FIN RESOURCES LIMITED - Capital/Financing Update 2008

MONITOR ENERGY LIMITED ACN 009 121 644

ENTITLEMENT ISSUE PROSPECTUS

For a non-renounceable entitlement issue of one (1) Option for every two (2) Shares held by Shareholders registered at 5.00pm (WST) on 15 July 2008 at an issue price of $0.002 cents per Option to raise approximately $728,617.

Each Option has an exercise price of $0.025 each on or before 5.00 pm (WST) on 31 August 2011.

The Offer is not underwritten, however the Company has entered into an agreement with Melbourne Capital Limited to place any shortfall on a reasonable endeavours basis.

IMPORTANT NOTICE

This document is important and should be read in its entirety. If after reading this Prospectus you have any questions about the securities being offered under this Prospectus or any other matter, then you should consult your stockbroker, accountant or other professional adviser.

The Options offered by this Prospectus should be considered as speculative.

1.	SUMMARY OF IMPORTANT DATES AND IMPORTANT NOTES ........................... 3
2.	CORPORATE DIRECTORY.................................................................................... 5
3.	DETAILS OF THE OFFER........................................................................................ 6
4.	PURPOSE AND EFFECT OF THE OFFER.............................................................. 10
5.	RIGHTS AND LIABILITIES ATTACHING TO THE SHARES AND OPTIONS........... 13
6.	RISK FACTORS ................................................................................................... 18
7.	ADDITIONAL INFORMATION ............................................................................ 22
8.	AUTHORITY OF DIRECTORS............................................................................... 28
9.	DEFINITIONS ...................................................................................................... 29

1. SUMMARY OF IMPORTANT DATES AND IMPORTANT NOTES

TIMETABLE AND IMPORTANT DATES

Lodgement of Prospectus with ASIC and ASX	4 July 2008
Lodgement of Appendix 3B with ASX	4 July 2008
Notice sent to Shareholders	8 July 2008
Ex Date	9 July 2008
Record Date for determining entitlements to Options	15 July 2008
Prospectus despatched to Shareholders	17 July 2008
Closing Date of Offer	31 July 2008
Securities quoted on a deferred settlement basis	1 August 2008
Despatch of holding statements	11 August 2008

The Directors may extend the Closing Date by giving at least 6 business days notice to ASX prior to the Closing Date. As such the date the Options are expected to commence trading on ASX may vary.

IMPORTANT NOTES

Shareholders should read this document in its entirety and, if in doubt, should consult their professional advisors.

This Prospectus is dated 4 July 2008 and a copy of this Prospectus was lodged with the ASIC on that date. The ASIC and ASX take no responsibility for the content of this Prospectus.

The Expiry Date of the Prospectus is the date that is 13 months after the date of this Prospectus (Expiry Date). No Shares or Options will be allotted or issued on the basis of this Prospectus after the Expiry Date.

Applications for Options offered pursuant to this Prospectus can only be submitted on an original Entitlement and Acceptance Form which accompanies this Prospectus.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities laws. Applicants who are resident in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

No person is authorised to give information or to make any representation in connection with this Prospectus which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

ELECTRONIC PROSPECTUS

Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

2. CORPORATE DIRECTORY

Directors

Share Registry*

Scott Spencer Jon Roestenburg Mark Gwynne

Company Secretary

Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace PERTH WA 6000

Martin Stein

Telephone 1300 55 70 10 Facsimile (+61 8) 9323 2033

Registered Office

35 Richardson Street West Perth WA Telephone (+61 8) 9211 1555 Facsimile (+61 8) 9211 1500

Solicitors

Steinepreis Paganin Lawyers and Consultants Level 4 16 Milligan Street PERTH WA 6000

Website and E-mail Address

www.monitorenergy.com.au

This party is included for information purposes only. It has not been involved in the preparation of this Prospectus.

3. DETAILS OF THE OFFER

3.1 Offer of Options

The Offer is being made as a non-renounceable entitlement issue of one (1) Option for every two (2) Shares held by Shareholders registered at 5.00pm (WST) on the Record Date at an issue price of $0.002 per Option. Fractional Entitlements will be rounded up to the nearest whole number.

Based on the capital structure of the Company, the maximum number of Options to be issued pursuant to this Offer is approximately 364,308,384. The Offer will raise up to approximately $728,617 before costs of the issue. The purpose of the Offer and the use of funds raised are set out in Section 4 of this Prospectus.

The Company currently has 29,500,000 Options on issue. The Option Holders are not entitled to participate in the Offer to the extent of those Options. However, it is a term of those Options that the Option Holders be given seven (7) days notice prior to the Record Date to exercise their Options in order to participate in the Offer.

3.2 How to Accept the Offer

Your acceptance of the Offer must be made on the Entitlement and Acceptance Form accompanying this Prospectus. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement.

You may participate in the Offer as follows:

(a) if you wish to accept your Entitlement in full:
(i) complete the Entitlement and Acceptance Form, filling in the details in the spaces provided; and
(ii) attach your cheque for the amount indicated on the Entitlement and Acceptance Form; or
(b) if you only wish to accept part of your Entitlement:
(i) fill in the number of Options you wish to accept in the space provided on the Entitlement and Acceptance Form; and
(ii) attach your cheque for the appropriate application monies (at $0.002 per Option); or
(c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “Monitor Energy Limited – Subscription Account” and crossed “Not Negotiable”.

