CORAZON MINING LIMITED — AGM Information 2005

Oct 26, 2005

GRAYNIC METALS LIMITED

ABN: 87 112 898 825

NOTICE OF ANNUAL GENERAL MEETING

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EXPLANATORY STATEMENT

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PROXY FORM

DATE AND TIME OF MEETING:

TIME: 10.30am WST DATE: Wednesday 30 November 2005 Willow Room PLACE: Level 2, Prindiville Stand, WACA Western Australian Cricket Association (Inc.) Nelson Crescent EAST PERTH WA 6004

These documents should be read in their entirety. If shareholders are in any doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional advisor.

NOTICE OF MEETING

Notice is hereby given that the Annual General Meeting of the members of Graynic Metals Limited ("Gravnic Metals" or the "Company") will be held at the Willow Room. Level 2. Prindiville Stand, WACA, Western Australian Cricket Association (Inc.), Nelson Crescent, East Perth, Western Australia at 10.30am on 30 November 2005.

The Explanatory Statement that accompanies and forms part of this Notice of Meeting describes in more detail the matters to be considered.

AGENDA

ORDINARY BUSINESS

Reports and Accounts

To receive the financial report of the Company for the year ended 30 June 2005, together with the directors' report and the auditor's report.

Resolution 1 - Adoption of Remuneration Report (Non-binding)

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That, for the purposes of Section 250R(2) of the Corporations Act and for all other purposes, the Company adopts the Remuneration Report."

Short Explanation: The Corporations Act provides that a resolution that the remuneration report be adopted must be put to vote at a listed company's annual general meeting. The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

Resolution 2 - Re-election of Mr Clive Jones

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That Mr Clive Jones, being a Director, retires by rotation in accordance with clause 11.3 of the Constitution and, being eligible, is hereby re-elected as a Director."

Resolution 3 - Re-election of Mr Hoffman

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

That Mr Ivan Hoffman, being a Director, retires in accordance with Clause 11.12 of the Company's Constitution and, being eligible, is hereby reelected as a Director.

NOTICE OF MEETING

Resolution 4 - Issue of Director Options to Mr Ivan Hoffman

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That, subject to the passing of resolution 3, for the purposes of Listing Rule 10.11 of the ASX Listing Rules, Section 208 of the Corporations Act and for all other purposes, approval is given for the Company to allot and issue 1,000,000 Director Options to Mr Ivan Hoffman (or his nominee) on the terms and conditions set out in the Explanatory Statement accompanying this Notice."

Prior to making a decision with respect to Resolution 4, members should refer to Section 4 of the Explanatory Statement which $\overline{1}$ accompanies this Notice of Meeting.

The Company will disregard any votes cast on Resolution 4 by Mr Hoffman or any associate of Mr Hoffman. However, the $\overline{2}$ . Company need not disregard a vote if it is cast by such a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if 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.

Resolution 5 - Issue of Director Options to Mr Ron Thom

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

"That, for the purposes of Listing Rule 10.11 of the ASX Listing Rules. Section 208 of the Corporations Act and for all other purposes, approval is given for the Company to allot and issue 1,000,000 Director Options to Mr Ron Thom (or his nominee) on the terms and conditions set out in the Explanatory Statement accompanying this Notice."

• $\overline{1}$ Prior to making a decision with respect to Resolution 5, members should refer to Section 5 of the Explanatory Statement which accompanies this Notice of Meeting.
• $\overline{2}$ . The Company will disregard any votes cast on Resolution 5 by Mr Thom or any associate of Mr Parsons. However, the Company need not disregard a vote if it is cast by such a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or if 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.

PROXIES

• $\uparrow$ . A member entitled to attend and vote at a meeting of the Company is entitled to appoint not more than two proxies to attend and vote instead of the member. If two proxies are appointed, and a member does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half the votes. A proxy need not be a member of the Company.
• $\overline{2}$ . In order to vote on behalf of a company that is a shareholder of Graynic Metals, a valid Power of Attorney in the name of the attendee, must be either lodged with the Company prior to the Meeting, or be presented at the Meeting before registering on the attendance register for the Meeting.

