CLARA RESOURCES AUSTRALIA LTD — M&A Activity 2012

Oct 31, 2012

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ASX Announcement

1 November 2012

AusNiCo Limited to Merge With Taronga Mines Limited

Highlights

• AusNiCo to merge with Taronga Mines Ltd to create an advanced stage company with exposure to Tin, Nickel, Copper and Gold.

• Taronga holds a 100% interest in the Taronga Tin Project which is ranked the 14th largest undeveloped tin project globally.[1]

The Board of AusNiCo Limited ( AusNiCo, ASX:ANW ) is pleased to announce an agreed merger transaction with Taronga Mines Ltd ( Taronga ) to create a company with an advanced-stage tin project with a suite of complementary nickel sulphide, copper and gold projects.

Taronga holds a 100% interest in the Taronga Tin Project as well as 368km[2] of granted exploration licences prospective for tin, tungsten, silver and copper. The Taronga Tin Project is a world class tin project, ranked the 14[th] largest undeveloped tin project globally[1] . A pre-feasibility study was completed between 1978 and 1983, including drilling in excess of 33,000m of diamond core and percussion holes. Taronga’s projects are located in the New England district of northern NSW.

Transaction Highlights

• Provides AusNiCo shareholders with exposure to an advanced-stage project which has previously had a pre-feasibility study completed over the deposit.

• Provides exposure to additional commodities, primarily tin, which the Board believes has robust supply/demand fundamentals.

• Brings to AusNiCo a well credentialed management and exploration team from Taronga lead by Mr Peter Williams, who will join AusNiCo as CEO.

• AusNiCo Board to be complimented by the appointment of two (2) Taronga Board members (John Bovard and Richard Willson) who bring a strong project development skill set to bear.

• Provides a potential valuation uplift to AusNiCo shareholders by committing to a focused exploration effort at the Taronga Tin Project which leverages off historical work.

• Maintained exposure to AusNiCo’s existing suite of early stage nickel sulphide exploration projects in Queensland and Tasmania.

1 CRU Tin Monitor April 2012

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

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The Offer

AusNiCo Limited (ASX:ANW) will 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 a value of $0.12 per Taronga share or approximately $6.9 million for all of Taronga’s issued capital[2] .

Taronga 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 exercisable by 30 June 2015 to 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 offer for Taronga, which will be subject to certain conditions summarised in Schedule 1, including a 90 per cent minimum acceptance condition.

AusNiCo expects to finalise its Bidder’s Statement shortly.

Merger Rationale

The Board of AusNiCo considers there to be a compelling strategic rationale for the transaction, including:

• Acquiring an advanced-stage project that can be brought into the development phase following the completion of a scoping study in 2013.

• Exposure to a new suite of commodities including tin.

• Bringing to AusNiCo a well credentialed management and exploration team lead by Mr Peter Williams.

• Exploration upside from an additional 368km[2] of exploration tenements prospective for tin, tungsten, silver and copper.

• Continued exposure to AusNiCo’s existing nickel sulphide projects in Queensland and Tasmania.

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.

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

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Taronga’s 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 for their own holdings of Taronga shares, 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 summary of the MID is attached at Schedule 2.

AusNiCo has engaged HopgoodGanim as legal adviser.

Taronga has engaged Porter Davies as legal adviser.

Background Information on AusNiCo and Taronga

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 EPMA177768 (Marlborough Project) in Queensland as well as EL50/2011 (Heazelwood Project) in north west Tasmania. The total area includes 524km[2] prospective for nickel mineralisation.

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

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

About Taronga

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

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 between 1978 and 1983, including drilling in excess of 33,000m of diamond core and percussion holes.

3 CRU Tin Monitor April 2012

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

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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 global supply deficit, and are trading above 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

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On behalf of the Board KM Schlobohm Company Secretary

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 Member 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.

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

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Schedule 1: Offer Conditions

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

1. AusNiCo obtaining a relevant interest in at least 90 per cent of Taronga shares prior to the end of the offer period;

2. 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;

3. 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;

4. any other necessary regulatory approvals being obtained on an unconditional basis and remaining in full force and effect;

5. both AusNiCo and Taronga confirming in writing that they have completed and are satisfied (acting reasonably) with their respective due diligence investigations;

6. no regulatory action occurring which may:

7. a. restrain, prohibit or otherwise materially adversely impact the making of the Offer or the completion of the merger; or

8. 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;

9. no prescribed occurrences , regulated events or material adverse changes occurring in respect of Taronga or AusNiCo;

10. no material mergers, acquisitions, disposals or new commitments having been undertaken on by Taronga; and

11. 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.

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

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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:

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

2. 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 (as that term is defined in the MID) 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:

1. the other party is in material breach of the MIA and such breach continues after the expiry of ten Business Day’s notice to remedy the breach;

2. AusNiCo withdraws its Offer for non-satisfaction of certain bid conditions;

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

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1. all necessary regulatory approvals are not obtained in connection with the Offer;

2. any regulatory action occurs which may:

3. a. restrain, prohibit or otherwise materially adversely impact the making of the Offer or the completion of the merger; or

4. 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;

5. AusNiCo’s shareholders do not approve the necessary resolutions in connection with the Offer; or

6. 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:

1. a Bidder Competing Proposal (as defined in the MID) is publically announced;

2. an Independent Expert appointed by Taronga concludes the Offer is not fair or reasonable;

3. Taronga is not satisfied with its due diligence investigations of AusNiCo; or

4. a material adverse change or prescribed occurrence occurs in respect of AusNiCo.

In addition, AusNiCo may terminate the MID if:

1. 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;

2. an Independent Director of Taronga (subject to certain qualifications) does not recommend the merger to Taronga securityholders, withdraws his recommendation , or recommends a Superior Proposal;

3. AusNiCo is not satisfied with its due diligence investigations of Taronga; or

4. 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:

1. 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;

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

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1. 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);

2. an Independent Director of Taronga (subject to certain qualifications) does not recommend the merger to Taronga securityholders, withdraws his recommendation, does not accept the Offer in respect of the Taronga shares they hold or control, or recommends a Superior Proposal;

3. 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:

1. 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;

2. a Bidder Competing Proposal (as defined in the MID) is publically announced;

3. 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:

1. suspend any existing negotiations or discussions in respect of a Bidder Competing Proposal;

2. 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

3. not:

4. a. negotiate or enter into; or

5. b. participate in negotiations or discussions in relation to,

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

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

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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.

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