ENERGY METALS LTD - Capital/Financing Update 2007

29 November 2007

Company Announcements Office Australian Stock Exchange Limited Level 4, 20 Bridge Street SYDNEY NSW 2000

Energy Metals Limited ABN 63 111 306 533 Level 2 18 Kings Park Road West Perth WA 6005 PO Box 1033 West Perth WA 6872 Western Australia Telephone: (08) 9322 6904 Facsimile: (08) 9321 7950 Email: [email protected] Web: www.energymetals.net

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Dear Sir/Madam

RIGHTS ISSUE – DESPATCH OF LETTER OF OFFER AND ENTITLEMENT AND ACCEPTANCE FORM

The Company confirms it will today despatch the attached Letter of Offer, together with a personalised Entitlement & Acceptance Form to eligible shareholders who were registered at 5.00pm WDT on 28 November 2007 (“Record Date”) in relation to the Rights Issue of approximately 1,415,866 Shares at an issue price of $3.50 per Share to raise approximately $4,955,531 (before costs of the Rights Issue). The Shares will be offered on the basis of one (1) share for every twenty (20) shares held.

Yours sincerely,

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Trish Farr Company Secretary.

29 November 2007

Dear Shareholder

LETTER OF OFFER – RIGHTS ISSUE OF SHARES

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Energy Metals Limited (“the Company”) invites shareholders who are registered at 5.00pm WDT on 28 November 2007 (“Record Date”) to participate in a pro-rata non-renounceable rights issue of one (1) fully paid ordinary share ("Share") for every twenty (20) Shares held at an issue price of $3.50 per Share (“Rights Issue”).

The purpose of the Rights Issue is to raise approximately $4,955,531 which will be applied to further the exploration and development of the Company’s Bigrlyi Uranium Project in the Northern Territory and the Company’s 100% owned projects in the Northern Territory and Western Australia and to provide working capital.

Pursuant to new provisions introduced into the Corporations Act the Company is not required to prepare a prospectus for the Rights Issue. A summary of the key information and an indicative timetable are set out in the Appendix to this Letter of Offer for your information.

Also attached to this letter is a personalised Entitlement and Acceptance Form. If you are eligible and wish to participate in the Rights Issue, it will be necessary for you to complete this personalised Entitlement and Acceptance Form and return it, with the appropriate application monies, to the Company’s share registry before the anticipated closing date of 13 December 2007.

If you have any questions in relation to the Rights Issue, please do not hesitate to contact the Company on 08 9322 6904.

Yours faithfully,

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LINDSAY DUDFIELD Executive Director.

APPENDIX

SUMMARY OF KEY INFORMATION AND INDICATIVE TIMETABLE

Type of offer:

Non-renounceable pro-rata rights issue ("Rights Issue") to shareholders of approximately 1,415,866 fully paid ordinary shares (“Shares”)*

Offer price: $3.50 per Share

Offer ratio : One (1) Share for every twenty (20) Shares held at the Record Date of 28 November 2007. Fractions will be rounded down.

Underwriting: Underwritten by Hartley’s Limited for a fee of 5% total funds raised.

* The Rights Issue may be increased to a total of 1,958,493 Shares if existing optionholders exercise their options prior to the record date.

Key Dates:

A proposed timetable for the Rights Issue is set out below in more detail:

Rights Issue announcement, Appendix 3B and first Section 708AA Notice	12 November 2007
Letter to option holders detailing the Rights Issue	12 November 2007
Notice to security holders of Rights Issue terms	12 November 2007
Record dateto identify eligible shareholders entitled to participate in the Rights Issue	28 November 2007
Lodge second Section 708AA Notice and dispatch Entitlement and Acceptance Forms	29 November 2007
Acceptances closeat 5.00pm Western Daylight Time ("WDT") (closing date)	13 December 2007
Notification to Australia Securities Exchange ("ASX") of under subscriptions	18 December 2007
Allotment of Shares, despatch of holding statements and lodge Section 708A Cleansing Notice	21 December 2007

This timetable is indicative only and may be subject to change. The Company reserves the right to amend this timetable including, subject to the Corporations Act 2001 and the ASX Listing Rules, to extend the closing date.