PROXIES

• Forms to appoint proxies, and the Power of Attorney (if any) under which they are signed, 3. must be lodged at the registered office of the Company, at Level 2, 22 Oxford Close, LEEDERVILLE WA 6005, or by facsimile (61 8) 9381 1068 not less than 48 hours before the time of the Meeting or resumption of an adjourned meeting at which the person named in the instrument proposes to vote.
• $\overline{4}$ An instrument appointing a proxy:
• a) shall be in writing under the hand of the appointor or of his attorney, or if the appointor is a corporation, either under seal or under the hand of a duly authorised officer or attorney:
• b) may specify the manner in which the proxy is to vote in respect of a particular resolution and, where an instrument of proxy so provides, the proxy is not entitled to vote on the resolution except as specified in the instrument:
• c) shall be deemed to confer authority to demand or join in demanding a poll:
• d) shall be in such form as the Directors determine and which complies with Section 250A of the Corporations Act 2001:
• e) proxies appointing the Chairman which do not specify the way in which the proxy is to vote on a particular resolution will be recorded as voting in favour of the resolutions.

ATTENDANCE AND VOTING ELIGIBILITY

For the purpose of regulation 7.11.37 of the Corporations Regulations 2001, the Directors have determined that Shares held at 5.00pm WST on 28 November 2005 will be taken, for the purposes of this Annual General Meeting, to be held by the persons who held them at that time.

BY ORDER OF THE BOARD

Kent Hunter Company Secretary Dated: 21 October 2005

Enquiries

All enguiries in relation to the contents of the Notice of Meeting or Explanatory Statement should be directed to the Company's Managing Director, Mr Ron Thom or Company Secretary, Mr Kent Hunter (telephone: +61 8 9381 1436).

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting to be held at the WACA Ground, Willow Room, at 10.30am WST, 30 November 2005.

VENUE

The Annual General Meeting of the Shareholders of Gravnic Metals Limited which this Notice of Meeting relates to will be held at 10.30am WST on Wednesday 30 November 2005 at:

Willow Room, Level 2, Prindiville Stand, WACA Western Australian Cricket Association (Inc.) Nelson Crescent EAST PERTH WA 6004

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the resolutions in the Notice of Meeting.

$\mathbf{1}$ RESOLUTION 1 - REMUNERATION REPORT (NON-BINDING RESOLUTION)

In accordance with Section 250R(2) of the Corporations Act, the Company must put a resolution that the Remuneration Report be adopted to vote at the Annual General Meeting. The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

The Remuneration Report includes all of the information required by Section 300A of the Corporations Act, including:

• a) board policy for determining, or in relation to, the nature and amount (or value, as appropriate) of remuneration of directors, secretaries and senior managers of the Company:
• b) discussion of the relationship between such policy and the Company's performance; and
• c) the prescribed details in relation to the remuneration of each Director and certain executives.

A reasonable opportunity will be provided for discussion of the Remuneration Report at the Annual General Meeting.

$\overline{2}$ RESOLUTION 2 - RE-ELECTION OF MR CLIVE JONES

Clause 11.3 of the Constitution provides that, at the annual general meeting in every year one-third of the Directors for the time being, or, if their number is not 3 or a multiple of 3, then the number nearest one-third, and any other Director not in such one-third who has held office for 3 years or more (except the Managing Director), must retire from office. A retiring Director is eligible for re-election. The Directors to retire at any annual general meeting must be those who have been longest in office since their last election but, as between persons who became Directors on the same day, those to retire must (unless they otherwise agree among themselves) be determined by lot.

Mr Clive Jones retires and seeks re-election in accordance with clause 11.3 of the Constitution. Details regarding Mr Clive Jones are set out in the Company's 2005 Annual Report.

$3.$ RESOLUTION 3 - RE-ELECTION OF MR IVAN HOFFMAN

Clause 11.12 of the Constitution provides that any director appointed under clause 11.11 of the Company's constitution holds office until the next annual general meeting of the Company and is then eligible for re-election.

