DREADNOUGHT RESOURCES LTD — Investor Presentation 2010

Oct 13, 2010

Proposed Acquisition o f

South East Energy Limited

==> picture [721 x 68] intentionally omitted <==

Slide 1

Presentation Notes

DISCLAIMER

This presentation contains forward looking statements that are subject to risk factors associated with the exploration and mining industry. It is believed that the expectations reflected in these statements are reasonable, but they may be affected by a variety of variables which could cause actual results or trends to differ materially.

COMPETENT PERSON

The following statements apply in respect of the information in this report that relates to Exploration Results, Exploration Targets and Mineral Resources: The information is based on, and accurately reflects i n orma f ti on rev ewe i d b y M r y e Ll l S awyer, w h o s a i M em b er o f A us ra t li an ns I tit u e o t f G eosc en i ti s s. t

Mr Sawyer is a geologist employed by Geos Mining, whom are independent consultants to South East Energy Limited. He has the relevant experience in relation to the uranium and lithium mineralisation being reported on to qualify as a Competent Person as defined in the Joint Ore Reserves Committee (JORC) Australasian Code for Reporting of Exploration Results, Identified Mineral Resources and Ore Reserves. Mr Sawyer has consented in writing to the inclusion in this report of the matters based on the information in the form and context in which it appears.

EXPLORATION TARGETS

Exploration Targets are reported according to Clause 18 of the JORC Code. This means that the potential quantity and grade is conceptual in nature and that considerable further exploration is necessary before any identified Mineral Resource can be reported. It is uncertain if further exploration will lead to a larger, smaller or any Mineral Resource.

Slide 2

Transaction Overview

• ERO Mi i Li it e or th e “C i 100% o f th e ssue i d n ng m d (“ERO” ompany ”) t o acqu re

• capital of South East Energy Limited (“South East”) for the issue of 152,325,014 ordinary shares and 191,250,000 options in the Company

• � South East is an unlisted South Australian based lithium and uranium explorer that has compiled a package of highly prospective exploration acreage at Lake Frome, Lake Torrens and via its Padthaway projects in the South East of South Australia

• ERO to acquire 3 ELAs & 9 ELs covering 7,012 km[2]

• World class lithium exploration target at Lake Frome

• ERO to shift focus from gold to lithium exploration, secondary focus - uranium and old g

• ERO will undertake a review of all projects and dispose of any non core assets

Slide 3

New Capital Structure

A s cons id era ti on or f th e acqu s i iti on o f S ou th E as , t ERO w ill i ssue:

• 4.5 new ERO shares for every existing South East share; and

• 4 . 5 new ERO op ti ons exerc sa i bl e a t 5 cen s eac t h on or e ore b f 31 October 2011 for every existing South East option

	Capital Structure	Number of Shares	Number of Options
	ExistingCapital Structure	160,175,576	28,870,880
	Shares and Options Issued to South East	152,325,014	191,250,000
	Post Transaction Total	312500590	220120880
		,,	,,

• Post transaction market cap of approx $15.9M[1]

1 Based on ERO share price of 5.1 cents at close of trade on 13 Oct 2010

Slide 4

New Board

Th e success u comp et on o f l l i f t h e transact on w i ill resu t n t l i h e appointment of a new highly qualified Board and management team with considerable resource industry experience and a track record of developing and bringing projects to the capital markets.

The post transaction Board will comprise:

• Mr Robert Kennedy – Non-Executive Chairman

• Mr Shane Gale – CEO

• � Dr Neville Alley – Executive Director

• Mr Hector Gordon – Non-Executive Director

==> picture [721 x 68] intentionally omitted <==

Slide 5

New Strategic Focus

Th e ompany s mme C ’ i di a e s ra egy o t t t f ll ow ng i th e comp e l ti on o f th e transaction is to:

• Undertake focused exploration for lithium within continental brines and sediments beneath Lake Frome and Lake Torrens

• Explore for uranium at the Lake Frome, Lake Torrens and Padthaway projects

• Review the merged group’s licence portfolio and divest non-core asse s t

• Complete the sale of Georgetown (if not completed prior to transaction)

Slide 6

Why Lithium

• Lithi h i d f t i i l di l i um as many uses n mo ern manu ac ur ng nc u ng; g ass, ceram cs,

• batteries, lubricants and refrigeration products.

• Lithium has the highest electro-chemical potential of all metals, making it a highly sought after component for a range of electrical devices. In particular, lithium is used in the production of standard Tonnes

• household batteries and

==> picture [370 x 261] intentionally omitted <==

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

Tonnes
300,000
Total Lithium Carbonate Demand
250,000
200,000
150,000
100,000
50,000
02 04 06 08 10 12 14 16 18 20
YEAR
Source: TRU Group – Lithium Supply and Markets Conference, Chile
----- End of picture text -----

increasingly in automotive batteries which fuel hybrid and fully electric vehicles.

• World demand for lithium has been growing and is forecast to continue to grow as the main industrial markets for lithium benefit from high economic growth rates and lithium usage in batteries continues to increase.

