CORAZON MINING LIMITED — Capital/Financing Update 2005

Dec 13, 2005

GRAYNIC METALS LIMITED ABN 87 112 898 825

SHORT FORM PROSPECTUS

For the issue of 2,500,000 Shares at an issue price of \$0.20 to raise \$500,000

Important Notice

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. This Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type but refers to another document the information of which is deemed to be incorporated in this Prospectus.

CORPORATE DIRECTORY

	TABLE OF CONTENTS
	SECTION 1 CORPORATE DIRECTORY	4
SECTION 2	MANAGING DIRECTOR'S LETTER	5
	SECTION 3 TIMETABLE AND IMPORTANT DATES	6
	SECTION 4 DETAILS OF THE OFFER	7
SECTION 5	INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS	10
SECTION 6	COMPANY OVERVIEW	13
SECTION 7	EFFECT OF THE ISSUE ON THE COMPANY	14
	SECTION 8 OVERSEAS PARTICIPANTS	14
SECTION 9	TERMS AND CONDITIONS AND RIGHTS ATTACHING TO SHARES	15
	SECTION 10 ADDITIONAL INFORMATION	17.
	SECTION 11 MATERIAL CONTRACTS	18
SECTION 12 CONSENTS		19
	SECTION 13 AUTHORITY OF DIRECTORS	20
	SECTION 14 DEFINITIONS	21

Important Notice

This Prospectus is dated 14 December 2005.

A copy of this Prospectus was lodged with the ASIC on 14 December 2005. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus.

No Shares will be issued on the basis of this Prospectus later than thirteen (13) months after the date of this Prospectus. Application will be made within seven (7) days after the date of this Prospectus for permission for the Shares offered by this Prospectus to be listed for Quotation.

Applicants should read this document in its entirety and, if in any doubt, consult with their professional advisors before deciding whether to apply for Shares. There are risks associated with an investment in Graynic and the Shares offered under this Prospectus must be regarded as a speculative investment. The Shares offered under this Prospectus carry no guarantee with respect to return on capital investment, payment of dividends or the future value of the Shares.

Certain abbreviations and other defined terms are used throughout this Prospectus. Defined terms are generally identifiable by the use of an upper case first letter. Details of the definitions and abbreviations used are set out in Section 14 of this Prospectus.

In accordance with Chapter 6D of the Corporations Act, this Prospectus is subject to an exposure period of seven days from the date of lodgement with ASIC. This period may be extended by ASIC for a further period of up to seven days. The purpose of this exposure period is to enable this Prospectus to be examined by market participants prior to the raising of funds, which examination may result in the identification of deficiencies in this Prospectus. If this Prospectus is found to be deficient, Applications received during the exposure period will be treated as if they were simultaneously received on the date on which Applications open.

Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type. Rather, the Prospectus incorporates by reference information contained in a document that has been lodged with the ASIC.

This Prospectus refers to the disclosure documents lodged by the Company with the ASIC on 13 April 2005 for the offer of 6,250,000 Shares at an issue price of 20 cents each to raise a total of \$1,250,000 (April 2005 Prospectus) and 18 August 2005 for the non renounceable entitlement issue of 1 Option for each 2 Shares held by a Shareholder to raise up to \$122,500 (August 2005 Prospectus). In referring to the April 2005 Prospectus and the August 2005 Prospectus, the Company:

• identifies the April 2005 Prospectus and the August 2005 Prospectus as being $(a)$ relevant to the offer of Share under this Prospectus and containing information that will provide investors and their professional advisers information to assist them in making an informed assessment of:
• the rights and liabilities attaching to the Shares; $(1)$
• (ii) the capacity of the Company to issue the Shares; and

• (iii) the assets and liabilities, financial position and performance, profits and losses and prospects of Graynic;

• refers investors and their professional advisers to Section 5 of this Prospectus which $(b)$ summarises the information in the April 2005 Prospectus and the August 2005 Prospectus deemed to be incorporated in this Prospectus;

• informs investors and their professional advisers that they are able to obtain, free of $(c)$ charge, a copy of the April 2005 Prospectus and the August 2005 Prospectus by contacting the Company at its registered office during normal business hours during the Offer Period: and
• $(d)$ advises that the information in the April 2005 Prospectus and the August 2005 Prospectus will be primarily of interest to investors and their professional advisers or analysts.

