Golden Deeps Ltd

A.C.N. 054 570 777

1st Floor, 8 Parliament Place, West Perth WA 6005 PO Box 1618, West Perth WA 6872 Tel: (08) 9481-7833 Fax: (08) 9481-7835 Email: [email protected] Website: www.goldendeeps.com

10^th August 2004

Dear Shareholder.

On 27^th July 2004 we announced that the Company had executed an Agreement to acquire the Kelimaizina Gold Project in Madagascar.

The Directors believe that the acquisition and exploration of the project will provide shareholders with valuable exposure to a quality project in a viable gold market.

The Company would like your approval as a shareholder for the transaction to proceed.

The enclosed document provides information on the acquisition to enable you to make an informed decision on the Resolution to be tabled at the General Meeting to be held at The Celtic Club (Inc), 48 Ord Street, West Perth on Friday, 17^th September 2004 at 9:30am.

Your Directors unanimously recommend shareholders vote in favour of the Resolution. The Independent Expert has concluded the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company.

If you are unable to attend the meeting we invite you to complete the attached Proxy Form and return it to this office no less than 48 hours before the time appointed for the meeting.

Yours sincerely,

D N Zukerman Director

Encl.

GOLDEN DEEPS LTD A.B.N. 12054 570 777

NOTICE OF GENERAL MEETING

$-$ and $-$

EXPLANATORY STATEMENT

Including the Expert's Report of Stanton Partners Corporate Pty Ltd and Independent Geologist's Report and Valuation of the Kelimaizina Project Madagascar Prepared by Malcolm Castle

$-$ and $-$

PROXY FORM

The Independent Expert has concluded the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company

DATE AND TIME OF MEETING: Friday, 17^th September 2004 at 9:30am

VENUE: Presidents Room, The Celtic Club, 48 Ord Street, West Perth WA 6005

These documents should be read in their entirety. If shareholders are in any doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional advisor.

GOLDEN DEEPS LTD A.B.N. 12 054 570 777

Notice of Meeting
Explanatory Statement
Proxy Form
Schedule 1: Expert's Report of Stanton Partners Corporate Pty Ltd
Schedule 2: Independent Geologist's Report and Valuation Of the Kelimaizina Project Madagascar

GOLDEN DEEPS LTD A.B.N. 12 054 570 777 NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a General Meeting of Members of Golden Deeps Ltd, will be held at the Celtic Club Inc, 48 Ord Street, West Perth, Western Australia on Friday, 17^th September 2004 at 9:30am.

An Explanatory Statement containing information in relation to each of the following Resolutions accompanies this Notice of General Meeting.

AGENDA

ORDINARY BUSINESS OF THE MEETING

Acquisition of the Kelimaizina Gold Project. $\mathbf{1}$ .

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

"That for the purposes of ASX Listing Rules 7.1 and 10.1 and Section 611 Item7 of the Corporations Act and all other purposes the Company approves and agrees to:

the acquisition by the Company of Kelimaizina Gold Project in consideration for the issue to Kalgoorlie Mine a) Management Pty Ltd ("KMM") of a total of 2,000,000 ordinary fully paid shares in the Company ("Shares") and 2,000,000 options to acquire ordinary fully paid shares in the Company on or before 30 June 2009 at 10 cents each ("Options") together with a cash payment of \$82,000 for reimbursement of previous expenditure;
b) the Directors issuing and allotting to KMM the 2,000,000 Shares and 2,000,000 Options referred to in paragraph (a):
the acquisition by KMM and its associates (as described in the Explanatory Statement accompanying this c) Notice of Meeting) by way of allotment referred to in paragraph (b) of the 2,000,000 Shares; and
d) the acquisition by KMM and its associates (as described in the Explanatory Statement accompanying this Notice of Meeting) of a further 2,000,000 Shares on exercise of the 2,000,000 Options referred to in paragraph (b).

in each case on the terms and conditions more particularly described in the Explanatory Statement accompanying this Notice of Meeting."

NOTES

No votes can be cast on Resolution 1 by KMM or any associates of KMM.
Further details of the above acquisitions are set out in the Explanatory Statement accompanying this Notice of Meeting, $2.$ including further information required to be disclosed to shareholders under Australian Securities & Investments Commission Policy Statement 74 and the Listing Rules of Australian Stock Exchange Limited.
Shareholders are urged to read the Independent Expert's Report prepared by Stanton Partners Corporate Pty Ltd which report 3. is attached to the Explanatory Statement accompanying this Notice of Meeting. The Independent Expert has concluded that the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company

$\overline{2}$ . Issue of Shares and Options.

