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COKAL LIMITED Proxy Solicitation & Information Statement 2007

Oct 29, 2007

64656_rns_2007-10-29_2000aac3-9c33-40f1-99c0-46789d43d118.pdf

Proxy Solicitation & Information Statement

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ALTERA CAPITAL LIMITED (ACN 082 541 437)

NOTICE OF MEETING

AND

EXPLANATORY MEMORANDUM

IMPORTANT INFORMATION

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay.

If you wish to discuss any aspects of this document with the Company contact Mr Godfrey Rule on telephone 0413 510 530

Legal Adviser to the Company

Jeremy Shervington Barrister & Solicitor 52 Ord Street WEST PERTH WA 6005 Tel: (08) 9481 8760 Fax: (08) 9481 5142 E-mail: [email protected]

TABLE OF CONTENTS

  • A NOTICE OF MEETING B EXPLANATORY MEMORANDUM 1. Background & Summary 2. Resolutions 1 & 2 (a) Background – the Company (b) Background – the Farmin Agreement & the Proposal (c) Background – the Gascoyne Base Metals Project (d) Effect of Resolutions 1 and 2 (e) Other Information – Taxation (f) Regulatory Requirements 3. Resolutions 3 & 4 (a) Background (b) Regulatory Requirements 4. Resolutions 5, 6, 7 & 8 (a) Background (b) Regulatory Requirements 5. Resolutions 9 & 10 6. Interpretation

  • C PROXY FORM D INDEPENDENT GEOLOGIST’S REPORT

NOTICE OF MEETING

ALTERA CAPITAL LIMITED ACN 082 541 437

Notice is hereby given that a general meeting of members of the Company will be held at 9 am on 26 November 2007 at 52 Ord Street, West Perth, Western Australia 6005 to consider and, if thought fit, to pass the following resolutions:

1. Special Resolution

  • “That, subject to:

  • (a) the due passage of Resolutions 2-9 (inclusive) hereof; and

  • (b) the satisfaction of all of the other preconditions necessary for Completion to occur

the existing share capital of the Company be reduced pursuant to Subsection 256C(2) of the Corporations Act from $7,367,086 comprising 142,018,213 Shares to approximately $1,546,670 comprising approximately 7,703,348 Shares as follows:

  • (i) The 6,854 Shares held by the Category 1 Shareholders will not be affected;

  • (ii) The shareholdings of the Category 2 Shareholders (being 2,539,946 Shares in total) will be reduced to 346,000 Shares in total by reducing each Category 2 Shareholder’s Shareholding to 1,000 Shares;

  • (iii) The shareholdings of the Category 3 Shareholders (being 6,637,397 Shares in total) will be reduced to 1,860,000 Shares in total by reducing each Category 3 Shareholder’s Shareholding to 10,000 Shares;

  • (iv) The shareholdings of the Category 4 Shareholders (being 2,482,633 Shares in total) will be reduced to approximately 248,263 Shares in total by dividing each Category 4 Shareholder’s Shareholding by 10;

  • (v) The shareholdings of the Category 5 Shareholders (being 2,817,628 in total) be reduced to approximately 140,881 Shares in total by dividing each Category 5 Shareholder’s Shareholding by 20;

  • (vi) The shareholdings of the Category 6 Shareholders (being 127,533,755 in total) be reduced to approximately 5,101,350 Shares in total by dividing each Category 6 Shareholder’s Shareholding by 25;

by cancelling approximately $5,826,416 of paid up capital that is lost, with effect from the time immediately after the expiry of 14 days from the lodgement of a copy of this Resolution with the Australian Securities & Investments Commission

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in accordance with Subsection 256C(3) of the Corporations Act, and otherwise on the terms and conditions described in the Explanatory Memorandum attached to and forming part of this Notice and that any applicable provisions of the Company’s Constitution be amended accordingly.”

2.

Special Resolution

“That for the purposes of Subsection 256C(2) of the Corporations Act approval be and is hereby given by those Shareholders, some or all of whose Shares are to be cancelled, to the reduction of capital contemplated by Resolution 1 hereof.”

3. Ordinary Resolution

“That for the purposes of Listing Rules 7.1 and 11.1 approval be and is hereby given to:

  • (a) the Company entering into the Farmin Agreement; and

  • (b) the allotment and issue of 250,000 Shares to ABM Resources NL;

on the terms and conditions contained in the Explanatory Memorandum attached to and forming part of this Notice.”

4.

Ordinary Resolution

“That for the purposes of Listing Rules 7.1 and 11.1 approval be and is hereby given to the allotment and issue of up to 12,500,000 Shares to subscribers to the Prospectus on the terms and conditions contained in the Explanatory Memorandum attached to and forming part of this Notice.”

5.

Ordinary Resolution

“That for the purposes of Chapter 2E of the Corporations Act and Listing Rule 10.11 approval be and is hereby given to the allotment and issue of 1,000,000 Options to Mr Godfrey Rule or his nominee on the terms and conditions contained in the Explanatory Memorandum attached to and forming part of this Notice.”

6.

Ordinary Resolution

“That for the purposes of Chapter 2E of the Corporations Act and Listing Rule 10.11 approval be and is hereby given to the allotment and issue of 1,000,000 Options to Panga Pty Ltd on the terms and conditions contained in the Explanatory Memorandum attached to and forming part of this Notice.”

7.

Ordinary Resolution

“That for the purposes of Chapter 2E of the Corporations Act and Listing Rule 10.11 approval be and is hereby given to the allotment and issue of 1,000,000 Options to Mr Harjinder Kehal or his nominee on the terms and conditions

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contained in the Explanatory Memorandum attached to and forming part of this Notice.”

8. Ordinary Resolution

“That for the purposes of Chapter 2E of the Corporations Act and Listing Rule 10.11 approval be and is hereby given to the allotment and issue of 1,000,000 Options to Pippin Nominees Pty Ltd on the terms and conditions contained in the Explanatory Memorandum attached to and forming part of this Notice.”

9. Special Resolution

“That the name of the Company be changed to Altera Resources Limited.”

DATED this 4[th] day of October 2007.

BY ORDER OF THE BOARD

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_______ Jeremy Shervington Director

Notes:

Definitions

Terms which are used in this Notice which are defined in Section 6 of the Explanatory Memorandum have the meanings ascribed to them therein.

Voting Entitlement

Altera Capital Limited (as convenor of the Meeting) has determined that a person’s entitlement to vote at the Meeting will, in accordance with Section 1109N of the Corporations Act, be the entitlement of that person set out in the register of members as at 6 pm Perth time on the 24[th] day of November 2007.

This means that any holder registered at 6 pm Perth time on the 24[th] day of November 2007 is entitled to attend and vote at the Meeting.

Proxies

A member entitled to attend this Meeting and vote is entitled to appoint a proxy to attend and vote for the member at the Meeting. A proxy need not be a member. If the member is entitled to cast 2 or more votes at the Meeting the member may appoint 2 proxies. If a

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member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes each proxy may exercise, each proxy may exercise half of the votes. A form of proxy is attached with this notice.

In accordance with section 250BA of the Corporations Act, the Company specifies the following information for the purposes of receipt of proxy appointments. To vote by proxy, please complete and sign the proxy form enclosed with this Notice as soon as possible and either:

  • Return the proxy form (by post or delivery) to Altera Capital Limited, 813 Wellington Street, West Perth, Western Australia, 6005; or

  • Send the proxy form to Altera Capital Limited on facsimile number +61 8 9322 1385.

