EVOLUTION MINING LIMITED — Capital/Financing Update 2005

May 19, 2005

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser.

WESTONIA MINES LIMITED

ACN 084 669 036

REPLACEMENT PROSPECTUS

For a renounceable Entitlement Issue to shareholders of 115,760,902 New Shares on the basis of eleven New Shares for every ten Shares held at an issue price of 6 cents per New Share to raise \$6,655,654 (after costs of the issue)

Underwriter to the Entitlement Issue

Euroz Securities Limited

This Replacement Prospectus replaces the Prospectus lodged by the Company with ASIC on 20 May 2005

The Entitlement Issue closes at 5.00 pm on 21 June 2005

TABLE OF CONTENTS

	CORPORATE DIRECTORY	1
CHAIRMAN'S LETTER		$\overline{2}$
	Section 1 DETAILS OF THE ISSUE	3
	Section 2 PURPOSE OF THE ISSUE	7
	Section 3 EFFECT OF THE ISSUE ON THE COMPANY	8
Section 4	INFORMATION ON THE COMPANY	10
	Section 5 RISK FACTORS	18
Section 6	ADDITIONAL INFORMATION	21
	Section 7 SIGNING BY THE DIRECTORS	33
Section 8	KEY DEFINITIONS	34
	SHORTFALL APPLICATION FORM

This Replacement Prospectus is dated 20 May 2005. It replaces the Prospectus lodged with Australian Securities & Investments Commission ('ASIC') on 19 April 2005. A copy of this Replacement Prospectus was lodged with the Australian Securities & Investments Commission ('ASIC') on 20 May 2005. Neither the Australian Securities & Investments Commission nor Australian Stock Exchange Limited ('ASX') take any responsibility in respect to the contents of this Prospectus.

No securities will be allotted or issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus.

Application will be made for the New Shares issued pursuant to this Prospectus to be listed on ASX. ASX takes no responsibility for the contents of this Prospectus.

Key Definitions

Throughout this Prospectus, for ease of reading, various words and phrases have been defined rather than being repeated in full on each occasion. Definitions used in this Prospectus are set out in Section 8 of this Prospectus.

Announcement of Entitlement Issue	18 May 2005
Prospectus lodged at ASIC	20 May 2005
Application to ASX for official quotation of New Shares	20 May 2005
Existing Shares trade "ex" rights	30 May 2005
Rights trading begins	31 May 2005
Record date to determine Entitlements	3 June 2005
Prospectus with Entitlement and Acceptance Form despatched	7 June 2005
Rights trading ends	14 June 2005
Closing Date for acceptance and receipt of applications under the Entitlement Issue	21 June 2005
Holding statements for New Shares despatched	24 June 2005

SUMMARY OF IMPORTANT DATES

CORPORATE DIRECTORY

DIRECTORS	Pieter Greeff David Hatch Murray Pollock Chris Melloy David Macoboy
SECRETARY	Dennis Wilkins
REGISTERED AND PRINCIPAL OFFICE	Level 1 9 Havelock Street WEST PERTH WA 6005 Telephone: (08) 9321 3088 Facsimile: (08) 9321 8804 www.westoniamines.com.au
SOLICITORS	HARDY BOWEN 28 Ord Street WEST PERTH WA 6005
AUDITORS	ORD PARTNERS Level 2 47 Colin Street WEST PERTH WA 6005
UNDERWRITER	EUROZ SECURITIES LIMITED Level 14 1 William Street PERTH WA 6000 (08) 9488 1400 Telephone: Facsimile: (08) 9488 1477
SHARE REGISTRY	SECURITY TRANSFER REGISTRARS PTY LTD 770 Canning Highway APPLECROSS WA 6000 Telephone: $(08)$ 9315 2333 Facsimile: (08) 9315 2233

LETTER FROM THE CHAIRMAN

Dear Shareholder

During the latter half of 2004. Westonia Mines Limited experienced significant adverse contract mining and construction cost movements compared to the Bankable Feasibility Study projections. Whilst the Company made every effort to mitigate the impact of these cost increases, the Board recently came to the reluctant but responsible conclusion that the Westonia Project in its current form was too marginal to develop.

Concurrently, a Board commissioned Strategic Review in January/February 2005 concluded that although there were some areas in which potential cost savings could be realised, the real opportunity for Westonia lay in addressing the believed shortfall in the resource. The Board considers the currently modelled geological resource does significantly under-state the contained metal, but that this is largely a function of drill density. In addition, the Board believes that by fully realising the potential of the open pit resource, the Company can achieve a significantly more robust project.

Accordingly, as recommended by the Strategic Review, the Company is planning a programme to enable the required drilling to occur. This involves an initial pit dewatering programme to gain access to the pit floor, followed by two phases of drilling. The initial phase of drilling is intensive RC grade control, which will be followed by infill resource drilling. The above programmes are aimed at achieving a fully JORC compliant, geological resource upon which your Company will seek to establish a robust open pit mine.

The Board recently announced the appointment of Mr David Hatch as Managing Director. Mr Hatch is an internationally experienced Mining Engineer with a successful record in senior operational roles. Mr Hatch has responsibility for implementing the above programmes, along with reworking the Bankable Feasibility Study and then subject to the outcomes, developing the Westonia Gold Mine.

Your company is also implementing an exploration programme to test a series of near-mine and more regional anomalies, which have already been identified on the Company's substantial tenement position.

The Board regrets for any uncertainty created by the recent trading halt and voluntary suspension and the need to issue a Replacement Prospectus. These steps were necessary in order to resolve a bonding requirement in return for your Company negotiating a time extension for the removal of the Big Bell mill.

Your patience in retaining your Westonia equity is acknowledged and appreciated and the Board invites your ongoing participation in the capital raising, which is aimed at realising full value from the Company's known assets and rewarding our shareholders accordingly.

Pieter Greeff Chairman

Section 1 DETAILS OF THE ISSUE

$11$ Entitlement Issue

This Prospectus invites shareholders to participate in a pro-rata renounceable Entitlement Issue of 115,760,902 New Shares on the basis of eleven New Shares for every ten Shares held on the Record Date at an issue price of 6 cents per New Share.

The Entitlement Issue will raise \$6,945,654 less the expenses of the Entitlement Issue, which are estimated to be \$290,000 providing net funds to the Company of \$6,655,654.

As at the date of this Prospectus, 105,237,184 Shares, 27,404,669 listed Options and 2,070,000 unlisted options are on issue. New Shares will only be offered under the Entitlement Issue to holders of Shares on the Record Date. Existing holders of listed Options and unlisted options will not be entitled to participate in the Entitlement Issue but may exercise their options prior to the Record Date if they wish to participate in the Entitlement Issue.

New Shares not validly applied for under the Entitlement Issue by the Closing Date will revert to the Underwriter.

$1.2$ Minimum Subscription

The Entitlements Issue is fully underwritten by Euroz Securities Limited and, accordingly the Company will raise \$6,945,654 (before expenses) pursuant to this Prospectus.

$1.3$ Rights Trading

Entitlements to New Shares under the Entitlement Issue are renounceable. Accordingly, there will be trading of rights from 31 May 2005 to close of trading on 14 June 2005.

$1.4$ Market Prices of Shares on ASX

The highest and lowest market sale prices of Shares on ASX during the 3 months immediately preceding the date of this Prospectus and the respective dates of those sales were 18.5 cents on 22 February 2005 and 9 cents on 18 May 2005. The latest available market sale price of Shares on ASX immediately before the date of issue of this Prospectus was 9 cents on 18 May 2005.

$1.5$ Opening and Closing Dates

The Entitlement Issue will open for receipt of acceptances and applications at 9.00 am WST on 7 June 2005 and will close at 5.00 pm WST on 21 June 2005.

$1.6$ Underwriting

The Entitlement Issue is fully underwritten by Euroz Securities Limited ('Euroz'). On the proportion of the Entitlement Issue taken up by Lion Selection Group Limited a fee of 1.25% will be charged. On the balance a fee of 5% will be charged, subject to certain terms and conditions. Lion Selection Group Limited have agreed to subscribe for their full entitlement of \$2.54 million Further details of the underwriting and subunderwriting arrangements are set out in Section 6 of this Prospectus.