Your completed Entitlement and Acceptance Form and cheque must reach the Company no later than 5:00pm (WST) on the Closing Date.

The Offer is non-renounceable. Accordingly, a holder of Shares may not sell or transfer all or part of their Entitlement.

4.1 No Underwriting

The Entitlement Issue is not underwritten, however, the Company has granted to Melbourne Capital Limited the rights to place the Shortfall on a reasonable endeavours basis. Refer to Section 7.3 for the material terms of the agreement with Melbourne Capital Limited.

4.2 Shortfall

If you do not wish to take up any part of your Entitlement you are not required to take any action. That part of your Entitlement not taken up will form part of the Shortfall. Shareholders who wish to apply for Options above their Entitlement can complete the Shortfall Application Form attached to the back of this Prospectus and return it, together with a cheque for the value of those Shortfall Options (at $0.002 per Option) to the Company.

The offer of the Shortfall is a separate offer pursuant to this Prospectus. The issue price of any Options offered pursuant to the Shortfall Offer shall be $0.002 cents being the price at which the Entitlement has been offered to Shareholders pursuant to this Prospectus. The Shortfall shall be placed at the discretion of the Company in consultation with Melbourne Capital Limited. The Company reserves the right to allot to an applicant a lesser number of Shortfall Options than the number for which the applicant applies, or to reject an application, or to not proceed with placing the Shortfall (pursuant to the agreement with Melbourne Capital Limited).

3.3 Australian Securities Exchange Listing

Application for official quotation by ASX of the Options offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus. If approval is not obtained from ASX before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue any Options and will repay all application monies for the Options within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant official quotation to the Options is not to be taken in any way as an indication of the merits of the Company or the Options now offered for subscription.

3.4 Allotment of Options

Options issued pursuant to the Offer will be allotted as soon as practicable after the Closing Date. The Company will allot the Options on the basis of a Shareholder’s Entitlement. Where the number of Options issued is less than the number applied, or where no allotment is made (in respect of the Shortfall Offer), surplus application monies will be refunded without any interest to the applicant as soon as practicable after the Closing Date.

Pending the allotment and issue of the Options or payment of refunds pursuant to this Prospectus, all application monies will be held by the

Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

Holding statements for the Options will be mailed as soon as possible after the Closing Date.

3.5 Overseas Shareholders

This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus.

It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of Options these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Options will not be issued to Shareholders with a registered address which is outside Australia or New Zealand.

Shareholders resident in New Zealand should consult their professional advisors as to whether any government or other consents are required, or other formalities need to be observed, to enable them to exercise their Entitlements under the Offer.

3.6 Taxation Implications

The Directors do not consider that it is appropriate to give Applicants advice regarding the taxation consequences of applying for Options under this Prospectus, as it is not possible to provide a comprehensive summary of the possible taxation consequences. The Company, its advisers and officers, do not accept any responsibility or liability for any taxation consequences to Applicants. Potential Applicants should, therefore, consult their own professional tax adviser in connection with the taxation implications of the Options offered pursuant to this Prospectus.

3.7 Privacy Act

If you complete an application for Options, you will be providing personal information to the Company (directly or by the Company’s share registry). The Company collects holds and will use that information to assess your application, service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company’s share registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company’s share registry if you wish to do so at the relevant contact numbers set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for Options, the Company may not be able to accept or process your application.

4. PURPOSE AND EFFECT OF THE OFFER

4.1 Purpose of the Offer

The purpose of the Offer is to raise approximately $728,617 (before expenses). The funds raised from the Offer (after expenses) will be used as set out in the table below:

	$
Exploration expenditure on Kyrgyz assets1	600,000
Working capital	60,890
Expenses of the Offer2	67,727
Total raised pursuant to Offer	728,617

The Company is intending on using the funds raised from the Offer to continue the development of the Company’s Kyrgyz assets.
Refer to Section 7.7 of this Prospectus for further details relating to the expenses of the Offer.

5.1 Effect of the Offer and Pro Forma Statement of Financial Position

Set out below is:

(a) an unaudited Balance Sheet as at 18 June 2008 and
(b) an unaudited pro forma Balance Sheet at 18 June 2008 incorporating the effects of the Offer.

The proposed transactions adjusting the 18 June 2008 unaudited Balance Sheet in the pro forma Balance Sheet are:

(a) the issue of 364,308,384 Options pursuant to this Prospectus; and
(b) the receipt of funds of $728,617 and the payment of costs of $67,727 relating to this Prospectus.

5.2 Pro Forma Balance Sheet

The Balance Sheet as at 18 June 2008 (unaudited) and unaudited Pro Forma Balance Sheet as at 18 June 2008 shown on the following page have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position, assuming that all the Options are issued by the Closing Date. They have been prepared on the assumption that the Offer is fully subscribed.

