EQUATORIAL RESOURCES LIMITED — Capital/Financing Update 2002

Dec 19, 2002

20 December 2002

The Manager Companies Australian Stock Exchange Limited

Dear Sir,

EQITX Limited

ABN 50 009 188 694

Level 3, IBM Building 1060 Hay Street West Perth Western Australia 6005

Postal Address PO Box 1592 West Perth Western Australia 6872

Phone 61 8 9480 0490 61 8 9480 0452 Fax

Email info@eqitx.com Website www.egitx.com

EQITX (ASX: EQX) ACQUISITION OF BIOTECHNOLOGY PROJECT

Summary:

• EQITX Limited announces its entry into the biotechnology sector in an alliance with The University of Sydney.
• Signs a Heads of Agreement for the acquisition which has potential applications in the substantial market for anti-arthritic drugs.
• Strong anticipated growth in age related diseases; Patent already allowed in the US; Proof of efficacy in animal models
• The acquisition will involve EQiTX investing a total of \$2.36 million over a two year period, giving the company a 58% shareholding in the project.
• The investment follows a rigorous evaluation process by EQiTX's eminent advisory panel following the evaluation by the company of more than 70 opportunities over the previous six months.

The Directors of EQITX Limited (EQITX) are pleased to advise that the company has signed a Heads of Agreement for the acquisition of its first biotechnology project with potential applications in the substantial market for anti-arthritic drugs.

The proposed acquisition is a key element in the execution of EQiTX's strategy and follows the recent reconstitution of the company's board and management team. EQiTX's strategy is to develop and actively manage a portfolio of biotechnology investments where the company can add value based on the extensive experience of its personnel, encompassing backgrounds in the international pharmaceutical sector; senior management; and academia.

A new company will be established to develop a suite of potential novel drugs across a range of therapeutic areas targeting the substantial markets for pain and inflammation. A prime target will be the multi-billion dollar market for anti-arthritis drugs. The acquisition is subject to shareholder approval and the completion of due diligence.

EQITX will invest a total of \$2.36 million over a two year period, subject to the completion of Milestones to ultimately own 58% of the new company with the balance held by The University of Sydney and Thursday Plantation Laboratories. EQiTX will enter into a service agreement with the new company to provide management services on a fee for service basis.

The technology was developed in the School of Pharmacy at The University of Sydney where Professor Basil Roufogalis and his team isolated and subsequently synthesised new active analogues from an extract of the plant, Zingiber officinale. Importantly, the patent protecting the synthetic compounds that are to be further investigated for therapeutic use has already been allowed in the U.S.

The lead compounds have shown encouraging proof of efficacy in animal models for the control and management of pain and inflammation and initial toxicity studies have been positive.

It is expected that the further optimisation of these lead compounds will build upon their current specificity profile, with the objective of developing new drug candidates with improved safety profiles compared to currently available treatments.

The decision to proceed with this investment follows a rigorous evaluation process by EQiTX's eminent advisory panel. The company has evaluated in excess of 70 opportunities over the previous six months. Key evaluation criteria for potential investments include consideration of:

• The quality and stage of the research
• The intellectual property position
• $\bullet$ The market potential and competitive advantages within the market
• The development of a realistic outcome focussed research and development plan $\bullet$

The project will proceed according to pre-determined milestones with the first milestone focussing on lead compound selection. It is currently anticipated that the first milestone will be achieved within six months from commencement following shareholder approval.

The Board is delighted to have formed an association with the University of Sydney and believes this investment will be the catalyst for the emergence of EQiTX as a leading participant in the biotechnology sector.

EQITX has previously advised that it has a range of potential projects under consideration beyond that announced today. The company is still evaluating a number of additional opportunities and these evaluations are at varying stages of completion. Shareholders will be advised upon conclusion of negotiations.

Yours sincerely,

Dr Noel Chambers Chief Executive Officer

For further information, please contact Dr Noel Chambers (CEO) or Stephen Brown (Company Secretary) on 61 8 94800490