In addition to Lion's commitment to subscribe for its full entitlement. Lion has also agreed to sub-underwrite an additional \$1 million of the Entitlement Issue. Should Lion be called upon in full for this additional sub-underwriting commitment, it will result in an additional 16,666,667 New Shares being issued to Lion which will result in Lion's voting control of the Company increasing from 36.6% currently to 44.1%.

$1.7$ Applying for New Shares under the Entitlements Issue

All applications for New Shares pursuant to the Entitlement Issue must be made on the enclosed Entitlement and Acceptance Form.

In determining entitlements, any fractional entitlement will be rounded up to the nearest whole number.

Acceptance in Full

If you wish to take up all of your Entitlement under the Entitlement Issue, please complete the Entitlement and Acceptance Form in accordance with the instructions set out in the Form. Applications must not exceed your Entitlement as shown on the Applications exceeding your Entitlement will be deemed to be for your Form. maximum Entitlement and any surplus subscription funds will be returned.

Forward the completed Form, together with a cheque for the amount shown on the Form, in the enclosed reply paid envelop, to reach the Company's share registry, Security Transfer Registrars Pty Ltd. 770 Canning Highway, Applecross, Western Australia not later than 5.00 pm WST on 21 June 2005 or such later date as the Directors advise.

Cheques should be made payable to "Westonia Mines Limited Subscription Account" and crossed "not negotiable".

Partial Acceptance

If you wish to take up part only of your Entitlement under the Entitlement Issue, please complete the Entitlement and Acceptance Form by inserting the number of New Shares for which you wish to accept the offer under this Prospectus (being less than your Entitlement as specified on the Form) and forward the completed Form together with a cheque for the total amount payable to reach the Company's share registry, Security Transfer Registrars Pty Ltd, 770 Canning Highway, Applecross, Western Australia not later than 5.00 pm WST on 21 June 2005 or such later date as the Directors advise.

Cheques should be made payable to "Westonia Mines Limited Subscription Account" and crossed "not negotiable".

The balance of your Entitlement under the Entitlement Issue which is not accepted may be issued at the discretion of the Directors.

Non Acceptance

If you do not wish to take up any part of your Entitlement under the Entitlement Issue, you are not required to take any action. In this case, your Entitlement to subscribe for New Shares under the Entitlement Issue will revert to the Underwriter.

If you have any queries concerning your Entitlement, please contact Westonia's Share Registry located at Security Transfer Registrars Pty Ltd, 770 Canning Highway, Applecross, Western Australia, 6001, Telephone (61 8) 9315 2333 or contact your stockbroker or professional adviser.

Shortfall

If you are a shareholder as at the Record Date and wish to participate in any shortfall that may arise under the Entitlements Issue, you should complete the appropriate section on the Entitlement and Acceptance Form accompanying this Prospectus.

If you are not a shareholder as at the Record Date and wish to participate in any shortfall that may arise under the Entitlement Issue, you should complete the Shortfall Application Form attached to this Prospectus.

Forward the completed Form, together with a cheque for the total amount payable to reach the Company's share registry. Security Transfer Registrars Pty Ltd. 770 Canning Highway, Applecross, Western Australia, 6000 not later than 5.00 pm WST on 21 June 2005 or such later date as the Directors advise.

Cheques should be made payable to "Westonia Mines Limited Subscription Account" and crossed "not negotiable".

The Directors cannot quarantee that any application to participate in any shortfall will be filled. In the event the request cannot be filled (in whole or in part), monies in relation to the unallocated New Shares will be refunded in full (without interest accruing) within 21 days of notification of the shortfall by the Company to ASX.

$1.8$ Allotment of New Shares

The New Shares are expected to be allotted by no later than 24 June 2005.

$1.9$ ASX Listing

Application will be made to ASX on or before the third day on which ASX is open after the date of issue of this Prospectus for the official quotation of the New Shares offered by this Prospectus. If permission is not granted by ASX for the official quotation of the New Shares offered by this Prospectus within three (3) months of the date of issue of this Prospectus then any allotment or issue, whenever made, on application pursuant to this Prospectus is void and all moneys received pursuant to this Prospectus will be repaid to applicants.

A decision by ASX to grant official quotation of the New Shares is not to be taken in any way as an indication of ASX's view as to the merits of the Company or of the New Shares now offered for subscription. ASX takes no responsibility as to the contents of this Prospectus. Quotation, if granted, of the New Shares offered by this Prospectus will commence as soon as practicable after statements of holdings for the New Shares are dispatched.

$1.10$ Overseas Investors

This Prospectus and the Entitlement and Acceptance Form do not constitute an offer in any place where or to any person to whom it would not be lawful to make such an offer.

In accordance with the Listing Rules of ASX, the Company has decided that it would be unreasonable to extend this Entitlement Issue to Shareholders with registered addresses outside of Australia and New Zealand having regard to:

• the numbers of Shareholders with registered addresses outside of Australia and $(a)$ New Zealand:
• the number and value of the New Shares the Shareholders with registered $(b)$ addresses outside of Australia and New Zealand would be offered; and
• the cost of complying with the legal requirements of regulatory authorities in $(c)$ those countries outside of Australia and New Zealand.

This Prospectus has not been registered in New Zealand and may not contain all the information that a New Zealand registered prospectus is required to contain.

1.11 No issue of New Shares after 13 months

No New Shares will be allotted or issued on the basis of this Prospectus later than 13 months after the date of issue of this Prospectus.

Section 2 PURPOSE OF THE ISSUE

$2.1$ Purpose of the Entitlement Issue

The purpose of the Entitlement Issue is to provide the Company with additional working capital to investigate and assess new resource development opportunities at its wholly owned Westonia Gold Project. The Board of Directors believe the potential of the Westonia orebody is currently not fully realised. In order to unlock the full potential for an open pit operation, additional funding is required to generate additional drill assay data. The intention in proceeding with the current capital raising is to substantially upgrade the mineral resource, thereby providing the economic basis for a significantly more robust project. This will include applying most of the funds raised from this Entitlement Issue towards dewatering and accessing the floor of the presently flooded open pit and conducting drilling programmes from there. Should the Company not proceed with its development of the Westonia Mine, the funds raised will be utilised to assess other opportunities.

In addition to applying funds to proving the viability of the Westonia project as an open pit mine, the Company intends to provide additional performance bonding to cover rehabilitation requirements. In the event that Westonia did not comply with the terms of the amended Sale Agreement for the purchase of the Big Bell mill. Westonia will post additional performance bonding to cover the sellers mine closure rehabilitation obligations in return for a timing extension for mill removal. On the basis that Westonia does comply, the funds committed to performance bonding will be fully refundable. In addition, Westonia will post an environmental performance bond to cover the evaporation ponds which will receive the water pumped from the Westonia open pit.

Furthermore, in parallel with the dewatering and drilling programmes at Westonia, the Company will be testing a series of near-mine and more regional exploration targets aimed at providing the Company with additional future development options.

More details on the application of funds and the cost estimates are found in Section 4.4 of this Prospectus.

Section 3 EFFECT OF THE ISSUE ON THE COMPANY

$3.1$ Principal Effects

The principal effect on the Company of the issue of New Shares under this Prospectus is dependent on the success of the Entitlement Issue.

The immediate effect of the Entitlement Issue will be to increase cash reserves by approximately \$6.65 million to enable the Company to pursue its objectives.

The equity of Existing Shareholders who do not participate in the Entitlement Issue will be diluted to the extent of the Entitlement Issue as is evident from the figures set out in this section. The equity of Existing Shareholders who take up part of their Entitlement only will also be diluted but to a lesser extent.

$3.2$ Capital Structure

The Entitlement Issue will have the following effect on the Company's capital structure:

Issued Capital	Number	S
Existing Shares	105,237,184	\$13,770,542
New Shares to be issued pursuant to this Prospectus	115,760,902	\$6,655,654
Shares on issue after Entitlement Issue	220,998,086	\$20,426,196

$3.3$ Proforma Consolidated Balance Sheet

An audit-reviewed half yearly balance sheet of the Company as at 31 December 2004 has been released to ASX and ASIC. Following is a proforma consolidated balance sheet of the Company as at 30 April 2005, incorporating unaudited management accounts to 30 April 2005. The pro forma consolidated balance sheet is based on the Company's unaudited balance sheet for the year ended 30 April 2005 adjusted to show the effects of the Entitlement Issue as if it had been successfully completed on that date.