SECTION 1 CORPORATE DIRECTORY

DIRECTORS

Ivan Hoffman Ron Thom Nathan McMahon Clive Jones

Non-Executive Chairman Managing Director Non-Executive Director Non-Executive Director

COMPANY SECRETARY

Kent Hunter

REGISTERED OFFICE

Level 2, 22 Oxford Close, LEEDERVILLE WA 6005

LAWYERS TO THE COMPANY

Price Sierakowski Level 24, 44 St Georges Terrace PERTH WA 6000

AUDITORS

Ord Partners Chartered Accountants Level 2, 47 Colin Street WEST PERTH WA 6005

SHARE REGISTRY

Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009

CONTACT DETAILS

Website: www.graynicmetals.com.au

Email: admin@gravnicmetals.com.au

Telephone: Graynic Metals Ltd $(08)$ 9381 1436

Facsimile: Graynic Metals Ltd $(08)$ 9381 1068

Telephone: Share Registry $(08)$ 9389 8033

Facsimile: Share Registry (08) 9389 7871

MANAGING DIRECTOR'S LETTER SECTION 2

14 December 2005

Dear Investor

The Board is pleased to offer investors the opportunity to participate in the Offer.

The Offer is open only to those investors exempted under section 708 of the Corporations Act and any application for Shares under this Prospectus must be accompanied by evidence to the satisfaction of Graynic that the applicant is a sophisticated investor under section 708(8) of the Corporations Act.

The Closing Date for applications is 5.00pm WST on 19 December 2005.

Yours faithfully,

Ron Thom Managing Director

SECTION 3

TIMETABLE AND IMPORTANT DATES

ieventi	DAVES
Prospectus lodged with ASIC and ASX	14 December 2005
Closing Date	19 December 2005
Dispatch of holding statements	21 December 2005

SECTION 4

DETAILS OF THE OFFER

$4.1$ Purpose of the Issue

The funds raised by the Offer will be applied to acquisition costs for the Broken Hill and Gulf Creek Projects, working capital and also to meet issue expenses of approximately \$25,000.

$4.2$ The Share Issue

The Company by this Prospectus invites investors to subscribe for 2,500,000 Shares at an issue price of \$0.20 to raise \$500,000.

Applications for Shares must be made on the Application Form attached to this Prospectus.

$4.3$ Application for Shares

An applicant for Shares under this Prospectus may subscribe for a minimum of 10,000 Shares (\$2,000) and thereafter may apply for Shares in multiples of 1,000 Shares (\$200). No brokerage, stamp duty or other costs are payable by an applicant for Shares.

Investors must apply for Shares by returning a completed Application Form to the Company's Share Registry by 5.00 pm WST, 19 December 2005.

4.4 Minimum Subscription

There is no minimum subscription.

4.5 Oversubscriptions

Oversubscriptions will not be accepted.

Issue Price 4.6

The issue price is 20 cents for each Share payable in full in Australian currency on the Application as follows:

• o Cheque drawn on and payable at any Australian bank;
• Money Order; or $\circ$
• Bank draft drawn on and payable at any Australian bank. $\Omega$

4.7 Application

This Offer may be accepted by completing the Application Form. Application and payment in full of 20 cents per Share must be received before 5.00pm WST on 19 December 2005. Instructions for completion and lodgement of Applications are set out on the back of the enclosed Application Form.

SECTION 4

DETAILS OF THE OFFER

$4.8$ Action Required

If you wish to apply for Shares, complete the enclosed Application Form in accordance with the instructions set out and lodge the form together with your cheque for the amount shown on the form so that it reaches the Company's share registry:

Advanced Share Registry Services 110 Stirling Highway Nedlands WA 6009

by no later than 5.00pm WST on 19 December 2005.

Cheques and drafts should be made payable to "Graynic Metals Ltd - Placement" and crossed "Not Negotiable".

An original, completed and lodged Application Form together with the correct payment of application money constitutes a binding and irrevocable offer for the number of Shares specified in the Application Form. The Application Form does not need to be signed to be valid. The Director's decision to regard any Application as valid is final however an Applicant will not be regarded as applying for more Shares than is indicated by the payment sent with the Application Form.

