FORTUNA METALS LTD — AGM Information 2007

Oct 17, 2007

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A.B.N. 96 095 684 389

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Frontier Resources Ltd will be held at The Paradise Room, Gold Coast Turf Club, Racecourse Drive, Surfers Paradise, Queensland on Tuesday 20th November 2007 at 1.00pm.

ITEMS OF BUSINESS

FINANCIAL REPORT AND DIRECTORS’ AND AUDITOR’S REPORT

The Financial Report, the Directors’ Report and the Independent Auditor’s Report for the year ended 30 June 2007 will be presented for consideration.

Frontier Resources Ltd’s Annual Report which includes the Financial Report for the year ended 30 June 2007 is available on-line at www.frontierresources.com.au. Following consideration of Reports, the Chairman will give shareholders a reasonable opportunity to ask questions on the Reports.

A representative of the Auditors will be available to answer questions.

RESOLUTION 1: RE-ELECTION OF DIRECTOR – R.D. MCNEIL

That Mr R.D. McNeil, who retires as a Director of the Company in accordance with Article 16.1 of the Constitution and, being eligible, offers himself for re-election, be and is hereby re-appointed a Director of the Company.

RESOLUTION 2: CHANGE OF AUDITOR

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

“That BDO Kendalls be appointed as auditor of Frontier Resources Ltd effective from the close of this meeting.”

A notice of nomination of BDO Kendalls as auditor of the Company is enclosed (Annexure B) with this notice in accordance with Section 328B(3) of the Corporations Act 2001.

Without limitation, Section 327B of the Corporations Act is relevant to this resolution.

RESOLUTION 3: REMUNERATION REPORT

That the remuneration report as set out in the Annual Report be adopted. This vote is a “non-binding” vote required by the Corporations Act 2001 as amended.

RESOLUTION 4: APPROVAL FOR THE ISSUE OF OPTIONS TO RELATED PARTIES (DIRECTORS)

That in accordance with the provisions of Listing Rules 7.1 and 10.11 of the Official Listing Rules of the Australian Stock Exchange Limited and Section 208(1) of the Corporations Act 2001, and for all other purposes, the Company and the Directors of the Company are hereby authorised:

Frontier Resources Ltd Notice of Annual General Meeting

Page 1 of 7

To issue a maximum of 3.2 million (20 cent, expiry 30 November 2010) options to acquire fully paid ordinary shares in the Company on the terms and conditions attached to this Notice of Meeting and to issue those options to related parties (Directors) or their nominees as follows:

Director P.A. McNeil R.D. McNeil	Options 800,000 800,000	Director G.J. Fish W.J. Staude	Options
			800,000 800,000

The options are to be issued within one month from the date of this meeting and for no consideration. The options are exercisable at 20 cents between 30 November 2008 and 30 November 2010, (i.e. exercisable one year after grant). Any funds raised from the exercise of the options will be used for working capital purposes.

An explanatory statement relating to this resolution, as required by Section 219 of the Corporations Act 2001, is attached.

The Company will disregard any votes cast on this resolution by:

▪ P.A. McNeil ▪ R.D. McNeil ▪ G.J. Fish ▪ W.J. Staude ▪ Any associate of those persons

However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

FINAL ITEM OF BUSINESS:

To transact any other business that may be lawfully brought forward in accordance with the Constitution of the Company and the Corporations Act 2001.

ELIGIBILITY TO ATTEND AND VOTE AT MEETING

The Company has determined that all shares of the Company that are quoted shares at 7.00pm on 18 November 2007 will be taken for the purposes of the meeting to be held by the persons who held them at that time.

By order of the Board

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G.M. Edwards Company Secretary

NOTES

• (i) A member entitled to attend and vote at the Meeting may appoint not more than two proxies to attend and vote instead of such member.

• (ii) Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the members’ voting rights and neither proxy may vote on a show of hands.

• (iii) A proxy need not be a Member of the Company.

• (iv) A proxy form and the authority (if any) under which it is signed or a copy of that authority certified as a true copy by statutory declaration must be returned to the Secretary, at the registered office or forwarded to P.O. Box 7996, Gold Coast Mail Centre, Queensland 9726, Australia. Proxy forms must be received not less than 48 hours before the time for holding the meeting.