PROFORMA CONSOLIDATED BALANCE SHEET

Westonia Mines Limited

	Unaudited
	Management	Proforma
	Accounts to	30 April 2005 Post
	30 April 2005	Entitlement Issue
CURRENT ASSETS	\$	\$
Cash	757,015	7,412,669
Receivables	23,791	23,791
TOTAL CURRENT ASSETS	780,806	7,436,460
NON-CURRENT ASSETS
Plant and equipment	2,714,083	2,714,083
Investments	2
Exploration and development expenditure	7,782,866	7,782,866
TOTAL NON-CURRENT ASSETS	10,496,951	10,496,951
TOTAL ASSETS	11,277,757	17,933,411
CURRENT LIABILITIES
Accounts payable	143,359	143,359
TOTAL CURRENT LIABILITIES	143,359	143,359
TOTAL LIABILITIES	143,359	143,359
NET ASSETS	11,134,398	17,790,052
SHAREHOLDERS' EQUITY
Share capital Reserves	13,770,543	20,426,197
Accumulated profits (losses)	(2,636,145)	(2,636,145)
TOTAL SHAREHOLDERS' EQUITY	11,134,398	17,790,052

At completion of the issue the Company will have a contingent liability of \$1.5M in Note: relation to performance bonds connected with the relocation of the big bell mill and associated rehabilitation and a further \$0.3M to cover the evaporation ponds at Westonia. Please refer to the Material Contracts section of this Prospectus for further details.

Section 4 INFORMATION ON THE COMPANY

$4.1$ Background

Westonia Mines Limited has been listed on the ASX since August 2002. The Company was formed predominantly to extract the gold mineralisation remaining within the large, Edna May mineralised system which had previously hosted two phases of underground mining and one phase of open pit mining. In total, the Westonia underground and open pit mines have extracted 634,000 ounces of gold.

The higher grade underground ore is contained within a series of seven arcuate reefs which splay off the footwall contact of the Edna May Gneiss. Recovered grade of the estimated 575,000 tonnes of underground ore mined was 19.5 g/t Au for some 360,000 ounces.

The open pit mined in the 1980's was predominantly an oxide pit, with gold bearing ore found at surface in laterite, then progressively deeper in transported "wash" material, a depleted zone and a supergene enrichment zone. The as-mined open pit floor reflects the weathering profile: ACM mined little of the hard, primary ore as the processing plant was designed to treat oxide ore and was unable to treat economic quantities of hard primary ore.

The Westonia project is located adjacent and immediately to the North of the small. but well serviced wheatbelt town of Westonia. Westonia is approximately 10 kilometres North of Carrabin, which is situated on the Great Eastern Highway about 50 kilometres East of Merredin and 300 kilometres East of Perth.

Prior to and since listing. Westonia Mines Limited has consolidated a large tenement position on the largely under-explored Westonia Greenstone Belt. Westonia is the only mine of consequence on the Westonia Belt, which is approximately 100 kilometres long. The Westonia Belt is an offshoot of the Southern Cross Greenstone Belt, which is approximately 200 kilometres long, has hosted more than 20 mines and has produced more than 16 million ounces of gold.

The Westonia orebody is quite intensively drilled to around 100 metres below surface. Most of these holes were drilled in the 1980's, however as a result of the evolution of the quality control methodology since that time, the confidence levels for modern JORC compliant resource estimates are adversely impacted. Due to a combination of old underground stopes and drill collar access difficulties, the deeper drilling has significant gaps, especially in proximity to the more highly mineralised footwall contact.

Following the purchase of the Big Bell mill in November 2003 and the subsequent delays in removing the mill due to Westonia project economics, the Company has negotiated new terms for the Sale Agreement. In protecting this major tangible asset. the Company will post additional performance bonding to cover the sellers exposure associated with a newly negotiated time extension for mill removal. Further explanation is provided in Sections 4.4.7 and 5 of this Replacement Prospectus.

Map of Greenstone Belts

$4.2$ Project Status

Since listing, several programmes of drilling have been undertaken in attempts to address gaps in the drill dataset and also infill the lower parts of the 300 metre deep open pit resource. However, the pit has not been dewatered, thereby preventing the ability to collar drill holes in the pit floor to adequately address the data shadow below the pit to 200 metres depth.

Whilst gaps still existed, it was believed that the status of the mineral resource was adequate to warrant development and demonstrate an appropriate return to shareholders. Consequently, the Company proceeded to Bankable Feasibility Study status in May, 2004. Subsequently, pricing confirmation was sought by formal tendering of the open pit mining contract and the relocation of the Big Bell mill which is owned by the Company and its re-construction at Westonia.

Like many other resource companies, Westonia Mines Limited experienced the dramatic inflation of contract mining and construction costs which occurred during the latter half of 2004. Significant attempts were made to mitigate these cost increases by reworking certain aspects of the project, however the gains were insufficient to compensate for the cost increases and the Company's Board recently reluctantly concluded that the project in its current form was too marginal to develop.

Concurrent with these studies, a Strategic Review of the project was conducted from January to February, 2005 and it concluded that certain aspects of the project were worthy of further work and that incremental operating unit cost per ounce decreases could reasonably be expected.

More importantly, the Strategic Review also identified that due to the distribution of sample data the current resource estimates may be significantly understated. In the event that the Company could prove this potential resource upside, the economics of the project would receive a substantial boost.

In the expectation that a favourable development decision would be reached in 2004 for a large tonnage, low grade project, the Company acquired the Big Bell Mill in late 2003 for \$2.55M inclusive of the agents commission. Additional design and engineering expenditure was committed during the Bankable Feasibility Study. Implementation of the dewatering and drilling programmes described below will result in postponement of the development decision until mid 2006.

The Company in the meantime is incurring ownership costs associated with the retention of the Big Bell Mill. In the event that a commercially attractive offer to purchase was received, the Board will consider such an offer in the context of whether proceeds from the sale of this asset could in the shorter term be more strategically utilised in moving towards development of the Westonia Gold Mine.

$4.3$ Project Potential

The Westonia orebody is a significant resource. Historical production is approximately 630,000 ounces of gold. The estimated contained metal remaining in the mineral resource to 300 metres depth is summarised in the tabulation below.

Further analysis of the contained metal per vertical increment within the mineral resource reveals the apparent effect of the "drill shadow" below 110 metres of depth.

According to the geological resource model, the contained metal drops substantially below the zone of intensive drilling (which extends to 110 metres depth), as demonstrated in the chart below, which is for a 0.7 g/t Au cut-off.

	July 2004
	Indicated	Inferred	Total
0.7 g/t Cut-off
Tonnes (MT)	23.10	7.29	30.39
Grade $(g/t)$	1.41	1.35	1.39
Total (kozs)	1046	315	1361
1.0 g/t Cut-off
Tonnes (MT)	14.30	3.96	18.26
Grade $(g/t)$	1.76	1.77	1.76
Total (kozs)	808	226	1034

Westonia Geological Resource Summary

Mineral Resource (July 2004) 0.7 g/t Cut-Off

The Company considers that:

• the broad spaced resource drill pattern does not adequately capture the structures controlling high grade mineralisation: gaps in the resource drilling near the footwall exacerbate this situation.
• the geostatistical method of resource modelling predicts the total contained metal adequately, although typically Multiple Indicator Kriging recoverable resource estimation techniques tend to limit the effect of high grade assays and frequently predict more tonnes at a lower grade than other modelling methodologies.
• the ability of geostatistical modelling (or any other method of resource estimation) to accurately predict local tonnes and grade within the geologically complex Westonia orebody is currently compromised by drill data limitations.

The Board of Directors believe the potential of the Westonia orebody is currently not fully realised. In order to unlock the full potential for an open pit operation, additional funding is required to generate the necessary additional drill assay data. The intention in proceeding with the current capital raising is to substantially upgrade the mineral resource, thereby providing the economic basis for a significantly more robust project. The Board has a clear desire to develop the Westonia Gold Mine as soon as the appropriate project returns can be demonstrated.

The scope of the current capital raising is intended to cover the dewatering and drilling programmes, inclusive of supervision as well as re-estimation of the mineral resource, re-optimisation, pit re-design, scheduling and all work associated with the In addition, cash requirements for performance bonding Bankable Feasibility Study. associated with a time extension for removal of the Big Bell mill and for developing temporary additional evaporation pond capacity will be covered by the funds raised.

