COKAL LIMITED — Capital/Financing Update 2006

May 31, 2006

Wednesday, 31 May 2006

MARKET ANNOUNCEMENT

Recapitalisation

The Company is pleased to announce that it has signed an agreement with representatives of a syndicate of investors (the Investors) to recapitalise the Company as a preliminary step towards, subject to shareholder approval and compliance with Australian Stock Exchange (ASX) listing rules, the re-admission of AEA to the ASX.

A General Meeting to approve these transactions will shortly be called by the Company. The meeting documentation will detail the proposed transactions in full and will include a report on the transactions by an independent expert. On passing of the relevant resolutions at the General Meeting, the current Board of Directors will resign and be replaced by a new Board of Directors nominated by the Investors (Incoming Board).

At the meeting, shareholder approval will be sought for the Company to issue 80,000,000 new shares at an issue price of 0.3 cents per share to the Investors (raising \$240,000) and 52,500,000 options with an exercise price of 0.4 cents per share and a 5 year term to members of the Incoming Board.

Shareholders will also be asked to elect the Incoming Board members as Directors of the Company.

It is the intention of the Incoming Board to subsequently introduce one or more projects into the Company and then seek re-admission to the ASX.

If the transactions above are approved, the Company will be in a much stronger financial position with net assets of approximately \$0.2 million.

Major shareholders Queste Communications Limited (QUE) and Strike Resources Limited (SRK) who currently hold 10,669,428 shares (17.3%) and 20,002,860 shares (32.3%) in the Company respectively, have agreed to sell their holdings to the Investors subject to shareholder approval.

The Incoming Board members will be as follows:

$\mathbf{1}$ . Harjinder Kehal

Mr Kehal with a Bachelor of Science (Hons) from the University of Western Australia and Master of Mineral and Energy Economics from Macquarie University is a geologist with over 20 years experience in precious metals, industrial minerals and base metals within Australia, China and Vietnam. He has extensive experience in project evaluation, feasibility studies, joint venture negotiations and statutory reporting.

www.alteracapital.com.au

ALTERA CAPITAL LIMITED

A.B.N. 55 082 541 437

Level 14, 221 St Georges Terrace, Perth WA 6000 $T$ | + 61 (8) 9214 9787 $F$ | + 61 (8) 9322 1515

Mr Kehal was instrumental in the discovery of the one million ounce Golden Cities gold deposit, near Kalgoorlie, Western Australia in 1998 in his capacity as Exploration Manager with ASX listed AMX Resources Ltd. He has also played a major part in the discovery of other gold deposits, including Hurricane/Repulse in the Northern Territory and Transvaal, King Street, Back of Beyond and Jupiter in Western Australia. He has wide experience in presentations at board level and to analysts, brokers and fund managers. Mr Kehal is responsible for the day to day activities of Hub Resources Pty Ltd. He is currently also the Chief Operating Officer of ASX listed company AXG Mining Ltd.

$\overline{2}$ Godfrey Rule

Mr Rule with a Bachelor of Commerce from the University of Western Australia has over 30 years experience in the merchant banking and resource industries in Australia and Overseas. He has been a founding director of a number of ASX listed resource companies including Gloucester Coal Ltd and AMX Resources Ltd. Until recently he was a director of Western Pacific, Symetry and Select Asset Management. He is currently the Chairman of MMC Asset Management. Until early 2005 he was a director of Orient Resources Holdings Pty Ltd with projects in China.

3. Bradley Abbott

Mr Abbott is the founding director of Abbotts Pty Ltd, a Chartered Accounting Practice based in Perth, Western Australia. The Practice also undertakes management consulting and corporate advisory services in Western Australia. He has been in public accounting since 1975 with main areas of specialty of small business, agricultural, mining and estate planning. Mr Abbott holds a Bachelor of Business degree from Curtin University, is a Fellow of the Taxation Institute of Australia and the Institute of Chartered Accountants and is a registered company auditor.

Mr Abbott has had close involvement in the corporate management of business' involved in manufacturing equipment for the mineral processing industry. He is Chairman of Palmteg Ltd, a past director of Orient Resources Holdings Pty Ltd and several other large private companies.

$\mathbf{4}$ Jeremy Shervington

Mr Shervington operates a legal practice in Western Australia. He specialises in the laws regulating companies and the securities industry in Australia. Mr Shervington has almost 25 years experience as a lawyer, gained since his admission as a Barrister and Solicitor of the Supreme Court of Western Australia. Mr Shervington has since 1985 served as a director of various ASX listed companies as well as a number of unlisted public and private companies. Mr Shervington is currently a director of the following ASX listed companies: Prairie Downs Metals Ltd, Australian Zircon NL, BioProspect Limited and Biron Capital Limited.

Further information:

Victor Ho Company Secretary T1(08) 9214 9787 E I vho@alteracapital.com