EQUATORIAL RESOURCES LIMITED — Capital/Financing Update 2011

Mar 30, 2011

E Q U A T O R I A L R E S O U R C E S L I M I T E D A C N 0 0 9 1 8 8 6 9 4

T H I R D S U P P L E M E N T A R Y P R O S P E C T U S

Section 1

Important Information

This is a Supplementary Prospectus that should be read in conjunction with the:

• (a) prospectus dated 1 September 2010 ( Original Prospectus );

• (b) first supplementary prospectus dated 5 October 2010 ( First Supplementary Prospectus ); and

• (c) second supplementary prospectus dated 10 December 2010 ( Second Supplementary Prospectus ),

issued by Equatorial Resources Limited ACN 009 188 694.

A copy of this Third Supplementary Prospectus was lodged with ASIC and ASX on 31 March 2011. ASIC and ASX do not take any responsibility for the contents of this Third Supplementary Prospectus.

Section 2 Placement

On 28 March 2011, Equatorial Resources Limited ( Company ) announced that it would make a placement of up to 12,000,000 fully paid ordinary shares in the Company ( Shares ) at $3.00 each to European based financial institutions and sophisticated investors to raise up to $36,000,000 before costs ( Third Placement ). The Shares will be issued progressively on or about 31 March 2011.

The Third Placement follows:

• (a) a placement completed on 5 October 2010 of 9,780,000 Shares at $0.82 each which raised $8,019,600 before costs ( First Placement ); and

• (b) a placement completed on 25 January 2011 of 14,200,000 Shares at $1.80 each (issued in two tranches) which raised $25,560,000 before costs ( Second Placement ).

The funds raised by the Third Placement will be used to accelerate the Company’s exploration activities at the Badondo and Mayoko-Moussondji Iron Projects in the Republic of Congo and for working capital.

Section 3 Supplementary Information

(a) Proposed Capital Structure

The Third Placement effects the capital structure of the Company by the amount of the Securities issued. To show this effect the table and notes in Section 2.1 of the Original Prospectus are deleted and replaced with the following:

2.1 Capital structure on completion of the Offer

	Number of Shares	Number of Options
Balance at the date of the Prospectus	65,212,922(1)	725,000(2)
Share Offer	100	-
Option Offer	-	10,400,000(3)
First Placement	9,780,000(4)	586,800(5)
Second Placement	14,200,000(6)	-
Third Placement	12,000,000	-
Exercise of Options	225,000(7)	(225,000)(7)
Balance after the Offer	101,418,022	11,486,800

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Notes:

• (1) Includes:

• (a) the 6,400,000 Tranche A Placement Shares issued on 2 June 2010;

• (b) the 10,000,000 Tranche B Placement Shares issued on 31 August 2010; and

• (c) the 5,700,000 Vendor Shares issued on 31 August 2010.

• (2) Includes:

• (a) 100,000 unlisted options exercisable at $2.335 expiring 4 August 2011;

• (b) 75,000 unlisted options exercisable at $1.835 expiring 31 December 2010;

• (c) 100,000 unlisted options exercisable at $2.835 expiring 31 December 2012;

• (d) 200,000 unlisted options exercisable at $2.00 expiring 30 July 2013;

• (e) 150,000 unlisted options exercisable at $3.00 expiring 30 July 2013; and

• (f) 100,000 unlisted options exercisable at $4.00 expiring 30 July 2013.

• (3) The Option Offer under the Prospectus was not fully subscribed. The following Options were issued pursuant to the Option Offer on 6 September 2010:

• (a) 2,500,000 unlisted options exercisable at $0.25 expiring 30 June 2012;

• (b) 3,950,000 unlisted options exercisable at $0.40 expiring 30 June 2013; and

• (c) 3,950,000 unlisted options exercisable at $0.60 expiring 31 December 2013.

• (4) 9,780,000 fully paid ordinary shares issued on 5 October 2010 under the First Placement.

• (5) 586,800 unlisted options exercisable at $0.82 expiring 5 October 2012 issued as part of the costs of the First Placement.

• (6) 11,200,000 fully paid ordinary shares issued on 10 December 2010 and 14 December 2010, and 3,000,000 fully paid ordinary shares issued on 25 January 2011 under the Second Placement.

• (7) Includes:

• (a) 75,000 unlisted options (exercisable at $1.835 expiring 31 December 2010) exercised on 24 December 2010;

• (b) 50,000 unlisted options (exercisable at $0.40 expiring 30 June 2013) exercised on 11 February 2011;

• (c) 50,000 unlisted options (exercisable at $0.60 expiring 31 December 2013) exercised on 11 February 2011; and

• (d) 50,000 unlisted options (exercisable at $2.335 expiring 4 August 2011) exercised on 31 March 2011.

