CLARA RESOURCES AUSTRALIA LTD - M&A Activity 2012

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ASX Announcement

30 November 2012

Merger with Taronga Mines Limited

Receipt of Target Statement

Attached is the Target Statement received from Taronga Mines Limited (Taronga) in conjunction with the offer made by AusNiCo to acquire all the issued shares of Taronga.

Under the offer Taronga shareholders to be offered 5 AusNiCo shares for every 1 Taronga share, as outlined in the Company’s previous release of 1 November 2012.

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On behalf of the Board KM Schlobohm Company Secretary

AusNiCo Limited Level 27, 111 Eagle Street, Brisbane, Qld 4000 (GPO Box 5261) Phone: 07 3303 0611, Fax: 07‐3303 0681, Web: www.ausnico.com.au

TARONGA MINES LIMITED

A.C.N. 126 854 288

Target’s Statement

in response to the Offer by AusNiCo Limited A.C.N. 122 957 322 to acquire all of your Taronga Shares.

The Independent Directors unanimously recommend that you ACCEPT the Offer to acquire all of your Taronga Shares in absence of a Superior Proposal.

This is an important document and requires your immediate attention. If you are in doubt as to how to deal with this document, you should consult your financial or other professional adviser immediately.

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Important Information

Nature of this document

On 1 November 2012 AusNiCo Limited A.C.N. 122 957 322 ( AusNiCo ) and Taronga Mines Limited A.C.N. 126 854 288 ( Taronga ) announced the proposed Merger of the companies by way of an off-market takeover bid for all the issued shares in Taronga by AusNiCo (please refer to Annexure “B” of this Target’s Statement for a copy of the Taronga announcement).This Target’s Statement dated 29 November 2012 is issued by Taronga in accordance with the Corporations Act (under Part 6.5 of Chapter 6, in compliance with section 638 of the Corporations Act) in response to the Bidder’s Statement issued by AusNiCo in respect of the Offer.

A copy of this Target’s Statement has been lodged with ASIC. Neither ASIC nor any of its officers take any responsibility for the content of this Target’s Statement.

Defined terms and interpretation

Capitalised terms used in this Target’s Statement are defined in section 7 of this Target’s Statement (Definitions and interpretation). That section also sets out some rules of interpretation which apply to this Target’s Statement.

Disclaimer regarding forward-looking statements

This Target’s Statement may contain various forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including statements as to the implied value of the Offer. Taronga Shareholders should note that those forward-looking statements are inherently subject to uncertainties in that they may be affected by a variety of known and unknown risks, variables and factors that could cause actual values or results, performance or achievements to differ materially from the expectations described in such forward-looking statements. These risks, variables and factors include, but are not limited to, those risks identified in section 8 of the Bidder’s Statement.

Taronga does not give any assurance that the anticipated results, performance or achievements expressed or implied in those forward-looking statements will be achieved. None of Taronga’s Directors, officers or advisers, nor any other person, give any representation or warranty (express or implied) or assurance as to the accuracy or likelihood of fulfilment of any forward-looking statements, or any events or results expressed or implied in any forward-looking statements, except to the extent required by law. Taronga Shareholders are cautioned not to place undue reliance on forward-looking statements.

The forward-looking statements in this Target’s Statement reflect views held only as at the date of this Target’s Statement.

Disclaimer as to Information

The information contained in this Target’s Statement in relation to AusNiCo has been prepared by Taronga using publicly available information (including that contained in the Bidder’s Statement). Taronga has not independently verified the information in this Target’s Statement concerning AusNiCo. Accordingly, subject to the Corporations Act, Taronga does not make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

Independent Expert’s Report

The Independent Expert’s Report set out in Annexure “A” of this Target’s Statement has been prepared by the Independent Expert for the purposes of this Target’s Statement and the Independent Expert takes full responsibility for that report.

Mining One has prepared and is responsible for the Independent Technical Report (which accompanies the Independent Expert’s Report) and takes full responsibility for that report. Taronga does not accept or assume any responsibility for the accuracy or completeness of the Independent Expert’s Report or the Independent Technical Report, other than factual information provided by Taronga to the Independent Expert or Mining One for the purposes of the Independent Expert’s Report or the Independent Technical Report.

Maps and Diagrams

Any diagrams and maps appearing in this Target’s Statement are illustrative only and may not be drawn to scale. Unless stated otherwise, all data contained in charts, maps, graphs and tables is based on information available at the date of this Target’s Statement.

Privacy

Taronga has collected your information from the Taronga register of shareholders for the purpose of providing you with this Target’s Statement. The type of information Taronga has collected about you includes your name, contact details and information on your shareholding in Taronga. Without this information, Taronga would be hindered in its ability to issue this Target’s Statement. The Corporations Act requires the name and address of the shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Taronga’s related bodies corporate and external service providers (such as the share registry of Taronga and print and mail service providers) and may be required to be disclosed to regulators such as the Australian Securities and Investments Commission. If you would like the details of your information held by Taronga, please contact the Company Secretary, Melanie Leydin on (03) 9692 7222.

Notice to Foreign Shareholders

The distribution of this Target’s Statement may, in some jurisdictions, be restricted by law or regulation. Accordingly, persons who come into possession of this Target’s Statement should inform themselves of, and observe, those restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations.

This Target’s Statement has been prepared in accordance with Australian law and the information contained in this Target’s Statement may not be the same as that which would have been disclosed if this Target’s Statement had been prepared in accordance with the law and regulations outside Australia.

No Account of Personal Circumstances

This Target’s Statement does not constitute financial product advice or take into account the individual investment objectives, financial situation and particular needs of each Taronga Shareholder and it does not contain personal financial and taxation advice. Taronga encourages you to seek independent financial and taxation advice before making a decision as to whether or not to accept the Offer for your Taronga Shares.

Enquiries about the Offer

If you have any questions about the Offer, please contact the AusNiCo’s Company Secretary, Mr Karl Schlobohm on +61 7 3303 0661 (local call cost for callers within Australia) or consult your legal or other financial or professional adviser. Any questions regarding this Target’s Statement should be directed to the Company Secretary, Melanie Leydin on (03) 9692 7222.

Target’s Statement of Taronga Mines Limited

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Table of Contents and Key Dates

Independent Chairman’s letter	Independent Chairman’s letter	4
1.	How to ACCEPT the Offer and your choices as a Taronga Shareholder	6
2.	Key reasons why you should accept the Offer	8
3.	Important matters to be considered by Taronga Shareholders	12
4.	Independent Directors’ recommendations and Director’s interests	21
5.	Important information about the Offer	25
6.	Additional information	30
7.	Definitions and interpretation	34
8.	Authorisation	38
Annexure A – Independent Expert’s Report		39
Annexure B – Announcement of the Offer (including key terms of the Merger Implementation		91
Deed)
Annexure C – Conditions of the Offer		98

KEY DATES

Announcement Date	1 November 2012
Lodgement of original Bidder’s Statement with ASIC	12 November 2012
Date of replacement Bidder’s Statement	23 November 2012
Offer Date (start of the Offer Period)	27 November 2012
Date of this Target’s Statement	29 November 2012
Scheduled Closing Date of the Offer (unless extended or withdrawn)	27 December 2012

Target’s Statement of Taronga Mines Limited

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Independent Chairman’s letter

Dear Taronga Shareholder,

On 1 November 2012, Taronga Mines Limited (Taronga) and ASX listed company AusNiCo Limited (AusNiCo) announced a proposed merger. AusNiCo is an Australian-based exploration company focused on the discovery and development of nickelcobalt mineral deposits in South-East Queensland and Tasmania. The proposed transaction will create a company with a foundation of base metals assets, including the world class Taronga Project in northern New South Wales, Australia.

THE OFFER

AusNiCo Limited (ASX:ANW) is offering to acquire all the issued shares of the public unlisted tin exploration company Taronga, with Taronga Shareholders being offered 5 AusNiCo shares for every 1 Taronga share held (the Offer). For Taronga Shareholders, the Offer represents a premium of 20% to the last capital raising conducted by Taronga in February 2012 at $0.10 per share.

The Offer is subject to certain conditions referred to in Annexure “C” of this Target’s Statement and set out in section 10 of the Bidder’s Statement, including a 90% minimum acceptance condition.

WHY YOU SHOULD ACCEPT THE OFFER

Taronga’s Independent Directors consider there is a compelling commercial rationale for the transaction, in particular the Merger:

a) delivers Taronga Shareholders a 20% premium to the last capital raising price of Taronga;
b) provides Taronga Shareholders a listing event for their Taronga shareholdings in an equities market that has been difficult for initial public offerings;
c) enables Taronga Shareholders to retain an exposure to the world class Taronga Project and benefit from potential upside as the development of the project is progressed;
d) provides access to a broader capital market; and
e) the Independent Expert has deemed the Offer from AusNiCo to be not Fair but Reasonable, and in the absence of a superior offer, consider that it should be accepted by Taronga Shareholders. A copy of the Independent Expert’s Report is set out in Annexure “A”.

See also Section 2 of this Target’s Statement which sets out in detail the key reasons why you should accept the Offer.

INDEPENDENT DIRECTOR’S UNANIMOUS RECOMMENDATION

Each of Taronga’s Independent Directors recommends that Taronga Shareholders accept the Offer, in the absence of a Superior Proposal, and encourage Taronga Shareholders to accept the Offer by completing the form at the back of the Bidder’s Statement.

Each of the Taronga’s Directors intends to accept the Offer in respect of the Taronga Shares they hold or control, in the absence of a Superior Proposal.

Target’s Statement of Taronga Mines Limited

You should read this Target’s Statement and the Bidder’s Statement in their entirety and seek independent advice from your financial, taxation and other professional advisers before making any decision in respect of the Offer. Please note that the Offer is intended to close at 7:00 pm Brisbane time on 27 December 2012. For more information please call Peter Williams, Chief Executive Officer on 0423 029 577.

Yours sincerely

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W.R. (Bill) Ryan Chairman

Target’s Statement of Taronga Mines Limited

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1. How to ACCEPT the Offer and your choices as a Taronga Shareholder

You should read this Target’s Statement and the Bidder’s Statement in full before making a decision on whether to accept the Offer.

1.1 DETAILS OF THE OFFER

The consideration being offered by AusNiCo under the Offer is 5 AusNiCo Shares for every 1 Taronga Share (Offer Consideration).

AusNiCo has entered into Option Cancellation and Replacement Deeds with the Taronga Optionholders, under which the Taronga Optionholders’ Taronga Options are cancelled and replaced with 5 AusNiCo Options for every 1 Taronga Option (subject to AusNiCo obtaining the relevant AusNiCo shareholder approvals and regulatory approvals required).

As a Taronga Shareholder, you have three choices available to you:

a) accept the Offer;
b) sell your Taronga Shares; or
c) do nothing.

The Independent Directors encourage you to consider your personal risk profile, investment strategy, tax position and financial circumstances before making any decision in relation to your Taronga Shares.

1.2 ACCEPTANCE OF THE OFFER

Each of the Independent Directors recommends you accept the Offer in respect of all of your Taronga Shares. Each of the Taronga Directors intends to accept the Offer in respect of all of the Taronga Shares they own or control.

To accept the Offer, please complete the Acceptance Form contained in the Bidder’s Statement. The completed Acceptance Form (and all other documents required by the Instructions on the Acceptance Form) should be returned in accordance with the Instructions.

Full details on how to accept the Offer are set out in section 10.4 of the Bidder’s Statement.

If you choose to accept the Offer, you will not be able to sell your Taronga Shares to another party or accept a Superior Proposal, unless the Offer is unsuccessful or the Offer is extended by a period of more than one month whilst still conditional.

The taxation implication of accepting the Offer depends on various factors and your particular circumstances. A general outline of the Australian taxation consequences is included in section 9 of the Bidder’s Statement. In addition, you should obtain independent taxation advice before accepting the Offer.

Target’s Statement of Taronga Mines Limited

1.3 CLOSING DATE FOR ACCEPTANCE

Your acceptance of the Offer must be completed before the Closing Date (before 7:00 pm Brisbane time on 27 December 2012), unless the Offer Period for the Offer is extended.

1.4 IF YOU CHOOSE NOT TO ACCEPT THE OFFER

If you do not wish to accept the Offer in relation to your Taronga Shares, you are not required to do anything further. By not taking any action you will have rejected the Offer and retain your Taronga Shares.

If you choose to do nothing and AusNiCo becomes entitled to compulsorily acquire your Taronga Shares in accordance with the relevant provisions in the Corporations Act (as it intends to do), you will receive the same Offer Consideration as the Taronga Shareholders who accepted the Offer. Refer to section 5.13 of this Target’s Statement for details on compulsory acquisition.

1.5 SELLING YOUR TARONGA SHARES

If you do not wish to accept the Offer and do not wish to retain your Taronga Shares, you may seek to sell your Taronga Shares privately during the Offer Period. However, as the Taronga Shares are not listed on any securities exchanges, there is currently no ready market for the sale of the Taronga Shares.

Target’s Statement of Taronga Mines Limited

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2. Key reasons why you should accept the Offer

The Independent Directors of Taronga unanimously recommend that you ACCEPT the Offer, in the absence of a Superior Proposal, for the following reasons:

2.1 THE INDEPENDENT EXPERT HAS CONCLUDED THE OFFER IS NOT FAIR BUT REASONABLE

Under section 640(1)(c) of the Corporations Act, if a director of the Bidder is also a director of the Target, the Target’s Statement must include or be accompanied by a report by an expert that states whether, in the expert’s opinion, the Offer is fair and reasonable. Section 640(1)(c) requires the expert to provide the reasons for their opinions which are detailed in the Independent Expert’s Report (included as Annexure “A” of this Target’s Statement).

As Nicholas Mather is a director of both Taronga and AusNiCo, the Independent Directors’ have appointed DMR Corporate Pty Ltd as an Independent Expert to prepare an independent assessment of the Offer under section 640(1)(c) of the Corporations Act.

The Independent Expert has:

a) valued the Taronga Shareholder interest before the Offer in a range of $7,498,400 to $8,075,200;
b) valued the Taronga Shareholders 66.5% interest in the Merged Group in a range of $6,542,000 to $7,092,400;
c) determined this represents a loss in value of $956,400 to $982,800, on which basis the Independent Expert considered the Offer is not fair;
d) determined the Offer while not ‘fair’ is ‘reasonable’ as the Offer provides:
a. a listing of the Taronga Shareholders’ interests;
b. increases the size of the merged entity; and
a. increases its public profile,

which should assist in future capital raisings to fund the exploration and development projects in the years ahead;

e) assessed values of the AusNiCo shares after the proposed merger in a range of $0.023 to $0.025 per share an considered these values extrapolate to an assessed value of $0.113 to $0.123 per original Taronga share. The Independent Expert noted these values are higher than the $0.10 per share subscription prices for the January 2011 and February 2012 capital raisings undertaken by Taronga; and
f) considered that in the absence of a Superior Proposal the Taronga Shareholders should accept the Offer.

Consequently, the Independent Directors recommend that you ACCEPT the Offer in absence of a Superior Proposal.

You should review the Independent Expert’s Report (set out in Annexure “A” of this Target’s Statement) carefully as it contains important information explaining how the Independent Expert has formulated its opinion.

Target’s Statement of Taronga Mines Limited

2.2 THE OFFER IS UNANIMOUSLY RECOMMENDED BY THE INDEPENDENT DIRECTORS

The Independent Directors have carefully considered the Offer and unanimously recommend that, in absence of a Superior Proposal, the Taronga Shareholders accept the Offer. Each of the Independent Directors intends to accept the Offer, in the absence of a Superior Proposal, in relation to the Taronga Shares held or controlled by them.

No proposal that is a Superior Proposal to the Offer has been received by Taronga since the Offer was announced on 1 November 2012.

2.3 PARTICIPATION IN MERGED GROUP

AusNiCo is a Queensland based minerals exploration company primarily focused on the discovery and economic development of large-scale nickel projects. As a shareholder in the combined AusNiCo / Taronga group of companies (Merged Group), Taronga Shareholders will receive a number of benefits including:

a) Financial, developmental and operational strength

The Merged Group will have a pro forma combined equity value of approximately 12,467,007 following successful completion of the Offer (refer to section 7 of the Bidder’s Statement).

As an ASX listed entity, the Merged Group will have a broader range of fundraising opportunities than Taronga currently enjoys. In order to meet Taronga’s commitments in respect of its projects (including ongoing exploration and development activities), further funding will be needed, and the Taronga Directors consider that the capacity to source this funding will be significantly enhanced by being part of the Merged Group.

The Merged Group’s enlarged size and stronger balance sheet should improve access to funding at a lower cost than what Taronga could achieve on a stand-alone basis and provide the Merged Group with the flexibility to allocate more funds and resources to advance Taronga’s project.

b) Diversified exposure

Taronga Shareholders will gain exposure to AusNiCo’s interests in various mineral tenements throughout Australia.

The Merged Group will have a more substantial portfolio of mineral prospects and will have the ability to pursue a broader range of new growth opportunities.

c) Continuing participation

Taronga Shareholders will retain a significant exposure to the assets, operations and growth prospects of Taronga. Following the successful completion of the Offer, Taronga Shareholders collectively will be entitled to 66.54% of all AusNiCo Shares on issue.

2.4 OFFER REPRESENTS AN APPROPRIATE VALUE FOR YOUR TARONGA SHARES

Taronga is an unlisted Australian public company with no earnings history.

In order to assess the value of Taronga Shares, a number of traditional valuation methods were considered, however, the Independent Directors determined that they were not appropriate to apply to the Offer Consideration. For example, the application of earnings multiples and quoted securities methodologies are not appropriate. Taronga has not received any offer for Taronga Shares or for its assets other than the Offer. Having regard to the matters referred to in section 2.1 of this

Target’s Statement of Taronga Mines Limited

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Target’s Statement and in the Independent Expert’s Report, the Independent Directors conclude the Offer Consideration represents an appropriate value for your Taronga Shares.

2.5 NO SUPERIOR PROPOSAL HAS BEEN RECEIVED

At the date of this Target’s Statement, no Superior Proposal has emerged and the Independent Directors are not aware of any Target Competing Proposals.

You should note that the Independent Directors’ recommendations made in this Target’s Statement are subject to the absence of a Superior Proposal. Should such a proposal arise, your Independent Directors will reconsider their recommendation and inform you accordingly.

2.6 LIQUIDITY FOR TARONGA SHARES

There is currently no ready market for Taronga Shareholders to trade Taronga Shares. By accepting the Offer you will receive AusNiCo Shares which will be quoted on ASX and will be freely tradeable, subject to any escrow restrictions that may be applicable to the AusNiCo Shares issued to you under the Offer. As a result, if you wish to sell your AusNiCo Shares immediately, you can (subject to escrow restrictions).

For further details in the escrow arrangements please refer to section 3.10 of this Target’s Statement.

2.7 CGT ROLLOVER RELIEF

Taronga Shareholders accepting the Offer may be entitled to CGT rollover relief. In summary, rollover relief means that the effective sale of your Taronga Shares will not crystallise a taxation event, and any potential tax liability will be deferred until you sell your AusNiCo Shares.

Taronga Shareholders should refer to section 9 of the Bidder’s Statement and consult their professional advisers in regard to how accepting the Offer will affect their individual circumstances.

2.8 OTHER MATTERS

In considering whether to accept the Offer, the Independent Directors encourage you to:

a) read both this Target’s Statement and the Bidder’s Statement in their entirety;
b) consider the future prospects of Taronga, AusNiCo and the Merged Group compared to the future prospects of Taronga as a stand-alone entity;
c) have regard to your individual risk profile, portfolio strategy, tax considerations and financial circumstances; and
d) obtain financial advice from your own broker or financial advisor regarding the Offer and obtain taxation advice on the effect of accepting the Offer.

If you choose not to accept the Offer, there are certain potential consequences of which you should be aware:

e) the emergence of another bidder may be unlikely, particularly if AusNiCo acquires sufficient Taronga Shares to prevent another bidder from proceeding to compulsory acquisition or achieving effective control; and

Target’s Statement of Taronga Mines Limited

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f) Taronga will not have access to AusNiCo’s ability to raise capital or funding, meaning that Taronga may remain without a funding solution in relation to its expenditure commitments for its projects.

You should also be aware that AusNiCo secured a Relevant Interest in 19.99% of Taronga’s issued share capital (11,478,320 Taronga Shares) through a pre-bid acceptance agreement with YTC.

Target’s Statement of Taronga Mines Limited

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3. Important matters to be considered by Taronga Shareholders

In making a decision whether to accept the Offer you should carefully consider your personal circumstances and have regard to the following:

3.1 INFORMATION ON TARONGA

Overview of Taronga Mines Limited

Taronga was incorporated on 3 August 2007 for the primary purpose of exploring and developing tin assets. Taronga’s principle asset is the Taronga Project located at Emmaville in northern New South Wales. Taronga also owns a portfolio of Exploration Licences in the area immediately surrounding the Taronga Project.

The Taronga Project was evaluated by a joint venture led by Newmont Holdings Pty Ltd (Newmont JV) between 1978 and 1984. Newmont completed a Preliminary Feasibility Study (PFS) in 1982 the Newmont JV ceased work in 1984 and relinquished the project, at a period of historic low tin prices.

Taronga acquired the Taronga Project in 2008. Following Taronga’s re-evaluation of the PFS and historic resource estimate, Taronga identified areas of key potential upside, including (i) increased in-situ grade; (ii) higher grades at depth; (iii) increased tin recovery; and (iv) the recovery of by-product metal credits.

Taronga also owns a portfolio of granted Exploration Licences adjacent to the Taronga Project, of which each is prospective for tin and other minerals. Historic mining activities and more recent exploration programs provide evidence of mineralisation at Torrington, Emmaville and Pound Flat.

Company structure

Taronga is an unlisted public company with 57 shareholders. Taronga has two wholly owned subsidiaries, namely Ten Star Mining Pty Ltd and New England Tin Pty Ltd.

Taronga has issued 57,680,002 ordinary shares (including 23,001,928 shares issued to raise $1,942,586; 2,278,074 in lieu of services rendered; and 32,400,000 as consideration for assets vended into Taronga). Taronga’s major shareholders include Tenstar Trading Ltd (28.08%), YTC (23.65%) and Samuel Holdings Pty Ltd (12.44%).

Location

The Taronga Project and Taronga’s portfolio of Exploration Licences are located near the historic mining town of Emmaville in northern New South Wales. Emmaville has a population of 247 (2001 Census) and key industries are agriculture and tourism. Emmaville is located in the shire of Glen Inness Severn Council.

Target’s Statement of Taronga Mines Limited

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Taronga Exploration Licences

Taronga holds a 100% interest in four granted Exploration Licences with a total area of approximately 368km[2] . Taronga’s Exploration Licences are located within the Clive 1:100,000 Sheet Area, reported at the centre of the most significant tin province in the New England Region, and prospective for other minerals including tungsten, base metals, molybdenite and gold.

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Each of Taronga’s Exploration Licences were issued for a period of two years and the following table provides respective expiry dates.

Target’s Statement of Taronga Mines Limited

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Tenement	Area (km2)	Date of Grant	Expiry
EL 7348 - Taronga	48	29/05/2009	29/05/2013
EL 6839 - Emmaville	18	24/07/2007	24/07/2013
EL7800 - Torrington	201	23/03/2011	04/07/2013
EL7801 - Pound Flat	102	23/03/2011	04/07/2013

Table: Details for Tenements held by Taronga

Taronga’s Exploration Licences are situated on freehold and crown land.

Project Details

a) Taronga (EL 7348)

The Taronga Project is the principal project within EL 7348, albeit other tin mineralisation exists at Rob Griffiths Lode, Poverty Point Prospect, Arvid North and Stormer.

