PAYNES FIND GOLD LIMITED (TO BE RENAMED “ARKOMA ENERGY LIMITED”)

ACN 141 450 624

NOTICE OF GENERAL MEETING

TIME: 10.00am DATE: Friday, 30[th] January 2015 PLACE: 9 Foundry Street, Maylands WA 6051

The Directors believe the proposed change of activities is in the best interests of Shareholders and recommend that Shareholders vote in favour of all Resolutions set out in this Notice of Meeting.

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Independent Expert has concluded that the transaction the subject of Resolutions 1 and 4 of the General Meeting is fair and reasonable to non-associated Shareholders. All Shareholders should refer to the Independent Expert’s Report enclosed with this Notice of Meeting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on +618 9481 3992.

Business of the Meeting (setting out the proposed Resolutions)	4
Explanatory Statement (explaining the proposed Resolutions)	9
Glossary	35
Schedule 1 – Terms and Conditions of Purchaser Options and Related Party Options	37
Schedule 2 – Pro Forma Balance Sheet	38
Schedule 3 – Pricing Methodology for Related Party Options`	41
Annexure 1 – Independent Expert’s Report
Proxy Form

IMPORTANT INFORMATION

Time and place of Meeting

Notice is given that the Meeting will be held at 10.00am on Friday, 30 January 2015 at:

9 Foundry Street, Maylands WA 6051

Your vote is important

The business of the Meeting affects your shareholding and your vote is important. The Board reserves the right not to implement any resolution although it may be passed by Shareholders.

Voting eligibility

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 10.00am (WST) on 28 January 2015.

Voting in person

To vote in person, attend the Meeting at the time, date and place set out above.

Voting by proxy

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

each Shareholder has a right to appoint a proxy;
the proxy need not be a Shareholder of the Company; and
a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not

specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes are set out below.

Proxy vote if appointment specifies way to vote

Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does:

the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (ie as directed); and
if the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands; and
if the proxy is the chair of the meeting at which the resolution is voted on, the proxy must vote on a poll, and must vote that way (ie as directed); and
if the proxy is not the chair, the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (ie as directed).

Transfer of non-chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and
the appointed proxy is not the chair of the meeting; and
at the meeting, a poll is duly demanded on the resolution; and
either of the following applies:
the proxy is not recorded as attending the meeting; or
the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

INDICATIVE TIMETABLE*

Event	Date
Lodgement of the Prospectus with ASIC	30 January 2015
General Meeting to approve Change in Nature and Scale of Activities	30 January 2015
Suspension of PNE’s securities from trading on ASX at the opening of trading pre General Meeting	30 January 2015
Completion of Transaction and issue of Shares under Post Consolidation Capital Raising	20 February 2015
Anticipated date the suspension of trading is lifted and PNE’s securities commence trading again on ASX	25 February 2015

*Note: this timetable is indicative only and is subject to change. The Directors of the Company reserve the right to amend the timetable. The timetable for the consolidation is set out in Section 3.6.

BUSINESS OF THE MEETING

1. RESOLUTION 1 – CHANGE IN NATURE AND SCALE OF ACTIVITIES, RELATED PARTY TRANSACTION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 11.1.2 and for all other purposes, approval is given for the Company to acquire Canadian River, Inc. from Delecta Limited, a company controlled by Mr Malcolm Day, a Director, and thereby make a significant change in the nature and scale of its activities, as set out in the Explanatory Statement.”

Short Explanation: If successful, the Transaction will result in the Company changing the nature and scale of its activities to include exploration of oil and gas assets. ASX Listing Rule 11.1.2 requires the Company to seek Shareholder approval where it proposes to make a significant change to the nature and scale of its activities. The Company that it will also be required to re-comply with the requirements of Chapters 1 and 2 of the ASX Listing Rules in accordance with ASX Listing Rule 11.1.3. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Malcolm Day, Delecta Limited and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2. RESOLUTION 2 – CONSOLIDATION OF CAPITAL

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purposes of Section 254H of the Corporations Act, ASX Listing Rule 7.20 and for all other purposes, approval is given for the issued capital of the Company to be consolidated on the basis that:

(a) every fifty (50) Shares be consolidated into one (1)Share; and
(b) every fifty (50) Options be consolidated into one (1) Option,

where this Consolidation results in a fraction of a Share or Option being held by a Shareholder or Optionholder, the Directors be authorised to round that fraction down to the nearest whole Share or Option.”

Short Explanation: The Company must consolidate its capital in order to satisfy Chapters 1 and 2 of the ASX Listing Rules and as a condition of the Company’s securities recommencing trading on the ASX following completion of the Transaction.

3. RESOLUTION 3 – CAPITAL RAISING

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue a minimum of 40,000,000 Shares and a maximum of 80,000,000 Shares (on a post-consolidation

basis), on the terms and conditions set out in the Explanatory Statement.”

Short Explanation: The Company must issue a Prospectus in order to satisfy the requirements of Chapters 1 and 2 of the ASX Listing Rules and as a condition of the Company’s securities recommencing trading on the ASX following the Transaction. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

4. RESOLUTION 4 – ISSUE OF CONSIDERATION SECURITIES TO DELECTA LIMITED

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That for the purpose of ASX Listing Rule 10.1, ASX Listing Rule 10.11 and Section 611 item 7 of the Corporations Act and for all other purposes, approval is given for the Company to issue up to:

(a) 30,000,000 Shares (on a post-consolidation basis); and
(b) 6,000,000 Options (on a post-consolidation basis);

to Delecta Limited (or its nominee), as consideration for the acquisition of 100% of the issued shares in Canadian River, Inc, and

(c) 9,022,067 Shares (on a post consolidation basis) upon the exercise of the Relevant Resolution Options and the Existing Relevant Options,

which, in addition to the Shares already held will result in Delecta Limited’s and Malcolm Day and his associates voting power in the Company increasing to the maximum amounts as set out in the Explanatory Statement and otherwise on the terms and conditions set out in the Explanatory Statement.”

Short Explanation: The Company has entered into a Heads of Agreement with Canadian River, Inc. (CRI) and its shareholder, Delecta Limited (Delecta), under which the Company has agreed to acquire all of the issued share capital in CRI. The Company seeks shareholder approval for the issue of the Shares and Options to be issued as consideration (and the exercise of those Options and the Existing Relevant Options) under this heads of agreement in accordance with ASX Listing Rules 10.1 and 10.11 and Section 611 item 7 of the Corporations Act.

Expert’s Report: Shareholders should carefully consider the Independent Expert’s Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd for the purpose of the Shareholder approval required under ASX Listing Rule 10.1 and Section 611 item 7 of the Corporations Act. The Independent Expert’s Report comments on the fairness and reasonableness of the transaction to the non-associated Shareholders in the Company.

not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:
(i) a member of the Key Management Personnel; or
(ii) a Closely Related Party of such a member; and
(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

(a) the proxy is the Chair; and
(b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

5. RESOLUTION 5 – APPOINTMENT OF MR JAMES R HOLCOMB

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That, subject to and conditional upon the passing of Resolutions 1 and 4, Mr Rick Holcomb is appointed as a Director of the Company.”

6. RESOLUTION 6 – CHANGE OF COMPANY NAME

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution:

“That, subject to and conditional upon the passing of Resolutions 1 and 4, for the purpose of Section 157(1)(a) of the Corporations Act and for all other purposes, approval is given for the name of the Company to be changed to Arkoma Energy Limited.”

Short Explanation: The Company proposes to change its name to more accurately reflect the proposed future activities of the Company, subject to the Transaction proceeding.

7. RESOLUTION 7 – ISSUE OF OPTIONS TO RELATED PARTY – PAUL LLOYD

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 6,000,000 Options to Paul Lloyd (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

ASX Voting Exclusion: The Company will disregard any votes cast on this Resolution by Paul Lloyd (or his nominee) and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:
(i) a member of the Key Management Personnel; or
(ii) a Closely Related Party of such a member; and
(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

(a) the proxy is the Chair; and
(b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

8. RESOLUTION 8 – ISSUE OF OPTIONS TO RELATED PARTY – JAMES R HOLCOMB

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, for the purposes of section 195(4) and section 208 of the Corporations Act, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 6,000,000 Options to James R. Holcomb (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

ASX Voting Exclusion: The Company will disregard any votes cast on this Resolution by James R. Holcomb (or his nominee) and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:
(i) a member of the Key Management Personnel; or
(ii) a Closely Related Party of such a member; and

(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

(a) the proxy is the Chair; and
(b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

9. RESOLUTION 9 – ISSUE OF OPTIONS TO RELATED PARTY – MALCOLM DAY

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

“That, for the purposes of section 195(4), section 208, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue 2,000,000 Options to Malcolm Day (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

ASX Voting Exclusion: The Company will disregard any votes cast on this Resolution by Malcolm Day (or his nominee) and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:

(i) a member of the Key Management Personnel; or

(ii) a Closely Related Party of such a member; and

(b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

(a) the proxy is the Chair; and

(b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

Dated: 23 December 2014

By order of the Board

PAUL LLOYD CHAIRMAN

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1. OVERVIEW OF CHANGE OF ACTIVITIES

1.1 Background

Paynes Find Gold Limited (PNE or the Company) is a public company listed on the official list of ASX (ASX code: PNE) with its principal focus being gold and mineral exploration. The Company was incorporated in March 2010 and was admitted to the official list of the ASX on 2 December 2010.

Historically, the Company has been an exploration company, focused on exploring for viable mineral deposits at Paynes Find, a significant gold producing region 420km northeast of Perth, Western Australia. Details of the Company’s most recent activities in these areas are set out in its Annual Report announced to ASX on 30 September 2014.

In addition to its principal business activities, the Company has recently been actively seeking to identify and evaluate new opportunities, in related or nonrelated industries, that may increase shareholder value.

1.2 Background to Change in Nature and Scale of Activities

On 25 September 2014, the Company announced that it had entered into a conditional agreement (Heads of Agreement) with Delecta Limited (a substantial shareholder in the Company and an entity in which Mr Malcolm Day and his associates have voting power of 26.9%) (Delecta) to acquire Canadian River, Inc. (CRI), an Oklahoma incorporated entity holding certain Oklahoma oil and gas assets (Transaction).

Pursuant to the contemplated Transaction, the Company would acquire all of the issued shares in CRI (CRI Shares) in the manner, and for the consideration, discussed in this Explanatory Statement.

1.3 Canadian River, Inc.

The field development project currently held, or an option to acquire which is currently held, by CRI (CRI Project) provides the opportunity to create immediate cash flow from a first well which has been drilled and successfully completed. Once due diligence has been completed and the project finalised, the well will be expected to produce predominately oil, but also gas.

The CRI Project is structured in two stages, with stage one being the drilling of a salt water disposal well and bringing the first well immediately into production. The second stage is the drilling of four other wells targeting the same producing horizon. All infrastructure to commence production is included in the acquisition cost, such as gas transmission lines, separation tanks, electricity cables to well head and pumping equipment.

Further detail on CRI and the CRI Project can be found in the announcements made by the Company to ASX on 25 September 2015. These wells will be funded from a capital raise to be conducted in conjunction with the Transaction.

Other information considered material to the Shareholders’ decision on whether to pass Resolution 1, approving, inter alia, the change in nature and scale of the Company’s activities, (and the other resolutions relevant thereto) is set out in this Explanatory Statement, and Shareholders are advised to read this information carefully.

1.4 Key Terms of the Heads of Agreement

In accordance with the terms of the Heads of Agreement, the Company has been granted, by the shareholder in CRI, Delecta, an option to acquire 100% of Delecta’s shares in CRI, conditional upon completion occurring in accordance with the Heads of Agreement.

The key terms of the Heads of Agreement are as follows:

(a) Conditions Precedent

Exercise of the Option is conditional upon the satisfaction or waiver of the following conditions precedent:

(i) completion of due diligence by the Company on CRI’s business and operations to the absolute satisfaction of the Company;
(ii) completion of a capital raising by the Company to raise a minimum of $4,000,000, and up to $8,000,000, through the issue of Shares at an issue price of not less than $0.10 each (Capital Raise);
(iii) completion of a consolidation of capital by the Company on the ratio mutually agreed between the Company and Delecta (which ratio has been agreed to be 50:1) in order to comply with applicable conditions set out in Chapters 1 and 2 of the ASX Listing Rules, or any waiver of such rules granted by ASX; and
(iv) the Company and Delecta obtaining all necessary shareholder and regulatory approvals pursuant to the ASX Listing Rules, Corporations Act 2001 (Cth) or any other law, including but not limited to, approval to reinstatement to official quotation on ASX of the Company on conditions satisfactory to the Company, and third party consents to allow Delecta and the Company to lawfully complete the matters set out in this document, including but not limited to assignment of the agreements pursuant to which CRI holds the CRI Project (CRI Agreements) in accordance with their terms.

(b) Consideration

In consideration for the sale of the CRI Shares to the Company, the Company would:

(i) pay to Delecta (or its nominee) $1,000,000 in cash;
(ii) issue to Delecta (or its nominee) 30,000,000 fully paid ordinary Shares in the capital of Company (on a post-consolidation basis) (Purchaser Shares); and

(iii) issue to Delecta (or its nominee) 6,000,000 options to acquire Shares exercisable at $0.125 each on or before that date which is 5 years after the date of issue (Purchaser Options) (on a postconsolidation basis) and otherwise on terms and conditions compliant with the ASX Listing Rules.

On and from issue, the Purchaser Shares issued as Consideration would rank equally with all Shares then on issue, other than for any escrow restrictions imposed in accordance with the ASX Listing Rules. The Purchaser Shares and the Purchaser Options (together, the Consideration Securities) would be subject to escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules.

Approval for the issue of the Consideration Securities to Delecta is the subject of Resolution 4.

(c)

Consolidation of Capital

In seeking re-admission to ASX following the Transaction, the Company will undertake a consolidation of its issued capital on the basis of one (1) Share for every fifty (50) Shares held and one (1) Option for every fifty (50) Options held (Consolidation) so that the Company’s Shares shall be valued at a minimum of $0.10 each following the Consolidation.

Approval for the Consolidation is the subject of Resolution 2.

(d) Capital Raising

In order to fund the Transaction and to re-comply with Chapters 1 and 2 of the ASX Listing Rules, the Company will conduct the Capital Raise, pursuant to which it will offer a maximum of 80,000,000 Shares at an issue price of not less than $0.10 each (following the Consolidation as defined above). The minimum amount that may be raised under the prospectus for the Capital Raise is $4,000,000 (before costs). The Capital Raise will be conducted under a full form prospectus to be prepared by the Company.

Approval for the issue of Shares pursuant to the Capital Raising is the subject of Resolution 3.

(e)

New Director

In accordance with the terms of the Heads of Agreement, the Company will appoint James R Holcomb to the board of the Company.

Approval for Mr Holcomb’s appointment is the subject of Resolution 5.

(f) Change of Name

As a result of the Transaction, the Company proposes to change its name to Arkoma Energy Limited.

Approval for the change of name is the subject of Resolution 6.

1.5 Pro forma balance sheet and Use of Funds

An unaudited pro forma balance sheet of the Company following completion of the Transaction contemplated by this Notice of Meeting, together with the use of funds is set out in Schedule 2.

1.6 Pro forma capital structure

The anticipated effect of the Transaction on the capital structure of the Company will be as follows:

Pre-Consolidation	Number
Shares currently on issue (including Shortfall under July 2014 Rights Issue)	911,027,100

Post-Consolidation	Number
Shares on issue post consolidation	18,220,542
Shares to be issued to Delecta pursuant to the Transaction	30,000,000
Shares to be issued pursuant to the Offer	80,000,000
Total post consolidation Shares on completion of the Offer	128,220,542

Options

Pre-Consolidation	Number
Options currently on issue 150,808,677 Quoted Options exercisable at $0.03 on or before 30 June 2015 33,640,000 Unquoted Options exercisable at $0.03 on or before 30 June 2015 56,000,000 Unquoted Options exercisable at $0.25 on or before 1 May 2015 24,000,000 Unquoted Options exercisable at $0.35 on or before 1 May 2016	264,448,677

Post-Consolidation*	Number
Total Options on issue post consolidation 3,016,173 Quoted Options exercisable at $1.50 on or before 30 June 2015 672,800 Unquoted Options exercisable at $1.50 on or before 30 June 2015 1,120,000 Unquoted Options exercisable at $12.50 on or before 1 May 2015 480,000 Unquoted Options exercisable at $17.50 on or before 1 May 2016	5,288,973

Option issue to Paul Lloyd (options exercisable at 12.5 cents on or before the date being 5 years from the date of grant)	6,000,000
Option issue to James R. Holcomb (options exercisable at 12.5 cents on or before the date being 5 years from the date of grant)	6,000,000
Option issue to Malcolm Day (options exercisable at 12.5 cents on or before the date being 5 years from the date of grant)	2,000,000
Options to be issued to Delecta pursuant to the Transaction (exercisable at 12.5 cents on or before the date being 5 years from the date of grant)	6,000,000
Options to be issued pursuant to the Capital Raise	Nil
Total Options on completion of the Offer and the Transaction	25,288,973

The Company also intends granting loyalty options to shareholders 3-6 months after relisting on a 1 for 2 basis at an exercise price of 12.5 cents.

Notes

1 Assumes no further securities are issued prior to completion of the Transaction, other than as set out in the tables.

2 Assumes that no Options are exercised prior to completion of the Transaction.

1.7 Advantages of the Transaction

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder’s decision on how to vote on the proposed Resolutions:

(a) the Transaction represents a significant opportunity for the Company to increase the scale of its activities which should increase the number and size of the investor pool that may invest in the Company’s shares;
(b) the Transaction provides an opportunity for the Company to diversify its interests to include oil and gas assets;
(c) the new Director will provide an experienced set of skills to guide the growth of the Company in the activities relevant to the new business;
(d) the acquisition of CRI provides the Company with the opportunity to increase the value of the Company; and
(e) the Company may be able to raise further funds at higher prices by way of share equity as a result of the Transaction.

1.8 Disadvantages of the Transaction

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder’s decision on how to vote on the proposed Resolutions:

(a) the Company will be changing the nature and scale of its activities to become a company which engages in exploration of oil and gas assets, which may not be consistent with the objectives of all Shareholders;
(b) the Transaction and the Capital Raise will result in the issue of Shares and Options to Delecta and new investors, which will have a dilutionary effect on the holdings of Shareholders; and
(c) there are inherent risks associated with the change in nature of the Company’s activities. Some of these risks are summarised in Section 1.9 below.

1.9 Risk factors

Shareholders should be aware that if the proposed Transaction is approved, the Company will be changing the nature and scale of its activities. Based on the information available, a non-exhaustive list of risk factors are as follows:

Risks relating to the Change in Nature and Scale of Activities

(a) Re-Quotation of Shares on ASX

The acquisition of CRI constitutes a significant change in the nature and scale of the Company’s activities and the Company needs to recomply with Chapters 1 and 2 of the ASX Listing Rules as if it were seeking admission to the official list of ASX.

There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares on the ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all. Shareholders may be prevented from trading their Shares should the Company be suspended until such time as it does re-comply with the ASX Listing Rules.

(b) Dilution Risk

The Company currently has 911,027,100 shares on issue. The Company would issue 30,000,000 Shares to Delecta pursuant to the Transaction (on a post-Consolidation basis). The total Shares then on issue equates to 48,220,542 Shares, post Consolidation.

In addition, a maximum of 80,000,000 Shares would be issued pursuant to the Capital Raise, giving 128,220,542 total post consolidation Shares on completion of the Transaction and Capital Raise (assuming that the maximum subscription is reached).

Following these issues (assuming no exercise of Options), the existing Shareholders will retain approximately 14.2% of the issued share capital of the Company, with Delecta receiving 23.4% pursuant to the Transaction and the investors under the Capital Raising holding 62.4% of the issued share capital of the Company.

On a fully diluted basis (assuming in each instance that all Options on issue are exercised) the Company would currently have 1,175,475,777 Shares on issue (on a pre-Consolidation basis), equating to 23,509,515 post-Consolidation Shares. The Shares on issue on a fully diluted, postConsolidation basis, following completion of the Transaction and the Capital Raise (assuming that the maximum subscription is reached), and

taking into account the Option issues contemplated by Resolutions 4, 7, 8 and 9, would be 153,509,515 Shares.

Following these issues, on a fully diluted basis, the existing Shareholders will retain approximately 15.31% of the issued share capital of the Company, with Delecta receiving approximately 23.45% pursuant to the Transaction, the Related Parties receiving a combined total of approximately 9.11% pursuant to Resolutions 7, 8 and 9 and the investors under the Capital Raising holding approximately 52.11% of the issued capital of the Company.

There is also a risk that the interests of Shareholders will be further diluted as a result of future capital raisings required in order to fund the development of the CRI Project and/or the Company’s continuing operations.

(c)

Liquidity Risk

Delecta currently holds 350,000,000 Shares in the Company. This equates to 38.42% Shares on a post-consolidation basis. On completion of the Transaction, the Company proposes to issue 30,000,000 Shares, and 6,000,000 Options to Delecta (on a post-Consolidation basis). These securities may be subject to escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules. Based on the post-offer capital structure (on a post-Consolidation basis) (and assuming no further Shares are issued or Options exercised), the Shares to be issued to Delecta will equate to approximately 23.4% of the post-Offer and postTransaction issued Share capital (assuming maximum subscription under the Capital Raising). The voting power which Delecta could potentially hold in the Company is detailed further in section 5 below. This could be considered an increased liquidity risk as a large portion of issued capital may not be able to be traded freely for a period of time.

(d) Contractual Risk

Pursuant to the Heads of Agreement (summarised above) the Company has been granted an option to acquire 100% of CRI, subject to the fulfilment of certain conditions precedent.

The ability of the Company to achieve its stated objectives will depend on the performance by the Vendors of their obligations under the Heads of Agreement. If the Vendors or any other counterparty defaults in the performance of their obligations, it may be necessary for the Company to approach a court to seek a legal remedy, which can be costly.

(e) Sovereign

The assets to be indirectly acquired by the Company pursuant to the Transaction are situated in the USA. Accordingly, the Company is subject to the risks associated with operating in foreign countries. The risks include economic, social or political instability or change, hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, export duties, repatriation of income or return of capital, environmental protection, labour relations as well as government control over natural resources or government regulations that require

the employment of local staff or contractors or require other benefits to be provided to local residents.

The Company and its advisers will undertake all reasonable due diligence is assessing and managing the risks associated with oil and gas exploration and production in the USA. However, any future material adverse changes in government policies or legislation in foreign jurisdictions in which the Company has projects is outside the control of the Company. Such changes may affect the foreign ownership, exploration, development or activities of companies involved in oil and gas exploration and production and in turn may affect the viability and profitability of the Company.

Industry Specific Risks– Oil and Gas

(a) Exploration and Development Risks

The business of oil and gas exploration, project development and production, by its nature, contains elements of significant risk with no guarantee of success. Ultimate and continuous success of these activities is dependent on many factors such as:

(i) the discovery and/or acquisition of economically recoverable reserves�
(ii) access to adequate capital for project development�
(iii) design and construction of efficient development and production infrastructure within capital expenditure budgets�
(iv) securing and maintaining title to interests�
(v) obtaining consents and approvals necessary for the conduct of oil and gas exploration, development and production�
(vi) access to competent operational management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced employees, contractors and consultants.

Whether or not income will result from projects undergoing exploration and development programs depends on successful exploration and establishment of production facilities. Factors including costs, actual hydrocarbons and formations, flow consistency and reliability and commodity prices affect successful project development and operations.

Drilling activities carry risk as such activities may be curtailed, delayed or cancelled as a result of weather conditions, mechanical difficulties, shortages or delays in the delivery of drill rigs or other equipment. In addition, drilling and operations include reservoir risk such as the presence of shale laminations in the otherwise homogeneous sandstone porosity.

Industry operating risks include fire, explosions, unanticipated reservoir problems which may affect field production performance, industrial disputes, unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment, mechanical failure or

breakdown, blow outs, pipe failures and environmental hazards such as accidental spills or leakage of liquids, gas leaks, ruptures, discharges of toxic gases or geological uncertainty (such as lack of sufficient subsurface data from correlative well logs and/or formation core analyses. The occurrence of any of these risks could result in legal proceedings against the Company and substantial losses to the Company due to injury or loss of life, damage to or destruction of property, natural resources or equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation, and penalties or suspension of operations. Damage occurring to third parties as a result of such risks may give rise to claims against the Company.

There is no assurance that any exploration on current or future interests will result in the discovery of an economic deposit of oil or gas. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically developed.

(b) Oil and gas price fluctuations

The demand for, and price of, oil and natural gas is highly dependent on a variety of factors, including international supply and demand, the level of consumer product demand, weather conditions, the price and availability of alternative fuels, actions taken by governments and international cartels, and global economic and political developments.

International oil and gas prices have fluctuated widely in recent years and may continue to fluctuate significantly in the future. Fluctuations in oil and gas prices and, in particular, a material decline in the price of oil or gas may have a material adverse effect on the Company's business, financial condition and results of operations.

(c) Environmental

The operations and proposed activities of the Company are subject to laws and regulations concerning the environment applicable in the jurisdiction of those activities. As with most production operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or production proceeds. It is the Company’s practice to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. Nevertheless, there are certain risks inherent in the Company’s activities such as accidental leakages or spills, or other unforeseen circumstances which could subject the Company to extensive liability.

Risks relating to the Company’s operations

(a) Future capital requirements

Future funding may be required by the Company to develop the CRI Project, the Company’s continuing operations or additional projects that the Company may identify. There can be no assurance that such funding will be available on satisfactory terms or at all. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities.

If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations as the case may

be, which may adversely affect the business and financial condition of the Company and its performance.

General Risks

(a) Management of growth

There is a risk that management of the Company will not be able to implement the Company’s growth strategy after completion of the Transaction. The capacity of the new management to properly implement and manage the strategic direction of the Company may affect the Company’s financial performance.

(b) Competition risk

The industry in which the Company will be involved is subject to domestic and global competition. While the Company will undertake all reasonable due diligence in its business decisions and operations, the Company will have no influence or control over the activities or actions of its competitors, whose activities or actions may, positively or negatively, affect the operating and financial performance of the Company’s projects and business.

(c)

Market risk

Share market conditions may affect the value of the Company’s quoted Securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(i) general economic outlook;
(ii) interest rates and inflation rates;
(iii) currency fluctuations;
(iv) commodity price fluctuations;
(v) changes in investor sentiment toward particular market sectors;
(vi) the demand for, and supply of, capital; and
(vii) terrorism and other hostilities.

(d) Potential acquisitions

As part of its business strategy, the Company may make acquisitions of, or significant investments in, complementary companies or projects. Any such future transactions would be accompanied by the risks commonly encountered in making such acquisitions.

(e)

Investment Speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above may, in the future, materially affect the financial performance of the Company and the value of the Company’s securities.

1.10 Plans for the Company if the Resolutions are not passed

If the Resolutions are not passed and the acquisition of CRI is not completed, the Company will continue to develop its existing activities and look for potential projects in order to continue to take the Company forward. As previously announced on ASX, the Company was seeking possible joint venture partners for its existing assets. At this stage, there have been no advances on these potential joint venture opportunities. As Shareholders would be aware, the market for commodities in general, and gold in particular, is significantly down, however the Board will continue to seek out possible joint venture partners.

1.11 Directors’ Recommendation

The Directors of the Company unanimously recommend the Transaction (and change in nature and scale of the Company’s activities) and therefore recommend that Shareholders vote in favour of the proposed Resolutions.

2. RESOLUTION 1 – CHANGE IN NATURE AND SCALE OF ACTIVITIES, RELATED PARTY TRANSACTION

2.1 General

Resolution 1 seeks the approval of Shareholders for a change in the nature and scale of the Company’s activities via the acquisition of all of the issued shares in CRI from Delecta, a related party of the Company. Delecta is a company controlled by Mr Malcolm Day, a Director of the Company. Delecta is also a substantial Shareholder in the Company, currently holding 38.42% of the issued Shares.

A detailed description of the proposed acquisition of CRI is outlined in Section 1 above.

2.2 ASX Listing Rule 11.1

ASX Listing Rule 11.1 provides that where an entity proposes to make a significant change, either directly or indirectly, to the nature and scale of its activities, it must provide full details to ASX as soon as practicable and comply with the following:

(a) provide to ASX information regarding the change and its effect on future potential earnings, and any information that ASX asks for;
(b) if ASX requires, obtain the approval of holders of its shares and any requirements of ASX in relation to the notice of meeting; and
(c) if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX Listing Rules as if the company were applying for admission to the official list of ASX.

Given the significant change in the nature and scale of the activities of the Company, upon completion of the acquisition of CRI, the Company will be required to:

(a) obtain the approval of its Shareholders for the proposed change of activities; and
(b) re-comply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules.

For this reason, the Company is seeking Shareholder approval for the Company to change the nature and scale of its activities under ASX Listing Rule 11.1.2 and pursuant to ASX Listing Rule 11.1.3 in order to re-comply with Chapters 1 and 2 of the ASX Listing Rules.

3. RESOLUTION 2 – CONSOLIDATION OF CAPITAL

3.1 Background

Resolution 2 seeks Shareholder approval to consolidate the number of Shares and Options on issue on a one (1) for fifty (50) basis (Consolidation).

The Consolidation is a requirement in order for the Company to re-comply with ASX Listing Rules 1 and 2 (which, as set out in Section 1.4(c) above, is necessary in order for the Transaction to proceed).

3.2 Legal requirements

Section 254H of the Corporations Act provides that a company may, by resolution passed in a general meeting, convert all or any of its shares and options into a larger or smaller number.

3.3 Fractional entitlements and taxation

Not all Shareholders and Optionholders will hold that number of Shares and Options which can be evenly consolidated on a one (1) for fifty (50) basis. Where a fractional entitlement occurs, the Directors will round that fraction down to the nearest whole Share or Option (as applicable).

Shareholders and Optionholders are advised to seek their own tax advice on the effect of the Consolidation and neither the Company, nor the Directors (nor the Company’s advisors) accept any responsibility for the individual taxation implications arising from the Consolidation.

3.4 Holding statements

From the date of the Consolidation, all holding statements for Shares and Options will cease to have any effect, except as evidence of entitlement to a certain number of Shares and Options on a post-Consolidation basis. After the Consolidation becomes effective, the Company will arrange for new holding statements for Shares and Options to be issued to holders of those Shares and Options.

It is the responsibility of each Shareholder and Optionholder to check the number of Shares and Options held prior to any disposal or exercise (as the case may be).

3.5 Effect on capital structure

The effect which the Consolidation will have on the capital structure of the Company is set out in the table in Section 1.6 of this Explanatory Statement.

The effect the Consolidation will have on the terms of the Options currently on issue is as set out in the tables below:

Options – Pre Consolidation

Terms	Number
Total Options currently on issue	264,448,677
150,808,677 Quoted Options exercisable at $0.03 on or before 30 June 2015 33,640,000 Unquoted Options exercisable at $0.03 on or before 30 June 2015 56,000,000 Unquoted Options exercisable at $0.25 on or before 1 May 2015 24,000,000 Unquoted Options exercisable at $0.35 on or before 1 May 2016

Options – Post Consolidation

Terms	Number
Total Options on issue post consolidation	5,288,973
3,016,173 Quoted Options exercisable at $1.50 on or before 30 June 2015 672,800 Unquoted Options exercisable at $1.50 on or before 30 June 2015 1,120,000 Unquoted Options exercisable at $12.50 on or before 1 May 2015 480,000 Unquoted Options exercisable at $17.50 on or before 1 May 2016

3.6 Timetable

The indicative timetable for the Consolidation is as follows:

Event	Date
General Meeting to approve transaction	30 January 2015
Notification to ASX of results of General Meeting	30 January 2015
Last day for trading in pre-reorganised securities	2 February 2015
Trading in reorganised securities on a deferred settlement basis would ordinarily occur	3 February 2015
Last day to register transfers on a pre-reorganisation basis	5 February 2015
First day for Company to send notice to Shareholders and Optionholders of change of holdings as a result of reorganisation First day for Company to register securities on a post- reorganisation basis and for issue of holding statements	6 February 2015
Issue date Deferred settlement market ends	12 February 2015

Last day for securities to be entered into the holders’ security holdings and for Company to send notice to each security holder

4. RESOLUTION 3 – CAPITAL RAISING

4.1 General

Resolution 3 seeks Shareholder approval for the issue of up to 80,000,000 Shares at an issue price of not less than $0.10 per Share to raise up to a total of $8,000,000 (on a post-Consolidation basis and before costs under a prospectus to be issued by the Company pursuant to ASX Listing Rule 11.1.3 in order to recomply with Chapters 1 and 2 of the ASX Listing Rules (Prospectus). The minimum amount that may be raised under the Prospectus is $4,000,000 (before costs).

The Company intends to issue the Prospectus on or about as soon as possible after this Notice has been despatched to Shareholders.

The effect of Resolution 3 will be to allow the Directors to issue the Shares pursuant to the Capital Raise during the period of 3 months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

4.2 Technical information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the offer of Shares under the Prospectus:

(a) the maximum number of securities to be issued is 80,000,000 Shares (on a post-Consolidation basis);
(b) the Shares will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that issue will occur on the same date;
(c) the issue price will be not less than $0.10 per Share (on a postConsolidation basis);
(d) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
(e) the Directors will determine to whom the Shares will be issued and will ensure that these persons will not be related parties of the Company; and
(f) the Company intends to use the funds raised (a maximum of $8,000,000, before costs) from the Capital Raise to enable the Company to fund the following:
(i) the CRI Project, including the drilling of four other wells targeting the same producing horizon as the first well drilled and detailed further in section 1 above;
(ii) administration costs, including ASX fees, registry fees, director fees, and staff salaries; and

(iii) general working capital.