$4.4$ Proposal for Utilisation of Funds

4.4.1. General

Relatively minor earthworks will be required initially to re-establish access from the surface down the old haul road to the standing water at approximately 40 metres below surface. There is expected to be a minor ongoing earthworks requirement as the water level decreases and access to the pit floor is attained. Provision has been made for dozer works on the pit floor to ensure drill collar access positions are maximised.

It is proposed to build upon the positive relations Westonia Mines Limited enjoys with the community by engaging local persons wherever possible for installation, monitoring and other works as appropriate.

All aspects of the respective drill programmes will be undertaken so as to enhance JORC compliance of resource estimates and financier requirements.

The costs of haul road refurbishment and earthworks associated with pit floor drill collar locations area are estimated to be \$120,000.

4.4.2. Dewatering

The Westonia open pit, which was mined in the late 1980's and the associated decline developed by the previous owner are currently flooded. Past records indicate that, on average, groundwater inflow into the pit approximated 4.5 Megalitres per day. In order to gain access to the open pit floor, the pit must be dewatered and the installed pumping must then hold the water table sufficiently low to allow dry RC sampling during the proposed drill programmes.

It is proposed to dewater the open pit mine by means of an accelerated pumping programme, targeting a discharge rate of between 15 and 23 Megalitres per day. The duration of this programme to completely dewater the pit is expected not to exceed 4 - 5 months from the time pumping commences. Due to the stepped nature of the pit floor, it is likely that drilling can commence some 3 months after dewatering commences.

Two evaporation ponds were operated by ACM in a paddock to the North of the mine and a third pond was constructed, but not operated. These will be refurbished by a Westonia-based contracting firm. The Company's hydrological consultants advise that additional pond capacity will be required to accommodate the accelerated dewatering programme. It is planned to construct temporary ponds within the footprint of the approved Notice of Intent where ultimately a mine waste dump and a tailings storage facility will be constructed.

Quotations have been received for several different pumping options and for piping and pond refurbishment work. Due to the high monthly costs of pump hire and associated equipment and the likelihood of cost over-runs if delays are experienced. the Company may choose to purchase equipment where appropriate which would then be utilised longer term in the operational mine. These possible outcomes are accommodated within the overall dewatering budget of \$1,716,000.

4.4.3. Grade Control Drilling

In consultation with the Company's geostatistical consultants, an RC grade control drill programme of a nominal 10,000 metres on an 8m by 5m pattern has been designed to test an appropriate proportion of the open pit floor to $15 - 20$ metres depth. The intent of this programme is twofold. The Company wishes to gain a better understanding of the high grade structures as well as validating the geological resource model estimations for contained metal per vertical increment in the zone immediately beneath the current pit floor, which show the highest levels of contained metal in the resource model.

Secondly, a properly implemented grade control drill programme, inclusive of the appropriate quality control protocols, will provide additional information and an ability to achieve a higher level of confidence in the resource model at depth by means of further model refinement if required.

The cost of the planned grade control drill programme, inclusive of site supervision and assaying is estimated to be \$600,000.

4.4.4. Resource Drilling

The intent of additional resource drilling is also twofold.

Initially, the infill drilling will be targeted at the substantial "drill shadow" beneath the pit floor especially between 110 and 180 metres depth. There is a strong expectation that this phase of drilling will, by addressing data gaps near the footwall, significantly add to the mineral resource inventory as well as converting inferred status mineralisation to indicated. A programme of about 60 holes for approximately 4,000 metres of drilling comprises this component of the resource drilling.

In addition, a lesser number of deeper holes will target infill areas mainly aimed at conversion of inferred resources at depth in the expectation that the ultimate open pit design will be based on an optimised shell significantly deeper than 200 metres. This component comprises 15 holes for approximately 3,000 metres of drilling.

The budget for new resource drilling totals \$890,000.

4.4.5. Exploration

The Company's primary focus will remain moving the Westonia project towards development in the shortest possible timeframe. To this end, the majority of efforts will be directed towards the Westonia mine and near-mine mineralisation. However, in parallel, the Company wishes to add value to its tenements for the benefit of shareholders and intends pursuing regional exploration to follow up identified anomalies and generate new targets.

Westonia Mines Limited has developed a strong tenement position on the Westonia Greenstone Belt. In addition to being prospective for gold mineralisation, some indications exist that the belt is also prospective for nickel. Over the past two vears, the Company has carried out mainly low cost, soil geochemical fieldwork to test a number of exploration targets. This work has identified several anomalies, which warrant further work

Details of the near-mine and regional exploration programmes are still being formulated, but the planned expenditure is \$500,000 inclusive of overheads to expend over the period to June 2006.

Task Name	Duration	Sept. 05 Qtr	Dec. 05 Qtr	Mar. 06 Otr	June 06 Qtr	Sept. 06 Qtr
Dewatering	5 mths
Grade Control	3 mths
Resource Drilling	3 mths
New Resource Model	1 mth
Optimise, Re-design & Re-schedule	2 mths
New Feasibility Study	4 mths

4.4.6. Timeframe

4.4.7. Performance Bonds - Big Bell Mill

At the time of execution of the Sale Agreement in November 2003, Westonia Mines posted a performance bond of \$250,000 to cover general site cleanup. The intent of this bond was to cover the sellers risk in the event that Westonia Mines did not prepare the site post plant removal for the seller to undertake mine closure rehabilitation. At the time there was no time pressure and the seller was able to accommodate a degree of time slippage to the original undertaking of plant removal by November 2004.

The seller is however now well-advanced with its mine closure rehabilitation programmes and further time slippage beyond December 2005 will adversely impact on ultimate rehabilitation costs. Accordingly, and in consideration of the negotiated time extension to 30 April 2007, Westonia Mines is required to post additional performance bonds in order to cover the sellers tenement compliance exposure.

Westonia Mines will post an additional performance bond of \$1,000,000 no later than 15 July 2005 and a further \$250,000 no later than 30 September 2005 to meet the requirements of expected rehabilitation costs in the event that Westonia did not comply by 30 April 2007.

Compliance by Westonia Mines of Big Bell plant removal by 30 April 2007 will result in a full refund of the then committed total of \$1,500,000 in performance bonds.

4.4.8. Westonia Performance Bonding

The proposed accelerated dewatering programme at Westonia requires that additional evaporation pond capacity be available for the duration of dewatering the open pit.

It is proposed to construct the additional temporary pond capacity within the footprint of the Notice of Intent, as documented and agreed with the Department of Industry and Resources. Construction of the temporary pondage will also impact upon the Shire of Westonia, which owns the croppable paddock within which the existing ponds are located and the temporary ponds will be built.

Westonia Mines has reached written agreement with the Department of Industry and Resources to post a performance bond of \$324,000. Furthermore a funding provision of \$200,000 has been made to compensate the Shire of Westonia for loss of income associated with construction of additional, temporary evaporation pond capacity.

	\$M
Pit Access	0.12
Dewatering	1.72
Drilling	1.49
Bonding	1.77
Feasibility Study	0.50
Exploration	0.50
Administration/Overheads	0.88
Total Expenses	6.98
Opening Cash Balance	0.50
Plus Outstanding Requirements	6.49
Less Capital Raising	6.66
Amount available for Working Capital	0.17

4.4.9. Summary of Funding Requirement

Section 5 RISK FACTORS

The New Shares offered under this Prospectus are considered speculative. The Directors strongly recommend investors examine the contents of this Prospectus and consult their professional advisers before deciding whether to apply for New Shares pursuant to this In addition, investors should be aware there are risks associated with Prospectus. investment in the Company. There are certain general risks and certain specific risks which relate directly to the Company's business and are largely beyond the control of the Company and its directors because of the nature of the business of the Company.

The following summary, which is not exhaustive, represents some of the major risk factors which potential investors need to be aware of:

Share Market Conditions

As Westonia is a company listed on ASX, its Share price (and subsequently, option price) is subject to the numerous influences which may affect both the trend in the share market and the share prices of individual companies.

Economic Conditions

Economic conditions, both domestic and global, may affect the performance of the Company. Factors such as currency fluctuation, inflation, interest rates, supply and demand and industrial disruption have an impact on operating costs, commodity prices, including gold prices, and share market prices. The Company's future possible revenue and share price can be affected by these factors all of which are beyond the control of the Company and the Directors. In addition, the Company's ability to raise additional capital, should it be required, may be affected.