4.9 Underwriting

This Offer is not underwritten. The Directors reserve the right to place with parties selected by them any Shares not taken up by the Shareholders. These Shares will be placed within 3 months of the Closing Date on the same terms as are being offered to Shareholders pursuant to this Prospectus. Shares not taken up by Shareholders will not be placed to the Directors or any associates of Directors.

SECTION 4

DETAILS OF THE OFFER

4.10 Closing Date

The Closing Date for the Offer is 5.00 pm WST on 19 December 2005.

4.11 Allotment

The Shares will be allotted and issued as soon as practicable the Closing Date.

Statements of holding for the Shares will be mailed as soon as possible after the Closing Date.

No Shares will be allotted and issued on the basis of this Prospectus later than thirteen (13) months after the date of this Prospectus.

4.12 Stock Exchange Quotation

Application for official quotation of the Shares by the ASX will be made by the Company within seven (7) days of the date of this Prospectus.

4.13 Overseas Shareholders

Shareholders resident outside Australia should consult their professional advisers as to whether any governmental or other consents are required, or other formalities need to be observed to enable them to accept or deal with this Offer.

This Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom it would not be lawful to make such an offer or invitation. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

4.14 Enquiries

If you have any questions concerning the Offer, please contact the Company Secretary, Mr Kent Hunter on (618) 9381 1436, or fax (618) 9381 1068 or contact your professional adviser.

INFORMATION DEEMED TO BE SECTION 5 INCORPORATED IN THIS PROSPECTUS

$5.1$ Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type, however it incorporates by reference information contained in a document that has been lodged with the ASIC.

The information to be incorporated by reference into this Prospectus is summarised below in subsection 5.2 and will primarily be of interest to investors and their professional advisers or analysts.

The Company informs investors and their professional advisers that they are able to obtain, free of charge, a copy of the April 2005 Prospectus and the August 2005 Prospectus by contacting the Company at its registered office during normal business hours during the Offer Period. The April 2005 and the August 2005 Prospectus will also be available by searching ASIC's records in relation to Graynic, or by visiting the Company's website at www.graynicmetals.com.au.

$5.2$ Summary of Information Deemed to be Incorporated

Set out below is a summary of the information contained in the April 2005 Prospectus that is deemed to be incorporated in this Prospectus to assist investors and their professional advisers to determine whether, for the purposes of making an informed investment decision in relation to the Shares, they should obtain a copy of the April 2005 Prospectus.

The Sections referred to below are a reference to sections in the April 2005 Prospectus.

Section 2 - Project Review

This section contains a summary of the projects and tenements acquired by Graynic since its incorporation on 10 February 2005. It details the objectives and strategies of the Company and provides information relating to the mineral exploration tenements.

Section 2 also summarises the intended exploration expenditure in regard to the projects noted above.

Section 3 - Board and Management

Section 3 contains information relating to each of the three directors of the Company and also refers to the corporate governance policies adopted by the Board.

Section 4 - Risk Factors

Section 4 notes that an investment in Gravnic Metals has risks reasonably expected of an investment in a business of its type. It details a number of factors that may impact on the success and future profitability of Graynic Metals. The factors referred to are Exploration Success, Operating Risks, Resource Estimates, Commodity Price Volatility and Exchange Rate Risks, Environmental Risks, Title Risks and Native Title, Share Market Conditions, General Investment Risks, and Specific Risks Associated with the Company.

SECTION 5 INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS

Section 5 - Independent Geologist's Report

Section 5 consists of the report prepared by the Independent Geologist, Boonjarding Resources Ltd. The report describes in detail the geological setting and historical mining and exploration on the mining tenements of Gravnic. The Report also sets out details of proposed exploration programs on the mining exploration tenements.

Section 6 - Investigating Accountant's Report

This comprises the Investigating Accountant's Report prepared by Ord Corporate Pty Ltd, dated 6 April 2005. The report was included in the April 2005 Prospectus to assist investors and their financial advisers in making an assessment of the financial position of the Company.

The Investigating Accountant's Report contains the unaudited Statement of Financial Performance for the period from incorporation to 31 March 2005, Statement of Financial Position of the Company as at 31 March 2005 and pro-forma Statement of Financial Position as at that date reflecting the position of the Company on the basis that various transactions, including the issue of all the Shares offered under the April 2005 Prospectus, and the final settlement of the acquisition of the mineral exploration tenements comprising the project by the Company, has been completed.