(b) Pro-forma statement of financial position

The Third Placement effects the pro-forma statement of financial position of the Company in the Original Prospectus. To show this effect the pro-forma statement of financial position of the Company in Section 2.2 of the Original Prospectus is deleted and a new pro-forma consolidated statement of financial position of the Company is added as follows:

Current Assets Cash and cash equivalents Trade and other receivables Total Current Assets Non-Current Assets Exploration assets Plant and equipment Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Provisions Total Current Liabilities	As at 31 December 2010 Pro-forma adjustments Pro-forma statement of financial position $ $ $ 27,329,979 38,310,750 65,640,729 185,718 - 185,718
	27,515,697 38,310,750 65,826,447
	7,243,893 - 7,243,893 771,253 - 771,253
	8,015,146 - 8,015,146
	35,530,843 38,310,750 73,841,593
	399,500 - 399,500 16,111 - 16,111
	415,911 - 415,911

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TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY	415,911 - 415,911
	35,114,932 38,310,750 73,425,682
	103,978,930 39,990,150 143,969,080 4,289,186 420,600 4,709,786 (73,153,184) (2,100,000) (75,253,184)
	35,114,932 38,310,750 73,425,682

Basis of Preparation

The above pro forma statement of financial position has been prepared in accordance with the draft ASIC Guide to Disclosing Pro Forma Financial Information (issued July 2005).

The pro forma statement of financial position has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and settlement of liabilities in the normal course of business.

The pro forma statement of financial position is based on the audit reviewed statement of financial position as at 31 December 2010 and has then been adjusted to reflect the following material transactions:

Effect of material changes since 31 December 2010:

• (a) The issue of up to 12,000,000 Shares at $3.00 each to raise up to $36,000,000 before costs of approximately $1,440,000 as part of the Third Placement.

• (b) The issue of 3,000,000 Shares at $1.80 each to raise $5,400,000 before costs of approximately $216,000 being the second tranche of the Second Placement.

• (c) The exercise of 150,000 Options to raise $166,750. A further impact will be to recognise a transfer from equity reserves to share capital of approximately $79,400.

• (d) Expenses incurred as a result of exploration on the Company’s projects and normal operations of the Company from 31 December 2010 of approximately $1,600,000.

Effect of the Offer under the Prospectus:

• (a) The impact of the issue of 100 Shares under the Share Offer to raise $25, if completed, will be to increase issued capital by $25 with a corresponding increase in cash. As these amounts are immaterial, the impact of the Share Offer has not been reflected in the above pro-forma.

• (b) The impact of the issue of 10,400,000 Options under the Option Offer is as follows:

• (i) a share-based payment expense of $1,571,956 was recognised in the income statement for the half year ended 31 December 2010 (with a corresponding increase in equity reserves); and

• (ii) a share-based payment expense of approximately $500,000 will be recognised in the income statement from 31 December 2010 (with a corresponding increase in equity reserves). This impact of the Option Offer has been reflected in the above pro-forma.

(c) Announcements

Since the lodgement of the Second Supplementary Prospectus the following announcements have been made by the Company:

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Date	Announcement
31/03/2011	Appendix 3B
31/03/2011	Drilling Commences at Mayoko-Moussondji Iron Project
28/03/2011	Badondo Iron Project Exploration Target of 1.3-2.2Bt
24/03/2011	Request for Trading Halt
24/03/2011	Trading Halt
9/03/2011	Half Year Accounts
4/03/2011	SandP Announces March SP/ASX Rebalance
11/02/2011	Appendix 3B-Exercise of Options
8/02/2011	Indaba Mining Conference Company Presentation
4/02/2011	Agreement Signed with Port Authority of Pointe-Noire
1/02/2011	FORM604CHANGEOF INTERESTS OFSUB HOLDER
31/01/2011	December 2010 QuarterlyReport
28/01/2011	22kmof NewStrikePotential Identified atBadondo
25/01/2011	Appendix3B
21/01/2011	Results of Meeting
10/01/2011	Changeinsubstantial holding
4/01/2011	Changeinsubstantial holding
29/12/2010	Changeinsubstantial holding
24/12/2010	Appendix3B - Exercise ofOptions
23/12/2010	Becoming a substantial holder
23/12/2010	Airborne Geophysics Survey Commences atBadondo
22/12/2010	SecuritiesTradingPolicy
22/12/2010	Notice ofGeneral Meeting/ProxyForm
21/12/2010	FORM604CHANGEOF INTERESTS OFSUB HOLDER
20/12/2010	Changeinsubstantial holding
20/12/2010	FORM604CHANGEOF INTERESTS OFSUB HOLDER
16/12/2010	Changeinsubstantial holding
16/12/2010	Becoming a substantial holder

Section 4 General

All other information contained in the Original Prospectus remains unchanged. Words and phrases as defined in the Original Prospectus have a corresponding meaning in this Third Supplementary Prospectus.

Section 5 Applications for Securities

The Directors believe that the changes in this Third Supplementary Prospectus are not materially adverse from the point of view of an investor. Accordingly, no action needs to be taken if you have already subscribed for Securities under the Original Prospectus.

Section 6 Directors’ Consents and Authorisations

Each Director of Equatorial Resources Limited has given and has not, at the date of this Third Supplementary Prospectus, withdrawn his written consent to the lodgement with the ASIC of this Third Supplementary Prospectus.

This Third Supplementary Prospectus is signed for and on behalf of Equatorial Resources Limited by:

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John Welborn Managing Director & CEO

Dated: 31 March 2011

This document is important and should be read in its entirety and in conjunction with the Original Prospectus, the First Supplementary Prospectus and the Second Supplementary Prospectus. If you do not understand its contents, you should consult your professional adviser without delay.

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