Operational Risk

By its nature, the business of exploration, mineral development and production which the Directors intend the Company to undertake contains risks. Prosperity depends on the successful exploration and/or acquisition of reserves, design and construction of efficient processing facilities, competent operation and management and efficient financial management. For its part, exploration is a speculative endeavour, while mining operations can be hampered by force majeure circumstances and cost overruns for unforeseen events.

Big Bell Mill

Westonia Mines purchased the Big Bell mill in November 2003 for \$2.45 million. A further \$100,000 was paid to Interguip Pty Ltd as a commission for sourcing the facility, and the associated Sale Agreement involved the three parties, namely Big Bell Gold Operations Pty Limited (Harmony), Interguip Pty Ltd and Westonia Mines Limited.

Westonia Mines committed to remove the Big Bell mill by November 2004 and posted a performance bond of \$250,000 at the time of purchase to cover site cleanup if mill removal did not occur by November 2004.

Due to postponement of the development decision by Westonia Mines, the seller became concerned that ongoing delays would adversely impact on its ability to

complete mine closure rehabilitation programmes in accordance with its tenement obligations.

Westonia Mines has now successfully negotiated a time extension to 30 April 2007, but in return is required to post additional performance bonds in order to cover the sellers mine closure rehabilitation exposure.

Following completion of the capital raising, Westonia will increase the level of performance bonding by a further \$1.0 million by no later than 15 July 2005 and then a further \$0.25 million by no later than 30 September 2005. At 30 September 2005, a total of \$1.5 million will be committed to performance bonding, a figure which will not increase until and unless Westonia Mines wishes to negotiate a further time extension for the removal of the Big Bell mill bevond 30 April 2007.

In the period until Westonia posts the additional \$1.0 million performance bond in July 2005, Westonia Mines will provide the seller with a first registered fixed charge over the Sale Assets. Following the posting of the additional \$1.0 million performance bond in July 2005, the seller will release the charge and the third party to the Sale Agreement. Interguip Pty Ltd will be released from its obligations under the Sale Agreement and shall cease to be a party to that Agreement.

Westonia Mines has entered into two separate agreements with Interguip Pty Ltd. In the event Westonia Mines undertakes to relocate the Big Bell mill to Westonia, Interquip will be engaged to carry out this work on a cost plus 20% margin basis. The second agreement involves sale of the Big Bell mill, where Westonia Mines has granted Interguip Pty Ltd exclusive agency on the basis of a 20% commission on an agreed sale value.

The additional cash performance bond requirements of \$1.25 million are fully accommodated within the current capital raising.

Native Title

The Native Title Act 1993 (Commonwealth) may affect the Company's ability to gain access to prospective exploration areas or obtain production titles. Compensatory obligations may be necessary in settling native title claims lodged over Westonia's tenements. However Native Title is not an issue for the Company for the granted Mining Leases constituting the actual Westonia Gold Project.

Environmental Risks

Exploration programmes impact on the environment. These impacts are minimised by the Company's application of best practice principles.

Government Policy

Industry profitability can be affected by changes in government policy relating to mineral exploration and production which are beyond the control of the Company.

Commodity Prices

The prices that the Company may obtain for mineral commodities may fluctuate due to market conditions and to the exchange rate.

Contingency $\bullet$

In estimating costs for the various components of the dewatering and drilling programmes, certain contingency provisions have been made and are included. In the event of an unforseen contingency however, the amount provided for exploration
will be reduced in the first instance to meet any cost overrun.

Section 6 ADDITIONAL INFORMATION

6.1 Legal Framework of this Prospectus

Westonia is a "disclosing entity" under the Corporations Law and as such is subject to regular reporting and disclosure obligations. Specifically, as a listed company, Westonia is subject to the Listing Rules of ASX which require continuous disclosure of any information the Company has to the market which a reasonable person would expect to have a material effect on the price or value of its Shares.

As a "disclosing entity" Westonia has issued this Prospectus in accordance with the provisions of the Corporations Law applicable to prospectuses for quoted enhanced disclosure securities.

Having taken such precautions and having made such enguiries as are reasonable. Westonia believes that it has complied with the provisions of ASX Listing Rules as in force from time to time which apply to disclosing entities, and which require Westonia to notify the ASIC of information available to the stock market conducted by ASX. throughout the 12 months before the issue of this Prospectus.

ASX maintains files containing publicly disclosed information about all listed companies. The Company's file is available for inspection at ASX during normal working hours. In addition, copies of documents lodged by, or in relation to, the Company with the ASIC may be obtained from, or inspected at, any Regional office of the ASIC.

$6.2$ Information Available to Shareholders

The Company will provide a copy of each of the following documents, free of charge, to any investor who so requests during the application period under this Prospectus:

• the 2004 Annual Report of Westonia which contains the financial statements $(a)$ and consolidated financial statements for the 2004 financial year;
• $(b)$ the following documents notifying ASX of information relating to Westonia during the period after lodgement of the financial statements contained in the 2004 Annual Report and before the issue of this Prospectus:

DATE	SUBJECT
18.10.04	First Quarter Activities and Cashflow Report
22.10.04	2004 Annual Report
22.10.04	Notice of Annual General Meeting
27.10.04	Change in Substantial Holding
28.10.04	Mining 2004 Conference Presentation
24.11.04	Notification of AGM on website
24.11.04	Results of AGM
24.11.04	Change in Company Secretary
25.11.04	Change of Director's Interest Notice
29.11.04	AGM Presentation
31.01.05	Second Quarter Activities and Cashflow Report
16.02.05	Change of Director's Interest Notice
21.02.05	Half Year Accounts
08.03.05	Appointment of Company Secretary and CFO
08.03.05	Ceasing to be a substantial shareholder
31.03.05	New Managing Director to Lead New Initiative
31.03.05	Final Director's Interest Notice
31.03.05	Initial Director's Interest Notice
07.04.05	Change of Director's Interest Notice
11.04.05	Presentation at Paydirt Conference 2005
12.04.05	Change of Director's Interest Notice
19.04.05	Underwritten Entitlement Issue and General Offer
20.04.05	Prospectus - Disclosure Document
20.04.05	Appendix 3B
21.04.05	Appendix 3B Amended
22.04.05	Appendix 3B Amended 21.04.05
29.04.05	March 2005 Quarterly Report
29.04.05	Appendix 5B
09.05.05	Trading Halt
11.05.05	Voluntary Suspension
11.05.05	Fund Raising Update
17.05.05	Fund Raising Resolution
17.05.05	Lifting of Voluntary Suspension
18.05.05	Underwritten Capital Raising

6.3 Rights Attaching to Shares and New Shares

Full details of the rights attaching to the Company's Shares are as set out in its Constitution, a copy of which can be inspected at the Company's registered office.

The following is a summary of the rights which attach to the Company's Shares and which will attach to the New Shares.

Voting Rights $(a)$

Each shareholder present in person or by proxy, representative or attorney has one vote on a show of hands and on a poll one vote for each fully paid share held in the capital of the Company. Shareholders holding partly paid shares have such number of votes on a poll as bears the same proportion to the total of such shares registered in a shareholder's name as the amount of the issue price thereof paid up bears to the total issued price. Each shareholder is entitled to notice of, and to attend and vote at, general meetings.

In the event of a breach of any escrow agreement entered into by the Company under the Listing Rules in relation to any shares which are classified under the Listing Rules or by ASX as vendor securities, the shareholder holding the shares in question shall cease to be entitled to any voting rights in respect of those shares for so long as the breach subsists.

$(b)$ Dividend Rights

The profits of the Company which the Directors from time to time determine to distribute by way of dividends are divisible amongst the shareholders in proportion to the number of shares held by them irrespective of the amount paid or credited as paid on the shares.

In the event of a breach of any escrow agreement entered into by the Company under the Listing Rules in relation to any shares which are classified under the Listing Rules or by ASX as vendor securities, the shareholder holding the shares in question shall cease to be entitled to any dividends in respect of those shares for so long as the breach subsists.

Rights on Winding Up $(c)$

If the Company is wound up, the liquidator may, with the authority of a special resolution, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the shareholders or different classes of shareholders.