Frontier Resources Ltd Notice of Annual General Meeting

Page 2 of 7

EXPLANATORY STATEMENT TO MEMBERS

RESOLUTION 3: ADOPTION OF THE REMUNERATION REPORT

A vote on the adoption of the Remuneration Report is a requirement of the Corporations Act 2001. The vote on the resolution is advisory only and does not bind the Directors or the Company.

The Directors believe remuneration as per the report is modest and is at or below industry levels.

RESOLUTION 4:

APPROVAL FOR THE ISSUE OF OPTIONS TO RELATED PARTIES (DIRECTORS)

Explanatory Statement in accordance with Section 219 of the Corporations Law;

It is proposed that options to acquire fully paid ordinary shares in the Company be issued to Directors of the Company to create greater incentives for the Directors to achieve results for the Company. The current total 1,600,000 Directors options, exercisable at $0.20 each, expire on 31 December 2007.

The issue of options to Non-Executive Directors is not in accordance with Recommendation 9.3 of the ASX Principles of Good Corporate Governance and Best Practice Recommendations. Mr W.J. Staude is a Non-Executive Director and he will receive options if this resolution is passed. The Company considers it appropriate to issue options to a Non-Executive Director at this exploration stage of the Company’s life and due to the relatively low remuneration of the Non-Executive Directors.

Each Director was previously granted 400,000 options. The current proposed issue of 800,000 per Director is based on the substantial increase in market capitalisation of the Company. The reason for proposing that each Director receives the same quantity of options is that each Director brings skills and experience to the Company that can assist the Company to achieve its objectives.

Terms and Conditions

Full terms and conditions of the options are attached, however in summary, Directors options are:

• Issued for no consideration

• Not transferable

• Exercisable at $0.20 (twenty cents) between 30 November 2008 and 30 November 2010 (i.e. the options cannot be exercised for the first year after grant.

• Expire on 30 November 2010

Directors Proposed Benefit, Interest in the Resolution and Recommendation to Members

Each Director will receive options if the resolution is passed and is a related party by the virtue of the fact that he is a Director of the Company. The Company is seeking shareholder approval for the grant of options to the related parties in terms of Chapter 2E of The Corporations Act.

Frontier Resources Ltd Notice of Annual General Meeting

Explanatory Statement to Members

Page 3 of 7

Director		Directors’ Options	Option Value Calculation*
P.A. McNeil	Interest: The Director will be issued options over shares in the Company if the resolution is passed. Recommendation:Refrains from making a recommendation because of his interest in the resolution.	800,000	$58,718
R.D. McNeil	Interest: The Director will be issued options over shares in the Company if the resolution is passed. Recommendation:Refrains from making a recommendation because of his interest in the resolution.	800,000	$58,718
G.J. Fish	Interest: The Director will be issued options over shares in the Company if the resolution is passed. Recommendation:Refrains from making a recommendation because of his interest in the resolution.	800,000	$58,718
W.J. Staude	Interest: The Director will be issued options over shares in the Company if the resolution is passed. Recommendation:Refrains from making a recommendation because of his interest in the resolution.	800,000	$58,718
TOTAL		3,200,000	$234,872

Other Information on the Resolution

*Options valuation calculation

The proposed options are not tradeable and Directors will only derive a benefit if the share price exceeds the option price during the exercise period and the Director pays the Company the exercise price.

The valuation was made using the Black-Scholes options Pricing Model on the basis using the following assumptions in respect of inputs to the valuation model:

• As at the date of this Explanatory Statement, the Company has not forecast any future dividend payments. For the purposes of this valuation it has been assumed that the Company’s projected annual dividend yield is nil.

• A volatility factor of 102% was assumed based on the volatility of the Company’s shares over the previous three (3) year period.

• A risk free rate of 6.43% which is the time-weighted interest rate for a 3 year bond based on the RBA treasury bond rates for 2 year and 5 year bonds.