Mr Ivan Hoffman seeks re-election in accordance with clause 11.12 of the Constitution. Mr Ivan Hoffman is a Certified Practicing Accountant and a Fellow of the Institute of Corporate Managers, Secretaries and Administrators. For about 18 years, Mr Hoffman was a corporate advisory consultant specialising in mergers and acquisitions and company reconstructions. during which period he served on the boards of several public listed companies, including mineral exploration and mining companies. Before that. Mr Hoffman worked several vears with local and international financial institutions, including four years in investment management and project financing with Lloyds Bank International. Mr Hoffman is currently chairman of the Fortron group of companies and a non-executive director of Saracen Mineral Holdinas Limited.

RESOLUTION 4 - ISSUE OF DIRECTOR OPTIONS TO MR IVAN HOFFMAN $\mathbf{A}$

Background

Resolution 4 seeks Shareholder approval for the issue of 1,000,000 Director Options to Mr Ivan Hoffman (or his nominee). Mr Hoffman is the Non Executive Chairman of the Company.

The ASX Listing Rules and the Corporations Act set out a number of regulatory requirements which must be satisfied. These are summarised below.

$4.1$ ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party of the company.

If Resolution 4 is passed. Director Options will be issued to Mr Ivan Hoffman, who is a related party of the Company. Accordingly, approval for the issue of Director Options is required pursuant to ASX Listing Rule 10.11.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to Mr Ivan Hoffman as approval is being obtained under ASX Listing Rule 10.11. Shareholders should note that the issue of securities to Mr Ivan Hoffman will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 5:

• $(a)$ the maximum number of Director Options to be issued by the Company is 1,000,000 to Mr Ivan Hoffman:
• $(b)$ the Director Options will be issued not later than one month after the date of the Annual General Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated that allotment will occur on one date:
• $(c)$ the Director Options will be issued for no cash consideration;
• $(d)$ the Director Options will be issued on the terms and conditions set out in Section 6.2 of the Explanatory Statement; and
• $(e)$ no funds will be raised from the issue of the Director Options as the purpose of the issue is to give Mr Ivan Hoffman an incentive to provide dedicated and ongoing commitment to the Company.

$4.2$ Section 208 of the Corporations Act

Under Chapter 2E of the Corporations Act, a public company cannot give a "financial benefit" to a "related party" unless one of the exceptions to the section apply or shareholders have in general meeting approved the giving of that financial benefit to the related party.

In the current circumstances, the issue of the Director Options to Mr Ivan Hoffman constitutes a "financial benefit" as defined in the Corporations Act. Further, Mr Ivan Hoffman is a "related party" of the Company as defined under the Corporations Act. Accordingly, the proposed issue of Director Options to Mr Ivan Hoffman will constitute the provision of a financial benefit to a related party of the Company.

It is the view of the Directors that the exceptions under the Corporations Act to the provision of a financial benefit to a related party may not apply in the current circumstances. The Directors have determined to seek Shareholder approval under Section 208 of the Corporations Act to permit the issue of the Director Options.

Sections 217 to 227 of the Corporations Act

Pursuant to Sections 217 to 227 of the Corporations Act, the Company provides the following information to Shareholders in respect of the proposed financial benefit to be given to Mr Ivan Hoffman:

• $(a)$ the related party to whom the financial benefit will be given is Mr Ivan Hoffman:
• $(b)$ the maximum number of Director Options (being the nature of the financial benefit to be provided) to be issued is 1,000,000;

$(c)$ the Directors (other than Mr Ivan Hoffman), who do not have a material personal interest in the outcome of Resolution 4, recommend that Shareholders vote in favour of Resolution 4 as they are of the view that the issue of 1,000,000 Director Options to Mr Ivan Hoffman is an appropriate form of remuneration to provide him with an incentive to maximise returns The Board, with the exclusion of Mr Hoffman, has to Shareholders. examined carefully the remuneration package of Hoffman to determine the fairness and reasonableness of the remuneration package. As part of the examination, the Board has reviewed the remuneration packages of industry executives in similar roles to Mr Hoffman as Non Executive Chairman of Gravnic Metals Limited.