The Taronga tin deposit comprises two major zones of quartz-cassiterite, sheeted vein-style mineralisation; the Northern and Southern Zones. The two vein swarms in the Northern Zone are between 10 and 80 metres wide over lengths of between 600 and 650 metres and has been outlined in detail by historic (1979 to 1982) drilling to a depth of 200 metres. The four separate vein swarms in the Southern Zone are 8 and 10 metres wide over lengths of between 150 and 550 metres, and have been outlined by historic drilled to a depth of 150 metres.

The Taronga deposit contains minor but potentially significant quantities of copper and silver but no historical estimates of the tenor of this mineralisation are reported.

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Wireframes and drill hole locations showing zones of the mineralisation

In 1933, BHP undertook the first systematic testing at the Taronga Project with the driving of a 90m adit into the deposit, from which bulk samples were extracted. BHP treated three parcels of mineralised material for a recovered grade of 0.25 percent tin. It was reported that channel sampling in the adit wall of the section from which the mineralised material was

Target’s Statement of Taronga Mines Limited

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removed had returned a much lower average grade of only 0.15 percent tin. Between 1958 and 1964, BHP conducted extensive sampling in 11 shallow surface costeans and drilled twelve percussion drill holes into sections of the deposit.

In 1978, Endeavour Resources Ltd was granted an Exploration Licence over the area and subsequently farmed it out to the Newmont JV. The Newmont JV consisted of a consortium of Newmont Holdings Pty Ltd (as manager), ICI Australia, Endeavour Resources and Pelsart Holdings. The Newmont JV carried out extensive exploration and investigatory work between 1978 and 1984. They drilled 357 holes (178 diamond core and 179 reverse circulation percussion) for a total of 33,350 metres of drilling in all. Notably only 18 holes failed to intersect tin mineralisation above the initial 0.1 percent tin lower cut-off grade.

The Newmont JV also drove three adits, generating sufficient mineralised material to complete three programs of metallurgical test work and an evaluation of the impact of sample size on resource grade. Newmont concluded in their study that the grade from the bulk samples was higher than the drilling data, thought to be due in part to volume variance effects.

The Newmont JV completed a Preliminary Feasibility Study (PFS) which included a historic resource estimate, open-cut mine design, conceptual metallurgical process flow sheet, processing plant design and project related infrastructure. The PFS also concluded that a saleable concentrate of 55 – 74% Sn could be produced. Following an initial estimation based on a 0.10% Sn cut-off, economic analysis post PFS showed that a 0.083% “break-even” cut-off grade could be sustained. A subsequent geostatistical ore reserve estimation of 46,757,000 tonnes @0.145% Sn[1] was calculated. Around the time the PFS was completed the tin price was falling and the Taronga Project was put on hold and eventually abandoned.

Following the acquisition of the Taronga Project in 2008, Taronga has completed additional work, including field investigations and studies. Most recently, Taronga digitised and undertook a geostatistical review of all available historical drilling data, using the results to develop a proposed drilling program that will target the establishment of a JORC compliant resource. Taronga also completed a metallurgical review of the PFS and identified areas for future test work.

Taronga have identified a number of areas of key potential upside for the Taronga Project, including:

a) increased in-situ grade – comparisons of Newmont data on bulk grade of underground sampling and adjacent drill holes supports the potential for actual resource grades to be higher than estimated;
b) higher grades at depth – based upon a better understanding of the geological model, supported by historic drilling data at depth, including 2m at 1.0% Sn from 351m in DG402-7; 1m at 2.6% Sn from 169m and 1m* at 2.1%Sn from 213m in hole DG410-3E (Note * down hole length, true width is unknown);
c) increased tin recovery – the application of modern comminution and gravity separation equipment developed since the PFS completed; and
d) by-product credits – the recovery of copper and silver through the adoption of fine grinding and flotation.

In addition to the Taronga Project, there are a number of exploration targets contained within EL 7348. Based on mapping and geochemical work completed in September 2012, the most prospective of these targets include Rob Griffiths Lode, Poverty Point Prospect, Arvid North and Stormer.

1 The historic resource predates the introduction of the JORC Code in 1989 and as such represents a historical estimate which was not reported in accordance with the JORC Code. There has been insufficient recent exploration to define a Mineral Resource and it remains uncertain if further exploration will result in the determination of a Mineral Resource.

Target’s Statement of Taronga Mines Limited

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b) Torrington (EL 7800)

EL 7800 is considered highly prospective for tin with numerous known occurrences of mineralisation, and recorded mining activities dating back to 1882. A number of the more advance projects include McDonalds Zone, Poverty Point, Emerald and Big Plant Creek.

The southwest corner of EL 7800 is referred to as the East Grampians Corridor (refer to the figure below) and hosts a number of targets, including, McDonalds Zone, Poverty Point, Emerald and Big Plant Creek. The geology and mineralisation of these target zones is similar to Taronga. These targets were generated by exploration in the mid 1980’s but have not been systematically tested by drilling, including the McDonalds and Emerald zones. These two targets are situated at the contact of the tin-bearing Mole Granite with hornfelsed host sediments, a very favourable position to host tin mineralisation. YTC found tin values of 0.23 percent and 1.93 percent tin in rock chip samples at McDonalds.

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East Grampians Corridor

Taronga has recently conducted a program of exploration on the McDonald’s zone target in the Torrington area. The work, comprising grid soil sampling, Induced Polarisation-Resisitivity geophysics and detailed ground gravity geophysics, has confirmed McDonald’s zone as a viable target for Taronga-style tin mineralisation. Coincidence of Induced Polarisation anomalies with geochemical anomalies (tin-in-soil values peaking above 1200 parts per million (ppm) tin) have defined a high priority drill target within the south-western portion of the 3000 metre by 1000 metre gridded area. The main anomaly so defined, a 700 metre by 150 metre target is one of three anomalies within the McDonald’s target that are within the plus 400 ppm tin contour limits.

Accordingly, Taronga has only recently confirmed the earlier work by EZ Industries at McDonalds in the early 1980’s. This provides confidence that similar tin-in-soil anomalies generated by the same explorer at other targets in the East Grampians Corridor (Emerald Zone, Big Plant Creek and Poverty Point) will also be confirmed as genuine targets for more Taronga-style tin mineralisation.

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The Torrington Exploration Licences also contain numerous historic lode tin workings where high-grade tin occurs in discreet, multiple, quartz lodes. Very little drilling has been done to test these historic quartz lodes, however YTC did obtain some significant tin intercepts in the area of the old ‘Harts’ and ‘Dutchmans’ lodes with 0.8 metres at 3.64 percent tin and 1.0 metre at 1.23 percent tin. In other drilling, at the ‘Planet’ lode, YTC achieved results of 1.0 metre at 1.75 percent tin, 25 metres at 0.21 percent tin plus 0.12 percent copper.

In the period between November 2010 and April 2012, Taronga conducted extensive low impact investigations on the Torrington Exploration Licences including geochemical soil sampling, Induced Polarisation (IP) and Gravity geophysical surveys.

c) Emmaville (EL 6839)

EL 6839 is considered highly prospective for tin. The area has been subject to extensive mining activity dating back more than a hundred years. The main activity was sluicing of the upper reaches of Vegetable Creek, immediately west of Tent Hill, and tributaries for alluvial cassiterite.

d) Pound Flat (EL7801)

Pound Flat is situated in EL7801, some 15 kilometres south of the Taronga deposit. The Newmont JV obtained two large tin intercepts at Pound Flat in limited drilling. They intercepted 49 metres at 0.18 percent tin from surface and 98.5 metres at 0.13 percent tin from 13.5 metres down-hole.

The Newmont JV estimated a historical in-pit resource of 2.2 million tonnes @ 0.12% Sn.

3.2 INFORMATION OF AUSNICO

AusNiCo is an Australian-based exploration company focused on the discovery and development of nickel-cobalt mineral deposits in South-East Queensland and Tasmania. AusNiCo was incorporated on 1 December 2006 and was admitted to the official list of ASX on 21 October 2010 (ASX Code: ANW).

AusNiCo is making the Offer in the Bidder’s Statement. Please refer to section 4 of the Bidder’s Statement for details regarding AusNiCo.

3.3 PROFILE OF THE MERGED GROUP

Please refer to section 7 of the Bidder’s Statement for details on the Merged Group (AusNiCo and Taronga).

3.4 SUPERIOR PROPOSAL

If you accept the Offer, then unless you are able to withdraw your acceptance in circumstances described in section 5.9 of this Target’s Statement you will forego the opportunity to benefit from any Superior Proposals by another party for your Taronga Shares should such proposal eventuate. As at the date of this Target’s Statement, the Independent Directors are not aware of a proposal by anyone to make a Superior Proposal.

If AusNiCo varies the Offer to increase the Offer Consideration it is offering for your Taronga Shares, you will be entitled to receive the increased consideration even if you have already accepted the Offer. This is unless one of the defeating conditions

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attached to the revised offer is triggered and AusNiCo does not waive that condition, in which case the revised offer will lapse and you will retain your Taronga Shares.

3.5 TARONGA FUNDING REQUIREMENTS

As at the date of this Target’s Statement, Taronga has minimal cash reserves. In order to fulfil its funding commitments in respect of its projects and otherwise maintain Taronga’s operations, Taronga requires additional capital.

AusNiCo’s intentions in relation to funding requirements are set out in section 6.1 of the Bidder’s Statement. AusNiCo has indicated that it is likely to seek to raise money through a private placement and/or through an offer to existing shareholders in order to provide funding for the Merged Group’s exploration activities (following a successful Merger).

3.6 LIKELIHOOD OF THE CONDITIONS BEING SATISFIED

The Offer is subject to a number of conditions detailed in section 10.2 of the Bidder’s Statement and summarised in Annexure “C” to this Target’s Statement. Whilst the Independent Directors believe that the conditions are likely to be satisfied, you should be aware that there is a risk that some of the conditions may not be satisfied. If this occurs, and AusNiCo does not waive the conditions, the Offer will lapse and you will retain your Taronga Shares.

3.7 STRATEGY OF AUSNICO FOLLOWING THE PROPOSED MERGER

Section 6 of the Bidder’s Statement sets out AusNiCo’s intentions in respect of Taronga’s business and operations if AusNiCo acquires control. The Independent Directors have no information that suggests to them that this information may be inaccurate or misleading.

Intentions upon acquiring control but less than 90% of the Taronga Shares

Please refer to section 6.3 of the Bidder’s Statement regarding AusNiCo’s intentions if it acquires control of Taronga, but less than 90% of the Taronga Shares.

Intention upon acquisition of 90% of the Taronga Shares

Please refer to section 6.4 of the Bidder’s Statement regarding AusNiCo’s intentions if it acquires 90% or more of the Taronga Shares and it is entitled to proceed to compulsory acquisition of the outstanding Taronga Shares.

3.8 RISKS FACTORS

Section 8 of the Bidder’s Statement outlines the risks that Taronga Shareholders may face when investing in AusNiCo Shares. If you require further information regarding such risks in order to make decisions as to whether or not to accept the Offer, please contact your professional adviser.

Neither Taronga nor AusNiCo accept any liability or responsibility in respect of the movement in the price of AusNiCo Shares before, or after the Closing Date.

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3.9 TAXATION

The taxation consequences of accepting the Offer depends on a number of factors and will vary depending on your particular circumstances.

Taronga Shareholders should refer to section 9 of the Bidder’s Statement that contains a discussion of certain possible tax implication for Taronga Shareholders. It is not intended to be an authoritative or complete statement of the tax position applicable to any given Taronga Shareholder.

You should note that scrip-for-scrip capital gains tax rollover relief may be available if you accept the Offer. The tax consequence for you will depend on your individual circumstances. You should seek your own independent financial and taxation advice, which takes into account your personal circumstances before making a decision as to whether or not to accept the Offer.

Neither Taronga nor any of its officers or advisers accepts any liability or responsibility in respect of any statement concerning taxation consequences, or in respect of the taxations consequences themselves.

3.10 ESCROW

Taronga Shareholders who are to receive the AusNiCo Shares as the Offer Consideration for their Taronga Shares, and if determined by the ASX to be “restricted securities” within the meaning of the Listing Rules, will be required to enter into restriction agreements in respect of such AusNiCo Shares in accordance with the requirements of the ASX and the Listing Rules.

3.11 FOREIGN SHAREHOLDERS

AusNiCo is not making the Offer to Taronga Shareholders that are “Foreign Shareholders” (as defined in the Bidder’s Statement) in any jurisdiction in which, or to any person to whom, it would be unlawful to make such an offer. If you are considered a “Foreign Shareholder” then, unless AusNiCo determines that:

a) it is lawful and not unduly onerous or not unduly impractical to make the Offer to you and to issue you with AusNiCo Shares on acceptance of the Offer; and
b) it is not unlawful for you to accept the Offer by the law of the relevant place outside Australia and its external territories,

you will not be entitled to receive the Offer Consideration (as the case may be) and would instead receive the cash proceeds from a sale of the AusNiCo Shares to which you would otherwise have been entitled (by reason of your acceptance of the Offer). Refer to section 10.8 of the Bidder’s Statement for details on the treatment of “Foreign Shareholders” and how the cash proceeds will be ascertained.

If you are a Taronga Shareholder with a registered address outside of Australia and its external territories or New Zealand and you require confirmation of your entitlement to the Offer Consideration upon an acceptance of the Offer, you should contact the company secretary of AusNiCo:

Company Secretary of AusNiCo Karl Schlobohm Phone +61 7 3303 0661

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Fax +61 7 3303 0651

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4. Independent Directors’ recommendations and Directors’ interests

4.1 TARONGA DIRECTORS

As at the date of this Target’s Statement, the Taronga Directors are:

DIRECTOR	POSITION
Mr William Ryan	Chairman
Mr Nicholas Mather	Non-Executive Director
Mr Teunis Kwak	Non-Executive Director
Mr John Bovard	Non-Executive Director
Mr Richard Willson	Non-Executive Director

Mr Nicholas Mather holds directorship, shares and options in each of Taronga and AusNiCo.

Mr Nicholas Mather has not voted at Taronga’s Board meetings, or been involved in any negotiations relating to the Merger Implementation Deed, the Offer, or the adoption of this Target’s Statement on behalf of Taronga. Mr Mather has been involved in the preparation of the Target’s Statement to the extent only that his involvement has been required in undertaking the Due Diligence Investigations necessary to prepare and verify the Target’s Statement.

Each company has sought its own independent legal advice with respect to the Offer.

For the reasons outlined above Mr Mather is of the opinion that it is not appropriate to make a recommendation to the Taronga Shareholders in relation to the Offer, and as such, has abstained from making such recommendation.

4.2 INDEPENDENT DIRECTORS’ RECOMMENDATION

At the date of this Target’s Statement, Mr Nicholas Mather is a Taronga Director and shareholder of Taronga and AusNiCo and therefore is not considered an Independent Director for the purposes of the Offer and makes no recommendation in relation to the Offer.

Each of the Independent Directors (being Mr William Ryan, Mr Teunis Kwak, Mr John Bovard and Mr Richard Willson) consider themselves independent for the purposes of the Offer and able to make recommendations to Taronga Shareholders.

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The Independent Directors’ unanimously recommend the Taronga Shareholders ACCEPT the Offer with respect to all your Taronga Shares for the reasons set out in this Target’s Statement (particularly the matters discussed in section 2 of this Target’s Statement), subject to there being no Superior Proposal for the reason set out in this Target’s Statement (in particular please refer to section 2).

4.3 TARONGA DIRECTORS’ CURRENT INTENTIONS

Each of the Taronga Directors currently intends to accept or procure acceptance of the Offer in respect of all the Taronga Shares they own or control, subject to there being no Superior Proposal.

4.4 TARONGA DIRECTORS’ INTERESTS IN TARONGA AND AUSNICO

The Taronga Directors have holdings in Taronga and AusNiCo (directly or indirectly through an Associate) as follows:

DIRECTOR	HOLDINGS IN TARONGA	HOLDINGS IN TARONGA	HOLDINGS IN AUSNICO	HOLDINGS IN AUSNICO
Type of Security	Shares	Options	Shares	Options
Mr William J (Bill) Ryan(Note 1)	2,400,000	2,000,000	-	-
Mr Nicholas Mather(Note 2)	7,173,388	2,000,000	2,762,917	500,000
Mr Teunis Kwak(Note 3)	-	1,000,000	-	-
Mr John Bovard(Note 4)	-	1,000,000	-	-
Mr Richard Willson(Note 5)	-	1,000,000	-	-

Notes:

2,000,000 Taronga Shares were issued to Rytech Pty Ltd as trustee for the Rytech Superannuation Fund (an entity associated with Mr Ryan, director) under a Share and Option Agreement dated on or about 30 October 2007 and a further 400,000 Taronga Shares issued in 20 February 2012 under an Offer Information Statement on 1 December 2010, Taronga Shareholders approved the issue of 2,000,000 Taronga Options to Mr Ryan or his nominee. The Taronga Options are exercisable at $0.20 each on or before 30 June 2015 (as approved by the Taronga Shareholders on 12 June 2012).
Samuel Holdings Pty Ltd as trustee for the Discretionary Trust Account (an entity associated with Mr Mather, director) holds 1,589,390 Taronga Shares (being issue of 1,750,000 less 160,610 subsequent transfer) issued under a seed capital raising in the fourth quarter of 2007/2008, 2,202,664 Taronga Shares issued under the New England Tin Pty Ltd Share Sale Agreement dated 31 March 2008 on the acquisition by Taronga of New England Tin Pty Ltd and a further 3,381,334 Taronga Shares issued on 29 February 2012 under an Offer Information Statement. On 1 December 2010, Taronga Shareholders approved the issue of 2,000,000 Options to Mr Mather or his nominee. The Taronga Options are exercisable at $0.20 each on or before 30 June 2015 (as approved by the Taronga Shareholders on 12 June 2012).
On 1 December 2010, Taronga Shareholders approved the issue of 1,000,000 Taronga Options to Dr Kwak or his nominee. The Taronga Options are exercisable $0.20 each on or before 30 June 2015 (as approved by the Taronga Shareholders on 12 June 2012).
On 17 March 2011, Taronga Shareholders approved the issue of 1,000,000 Taronga Options to Mr Bovard or his nominee. The Taronga Options are exercisable at $0.20 each on or before 30 June 2015 (as approved by the Taronga Shareholders on 12 June 2012).
On 17 March 2011, Taronga Shareholders approved the issue of 1,000,000 Taronga Options to Richard Willson or his nominee. The Taronga Options are exercisable at $0.20 each on or before 30 June 2015 (as approved by the Taronga Shareholders on 12 June 2012).

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4.5 TARONGA DIRECTORS’ DEALINGS IN TARONGA AND AUSNICO

No Taronga Directors have recently acquired or disposed of a Relevant Interest in Taronga Shares or AusNiCo Shares.

4.6 BENEFITS AND AGREEMENTS

Retirement Benefits

As a result of the Offer, no benefit (other than a benefit permitted by section 200F or 200G of the Corporations Act) has been or will be given to a person:

a) in connection with the retirement of a person from a board or managerial office in Taronga or a Related Body Corporate of Taronga; or
b) who holds, or has held a board or managerial office in Taronga or a Related Body Corporate, or a spouse, relative or Associate of such a person, in connection with the transfer of the whole or any part of the undertaking or property of Taronga.

Agreements connected with or conditional on the Offer

No Taronga Director is a party to any agreement or arrangement with any other person in connection with or conditional on the outcome of the Offer.

Interests of Taronga Directors in contract with AusNiCo

No Taronga Director has an interest in any contract entered into by them with AusNiCo (other than in respect of DGR Global Limited (of which Nicholas Mather is a director) in connection with a services agreement with AusNiCo (as referred to in the 2012 Annual Report of AusNiCo Limited lodged with the ASX)).

Proposed board positions in AusNiCo

Post-Merger, AusNiCo will use its best endeavours to appoint John Bovard and Richard Willson to the board of the Merged Group. Please refer to section 11.1(i) of the Bidder’s Statement for further details.

4.7 PERSONAL CIRCUMSTANCES

It is not possible for the Independent Directors’ recommendations to take into account your personal circumstances, such as the size or nature of your Taronga shareholding, your investment strategy or your tax position. Accordingly, and particularly if you are a smaller Taronga Shareholder, you should seek advice from your financial, taxation or other professional adviser before making any decision in relation to your Taronga shareholding.

In considering whether to accept the Offer, the Independent Directors encourage you to:

a) read the whole of this Target’s Statement and the Bidder’s Statement;
b) have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances;
c) ensure that you understand the consequences of accepting the Offer;
d) consider the choices available to you, as detailed in section 1 of this Target’s Statement;

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e) obtain financial advice from your broker or financial adviser in relation to the Offer; and
f) obtain taxation advice on the effect of accepting of the Offer.

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5. Important information about the Offer

5.1 SUMMARY OF THE OFFER FOR TARONGA SHARES

AusNiCo is offering to acquire all of your Taronga Shares during the period from the Offer Date to the Closing Date.

The Offer extends to any person who becomes registered or entitled to be registered as the holder of any of your Taronga Shares during the period from the Offer Date to the Closing Date.

5.2 OFFER CONSIDERATION FOR TARONGA SHARES

The consideration being offered by AusNiCo under the Offer is 5 AusNiCo Shares for every 1 Taronga Share. As the Offer is to acquire all of your Taronga Shares, you may only accept the Offer in respect of all of your Taronga Shares. If, as a result of accepting the Offer, you become entitled to a fraction of an AusNiCo Share, then your entitlement will be disregarded and you will receive the lowest next whole number of AusNiCo Shares.

5.3 OFFER FOR TARONGA OPTIONS

5.4 CONDITIONS OF THE OFFER

The Offer is subject to certain conditions, the full details of these conditions are set out in Annexure “C” of the Target’s Statement. Please refer to section 10.2 of the Bidder’s Statement for further details regarding the conditions to the Offer.

The majority of the conditions are outside Taronga’s control and your Independent Directors are therefore unable to provide any indication as to whether those conditions will be satisfied. However, as at the date of this Target’s Statement, the Independent Directors are not aware of any matter which would cause a breach or lead to non-satisfaction of any of the conditions.

Even if certain conditions of the Offer are not satisfied (or triggered), AusNiCo may waive them. If a condition is unsatisfied and has not been waived, AusNiCo may elect to proceed with the acquisition of the Taronga Shares under its Offer or allow its Offer to lapse with unsatisfied conditions. Generally, AusNiCo would not have to decide whether to proceed with the acquisition of the Taronga Shares under the Offer until the date it is required to provide the Notice of Status of Conditions (discussed further in section 5.5 of this Target’s Statement).

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The Offer will lapse if the Offer conditions are not freed or fulfilled by the Closing Date. If the Offer lapses, all contracts resulting from the acceptance of that Offer and all acceptances that have not resulted in binding contracts will be void and you will be free to deal with the corresponding Taronga Shares that you hold as you see fit.

5.5 NOTICE OF STATUS OF THE CONDITIONS

The Bidder’s Statement indicates that AusNiCo will give a Notice of Status of Conditions for the Offer in accordance with section 630(3) of the Corporations Act seven days before the end of the Offer Period. Please refer to section 10.2 of the Bidder’s Statement for further details.

AusNiCo is required to set out in its Notice of Status of Conditions:

a) whether the Offer is free of any or all of the conditions;
b) whether, so far as AusNiCo knows, any of the conditions have been fulfilled; and
c) AusNiCo’s voting power in Taronga.

If the Offer Period is extended before the time by which the Notice of Status of Conditions is to be given, the date for giving the Notice of Status of Conditions for the Offer will be taken to be postponed for the same period. In the event of such extension, AusNiCo will be required (as soon as practicable after the extension) to notify ASIC and Taronga of the new date for the giving of the Notice of Status of Conditions.

In addition, if a condition of the Offer is fulfilled (so that the Offer becomes free of that condition) during the Offer Period but before the date on which the Notice of Status of Conditions is required to be given, AusNiCo must, as soon as practicable, give ASIC and Taronga a notice that states that the particular condition has been fulfilled.

5.6 OFFER PERIOD

The Offer is open for acceptance from 27 November 2012 to 27 December 2012, unless it is withdrawn or extended. The circumstances in which AusNiCo may extend or withdraw the Offer are set out below.

