GALE PACIFIC LIMITED — Capital/Financing Update 2004

May 19, 2004

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX's property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003.

Name of entity

Gale Pacific Limited

ABN

80 082 263 778

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

• $\mathbbm{I}$ ⁺Class of ⁺securities issued or to be Options to subscribe for ordinary fully paid issued shares
• $\overline{2}$ Number of ⁺securities issued or to be issued (if known) or maximum number which may be issued

50,000

⁺ See chapter 19 for defined terms.

$\overline{3}$

Principal terms of the securities (eg, if options, exercise price and date; if expiry partly paid securities, the amount outstanding and due dates for payment; if securities, *convertible the conversion price and dates for conversion)	follows:	The options were issued under the company's employee option plan to a senior executive of a subsidiary of the company. The terms of the plan were summarised in the company's 2003 notice of annual general meeting and approved by shareholders at that meeting. The principal terms of issue of options under the plan are as
	ĺ.	Each option entitles the holder to subscribe for 1 fully paid ordinary share.
	2.	The exercise price is \$1.50 per option.
	3.	The expiry date of the options is. 1/12/2006.
	4.	The exercise price or the number of options or underlying shares may be adjusted in the event of a bonus or rights reconstruction of the issue or a company's capital in accordance with the ASX listing rules.
	5.	A holder of options may exercise their options on or at any time after 1/09/05 until the expiry date subject to the following conditions:
		45% of the total number of options (a) (rounded to the nearest whole number) issued to the holder may be exercised provided that at any time before the day on which options are exercised by the holder, the market price on each day for a consecutive period of 30 days on which there was a sale of the company's shares on the stock market of ASX was equal to or exceeded \$3.20;

⁺ See chapter 19 for defined terms.

(b)	a further 30% of the total number
	of options (rounded to the nearest
	whole number) issued to the holder
	may be exercised in addition to
	any other options the holder has
	previously become entitled to
	exercise, provided that at any time
	before the day on which options
	are exercised by the holder, the market price on each day for a
	consecutive period of 30 days on
	which there was a sale of the
	company's shares on the stock
	market of ASX was equal to or
	exceeded \$3.60; and
(c)	a further 25% of the total number
	of options (rounded to the nearest
	whole number) issued to the holder may be exercised in addition to
	any other options the holder has
	previously become entitled to
	exercise, provided that at any time
	before the day on which options
	are exercised by the holder, the
	market price on each day for a
	consecutive period of 30 days on
	which there was a sale of the
	company's shares on the stock
	market of ASX was equal to or exceeded \$3.95.

$\overline{4}$ Do the *securities rank equally in all respects from the date of allotment with an existing "class of quoted *securities?

If the additional securities do not rank equally, please state:

• the date from which they do $\bullet$
• the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment
• the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment

No. Options will not be quoted or rank equally with any class of quoted securities. However, fully paid ordinary shares issued on exercise of the options will be quoted. Under the terms of issue of options, those shares will rank:

• for any dividend with a record date (for $\bullet$ determining entitlements to it) which is the same as or after the date of issue of the shares equally with the fully paid ordinary shares then on issue; and
• $\bullet$ from the date of issue of the shares, in all other respects, equally with the fully paid ordinary shares then on issue.
• 5 Issue price or consideration

Nil

$\overline{\text{+ See chapter 19}}$ for defined terms.

6	Purpose of the issue
	(If issued as consideration for the acquisition of assets, clearly identify those assets)	executives of the group to whom options are issued to improve the group's performance.	The options are issued under the company's existing employee share plan with the objective of providing an incentive to those key senior
7	Dates of entering "securities into uncertificated holdings or despatch of certificates	May 2004.	Certificates will be dispatched on or before 20
		Number	* Class
8	Number elass of all and securities quoted ASX. on (including the securities in clause 2 if applicable)	50,210,925	fully Ordinary paid shares
		Number	+ Class
9	Number + class and of all *securities not quoted on ASX (including the securities in clause 2 if applicable)	625,442 comprised of: 575,442 options previously issued under the. company's employee option plan; and the 50,000 options referred to in item 2 above.	Options to subscribe for ordinary fully paid shares
10	Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests)	receive dividends: refer to item 4 above.	The options do not entitle their holders to dividends. Ordinary fully paid shares issued on exercise of the options will carry a right to

Part 2 - Bonus issue or pro rata issue

$\overline{11}$ Is security holder approval $\rm N/A$ required? $12 \,$ Is the issue renounceable or non- $N/A$ renounceable?