Based on the examination, the Board, with the exclusion of Mr Hoffman, has concluded that the totality of Mr Hoffman's remuneration package. including the equity component of 1,000,000 Options now to be considered for approval by shareholders, is fair and reasonable in the circumstances of Graynic Metals, in light of Mr Hoffman's management experience and knowledge of the finance and mineral exploration industries.

• $(d)$ The Board, with the exclusion of Mr Hoffman, also considered the market price of the Shares when the resolution was passed by the Board and current market practice when determining the number and exercise price of the Director Options to be issued to Mr Ivan Hoffman. Mr Ivan Hoffman declined to make a recommendation in relation to Resolution 4 due to the fact that he has a material personal interest in its outcome:
• Mr Ivan Hoffman is currently paid \$40,000 (plus statutory superannuation of $(e)$ 9%) per annum for his services to the Company;
• $(f)$ Mr Ivan Hoffman currently has an interest in nil Shares and nil options to acquire Shares:
• If all the options the subject of Resolutions 4, and 5 are granted and $(q)$ exercised, then the Company's fully paid share capital will be diluted by approximately 8.2% (based on the existing number of Shares). The Company will, however, receive subscription monies totaling \$600,000. If however, only the Directors' Options, the subject of this Resolution 4, are exercised, then the Company's fully paid share capital will be diluted by approximately 4.1% (based on the existing number of Shares). The Company will, however, receive subscription monies totaling \$300,000.
• $(h)$ The market price for Shares during the term of the Director Options would normally determine whether or not Mr Ivan Hoffman exercises the Director Options. If, at the time any of the Director Options are exercised, the Shares are trading on ASX at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company.

The highest, lowest and last trading price of Shares on ASX during the period from the commencement of official quotation on 30 June 2005 and the date of this Notice are as set out below:

	Date	Price
Highest	30 June 2005	\$0.20
	and 1 July 2005
Lowest	10 and 14 October	\$0.105
	2005
Last	19 October 2005	\$0.115

The highest, lowest and last trading price of the Company's Listed Options on ASX during the period from the commencement of official quotation on 27 September 2005 and the date of this Notice are as set out below:

	Date	Price
Highest	03, 04, 11, 12 and 17 October 2005	\$0.025
Lowest	27 September 2005	\$0.021
Last	19 October 2005	\$0.022

• $(i)$ the ASIC in reviewing documents lodged under section 218 relating to the giving of financial benefits to related parties of public companies requires explanatory information regarding the value of the options proposed to be granted. The value of the Director Options has been calculated by Capital & Corporate Advisers Pty Ltd using the Black & Scholes pricing model and is set out in Section 6.1; and
• $($ i) additional information in relation to Resolution 4 is set out throughout this Explanatory Statement. Shareholders should therefore read the Notice and Explanatory Statement in its entirety before making a decision as to how to vote on Resolution 4.

$5.$ RESOLUTION 5 - ISSUE OF DIRECTOR OPTIONS TO MR RON THOM

Background

Resolution 5 seeks Shareholder approval for the issue of 1,000,000 Director Options to Mr Ron Thom (or his nominee). Mr Thom is the Managing Director of the Company.

The ASX Listing Rules and the Corporations Act set out a number of regulatory requirements which must be satisfied. These are summarised below

5.1 ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires a listed company to obtain shareholder approval by ordinary resolution prior to the issue of securities (including an option) to a related party of the company.