To be effective a completed proxy form must be received by the Company by no later than 9.00 am (WST) on 24[th] November 2007.

Where the proxy form is executed under power of attorney, the power of attorney must be lodged in like manner as the proxy.

Voting Restrictions

  1. The Company will disregard any votes cast in favour of Special Resolution 1 by any person who is to receive consideration as part of the Capital Reduction or by their associates.

  2. The Company will disregard any votes cast in favour of Special Resolution 2 by any Shareholder none of whose Shares are to be cancelled pursuant to the Capital Reduction.

  3. In accordance with Listing Rules 7.3.8, 11.1.2 and 14.11 the Company will disregard any votes cast on Resolution 3 by:

ABM Resources NL; and

Any associate of ABM Resources NL.

However, the Company need not disregard a vote cast on Resolution 3 if:

  • It is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

  • It is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

  • In accordance with Listing Rules 7.3.8, 11.1.2 and 14.11 the Company will disregard any votes cast on Resolution 4 by:

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  • A person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed; and

Any associate of the above persons.

However, the Company need not disregard a vote cast on Resolution 4 if:

  • It is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

  • It is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

  • In accordance with section 224 of the Corporations Act and Rule 10.11 of the Listing Rules a vote in respect of Resolution 5 must not be cast by or on behalf of:

Mr G Rule or an associate of Mr G Rule.

However this prohibition does not apply if:

  • A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

  • A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides; and

The vote is not cast on behalf of Mr G Rule or an associate of Mr G Rule.

  1. In accordance with section 224 of the Corporations Act and Rule 10.11 of the Listing Rules a vote in respect of Resolution 6 must not be cast by or on behalf of:

Panga Pty Ltd, Mr J Shervington or an associate of either of them. However this prohibition does not apply if:

  • A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

  • A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides; and

  • The vote is not cast on behalf of Panga Pty Ltd, Mr J Shervington or an associate of either of them.

  • In accordance with section 224 of the Corporations Act and Rule 10.11 of the Listing Rules a vote in respect of Resolution 7 must not be cast by or on behalf of:

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Mr H Kehal or an associate of Mr H Kehal. However this prohibition does not apply if:

  • A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

  • A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides; and

  • The vote is not cast on behalf of Mr H Kehal or an associate of Mr H Kehal.

  • In accordance with section 224 of the Corporations Act and Rule 10.11 of the Listing Rules a vote in respect of Resolution 8 must not be cast by or on behalf of:

Pippin Nominees Pty Ltd, Mr B Abbott or an associate of either of them. However this prohibition does not apply if:

  • A vote is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

  • A vote is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides; and

  • The vote is not cast on behalf of Pippin Nominees Pty Ltd, Mr B Abbott or an associate of either of them.

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ALTERA CAPITAL LIMITED ACN 082 541 437

EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice convening a Meeting of Shareholders of the Company to be held on the 26[th] day of November 2007. This Explanatory Memorandum is to assist Shareholders in understanding the background to and the legal and other implications of the Notice and the reasons for the Resolutions proposed. Terms used in this Explanatory Memorandum are defined in Section 6.

1. BACKGROUND & SUMMARY

The Company’s shares have been suspended from quotation on ASX since 13 June 2003. The current Board was appointed on 8 August 2006 in conjunction with a capital raising of $240,000 by the Company to provide it with working capital to fund the search for suitable projects to achieve reinstatement of the Company’s shares to quotation on ASX.

The Company has entered into the Farmin Agreement in respect of the Gascoyne Base Metals Project.

The passage of the Resolutions will facilitate the implementation of the Proposal which will result in:

  • The Company's existing capital being reduced to approximately 7.7 million Shares;

  • The Company raising new capital of $2,500,000 by the issue of 12,500,000 Shares at 20 cents each in cash;

  • 250,000 Shares being issued pursuant to the Farmin Agreement;

  • The reinstatement of quotation of the Shares of the Company by ASX; and

  • 4 million new Options being issued to the continuing members of the Board.

Further information in relation to the Gascoyne Base Metals Project is set out in Section 2 and in the Independent Geologist’s Report which is annexed to this Explanatory Memorandum.

2. RESOLUTIONS 1 & 2

(a) Background – The Company

At the date hereof the Company has no assets other than cash of $80,000 and liabilities of approximately $5,000. The Company has no activities. It is admitted

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to the Official List and its securities are and have since 13 June 2003 been suspended from quotation.

At the date hereof the capital structure of the Company comprises issued capital of 142,018,213 Shares together with 52,500,000 Existing Options.

There are 609 Shareholders recorded in the Register.

As at 30 June 2007 the balance sheet (audited) of the Company was as follows:

CURRENT ASSETS
Cash Assets
Receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
TOTAL ASSETS
CURRENT LIABILITIES
Payables
TOTAL CURRENT LIABILITIES
TOTAL LIABILITIES
NET ASSETS (LIABILITIES)
EQUITY
Issued Capital
Reserves
Accumulated Losses
TOTAL EQUITY		 2007
$
2006
$
102,947
16,981
1,741
5,128
104,688
22,109
-
-
104,688
22,109
6,245
64,591
6,245
64,591
6.245
64,591
98,443
(42,482)
7,367,086
7,127,086
20,314
(7,288,957)
(7,169,568)
98,443
(42,482)

Shareholders are referred to the Financial Report of the Company for the financial year ended 30 June 2007 (lodged with ASX on 28 September 2007) for further details of the recent background of the Company.

(b) Background – The Farmin Agreement & the Proposal

The Company has entered into the Farmin Agreement with ABM Resources.

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Under the Farmin Agreement the Company can earn 65% interest in the Gascoyne Base Metals Project by the expenditure of $1,000,000 on exploration by no later than January 2011 and by issuing 250,000 Shares to ABM Resources. For further details on the Gascoyne Base Metals Project please refer to Section 2(c) hereunder.

It is a condition of the Farmin Agreement that the Company’s securities be reinstated to quotation by ASX by no later than 14 January 2008.

The Company proposes to issue the Prospectus and to complete the Capital Raising thus satisfying the abovementioned condition of the Farmin Agreement and enabling it to proceed to Completion.

At Completion the Company will issue the Capital Raising Shares.

It will be a condition of Completion that the Company has obtained conditional approval from ASX for the Shares to be reinstated to quotation.

Resolutions 1 and 2 are designed to bring the capital structure of the Company to a level that results in a market capitalisation for the Company pre Completion that reflects more accurately the asset base of the Company at that time, thus assisting in the Capital Raising while at the same time preserving a spread of Shareholders with a meaningful parcel of Shares.

(c) Background – The Gascoyne Base Metals Project

Full details of the Gascoyne Base Metals Project including the Company’s proposed exploration programme and budget is set out in the Independent Geologist’s Report which is annexed to this Explanatory Memorandum.

Location

The Gascoyne Project is located approximately 100km north of the township of Gascoyne Junction and 250 km to the east Carnarvon, Western Australia. It comprises of three tenements, namely Exploration Licence 09/1074, Exploration Licence Application 09/1266 and Mining Licence 09/62. The project covers an area of approximately 371 km[2] in the region west of the Lockyer Range.