The statements have been prepared to provide Shareholders with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form,

insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

Current Assets Cash and cash equivalents Trade and other receivables Inventory Other Total Current Assets Non-Current Assets Exploration and evaluation Property, plant & equipment Total Non-Current Assets TOTAL ASSETS Current Liabilities Trade and other payables Provisions Tax liabilities Total Current Liabilities TOTAL LIABILITIES NET ASSETS Equity Issued capital Reserves Accumulated losses TOTAL EQUITY	Unaudited as at 18 June 2008 Proforma Adjustments Note $ $ 1,237,761 660,890 1 16,073 - 7,101 - 2,359 - 1,263,295 660,890 2,881,044 - 236,058 - 3,117,102 - 4,380,397 660,890 76,731 - 7,853 - 8,295 - 92,879 - 92,879 - 4,287,518 660,890 14,861,765 660,890 1 124,662 - (10,698,909) - 4,287,518 660,890	Unaudited Proforma as at 18 June 2008 $ 1,898,651 16,073 7,101 2,359
		1,924,185
		2,881,044 236,058
		3,117,102
		5,041,287
		76,731 7,853 8,295
		92,879
		92,879
		4,948,408
		15,522,655 124,662 (10,698,908)
		4,948,408

Notes:

Proforma adjustment based on the Company receiving the proceeds from the Issue of Options under the Entitlements Issue. The adjustment reflects the Entitlements Issue being fully subscribed, and the Company receiving proceeds of $728,617 via the issuance of 364,308,304 Options at a price of $0.002 per Option. The Company’s anticipated costs associated with the Entitlements Issue, being $67,727, have being applied against the proceeds received, giving a net cash inflow of $660,890.

5.3 Effect on Capital Structure

A comparative table of changes in the capital structure of the Company as a consequence of the Offer is set out below, assuming that the Offer is fully subscribed.

	Number
Shares currently on issue	728,616,768
Shares offered pursuant to the Offer	0
Total Shares on issue	728,616,7681

Notes:

Assumes the Offer is fully subscribed and no Options are exercised prior to the Record Date.
As at the date of this Prospectus, the Directors intend to seek the approval of Shareholders to issue up to 100,000,000 Shares for the purpose of raising ongoing capital for the Company. In the event approval is given to the Shareholders at the General Meeting to be held on 7 August 2008, and the Directors issue all of the 100,000,000 Shares, a total of 828,616,768 Shares will be on issue in the Company.

Options

	Number
Options currently on issue1	29,250,000
Options offered pursuant to the Offer	364,308,384
Total Options on Issue	393,558,3842

It is a term of the Options that Option Holders be given notice seven (7) business days before the Record Date to exercise their Options to participate in the Offer.
Assumes Offer is fully subscribed and no Options are exercised prior to the Record Date.

In addition to the above Options on issue, as announced to ASX on 18 June 2008, the Company intends to seek the approval of Shareholders to issue up to a further 250,000,000 Options at an issue price of $0.002 per Option to raise a further $500,000. If approval is granted by Shareholders to the issue of these Options, and all of the Options are issued, the number of Options on issue will increase to 643,558,384 Options (assuming all Options are issued under this Prospectus and no other Options are exercised). Funds raised from the issue of these Options will be allocated towards the continued exploration of its assets in the Kyrgyz Republic and to enable the Company to pursue ongoing project opportunities in South-East Asia and in other near term production areas.

5. RIGHTS AND LIABILITIES ATTACHING TO THE SHARES AND OPTIONS

5.1 Terms and Conditions of Options

The terms and conditions of the Options are as follows:

(a) Exercise Price

The exercise price of each Option is 2.5 cents per Share.

(b) Entitlement

Each Option shall entitle the holder the right to subscribe (in cash) for one Share in the capital of the Company.

(c) Option Period

The Options will expire at 5.00pm WST on 31 August 2011. Subject to clause (g), Options may be exercised at any time prior to the expiry date and Options not so exercised shall automatically expire on the expiry date.

(d) Ranking of Share Allotted on Exercise of Option

Each Share allotted as a result of the exercise of any Option will, subject to the Constitution of the Company, rank in all respects pari passu with the existing Shares in the capital of the Company on issue at the date of allotment.

(e) Voting

A registered owner of an Option (Option Holder) will not be entitled to attend or vote at any meeting of the members of the Company unless they are, in addition to being an Option Holder, a member of the Company.

(f) Transfer of an Option

Options are transferable at any time prior to the expiry date. This right is subject to any restrictions on the transfer of Options that may be imposed by the ASX in circumstances where the Company is listed on the ASX.

(g) Method of Exercise of an Option

(i) The Company will provide to each Option Holder a notice that is to be completed when exercising the Options (Notice of Exercise of Options). Options may be exercised by the Option Holder by completing the Notice of Exercise of Options and forwarding the same to the Company Secretary to be received prior to the expiry date. The Notice of Exercise of Options must state the number of Options exercised and the consequent number of ordinary shares in the capital of the Company to be allotted; which number of Options must be a multiple of 2,500 if only part of the Option Holder’s total Options are exercised, or if the total number of

Options held by an Option Holder is less than 2,500, then the total of all Options held by that Option Holder must be exercised.

(ii) The Notice of Exercise of Options by an Option Holder must be accompanied by payment in full for the relevant number of shares being subscribed, being an amount of 2.5 cents($0.025) per Share.

(iii) Subject to paragraph (g)(i) above, the exercise of less than all of an Option Holder’s Options will not prevent the Option Holder from exercising the whole or any part of the balance of the Option Holder’s entitlement under the Option Holder’s remaining Options.

(iv) Within 14 days from the date the Option Holder properly exercises Options held by the Option Holder, the Company shall issue and allot to the Option Holder that number of Shares in the capital of the Company so subscribed for by the Option Holder.