Further details on the use of funds will be set out in the Prospectus that will be issued in respect of the Capital Raise.

5. RESOLUTION 4 – ISSUE OF CONSIDERATION SECURITIES TO DELECTA LIMITED

5.1 General

Resolution 4 seeks Shareholder approval for the issue of the Consideration Securities to Delecta pursuant to ASX Listing Rules 10.1 and 10.11 and Section 611 item 7 of the Corporations Act.

As outlined in Section 1 of this Explanatory Statement, the Company has entered into the Heads of Agreement pursuant to which the Company has the right to acquire 100% of the issued share capital of CRI.

In consideration for the acquisition of all the shares in CRI, the Company is required, subject to Shareholder approval, to issue the following securities on completion of the Transaction to Delecta, on a post-consolidation basis:

(a) 30,000,000 Shares; and
(b) 6,000,000 Options, to be issued on the terms set out in Schedule 1.

Delecta is a company in which Mr Malcolm Day and his associates have a voting power of 26.9%. Mr Day is a Director of the Company. Delecta is also a substantial Shareholder in the Company, currently holding 38.42% of the issued Shares and as a result of the deeming provision in section 608(3) of the Corporations Act, Mr Day and his associates are deemed to have a relevant interest in the Shares that Delecta holds in the Company.

The Consideration Securities may be subject to escrow restrictions for up to 24 months from their date of issue in accordance with the ASX Listing Rules. As at the date of this Notice of Meeting, ASX has not made a determination in this regard but expects to do so prior to any final approval for the reinstatement of the Company's securities on ASX.

The terms of the Heads of Agreement are summarised in Section 1.4 above.

5.2 Chapter 2E of the Corporations Act

For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

(a) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and
(b) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

The proposed Transaction will result in the payment/issue by the Company to Delecta (or its nominee) of $1,000,000 plus the Consideration Securities. This expenditure constitutes giving a financial benefit.

Delecta is a company in which Mr Malcolm Day and his associates have a voting power of 26.9%. Mr Day is a Director of the Company. Delecta is also a substantial Shareholder in the Company, currently holding 38.42% of the issued Shares and, as a result of the deeming provision in section 608(3) of the Corporations Act, Mr Day and his associates are deemed to have a relevant interest in the Shares that Delecta holds in the Company.

Delecta may be a related party of the Company as it could be considered to be a company controlled by Mr Malcolm Day.

The Directors (other than Malcolm Day who has a material personal interest in Resolution 4) consider that Shareholder approval pursuant to Chapter 2E of the Corporations Act is not required in respect of the proposed Transaction because the proposed Transaction, and therefore the financial benefit, is on arm’s length terms which are reasonable in the circumstances.

The deal was negotiated and considered at length by the Directors (other than Malcolm Day), and was compared to other similar opportunities. It was ultimately determined by the Directors (other than Malcolm Day) that the Transaction provided the best opportunity for higher returns to Shareholders. In addition, HLB Mann Judd Corporate (WA) Pty Ltd concluded in their Independent Experts Report that the proposed Transaction is fair and reasonable to the non-associated Shareholders.

Details of the assets to be acquired by the Company and the proposed changes to the structure and operations of the Company are set out throughout this Explanatory Statement.

5.3 ASX Listing Rule 10.1

ASX Listing Rule 10.1 provides that an entity (or any of its subsidiaries) must not acquire a “substantial asset” from, or dispose of a substantial asset to, inter alia, a related party without the approval of holders of the entity’s ordinary securities.

As mentioned above, Delecta may be a related party of the Company as it could be considered to be a company controlled by Mr Malcolm Day, a Director of the Company. Delecta is also a substantial Shareholder in the Company, currently holding 38.42% of the issued Shares.

An asset is substantial if its value or the value of the consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the company as set out in the latest accounts given to ASX under the Listing Rules.

Based on the Company’s Annual Report lodged with the ASX on 30 September 2014, the Company’s equity interests are $110,585; 5% of this amount is $5,529. Based on the consideration payable by the Company to acquire CRI being $1,000,000 plus the Consideration Securities, the Transaction constitutes acquisition of a “substantial asset” of the Company.

Accordingly, the Company considers that the Transaction is a transaction which should be approved by Shareholders for the purpose of ASX Listing Rule 10.1.

ASX Listing Rule 10.10 provides that shareholder approval sought for the purpose of ASX Listing Rule 10.1 must include a report on the proposed acquisition from an independent expert. Accompanying this Notice is an Independent Expert’s Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd concluding that the proposed Transaction is fair and reasonable to the non-associated Shareholders.

Please refer to the Independent Expert’s Report at Annexure 1 of this Notice for further details and, in particular, an assessment of the advantages and disadvantages of the proposed Transaction. This assessment is designed to assist all Shareholders in reaching their voting decision. It is recommended that all Shareholders read the Independent Expert’s Report in full.

Shareholders should note that CRI was only incorporated on 19 September 2014 as a special purpose vehicle. CRI does not have an operating history, it does not yet have an operating bank account and the only transaction it has entered into relates to the agreements with respect to the Project. The Independent Expert notes at section 7.3 that CRI has no liabilities and no assets, other than its interest in the Project and accordingly the Independent Expert does not include an assessment of CRI itself.

5.4 ASX Listing Rule 10.11

ASX Listing Rule 10.11 also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose relationship with the entity or a related party is, in ASX’s opinion, such that approval should be obtained unless an exception in ASX Listing Rule 10.12 applies.

As the grant of the Consideration Securities involves the issue of securities to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

5.5 Technical Information required by ASX Listing Rule 10.13

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to Resolution 4:

(a) the Consideration Securities will be granted to Delecta (or its nominee), and the relationship between the Company and Delecta is set out in Section 5.3;
(b) the number of Consideration Securities to be issued is 30,000,000 Shares (on a post-consolidation basis) and 6,000,000 Options (on a post consolidation basis);
(c) the Purchaser Shares will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares (and will rank equally with the Company’s existing Shares);
(d) the Consideration Securities will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that issue of the Options will occur on the same date;
(e) the Consideration Securities will be issued for nil cash consideration for the acquisition of CRI, pursuant to the Heads of Agreement (a summary of which is set out in Section 1.4 of this Explanatory Statement). Accordingly, no funds will be raised from their issue; and
(f) the terms and conditions of the Purchaser Options are set out in Schedule 1.

Approval pursuant to ASX Listing Rule 7.1 is not required for the grant of the Consideration Securities as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the grant of Consideration Securities to Delecta (or its nominee) will not be included in the use of the Company’s 15% annual placement capacity pursuant to ASX Listing Rule 7.1.Technical information required by ASX Listing Rule 7.3.

5.6 Item 7 of Section 611 of the Corporations Act

Resolution 4 also seeks Shareholder approval, for the purpose of Item 7 of Section 611 of the Corporations Act, to allow the Company to issue and allot the Consideration Securities to Delecta (or its nominee).

5.7 Section 606 of the Corporations Act – Statutory Prohibition

Pursuant to Section 606(1) of the Corporations Act, a person must not acquire a relevant interest in issued voting shares in a listed company if the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person and because of the transaction, that person’s or someone else’s voting power in the company increases:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%, (Prohibition

Voting Power

The voting power of a person in a body corporate is determined in accordance with Section 610 of the Corporations Act. The calculation of a person’s voting power in a company involves determining the voting shares in the company in which the person and the person’s associates have a relevant interest.

Associates

For the purposes of determining voting power under the Corporations Act, a person (second person) is an “associate” of the other person (first person) if:

(a) (pursuant to Section 12(2) of the Corporations Act) the first person is a body corporate and the second person is:

a body corporate the first person controls;

(a) a body corporate that controls the first person; or
(b) a body corporate that is controlled by an entity that controls the person;
(b) the second person has entered or proposed to enter into a relevant agreement with the first person for the purpose of controlling or influencing the composition of the company’s board or the conduct of the company’s affairs; or
(c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the company’s affairs.

Associates are, therefore, determined as a matter of fact. For example where a person controls or influences the board or the conduct of a company’s business affairs, or acts in concert with a person in relation to the entity’s business affairs.

Relevant Interests

Section 608(1) of the Corporations Act provides that a person has a relevant interest in securities if they:

(a) are the holder of the securities;
(b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
(c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

In addition, Section 608(3) of the Corporations Act provides that a person has a relevant interest in securities that any of the following has:

(a) a body corporate in which the person’s voting power is above 20%;
(b) a body corporate that the person controls.

Relevant Interests and Voting Power of Delecta and Mr Day

As mentioned above, Delecta currently has a relevant interest in 350,000,000 Shares in the Company. This currently equates to a voting power of 38.42%.

On completion of the Transaction, the Company proposes to issue 30,000,000 Purchaser Shares, and 6,000,000 Purchaser Options to Delecta which comprise the Consideration Securities (on a post-Consolidation basis). These securities may be subject to escrow restrictions in accordance with Chapter 9 of the ASX Listing Rules.

When the Purchaser Shares are taken into account, post-Consolidation Delecta will have a relevant interest in 37,000,000 Shares which will comprise a voting power of 28.85% based on the post-Offer and post-Transaction issued Share capital, assuming maximum subscription under the Capital Raising and 41.94% assuming minimum subscription under the Capital Raising (and no exercise of any Options).

Malcolm Day, a director of the Company, and his associates have a voting power in Delecta equal to 26.9% and, therefore, by virtue of the deeming provision in section 608(3) of the Corporations Act, has a relevant interest in the Shares in the Company held by Delecta.

If the Shares in respect of which Mr. Day and his associates hold a relevant interest are taken in conjunction with those Shares held and to be held (if the Resolutions are passed) by Delecta disclosed above, this would equate to 37,066,201 Shares. This is a voting power of 28.9% based on the post-Offer and post-Transaction issued Share capital, assuming maximum subscription under the Capital Raising and 42.01% assuming minimum subscription under the Capital Raising (and no exercise of any Options).

If the existing Options held by all other optionholders other than Mr Day and Delecta, together with the new Options to be granted to other proposed

optionholders other than Mr Day and Delecta are exercised then on completion of the Transaction:

(a) Mr. Day would have a relevant interest in 37,066,201 Shares, which would comprise a maximum voting power of 35.47% based on the minimum subscription and 25.65% based on the maximum subscription; and
(b) Delecta would have a relevant interest in 37,000,000 Shares, which would comprise a maximum voting power of 35.41% based on the minimum subscription and 25.61% based on the maximum subscription.

If the existing Options held by Mr Day (22,067) and Delecta (1,000,000), together with the new Options to be granted to them (Mr Day – 2,000,000 Options and Delecta – 6,000,000 Options) are exercised (and no other Options are exercised) and their existing Shares are taken in conjunction with those Shares to be issued to Delecta (if the Resolutions are passed) then on completion of the Transaction:

(a) Mr. Day would have a relevant interest in 46,088,268 Shares, which would comprise a maximum voting power of 47.40% based on the minimum subscription and 33.58% based on the maximum subscription; and
(b) Delecta would have a relevant interest in 44,000,000 Shares, which would comprise a maximum voting power of 45.25% based on the minimum subscription and 32.06% based on the maximum subscription.

Shareholders should refer to the Independent Expert’s Report for further information.

5.8 Reason Section 611 Approval is Required

Item 7 of Section 611 of the Corporations Act provides an exception to the Prohibition, whereby a person may acquire a relevant interest in a company’s voting shares with shareholder approval.

Shareholder approval under Item 7 of Section 611 of the Corporations Act is required for Resolution 4.

5.9 Prescribed Information – Section 611 item 7 and ASIC Regulatory Guide 74

The following information is required to be provided to Shareholders under the Corporations Act and ASIC Regulatory Guide 74 in respect of obtaining approval for Item 7 of Section 611 of the Corporations Act. Shareholders are also referred to the Independent Expert’s Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd annexed to this Explanatory Statement.

5.9.1 Identity of the Acquirer and its Associates

It is proposed that Delecta will be issued and allotted a maximum of 30,000,000 Purchaser Shares and 6,000,000 Purchaser Options (on a postConsolidation basis), in accordance with the terms of the Heads of Agreement and for the reasons set out in Section 1 of this Explanatory Statement.

5.9.2 Relevant Interest and Voting Power

The effect on the relevant interests and voting power of Delecta and Malcolm Day (and his associates) pursuant to the proposed issue and allotment of the Purchaser Shares and exercise of all Options is set out in detail in section 5.7:

Further details on the voting power of Delecta and Mr Day are set out in the Independent Expert’s Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd and annexed to this Notice.

5.9.3 Date of Proposed issue of Securities

The Consideration Securities will be issued to Delecta (or its nominee) upon completion of the Transaction.

5.9.4 Mr. Day and Delecta’s Intentions

Other than as disclosed elsewhere in this Explanatory Statement and following completion of the Transaction, the Company understands that Delecta (and its associates) and Mr Day (and his associates):

(a) have no present intention of making any significant changes to the business of the Company, other than as contemplated by Resolution 1;
(b) have no present intention to inject further capital into the Company;
(c) have no present intention of making changes regarding the future employment of the present employees of the Company;
(d) do not intend to redeploy any fixed assets of the Company;
(e) do not intend to transfer any property between the Company and either of them or any of their respective associates; and
(f) has no intention to change the Company’s existing policies in relation to financial matters or dividends.

These intentions are based on information concerning the Company, its business and the business environment which is known to Delecta and its associates at the date of this Notice.

These present intentions may change as new information becomes available, as circumstances change or in the light of all material information, facts and circumstances necessary to assess the operational, commercial, taxation and financial implications of those decisions at the relevant time.

5.9.5 Particulars of Proposed Allotment

Particulars relating to the proposed issue and allotment of the Consideration Securities are set out in Section 1 of this Explanatory Statement.

5.9.6 Material Terms of Consideration Securities

The Consideration Securities will be issued for nil cash consideration for the acquisition of CRI. Accordingly, no funds will be raised from their issue.

The Purchaser Shares will be fully paid ordinary shares in the capital of the Company, issued on the same terms and conditions as the Company’s existing Shares (and will rank equally with the Company’s existing Shares).

5.9.7 Reason for the Proposed Allotment

The Consideration Securities will be issued pursuant to the Agreement for the reasons set out in Section 1 of this Explanatory Statement.

5.9.8 Interests and Recommendations of Directors

The Directors, other than Malcolm Day who has a material personal interest in Resolution 4, recommend that Shareholders approve Resolution 4.

5.9.9 Capital Structure

The changes to the capital structure of the Company are as set out at section 1.6 of this Explanatory Statement.

6. RESOLUTION 5 – APPOINTMENT OF MR JAMES R HOLCOMB

The Company may elect a person as a Director by resolution passed at a general meeting. A Director elected at a general meeting is taken to have been elected with effect immediately after the end of the general meeting.

The Company is seeking Shareholder approval for appointment of Mr James R Holcomb as a director of the Company.

Mr. Holcomb has in excess of 30 years of diversified experience in the oil and gas industry. He has served as an officer and director for numerous private and public companies, both in the USA and in Australia, UK and Germany. He has significant hands on experience in field operations, land and leasing, oil and gas marketing, acquisitions and divestitures, and legal/regulatory compliance. As co-founder and Managing Partner of Metro Energy Group, he was responsible for many joint venture partnerships, including a venture with Devon in the emerging Woodford shale play.

He has negotiated strategic joint venture partnerships with publicly traded companies on the ASX in Australia and AIM in the UK. He is co-founder and Managing Director of Energy Source Advisors, LLC. Mr Holcomb has 12,500,000 Shares in the Company, and does not have an interest in any shares in Delecta.

7. RESOLUTION 6 - CHANGE OF COMPANY NAME

Section 157(1)(a) of the Corporations Act provides that a company may change its name if the company passes a special resolution adopting a new name.

Resolution 6 seeks the approval of Shareholders for the Company to change its name to Arkoma Energy Limited.

If Resolution 6 is passed, the change of name will take effect when ASIC alters the details of the Company’s registration.

The proposed name has been reserved by the Company and if Resolution 6 is passed, the Company will lodge a copy of the special resolution with ASIC on completion of the Transaction in order to effect the change.

The Board proposes this change of name on the basis that it more accurately reflects the proposed future operations of the Company in the energy sector.

8. RESOLUTIONS 7-9 – ISSUE OF OPTIONS TO RELATED PARTY

8.1 General

The Company has agreed to issue a total of 14,000,000 Options (Related Party Options) to Messrs Paul Lloyd, James R Holcomb and Malcolm Day (Related Parties) on the terms and conditions set out below.

A summary of Section 2E of the Corporations Act is set out at section 5.2 above.

The grant of the Related Party Options constitutes giving a financial benefit and Messrs Lloyd, Holcomb and Day are related parties of the Company by virtue of being Directors in the case of Messrs Lloyd and Day and a proposed Director in the case of Mr Holcomb.

In addition, a summary of ASX Listing Rule 10.11 is set out at section 5.3 above.

It is the view of the Company that the exceptions set out in sections 210 to 216 of the Corporations Act and ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the grant of Related Party Options to the Related Parties.

8.2 Shareholder Approval (Chapter 2E of the Corporations Act and Listing Rule 10.11)

Pursuant to and in accordance with the requirements of section 219 of the Corporations Act and ASX Listing Rule 10.13, the following information is provided in relation to the proposed grant of Related Party Options:

(a) the related parties are Messrs Lloyd, Day and Holcomb and they are related parties by virtue of being Directors in the case of Messrs Lloyd and Day and a proposed Director in the case of Mr Holcomb;
(b) the maximum number of Related Party Options (being the nature of the financial benefit being provided) to be granted to the Related Parties is: (i) 6,000,000 Related Party Options to Paul Lloyd;
(ii) 6,000,000 Related Party Options to James R. Holcomb; and (iii) 2,000,000 Related Party Options to Malcolm Day;
(c) the Related Party Options will be granted to the Related Parties no later than 1 month after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules)

and it is anticipated the Related Party Options will be issued on one date;

(d) the Related Party Options will be granted for nil cash consideration, accordingly no funds will be raised;
(e) the terms and conditions of the Related Party Options are set out in Schedule 1;
(f) the value of the Related Party Options and the pricing methodology is set out in Schedule 3;
(g) the relevant interests of the Related Parties in securities of the Company on a pre-Consolidation basis are set out below:

Related Party	Shares	Options
Paul Lloyd	Nil	Nil
James R Holcomb	12,500,000	Nil
Malcolm Day	353,310,0981	51,103,3662

1 3,310,098 Shares held by Goldshore Investments Pty Ltd ATF The Goldshore Trust and the MR Day Superfund (a company of which Mr Day is a director) and 350,000,000 Shares held by Delecta Limited (a company of which Mr Day is a director).

2 51,103,366 Options exercisable at $0.03 each on or before 30 June 2015. 1,103,366 Options held by Goldshore Investments Pty Ltd and 50,000,000 held by Delecta Limited.

(h) the remuneration and emoluments from the Company to the Related Parties for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out below:

Related Party	Current Financial Year	Previous Financial Year
Paul Lloyd	180,000	90,000
James R Holcomb	30,000	Nil
Malcolm Day	36,667	36,667

(i) if the Related Party Options granted to the Related Parties are exercised, a total of 14,000,000 Shares would be issued. This will increase the number of Shares on issue from 128,220,542 (being the Shares on issue following the completion of the Offer and the Transaction) to 142,220,542 (assuming that no other Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of approximately 9.84%, comprising 4.22% by Paul Lloyd, 4.22% by James R Holcomb and 1.40% by Malcolm Day.

(j) The market price for Shares during the term of the Related Party Options would normally determine whether or not the Related Party Options are exercised. If, at any time any of the Related Party Options are exercised and the Shares are trading on ASX at a price that is higher than the exercise price of the Related Party Options, there may be a perceived cost to the Company.

(k) the trading history of the Shares on ASX in the 12 months before the date of this Notice is set out below:

	Price	Date
Highest	0.30 cents	30 September 2014
Lowest	0.06 cents	31 July 2014
Last	0.10 cents	16 December 2014

Shareholders should note that these prices are applicable to the Shares on a pre-Consolidation basis and Consolidation will have an impact on the price per Share, limiting the relevance of the above table.

(l) the Board acknowledges the grant of Related Party Options to Paul Lloyd, James R Holcomb and Malcolm Day is contrary to Recommendation 8.3 of The Corporate Governance Principles and Recommendations with 2010 Amendments (2[nd] Edition) as published by The ASX Corporate Governance Council. However, the independent director considers the grant of Related Party Options to Paul Lloyd, James R Holcomb and Malcolm Day reasonable in the circumstances for the reason set out in paragraph (n);
(m) the primary purpose of the grant of the Related Party Options to the Related Parties is to provide a performance linked incentive component in the remuneration package for the Related Parties to motivate and reward the performance of the Related Parties in their respective roles as Directors;
(n) Paul Lloyd declines to make a recommendation to Shareholders in relation to Resolution 7 due to Paul Lloyd’s material personal interest in the outcome of the Resolution on the basis that Paul Lloyd is to be granted Related Party Options in the Company should Resolution 7 be passed. However, in respect of Resolutions 8 and 9, Paul Lloyd recommends that Shareholders vote in favour of those Resolutions for the following reasons:
(i) the grant of Related Party Options to the Related Parties, will align the interests of the Related Parties with those of Shareholders;
(ii) the grant of the Related Party Options is a reasonable and appropriate method to provide cost effective remuneration as the non-cash form of this benefit will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Related Parties; and
(iii) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in granting the Related Party Options upon the terms proposed;
(o) Malcolm Day declines to make a recommendation to Shareholders in relation to Resolution 9 due to Malcolm Day’s material personal interest in the outcome of the Resolution on the basis that Malcolm Day is to be granted Related Party Options in the Company should Resolution 9 be passed. However, in respect of Resolutions 7 and 8, Malcolm Day

recommends that Shareholders vote in favour of those Resolutions for the reasons set out in paragraph (n);

(p) with the exception of Paul Lloyd and Malcolm Day, no other current Director has a personal interest in the outcome of Resolutions 7, 8 or 9;
(q) David Holden recommends that Shareholders vote in favour of Resolutions 7, 8 and 9 for the reasons set out in paragraph 8.2(n)(i) to paragraph 8.2(n)(iii) (n)(ii);
(r) in forming their recommendations, each Director considered the experience of each other Related Party, the current market price of Shares, the current market practices when determining the number of Related Party Options to be granted as well as the exercise price of 12.5 cents and expiry date of those Related Party Options; and
(s) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 7, 8 and 9.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Related Party Options to the Related Parties as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Related Party Options to the Related Parties will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

GLOSSARY

$ means Australian dollars.

Transaction has the meaning set out in section 1.2 of this Notice.

ASIC means the Australian Securities & Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Chair means the chair of the Meeting.

Company or PNE means Paynes Find Gold Limited (ACN 141 450 624).

Consideration Securities has the meaning set out in section 1.4 of this Notice.

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Existing Relevant Options means those Options held at the date of this Notice by Delecta together with any other Options in which Malcolm Day has, on the date of this Notice, a relevant interest.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by the Notice.

Heads of Agreement has the meaning set out in section 1.2 of this Notice.

CRI means Canadian River, Inc., an Oklahoma incorporated entity.

CRI Shares means 100% of the fully paid ordinary shares in the capital of CRI.

Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share with the terms and conditions set out in Schedule 1.

Optionholder means a holder of an Option.

Proxy Form means the proxy form accompanying the Notice.

Relevant Resolution Options means all Options to be issued to either of Malcolm Day or Delecta (or any of their nominees) pursuant to the Resolutions.

Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a registered holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

SCHEDULE 1 – TERMS AND CONDITIONS OF PURCHASER OPTIONS AND RELATED PARTY OPTIONS

The Options entitle the holder to subscribe for Shares on the following terms and conditions:

(b) Each Option gives the Optionholder the right to subscribe for one Share.
(c) Each Option will expire at 5.00pm (WST) on 31 December 2019 (Expiry Date). An Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
(d) Subject to paragraph (k), the amount payable upon exercise of each Option will be $0.125 (Exercise Price).
(e) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.
(f) An Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:
(i) a written notice of exercise of Options specifying the number of Options being exercised; and
(ii) a cheque for the Exercise Price for the number of Options being exercised,

(together, Exercise Notice).

(g) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
(h) Within 10 business days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will issue the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
(i) Subject to the expiry of any applicable escrow period the Options shall be freely transferable.
(j) All Shares issued upon the exercise of Options will, upon issue, rank pari passu in all respects with other Shares.
(k) The Company will apply for quotation of all Shares issued pursuant to the exercise of Options on ASX within 10 Business Days after the date of issue of those Shares.
(l) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
(m) There are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options.
(n) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

SCHEDULE 2 – PRO FORMA BALANCE SHEET

Notes Current Assets Cash assets 1 Receivables Prepayments Total current assets Net Current Assets Interest in Oil and Gas project 2 Total non-current assets Total assets Current Liabilities Trade and other payables Borrowings Total current liabilities Total liabilities Net assets Equity Issued capital 3 Share based payments reserve Accumulated losses Total equity	(Unaudited) 30 September 2014 $ 360,823 792 4,522 366,137 - 366,137 366,137 93,156 13,739 106,895 106,895 259,242 15,370,218 2,028,954 (17,139,930) 259,242	(Unaudited) Pro-forma Maximum Capital Raising $4 million 3,205.823 792 4,522 3,211,137 4,390,000 4,390,000 7,601,137 93,156 13,739 106,895 106,895 7,494,242 22,335,218 2,298,954 (17,139,930) 7,494,242	(Unaudited) Pro-forma Maximum Capital Raising $8 million $ 7,005,823 792 4,522
			7,011,137
			4,390,000
			4,390,000
			11,401,137
			93,156 13,739
			106,895
			106,895
			11,294,242
			26,135,218 2,298,954 (17,139,930)
			11,294,242

Note 1: Cash assets

	$
Balance at 30 September 2014	360,823
Issue of rights issue shortfall shares	195,000
Funds raised from Prospectus	8,000,000
Expenses of the issue	(430,000)

Payment for Oil and Gas project under option Due diligence costs Closing balance	(1,000,000) (120,000)
	7,005,823

Note 2: Interest in Oil and Gas project

Balance at 30 September 2014 Acquisition cost of oil and gas project*	$ - 4,390,000
	4,390,000

*30,000,000 post consolidation shares at $0.10

6,000,000 post consolidation options at 12.5 cents with a 5 year life $1,000,000 cash payment $120,000 due diligence costs

Note 3: Issued capital

Balance at 30 September 2014 Issue of a portion of rights issue shortfall Shares issued to acquire Oil and Gas project Funds raised from Prospectus Costs of funds raised from Prospectus Closing balance	$ 15,370,218 195,000 3,000,000 8,000,000 (430,000)
	26,135,218

USE OF FUNDS (indicative only)

Capital raising costs Drilling of additional wells per agreement Purchase of Seismic per agreement Working capital* Total	Pro-forma Maximum Capital Raising $4 million 230,000 2,936,747 301,205 532,048 4,000,000	Pro-forma Maximum Capital Raising $8 million 430,000 5,873,494 301,205 1,395,301
		8,000,000

*The Working Capital is made up of the following:

Chairman Executive Director Non Executive Director Rent Listing fees Share Registry Audit fees Insurance Legal fees Gold exploration expenditure Travel Other	180,000 180,000 120,000 120,000 40,000 40,000 20,000 20,000 30,000 30,000 8,000 9,000 30,000 34,000 20,000 22,000 35,000 40,000 20,000 50,000 25,000 50,000 4,048 800,301
	532,048 1,395,301

SCHEDULE 3 – PRICING METHODOLOGY OF RELATED PARTY OPTIONS

The Related Party Options to be issued to the Related Parties pursuant to Resolutions 7, 8 and 9 have been valued by internal management using the Black and Scholes option model and based on the assumptions set out below, the Related Party Options were ascribed the following value:

Assumptions:

Valuation date	20 November 2014
Market price of Shares	10 cents
Exercise price	12.5 cents
Expiry date (length of time from issue)	5 years
Risk free interest rate	2.78%
Volatility (discount)	85%
Discount for lack of marketability	30%
Indicative value per Related Party Option	4.50 cents

Total Value of Related Party Options	$630,000

- Paul Lloyd	$270,000
- James R Holcomb	$270,000
- Malcolm Day	$90,000

Note: The valuation noted above is not necessarily the market price that the Related Party Options could be traded at and is not automatically the market price for taxation purposes.

APPOINTMENT OF PROXY FORM

PAYNES FIND GOLD LIMITED ACN 141 450 624

GENERAL MEETING

I/We of: being a Shareholder entitled to attend and vote at the Meeting, hereby appoint: Name: OR: the Chair of the Meeting as my/our proxy.

or failing the person so named or, if no person is named, the Chair, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting to be held at 10.00am, on 30 January 2015 at 9 Foundry Street, Maylands WA 6051, and at any adjournment thereof.

AUTHORITY FOR CHAIR TO VOTE UNDIRECTED PROXIES ON REMUNERATION RELATED RESOLUTIONS

Where I/we have appointed the Chair as my/our proxy (or where the Chair becomes my/our proxy by default), I/we expressly authorise the Chair to exercise my/our proxy on Resolutions 4, 7, 8 and 9 (except where I/we have indicated a different voting intention below) even though Resolutions 4, 7, 8 and 9 are connected directly or indirectly with the remuneration of a member of the Key Management Personnel, which includes the Chair

CHAIR’S VOTING INTENTION IN RELATION TO UNDIRECTED PROXIES

The Chair intends to vote undirected proxies in favour of all Resolutions in which the Chair is entitled to vote Voting on Business of the Meeting. In exceptional circumstances the Chair may change his/her voting intention on any Resolution. In the event this occurs an ASX announcement will be made immediately disclosing the reasons for the change.

Voting on business of the Meeting	Voting on business of the Meeting	FOR	FOR	FOR	AGAINST	AGAINST	AGAINST	ABSTAIN	ABSTAIN	ABSTAIN
Resolution 1	Change In Nature and Scale of Activities, Related Party Transaction
Resolution 2	Consolidation of Capital
Resolution 3	Capital Raising
Resolution 4	Issue of Consideration Securities to Delecta Limited
Resolution 5	Appointment of Mr James R Holcomb
Resolution 6	Change of Company Name
Resolution 7	Issue of Options to Related Party – Paul Lloyd
Resolution 8	Issue of Options to Related Party – James R Holcomb
Resolution 9	Issue of Options to Related Party – Malcolm Day

Please note: If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is: %

Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary Date: Contact name: E-mail address:	Shareholder 2 Shareholder 3 Director Director/Company Secretary Contact ph (daytime): Consent for contact by e-mail: YES NO	Shareholder 3

Instructions for Completing ‘Appointment of Proxy’ Form

(Appointing a proxy): A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.
(Direction to vote): A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.

3. (Signing instructions):

(Individual): Where the holding is in one name, the Shareholder must sign.
(Joint holding): Where the holding is in more than one name, all of the Shareholders should sign.
(Power of attorney): If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.
(Companies): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.
(Attending the Meeting): Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.
(Return of Proxy Form): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
(a) post to Paynes Find Gold Limited, PO Box 2138, Subiaco WA 6904; or
(b) facsimile to the Company on facsimile number +61 8 9381 1122; or
(c) email to the Company at [email protected],

so that it is received not less than 48 hours prior to commencement of the Meeting.

Proxy Forms received later than this time will be invalid.

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Independent Expert!s Report Paynes Find Gold Ltd

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HLB Mann Judd Corporate (WA) Pty Ltd AFSL 250903 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: http://www.hlb.com.au

HLB Mann Judd Corporate (WA) Pty Ltd is a member of

International, a worldwide organisation of accounting firms and business advisers.

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FINANCIAL SERVICES GUIDE Dated 1 July 2014

1. HLB Mann Judd Corporate (WA) Pty Ltd

HLB Mann Judd Corporate (WA) Pty Ltd ABN 69 008 878 555 (!HLB Mann Judd Corporate" or !we" or #us" or !ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide (" FSG #). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as a financial services licensee.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No. 250903 ;
remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

securities;
interests in managed investment schemes excluding investor directed portfolio services;
� superannuation; and
debentures, stocks or bonds issued or proposed to be issued by a government.

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General financial product advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

HLB Mann Judd Corporate (WA) Pty Ltd is a member of International, a worldwide organisation of accounting firms and business advisers.

Financial Services Guide

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You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product and there is no statutory exemption relating to the matter, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither HLB Mann Judd Corporate, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by us

HLB Mann Judd Corporate has no employees. All personnel who complete reports for HLB Mann Judd Corporate are partners of HLB Mann Judd (WA Partnership). None of those partners are eligible for bonuses directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

HLB Mann Judd Corporate is wholly owned by HLB Mann Judd (WA Partnership). Also, our directors are partners in HLB Mann Judd (WA Partnership). Ultimately the partners of HLB Mann Judd (WA Partnership) own and control HLB Mann Judd Corporate.

From time to time HLB Mann Judd Corporate or HLB Mann Judd (WA Partnership) may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1. Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. Complaints must be in writing, addressed to The Complaints Officer, HLB Mann Judd Corporate (WA) Pty Ltd, Level 4, 130 Stirling Street, Perth WA 6000.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 7 days and investigate the issues raised. As soon as practical, and not more than one month after receiving the written complaint, we will advise the complainant in writing of the determination.

