EQUATORIAL RESOURCES LIMITED — Capital/Financing Update 2007

Oct 28, 2007

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ASX Release

EQX finalises its move into the Resources Sector.

29 October 2007, Perth: The Board of Directors of EQiTX Limited (ASX: EQX) is pleased to provide shareholders with an update on the progress being made with regards its already announced intentions to move into the resources sector. As initially announced on 23 July 2007 and further updated on 27 September 2007, the Board has been reviewing a range of opportunities in Indonesia with a view to becoming a coal exploration and production company.

The Board today advises that it does not intend to progress with the transaction outlined in the announcement made on 23 July 2007. Instead, the Company confirms that it has signed a binding Terms Sheet with a consortium that will enable EQX to take a 70% interest in three (3) mineral permits in Indonesia. As was the case previously, and subject to shareholder approval, the Company will in due course change its name, Board and Management to reflect this new line of business.

Background on Permits

The three permits are based in East Kalimantan, located in the Regency of Penajam Paser Utara. Specifically the permits are 3,679, 7,479, and 9,938 hectares in size and are shown as B01, B02 and B03 on the map below:

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Details of the Terms Sheet

The material terms of the binding Terms Sheet are as follows:

• EQX will acquire, through the purchase of 100% shares in Equatorial Resources Pte Ltd (Equatorial), the rights to 70% of the net profits generated from the production of coal from the three Indonesian mining permits. Equatorial has entered into an agreement with the owners of the permits, PT Mega Coal Indo Mine ( Mega Coal ), to acquire these rights. The shareholders of Equatorial are directors of Corporate and Resource Consultants (Singapore) Pte Ltd and parties related to Capital Investment Partners Pty Ltd (together “the vendors”).

• • EQX will pay a deposit of $US2 million to Mega Coal within the next two weeks. This deposit will be fully refundable if EQX is not able to prove up reserves of at least 20 million tonnes of coal on the three permits during its due diligence or if Mega Coal is found not to be the owner of the permits. Suitable security arrangements for the deposit have been put in place by Equatorial.

• On the identification of a minimum 20 million tonnes coal reserve with a minimum caloric value (CV) of 5700 gross air dried (GAD), EQX will also pay a rate per metric tonne based on a formula which equates to 70% (EQX’s share) times 25.0% of an agreed rate per metric tonne of in-situ coal. This payment will be reduced by the $US2 million deposit already paid. The indicative value of this payment is up to $US450,000. (Refer to Annexure 4 for the various applicable rates per metric tonne.)

• • On the receipt of an Exploitation Permit from the Government of Indonesia for the Assets, EQX will also pay a rate per metric tonne which equates to 70% (EQX’s share) times 45.0% of an agreed rate per metric tonne of in-situ coal. The indicative value of this payment is up to $US4.41 million (Refer to Annexure 4 for the various applicable rates per metric tonne.)

• On the completion of the first production from the Assets, EQX will also pay a rate per metric tonne which equates to 70% (EQX’s share) times 30.0% of the value of an agreed rate per metric tonne of in-situ coal. The indicative value of this payment is up to $US2.94 million. (Refer to Annexure 4 for the various applicable rates per metric tonne.)

• • EQX will carry out detailed due diligence on these permits (at a cost of up to $US500,000) to verify the information provided to the Company regarding the prospectivity and ownership of the mining permits.

• • Assuming the due diligence process is completed successfully, shareholders approve the transaction, and the required funds are raised, EQX will issue a total of 20 million shares to the vendors for 100% of the shares in Equatorial Resources Pte Ltd.

• • An additional 10 million shares will be issued to the vendors if and when the permits produce in excess of 500,000 tonnes of coal.

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• Capital Investment Partners will work with EQX to raise an initial $A4 million which will be used to fund the initial deposit on the permits and the due diligence costs. These funds will be raised at the equivalent of $0.10 per share by a combination of a placement ($A700,000) and a converting loan ($A3,300,000). The converting loan portion of the raising will be converted to EQX shares assuming the conversion of the loan to shares is approved by shareholders at the upcoming Annual General Meeting which will be held in November 2007.

• A further capital raising will be carried out once the indicated resource has been proven to stand at a minimum of 20 million tonnes. The amount and the price of this further capital raising will be determined at a later date. This further capital raising will be undertaken by way of a prospectus and at a minimum issue price of $0.20 per share.

• • Mr Jim Dracopoulos will join the EQX Board as Executive Chairman once the transaction has been completed. More information on Jim’s background is contained in Annexure 3.