Based on their review, the Investigating Accountant stated that nothing had come to their attention that caused them to believe that:

(a) the historical financial information, as set out in Appendix 1 and 2 of their Report, is not presented fairly in accordance with generally accepted accounting principles, as applied in Australia for reporting on financial information in a public offer document; or

(b) the pro-forma financial information, as set out in Appendix 1 and 2 of their Report, is not properly drawn up in accordance with the basis of preparation in Appendix 1 and 2, and the assumptions set out in their Report, and with generally accepted practice as applied in Australia for presenting pro-forma financial information in a public offer document.

Subsequent to lodgement of the April 2005 Prospectus, and as announced to ASX by way of pre-quotation disclosure on 30 June 2005, the financial statements have been prepared in accordance with the measurement and recognition (but not the disclosure) requirements of all Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards ('AIFRS'), and UIG interpretations with the exception of AASB 107 - Cash Flow Statements.

SECTION 5

INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS

Section 7 - Solicitor's Report on Tenements

Section 7 consists of a report prepared by Price Sierakowski Lawyers, on the mining tenements acquired, or which may be acquired or in which an interest may earned by Graynic. The report details the titleholders of the mining tenements and the agreements entered into by the Company with Cazaly Resources Limited. The report also details the further contracts entered into by Cazaly Resources Limited which have been identified as material and relevant to potential investors.

Section 8 - Additional Information

Section 8 sets out additional information required to be disclosed in the prospectus including:

• Rights Attaching to Shares:
• Summarv of Material Contracts to which the Company is a party (other than those summarised in Section 7) that the Directors considered were material in enabling investors to make an informed assessment of the offer of shares under the April 2005 Prospectus;
• Interests of Directors of the Company;
• Interests of Persons Named in the April 2005 Prospectus;
• Details of the Consents of persons to be named in the April 2005 Prospectus:
• Expenses of the Issue:
• Taxation;
• Exposure Period:
• A statement that the Company is not involved in any material litigation or arbitration proceedings, nor are any proceedings pending or threatened against the Company;
• Availability of an Electronic Prospectus: and
• Details of the Employee Incentive Scheme.

The August 2005 Prospectus

The August 2005 Prospectus incorporated the above sections of the April 2005 Prospectus by way of reference as permitted under the Corporations Act.

The Directors of Graynic confirm that investors intending to accept the Offer under this Prospectus should regard this Prospectus as including the matters set out in this section 5.2 pursuant to section 712 of the Corporations Act.

SECTION 6

COMPANY OVERVIEW

Overview and Reference to April 2005 Prospectus and August 2005 Prospectus 6.1

A comprehensive overview of the Company is set out in the April 2005 Prospectus that was lodged with ASIC on 13 April 2005 for the initial public offering of 6.250,000 Shares. Persons considering subscribing for Shares under this Prospectus should refer to Section 5 of this Prospectus for a summary of the information contained in the April 2005 Prospectus deemed to be incorporated in this Prospectus.

As detailed in Section 2.2 of the April 2005 Prospectus. Graynic had proposed an exploration budget of \$1,700,000 over 24 months on the Quartz Circle. Jutson Rock and Northampton Project acquired by Gravnic.

The actual manner in which the exploration expenditure is incurred may vary having regard to numerous factors, including the results of ongoing exploration activities and other matters as outlined in Section 4 of the April 2005 Prospectus.

On 16 June 2005, the Directors resolved to allot and issue 6,250,000 Shares at an issue price of 20 cents each pursuant to applications received under the April 2005 Prospectus. On 16 June 2005 the Directors resolved to allot and issue 6,250,000 Shares required under the Share Subscription Agreement with RAB Special Situations LP. On 31 May 2005 the Directors resolved to allot and issue 10,000,000 Shares to Cazaly Resources Limited pursuant to the Farm-in Agreement between Cazaly Resources Limited, Hayes Mining Pty Ltd and the Company.

On 18 August 2005 the Company lodged a Prospectus with ASIC for a non-renounceable entitlements issue of 1 new option for every 2 existing shares held, at an issue price of 1 cent per new option. A total of 12,250,118 options exercisable at 20 cents, on or before 31 October 2007, were taken up and issued under the entitlement.

The Company now has 24,500,003 Shares on issue and 12,250,118 options exercisable at 20 cents on or before 31 October 2007.