If Resolution 5 is passed. Director Options will be issued to Mr Ron Thom, who is a related party of the Company. Accordingly, approval for the issue of Director Options is required pursuant to ASX Listing Rule 10.11.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to Mr Ron Thom as approval is being obtained under ASX Listing Rule 10.11. Shareholders should note that the issue of securities to Mr Ron Thom will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 5:

• $(a)$ the maximum number of Director Options to be issued by the Company is 1.000.000 to Mr Ron Thom:
• the Director Options will be issued not later than one month after the date of $(b)$ the Annual General Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated that allotment will occur on one date:
• $(c)$ the Director Options will be issued for no cash consideration;
• $(d)$ the Director Options will be issued on the terms and conditions set out in Section 6.2 of the Explanatory Statement; and
• no funds will be raised from the issue of the Director Options as the $(e)$ purpose of the issue is to give Mr Ron Thom an incentive to provide dedicated and ongoing commitment to the Company.

$5.2$ Section 208 of the Corporations Act

Under Chapter 2E of the Corporations Act, a public company cannot give a "financial benefit" to a "related party" unless one of the exceptions to the section apply or shareholders have in general meeting approved the giving of that financial benefit to the related party.

In the current circumstances, the issue of the Director Options to Mr Ron Thom constitutes a "financial benefit" as defined in the Corporations Act. Further, Mr Ron Thom is a "related party" of the Company as defined under the Corporations Act. Accordingly, the proposed issue of Director Options to Mr Ron Thom will constitute the provision of a financial benefit to a related party of the Company.

It is the view of the Directors that the exceptions under the Corporations Act to the provision of a financial benefit to a related party may not apply in the current circumstances. The Directors have determined to seek Shareholder approval under Section 208 of the Corporations Act to permit the issue of the Director Options.

Sections 217 to 227 of the Corporations Act

Pursuant to Sections 217 to 227 of the Corporations Act, the Company provides the following information to Shareholders in respect of the proposed financial benefit to be given to Mr Ron Thom:

• the related party to whom the financial benefit will be given is Mr Ron $(a)$ Thom:
• the maximum number of Director Options (being the nature of the financial $(b)$ benefit to be provided) to be issued is 1,000,000;
• $(c)$ the Directors (other than Mr Ron Thom), who do not have a material personal interest in the outcome of Resolution 5, recommend that Shareholders vote in favour of Resolution 5 as they are of the view that the issue of 1,000,000 Director Options to Mr Ron Thom is an appropriate form of remuneration to provide him with an incentive to maximise returns to Shareholders. The Board, with the exclusion of Mr Thom, has examined carefully the remuneration package of Thom to determine the fairness and reasonableness of the remuneration package. As part of the examination. the Board has reviewed the remuneration packages of industry executives in similar roles to Mr Thom as Managing Director of Graynic Metals Limited.

Based on the examination, the Board, with the exclusion of Mr Thom, has concluded that the totality of Mr Thom's remuneration package, including the equity component of 1,000,000 Options now to be considered for approval by shareholders, is fair and reasonable in the circumstances of Graynic Metals, in light of Mr Thom's management experience and knowledge of the mineral exploration industry.

• $(d)$ The Board, with the exclusion of Mr Thom, also considered the market price of the Shares when the resolution was passed by the Board and current market practice when determining the number and exercise price of the Director Options to be issued to Mr Ron Thom. Mr Ron Thom declined to make a recommendation in relation to Resolution 5 due to the fact that he has a material personal interest in its outcome;
• $(e)$ Mr Ron Thom is currently paid \$120,000 (plus statutory superannuation of 9%) per annum for his services to the Company;
• $(f)$ Mr Ron Thom currently has an interest in 524,000 Shares (being 2.14% of Issued Capital) and 262,000 20 cent 31 October 2007 options to acquire Shares
• If all the options the subject of Resolutions 4, and 5 are granted and $(g)$ exercised, then the Company's fully paid share capital will be diluted by approximately 8.2% (based on the existing number of Shares). The Company will, however, receive subscription monies totaling \$600,000. If, however, only the Directors' Options, the subject of this Resolution 5, are exercised, then the Company's fully paid share capital will be diluted by approximately 4.1% (based on the existing number of Shares). The Company will, however, receive subscription monies totaling \$300,000.