Regional Geology

The Project area lies within the Gascoyne Province which is the deformed and high-grade metamorphic core zone of the early Proterozioc Capricorn Orogen. The province comprises of voluminous granitoid intrusions, mantled-gneiss domes, metamorphosed and partly melted sedimentary rocks, and remobilized Archaean basement gneiss. It lies between the Pilbara Craton and Yilgarn Block

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and tectonic trends within the Gascoyne Province wrap around the margins of these relatively stable cratons.

A group of ensialic, geosynclinal shelf and trough sedimentary rocks – the Morrissey Metamorphic Suite (MMS) – extends throughout the Province, and was probably deposited on Archaean continental crust. The Archean basement is extensively remobilized and this, together with repeated deformation and amphibolite-facies metamorphism of the MMS, is largely attributed to the emplacement of mantled-gniess domes and granitoid batholiths.

The key aspects of the geology of the Gascoyne Province are summarised below:.

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  • There are 3 main zones of supracrustal rocks defined within the Gascoyne Province; Northern, Central and Southern.

  • Widespread granite gneisses formed pre-syn D1.

  • There are complex fold patterns with variable plunges, however there is a dominant west northwest grain to the country.

  • The age of the MMS is poorly constrained between 2000 and 1700 Ma.

  • The MMS comprises a range of lithologies, including pelitic gneisses and schists, quartzo-feldspathic gneisses-schists, quartzite, meta-arkoses with lesser calc-silicate gneiss-granofels, marble, amphibolite, and minor BIF.

  • Amphibolites occur mostly as narrow units concordant to gneissic banding. Overall they form a minor component of the MMS. The only area with large bodies of amphibolite occurs between the Nardoo and Injinu Belts, where the amphibolite is intercalated with pelitic schist.

  • Possible Broken Hill Type source rocks such as meta-arkoses are widespread in the northern zone.

  • The Gascoyne Province contains numerous epigenetic Ag-Pb-Zn occurrences.

Project Geology

The MMS within the Project area consists of four main units. The dominant unit is a quartz-microcline-oligoclase-biotite-muscovite paragneiss and schist (interpreted protolith is an arkose). This unit is widespread within the Mt Phillips 1:250,000 sheet area. Forming a subordinate unit is a quartz-biotite-muscovitefeldspar-garnet paragneiss-schist with intercalated quartzite and micaceous quartzite. A large oval body of migmatite and gneissic granodiorite occurs within the eastern portion of the Project area, which coincides with a distinctive magnetic ovoid.

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Previous Exploration

In the course of its regional diamond-search program in 2003, BHP Billiton collected numerous alluvial/colluvial bulk samples from which, in a locality in the central part of the Project, numerous gahnite grains were recovered in the heavy mineral fraction. Gahnite mineral, together with fundamental geology (age and lithology) were reminiscent of the Broken Hill SEDEX massive sulphide mineralizing environment and reconnaissance exploration for that model was initiated.

“Gahnite is a zinc-aluminium oxide similar in form to magnetite, which is an iron spinel; it is resistant to weathering and hence is usually found in stream heavy mineral concentrates. It is notable that gahnite occurs in the mineralized horizon some significant distance from the sulphide body in SEDEX deposits such as Broken Hill, Cannington and Mt Isa. Gahnite is also found in high grade metamorphics – just that environment exists in the Gascoyne Project area.”

Fifteen rock chip samples taken from the Project were assayed by BHP for a suite of elements including Cu-Pb-Zn-Co-Ag-Au-Mn-Ni. Of theses, two some 8km apart, returned anomalous levels of Co-Cu-Zn, one sample, in the centre of the Project area had a concentration of 953ppm Pb.

Follow-up exploration included the collection of 17 soil samples along station tracks in the vicinity of higher rock chip samples, which were again assayed for Cu-Pb-Zn-Co-Ag-Mn-Ni. Of the soil geochemical samples, three showed elevated Pb-Zn values of which one contained 408ppm Pb and 156ppm Zn.

A subsequent gravity survey did not reveal any anomalism satisfactory to BHP’s requirements and no further exploration was carried out. It may be significant that this survey, whilst covering the area of the soil geochemical anomalism in the west of the tenement, did not cover the rock chip anomalism in the centre of the Project.

In 2006 ABM Resources NL carried out a detailed (50m line spacing) airborne magnetic survey over the northern half of EL09/1074 licence area. A reinterpretation of the geology of the district followed. It is apparent the structure of the district followed by a west northwest striking (290°) domal feature; the lithologies are probably silicieous, clastic sediments. The southern margin of the antiform has been transected by a west northwest striking shear, whilst the western part of the dome has undergone a later stage folding regime and the intrusion of a granitoid.

The geochemical sampling has taken place in zones of relative magnetic quiescence to the north and northwest of the dome.

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First-vertical derivative magnetic imagery shows the dome to be cut by several north-north east trending faults and mafic dykes whilst the north western area (the region of possible intrusion and complex folding) is separated by northwest striking faults. On the northern flank of the dome, in the area of magnetic quiescence, subtle parallel (stratigraphic) linear anomalies have been outlined. Periodically, along some of these “strata” are weak but definite magnetic anomalies (“blobs”). A total of 8 magnetic anomalies have been outlined in the Project area. Interestingly, rock chip GG5312 returned values of 953ppm Pb, 487ppm Zn, 319ppm Cu and 394ppm Co and other anomalous samples, derive from one such stratum.

The derivation of the geochemical anomalies in the northwest of E09/1074 licence area has not been clarified.

In summary, the important features of the Gascoyne Project are:

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  • A sequence of folded Proterozoic, silicieous, clastic sediments; probable late-stage granitoid intrusions.

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  • A series of, apparent stratigraphic, magnetic anomalies.

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  • Gahnite in heavy mineral concentrations from this region; source not determined.

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  • Anomalous PB-Zn-Cu-(Mn) values in rock chip and soil samples, some of which appear to be at the same stratigraphic level as magnetic anomalies.

Altera Exploration Program

BHP’s gravity survey is being reassessed and compared, spatially, with the detailed aeromagnetic and soil/rock geochemistry.

Altera will undertake a detailed regolith/geological mapping and systematic program of soil rock geochemistry in areas of discrete magnetic anomalies. Ground magnetic surveys will also be completed to further define the strike extent of the magnetic anomalies. Reverse Circulation and diamond drilling will test these targets.

(d) Effect of Resolutions 1 & 2

In essence the effect of the Resolutions will be as follows:

  • (i) the Shareholding of the Category 1 Shareholders will remain unchanged leaving the Category 1 Shareholders with approximately 0.09% of the undiluted issued capital immediately pre-Completion compared to approximately 0.005% as at the date hereof;

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  • (ii) the Shareholdings of the Category 2 Shareholders will be reduced such that Category 2 Shareholders will be left with approximately 4.5% of the undiluted issued capital immediately pre-Completion compared to approximately 1.8% as at the date hereof;

  • (iii) the Shareholdings of the Category 3 Shareholders will be reduced such that Category 3 Shareholders will be left with approximately 24% of the undiluted issued capital immediately pre-Completion compared to approximately 4.7% as at the date hereof;

  • (iv) the Shareholdings of the Category 4 Shareholders will be reduced such that Category 4 Shareholders will be left with approximately 3.2% of the undiluted issued capital immediately pre-Completion compared to approximately 1.7% as at the date hereof;

  • (v) the Shareholdings of the Category 5 Shareholders will be reduced such that Category Shareholders will be left with approximately 1.8% of the undiluted issued capital immediately pre-Completion compared to approximately 1.98% as at the date hereof;

  • (vi) the Shareholdings of the Category 6 Shareholders will be reduced such that Category 6 Shareholders will be left with approximately 66.2% of the undiluted issued capital immediately pre-Completion compared to approximately 89.8% as at the date hereof;

  • (vii) the Existing Options will be reduced in number to 2,100,000 each with an exercise price of 10 cents.