Graynic was admitted to the Official List on 28 June 2005 with official quotation of its shares commencing on 30 June 2005.

$6.2$ Circumstances or Matters subsequent to the April 2005 Prospectus

Other than as stated in this Prospectus, the Company is not aware of any material matter or circumstance that would impact on the contents of the April 2005 Prospectus or the activities and prospects of the Company and be relevant to assist investors or their professional advisers making an informed assessment of relevant matters.

$6.3$ Circumstances or Matters subsequent to the August 2005 Prospectus

On or about 12 December 2005 the Company entered into acquisition agreements with Resource Investment Group Pty Ltd. Investors should refer to the announcement made to the ASX by the Company on 12 December 2005 for further details on the NSW Projects.

The consideration payable by the Company for the NSW Projects is \$50,000 cash, 10,000,000 Shares and 4.000,000 Options exercisable at \$0.30.

SECTION 6

COMPANY OVERVIEW

Other than as stated in this Prospectus, the Company is not aware of any material matter or circumstance that would impact on the contents of the August 2005 Prospectus or the activities and prospects of the Company and be relevant to assist investors or their professional advisers making an informed assessment of relevant matters.

SECTION 7 EFFECT OF THE ISSUE ON THE COMPANY

Under the Offer, up to 2,500,000 Shares are available for issue and will be issued if the Offer is fully subscribed (either by Shareholders accepting the offer under this Prospectus or pursuant to the Directors' discretion to place any shortfall referred to in Section 4.9 of this Prospectus).

After expenses of the Offer, the proceeds from the issue of Shares will be approximately \$475,000. These funds will be applied to the general working capital requirements of the Company.

$7.1$ Effect of the Offer

The principal effect of the Offer will be to:

increase cash reserves by approximately \$475,000 after deducting estimated expenses of the Offer and assuming all Shares offered under this Prospectus are issued: and

increase the number of Shares on issue from 24,500,003 as at the date of this Prospectus to up to 27,000,003 Shares.

$7.2$ Pro Forma Capital Structure of the Company

Shares

Upon completion of the issue of Securities, the capital structure of the Company will be as follows

Shares on issue as at the date of this Prospectus	24,500,003
Shares offered pursuant to this Prospectus	2,500,000
Shares on issue on completion of the Offer	27.000.003

EFFECT OF THE ISSUE ON THE COMPANY SECTION 7

$7.3$ Pro Forma Balance Sheet

Set out below, for the purposes of illustration only, is a pro forma statement of financial position of the Company after taking account of the Offer. It is based on the unaudited statement of financial position of the Company as at 30 September 2005. The pro forma statement of financial position illustrates the effect of the Offer as if the issue of Securities under this Prospectus had occurred on 30 September 2005 (based on the assumptions set out below).

	Unaudited 30 September 2005	Adjustments	Proforma
	\$	\$	\$
CURRENT ASSETS
Cash assets	1,919,739	475,000	2,394,739
Receivables	22,926		22,926
TOTAL CURRENT ASSETS	1,942,665		2,417,665
NON-CURRENT ASSETS
Investments	15,910		15,910
Property, plant and equipment	8,587		8,587
Exploration expenditure capitalised	2,515,940		2,515,940
TOTAL NON-CURRENT ASSETS	2,540,437		2,540,437
TOTAL ASSETS	4,483,102		4,958,102
CURRENT LIABILITIES
Payables	22,579		22,579
Provisions	3,008		3,008
TOTAL CURRENT LIABILITIES	25,587		25,587
TOTAL LIABILITIES	25,587		25,587
NET ASSETS	4,457,515		4,932,515
EQUITY
Contributed Equity	4,483,559	475,000	4,958,559
Reserves	167,330		167,330
Accumulated losses	(193, 374)		(193, 374)
TOTAL EQUITY	4,457,515		4,932,515

SECTION 7 EFFECT OF THE ISSUE ON THE COMPANY

The assumptions used in the preparation of the pro forma statement of financial position set out above are as follows:

the Company issues 2,500,000 Shares at \$0.20 per Share pursuant to this Prospectus, raising proceeds of approximately \$500,000;

estimated costs of the Offer of \$25,000 have been recognised directly against Share capital, as a reduction of the proceeds of the Issue; and

the net cash adjustment to the pro forma statement of financial position is therefore an increase of \$475,000.