ACTION REQUIRED BY SHAREHOLDERS

Entitlement and Acceptance Form

The number of Shares to which you are entitled is shown in the accompanying personalised Entitlement and Acceptance Form.

All applications for Shares must be made on the Entitlement and Acceptance Form. Any application will be treated as an offer from the applicant to acquire Shares on the terms and conditions set out in this Letter of Offer. The Directors of the Company reserve the right to reject any applications for Shares.

Acceptance of Entitlement in Full or Part

If you wish to take up all or part of your entitlement under the Rights Issue, please complete the Entitlement and Acceptance Form in accordance with the instructions set out on the form.

Please ensure the completed Entitlement and Acceptance Form and your payment is received by the Company's share registry at:

By delivery:

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

By post:

Security Transfer Registrars Pty Ltd PO Box 535 APPLECROSS WA 6953

no later than 5.00pm WDT on 13 December 2007 or such later date as the Directors of the Company advise.

Payment Terms:

The payment of $3.50 per Share pursuant to the Rights Issue must be made in full and cheques in respect of applications for Shares must be in Australian currency drawn on an Australian bank, made payable to “ Energy Metals Limited – Rights Issue ”, and be crossed "Not Negotiable". Applicants must not forward cash. Receipts for payment will not be issued. Payment must accompany the duly completed Entitlement and Acceptance Form.

Non-Acceptance of Entitlement

If you do not wish to take up any part of your entitlement under the Rights Issue, you are not required to take any action. If you decide not to accept all or part of your entitlement, the Shares not accepted will form part of the shortfall and will be dealt with in accordance with the Underwriting Agreement.

Overseas Shareholders

The Company is of the view that it is unreasonable to make an offer under this Letter of Offer to shareholders outside of Australia and New Zealand having regard to:

(a) the number of shareholders outside of Australia and New Zealand;
(b) the number and value of the securities to be offered to shareholders outside of Australia and New Zealand; and
(c) the cost of complying with the legal requirements and requirements of regulatory authorities in the overseas jurisdictions.

Accordingly, the Company is is not required to make offers under this Letter of Offer to shareholders outside of Australia and New Zealand.

Risk Factors

Investors should be aware that an investment in the Company involves many risks which may be higher than the risks associated with an investment in other companies. Intending investors should refer to announcements made by the Company to ASX. This information is available from the ASX website http://www.asx.com.au - the Company's ASX code is EME . Intending investors should review announcements made by the Company in order to fully appreciate such matters and the manner in which the Company operates before making a decision regarding the Rights Issue. Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares.

Investors should note that the Shares to be issued pursuant to this Letter of Offer carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

ADDITIONAL INFORMATION

Underwriting Agreement

Pursuant to an Underwriting Agreement dated 12 November 2007 ("Underwriting Agreement") between the Company and Hartleys Limited ("Underwriter"), the Underwriter has agreed to underwrite the Rights Issue.

Pursuant to the Underwriting Agreement, the Company will pay the Underwriter an underwriting commission equal to 5% of the funds raised under the Rights Issue (assuming a maximum of 1,415,866 Shares are issued under the Rights Issue), plus GST. In addition, the Company must pay, indemnify and keep indemnified the Underwriter for all costs incurred by the Underwriter in connection with the Rights Issue, including legal fees and disbursements.

The Company has given warranties and covenants to the Underwriter which are usual in an agreement of this nature.

The Underwriting Agreement provides that the Underwriter may terminate its obligations under the Underwriting Agreement by notice to the Company if, on or before the allotment of the Shares the subject of the Rights Issue:

(a) a termination event ("Termination Event") as set out below occurs; and
(b) in the reasonable opinion of the Underwriter the Termination Event:
(i) has or is likely to have a material adverse effect on the Rights Issue; or
(ii) is likely to create a potential liability for the Underwriter.

The Termination Events include the following:

(a) Fall of ASX All Ordinaries Index

There is a fall in the ASX All Ordinaries Index of greater than 10% at any time after the date of the Underwriting Agreement in comparison to the ASX All Ordinaries Index at the close of trading on the date of the Underwriting Agreement.