As a condition of the implementation of the Proposal the Company’s Shares will be reinstated to quotation by ASX.

Set out below are:

  • (i) a pro forma balance sheet of the Company based on the 30 June 2007 audited financial statements of the Company adjusted to reflect the transactions contemplated by the Proposal having all been implemented; and

  • (ii) a table setting out the existing capital structure of the Company and the proposed capital structure as if the Capital Reduction and Proposal had been fully implemented.

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PRO FORMA BALANCE SHEET
CURRENT ASSETS
Cash
Receivables
TOTAL CURRENT ASSETS
NON CURRENT ASSETS
Interest under Farmin Agreement
TOTAL ASSETS
CURRENT LIABILITIES
Payables (including Capital Raising and requotation
costs)
TOTAL LIABILITIES
NET ASSETS		 $ 2,602,947
1,741
2,604,688
50,000
2,654,688
322,000
282,000
2,332,688

EXISTING CAPITAL STRUCTURE

142,018,213 Shares comprising:

6,845 Shares held by Category 1 Shareholders 2,539,946 Shares held by Category 2 Shareholders 6,637,397 Shares held by Category 3 Shareholders 2,482,633 Shares held by Category 4 Shareholders 2,817,628 Shares held by Category 5 Shareholders 127,533,755 Shares held by Category 6 Shareholders

In addition 52,500,000 Existing Options are on issue.

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PROPOSED CAPITAL STRUCTURE

Approximately 20,453,348 Shares comprising:

6,854 Shares held by Category 1 Shareholders Approximately 346,000 Shares held by Category 2 Shareholders Approximately 1,860,000 Shares held by Category 3 Shareholders Approximately 248,263 Shares held by Category 4 Shareholders Approximately 140,881 Shares held by Category 5 Shareholders Approximately 5,101,350 Shares held by Category 6 Shareholders

12,500,000 Shares to be issued under the Prospectus.

250,000 Shares to be issued to ABM Resources.

In addition:

(i) 2,100,000 Existing Options will be on issue with an exercise price of 10 cents each.

  • (ii) 4,000,000 Directors’ Options will be on issue.

(e) Other Information – Taxation

Because of the complexities involved in taxation issues particularly given the varying circumstances and different taxation profiles of each Shareholder, Shareholders are advised to seek their own taxation advice on the effect of the Capital Raising and other Resolutions on them and neither the Company nor the Directors nor any of their respective advisers offer any such advice or accept any responsibility for any individual Shareholder’s taxation consequences of the Resolutions or the Proposal.

(f) Regulatory Requirements

Corporations Act – Chapter 2J

Chapter 2J of the Corporations Act provides authority for a company to reduce its share capital.

The Corporations Act distinguishes between an “equal reduction” and a “selective reduction”. The relevant definitions are:

“The reduction is either an equal reduction or a selective reduction. The reduction is an equal reduction if:

  • (a) it relates only to ordinary shares; and

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  • (b) it applies to each holder of ordinary shares in proportion to the number of ordinary shares they hold; and

  • (c) the terms of the reduction are the same for each holder of ordinary shares.

Otherwise, the reduction is a “selective reduction”.”

The Corporations Act provides in subsection 256B(1) that:

“A company may reduce its share capital in a way that is not otherwise authorized by law if the reduction:

  • (a) is fair and reasonable to the company’s shareholders as a whole; and

  • (b) does not materially prejudice the company’s ability to pay its creditors; and

  • (c) is approved by shareholders under section 256C.”

Subsection 256C(2) of the Corporations Act is as follows:

  • “(2) Special shareholder approval for selective reduction

If the reduction is a selective reduction, it must be approved by either:

  • (a) a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person who is to receive consideration as part of the reduction or whose liability to pay amounts unpaid on shares is to be reduced, or by their associates; or

  • (b) a resolution agreed to, at a general meeting, by all ordinary shareholders.

If the reduction involves the cancellation of shares, the reduction must also be approved by a special resolution passed at a meeting of the shareholders whose shares are to be cancelled.”

Resolution 1 is designed to fulfill the requirements of Subsection 256C(2) of the Corporations Act.

Resolution 2 is designed to fulfill the requirements of Subsection 256C(2) of the Corporations Act insofar as that Subsection requires that the reduction must also be approved by a meeting of those Shareholders whose Shares are to be cancelled.

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In essence, the reason why the Capital Reduction is proposed is that given the financial state of the Company, its capital structure and the current spread of its Shareholdings the Capital Raising (which under the Listing Rules must be made at a price of no less than 20 cents per Share) will, commercially, only be achievable if there is a consolidation of the number of Shares on issue. One aspect of the value that is considered to be attributable to the Company from the perspective of investors is the so-called “shareholder base” and the Board considers that the “shareholder base” is only of value if the number of Shares on issue is reduced to the extent contemplated by Resolution 1 and in a manner which, at the same time, maximises the “spread” of Shareholders with a meaningful number of Shares for the purposes of the Listing Rules.

Subsection 256C(4) of the Corporations Act requires that a notice of meeting in respect of a “selective reduction” must also contain all known information that is material to the decision on how to vote.

All such information is considered to be contained in the Notice and the Explanatory Memorandum.

  1. This Explanatory Memorandum contains all information known to the Company and to the Directors to be material to the making of the decision by the Shareholders who are entitled to vote on Resolution 1 and Resolution 2.

  2. Set out hereunder are the interests of Directors in terms of:

  3. (a) the securities affected by the Capital Reduction;

  4. (b) the securities of the Company generally; and

  5. (c) any general interest in the broad Proposal to be effected.

  6. The interests of the Directors in Shares and Existing Options is as follows:

  7. G Rule – indirect interest – 6,642,137 Shares and 13,125,000 Existing Options

  8. B Abbott – indirect interest – 6,642,140 Shares and 13,125,000 Existing Options

  9. J Shervington – indirect interest – 37,638,778 Shares and 13,125,000 Existing Options

  10. H Kehal – indirect interest – 6,642,137 Shares and 13,125,000 Existing Options

All of the above Shares are “Category 6 Shareholdings” and will be reconstructed on a 1 for 25 basis. Similarly the Existing Options referred to above will, as required by the Listing Rules, be reconstructed on a 1 for

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25 basis and the exercise price will increase 25 times. The Directors will, if the Proposal is effected, be entitled to be granted Directors’ Options as set out in Section 4.

  1. None of the Directors will be precluded from voting in respect of Resolutions 1 and 2. They each recommend that Shareholders vote for Resolutions 1 and 2 because they consider that the Capital Reduction is a sensible means of reconstructing the capital structure of the Company in a way that will facilitate the Capital Raising and the eventual reinstatement of quotation of the Company’s Shares.

  2. There are no benefits “in relation to the Capital Reduction” that are being offered or will be offered to any person which are not being offered to all Shareholders except to the extent that the Shares of the Category 1 Shareholders will not be affected and the level of consolidation arising from the Capital Reduction varies amongst the remaining categories (Categories 2 – 6).