(v) The Company will within 3 business days from the date of issue and allotment of Shares pursuant to the exercise of an Option, apply to the ASX for, and use its best endeavours to obtain, Official Quotation of all such Shares, in accordance with the Corporations Act and the Listing Rules of the ASX.

(vi) The Company will generally comply with the requirements of the Listing Rules in relation to the timetables imposed when quoted Options are due to expire. Where there shall be any inconsistency between the timetables outlined herein regarding the expiry of the Options and the timetable outlined in the Listing Rules, the timetable outlined in the Listing Rules shall apply.

(h) ASX Listing

Application for quotation of the Options on the ASX will be made.

(i)

Reconstruction

In the event of a reconstruction (including a consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the Option Holder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction.

(j)

Participation in New Share Issues

There are no participating rights or entitlements inherent in the Options to participate in any new issues of capital which may be made or offered by the Company to its shareholders from time to time prior to the expiry date unless and until the Options are exercised. The Company will ensure that during the exercise

period, the record date for the purposes of determining entitlements to any new such issue, will be at least nine (9) business days after such new issues are announced (or such other date if required under the Listing Rules) in order to afford the Option Holder an opportunity to exercise the Options held by the Option Holder.

(k) No Change of Options Exercise Price or Number of Underlying Shares

There are no rights to change the exercise price of the Options or the number of underlying Shares.

5.2 Rights Attaching to Shares

There is only one class of share on issue in the Company, being fully paid ordinary shares. The rights attaching to Shares are:

(a) set out in the constitution of the Company; and
(b) in certain circumstances, regulated by the Corporations Act, the Listing Rules, the ASTC Settlement Rules (formerly the SCH Business Rules) and the general law.

The following is a broad summary of the rights, privileges and restrictions attaching to all Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of shareholders.

All Shares issued upon exercise of the Options offered pursuant to this Prospectus will from the time they are issued, rank pari passu with all the Company’s existing Shares.

(a) Voting

Subject to any restriction on voting imposed due to a breach of the Listing Rules relating to restricted shares or any escrow agreement entered into by the Company and a member, every holder of Shares present in person or by proxy, attorney or representative at a meeting of Shareholders has one vote on a vote taken by a show of hands, and, on a poll every holder of Shares who is present in person or by proxy, attorney or representative has one vote for every Share held by him or her, but, in respect of partly-paid shares, shall have a fraction of a vote for each partly-paid share.

A poll may be demanded before a vote is taken, or before or immediately after the declaration of the result of the show of hands by the chairperson of the meeting, by at least five Shareholders present in person or by proxy, attorney or representative, or by any one or more Shareholders who are together entitled to not less than 5% of the total voting rights of all those Shareholders having the right to vote on the resolution.

(b) Dividends

Dividends are payable out of the Company's profits and are declared by the Directors. Dividends declared will (subject to the

(c)

rights of any preference shareholders and to the right of the holders of any shares created or raised under any special arrangement as to dividend) be payable on the Shares in accordance with the Corporations Act.

Transfer of Shares

A Shareholder may transfer Shares by a market transfer in accordance with any computerised or electronic system established or recognised by ASX or the Corporations Act for the purpose of facilitating transfers in shares or by an instrument in writing in a form approved by ASX or in any other usual form or in any form approved by the Directors.

The Directors may refuse to register any transfer of Shares, other than a market transfer, where permitted by the Listing Rules or the ASTC Settlement Rules. The Company must comply with such obligations as may be imposed on it by the Listing Rules and where appropriate the ASTC Settlement Rules in connection with any market transfer and may not prevent, delay or in any way interfere with the registration of a market transfer where to do so would be contrary to the provisions of any of the Listing Rules or the ASTC Settlement Rules.

(d) Meetings and Notice

Each Shareholder is entitled to receive notice of and to attend general meetings for the Company and to receive all notices, accounts and other documents required to be sent to Shareholders under the constitution of the Company, the Corporations Act or the Listing Rules.

(e) Winding Up

The Company has only issued one class of shares, which all rank equally in the event of liquidation. A liquidator may, with the authority of a special resolution of Shareholders 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 carried out as between the Shareholders. The liquidator can with the sanction of a special resolution of the Company’s Shareholders vest the whole or any part of the assets in trust for the benefit of Shareholders as the liquidator thinks fit, but no Shareholder of the Company can be compelled to accept any Shares or other shares in respect of which there is any liability.

(f) Shareholder Liability

As the Shares under the Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(g) Alteration to the Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. At least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

6. RISK FACTORS

6.1 Introduction

An investment in the Company is not risk free and prospective new investors should consider the risk factors described below, together with information contained elsewhere in the Prospectus, before deciding whether to apply for Options.

The value of the Company's Securities is affected by a number of general factors which are beyond the control of the Company and its Directors.

Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

6.2 Risks Specific to the Company

(a) Future performance of business activities

The value of the Company’s business activities is subject to the various and unpredictable influences of the market it operates in and the economy in general. Accordingly, adverse economic and market conditions may be experienced by the Company which are outside of its control and may have an adverse effect on the Company.

(b) Exploration Risk

There is no assurance that oil and/or gas will be discovered in the areas in which the Company has an interest. Even if further oil and/or gas is discovered in those areas, there is no assurance that commercial quantities of oil and/or gas can be recovered from the Company’s permits.