5.7 EXTENSION OF OFFER PERIOD

AusNiCo may extend the Offer Period for the Offer at any time before giving the Notice of Status of Conditions while the Offer is subject to conditions. However, if the Offer is unconditional (that is all the conditions of the Offer are satisfied or waived), AusNiCo may extend the Offer Period for the Offer at any time before the Closing Date. Section 624(1)(b) of the Corporations Act prevents an Offer Period lasting more than 12 months.

In addition, the Offer Period will be automatically extended if, within the last 7 days of the Offer Period:

a) AusNiCo improves the Offer Consideration offered under the Offer; or
b) AusNiCo’s voting power in Taronga increases to more than 50%.

If either of these two events occurs, the Offer Period will be automatically extended so that it ends 14 days after the relevant event occurs.

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5.8 WITHDRAWAL OF OFFER

AusNiCo may not withdraw the Offer if you have already accepted it. Before you accept the Offer, AusNiCo may withdraw that Offer with the written consent of ASIC and subject to the conditions (if any) specified in such consent. Please refer to section 10.9 of the Bidder’s Statement for further details.

5.9 WITHDRAWAL OF YOUR ACCEPTANCE

If you accept the Offer (even whilst it remains subject to conditions), you will not be able to sell or otherwise deal with your Taronga Shares, subject to limited statutory rights to withdraw your acceptance in certain circumstances.

Taronga Shareholders will only be able to withdraw your acceptance of the Offer if:

a) the Offer conditions are not satisfied or waived by the Closing Date (in that situation you will be free to deal with your Taronga Shares); or
b) if the Offer is varied in a way that postpones, for more than 1 month, the time in which AusNiCo has to meet their obligations under the Offer and the Offer is still subject to conditions. In this circumstance, you will have a period of 1 month after the date the Offer is extended or varied to withdraw your acceptance.

The effect of acceptance of the Offer is set out in more detail in section 10.7 of the Bidder’s Statement. You should read those provisions in full to understand the effect that acceptance will have on your ability to exercise the rights attaching to your Taronga Shares and the representations and warranties that you are deemed by AusNiCo to give to it by accepting the Offer.

Please refer to section 8.4(i) of the Bidder’s Statement for further details regarding Taronga Shareholders’ limited withdrawal rights with respect to the Offer.

5.10 EFFECT OF ACCEPTANCE

Accepting AusNiCo’s conditional Offer would (subject to withdrawal rights):

a) prevent you from accepting any higher takeover bid that may be made by a third party or any alternative transaction that may be recommended by the Taronga’s Board;
b) relinquish control of your Taronga Shares to AusNiCo with no guarantee the AusNiCo Shares will be provided until the Offer becomes or is declared unconditional (noting the Offer Period can be extended up to 12 months); and
c) give AusNiCo the option to keep your Taronga Shares and pay you the Offer Consideration (if the conditions of its Offer are not satisfied or return your Taronga Shares to you).

If AusNiCo improves the Offer Consideration, all Taronga Shareholders that accept the Offer (regardless of when they accepted the Offer) will be entitled to the benefit of the improved Offer Consideration.

For further details, please refer to section 10.7 of the Bidder’s Statement.

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5.11 LAPSE OF THE OFFER

The Offer will lapse if, at the Closing Date, the conditions to which the Offer is subject are not satisfied or waived. If this occurs, the acceptances given by Taronga Shareholders will be void. Taronga Shareholders will continue to own the Taronga Shares the subject of any acceptances and will be free to deal with them as they choose.

5.12 WHEN WILL YOU RECEIVE THE OFFER CONSIDERATION

In the usual case, you will be allocated the AusNiCo Shares in consideration for the sale of your Taronga Shares on or before the earlier of:

a) one month after the later of your acceptance and the date Offer becomes or is declared unconditional; and
b) 21 days after the Closing Date.

There are, however, certain exceptions to the above time frames for receiving the Offer Consideration. Refer to the Bidder’s Statement for full details of when you will receive the Offer Consideration.

Please refer to section 10.8 of the Bidder’s Statement for further details.

5.13 COMPULSORY ACQUISITION

AusNiCo has stated in sections 6.3 and 6.4 of the Bidder’s Statement that it intends to compulsorily acquire all outstanding Taronga Shares (if it is entitled to do so in accordance with the Corporations Act).

Compulsory Acquisition

Under Part 6A.1 of the Corporations Act, if, during or at the Closing Date, AusNiCo has (together with its Associates):

a) a Relevant Interest in at least 90% (by number) of Taronga Shares; and
b) acquired at least 75% (by number) of the Taronga Shares for which it has made an offer to acquire,

it will be entitled to compulsorily acquire any Taronga Shares for which it did not receive acceptance, on the same terms as the Offer. If these thresholds are met, AusNiCo will have 1 month after the end of the Offer Period, to issue compulsory acquisition notices to those Taronga Shareholders (that did not accept the Offer).

If AusNiCo compulsorily acquires your Taronga Shares, you will receive the same consideration as if you had accepted the Offer. However, you should be aware that if your Taronga Shares are compulsorily acquired, it is likely there will be some delay until you will receive your AusNiCo Shares after the compulsory acquisition notices are dispatched to you.

Taronga Shareholders have statutory rights to challenge the compulsory acquisition, but a successful challenge will require the relevant Taronga Shareholders to establish to the satisfaction of a court that the terms of the Offer do not represent “fair value”.

If AusNiCo does not become entitled to compulsorily acquire the Taronga Shares in accordance with Part 6A.1 Division 1 of the Corporations Act, it may nevertheless become entitled to exercise general compulsory acquisition rights under Part 6A.2 Division 1 of the Corporations Act.

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Compulsory buy-out rights

If AusNiCo (with its Associates) has a Relevant Interest in at least 90% of the Taronga Shares by the Closing Date and it does not exercise its compulsory acquisition rights described above, AusNiCo must offer to acquire the remaining Taronga Shares. The terms of the buy-out offer must be set out in a notice given within 1 month after the Closing Date and the Taronga Shareholders (that have not accepted the Offer) must accept the buy-out offer within 1 month of receiving the notice.

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6. Additional information

6.1 MERGER IMPLEMENTATION DEED

Taronga has entered into a merger implementation deed with AusNiCo dated 31 October 2012 (as amended) under which:

a) AusNiCo agreed to make the Offer;
b) Taronga and AusNiCo agreed to comply with certain exclusivity obligations; and
c) both parties agreed to exchange confidential information for the purposes of preparing the Bidder’s Statement and this Target’s Statement

(Merger Implementation Deed).

A summary of the key terms of the Merger Implementation Deed is set out in Annexure “B” of this Target’s Statement and detailed in section 11.1 of the Bidder’s Statement.

Further, under the Merger Implementation Deed, Taronga has agreed to certain exclusivity obligations in favour of AusNiCo.However, these exclusivity obligations are subject to the following fiduciary carve-outs:

Taronga is not prevented from taking or refusing to take any action with respect of a bona fide Target Competing Proposal or to responding to unsolicited approaches from third parties that are likely to result in Target Competing Proposals, where Taronga’s Board has determined:

a) the relevant Target Competing Proposal may reasonably be expected to lead to a Superior Proposal; and
b) failing to take that action or not refusing to that action may or is likely to constitute a breach of the fiduciary or statutory duties and obligations of Taronga’s Board.

6.2 MATERIAL CONTRACTS

Chief Executive Agreement

Taronga has entered into a services agreement with Mr Peter Williams dated 28 November 2011 under which Mr Williams agreed to become Chief Executive Officer of Taronga effective 9 January 2012 (Chief Executive Agreement).

Taronga is also obliged to reimburse Mr Williams for all reasonable and necessary expenses incurred by him in the performance of his duties.

The Chief Executive Agreement will continue for a term of three (3) years, unless it is terminated earlier.

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Taronga may terminate the Chief Executive Agreement on the happening of various events, with different notice periods applying in each case.

It is intended that an agreement on similar terms will be entered into by Peter Williams with AusNiCo following the completion of the Merger.

Performance Share Deed

Conditional upon completion of the Offer, Taronga has agreed to grant Peter Williams (or his nominee) 1,783,919 performance shares in Taronga (Taronga Performance Shares). AusNiCo and Taronga have agreed that the Taronga Performance Shares will not be issued and Peter Williams will be granted 8,919,595 performance shares in AusNiCo in substitution (that is, 5 performance shares in AusNiCo for each Taronga Performance Share which it was agreed would be issued)(Williams Performance Shares). AusNiCo and Taronga propose to enter into a Performance Share Deed with Peter Williams, which will facilitate the issue of the Williams Performance Shares (subject to shareholder approval of AusNiCo).

6.3 EFFECT OF THE OFFERS ON TARONGA’S MATERIAL CONTRACTS

Taronga is not a party to any material contracts which contain a change of control provision that may be triggered in connection with the Offer.

6.4 RESOURCE ESTIMATES

Should a JORC compliant mineral resource be delineated on any of the exploration licences in which Taronga holds any interest, any resource estimate will be an expression of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect Taronga’s operations.

6.5 MATERIAL LITIGATION

As at the date of this Target’s Statement, the Taronga Directors have no knowledge of, nor any expectation of, any litigation or dispute that may have a material impact on your decision to accept the Offer or affect this transaction.

6.6 CONSENTS TO BE NAMED

The following persons have given, and have not withdrawn their consents, as at the date of this Target’s Statement. They consent to:

a) be named in this Target’s Statement in the form and context in which they are named;
b) the inclusion of their respective reports or statement noted below and any reference to those reports or statements in the form and context in which they are included in this Target’s Statement; and

Target’s Statement of Taronga Mines Limited

32 -
c) the inclusion of other statements in this Target’s Statement which are based on or referable to statements made in those reports or statement, or which are based or referable to other statements made by those persons in the form and context in which they are included.

The following table details the parties consenting to be named in this Target’s Statement:

NAME OF PERSON	CAPACITY	REPORTS OR STATEMENTS
Porter Davies Lawyers	Legal adviser	Not applicable
Mining One Pty Ltd	Independent technical expert	Independent Technical Report (included in the Independent Expert’s Report)
DMR Corporate Pty Ltd	Independent Expert	Independent Expert’s Report
Taronga Directors	Directors of Taronga	Statements made by, or statements based on statements by, the Taronga Directors

Each of the above persons:

a) does not make, or purport to make any statement in this Target’s Statement other than those statements referred to above and consented to by that person; and
b) to the maximum extent permitted by law, expressly disclaims and trades no responsibility for any part of this Target’s Statement other than as described in this section with the person’s consent.

As permitted by ASIC Class Order 01/1543, this Target’s Statement contains statements which are made, or based on statements made, in documents lodged with ASIC or the ASX, in compliance with the Listing Rules pursuant to this Class Order, the consent of the person such statements are attributable to is not required for the inclusion in this Target’s Statement.

As permitted by ASIC Class Order 07/429, this Target’s Statement contains trading data references obtained from ASX without their consent.

As permitted by ASIC Class Order 03/635, this Target’s Statement may include or be accompanied by certain statements:

a) fairly representing a statement by an official person; or
b) from a public official document or published book, journal or comparable publication.

These statements have been included in this Target’s Statement without the consent of the persons responsible for such statements (where the statement was not made, or the document was not published, in connection with the Offer, AusNiCo, Taronga or any business, property or person the subject of the Bidder’s Statement or this Target’s Statement).

6.7 NO OTHER MATERIAL INFORMATION

This Target’s Statement is required to include all the information that Taronga Shareholders and their professional advisers would reasonably require to make an informed assessment of whether to accept the Offer, but:

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33 -
a) only to the extent to which it is reasonable for investors and their professional advisers to expect to find this information in this Target’s Statement; and
b) only if the information is known to any of the Taronga Directors.

The Independent Directors are of the opinion that the information that Taronga Shareholders and their professional advisers would reasonably require to make an informed assessment of whether to accept the Offer is:

a) the information contained in the Bidder’s Statement (to the extent that the information is not inconsistent with or superseded by information in this Target’s Statement);
b) the information released on Taronga’s website www.tarongamines.com.au;
c) the documents lodged by Taronga with ASIC; and
d) the information contained in this Target’s Statement (including the annexures of this Target’s Statement).

The Taronga Directors do not take any responsibility for the contents of the Bidder’s Statement and are not to be taken as endorsing , in any way, any or all statements contained in it.

In deciding what information should be included in this Target’s Statement, the Independent Directors have had regard to:

a) the nature of the Taronga Shares;
b) the matters Taronga Shareholders may reasonably expect to know;
c) the fact that certain matters may reasonably be expected to be known to the professional advisers of Taronga Shareholders; and
d) the time available to Taronga to prepare this Target’s Statement.

Target’s Statement of Taronga Mines Limited

34 -

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7. Definitions and interpretation

7.1 DEFINITIONS

TERM	MEANING
Acceptance Form	means the acceptance and transfer form for the Offer that accompanies the Bidder’s Statement.
Announcement Date	means the date on which the Offer was announced to the market by AusNiCo and Taronga, being 1 November 2012.
ASIC	means Australian Securities and Investments Commission.
Associate	has the meaning given in Division 2 of Part 1.2 of the Corporations Act as if section 12(1) of the Corporations Act includes.
ASX	means ASX Limited A.B.N. 98 008 624 691, or the financial market operated by it, as the case may be.
AusNiCoorBidder	means AusNiCo Limited A.C.N. 122 957 322.
AusNiCo Option	means an option to subscribe for an AusNiCo Share.
AusNiCo Share	means one fully paid ordinary share in the issued capital of AusNiCo.
Bidder’s Statement	means the replacement Bidder’s Statement dated 23 November 2012 (and any supplementary or replacement bidder’s statement) prepared by AusNiCo under Part 6.5 Division 2 of the Corporations Act in relation to the Offer.
Board of Tarongaor Taronga’s Board	means the board of directors of Taronga.
CGT	means Capital Gains Tax.
Closing Date	means the last day of the Offer Period, being 27 December 2012.
Corporations Act	meansCorporations Act 2001(Cth).
Due Diligence Investigation	means the commercial, legal, technical and financial due diligence investigations carried out by either AusNiCo or Taronga in respect of the other.

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Exclusivity Period	has the meaning given to it in section 12.1 of the Bidder’s Statement.
Exploration Licencesor Tenements	means each of the exploration licences held by Taronga or any of its subsidiaries, including but not limited to those referred to in section 5.2 of the Bidder’s Statement.
Foreign Shareholder	has the meaning given to it in section 10.8 of the Bidder’s Statement.
Independent Directors	means the Taronga Directors considered independent for the purposes of the Offer, being: a) William Ryan; b) Teunis Kwak; c) John Bovard; and d) Richard Willson.
Independent Expert	means DMR Corporate Pty Ltd.
Independent Expert’s Report	means the independent expert’s report prepared by the Independent Expert dated 27 November 2012 as set out in Annexure “A” of this Target’s Statement.
Independent Technical Report	means the technical report prepared by Mining One dated 14 November 2012 included in the Independent Expert’s Report.
Instructions	mean those instructions on how to accept the Offer as set out in the Acceptance Form included in the Bidder’s Statement.
JORC	means Joint Ore Reserves Committee.
JORC Code	means the code published by JORC, which provides minimum standards for public reporting on minerals and resources.
Merger	means the merger of Taronga and AusNiCo by way of a takeover bid by AusNiCo for all of the Taronga Shares in accordance with the Offer.
Merged Group	means AusNiCo and its subsidiaries (including Taronga and Taronga ’s subsidiaries) which will exist as a result of the takeover bid as constituted by this Offer, should the Offer be successful.
Merger Implementation Deed	means the merger implementation deed described in section 6.1 of this Target’s Statement.
Mining One	means Mining One Pty Ltd, the independent technical expert.
Notice of Status of Conditions	means in respect of the Offer, AusNiCo’s notice disclosing the status of the conditions to the Offer required under section 630(3) of the Corporations Act.
Offer	means the offer by AusNiCo to acquire all of the Taronga Shares on the terms and conditions established in the Bidder’s Statement.

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Offer Consideration	means has the meaning given to it in section 5.2 of this Target’s Statement.
Offer Date	means the date set by AusNiCo under section 633(2) of the Corporations Act, being 27 November 2012.
Offer Period	means the period within which the Offer is open for acceptance in accordance with section 10.3 of the Bidder’s Statement.
Relevant Interest	means has the meaning given to that term in section 608 and 609 the Corporations Act.
Related Body Corporate	means has the meaning given to that term in the Corporations Act.
subsidiary	has the meaning given to that term in the Corporations Act.
Superior Proposal	means a publically announced Target Competing Proposal which Taronga’s Board (acting in good faith and after taking advice from its legal advisors and after taking into account all the terms and conditions of the Target Competing Proposal) determines is: a) reasonably capable of being completed taking into account all aspects of the Target Competing Proposal; and b) more favourable to Taronga Shareholders than the Offer.
Target Competing Proposal	means a transaction or proposed transaction which, if completed, would result in: a) a Third Party directly or indirectly, acquiring an interest or relevant interest in or becoming the holder of: i. 20% or more of all the Taronga Shares; or ii. all or a substantial part or a material part of the business of Taronga, including by way of a takeover bid, scheme of arrangement, capital reduction, sale of assets, sale of shares or joint venture, but not as a custodian, nominee or bare trustee; b) a Third Party acquiring control of Taronga within the meaning of section 50AA of the Corporations Act; or a c) a Third Party otherwise acquiring or merging with Taronga.
Target’s Statement	means this Target’s Statement dated 29 November 2012 provided by Taronga in response to AusNiCo’s Bidder’s Statement dated 23 November 2012.
TarongaorTarget	means Taronga Mines Limited A.C.N. 126 854 288.
Taronga Directors	means the directors on the Board of Taronga, being: a) William Ryan; b) Teunis Kwak; c) John Bovard;

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37 -

	d) Richard Willson; and e) Nicholas Mather.
Taronga Option	means an option to subscribe for a Taronga Share.
Taronga Optionholder	means the holder of a Taronga Option.
Taronga Project	means the Taronga tin project located within EL 7348.
Taronga Share	means one fully paid ordinary share in the issued capital of Taronga.
Taronga Shareholder	means the holder of a Taronga Share.
Third Party	means a person or entity other than: a) Taronga; b) any Related Bodies Corporate of Taronga; c) AusNiCo; or d) any Related Bodies Corporate of AusNiCo.
YTC	means YTC Resources Limited.

7.2 INTERPRETATION

The following rules of interpretation apply unless the context requires otherwise:

a) unless specified otherwise, all capitalised words and phrases in this Target’s Statement shall have the meanings given to them in section 7 of this Target’s Statement or in the Corporations Act (if relevant);
b) a gender includes all genders and wording denoting the singular includes the plural and vice versa;
c) a reference to a person includes a body corporate, an unincorporated body or other entity and conversely;
d) the table of contents and headings are used for convenience only and do not affect interpretation;
e) a reference to any instrument (such as an agreement, announcement or statement) is to that instrument (or, if required by the context, to a part of it) as amended, novated, substituted or supplemented from time to time;
f) where an expression is defined, another part of speech or grammatical form of that expression has a corresponding meaning and “including” and similar expressions are not and must not be treated as words of limitation;
g) $ or A$ is a reference to the lawful currency of Australia; and
h) all references to time in this Target’s Statement are to Brisbane, Queensland time, unless otherwise stated.

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8. Authorisation

In accordance with section 639(1)(a) of the Corporations Act, this Target’s Statement has been approved by a resolution of the Board of Taronga.

Dated 29 November 2012

Signed for and on behalf of Taronga Mines Limited

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W.R. (Bill) Ryan Chairman

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Annexure A –Independent Expert’s Report

Target’s Statement of Taronga Mines Limited

DMR CORPORATE

______

______ DMR Corporate Pty Ltd A.C.N. 063 564 045 470 Collins Street Melbourne Telephone (03) 9629 4277 Victoria 3000 Facsimile (03) 9629 4598 Australia Web www.dmrcorporate.com.au

INDEPENDENT EXPERT’S REPORT and FINANCIAL SERVICES GUIDE

27 November 2012

The Independent Directors Taronga Mines Limited Level 4, 100 Albert Road, South Melbourne VIC 3205

Dear Sirs,

1. Introduction

On 1 November 2012 AusNiCo Limited (“AusNiCo”) announced a proposal to acquire all of the shares in Taronga Mines Limited (“Taronga” or “the Company”) by way of a conditional off-market takeover offer. AusNiCo’s shares are listed on the Australian Securities Exchange (“ASX”) and we understand that at present AusNiCo does not hold any Taronga shares.

The terms of the AusNiCo takeover offer (“the Offer”) are 5 AusNiCo shares for every 1 Taronga share.

The Offer is subject to the specific conditions detailed in Annexure B – Schedule 1 to the Target’s Statement, however the key conditions are:

the Offer is conditional upon receiving acceptances from Taronga shareholders holding not less than 90% of the Taronga shares on issue;
the execution by AusNiCo, Taronga and each of the holders of existing Taronga options of a deed under which all existing Taronga options are cancelled and the holders of those options are instead issued with 5 AusNiCo options for each Taronga option; and
AusNiCo shareholders passing all the necessary resolutions to satisfy the Offer conditions.

If the AusNiCo Offer is successful then the share capital of Taronga and AusNiCo will be as follows:

Table 1 Taronga shareholders AusNiCo shareholders Subtotal Proposed issue of AusNiCo directors shares- Nov 2012 Subtotal Taronga option holders Taronga option holders AusNiCo option holders Totals	Before Takeover	AusNiCo Voting Voting AusNiCo % Taronga AusNiCo Fully Paid Power Power Fully Diluted Interests Interests Interests Shares % % Basis Fully Fully Diluted Diluted 288,400,010 66.5% 65.6% 288,400,010 54.7% 54.7% 144,994,142 33.5% 33.0% 144,994,142 27.5% 27.5% 433,394,152 100.0% 6,000,000 1.4% 6,000,000 1.1% 1.1% 439,394,152 100% 27,500,000 5.2% 5.2% 38,000,000 7.2% 7.2% 22,000,000 4.2% 4.2% 439,394,152 100% 526,894,152 100% 67.2% 32.8% After Takeover	AusNiCo Voting Voting AusNiCo % Taronga AusNiCo Fully Paid Power Power Fully Diluted Interests Interests Interests Shares % % Basis Fully Fully Diluted Diluted 288,400,010 66.5% 65.6% 288,400,010 54.7% 54.7% 144,994,142 33.5% 33.0% 144,994,142 27.5% 27.5% 433,394,152 100.0% 6,000,000 1.4% 6,000,000 1.1% 1.1% 439,394,152 100% 27,500,000 5.2% 5.2% 38,000,000 7.2% 7.2% 22,000,000 4.2% 4.2% 439,394,152 100% 526,894,152 100% 67.2% 32.8% After Takeover
	Ordinary Options Fully Paid Shares Note 1 57,680,002 144,994,142 6,000,000 5,500,000 7,600,000 22,000,000	AusNiCo Voting Voting Fully Paid Power Power Shares % % 288,400,010 66.5% 65.6% 144,994,142 33.5% 33.0% 433,394,152 100.0% 6,000,000 1.4%	AusNiCo % Fully Diluted Interests Basis 288,400,010 54.7% 144,994,142 27.5% 6,000,000 1.1% 27,500,000 5.2% 38,000,000 7.2% 22,000,000 4.2%
		439,394,152 100%

		439,394,152 100%	526,894,152 100%

Note 1 - If Taronga shareholders and option holders approve the AusNiCo offers the options convert to: Taronga options AusNiCo options		Number Expiry Exercise Conversion Date Price Monies 27,500,000 30/06/15 $0.04 $1,100,000 38,000,000 30/06/15 $0.04 $1,520,000 65,500,000 $2,620,000 22,000,000 19/11/13 $0.30 $6,600,000

The directors of Taronga are to issue a Target’s Statement, in response to the Bidder’s Statement from AusNiCo, which will include their recommendation as to whether the Taronga shareholders should accept the Offer.