  3. No person will receive consideration as part of the Capital Reduction and no person will have any liability to pay amounts unpaid on Shares reduced as part of the Capital Reduction. Accordingly it is not proposed that any Shareholder will be precluded from voting on Resolution 1.

  4. None of the Shareholders whose Shares are not being cancelled will be entitled to vote on Resolution 2.

  5. The Capital Reduction will not of itself have any effect on the capacity of the Company to pay its existing liabilities. The only effects on the financial or capital structure of the Company will be:

  6. (a) to reduce paid up capital and, correspondingly, accumulated losses, by $5,826,416; and

  7. (b) to reduce the number of issued Shares from 142,018,213 to approximately 7,703,348.

The Capital Reduction will facilitate the implementation of the other aspects of the Proposal which will affect the financial and capital structure of the Company as disclosed elsewhere in this Explanatory Memorandum.

3. RESOLUTIONS 3 & 4

(a) Background

As noted previously, it is a term of the Farmin Agreement that the Company will issue 250,000 Shares to ABM Resources as part of the consideration to earn a

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65% interest in the Gascoyne Base Metals Project. These are the Shares the subject of Resolution 3.

As also noted previously, it is a condition of the Proposal that the Capital Raising is completed. The Capital Raising Shares are the Shares the subject of Resolution 4.

(b) Regulatory Requirements

Listing Rules

Chapter 11

Under Rule 11.1 of the Listing Rules it is provided that if an entity proposes to make a significant change, either directly or indirectly, to the nature or scale of its activities, it must provide full details to ASX as soon as is practicable. It must do so in any event before making the change.

Rule 11.1.1 specifically requires that an entity must give ASX information regarding the change and its effect on future potential earnings and any information that ASX asks for.

The implementation of the Proposal will constitute a change of the nature contemplated by Rule 11.1.

The announcement made by the Company to ASX on 17 September 2007 and subsequent announcements together with the contents of the Notice and of this Explanatory Memorandum are intended to fulfil the above requirements of Rule 11.1

Further, Rule 11.1.2 of the Listing Rules provides that in the case of a change of the nature contemplated by Rule 11.1, if ASX requires, the entity must get the approval of holders of its ordinary securities and must comply with any requirements of ASX in relation to the relevant notice of meeting.

By despatching the Notice and this Explanatory Memorandum and by proposing Resolutions 3 and 4 the Company also fulfils this requirement, subject to the passage of Resolutions 1 and 2.

Further, Rule 11.1.3 of the Listing Rules provides that if ASX requires, the relevant entity must meet the requirements of Chapters 1 and 2 of the Listing Rules as if the entity were applying for admission to the Official List.

The Company proposes (but at this stage there is no guarantee that it will – however, Completion will not proceed unless it does) to meet the requirements of Rule 11.1.3 viz:

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==> picture [12 x 16] intentionally omitted <==

The Company will ensure that on or before Completion the “spread requirements” of Listing Rule 1.1 are met namely:

  • (i) that the Company has at least 400 Shareholders each having a parcel of Shares with a value (based on 20 cents each) of at least $2,000 excluding “restricted securities”; and

  • (ii) that persons who are not related parties of the Company hold more than 25% of the issued Shares (excluding “restricted securities”);

To the extent that the Company’s existing shareholder base does not enable this requirement to be satisfied, the Company will endeavour to ensure that the subscriptions under the Prospectus are such that this requirement is met at the time of Completion.

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The Company’s Constitution is consistent with the Listing Rules;

  • The Company will issue the Prospectus;

  • There is a requirement that Shares in the Company trade at or above or are issued at a price at or above 20 cents prior to Completion. This will be achieved via the Prospectus;

  • The Company will comply with Listing Rule 1.1 (Condition 11) by reason that the Directors’ Options are exercisable at 20 cents each and a waiver has been obtained in respect of the Existing Options.

  • The Company will issue a Prospectus which will be lodged with ASIC in respect of the Capital Raising i.e. an issue of 12.5 million Shares at 20 cents per Share. It is anticipated that this will be lodged and issued between the date of despatch of the Notice of Meeting and the date of the Meeting.

  • At the time of Completion the Company will meet the requirements of Listing Rule 1.3 in that it will have net tangible assets of at least $2 million and less than half of the Company’s total tangible assets (after the costs of the Proposal) will be in cash or in a form readily convertible to cash.

The Prospectus will include a statement that the Company has sufficient working capital to carry out its stated objectives and the Company’s working capital, as at Completion, will be at least $1.5 million.

  • The Company has included a pro forma consolidated balance sheet of the Company (based on Completion having occurred) in this Explanatory

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Memorandum. A similar pro forma will be included in the Prospectus. Prior to Completion the Company will provide a review of this by an independent firm of accountants to ASX.

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Within seven days of the issue of the Prospectus the Company will apply for quotation of the securities to be issued under the Prospectus. On or before Completion the Company will also seek quotation of any other ordinary shares to be issued as part of the Proposal. This will meet the requirements of Listing Rule 2.4.

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To the extent that ASX classifies any of the securities to be issued as part of the Transaction as “restricted securities” the Company will be required to obtain executed restriction agreements from the relevant holders and give them to ASX – it is planned that this will occur on or before Completion.

So long as any of the requirements of Chapters 1 and 2 are still outstanding trading in the Company’s securities will not start before those requirements are satisfied. It is expected that this will occur immediately following Completion.

Chapter 7

Under Chapter 7 of the Listing Rules there are limitations on the capacity of a company to enlarge its capital by the issue of equity securities in any 12 month period. The limitation is to 15%.

The issue of the Shares the subject of Resolutions 3 and 4 (which will only be issued if the Consolidation is effected) would exceed that limit.

Accordingly the purpose of Resolutions 3 and 4 is to meet the requirements of Rule 7.1 that an issue of securities can exceed the 15% threshold if the issue receives the prior approval of the holders or ordinary securities in the Company by ordinary resolution.

Rule 7.3 of the Listing Rules contains certain requirements as to the contents of a notice sent to Shareholders for the purposes of Rule 7.1 and the following information is included in this Explanatory Memorandum for that purpose:

  • The maximum number of securities to be issued pursuant to Resolutions 3 and 4 is 12,750,000 Shares;

  • The 12,750,000 Shares will be issued no later than three months after the Meeting or such later date as ASX may allow pursuant to any Listing Rules waiver application that may be made;

  • The issue price of the 12,750,000 Shares is 20 cents each;

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  • The name of the allottee of the Shares – The allottee of the Shares the subject of Resolution 3 is ABM Resources. The allottees of the Shares the subject of Resolution 4 will be the subscribers to the Prospectus;

  • The terms of issue of the Shares – the Shares that will be issued pursuant to Resolutions 3 and 4 will be issued on the same terms and conditions as the Existing Shares and will from the date of issue rank equally in all respects with all of the Existing Shares including the right to participate in any dividends paid or declared after the date of issue;

  • The intended use of the funds raised – no funds will be raised from the issue of the Shares the subject of Resolution 3. The $2.5 million to be raised pursuant to the issue of the Shares the subject of Resolution 4 will be used to pay the costs of the Capital Raising, the ASX costs for obtaining quotation of the Company’s Shares, for funding the exploration programme intended to be carried out on the Gascoyne Base Metals Project as detailed elsewhere in this Explanatory Memorandum and for working capital purposes.