SECTION 8 OVERSEAS PARTICIPANTS

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make an offer.

SECTION 9 TERMS AND CONDITIONS AND RIGHTS ATTACHING TO SHARES

$9.1$ Rights attaching to Shares

Full details of the rights attaching to Shares are set out in the Company's Constitution a copy of which can be inspected, free of charge, at the Company's registered office during normal business hours

The following is a broad summary of the rights, privileges and restrictions attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders.

All Shares issued pursuant to this Prospectus will from the time they are issued, rank pari passu with all the Company's existing Shares.

Voting Rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares (at present there are none), at meetings of shareholders of Graynic:

• a) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;
• b) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
• c) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares, shall have such number of votes as bears the same proportion which the amount paid (not credited) is of the total amounts paid and payable (excluding amounts credited).

Rights on Winding Up

Subject to the rights of holders of shares with special rights in a winding up (at present there are none), on a winding up of the Company all assets that may be legally distributed among members will be distributed in proportion to the number of fully paid shares held by them (and a partly paid share is counted as a fraction of a fully paid share equal to the amount paid on it, divided by the total issue price of the share).

Transfer of Shares

Subject to the Constitution of the Company, the Corporations Act 2001, the ASTC Settlement Rules, the ASX Listing Rules, and any other applicable laws, Shares are freely transferable.

Future Increases in Capital

The allotment and issue of any Shares is under the control of the Directors. Subject to restrictions on the allotment of Shares to Directors or their associates contained in the ASX Listing Rules, the Constitution of the Company and the Corporations Act 2001, the Directors may allot or otherwise dispose of Shares on such terms and conditions as they see fit.

TERMS AND CONDITIONS AND RIGHTS ATTACHING TO SHARES SECTION 9

Variation of Rights

Under the Corporations Act 2001, the Company may, with the sanction of a special resolution passed at a meeting of shareholders vary or abrogate the rights attaching to shares. If at any time the share capital is divided into different classes of shares, the rights attached to any class (unless otherwise provided by the terms of the issue of the shares of that class), whether or not the Company is being wound up may be varied or abrogated with the consent in writing of the holders of three quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

Dividend Rights

Subject to the rights of holders of shares issued with special, preferential or qualified rights (at present there are none), the profits of the Company which the Directors determine to distribute by way of dividend are divisible among the Shareholders in proportion to the number of Shares held by them.

SECTION 10 ADDITIONAL INFORMATION

$10.1$ Market Prices of Ordinary Shares

Official quotation of the Company's Shares commenced on 30 June 2005 and consequently, the trading history on ASX as at the date of this Prospectus is limited to that period.

The highest recorded market sale price of the Company's Shares quoted on ASX during the period from commencement of official quotation to the date of this Prospectus was 24 cents on 13 December 2005. The lowest recorded market sale price of the Company's Shares during this period was 10 cents on 8 November 2005.

The last market sale price of the Company's Shares on ASX on the last day that trading took place in these shares prior to the date of this Prospectus was 24 cents on 13 December 2005.

The Company has 12,250,118 Options over Shares currently quoted on ASX.

The Company has 8,000,000 Options over Shares not quoted on ASX.

$10.2$ Taxation

It is the responsibility of all persons to satisfy themselves of the particular taxation treatment that applies to them by consulting their own professional tax advisers before investing in the Shares. Taxation consequences will depend on particular circumstances. Neither Graynic nor any of its officers accept any liability or responsibility in respect of the taxation consequences of the matters referred to above or any other taxation consequences connected with an investment in the Shares in Gravnic.

$10.3$ Legal Proceedings

There is no litigation, arbitration or proceedings pending against or involving the Company as at the date of this Prospectus.

SECTION 10

ADDITIONAL INFORMATION

10.4 Continuous Disclosure and Documents Available for Inspection

The Company is listed on ASX and its Shares and Options are quoted on ASX.

The Company is a "disclosing entity" for the purposes of the Corporations Act 2001. As such, it is subiect to regular reporting and disclosure obligations, which require it to disclose to ASX any information of which it is or becomes aware concerning the Company and which a reasonable person would expect to have a material effect on the price or value of securities of the Company.