Effect of Passing this Resolution

The effect of passing this resolution on the Company would be:

• to increase the number of options over ordinary shares in the Company from 87,769,359 to 90,969,359;

• to increase the relevant interest of Directors in options over shares in the Company as follows:

Director	Description	Current Relevant Interest in Options in the Company	Potential Relevant Interest if this Resolution is Passed
P.A. McNeil	• Purchased listed options • Directors options	1,879,578 (expire 31.12.07)400,000	1,879,578 800,000
R.D. McNeil	• Purchased listed options • Directors options	1,181,000 (expire 31.12.07)400,000	1,181,000 800,000

Frontier Resources Ltd Notice of Annual General Meeting

Explanatory Statement to Members

Page 4 of 7

Director	Description	Current Relevant Interest in Options in the Company	Potential Relevant Interest if this Resolution is Passed
G.J. Fish	• Purchased listed options • Directors options	20,829 (expire 31.12.07)400,000	20,829 800,000
W.J. Staude	• Purchased listed options • Directors options	50,000 (expire 31.12.07)400,000	50,000 800,000
TOTAL	• Purchased listed options • Directors options	3,131,407 (expire 31.12.07) 1,200,000	3,131,407 3,200,000

• to increase the potential amount of cash which the Company may receive from the exercise of options in the future.

Dilution

The dilution effect on all other shareholders, if the options proposed in this Resolution are issued and those options were subsequently exercised based on current issued capital, would be to dilute other shareholders by 2.35%.

Directors Remuneration

The following table shows the total remuneration received by each Director for the year ended 30 June 2007 (as detailed in the Company’s Annual Report) and a projection of likely remuneration for the year ended 30 June 2008 assuming that this resolution is passed and the total 3 year option value is all included in one year’s remuneration for the 2008 year.

Director	Year Ended 30 June	Cash Fees and Superannuation	Value of Options	Total
R.D. McNeil	2007	$16,350	Nil	$16,350
	2008	$21,800	$58,718	$80,518
P.A. McNeil	2007	$228,631	Nil	$228,631
	2008	$240,000	$58,718	$298,718
G.J. Fish	2007	$32,700	Nil	$32,700
	2008	$55,000	$58,718	$113,718
W.J. Staude	2007	$27,350	Nil	$27,350
	2008	$31,800	$58,718	$90,518

Share Price

Over the six months preceding the preparation of this notice on 3 October 2007, the Company’s ordinary shares have traded as high as 22 cents and as low as 9 cents. On 2 October 2007 the last price paid was 15.5 cents.

Costs of the Issue

The Company is not aware of any other opportunity cost or benefit foregone as a result of the issue of the options. There is no GST or stamp duty payable by the Company in respect of the issue of the options. The Company is not aware of any adverse tax consequence as a result of the issue.

No Other Information

Other than the information set out in this Explanatory Statement the Company believes there is no other information that would be reasonably required by Shareholders in order to decide whether it is in the best interests of the Company to pass Resolution 4.

Frontier Resources Ltd Notice of Annual General Meeting

Explanatory Statement to Members

Page 5 of 7

ANNEXURE A

FRONTIER RESOURCES LTD DIRECTORS’ OPTIONS

It is proposed to issue 800,000 options each to P.A. McNeil, R.D. McNeil, G.J. Fish and W.J. Staude (Directors) as follows:-

The options, if approved by the meeting, will be issued on 30 November 2007.

Terms and Conditions

The terms and conditions for these options are set out below.

1. Each option entitles the holder to subscribe for one fully paid ordinary share in the capital of the Company.

2. The options are exercisable at any time from 30 November 2008 (one year after grant) and prior to 5.00pm eastern standard time, 30 November 2010 (“expiry date”). Options may only be exercised in multiples of 50,000. Any options not exercised by the expiry date shall lapse.

3. The exercise price of each option will be 20 cents.

4. Exercise of the options is effected by delivery of a Notice of Exercise to the registered office of the Company together with payment of the exercise price of the options. Shares will be issued pursuant to the exercise of the options not more than 14 days after receipt by the Company from the optionholder of the Notice and the exercise price in respect of the options.

5. Options may not be exercised if the effect of such exercise and subsequent allotment of shares would be to create a holding of less than a marketable parcel of ordinary shares unless the allottee is already a shareholder of the Company at the time of exercise.

6. Options are not transferable. Application will not be made to Australian Stock Exchange Limited (“ASX”) for their Official Quotation.