  • The Shares the subject of Resolutions 3 and 4 will all be issued simultaneously at Completion;

  • The relevant notice is required to include a voting exclusion statement – this is included in the Notice.

4. RESOLUTIONS 5, 6, 7 & 8

(a)

Background

Resolutions 5, 6, 7 and 8 seek Shareholder approval for the grant of a total of 4 million Options exercisable at 20 cents each to Messrs G Rule and H Kehal or their respective nominees, and Panga and Pippin Nominees.

The primary purpose of the grant of the Directors’ Options is to assist in preserving the Company’s cash reserves by reducing the requirement to pay Directors increased cash remuneration and to assist in retaining appropriately qualified Board members for the Company and at the same time to add incentive.

(b) Regulatory Requirements

Corporations Act - Chapter 2E

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party. Because each of them is a director of the Company, pursuant to Subsection 228(2) of the Corporations Act, Messrs G Rule, J Shervington, H Kehal and B Abbott are each a related party of the Company.

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Pursuant to Subsection 228(4) of the Corporations Act, Panga is a related party of the Company, and Pippin Nominees is a related party of the Company.

The definition of what constitutes giving a financial benefit pursuant to Section 229 of the Corporations Act is broad and does not necessarily involve paying money. It includes buying or selling assets, issuing securities and granting options. It includes giving a financial benefit indirectly, for example, through one or more interposed entities.

Paragraph 229(1)(c) of the Corporations Act provides that in deciding whether a financial benefit is given any consideration that is or may be given for the benefit is to be disregarded, even if it is adequate.

The issue of the 1 million Options to Mr Rule contemplated by Resolution 5, the issue of 1 million Options to Panga contemplated by Resolution 6, the issue of the 1 million Options to Mr Kehal contemplated by Resolution 7 and the issue of the 1 million Options to Pippin Nominees will, therefore, in each instance constitute the Company giving a financial benefit to a related party. Section 208 of the Corporations Act provided an exemption from the prohibition contained in Chapter 2E and provides that a public company may give a financial benefit to a related party if a resolution of the shareholders of the public company permits the benefit to be given, and the resolution was passed at a general meeting of the public company held within 15 months before the public company gives the benefit and if the conditions prescribed by Division 3 of Part 2E.1 of the Corporations Act have been satisfied in relation to the resolution.

Resolutions 5, 6, 7 and 8 are therefore, intended to satisfy these requirements.

The requirements of Section 219 of the Corporations Act in relation to the Explanatory Memorandum to accompany a notice of meeting for these purposes are as follows. The Explanatory Memorandum must set out:

  • (i) the related parties to whom the proposed resolution would permit financial benefits to be given. The related parties are:

  • (1) Resolution 5 – Mr G Rule;

  • (2) Resolution 6 – Panga/Mr J Shervington;

  • (3) Resolution 7 – Mr H Kehal; and

  • (4) Resolution 8 – Pippin Nominees/Mr B Abbott.

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  • (ii) The nature of the financial benefits:

The financial benefits are:

  • (1) in the case of Resolution 5 - the 1 million Options to be issued to Mr G Rule or his nominee; and

  • (2) in the case of Resolution 6 – the 1 million Options to be issued to Panga; and

  • (3) in the case of Resolution 7 – the 1 million Options to be issued to Mr H Kehal or his nominee; and

  • (4) in the case of Resolution 8 – the 1 million Options to be issued to Pippin Nominees,

any advantages thereby conferred which can only be gauged by reference to the consideration provided (being nil cash consideration), the underlying assets of the Company, the market price of the Company’s shares from time to time and the number of Shares and other securities on issue in the Company from time to time. Please refer to the audited balance sheet of the Company as at 30 June 2007 and the pro-forma balance sheet of the Company in Sections 2(a) and 2(d) respectively for more information on the recent and projected financial position of the Company.

Please refer to Section 2(d) for details of the proposed capital structure of the Company at Completion.

Although it is not a direct benefit, a legal firm which Mr Shervington controls, will on completion of the Proposal be paid professional fees out of the Capital Raising in respect of legal work in connection with the Proposal.

Although it is not a direct benefit, Abbott’s Pty Ltd which is a company controlled by Mr Abbott, will on completion of the Proposal be paid professional fees out of the Capital Raising in respect of administrative, accounting and secretarial services provided in connection with the Proposal.

(iii) In relation to each Director of the Company:

  • (1) if the Director wanted to make a recommendation to members about the proposed resolution - the recommendation and his or her reasons for it; or

  • (2) if not why not? or

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  • (3) if the Director was not available to consider the proposed resolution - why not?

None of the ongoing Directors (Messrs Rule, Shervington, Kehal or Abbott) make any recommendations as to whether Shareholders vote for Resolutions 5, 6, 7 and 8 because of their respective interests in the outcome thereof.

  • (iv) In relation to each such director whether the director had an interest in the outcome of the proposed resolution:

Mr Rule has a personal interest in the outcome of the proposed Resolution 5, Mr Shervington in Resolution 6, Mr Kehal in Resolution 7 and Mr Abbott in Resolution 8. The interests of the Directors in Shares and Options and in the outcome of the Proposal generally are disclosed elsewhere in this Explanatory Memorandum.

  • (v) All other information that is reasonably required by members in order to decide whether or not it is in the Company’s interest to pass the proposed resolution and is known to the Company or any of its Directors.

To the extent that the exercise price of the Options the subject of Resolutions 5, 6, 7 and 8 may be below the market price of the Company’s shares at the time(s) the Options are exercised the Company will have foregone the opportunity of issuing the relevant Shares at a price higher than the exercise price and closer to the relevant market price.

The issue of the Options could cause dilution of the shareholdings of existing Shareholders. On the basis of the issued capital of the Company at Completion, the Shares issued upon exercise of the 4 million Options the subject of the Resolutions will, if all were exercised, equate to approximately 19.56% of the diluted ordinary share capital of the Company at that time assuming none of the Existing Options were exercised.

If the Existing Options were also exercised the 4 million Options the subject of the Resolutions will equate to approximately 15.06% of the capital at that time.

In accordance with a policy requirement of ASIC, the Company, having taken appropriate advice, in light of that policy notes that the Company attributes a total value of $3,784 in respect of the 4 million Options the subject of the Resolutions.

This value, which was provided to the Company by an independent accountant, was arrived at using the “Black & Scholes” valuation method.

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The calculation is based on the following inputs and assumptions:

  • Hypothetical Current Share price – 0.013 cents

  • Exercise price – 20 cents

  • The option term is five years

  • Risk free interest rate – 6.25%

  • Volatility factor of 75%

Based on the inputs outlined above, the “Black & Scholes” method calculates the Options to have a value of $0.0000378 each.

The terms of the Options the subject of the Resolutions are set out below.

  • (i) each Option is exercisable on or before 5.00 pm Perth time on 31 December 2012;

  • (ii) the Options held by each holder can be exercised in whole or in part, and if exercised in part multiples of 10,000 must be exercised on each occasion;

  • (iii) the exercise price of each Option is $0.20;

  • (iv) the Optionholder will be permitted to participate in any new prorata issue of securities of the Company on prior exercise of the Options in which case the Optionholder will be afforded the period of at least 9 Business Days prior to and inclusive of the record date to determine entitlements to the issue to exercise the Options;

  • (v) the Options do not confer on the holder any right to participate in dividends until Shares are allotted pursuant to the exercise of the Options;

  • (vi) in the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on Optionholders which are not conferred on Shareholders;

  • (vii) the number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to exercise of the Options so that, upon exercise of the Options the number of Shares received by the Optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The

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exercise price of the Options shall not change as a result of any such bonus issues;

  • (viii) Application will not be made for the Options to be granted quotation by ASX;

  • (ix) subject to paragraph (vii) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.