Financial Services Guide

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9.2 Referral to external disputes resolution scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited ( !FOS #). FOS independently and impartially resolves disputes between consumers, including some small business, and participating financial services providers.

Further details about FOS are available at the FOS website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399

10. Contact details

You may contact us using the details at the foot of page 1 of this FSG.

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22 December 2014

The Directors Paynes Find Gold Ltd Suite 1, 437 Roberts Road SUBIACO WA 6008

Dear Sirs

INDEPENDENT EXPERT$S REPORT

INTRODUCTION

On 25 September 2014 ("Announcement Date#), Paynes Find Gold Ltd ("PNE# or the "Company#) announced that it had entered into an Agreement with Delecta Ltd ("Delecta#) under which the Company has the Option to acquire Delecta!s interest in the Canadian River field development project in Oklahoma, USA, subject to completion of due diligence and other conditions.

The Company has not incurred any fee for entering into the Agreement, however should the Option be exercised, the key terms of the consideration for the acquisition are as follows:

The issue of $3,000,000 worth of shares at a deemed price of 0.2 cents per share, preconsolidation to the vendor.
The issue of 6,000,000 post-consolidation options exercisable at 12.5 cents each within 5 years from the date of issue.
The payment to Delecta of the first $1,000,000 of oil and gas revenue derived from the project.

The Company proposes to exercise the Option ("Proposed Transaction#). The issue of shares and options to Delecta would require approval of the Company!s shareholders under Australian Securities Exchange Listing Rule 10.1 relating to the acquisition of a substantial asset from a related party. The Proposed Transaction is contingent upon shareholders! approval, as well as the successful raising of a minimum of $4,000,000 in capital pursuant to a prospectus to be issued in the near future ("Proposed Capital Raising#).

A summary of the key components of the Agreement is set out in Section 3 of this Report.

STRUCTURE OF REPORT

This Report has been divided into the following sections:

Summary and opinion
Purpose of the Report
Key components of the Agreement
Economic analysis

HLB Mann Judd Corporate (WA) Pty Ltd is a member of International, a worldwide organisation of accounting firms and business advisers.

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Industry analysis
Adopted basis of evaluation
Profile of PNE
Valuation of PNE prior to the Proposed Transaction
Valuation of PNE subsequent to the Proposed Transaction
Assessment of whether the Proposed Transaction is fair
Consideration whether the Proposed Transaction is reasonable
Sources of information
Qualifications, Declarations and Consents Appendices

1. SUMMARY AND OPINION

1.1 Fairness

Set out in the table below is a comparison of our assessment of the fair market value of a PNE share prior to the Proposed Transaction on a control basis with the value of a PNE share subsequent to the Proposed Transaction on a minority basis.

	Report	Low	Preferred	High
	Reference	cents	cents	cents
Value of a PNE share pre-transaction	8.3.1	0.17	0.19	0.22
Value of a PNE share post-transaction:	9	0.14	0.19	0.26

As the preferred value of a PNE share post-transaction on a minority basis is equivalent to the preferred value pre-transaction on a control basis, it is our opinion that the Proposed Transaction is fair.

1.2 Reasonableness

We have considered the analysis in Section 11 of this Report, in terms of both the advantages and disadvantages of the Proposed Transaction and the position of the nonassociated shareholders of PNE if the Proposed Transaction was to proceed.

In our opinion, the position of the non-associated shareholders of PNE if the Proposed Transaction was to proceed is more advantageous than if the Proposed Transaction was not approved by the shareholders.

1.3 Opinion

We are of the opinion that the Proposed Transaction is fair and reasonable to the nonassociated shareholders of PNE.

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2. PURPOSE OF THE REPORT

2.1 General

The Directors of PNE have requested that HLB Mann Judd Corporate (WA) Pty Ltd ("HLB#) provide an independent expert!s report ("Report#) advising whether, in our opinion, the Proposed Transaction is fair and reasonable to holders of the Company!s ordinary shares whose votes are not to be regarded ("non-associated shareholders#).

This Report has been prepared to assist shareholders in their decision whether to vote for or against the resolution giving effect to the Proposed Transaction. PNE is seeking the approval of its shareholders, under Australian Securities Exchange Listing Rule 10.1 and 10.4 relating to the acquisition of a substantial asset from, and the issue of securities to, a related party. Additionally, PNE is seeking the approval of its shareholders under Item 7 of section 611 of the Corporations Act 2001 for the Proposed Transaction as it involves Delecta acquiring a relevant interest in PNE as referred to in section 606 of the Act. In addition, Mr Malcolm Day (a director of the Company) and his associates, have a voting power of 26.9% in Delecta, as well as an indirect interest in the Company!s shares and options as set out in the Notice of General Meeting.

2.2 Regulatory Guidance

This Report is to be included in the Notice of General Meeting and Explanatory Statement ("Notice of General Meeting#) for the meeting to be held on or about 30 January 2015 to consider the resolution giving effect to the Proposed Transaction, for the purpose of assisting shareholders in their consideration of that resolution. This Report should not be used for any other purpose.

We have prepared this Report having regard to the relevant Australian Securities and Investments Commission ("ASIC#) releases. ASIC Regulatory Guide 74 " Acquisitions approved by members # suggests that the obligation to supply shareholders with all information that is material to the decision on how to vote on the resolution giving effect to the Proposed Transaction can be satisfied by the non-associated directors of PNE, by either:

(a) undertaking a detailed examination of the Proposed Transaction themselves, if they consider that they have sufficient expertise; or
(b) by commissioning an independent expert!s report.

The directors of PNE have commissioned this Report to satisfy this obligation.

In determining the fairness and reasonableness of the Proposed Transaction, we have had regard to ASIC Regulatory Guide 111 "Content of expert reports# ("RG 111#), which states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price or consideration and the value of the securities the subject of the offer (fairness ) and an examination to determine whether there are sufficient reasons for security holders to accept the offer despite an offer not being fair ( reasonableness ) .

The concept of fairness is taken to be the value of the offer price, or the consideration, being equal to or less than the value of the asset proposed to be acquired. Furthermore, this comparison should be made assuming 100% ownership of the "target# (in this case, 100% of PNE) and irrespective of whether the consideration is scrip or cash.

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RG 111 states that an offer is reasonable if it is fair. An offer may also be reasonable, if despite it not being fair, there are significant factors which in the expert!s opinion shareholders should consider in accepting the offer.

RG 111 also suggests that where the Proposed Transaction is a control transaction the expert should focus on the substance of the control transaction, rather than the legal mechanism used to effect it. RG 111 suggests that where a transaction is a control transaction it should be analysed on a basis that is consistent with a takeover bid.

In our opinion, the Proposed Transaction is a control transaction as defined by RG 111 and we have therefore assessed the Proposed Transaction to consider whether, in our opinion, it is fair and reasonable to the non-associated shareholders of PNE.

We have also had regard to ASIC Regulatory Guide 112 "Independence of experts#.

2.3 Compliance with APES 225 Valuation Services

This Report has been prepared in accordance with the requirements of the professional standard APES 225 Valuation Services ("APES 225#) as issued by the Accounting Professional & Ethical Standards Board.

In accordance with the requirements of APES 225, we advise that this assignment is a Valuation Engagement as defined by that standard as follows:

"an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Member is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Member at that time.#

3. KEY COMPONENTS OF THE AGREEMENT

On 25 September 2014, PNE announced that it had entered into an Agreement with Delecta under which the Company has the option to acquire Delecta!s interest in the Canadian River field development project ("Project#) in Oklahoma, USA subject to completion of due diligence and other conditions.

The Company has not incurred any fee for entering into the Agreement, however should the Option be exercised, the key terms of the consideration payable by the Company are as follows:

The issue of $3,000,000 worth of shares at a deemed price of 0.2 cents per share, pre-consolidation to the vendor.
The issue of 6,000,000 post-consolidation options exercisable at 12.5 cents each within 5 years from the date of issue.
The payment of the first $1,000,000 of oil and gas revenue derived from the Project.

The Proposed Transaction is contingent upon shareholder approval, as well as the successful raising of a minimum of $4,000,000 in capital pursuant to a prospectus to be issued in the near future. The maximum amount to be raised pursuant to the prospectus is $8,000,000. The Directors of the Company will determine to whom the shares under the prospectus will be issued and will ensure that these persons will not be related

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parties of the Company. This will mean that Delecta and Mr Malcolm Day and his associates will not be issued shares under the prospectus.

The assets that would be acquired by PNE from Delecta should the Option be exercised are as follows:

Stage 1 of the Project which comprises a drilled and successfully completed production well, the drilling of a salt water disposal well, together with access to all existing infrastructure such as gas transmission lines, separation tanks, electricity cables to well head and pumping equipment required for production. The well is expected to produce oil and gas, however a salt water disposal well will be required to be completed before production can be commenced. Delecta has an 80% working interest in the production well with a 58% net revenue interest.
Stage 2 of the Project which comprises an option to undertake a four well drilling program, at a turnkey cost of US$4,875,000. Delecta has an 80% working interest in each of the 4 wells and infrastructure, with a 54% net revenue interest.
' An option to access 64 square miles of seismic data, surrounding the 425 acre Project area lease, which will provide additional prospects and drill targets.

Delecta currently holds 38.42% of the issued capital of PNE. Additionally, Delecta currently holds 50,000,000 pre-consolidation options in PNE, which would be converted to 1,000,000 post-consolidation options if the capital of PNE is reconstructed on the basis of one reconstructed share for every 50 existing shares. As noted in Section 2.1 of this Report, Mr Malcolm Day (a director of the Company) and his associates have a voting power of 26.9% in Delecta, as well as an indirect interest in the Company!s shares and options as set out in the Notice of General Meeting. If the Proposed Transaction is approved by the non-associated shareholders of PNE, together with all other resolutions included in the Notice of General Meeting relating to the issue of shares and options in the Company, Delecta!s interest in the issued capital of PNE and the combined interest of Delecta and Mr Day in the issued capital of PNE based on both a maximum capital raising of $8,000,000 and a minimum capital raising of $4,000,000 pursuant to the Proposed Capital Raising (in which Delecta and Mr Day will not take part) will be as follows:

	Maximum	Minimum
	capital raising	capital raising
	%8M	%4M
Maximum interest of Delecta	32.06%	45.25%
Maximum combined interest of Delecta and Mr Malcolm	33.58%	47.40%
Day
Minimum interest of Delecta	25.61%	35.41%
Minimum combined interest of Delecta and Mr Malcolm	25.65%	35.47%
Day

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4. ECONOMIC ANALYSIS

At its meeting on 4 November 2014, the Reserve Bank of Australia Board ("Board#) decided to leave the cash rate unchanged at 2.5 per cent. In support of this decision, the Board provided the following commentary:

"Growth in the global economy is continuing at a moderate pace. China's growth has generally been in line with policymakers' objectives, though weakening property markets there present a challenge in the near term. Commodity prices in historical terms remain high, but some of those important to Australia have declined further in recent months.

Volatility in some financial markets has picked up over the past couple of months. Overall, however, financial conditions remain very accommodative. Long-term interest rates and risk spreads remain very low. Markets still appear to be attaching a low probability to any rise in global interest rates or other adverse event over the period ahead.

In Australia, most data are consistent with moderate growth in the economy. Resources sector investment spending is starting to decline significantly, while some other areas of private demand are seeing expansion, at varying rates. Public spending is scheduled to be subdued. Overall, the Bank still expects growth to be a little below trend for the next several quarters.

Recent data on prices confirmed that inflation is running between 2 and 3 per cent, as expected, and this is likely to continue. Although some forward indicators of employment have been firming this year, the labour market has a degree of spare capacity and it will probably be some time yet before unemployment declines consistently. Hence, growth in wages is expected to remain relatively modest over the period ahead, which should keep inflation consistent with the target even with lower levels of the exchange rate.

Monetary policy remains accommodative. Interest rates are very low and have continued to edge lower over the past year or so as competition to lend has increased. Investors continue to look for higher returns in response to low rates on safe instruments. Credit growth is moderate overall, but with a further pick-up in recent months in lending to investors in housing assets. Dwelling prices have continued to rise.

The exchange rate has traded at lower levels recently, in large part reflecting the strengthening US dollar. But the Australian dollar remains above most estimates of its fundamental value, particularly given the further declines in key commodity prices in recent months. It is offering less assistance than would normally be expected in achieving balanced growth in the economy.

Looking ahead, continued accommodative monetary policy should provide support to demand and help growth to strengthen over time. Inflation is expected to be consistent with the 2$3 per cent target over the next two years.

In the Board's judgement, monetary policy is appropriately configured to foster sustainable growth in demand and inflation outcomes consistent with the target. On present indications, the most prudent course is likely to be a period of stability in interest rates.#

Source : www.rba.gov.au Statement by Glenn Stevens, Governor: Monetary Policy Decision 4 November 2014

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5. INDUSTRY ANALYSIS

The following analysis is provided in respect of the major industries in which the Company is currently operating (Gold Mining in Australia) and in which it also plans to operate in future (Oil and Gas in the USA).

5.1 Gold Mining in Australia

Executive Summary

The Gold and Other Non-Ferrous Metal Processing industry has been highly volatile over the past five years. The period has been characterised by large swings in industry revenue, reflecting dramatic shifts in US dollar prices for gold and nickel, and Australian dollar volatility. The industry is expected to generate revenue of $20.2 billion in 2014-15 compared with $21.5 billion in 2009-10. This equates to a fall of 1.3% over the past five years. Industry revenue is forecast to fall by 5.1% in 2014-15.

The main product processed by the industry is refined gold. Semi-refined gold and gold dore bars are supplied to the industry for further processing into refined gold. Some of these intermediate gold products are also included as being processed in the industry, when produced by the non-mining company. Refined gold volumes are expected to total 318.0 tonnes in 2014-15, down from 356.0 tonnes in 2009-10 due to lower mining volumes and some pricing declines. Although the volume of gold refined by the industry is substantial, some firms that refine gold do so for a fee. They do not own either the gold bullion feedstock or the refined gold produced. The refining fee earned by these industry participants represents only a small fraction of the value of the refined gold.

The industry also produces class-one and class-two nickel, consisting essentially of nickel metal and nickel oxide. The industry also produces a semi-refined product known as nickel matte, some of which is refined into nickel metal. The remainder is exported in semi-refined form. A high proportion of industry output is exported. Gold imports are also high, as these are refined and often re-exported. Imports also include scrap gold for reprocessing.

Industry performance is expected to improve over the five years through 2019-20, reflecting the interplay of moderate growth in output and higher US dollar gold prices offset by a weaker Australian dollar. Industry revenue is forecast to grow by an annualised 0.3% through 2019-20 to $20.4 billion. Industry profit will expand slightly in response to improved capacity utilisation and more stable operating conditions.

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Current Performance

Revenue and profit

The performance of the Gold Ore Mining industry follows broad trends in gold production and Australian dollar prices for gold. Industry revenue is expected to increase at an annualised 3.2% over the five years through 2014/15, despite gold price declines pushing revenue lower in 2012/13 and 2013/14. As gold mining volumes decline in 2014/15, IBISWorld estimates industry revenue will decline 2.4% in 2014/15 to $12.2 billion. The overall industry gains reflect the industry*s tendency to run counter-cyclical to

==> picture [201 x 199] intentionally omitted <==

general economic conditions, and gold*s appeal as a safe haven asset during uncertain economic times. These trends have generally increased gold demand, prices and production in both Australia and the rest of the world in the past five years.

Industry profit is estimated to account for 8.7% of industry revenue in 2014/15. This is down from 12.6% in 2009/10 due to higher industry wage and processing costs, and falling gold prices in some years. Industry exports have been strong, growing at an estimated 12.7% annualised in the five years through 2014/15 due to higher internal gold processing by the industry, which has pushed smelted gold exports higher. Competing gold imports are negligible.

Despite the strong performance, there have been several factors detracting from growth, including increasing royalty rates in some states and high production costs. By the end of 2014, the WA Government is expected to decide whether to increase gold royalty payments from 2.5% of the finished product to between 5.0% and 10.0%. As a result of this uncertainty, enterprise numbers are expected to only increase marginally over the five-year period as unprofitable firms exited the industry. However, with output and revenue increasing, establishment numbers are estimated to increase at an annualised 2.0% over the five years through 2014/15, with industry employment expected to increase at an annualised 2.2% over the same period.

Counter-cyclical asset

The performance of Australias Gold Ore Mining industry depends heavily on the movements and interaction of global gold prices, exchange rates and demand from central banks across the world. The industrys connections to world economic conditions and global financial assets make gold ore mining a volatile business. As a monetary asset, gold is considered a safe haven investment during periods of economic uncertainty, especially on financial markets. This is because gold is considered to be more resilient and less risky than world currencies. However, when global economic conditions are healthy, demand for gold generally declines as investors move towards riskier assets offering higher returns.

Since the onset of the global financial crisis, investors have flocked to gold due to the volatility of financial markets and ongoing uncertainty about economic growth

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prospects in many developed economies. In response, the world price of gold is forecast to increase at an annualised 2.9% over the five years through 2014/15. From an average of US$1,225 per troy ounce in 2009/10, gold prices soared in the early part of the period in the wake of the financial crisis. Prices peaked at US$1,669 per troy ounce during 2011/12 due to ongoing concern over the US and European debt crises, before declining in 2012/13 and 2013/14 as economic conditions improved. Gold prices are expected to increase in 2014/15 to an average of US$1,411 per troy ounce as the global economy improves and inflationary pressures ease with higher interest rates in the United States and Europe.

Questions of viability

Gold ore mining traditionally incurs high production costs. Many of these are fixed at least for the short term as a result of miners inability to alter costs significantly once a mine is operating at or near capacity. In addition, the industry has a high level of capital intensity, together with the many associated indirect costs required for exploration, royalties, overheads, marketing, native title laws and research and development. Because of these significant fixed costs, the industrys performance and profitability depend largely on movements in the world price of gold. As a result, increases in industry production costs threaten profit growth.

According to the Chamber of Minerals and Energy of Western Australia, industry production costs have risen in response to higher wages, energy costs and the development of lower grade ore ( Australian Mining Review ). This has been exacerbated by the increasingly complex regulatory landscape facing Australia*s resources and energy sector given the introduction of the Minerals Resources Rent Tax, the implementation and subsequent repeal of the carbon tax, and the increase in royalty rates in some states.

Industry Outlook

The performance of the Gold Ore Mining industry will continue to follow broad trends in gold pricing, production volumes and the value of the Australian dollar over the next five years. High gold prices are likely to continue in the next five years. This reflects some global economic uncertainty, and the continued reliance on gold*s traditional use as a store of value. Central banks in particular will remain substantial purchasers and holders of gold.

Revenue and profit

Over the next five years, industry revenue and profit will reflect trends in production, US dollar gold prices and the exchange rate. The US dollar gold price is expected to rise slightly over the next five years and that gain, combined with a marginally weaker Australian dollar, will push up gold prices slightly in local currency. Once inflation is taken into account, the forecast price increase will be relatively small. The higher Australian dollar gold price and increased output are expected to result in moderate industry revenue gains over the period. Overall, industry revenue is forecast to grow at an annualised 0.9% over the five years through 2019/20, to total $12.7 billion. Export growth is anticipated to ease as global gold production increases. IBISWorld expects that industry exports will account for 10.3% of revenue in 2019/20, with annualised growth of 1.5% forecast over the five-year period. Imports are expected to remain very low.

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Profit is forecast to decrease to 7.6% of industry revenue in 2019/20 as volume, pricing and demand growth remain relatively stable, and as industry wage increases reduce margins. Industry risks include the higher costs associated with deeper mines and more complex geological formations, as well as higher royalty rates. The industry is expected to start the next five-year period with 1.8% growth in 2015/16 on the back of higher gold production and prices. However, production declines and lower prices in 2018/19 and 2019/20 are expected to result in revenue falls for these years.

Rising output and more-complex operations are expected to boost industry employment, leading to growth of 1.2% annualised over the five years through 2019/20. More new firms are expected to enter the industry to chase high profit margins, with establishment numbers forecast to grow 0.9% annualised over the period. However, most new firms will be small in scale and generate relatively low gold production volumes.

Production and projects

Although gold prices are expected to remain relatively high, rising supply worldwide is forecast to constrain price growth. Gold will remain an important part of central bank reserves around the world, while growing affluence in China will likely boost demand for gold jewellery. Gold will continue to be viewed as a portable store of value throughout Asia. Major political shocks to the global economy have the potential to cause large short-term fluctuations in the price of gold. Similarly, a major unexpected flow of gold from stocks onto the market can push the price down. This situation is complicated by the fact that fluctuations in the gold price reflect changes in the value placed on the US dollar, as well as shifts in the market for gold itself.

Australias gold production is expected to increase over the five years through 2019/20. Significant contributions will be made by the Tropicana joint venture project involving AngloGold Ashanti and Independence Group, which is expected to yield 320,000 to 350,000 troy ounces of gold per annum at full production; the continued ramp-up of Newcrests Cadia East mine (about 700,000 troy ounces at full production); Mungana Goldmines Chillagoe project (160,000 ounces); and Tanami Golds Central Tanami project (160,000 ounces).

A number of smaller projects are also expected to come onstream over the next five years. As well as underpinning new developments, high gold prices provide an incentive to lift production at existing operations where possible, and provide a buffer against expected rises in the cost of obtaining gold at older mines. Production costs tend to increase as mines become deeper, or move from being open-cut to underground operations, and encounter harder ores. The net increase in Australia*s total output will be less than what is added by new projects, as output from some existing mines will decline as they approach resource depletion.

High gold prices will have a longer term effect on the industry, providing an incentive to re-examine techniques aimed at exploiting lower grade ore. Increasingly, Australias gold production will come from larger mines as smaller, short-life mines become uneconomic and are closed. Considering these factors, Australias gold output is expected to rise from 269.6 tonnes in 2014/15 to 271.9 tonnes in 2019/20, which represents annualised growth of 0.2%. The largest increases are expected for 2016/17 and 2017/18 as several gold projects ramp-up to full production.

The long-term, high-risk nature of greenfield gold exploration, and the resources required to fund it, mean that gold exploration and production will remain the province

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of large companies. This trend will be reinforced by production requirements, including the large amounts of capital required for open-cut mining at depth, the technology needed to make the transition to underground operations as shallow reserves are depleted, and the higher costs of processing deeper sulphide ores rather than shallow oxide ores.

Source : IBIS World

5.2 Oil and Gas in the USA

Should the Proposed Transaction be approved, the Company would be operating in the Oil and Gas Industry in the USA, and Oklahoma in particular. Commentary on the Oil and Gas industry in the USA and Oklahoma in particular is set out in the "Project Assessment Overview# of the expert report prepared by dB LLC, attached as Appendix 3 to this Report.

6. ADOPTED BASIS OF EVALUATION

6.1 Fairness

We have assessed whether the Proposed Transaction is fair by comparing our assessment of the fair market value of a PNE share on a control basis prior to incorporating the effects of the Proposed Transaction with our assessment of the fair market value of a PNE share on a minority basis subsequent to incorporating the effects of the Proposed Transaction.

The proposed consideration payable by PNE is comprised of shares and options in PNE and the payment to Delecta of the first $1,000,000 of oil and gas revenue derived from the Project. The PNE shares have been valued at fair market value, which we have defined as the amount at which the shares would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to gain control, to reduce or eliminate competition, to secure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. As the Proposed Transaction is a control transaction (as defined in RG 111), we have considered this factor in forming our opinion.

6.2 Reasonableness

We have assessed the reasonableness of the Proposed Transaction by considering other advantages and disadvantages of the Proposed Transaction to the non-associated shareholders of PNE.

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6.3 Individual circumstances

We have evaluated the Proposed Transaction for PNE shareholders as a whole. We have not considered the effect of the Proposed Transaction on the particular circumstances of individual shareholders. Due to their particular circumstances, individual shareholders may place a different emphasis on various aspects of the Proposed Transaction from those adopted in this Report. Accordingly, individual shareholders may reach different conclusions to ours on whether the Proposed Transaction is fair and reasonable. If in doubt, shareholders should consult an independent adviser.

6.4 Limitations and Reliance on Information

HLB!s opinion is based on economic, share market, business trading and other conditions and expectations prevailing at the date of this Report. These conditions can change significantly over relatively short periods of time. If these conditions did change materially the valuations and opinions could be different in these changed circumstances.

This Report is also based upon financial information and other information provided by PNE. HLB has considered and relied upon this information. HLB has no reason to believe that any material facts have been withheld. The information provided to HLB has been evaluated through analysis, enquiry and review for the purposes of forming an opinion as to whether the Proposed Transaction is fair and reasonable. However, in preparing reports such as this, time is limited and HLB does not warrant that its enquiries have identified or verified all of the matters that an audit, extensive examination or "due diligence# investigation might disclose. In any event, an opinion as to fairness and reasonableness is more in the nature of an overall review rather than a detailed audit or investigation.

An important part of the information used in forming an opinion of the kind expressed in this Report is comprised of the opinions and judgment of management. This type of information was also evaluated through analysis, enquiry and review to the extent practical. However, such information is often not capable of external verification or valuation.

Preparation of this Report does not imply that HLB has audited in any way the records of PNE for the purposes of this Report. It is understood that the accounting information that was provided was prepared in accordance with generally accepted accounting principles and in a manner consistent with the method of accounting in previous years except as otherwise noted.

The information provided to HLB included historical financial information for PNE. PNE is responsible for this information. HLB has used and relied on this information for the purpose of analysis. HLB has assumed that this information was prepared appropriately and accurately based on the information available to management at the time and within the practical constraints and limitations of such information. HLB has assumed that this information does not reflect any material bias, either positive or negative. HLB has no reason to believe otherwise.

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7. PROFILE OF PNE

7.1 Company History

PNE was registered on 10 March 2010 and was admitted to the Official List of ASX on 29 November 2010.

PNE is an exploration company which has most recently focussed its strategic and exploration efforts on the Paynes Find Gold Prospect in Western Australia. Details of the work completed by the Company on this Prospect are included in the Company!s Annual Report for the year ended 30 June 2014 as lodged with the Australian Securities Exchange on 30 September 2014.

7.2 Assets

The Company!s assets comprise predominantly mineral exploration properties. Extracts of the Company!s audited financial report for the year ended 30 June 2014 and unaudited financial report for the 3 months ended 30 September 2014 are shown at Sections 7.7 and 7.8 of this Report.

7.3 Legal Structure

PNE is a public company incorporated and domiciled in Australia. PNE has no subsidiaries, however if the Proposed Transaction is approved, PNE will acquire 100% of the issued capital of Canadian River Inc, an entity which currently holds Delecta!s interest in the Canadian River field development project. Canadian River Inc has no liabilities and no assets other than its interest in the Project.

7.4 Management and Personnel

The Company!s current directors are:

Mr Paul Lloyd Non-Executive Chairman Mr Malcolm Day Non-Executive Director Mr David Holden Non-Executive Director

7.5 Capital Structure and Shareholders

At the date of this Report, PNE had the following securities on issue:

Shares:

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Fully paid ordinary shares

Number 911,027,100

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Options:

Expiry date Status Exercise price (cents)	Number
01/05/2015 Unlisted 25 cents 30/06/2015 Listed 3 cents 30/06/2015 Unlisted 3 cents 01/05/2016 Unlisted 35 cents	56,000,000 150,808,677 33,640,000 24,000,000
	264,448,677

Escrow provisions

At the date of this Report, no shares or options were held in escrow.

Top 20 shareholders

The top 20 shareholders as at 12 November 2014 are set out below.

Shareholder	Number of Shares & of total shares on issue
Delecta Limited Paranoid Enterprises Pty Ltd Mr Michael Charles Mann & Mr Ross Gregory Adelco Inc Yardie (WA) Pty Ltd Ms Rebecca Thompson Mr Carl Coward Mr Andrew William Spencer Mr Matthew Blumberg Ghan Resources Pty Ltd Mr Henry John Bennett Francis Xavier Pte Ltd Cascade Royalty Holdings LLC Mr John Gerner Mr John Raymond Frew Nefco Nominees Pty Ltd Elaine Faye Taylor Douglas Ernest Taylor Kane Anthony Bennett Talfresh Pty Ltd	350,000,000 38.42 25,000,000 2.74 25,000,000 2.74 25,000,000 2.74 20,000,000 2.20 20,000,000 2.20 20,000,000 2.20 20,000,000 2.20 15,226,220 1.67 15,100,618 1.66 14,450,000 1.59 14,318,768 1.57 12,500,000 1.37 12,500,000 1.37 12,000,000 1.32 9,724,396 1.07 9,429,426 1.04 9,375,000 1.03 7,784,383 .86 7,675,000 .84
	645,083,811 70.83

Shareholder

Number of
Shares
& of total
shares on
issue

Delecta Limited
Paranoid Enterprises Pty Ltd
Mr Michael Charles Mann & Mr Ross Gregory
Adelco Inc
Yardie (WA) Pty Ltd
Ms Rebecca Thompson
Mr Carl Coward
Mr Andrew William Spencer
Mr Matthew Blumberg
Ghan Resources Pty Ltd
Mr Henry John Bennett
Francis Xavier Pte Ltd
Cascade Royalty Holdings LLC
Mr John Gerner
Mr John Raymond Frew
Nefco Nominees Pty Ltd
Elaine Faye Taylor
Douglas Ernest Taylor
Kane Anthony Bennett
Talfresh Pty Ltd

350,000,000
38.42
25,000,000
2.74
25,000,000
2.74
25,000,000
2.74
20,000,000
2.20
20,000,000
2.20
20,000,000
2.20
20,000,000
2.20
15,226,220
1.67
15,100,618
1.66
14,450,000
1.59
14,318,768
1.57
12,500,000
1.37
12,500,000
1.37
12,000,000
1.32
9,724,396
1.07
9,429,426
1.04
9,375,000
1.03
7,784,383
.86
7,675,000
.84

645,083,811
70.83

7.6 Share Price Performance

PNE!s share price movements in the 12 months to the date of preparation of this Report, together with volumes traded are presented in the graph below:

Paynes Find Gold Limited - Independent Expert!s Report -15-

==> picture [452 x 240] intentionally omitted <==

The following key announcements were made by the Company to the market during the above period:

Date	Announcement	Closing share price after announcement % (movement)	Closing share price three days after announcement % (movement)
29/10/2014	Appendix 3B	0.002 (� 0%)	0.002 (� 0%)
24/10/2014	Quarterly Activities and Cash Flow Report	0.002 (� 0%)	0.002(� 0%)
30/09/2014	Annual Report to shareholders	0.003 (� 0%)	0.002 (� 50%)
25/09/2014	DLC: Acquisition of Oil & Gas project	0.003 (�0%)	0.003 (�0%)
25/09/2014	Option to acquire Oil and Gas project	0.003 (�0%)	0.003 (�0%)
23/09/2014	Trading Halt	0.002 (�0%)	0.003 (�33%)
01/09/2014	Sale of Tenements	0.002 (�0%)	0.001 (�100%)
28/08/2014	Notification of Rights Issue Shortfall	0.002 (�0%)	0.001 (�100%)
30/07/2014	Renounceable Rights Issue Prospectus	0.0013 (�0%)	0.0006 (�117%)
15/05/2014	DLC: Loan to associate company	0.0013 (�0%)	0.0013 (�0%)
15/05/2014	Loan agreement signed	0.0013 (�0%)	0.0013 (�0%)
12/03/2014	Half Yearly Report and Accounts	0.0019 (�0%)	0.0006 (�217%)
28/11/2013	Results of Meeting	0.0019 (�0%)	0.0019 (�0%)

Source : ASX company announcements

The following facts are worthy of note:

(a) during the above period, the PNE closing share price fluctuated from a low of 0.06 cents to a high of 0.2 cents, which was the price immediately before the Company!s announcement on 25 September 2014 that the Company had signed the Agreement with Delecta; and

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(b) following the announcement on 25 September 2014 that the Company had signed the Agreement with Delecta, the Company!s closing share price increased by 50% before settling to its pre-announcement price of 0.2 cents, which is the most recent price as at the date of preparation of this Report.

7.7 Financial Performance

Extracts of the Company!s audited financial results for the year ended 30 June 2014 and unaudited financial results for the three months ended 30 September 2014 are set out below:

	Audited Year to 30 June 2014 % Unaudited 3 months to 30 September 2014 %
Revenue Other income Employee benefits expense Premises expense Administration expense Exploration expense Depreciation expense Loss from continuing operations before tax and finance costs Finance costs Loss before income tax attributable to members of the Company Income tax expense Loss after tax from continuing operations	5,362 519 355,060 3,000 (225,608) (36,667) (64,013) (19,426) (316,433) (63,398) (4,658,861) (24,600) (12,957) -
	(4,917,450) (140,572) (5,533) (7,397)
	(4,922,983) (147,969) - -
	(4,922,983) (147,969)

7.8 Financial Position

Extracts of the Company!s audited financial position as at 30 June 2014 and unaudited financial position as at 30 September 2014 are set out below:

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	Audited 30 June 2014 % Unaudited 30 September 2014 %
ASSETS Current Assets Cash and cash equivalents Trade and other receivables Prepayments Total Current Assets TOTAL ASSETS LIABILITIES Current Liabilities Trade and other payables Borrowings Total Current Liabilities TOTAL LIABILITIES NET ASSETS EQUITY Contributed equity Reserves Accumulated losses TOTAL EQUITY	178,423 360,823 336,676 792 4,522 4,522
	519,621 366,137
	519,621 366,137
	145,297 106,896 263,739 -
	409,036 106,896
	409,036 106,896
	110,585 259,241
	15,073,593 15,370,218 2,028,954 2,028,954 (16,991,962) (17,139,931)
	110,585 259,241

7.9 Tax Losses

At 30 June 2014, the Company had a net unrecognised deferred tax asset of $3,109,084 primarily relating to the benefit of income tax losses. This asset is not included in the statement of financial position in Section 7.8 of this Report. Refer to Section 8.3.1 of this Report for further discussion on this matter.