The liquidator may with the authority of a special resolution vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any shares or other securities in respect of which there is any liability. Subject to the rights of the shareholders (if any) entitled to shares with special rights in a winding up, all moneys and property that are to be distributed among shareholders on a winding up shall be so distributed in proportion to the shares held by them respectively irrespective of the amount paid up or credited as paid up on the shares.

On a winding up of the Company, the holders of any shares which are classified under the Listing Rules or by ASX as vendor securities and which are subject to escrow restrictions at the commencement of the winding up shall rank on a return of capital behind all other shares in the Company.

$(d)$ Transfer of Shares

Subject to the Constitution of the Company, the Corporations Law, any other laws and the Listing Rules, shares in the Company are freely transferable.

$(e)$ Future Increases in Capital

The Company may by ordinary resolution:

• create new shares of such amount as is specified in the resolution;
• consolidate and divide all or any of its nominal capital into shares of a larger amount than its existing shares;
• sub-divide all or any of its shares into shares of a smaller amount; and
• cancel shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person or have been forfeited and, reduce its nominal share capital by the amount of the shares so cancelled.

The allotment and issue of any new shares is under the control of the Directors from time to time of the Company. Subject to restrictions on the allotment of shares to Directors or their associates contained in the Listing Rules, the Constitution of the Company and the Corporations Law, the Directors may allot or otherwise dispose of shares on such terms and conditions as they see fit.

$(f)$ Variation of rights

If at any time the share capital of the Company is divided into different classes of shares the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class) may be varied whether or not the Company is being wound up with the consent in writing of three quarters of the issued shares of that class or if authorised by a special resolution at a separate meeting of the holders of shares of that class.

The Directors do not anticipate declaring a dividend on the Company's Shares in the foreseeable future.

Copies of the Company's Constitution are available for inspection by shareholders at the Company's registered office during normal business hours.

6.4 Material Contracts

Sale agreement

Big Bell Gold Operations Pty Limited ("Harmony"), Westonia Mines Limited ("Westonia") and Interguip Pty Ltd ("Interguip") entered into a Sale Agreement for Plant and Associated Assets on 6 November 2003 ("Sale Agreement"). It was

subsequently varied by deeds dated 30 November 2003 and 1 July 2004 and most recently by an agreement dated 18 May 2005.

Under the Sale Agreement, Westonia purchased certain Plant and Associated Assets ("Assets") for \$2.45M. Those plant and assets included the Big Bell Mill. Westonia was obliged to remove them by a particular date, to undertake certain rehabilitation works associated with the Assets and to lodge a performance bond in the amount of \$250,000. If the relevant Assets were not removed by the relevant date. Harmony was entitled to issue notice requiring that to occur within 21 days, failing which property in the Assets would transfer to Interguip which would then be responsible for their removal and the associated rehabilitation. If Interguin failed to perform the removal and rehabilitation obligations within 4 months, Harmony was entitled to issue notice requiring that to occur within 21 days, failing which property in the Assets would transfer to it and it could perform the relevant cleanup works at the cost of Westonia and/or Interguip.

Under the subsequent variations (including the most recent variation):

• $1$ The date for moving the Assets has been extended to 30 April 2007. If that does not occur. Harmony may issue a notice requiring compliance within 21 days, failing which:
• property in the Assets transfer to Harmony; and $(a)$
• $(b)$ Harmony may undertake the removal and rehabilitation works at the cost of Westonia:
• $2.$ Relocation of certain assets within the Big Bell site (not including the Big Bell mill) are to be performed by 15 July 2005;
• $\mathcal{R}$ Westonia will undertake the rehabilitation obligations in respect of the areas upon which the relevant Assets are situated:
• $4.$ Westonia will be the Principal Employer (within the meaning of the Mines Safety and Inspection Act 1994) for the works it will undertake;
• The performance bond will be increased from \$250,000 to \$1.5M, with \$1M $5.$ payable by 15 July 2005 and the balance by 30 September 2005. A charge will be granted over the Assets until the posting of the additional \$1.0M performance bond (i.e. total of \$1.25M) in July 2005.
• Upon lodgement of the whole of the performance bond by Westonia, Interguip 6. will surrender its rights and be released from its obligations under the Sale Agreement; and
• $7₁$ Harmony is entitled to recover and remove foundations and earth from the site of the Assets to process for gold content.

Exclusive Services Agreement

In consideration of Interguip's surrendering of its rights under the Sale Agreement, Westonia has entered into an agreement with Interguip dated 18 May 2005 whereby:

• Interguip are engaged to manage the removal and relocation of the Assets $1¹$ under the Sale Agreement, in which respect they are obliged to use reasonable endeavours to obtain the best price for necessary works; and
• $\mathcal{P}$ Westonia will pay a 20% commission on the costs of such works within 30 days of incurring charges for the works.

Exclusive Agency Agreement

In consideration of Interquip's surrendering of its rights under the Sale Agreement, Westonia has entered into an agreement with Interquip whereby:

• $1$ If Westonia decides to sell the Assets or any part of them, Interquip will be Westonia's exclusive agent on such sale:
• $2₁$ Interquip are obliged to use reasonable endeavours to achieve the best possible price for the Assets: and
• $\mathcal{R}$ Westonia will pay a 20% commission on the sale price, which commission will be deducted from the proceeds of the sale of the assets.

Westonia is not obliged to sell the Assets under this agreement or otherwise. The Exclusive Agency Agreement will only apply if Westonia (in its discretion) elects to dispose of the Assets or any of them.

Charge

Under the variation to the Sale Agreement dated 18 May 2005, a charge will be granted over the Assets until the posting of the additional \$1.0M during July 2005, whereupon the charge will be released.

6.5 Interest of Directors

$(a)$ Director's Shareholding

At the date of this Prospectus the relevant interest of each of the Directors the Shares and Options of the Company is as follows:

Director	Associates	No of Shares	No. of Listed Options	No. of Unlisted Options
P Greeff	ATF The Greeff Family Trust	112,500	33,333	750,000
D Hatch $_2$				2,000,000
M Pollock	Jayleaf Holdings Pty Ltd 3 Goldrich Holdings Pty Ltd 4	16,250 1,562,151 10,006,283	3,333 413,800 3,333,344
C Melloy	Gemfield Lake Pty Ltd 5 Melloy Superannuation Fund A/c 6	40,000 30,000	13,333 10,000
D Macoboy	Jeumont Pty Ltd ATF DMM Superfund $7$	100,000

• $1¹$ Mr Greeff is the trustee and beneficiary of the Greeff Family Trust.
• $\mathcal{P}$ Mr Hatch's interest is subject to shareholder approval at the next general meeting of the members of the Company.
• $\mathfrak{Z}$ . Mr Pollock is a director of and 100% shareholder of Jayleaf Holdings Pty Ltd.
• Mr Pollock is a director of and 100% shareholder of Goldrich Holdings Pty $\overline{4}$ $ht$
• 1. Mr Melloy is a director of and 50% shareholder of Gemfield Lake Pty Ltd.
• 1. Mr Melloy is a trustee of the Melloy Superannuation Fund of which Mr Melloy is a member.
• $7¹$ Mr Macoboy is a director of and 100% shareholder of Jeumont Pty Ltd, which is the trustee of the DMM Superannuation Fund of which Mr Macoboy is a beneficiary.
• Mr Hatch has entered into a sub-underwriting agreement with the 8. Underwriter whereby Mr Hatch or his nominee has agreed to subunderwrite 333.334 New Shares in firm relief of the Underwriters obligation.
• $\mathbf{q}$ Mr Pollock has entered into a sub-underwriting agreement with the Underwriter whereby Mr Pollock or his nominee has agreed to subunderwrite 3,333,334 New Shares in firm relief of the Underwriters obligation.
• Mr Melloy has entered into a sub-underwriting agreement with the $10^-10$ Underwriter whereby Mr Melloy or his nominee has agreed to subunderwrite 1,000,000 New Shares in firm relief of the Underwriters obligation.
• 1. Mr Melloy is a Director of the Lion Manager Pty Ltd, which provides investment management services to Lion.

The Directors may subscribe for New Shares under this Prospectus.

Directors' Remuneration $(b)$

The aggregate Directors' fees has been set at a maximum of \$200,000 per annum. Non executive Directors are paid fees totalling \$85,000 per annum.

The Directors' fees may not be increased except pursuant to a resolution passed at a general meeting of shareholders of the Company where notice of the amount of the proposed increase and the maximum sum that may be paid have been given to shareholders in the notice of the meeting.