In the event that the Resolutions are approved Messrs Rule, Shervington, Kehal and Abbott, pursuant to their direct or indirect interest in the Directors’ Options, will each receive the following financial benefit pursuant to the issue of the Options the subject of Resolutions:

Name of Director Financial Benefit
$
G Rule 946
J Shervington 946
H Kehal 946
G Abbott 946

Details of the remuneration of Messrs Rule, Shervington, Kehal and Abbott which will be payable on and from Completion are set out below:

Name of Director Base Fee
$
G Rule 60,000
J Shervington 40,000
H Kehal 40,000
G Abbott 40,000

Statutory superannuation payments are made in addition to the above base fees.

The Company’s Shares were suspended from quotation on the Official List on 13 June 2003. The last sale price of the Company’s Shares on 12 June 2003 was $0.017.

In determining the number of Directors’ Options that are proposed to be issued the Board took account of the efforts that would be required by the Board in implementing the transactions contemplated by the Proposal and the ongoing responsibilities as a Director, the Company’s relatively low

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cash resources (and, therefore, the preference for it to limit the amount of cash remuneration that would otherwise be considered appropriate to be paid in the circumstances for implementation of the transactions contemplated by the Proposal and the ongoing responsibilities as a Director) and the capital structure of the Company. The Board concluded that the number of Options proposed to be issued and the value that it expected would be attributed to them under a valuation along the lines of the valuation referred to above, taking into account the above factors and the risks associated with the Proposal being concluded, offered a reasonable level of value to remunerate the Directors concerned for the work involved.

Other than as set out in this Explanatory Memorandum, there is no such further information considered by the Directors to be relevant.

Regulatory Requirements

Listing Rules

Chapter 10

Chapter 10 of the Listing Rules contains certain provisions in relation to transactions between a company and “persons in a position of influence”. Rule 10.11 provides that a company must not issue equity securities to a “related party” (or a person whose relationship with a related party is, in ASX’s opinion, such that shareholder approval should be obtained) without the approval of the holders of ordinary securities by ordinary resolution. Messrs Rule (Resolution 5), Shervington (Resolution 6), Kehal (Resolution 7) and Abbott (Resolution 8) are Directors and are, therefore, each a “related party”. Entities controlled by them are also related parties. Approval is, therefore, sought under Resolutions 5, 6, 7 and 8 for the purposes of fulfilling the requirements of Listing Rule 10.11.

The following information is included in this Explanatory Memorandum for the purposes of the Listing Rules:

  • The maximum number of securities to be issued pursuant to the Resolutions is:

Resolution 5 – 1 million Options;

Resolution 6 – 1 million Options;

Resolution 7 – 1 million Options;

Resolution 8 – 1 million Options;

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  • The Options will be issued no later than one month after the Meeting or such later date as ASX may agree to pursuant to any Listing Rule waiver application that may be made;

  • The Options are to be granted free;

  • The allottees of the Options will be:

  • Resolution 5 – Mr G Rule or his nominee; and

  • Resolution 6 – Panga;

  • Resolution 7 – Mr H Kehal or his nominee; and

Resolution 8 – Pippin Nominees.

  • The terms of issue of the Options are set out in Section 4(b) above.

  • The intended use of the funds raised – no funds will be raised unless and until the Options are exercised.

  • The Options the subject of the Resolutions will all be issued simultaneously.

  • The relevant notice is required to include a voting exclusion statement – this is included in the Notice.

For the purpose of Exception 14 to Listing Rule 7.2 it is noted that if approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1

It is noted that some or all of the Options the subject of the Resolutions may be classified as “restricted securities” by ASX.

5.

RESOLUTION 9

The proposed change of name pursuant to Resolution 9 is to reflect the proposed new focus of the Company.

6. INTERPRETATION

In this Explanatory Memorandum unless the context or subject matter otherwise requires:

  • “ABM Resources” means ABM Resources NL ACN 009 127 020;

  • “ASIC” means the Australian Securities & Investments Commission;

  • “ASX” means ASX Limited ACN 008 624 691;

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“Business Day” has the meaning ascribed to it in the Listing Rules;

“Capital Raising” means an issue of 12,500,000 Shares to raise a gross amount of $2,500,000;

“Capital Reduction” or “Consolidation” means a selective reduction of the paid up capital of the Company pursuant to which the paid up capital of the Company will be reduced to approximately $1,540,670 and the numbers of Shares on issue will be reduced to approximately 7,703,346;

“Category 1 Shareholders” means the 12 Shareholders holding a total of 6,854 Shares in the 1 Share – 5,000 Shares range;

“Category 2 Shareholders” means the 346 Shareholders holding a total of 2,539,946 Shares in the 5,001 Shares – 15,000 Shares range;

“Category 3 Shareholders” means the 186 Shareholders holding a total of 6,637,397 Shares in the 15,001Shares – 99,999 Shares range;

“Category 4 Shareholders” means the 19 Shareholders holding a total of 2,482,633 Shares in the 100,000 Shares – 199,999 Shares range;

“Category 5 Shareholders” means the 13 Shareholders holding a total of 2,817,628 Shares in the 200,000 Shares – 299,999 Shares range;

“Category 6 Shareholders” means the 32 Shareholders holding a total of 127,533,755 Shares in the 300,000 Shares and upwards range;

“Company” means Altera Capital Limited ACN 082 541 437;

“Completion” means the simultaneous occurrence of the events that are required to occur under the Proposal to enable the Capital Raising Shares to be issued and the Shares to be granted quotation by ASX;

“Constitution” means the constitution of the Company;

“Directors’ Options” means 4 million Options to be issued on the terms described in Section 4(b);

“Existing Options” means 52,500,000 Options each exercisable at 0.004 cents on or before 8 August 2011;

“Existing Shares” means the ordinary fully paid shares on issue by the Company as at the date hereof;

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“Explanatory Memorandum” means this explanatory memorandum;

“Farmin Agreement” means a farm in joint venture agreement executed on 14 September 2007 between the Company, ABM Resources and Rare Resources NL (a subsidiary of ABM Resources) a summary of the terms of which is as follows:

  • (i) by expending no less than $1 million on exploration by January 2011 and by issuing 250,000 Shares to ABM Resources the Company can earn a 65% interest in the Gascoyne Base Metals Project;

  • (ii) a joint venture with ABM Resources will be formed if and when the Company earns its 65% interest in the Gascoyne Base Metals Project;

  • (iii)

  • the initial joint venture interests will be:

  • (1) the Company – 65%;

  • (2) ABM Resources – 35% comprising:

  • A. ABM’s Free Carried Interest; and

  • B. ABM’s Remaining Participating Interest

where:

“ABM’s Free Carried Interest” means a 10% Participating Interest owned by ABM Resources in respect of which:

  • (a) subject to paragraph (b), the holder will not be required to make any contributions to Joint Venture Costs;