Subject to completion of the due diligence, shareholder approval, the entry into a formal agreement, the successful completion of an appropriate capital raising and ASX providing conditional approval to the re-admission of EQX to the Official List as a resource company, the Company will change activities and focus on this new coal opportunity . As a result of the proposed change of the Company’s activities to focus on the resources sector, EQX will be required to satisfy the requirements in Chapters 1 and 2 of the ASX Listing Rules as if the Company were applying for admission to the official list. Re-compliance with Chapters 1 and 2 of the ASX Listing Rules requires the issue of a prospectus, raising capital at a minimum of 20 cents and evidence of 400 EQX shareholders with parcels of shares worth at least $2,000 each.

As discussed above, EQX intends to raise the appropriate amount of funds as part of this re-compliance process. The funds raised will be used for the proposed exploration programme on the three mining permits and to meet ongoing working capital requirements.

Details of the In Specie Distribution of the Biotechnology Assets

Whilst EQX has not been able to develop either VacTX or ZingoTX to a commercial level, there is a possibility that these projects may ultimately generate some commercial value.

The existing Board has been in dialogue with a number of national and international companies that have been interested in investing in one or both projects and taking on the day to day management role required to develop the projects further.

Discussions are currently ongoing with one party with regards a potential investment in VacTX as well as another international organisation with regards a potential investment in ZingoTX.

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These discussions will be ongoing but in order to preserve any potential upside in these projects, the Board has decided, subject to shareholder approval and the completion of the Company’s acquisition of its Indonesian coal interest, to carry out an in specie distribution of these assets to all EQX shareholders as at the nominated Record Date. The Record Date will be 5 business days after the date of the General Meeting that seeks to approve resolutions pertaining to the issue of the vendor shares relating to the coal transaction as well as approving the in specie distribution itself.

The biotechnology assets will be held in a public entity that will have a Board to oversee the two projects and the opportunities that develop for their potential commercialisation.

Whilst there is no guarantee that there will be any returns from these assets, this structure seeks to maximise, for shareholders, whatever returns are achieved over time.

The Company is also receiving taxation advice on this matter in order to try and minimise any taxation obligations arising from the proposed demerger to EQX shareholders and the Company will keep shareholders informed of this situation in the lead up to the General Meeting.

Anticipated Timetable

The anticipated timetable for completion of the transaction and the balance of the matters referred to above is set out below:

Sign bindingTerms Sheet with Vendors	26 October 2007
Pay initial $US2 million refundable deposit on permits to the owners of thepermit	9 November 2007
Carrying out of Due Diligence by EQX on the permits including confirming a proven reserve of at least 20 million tonnes of coal	November 2007 to February 2008
Confirmation that successful Due Diligence has been completed and that the transaction is recommended to shareholders	3 March 2008
Despatch Notice of Meeting to shareholders to consider and approve resolutions relating to the proposed transaction	17 March 2008
Suspension of EQX’s securities from trading on ASX at the openingof trading	1 May 2008
General Meeting to approve the change of activities of the Companyand other relevant resolutions	2 May 2008

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Issue of Prospectus to raise funds to complete readmission to the ASX and fund theproject	2 May 2008
Record Date for In specie distribution of biotechnology assets	9 May 2008
Closure of Prospectus	16 June 2008
Relistingof EQX on the ASX	30 June 2008

PLEASE NOTE: THE ABOVE DATES ARE SUBJECT TO CHANGE

Proforma Balance Sheet

A Proforma Balance Sheet of EQX following the completion of the proposed transaction is provided in Annexure 1.

Proforma Capital Structure

A Proforma Capital Structure of EQX is provided in Annexure 2.

Rationale for a change to the Resources Sector

EQX has been focussed on the biotechnology sector for the past five years with interests in the areas of chronic diseases and age-related conditions. Over this time, EQX developed a portfolio of technologies to a stage where they could be of commercial interest to multinational pharmaceutical and biotechnology companies. The company’s two main programs are the ZingoTX project to develop pharmacologically active compounds for pain management, and the VacTX project to develop and commercialise novel synthetic immunotherapeutics against a range of human conditions, including infectious diseases, cancer, allergies and autoimmune diseases.

Despite the best efforts of past Board and Management teams, neither project has proven to be a company maker and in August 2006 there was a major restructure of the Company and a deliberate effort to reduce the company’s burn rate as well as to focus on finding larger partners to develop the two projects to their next commercial level.

Whilst the search for partners has shown some positive signs, it has become clear to the EQX Board that a new direction is needed to be taken to build shareholder value in EQX. After reviewing a number of opportunities, the Board has decided to invest further time and funds in carrying out due diligence on what has the potential to be a significant coal project in Indonesia.

The Directors believe that the proposed change of direction to focus of the resources sector, the appointment of senior management with significant experience in this sector and entering into the agreement to earn an interest in

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these mining permits will provide the Company and its shareholders with significant potential upside.