You have requested DMR Corporate Pty Ltd (“DMR Corporate”) to prepare an independent expert's report to express an opinion as to whether or not the Offer is fair and reasonable to the Taronga shareholders.

A copy of our report is to be included as an Appendix to the Target’s Statement in order to assist the shareholders in their decision whether to accept the Offer.

2. Opinions

We have concluded that the Offer made to the Taronga shareholders is not fair, however we consider it to be reasonable and in the absence of a superior offer, we consider that it should be accepted by the Taronga shareholders.

Our principal reason for reaching the above opinion is that we have valued the Taronga shareholders’ interests before the Offer in a range of $7,498,400 to $8,075,200 and we have valued the Taronga shareholders’ 66.5% interest in the merged Taronga/AusNiCo in a range of $6,542,000 to $7,092,400. This represents a loss in value of $956,400 to $982,800. On this basis we consider that the offer is not fair.

Although the Offer has been determined to be not fair we consider that the Offer is reasonable as the Offer provides a listing of the shareholder interests, increases the size of the merged entity and increases its public profile. These factors should assist in future capital raisings to fund the exploration and development projects in the years ahead.

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3. Structure of this Report

This report is divided into the following sections:

Section			Page
4		Purpose of the Report	3
5		Taronga - Key Information	5
6		Valuation of Taronga Shares	9
7		AusNiCo – Key Information	13
8		Valuation of AusNiCo Shares	17
9		Control Premium	21
10		Assessment as to Fairness and Reasonableness	22
11		Financial Services Guide	24
Appendix
A		Sources of Information	26
B		Top Ten AusNiCo Shareholder List After the Merger	27
C		Qualifications, Declarations and Consent	28
Attachment	1	Mining One Pty Ltd – Valuation of the Mineral Assets of Taronga
		Mines Limited and AusNiCo Ltd	29

4. Purpose of the Report

4.1 Section 640 of the Corporations Act 2001 (“the Act”) states that a Target’s Statement made in response to a takeover offer must be accompanied by an independent expert’s report if:
- the bidder’s voting power in the target is 30% or more; or
- a director of the bidder is also a director of the target company.
4.2 In terms of the current AusNiCo Offer, Mr. Nicholas Mather is a director of both Taronga and AusNiCo and accordingly the Taronga directors have engaged DMR Corporate to prepare an independent expert’s report for the purposes of the Act. The independent expert’s report is to set out the opinion of DMR Corporate as to whether the AusNiCo Offer is fair and reasonable and to state the reasons for this opinion.
4.3 The DMR Corporate report is a general financial product advice only and has been prepared without taking into account the objectives, financial situation or needs of individual Taronga shareholders. Because of that, before acting in relation to their investment, shareholders should consider the appropriateness of the advice in relation to their own objectives, financial situation or needs. Shareholders should read the Bidder’s Statement issued by AusNiCo and the Target’s Statement issued by Taronga in relation to the AusNiCo Offer.
4.4 Australian Securities and Investments Commission (“ASIC”) Regulatory Guide 111 (“RG111”) defines the words “fair” and “reasonable” as:
Fair - “an offer is ‘fair’ if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer. This comparison should be made assuming 100% ownership of the ‘target’ and irrespective of whether the consideration is scrip or cash. The expert should not consider the percentage holding of the ‘bidder’ or its associates in the target when making this comparison.”

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Reasonable -

     - “an offer is ‘reasonable’ if it is fair.  It may also be ‘reasonable’ if, despite not being ‘fair’ but after considering other significant factors, shareholders should accept the offer in the absence of any higher bid before the close of the offer.”

4.5 The RG111 definitions of “fair” and “reasonable” as set out above are designed to ensure that the shareholders of a target receive a fair premium for gaining control of their company from the bidder.
4.6 AusNiCo announced on 1 November 2012 that it was to merge with Taronga to create an advanced stage company with exposure to tin, nickel, copper and gold. The terms of the offer detailed in Section 1 above, involve the issue of AusNiCo shares for Taronga shares.
4.7 If the Proposed Transaction is implemented, the Taronga shareholders will become shareholders in the expanded capital of AusNiCo. We therefore need to consider whether the Proposed Transaction is a control transaction and whether a premium for control should form part of the offer consideration. In making this assessment we have considered the following:
shareholders in Taronga and AusNiCo will hold shares in the merged entity in the approximate proportions of 66.54% and 33.46% respectively following the merger.
no one shareholder will control more than 18.9% of the AusNiCo shares immediately following the implementation of the merger – Appendix B.
2 Taronga directors will be appointed to the AusNiCo board of directors following the merger making a total of 6 AusNiCo directors. The Taronga directors will not control the Board following the implementation of the merger.
all shareholders will benefit from any synergistic benefits that may arise from the merger.
Taronga’s current Chief Executive Officer (“CEO”) will take over as CEO of the merged entity.
4.8 On the basis of the above, we consider that this transaction should be viewed as a merger rather than as a takeover as the Proposed Transaction does not involve a change of control for shareholders, as they are not associates of each other. As the individual Taronga shareholders will become shareholders in the merged AusNiCo, we have valued the shareholder interests in both Taronga and the merged AusNiCo on an equivalent minority basis.
4.9 In framing the methodology that we have used to form an opinion as to whether the Offer is fair and reasonable to the Taronga shareholders, we have:
(i) In determining whether the Offer is fair, we have:
- valued Taronga and its shares on a minority basis ;
- valued AusNiCo and its shares on a minority basis;

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assessed the value of AusNiCo after the acquisition of Taronga on a minority basis;
compared the value of the Taronga shareholders’ interests in Taronga before the takeover with the value of the Taronga shareholders’ proportional interests in AusNiCo after completion of the takeover.
(ii) In determining whether the Offer is reasonable, we have analysed the advantages and disadvantages of accepting the Offer and not accepting the Offer.

5. Taronga - Key Information

5.1 Overview[1]

Taronga was incorporated as an unlisted public company on 3 August 2007 with the objective to focus on the exploration and development of a portfolio of tin exploration projects in New South Wales. The Company’s strategy was to explore and develop targets held by past explorers and miners.

Located in New England in northern New South Wales, the Taronga Tin Project was evaluated by a Joint Venture led by Newmont Holdings (“Newmont Joint Venture”) between 1978 and 1984. The Newmont Joint Venture drilled 357 holes into the deposit (178 diamond core holes and 179 RC holes) for a total of 33,350 metres of drilling.

Newmont completed a Preliminary Feasibility Study in 1982, but with the tin price at historic lows, the Newmont Joint Venture ceased work in 1984 and relinquished the project. Taronga acquired the project in 2008 (now EL 7348 (Act 1992)). Following the Company’s evaluation of the project, the Company considers that the average grade may have been understated by the Newmont Joint Venture, and that potential exists for higher grade mineralisation beneath the deposit discovered by the Newmont Joint Venture. With modern techniques likely to provide improved metal recoveries and the recent strength tin prices, the Taronga Tin Project, notwithstanding its low grade, has the potential to attain commercial viability.

During the last quarter of 2010 Taronga reached an agreement with listed explorer, YTC Resources Limited (YTC) to acquire total ownership of four (4) Torrington Exploration Licences including the Pound Flat Exploration Licence which is adjacent to and nearby to the Taronga Tin Project. These projects are known as the Torrington and Pound Flat Projects. The Company has recently been granted new Exploration Licences (numbered EL 7800 & EL 7801 (Act 1992)) over the same area and additional open ground in the area. The Company believes these Exploration Licences have real potential to host repetitions of the Taronga deposit, as well as having potential to host smaller, higher-grade tin deposits.

The acquisition of the Pound Flat and Torrington Projects, the new grants and reevaluation of the Taronga Tin Project have given Taronga the opportunity to substantially expand the scope and extent of tin mineralisation at Taronga and the chance to explore and develop a world scale tin mining venture.

1 Extracts from the Offer Information Statement issued in December 2011.

2 Control premiums are normally in a range of 20% to 30% above the value of a minority share – RSM Bird

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As at the date of this report Taronga holds the following tenements:

Tenement	Date of Grant	Licence Holder	Expiry
• EL 7348 - Taronga	23/01/12	Taronga Mines Limited	29/05/13
• EL 6839 - Emmaville	24/07/07	Ten Star Mining	24/07/13
• ELA 4208 (now EL7800) - Torrington	23/03/11	Taronga Mines Limited	4/07/13
• ELA 4209 (Now EL7801) - Pound Flat	23/03/11	Taronga Mines Limited	4/07/13

5.2 Share Capital

As at 30 June 2012, Taronga had on issue 57,680,002 fully paid ordinary shares. Taronga’s 10 major shareholders are presented in Table 2 below and they held 86.7% of the issued fully paid ordinary shares.

Table 2 Shareholder Name TENSTAR TRADING LIMITED YTC RESOURCES LIMITED SAMUEL HOLDINGS PTY LTD PINE MOUNTAIN PTY LTD RYTECH PTY LTD EKCO INVESTMENTS PTY LTD HG CORPORATE CONSULTING PTY LTD KINGSLANE PTY LTD MDP PTY LTD BRIAN LIONEL ROACH	Number of Shares 16,194,255 28.08% 13,640,000 23.65% 7,173,388 12.44% 3,700,000 6.41% 2,400,000 4.16% 1,350,000 2.34% 1,018,742 1.77% 1,000,000 1.73% 1,000,000 1.73% 897,542 1.56%
	48,373,927 83.87%

In addition to the issued shares Taronga also has the following options on issue:

5,500,000 options expiring on 30 June 2014, exercisable at $0.20 each
• 7,600,000 options expiring on 30 June 2015, exercisable at $0.20 each

5.3 Directors

Taronga currently has 5 directors and their names are:

William Ryan Nicholas Mather Teunis Kwak John Bovard Richard Willson

5.4 Operating Performance

Taronga’s audited Statements of Comprehensive Income for the financial years ended 30 June 2011 and 2012 are set out in Table 3 below:

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Table 3 Statements of Comprehensive Income for the year ended Revenue Interest income Expenses Corporate expenses Administration expenses Employee benefits expense Depreciation and amortisation Share based payments Exploration expenditure written off Write off IPO expenses Loss before income tax Income tax expense Loss after income tax expense	30-Jun 30-Jun 2011 2012 Audited Audited $ $ 7,092 8,379 (121,865) (188,136) (32,084) (41,650) - (8,596) - (226) (228,640) (60,160) (78,435) - - (303,485)
	(453,932) (593,874)
	- -
	(453,932) (593,874)

5.5 Statements of Financial Position

Taronga’s audited Statements of Financial Position as at 30 June 2011 and 2012 are set out in Table 4 below:

Table 4 Statements of Financial Position Current Assets Cash and cash equivalents Trade and other debtors Other Total Current Assets Non-Current Assets Property, plant and equipment Exploration and evaluation Other Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Total Current Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity	30-Jun 30-Jun 2011 2012 Audited Audited $ $ 87,067 278,419 11,974 56,545 262,914 -
	361,955 334,964
	- 2,030 1,548,952 4,887,799 70,059 60,059
	1,619,011 4,949,888

	1,980,966 5,284,852
	226,532 71,847
	226,532 71,847
	1,754,434 5,213,005 3,085,390 6,452,875 228,640 913,600 (1,559,596) (2,153,470)
	1,754,434 5,213,005

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Commentary on significant movements in the above statements are as follows:

(a) Capital raisings - On 16 January 2011 5,000,000 shares were issued at $0.10 per share and on 29 February 2012, 9,613,334 shares were issued at $0.10 per share.
(b) Tenement acquisition – On 30 July 2011 12,400,000 shares ($0.20 per share) and 5,500,000 options were issued as consideration ($3,104,800) to acquire exploration licences from YTC Resources Limited. Taronga acquired the 3 Torrington Exploration Licences and the Pound Flat Exploration Licence adjacent to and nearby the Taronga Tin Project known as the Torrington and Pound Flat Projects. The Company has recently been granted new Exploration Licences (numbered EL 7800 and EL 7801) over the same areas. A further $234,047 was spent on exploration costs during the year.
(c) Other current assets – The 30 June 2011 balance included prepaid IPO costs and sundry other prepayments. The prepaid IPO costs ($234,634) together with other IPO costs have been written off in the 2012 financial year and the other prepayments ($28,280) have been expensed in the 2012 financial year.

5.6 Cash Flow Statements

Taronga’s audited Statements of Cash Flow for the financial years ended 30 June 2011 and 2012 are set out in Table 5 below:

Table 5 Statements of Cash Flow for the year ended Cash flows from operating activities Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Payments for property, plant & equipment Payments for exploration and evaluation Refund of security deposits Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Payments for capital raising costs Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	30-Jun 30-Jun 2011 2012 Audited Audited $ $ (109,294) (499,016) 7,092 8,379
	(102,202) (490,637)
	- (2,256) (340,641) (213,240) - 10,000
	(340,641) (205,496)
	500,000 961,333 (110,093) (73,848)
	389,907 887,485
	(52,936) 191,352 140,003 87,067
	87,067 278,419

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6. Valuation of Taronga Shares

6.1 Value Definition

DMR Corporate’s valuation of Taronga has been made on the basis of fair market value, defined as the price that could be realized in an open market over a reasonable period of time given the current market conditions and currently available information, assuming that potential buyers have full information in a transaction between a willing but not anxious seller and a willing but not anxious buyer acting at arm’s length.

6.2 Valuation Methodologies

In selecting appropriate valuation methodologies, we considered the applicability of a range of generally accepted valuation methodologies. These included:

asset based methods;
share price history;
alternate acquirer.
capitalisation of future maintainable earnings; and
net present value of future cash flows.

Each of the above methodologies is described and where possible applied in the balance of this Section 6.

6.3 Asset Based Methods

6.3.1 This methodology is based on the realisable value of a company’s identifiable net assets. Asset based valuation methodologies include:

(a) Net Assets

The net asset valuation methodology involves deriving the value of a company or business by reference to the value of its assets. This methodology is likely to be appropriate for a business whose value derives mainly from the underlying value of its assets rather than its earnings, such as property holding companies and investment businesses that periodically revalue their assets to market. The net assets on a going concern basis method estimates the market values of the net assets of a company but does not take account of realization costs.

(b) Orderly Realisation of Assets

The orderly realisation of assets method estimates the fair market value by determining the amount that would be distributed to shareholders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the company is wound up in an orderly manner.

(c) Liquidation of Assets

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes that the assets are sold in a short time frame.

6.3.2 Net Assets

The net assets of Taronga as at 30 June 2012, per the audited annual report, were $5,231,003 or $0.09 per share.

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The $0.09 per share is not a value that shareholders should necessarily expect to receive for their shares and it has not been included in our summary of values as the orderly realisation of assets valuation methodology supersedes this valuation methodology.

6.3.3 Orderly Realisation of Assets

The value achievable in an orderly realisation of assets is estimated by determining the net realisable value of the assets or business segments on the basis of an assumed orderly realisation. Consequently, this method may ignore the ability of the businesses asset base to generate ongoing future earnings at a level sufficient to justify a value in excess of the value of its assets in an orderly realisation. Costs associated with the sale of the assets or business segments are deducted as part of the assessment.

Taronga’s main assets are its mineral exploration rights. We appointed Mining One Pty Ltd (“Mining One”) to independently conduct a technical review and to prepare a valuation of all tenement holdings of both Taronga and AusNiCo.

We have reviewed the valuation report prepared by Mining One and discussed the valuation with Messrs. Stuart Hutchin and Tim Summons as they are responsible for preparation of the report.

As a result of our review and discussions, we have used the preferred Fair Market Value as determined by Mining One as a basis of our assessment of the value that an alternate acquirer may be prepared to pay to acquire Taronga’s mineral assets.

A copy of the Mining One report dated 14 November 2012 is set out as Attachment 1 to this report and the Executive Summary contains the following valuation of Taronga’s projects:

“Taronga Mines Ltd Mineral Assets

Taronga Mines Ltd owns three mineral projects in New South Wales, as follows:

The Taronga Project – classed as a Pre-Development Project
The Torrington Project – classed an Exploration Area
The Pound Flat Project - classed an Exploration Area

Overall the New South Wales mineral assets controlled by Taronga Mines Ltd are estimated to have a total Technical Value in the range of $3.73M to $10.41M. After consideration of relevant adjustment factors, the properties are estimated to have a Fair Market Value in the range $7.07M - $10.41M, with a Preferred Fair Market Value of $9.52M.”

Our assessment of the orderly realisation of Taronga’s net assets is set out in Table 6 below:

Page 10

Table 6 30-Jun 2012 Orderly Realisation of Net Assets Audited Note $ Current Assets Cash and cash equivalents 278,419 Trade and other debtors 56,545 Total Current Assets 334,964 Non-Current Assets Property, plant and equipment 1 2,030 Exploration and evaluation 2 4,887,799 Other 3 60,059 Total Non-Current Assets 4,949,888 Total Assets 5,284,852 Current Liabilities Trade and other payables 71,847 Total Current Liabilities 71,847 Net Assets 5,213,005 Realisation costs 4 Net realisable values Shares on issue 57,680,002 Value per share	30-Jun 2012 Audited $ 278,419 56,545	Estimated Realisable Values
		Low High $ $ 278,419 278,419 56,545 56,545
	334,964	334,964 334,964
	2,030 4,887,799 60,059	- 500 9,520,000 9,520,000 - 50,000
	4,949,888	9,520,000 9,570,500

	5,284,852	9,854,964 9,905,464
	71,847	71,847 71,847
	71,847	71,847 71,847
		9,783,117 9,833,617 (50,000) (25,000)
	5,213,005
		9,733,117 9,808,617
		0.1687 $ 0.1701 $

Note 1- Property, plant and equipment realisable values have been estimated by DMR Corporate.
Note 2 - Realisable values have been assessed by Mining One as stated in Section 6.3.3 above. A full copy of the Mining One report is attached to this report.
Note 3 - Security deposits held by the Department of Mines as guarantees for the rehabilitation of exploration licences held by Taronga. These funds cannot be accessed until such time as the Company relinquishes the exploration licences. Realisable values have been estimated by DMR Corporate.
Note 4 - Realisation costs have been estimated by DMR Corporate.

Based on the above assessment of orderly realisation values, Taronga is valued on a control basis in a range of $9,733,117 to $9,808,617 or $0.169 to $0.170 per share.

6.4 Share Price History

6.4.1 The share price history valuation methodology values a company based on the past trading in its shares. For a company listed on the ASX we normally analyse the share prices up to a date immediately prior to the date when a takeover, merger or other significant transaction is announced to remove any price speculation or price escalations that may have occurred subsequent to the announcement of the proposed transaction.
6.4.2
As Taronga is an unlisted public company its shares are not readily tradable.
6.4.3 Taronga has conducted a number of capital raisings in the recent past and these may provide relevant evidence as to the value of Taronga’s shares:
on 16 January 2011 Taronga raised $500,000 by the issue of 5,000,000 shares at $0.10 per share; and

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on 29 February 2012 Taronga raised $961,333 by the issue of 9,613,334 shares at $0.10 per share.

These capital raisings were pre-listing and were at a substantial discount to the expected listing price of $0.20 per share due to the ‘marketability discount’. For this reason we do not consider that these share prices should be used to value Taronga.

6.5 Alternate Acquirer

The value that an alternative bidder may be prepared to pay to acquire the shares is a relevant valuation methodology to be considered.

As at the date of this report, we are not aware of any alternative offer and we consider that it would be unlikely that an alternative offer would be made without the support of the Board of the directors and the major shareholders.

6.6 Capitalisation of Future Maintainable Earnings

This method involves capitalising the future maintainable earnings of a business at a multiple which reflects the risks of the business and its ability to earn future profits.

There are different definitions of earnings to which a multiple can be applied. The traditional method is to use net profit after tax. Another common method is to use Earnings Before Interest and Tax, or EBIT. One advantage of using EBIT is that it enables a valuation to be determined which is independent of the financing and tax structure of the business. Different owners of the same business may have different funding strategies and these strategies should not alter the fundamental value of the business.

Taronga does not have an operating business and we consider that the capitalisation of maintainable earnings is not an appropriate methodology to use to value Taronga and its shares.

6.7 Net Present Value of Future Cash Flows

An analysis of the net present value of the future cash flows of a business (or discounted cash flow technique) is based on the premise that the value of the business is the net present value of its future cash flows. This methodology requires an analysis of future cash flows, the capital structure and costs of capital and an assessment of the residual value of the business remaining at the end of the forecast period.

As Taronga does not have a business capable of producing long-term cash flows, we consider that the capitalisation of future cash flows is not an appropriate methodology to use to value Taronga and its shares.

6.8 Conclusion

The valuation methodologies that we have considered are summarised as:

Table 7		Low	High
VALUATION METHODOLOGY	Section	Per Share	Per Share
Net assets – orderly realization of net
assets	6.3.3	$0.169	$0.170
Share price history	6.4	N/A	N/A

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In our opinion the orderly realization of assets valuation methodology is the only applicable valuation methodology and we have therefore valued the Taronga shares, on a control basis, in a range of $0.169 to $0.170 per share.

Whilst the Taronga shareholders together currently control Taronga, the largest shareholder holds 28.08% of the shares on issue. If the proposed takeover is successful, the Taronga shareholders together will control approximately 66.5% of the voting power of AusNiCo (before the exercise of any options) and the influence of Taronga’s largest shareholder will be significantly diluted.

Pursuant to the terms of the AusNiCo Offer, the Taronga shareholders are being asked to exchange a minority share in Taronga for a minority share in AusNiCo. In Table 8 below, we have set out our assessment of the minority value of each Taronga share. For the purpose of this assessment we have adopted the value per share range of $0.169 to $0.170 (Section 6.8 above) as per the orderly realisation methodology set out in Section 6.3.3 above and reduced these values by a typical minority discount (reciprocal of a control premium).

Table 8	Minority Discounted Values	Minority Discounted Values
Control Values	High	Low
$	$	$
0.169	0.14	0.13
0.170	0.14	0.13

As can be seen from the above Table, we have concluded that on a minority (or portfolio) basis the value of a Taronga share is in a range of $0.13 to $0.14 per share.

7. AusNiCo – Key Information

7.1 Background

AusNiCo was incorporated on 1 December 2006 and it was listed on the ASX on 19 October 2010. AusNiCo’s prospectus issued in August 2010 stated that AusNiCo’s overall objective was to create shareholder value through the discovery and development of mineral deposits with a key focus on nickel-cobalt resources and related forms of mineralisation, copper-gold, copper-silver, cobalt, platinum group precious metals and gold.

The following matters were listed as being relevant to the achievement of the above objective:

AusNiCo’s corporate strategy is to demonstrate the reliability of the new nickel model and secure additional exploration projects by new tenement applications and farm-in arrangements.
The new nickel model will be pursued using systematic exploration techniques previously tested successfully by AusNiCo.
Management will continually monitor and identify additional target projects with the potential for new nickel sulphide exploration opportunities.

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The exploration and acquisition focus will target the identification of nickel sulphide mineralization with potential to yield over 10 to 20 million tonnes at a grade in excess of 0.8% to plus 2% nickel and oxide nickel mineralization with potential to yield over 15 to 30 million tonnes at a grade over 0.5% to plus 2% nickel.
Continue to maximize the proportion of the total budget that is spent on the exploration and evaluation of its discoveries.
Aim to maximize its ‘first mover’ advantage in the new nickel strategy and continue its project focus on nickel-cobalt opportunities.