8. VALUATION OF PNE PRIOR TO THE PROPOSED TRANSACTION

8.1 Valuation Summary

HLB has assessed the fair market value of PNE to be 0.19 cents per share. This is based on our assessment of the fair market value on a control basis prior to incorporating the effects of the Proposed Transaction.

For the purpose of our opinion, fair market value is defined as the amount at which the shares would change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither being under a compulsion to buy or sell. We have considered the aspect of a premium for control in forming our opinion.

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In determining this amount, we assessed the fair market value of PNE after considering the various valuation methods, which are discussed in further detail at Section 8.2 of this Report.

8.2 Valuation Methodology

Methodologies commonly used for valuing assets and businesses are as follows:

8.2.1 Capitalisation of future maintainable earnings (!FME")

This method places a value on a business by estimating the likely future maintainable earnings, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax (" EBIT #) or earnings before interest, tax, depreciation and amortisation (" EBITDA #). The capitalisation rate or +earnings multiple+ is adjusted to reflect which base is being used for FME.

This method is not appropriate for use in mining exploration companies.

8.2.2 Discounted future cash flows (!DCF")

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present values at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start-up phase, or experience irregular cash flows.

The DCF methodology is not considered appropriate to use in the valuation of PNE as the Company is in the exploration phase and does not have cash flow forecast information based on JORC reserves.

8.2.3 Net asset value

Asset based methods estimate the market value of an entity!s securities based on the realisable value of its identifiable net assets. Asset based methods include:

Orderly realisation of assets method
Liquidation of assets method
Net assets on a going concern method

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The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Where wind up or liquidation of the entity is not being contemplated, these methods in their strictest form are generally not appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

The net assets on a going concern method is usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity!s valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall net assets on a going concern basis.

These asset based methods ignore the possibility that the entity!s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when entities are not profitable, a significant proportion of the entity!s assets are liquid or for asset holding companies.

8.2.4 Quoted Market Price Basis

Another valuation approach that can be used in conjunction with (or as a replacement for) any of the above methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a "deep# market in that security.

8.2.5 Methodology Adopted

We consider that the most appropriate methods for the valuation of PNE shares are the net assets on a going concern method and the quoted market price basis.

8.3 Valuation of PNE Shares

8.3.1 Net assets on a going concern method of valuation of PNE (prior to incorporating the effects of the Proposed Transaction)

Our valuation of PNE on a going concern method of valuation is set out in our valuation calculations below. We have assessed the valuation of PNE prior to incorporating the effects of the Proposed Transaction.

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-20-

Statement of Financial Position Note	Unaudited 30 September 2014 % Valuation Low % Valuation Preferred % Valuation High %
Current Assets Cash and cash equivalents 1 Trade and other receivables Prepayments Total Current Assets Non Current Assets Exploration expenditure 2 Total Non Current Assets Total Assets Liabilities Current Liabilities Trade and other payables Total Current Liabilities Total Liabilities Net Assets	360,823 556,049 556,049 556,049 792 792 792 792 4,522 4,522 4,522 4,522
	366,137 561,363 561,363 561,363
	- 1,066,000 1,291,000 1,516,000
	- 1,066,000 1,291,000 1,516,000
	366,137 1,627,363 1,852,363 2,077,363
	106,896 106,896 106,896 106,896
	106,896 106,896 106,896 106,896
	106,896 106,896 106,896 106,896
	259,241 1,520,467 1,745,467 1,970,467


Shares on issue 1 Value per share (cents)	715,800,880 911,027,100 911,027,100 911,027,100 0.17 0.19 0.22

We have made the following adjustments to the net assets and issued capital of PNE as at 30 September 2014 in determining our valuation. These adjustments relate to matters which have effect prior to the effects of the Proposed Transaction.

We included the cash flow from the receipt in October 2014 of proceeds of $195,226 from the issue of 195,226,220 shares at 0.1 cent each under the Company!s rights issue prospectus.
We instructed Corvidae Pty Ltd trading as Ravensgate ("Ravensgate#) to provide an independent market valuation of the mineral assets currently held by PNE. Ravensgate considered a number of different valuation methods when valuing this mineral asset. A copy of the report prepared by Ravensgate is attached to this Report as Appendix 2.
We have assumed that no options currently on issue will be exercised for the purposes of our valuation. The options are exercisable at pre-consolidation amounts ranging from 3 cents each to 25 cents each; the Company!s quoted share price at the date of this Report is 0.2 cents.

The range of values for PNE!s exploration assets as assessed by Ravensgate is set out below:

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-21-

	Low Value % Preferred Value % High Value %
Paynes Find Gold Prospect	1,066,000 1,291,000 1,516,000

We have incorporated an adjustment to update the carrying values of the above asset in the Company!s books with the "Valuation Low#, "Valuation High# and "Valuation Preferred# amounts above.

There is no income tax applicable to the adjustment for the valuation of the Company!s exploration assets due to the Company!s unrecognised deferred tax asset. Refer to Section 7.9 of this Report.

8.3.2 Quoted Market Price Basis - Shares

To provide a comparison to our valuation of PNE in Section 8.3.1, we have also assessed the value of PNE on the quoted market price basis.

The quoted market value of a company!s shares is reflective of its value on a minority interest basis. A minority interest is an interest in a company that is not significant enough for the holder to have an individual influence in the operations and value of that company.

RG 111.25 suggests that when considering the value of a company!s shares for the purposes of approval under Item 7 of section 611 of the Corporations Act 2001, the expert should consider a premium for control. An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain control of another company. These advantages include the following:

control over policy, decision making and strategic direction;
access to cash flows;
control over dividend policies; and
potentially, access to tax losses.

Whilst Delecta would not acquire 100% of the issued capital of PNE if the Proposed transaction was approved, RG 111 states that the expert should calculate the value of a "target!s# (ie PNE) shares as if 100% control was being obtained. RG 111.3 states that the expert can then consider an acquirer!s practical level of control when considering reasonableness. We have considered reasonableness in Section 11 of this Report.

Our valuation calculation has been prepared in two parts. First, we have calculated the quoted market price on a minority interest basis. Secondly, we have added a premium for control to the minority interest value to arrive at a quoted market price value that includes a premium for control.

Minority interest value

A chart of the share price movement of PNE over the 12 month period prior to the date of this Report is included in Section 7.6 of this Report.

Paynes Find Gold Limited - Independent Expert!s Report -22-

The PNE closing share price fluctuated from a low of 0.06 cents to a high of 0.2 cents during the 12 months preceding the preparation of this report. The closing share price at the date of this Report was 0.2 cents per share.

To provide further analysis of the market prices for a PNE share, we have also calculated the volume weighted average market price for 10, 30, 60 and 90 trading day periods prior to 25 September 2014 (being the date of the announcement that the Company had entered into the Agreement with Delecta) as follows:

	25	10 Days	30 Days	60 Days	90 Days
	September	cents	cents	cents	cents
	2014
	cents
Closing price	0.20
Volume weighted average		0.20	0.20	0.15	0.11

For the quoted market price basis to be reliable there needs to be an adequately liquid and active market for the securities. We consider the following characteristics to be representative of a liquid and active or "deep# market:

Regular trading in a company!s securities;
At least 50% of a company!s securities are traded on an annual basis;
The spread of a company!s shares must not be so great that a single minority trade can significantly affect the market capitalisation of a company; and
There are no significant and unexplained movements in the company!s share price.

A company!s shares should meet all of the above criteria to be considered as trading in a "deep# market, however, failure of a company!s securities to exhibit all of the above characteristics does not necessarily mean that the value of its shares determined on this basis cannot be considered relevant.

An analysis of the volume of trading in PNE shares for the twelve months to the date of preparation of this report is set out below:

	Low	High	Cumulative	As a & of
	cents	cents	Volume Traded	issued capital
				as at 30 June
			No	2014
10 days	n/a	n/a	-	-%
30 days	0.20	0.30	22,740,165	5.6%
60 days	0.10	0.30	25,905,190	6.4%
90 days	0.06	0.30	29,905,003	7.4%
180 days	0.06	0.30	81,276,363	20.2%
365 days	0.06	0.32	124,059,931	30.8%

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This table indicates that the Company!s shares display a low level of liquidity, with only 30.8% of the Company!s issued capital at 30 June 2014 being traded in the 12 month period to the date of preparation of this Report and only 7.4% over the last 90 days. We do not consider this level of trading in the Company!s shares to be sufficiently adequate and to otherwise meet the criteria in order for the trading in the Company!s shares to be considered as "deep#.

Notwithstanding our opinion that the quoted market price basis is not a reliable valuation basis for our assessment, for the purpose of comparison, in our opinion a range of values for PNE shares based on market pricing, after disregarding postannouncement pricing, is between 0.15 cents and 0.20 cents per share, with a preferred pricing of 0.17 cents per share.

Control Premium

Share prices from share market trading do not reflect the market value for control of a company as they are in respect of minority interest holdings. Traditionally, the premiums required to obtain control of companies range between 15% and 25% of the minority interest values.

Quoted market price including control premium

Applying these control premiums to PNE!s quoted market share price results in the following quoted market price values including a premium for control:

	Low	Preferred	High
	cents	cents	cents
Quoted market price value	0.15	0.17	0.20
Control premium	15%	20%	25%
Quoted market price value inclusive of a
control premium	0.17	0.20	0.25

Therefore, our valuation of a PNE share based on the quoted market price method and including a premium for control is between 0.17 cents and 0.25 cents with a preferred value of 0.20 cents.

8.3.3 Assessment on the Fair Market Value of a PNE Share

The results of the net asset and quoted market price valuations performed are summarised in the table below:

	Low	Preferred	High
	cents	cents	cents
Net assets (Section 8.3.1)	0.17	0.19	0.22
Quoted market price (Section 8.3.2)	0.17	0.20	0.25

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As it is our opinion that the trading in PNE shares is illiquid, we believe the most appropriate method of valuation of PNE shares in accordance with RG 111 is the net assets method.

Based on the results above we consider the value of a PNE share to be between 0.17 cents and 0.22 cents, with a preferred value of 0.19 cents.

9. VALUATION OF PNE SUBSEQUENT TO THE PROPOSED TRANSACTION

Following is our assessment of the fair market value of a PNE share on a minority basis subsequent to incorporating the effects of the Proposed Transaction.

Report Reference	Valuation Low Valuation Preferred Valuation High
Value of PNE - pre-transaction 8.3.1 Assessed value of the assets to be acquired under the Proposed Transaction(Note 1) Liability to Delecta in respect of the first A$1,000,000 of production (Note 2) Cash received from contingent Proposed Capital Raising(Note 3) Net assets ($) Shares on issue < pre-transaction Issue of shares under the Proposed Transaction(Note 4) Issue of shares under the contingent Proposed Capital Raising(Note 3) Total shares on issue (Number) Net assets per share (cents) Minority interest discount(Note 5) Value post transaction (cents)	1,520,467 1,745,467 1,970,467 3,354,435 5,488,658 10,027,753 (1,000,000) (1,000,000) (1,000,000) 4,000,000 6,000,000 8,000,000
	7,874,902 12,234,125 18,998,220
	911,027,100 911,027,100 911,027,100 1,500,000,000 1,500,000,000 1,500,000,000 2,000,000,000 3,000,000,000 4,000,000,000
	4,411,027,100 5,411,027,100 6,411,027,100
	0.18 0.23 0.30 20% 17% 13% 0.14 0.19 0.26

Note 1 < Asset to be acquired under the Proposed Transaction

Under the Proposed Transaction, PNE would acquire the interest currently held by Delecta in the Canadian River field development project as outlined in Section 3 of this Report.

We instructed dB LLC Petroleum Advisory Services ("dBLLC#) to provide an independent market valuation of this interest.

A copy of the report prepared by dBLLC is attached to this Report as Appendix 3.

The range of values as assessed by dBLLC is set out below:

Paynes Find Gold Limited - Independent Expert!s Report -25-

	Low	Preferred	High
	value	value	value
Delecta!s interest in the Canadian River
field development project ($US)	2,925,000	4,786,000	8,744,000
Converted to $A	3,354,435	5,488,658	10,027,753

We have incorporated these values into our above assessment.

Note 2 < Liability to Delecta

Under the Proposed Transaction, PNE would pay to Delecta the first A$1,000,000 of oil and gas revenues from the Project.

Note 3 < Proposed Capital Raising

The Proposed Transaction is contingent upon the successful raising of a minimum of $4,000,000 and a maximum of $8,000,000 pursuant to a prospectus. Whilst the Proposed Capital Raising will take place on a post-consolidation basis, for the purpose of our valuation, we have noted the shares to be issued on a pre-consolidation basis.

Note 4 < Shares and options to be issued to Delecta

Under the Proposed Transaction, Delecta is to be issued 1,500,000,000 pre-consolidation shares in the capital of PNE.

Delecta is also to be issued 6,000,000 post-consolidation options on the basis of a 1 for 50 reconstruction of the Company!s issued capital. The options will be exercisable at 12.5 cents each and expire 5 years from the date of issue. As the Company!s current share price is 0.2 cents per share, a reconstructed share price of 10 cents per share is anticipated. As this anticipated share price is less than the exercise price of the options we have assumed that the options will not be exercised for the purpose of our evaluation.

Note 5 < Minority interest discount

The above "Net assets per share (cents)#of a PNE share have been determined on a controlling interest basis. If the Proposed Transaction is approved, together with all other resolutions included in the Notice of General Meeting relating to the issue of shares and options in the Company, Delecta and Mr Malcolm Day will hold a combined interest of at least 25.65% interest and as much as 47.40% in the Company. As a result, non-associated shareholders would become minority shareholders in the Company.

We have therefore adjusted our valuation of a PNE share to reflect a minority interest holding. As noted in Section 8.3.2 of this Report, we assessed an appropriate premium for control to range from 15% to 25%. We have therefore assessed a range for an appropriate minority interest discount (which is the inverse of a premium for control) of 13% to 20%.

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10. ASSESSMENT OF WHETHER THE PROPOSED TRANSACTION IS FAIR

RG 111 defines an offer as being fair if the value of the offer price (value of the shares and options proposed to be issued to Delecta and the other consideration, being the payment of the first $1,000,000 of oil and gas revenue) is equal to or less than the value of asset proposed to be acquired from Delecta.

	Report	Low	Preferred	High
	Reference	cents	cents	cents
Value of a PNE share pre-transaction	8.3.1	0.17	0.19	0.22
Value of a PNE share post-transaction:	9	0.14	0.19	0.26

As the preferred value of a PNE share post transaction on a minority basis is equivalent to the preferred value pre-transaction on a control basis, it is our opinion that the Proposed Transaction is fair.

11. CONSIDERATION WHETHER THE PROPOSED TRANSACTION IS REASONABLE

In accordance with RG 111, an offer is reasonable if it is fair. Accordingly, as we have assessed the Proposed Transaction to be fair, we also consider the Proposed Transaction to be reasonable. Notwithstanding this conclusion we have also considered other factors that the non-associated shareholders of PNE should consider in forming their views on whether or not to approve the Proposed Transaction.

Advantages

Approval of the Proposed Transaction would provide the opportunity to grow the market capitalisation of the Company and potentially shareholder wealth.
The Project provides an opportunity for the Company to diversify its activities and generate cash flows from operations more quickly than would be generated from the Company!s existing Paynes Find Gold Project.

Disadvantages

The non-associated shareholders may have their current shareholding interests in the Company diluted, depending on the extent of the Proposed Capital Raising and the exercise of existing and proposed options.
There is no guarantee that the Company!s share price will not fall as a result of the approval of the Proposed Transaction.
The Company will be changing the nature, scale and location of its activities; this may not be consistent with the objectives of all non-associated shareholders.

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12. SOURCES OF INFORMATION

In preparing this report we have had access to the following principal sources of information:

Draft notice of general meeting and explanatory statement concerning the Proposed Transaction;
PNE!s Annual audited financial report for the year ended 30 June 2014;
PNE!s Management accounts for the 3 months ended 30 September 2014;
Discussions with officers of PNE;
Publicly available information;
Share registry information;
ASX Announcements concerning the Proposed Transaction;
Valuation report of PNE!s exploration and evaluation assets prepared by Ravensgate; and
Valuation report of the asset proposed to be acquired from Delecta prepared by dB LLC Petroleum Advisors.

13. QUALIFICATIONS, DECLARATIONS AND CONSENTS

HLB, which is a wholly owned entity of HLB Mann Judd Chartered Accountants, is a Licensed Investment Adviser and holder of an Australian Financial Services Licence under the Act and its authorised representatives are qualified to provide this Report. The authorised representative of HLB responsible for this Report has not provided financial advice to PNE.

The author of this Report is Wayne Clark. He is a Fellow of the Institute of Chartered Accountants in Australia, holds a Bachelor of Business, and has considerable experience in the preparation of independent expert reports and valuations of business entities in a wide range of industry sectors.

Prior to accepting this engagement, HLB considered its independence with respect to PNE with reference to ASIC Regulatory Guide 112 and APES 225. In HLB!s opinion, it is independent of PNE.

This Report has been prepared specifically for the shareholders of PNE. It is not intended that this Report be used for any other purpose other than to accompany the Notice of Meeting to be sent to the PNE shareholders. In particular, it is not intended that this Report should be used for any purpose other than as an expression of the opinion as to whether or not the Proposed Transaction is fair and reasonable to the nonassociated shareholders of PNE. HLB disclaims any assumption of responsibility for any reliance on this Report to any person other than those for whom it was intended, or for any purpose other than that for which it was prepared.

The statements and opinions given in this Report are given in good faith and in the belief that such statements and opinions are not false or misleading. In the preparation of this Report, HLB has relied on and considered information believed, after due inquiry, to be reliable and accurate. HLB has no reason to believe that any information supplied to it was false or that any material information has been withheld.

Paynes Find Gold Limited - Independent Expert!s Report -28-

HLB has evaluated the information provided to it by PNE and other parties, through inquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially misstated or would not provide a reasonable basis for this Report. HLB has not, nor does it imply that it has, audited or in any way verified any of the information provided to it for the purposes of the preparation of this Report.

In accordance with the Act, HLB provides the following information and disclosures:

HLB will be paid its usual professional fee based on time involvement at normal professional rates, for the preparation of this Report. This fee, estimated to be in the range of $15,000 to $20,000 excluding GST, is not contingent on the conclusion, content or future use of the Report.
Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report.
HLB and its directors and associates do not have any interest in PNE.
HLB and its directors and associates do not have any relationship with PNE or any associate of PNE, other than the firm of HLB Mann Judd being appointed as the Company!s auditor at the 2014 Annual General Meeting.

Yours faithfully HLB MANN JUDD CORPORATE (WA) PTY LTD Licensed Investment Advisor (AFSL Licence number 250903)

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W M CLARK Authorised Representative

Paynes Find Gold Limited - Independent Expert!s Report

APPENDIX 1 Appendix 1 ! Glossary of Terms

TERM DEFINITION Ravensgate Corvidae Pty Ltd trading as Ravensgate Announcement Date Date the event giving rise to the Proposed Transaction was announced to ASX being 25 September 2014 ASIC Australian Securities and Investments Commission ASX Australian Securities Exchange Limited dBLLC dB LLC Petroleum Advisory Services DCF Discounted cash flows Directors Directors of PNE EBIT Earnings before Interest and Tax EBITDA Earnings before Interest, Tax, Depreciation and Amortisation FME Future maintainable earnings Delecta Delecta Limited HLB HLB Mann Judd Corporate (WA) Pty Ltd JORC Code of the Joint Ore Reserves Committee of the AIMM, AIG and MCA PNE or the Company Paynes Find Gold Limited Notice of General Meeting The Notice of General Meeting and Explanatory Statement for the meeting to be held on or about 30 January 2015 Project Canadian River field development project Proposed Transaction The transaction outlined in Section 3 of this Report Report Independent expert!s report prepared by HLB Non-associated shareholders Existing shareholders in PNE who are not associated with Delecta

Paynes Find Gold Limited - Independent Expert!s Report

APPENDIX 2

Appendix 2 ! Independent valuation of mineral assets prepared by Ravensgate.

TECHNICAL PROJECT REVIEW

and

INDEPENDENT VALUATION REPORT

PAYNES FIND GOLD PROJECT

for

HLB MANN JUDD CORPORATE (WA) PTY LTD

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TECHNICAL PROJECT REVIEW

and

INDEPENDENT VALUATION REPORT

PAYNES FIND GOLD PROJECT

for

HLB MANN JUDD CORPORATE (WA) PTY LTD

20 October 2014

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TECHNICAL PROJECT REVIEW

and

INDEPENDENT TECHNICAL VALUATION

Prepared by RAVENSGATE on behalf of:

HLB Mann Judd Corporate (WA) Pty Ltd

Author(s): Sam Ulrich Principal Consultant BSc (Hons) Geology, MAusIMM, MAIG, GDipAppFin, FFin Alan Hawkins Principal Consultant BSc (Hons) Geology, MSc Ore Deposit Geology, MAIG, FSEG H. Kate Holdsworth Senior GIS Geologist BSc (Hons) Geology, MAusIMM Reviewer: Neal Leggo Principal Consultant BSc (Hons) Geology, MAIG, MSEG Date: 20 October 2014 Copies: Paynes Find Gold Limited (2) Ravensgate (1) Project No: PAY002 Document Ref: PAY002_VAL_03_NOV_2014_FINAL

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___ ___ Sam Ulrich Alan Hawkins For and on behalf of: For and on behalf of: RAVENSGATE RAVENSGATE

This report has been commissioned from and prepared by Ravensgate for the exclusive use of HLB Mann Judd Corporate (WA) Pty. Each statement or opinion in this report is provided in response to a specific request from HLB Mann Judd Corporate (WA) Pty to provide that statement or opinion. Each such statement or opinion is made by Ravensgate in good faith and in the belief that it is not false or misleading. Each statement or opinion contained within this report is based on information and data supplied by Paynes Find Gold Limited to Ravensgate, or otherwise obtained from public searches conducted by Ravensgate for the purposes of this report.

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	TABLE OF CONTENTS	TABLE OF CONTENTS
1.	EXECUTIVE SUMMARY ............................................................................................8
	1.1	Background .............................................................................................. 8
	1.2	Project Review ......................................................................................... 8
	1.3	Technical Valuation.................................................................................... 8
2.	INTRODUCTION .................................................................................................. 10
	2.1	Terms of Reference .................................................................................. 10
	2.2	Tenement Status Verification ...................................................................... 10
	2.3	Site Investigation ..................................................................................... 10
	2.4	Qualifications, Experience and Independence .................................................. 11
	2.5	Disclaimer ............................................................................................. 12
	2.6	Consent ................................................................................................ 13
	2.7	Principal Sources of Information .................................................................. 13
	2.8	Competent Persons Statement .................................................................... 13
	2.9	Background Information ............................................................................ 13
3.	PAYNES	FIND GOLD PROJECT ................................................................................. 15
	3.1	Introduction ........................................................................................... 15
		3.1.1 Project Location ............................................................................ 15
		3.1.2 Access ........................................................................................ 16
		3.1.3 Supporting Infrastructure ................................................................ 17
		3.1.4 Geopolitical Environment ................................................................ 17
	3.2	Ownership and Tenure .............................................................................. 17
		3.2.1 Project Ownership and Relevant Interests ............................................ 19
		3.2.2 Agreements ................................................................................. 19
		3.2.3 Royalties and Taxes ........................................................................ 20
	3.3	History ................................................................................................. 21
		3.3.1 Ownership History ......................................................................... 21
		3.3.2 Exploration History ........................................................................ 21
		3.3.3 Previous Mineral Resource Estimates .................................................. 24
		3.3.4 Previous Production ....................................................................... 24
	3.4	Geological Setting ................................................................................... 26
		3.4.1 Regional Geology and Mineralisation ................................................... 26
		3.4.2 Project Geology ............................................................................ 26
		3.4.3 Controls on Mineralisation ............................................................... 28
	3.5	Exploration Results and Potential ................................................................. 31
		3.5.1 Recent Exploration Activities ............................................................ 31
		3.5.2 Exploration Potential ..................................................................... 43
		3.5.3 Constraints to Further Exploration Success ........................................... 46
4.	VALUATION ....................................................................................................... 47
	4.1	Introduction ........................................................................................... 47
	4.2	Previous Mineral Asset Valuations ................................................................. 49
	4.3	Material Agreements ................................................................................ 49
	4.4	Comparable Transactions ........................................................................... 50

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	4.4.1 Reported Market Transactions ........................................................... 50
	4.4.2 Commodity Prices .......................................................................... 53
	4.5 Mineral Asset Valuations ............................................................................ 54
	4.5.1 Paynes Find Gold Project, Western Australia ......................................... 54
	4.6 Valuation Summary .................................................................................. 58
5.	REFERENCES ...................................................................................................... 59
6.	LIST OF ABBREVIATIONS ....................................................................................... 60
7.	GLOSSARY ......................................................................................................... 61

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LIST OF TABLES

		LIST OF TABLES
Table	1	Summary Project Technical Valuation in 100% Equity Terms ...................................... 9
Table	2	Paynes Find Gold Project Tenement Details ........................................................ 17
Table	3	Paynes Find Gold Project: Exploration History ..................................................... 21
Table	4	Significant Results from historical drilling ......................................................... 22
Table	5	Production Records from Historical Gold Mines (after, Paynes Find Gold Limited, 2011) . 25
Table	6	Paynes Find Gold Limited Stage 1 drilling Program Significant results >1g/t Au ............ 34
Table	7	Assay Results – 2012 Stage 2 Drilling Program ...................................................... 38
Table	8	Stage 2 drill holes with no significant result ....................................................... 40
Table	9	Market Transactions Involving Gold Projects at the Exploration Stage in Western
		Australia ................................................................................................... 51
Table	10	Summary Statistics of Comparative Transactions by Tenement Type ......................... 54
Table	11	Tenement Type Value Ranges Breakdown ........................................................... 55
Table	12	Comparable Transaction Valuation of PFGL’s Exploration Tenure ............................. 57
Table	13	Summary Project Technical Valuation in Ownership Equity Percentage Terms .............. 58

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LIST OF FIGURES

		LIST OF FIGURES
Figure	1	Location of the Paynes Find Gold Project ........................................................... 14
Figure	2	Location of the Paynes Find Gold Project (after Paynes Find Gold Ltd, 2014) ............... 15
Figure	3	Great Northern Highway Route from Perth to Paynes Find ...................................... 16
Figure	4	Paynes Find Granted Tenements (after Paynes Find Gold Limited, 2014 edited by
		Ravensgate) ............................................................................................... 18
Figure	5	Tenements Divested as of 1 September 2014 ....................................................... 20
Figure	6	Significant Historic Drilling Results (after Paynes Find Gold Limited, 2011) ................. 24
Figure	7	Yilgarn Craton and Murchison Province .............................................................. 26
Figure	8	Paynes Find Gold Project Simplified Geology ...................................................... 27
Figure	9	Fine, Visible Gold in Laminated, Sheared (S2) Vein (PFGDD003, 1m @ 26.79g/t Au, from
		210-211m) ................................................................................................. 29
Figure	10	Schematic Representation of Conceptual Gold Target ........................................... 30
Figure	11	Paynes Find Tenement Holding (2013) Overlain on Magnetics and Soil Geochemistry;
		Interpreted Shears and Drilling Areas, with New Zones of Interest in Yellow ............... 31
Figure	12	MMI Results and Historical RC Drilling Within the Planned Stage 2 Area Prior to Drilling . 32
Figure	13	Significant Results from the Stage 1 Drilling Programme (after Paynes Find Gold
		Limited, 2011) ............................................................................................ 33
Figure	14	Composite Cross-Section 6763915N, as Shown on Figure 12 and Figure 13 ................... 33
Figure	15	Historical and Stage 1 Drill Holes (A) and Planned (2012) Stage 2 RC and Diamond Drill
		Holes (B) ................................................................................................... 37
Figure	16	Stage 2 Drill Hole Locations and Significant Intersections ....................................... 42
Figure	17	Cross-Section Through Stage 2 Drilling .............................................................. 43
Figure	18	CSA Priority Targets ..................................................................................... 44
Figure	19	Gold Five Year Monthly Average Price Chart to September 2014 .............................. 53

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1. EXECUTIVE SUMMARY

1.1 Background

Corvidae Pty Ltd ATF Ravensgate Unit Trust T/As Ravensgate (Ravensgate) was commissioned by HLB Mann Judd Corporate (WA) Pty Ltd (HLB) and Paynes Find Gold Limited (PFGL) to provide a Technical Project Review on the Paynes Find Gold Project and an Independent Technical Valuation over this project. This Technical Project Review and Independent Valuation Report were prepared by Ravensgate for inclusion in the Independent Expert’s Report (IER) prepared by HLB. The effective date of this Technical Project Review and Independent Valuation Report prepared by Ravensgate is the 20 October 2014.

The project included in this report and its ownership is listed below.

Mineral Asset Paynes Find Gold Project, Western Australia	PFGL Ownership %
	100%

1.2 Project Review

The Paynes Find Gold Project area is located approximately 420km northeast of Perth in the Murchison Province of the Mid-West region of Western Australia. The Paynes Find area has undergone historic mining since the early 1900s. Gold was first discovered in the area in 1911 with an estimated 36 historic gold mines reporting production grades that ranged from 15g/t Au to 150g/t Au.

PFGL acquired the Paynes Find Gold Project in June 2010 and carried out geological mapping and geochemical surveys, before commencing two drilling campaigns in 2011 and 2013, centred around the main area of previous historic workings. The drill programs returned encouraging results, both confirming historic areas of high grade mineralisation and identifying new areas of mineralisation, which led to a structural study being carried out identifying four phases of deformation throughout the area and three styles of mineralisation. This study was refined to identify 11 targets for (Stage 3) follow-up drilling over the tenement package, however due to the decline in the gold price over the last two years this program was not carried out.

PFGL has also trialed alluvial mining through a small, on site, gravity processing plant, signing various agreements with local contractors; however these activities ceased in late 2013.

The depressed gold price led PFGL to review all aspects the Paynes Find Gold Project which led to a Deed of Sale for seven tenements in the northwest of the project in April 2014, with the divestment being finalised in September 2014.

1.3 Technical Valuation

The valuation presented in this report was completed on behalf of PFGL. The valuation has been completed with information provided by and with the full support of PFGL. The applicable valuation date is 20 October 2014. The project can be classified as an Advanced Exploration Area Mineral Asset. No Mineral Resources as defined by the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves – 2012 Edition (JORC Code 2012) have been reported for the project.

Ravensgate did not carry out a site visit to the Paynes Find Gold Project. Ravensgate is satisfied that there is sufficient current information available to allow an informed appraisal to be made. Both Mr Alan Hawkins and Mr Sam Ulrich of Ravensgate have had extensive Western Australian gold experience and have visited the Paynes Find area in the past. Ravensgate is of the opinion that no significant additional benefit would have been gained through a site visit to the project area at this stage.

To derive appropriate values for the various exploration tenements Ravensgate reviewed the exploration data and prospectivity for the various licences. The preferred value for each

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range was based upon a review of the prospectivity of each licence and the number and quality of exploration targets on each licence as described in Section 3.5. To derive the values for the mineral resources, Ravensgate reviewed the resources and the values assigned reflected the confidence and grade of the mineral resources.

Ravensgate has concluded that the Paynes Find Gold Project is of merit (although at varying stages of exploration and subsequent Mineral Asset classification), and worthy of further exploration. A summary of the Paynes Find Gold Project valuation in 100% equity terms is provided in Table 1. The applicable valuation date is 20 October 2014 and is derived from using the Comparable Transactions valuation method. The value of the Paynes Find Gold Project is considered to lie in a range from $0.835M to $1.208M; within this range Ravensgate has selected a preferred value of $1.022M. As the technical valuation is based on comparable market transactions it can be considered to also be the market value. The definition of market value that Ravensgate adopts is that used in the VALMIN code, which is the market value definition as defined by the International Valuation Standards Committee (IVSC).

*Table 1*	*Summary Project Technical Valuation in 100% Equity Terms*	*Summary Project Technical Valuation in 100% Equity Terms*	*Summary Project Technical Valuation in 100% Equity Terms*	*Summary Project Technical Valuation in 100% Equity Terms*	*Summary Project Technical Valuation in 100% Equity Terms*	*Summary Project Technical Valuation in 100% Equity Terms*
Project	Mineral Asset	Equity %	Area km2		Valuation
				Low $M	Preferred $M	High $M
Paynes Find Gold Project	Advanced Exploration Area	100	7.007	0.835	1.022	1.208

Note: The valuation has been compiled to an appropriate level of precision and minor rounding errors may occur.