Slide 7

Why Lithium

• In 2008 Warren Buffett ’ s MidAmerican Energy Holdings acquired a 10% stake in the Chinese lithium battery manufacturer BYD for US$230 million. BYD is at the forefront of hybrid car develo ment in China Lithium Consumption Forecasts p

• USA targeting 1 million hybrids on roads by 2015

• Global push for renewable energy targets

• China targeting 20% renewable energy by 2020

==> picture [423 x 288] intentionally omitted <==

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

20,000
Lithium Consumption by End-Use 2002-2020
15,000
Ceramics Glazing
Lubricants
Air Conditioning
Phamaceuticals
10 , 000
Synthetic Rubber
Polymer Process
Al Process Add
5,000
0
02 04 06 08 10 12 14 16 18 20
Source: TRU Group – Lithium Supply and YEAR
Markets Conference, Chile
ined
ion (t) Li-conta
Consumpt
----- End of picture text -----

Slide 8

EXP Licence APPs – Lithium

==> picture [721 x 362] intentionally omitted <==

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

The acquisition of South East will
result in ERO attaining ELAs covering S O U T H
A U S T R A L I A
2,580 km [2] Moomba
� Lake Frome South – 782 km [2]
Beverley
� Lake Frome North – 975 km [2]
Olympic Dam
� L a k e orrens ou T S th – 823 k m 2 Lake Torrens
Lake
Ceduna
"
Frome
In close proximity to existing Port Augusta
infrastructure: Port Pirie
� 200 km
Moomba gas pipeline and its
Port Lincoln
access road ADELAIDE
� Beverley Uranium Mine
Padthaway
� Port Augusta/Whyalla – Broken Hill, Ridge
road and rail
Mount Gambier
----- End of picture text -----

==> picture [721 x 37] intentionally omitted <==

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

Slide 9
----- End of picture text -----

Lake Frome Summary

• ELA365/09 & ELA366/09 (PIRSA gran o t ff ers accep e t d)

• Previous exploration at Lake Frome carried out by the Commonwealth Aluminum Cor p oration Limited ( “Comalco” ) in the 1970’s encountered significant lithium mineralisation

• South East has estimated a world class conceptual exploration target of 8 t o 10 m illi on onnes t lithi um car b ona e equ va en o gra t i l t f d e range rom f 10 ppm to 250 ppm*

• ERO will ex lore for lithium within continental brines and sediments p

• ERO will also evaluate potential for other commodities such as uranium and halite

• The potential tonnage and grade is conceptual in nature, as there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

Slide 10

Lithium at Lake Frome

� D ur ng i 1978 - 80 C oma co un l d er oo t k very roa b d sca e es l t ti ng o f th e sur ace an f d subsurface brines. Their drilling intersected highly encouraging lithium concentrations in Lake Frome’s south-western corner.

• Th e eve s o l l f lithi um n o es i h l CF1 an d CF2 compare favourably with lithium recovered commercially from brines at Silver Peak, Nevada , where levels vary from 100 to 300 ppm.

==> picture [295 x 66] intentionally omitted <==

	Depth(Metres)	CF1(ppm)	CF2(ppm)
	10	100	250
	20	100	30
	30	150	100
	40	150	200
	50	150	100
	60	100	250
	70		250
	80		200

Comalco Drillholes CF3 to CF9 showed 10 to 70 ppm.

Slide 11

Lake Frome Brine Impurities

� A i ifi i i i li hi b i i i s gn cant mpur ty n t um r nes s magnes um

• The lower the magnesium to lithium ratio, the lower the processing costs

• Commercial operations tend to exhibit Mg/Li ratios below 15

• The Lake Frome Mg/Li ratio is generally favourable:

• � CF2 40 42m , 1 700ppm Mg , Mg/Li 8 . 5 � CF2 48-50m 1,700ppm Mg, Mg/Li 17.0 � CF2 75m+ , 1 550ppm Mg , Mg/Li 7 . 7

• CF2 48-50m 1,700ppm Mg, Mg/Li 17.0

Slide 12

Lake Frome Solar Evaporation

• Hi g h evaporat on rates an i d l ow ra n a i f ll are requ re i d f or stea d y production and to minimise costs

• Solar evaporation at Lake Frome is comparable to that of the worlds largest lithium producer, SQM

Solar Evaporation Precipitation Salar de Atacama (SQM) 3,200 mm p.a. 15 mm p.a. Lake Frome (South East) 2,400 to 2,800 mm p.a. 0 to 200 mm p.a.

==> picture [721 x 68] intentionally omitted <==

Slide 13

Lake Frome has Scale

The Lake Frome ELAs’ areas are more than 20 times the si z e of the Clayton Valley Silver Peak Brines Project, the only lithium carbonate producer in the US.