7.2 Share Capital

As at 30 June 2012, AusNiCo had on issue 144,994,142 fully paid ordinary shares. AusNiCo’s 10 major shareholders are presented in Table 9 below:

Table 9 Shareholder Name DGR GLOBAL LIMITED BIZZELL CAPITAL PARTNERS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LTD WOODLANDS ASSET MANAGEMENT PTY LTD INDIUM INVESTMENTS PTY LTD BALLARAT CERAMIC INDUSTRIES PTY LTD TENSTAR TRADING LIMITED CF2 PTY LTD JUSTEVIAN PTY LTD MR J HERRMANN & MRS P HERRMANN	Shares % 59,776,500 41.23% 7,616,667 5.25% 6,047,978 4.17% 4,700,000 3.24% 4,000,000 2.76% 3,750,000 2.59% 3,700,000 2.55% 3,600,000 2.48% 2,800,000 1.93% 2,200,000 1.52% 98,191,145 67.72%

In addition to the issued shares, AusNiCo also has 22,000,000 options expiring on 19 November 2013, exercisable at $0.30 each.

7.3 Directors

AusNiCo currently has 4 directors and their names are:

Brian Moller John Downie Nicholas Mather Ben Harrison

7.4 Operating Performance

AusNiCo’s audited Statements of Comprehensive Income for the financial years ended 30 June 2011 and 2012 are set out in Table 10 below:

Page 14

Table 10 Statements of Comprehensive Income for the year ended Revenue Interest income Other Research & development concession from ATO Expenses Administration and consultancy expenses Depreciation and amortisation Employee benefits expense Exploration expenditure written off Legal expenses Share based payments Loss before income tax	30-Jun 30-Jun 2011 2012 Audited Audited $ $ 74,032 35,550 3,574 4,306 - 496,499 (521,714) (516,354) (12,896) (16,275) (267,231) (50,926) (102,209) (791,346) (28,824) (16,871) (328,787) -
	(1,184,055) (855,417)

7.5 Statements of Financial Position

AusNiCo’s audited Statements of Financial Position as at 30 June 2011 and 2012 are set out in Table 11 below:

Table 11 Statements of Financial Position Current Assets Cash and cash equivalents Trade and other debtors Other current assets Total Current Assets Non-Current Assets Other financial assets Property, plant and equipment Exploration and evaluation Total Non-Current Assets Total Assets Current Liabilities Trade and other payables Provisions Other financial liabilities Total Current Liabilities Non-current Liabilities Other financial liabilities Total Non-current Liabilities Total Liabilities Net Assets Equity Issued capital Reserves Accumulated losses Total Equity	30-Jun 30-Jun 2011 2012 Audited Audited $ $ 978,921 1,114,439 79,244 15,288 - -
	1,058,165 1,129,727
	95,402 151,252 45,454 29,179 4,833,141 4,795,862
	4,973,997 4,976,293

	6,032,162 6,106,020
	580,883 86,604 17,935 3,738 6,340 7,022
	605,158 97,364
	27,272 20,250
	27,272 20,250

	632,430 117,614
	5,399,732 5,988,406 5,771,460 7,215,551 2,412,055 2,412,055 (2,783,783) (3,639,200)
	5,399,732 5,988,406

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Commentary on significant movements in the above statements are as follows:

(a) Capital raisings – During the period from 20 September 2011 to 30 June 2012 the following share issues were made:

20 September 2011 16,000,000 shares at $0.05 per share - cash 20 October 2011 3,500,000 shares at $0.04 per share - share purchase plan 9 November 2011 11,500,000 shares at $0.04 per share - share purchase plan 9 November 2011 926,000 shares at $0.05 per share - management services 9 November 2011 1,810,417 shares at $0.04 per share - directors/secretary for services 3 February 2012 611,113 shares at $0.03 per share - directors/secretary for services 12 April 2012 486,112 shares at $0.036 per share - directors/secretary for services

(b) Exploration and evaluation assets - $754,067 was spent on exploration and evaluation during the year and a sum of $791,346 was written off during the year.

7.6 Cash Flow Statements

AusNiCo’s audited Statements of Cash Flow for the financial years ended 30 June 2011 and 2012 are set out in Table 12 below:

Table 12 Statements of Cash Flow for the year ended Cash flows from operating activities Receipts in the ordinary course of business Receipt of research and development concession Payments to suppliers and employees Interest received Net cash used in operating activities Cash flows from investing activities Paymnents for security deposits Payments for property, plant & equipment Payments for exploration and evaluation Net cash used in investing activities Cash flows from financing activities Proceeds from issue of shares Transaction costs on the issue of shares Proceeds from borrowings Repayment of borrowings Payment on leases Net cash from financing activities Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the financial year Cash and cash equivalents at the end of the financial year	30-Jun 30-Jun 2011 2012 Audited Audited $ $ 3,145 4,306 - 496,499 (767,973) (508,363) 70,742 35,550
	(694,086) 27,992
	(61,250) (55,850) (2,611) - (1,266,658) (1,116,643)
	(1,330,519) (1,172,493)
	4,000,000 1,400,000 (448,541) (110,484) 144,637 - (683,783) - (8,869) (9,497)
	3,003,444 1,280,019
	978,839 135,518 82 978,921
	978,921 1,114,439

7.7 Tenements

As at the date of this report AusNiCo holds the following tenements:

EPM 19366 - granted 9/8/12 for 3 years
EPMA 177768 - application pending
EL 50/2011 - granted 21/5/2012 for 5 years
area 301.8 km[2 ] - Kilkivan project
area 157. 8 km[2 ] - Marlborough project - area 64.3 km[2 ] - Heazelwood project

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8. Valuation of AusNiCo Shares

8.1 Value Definition and Valuation Methodologies

The value definition and valuation methodologies described in Sections 6.1, 6.2, 6.3, 6.4, 6.5, 6.6 and 6.7 above are also applicable in the valuation of AusNiCo.

8.2 Asset Based Methods

8.2.1 Net Assets

The net assets of AusNiCo as at 30 June 2012, per the audited annual report, were $5,988,406 or $0.041 per share.

In our opinion the value of net assets is not a valid valuation methodology to value AusNiCo or its shares as the book value of the net assets do not reflect the market values of the assets.

8.2.2 Orderly Realisation of Assets

AusNiCo’s main assets are its mineral exploration rights. Given that these assets are still in the exploration stage we appointed Mining One Pty Ltd to independently conduct a technical review and to prepare a valuation of all tenement holdings of both Taronga and AusNiCo.

We have reviewed the valuation report prepared by Mining One and discussed the valuation with Messrs Stuart Hutchin and Tim Summons of Mining One as they were responsible for preparation of the report. As a result of our review of the Mining One report and discussions, we have used the preferred Fair Market Value as determined by Mining One as a basis for our assessment of the value that an alternate acquirer may be prepared to pay to acquire AusNiCo’s mineral assets.

A copy of the Mining One report dated 14 November 2012 is set out as Attachment 1 to this report and the Executive Summary contains the following summary valuation of AusNiCo’s projects:

“AusNiCo Ltd Mineral Assets

AusNiCo Ltd owns three mineral projects in Queensland, and one in Tasmania, as follows:

The Kaldanga Project – classed as an Advanced Exploration Project
The Marlborough South Project – classed as an Exploration Area
The Heazlewood River Project - classed as an Exploration Area

The AusNiCo Ltd mineral assets in Queensland are estimated to have a total Technical Value in the range of $2.51M - $6.34M.

The AusNiCo Ltd mineral assets in Tasmania are estimated to have a Technical Value in the range of $0.08M to $0.41M.

The overall AusNiCo Ltd mineral assets in Queensland and Tasmania are estimated to have Technical Value in the range of $2.59M - $6.75.

After consideration of relevant adjustment factors, the properties are estimated to have a Fair Market Value in the range $1.79M - $3.75M, with a Preferred Fair Market Value of $1.96M”.

Our assessment of the orderly realisation of AusNiCo’s net assets is set out in Table 13 below:

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Table 13 30-Jun 2012 Orderly Realisation of Net Assets Audited Note $ Current Assets Cash and cash equivalents 1,114,439 Trade and other debtors 15,288 Total Current Assets 1,129,727 Non-Current Assets Other financial assets 1 151,252 Property, plant and equipment 2 29,179 Exploration and evaluation 3 4,795,862 Total Non-Current Assets 4,976,293 Total Assets 6,106,020 Current Liabilities Trade and other payables 86,604 Provisions 3,738 Other financial liabilities 7,022 Total Current Liabilities 97,364 Non-current Liabilities Other financial liabilities 20,250 Total Non-current Liabilities 20,250 Total Liabilities 117,614 Net Assets 5,988,406 Realisation costs 4 Net realisable values Shares on issue 144,994,142 Value per share	30-Jun 2012 Audited $ 1,114,439 15,288	Estimated Realisable Values
		Low High $ $ 1,114,439 1,114,439 5,000 15,000
	1,129,727	1,119,439 1,129,439
	151,252 29,179 4,795,862	125,000 151,252 5,000 10,000 1,960,000 1,960,000
	4,976,293	2,090,000 2,121,252

	6,106,020	3,209,439 3,250,691
	86,604 3,738 7,022	86,604 86,604 3,738 3,738 7,022 7,022
	97,364	97,364 97,364
	20,250	20,250 20,250
	20,250	20,250 20,250

	117,614	117,614 117,614

	5,988,406	3,091,825 3,133,077 (50,000) (25,000)
		3,041,825 3,108,077
		0.0210 $ 0.0214 $

Note 1- Other financial assets – balance represents security deposits held by the Department of Mines as guarantees for the rehabilitation of exploration licences held by AusNiCo. These funds cannot be accessed until such time as AusNiCo relinquishes the exploration licences. Realisable values have been estimated by DMR Corporate.

Note 2- Property, plant and equipment realisable values have been estimated by DMR Corporate.

Note 3 - Realisable values have been assessed by Mining One as stated in Section 8.2.2 above and we have adopted the Mining One ‘Preferred Value’ in the above Table. A full copy of the Mining One report is attached to this report.

Note 4 - Realisation costs have been estimated by DMR Corporate.

Based on the above assessment of orderly realisation values, AusNiCo is valued on a control basis in a range of $3,041,825 to $3,108,077 or say $0.021 per share.

8.3 Share Price History

AusNiCo announced the proposed merger with Taronga on 1 November 2012 and there has been limited trading in the AusNiCo shares since 1 November 2012 – 94,700 shares @ $0.02 per share.

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We have reviewed AusNiCo’s ASX announcements over the last 6 months and no announcements have been made that have had an impact on the trading prices and trading volumes of AusNiCo’s shares during this period.

On a daily basis the closing prices and trading volumes are graphed as follows:

==> picture [427 x 342] intentionally omitted <==

----- Start of picture text -----

0.045 900,000
0.040 800,000
0.035 700,000
0.030 600,000
0.025 500,000
0.020 400,000
0.015 300,000
0.010 200,000
0.005 100,000
0.000 0
Close
Volume
2-Nov-11 16-Nov-11 30-Nov-11 14-Dec-11 28-Dec-11 11-Jan-12 25-Jan-12 8-Feb-12 22-Feb-12 7-Mar-12 21-Mar-12 4-Apr-12 18-Apr-12 2-May-12 16-May-12 30-May-12 13-Jun-12 27-Jun-12 11-Jul-12 25-Jul-12 8-Aug-12 22-Aug-12 5-Sep-12 19-Sep-12 3-Oct-12 17-Oct-12
----- End of picture text -----

Table 14 below summarises the volume, values and the volume weighted share price (“VWAP”) of the trading in the AusNiCo shares during the period from 1 November 2011 to 31 October 2012:

==> picture [246 x 103] intentionally omitted <==

----- Start of picture text -----

Table 14 Volume Value VWAP
Period to 31/10/2012 $ $
30 days preceding 155,163 3,103 0.0200
60 days preceding 456,363 10,022 0.0220
90 days preceding 872,263 17,632 0.0202
From 1/1/2012 7,395,792 211,606 0.0286
From 1/11/2011 7,678,697 222,923 0.0290
----- End of picture text -----

The total volume of shares traded in the last 12 months represents only 5.3% of AusNiCo’s issued capital. We have therefore concluded that there is a low liquidity in the trading of AusNiCo shares.

Based on the VWAP of the AusNiCo shares over the last 90 days we consider that the shares are valued in a range of $0.020 (based on 30 day VWAP) to $0.022 (based on 60 day VWAP) per share.

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A recent study has indicated that control premiums are generally in a range of 20% to 30%[2] above the value of a minority share. If these levels of control premium were added to the maximum and minimum minority values of $0.020 to $0.022 per share, the share price values, on a control basis would be:

Table 15	20% Control	30% Control
Minority Value	Premium	Premium
$0.020	$0.024	$0.026
$0.022	$0.026	$0.029

After applying a typical level of control premium, the share price history values on a control basis will be in a range of $0.024 to $0.029 per AusNiCo share.

As AusNiCo has 144,994,142 shares on issue, the value of AusNiCo using the share price history methodology can be determined as follows:

Table 16	Low	High
Number of shares on issue	144,994,142	144,994,142
Value per share	$0.024	$0.029
	______	______
Value of AusNiCo’s equity	$3,479,859	$4,204,830

Based on the share price history methodology we consider that AusNiCo is valued in a range of $3,479,859 to $4,204,830, say $3,500,000 to $4,200,000.

8.4 Capitalisation of Future Maintainable Earnings

AusNiCo does not have an operating business and we consider that the capitalisation of maintainable earnings is not an appropriate methodology to use to value AusNiCo and its shares.

8.5 Net Present Value of Future Cash Flows

As AusNiCo does not have a business capable of producing long-term cash flows, we consider that the capitalisation of future cash flows is not an appropriate methodology to use to value AusNiCo and its shares.

2 Control premiums are normally in a range of 20% to 30% above the value of a minority share – RSM Bird Cameron Control Premium Study – September 2010.

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8.6 Conclusion

The valuation methodologies that we have considered are summarised as:

Table 17		Low	High
VALUATION METHODOLOGY	Section	Per Share	Per Share
Net assets – orderly realization of net
assets	8.2	$0.0210	$0.0214
Share price history	8.3	$0.024	$0.029

Having regard to the evidence provided by the limited trading in the AusNiCo shares, we believe that the results of the orderly realisation of assets methodology should be the preferred valuation methodology. We have therefore valued the AusNiCo shares on a control basis in a range of $0.0210 to $0.0214 per share.

The Taronga shareholders individually are being asked to exchange a minority share in Taronga for a minority share in AusNiCo. In Table 18 below we have set out our assessment of the minority value of each AusNiCo share. For the purpose of this assessment we have adopted the per share values of $0.0210 to $0.0214 (Section 8.6 above) as per the orderly realisation methodology and reduced these values by a typical minority discount (reciprocal of a control premium).

Table 18	Minority	Discounted Values
Control Values	High	Low
$	$	$
0.0210	0.0175	0.0161
0.0214	0.0179	0.0165

As can be seen from the above Table, we have concluded that on a minority (or portfolio) basis the value of an AusNiCo share is in a range of $0.016 to $0.018 per share.

9. Control Premium

A control premium represents the difference between the price that would have to be paid for a share to which a controlling interest attaches and the price at which a share which does not carry with it control of the company could be acquired. Control premiums are normally in a range of 20% to 30% above the value of a minority share. The actual control premium paid is transaction specific and depends on a range of factors, such the level of synergies available to the purchaser, the level of competition for the assets and the strategic importance of the assets.

In Sections 4.7 and 4.8 above we considered whether the Proposed Transaction was a control transaction or not, and we concluded that the Proposed Transaction is a merger rather than a control transaction to which a control premium may be applicable.

We have therefore compared the value of the Taronga shareholders’ interests on a minority basis before the Proposed Transaction, with the value of their minority interests assuming that the Proposed Transaction had been completed.

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These values reflect the fact that the Taronga shareholders are receiving minority interests in the merged AusNiCo and this value is consistent with the amount the Taronga shareholders could expect to realise, were they to seek to divest their interests in the merged AusNiCo, once the merger had been implemented.

10. Assessment as to Fairness and Reasonableness

10.1 Assessment as to Fairness

In Section 6.8 above we valued the Taronga shares in a range of $0.13 to $0.14 on a minority share basis .

In Section 8.6 above we valued the AusNiCo shares in a range of $0.016 to $0.018 on a minority share basis .

Pursuant to the terms of the AusNiCo Offer, the Taronga shareholders are being asked to exchange a minority share in Taronga for a minority share in AusNiCo. Based on this premise, we have valued both companies using the minority interest values and then determined the value of the Taronga shareholders’ interests before the Offer with the value of their interests assuming the Offer is successful.

Table 19 Low High $ $ Taronga valuation 0.13 0.14 AusNiCo valuation 0.016 0.018 Merged value on a minority basis Taronga shareholders interests 66.50% Loss of value by Taronga Shareholders Per Share	Low High $ $ 7,498,400 8,075,200 2,339,200 2,590,000 9,837,600 10,665,200 6,542,004 7,092,358 Company	Low High $ $ 7,498,400 8,075,200 6,542,000 7,092,400 956,400 982,800 Taronga Shareholder Interests
Shares on issue after proposed merger DMR assessed value per share after proposed merger DMR assessed value per original Taronga share	433,394,152 433,394,152 0.023 0.025 0.113 0.123

Table 19 indicates that the Taronga shareholder interests before the Proposed Transaction were valued in a range of $7,498,400 to $8,075,200 and that their interests will be valued in a range of $6,542,000 to $7,092,400 after the Proposed Transaction. The Offer therefore results in a loss in value of $956,400 to $982,800 in the value of the Taronga shareholder interests.

Based on the above analysis, we consider that the Offer is not fair.

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10.2 Assessment as to Reasonableness

10.2.1 Acceptance of the Offer

Advantages

Taronga shares are an illiquid investment. The Offer provides an opportunity for shareholders to exchange their Taronga shares for shares in AusNiCo, which is an ASX listed company. Although the AusNiCo shares are not presently a liquid stock, the increased size and diversity of mineral interests may assist in generating new interest in the merged companies following completion of the Offer.
The listed company structure should facilitate the raising of further capital to advance projects.
The assessed values of the AusNiCo shares after the proposed merger is in a range of $0.023 to $0.025 per share. These values extrapolate to an assessed value of $0.113 to $0.123 per original Taronga share – Table 19 above. These values are higher than the $0.10 per share subscription prices for the January 2011 and February 2012 capital raisings.
There will be economies of Board, executive expenses and other administrative costs achieved through the sharing of these costs over a broader shareholder base.
The Taronga shareholders will gain exposure to a more diversified portfolio of assets across a greater number of projects.

Disadvantages

In Section 10.1 above we concluded that the Offer is not fair.
Taronga shareholders are paying a premium of $956,400 to $982,800 to gain their interests in a listed entity.

10.2.2 Rejection of the Offer

Advantages

We are not aware of any advantages of rejecting the Offer.

Disadvantages

Taronga shareholders will continue to hold shares in an unlisted public company which has to date been unable to implement a listing on the ASX to provide liquidity to shareholders and an avenue to raise future capital for exploration and evaluation of its mineral tenements. In the 2012 financial year Taronga wrote off $303,485 in relation to IPO costs incurred without getting Taronga listed.
Taronga shareholders will individually remain minority shareholders in a company with virtually no prospect of disposing of their shares at a fair price unless the underlying assets were sold and the net proceeds distributed to shareholders. If this were to occur there is no surety that the orderly realisation values determined in Section 6.3.3 above would actually be realised.
It may become increasingly more difficult to fund Taronga’s ongoing operations.

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10.2.3 Conclusion as to Reasonableness

In our opinion the Offer is reasonable as the advantages of accepting the Offer outweigh both the disadvantages of accepting the Offer and the advantages and disadvantages of rejecting the Offer.

10.3. Conclusion as to Fairness and Reasonableness

We have concluded that the Offer made to the Taronga shareholders is not fair, however we consider it to be reasonable and in the absence of a superior offer, we consider that it should be accepted by the Taronga shareholders.

11. Financial Services Guide

11.1 Financial Services Guide

This Financial Services Guide provides information to assist retail and wholesale investors in making a decision as to their use of the general financial product advice included in the above report.

11.2 DMR Corporate

DMR Corporate holds Australian Financial Services Licence No. 222050, authorizing it to provide general financial product advice in respect of securities to retail and wholesale investors.

11.3 Financial Services Offered by DMR Corporate

DMR Corporate prepares reports commissioned by a company or other entity (“Entity”). The reports prepared by DMR Corporate are provided by the Entity to its members.

All reports prepared by DMR Corporate include a description of the circumstances of the engagement and of DMR Corporate’s independence of the Entity commissioning the report and other parties to the transactions.

DMR Corporate does not accept instructions from retail investors. DMR Corporate provides no financial services directly to retail investors and receives no remuneration from retail investors for financial services. DMR Corporate does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice to retail investors.

11.4 General Financial Product Advice

In the reports, DMR Corporate provides general financial product advice. This advice does not take into account the personal objectives, financial situation or needs of individual retail investors.

Investors should consider the appropriateness of a report having regard to their own objectives, financial situation and needs before acting on the advice in a report. Where the advice relates to the acquisition or possible acquisition of a financial product, an investor should also obtain a product disclosure statement relating to the financial product and consider that statement before making any decision about whether to acquire the financial product.

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11.5 Independence

At the date of this report, none of DMR Corporate, Derek M Ryan nor Mr Paul Lom has any interest in the outcome of the Proposed Transaction, nor any relationship with Taronga or AusNiCo or any of their associates.

Drafts of this report were provided to and discussed with Taronga’s Chief Executive Officer. There were no alterations to the methodologies that were adopted by DMR Corporate.

DMR Corporate had no part in the formulation of the Offer. Its only role has been the preparation of this report that will form part of the Target’s Statement.

DMR Corporate considers itself to be independent in terms of Regulatory Guide 112 issued by ASIC in March 2011.

11.6 Remuneration

DMR Corporate is entitled to receive a fee of $22,000 plus GST for the preparation of this report, plus out of pocket expenses. With the exception of the above, DMR Corporate will not receive any other benefits, whether directly or indirectly, for or in connection with the making of this report.

Except for the fees referred to above, neither DMR Corporate, nor any of its directors, employees or associated entities will receive any fees or other benefits, directly or indirectly, for or in connection with the provision of this report.

11.7 Compensation Arrangements and Complaints Process

As the holder of an Australian Financial Services Licence, DMR Corporate is required to have suitable compensation arrangements in place. In order to satisfy this requirement DMR Corporate holds a professional indemnity insurance policy that is compliant with the requirements of Section 912B of the Act.

DMR Corporate is also required to have a system for handling complaints from persons to whom DMR Corporate provides financial services. All complaints must be in writing and sent to DMR Corporate at the above address.

DMR Corporate will make every effort to resolve a complaint within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service Limited – GPO Box 3, Melbourne Vic 3000.

Yours faithfully

DMR Corporate Pty Ltd

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Paul Lom Director

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Derek Ryan Director

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Appendix A

Sources of Information

The following sources of information have been utilised and relied upon in the course of preparing this report.

Taronga’s audited financial statements for the years ended 30 June 2011 and 2012;
Taronga’s management accounts – 30 September 2012;
Taronga’s tenement data and information;
Taronga’s Offer Information Statement issued in December 2011;
Taronga’s share register as at 30 October 2012;
The Mining One report dated 14 November 2012;
RSM Bird Cameron Control Premium Study – September 2010.
AusNiCo’s financial statements for the years ended 30 June 2011 and 2012;
AusNiCo’s tenement data and information;
ASX announcements since 1 January 2012 in respect of AusNiCo;
Share price history of AusNiCo shares from Commonwealth Securities and Capital IQ;
AusNiCo’s prospectus issued in August 2010;
AusNiCo Bidder’s Statement; and
Taronga Target’s Statement.