Copies of documents lodged with the ASIC in relation to the Company, including Financial Reports. may be obtained from or inspected at an office of the ASIC. This includes the April 2005 Prospectus and the August 2005 Prospectus referred to in Section 5 of this Prospectus.

If requested by any prospective investor, the Company will provide a copy of all documents used to notify the ASX of information relating to the Company under the provisions of the Listing Rules since official quotation on 30 June 2005. As at the time of lodging this Prospectus the documents lodged since the August Prospectus are:

Date	Document Title
12/12/2005	NSW Projects Acquisition & Placement
09/12/2005	Company Trading Halt Request
09/12/2005	Trading Halt
07/12/2005	Appendix 3B
07/12/2005	Change of Director's Interest Notice x2
30/11/2005	Results of AGM
17/11/2005	Appendix 3B - Release from Escrow
09/11/2005	Jutson Rocks Project Expanded
31/10/2005	First Quarter Activities Report
31/10/2005	First Quarter Cashflow Report
28/10/2005	Initial Director's Interest Notice
28/10/2005	Appointment of Non-Executive Chairman
27/10/2005	Annual Report
27/10/2005	Notice of Annual General Meeting
26/10/2005	Change of Director's Interest Notice x 2
29/09/2005	Commission of Aeromagnetic Survey at Quartz Circle
28/09/2005	Acquires Diamond Project in the Kimberley
27/09/2005	Annual Financial Report 30 June 2005
23/09/2005	Top 20 Optionholders Report & Top Spread Report
22/09/2005	Closure of Non-Renounceable Pro Rata Offer of Options
02/09/2005	Despatch of Disclosure Document
29/08/2005	Short Form Disclosure Document
17/08/2005	Non-Renounceable Pro Rata Offer of Options
17/08/2005	Appendix 3B - New Issue announcement Options

10.5 Interests of Directors and Experts

A full disclosure of the interests of Directors, Experts and Promoters of and to the Company for the period commencing on incorporation of the Company and to the date of issue of the April 2005 Prospectus are set out in Section 8.3 of the April 2005 Prospectus and other than as set out below or elsewhere in this Prospectus, that information and disclosure remains current.

The interest of the Directors in the securities of the Company at the date of this Prospectus are as follows :

Directors	Shares	$20$ cent, 31 October 2007 Options	30 cent, April 30 Options	$30$ cent, 2008 31 October 2008 Options
Ivan Hoffman				1,000,000
Ronald Thom	524,000	262,000		1,000,000
Nathan McMahon	1,285,032		1,000,000
Clive Jones	1.057,689	528,845	1,000,000

$10.6$ Expenses of the Issue

The total expenses of the Issue are estimated to be \$25,000 comprising ASIC Lodgement fees, brokerage, legal and due diligence costs and printing and other administrative expenses, including ASX quotation fees.

10.7 Appointment of Director

On 28 October 2005 Mr Ivan Hoffman was appointed as a Non-executive Chairman of the Company.

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. Mr Hoffman is currently chairman of the Fortron group of companies and a non-executive director of Saracen Mineral Holdings Limited.

SECTION 11

MATERIAL CONTRACTS

Section 8.2 and Section 7 of the April 2005 Prospectus which are referred to in Section 5.2 of this Prospectus, set out contracts to which the Company is a party which were considered by the Directors as being material to enable investors to make an informed assessment of the shares being offered under that Prospectus. Investors and their professional advisers are referred to those sections of the April 2005 Prospectus in relation to material contracts.

On or about 12 December 2005 the Company entered into acquisition agreements with Resource Investment Group Pty Ltd. Investors should refer to the announcement made to the ASX by the Company on 12 December 2005 for further details on the NSW Projects.

The consideration payable by the Company for the NSW Projects is

• (a) \$50,000 in cash
• (b) 10,000,000 Graynic Shares; and
• (c) 4,000,000 Options exercisable at 30 cents, on or before 30 April 2008.

A true copy of each of the material contracts referred to in the April 2005 prospectus and the contracts in relation to the acquisition of the NSW Projects will be available for inspection at the Company's registered office during office hours.

SECTION 12

CONSENTS

The following persons have each consented to the inclusion of the following statements and statements identified in this Prospectus as being based on statements made by those persons, in the form and context in which they are included, and have not withdrawn that consent before lodgement of this Prospectus with the ASIC:

Ord Corporate Pty Ltd in relation to the Investigating Accountant's Report in Section 6 of the April 2005 Prospectus and the reference to that report in this Prospectus. Ord Corporate Pty Ltd has not authorised or caused the issue of any other part of this Prospectus.