As already discussed, it is also proposed that the Company will do an in specie distribution of the biotechnology assets into a separate, unlisted, company and in doing so provide shareholders (registered as at the In Specie Record Date) with an opportunity to share in any upside that may arise if the existing biotechnology assets are developed to a commercial outcome with the assistance of a 3[rd] party.

Summary

The EQX Board believes that this proposed change of direction has the potential to provide significant upside to EQX shareholders. All inquiries regarding this announcement should be directed to EQX, through the Chairman Geoff Gander, who can be reached on 0417 914 137.

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Annexure 1

BALANCE SHEET

Set out below, for the purpose of illustration only, is an unaudited pro forma consolidated balance sheet of the Company as at 30 June 2007 taking into account the effect of the Offer made pursuant to MOU and assuming completion has occurred. The pro forma consolidated balance sheet illustrates the effect of the Offer as if the issue of securities occurred on 30 June 2007 (based on the assumptions below).

The financial information is presented in abbreviated form and does not contain all the disclosures that are usually provided in an annual report prepared in accordance with the Corporations Act.

Current Assets Cash and cash equivalents Trade and other receivables Current tax assets Prepayments Total Current Assets Non Current Assets Plant and equipment Exploration expenditure Available-for-sale financial assets Investment accounted for using the equity method Total Non Current Assets Total Assets Current Liabilities Trade Payables Interest bearing loans Total Current Liabilities Total Liabilities Net Assets Equity Contributed equity Accumulated losses Other reserves Total Equity

Audited Pro- forma Consolidated Consolidated June 07 June 07 $ $ 645,028 2,360,584 31,328 31,328 153,048 153,048 4,664 4,664 833,978 2,549,624 7,963 7,963 - 13,444,354 10,801 10,801 1,121,056 1,121,056 1,139,820 14,584,174 1,973,798 17,133,798 49,799 49,799 591,667 591,667 641,466 641,466 641,466 641,466 1,332,332 16,492,332 51,631,975 66,791,975 (50,842,044) (50,842,044) 542,401 542,401 1,332,332 16,492,332

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The pro forma consolidated balance sheet assumes:

• (a) the issue and allotment by the Company of 40,000,000 shares at an issue price of 10 cents to raise a total of $4,000,000 before costs.

• (b) the issue and allotment by the Company of 20,000,000 shares at an issue price of 10 cents as consideration to the vendors for the assets.*

• (c) the issue and allotment by the Company of 50,000,000 shares at an issue price of 20 cents to raise a total of $10,000,000 before costs.^

• (d) the payment of $1,573,333 for fundraising costs for both issues of shares.

• This is assumed to be the minimum issue price, however the market at the time will determine the actual issue price.

• ^ The final size and pricing of this capital raising has not yet been determined.

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Annexure 2

CAPITAL STRUCTURE

CAPITAL STRUCTURE
	No. of shares	$
Opening balance	46,464,170	51,631,975
Issue of 20 million shares @ 10 cents	20,000,000	2,000,000
Issue of 40 million shares @ 10 cents	40,000,000	4,000,000
Issue of 50 million shares @ 20 cents	50,000,000	10,000,000
Associated costs		(840,000)
Total Equity	156,464,170	66,791,975
In addition to the above equity, EQX also has	the following securities that are
not quoted on the ASX:
Convertible Notes, 8% p.a., redemption	5,800,000
date 31 Dec 2008
Employee Options, exercise price $0.20,	200,000
expiry date 08 May 2008
Unlisted Options, exercise price $0.25,	1,000,000
expiry date 04 Aug 2011

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Annexure 3

Background on Jim Dracopoulos

Jim Dracopoulos is currently the Managing Director of Equatorial Resources Pte Ltd and is a finance executive with over 20 years of Australian and international experience in finance, administration, marketing and general management in the Mining and Construction industry.

Jim has developed a broad range of skills and experience in the resources industry, having recently completed 13 years with Straits Resources Limited, an ASX listed resources company focussed on the coal sector. Prior to working with Straits, Jim had worked in finance and commercial roles with Western Mining Corporation, Macmahon Contractors (Macmahon Holdings Limited), Pancontinental Gold, and the coal production department of the Electricity Trust of South Australia.

For seven of the past ten years with Straits, Jim was based in Indonesia and Singapore in various roles including CFO, Operations Manager, Country Manager (Indonesia), and Managing Director of the company’s commodity trading business. He has also held directorships of various Indonesian, Singaporean and Australian subsidiary companies of Straits Resources Limited, and has a solid understanding of corporate governance matters.

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Annexure 4

APPLICABLE RATES

The Rate payable for the in-situ coal will be determined as follows:

Coal Quality CV (GAD)	US$ cents per metric tonne
>6150	0.70
5950 - 6149	0.60
5700 - 5949	0.50
<5700	0.35

ENDS

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