(c) Oil and gas price fluctuations

The price for oil and gas will depend on available markets at acceptable prices and transmission, distribution and other costs. Any substantial decline in the prices of oil and gas or an increase in transmission, distribution or other costs could have a material adverse effect on the Company.

(d) Drilling and operating risks

The Company’s operations may be curtailed, delayed or cancelled as a result of weather conditions, mechanical difficulties, shortage or delays in the delivery of rigs and/or other equipment and compliance with governmental requirements.

Fire, explosions, blow-outs, pipe failure, well collapse, abnormally pressure formations and environmental spills or leakage of petroleum liquids, gas leaks, ruptures or discharges of toxic gases, could cause the Company substantial loss due to the cost

of personal injury or loss of life, damage to or destruction of property, natural resources and equipment, pollution or other environmental damage, cleanup responsibilities, regulatory investigation and penalties and suspension of operations.

Any of these events might also give rise to claims against the Company.

(e)

Ability to exploit success

Any successful exploitation of discoveries would require obtaining the necessary production permit and the relevant government approvals as required by the Government of the Kyrgyz Republic. The required approvals may be issued at the discretion of the relevant authorities and might be issued subject to conditions or preconditions.

(f)

Future funding requirements

To develop its business, including the exploration and development of any oil and gas discoveries, the Company will require additional funding. There can be no assurance that any such equity or debt funding will be available for the Company on favourable terms or at all. If adequate funds are not available on acceptable terms, the Company may not be able to participate in further developing and exploiting its assets.

(g)

Sovereign risks

The Company is currently conducting its exploration activities in the Kyrgyz Republic, which achieved independence from the USSR in 1991. Although the Government in the Kyrgyz Republic is currently stable, the country has a history of civil uprising. The Company will continue to monitor the political climate in the country.

(h) Reliance on key personnel and advisors

The ability of the Company to achieve its objectives depends on the engagement of key employees, directors and external contractors that provide management and technical expertise. If the Company cannot secure external technical expertise (for example to carry out drilling) or if the services of the present management or technical team cease to become available to the Company, this may affect the Company’s ability to achieve its objectives either fully or within the timeframes and the budget the Company has decided upon.

Whilst the ability of the Company to achieve its objectives may be affected by the matters mentioned above it is the belief of the Directors that appropriately skilled and experienced professionals would be available to provide services to the Company at market levels of remuneration in the event key employees or external contractors cease to be available.

6.3 General Investment Risks

In addition to specific risks associated with the Company's existing and proposed business operations there are also general risks associated with an investment in the Company. These include:

(a) Investment in securities

Applicants should be aware that there are risks associated with any investment in securities. The prices at which the Company's Securities trade may be above or below the issue price, and may fluctuate in response to a number of factors.

Furthermore, the stock market has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of companies. There can be no guarantee that these trading prices and volumes will be sustained. These factors may materially affect the market price of the Securities, regardless of the Company's operational performance.

(b)

Share Market Conditions

The market price of the Securities may fall as well as rise and may be subject to varied and unpredictable influences on the market for equities. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

(c)

Economic Risk

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include the level of direct and indirect competition against the Company, industrial disruption in Australia, the rate of growth of gross domestic product in Australia and in the countries to which the Company sells its products, interest rates and the rates of inflation.

(d)

Insurance risks

In certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

Insurance of all risks associated with oil and gas exploration and production is not always available and where available the costs can be prohibitive.

There is a risk that insurance premiums may increase to a level where the Company considers it is unreasonable or not in its interests to maintain insurance cover or not to a level of coverage which is in accordance with industry practice.

The Company insures the risks it considers appropriate for the Company’s need and for its circumstances. Insurance cover will not be available for every risk faced by the Company.

In addition, the Company may, following a cost-benefit analysis, elect to not insure certain risks on the ground that the amount of premium payable for that risk is excessive when compared to the potential benefit to the Company of the insurance cover.

7. ADDITIONAL INFORMATION

7.1 Continuous Disclosure Obligations

The Company is a “disclosing entity” (as defined in Section 111AC of the Corporations Act) for the purposes of Section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities. The Shares that will be issued on conversion of the Options issued pursuant to this Prospectus are in the same class of Shares that have been quoted on the official list of the ASX during the 3 months prior to the issue of this Prospectus.

This Prospectus is a “transaction specific prospectus”. In general terms “transaction specific prospectuses” are only required to contain information in relation to the effect of the issue of securities on the Company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company.

This Prospectus is intended to be read in conjunction with the publicly available information in relation to the Company which has been notified to ASX and does not include all of the information that would be included in a prospectus for an initial public offering of securities in an entity that is not already listed on a stock exchange. Investors should therefore have regard to the other publicly available information in relation to the Company before making a decision whether or not to invest.

Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 3 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX.

Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus complete.

The Company, as a disclosing entity under the Corporations Act states that:

(a) it is subject to regular reporting and disclosure obligations;
(b) copies of documents lodged with the ASIC in relation to the Company (not being documents referred to in Section 1274(2)(a) of the Corporations Act) may be obtained from, or inspected at, the offices of the ASIC; and

(c) to the extent they are available, it will provide a copy of each of the following documents, free of charge, to any person on request between the date of issue of this Prospectus and the Closing Date:
(i) the annual financial report most recently lodged with the ASIC by the Company and any half-year financial report lodged with the ASIC by the Company after the lodgement of that annual report and before the lodgement of this Prospectus with the ASIC; and
(ii) any documents used to notify ASX of information relating to the Company in the period from lodgement of the financial statements referred to in paragraph (i) above until the issue of the Prospectus in accordance with the Listing Rules as referred to in Section 674(1) of the Corporations Act.