(b) Change in law or policy

A new law or policy is announced, introduced or adopted after the date of the Underwriting Agreement which does or is likely to prohibit or restrict or have a materially adverse effect upon the Offer. A “law” or “policy” includes:

(i) any legislation of the Australian parliament or the parliament of any state or territory;
(ii) any regulation, proclamation, order or other delegated legislation under the authority of the Australian parliament or the parliament of any state or territory, including local government ordinances and by-laws; and
(iii) any policy, guidelines or rule of the ASIC, the ASX, the Reserve Bank of Australia or other relevant fiscal or regulatory authority.

(c)

Failure to lodge Appendix 3B or Withdrawal of Offer

The Company:

(i) fails to lodge the Appendix 3B with ASX by the Lodgment Date; or
(ii) withdraws the Offer.

(d) Misleading Rights Issue Documentation

It transpires that there is a statement in the Rights Issue Documentation that is misleading or deceptive or likely to mislead or deceive, or that there is an omission from the Rights Issue Documentation or it any statement in the Rights Issue Documentation becomes misleading or deceptive or likely to mislead or deceive or if the issue of the

Rights Issue Documentation is or becomes misleading or deceptive or likely to mislead or deceive.

(e) Repayment or withdrawal

Any circumstance arises after the Lodgment Date resulting in:

(i) the Company being required to:
A. repay the money received from applicants; or
B. give applicants an opportunity to withdraw their Applications and be repaid; or
(ii) persons having a right to return securities issued in connection with the Offer and have their Application Money repaid.

(f)

Failure to obtain listing

(i) The ASX makes an official statement to any person, or indicates to the Company or the Underwriter in writing, that unconditional approval, or approval subject to conditions the satisfaction of which is within the control of the Company or the Underwriter for the official quotation of all the Shares the subject of the Offer will not be granted, or will not be granted within 3 months after the date of the Offer.
(ii) Approval for the official quotation of all the Shares the subject of the Offer, although granted, is subsequently withdrawn, qualified or withheld before the issue of the Shares.

(g)

Hostilities

There is an outbreak of hostilities not presently existing or an escalation of hostilities (whether or not war has been declared) or political or civil unrest or a terrorist act is committed involving any one or more of the following:

(i) Australia;
(ii) New Zealand;
(iii) the United Kingdom;
(iv) Canada;
(v) the United States of America;
(vi) Japan;
(vii) the People's Republic of China (including Hong Kong);
(viii) Indonesia; or
(ix) the Middle East;

or a diplomatic, military or political establishment of any of those countries anywhere in the world.

(h) Specific intervention by ASIC

The ASIC gives notice of any deficiency in the Rights Issue Documentation or related documents or ASIC gives notice of an intention to hold a hearing, examination or investigation, or it requires information to be disclosed in connection with the Offer or the Company.

(i) Non-compliance

The Company or any Related Body Corporate of the Company fails to comply with:

(i) a provision of its constitution;
(ii) any law of the country where it is incorporated, or in which it carries on business, or where its securities are listed or are intended to be listed;
(iii) a requirement of the Listing Rules;
(iv) a requirement, order or request made by or on behalf of the ASIC or any governmental agency; or
(v) any agreement entered into by it.

(j) Default under Underwriting Agreement

The Company is in default under the Underwriting Agreement.

(k) Warranty untrue or incorrect

Any representation or warranty in the Underwriting Agreement is or becomes untrue or incorrect.

(l) Insolvency

An Insolvency Event occurs or is threatened.

(m)

Change of law

Any of the following occurs and which has or is likely to have the effect of prohibiting, restricting or regulating the Offer:

(i) the introduction of legislation into the Parliament of the Commonwealth of Australia or of any state or territory;
(ii) the public announcement or proposal of prospective legislation or policy by the government of the Commonwealth of Australia or of any state or territory;
(iii) the adoption of, or announcement of a proposal to adopt, any policy or regulation by the ASIC, the Reserve Bank of Australia or any other governmental authority.

(n) Market conditions

Any change or disruption in the national or international political, financial or economic conditions which has or is likely to have a adverse effect on the Offer including without limitation any outbreak of avian influenza, SARS or other significant epidemic or pandemic.