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2. INTRODUCTION

The objective of this report is to firstly provide a Technical Project Review of Paynes Find Gold Limited’s (PFGL) Paynes Find Gold Project in Western Australia. The second objective of this report is to provide a market valuation and technical assessment of this project prepared in accordance with the guidelines of the VALMIN Code. The work has been commissioned by HLB Mann Judd Corporate (WA) Pty Ltd (HLB) and PFGL. The Independent Expert’s Report (IER) will be included in PFGLs Notice of Meeting.

This report does not provide a valuation of PFGL as a whole, but only of the Paynes Find Gold Project mineral assets. This report does not make any comment on the fairness and reasonableness of any transaction between any two companies. The conclusions expressed in this Independent Technical Project Review and Independent Technical Valuation are valid as at the valuation date (20 October 2014). The review and valuation is therefore only valid for this date and may change with time in response to changes in economic, market, legal or political factors, in addition to ongoing exploration results. All monetary values included in this report are expressed in Australian dollars (A$) unless otherwise stated.

This report has been prepared in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (The VALMIN Code) as adopted by the Australasian Institute of Mining and Metallurgy (AusIMM) in April 2005. The report has also been prepared in accordance with ASIC Regulatory Guides 111 (Contents of Expert Reports) and 112 (Independence of Experts). The Technical Project Review and Independent Technical Valuation report has been compiled based on information available up to and including the valuation date of this report for the valuation of exploration tenure and two years of data post the transaction date has been used for the valuation of mineral resources to provide a larger dataset for comparison.

2.1 Terms of Reference

Corvidae Pty Ltd as trustee for the Ravensgate Unit Trust trading as Ravensgate (Ravensgate) has been commissioned by HLB Mann Judd Corporate (WA) Pty Ltd and Paynes Find Gold Limited to provide an Independent Technical Project Review and Independent Technical Valuation on the Paynes Find Gold Project in Western Australia.

This report has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (The VALMIN Code) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves - 2012 Edition (JORC Code 2012).

2.2 Tenement Status Verification

Ravensgate has not independently verified the status of all the tenements that are referred to in this report as set out in Section 3.2 of this report. This is a matter for independent legal or tenement experts. PFGL commissioned an independent review of PFGL’s tenement status. Tenement specialist McMahon Mining Title Services Pty Ltd (McMahon), of Perth, Australia completed this review and did not identify any material issues that would impact on Ravensgate’s valuation.

Ravensgate is satisfied, based on McMahon’s review, that the tenements are in good standing and the values assigned to the tenements correctly reflect PFGL’s ownership.

2.3 Site Investigation

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2.4 Qualifications, Experience and Independence

Ravensgate is an internationally recognised and respected minerals industry consultancy that has been serving the industry with excellence since 1997. Ravensgate provides world class technical expertise to the mining and resource sector globally. The company has worked for major clients globally, such as Freeport at Grasberg Mine, Ok Tedi Gold Mine in Papua New Guinea, Goldfields and Newmont in Ghana and many junior resource companies which are ASX (Australian Stock Exchange), TSX (Toronto Stock Exchange) or AIM (London Stock Exchange) listed. Ravensgate has focused upon providing resource estimations, valuations, independent technical documentation and has been involved in the preparation of Independent Reports for Canadian, Australian and United Kingdom companies.

Author: Sam Ulrich, Principal Consultant, BSc (Hons) Geology, GDipAppFin, MAusIMM, MAIG, FFin.

Sam Ulrich is a geologist with over 19 years’ experience in near mine and regional mineral exploration, resource development and the management of exploration programs. He has worked in a variety of geological environments in Australia, Indonesia, Laos and China primarily in gold, base metals and uranium. Prior to joining Ravensgate Sam worked for Manhattan Corporation Ltd a uranium exploration and resource development company in a senior management position. Mr Ulrich holds the relevant qualifications and experience as well as professional associations required by the ASX, JORC and VALMIN Codes in Australia to qualify as a Competent Person as defined in the JORC Code. He is a Qualified Person under the rules and requirements of the Canadian Reporting Instrument NI43-101.

Co-Author: Alan Hawkins, Principal Consultant, BSc (Hons) Geology, MSc Ore Deposit Geology, MAIG, FSEG.

Alan Hawkins is a geologist with over 18 years’ experience in near mine and regional mineral exploration, resource development and the management of exploration programs. He has worked in a variety of geological environments in Australia and Indonesia, primarily in gold and copper. Prior to joining Ravensgate, Alan worked for Newmont Mining Corporation as a Principal Geologist in their exploration, corporate and business development divisions, providing technical support, due diligence and rapid first-filter geological and economic analysis to M&A teams in the Asia Pacific region as well as US and African EBD teams. This role also included project and non-core asset divestments including commercial negotiations with junior exploration companies, stakeholders and land & legal teams.

Previous to this, Alan held various principal and senior regional exploration management roles in WA and NT. In the 1990’s Alan worked as a near mine exploration geologist for Eagle Mining Corporation NL, Great Central Mines Ltd and Normandy Mining Ltd at the Jundee-Nimary Gold Mine and was part of the team that discovered the +2Moz Au Westside deposit, where he also worked as a resource modelling geologist before joining Newmont’s regional exploration team. Alan holds the relevant qualifications and professional associations required by the ASX, JORC and VALMIN Codes in Australia to qualify as a Competent Person as defined in the JORC Code. He is a Qualified Person under the rules and requirements of the Canadian Reporting Instrument NI43-101.

Co-Author: H. Kate Holdsworth, BSc (Hons) Geology, MAusIMM.

Kate Holdsworth is a senior GIS geologist with over 17 years GIS experience who joined the Ravensgate team in September 2006. During her tenure at Ravensgate, she has contributed to the compilation of numerous Independent Geologists Reports, Valuation Reports, GIS projects as well as having assisted clients with their exploration reporting requirements and QA/QC investigations into client’s data quality. Prior to joining Ravensgate, she worked for Giscoe Pty Ltd, a GIS company in Johannesburg, for ten years, where she was involved in diverse GIS projects, including database creation, database population and data validation. Kate has four

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years’ experience in GIS with the Geological Survey of South Africa, where she was a member of their GIS database design team.

Peer Reviewer: Neal Leggo, Principal Consultant, BSc (Hons) Geology, MAIG, MSEG

Neal Leggo has over 28 years’ experience in minerals geology including senior management, consulting, exploration, development, underground mining and open pit mining. He has extensive experience with a wide variety of commodities including gold, copper, iron ore, silver, lead and zinc, uranium and manganese across numerous geological terrains within the Asia-Pacific region.

Prior to joining Ravensgate, Neal worked for FMG leading a large field team undertaking fasttrack exploration, delineation and feasibility study of a major new iron ore discovery in the Pilbara of WA. Previous to this Neal was Exploration Manager at Crescent Gold were he led a successful exploration team and also managed feasibility study and development work on seven gold deposits in preparation for mining. At Hatch he undertook numerous geological consulting assignments included scoping, prefeasibility and review studies, geological audit and due diligence. At BHP he modelled mineral resources including the Cannington, Mt Whaleback and Yandi world-class deposits. Previous to this Neal worked 8 years in Mt Isa for MIM where roles included chief geologist for the Hilton underground lead zinc mine and exploration manager for Isa District. During the 1980s he worked as a field geologist across northern Australia on a wide variety of exploration projects and mines.

Neal offers extensive knowledge of available geological, geophysical, geochemical and exploration techniques and methodologies, combined with strong experience in feasibility study, development and mining of mineral deposits. Neal completed an Honours degree in Geology at the University of Queensland in 1980 and holds the relevant qualifications, experience and professional associations required by the ASX, JORC and VALMIN Codes in Australia. He is a Qualified Person under the rules and requirements of the Canadian Reporting Instrument NI43-101.

2.5 Disclaimer

The authors of this report, and Ravensgate, have had a prior association with PFGL in regard to the mineral assets, but have no interest in the outcome of this technical assessment. Ravensgate completed an independent review of the project in 2011.

Ravensgate is independent of PFGL, its directors, senior management and advisors and has no economic or beneficial interest (present or contingent) in any of the mineral assets being reported on. Ravensgate is remunerated for this report by way of a professional fee determined in accordance with a standard schedule of commercial rates, which is calculated based on time charges for review work carried out, and is not contingent on the outcome of this report. Fees arising from the preparation of this report are in the order of $18,000 to $20,000.

The relationship with PFGL is solely one of professional association between client and independent consultant. None of the individuals employed or contracted by Ravensgate are officers, employees or proposed officers of PFGL or any group, holding or associated companies of PFGL.

The report has been prepared in compliance with the Corporations Act and ASIC Regulatory Guides 111 and 112 with respect to Ravensgate’s independence as experts. Ravensgate regards RG112.31 to be in compliance whereby there are no business or professional relationships or interests which would affect the expert’s ability to present an unbiased opinion within this report.

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This report has been compiled based on information available up to and including the valuation date. The statements and opinions are based on the reference date of 20 October 2014 and could alter over time depending on exploration results, mineral prices and other relevant market factors.

2.6 Consent

Ravensgate consents to this report being distributed, in full, in the form and context in which the technical assessment in provided, for the purpose for which this report was commissioned. Ravensgate provides its consent on the understanding that the assessment expressed in the individual sections of this report will be considered with, and not independently of, the information set out in full in this report.

2.7 Principal Sources of Information

The principal sources of information used to compile this report comprise technical reports and data variously compiled by PFGL and their partners or consultants, publically available information such as ASX releases, government reports and discussions with PFGL’s technical and corporate management personnel. With the consent of PFGL, the report sections describing the geology, historical exploration and current exploration have been reproduced from their reports. A listing of the principal sources of information is included in the references attached to this report.

Ravensgate has endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy and completeness of the technical data upon which this report is based. A final draft of this report was also provided to PFGL prior to finalisation by Ravensgate, requesting that PFGL identify any material errors or omissions prior to its final submission. Ravensgate does not accept responsibility for any errors or omissions in the data and information upon which the opinions and conclusions in this report are based, and does not accept any consequential liability arising from commercial decisions or actions resulting from errors or omissions in that data or information.

2.8 Competent Persons Statement

The information in this report to which this statement is attached that relates to Exploration Results (Section 3.5) is based on information compiled by Mr David Holden, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr Holden is a full-time employee of Paynes Find Gold Limited. Mr Holden has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Holden consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

2.9 Background Information

The project discussed in this report is located in Western Australia. A locality map of the projects is presented in Figure 1 below. A summary of the Paynes Find tenement details are listed in Section 3.2. Report file references and a glossary of terms are also included at the end of this report. Ravensgate understands that the tenements held by PFGL are held in good standing. A brief overview of the project is outlined in Section 3. The Independent Valuation of the projects is outlined in Section 4.

Section 3.2.2 refers to a recent Deed of Sale for seven tenements which was finalised on 1 September 2014. Various figures in this report will show tenement outlines which include these divested tenements, as they were current at the time of the work that is being reported on at the time. Figure 4 shows the current tenement package controlled by PFGL, with Figure 5 showing the tenements that were divested.

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

Figure 1 Location of the Paynes Find Gold Project
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3. PAYNES FIND GOLD PROJECT

3.1 Introduction

The Paynes Find area has undergone historic mining since the early 1900s (refer to Section 3.3.4 and Table 5). Gold was first discovered in the area in 1911. An estimated 36 historic gold mines within the Paynes Find Goldfield have reported production grades that ranged from 15g/t Au to 150g/t Au. From 1911-1982, approximately 69,000t of ore produced 1,784kg (63,000 ounces) of gold at an average grade of 25g/t Au, (Paynes Find Gold Limited, 2011).

3.1.1 Project Location

The project area is located approximately 420km northeast of Perth in the Mid-West region of Western Australia (Figure 2).

Figure 2 Location of the Paynes Find Gold Project (after Paynes Find Gold Ltd, 2014)

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The area experiences a semi-desert Mediterranean climate, which is defined as nine to eleven months of dry weather, mild wet winters and hot dry summers. The mean maximum temperature is 27.7[o] C whilst the mean minimum temperature is 12.8[o] C, with an annual rainfall of 281.9mm.

3.1.2 Access

The area can be accessed via the Great Northern Highway, a sealed highway originating in Perth which passes through the project area (Figure 3) and then continues north to Mt Magnet, Cue and Meekatharra (Figure 1). The area is also serviced by an airstrip located at Paynes Find (refer Figure 4).

Figure 3 Great Northern Highway Route from Perth to Paynes Find

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3.1.3 Supporting Infrastructure

There is a roadhouse and tavern at Paynes Find Town, which also serves as a fuel stop, has a dining room and offers accommodation (refer Figure 3 and Figure 4). The airstrip is located ~1km to the west of the Paynes Find Tavern and Roadhouse (refer Figure 4).

3.1.4 Geopolitical Environment

Australia is a politically stable, liberal democracy. According to Control Risks Group Limited on the Intierra / SNL Metals and Mining website, Political risk, Security risk and Terrorism risk ratings are all categorised as low risk, with Operational risk rating categorised as insignificant risk.

3.2 Ownership and Tenure

The tenements are all held by PFGL, the details of which are listed in Table 2 and a map of the tenements are shown in Figure 4.

Table 2 Paynes Find Gold Project Tenement Details

*Table 2* *Paynes Find Gold Project Tenement Details*	*Table 2* *Paynes Find Gold Project Tenement Details*	*Table 2* *Paynes Find Gold Project Tenement Details*	*Table 2* *Paynes Find Gold Project Tenement Details*	*Table 2* *Paynes Find Gold Project Tenement Details*
Exploration Licence	Area (km2)	Grant Date	Expiry Date	Owner and Equity
M59/0002*	0.05	31-Aug-83	30-Aug-25	100% PFGL
M59/0010*	0.25	23-Oct-84	22-Oct-26	100% PFGL, First Tech Energy Caveat
M59/0235*	0.07	04-Nov-91	03-Nov-33	100% PFGL, First Tech Energy Caveat
M59/0244*	0.92	24-Jan-92	23-Jan-34	100% PFGL, First Tech Energy Caveat
M59/0396#	0.05	23-Jul-96	22-Jul-17	100% PFGL
M59/0662#	0.39	27-Oct-09	26-Oct-30	100% PFGL, First Tech Energy Caveat
M59/0663#	0.14	27-Oct-09	26-Oct-30	100% PFGL, First Tech Energy Caveat
P59/1907#	0.08	18-Nov-09	17-Nov-17	100% PFGL
P59/1908#	0.01	18-Nov-09	17-Nov-17	100% PFGL
P59/1909#	0.01	18-Nov-09	17-Nov-17	100% PFGL
P59/1924# ^	0.44	30-Sep-10	29-Sep-14	100% PFGL
P59/1941**	1.75	02-May-12	01-May-16	100% PFGL
P59/1942#	0.85	22-Feb-12	21-Feb-16	100% PFGL
P59/1956#	0.05	16-Dec-11	15-Dec-15	100% PFGL
P59/1957#	0.05	16-Dec-11	15-Dec-15	100% PFGL
P59/1958#	0.52	16-Dec-11	15-Dec-15	100% PFGL
P59/1959#	1.48	16-Dec-11	15-Dec-15	100% PFGL

*Condition of tenement, compliance with the provisions of the Aboriginal Heritage Act, 1972 to ensure that no action is taken which is likely to interfere with or damage any Aboriginal Site (eMiTs, 2014).

** Expedited Procedure: Native Title Cleared - Expedited Applies (eMiTs, 2014).

# Native Title cleared (eMiTs, 2014).

^ Four year extension of term applied for on 25 September 2014.

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Figure 4 Paynes Find Granted Tenements (after Paynes Find Gold Limited, 2014 edited by Ravensgate)

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3.2.1 Project Ownership and Relevant Interests

The tenements are all held 100% by PFGL, as listed in Table 2.

3.2.2 Agreements

The Taylor Agreement and the Cable Agreement are agreements entered into by First Tech Energy to acquire the tenements from D. and E. Taylor and from D. Cable. By a Deed of Assignment made 15 July 2010, First Tech Energy Limited assigned its rights and obligations under the Taylor Agreement to Paynes Find Gold Limited. By a Deed of Assignment made 15 July 2010, First Tech Energy Limited assigned its rights and obligations under the Cable Agreement to Paynes Find Gold Limited. First Tech Energy Limited has thus reserved the right to enter the tenements and explore for and extract the minerals of nickel, cobalt and other base metals (Paynes Find Gold Limited, 2010).

In 2013, PFGL entered into a toll processing agreement with a local contractor, which allowed mining and processing of eluvial and alluvial gold utilising PFGL’s existing alluvial gravity circuit plant with mill and knudsen concentrator which is capable of processing at a rate of 50 tonnes/hour. All expenditure was borne by the contractor on a return for the Company totalling 25% of off the top revenue.

On 4 June 2013, PFGL announced that it had entered into an agreement with MJF Mining Contractors (MJF) to upgrade mining and processing operations at Paynes Find. The contractor was to install a three stage track-mounted crushing and screening circuit to exploit a selective open pit development plan previously designed by PFGL. Under the agreement PFGL was entitled to 50% of the recovered gold after taking into account refining costs. PFGL advised the ASX on 1 October 2013, that it had not been able to conclude a revised Mining Services Agreement with MJF and had formally terminated the agreement. Further trial mining would not be considered until results of a re-evaluation of the Paynes Find Project was determined and communicated to shareholders.

PFGL announced to the ASX on 23 April 2014, that a conditional Deed of Sale for seven mining tenements to the west of the main Paynes Find Gold Project had been signed. PFGL received a non-refundable $50,000 deposit on signing the deed. The sale of the tenements for a total consideration of $350,000 was conditional upon the purchaser raising funds to pay the balance of the consideration within 90 days from signing of the deed.

The tenements subject to the conditional Deed of Sale made up an area of 247 hectares which was approximately 25% of PFGL’s total land holding at the Paynes Find Gold Project and are considered grass roots exploration ground which had not been the subject of the PFGL’s previous exploration efforts and drilling programs. Settlement of the tenement sale was announced to the ASX on 1 September 2014. The seven divested tenements that were part of this Deed of Sale can be seen in Figure 5.

The operations and proposed activities on the tenements of the Paynes Find Gold Project are subject to State and Federal laws and regulations concerning the environment. As with most exploration projects and mining operations, PFGLs activities have had an impact on the environment, particularly with regard to M59/0010, M59/0224 and M59/0662 where the Stage 1 and 2 drilling campaigns have been carried out. A recent Department of Mines and Petroleum (DMP) inspection identified that PFGL had not met its environmental obligations with respect to the Stage 1 and 2 drill programs and identified additional environmental and occupational health and safety (OHS) concerns.

Although it is the intention of PFGL to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws, at the time of this report no rehabilitation has been conducted. Tracks need to be vegetated, drill collars are to be removed and plugged and sumps need to be filled in. In addition, the alluvial plant would need to be removed (or scrapped) and the tails storage facility rehabilitated to meet environmental and OHS requirements, should a decision be made to cease further work at the project.

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Figure 5 Tenements Divested as of 1 September 2014

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(Modified from PFGL, Q3 Report, 2014)

3.2.3 Royalties and Taxes

First Tech Energy Limited is to receive a royalty equal to 2% of the gross revenue derived from the tenements which are the subject of the Taylor Agreement and the Cable Agreement where gross revenue is described as the amount received from the sale of gold derived from the tenements (Paynes Find Gold Limited, 2010).

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3.3 History

3.3.1 Ownership History

Refer to Table 3 for ownership history.

3.3.2 Exploration History

The project has been explored by a number of explorers in the past, their programs are summarised in Table 3, with significant results in Figure 6 and Table 4. Drill hole locations are displayed in Figure 15 (A), in Section 3.5.1.2.


	*Table 3* *Paynes Find Gold Project: Exploration History*
*Date*	*Company*	*Findings*
1983	West Australian Geological Survey	Geological mapping.
1985	G R Dale and Associates	Undertook both surface and underground exploration.
1987	Falcon Australia Limited	Carried out exploration of the Carnation Gold Mine as well as sampling other old mine workings including Blue Heaven, Leschenaultia, Romes, Carnation, Daphne, Scadden (extensions), Daisy, Primrose, Sweet William, Kowhai, Horseshoe, Wattle, Marigold, Orchid. It was determined that gold mineralisation at the Carnation Mine is structurally controlled, high grade mineralisation shoots within narrow, tight shear zones having variable, generally limited, wall rock alteration. They also undertook a drilling program (refer Figure 6).
1986-1987	Forsayth NL	Carried out a field inspection, photograph interpretation and a drilling programme (refer Figure 6).
1996-1998	Kirkwood Gold NL	Two holes were drilled on M59/10, one diamond with an RC collar (57.6m RC and 125.6m diamond, total depth 183.20m) and one RC for 46m (PFRCDD1, PFRC5). For PFRCDD1 seven samples were analysed from the diamond core, two returning results less than 0.01g/t Au, the rest of the results are listed in Table 4. For PFRC5 from the 18 samples analysed the results greater than 0.5g/t Au are listed in Table 4. Three RC drill holes (PFRC2-4) were drilled on M59/244 for a total of 85m. A hundred samples were assayed with the results ranging from below the detection limit to 23.9g/t, the median result was 0.03g/t Au. The most significant result being one metre at 23.9g/t Au from 55m in PFRC4 (refer Figure 6).
2002-2003	Hallmark Mining Limited	Undertook drilling with the aim of testing high-grade gold shoots below old workings for depth extensions. During 2002 11 RC holes were drilled for 1,272m. Results >0.50g/t Au are listed in Table 4. Hallmark drilled two RC holes in 2003 for 164m. Results >0.50g/t Au are listed in Table 4 (refer Figure 6).

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	*Table 4* *Significant Results from historical drilling*
Drill hole	From (m)	To (m)	Length (m)	Grade Au (g/t)
	Kirkwood 1996 – 1998 Drilling Intersections
PFRCDD1	74.18	74.42	0.24	0.16
PFRCDD1	74.54	74.82	0.28	13.7
PFRCDD1	91.73	92.27	0.54	0.12
PFRCDD1	94.02	94.42	0.40	2.8
PFRCDD1	134.61	135.05	0.44	83.7
PFRC5	12	16	4	4.6
PFRC5	32	34	2	3.7
PFRC5	34	38	4	0.6
PFRC5	32	33	1	0.83
PFRC5	34	35	1	0.9
PFRC5	30	31	1	0.12
	Hallmark Mining Limited 2002 and 2003 Drilling Results
HPFRC18	63	64	1	4.16
HPFRC18	64	65	1	3.9
HPFRC18	112	113	1	0.62
HPFRC20	20	21	1	0.51
HPFRC20	23	24	1	0.72
HPFRC20	27	28	1	1.53
HPFRC20	29	30	1	4.32
HPFRC20	30	31	1	0.69
HPFRC20	33	34	1	1.19
HPFRC20	34	35	1	0.75
HPFRC19	20	21	1	0.93
HPFRC19	21	22	1	12.2
HPFRC19	22	23	1	17.2
HPFRC19	23	24	1	3.52
HPFRC19	30	31	1	0.93
HPFRC19	34	35	1	1.07
HPFRC19	39	40	1	0.87
HPFRC19	55	56	1	0.73
HPFRC19	106	107	1	0.71

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	*Table 4* *Significant Results from historical drilling*
Drill hole	From (m)	To (m)	Length (m)	Grade Au (g/t)
HPFRC21	33	34	1	5.23
HPFRC21	34	35	1	0.84
HPFRC21	38	39	1	0.96
HPFRC21	60	61	1	1.09
HPFRC21	63	64	1	0.53
HPFRC21	64	65	1	0.73
HPFRC21	66	67	1	2.9
HPFRC21	67	68	1	2.5
HPFRC21	69	70	1	0.8
HPFRC21	70	71	1	4.66
HPFRC21	71	72	1	1.77
HPFRC21	72	73	1	1.52
HPFRC21	110	111	1	1.07
HPFRC21	111	112	1	0.96
HPFRC21	131	132	1	1.02
HPFRC22	88	89	1	2.37
HPFRC22	91	92	1	0.54
HPFRC22	103	104	1	2.86
HPFRC22	112	113	1	8.86
HPFRC22	140	141	1	4.82
HPFRC30	41	42	1	0.67
HPFRC30	42	43	1	0.94
HPFRC30	44	45	1	0.78
HPFRC33	35	36	1	5.47
HPFRC33	77	78	1	2.35

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Figure 6 Significant Historic Drilling Results (after Paynes Find Gold Limited, 2011)

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(Refer to Figure 14 for cross-section 6763915N)

3.3.3 Previous Mineral Resource Estimates

There have been no previous mineral resource estimates in accordance with the JORC Code (2004 or 2012) at the project.

3.3.4 Previous Production

The Paynes Find area has undergone historic mining since the early 1900s. Gold was first discovered in the area in 1911 when prospector Thomas Payne, registered a lease for gold mining with the Mines Department of Western Australia. An estimated 36 historic gold mines within the Paynes Find Goldfield have reported production grades that ranged from 15g/t Au to 150g/t Au. From 1911-1982, approximately 69,000t of ore produced 1,784kg (63,000 ounces) of gold at an average grade of 25g/t Au, (Paynes Find Gold Limited, 2011). Table 5 below shows the production records from historical gold mines (after, Paynes Find Gold Limited, 2011).

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Table 5 Production Records from Historical Gold Mines (after, Paynes Find Gold Limited, 2011)

*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*	*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*	*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*	*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*	*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*	*Table 5* *Production Records from Historical Gold Mines* *(after, Paynes Find Gold Limited, 2011)*
Mine Name	Production Period	Max. Inclined depth (m)	Ounces Produced	Grams/Tonne Gold	Current Lease
Ark	1933-1982	240	5,258	23	M59/244
Aster	1935-1951	180	3,281	18	M51/244
Aster Cons	1913-1919	180	1,092	23	M59/244
Big 5	1940-1954	190	N/A	45	M59/10
Blue Heaven	1939-1945	105	*	93	M59/10
Bob's	1943-1945	108	*	150	M59/10
Carnation	1912-1951	280	*	31	M59/10
Centre	1980-1985	69	300+	31	M59/10
Cracker	194-N/A	105	*	62	M59/10
Daphne	1915-1917	90	376	33	M59/10
Goat	1943-N/A	45	80	31	M59/10
Green Heaven	1940-1949	36	200	31	M59/10
Horseshoe	1943-1956	270	*	32	M59/10
Lake View	1912-1925	210	10,559	31	M59/244
Lake View	1926-1937	210	5,222	28	M59/244
League	1930-N/A	108	*	50	M59/10
Marigold	1940-N/A	150	1,780	15	M59/10
Mariposa	1912-1940	140	968	26	M59/244
Orchid	1911-1942	210	13,839	31	M59/244
Oversight	I912-N/A	120	2,700	15	M59/244
Princess Mary	1916-1931	118	528	28	M59/244
Rolands	11964-N/A	50	300	23.00	M59/10
Scadden	1951-N/A	51	*	18	M59/10
Sweet William	1911-1981	210	4,600	35	M59/235
Blue Bell	1912-1981	75	392	34	M57/663

* Shafts grouped under Carnation 21,450ozs

Production details source from Paynes Find Gold Battery records

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3.4 Geological Setting

The project is located in the Yilgarn Craton (Block) of Western Australia (Figure 7). The craton is primarily composed of approximately 2.8 billion year old (~2.8 Ga) granite-gneiss metamorphic terrains (the Southwest Gneiss Terrane and Northwest Gneiss Terrane), and three granite-greenstone terrains - the Eastern Goldfields Province (which contains the Norseman-Wiluna Belt), the Southern Cross Province and Murchison Province (Figure 7 and Figure 2).

Figure 7 Yilgarn Craton and Murchison Province

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The Murchison Province is exposed in the western and northern third of the Yilgarn Craton. The Province is bounded by major transcrustal structures which separate it from the surrounding tectonic provinces of the craton and the Northwest Gneiss Terrane. The structural framework in the northeastern Yilgarn craton was largely shaped by transpression that led to the development of folds, reverse faults, sinistral strike-slip movement on northnorthwest trending regional shears, followed by regional folding and shortening. The latter occurred in overlapping tectonic processes. The first deformation event is poorly understood but appears to have involved north-south thrusting.

3.4.1 Regional Geology and Mineralisation

The regional area is comprised of Archaean folded mafic volcanics which have been intruded by granitoids and covered by alluvium and laterite. Rock types within the region consist of interlayered basaltic and dacitic, meta-volcanics, subordinate banded iron formations and ultramafic schists. Within the project area, rock types include granite, gneiss, ultramafic and mafic schist and felsic porphyries. The Paynes Find Gneiss hosts most of the quartz vein mineralisation, The Paynes Find Gneiss is strongly deformed and metamorphosed to amphibolites grade. Gold mineralisation has also been noted in places within the felsic intrusive rocks (Maynard, 2010 and Fitton, 2011).

3.4.2 Project Geology

Most of the gold mineralisation at Paynes Find is hosted by a rock type that has been informally named the Paynes Find Gneiss. This is a 3,000m long by up to 800m wide lozenge shaped unit striking northwesterly from P59/1942 in the north, to the Pansy deposit in the south and is bounded by the Daffodil and Primrose Faults (Figure 8). The gneiss is a variably deformed and metamorphosed quartz diorite / tonalite / gabbro intrusive, varying in colour from blue-grey to black and is commonly porphyritic. The foliation is very regular and has a strike direction of 330º to 360º (along the principal axis of the unit) and a dip of 60ºW to the vertical. It contains numerous (sometimes very large) xenoliths of black amphibolite and hosts

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numerous gold-bearing quartz veins and stringers. This unit is in fault contact to the east with large younger batholitic granite (the Eastern Granite).

Figure 8 Paynes Find Gold Project Simplified Geology

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(NB: Tenement package outline shown as at 2011)

To the west of the Paynes Find Gneiss and in fault contact with it is a sequence of mafic and ultramafic rocks striking north-south to north-northwest. The ultramafic rocks form what has been termed the Paynes Find Intrusion which aeromagnetic data shows to be a 10km long by up to 2.5km wide body of strongly magnetic rock. Where this rock type outcrops it varies from a strongly magnetic massive grey/blue - green serpentinite to a less magnetic talc-tremolitechlorite (carbonate) schist. The age relationship between these ultramafic rocks and the Paynes Find Gneiss is as yet unclear. Several small bodies of younger felsic porphyry intrude both the ultramafic rocks and the Paynes Find Gneiss. A larger, poorly exposed granitoid body (the Western Granite) occurs to the west of the Paynes Find Intrusion but again its age relationship with the ultramafic rocks is unclear.

Evidence for the ultramafic rocks being intrusive is as follows:

The aeromagnetic signature which suggests a discrete deformed lopolith.
The presence of a titaniferous magnetite unit. These rocks are only found in differentiated intrusive igneous complexes which are usually layered.
The predominance of serpentinite after original dunitic or magnesium-rich, peridotitic cumulate rocks.

Gold mineralisation within the Paynes Find Gneiss exhibits weak to strong foliation striking 300-340° and dipping steeply westwards at 60-80°. The auriferous quartz veins strike approximately north-south, have a consistent plunge direction at 206°- 249° and dip at 55°77°W. The plunge of the lodes is the dominant structural control which helps to predict the location of down-dip mineralisation. The mineralised shears are tight, measuring up to two metres wide with minor wallrock alteration. The auriferous quartz veins occasionally split and tend to be boudinaged with high grade shoots having a strike length of up to 10m. Late-stage

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pegmatites, known locally as bars, intrude the shear zones and have displaced some of the quartz lodes.

3.4.3 Controls on Mineralisation

A structural review was carried out by CSA Global (CSA) in late 2012 / early 2013 following the completion of the Stage 2 drilling program. Four major structural episodes can be recognised over the Paynes Find Gold Project area, which originally comprised an Archaean sequence of mafic and ultramafic volcanics interlayered with sedimentary units.

D1 deformation is characterised by a regional metamorphic event, leading to regional amphibolite-facies metamorphism and development of compositional layering within gneissic units (shearing S1).
During early D2, a pervasive ductile northwest-southeast foliation (S2) developed, partly exploiting the existing S1 fabric. Shearing was accompanied by fluid-flow along the shears, accompanied by quartz veining during late D2. High grade gold occurs within these quartz veins and is mostly restricted to them. D2 veins are intensely boudinaged, pinching and swelling significantly along the strike of the veins, which usually dip at 45� in the eastern parts to very steeply west, towards the western contact.
D3 is characterised by intense pegmatitic dyke/sill and stock intrusion. Pegmatites occur throughout the gneissic parts of the study area, are shallow-dipping (usually <50�) and display a northwest trending domal structure. D3 is accompanied by a non-pervasive S3 fabric, overprinting all earlier foliations. Anecdotal association of the pegmatite with gold requires further investigation.
A late-stage brittle overprint (D4) is evident in the form of brittle fractures and faults accompanied by strong epidote alteration.

Two separate mineralising events were initially identified by CSA over the exploration area, with further study identifying a third:

Shear-related quartz veining indicated by high-grade gold within segmented and boudinaged quartz veins within the gneissic units, associated with a late D2 fabric (Type 1).
Consistent gold mineralisation along the sheared contact between mafic amphibolite and gneiss (Type 2).
Quartz veining containing gold mineralisation in the western mafic / ultramafic sequence (Type 3).

Type 1 mineralisation is generally of a very high-grade gold tenor. Where these veins were successfully intersected in PFGL’s drilling campaigns, this was reflected in drill sample assays (Figure 9). The gold-bearing veins pinch and swell due to their boudinaged shape, generally extending from 5-20m in length, 1-5m in width and pinching to sub-metre widths away from the boudin development. These veins were the target of historical mining activities within the gneiss and the focus for most of PFGL’s Stage 1 and Stage 2 drilling programs. Most historic workings follow individual lenses along a prominent steep south-westerly plunge (~75°), often to 100’s of metres depth. This shoot geometry shows good continuity and a large lateral extent for the gold mineralising system.