Copies of all documents lodged with the ASIC in relation to the Company can be inspected at the registered office of the Company during normal office hours.

Pursuant to Section 713 of the Corporations Act, the Company has lodged the following announcements with ASX since lodgement of last annual financial report:

Date	Description of Announcement
04/07/2008	Response to ASX Query
01/07/2008	Monitor in New JV Discussions
18/06/2008	Capital Raising/Option Entitlement Offer/Option Placement
18/06/2008	Corporations Act Section 708A Notice
18/06/2008	Appendix 3B
13/06/2008	Capital Raising
20/05/2008	Field Survey Results
14/05/2008	Response to ASX Appendix 5B Query
30/04/2008	Quarterly Activities and Cashflow Report
14/04/2008	Monitor Signs JVOA with Sentry Petroleum Ltd
02/04/2008	Appendix 3B
26/03/2008	Appendix 3B
14/03/2008	Half Yearly Report and Accounts
31/01/2008	Quarterly Activities Report

31/01/2008	Quarterly Cashflow Report
07/01/2008	Company Secretary Appointment/Resignation
28/11/2007	Results of Meeting
26/11/2007	Oil and Gas Joint Venture Heads of Agreement Terms
21/11/2007	Change of Director’s Interest Notice
14/11/2007	Response to ASX Share Price Query
01/11/2007	Quarterly Activities Report
31/10/2007	Notice of Annual General Meeting/Proxy Form

ASX maintains files containing publicly available information for all listed companies. The Company’s file is available for inspection at ASX during normal office hours.

7.2 Directors’ Interests

Other than as set out below or elsewhere in this Prospectus, no Director nor any firm in which such a Director is a partner, has or had within 2 years before the lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;
(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of securities pursuant to this Prospectus; or
(c) the Offer of securities pursuant to this Prospectus,

and no amounts have been paid or agreed to be paid (in cash or Shares or otherwise) to any Director or to any firm in which any such Director is a partner, either to induce him to become, or to qualify him as, a Director or otherwise for services rendered by him or by the firm in connection with the formation or promotion of the Company or Offer of securities pursuant to this Prospectus.

Directors’ relevant interests in securities of the Company at the date of this Prospectus are:

Name	Shares	Options	Entitlement
Scott Spencer	8,000,000	Nil	4,000,000
Mark Gwynne*	5,500,000	Nil	2,750,000
Jon Roestenburg*	2,500,000	15,000,000	1,250,000

Pursuant to the Notice of Meeting dated 7 August 2008, Messrs Gwynne and Roestenburg are seeking the approval of Shareholders to participate in the issue of the 250,000,000 Options referred to in Section 5.3 above to a combined total of 12,500,000 Options. The Options will be issued at a price of $0.002 per Option and be exercisable at $0.025 per Share on or before 31 August 2011.

The Constitution of the Company provides that the non-executive Directors may be paid for their services as Directors a sum not exceeding such fixed sum per annum as may be determined by the Company in general meeting, to be divided among the non-executive Directors as determined by the Directors and in default of agreement, then in equal shares.

For the year ended 30 June 2007 and 30 June 2008, the Company paid a total of $304,381 and $351,572 to all Directors as remuneration for services provided by all Directors (executive, non-executive and alternate), companies associated with those Directors or their associates in their capacity as directors, employees, consultants or advisers (and including superannuation payments). Directors, companies associated with the Directors or their associates are also reimbursed for all reasonable expenses properly incurred in the course of conducting their duties which include, but are not in any way limited to, out of pocket expenses, travelling expenses, disbursements made on behalf of the Company and other miscellaneous expenses.

7.3 Melbourne Capital Agreement

On 5 June 2008, the Company entered into a Capital Raising Agreement (Agreement) with Melbourne Capital Limited (MCL) pursuant to which, amongst other things, the Company granted to MCL the right to place all the Shortfall Options on a reasonable endeavours basis.

In consideration of the services to the Company to be provided by MCL under the Agreement, MCL will be entitled to a fee of 5% (up to $36,431) (plus GST) on all funds raised under the Offer and the other capital raisings to be conducted by MCL together with a 1% (up to $7,286) management fee (plus GST).

7.4 Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no expert, underwriter, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, nor any firm in which any of those persons is or was a partner, nor any company with which any of those persons is or was associated, has or had within two (2) years before the lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company; or
(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer of securities pursuant to this Prospectus; or

and no amounts have been paid or agreed to be paid (in cash or Shares or otherwise) to any expert, underwriter, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus, or to any firm in which any of those persons is or was a partner, or to any company with which any of those persons is or was associated, for services rendered by that person, or by the firm or the company, in connection with the formation or promotion of the Company or the Offer of securities pursuant to this Prospectus.

Pursuant to Section 716 of the Corporations Act, Melbourne Capital Limited has given, and has not withdrawn its consent to being named in this Prospectus in the form and context in which it is named. Melbourne Capital Limited has not caused or authorised the issue of this Prospectus, does not make or purport to make any statement in this Prospectus and takes no responsibility for any part of this Prospectus.