Price Sierakowski Lawyers in relation to the Solicitor's Report set out in Section 7 of the April 2005 Prospectus and the reference to that report in this Prospectus. Price Sierakowski Lawyers have also consented to be named in this Prospectus as Lawyers to the Company. Price Sierakowski Lawyers has not authorised or caused the issue of any other part of this Prospectus.

Booniarding Resources Ltd in relation to the Independent Geologist's Report set out in Section 5 of the April 2005 Prospectus and the reference to that report in this Prospectus. Boonjarding Resources Ltd has not authorised or caused the issue of any other part of this Prospectus.

SECTION 13

AUTHORITY OF DIRECTORS

The Directors state that they have made all reasonable enguiries and on the basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and that in respect to any other statements made in this Prospectus by persons other than Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, those persons have given their consent to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn that consent before lodgement of this Prospectus with the ASIC, or to the Directors knowledge, before any issue of Shares pursuant to this Prospectus.

Each of the Directors of Gravnic Metals Limited has consented to the lodgement of this Prospectus in accordance with Section 720 of the Corporations Act 2001 and has not withdrawn that consent.

Dated 14 December 2005.

Signed for and on behalf of GRAYNIC METALS LIMITED

By Nathan McMahon Non-Executive Director

SECTION 14

DEFINITIONS

Application Form means the form enclosed with this Prospectus.

Applicant means a person who submits an Application.

Application means a valid application to subscribe for Shares.

April 2005 Prospectus means the prospectus lodged by the Company with the ASIC and dated 13 April 2005

ASIC means Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited (ACN 008 624 691).

August 2005 Prospectus means the prospectus lodged by the Company with the ASIC and dated 18 August 2005.

Board means the board of Directors unless the context indicates otherwise.

Business Day means a day other than a Saturday or Sunday on which banks are open for business in Perth, Western Australia.

CHESS means ASX Clearing House Electronic Subregistry System.

Closing Date means the date on which the Offer closes.

Company means Graynic.

Corporations Act 2001 and Law means the Corporations Act 2001 of Australia.

Directors means the directors of the Company from time to time.

Dollars or \$ means Australian dollars unless otherwise stated.

Glossary means this glossary.

Gravnic and Gravnic Metals means Gravnic Metals Limited (ABN 87 112 898 825).

Issue means the issue of Shares pursuant to this Prospectus.

Listing Rules or ASX Listing Rules means the official Listing Rules of ASX.

NSW Projects means four new projects which the Company has signed acquisition agreements in relation to as detailed in the release of the Company to the ASX dated 12 December 2005.

Offer means the offer of 2,500,000 Shares at an issue price of \$0.20 each to raise \$500,000 pursuant to this Prospectus.

Offer Period means the period commencing on the Opening Date and ending on the Closing Date.

Official List means the Official List of ASX.

Opening Date means the date on which the Offer opens.

Option means an option to acquire a Share.

Option Holders means those parties holding options to acquire Shares in Graynic.

Prospectus means this prospectus dated 14 December 2005 for the issue of up to 2,500,000 Shares, including any electronic or online version.

Quotation means quotation of the Shares on ASX.

Share means a fully paid ordinary share in Graynic Metals Limited.

Shareholder means a holder of Graynic Shares.

WST means Western Standard Time, Perth, Western Australia.

APPLICATION FORM GRAYNIC METALS LIMITED (ACN 112 898 825)

Firm Stamp I/We apply to purchase		Broker Code (office use)
		Shares at 20 cents per Share
I/We lodge full application money
	This amount must equal the number of Shares applied for multiplied by the application price.
	Complete full name details - Title, Given Name(s) & Surname or Company Name
Joint Application #2
	Joint Application #3 (or designated account eg Superfund A/C)
Complete address details Number and Street
		State WA	Postcode
	CHESS HIN (if applicable)		E-Mail Address
Home Telephone			Work Telephone
	Contact Name
	Tax file number/exemption details
	Joint Applicant #2		Joint Applicant #3
Drawer	Cheque Details Bank	Branch	$\mathbb{S}$