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Appendix B

Taronga Mines Limited

Top Ten AusNiCo Shareholder List After the Proposed Merger

Shareholder Name TENSTAR TRADING LIMITED YTC RESOURCES LIMITED DGR GLOBAL LIMITED SAMUEL HOLDINGS PTY LTD PINE MOUNTAIN PTY LTD RYTECH PTY LTD BIZZELL CAPITAL PARTNERS PTY LTD EKCO INVESTMENTS PTY LTD HSBC CUSTODY NOMINEES (AUSTRALIA) LTD HG CORPORATE CONSULTING PTY LTD	Shares % 80,971,275 18.68% 68,200,000 15.74% 59,776,500 13.79% 35,866,940 8.28% 18,500,000 4.27% 12,000,000 2.77% 7,616,667 1.76% 6,750,000 1.56% 6,047,978 1.40% 5,093,710 1.18% 300,823,070 69.41%	Ex Taronga Ex AusNiCo 18.68% 15.74% 13.79% 8.28% 4.27% 2.77% 1.76% 1.56% 1.40% 1.18%
		52.47% 16.95%

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Appendix C

Taronga Mines Limited

Declarations, Qualifications and Consents

1. Declarations

This report has been prepared at the request of the Directors of Taronga pursuant to Section 640 of the Act to accompany Taronga’s Target’s Statement. It is not intended that this report should serve any purpose other than as an expression of our opinion as to whether or not the AusNiCo Offer is fair and reasonable.

The recipients of this report should be aware that this report has been prepared without taking account of their individual objectives, financial situation or needs. Accordingly, each recipient should consider these factors before acting on the Offer.

This report has also been prepared in accordance with the Accounting Professional and Ethical Standards Board professional standard APES 225 – Valuation Services.

The procedures that we performed and the enquiries that we made in the course of the preparation of this report do not include verification work nor constitute an audit in accordance with Australian Auditing Standards.

Mining One is to be paid a fee of $23,000 plus GST for the preparation of its specialist technical report. Mining One has consented to the inclusion of statements made by it, or based on statements made by it, or statements or information extracted or derived from its report titled “Valuation of the Mineral Assets of Taronga Mines Ltd & AusNiCo Ltd” dated 14 November 2012:

(a) in the form and context in which they are included; and
(b) to all references to that information in the form and context in which it appears.

2. Qualifications

Mr Derek M Ryan and Mr Paul Lom, directors of DMR Corporate prepared this report. They have been responsible for the preparation of many expert reports and are involved in the provision of advice in respect of valuations, takeovers and capital reconstructions and reporting on all aspects thereof.

Mr Ryan has had over 40 years experience in the accounting profession and he is a Fellow of the Institute of Chartered Accountants in Australia. He has been responsible for the preparation of many expert reports and is involved in the provision of advice in respect of valuations, takeovers and capital reconstructions and reporting on all aspects thereof.

Mr Lom is a Fellow of the Institute of Chartered Accountants in Australia and a Registered Company Auditor with more than 35 years experience in the accounting profession. He was a partner of KPMG and Touche Ross between 1989 and 1996, specialising in audit. He has extensive experience in business acquisitions, business valuations and privatisations in Australia and Europe.

3. Consent

DMR Corporate consents to the inclusion of this report in the form and context in which it is included in Taronga’s Target’s Statement.

Page 28

ATTACHMENT 1

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VALUATION

THE MINERAL ASSETS

OF

TARONGA MINES LTD & AUSNICO LTD

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Job No. 1816_G Doc No. 3388 Date: 14[th] November 2012 Prepared by: T G Summons

Mining One Pty Ltd Level 9, 50 Market Street Melbourne VIC 3000 Ph: 03 9600 3588 Fax: 03 9600 3944

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TABLE OF CONTENTS	TABLE OF CONTENTS	TABLE OF CONTENTS
EXECUTIVE SUMMARY ............................................................................................................................. iii
1	INTRODUCTION ................................................................................................................................ 1
	1.1	Commission and Scope ............................................................................................................ 1
	1.2	Applicability of the VALMIN Code ............................................................................................. 1
	1.2.1	Background ........................................................................................................................... 1
	1.2.2	Relevant Extracts.................................................................................................................. 2
	1.2.3	Classification of Mineral Assets ............................................................................................ 2
	1.3	Independence, Qualifications and Experience ......................................................................... 3
	1.4	Disclaimer ................................................................................................................................. 3
2	TARONGA MINES LTD MINERAL ASSETS .................................................................................... 4
	2.1	Taronga Project Description ..................................................................................................... 4
	2.1.1	Tenement .............................................................................................................................. 4
	2.1.2	Mineral Asset Status ............................................................................................................. 4
	2.1.3	Regional Geological Setting ................................................................................................. 4
	2.1.4	Local Geology ....................................................................................................................... 4
	2.1.5	Mineralisation Overview ....................................................................................................... 4
	2.1.6	Local Mineralisation .............................................................................................................. 5
	2.1.7	Mineral Resources ................................................................................................................ 5
	2.2	Torrington Project Description .................................................................................................. 5
	2.2.1	Tenements ............................................................................................................................ 5
	2.2.2	Mineral Asset Status ............................................................................................................. 5
	2.2.3	Regional Geological Setting ................................................................................................. 6
	2.2.4	Local Geology ....................................................................................................................... 6
	2.2.5	Mineralisation Overview ....................................................................................................... 6
	2.2.6	Local Mineralisation .............................................................................................................. 6
	2.3	Pound Flat Project Description ................................................................................................. 7
	2.3.1	Tenement .............................................................................................................................. 7
	2.3.2	Mineral Asset Status ............................................................................................................. 8
	2.3.3	Regional Geological Setting ................................................................................................. 8
	2.3.4	Local Geology ....................................................................................................................... 8
	2.3.5	Local Mineralisation .............................................................................................................. 8
	2.3.6	Mineral Resources ................................................................................................................ 8
	2.4	Technical Valuations ................................................................................................................ 8
	2.4.1	Valuation Methodology ......................................................................................................... 8
	2.4.2	Taronga Project Technical Valuation ................................................................................... 9
	2.4.3	Torrington Project Technical Valuation ................................................................................ 9
	2.4.4	Pound Flat Project Technical Valuation ............................................................................... 9
	2.4.5	Total Taronga Mines Ltd Properties Technical Valuation .................................................... 9
	2.4.6	Total Taronga Mines Ltd Properties Fair Market Valuation ................................................ 10
3	AUSNICO LTD MINERAL ASSETS ................................................................................................ 12
	3.1	Kildanga Project Description .................................................................................................. 12
	3.1.1	Tenement ............................................................................................................................ 12
	3.1.2	Mineral Asset Status ........................................................................................................... 12
	3.1.3	Regional Geological Setting ............................................................................................... 12
	3.1.4	Local Geology ..................................................................................................................... 12
	3.1.5	Mineralisation Overview ..................................................................................................... 12

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	3.1.6	Local Mineralisation ............................................................................................................ 12
	3.2	Marlborough Project ............................................................................................................... 13
	3.2.1	Tenement ............................................................................................................................ 13
	3.2.2	Mineral Asset Status ........................................................................................................... 14
	3.2.3	Regional Geological Setting ............................................................................................... 14
	3.2.4	Local Geology ..................................................................................................................... 14
	3.2.5	Mineralisation Overview ..................................................................................................... 14
	3.2.6	Local Mineralisation ............................................................................................................ 14
	3.3	Heazlewood River Project ...................................................................................................... 15
	3.3.1	Tenements .......................................................................................................................... 15
	3.3.2	Mineral Asset Status ........................................................................................................... 15
	3.3.3	Regional Geological Setting ............................................................................................... 15
	3.3.4	Local Geology ..................................................................................................................... 15
	3.3.5	Local Mineralisation ............................................................................................................ 15
	3.4	Technical Valuations .............................................................................................................. 16
	3.4.1	Valuation Methodology ....................................................................................................... 16
	3.4.2	Kildanga Project Technical Valuation ................................................................................. 16
	3.4.3	Marlborough Project ........................................................................................................... 17
	3.4.4	Heazlewood River Project .................................................................................................. 17
	3.4.5	Total AusNiCo Ltd Properties Technical Valuation ............................................................ 17
	3.4.6	Total AusNiCo Ltd Properties Fair Market Valuation .......................................................... 17
4	REFERENCES ................................................................................................................................. 19

TABLE	INDEX
Table 1:	Total Taronga Mines Ltd Properties Valuation ....................................................................... 11
Table 2:	Total AusNiCo Ltd Properties Valuation ................................................................................. 18

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EXECUTIVE SUMMARY

Taronga Mines Ltd Mineral Assets

Taronga Mines Ltd owns three mineral projects in New South Wales, as follows:

1) The Taronga Project – classed as a Pre-Development Project
2) The Torrington Project – classed an Exploration Area
3) The Pound Flat Project - classed an Exploration Area

AusNiCo Ltd Mineral Assets

AusNiCo Ltd owns three mineral projects in Queensland, and one in Tasmania, as follows:

1) The Kildanga Project – classed as an Advanced Exploration Project
2) The Marlborough Project – classed as an Exploration Area
3) The Heazlewood River Project - classed as an Exploration Area

The AusNiCo Ltd mineral assets in Queensland are estimated to have a total Technical Value in the range of $2.51M - $6.34M.

The AusNiCo Ltd mineral assets in Tasmania are estimated to have a Technical Value in the range of $0.08M to $0.41M.

The overall AusNiCo Ltd mineral assets in Queensland and Tasmania are estimated to have Technical Value in the range of $2.59M - $6.75. After consideration of relevant adjustment factors, the properties are estimated to have a Fair Market Value in the range $1.79M - $3.75M, with a Preferred Fair Market Value of $1.96M .

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T G Summons Senior Resource Geologist Mining One Pty Ltd

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iii

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1 INTRODUCTION

1.1 Commission and Scope

DMR Corporate Pty (DMR Corporate) has commissioned Mining One Pty Ltd (Mining One) to prepare a Technical Assessment Report containing a Technical Fair Market Valuation of various mineral assets, as supporting documentation to a proposed takeover offer by AusNiCo Ltd (AusNiCo) for Taronga Mines Ltd (Taronga).

The various mineral assets are those held by Taronga and AusNiCo respectively, and the Fair Market Valuation data is required by DMR Corporate.

The VALMIN Code (2005) defines a Technical Value as “an assessment of a Mineral or Petroleum Asset’s future net economic benefit at the Valuation Date under a set of assumptions deemed most appropriate by an Expert or Specialist, excluding any premium or discount to account for such factors as market or strategic considerations”

A “Fair Market Value” is defined within the VALMIN Code (2005) as the “value of a Mineral or Petroleum Asset or Security. It is the amount of money determined by the Expert in accordance with the provisions of the VALMIN Code for which the Mineral or Petroleum Asset or Security should change hands on the Valuation Date in an open and unrestricted market between a willing buyer and a willing seller in an ““arm’s length”” transaction, with each party acting knowledgeably, prudently and without compulsion. Value is usually comprised of two components, the underlying or “Technical Value” of the Mineral or Petroleum Asset or Secruity, as defined by the Technical Value, and a premium or discount relating to market, strategic or other considerations”

This report is a Technical Assessment Report as defined in the VALMIN Code, and has also been prepared in accordance with the requirements of the Australian Securities and Investments Commission Regulatory Guides 111 and 112 (ASIC, 2011).

1.2 Applicability of the VALMIN Code

1.2.1 Background

This valuation report has been prepared in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports, also referred to as the VALMIN Code (2005).

The VALMIN Code is a code written for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports prepared by the VALMIN Committee, a joint committee of the AusIMM (Australasian Institute Of Mining and Metallurgy) and AIG (Australian Institute of Geoscientists) and MICA (Mineral Industry Consultants Association).

DMR Corporate, as the Independent Expert, has obtained from Taronga, as the Commissioning Entity, verbal confirmation that it will comply with the requirements of Clauses 27-29 of the VALMIN Code. These clauses relate to independence of the Commissioning Entity from the Independent Expert and the Specialist (ie Mining One), and the transparency of all reporting by DMR Corporate and Mining One.

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1.2.2 Relevant Extracts

Other relevant sections of the VALMIN Code are as follows:

VALMIN Clause 12: this applies to the “Technical Assessment and/or Valuation of Mineral ….assets …for any independent Expert Report intended for public release …..”

VALMIN Clause 41 (a): The Commissioning Entity has confirmed in writing that “ full, accurate and true disclosure of all Material information will be made to the Expert.”

VALMIN Clause 42: The Expert and/or Specialists “ must enter in to a written agreement with the Commissioning Entity,…..”.

VALMIN Clause 49: Time and cost constraints “must not be permitted to compromise fundamental compliance with the requirements of the Code. Any restrictions so caused to the depth of analysis or the extent of detail required must be recorded in the report.”

Whilst strict compliance with Clause 41(a) has not occurred, the following should be noted:

Taronga has given Mining One verbal assurance about the extent of the Taronga data provided, and has verbally explained the scope and purpose of the report. This aspect is not considered to be in contravention of Clause 41(A).
Taronga has also given Mining One verbal assurance about the extent of AusNiCo data provided, with the same explanation of the scope and purpose of the report. This aspect is not considered to be in contravention of Clause 41(A).

Regarding Clause 42, the Commissioning Entity (Taronga) has a written agreement with the Independent Expert (DMR Corporate), who in turn have a written agreement with the Specialist (Mining One).

Regarding Clause 49, whilst both Taronga and AusNiCo have made available all relevant documentation, the opportunity to make site visits to the various projects was precluded by the short time frame available to complete the work. This aspect is not considered to be in contravention of said Clause 49.

1.2.3 Classification of Mineral Assets

VALMIN Code clauses D20 and D21, refer respectively to Mineral Assets, and to Mineral Resources and Ore Reserves.

Clause D20 of the VALMIN Code can be summarised to state that most Mineral Assets can be classified as one of the following:

Exploration Areas – properties where mineralisation may or may not have been identified, but where a Mineral Resource has not been identified.
Advanced Exploration Areas – properties where sufficient exploration has occurred to enable a good understanding of the type of mineralisation present, and for which the untested potential still warrants extra work. A Mineral Resource may or may not have been identified.
Pre-Development Projects – properties where Mineral Resources have been identified, but where a decision to proceed with development has not been made.
Development Projects – properties for which a decision to proceed with production has been made, but have not yet been commissioned.

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Operating Mines – properties with fully commissioned and operating mine.

Clause D21 of the VALMIN Code is a reference to Mineral Resources and Ore Reserves as defined by the JORC Code, and is one of several links between the JORC and VALMIN Codes.

1.3 Independence, Qualifications and Experience

Mining One Pty Ltd is an independent private consulting company which has been providing consulting services to the international and local mining industry since 2005.

This valuation report has been prepared by Mr TG Summons, who is a geologist BSc, MSc with over 40 years of experience in the mining industry, and is a Member of the Australian Institute of Geoscientists. Mr Summons is appropriately qualified and experienced to act in the following capacities:

A Competent Person as defined in the JORC Code (2004).
An Independent Expert as defined in the VALMIN Code & ASIC Regulatory Guide 111.

Mr Summons does not have any significant pecuniary or beneficial interest in Taronga, or in AusNiCo Ltd, or in the outcome of the valuation.

1.4 Disclaimer

This report was prepared using data and information which were available to the author at the time of writing. It is based on data provided which is understood (refer VALMIN Cl 41(a) as discussed in Sec 1.2. above), to be suitably representative of the various mineral properties and projects held by Taronga and AusNiCo. It is not based on any Mineral Resources estimated in accordance with the JORC Code (2004).

This report is provided for the use of DMR Corporate, and should only be reproduced, pending relevant consent by Mining One Pty Ltd, in whole and not in part.

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2 TARONGA MINES LTD MINERAL ASSETS

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2.1 Taronga Project Description

2.1.1 Tenement

The Taronga Project consists of Exploration Licence, EL 7348 covering 16 units (~ 48 sqr.km.) and Exploration Licence EL 6839 covering 6 units (~ 18 sqr.km.)

2.1.2 Mineral Asset Status

The Taronga Project was the subject of intensive and detailed investigation between 1978 and 1982 by Newmont Pty Ltd. It is considered to be a Pre-Development Project according to VALMIN definitions.

2.1.3 Regional Geological Setting

The Taronga Project is situated in the southern New England Fold Belt which hosts Triassic age S-type and I-type granitoids intruded in to Permo-Triassic volcanics and sediments. Fractionation of the I-type granites has resulted in a suite of leuco-granites, which are the source of most of the mineralisation in the area including the Mole Granite.

2.1.4 Local Geology

Work by Newmont subdivided the early Permian age Grampian Formation in to several sedimentary units, including the Taronga Siltstone. This unit hosts the tin mineralisation at the Taronga deposit, and consists of interbedded siltstone, sandstone and greywacke, with minor intra-formational matrix-supported conglomerates, pillow basalts and cherts. Proximity to the Mole Granite has resulted in thermal metamorphism of the sedimentary rocks to hornfels.

The Grampian Formation rocks have been folded about north west – south east trending axes, with later orthogonal re-folding, resulting in a series of plunging folds defining domal structures.

Mapping by Newmont indicates the sheeted veins at the Taronga deposit occur along a north east aligned anticlinal structure, within a domal culmination.

2.1.5 Mineralisation Overview

There are three broad settings for primary mineralisation related to the Mole Granite, as follows:

Type1 - Mineralisation in the granite:
Greisen veins of quartz-chlorite-tourmaline-sericite- tin (cassiterite)
Quartz lodes with tungsten, bismuth and base metals
Examples are the old Harts-Dutchman, Curnows, Wallaroo and Planet mines
Type 2 - Mineralisation in the altered sediments (contact aureole):
Sheeted quartz-greisen vein systems of tin -copper-tungsten-molybdenum-zinc-leadarsenic-fluorite-tourmaline-topaz
Quartz lodes with tin , tin -arsenic, or base metals-silver-arsenic
Examples occur in the Taronga -McDonalds and Dalcoath groups of old mines

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Type 3 - Mineralisation in the altered sediments (roof pendant):
Silexite (a quartz-topaz rock) with disseminated tungsten-bismuth and lesser tin

2.1.6 Local Mineralisation

Various episodes of folding have generated a complex series of domes. Work by Newmont showed the sheeted cassiterite-bearing veins at Taronga occur along a north east trending anticlinal/domal structure. Faulting recognised in the area trends north (350°- 010°), north east (about 050°), and east south east (100° -130°).

The Northern Zone occurs as two vein swarms ranging 600-650 metres in length and 10-80 metres in width. The vein swarms with > 0.10% Sn define two main directions – 068° and 086°.

The Southern Zone occurs as four vein swarms ranging 150-550 metres in length, and 8-10 metres in width. The vein swarms with > 0.10% Sn define two main directions – 057° and 072°.

The Taronga Tin Deposit can be described as a sheeted vein style deposit but in detail there are aspects of the mineralisation and alteration characteristics that demonstrate multi-event complexity and polymetallic mineralisation associated with the Mole Granite.

2.1.7 Mineral Resources

The Northern Zone has two vein swarms (Adit East & West, and Adit West Ext), while the Southern Zone has four discrete vein swarms (Hillside, Hillside Ext, Payback & Payback Ext) which have thicker veins spaced more widely than the Northern Zone.

Newmont undertook various estimates of tin resources, culminating in November 1982 with a supplement to a pre-feasibility study, described as a “geostatistical estimate, drill-defined diluted mineable ore reserve”, using a 0.083% Sn cut off, and comprising:

Northern Zone : 33,939,000 tonnes @ 0.135% Sn
Southern Zone :12,818,000 tonnes @ 0.172% Sn Total: 46,757,000 tonnes @ 0.145% Sn

It is emphasised that this estimate predates the initial introduction of the JORC Code in 1989, and as such represents an “historical estimate” which was not reported in accordance with the JORC Code and it is uncertain that following further evaluation if the estimate will ever be able to be reported in accordance with the JORC Code.

It is understood that Taronga Mines Ltd intends to conduct selected infill and twin drilling, along with bulk sampling in order to confirm and update the historical estimate completed by Newmont.

2.2 Torrington Project Description

2.2.1 Tenements

The Torrington Project consists of Exploration Licence EL 7800 covering 67 units (~ 201 sqr.km.).

2.2.2 Mineral Asset Status

The tenement comprising the Torrington Project is considered to be an Exploration Area according to VALMIN definitions.

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2.2.3 Regional Geological Setting

The Torrington Project is situated in the southern New England Fold Belt which hosts Triassic age S-type and I-type granitoids intruded in to Permo-Triassic volcanics and sediments. Fractionation of the I-type granites has resulted in a suite of leuco-granites, which are the source of most of the mineralisation in the area including the Mole Granite.

2.2.4 Local Geology

The basement rocks for this project consist of Grampian Formation, Dundee Rhyodacite, Tent Hill Porphyrite, Emmaville Volcanics and the Mole Granite. The Dundee Rhyodacite is a strongly porphyritic rhyodacite, while the Tent Hill Porphyrite includes porphyritic andesite and agglomerate. The Emmaville Volcanics are undifferentiated rhyolites and rhyodacites, and the Mole Granite is a coarse grained leucogranite.

In the Harts-Dutchmans-Curnows area near the southern edge of the Mole Granite there are several intrusive phases grouped as follows:

1) Early Phase - grey porphyritic granite & monzogranite (quenched marginal phases) grading in to a grey coarse grained equigranular granite – main phase of Mole Granite
2) Later Phase - pink equigranular aplitic syenogranite and mineralised pegmatite dykes

Further evolution of the underlying magma resulted in two phases of mineralised hydrothermal veining, an early high temperature and later low temperature event.

2.2.5 Mineralisation Overview

There are three broad settings for primary mineralisation related to the Mole Granite, as follows:

Type1 - Mineralisation in the granite:
Greisen veins of quartz-chlorite-tourmaline-sericite- tin (cassiterite)
Quartz lodes with tungsten, bismuth and base metals
Examples are the old Harts-Dutchman, Curnows, Wallaroo and Planet mines
Type 2 - Mineralisation in the altered sediments (contact aureole):
Sheeted quartz-greisen vein systems of tin -copper-tungsten-molybdenum-zinc-leadarsenic-fluorite-tourmaline-topaz
Quartz lodes with tin , tin -arsenic, or base metals-silver-arsenic
Examples occur in the Taronga- McDonalds and Dalcoath groups of old mines
Type 3 - Mineralisation in the altered sediments (roof pendant):
Silexite (a quartz-topaz rock) with disseminated tungsten-bismuth and lesser tin

2.2.6 Local Mineralisation

The EZ Company explored the area north east of Taronga in the early 1980’s and recognised a north-east trending mineralised corridor in the hornfelsed sediments, described here as the East Grampian Corridor. The Curnows, Harts and Dutchmans lodes in the Mole Granite are on trend with this corridor, and may indicate post-granite shearing.

In addition to Taronga, the East Grampian Corridor also contains the Poverty Point, Big Plant Creek, McDonalds and Emerald tin prospects, which are untested, variably coincident, tin geochemical anomalies and geophysical anomalies.

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The tin/tungsten/arsenic geochemical anomalies have two main orientations, as follows:

Poverty Point – 076° and 090° (100°)
Big Plant Creek – 060° and 070°
McDonalds – 060° and 091°
Emerald – 040° and 075°

Quartz veins at the various prospects occur as follows:

Poverty Point – 090° and 100°
Big Plant Creek – 060° (weaker veins) and 070° (sheeted veins)
McDonalds – 060° and 070° (? both sheeted veins) – distal to Mole Granite - 060° and 091° (? both netted # veins) – proximal to Mole Granite
Emerald - 040° and 075° (sheeted/netted veins)
Taronga Northern Zone – 068° and 086° (sheeted veins)
Taronga Southern Zone – 057° and 072° (sheeted veins)
(# netted veins occur proximal to the Mole Granite at both Emerald and McDonalds)

The Torrington Project prospects (Poverty Point, Big Plant Creek, McDonalds and Emerald,) in the East Grampian Corridor outside the Mole Granite typically display bifurcating veins, with similar inter-vein angles to those at Taronga (15°-18°). This geometry is interpreted to show similar orientations of shearing and extension across the entire corridor.

The sequence of alteration & mineralisation in the Harts – Dutchman and Curnows area within the Mole Granite is as follows:

Quartz-feldspar pegmatite veins (+/- fluorite-tourmaline-topaz-molybdenite-chalcopyritepyrite-arsenopyrite-ferberite- cassiterite ), followed by;
Quartz veins (+/- iron oxide-fluorite-tourmaline- cassiterite -chalcopyrite-galena) with a selvage of chlorite-sericite (+/- epidote- cassiterite )
Stilbite veins (+/- adularia- cassiterite )

Consequently, early high temperature pegmatite veining was followed by hydrothermal veining (lodes < 5m wide & main focus for previous mining), in turn by low temperature zeolite (stilbite) veining.