In the two years prior to the date of this Prospectus, the Company has paid, or has payable to, Melbourne Capital Limited fees totalling $73,920 for services provided to the Company.

Pursuant to Section 716 of the Corporations Act, Steinepreis Paganin has given, and has not withdrawn its consent to being named as Solicitors to the Company in the Corporate Directory of this Prospectus in the form and context in which it is named. Steinepreis Paganin has not caused or authorised the issue of this Prospectus, does not make or purport to make any statement in this Prospectus and takes no responsibility for any part of this Prospectus.

Steinepreis Paganin act as solicitors to the Company. Steinepreis Paganin will be paid approximately $5,000 for services in relation to this Prospectus.

7.5 Other Matters

The Company is in negotiations to purchase further assets in the Kyrgyz Republic, however, at the date of this Prospectus these negotiations are still in progress, and no transaction has been completed.

7.6 Legal Proceedings

There is no material litigation, arbitration or proceedings pending against or involving the Company as at the date of this Prospectus.

7.7 Estimated Expenses of Offer

In the event that the Offer is fully subscribed, the estimated expenses of the Offer are as follows:

ASIC fees Melbourne Capital fees Legal expenses Share register Printing and other expenses Total	$ 2,010 43,717 5,000 5,000 12,000
	67,727

7.8 Market Price of Shares

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market sale prices of the Company’s Shares on ASX during the three months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

Highest: $0.026 on 13 June 2008; and Lowest: $0.015 on 5 May 2008.

The latest available closing sale price of the Company’s Shares on ASX prior to the lodgement of this Prospectus with the ASIC was $0.016 on 3 July 2008.

7.9 Electronic Prospectus

Pursuant to Class Order 00/044, the ASIC has exempted compliance with certain provisions of the Corporations Act 2001 to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Entitlement and Acceptance Form. If you have not, please phone the Company on (08) 9211 1555 and the Company will send you, for free, either a hard copy or a further electronic copy of the Prospectus, or both.

The Company reserves the right not to accept an Entitlement and Acceptance Form from a person if it has reason to believe that when that person was given access to the electronic Entitlement and Acceptance Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

8. AUTHORITY OF DIRECTORS

8.1 Directors’ Consent

Each of the Directors of Monitor Energy Limited has consented to the lodgement of this Prospectus with the ASIC in accordance with Section 720 of the Corporations Act.

Dated the 4[th] of July 2008

==> picture [142 x 68] intentionally omitted <==

Jon Roestenburg Director

9. DEFINITIONS

Applicant means a Shareholder or other party who applies for Options pursuant to the Offer or the Shortfall Offer.

ASIC means the Australian Securities and Investments Commission.

ASTC Settlement Rules means the settlement rules of the securities clearing house which operates CHESS.

ASX means the ASX Limited (ACN 008 624 691).

Board means the board of Directors unless the context indicates otherwise.

Business Day means a day on which trading takes place on the stock market of ASX.

Closing Date means the closing date of the Offer, being 5pm (WST) on 31 July 2008 (unless extended).

Company means Monitor Energy Limited (ACN 009 121 644).

Constitution means the Company’s Constitution as at the date of this Prospectus.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

Dollar or “$” means Australian dollars.

Entitlement means the entitlement of a Shareholder who is eligible to participate in the Offer.

Entitlement and Acceptance Form means the entitlement and acceptance form either attached to or accompanying this Prospectus.

Listing Rules or ASX Listing Rules means the Listing Rules of the ASX.

Offer means the non-renounceable entitlement offer of one (1) Option for every two (2) Shares to Shareholders on the Record Date, further details of which are included in Section 3 of this Prospectus.

Offer Period means the period commencing on the Opening Date and ending on the Closing Date.

Official List means the official list of ASX.

Option means an option to acquire a Share.

Prospectus means this prospectus.

Quotation and Official Quotation means official quotation on ASX.

Record Date means 5pm (WST) on 15 July 2008.

Security means a Share or Option in the capital of the Company.

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

Shareholder means a shareholder of the Company.

Shortfall Application Form means the Shortfall Application Form attached to the back of this Prospectus.

WST means Western Standard Time, Perth, Western Australia.

ONLY COMPLETE THIS SHORTFALL APPLICATION FORM IF APPLYING FOR SHORTFALL OPTIONS

SHORTFALL APPLICATION FORM MONITOR ENERGY LIMITED

ABN 009 121 644

REGISTERED OFFICE :

35 Richardson Street WEST PERTH WA 6000

SHARE REGISTRY : Computershare Investor Services Pty Ltd Level 2, Reserve Bank Building 45 St George’s Terrace PERTH WA 6000 Tel: 1300 55 70 10 Fax: (08) 9323 2033

APPLICANT’S DETAILS:

Full name (PLEASE PRINT)

Title, Given Name(s) & Surname or Company Name

Joint Applicant #2 or

Joint Applicant #3 or

Postal Address (PLEASE PRINT) Street Number Street Suburb/Town State Post Code

ABN, Tax File Number or Exemption Applicant #2 Applicant #3

CHESS HIN or Existing SRN (where applicable)

Number of Options applied for Application Money enclosed at 0.2 cents per Option A$……………………………

I/We whose full name(s) and address appear above hereby apply for the number of Options shown above (to be allocated to me/us by the Company in respect of this Application) under the Prospectus on the terms set out in the Prospectus. Cheque Details:

PLEASE ENTER Drawer CHEQUE DETAILS THANKYOU My/Our contact numbers in the case of inquiry are: Telephone ( ) . . . . . . . . . . . . . . . . . . . . . . . . . Fax ( ) . . . . . . . .	Drawer	Bank	BSBor Branch	Amount

		. . . . . . . . . . . . . . .