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Figure 9 Fine, Visible Gold in Laminated, Sheared (S2) Vein (PFGDD003, 1m @ 26.79g/t Au, from 210-211m)

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(Source: PFGL, 2013)

Compared with the somewhat discontinuous surface expression of gold veins within the gneiss, the contact area between the mafic amphibolite and gneiss is strongly sheared along its length (and mappable in excess of 6km strike in the project area, refer Figure 11, Zone 1) with significant gold values over good thicknesses apparent within the sheared contact, accompanied by chlorite-epidote-carbonate alteration. This contact is considered to be poorly explored and warrants further targeting, particularly in light of the results from the Stage 2 drilling program and especially at depth where veins and contact-shears potentially coalesce, as seen conceptually in Figure 10.

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Figure 10 Schematic Representation of Conceptual Gold Target

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High grade veins, distal to the mafic amphibolite/gneiss contact, tend to dip at a flatter angle, while veins more proximal to the sheared contact dip more steeply. The intersection of converging, boudinaged quartz veins with the main shear at depth could present a further valuable target within Zone 1 (Figure 11) that remains largely untested to date.

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Figure 11 Paynes Find Tenement Holding (2013) Overlain on Magnetics and Soil Geochemistry; Interpreted Shears and Drilling Areas, with New Zones of Interest in Yellow

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(Source: PFGL, 2013)

Additional review of the larger area highlighted that a gold geochemical anomaly on very wide-spaced reconnaissance sampling is coincident with an interpreted parallel contact zone on the western side of the mafic amphibolite, which may possibly be sheared (refer Figure 11, Zone 2). A third area (Zone 3) was also interpreted along a possibly sheared felsic schist contact, which converges with Zone 2 (refer Figure 11).

3.5 Exploration Results and Potential

PFGL is the first company to bring all the tenements of the Paynes Find area under the one company control, providing security in tenure and access to the project area. Historically many of the tenements have been owned by private companies or individuals, who have not explored them to the extent an exploration company normally would.

3.5.1 Recent Exploration Activities

During the period 2010-2011 PFGL undertook geological mapping at scales of 1:5000 and 1:2000. As a result of the mapping, 41 gold mineralised quartz reefs were identified over an extent of 600m. The mapping program outlined the following:

Quartz lode separation was on average 15m.
Lower grade link structures were identified between the main high-grade gold lodes.
The quartz vein mineralisation within the strongly deformed quartz diorite outcrops over a strike length of approximately 2,000m before dipping beneath laterite cover.
Further mineralisation was observed over approximately 3,000m within varying rock types adjoining the main goldfield.

PFGL also completed a Mobile Metal Ion (MMI) geochemical survey (Figure 12) and concluded that the results from the survey indicated that gold mineralisation was more widespread than initially thought, especially in areas of shallow soil and laterite cover. Ravensgate advises that caution should be exercised when reviewing this data however, since the Paynes Find

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area has been extensively worked historically and the potential for gold mineralisation ‘contamination’ from many sources is significant.

Figure 12 MMI Results and Historical RC Drilling Within the Planned Stage 2 Area Prior to Drilling

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3.5.1.1 Stage 1 Drilling -2011

On 4 April 2011, PFGL announced that the company had commenced its Stage 1 drilling program centred on the Carnation/Blue Heaven line of old workings. The drilling targeted an area 500m long north-south and 400m wide east - west to a depth of 50 to 80m. A program comprising 69 RC drill holes for 3,800m were completed in the area shown on Figure 8. Significant results from the Stage 1 drilling program are indicated on Figure 13 and listed in Table 6.

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Figure 13 Significant Results from the Stage 1 Drilling Programme (after Paynes Find Gold Limited, 2011)

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Figure 14 Composite Cross-Section 6763915N, as Shown on Figure 12 and Figure 13

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Table 6 Paynes Find Gold Limited Stage 1 drilling Program Significant results >1g/t Au

*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*
Hole ID	From (m)	To (m)	Width (m)	Grade Au (g/t)	Comments
PFRC003	29	30	1	2.38
PFRC004	42	43	1	2.36
	72	73	1	1.54
PFRC005	28	34	6	1.5	incl. 1m at 4.81 g/t from 29m
	55	57	2	2.9
	85	92	7	1.1
PFRC006	16	18	2	3.4
	24	29	5	1.0
	35	36	1	1.00
	62	63	1	1.92
PFRC007	23	28	5	1.5	incl. 1m at 5.26 g/t from 27m
	56	57	1	6.2
	68	70	2	1.7
PFRC008	25	27	2	1.1
	31	32	1	15.20
PFRC009	19	22	3	1.8	incl. 1m at 4.57 g/t from 21m
	25	34	9	1.1	incl. 1m at 2.20 g/t from 26m
PFRC010	18	28	10	1.8	incl. 2m at 4.16 g/t from 18m
	45	46	1	3.93
PFRC012	34	35	1	1.01
	39	41	2	19.0	incl. 1m at 36.0 g/t from 39m
	50	51	1	1.10
PFRC013	44	46	2	2.4
	51	52	1	1.19
PFRC015	51	52	1	5.2
PFRC017	35	36	1	1.68
PFRC018	20	26	6	1.9	incl. 2m at 2.78 g/t from 22m
	30	33	3	1.9
PFRC019	42	45	3	1.0
PFRC021	31	32	1	1.14
PFRC024	17	18	1	1.53

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Table 6 Paynes Find Gold Limited Stage 1 drilling Program Significant results >1g/t Au

*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*	*Table 6* *Paynes Find Gold Limited Stage 1 drilling Program* *Significant results >1g/t Au*
Hole ID	From (m)	To (m)	Width (m)	Grade Au (g/t)	Comments
PFRC026	41	42	1	1.06
PFRC034	17	20	3	1.3	incl. 1m at 2.73 g/t from 19m
	29	30	1	1.03
PFRC037	25	27	2	1.3	incl. 1m at 1.80 g/t from 25m
	32	33	1	3.41
	37	38	1	2.14
PFRC039	50	53	3	8.6	incl. 2m at 12.56 g/t from 50m
PFRC043	46	49	3	1.1
PFRC046	22	24	2	2.4
PFRC047	40	41	1	6.99
	50	51	1	1.52
PFRC048	37	38	1	0.66
PFRC049	22	24	2	50.5	incl. 1m at >100 g/t from 22m
PFRC051	52	53	1	1.11
	39	40	1	1.70
PFRC053	55	56	1	4.41
PFRC056	13	16	3	2.6
PFRC058	58	61	3	4.2
PFRC059	9	12	3	1.0
	39	45	6	2.4	incl. 2m at 5.84 g/t from 39m
PFRC061	2	3	1	7.52
PFRC062	2	3	1	1.22
	15	16	1	2.05
	25	26	1	3.12
PFRC063	18	20	2	2.0
PFRC065	32	35	3	16.0	incl. 1m at 46.4 g/t from 32m
PFRC066	25	27	2	1.6
	34	36	2	2.6
PFRC068	31	32	1	2.67
PFRC069	26	31	5	1.6	incl. 1m at 4.9 g/t from 26m
PFRC070	5	8	3	1.6

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3.5.1.2 Stage 2 Drilling - 2012

The Stage 2 drilling program was designed as a northwestern extension to the Stage 1 drill program (Figure 15) consisting of six diamond drill holes and approximately 64 RC drill holes, for 2,000m and 5,000m respectively, to test open ended known extensions of gold mineralisation.

The Stage 2 program was commenced in July 2012 with drilling of the initial area of interest completed by early September, with 54 RC holes totaling 5,326m (to a maximum depth of 250m) and six diamond drill holes totaling 1,540m (to a maximum depth of 480m). A total of 7,145 samples (including duplicates) were assayed for gold, silver and copper, significant results are presented below in Table 7 and Figure 16. Drill holes that returned no significant results are shown in Table 8. A geological cross-section of the deposit is shown in Figure 17, with the location of this cross-section depicted in the accompanying map Figure 16.

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Figure 15 Historical and Stage 1 Drill Holes (A) and Planned (2012) Stage 2 RC and Diamond Drill Holes (B)

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	*Table 7* *Assay Results – 2012 Stage 2 Drilling Program*
Hole ID	Easting (m)	Northing (m)	Max Depth (m)	Dip (°)	Azi (°)	From (m)	To (m)	Int. (m)	Au (g/t)
PFRC102	566800	6764080	80	-60	90	16	19	3	0.84
PFRC110	566760	6764160	108	-60	90	96	98	2	3.82
PFRC112	566672	6764148	192	-60	90	13	15	2	0.63
						57	59	2	0.71
						114	117	3	4.94
						170	172	2	1.11
PFRC115	566608	6764206	102	-60	90	16	20	4	1.91
						26	33	7	2.43
						44	47	3	0.6
						71	73	2	1.85
PFRC116	566643	6764196	80	-60	90	10	22	12	6.61
PFRC117	566596	6764181	144	-60	90	49	51	2	0.6
						92	95	3	2.07
PFRC118	566640	6764133	120	-60	90	40	45	5	1.24
						49	51	2	1.45
PFRC120	566587	6764185	186	-60	90	41	44	3	92.0 8
						58	61	3	0.8
						69	71	2	2.56
						82	85	3	1.45
PFRC121	566565	6764205	144	-60	90	9	12	3	0.63
						40	43	3	1.2
						53	56	3	1.82
						91	96	5	1.24
PFRC123-1	566686	6764231	18	-60	90	8	10	2	2.56
PFRC124	566651	6764233	120	-60	90	7	9	2	1.11
PFRC127	566745	6764265	120	-60	90	6	8	2	0.88
						59	61	2	2.45
PFRC128	566788	6764194	100	-60	90	67	69	2	1.85
						90	93	3	1.27
PFRC131	566830	6764126	131	-60	90	69	71	2	1.45
						122	124	2	1.02

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	*Table 7* *Assay Results – 2012 Stage 2 Drilling Program*
Hole ID	Easting (m)	Northing (m)	Max Depth (m)	Dip (°)	Azi (°)	From (m)	To (m)	Int. (m)	Au (g/t)
PFRC133	566764	6764123	108	-60	90	50	52	2	1.61
						99	103	4	2.64
PFRC134	566733	6764121	198	-60	90	45	48	3	8.04
						140	143	3	5.21
PFRC135	566740	6764002	102	-60	90	25	28	3	0.69
						48	50	2	3.59
						77	84	7	4.83
						93	97	4	0.89
PFRC136	566787	6764103	90	-60	90	23	27	4	1.13
						42	47	5	1.66
PFRC137	566759	6764080	84	-60	90	60	62	2	1.43
PFRC140	566827	6764050	90	-60	90	15	18	3	0.87
						22	24	2	1.15
PFRC142	566763	6764047	120	-60	90	30	33	3	3.21
PFRC143	566730	6764045	198	-60	90	91	93	2	0.94
						155	157	2	2.29
PFRC145	566797	6763983	96	-60	90	44	46	2	3.33
						50	56	6	1.37
						60	62	2	0.6
						82	85	3	0.67
PFRC146	566820	6763984	115	-60	90	29	34	5	0.99
PFRC147	566772	6763982	80	-60	90	22	24	2	0.95
						27	31	4	1.16
						76	79	3	3.15
PFRC148	566978	6763742	234	-60	90	128	130	2	3.94
PFRC149	566832	6764025	84	-60	90	41	44	3	4.64
						46	50	4	1.21
PFRC150	566768	6764015	155	-60	90	51	56	5	0.99
						79	83	4	6.28
						109	111	2	0.81
						120	126	6	3.56

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	*Table 7* *Assay Results – 2012 Stage 2 Drilling Program*
Hole ID	Easting (m)	Northing (m)	Max Depth (m)	Dip (°)	Azi (°)	From (m)	To (m)	Int. (m)	Au (g/t)
PFGDD01	566640	6764024	483	-60	60	294	297	3	0.5
PFGDD02	566777	6764100	327.2	-62	58.7	36	37	1	3.95
PFGDD03	566784	6763974	402	- 62.3	80	70	74	4	0.73
						80	92	12	1.33
						219	221	2	0.88
PFGDD06	566625	6763993	385	-70	70	214	216	2	2.07
						222	225	3	1.28


	*Table 8* *Stage 2 drill holes with no significant result*
Hole ID	Easting (m)	Northing (m)	Max Depth (m)	Dip (°)	Azi (°)	From (m)	To (m)	Int. (m)	Au (g/t)
PFRC100	566880	6764080	80	-60	90	NRI
PFRC101	566840	6764080	80	-60	90	NRI
PFRC103	566880	6764200	80	-60	90	NRI
PFRC104	566840	6764200	80	-60	90	NRI
PFRC105	566760	6764200	78	-60	90	NRI
PFRC106	566720	6764200	80	-60	90	NRI
PFRC107	566680	6764200	80	-60	90	NRI
PFRC108	566880	6764160	80	-60	90	NRI
PFRC109	566800	6764160	79	-60	90	NRI
PFRC111	566720	6764148	120	-60	90	NRI
PFRC113	566639	6764164	120	-60	90	NRI
PFRC114	566643	6764189	54	-60	90	NRI
PFRC119	566608	6764131	138	-60	90	NRI
PFRC122	566722	6764232	174	-60	90	NRI
PFRC125	566624	6764235	90	-60	90	NRI
PFRC126	566588	6764238	90	-60	90	NRI
PFRC129	566840	6764169	108	-60	90	NRI
PFRC130	566871	6764127	100	-60	90	NRI
PFRC132	566796	6764124	92	-60	90	NRI
PFRC138	566721	6764079	90	-60	90	NRI

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	*Table 8* *Stage 2 drill holes with no significant result*
Hole ID	Easting (m)	Northing (m)	Max Depth (m)	Dip (°)	Azi (°)	From (m)	To (m)	Int. (m)	Au (g/t)
PFRC139	566876	6764057	60	-60	90	NRI
PFRC141	566794	6764052	80	-60	90	NRI
PFRC144	566625	6763993	150	-60	90	NRI
PFGDD04	566598	6764162	378	-60	80	NRI
PFGDD05	566740	6764002	142.4	-60	80	NRI

Notes:

All coordinates are Zone 50, MGA94 based on single GPS averages.
PFGDD prefixes are for holes drilled with NQ diamond core.
PFRC prefixes are for holes drilled by 51/2” RC percussion.
Half NQ core was sampled in 1m intervals following geological logging.
RC percussion samples were split on site using a riffle splitter.
All holes were geologically logged by industry standard approaches.
Sample recoveries from both drilling techniques were good.
Sample analysis was by Nagrom laboratory in Perth, WA.
40g of sample is digested in aqua regia (HCL and HNO3) and the solution analysed by ICP. Ag and Au are analysed by ICP-MS and Cu by ICP-OES.
Intersections were calculated using minimum criteria of 2m at 0.5 g/t Au and with a maximum internal waste interval of 1m.
Field standards and duplicates together with laboratory QC replicates and standards were used to monitor the reliability of the analysis. Inspection of QA reports showed no issues with the analysis.
The extreme high grade samples were verified by repeat sampling of the original bulk reject RC percussion chips from the drill hole, together with laboratory repeats, by the Company’s personnel.
All intersections are downhole lengths and it is not known whether these are true widths.
NRI - No reportable intersection - note that the holes are potentially part of further planned drilling at different azimuths and angles taking into account the 'snaking' mineralised nature of the reefs encountered.

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Figure 16 Stage 2 Drill Hole Locations and Significant Intersections

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The results of the Stage 2 drill program led to the structural study carried out by CSA and ioGlobal, as described in Section 3.4.3. PFGL were confident that the key point to derive from the Stage 2 results was that it now provided the economic and geological rationale to continue further drilling to assess the real potential of the tenements at large.

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Figure 17 Cross-Section Through Stage 2 Drilling

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3.5.1.3 Stage 3 Program

PFGL began planning a short interim program of shallow RC holes (15 holes for ~500m) into regional targets, and reviewed requirements for a third phase of drilling based on outcomes from Stage 2 and the associated structural studies. The third round of drilling was planned for Q1 2013, however due to the declining gold price (refer to Figure 19) that was experienced during this time (which has continued to the present) the Stage 3 program has been postponed.

3.5.2 Exploration Potential

Potential remains at the Paynes Find Project due to the following reasons:

Multiple high-grade intersections have been returned from PFGL’s Stage 1 and 2 drilling programs, confirming multiple lodes and target geometries.
Shallow high-grade gold results have enhanced the open pit potential of the area.
Stage 1 and 2 assay results confirm that gold mineralisation is not limited to the predominantly explored gneiss (as previously thought), with significant intersections occurring in the adjacent greenstone schist.
Considerable potential remains for small to medium scale development of the higher grade shoots and to potentially link high grade zones along strike; and for the discovery

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of additional blind high grade zones along strike during future exploration or mining activity.

In addition, CSA reviewed and re-ranked targets outlined by ioGlobal (in mid-2013) in the context of resource potential (refer Figure 18). Several targets (A, B, F, H) represent high grade gold targets, and are identified for RC drill testing. Targets C, D, E, G, I, J and K are targets for RAB or possibly aircore testing on 100m line spacing with 50m drill centres and nominal 60m drill depth, though this may not be achievable in some areas with limited weathering.

Figure 18 CSA Priority Targets

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NB: PFGL tenure* (red), CSA ranked targets (pink), and selected drill intersection highlights underlain by combined Au geochemistry, structural control, and other prioritised anomalies (yellow, mostly obscured).

*Note that the tenement package shown includes the recently divested tenements that contain targets G, H, I, and J.

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On an individual basis, Ravensgate provides the following comments on the tenements of the Paynes Find Gold Project:

M59/0002: The licence is located immediately to the south from M59/396 and is largely underlain by the Paynes Find Gneiss, containing historic workings in its northern area. Minor granite occurs in the south. The prospectivity of the licence is rated as medium to high.
M59/0010: The licence mostly contains the Paynes Find Gneiss and contains a line of historic workings on the northwest – southeast trending Primrose Fault and sheared contact with the mafic schist, which was the focus of PFGL’s Stage 2 drilling program. The licence contains CSA’s target ‘A’ which is proximal to the high grade result from PFRC120 which returned 3m at approximately three ounces of gold (Figure 17 and Figure 18). Therefore, the prospectivity of the licence is rated as high.
M59/0235: The licence is on the Paynes Find Gneiss with historic workings, immediately to the northeast of the Stage 2 drill program. The southern area was previously drilled by Forsayth in 1987 (Figure 15). The prospectivity of the licence is rated as medium to high.
M59/0244: The licence mostly contains the Paynes Find Gneiss and contains a line of historic workings on the northwest – southeast trending Primrose Fault and sheared contact with the mafic schist, which was the focus of PFGL’s Stage 1 drilling program. The areas potential has been highlighted by CSA, which also contains target ‘F’ (Figure 18). Therefore, the prospectivity of the licence is viewed as high.
M59/0396: The licence is located immediately to the east of CSA target ‘F’ on the Paynes Find Gneiss, containing historic workings. The prospectivity of the licence is rated as medium to high.
M59/0662: South of the historic Daffodil open pit and containing the historic workings of Pansy (south) and Shamrock, the area has been identified by CSA with the western area of the licence viewed as prospective, containing target ‘B’ (Figure 18). As it is not on the main Paynes Find Gneiss package, the licence is viewed as medium to high prospectivity.
M59/0663: The licence contains the historic Bluebell workings on the Paynes Find Gneiss which is at the northern end of the main strike of historic workings (Figure 8) and favourable structural trend, containing CSA target ‘E’ (Figure 18). The licence is viewed as having medium to high prospectivty, with also alluvial potential on the licence.
P59/1907: On the Eastern side of the Daffodil Fault, on the Eastern Granite, the area has not been covered by geochemical surveys. The area is underlain by the Eastern Ultramafic and therefore maybe more prospective for nickel. The area is proximal to the Daffodil tailings – refer to comments for P59/1956. The prospectivity of the licence is rated as low.
P59/1908: A small, strategic, gap-fill prospecting licence in proximity to CSA’s target ‘A’. The licence is on the mafic schist and Paynes Find Gneiss contact at the Primrose Fault, within close proximity to historic workings. Therefore, although a small area, the prospectivity of the licence is viewed as high.
P59/1909: A small, strategic, gap-fill prospecting licence on Paynes Find Gneiss, immediately to the northwest of the historic Adeline workings. Therefore, although a small area, the prospectivity of the licence is viewed as high.
P59/1924: The licence is split approximately north to south by the Daffodil Fault with the eastern half of the licence on the Eastern Granite and the western half on the Paynes Find Gneiss, which contains historic workings. The licence does not contain any targets identified by CSA, and is viewed as having medium prospectivity.
P59/1941: CSA has defined a structural corridor at the north-south border between this licence and P59/1959 to the west, containing target ‘C’ on P59/1941 and target ‘D’ on P59/1959 (Figure 18). The licences are viewed as having medium prospectivity. They are traversed by the Great Northern Highway in their northern area, with P59/1941 also containing the Paynes Find Tavern and Roadhouse.

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P59/1942: The tenement is mostly underlain by the Eastern Granite, with a sheared area of the Paynes Find Gneiss in the southwest corner, which is the only area of the tenement that was covered by geochemical soil sampling. The tenement does not contain any historic workings or drill holes, is not proximal to any of the CSA targets and is therefore viewed as having low prospectivity.
P59/1956: A small licence on the eastern side of the Daffodil Fault on the Eastern Granite, at the southern pinch-out of the Paynes Find Gneiss. The southern area of the licence has been used as a tailings dump from the historic Daffodil open pit which is ~400m to the southwest (refer to Figure 4). In Ravensgate’s opinion, an area that has been used as a waste / tailings site is viewed as having low prospectivity.
P59/1957: A strategically placed tenement at the southern pinch out of the Paynes Find Gneiss, the licence covers the southern strike extent of a line of historic workings (Figure 4), which is viewed as having medium prospectivity.
P59/1958: The licence covers the east-west extension of licences P59/1941 and P59/1959, which includes the southern extension of CSA identified north – south structural corridor, however the licence does not contain a target and is viewed as having medium prospectivity.
P59/1959: Refer to P59/1941.

In addition to the gold potential at the project, according to Fitton (n.d.), detailed geological mapping has shown the rocks of the Paynes Find intrusion are believed to form a discrete intrusive lopolithic complex. By analogy with other such bodies around the world, these types of rocks are known to host significant economic deposits of nickel sulphides, often accompanied by copper, cobalt and PGEs.

The size of the Paynes Find intrusion (10km x 3km) is fairly typical of other world examples that host very large nickel sulphide deposits e.g. Voisey’s Bay in Labrador, Canada (141Mt @1.6% Ni) and Jinchuan in China (this deposit is 10km long up to 500m wide and extends to at least 1.5km vertical depth). Athena Resources are currently exploring similar ultramafic intrusions in the Byro district (Milly Milly) ~200km north-northwest of Paynes Find.

3.5.3 Constraints to Further Exploration Success

Geologically, intersecting the boudinaged high-grade zones (Type 1 veins) effectively with conventionally orientated drilling is considered difficult unless vein density is demonstrably high, however as described above, the prospectivity and potential of the project remains high.

Ravensgate views the current depressed gold price and market sentiment towards exploration projects, as the most problem constraint to further exploration success at the Paynes Find Project, as highlighted in PFGL’s 2013 December quarterly report, announced to the ASX on 29 January 2014, stating that the project would be subject to re-evaluation, in relation to administrative holding costs, which ultimately led to the conditional Deed of Sale announced to the ASX on 23 April 2014 and finalised on 1 September 2014.

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4. VALUATION

4.1 Introduction

There are a number of recognised methods used in valuing mineral assets. The most appropriate application of these various methods depends on several factors, including the level of maturity of the mineral asset, and the quantity and type of information available in relation to the asset. All monetary values included in this report are expressed in Australian dollars (A$) unless otherwise stated.

The VALMIN Code, which is binding upon Experts and Specialists involved in the valuation of mineral assets and mineral securities, classifies mineral assets in the following categories:

Exploration Areas refer to properties where mineralisation may or may not have been identified, but where specifically a Mineral Resource has not been identified.
Advanced Exploration Areas refer to properties where considerable exploration has been undertaken and specific targets have been identified that warrant further detailed evaluation, usually by some form of detailed geological sampling. A Mineral Resource may or may not have been estimated but sufficient work will have been undertaken that provides a good understanding of mineralisation and that further work will elevate a prospect to the resource category. Ravensgate considers any identified Mineral Resources in this category would tend to be of relatively lower geological confidence.
Pre-Development Projects are those where Mineral Resources have been identified and their extent estimated, but where a positive development decision has not been made. This includes projects at an early assessment stage, on care and maintenance or where a decision has been made not to proceed with immediate development.
Development Projects refers to properties which have been committed to production, but which have not been commissioned or are not operating at design levels.
Operating Mines are those mineral properties, which have been fully commissioned and are in production.

Various recognised valuation methods are designed to provide the most accurate estimate of the asset value in each of these categories of project maturity. In some instances, a particular mineral property or project may include assets that comprise one or more of these categories. When valuing Exploration Areas and therefore by default where the potential is inherently more speculative than more advanced projects, the valuation is largely dependent on the informed, professional opinion of the valuer. There are a number of methods available to the valuer when appraising Exploration Areas.

The Multiple of Exploration Expenditure (MEE) method can be used to derive project value, when recent exploration expenditure is known or can be reasonably estimated. This method involves applying a premium or discount to the exploration expenditure or Expenditure Base (EB) through application of a Prospectivity Enhancement Multiplier (PEM). This factor directly relates to the success or failure of exploration completed to date, and to an assessment of the future potential of the asset. The method is based on the premise that a grass roots project commences with a nominal value that increases with positive exploration results from increasing exploration expenditure. Conversely, where exploration results are consistently negative, exploration expenditure will decrease along with the value. The following guidelines are presented on selection of the PEM:

PEM = 1. Exploration activities and evaluation of mineralisation potential justifies continuing exploration.
PEM = 2. Exploration activities and evaluation of mineralisation potential has identified encouraging drill intersections or anomalies, with targets of noteworthy interest generated.
PEM = 3. Exploration activities and evaluation of mineralisation potential has identified significant grade intersections and mineralisation continuity.

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Where transactions including sales and joint ventures relating to mineral assets that are comparable in terms of location, timing, mineralisation style and commodity, and where the terms of the sale are suitably “arm’s length” in accordance with the VALMIN Code, such transactions may be used as a guide to, or a means of, valuation. This method (termed Comparable Transactions) is considered highly appropriate in a volatile financial environment where other cost based methods may tend to overstate value.

The Joint Venture Terms valuation method may be used to determine value where a Joint Venture Agreement has been negotiated at “arm’s length” between two parties. When calculating the value of an agreement that includes future expenditure, cash and/or shares payments, it is considered appropriate to discount expenditure or future payments by applying a discount rate to the mid-point of the term of the earn-in phase. Discount factors are also applied to each earn-in stage to reflect the degree of confidence that the full expenditure specified to completion of any stage will occur. The value assigned to the second and any subsequent earn-in stages always involves increased risk that each subsequent stage of the agreement will not be completed, from technical, economic and market factors. Therefore, when deriving a technical value using the Joint Venture Terms method, Ravensgate considers it appropriate to only value the first stage of an earn-in Joint Venture Agreement. Ravensgate have applied a discount rate of 10.0% per annum to reflect an average company’s cost of capital and the effect of inflation on required exploration spends over the timeframe required.

The total project value of the initial earn-in period can be estimated by assigning a 100% value, based on the deemed equity of the farminor, as follows:

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where:

V 100 = Value of 100% equity in the project ($) D = Deemed equity of the farminor (%) CP = Cash equivalent of initial payments of cash and/or stock ($) Cash equivalent of committed, but future, exploration expenditure and payments of cash and/or stock
CE = ($) Uncommitted, notional exploration expenditure proposed in the agreement and/or uncommitted future
EE = cash payments ($) I = Discount rate (% per annum) t = Term of the Stage (years) Probability factor between 0 and 1, assigned by the valuer, and reflecting the likelihood that the Stage
P = will proceed to completion.

Where Mineral Resources remain in the Inferred category, reflecting a lower level of technical confidence, the application of mining parameters using the more conventional DCF/NPV approach may be problematic or inappropriate and technical development studies may be at scoping study level. In these instances it is considered appropriate to use the ‘in-situ’ Resource method of valuation for these assets. This technique involves application of a heavily discounted valuation of the total in-situ metal or commodity contained within the resource. The level of discount applied will vary based on a range of factors including physiography and proximity to infrastructure or processing facilities. Typically and as a guideline, the discounted value is between 1% and 5% of the in-ground value of the metal in the Mineral Resource.

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In the case of Pre-development, Development and Mining Projects, where Measured and Indicated Mineral Resources have been estimated and mining and processing considerations are known or can be reasonably determined, valuations can be derived with a reasonable degree of confidence by compiling a discounted cash flow (DCF) and determining the net present value (NPV).

The Australasian Code of Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2012) sets out minimum standards, recommendations and guidelines. A Mineral Resource defines a mineral deposit with reasonable prospects of economic extraction. Mineral Resources are sub-divided into Inferred, Indicated and Measured to represent increasing geological confidence from known, estimated or interpreted specific geological evidence and knowledge. An Ore Reserve is the economically minable part of a Measured or Indicated Resource after appropriate studies. An Inferred Resource reflecting insufficient geological knowledge, cannot translate into an Ore Reserve. Measured Resources may become Proved (highest confidence) or Probable Reserves. Indicated Resources may only become Probable Reserves.

4.2 Previous Mineral Asset Valuations

Ravensgate is not aware, nor have we been made aware, of any valuations over the Paynes Find Gold Project. Exploration tenements have not been included in the valuation where tenure or permits have not been granted to the relevant company and the company does not therefore have any ownership over tenement mineral assets or any exploration value within the tenements. Whilst ground is under application, there are uncertainties as to whether the tenement will be granted in its entirety or only part due to specific exclusions or if at all, due to environmental or Native Title considerations. There could be competing applications for the same ground with no guarantee that PFGL would be successful in its application.

4.3 Material Agreements

Ravensgate has been commissioned by HLB to provide an Independent Technical Project Review and Valuation Report. The Technical Project Review and Valuation report encompasses the Paynes Find Gold Project. The Technical Valuation report provides an assessment of the Australian “Advanced Exploration Area” mineral assets listed below in which the tenements are owned 100% by PFGL.

Mineral Asset Paynes Find Gold Project, Western Australia	PFGL Ownership %
	100%

Ravensgate understands all active mining and exploration tenements are granted at this point in time and are in good standing. Refer to Section 3.2.3 for information relating to royalties and taxes.

Ravensgate is not aware, nor have been made aware, of any other agreements that have a material effect on the provisional valuations of the mineral assets, and on this basis have made no adjustments on this account.

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4.4 Comparable Transactions

Ravensgate has completed a search for publicly available market transactions involving gold projects, without resources within Western Australia primarily on Prospecting and Mining Licences. Transactions reflect comparable tenement holdings in geological provinces that are considered prospective for similar commodities, and that are of similar prospectivity to the mineral assets being valued. In Ravensgate’s opinion and experience, it is understood that individual market transactions are rarely completely identical to the relevant project area or may not necessarily contain all the required information for compilation. In practice, a range of implied values on a dollar per metal unit or dollar per square kilometre of tenement holding will be defined as suitable for use. The transactions identified along with the implied cash-equivalent values are summarised in Section 4 by commodity and region. Based on the limited information available Ravensgate have done their best to only use transactions between willing buyers and sellers in arms length transactions.

Publically available market transactions have been separated to reflect transactions on a dollar per square kilometre of tenement holding or on a dollar per metal unit for a more advanced Exploration Target or Mineral Resource. This was undertaken to reflect the varying levels of geological exploration carried out within the various project tenements. In general terms, exploration projects may start with a relatively large tenement holding where a lack of detailed geological sampling and knowledge renders the use of the “in-situ” yardstick valuation method inappropriate (i.e. an Exploration Area Mineral Asset). For these particularly early-stage exploration areas comparable transactions on a dollar per square kilometre basis are more relevant. As the project advances and as geological sampling and knowledge increase, tenement areas tend to decrease to match a narrowing focus on more prospective areas. For these areas where specific, drill sample supported Exploration Targets have been identified that warrant further detailed evaluation or Mineral Resources require estimation, comparable transactions on a dollar per metal unit basis may be more appropriate (i.e. an “Advanced Exploration Area Mineral Asset or Pre-Development Project at early assessment”).

4.4.1 Reported Market Transactions

4.4.1.1 Reported Market Transactions for Exploration Area Gold Projects in Western Australia Ravensgate’s analysis of Western Australian market transactions for exploration gold projects (Table 9) on Prospecting and Mining Licences indicates an implied value between $3,497 and $1,586,207 per km[2] for Exploration and Advanced Exploration Area Mineral Assets, with no estimated Mineral Resources in accordance with the JORC Code 2012. The implied value per km[2] is dependent on the type of licence, whether it is an Exploration Licence, Prospecting Licence or Mining Licence. With lower implied values per km[2] for Exploration Licences compared to Prospecting Licences and lower implied values per km[2] for Prospecting Licences compared to Mining Licences. The implied value was also affected by the strategic importance of the licences and the presence of known gold mineralisation upon them and the grade of the gold mineralisation.