Clayton Valley (Silver Peak) Nevada 83 km[2]

Lake Frome tenements 1,757 km[2]

==> picture [331 x 34] intentionally omitted <==

==> picture [282 x 34] intentionally omitted <==

==> picture [721 x 203] intentionally omitted <==

==> picture [331 x 18] intentionally omitted <==

==> picture [282 x 18] intentionally omitted <==

Slide 14

World Class Exploration Target

South East has estimated an exploration target of 8 to 10 million tonnes at a grade range 10 ppm to 250 ppm* lithium carbonate equivalent. This is comparable with the following viable lithium projects.

Chemical Composition of Lithium Brine Lakes

		Salar de Atacama (SQM)	Salar de Hombre Muerto	Salar de Rincon	Salar de Uyuni	Clayton Valley USA	Great Salt Lake	Zhabuye Salt Lake China	DXC Salt Lake China	Taijinaker Salt Lake China	Sea Water	Lake Frome
	Lithium Content	0.150%	0.062%	0.033%	0.035%	0.023%	0.004%	0.120%	0.040%	0.000%	0.000017%	0.001- 0.025%
	Mg/Li Ratio	6.4	1.37	8.61	18.6	1.43	250	Low	0.22	0	7000	7.7 to 17.0
	Height AMSL	2,300m	3,700m	3,700m	3,653m	0	0	4,422m	4,475m	0	0	Below SL to 3m
	Recoverable LCE	8MT	4MT	1.2MT	14.3MT	0.25MT	0	4MT	0.4MT	1.4MT	0	*8-10MT

Source: “Evaluation of the Potential of the Salar del Runcon Brine”, Report by Consulting Geologist Mr Pedro Pavlovic to ADY, Dec 2004; Sterling Group Ventures Inc; Other Sources.

* The potential tonnage and grade is conceptual in nature, as there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource. The Lake Frome exploration target has been included for illustrative purposes only – this target does not represent ‘Recoverable LCE’.

Slide 15

Lake Torrens Summary

• ELA 364/09 (PIRSA grant offer accepted)

• Ex loration and testin of p g

• brines in southern Lake Torrens by Delhi in the mid 1970s showed that hi h densit brine g y

• is present throughout the upper 4-5 m of the lake sediments.

• G oo d po en t ti a l f or lithi um concentration

• Close proximity to existing infrastructure including ports, major railways and major highways.

Lake Torrens licence

==> picture [339 x 10] intentionally omitted <==

==> picture [339 x 68] intentionally omitted <==

==> picture [339 x 69] intentionally omitted <==

==> picture [339 x 68] intentionally omitted <==

==> picture [339 x 69] intentionally omitted <==

==> picture [339 x 68] intentionally omitted <==

==> picture [339 x 23] intentionally omitted <==

Slide 16

Hypothetical Lithium Concentrate from Brine Flowsheet

Evaporation ponds Brine pumped Concentrate drop out solids from salt lake Lithium Remove Mg & Ca Pipeline Pipeline Lithium Plant

==> picture [721 x 136] intentionally omitted <==

Slide 17

Padthaway Licence Summary

• The tenements straddle the Padthaway Ridge and the on-lapping Murray Basin sediments .

• Nine ELs covering approx

• 4,400 km[2] of freehold land.

• South East’s review of the mineral exploration data for the region found that some of the granites contain more than five times the average uranium levels expected in granite.

Padthaway exploration licences

==> picture [331 x 10] intentionally omitted <==

==> picture [331 x 68] intentionally omitted <==

==> picture [331 x 69] intentionally omitted <==

==> picture [331 x 68] intentionally omitted <==

==> picture [331 x 69] intentionally omitted <==

==> picture [331 x 68] intentionally omitted <==

==> picture [331 x 21] intentionally omitted <==

Slide 18

Padthaway Exploration

ERO will focus exploration on:

• undertaking rapid, low cost radon survey in the proposed areas of focus that may represent drill targets;

• employing gravity and AEM surveys; and

• undertaking drilling to test the target areas once the radon anomalies, channels and suitable basin sediments are accurately defined.

==> picture [721 x 136] intentionally omitted <==

Slide 19

Risks of Exploration

The following summary , which is not exhaustive , lists some of the major risk factors:

• Exploration and mining in Australia is subject to extensive regulation by Commonwealth and State Governments

• Approval processes for mining (evaporation and extraction) may be more rigorous than for the mining of other minerals

• Negotiated access to land , including processes and requirements under the Native Title Act and conducting successful heritage and environmental surveys

• There is no guarantee exploration activities will succeed in the discovery of a commercially viable deposit

• Commodity prices and exchange rates are constantly changing

• I nsu ffi c en i t f un di ng may e ava b il a bl e

• Exploration and mining companies throughout the world are subject to the inherent risks of their industry

Slide 20

Summary

• ERO w with a new focus on ex ill reposition itself ploration

• for lithium

• New board and management

• ERO’s immediate strategy is to explore for lithium within continental brines and sediments beneath Lake Frome and Lake Torrens

• ERO’s secondary focus will be uranium and gold exploration

• ERO will rationalise non core assets

• ERO will seek shareholder approval for the acquisition of South East at a forthcoming general meeting

Slide 21