7. All shares issued upon exercise of the options and payment of the exercise price will rank pari passu in all respects with the Company’s then existing ordinary fully paid shares. The Company will apply for Official Quotation by ASX Limited of all shares issued upon exercise of the options.

8. There are no participating rights or entitlements inherent in the options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the books closing date will be at least 7 business days after the issue is announced. This will give optionholders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue.

9. In the event of any reconstruction, including a consolidation, sub-division, reduction or return of the issued capital of the Company prior to the expiry date, the number of options to which each holder is entitled or the exercise price of the options or both will be reconstructed as appropriate in a manner which is in accordance with the Listing Rules and will not result in any benefits being conferred on optionholders which are not conferred on shareholders, subject to such provisions with respect to the rounding of entitlements as may be sanctioned by the meeting of shareholders approving the reconstruction of capital, but in all other respects the terms of exercise of the options will remain unchanged.

10. If a Director issued options under these Terms and Conditions ceases to be substantially involved with the Company the Directors at their discretion may cancel all or part of the holder’s options obtained under this plan after giving the holder 60 days notice of their intention to do so.

11. The options can be issued to a Director or his nominee.

Frontier Resources Ltd Notice of Annual General Meeting

Explanatory Statement to Members

Page 6 of 7

ANNEXURE B

COPY OF SHAREHOLDER NOMINATION OF NEW AUDITOR

3 October 2007

Mr Garry Edwards Company Secretary Frontier Resources Ltd PO Box 7996 GOLD COAST MAIL CENTRE QLD 9726

Dear Mr Edwards

Pursuant to Section 328B(1) of the Corporations Act 2001, I, Robert D. McNeil, as a shareholder of Frontier Resources Ltd hereby nominate BDO Kendalls Chartered Accountants, for appointment as auditors of the Company at the next Annual General Meeting or any adjournment thereof, subject to the resignation of the current auditors, PricewaterhouseCoopers, Brisbane.

Yours sincerely

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R.D. McNeil

Frontier Resources Ltd Notice of Annual General Meeting

Explanatory Statement to Members

Page 7 of 7

PROXY FORM

A.B.N. 96 095 684 389

FRONTIER RESOURCES LTD

I/We (1)

� � �

of

being a member of Frontier Resources Ltd hereby appoint

Name (2)

failing whom, or if no person is named, the Chairman of the meeting as my/our proxy to vote and act for me/us and on my/our behalf at the Annual General Meeting of Frontier Resources Ltd to be held at The Paradise Room, Gold Coast Turf Club, Racecourse Drive, Surfers Paradise, Queensland on Tuesday 20 November 2007 at 1.00pm, and any other day to which the meeting is adjourned or postponed.

If you do not wish to direct your proxy how to vote in relation to Resolution 4 please tick the box.

�

If the Chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of resolution 4, please place a mark in the box.

By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has an interest in the outcome of the resolution/s and that votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

My proxy is authorised to exercise (3) all /

� my voting rights.

I direct that my proxy vote in the following manner:-

I direct that my proxy vote in the following manner:-	I direct that my proxy vote in the following manner:-	I direct that my proxy vote in the following manner:-
Ordinary Resolutions			For		Against	Abstain
No. 1	Re-elect R.D. McNeil
No. 2	Change of Auditor
No. 3	Advisory/Non-binding Vote on Remuneration Report
No. 4	Approval	for the Issue of Options to Related Parties (Directors)
Signature:(4)		� Date:
		�				�

Notes

• (1) Insert name and address of member(s), as it appears in the register of members.

• (2) Insert name of proxy. The proxy must be a natural person.

• (3) A member is entitled to appoint 1 or 2 proxies to attend and vote at the meeting. If you appoint another proxy you must delete the word “all” and insert the proportion of your voting rights given to the proxy in this form. An additional proxy form for the other proxy will be supplied on request.

• (4) All joint holders of shares must sign this form. A corporation must sign in accordance with its Constitution.

IMPORTANT : Please complete this form where indicated � and return to the Secretary, at the registered office or forward to P.O. Box 7996, Gold Coast Mail Centre, Queensland 9726, Australia.

Proxy forms must be received not less than 48 hours before the time for holding the meeting.