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	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*
Date	Vendor	Purchaser/Farminee	Transaction Type	Prospective Commodities1	Value2 $M	Area km2	Cost per km2 A$
15-Sep-14	Meteoric Resources NL	Resourceful Mining Group Pty Ltd	Acquisition	Au	0.450	9.30	48,387
7-Mar-14	Mount Magnet South NL	Australian Mines Limited	Joint Venture	Au-Cu	1.515	129.00	11,745
20-Dec-13	Doray Minerals Limited	Mithril Resources Limited	Joint Venture	Au-BM	1.033	160.00	6,457
17-Oct-13	Cazaly Resources Limited	Excelsior Gold Limited	Acquisition	Au	0.230	18.00	12,778
12-Aug-13	Panoramic Resources Limited	Gateway Mining Limited	Joint Venture	Au	1.522	6.51	233,755
9-Aug-13	Private Vendors	Stratum Metals Limited	Acquisition	Au	0.110	3.77	29,201
1-Jul-13	Ramelius Resources Limited	Eros Mining Limited	Acquisition	Au-Ni	0.400	114.40	3,497
19-Jun-13	Private Vendor	Phoenix Gold Limited	Acquisition	Au	0.030	1.70	17,647
27-May-13	Private Vendors	Bligh Resources Ltd	Acquisition	Au	0.080	0.37	216,216
7-May-13	Trafford Resources Limited	Alloy Resources Limited	Joint Venture	Au	1.131	27.64	40,913
3-Apr-13	Resources and Investment NL	Naracoota Resources Limited	Acquisition	Au	0.300	45.50	6,593
7-Sep-12	Breakaway Resources Limited	Mithril Resources Limited	Acquisition	Au	0.200	10.45	19,139
20-Aug-12	Private Vendors	Resource & Investment NL	Joint Venture	Au-Cu	1.518	5.93	255,984
13-Jun-12	Clive Humberston	General Mining Corporation Ltd	Acquisition	Au	0.920	0.58	1,586,207
29-May-12	Wakeford Holdings Pty Ltd	Millennium Minerals Limited	Acquisition	Au	0.350	1.20	291,181
14-May-12	Birimian Gold Limited	Peel Mining Limited	Acquisition	Au	0.060	0.24	247,219
28-Mar-12	Carrick Gold Limited	Phoenix Gold Limited	Acquisition	Au	0.706	85.00	8,311
08-Feb-12	Breakaway Resources Limited	Ramelius Resources Limited	Acquisition	Au	0.300	20.81	14,419
27-Jan-12	Galaxy Resources Limited	Phillips River Mining Limited	Acquisition	Au	0.250	3.10	80,645

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Table 9 Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia

*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*	*Table 9* *Market Transactions Involving Gold Projects at the Exploration Stage in Western Australia*
Date	Vendor	Purchaser/Farminee	Transaction Type	Prospective Commodities1	Value2 $M	Area km2	Cost per km2 A$
25-Jan-12	Private Vendor	GGG Resources Plc	Acquisition	Au	3.129	10.00	312,936
12-Dec-11	Northern Mining Limited	Macphersons Reward Gold Limited	Acquisition	Au-Zn-Ag	0.500	1.08	465,116
12-Dec-11	Cazaly Resources Limited	Macphersons Reward Gold Limited	Acquisition	Au-Zn-Ag	0.826	30.10	27,439
12-Dec-11	Private Vendor	Macphersons Reward Gold Limited	Acquisition	Au-Zn-Ag	0.100	8.06	12,405
12-Dec-11	Private person	Macphersons Reward Gold Limited	Acquisition	Au-Zn-Ag	0.005	0.76	6,595
22-Sep-11	Private Vendor	Exterra Resources Limited	Acquisition	Au	0.050	1.75	28,571
13-Sep-11	Private Vendor	Power Resources Limited	Acquisition	Au	0.022	3.42	6,498
18-Aug-11	Millennium Minerals Limited	Novo Resources Corp	Joint Venture	Au	2.013	8.36	240,730
05-Apr-11	Millennium Minerals Limited	Galliard Resources Corp	Joint Venture	Au	1.299	8.36	155,310
24-Feb-11	Private Vendor	Vector Resources Limited	Acquisition	Au	0.250	17.72	14,108
31-Jan-11	Australian Gold Investments Limited	Phoenix Gold Limited	Acquisition	Au	2.500	24.28	102,965
19-Jan-11	Provider Express Pty Ltd	Paynes Find Gold Limited	Acquisition	Au	0.060	0.43	139,535
30-Dec-10	Private Vendor	Saracen Mineral Holdings Limited	Acquisition	Au	0.538	1.53	351,307

1 Commodities: Au = Gold, Ni = Nickel, BM = Base Metals, Cu = Copper, Zn = Zn, Ag = Silver.

2 Value is on a 100% equity basis.

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4.4.2 Commodity Prices

Ravensgate has examined the historical commodity chart for gold Figure 19 for general trends over time. A general analysis of the five year price chart for gold in Figure 19 shows a continuous steady rise culminating in a significant rise in late 2011 interpreted to be partly a response to the European Debt Crisis. The gold price remained relatively steady until October 2012, from where it was in decline until July 2013, from where it has traded in a range from US$1,200 to US$1,350. In the last few months the gold price has been declining. Ravensgate has taken into consideration the general commodity trend as an influence on deriving a final project valuation.

Figure 19 Gold Five Year Monthly Average Price Chart to September 2014

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

$2,000
$1,500
$1,000
$500
$0
US$ Per Troy Ounce
Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14
----- End of picture text -----

Source: Perth Mint Commodity Prices (Monthly Average London PM Fix Gold Price in US$)

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4.5 Mineral Asset Valuations

4.5.1 Paynes Find Gold Project, Western Australia

To value the Paynes Find Gold Project Ravensgate has broken it up into its individual tenements and valued it based on the results and prospectivity of each tenement.

4.5.1.1 Selection of Valuation Method

The Paynes Find Gold Project, in which PFGL has a 100% interest in can be classified as a “Advanced Exploration Area” mineral asset as defined in Section 4.1 and the surrounding exploration tenure purchase can be classified as an Exploration Area mineral asset as defined in Section 4.1.

A mineral resource as defined in the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves - 2012 Edition (JORC Code 2012) has not been reported for the Paynes Find project. In valuing the mineral asset of the Paynes Find project, Ravensgate considers the DCF/NPV method inappropriate, due to the early stage of the project.

Ravensgate has elected to apply the Comparable Transaction method to value the project after consideration of the various valuation methods outlined in Section 4.1 and the geological / exploration information outlined in Section 3.5. Multiples of Exploration (MEE) and other cost based methods were not thought to be appropriate to apply in this case due to the very mature stage of exploration at the project and the substantial historic expenditures.

4.5.1.2 Project Analysis – Comparable Transactions Method

Ravensgate’s analysis of Western Australian market transactions for exploration mineral assets (Table 9) suggests an implied value between $3,497 and $1,586,207 per km[2] for exploration mineral assets, with no estimated mineral resources in accordance of the JORC Code 2012. Analysing the transactions in Table 9 in more detail and sub-setting transactions into just prospecting licences, mining licences, a mixture of prospecting and mining licences and a mixture of exploration with either prospecting and/or mining licences, the following statistics were determined (Table 10). It can be seen that the average values are all skewed upwards due to a few highly valued strategic transactions, with the median values being more representative of a normal price for a type of tenement.

Table 10 Summary Statistics of Comparative Transactions by Tenement Type

*Table 10* *Summary Statistics of Comparative Transactions by Tenement Type*	*Table 10* *Summary Statistics of Comparative Transactions by Tenement Type*	*Table 10* *Summary Statistics of Comparative Transactions by Tenement Type*	*Table 10* *Summary Statistics of Comparative Transactions by Tenement Type*	*Table 10* *Summary Statistics of Comparative Transactions by Tenement Type*
Tenure Combinations	Low $	High $	Mean $	Median $
Exploration + Prospecting and/or Mining	3,497	48,387	16,313	8,311
Prospecting	6,595	465,116	96,803	28,571
Prospecting + Mining	12,778	351,307	114,710	47,377
Mining	155,310	1,586,207	415,415	251,602

The value ranges differ between the different licence types, where generally mining tenements are worth more than prospecting, which are worth more than exploration tenements on a cost per km[2] basis. A breakdown of ranges for Prospecting and Mining Licences based on their prospectivity and strategic value are shown in Table 11 below.

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*Table 11* *Tenement Type Value Ranges Breakdown*
Cost per km2 Range	Comments
Prospecting Licences
$6,000 - $15,000	Grass roots early stage exploration, with limited work or limited exploration potential.
$15,000 - $30,000	Average exploration stage, some defined gold targets for follow up. Mature exploration ground that has been well explored
$30,000 - $150,000	Advanced stage exploration with good potential, defined gold targets ready for resource drilling
$150,000+	Advanced stage exploration with good potential and/or strategic to the purchaser.
Mining Licences
$150,000 - $500,000	Value varies due to quality of gold mineralisation and how strategic it is to the purchaser.
$500,000+	Good quality gold targets with good potential to be converted to a mineral resource and/or highly strategic to the purchaser.

Ravensgate has derived implied ranges and preferred values varying on the tenements prospectivity per km[2] to apply to the area of the granted Prospecting and Mining licences (Table 12), which have a total combined area of 7.007km[2] . These values relate to approximately $0.835M to $1.208M. From this range a preferred value of $1.022M has been selected, which reflects the outcome of successful exploration to date and the quality of the exploration ground.

To derive appropriate values for the various tenements Ravensgate reviewed the exploration data and prospectivity for the various licences and selected an appropriate range based on Table 11. The values attributed to each tenement were based upon a review of the prospectivity and quality of exploration targets on each tenement as described in Section 3.5. A brief description of the factors that have been taken into account in determining the value range and preferred value for the tenements are as follows:

M59/0002: The licence is located immediately to the south from M59/396 and is largely underlain by the Paynes Find Gneiss, containing historic workings in its northern area. Minor granite occurs in the south. The prospectivity of the licence is rated as medium to high.
M59/0010: The licence mostly contains the Paynes Find Gneiss and contains a line of historic workings on the northwest – southeast trending Primrose Fault and sheared contact with the mafic schist, which was the focus of PFGL’s Stage 2 drilling program. The licence contains CSA’s target ‘A’ which is proximal to the high grade result from PFRC120 which returned 3m at approximately three ounces of gold (Figure 17 and Figure 18). Therefore, the prospectivity of the licence is rated as high. The value of this licence was discounted by 25% due to ongoing environmental and OHS concerns as detailed in Section 3.2.2.
M59/0235: The licence is on the Paynes Find Gneiss with historic workings, immediately to the northeast of the Stage 2 drill program. The southern area was previously drilled by Forsayth in 1987 (Figure 15). The prospectivity of the licence is rated as medium to high.
M59/0244: The licence mostly contains the Paynes Find Gneiss and contains a line of historic workings on the northwest – southeast trending Primrose Fault and sheared contact with the mafic schist, which was the focus of PFGL’s Stage 1 drilling program.

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The areas potential has been highlighted by CSA, which also contains target ‘F’ (Figure 18). Therefore, the prospectivity of the licence is viewed as high. The value of this licence was discounted by 25% due to ongoing environmental and OHS concerns as detailed in Section 3.2.2.

M59/0396: The licence is located immediately to the east of CSA target ‘F’ on the Paynes Find Gneiss, containing historic workings. The prospectivity of the licence is rated as medium to high.
M59/0662: South of the historic Daffodil open pit and containing the historic workings of Pansy (south) and Shamrock, the area has been identified by CSA with the western area of the licence viewed as prospective, containing target ‘B’ (Figure 18). As it is not on the main Paynes Find Gneiss package, the licence is viewed as medium to high prospectivity. The value of this licence was discounted by 25% due to ongoing environmental and OHS concerns as detailed in Section 3.2.2.
M59/0663: The licence contains the historic Bluebell workings on the Paynes Find Gneiss which is at the northern end of the main strike of historic workings (Figure 8) and favourable structural trend, containing CSA target ‘E’ (Figure 18). The licence is viewed as having medium to high prospectivty, with also alluvial potential on the licence.
P59/1907: On the Eastern side of the Daffodil Fault, on the Eastern Granite, the area has not been covered by geochemical surveys. The area is underlain by the Eastern Ultramafic and therefore maybe more prospective for nickel. The area is proximal to the Daffodil tailings – refer to comments for P59/1956. The prospectivity of the licence is rated as low.
P59/1908: A small, strategic, gap-fill prospecting licence in proximity to CSA’s target ‘A’. The licence is on the mafic schist and Paynes Find Gneiss contact at the Primrose Fault, within close proximity to historic workings. Therefore, although a small area, the prospectivity of the licence is viewed as high.
P59/1909: A small, strategic, gap-fill prospecting licence on Paynes Find Gneiss, immediately to the northwest of the historic Adeline workings. Therefore, although a small area, the prospectivity of the licence is viewed as high.
P59/1924: The licence is split approximately north to south by the Daffodil Fault with the eastern half of the licence on the Eastern Granite and the western half on the Paynes Find Gneiss, which contains historic workings. The licence does not contain ant targets identified by CSA, and is viewed as having medium prospectivity.
P59/1941: CSA has defined a structural corridor at the north-south border between this licence and P59/1959 to the west, containing target ‘C’ on P59/1941 and target ‘D’ on P59/1959 (Figure 18). The licences are viewed as having medium prospectivity. They are traversed by the Great Northern Highway in their northern area, with P59/1941 also containing the Paynes Find Tavern and Roadhouse.
P59/1942: The tenement is mostly underlain by the Eastern Granite, with a sheared area of the Paynes Find Gneiss in the southwest corner, which is the only area of the tenement that was covered by geochemical soil sampling. The tenement does not contain any historic workings or drill holes, is not proximal to any of the CSA targets and is therefore viewed as having low prospectivity.
P59/1956: A small licence on the eastern side of the Daffodil Fault on the Eastern Granite, at the southern pinch-out of the Paynes Find Gneiss. The southern area of the licence has been used as a tailings dump from the historic Daffodil open pit which is ~400m to the southwest (refer to Figure 4). In Ravensgate’s opinion, an area that has been used as a waste / tailings site is viewed as having low prospectivity.
P59/1957: A strategically placed tenement at the southern pinch out of the Paynes Find Gneiss, the licence covers the southern strike extent of a line of historic workings (Figure 4), which is viewed as having medium prospectivity.

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P59/1958: The licence covers the east-west extension of licences P59/1941 and P59/1959, which includes the southern extension of CSA identified north – south structural corridor, however the licence does not contain a target and is viewed as having medium prospectivity.
P59/1959: Refer to P59/1941.

Table 12 Comparable Transaction Valuation of PFGL’s Exploration Tenure

*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*	*Table 12* *Comparable Transaction Valuation of PFGL’s Exploration Tenure*
Tenement	Area km2	Equity %	Values Per km2				Valuation
			Low $	Preferred $	High $	Low $K	Preferred $K	High $K
M59/0002	0.050	100	300,000	400,000	500,000	14.9	19.8	24.8
M59/0010*	0.243	100	700,000	800,000	900,000	127.4	145.7	163.9
M59/0235	0.060	100	300,000	400,000	500,000	18.0	24.0	30.0
M59/0244*	0.911	100	700,000	800,000	900,000	478.3	546.7	615.1
M59/0396	0.040	100	400,000	500,000	600,000	16.2	20.2	24.3
M59/0662*	0.390	100	300,000	400,000	500,000	87.6	116.9	146.1
M59/0663	0.136	100	150,000	250,000	350,000	20.5	34.1	47.7
P59/1907	0.080	100	6,000	10,500	15,000	0.5	0.8	1.2
P59/1908	0.006	100	150,000	175,000	200,000	0.9	1.1	1.2
P59/1909	0.002	100	110,000	130,000	150,000	0.2	0.2	0.2
P59/1924	0.431	100	20,000	40,000	60,000	8.6	17.2	25.8
P59/1941	1.741	100	15,000	22,500	30,000	26.1	39.2	52.2
P59/1942	0.841	100	6,000	10,500	15,000	5.0	8.8	12.6
P59/1956	0.047	100	6,000	10,500	15,000	0.3	0.5	0.7
P59/1957	0.047	100	20,000	40,000	60,000	0.9	1.9	2.8
P59/1958	0.511	100	15,000	22,500	30,000	7.7	11.5	15.3
P59/1959	1.472	100	15,000	22,500	30,000	22.1	33.1	44.2
TOTAL	7.007	100	NA	NA	NA	835.2	1,021.7	1,208.1

The valuation has been compiled to an appropriate level of precision and minor rounding errors may occur.

*Licences M59/0010, M59/0244 and M59/0662 were discounted by a further 25% due to environmental and OHS concerns.

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4.6 Valuation Summary

Ravensgate has concluded that the Paynes Find Gold Project is of merit and worthy of further exploration. A summary of the Paynes Find Gold Project valuation in ownership equity percentage terms is provided in Table 13. The applicable valuation date is 20 October 2014 and is derived from using the Comparable Transactions valuation method. The value of the Paynes Find Gold Project is considered to lie in a range from $0.835M to $1.208M; within this range Ravensgate has selected a preferred value of $1.022M. As the technical valuation is based on comparable transactions it can be considered to also be the market value. The definition of market value that Ravensgate adopts is that used in the VALMIN code, which is the market value definition as defined by the International Valuation Standards Committee (IVSC).


*Table 13* *Summary Project Technical Valuation in Ownership Equity Percentage* *Terms*
Project	Mineral Asset	Equity %	Area km2		Valuation
				Low $M	Preferred $M	High $M
Paynes Find	Advanced Exploration Area	100	7.007	0.835	1.022	1.208

The valuation has been compiled to an appropriate level of precision and minor rounding errors may occur.

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5. REFERENCES

Downie, A., 2002. Hallmark Mining Limited, Annual Technical Report, Paynes Find Project, M59/10, for reporting period 23/10/2001 to 22/10/2002, Wamex a65721.

Fitton, F., 2011. Comparison of the Paynes Find Goldfield with the Boddington Gold Deposit, West Australia.

JORC, 2004. Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code) prepared and jointly published by: The Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council of Australia (JORC) Published December 2004.

JORC, 2012. Australasian Code for Reporting of Mineral Resources and Ore Reserves (The JORC Code) prepared and jointly published by: The Joint Ore Reserve Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Minerals Council of Australi a (JORC) The JORC Code 2012 Edition - Effective 20 December 2012 and mandatory from 1 December 2013 (Published December 2012).

Libby, J., 2003. Batavia Mining Limited Annual Technical Report, Paynes Find Project, M59/10, October 2003, Wamex a67824.

Maynard, A., 2010. Independent Geologist’s Report on Mineral Exploration Projects in Western Australia for Paynes Find Gold Limited.

Paynes Find Gold Limited, 2010. Prospectus, Section 9.4 pp78.

Paynes Find Gold Limited, 2011. Exploration update, ASX Release, 21st February 2011.

Paynes Find Gold Limited, 2013. Structural Review of Paynes Find Gold Field. ASX Announcement 24 January 2013.

Paynes Find Gold Limited, 2013. Positive Results from Structural Survey Confirms Greater Gold Potential. ASX Announcement 7 March 2013.

Paynes Find Gold Limited, 2013. Gold Production Commences. ASX Announcement 7 March 2013.

Paynes Find Gold Limited, 2013. Milestone Mining Agreement. ASX Announcement 4 June 2013.

Paynes Find Gold Limited, 2013. Geochem Results Confirm New Gold Targets at Paynes Find. ASX Announcement 12 June 2013.

Paynes Find Gold Limited, 2013. Quarterly Activities Report and Appendix 5B. For the Quarter ending 30 September 2013.

Paynes Find Gold Limited, 2013. Operations Update. ASX Announcement 1 October 2013.

Paynes Find Gold Limited, 2014. http://www.paynesfindgold.com

Paynes Find Gold Limited, 2014. Quarterly Activities Report and Appendix 5B. For the Quarter ending 31 March 2014.

Paynes Find Gold Limited, 2014. Quarterly Activities Report and Appendix 5B. For the Quarter ending 30 June 2014.

VALMIN, 2005. Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports – The VALMIN Code, 2005 Edition.

Wolstencroft, A., 1997. Annual Report for Mining Lease M59/10, Paynes Find for the period 23 October 1996 to 22 October 1997. Kirkwood Gold NL, Wamex a52954.

Wolstencroft, A., 1998. Annual Report for Mining Lease M59/10, Paynes Find for the period 24 January 1997 to 23 October 1998. Kirkwood Gold NL, Wamex a52955. www.intierra.com

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6. LIST OF ABBREVIATIONS

A$	Australian dollar(s)
AC	Aircore (drill hole)
Ag	Silver
ASX	Australian Securities Exchange
Au	Gold
Azi	Azimuth
Cu	Copper
DCF	Discounted cash flow
FAusIMM	Fellow of the Australasian Institute of Mining and Metallurgy
g/t	Grams per tonne
JORC Code	2012 Edition of the Australasian Code for Reporting of Exploration
	Results, Mineral Resources and Ore Reserves
K	Thousand(s)
km	kilometre(s)
km2	Square kilometre(s)
m	Metre(s)
M	Million(s)
MAIG	Member of the Australian Institute of Geoscientists
MAusIMM	Member of the Australasian Institute of Mining and Metallurgy
mm	Millimetre(s)
MMI	Mobile Metal Ion
Mt	Million Tonnes.
NPV	Net present value
oz	Ounce (Troy ounce measure of weight)
Pb	Lead
PGE	Platinum Group Element
ppb	Parts per billion; a measure of concentration
ppm	Parts per million; a measure of concentration
QA/QC	Quality Assurance / Quality Control
RAB	Rotary Air Blast (drill hole)
RC	Reverse circulation (drill hole)
t	Tonne(s)
US$	United States Dollar(s)
Zn	Zinc

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7. GLOSSARY

GLOSSARY
aircore drilling	Air Core Drilling. A relatively inexpensive drilling technique similar to
	RC drilling, in that the drill cuttings are returned to surface inside the
	rods.
aeromagnetic	A survey undertaken by helicopter or fixed-wing aircraft for the
	purpose of recording magnetic characteristics of rocks by measuring
	deviations of the Earth’s magnetic field.
anomalies	An area where exploration has revealed results higher than the local
	background level.
amphibolite	A metamorphic rock consisting mainly of amphibole, especially the
	species hornblende and actinolite
Archaean	The oldest rocks of the Precambrian era, older than about 2,500
	million years.
assayed	The testing and quantification metals of interest within a sample.
bedrock	Any solid rock underlying unconsolidated material.
boudin / boudinage	Structures formed by extension, where a rigid tabular body such as
	Hornfels, is stretched and deformed amidst less competent
	surroundings. The competent bed begins to break up, forming
	sausage-shaped boudins.
craton	An old and stable part of the continental lithosphere
diamond drilling	Drilling method employing a (industrial) diamond encrusted drill bit
	for retrieving a cylindrical core of rock.
dolerite	A medium grained mafic intrusive rock composed mostly of pyroxenes
	and sodium-calcium feldspar.
domain	Geological zone of rock with similar geostatistical properties; typically
	a zone of mineralisation
dykes	A tabular body of intrusive igneous rock, crosscutting the host strata
	at a high angle.
fault	A wide zone of structural dislocation and faulting.
geochemical	Pertains to the concentration of an element.
geophysical	Pertains to the physical properties of a rock mass.
geosyncline	A subsiding linear trough that was caused by the accumulation of
	sedimentary rock strata deposited in a basin and subsequently
	compressed.
gneiss	A common and widely distributed type of rock formed by high-grade
	regional metamorphic processes from pre-existing formations that
	were originally either igneous or sedimentary rocks.
graben	A depressed block of land bordered by parallel faults.
granite	A coarse-grained igneous rock containing mainly quartz and feldspar
	minerals and subordinate micas.
greenschist	A metamorphosed basic igneous rock which owes its colour and
	schistosity to abundant chlorite.
greenstone belt	A broad term used to describe an elongate belt of rocks that have
	undergone regional metamorphism to greenschist facies.
magnetite	A mineral comprising iron and oxygen which commonly exhibits
	magnetic properties.
mesothermal	A hydrothermal ore deposit formed at intermediate temperatures
	(200-300°C) and depths.
metamorphic	A rock that has been altered by physical and chemical processes
	involving heat, pressure and derived fluids
mobile metal ion	MMI is a highly sensitive proven geochemical exploration method

Page 61 of 62

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whereby Mobile Metal Ions, adsorbed onto the surface of screened soil particles, are dissolved using patented chemical extractants and analysed at ppb levels. This method is more sensitive than conventional geochemical methods. NQ Diamond Drilling. A core diameter of 47.6mm. orogeny The process of mountain formation, especially by a folding and faulting of the earth's crust. outcrop Surface expression of underlying rocks. Precambrian A period of geological time older than 570 million years before present. Proterozoic An eon of geological time spanning the period from 2,500 million years to 570 million years before present RAB drilling Rotary Air Blast. A relatively inexpensive and less accurate drilling technique involving the collection of sample returned by compressed air from outside the drill rods. RC drilling Reverse Circulation. A drilling method in which the fragmented sample is brought to the surface inside the drill rods, thereby reducing contamination. regolith The layer of unconsolidated material which overlies or covers in situ basement rock resource In situ mineral occurrence from which valuable or useful minerals may be recovered.

rock chip sampling The collection of rock specimens for mineral analysis. sedimentary A term describing a rock formed from sediment. soil sampling The collection of soil specimens for mineral analysis. strata Sedimentary rock layers. stratigraphic Composition, sequence and correlation of stratified rocks. strike Horizontal direction or trend of a geological structure. unconformity An erosional or non-depositional surface separating two rock masses or strata of different ages, indicating that sediment deposition was not continuous. volcanics Rocks formed or derived from volcanic activity.

Page 62 of 62

Paynes Find Gold Limited - Independent Expert!s Report

APPENDIX 3

Appendix 3 ! Independent valuation of mineral assets prepared by dB LLC Petroleum Advisory Services.

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

Mr. WM Clark Mann Judd Corporate (WA) Pty Ltd Level 4 130 Stirling Street Perth 6000 Western Australia

November 15, 2014

Subject: Fair Market Value Assessment Canadian Valley Project Okfuskee County, Oklahoma, USA

Dear Mr. Clark:

FAIR MARKET VALUE ASSESSMENT

This opinion has been prepared following the guidance provided by the Australian Institute of Mining and Metallurgy’s Code and Guidelines for Technical Assessment and/or Valuation of Mineral and Petroleum Assets and Mineral and Petroleum Securities for Independent Expert Reports (the VALMIN Code).

The definition of Value or Fair Market Value of a Petroleum Asset or Security is the amount of money (or the cash equivalent of some other consideration) determined by the Expert in accordance with the provisions of the VALMIN Code for which the Petroleum Asset or Security should change hands on the Valuation Date in an open and unrestricted market between a willing buyer and a willing seller in an “arms-length” transaction, with each party acting knowledgeably, prudently and without compulsion.

Value is usually comprised of two components, the underlying or “Technical Value” of the Mineral or Petroleum Asset or Security and a premium or discount relating to market, strategic or other considerations. Value should be selected as the most likely figure from within a range after taking account of risk and the possible variation in recovery, capital and operating costs, commodity prices, exchange rates and the like.

We have prepared estimates of the net reserves, future annual production and future net income attributable to the anticipated leasehold interest of PAYNES FIND GOLD LIMITED (“PNE”) in the Canadian Valley Project as of October 31, 2014. The properties evaluated in this review are located in Okfuskee County, Oklahoma. The discounted net present values (NPV10) presented in the table below should be considered as the !Technical Value" of the petroleum asset with respect to the VALMIN standard quoted above.

These proved reserve classifications were assigned following the Society of Petroleum Engineers (SPE) guidelines. Economics were run utilizing future oil and gas prices from the 5-Year NYMEX Strip pricing as of October 1, 2014 held flat (no additional escalation or de-escalation) and operating cost parameters held constant for the life of the production.

4849 Greenville Ave. 1 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

The summary of Net Future Estimated Reserves and Discounted Net Present Value are presented in the Reserve Table shown below. These values are calculated using a 10% discount factor, calculated at the middle of each year and an “AS OF” Date on October 31, 2014. All values summarized in the table below are net to the interest of Paynes Find Gold LTD and include Oklahoma State Severance Tax (7.1%) and estimated US Federal Corporate Taxes (30%).

PROVED RESERVES SUMMARY

(ALL VALUES ARE NET TO PAYNES FIND GOLD LTD. INTERESTS) (values are in US Dollars)

PROVED	PRODUCING	BEHIND PIPE	UNDEVELOPED	TOTAL
Gross Wells	0	0	5	5
Net Oil, STB NetGas,MCF			267,430 436,400	267,430 436,400

Net Revenue
Oil – USD ($) Gas–USD($)			$22,998,460 $1,804,990	$22,998,460 $1,804,990
Total			$24,803,450	$24,803,450
Expenses			$2,110,030	$2,110,030
Taxes (State andFederal)			$9,200,840	$9,200,840
Investments			$4,875,000	$4,875,000
Future Net Income– zero discount			$8,617,580	$8,617,580

Future Net Inc-10% discount			$6,381,500	$6,381,500
Fair Market Value # 25% discount			$4,786,125	$4,786,125

DISCUSSION OF PREMIUM OR DISCOUNT RELATED TO MARKET OR STRATEGIC CONSIDERATIONS

The second component of Fair Market Value is much more subjective as a result of the wide variety of oil and gas properties currently available in the USA markets. In recent years, billions of dollars have changed hands over very large transactions in the USA that have occurred in pursuit of the highly successful and popular horizontal shale plays. In this arena, transactions occur with the sale of large undeveloped acreage positions (10,000 to 100,000 acres) that have been de-risked through the drilling of numerous horizontal wells that have established a large component of Proved Developed Production (PDP) that also provides a large number of Proved Un-Developed (PUD) drilling locations. In this case, a useful metric for transaction value ranges between $60,000 to $100,000 USD per flowing PDP barrel of oil. This metric can be used to establish fair market value estimates for large horizontal shale play projects.

Low rate vertical production similar to the Canadian Valley Project carries a similar but much reduced metric for fair market value which ranges between $20,000 and $35,000 per flowing barrel. These metrics are typically derived by a potential buyer by paying 100% of the PDP value discounted at 10%

4849 Greenville Ave. 2 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

(NPV10). In the event that PUD locations are included in the transactions, those values are typically discounted by paying 75% of the indicated PUD values. These reduced rates reflect the reality of the limited upside represented in developing a smaller conventional project area and the current market preference to invest in the much larger upside represented by the horizontal shale projects now popular in the USA.

In the case of the Canadian Valley Project, the Operator has drilled an initial well which has been tested successfully in the Wilcox, but operations are still ongoing as of the date of this report to build the infrastructure necessary to establish stabilized production for this well. As such, no specific production history exists for the well on this lease. However, using analogous production from other recently completed wells in the region, we have based our technical evaluation on the production rates shown to be reasonable as compared to these analogous wells. We have also presented a range of possible economic outcomes which we have represented in the report as P10 (90% confidence in outcome), P50 (50% confidence in outcome) and P90 (10% confidence in outcome) for the project ultimate recoveries and discounted present values.

For the Canadian Valley Project, as no PDP production rate is currently available to be valued on the basis of $/flowing barrel as discussed above, we have chosen to set the Fair Market Value (!FMV") by taking the P50 project NPV10 of $6,381,500 USD and applying the standard PUD discount factor of .75 which results in the FMV of $4,786,125 USD.

It is the opinion of this evaluator that this value of $4,786,125 USD represents a fair price should the property change hands on the Valuation Date in an open an unrestricted market between a willing buyer and a willing seller in an !arms-length" transaction, with each party acting knowledgeably, prudently and without compulsion.

Three classes of Proved Reserves have been considered in this report, Proved Developed Producing (PDP), Proved Behind Pipe (PBP) and Proved Undeveloped (PUD). The estimated Proved Developed Producing Reserve (PDP) is typically calculated by decline curve forecasting of historical production data using historical production data from the daily pumper reports supplied by the operator Inland Oil & Gas, LLC. The estimated reserve values for Proved Behind Pipe (PBP) and Proved Undeveloped (PUD) classifications were calculated using decline curve forecasting through extrapolation of historical production observed in analogous producing fields that exhibit geological and reservoir conditions similar to those in the Canadian Valley Project for the various reservoirs evaluated. The estimated future reserves should not be considered exact quantities because these values are projected based on an estimated decline curve derived from actual production history. The actual recovered reserves may vary from the projections in this report due to a wide range of circumstances. Future prices for hydrocarbons and operating costs are two major factors that will determine if future reserves can be economically produced.

Oil and Condensate volumes have been expressed in the standard 42 gallons per barrel. The gas volumes are expressed in thousands of cubic feet (MCF), at the official pressure and temperature base for the State of Oklahoma, USA.

4849 Greenville Ave. 3 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

EVALUATION PRICE/COST ASSUMPTIONS

Forecast of Prices and Costs

The oil and gas prices used in the economic forecast are derived from publically available sources as published by the New York Mercantile Exchange (NYMEX) using the 5-Year NYMEX Strip pricing as of October 1, 2014. The prices were then held flat for the duration of each year as shown in the table below with no additional escalation or de-escalation applied.