It is noteworthy that all vein stages, including alteration of the host granite, were stanniferous. Whilst the second and third stages may have involved the re-mobilisation of earlier formed cassiterite, the varied mineralogy and overprinting relationships all testify to multiple events of veining/alteration.

2.3 Pound Flat Project Description

2.3.1 Tenement

The Pound Flat Project consists of a single Exploration Licence EL 7801 covering 34 units (~ 102 sqr.km.)

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2.3.2 Mineral Asset Status

The tenement comprising the Pound Flat Project is considered to be an Exploration Area according to VALMIN definitions.

2.3.3 Regional Geological Setting

The Pound Flat Project is situated in the southern New England Fold Belt which hosts Triassic age S-type and I-type granitoids intruded in to Permo-Triassic volcanics and sediments. Fractionation of the I-type granites has resulted in a suite of leuco-granites, which are the source of most of the mineralisation in the area including the Mole Granite.

2.3.4 Local Geology

The basement rocks for this project consist of the Late Permian – early Triassic age Emmaville Volcanics, consisting of tuffs, ignimbrites and felsic/intermediate lavas, with Pound Flat hosted in rhyodacitic agglomerate.

2.3.5 Local Mineralisation

The tin mineralisation at Pound Flat occurs in a vein swarm of vertical/sub vertical sheeted veins over an area of 1,800m x 150m. The veins strike 030° - 070°, and whilst seldom wider than 5mm, have a high density with up to 70 veins/metre.

The veins are composed of quartz-mica (+/-pyrite, arsenopyrite, cassiterite , chlorite, chalcopyrite, galena, sphalerite, wolframite, fluorite, topaz and beryl).

Chlorite forms the selvedges from 20 – 50mm thick.

2.3.6 Mineral Resources

The most detailed and thorough exploration was done by Newmont between 1978 and 1981, and involved geological mapping, gradient array/induced polarisation surveys, and drilling of 47 RAB holes and 8 cored holes.

Based on this work, Newmont estimated an in pit resource of 2.2M tonnes grading 0.12% Sn, using a 1:1 strip ratio. Subsequently they undertook metallurgical studies and preliminary open pit designing.

Newmont were working concurrently on the Taronga deposit, and viewed Pound Flat as potential satellite operation to Taronga.

2.4 Technical Valuations

2.4.1 Valuation Methodology

The Kilburn Geoscience rating system was used for the valuation due to the assets for both companies being at the exploration stage without any JORC/NI43-101 compliant resources. Other valuation techniques involve ascribing a value to resource/reserve estimates and/or valuing level of previous exploration/development expenditure to each of the tenements. These

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methods were not deemed suitable for either Taronga or AusNico. The Kilburn system was therefore used.

The Kilburn Geoscience Rating Method is based on the following:

Basic Acquisition Cost

In NSW the grant of an Exploration Licence is contingent on the following:

An application fee - $1,000
A unit fee - $12.50/unit/yr
Annual rent - $60/unit/yr
An administration levy – 1% of the environmental levy (min. $100)
Minimum expenditure - for 2-6 units =$2,000 + $3,000/unit/yr or for > 6 units = $20,000 +$500/unit/yr

The BAC may be applied to the entire tenement, or allocated to various prospects within the tenement/property.

Proximity to Adjacent (Off-Property) Geophysical and Geochemical Anomalies
Consideration is given to any geophysical and geochemical anomalies that exist in the proximity of the tenements to be valued.
Proximity to Adjacent (Off-Property) Mineralisation Consideration is also given to any significant and relevant mineralization that exists in the proximity of the tenements to be valued.
Mineralisation and Prospectivity Characteristics of the Properties

The style, extent and significance of any defined mineralization is assessed, along with geophysical and geochemical anomalism on the prospects is taken in account in this part of the assessment.

Calculated Technical Valuation

The combination of the basic acquisition cost, actual mineralisation, and anomalism within the tenements is calculated to form an overall valuation of the prospects.

2.4.2 Taronga Project Technical Valuation

Application of Modified Kilburn Ratings to the Taronga Project (ELs 7348 and 6839) results in a range of estimated Technical Values from $3.20M to $9.01M.

2.4.3 Torrington Project Technical Valuation

Application of Modified Kilburn Ratings to the Torrington Project (EL 7800) results in a range of estimated Technical Values from $0.43M to $1.16M.

2.4.4 Pound Flat Project Technical Valuation

Application of Modified Kilburn Ratings to the Pound Flat Project (EL 7801) results in a range of estimated Technical Values from $0.1M to $0.24M.

2.4.5 Total Taronga Mines Ltd Properties Technical Valuation

Overall the NSW mineral assets controlled by Taronga Mines Ltd are estimated to have a total Technical Value in the range of $3.73M to $10.41M.

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Complete details are shown in Table 1.

2.4.6 Total Taronga Mines Ltd Properties Fair Market Valuation

After consideration of the data collected from the Technical Valuation and the overall market conditions Mining One assess the Fair Market Value for the Taronga Mines to be $9.37m. The Fair Market Valuation is assessed as falling in the upper end of the Technical Valuation due to the Assets representing a globally significant Tin province with potential exploration upside.

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TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD	TARONGA MINESLTD

MODIFIED KILBURN RATINGS-NSW MINERAL ASSETS

Exploration Licence			BAC	Joint	Proximity to Off-Property :			Property Features							Technical
				Venture	Geophys or	Mineralisation		Geophysical	Geochemical	Geological		Mineralisation			Valuation
Name	No	Units	$	Factor	Geochem	rank	metals	Targets	Targets	Patterns	rank	metals	resources		$
					Targets		low high low high low high low high d1 d2 e1 e2 f1 f2 g1 g2 Sn 2 2.5 2 2.5 2.5 3 1 1 Sn (Taronga) 1 1.5 1 1 1 1.5 1 1.3 Sn (Taronga) 1.3 1.5 1.5 2 1.5 2.5 1.3 1.5 Sn (Taronga) 1.3 1.5 1.5 2 1.5 2.5 1.3 1.5 Sn (Taronga) 1.3 1.5 1.5 2 1.3 2 1.3 1.5 Sn (Taronga) 1.3 1.5 1.5 2 1.3 2 1.3 1.5 Sn 1.3 1.5 1.3 1.5 1.3 2 1.3 1.5 Sn 1.3 1.5 1.3 1.5 1.3 2 1.3 1.5 Sn 1.3 1.5 1.3 1.5 1.3 2 1.3 1.5 1 1 1 1 1.3 2 1 1					low high low high h1 h2 i1 i2 Sn 4 6 3,147,040 8,851,050 Sn 1 1 55,211 161,492 Sn, W, Cu 1 1 83,976 248,450 Sn,W 1 1 83,976 248,450 Sn 1 1 72,779 198,760 Sn, Cu 1 1 72,779 198,760 Sn, Mo, Cu 1 1 24,260 57,335 Sn, Mo, Cu 1 1 24,260 57,335 Sn, Cu, In 1 1 63,075 149,070 Sn, W, Cu 2 3 105,469 243,390
				a	b	c

Taronga	7348	16	30,260	1	1.3	2

Emmaville	6839	6	21,235	1	1.3	2

Torrington	7800	67
	McDonalds		8,494	1	1.3	2
	Emerald		8,494	1	1.3	2
	Poverty Point		8,494	1	1.3	2
	Big Plant Ck		8,494	1	1.3	2
	Dutchmans #		8,494	1	1	1
	Curnows #		8,494	1	1	1
	Planet		8,494	1	1.3	2

Pound Flat	7801	34	40,565	1	1	1
														3,732,825 10,414,089
			BAC : Basic Acquisition Cost-calculated from the application fee+unit fee+annual rent+administration levy+minimum expenditure

	# Unknown potential devlopment status due to location within Torrington State Conservation Area

Table 1: Total Taronga Mines Ltd Properties Valuation

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3 AUSNICO LTD MINERAL ASSETS

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3.1 Kildanga Project Description

3.1.1 Tenement

The Kildanga Project is located about 30km south west of Gympie, and consists of a single Exploration Permit EPM 19366 covering 98 sub blocks (~ 294 sqr.km.)

3.1.2 Mineral Asset Status

The Kildanga Project is considered to be an Advanced Exploration Area according to VALMIN definitions. This status is consistent with the exploration target defined by AusNiCo at the Pembroke prospect.

3.1.3 Regional Geological Setting

The Kildanga Project occurs in the Tasman Fold Belt, comprising the Lachlan and New England Fold Belts, the latter forming much of northern NSW and south east Queensland.

In southern Queensland the New England Fold Belt consists of the Gympie, Wandilla and Yarrol terranes. These terranes are fault-bounded, with the interface between the Yarrol and Wandilla terranes delineated by the Yarrol Fault Zone which consists of the Marlborough ultramafics. These rocks were deformed during Devonian – Carboniferous/Permian time, and intruded by Permian/Triassic age granitoid bodies.

3.1.4 Local Geology

Lithologies present in the Kildanga Project area include phyllites, schist, greenstone, amphibolite, serpentinite, minor limestone and marble, slate, mudstone, chert, and jasper.

The ultramafic rocks include serpentinised peridotite, and harzburgite. These rocks are adjacent to a composite breccia/mélange considered to be the expression of a thrust fault, and may have originally been part of a layered intrusive complex including gabbros. The ultramafics are juxtaposed with a calcareous mudstone-volcanic sequence, and have garnet-pyroxene skarns and jasperoid alteration zones about their contacts.

Triassic age porphyryies, exemplified by the Black Snake Porphyry, are associated with baseand precious-metal mineralisation.

3.1.5 Mineralisation Overview

Gold and base metal mineralisation of the D ’ Aguilar Block occurs mainly as polymetallic mesothermal (-epithermal) veins in a range of breccia zones and alteration zones.

The ultramafics at Kilkivan-Black Snake and Widgee contain nickel and cobalt mineralisation in both primary and secondary deposits. Platinum Group Metals occur in Kandanga Creek, and mercury deposits have been mined at Cinnabar west of Kilkivan.

3.1.6 Local Mineralisation

Numerous old high grade copper-silver-gold mines occur in the area, including Shamrock, Mount Coora, Mount Clara, Peak, Mariners, Copper Lode and Pembroke.

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AusNiCo have identified (or re-confirmed) prospects at Mt Cobalt, Pembroke, Silver Valley, Jackson North and Ridley.

Mt Cobalt – drilling has encountered broad zones of Ni Co mineralisation (eg 30-80m @ 0.40.5%Ni and 0.02% Co), developed in the oxidised zone of the weathering profile. The mineralisation occurs in nontronite clays derived by deep weathering of epithermal breccias and quartz sulhpide mineralisation. The primary zone has been shown to consist of disseminated pyrrhotite, chalcopyrite, pentlandite in a serpentinite host.

There has not been any estimate of mineral resources undertaken.

Pembroke – located about 1km south of Mt Cobalt, where historic mine workings exploited CuAu mineralisation, hosted in a strongly altered tectonic breccia comprised of ultramafic and carbonate - quartz - talc - tourmaline bearing materials.

Shallow drilling has intersected low grade Cu-Au mineralisation (eg 20m @ 0.48% Cu and 1.5 gAu/t), above a deeper broad zone of low grade Ni mineralisation. Later drilling under the old copper mine workings, returned an intersection of 21m @ 1.0% Cu and 2.1gAu/t.

Subsequent drilling has also shown the Ni mineralisation to occur over large widths (eg 78m @ 0.27% Ni, and 93m @ 0.29% Ni), and to represent a supergene assemblage of Ni, Cu and Fe sulphides (eg violarite, vallerriite, bravoite, digenite, and gold etc). The precursor sulphide assemblage in the primary zone includes pyrrhotite, chalcopyrite, pentlandite (& molybdenite).

There has not been any estimate of mineral resources undertaken. However, AusNiCo has developed an exploration target of 3 M tonnes grading > 0.25% Ni.

Silver Valley – located about 2km east of Pembroke, where historic mine workings exploited sulphide mineralisation hosted in an en echelon shaped shear zone in serpentinite.

Drilling at this prospect has encountered 14m @ 1.2% Cu & 87 gAg/t, reported to be in primary pyrite-chalcopyrite mineralisation.

There has not been any estimate of mineral resources undertaken.

Mt Coora - The Peak - Orions Belt – located about 2km east of Mt Cobalt, where disseminated mineralisation is contained in shears and vein stockworks. The ultramafic bedrock is in contact with an adjacent monzonite, and similarities may exist with Silver Valley.

Drilling results include 10m @ 0.4% Cu, 27 gAg/t and 0.4 gAu/t.

There has not been any estimate of mineral resources undertaken.

Ridley and Jackson North – these are lateritic Ni-Co deposits, which appear to have been derived from the weathering of an un-mineralised (ie no Ni sulphides present) protolith; consequently these deposits are different to the mineralisation at Mt Cobalt.

The in situ resources, which may not be JORC-compliant, have been estimated to be smaller than 1 M tonnes grading 0.9% Ni and 0.08% Co.

3.2 Marlborough Project

3.2.1 Tenement

The Marlborough Project is located 600km north of Brisbane and consists of a single Exploration Permit EPM 17768.

EPM 17768 covers 50 sub blocks (~150 sqr. km.).

It is understood that finalisation of the grant of EPM 17768 is pending AusNiCo completing the public notification requirements as set out in Sec. 29 (3) of the Native Title Act 1993.

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3.2.2 Mineral Asset Status

The Marlborough Project is considered to be an Exploration Area according to VALMIN definitions.

3.2.3 Regional Geological Setting

The Marlborough Project lies in the New England Fold Belt within the larger Tasman Fold Belt of eastern Australia.

The Marlborough Block/terrane, encompassing and cut by the Yarrol Fault Zone, is situated north of the Yarrol terrane.These rocks were deformed during Devonian – Carboniferous/Permian time, and intruded by Permian/Triassic age granitoid with lesser gabbroic bodies. The Marlborough ultramafics around Rockhampton and Marlborough include intrusives in rocks of early Devonian to Permian age

3.2.4 Local Geology

The Marlborough nickel-cobalt deposits are associated with one of the larger (50 x 20 Km) ultramafic complexes along the northern section of the Yarrol Fault Zone.

The ultramafic complex is fault bounded by moderate to steeply dipping sediments, most of which are schists derived from quartz-rich clastic and calcareous varieties. Harzburgite is the most common ultramafic lithology, and serpentinisation is extensive.

The ultramafics occur as two northwest striking bodies, the western intrusive separated from the eastern body by a fault-bounded corridor of metasediments several kilometers wide. The southern boundary of the ultramafics is extensively stoped by granite and block-faulted, with east-trending structures juxtaposing younger felsic intrusives with older clastic metasediments.

The area covered by EPM 17768 overlaps the contact between the Princhester Serpentinite and a quartz monzonite intrusive, and preliminary geochemical sampling has identified a large Ni anomaly in the area.

3.2.5 Mineralisation Overview

The laterite-hosted nickel deposits in the district occur as positive topographic features, and. cover only a relatively small percentage of the ultramafic lithologies.

These deposits are aligned on a northwest trend along the western margin of the western ultramafic body, and constitute much of the Marlborough Nickel Mine, with a total Measured/Indicated/Inferred resource of 70.9M tonnes @ 0.92 % Ni and 0.06 % Co. EPM 17768 is located to the east and immediately adjacent to the Marlborough Nickel Mine.

3.2.6 Local Mineralisation

Previous exploration in the area identified pronounced nickel-zinc anomalies. A stream sediment sampling program revealed a > 3,000ppm Ni anomaly over the area south of the contact between the Princhester Serpentinite and a quartz monzonite intrusive.

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The Ni anomaly is superimposed by a northeasterly trend of zinc anomalism, implying the roles of both bedrock structures, late Mesozoic age intrusives and primary mineralisation. More recent soil sampling has located elevated Ni, Cr, Au and Pt values.

The potential for mineralisation analogues with the Pembroke and Mt Cobalt prospects is evident and as yet untested.

There has not been any estimate of mineral resources undertaken.

3.3 Heazlewood River Project

3.3.1 Tenements

The Heazlewood River Project consists of a single Exploration Licence, EL 34467 covering 75 sqr. km. The tenement is located in north west Tasmania about 25 Km west of Waratah.

3.3.2 Mineral Asset Status

The Heazlewood River Project Project is considered to be an Exploration Area according to VALMIN definitions.

3.3.3 Regional Geological Setting

The project is located in north western Tasmania substantially over the Cambrian age Heazlewood Ultramafic Complex, and partly near the northern margin of the Devonian age Meredith Granite.

The Heazlewood Ultramafic Complex is a dismembered layered ultramafic-mafic sequence, with gabbro, dolerite, dunite/peridotite, pyroxenite and harzburgite lithologies trending north east and northerly. The complex was intruded in to Proterozoic age metasediments, and was itself intruded by Cambrian age tonalite and by the Devonian age Meredith Granite. Subsequent deformation and faulting has obscured the original intrusive margins of the complex.

3.3.4 Local Geology

Remnants of the original layered complex occur as fault-juxtaposed blocks, with perhaps the western side displaying original stratigraphy, where rhythmically layered pyroxenes, olivine/antigorite and spinels in harzburgite attest to gravity-settled minerals.

Banded gabbro-pyroxenites are common in the centre and east of the complex, and tholeiitichigh magnesian mafics occur around Mt Cleveland in the east of the tenement.

3.3.5 Local Mineralisation

Historical (1920’s) alluvial workings occur in the valley of 19 Mile Creek on the western side of the complex, where detrital platinoid group metals (PGM), principally osmium-iridium were mined. Further south, old mine workings at Caudrys and at Purcells are believed to be directed at PGM mineralisation.

Nickel was mined from the Lord Brassey mine in the centre of the complex, where the mineralisation consisted of the low sulphur species heazlewoodite (Ni3S2).

Copper, lead and zinc vein style mineralisation occurs along the southern margin of the complex, and was historically mined in 19th century.

Work by Metals Exploration during the 1980’s resulted in the following discoveries:

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Nickel (pentlandite) in the 19 Mile Creek Dunite at and around Fentons Knob,
Copper (native) in an anorthosite dyke near Brassey Hill
PGM’s (Pt, Os & Ir) in banded harzburgites adjacent to the 19 Mile Creek Dunite

There is potential for Avebury-style nickel sulphide mineralisation along the contact with the Meredith Granite, and for disseminated/semi massive strata-bound nickel sulphide mineralisation in the 19 Mile Creek Dunite.

There has not been any estimate of mineral resources undertaken.

3.4 Technical Valuations

3.4.1 Valuation Methodology

The Kilburn Geoscience Rating Method is based on the following:

Basic Acquisition Cost

In Queensland the grant of an Exploration Permit is contingent on the following:

An application fee - $799
Annual rent - $131.4/sub block/yr
Minimum expenditure - $1,500/sub block/yr

In Tasmania the grant of an Exploration Licence is contingent on the following:

An application fee - $1,238.40
Annual rent - $28.74/sqr.km./yr
Minimum expenditure - $200/sqr.km./yr
Proximity to Adjacent (Off-Property) Geophysical and Geochemical Anomalies
Consideration is given to any geophysical and geochemical anomalies that exist in the proximity of the tenements to be valued.
Proximity to Adjacent (Off-Property) Mineralisation

Consideration is also given to any significant and relevant mineralization that exists in the proximity of the tenements to be valued.

Mineralisation and Prospectivity Characteristics of the Properties

The style, extent and significance of any defined mineralization is assessed, along with geophysical and geochemical anomalism on the prospects is taken in account in this part of the assessment.

Calculated Technical Valuation

The combination of the basic acquisition cost, actual mineralisation, and anomalism within the tenements is calculated to form an overall valuation of the prospects.

3.4.2 Kildanga Project Technical Valuation

Application of Modified Kilburn Ratings to the Kildanga Project (EPM 19366) results in a range of estimated Technical Values from $1.93M to $3.77M.

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3.4.3 Marlborough Project

Application of Modified Kilburn Ratings to the Marlborough Project ((EPM 17768) results in a range of estimated Technical Values from $0.58M to $2.57M.

3.4.4 Heazlewood River Project

Application of Modified Kilburn Ratings to the Heazlewood River Project (EL 34467) results in a range of estimated Technical Values from $0.08M to $0.41M.

3.4.5 Total AusNiCo Ltd Properties Technical Valuation

Overall the AusNiCo Ltd mineral assets in Queensland are estimated to have a Technical value in the range of $2.59M - $6.75M.

The AusNiCo Ltd mineral assets in Tasmania are estimated to have a Technical value in the range of $0.08M to $0.41M.

Complete details are shown in Table 2.

3.4.6 Total AusNiCo Ltd Properties Fair Market Valuation

After consideration of the data collected from the Technical Valuation and the overall market conditions Mining One assess the Fair Market Value for the AusNiCo Assets to be in the range $1.79M - $3.75M, with a preferred Fair Market Value of $1.96M. The Fair Market Valuation is assessed as falling in the lower end of the Technical Valuation range due to some uncertainty about the economic significance of the mineralisation identified to date at the Kildanga Project, and some access uncertainty arising from possible environmental limitations on any mine development in the area. Mining One assesses that it is unlikely the assets would attract more than this Fair Market Value if subject to a sale.

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AusNiCo Ltd

MODIFIED KILBURN RATINGS -QUEENSLAND MINERAL ASSETS

Exploration Permit			BAC	Joint	Proximityto Off-Property:				PropertyFeatures										Technical
				Venture	Geophys or	Mineralisation		Geophysical		Geochemical		Geological				Mineralisation			Valuation
Name	No	Sub	$	Factor	Geochem	rank	metals	Targets		Targets		Patterns		rank		metals	resources		$
		Blocks			Targets			low	high	low	high	low	high	low	high		low	high	low	high
				a	b	c		d1	d2	e1	e2	f1	f2	g1	g2		h1	h2	i1	i2

Pembroke	19366	98	160,676	1	1	1		1.5	1.5	2	2.5	2	2.5	2	2.5	Ni,Cu-Au-Ag	1	1	1,928,112	3,765,844


Marlborough	17768 #	50	82,369	1	1.3	2	Marl. Ni	1.1	1.5	1.5	2	1.5	2	1.1	2	Ni	1	1	583,049	2,569,913
																			2,511,161	6,335,757
	# subject to Native Title clearance


			MODIFIED KILBURN RATINGS - TASMANIA MINERAL ASSETS

Exploration Licence			BAC	Joint	Proximityto Off-Property:			PropertyFeatures											Technical
				Venture	Geophys or	Mineralisation		Geophysical		Geochemical		Geological				Mineralisation			Valuation
Name	No	sqr. km	$	Factor	Geochem	rank	metals	Targets		Targets		Patterns		rank		metals	resources		$
					Targets			low	high	low	high	low	high	low	high		low	high	low	high
				a	b	c		d1	d2	e1	e2	f1	f2	g1	g2		h1	h2	i1	i2


Heazlewood	34467	75	18,394	1	1	1		1.3	1.5	1.5	2.5	1.5	2	1.5	3	Ni,PGM,Au	1	1	80,704	413,865
																			80,704	413,865

			BAC : Basic Acquisition Cost - calculated from the application fee + annual rent + minimum expenditure

Table 2: Total AusNiCo Ltd Properties Valuation

P:\1816_G Taronga_AusNiCo_Valuation\WPO\3388v4.doc

4 REFERENCES

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ASIC 2011: Content of Expert Reports; Regulatory Guide 111. Australian Securities & Investments Commission.

JORC 2004: Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Prepared by Joint Ore Reserves Committee (JORC) of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia

VALMIN 2005: Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports. Prepared by the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Mineral Industry Consultants Association with the participation of ASIC, ASX, MCA, PESA and SAA.