⁺ See chapter 19 for defined terms.

13	Ratio in which the *securities will be offered	N/A
14	Class of securities to which the offer relates	N/A
15	determine *Record : date to entitlements	N/A
16	Will holdings on different registers (or subregisters) be aggregated for calculating entitlements?	N/A
17	Policy for deciding entitlements in relation to fractions	N/A
18	Names of countries in which the entity has "security holders who will not be sent new issue documents	N/A
	Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7.
19.	Closing date for receipt οf acceptances or renunciations	N/A
20	Names of any underwriters	N/A
21	Amount of any underwriting fee or commission	N/A
22	Names of any brokers to the issue	N/A
23	Fee or commission payable to the broker to the issue	N/A
24	any handling fee Amount $\sigma$ f brokers who lodge payable to acceptances or renunciations on behalf of *security holders	N/A
25	If the issue is contingent on "security holders" approval, the date of the meeting	N/A

⁺ See chapter 19 for defined terms.

26	Date entitlement and acceptance form and prospectus or Product Disclosure Statement will be sent to persons entitled	N/A
27	If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders	N/A
28	Date rights trading will begin (if applicable)	N/A
29.	Date rights trading will end (if applicable)	N/A
30	How do *security holders sell their entitlements in full through a broker?	N/A
31	How do "security holders sell part of their entitlements through a broker and accept for the balance?	N/A
32	How do *security holders dispose of their entitlements (except by sale through a broker)?	N/A
33	+ Despatch date	N/A

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities $(iick one)$
• Securities described in Part 1 $(a)$

All other securities

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of conve

Entities that have ticked box 34(a)

$(b)$

⁺ See chapter 19 for defined terms.

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the "securities are "equity securities, the names of the 20 largest holders of the additional "securities, and the number and percentage of additional "securities held by those holders
• 36 If the *securities are *equity securities, a distribution schedule of the additional *securities setting out the number of holders in the categories $1 - 1,000$ $1,001 - 5,000$ $5,001 - 10,000$ 10,001 - 100,000 100,001 and over
• A copy of any trust deed for the additional *securities

Entities that have ticked box 34(b)

37

38	Number of securities for which * quotation is sought
39.	Class of "securities for which quotation is sought
40.	Do the *securities rank equally in all respects from the date of allotment with an existing "class of quoted "securities? If the additional securities do not rank equally, please state: the date from which they do ٠ the extent to which they ٠ participate for the next dividend, (in the case of a trust, distribution) or interest payment the extent to which they do not ٠
	rank equally, other than in relation to the next dividend, distribution or interest payment

⁺ See chapter 19 for defined terms.

41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security) Number ^*Class 42 Number and *class of all *securities quoted on ASX (including the securities in clause 38)

Quotation agreement

• $\mathbf{I}$ *Quotation of our additional *securities is in ASX's absolute discretion. ASX may quote the *securities on any conditions it decides.
• $\overline{2}$ We warrant the following to ASX.
• The issue of the "securities to be quoted complies with the law and is not for $\bullet$ an illegal purpose.
• There is no reason why those *securities should not be granted *quotation.
• An offer of the "securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any "securities to be quoted and that no-one has any right to return any "securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the "securities be quoted.
• We warrant that if confirmation is required under section 1017F of the Corporations Act in relation to the *securities to be quoted, it has been provided at the time that we request that the *securities be quoted.
• If we are a trust, we warrant that no person has the right to return the $\bullet$ *securities to be quoted under section 1019B of the Corporations Act at the time that we request that the "securities be quoted.

⁺ See chapter 19 for defined terms.

• $\overline{3}$ We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.
• $\overline{4}$ We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before *quotation of the *securities begins. We acknowledge that $\overline{ASX}$ is relying on the information and documents. We warrant that they are (will be) true and complete.

(Company secretary)

Print name:

Sign here:

Rodney House....................................

Date:..20 May 2004...................................

$== == == == ==$

⁺ See chapter 19 for defined terms.