NOTE: Cheques should be made payable to “Monitor Energy Limited – Subscription Account”, crossed “NOT NEGOTIABLE” and forwarded to Monitor Energy Limited, 35 Richardson Street, West Perth, WA 6005 to arrive no later than 5.00 pm WST on that date which is 3 months after the Closing Date (or such earlier date as directed by the Company) .

Declaration

This Shortfall Application Form does not need to be signed. By lodging this Shortfall Application Form and a cheque for the application money this Applicant hereby: (1) applies for the number of Options specified in the Shortfall Application Form or such lesser number as may be allocated by the Directors; (2) agrees to be bound by the constitution of the Company; and

(3) authorises the Directors to complete or amend this Shortfall Application Form where necessary to correct any errors or omissions.

INSTRUCTIONS TO APPLICANTS

Please post or deliver the completed Shortfall Application Form together with a cheque to the share registry of the Company. If an Applicant has any questions on how to complete this Shortfall Application Form, please telephone the Share Registry on 1300 55 70 10. The Form must be received by the Registry no later than 5.00 pm WST on the date which is 3 months after the Closing Date (or such earlier date as directed by the Company).

A. Application for Options

The Shortfall Application Form must only be completed in accordance with instructions included in the Prospectus.

B. Name of Applicant

Write the Applicant’s FULL NAME. This must be either an individual’s name or the name of a company. Please refer to the bottom of this page for the correct

form of registrable title. Applications using the incorrect form of registrable title may be rejected.

C. Name of Joint Applicants or Account Designation

If JOINT APPLICANTS are applying, up to three joint Applicants may register. If applicable, please provide details of the Account Designation in brackets. Please refer to the bottom of this page for instructions on the correct form of registrable title.

D. Address

Enter the Applicant’s postal address for all correspondence. If the postal address is not within Australia, please specify Country after City/Town.

E. Contact Details

Please provide a contact name and daytime telephone number so that the Company can contact the Applicant if there is an irregularity regarding the Shortfall Application Form.

F. CHESS HIN or existing SRN Details

The Company participates in CHESS. If the Applicant is already a participant in this system, the Applicant may complete this section with their existing CHESS

HIN. If the applicant is an existing shareholder with an Issuer Sponsored account, the SRN for this existing account may be used. Otherwise leave the section

blank and the Applicant will receive a new Issuer Sponsored account and statement.

G. Cheque Details

Make cheques payable to “Monitor Energy Limited – Subscription Account” in Australian currency and cross them “Not Negotiable”. Cheques must be drawn on an Australian Bank. The amount of the cheque should agree with the amount shown on the Shortfall Application Form.

H. Declaration

By completing the Shortfall Application Form, the Applicant will be taken to have made to the Company the declarations and statements therein. The Shortfall Application Form does not need to be signed.

If a Shortfall Application Form is not completed correctly, or if the accompanying payment is for the wrong amount, it may still be accepted. Any decision of the Directors as to whether to accept a Shortfall Application Form, and how to construe, amend or complete it, shall be final. A Shortfall Application Form will not however, be treated as having offered to subscribe for more Options than is indicated by the amount of the accompanying cheque.

Forward your completed application together with the application money to:

Monitor Energy Limited

35 Richardson Street
WEST PERTH WA 6000

CORRECT FORMS OF REGISTRABLE TITLE

Note that ONLY legal entities are allowed to hold securities. Shortfall Application Forms must be in the name(s) of a 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. Shortfall Application Forms cannot be completed by persons under 18 years of age. Examples of the correct form of registrable title are set out below.

Type of Investor	Correct Form of Registration	Incorrect Form of Registration
IndividualUsegiven names in full,not initials	MrJohn AlfredSmith	JASmith
CompanyUse the company’s full title,not abbreviations	ABC PtyLtd	ABC P/L or ABC Co
Joint Holdings Use full and complete names	Mr Peter Robert Williams & Ms LouiseSusan Williams	Peter Robert & LouiseSWilliams
Trusts Use the trustee(s) personal name(s).	Mrs Susan Jane Smith	Sue Smith Family Trust
Deceased Estates Use the executor(s) personal name(s).	Ms Jane Mary Smith & Mr Frank William Smith	Estate of late John Smith or JohnSmith Deceased
Minor (a person under the age of 18) Use the name of a responsible adult with an appropriate designation.	Mr John Alfred Smith	Master Peter Smith
Partnerships Use the partners personal names.	Mr John Robert Smith & Mr Michael John Smith	John Smith and Son
Long Names.	Mr John William Alexander Robertson-Smith	Mr John W A Robertson-Smith
Clubs/Unincorporated Bodies/Business Names Use office bearer(s) personal name(s).	Mr Michael Peter Smith	ABC Tennis Association
Superannuation Funds Use the name of the trustee of the fund.	Jane Smith Pty Ltd	Jane Smith Pty Ltd Superannuation Fund