(o) Capital structure

The Company or a Related Body Corporate of the Company alters its capital structure without the prior written consent of the Underwriter or issues or agrees to issue any shares, options or equity securities (as that term is defined in the Listing Rules) since the date of the Underwriting Agreement other than as set out in the Offer or on the exercise of any options existing at the date of the Underwriting Agreement.

(p) Constitution altered

The Company or a Related Body Corporate of the Company alters its constitution without the prior written consent of the Underwriter (except for an alteration requested by ASX).

(q) Directors

(i) There are any changes to the Board of Directors of the Company after the date of the Underwriting Agreement without the prior written consent of the Underwriter.
(ii) A director of the Company or any Related Body Corporate of the Company:
A. is charged with an indictable offence relating to any financial or corporate matter; or
B. is disqualified from managing a corporation under Part 2D.6 of the Corporations Act.

(r) Charge

The Company or any Related Body Corporate of the Company charges or agrees to charge the whole or a substantial part of its business or property without the prior written consent of the Underwriter.

(s) Ceasing business

The Company or a Related Body Corporate of the Company ceases or threatens to cease to carry on its business.

(t) Disposal

The Company disposes of or agrees to dispose of the whole or any significant part of any of its business or property.

(u) Acquisition

The Company acquires any major asset or enters into any major expenditure other than in accordance with the proposals in the Offer.

(v) Material adverse change

Any material adverse change occurs in the financial or trading position or performance or in the assets, liabilities, earnings, profits, losses, business, operations or prospects of the Company or a Related Body Corporate of the Company.

(w) Other material adverse events

Any other event occurs which has, or is likely to have, a material adverse effect on the Company.

(x) Prejudicial publication

The Company or any Related Body Corporate of the Company without the prior written approval of the Underwriter makes any statement or publishes or issues by any means any notice circular or advertisement relating to the Company or any Related Body Corporate of the Company or its activities or the Offer which is prejudicial in any manner whatever to the prospects of the Offer being fully subscribed by persons other than the Underwriter.

(y) Default by Firm Investor

A Firm Investor defaults under a Firm Subscription Agreement.

(z) Default by Nominated Sub-Underwriter

A Nominated Sub-Underwriter defaults under a Sub-Underwriting Agreement.

The following terms used in this summary of the Underwriting Agreement are defined as follows:

" All Ordinaries Index " means the All Ordinaries index published by the ASX from time to time;

" Application " means an application to subscribe for Shares made in accordance with the terms of the Offer accompanied by the Application Money;

" Application Money " means the money payable by an applicant for any Shares in respect of the applicant's Valid Application in accordance with the terms of the Offer;

" ASIC " means the Australian Securities and Investments Commission;

" ASX " means ASX Limited and, where the context permits, the Australian Securities Exchange operated by ASX Limited;

" Board " means the board of directors of the Company;

" Cleansing Notice " means the notice lodged with ASX by the Company within 5 business days after the Shares are issued pursuant to the Offer, in accordance with section 708A(6) of the Corporations Act;

" Closing Date " means 5pm on 13 December 2007 or another date agreed in writing between the Company and the Underwriter;

" Corporations Act " means the Corporations Act 2001 (Cth);

" Directors " means the directors of the Company;

" Firm Investor " means a Shareholder who has signed and delivered to the Underwriter a Firm Subscription Agreement;

" Firm Subscription Agreement " means a binding agreement by a Firm Investor to subscribe for all or part of the Shareholder’s entitlement pursuant to the Offer in a form agreed to by the Underwriter;

" Insolvency Event " means the happening of any of these events:

(a) execution or other process of a court or authority or distress is levied for an amount exceeding $10,000 upon any of the property of the Company or a Related Body Corporate of the Company and is not satisfied, set aside or withdrawn within 7 days of its issue;
(b) an order for payment is made or judgment for an amount exceeding $10,000 is entered or signed against the Company or a Related Body Corporate of the Company which is not satisfied within 7 days;
(c) the Company or a Related Body Corporate of the Company suspends payment of its debts;
(d) the Company or a Related Body Corporate of the Company becomes an “externallyadministered body corporate” within the meaning of the Corporations Act;
(e) steps are taken by any person towards making the Company or a Related Body Corporate of the Company an “externally-administered body corporate” within the meaning of the Corporations Act (but not where the steps taken consist of making an application to a court and the application is withdrawn or dismissed within 14 days);
(f) a controller (as defined in section 9 of the Corporations Act ) is appointed to, or acts in relation to, any of the property of the Company or a Related Body Corporate of the Company or any steps are taken for the appointment of a controller (but not where the steps taken are reversed or abandoned within 14 days);
(g) the Company or a Related Body Corporate of the Company is taken to have failed to comply with a statutory demand within the meaning of section 459F of the Corporations Act;
(h) a resolution is passed for the reduction of capital of the Company or a Related Body Corporate of the Company or notice of intention to propose such a resolution is given, without the prior written consent of the Underwriter;
(i) an event happens analogous to an event specified in clauses (a) to (h) of this definition to which the law of another jurisdiction applies and the event has an effect in that jurisdiction similar to the effect which the event would have had if the law of Australia applied;

" Lodgment Date " means the date on which the Appendix 3B of the Listing Rules with respect to the Offer is lodged with ASX;

" Nominated Sub-Underwriter " means a sub-underwriter introduced to the Underwriter by the Company who has signed and delivered to the Underwriter a Sub-Underwriting Agreement;

" Offer " means the non-renounceable pro rata offer of Shares to Shareholders on the basis of one Share for every 20 Shares held by Shareholders as at the record date specified in the Offer, at an issue price of $3.50 per Share;

" Related Body Corporate " has the meaning given in section 9 of the Corporations Act;

" Rights Issue Documentation " means:

(a) all announcements made to ASX referring to the Offer including, without limitation, the Appendix 3B, the Rights Issue Notices and the Cleansing Notice; and
(b) the Offer to Shareholders including the Application to subscribe for Shares under the Offer;

" Rights Issue Notice " means the notice to be lodged by the Company with ASX pursuant to section 708AA(2)(f) of the Corporations Act, permitting the Offer to be made without a disclosure document, in accordance with section 708AA of the Corporations Act;

" Shareholders " means holders of fully paid ordinary shares in the capital of the Company;

" Shares " means fully paid ordinary shares in the capital of the Company;

" Sub-Underwriter " means a person other than a Nominated Sub-Underwriter who has signed and delivered to the Underwriter a Sub-Underwriting Agreement;

" Sub-Underwriting Agreement " means a binding agreement by a Sub-Underwriter or a Nominated Sub-Underwriter to subscribe for Shares in a form agreed to by the Underwriter;

" Valid Application " means an application to subscribe for Shares:

(a) made on an application form accompanying the Offer and that is properly completed in accordance with the instructions in that form and in the Offer;
(b) received by the share registrar appointed by the Company on or before the Closing Date at the place specified in the Offer for lodgement of applications for Shares;
(c) not withdrawn before the Closing Date;
(d) accompanied by the appropriate Application Money; and
(e) in respect of which the Application Money is cleared when presented for payment by the relevant financial institution on which the payment is drawn;

and all Applications treated as Valid Applications under the Underwriting Agreement;

Sub-Underwriting

As announced to the market on 12 November 2007, the Underwriter has entered into subunderwriting agreements with 12 of the Company's Top 20 shareholders (including some Director and/or Director related entities) whereby they have agreed to take up their respective entitlements in full pursuant to the Rights Issue for a fee equal to 1% of the value of each shareholder's Shares taken up, which fee will be paid by the Underwriter out of the underwriting fees.

Messrs Dudfield and Aamodt are the two Directors of the Company who have entered into such sub-underwriting agreements. Mr Dudfield has agreed to take up his entitlement of 71,100 new Shares ($248,850 of the funds to be raised under the Rights Issue) and Mr Aamodt has agreed to take up his entitlement of 3,750 New Shares ($13,125 of the funds to be raised under the Rights Issue) however Messrs Dudfield and Aamodt have waived all rights to receive any sub-underwriting fees.