Non-executive Directors will receive such remuneration as the Directors determine. However, non-executive Directors will not be paid any part of their remuneration as a commission on or a percentage of the profits of the Company or a commission or a percentage of operating revenue.

$(c)$ Share Qualifications

Under the Constitution of the Company, the Directors are not required to hold any Shares in the Company.

Directors' Interests $(d)$

• $(i)$ An agreement (Employment Agreement) dated 31 March 2005 between the Company and Mr D Hatch for, among other things, the provision of Mr Hatch's services as Managing Director on reasonable commercial terms and conditions.
• An agreement (Deed of Indemnity, Insurance and Access) dated 13 April $(ii)$ 2005 between the Company and Mr D Hatch.
• $(iii)$ The Company paid for directors and officers liability insurance during the vear.

Other than the above and elsewhere in this Prospectus, no Director holds an interest, whether directly or indirectly in a contract or proposed contract with the Company.

$(e)$ Remuneration

The provisions of the Company's Constitution relating to the remuneration of Directors are as follows:

Article 13.7: The Directors shall be paid out of the funds of the Company by way of remuneration for their services as Directors such sum as may from time to time be determined by the Company in general meeting, to be divided among the Directors in such proportions as they shall from time to time agree or in default of agreement equally. Fees payable to non-executive Directors shall be by a fixed sum and not by a commission on or percentage of profits or operating revenue. Remuneration pavable to executive Directors shall not include a commission on or a percentage of operating revenue. The remuneration of a Director shall be deemed to accrue from day to day.

Article 13.8: The Directors shall be entitled to be paid reasonable travelling,

hotel and other expenses incurred by them respectively in or about the performance of their duties as Directors. If any of the Directors being willing shall be called upon to perform extra services or make any special exertions on behalf of the Company or the business thereof, the Directors may remunerate such Director in accordance with such services or exertions, and such remuneration may be either in addition to or in substitution for his share in the remuneration provided for by Article 13.8.

Article 13.7: The Managing Director or an executive Director shall, subject to the terms of any agreement entered into in a particular case, receive such remuneration (whether by way of salary, commission or participation in profits. or partly in one way and partly in another) as the Directors may determine provided that no executive Director shall be paid as the whole or part of his remuneration a commission on or percentage of operating revenue.

6.6 Underwriting

By virtue of the Underwriting Agreement dated 18 May 2005 made between the Underwriter and the Company, the Underwriter has agreed to fully underwrite (subject) to the terms and the termination events summarised below) the Entitlement Issue for an underwriting fee. On the proportion of the Entitlement Issue taken up by Lion Selection Group Limited, or an associated entity, a fee of 1.25% will be charged. On the balance a fee of 5% will be charged, plus out of pocket expenses incurred by the Underwriter in connection with or arising out of the Entitlement Issue.

The Company has agreed to indemnify the Underwriter, its related bodies corporate and their respective officers, employees and client advisers against all losses, liabilities and legal costs arising directly or indirectly as a result of or in connection with the issue of this Prospectus.

The Underwriter may terminate the Underwriting Agreement if any of the following events occur between the date of the Underwriting Agreement and the issue and allotment of the New Shares comprised in any shortfall under the Entitlement Issue provided that in the opinion of the Underwriter (acting reasonably), the event has or is likely to have a material adverse effect on the assets of the Company or on the outcome of the Issue or is likely to give rise to a liability of the Underwriter (other than a liability of a trivial or minor nature).

The terminating events are set out below, where "Relevant Company" means Westonia and its subsidiaries:

Events of Termination

The Underwriter may, by giving written notice to the Company at any time prior to the issue of the Underwritten Shares, including the Shortfall Shares, terminate its obligations under this Agreement if:

• Prospectus: any of the following occurs in relation to the Prospectus: $(a)$
• it is not lodged with ASIC by 31 May 2005 (or such later date agreed in $(i)$ writing by the Underwriter);

• $(ii)$ the Underwriter reasonably forms the view that there is a material omission, it contains a material statement which is misleading or deceptive, or a material statement has become misleading or deceptive;

• $(iii)$ the Underwriter reasonably forms the view that any projection or forecast in the Prospectus becomes, to a material extent, incapable of being met or unlikely to be met in the projected time;

• ASIC gives notice of intention to hold a hearing under section 739(2) of $(iv)$ the Corporations Act or makes an interim order under section 739(3) of the Corporations Act: or
• $(v)$ any person other than the Underwriter who consented to being named in the Prospectus withdraws that consent;
• $(b)$ Supplementary Prospectus: the Underwriter reasonably forms the view that a supplementary or replacement document (as appropriate) must be lodged with ASIC under section 719 or section 724 of the Corporations Act and the Company does not lodge a supplementary or replacement document (as the case may be) in the form and content and within the time reasonably required by the Underwriter:
• ASX listing: ASX does not give approval for the Underwritten Shares to be $(c)$ listed for official quotation, or if approval is granted, the approval is subsequently withdrawn, qualified or withheld;
• Index change: the S&P ASX 200 Index as determined at close of trading falls $(d)$ to a level that is 90% or less of the level at the close of trading on the date of this Agreement:
• $(e)$ indictable offence: a director of the Company or any Related Corporation is charged with an indictable offence;
• $(f)$ return of capital or financial assistance: the Company or a Related Corporation takes any steps to undertake a proposal contemplated under section 257A or passes or takes any steps to pass a resolution under section 260B of the Corporations Act, without the prior written consent of the Underwriter:
• $(q)$ banking facilities: the Company's bankers not terminating or issuing any demand or penalty notice or amending the terms of any existing facility or claiming repayment or accelerated repayment of any facility or requiring additional security for any existing facility;
• $(h)$ change in laws: any of the following occurs:
• $(i)$ the introduction of legislation into the Parliament of the Commonwealth of Australia or of any State or Territory of Australia; or
• the public announcement of prospective legislation or policy by the $(ii)$ Federal Government, or the Government of any State or Territory; or
• the adoption by the ASIC, its delegates, ASX, the Reserve Bank of $(iii)$ Australia or any other regulatory authority of any regulations or policy.

which does or is likely to prohibit, restrict or regulate the principal business of the Company, the Offer or the operation of stock markets generally;

• failure to comply: the Company or any Related Corporation fails to comply $(i)$ with any of the following:
• $(i)$ a provision of its constitution;
• $(ii)$ any statute:
• a requirement, order or request, made by or on behalf of the ASIC or any $(iii)$ Governmental Agency; or
• (iv) any material agreement entered into by it;
• $(i)$ alteration of capital structure or constitution: except as described in the Prospectus, the Company alters its capital structure or its constitution without the prior written consent of the Underwriter:
• $(k)$ hostilities: there is an outbreak of hostilities or a material escalation of hostilities (whether or not war has been declared) after the date of this Agreement involving one or more of Australia, Philippines, Indonesia, Japan, Russia, the United Kingdom, the United States of America, or the Peoples Republic of China:
• $(1)$ extended Force Majeure: a Force Majeure, which prevents or delays an obligation under this Agreement, lasting in excess of 2 weeks occurs;
• $(m)$ default: the Company is in default of any of the terms and conditions of this Agreement or breaches any warranty or covenant given or made by it under this Agreement:
• adverse change: any adverse change occurs which materially impacts or is $(n)$ likely to impact the assets, operational or financial position of the Company or a Related Corporation (including but not limited to an administrator, receiver, receiver and manager, trustee or similar official being appointed over any of the assets or undertaking of the Company or a Related Corporation):
• investigation: any person is appointed under any legislation in respect of $(0)$ companies to investigate the affairs of the Company or a Related Corporation;
• general meeting required: ASX or the ASIC or any other governmental $(p)$ agency requires the Company to, or stipulates that the Company should, convene a general meeting to consider any aspect of the issue of the Underwritten Shares, including, without limitation, the participation of the Underwriter or any Sub-Underwriter:
• sub-underwriters: any of the Sub-Underwriters do not comply with their $(q)$ respective obligations under the sub-underwriting agreements or threaten to not comply with their respective obligations under the sub-underwriting agreements;
• due diligence: there is a material omission from the results of the due diligence $(r)$ investigation performed in respect of the Offer or the results of the investigation or the verification material are false or misleading:

• Prescribed Occurrence: a Prescribed Occurrence occurs, other than as $(s)$ disclosed in the Prospectus;

• Suspension of debt payments: the Company suspends payment of its debts $(t)$ denerally:

• Event of Insolvency: an Event of Insolvency occurs in respect of a Related $(u)$ Corporation: or
• Judgment against a Related Corporation: $(v)$ a judgment in an amount exceeding \$50,000 is obtained against the Company or a Related Corporation and is not set aside or satisfied within 7 days.