The market price for Shares during the term of the Director Options would normally determine whether or not Mr Ron Thom exercises the Director Options. If, at the time any of the Director Options are exercised, the Shares are trading on ASX at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company. The highest, lowest and last trading price of Shares on ASX during the period from the commencement of official quotation on 30 June 2005 and the date of this Notice are as set out below:

	Date	Price
Highest	30 June 2005	\$0.20
	and 1 July 2005
Lowest	10 and 14 October	\$0.105
	2005
.ast	19 October 2005	\$0.115

The highest, lowest and last trading price of the Company's Listed Options on ASX during the period from the commencement of official quotation on 27 September 2005 and the date of this Notice are as set out below:

	Date	Price
Highest	03, 04, 11, 12 and 17	\$0.025
	October 2005
Lowest	27 September 2005	\$0.021
Last	17 October 2005	\$0.025

• $(h)$ the ASIC in reviewing documents lodged under section 218 relating to the giving of financial benefits to related parties of public companies requires explanatory information regarding the value of the options proposed to be granted. The value of the Director Options has been calculated by Capital & Corporate Advisers Pty Ltd using the Black & Scholes pricing model and is set out in Section 6.1: and
• additional information in relation to Resolution 5 is set out throughout this $(i)$ Explanatory Statement. Shareholders should therefore read the Notice and Explanatory Statement in its entirety before making a decision as to how to vote on Resolution 5.

$6.1$ Valuation of the Director Options

The Director Options have been valued using the Black & Scholes pricing model and based upon the following assumptions:

• $(a)$ the Director Options expire on 31 October 2008 and are exercisable at \$0.30 each;

• $(b)$ a volatility factor of 50% based on the historical volatility of the Company's Share price and reference to other similar companies for comparative purposes:

• a risk free interest rate of 5.33% based on the 3 year Australian $(c)$ Government Bond rate as at 19 October 2005; and

• $(d)$ the valuation date for the Director Options was 19 October 2005 and the Share price on that date was \$0.115.

Based on the above, the Director Options have been independently valued by Ord Corporate Pty Ltd at \$27,000 in aggregate (2,000,000 proposed to be issued), or \$0.0135 per Director Option. Mr Hoffman's and Mr Thom's separate proposed Director Options are therefore valued in aggregate at \$13,500.

6.2 Terms and Conditions of Director Options

The material terms and conditions of the Director Options are as follows:

• $(a)$ each Director Option entitles the holder, on exercise, to one Share;
• $(b)$ the Director Options will expire at 5.00pm (WST) on 31 October 2008 (Expiry Date):
• the Director Option exercise price is \$0.30 each; $\left( c\right)$
• $(d)$ the Director Options are exercisable at any time on or prior to the Expiry Date by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Director Options are exercised to the registered office of the Company:
• $(e)$ a Director Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director Option can be exercised;
• $(f)$ the Director Options are not transferable;
• all Shares issued upon exercise of the Director Options will rank pari passu $(a)$ in all respects with the Company's then issued Shares.
• $(h)$ the Company will not apply for quotation of the Director Options on ASX. however it will apply for quotation of all Shares issued upon exercise of the Director Options;
• $(i)$ there are no participating rights or entitlements inherent in the Director Options and the holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Director Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 business days after the issue is announced. This will give Director Option holders the opportunity to exercise their Director Options prior to the date for determining entitlements to participate in any such issue; and
• $\left($ il if at any time the issued capital of the Company is reconstructed, all rights of a Director Option holder are to be changed in a manner consistent with the ASX Listing Rules.

7. GLOSSARY OF TERMS

In this Explanatory Statement:

"ACN"	Australian Company Number
"Graynic Metals"or "Company"	Graynic Metals Limited (ABN: 87 112 898 825).
"ASIC"	Australian Securities and Investments Commission.
"ASX"	Australian Stock Exchange Limited (ACN 008 624 691)
"ASX Listing Rules" or "Listing Rules"	The Official Listing Rules of ASX as amended from time to time.
"Corporations Act"	The Corporations Act 2001 (Commonwealth).
"Director"	A director of Graynic Metals.
"Directors' Options"	An option to subscribe for a Share at an exercise price of 30 cents per share on or before 31 October 2008, and otherwise on the terms set out in Section 6.2 of this Explanatory Statement.
"Listed Option"	An option to subscribe for a Share at an exercise price of 20 cents per share on or before 31 October 2007 and listed on ASX.
"Meeting"	The Meeting of the Company to be held on 30 November 2005.
"Notice of Meeting"	The notice convening the Meeting, which accompanies this Explanatory Statement.
"Resolutions"	Resolutions in the Notice of Meeting.
"Share"	A fully paid ordinary share in the capital of the Company.
"Shareholder"	The registered holder of a Share in the Company.

PROXY FORM

[Please insert name and address]

The Secretary Graynic Metals Limited PO Box 1681 WEST PERTH WA 6872

being a member/members of Graynic Metals Limited (the "Company") hereby appoint

Print proxy's name in full
οf
print proxy's address
and (if you wish to appoint two proxies) print second proxy's name in full
of
print second proxy's address
or, in the proxy's/proxies' absence or if no other appointee is mentioned, the Chairman of the meeting as my/our proxy/proxies to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at the Willow Room, Level 2, Prindiville Stand, WACA, Western Australian Cricket Association (Inc.), Nelson Crescent, East Perth, Western Australia at 10.30am, 30 November 2005 and at any adjournment of that meeting in respect of of my/our shares or, failing any number being specified, ALL of my/our shares.
If you do not wish to direct your proxy how to vote, please place a mark in the box.
If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution, please place a mark in the box.
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/s and that votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.
If you do not mark the box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.
If you wish to indicate how your proxy is to vote, please tick the appropriate places below. If no indication is given on a resolution, the proxy may abstain or vote at his or her discretion.
I/We direct my/our proxy to vote as indicated below:
ORDINARY BUSINESS
RESOLUTION	FOR AGAINST ABSTAIN
1. Adoption of Remuneration Report (Non-binding)
Election of Director - Mr Clive Jones 2.
3. Election of Director - Mr Ivan Hoffman
Issue of Director Options - Mr Ivan Hoffman 4.
5. Issue of Director Options - Mr Ron Thom
If you have appointed two proxies the proportion of your voting rights allocated to each proxy is: $\uparrow$ . Note: Proxy No. 1 _% Proxy No. 2 --------------------------------------- 2. by the authority under which the appointment was signed, or a certified copy of the authority.	If the appointment of a proxy is signed by the appointor's attorney, this form must be accompanied
The completed Form of proxy may be: Mailed to the address on this form; or Faxed to the Company on (08) 9381 1068

PROXY FORM

Signed this	day of	2005
If a natural person:
SIGNED in the presence of:	by	(Signature)
(Signature of Witness)
(Name of Witness in full)
If a Company:
COMMON THE	SEAL οf
ACN was affixed in the presence of:
(Signature of Secretary/other Director)		(Signature of Director/Sole Director)
(Name of Secretary/other Director in full)		(Name of Director/Sole Director in full)

PROXY VOTES

A vote given in accordance with the terms of an instrument or proxy is valid not withstanding the previous death or unsoundness of mind of the principal, the revocation of the instrument (or the authority under which the instrument was executed), or the transfer of the Share in respect of which the instrument or power is given, if no intimation in writing of the death, unsoundness of mind, revocation or transfer has been received by the Company at the Registered Office before the commencement of the Meeting or adjourned Meeting at which the instrument is used or the power is exercised

REPRESENTATIVES OF CORPORATE SHAREHOLDERS

A body corporate ("the Appointor") that is a Shareholder may authorise, in accordance with Section 250D of the Corporations Act 2001, by resolution of its Directors or other governing body such person or persons as it may determine to act as its Representative at any Meeting of the Company or of any class of Shareholders. A person so authorised shall be entitled to exercise all the rights and privileges of the Appointor as a Shareholder. When a Representative is present at a Meeting of the Company, the Appointor shall be deemed to be personally present at the Meeting unless the Representative is otherwise entitled to be present at the Meeting.