Year	Gas	Oil
2014	$4.06	$90.24
2015	$3.93	$87.55
2016	$4.04	$85.90
2017	$4.18	$84.80
2018	$4.30	$84.53
2019+	$4.30	$84.53

During the most recent 30 days preceding this report, world oil markets have experienced extraordinary volatility with prices dropping nearly 20% almost overnight, and markets testing new lows below $75/bbl. At this time, it is unknown if these lower prices will stabilize at these levels or if this should be considered as a short term condition in the market place. As such we have relied on what is generally accepted as a credible source for the price decks used in this evaluation.

Cost Parameters

The Operating Costs for the vertical Wilcox wells operating with Electrical Submersible Pumps (ESP) of $5,000/well/month was supplied by Inland Oil & Gas, LLC which we reviewed and considered as normal for the area of operations.

The operating costs used in the economic calculations include the direct operating charges applicable to each well and allocated general and administrative overhead charges from the Operator. The economics also include Oklahoma oil and gas production taxes and ad valorem taxes (7.1% for both oil and gas) as well as US Federal Corporate Tax which was estimated to be 30%. The future Operating Costs were held constant for the economic life of each property.

Well cost estimates based on actual vertical drilling experiences on the project area have been reviewed and accepted as normal for the area and depth of drilling. Well cost estimates used in the economic model are $1,218,750 per completed vertical well. This turnkey fixed cost includes the completion and equipment cost (electric submersible pump) necessary to produce the well.

Estimated Future Remaining Reserves contained in this report are based upon our extensive subsurface review of well logs, core information, pressure test information, 3D seismic data, historical oil and gas production. No on site field examination of the subject properties has been undertaken. No existing environmental liabilities are currently identified with regard to the daily operations of Inland Oil & Gas, LLC. No environmental impact report has been provided for this property by the Operator.

4849 Greenville Ave. 4 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

The values for working interest and net revenue interest, furnished in connection with this report were accepted as given and without further verification by dB, LLC. Future estimates in this report are based on available data through October 2014.

Tax Considerations

The Proforma economics and Net Present Values shown are net of Oklahoma Oil and Gas severance taxes. Currently these tax rates are 7.10% for both Oil and Gas Production. In Oklahoma, these taxes are paid upon sale of the various hydrocarbons at the well head and are deducted from the Net Present Value calculations. The economics also include U.S. Federal Income Tax which was estimated to be 30%.

DISCLOSURE STATEMENT

Independence and Conflict of Interest - This report has been prepared by dB, LLC based on a brief directed by HLB Mann Judd Corporate (WA) Pty Ltd (“HLB”). dB, LLC (“dB”) is an independent oil and gas advisory firm headquartered in Dallas, Texas. Mr. Richard G. Boyce, the primary evaluator, holds no economic interest in the Canadian Valley Project, Inland Oil & Gas, LLC or in PAYNES FIND GOLD LIMITED (“PNE) or in Delecta Limited (“seller”). This report is produced under a “fee for services rendered” engagement for the amount of $5,000 USD and in compliance with the ASIC Regulatory Guide 112 in relation to Independence of Experts.

Purpose, Scope and Use of this Report - This report was commissioned by HLB for inclusion in a Notice for General Meeting in relation to Australian Securities Exchange Listing Rule 10.1 relating to the acquisition of a substantial asset from a related party and specifically to seek the approval of shareholders to issue fully paid ordinary shares to the seller . The scope of this report includes economic evaluation and an assessment of future present worth based on stated economic considerations. Recommendations for future development plans are outlined in the report and have been included in the economic forecasts. This report was prepared exclusively for HLB and should not be duplicated or distributed to any third parties without the express written consent of HLB and dB LLC, except as required by law.

Available Data - This study was based on data supplied by the project Operator- Inland Oil & Gas, LLC and on public domain information acquired from the Oklahoma Corporation Commission, IHS Energy, Inc. and DrillingInfo.com. The supplied data was reviewed for reasonableness from a technical perspective. As is common in oil field situations, basic physical measurements taken over time cannot be verified independently in retrospect. As such, beyond the application of normal professional judgment, such data must be accepted as representative. While we are not aware of any falsification of records or data pertinent to the result of this study, dB does not warrant the accuracy of the data and accepts no liability for any losses from actions based upon reliance on data which is subsequently shown to be falsified or erroneous.

Professional Qualifications - dB personnel who prepared this report are degreed professionals with the appropriate qualifications and experience to complete the project brief. dB and its staff do not claim expertise in accounting, legal and environmental matters, and do not offer legally binding opinions and such matters do not form part of this report. Mr. Richard G. Boyce is not a registered petroleum engineer.

4849 Greenville Ave. 5 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

Reserves Estimates - Reserves estimates were made using industry-accepted methodology including extrapolation of performance trends, volumetric calculations, material balance and statistical analysis of analogs. The evaluators’ professional judgment and experience was used to select the most appropriate method and to determine the reasonableness of the results. The estimates were made in accordance with the rules established by the Society of Petroleum Engineers (SPE). The reserves definitions allow for changes in category as information is gathered and as producing history is accumulated. As such, the volume and class of reserves is expected to change and be revised over time.

Net oil and gas reserves are those estimated quantities of crude oil, natural gas and natural gas liquids attributed to the evaluated interests (after deduction of applicable royalties and overriding royalties) that are considered to be economically recoverable under the economic conditions modeled. It is implicit that good oil field practices are maintained in order to cause recovery of the estimated reserves.

Future Cash Flow Estimates - Future cash flow estimates to the evaluated interests are based upon the estimated future production profile and future prices for oil and gas adjusted for capital expenditure, operating costs, interest reversions and severance and ad valorem taxes, and estimated federal income tax liability. The estimates do not include the salvage value for the leases or the cost of abandonment and site restoration or any outstanding encumbrance that might exist against the property. The present worth of future cash flow reflects the application of certain discount factors and does not represent an estimate of fair market value for the properties on a standalone basis. Please refer to the section entitled DISCUSSION OF PREMIUM OR DISCOUNT RELATED TO MARKET OR STRATEGIC CONSIDERATIONS for additional discussion relating to this subject.

The future cash flow and present worth of future cash flow estimates presented herein, are representative of the pricing and development/recompletion scenarios that have been modeled. Such estimates should not be construed as exact quantities. Future production rates, product prices, development costs and revenues from the sale of petroleum products could differ from the estimates presented. Modification of drilling schedules, availability of capital, and many other factors outside the realm of an engineering estimate could result in significant variances from the estimates present herein.

Exclusions - dB cannot attest to the validity or correctness of the ownership information provided by Inland Oil & Gas, LLC and such an opinion does not form part of this report. Operating cost data was provided by Inland Oil & Gas, LLC who is currently operating the properties evaluated. This report is restricted to our independent estimate of reserves. It is not the intention or purpose of this report to comment on title, ownership or legal encumbrances, any commercial or business relationships or sunk costs involved in acquiring the properties.

Field Visit and Inspection # No field visit was undertaken in support of this report.

Liability Waiver - This report has been prepared on a best efforts basis to address the requirement of the brief specified by HLB Mann Judd Corporate (WA) Pty Ltd. The results and conclusions represent informed professional judgments based on the data available. No warranty is implied or expressed that actual results will conform to these estimates.

4849 Greenville Ave. 6 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

EVALUATOR

This evaluation was conducted by Mr. Richard G. Boyce. He has practiced professional geological, geophysical and reserve evaluations for 35 years. He began oil and gas consulting in 1996 and founded dB, LLC in 2002.

Mr. Boyce began his career as a geophysicist for The Superior Oil Company with early training at their Geoscience Laboratory in Houston, Texas. In 1980, Mr. Boyce transferred to Midland, Texas to continue working for Superior Oil Company until 1983. During his ten year career in the Permian Basin, Mr. Boyce also worked for both Conquest Exploration Inc. and Hunt Oil Company. In 1991, Mr. Boyce transferred to Dallas, Texas where he served as the Chief Geophysicist for Hunt Oil Company and in 1992 was appointed the Exploration Manager for the Yemen Hunt Oil Company and the Exploration Vice President of the Hunt Oil subsidiaries, Ethiopia Hunt Oil and Jannah Hunt Oil.

Boyce’s education was at Colorado School of Mines where he received a Bachelor of Science Degree in Geophysical Engineering, graduating in 1978. He is a registered Professional Geoscientist in Texas, license number 2179. Memberships in professional associations at the local, state and national levels are the Society of Exploration Geophysicists, American Association of Petroleum Geologists, Society of Professional Earth Scientists (SIPES # 3245) and Association of International Petroleum Negotiators.

EVALUATOR QUALIFICATIONS

I, Richard G. Boyce, a consulting geoscientist, maintaining offices at 4849 Greenville Avenue, Suite 1360, Dallas, Texas 75206, hereby certify:

That I am a founding member of dB, LLC and I did prepare this internal evaluation and development plan with corresponding economic values net to the interests of PAYNES FIND GOLD LIMITED for properties located at in Okfuskee County, Oklahoma.
That I graduated in Geophysical Engineering in 1978 with a Bachelor of Science degree from Colorado School of Mines, Golden, Colorado.
That I am a registered Professional Geoscientist in Texas #2179. That I have thirty-five years experience in exploration and production, reservoir studies and evaluations of Canadian, Middle Eastern, African, Australian, Central Asian, Russian, South American, and United States oil and gas fields, both onshore and offshore.
That I maintain memberships in the following professional associations: the American Association of Petroleum Geologists; the Society of Exploration Geophysicists; the Society of Professional Earth Scientists (SIPES #3245); and the Association of International Petroleum Negotiators.
That I have no financial interests (past, present or future) in any of the parties involved in this business transaction.
That I have read the ASIC Regulatory Guide 112 in relation to Independence of Experts and consider myself qualified as an independent third party evaluator under those guidelines.

4849 Greenville Ave. 7 [email protected] Suite 1360 Tel: 214-987-1779 Dallas, Texas 75206 USA Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

Sincerely,

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Richard G. Boyce Texas Board of Professional Geoscientists, License No. 2179

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4849 Greenville Ave. Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

EXECUTIVE SUMMARY

The Canadian Valley Prospect is a field development project located in Okfuskee County, Oklahoma. The project Operator will be Inland Oil & Gas, LLC (“Inland”) headed by Mr. Jeffrey Leenerts. Inland has recently drilled the Wise #1-25 well in section 25 of T10N R11E and is currently completing the well in the Wilcox sand at a depth of 3,922 feet. Initial test results indicate production from the Wilcox at rates of 100-150 barrels of oil per day (bopd). In order to produce the well, Inland is in the final stages of building necessary production infrastructure including installation of an electric submersible pump (“ESP”) salt water disposal facilities (“SWDS”), tank batteries, gas sales line, meter run and three phase electrical lines.

Partners in the project will be Inland Oil & Gas, LLC (Operator), and Paynes Find Gold Limited (“PNE”). The base lease royalty is 20% to the mineral owners while ESA and Focus are both reserving a 5% overriding royalty (ORRI) each on the property. These various Working Interests and Net Revenue Interests are detailed in the table below.

	RevenueDistribution	RevenueDistribution
Participant	Royalty	Working Interest %	Net Revenue Interest %
MineralOwners	20.0%	0.00%	0.0%
Inland O&G,LLC	0.0%	20.00%	16.0%
PNE	0.0%	80.00%	58.0% / 54.0%
ESA(ORRI)	5.0%	0.00%	0.0%
Focus (ORRI)	5.0%	0.00%	0.0%
Totals	30.0%	100.00%	70.0%

PNE has agreed to acquire an 80% working interest (58% net revenue interest) in the initial phase of the project. Additionally PNE has the option to earn an interest in the drilling of an additional three (3) new wells to fully develop the Wilcox pay sands and one (1) new well to test the potential of the Woodford Shale formation. Should this option be exercised, PNE would have an 80% working interest in each of the four wells and infrastructure, with a 54% net revenue interest. The four well drilling program has an agreed turnkey cost of $4,875,000 USD.

The economics of the initial project have been modeled using three scenarios of estimated ultimate recovery (EUR) to assess the sensitivity of the project to this variable. In the opinion of the evaluator, the P10 case carries a confidence factor of 90% that the well production will exceed 75,000 barrels of oil, while the P90 case carries a confidence factor of 10% that the well production will exceed 200,000 barrels of oil. The P50 case indicates a most likely case of 100,000 barrels with a confidence factor of 50%.

Geological and Engineering review of the initial one (1) well investment indicates the following economic summary using NYMEX Five Year Strip Price as of 10/01/2014 held flat for the life of the production. All present values shown are net to PNE’s 80% working interest and 58% net revenue interest in this initial well.

4849 Greenville Ave. 9 [email protected] Suite 1360 Tel: 214-987-1779 Dallas, Texas 75206 USA Fax: 214-447-9523

	dB, LLC Petroleum Advisory Services www.dbgeo.com Richard G. Boyce Partner EUR (bbls) PV10 (USD000) IRR (%) ROI (%) Payout (yrs) 75,000 $1,589 100,000 $2,234 200,000 $3,169	dB, LLC Petroleum Advisory Services www.dbgeo.com Richard G. Boyce Partner EUR (bbls) PV10 (USD000) IRR (%) ROI (%) Payout (yrs) 75,000 $1,589 100,000 $2,234 200,000 $3,169	dB, LLC Petroleum Advisory Services www.dbgeo.com Richard G. Boyce Partner EUR (bbls) PV10 (USD000) IRR (%) ROI (%) Payout (yrs) 75,000 $1,589 100,000 $2,234 200,000 $3,169	dB, LLC Petroleum Advisory Services www.dbgeo.com Richard G. Boyce Partner EUR (bbls) PV10 (USD000) IRR (%) ROI (%) Payout (yrs) 75,000 $1,589 100,000 $2,234 200,000 $3,169	dB, LLC Petroleum Advisory Services www.dbgeo.com Richard G. Boyce Partner EUR (bbls) PV10 (USD000) IRR (%) ROI (%) Payout (yrs) 75,000 $1,589 100,000 $2,234 200,000 $3,169
Case	EUR (bbls)	PV10 (USD000)	IRR (%)	ROI (%)	Payout (yrs)
P10	75,000	$1,589
P50	100,000	$2,234
P90	200,000	$3,169

In the event that PNE exercises the option to participate in the optional four additional well full-field development, preliminary economic evaluation indicates the project upside could approach:

Case	EUR/well (bbls)	PV10 (USD000)	IRR (%)	ROI (%)	Payout (yrs)
P10	75,000	$3,900	133	2.06	1.27
P50	100,000	$6,381	189	2.77	1.15
P90	200,000	$11,658	179	5.37	1.15

As above all discounted present values and economic indicators shown are net to PNE’s 80% working interest and 58% net revenue interest in the initial well and 54% net revenue interest in all subsequent wells.

4849 Greenville Ave. Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

PROJECT ASSESSMENT OVERVIEW

dB, LLC Petroleum Advisors have been engaged to conduct independent geological and geophysical technical due diligence on the Canadian Valley Project. Additionally dB has been asked to provide an independent engineering opinion regarding the economic viability of the project as well as to outline and discuss the various risk elements regarding drilling and completion along with a preliminary view of the overall potential of the project.

The project Operator, Inland Oil & Gas, LLC have already drilled and are in the final stages of completing the #1-25 Wise well to establish oil and gas production from the Wilcox sands at a depth of 3,922 feet. Inland has provided an extensive database of information regarding their pre-drill interpretation of both 3D seismic data and subsurface well control. Additionally, the results of well testing completed on the #1-25 well have been made available to dB for evaluation.

Independently, dB has compiled a digital geological database including well logs, well completion histories, monthly production data, scout cards and various well test results which has been placed into the Petra mapping system to conduct independent confirmation of the geological picks, completion intervals and structural mapping presented by Inland. Additionally, the large 3D seismic data volume utilized by Inland to position the first well has been loaded on the seismic workstation and reviewed by dB geophysical staff.

PROJECT LOCATION

The Canadian Valley Project is located in the east-central portion of Oklahoma in the southeast portion of Okfuskee County, Oklahoma. Positioned south of the town of Weleetka, the project is easily accessible using the all-weather access

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provided by the state highway system and well-maintained gravel county roads. The local terrain is slightly hilly with ground elevations ranging from 700 to 900 feet above sea level. No known adverse environmental conditions exist on the surface or sub-surface.

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

4849 Greenville Ave. Suite 1360 Dallas, Texas 75206 USA

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dB, LLC Petroleum Advisory Services www.dbgeo.com

Richard G. Boyce Partner

OKLAHOMA ENERGY PROFILE # from U.S. Energy Information Administration

Excluding federal offshore areas, Oklahoma ranked fifth in crude oil production in the nation in 2013.
Oklahoma is an “oil industry friendly” state. Private mineral ownership is wide spread in the state and individuals reap the benefits of an active development of oil and gas resources directly.
Oil and Gas activity is regulated by the State of Oklahoma Corporation Commission which is well organized, efficient and reasonable in protecting the environment while encouraging the development of oil and gas resources to the benefits of the tax base enjoyed by the citizens of Oklahoma. Severance taxes for both oil and gas are 7.1%.
As of January 2013, Oklahoma had five operating petroleum refineries with a combined daily capacity of over 500,000 barrels per day (3% of the total U.S. operating distillation capacity).
Oklahoma is one of the top natural gas-producing states in the nation, accounting for 7.1% of U.S. gross production and 8.4% of marketed production in 2013.
Cushing, Oklahoma is where West Texas Intermediate crude oil futures prices are settled for the New York Mercantile Exchange (NYMEX).
In 2013, Oklahoma ranked fourth in net electricity generation from wind, which provided almost 15% of the state's net generation.

GEOLOGY

The project is located within the very prolific oil and gas producing region of east-central Oklahoma at the convergence of the Arkoma Basin, the Cherokee Platform and the Arbuckle Uplift tectonic provinces of Oklahoma. There is a general north-northwest regional strike and an average west-southwesterly dip of approximately 80 to 100 feet per mile across the project area. The normal inclination of strata is interrupted in places by basement involved faulting that subsequently forms doubling plunging anticlines

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and numerous closed structural features. Many times these parallel, en-echelon fault systems create highly prospective horst blocks upon which major oil and gas production occurs.

4849 Greenville Ave. 12 Suite 1360 Dallas, Texas 75206 USA

[email protected] Tel: 214-987-1779 Fax: 214-447-9523

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dB, LLC Petroleum Advisory Services

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Stratigraphy

The stratigraphy of the Cherokee Platform contains at least 15 stacked pay horizons beginning in the Pennsylvanian at depths of 1,200 feet that persist throughout the Paleozoic at maximum depths of 5,000 feet. The stratigraphic column at right illustrates these pay zones which are comprised of both sandstone reservoirs and limestone sequences.

The main pay sands already proven productive in the Canadian Valley Project are the First and Second Wilcox sands found within the Simpson Group at a depth of 3,920 feet and 3,960 feet respectively. Typically Wilcox sands in this area range in thickness from 3’ to 10’ with porosity ranging from 12% to 18% which exhibit typical ultimate recovery in the range of 50,000 barrels of

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oil per zone. In addition to the Wilcox sands other pay zones recognized in the Simpson Group include the Viola Limestone, the Tulip Creek Sand and the Oil Creek Sand.

In addition to the already perforated and producing Wilcox Sands, petrophysical analysis of the #1-25 Wise well logs indicates potential pay zones are present in the Viola limestone at a depth of 3,880’ and in the shallower Cromwell Sandstone at a depth of 3,200’ as well as in the Union Valley Limestone at a depth between 3,030-3,122’.

Within a three mile radius of the Canadian Valley Project most of the 15 pay zones shown on the stratigraphic column above have been produced in the numerous wells surrounding the area since the first wells were drilled in the 1930’s.

Structural Setting

The Canadian Valley Project is positioned on an up-thrown horst feature which is bounded by faults to the west and to the east. The positions of these faults have been mapped using a large 50 square mile 3D seismic survey that clearly demonstrates a regional up-thrown basement block trending NE – SW upon

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which a four way anticlinal closure at the Wilcox Sand level is mapped covering sections 25 and 36 of T10N R11E. The #1-25 Wise well is optimally positioned on the crest of this structure.

The map below is a seismic time structure map on the Viola horizon which is an excellent seismic reflector. The Wilcox sands are located immediately below this level and as such, this map provides excellent control on the overall hydrocarbon trap size.

Please note that only wells that penetrate the Simpson interval are shown on the map. For purposes of clarity, shallower well penetrations have been removed. Our technical review of all deep wells on this feature reveals that within the indicated structural closure, all wells that penetrated the Wilcox sands had indications of oil while none have yet been produced. Several of the wells were drilled in the 1930’s so wireline well logs and test information on these vintage wells is sparse, but Inland has recovered scout ticket information that supports the oil shows indicated on the map. Having reviewed all available information we believe that the hydrocarbon saturation on this feature is now fully documented and any pre-drill risk of hydrocarbons trapped on this structure have now been virtually eliminated.

RESERVOIR ENGINEERING

Original Oil In Place (OOIP) - #1-25 Wise

Oil wells drilled in Oklahoma have been determined by the state oil conservation commission to drain a maximum of 40 acres. This drainage area is known as a proration unit. Full field development of the Canadian Valley Project will occur on 40 acre spacing at the Wilcox sand level.

Review of the well logs from the #1-25 Wise well reveals specific intervals that indicate potential oil and gas production. Based on the rock properties of each pay zone, reservoir engineering can determine the Original Oil in Place (OOIP) across each 40 acre unit using a standardized volumetric equation. Once OOIP is known, a recovery factor appropriate to the rock properties is applied to determine the estimated recoverable barrels of oil from each zone.

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The table below outlines each of these potential pay zones within the #1-25 Wise well.

Formation	Pay In	terval	H Feet	Net Acre s	� %	Sw %	So %	OOIP Bbls	Recovery Factor %	Estimated Recoverable Oil	Formation Total BO
1st WilcoxSd	3921	3925	4	40	13	33	67	65,392	20	13,078
	3925	3930	4	40	12	30	70	84,087	20	16,817
	3930	3933	3	40	12	27	73	87,630	20	17,538	47,433
2nd Wilcox Sd	3957	3960	3	40	12	40	60	72,074	20	14,415
	3960	3964	4	40	14	33	67	117,371	20	23,474
	3964	3968	4	40	16	35	65	78,081	20	15,616	53,505
Viola Limestone	3867	3875	8	40	4	50	50	40,041	20	8,008
	3878	3886	8	40	3	60	40	24,025	20	4,805
	3888	3892	4	40	3	58	42	12,613	20	2,523	15,336
CromwellSd	3200	3205	5	40	14	21	79	138,393	20	27,679
	3205	3212	7	40	12	23	77	161,867	20	32,373	60,052
Union Valley Lm	3030	3034	4	40	4	50	50	20,021	20	4,004
	3034	3037	3	40	3	60	40	9,009	20	1,802
	3042	3045	3	40	3	58	42	9,460	20	1,892
	3045	3049	4	40	3	58	42	12,613	20	2,523
	3067	3070	3	40	3	58	42	9,460	20	1,892
	3070	3072	2	40	3	58	42	6,307	20	1,261
	3072	3074	2	40	3	58	42	6,307	20	1,261
	3076	3080	4	40	3	58	42	12,613	20	2,523
	3102	3112	9	40	3	58	42	28,379	20	5,676
	3112	3122	10	40	3	58	42	31,533	20	6,307	29,141

Totals/Avg.			99	40	7%	47%	53%	1,027,336	20	205,467

Where: Sw is water saturation � is porosity in percent 7758 bbls per acre-foot So is oil saturation H is net pay in feet 1.24 = oil formation volume factor (Bo)

It is anticipated that the 1[st] and 2[nd] Wilcox sands will be produced together during the initial production phase in this well. The estimated recoverable reserve for these two sands totals 100,938 barrels of oil. Additional revenue will be derived from the associated high BTU gas that will be produced and sold along with the oil. Inland has provided a gas assay from the produced gas that indicates 1,500 BTU natural gas will be produced from the Wilcox interval. This high BTU content will bring a premium price from the gas gatherer. Based on analogy to other recently competed Wilcox wells that have been completed and produced in a fashion similar to the #1-25 well, it is anticipated that an initial stabilized gas/oil ratio (GOR) will be 1,200 cu. ft/bbl of oil produced. Utilizing this GOR the pro-forma decline curve predicts that approximately 165 million cubic feet of gas (mmcf) will be produced from the Wilcox interval.

Producing Wilcox wells provide engineering analogy

Since the Wise #1-25 well is still being completed and the necessary production facilities and salt water disposal capacity is still under construction, there is no long term production history from this well to provide the basis for an actual production forecast in support of a cash flow model. As such we have identified two new Wilcox wells that have been recently drilled and completed with Electrical Submersible Pumps (ESP) and that represent geologically similar conditions to the Wise #1-25 well. In

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support to the project, Inland has provided production data and well logs from the Wildhorse #2-31 well located in section 31-T17N-R5E, Lincoln County, Oklahoma. The figure shown below illustrates the producing Wilcox Sand interval and is included with permission from the Operator’s well file.

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For comparison, the #1-25 Wise well is shown below.

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

Richard G. Boyce
Partner
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Review of the Operator’s daily completion notes indicates that a total of two Wildhorse wells have been completed in the Wilcox sands beginning in February 2014. The Wildhorse #2-31 well was perforated, acidized and swab tested the lower section of the Wilcox Sandstone. The result was a very strong oil and natural gas show with formation water. A bridge plug (RBP) was set to isolate the lower Wilcox and the upper section of the Wilcox was also perforated, acidized and swab tested again yielding very strong oil and natural gas shows with formation water. Subsequently the RBP was pulled and the two Wilcox zones were commingled for production. The well was equipped with an electrical submersible pump (ESP). Essentially the same operations have occurred on the Wildhorse #1-31.

Review of Inland’s daily completion notes indicates very similar swab and test results from the #1-25 Wise well. Given the geological similarities, the same depth and completion techniques, the production results from the Wildhorse project have been deemed as useful analogs for setting up the production proforma decline curve.

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The Operator of the Wildhorse project has provided some detailed daily production records that are included herein with their permission. It is important to note that this level of data not available without access to the Operator’s internal well records. The initial daily production from the Wildhorse #1-31 well stabilized at 90-95 bopd and 100 mcfgpd within 1 week of completion. The initial daily production from

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the Wildhorse #2-31 well stabilized at 150-155 bopd and 300 mcfgpd in approximately the same time period. The daily production graph included below illustrates the combined well performance over time.

Decline Curve Analysis provides basis for economic model

A proforma decline curve was constructed using the following assumptions:

Assumptions:
� Initial Rate Oil	100 bopd
� Initial Rate Gas	120 mcfpd
� InitialGOR	1,200 cu. ft/bbl
� Abandonment Oil Rate	10 bopd
� Recoverable OilVolume	100,000 bbls

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Richard G. Boyce Partner � Recoverable Gas Volume 165,000 mcf CalculatedResult: � Exponentialdeclinerate 27%/year � ProducingLife 7years	Richard G. Boyce Partner � Recoverable Gas Volume 165,000 mcf CalculatedResult: � Exponentialdeclinerate 27%/year � ProducingLife 7years
� Recoverable Gas Volume	165,000 mcf

CalculatedResult:
� Exponentialdeclinerate	27%/year
� ProducingLife	7years

These assumptions were inserted into the PHDWin production decline modeling software which produced the pro-forma decline curves for oil and natural gas production (shown below). Based on the production forecasts, a fully discounted cash flow model was constructed to determine net present value, discounted cash flow, return on investment and other economic parameters reported.

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Economic Assumptions and Pro forma Model

Forecast of Prices and Costs

The oil and gas prices used in the economic forecast are derived from publically available sources as published by the New York Mercantile Exchange (NYMEX) using the 5-Year NYMEX Strip pricing as

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of October 1, 2014. The prices were then held flat for the duration of each year as shown in the table below with no additional escalation or de-escalation applied.

Year	Gas	Oil
2014	$4.06	$90.24
2015	$3.93	$87.55
2016	$4.04	$85.90
2017	$4.18	$84.80
2018	$4.30	$84.53
2019+	$4.30	$84.53

Cost Parameters

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Tax Considerations

Using these assumptions the single well economics model for the P50 assumption of producing 100,000 barrels of oil and 165 mmcf of natural gas during a seven year production life is presented below.

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This economics run includes a drilling cost investment of $1,218,750 yields a PV10 value of $990,570 after the project has paid out in 1.49 years. This represents a 81% internal rate of return (IRR) and an undiscounted return on investment (ROI) of 2.17. The Present Worth (PW) Profile shown in the bottom right hand corner computes PW at various other discount rates.

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All numbers shown are quoted in USD and include both State and Federal Taxes and are computed net to the PNE 54% net revenue interest.

Economic Sensitivity Modeling

As in any risked investment in the oil business, uncertainties in the actual volumes of oil and gas to be produced in the future determines in large part project economics. While no one can accurately predict the exact future performance of a given well, informed geologic and engineering estimates can place reasonable boundary conditions with regard to future expectations. Based on this approach we have modeled a series of potential economic outcomes by varying the total volume of oil produced while applying the same investment and pricing scenarios.

Based on the volumetric calculations performed on the #1-25 well and the overall results of numerous wells drilled in this area historically along with comparison to the recent production results of the Wildhorse project we have chosen three scenarios of estimated ultimate recovery (EUR) which are summarized in the table below.

In the opinion of the evaluator, the P10 case carries a confidence factor of 90% that the well production will exceed 75,000 barrels of oil, while the P90 case carries a confidence factor of 10% that the well production will exceed 200,000 barrels of oil. The P50 case indicates a most likely case of 100,000 barrels with a confidence factor of 50%.

Case	EUR (bbls)	PV10 (USD000)
P10	75,000	$1,589
P50	100,000	$2,234
P90	200,000	$3,169

In the event that PNE exercises the option to participate in the optional four additional well full-field development, preliminary economic evaluation indicates the project upside could approach:

Case	EUR/well (bbls)	PV10 (USD000)	IRR (%)	ROI (%)	Payout (yrs)	Discount Factor	FMV (USD000)
P10 (Low)	75,000	$3,900	133	2.06	1.27	25%	$2,925
P50(Preferred)	100,000	$6,381	189	2.77	1.15	25%	$4,786
P90 (High)	200,000	$11,658	179	5.37	1.15	25%	$8,744

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AI assistant

EUROPEAN LITHIUM LIMITED — Proxy Solicitation & Information Statement 2014

64880_rns_2014-12-23_9e2b5505-4b00-487b-a072-96b0d8c3884a.pdf

PAYNES FIND GOLD LIMITED (TO BE RENAMED “ARKOMA ENERGY LIMITED”)

ACN 141 450 624

NOTICE OF GENERAL MEETING

CONTENTS

IMPORTANT INFORMATION

Time and place of Meeting

Your vote is important

Voting eligibility

Voting in person

Voting by proxy

Proxy vote if appointment specifies way to vote

Transfer of non-chair proxy to chair in certain circumstances

INDICATIVE TIMETABLE*

BUSINESS OF THE MEETING

1. RESOLUTION 1 – CHANGE IN NATURE AND SCALE OF ACTIVITIES, RELATED PARTY TRANSACTION

2. RESOLUTION 2 – CONSOLIDATION OF CAPITAL

3. RESOLUTION 3 – CAPITAL RAISING

4. RESOLUTION 4 – ISSUE OF CONSIDERATION SECURITIES TO DELECTA LIMITED

Voting Prohibition Statement:

5. RESOLUTION 5 – APPOINTMENT OF MR JAMES R HOLCOMB

6. RESOLUTION 6 – CHANGE OF COMPANY NAME

7. RESOLUTION 7 – ISSUE OF OPTIONS TO RELATED PARTY – PAUL LLOYD

Voting Prohibition Statement:

8. RESOLUTION 8 – ISSUE OF OPTIONS TO RELATED PARTY – JAMES R HOLCOMB

Voting Prohibition Statement:

9. RESOLUTION 9 – ISSUE OF OPTIONS TO RELATED PARTY – MALCOLM DAY

Voting Prohibition Statement:

Dated: 23 December 2014

By order of the Board

PAUL LLOYD CHAIRMAN

EXPLANATORY STATEMENT

1. OVERVIEW OF CHANGE OF ACTIVITIES

1.1 Background

1.2 Background to Change in Nature and Scale of Activities

1.3 Canadian River, Inc.

1.4 Key Terms of the Heads of Agreement

(a) Conditions Precedent

(b) Consideration

(c)

Consolidation of Capital

(d) Capital Raising

(e)

New Director

(f) Change of Name

1.5 Pro forma balance sheet and Use of Funds

1.6 Pro forma capital structure

Shares

Options

Notes

1.7 Advantages of the Transaction

1.8 Disadvantages of the Transaction

1.9 Risk factors

Risks relating to the Change in Nature and Scale of Activities

(a) Re-Quotation of Shares on ASX

(b) Dilution Risk

(c)

Liquidity Risk

(d) Contractual Risk

(e) Sovereign

Industry Specific Risks– Oil and Gas

(a) Exploration and Development Risks

(b) Oil and gas price fluctuations

(c) Environmental

Risks relating to the Company’s operations

(a) Future capital requirements

General Risks

(a) Management of growth

(b) Competition risk

(c)

Market risk

(d) Potential acquisitions

(e)

Investment Speculative

1.10 Plans for the Company if the Resolutions are not passed

1.11 Directors’ Recommendation

2. RESOLUTION 1 – CHANGE IN NATURE AND SCALE OF ACTIVITIES, RELATED PARTY TRANSACTION

2.1 General

EUROPEAN LITHIUM LIMITED Proxy Solicitation & Information Statement 2014