6.7 Consents and Liability Statements

Hardy Bowen have given and not withdrawn their consent to be named as solicitors to the Company in the form and context in which they are included. Hardy Bowen have had no involvement in the preparation of this Prospectus other than references to their consent. Hardy Bowen have not authorised or caused the issue of the whole or any part of this Prospectus and expressly disclaim and take no responsibility for any statements in or omissions from any part of this Prospectus.

Ord Partners have given and not withdrawn their consent to be named as Auditors of the Company in the form and context in which they are included. Ord Partners have had no involvement in the preparation of this Prospectus other than references to their consent. Ord Partners have not authorised or caused the issue of the whole or any part of this Prospectus and expressly disclaim and take no responsibility for any statements in or omissions from any part of this Prospectus.

Euroz Securities Limited has given and not withdrawn its consent to be named in this Prospectus as Underwriter to the Entitlement Issue, in the form and context in which it is named. Euroz Securities Limited has not authorised or caused the issue of any part of this Prospectus. Euroz Securities Limited makes no representations regarding. and takes no responsibility for, any statements or omissions from any part of this Prospectus.

Security Transfer Registrars Pty Ltd has given its consent to be named as Share Registry to the Company. Security Transfer Registrars Pty Ltd has only authorised the issue of that part of the Prospectus where it is named as the share registry of the Company and has not authorised or caused the issue of, and expressly disclaims and takes no responsibility for, any other part of this Prospectus.

6.8 Expenses of the Entitlement Issue

The approximate costs of the Entitlement Issue, including underwriting fees, are \$290,000.

$6.9$ Documents Available for Inspection

Copies of the following documents will be available for inspection free of charge during normal business hours at the registered office of the Company for 12 months after the date of this Prospectus:

• Constitution of the Company; $(a)$
• $(b)$ this Prospectus:
• Material Contracts referred to in Section 6.5; and $(c)$
• $(d)$ consents referred to in Section 6.6.

Section 7 SIGNING BY THE DIRECTORS

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and that in respect to any other statements made in the Prospectus by persons other than Directors, the Directors have made reasonable enquiries and on that basis have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, those persons have given their consent to the statements being included in this Prospectus in the form and context in which they are included and have not withdrawn that consent before lodgement of this Prospectus with the ASIC, or to the Directors knowledge, before any issue of New Shares pursuant to this Prospectus.

The Prospectus is prepared on the basis that certain matters may be reasonably expected to be known to likely investors or their professional advisers.

Each Director has consented to the lodgement of this Prospectus with the ASIC and has not withdrawn that consent.

D. F. Hotch

David Hatch

20 May 2005

Section 8 KEY DEFINITIONS

"ASIC" means Australian Securities & Investments Commission:

"ASX" means Australian Stock Exchange Limited;

"Closing Date" means 21 June 2005;

"Company" and "Westonia" means Westonia Mines Limited ACN 084 669 036 and where relevant, its subsidiary companies;

"Directors" means the directors of the Company:

"Entitlement" means the entitlement of a shareholder to apply for New Shares under the Entitlement Issue:

"Entitlement and Acceptance Form" means the entitlement and acceptance form accompanying this Prospectus:

"Entitlement Issue" means the proposed issue pursuant to this Prospectus of up to 115,760,902 New Shares at an issue price of 6 cents per New Share:

"Listing Rules" means the Listing Rules of ASX;

"New Share" means a Share to be issued by the Company under this Prospectus:

"Record Date" means 3 June 2005:

"Share" means an ordinary fully paid share in the capital of the Company;

"Underwriter" means Euroz Securities Limited ACN 089 314 983:

"Underwriting Agreement" means the underwriting agreement made 18 May 2005 between the Company and the Underwriter; and

"WST" means Australian Western Standard Time.

SHORTFALL APPLICATION FORM

IMPORTANT NOTE

This Application Form is for use only if you desire to participate in any shortfall of New Shares not taken up by Shareholders under the Entitlements Issue

The Directors To:

Westonia Mines Limited (ACN 084 669 036)

Before lodging this Application Form, Applicants should read the Prospectus to which this Application Form relates. Applications should be completed in accordance with the application instructions contained on the back of this Application Form.

I/We apply for ............................. New Shares (number of New Shares applied for) at a price of 6 cents per New Share, and lodge a cheque for \$................... being the subscription amount to this application.

Complete full name:
(Applicant)
(Mr/Mrs/Miss/Ms or Company Name) (given name(s))		(surname)
(Joint Applicant)
(Mr/Mrs/Miss/Ms)	(given name(s))	(surname)
Address Details:
(number and street)
(suburb or city)	(State)	(postcode)
Telephone Details:
STD ( ) (Home)	STD ( ) (Business)	(contact name)

Broker Sponsored Applicants only:

SBN/IPN ....................................

Declaration and Statements:

By lodging this Application Form:

I/We declare that all details and statements made by me/us are complete and accurate; I/We agree to be bound by the Constitution of the Company; and I/We authorise the Company to complete and execute any document necessary to effect the grant of Options to me/us.

In the event that I/We received this Prospectus electronically via the Internet I/We declare that I/We received this Prospectus personally, or a print out of it, accompanied by or attached to the Application Form prior to applying for New Shares. I/We acknowledge that the Corporations Law prohibits any person from passing on to another person the Application Form unless it is attached to or accompanied by the complete and unaltered electronic version of this Prospectus.

SHORTFALL APPLICATION INSTRUCTIONS

IMPORTANT NOTE

This Application Form is for use only if you desire to participate in any shortfall of New Shares not taken up by Shareholders under the Entitlements Issue.

Each applicant makes the following undertaking and acknowledgment:

This application is for New Shares in Westonia Mines Limited upon and subject to the terms and conditions of the Prospectus. All applications must be accompanied by payment of 6 cents per New Share.

Completed Application	Security Transfer Registrars Pty Ltd
Forms should be	770 Canning Highway
returned to:	APPLECROSS WA 6153

Cheques must be made payable to "Westonia Mines Limited Subscription Account"

As required by the Corporations Law, this Application Form must not be handed on to any person unless attached to this Prospectus. Please provide us with a telephone contact number (including the person responsible in the case of an application by a company) so that we can contact you promptly if there is an irregularity in your Application Form. If your Application Form is not completed correctly, it may still be treated as valid. There is no requirement to sign the Application Form. The Company's decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final.

Paper Copy of Prospectus

If you have received this Prospectus electronically via the Internet please ensure that you have received the entire Prospectus accompanied by the Application Form. You have the right at all times during the life of this Prospectus to obtain a paper copy of the Prospectus. If you wish to obtain a paper copy of the Prospectus, please contact the Company and the Company will send to you (at no cost to you) a paper copy of the Prospectus.

Correct Forms of Registrable Title

Applications must be made in the name(s) of natural person(s), companies or other legal entities acceptable to the Company. At least one full given name and the surname is required for each natural person. Some examples of incorrect and correct forms of registrable title are:

Type of Investor	Correct Form	Sample of Incorrect Form
Trusts	Andrew Brown (do not use name of trust, use personal name of trustee)	(a) Andrew Brown trustee for Michael Brown (b) Andrew Brown Family Trust (c) Andrew Brown Trust Account (d) Andrew Brown No 1 Account
Deceased Estates	Terry Brown (do not use name of deceased, use executor(s) personal names)	(a) Michael Brown (deceased). (b) Estate of the Late Michael Brown
Partnerships	Andrew Brown & Michael Brown (do not use name of partnership) use partners' personal names)	(a) Michael Brown & Son (b) Brown & Brown
Clubs/ Unincorporated Bodies	(a) Andrew Brown, or (b) Andrew Brown & Michael Brown (do not use name of clubs etc, use office bearer(s) personal name(s))	(a) Brown Investment Club (b) ABC Tennis Association
Superannuation Funds	(a) Michael Brown (do not use name of fund, use name of trustee of fund)	(a) Michael Brown Pty Limited Superannuation Fund