  • (b) no entitlement to any proceeds of Joint Venture Activities will arise unless and until the Payback Amount has been received by Altera;

And which will otherwise have the same attributes, on a pro-rata basis, as the remaining 90% Participating Interests; and

“ABM’s Remaining Participating Interest” means any Participating Interest owned from time to time by ABM Resources other than ABM’s Free Carried Interest; and

“Pay Back Amount” means the amount of all Joint Venture Costs borne by Altera from the Final Decision being made in respect of ABM’s Free Carried Interest which the Parties agree will, in priority to any claims by ABM Resources, be recouped by Altera out of the proceeds of Joint Venture Activities to which ABM Resources would otherwise be entitled; and

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“Final Decision” means a decision to proceed with a Bankable Feasibility Study in respect of a Mining Tenement or part of a Mining Tenement;

  • (iv) the dilution provisions of the joint venture are as follows:

  • ”3.4 Subject to clause 3.5, if a Party ( “Diluting Party” ) does not wish to contribute to the Joint Venture Costs in accordance with its Participating Interest (save for in relation to ABM’s Free Carried Interest) then the Participating Interest of the Diluting Party shall dilute so that its Participating Interest from time to time shall be calculated in accordance with the following formula (and the Participating Interests of the other Party ( “Non-Diluting Party” ) shall increase accordingly:

RE = AC/TC X 100

where:

  • “RE” is the Participating Interest of the Diluting Party calculated following the application of this formula. In the case of ABM Resources, RE is ABM’S Remaining Participating Interest and will be the amount arrived at as RE by the application of this formula minus 10;

  • “AC” is the total actual Joint Venture Costs incurred by the Diluting Party between the time the Final Decision is made and the date of calculation adjusted, in the case of ABM, by increasing the actual Joint Venture Costs by 10% of Total Joint Venture Costs and, in the case of Altera Capital, by decreasing actual Joint Venture Costs, plus the Deemed Contribution of the Diluting Party; and

  • “TC” is the Exploration Costs contributed by all Parties from the Execution Date to the date of making the Final Decision plus Total Joint Venture Costs.

“Total Joint Venture Costs” means total Joint Venture Costs of the Parties incurred between the time of the Final Decision and the date of calculation.

For the purposes of the above formula, the Deemed Contributions of the Parties will be:

Altera Capital:

65% of total Exploration Costs incurred by both Parties as at the time of the Final Decision

ABM Resources

35% of total Exploration Costs incurred by both Parties as at the time of the Final Decision.

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  • 3.5 (a) In the event that ABM’s Participating Interest would otherwise become less than 10% in accordance with clause 3.4 then it will be deemed thereafter to retain a Participating Interest of 10% which will, subject to clause 3.5(b), be “free carried” in respect of any Joint Venture Costs which relate to the period after the date of the election which gives rise to the relevant dilution.

  • (b) Altera shall be able to recoup the additional Joint Venture Costs it has borne as a result of ABM’s Participating Interest becoming “free carried” pursuant to clause 3.5(a) ( “Free Carry Costs” from the proceeds of production from mining on the Mining Tenements ( “Production Proceeds” ). These Free Carry Costs shall be deducted from all Production Proceeds ABM would otherwise be entitled to receive until Altera has recouped all Free Carry Costs.”

“Gascoyne Base Metals Project” means M09/62, E09/1074 and E09/1266;

"Listing Rules" means the listing rules of ASX:

“Meeting” means the general meeting of Shareholders convened by the Notice;

“Notice” means the notice dated 4[th] October 2007 convening the Meeting of which this Explanatory Memorandum forms part;

“Official List” means the official list of ASX;

“Option” means an option to subscribe for a Share;

“Panga” means Panga Pty Ltd ACN 008 817 696;

“Pippin Nominees” means Pippin Nominees Pty Ltd ACN 008 907 855;

“Proposal” means the proposal for the restructure and recapitalisation of the Company the essential terms of which are summarised in this Explanatory Memorandum one condition of which is that subject to Completion occurring the Shares will be quoted by ASX;

“Prospectus” means a prospectus to be issued by the Company under the Corporations Act in respect of the Capital Raising;

“Register” means the register of members of the Company as at the date hereof;

“Share” means an ordinary fully paid share in the capital of the Company and “Shareholder” has a corresponding meaning.

33

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References in this Explanatory Memorandum to “Sections” are to Sections of this Explanatory Memorandum.

34

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ALTERA CAPITAL LIMITED ABN 55 082 541 437

GENERAL MEETING PROXY FORM

The Company Secretary Altera Capital Limited 813 Wellington Street West Perth WA 6005 Fax Number: +61 8 9322 1385

APPOINTMENT OF PROXY

I/We being a Member of Altera Capital Limited entitled to attend and vote at the Meeting, hereby Appoint Name of proxy

or failing the person so named or, if no person is named, the Chair of the Meeting, to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the General Meeting to be held at 52 Ord Street, West Perth, Western Australia on 26 November 2007 at 9 am (WST) and at any adjournment thereof.

If the Chair of the Meeting is your nominated proxy, or may be appointed by default, and you do not wish to direct your proxy how to vote in respect of a Resolution, please place a mark in the box.

==> picture [20 x 21] intentionally omitted <==

By marking this box, you acknowledge that the Chair of the Meeting may exercise your proxy even if he has an interest in the outcome of the Resolution and votes cast by him, other than as proxy holder, will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair of the Meeting will not cast your votes on the Resolution and your votes will not be counted in computing the required majority if a poll is called on the Resolution. The Chair of the Meeting intends to vote all undirected proxies in favour of the Resolution.

Voting on Business of the Meeting

FOR FOR FOR AGAINST AGAINST AGAINST ABSTAIN ABSTAIN ABSTAIN
Resolution
Resolution		 1
2		 Selective reduction of capital
Cancellation of shares as a result of
selective reduction of capital
Resolution 3 Issue of 250,000 Shares to ABM Resources NL
Resolution
Resolution
Resolution		 4
5
6		 Issue of 12,500,000 Shares under the Prospectus
Issue of 1,000,000 Options to Mr G Rule or nominee
Issue of 1,000,000 Options to Panga Pty Ltd

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Voting on Business of the Meeting continued

FOR FOR FOR AGAINST AGAINST AGAINST ABSTAIN ABSTAIN ABSTAIN
Resolution
Resolution
Resolution		 7
8
9		 Issue of 1,000,000 Options to Mr H Kehal or nominee
Issue of 1,000,000 Options to Pippin Nominees Pty Ltd
Change of Company name to Altera Resources Limited

If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is

%

Signed this day of 2007

By:

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

Individuals and joint holders Companies (affix common seal if appropriate)
Signature Director
Signature Director/Company Secretary
Signature Sole Director and Sole Company Secretary
----- End of picture text -----

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Instructions for Completing ‘Appointment of Proxy’ Form

  1. A member entitled to attend and vote at a Meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.

  3. A duly appointed proxy need not be a member of the Company. In the case of joint holders, all must sign.

  4. Corporate shareholders should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:

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  • 2 directors of the company;

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  • a director and a company secretary of the company; or

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  • for a proprietary company that has a sole director who is also the sole company secretary – that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

  1. Completion of a Proxy Form will not prevent individual shareholders from attending the meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the meeting in person, then the proxy’s authority to speak and vote for that shareholder is suspended while the shareholder is present at the meeting.

  2. Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.

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