P:\1816_G Taronga_AusNiCo_Valuation\WPO\3388v4.doc

91 -

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Annexure B – Announcement of the Offer (including key terms of the Merger Implementation Deed)

Please note, in relation to the Announcement below, that:

since this announcement the Merger Implementation Deed has been amended, as a result the break fee amount is $60,000 not $90,000; and
the reference to VWAP in the footnote below should be considered in respect of the further clarification provided in section 1.1 of the Bidder’s Statement.

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Taronga Mines Limited to merge with AusNiCo Limited (ASX: ANW)

1[st] November 2012

The board of Taronga Mines Limited (Taronga) is pleased to announce the proposed merger of Taronga with ASX listed company AusNiCo Limited (AusNiCo). The proposed transaction will create a company with a foundation of base metals assets, including the world class Taronga Tin Project in northern New South Wales, Australia.

Transaction Highlights

Taronga shareholders will receive 5 AusNiCo shares for every 1 Taronga share, equivalent to $0.12[2] per Taronga share, or a 20% premium on the price per share offered at Taronga’s last capital raising which occurred in February 2012.
Provides Taronga shareholders with a listing event for their Taronga shares, allowing them to buy and sell Taronga shares on the Australian Securities Exchange (ASX).
Gives Taronga access to broader capital markets, providing greater capacity to raise funding to progress the exploration and development of the Company’s assets.
Provides Taronga shareholders with exposure to a suite of Australian nickel exploration assets.
Provides AusNiCo shareholders with exposure to an advanced Australian tin asset.
Taronga board members John Bovard and Richard Willson will join the AusNiCo Board, and Taronga CEO Peter Williams will join AusNiCo as CEO.

2 Implied values are calculated by multiplying an AusNiCo volume weighted average price (VWAP) over the last 6 months of $0.024 by the offer ratio of 5 AusNiCo shares for each Taronga share. Taronga has approximately 57.6 million shares on issue

Target’s Statement of Taronga Mines Limited

92 -

The Offer

AusNiCo Limited (ASX:ANW) intends to make an offer to acquire all the issued shares of the public unlisted tin exploration company Taronga, with Taronga shareholders to be offered 5 AusNiCo shares for every 1 Taronga share (the Offer).

The Offer implies an estimated value of $0.12 per Taronga share or approximately $6,921,600 million for the whole of Taronga’s issued capital.

Taronga currently has 13,100,000 options on issue each exercisable at $0.20 (Taronga Options). AusNiCo proposes to offer 5 AusNiCo options exercisable at $0.04 per option (with an expiry date of 30 June 2015) to existing Taronga Option holders in exchange for the cancellation of every Taronga Option held.

For Taronga shareholders, the Offer represents a premium of 20% to the last capital raising conducted by Taronga in February 2012 at $0.10 per share.

The transaction will be implemented through an off-market takeover bid for Taronga, which will be subject to certain conditions summarised in Schedule 1, including a 90% minimum acceptance condition.

Merger Rationale

The Board of Taronga considers there is a compelling commercial rationale for the transaction including;

Delivers Taronga shareholders a 20% premium to the last capital raising price.
Provides Taronga shareholders a listing event for their Taronga shareholdings in an equities market that has been difficult for Initial Public Offerings.
Enables Taronga shareholders to retain an exposure to the world class Taronga Tin Project and benefit from potential upside as the development of the project is progressed.
Provides access to a broader capital market.

Please refer to the AusNiCo announcement regarding their rational for the transaction.

Independent Directors’ Unanimous Recommendation

Taronga’s independent directors have resolved to unanimously recommend that Taronga shareholders accept the Offer, in the absence of a superior proposal.

The Taronga directors intend to accept the Offer in respect of the Taronga shares they hold or control, in the absence of a superior proposal.

Merger Implementation Deed

Taronga and AusNiCo have entered into a Merger Implementation Deed (MID) to progress the Offer. A brief summary of the key terms of the MID is attached at Schedule 2.

Taronga has engaged Porter Davies as legal adviser in relation to the Offer.

AusNiCo has engaged HopgoodGanim as legal adviser in relation to the Offer.

Background information on Taronga and AusNiCo

About Taronga Mines Limited (Taronga)

Taronga is an Australian based exploration company focused on the development of the Taronga Tin Project and a suite of exploration assets, located at Emmaville in northern NSW.

Target’s Statement of Taronga Mines Limited

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The Taronga Tin Project is a world class tin project, ranked the 14[th] largest undeveloped tin project globally[3] . A pre-feasibility study was completed by Newmont Holdings Pty Ltd (“Newmont”) as the manager of the Taronga Join Venture between 1978 and 1983, and included drilling in excess of 33,000m of diamond core and percussion holes to generate a “historic”, pre-JORC resource estimate of 46,757,000 tonnes at 0.145% Sn. Extensive metallurgical test work, including pilot plant trials, demonstrated (i) the amenability of the ore to pre-concentration, upgrading the ore to a concentrator feed of approximately 0.46% Sn, 0.18% Cu and 11g/t Ag; (ii) a predicted tin recovery of 69%; and (iii) an average tin concentrate grade >55% Sn with few impurities.

More recent work completed by Taronga has identified a number of areas of key upside, including:

i. Increased in-situ grade – comparisons of Newmont data on bulk grade of underground sampling and adjacent drill holes supports the potential for actual resource grades to be higher than estimated;
ii. Higher grades at depth – based upon a better understanding of the geological model, supported by historic drilling data at depth, including 2m at 1.0% Sn from 351m in DG402-7; 1m at 2.6% Sn from 169m and 1m* at 2.1%Sn from 213m in hole DG410-3E (Note * down hole length, true width is unknown;
iii. Increased tin recovery – application of modern comminution and gravity separation equipment developed since the Newmont work was completed;
iv. By-product credits - recovery of copper and silver compared to nil by Newmont; and
v. Exploration potential - McDonalds and Emerald are advanced exploration targets within trucking distance of the Taronga Tin Project and could provide incremental tonnage.

Taronga also holds a portfolio of granted Exploration Licenses surrounding the Taronga Tin Project that are highly prospective for tin, silver, copper and a number of other metals.

Tin prices have recently strengthened on the back of a forecast global supply deficit, and are trading around USD$20,000/t. Tin remains the principal metal used in electronics solder, with future applications being developed in Lithium batteries and stainless steel.

Further information on Taronga is available at www.tarongamines.com.au

About AusNiCo

AusNiCo is an Australian-based exploration company focused on the discovery and development of nickel suphide deposits.

AusNiCo holds a 100% interest in EPM19366 (Kilkivan Project) and application EPM17768 (Marlborough Project) in Queensland as well as EL50/2011 (Heazelwood Project) in north west Tasmania. The total area includes 524 km[2] prospective for nickel mineralisation.

AusNiCo was incorporated on 1 December 2006 and listed on ASX on 21 October 2010.

Further information on AusNiCo is available at www.ausnico.com.au

Competent Persons Statement

The information in this document that relates to the minerals prospectivity of Taronga Mines Ltd’s Exploration Licences is based on information compiled by Mr Bruce Pertzel. Mr Pertzel is a Fellow of the AusIMM and is a principal of Pertzel Tahan & Associates Pty Ltd. Mr Pertzel has sufficient experience which is relevant to the type of deposit under consideration and to the activity 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 Pertzel consents to the inclusion in the announcement of the matters based on his information in the form and context in which it appears.

3 CRU Tin Monitor June 2012

Target’s Statement of Taronga Mines Limited

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The historic, pre-JORC resources quote is based on a 1984 report available at http://digsopen.minerals.nsw.gov.au. No reference is made to categorisation of mineralisation in the report, though details are provided on the work program undertaken. Taronga Mines Ltd in conjunction with its consultants has prepared a work program which it considers will be sufficient to enable the historic, pre-JORC resource to be reported in accordance with the JORC Code upon completion.

Schedule 1: Offer conditions

The Offer (and the completion of the merger) is subject to the following key conditions:

AusNiCo obtaining a relevant interest in at least 90 per cent of Taronga shares prior to the end of the offer period;
the execution by AusNiCo, Taronga and each of the holders of the existing Taronga options of a deed under which all existing Taronga options are cancelled and the holders of those options are instead issued with 5 AusNiCo options for each Taronga option, and the obtainment of all AusNiCo shareholder approvals and regulatory approvals required in connection with the issue of AusNiCo options in accordance with that deed;
AusNiCo shareholders passing the necessary resolutions to complete the Merger including but not limited to those resolutions necessary to satisfy the requirements of Listing Rules 10.1 and 11.1.2;
any other necessary regulatory approvals being obtained on an unconditional basis and remaining in full force and effect;
both AusNiCo and Taronga confirming in writing that they have completed and are satisfied (acting reasonably) with their respective due diligence investigations;
no regulatory action occurring which may:
a. restrain, prohibit or otherwise materially adversely impact the making of the Offer or the completion of the merger, the acquisition of Taronga shares by AusNiCo; or
b. require the divestiture by AusNiCo of any Taronga shares or options, or the divestiture of any assets of Taronga (or its related bodies corporate) or AusNiCo (or its related bodies corporate) or otherwise;
no prescribed occurrences , regulated events or material adverse changes occurring in respect of Taronga or AusNiCo;
no material mergers, acquisitions, disposals or new commitments having been undertaken on by Taronga; and
no change of control or similar rights under agreements to which Taronga is a party, being exercised or any person stating an intention to exercise such rights such that it would have a material impact on Taronga or its business.

AusNiCo may waive some of the conditions in accordance with the terms of the Offer.

This is only a summary of the key conditions. The full conditions to the Offer are proposed to be set out in Schedule 2 of the Bidder’s Statement prepared by AusNiCo, a copy of which will be provided to ASX in due course.

Schedule 2: Key terms of the Merger Implementation Deed

AusNiCo and Taronga have entered into a Merger Implementation Deed (MID) in connection with the Offer.

A brief summary of some of the key provisions of the MID is set out below.

Exclusivity arrangements and matching rights

Taronga has agreed not to:

take any action which may lead to a Target Competing Proposal (as defined in the MID); or

Target’s Statement of Taronga Mines Limited

95 -
participate in negotiations or discussions, or give or make available information (including access to perform due diligence) in respect of a Target Competing Proposal (no talk condition).

The no talk condition is subject to a fiduciary carve-out in respect of Superior Proposals which is customary for a takeover offer of this nature.

Taronga has agreed to promptly notify AusNiCo if it becomes aware of any negotiations or discussions or attempts to initiate negotiations or discussions in respect of a competing proposal.

If Taronga receives a Target Competing Proposal that the Taronga board considers may be a superior proposal, Taronga must immediately notify AusNiCo of the terms of the superior proposal and must allow AusNiCo not less than five Business Days from the date of the notice in which to propose terms to vary the Offer to match or better the superior proposal.

Promotion of Offer

Taronga has certain standard obligations to promote the Offer, such as recommending the acceptance of the Offer, using reasonable endeavours to procure that the Taronga shareholders accept the Offer made to them by AusNiCo, and meeting and communicating with shareholders of AusNiCo and Taronga (subject to certain qualifications).

Warranties

Each of Taronga and AusNiCo give certain warranties to the other under the MID, including warranties in relation to their shareholdings as at the date of the MID.

Termination

Either party may terminate the MID if:

the other party is in material breach of the MIA and such breach continues after the expiry of ten Business days’ notice to remedy the breach;
AusNiCo withdraws its Offer for non-satisfaction of certain bid conditions;
all necessary regulatory approvals are not obtained in connection with the Offer;
any regulatory action occurs which may:
a. restrain, prohibit or otherwise materially adversely impact the making of the Offer or the completion of the merger, the acquisition of Taronga shares by AusNiCo; or
b. require the divestiture by AusNiCo of any Taronga shares or options, or the divestiture of any assets of Taronga (or its related bodies corporate) or AusNiCo (or its related bodies corporate) or otherwise;
AusNiCo’s shareholders do not approve the necessary resolutions in connection with the Offer; or
AusNiCo, Taronga and each of the holders of the existing Taronga options do not execute a deed which provides that all existing Taronga options are cancelled and the holders of those options are issued with 5 AusNiCo options for each Taronga option.

In addition, Taronga may terminate the MID if:

a Bidder Competing Proposal (as defined in the MID) is publically announced;
an Independent Expert appointed by Taronga concludes the Offer is not fair or reasonable;
Taronga is not satisfied with its due diligence investigations of AusNiCo; or
a material adverse change or prescribed occurrence occurs in respect of AusNiCo.

Target’s Statement of Taronga Mines Limited

96 -

In addition, AusNiCo may terminate the MID if:

a Superior Proposal (as defined in the MID) is publically announced by a third party in respect of Taronga and the proponent of the Superior Proposal receives acceptances in respect of not less than 50% of Taronga securities;
an Independent Director of Taronga (subject to certain qualifications) does not recommend the merger to Taronga security holders, withdraws his recommendation, does not accept the Offer in respect of the Taronga shares they hold or control, or recommends a Superior Proposal;
AusNiCo is not satisfied with its due diligence investigations of Taronga; or
a material adverse change or prescribed occurrence occurs in respect of Taronga.

Break fee payable by Taronga

Taronga has agreed to pay AusNiCo a break fee of $90,000 if AusNiCo terminates the MID because:

Taronga is in material breach of the MID and that material breach is not remedied by AusNiCo within ten Business Days of receiving notice of the breach from Taronga;
a Superior Proposal (as defined in the MID) for Taronga is publically announced by a third party and the relevant third party receives acceptances in respect of not less than 50% of Taronga’s securities (and AusNiCo fails to exercise its matching rights (discussed above) in response to that Superior Proposal);
an Independent Director of Taronga (subject to certain qualifications) does not recommend the merger to Taronga security holders, withdraws his recommendation, does not accept the Offer in respect of the Taronga shares they hold or control, or recommends a Superior Proposal;
there is a material adverse change or prescribed occurrence occurring in relation to Taronga on or before 5 pm on the date the Offer closes.

Break fee payable by AusNiCo

AusNiCo has agreed to pay Taronga a break fee of $90,000, if Taronga terminates the MID because:

AusNiCo is in material breach of the MID and that material breach is not remedied by Taronga within ten Business Days of receiving notice of the breach from AusNiCo;
a Bidder Competing Proposal (as defined in the MID) is publically announced;
there is a material adverse change or prescribed occurrence occurring in relation to AusNiCo on or before 5 pm on the date the Offer closes.

Bidder Competing Proposal

AusNiCo must:

suspend any existing negotiations or discussions in respect of a Bidder Competing Proposal;
not, directly or indirectly solicit, invite, facilitate or encourage any enquiries, negotiations or discussions with a view to obtaining an expression of interest, proposal or offer in relation to a Bidder Competing Proposal; and
not:
a. negotiate or enter into; or
b. participate in negotiations or discussions in relation to,

Target’s Statement of Taronga Mines Limited

97 -

a Bidder Competing Proposal, even if the Bidder Competing Proposal is not solicited by AusNiCo or publicly announced.

Other limitations

Taronga has agreed to conduct its business in the ordinary course and will not, without AusNiCo’s consent (such consent not to be unreasonably withheld) acquire or dispose of assets, or enter into any other agreement where the amount payable under the agreement or the value of the subject matter of the agreement is in excess of $100,000 in aggregate.

Taronga must consult with, and obtain AusNiCo’s consent, in respect of certain material business decisions.

Target’s Statement of Taronga Mines Limited

98 -

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Annexure C – Conditions to the Offer

The definitions for the defined terms in this Annexure are set out in section 12 of the Bidder’s Statement.

a) Minimum Acceptances

At the end of the Offer Period, AusNiCo has a relevant interest in at least 90% of Taronga Shares.

b) AusNiCo Shareholder approval

Before the end of the Offer Period AusNiCo Shareholders approving the Resolutions.

c) Option Cancellation and Replacement Deed

The execution by the Bidder, the Target and each of the Target Optionholders of the Option Cancellation and Replacement Deeds.

d) Regulatory Approvals

All necessary Regulatory Approvals are granted, given, made or obtained on an unconditional basis, remain in full force and effect in all respects, and do not become subject to any notice, intimation or indication of intention to revoke, suspend, restrict, modify or not renew the same.

e) No regulatory actions

Between the date of the Announcement Date of the Takeover Bid and the Closing Date, there being no Regulatory Act which may:

1) restrains or prohibits (or if granted could restrain or prohibit, or otherwise materially impact the making of the Offer or the completion of the Merger (whether subject to conditions or not); or
2) require the divestiture by AusNiCo of any the Target Securities, or the divestiture of any assets of the Target, or its respective Related Bodies Corporate.

f) Material adverse change

Between the Announcement Date and the Closing Date (each inclusive) there being no Material Adverse Change in relation to the Target or any subsidiary of the Target.

g) No material mergers, acquisitions, disposals or new commitments

Between the Announcement Date and the end Closing Date (each inclusive), neither Taronga nor any subsidiary of Taronga:

Target’s Statement of Taronga Mines Limited

99 -
1) consolidates with or merges with or into any other person (other than, in the case of a subsidiary of the Taronga, a wholly-owned subsidiary of the Taronga) or announces an intention to do so;
2) acquires, offers to acquire or agrees to acquire one or more companies, businesses or assets (or any interest in one or more companies, businesses or assets) for an amount in aggregate greater than $100,000, or announces an intention to do so;
3) disposes, offers to dispose or agrees to dispose of one or more companies, businesses or assets (or any interest in one or more companies, businesses or assets) for an amount, or in respect of which the book value (as recorded in Taronga’s consolidated statement of financial position as at 30 June 2012) is, in aggregate, greater than $100,000, or announces an intention to do so;
4) with the exception of any ongoing expenditure required to meet minimum expenditure requirements to maintain tenements in good standing, enters, offers to enter or agrees to enter into any transaction or becomes the subject of any obligation which would require the capital expenditure, the foregoing of revenue or may result in the Taronga or any subsidiary of the Taronga incurring any actual or contingent liability of an amount which is, in aggregate, more than $100,000, or announces its intention to do so;
5) enters, offers to enter or agrees to enter into, any agreement, joint venture or partnership, farm-in agreement, management agreement or commitment which would require expenditure, or the foregoing of revenue of an amount which is in aggregate is greater than $100,000, other than in the ordinary course of business, or makes an announcement in relation to such entry, offer or agreement;
6) disposes of, offers to dispose of or agrees to enter into any agreement, joint venture, partnership, farm-in agreement, management agreement or commitment involving the disposal of any legal beneficial or economic interest or right to or in connection with any mining tenements held by the Target or any of the Target’s subsidiaries; carries on its business otherwise than in the ordinary and usual course;
7) has threatened or commenced against it any material claims or proceedings in any court or tribunal (including a petition for winding up or an application for appointment of a receiver or receiver and manager).

h) No Prescribed Occurrences

Between the Announcement Date and the Closing Date (each inclusive) there being no Prescribed Occurrence happens in respect of Taronga or a subsidiary of Taronga.

i) Change of control and other rights under certain agreements

Between the Announcement Date and the Closing Date (each inclusive), no person exercises or purports to exercise or states an intention to exercise, any rights under any provision of any agreement or other instrument to which Taronga or any subsidiary of Taronga is a party or by or to which Taronga or any subsidiary of Taronga or any of its assets may be bound or be subject, which results or could result to an extent which is material in the context of Taronga and Taronga's subsidiaries taken as a whole, in:

1) any monies borrowed by Taronga or any subsidiary of Taronga being or becoming repayable or being capable of being declared repayable immediately or earlier than the repayment or maturity date stated in such agreement or other instrument;
2) any other such agreement or other instrument being terminated or modified or any action being taken or arising thereunder;

Target’s Statement of Taronga Mines Limited

100 -
3) the interest or rights of Taronga or any subsidiary of Taronga in any firm, joint venture, trust, corporation or other entity (or any arrangements relating to such interest) being terminated or modified; or
4) the business of Taronga or any subsidiary of Taronga with any other person being adversely affected; or
5) Taronga or a subsidiary of Taronga being required to dispose of or offer to dispose of, any material asset of the Taronga Group or acquire any asset, as a result of the acquisition of Taronga Shares by AusNiCo.

Target’s Statement of Taronga Mines Limited

AI assistant

CLARA RESOURCES AUSTRALIA LTD — M&A Activity 2012

64598_rns_2012-11-29_5027f17f-bd56-493b-8392-5f1c5f3fdbd2.pdf

ASX Announcement

30 November 2012

Merger with Taronga Mines Limited

Receipt of Target Statement

TARONGA MINES LIMITED

A.C.N. 126 854 288

Target’s Statement

Important Information

Nature of this document

Defined terms and interpretation

Disclaimer regarding forward-looking statements

Disclaimer as to Information

Independent Expert’s Report

Maps and Diagrams

Privacy

Notice to Foreign Shareholders

No Account of Personal Circumstances

Enquiries about the Offer

Table of Contents and Key Dates

TABLE OF CONTENTS

KEY DATES

Independent Chairman’s letter

THE OFFER

WHY YOU SHOULD ACCEPT THE OFFER

INDEPENDENT DIRECTOR’S UNANIMOUS RECOMMENDATION

1. How to ACCEPT the Offer and your choices as a Taronga Shareholder

1.1 DETAILS OF THE OFFER

1.2 ACCEPTANCE OF THE OFFER

1.3 CLOSING DATE FOR ACCEPTANCE

1.4 IF YOU CHOOSE NOT TO ACCEPT THE OFFER

1.5 SELLING YOUR TARONGA SHARES

2. Key reasons why you should accept the Offer

2.1 THE INDEPENDENT EXPERT HAS CONCLUDED THE OFFER IS NOT FAIR BUT REASONABLE

2.2 THE OFFER IS UNANIMOUSLY RECOMMENDED BY THE INDEPENDENT DIRECTORS

2.3 PARTICIPATION IN MERGED GROUP

b) Diversified exposure

c) Continuing participation

2.4 OFFER REPRESENTS AN APPROPRIATE VALUE FOR YOUR TARONGA SHARES

2.5 NO SUPERIOR PROPOSAL HAS BEEN RECEIVED

2.6 LIQUIDITY FOR TARONGA SHARES

2.7 CGT ROLLOVER RELIEF

2.8 OTHER MATTERS

3. Important matters to be considered by Taronga Shareholders

3.1 INFORMATION ON TARONGA

Overview of Taronga Mines Limited

Company structure

Location

Project Details

b) Torrington (EL 7800)

c) Emmaville (EL 6839)

d) Pound Flat (EL7801)

3.2 INFORMATION OF AUSNICO

3.3 PROFILE OF THE MERGED GROUP

3.4 SUPERIOR PROPOSAL

3.5 TARONGA FUNDING REQUIREMENTS

3.6 LIKELIHOOD OF THE CONDITIONS BEING SATISFIED

3.7 STRATEGY OF AUSNICO FOLLOWING THE PROPOSED MERGER

Intentions upon acquiring control but less than 90% of the Taronga Shares

3.8 RISKS FACTORS

3.9 TAXATION

3.10 ESCROW

3.11 FOREIGN SHAREHOLDERS

4. Independent Directors’ recommendations and Directors’ interests

4.1 TARONGA DIRECTORS

4.2 INDEPENDENT DIRECTORS’ RECOMMENDATION

4.3 TARONGA DIRECTORS’ CURRENT INTENTIONS

4.4 TARONGA DIRECTORS’ INTERESTS IN TARONGA AND AUSNICO

4.5 TARONGA DIRECTORS’ DEALINGS IN TARONGA AND AUSNICO

4.6 BENEFITS AND AGREEMENTS

Retirement Benefits

Agreements connected with or conditional on the Offer

Interests of Taronga Directors in contract with AusNiCo

Proposed board positions in AusNiCo

4.7 PERSONAL CIRCUMSTANCES

5. Important information about the Offer

5.1 SUMMARY OF THE OFFER FOR TARONGA SHARES

5.2 OFFER CONSIDERATION FOR TARONGA SHARES

CLARA RESOURCES AUSTRALIA LTD M&A Activity 2012