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

"That for the purposes of ASX Listing Rules 7.1 and for all other purposes, the Company approves and authorises the Directors to allot and issue to Tansearch Pty Ltd 200,000 ordinary fully paid shares in the Company and 200,000 options to acquire ordinary fully paid shares in the Company on or before 30 June 2009 at 10 cents each on the terms and conditions more particularly described in the Explanatory Statement accompanying this Notice of Meeting.^"

The Company will disregard any votes cast on Resolution 2 by Tansearch Pty Ltd and any person associated with Tansearch Pty Ltd. 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 proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

BY ORDER OF THE BOARD

B R McCullagh COMPANY SECRETARY 10^th August 2004

GOLDEN DEEPS LTD A.B.N. 12 054 570 777 EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of Shareholders of Golden Deeps Ltd ("Company") in connection with Resolutions 1 and 2 of the Meeting of Members to be held at the Celtic Club Inc. 48 Ord Street, West Perth, Western Australia on Friday, 17^th September 2004 at 9:30am.

An Independent Expert's Report prepared by Stanton Partners Corporate Pty Ltd comments on whether the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company.

Shareholders should note that Stanton Partners Corporate Pty Ltd has concluded that the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company.

The Directors recommend that shareholders read this Explanatory Statement and the Independent Expert's Reports in full before making any decision in relation to the Resolutions.

This Explanatory Statement should be read in conjunction with the accompanying Notice of Meeting. Please refer to Page 9 of this Explanatory Statement for a Glossary of Terms.

Resolution 1 - Acquisition of Kelimaizina Gold Project

Introduction

On 27 July 2004, the Company announced that it had executed an agreement ("Acquisition Agreement") with Kalgoorlie Mine Management Pty Ltd ("KMM") whereby the Company will acquire 100% of the Kelimaizina Gold Project in Madagascar for a consideration comprising 2,000,000 fully paid ordinary shares in the capital of the Company ("Shares") and 2,000,000 options to acquire Shares, each with an exercise price of 10 cents and an expiry date of 30 June 2009 ("Options"). In addition, the Company must also reimburse KMM the sum of \$82,000 for previous expenditure on the project.

KMM acquired the Kelimaizina Gold Project from Calibra Resource Engineers Madagascar SARL ("Calibra"), the prospector group who originally applied for and acquired the tenements, pursuant to an option agreement. The Company has acquired KMM's interest in the tenements and the option agreement. The Project is being acquired subject to a 25% net profit interest royalty (after amortisation of capital expenditure) on alluvial and eluvial production and a 1% net smelter return interest on the value of gold produced from hard rock mining (i.e. not alluvial or eluvial material) payable in favour of Calibra.

The acquisition and payment of the consideration is subject to shareholder approval. Resolution 1 seeks shareholder approval for the acquisition and the issue of the 2,000,000 Shares and 2,000,000 Options, and the reimbursement of \$82,000 for previous expenditure on the Project, to KMM.

The Project

The Kelimaizina Gold Project consists of 2 mining tenements known as "Permis Recherche" (PR6256 and PR6978) totalling 87.5 square kilometres located in the Maevatanana area, 260kms north of Antananarivo, the capital of Madagascar. The project location is shown in the maps included in the Independent Geologists Report attached as Schedule 2 to this Explanatory Statement.

The area is prospective for alluvial, eluvial and hardrock gold mining.

Previous exploration and alluvial mining was conducted by a French company from 1995 to 1998 when their tenancy was terminated. Reports from that period indicate a zone of mineralisation remains over an area of 140,000 square metres. Grades from exploration pits and surface workings ranged from 0.28g/m3 Au to 5.0 g/m3 Au with a suggested average of 2.6g/m3 Au. A JORC compliant resource has not been established at this stage.

In November 2003, KMM completed a soil and rock chip sampling programme to gauge the areal extent and host lithologies of the gold mineralisation system.

Metallurgical tests on the samples indicate that the mineralization is predominantly free gold less than 1mm in diameter and gravity separation would be easily achievable with a simple milling and gravity circuit. The sampling programme has provided a sound basis for future drill testing.

Independent Consultant Geologist, Malcolm Castle has reported "The Kelimaizina Gold Project has considerable exploration upside and with minimal expenditure could be brought into production."

"The exploration potential within the project area will come from exploration of the bedrock source below the current laterite and old workings, including the recently discovered Tsimahabekitoza and Mahatsinjo deposits. Dredging operations in nearby rivers, where high grades have been reported but not documented, may add to the mineral inventory."

Once acquired the Company intends to pursue an extensive aircore drilling programme to ascertain the following:-

The depth of weathering and oxidation of the host rocks, both transported and insitu. (i)
(ii). The true position of the gold within the profile and extent of the mineralised "laterite".
Generation of samples to allow a preliminary resource to be estimated. $(iii)$
Some preliminary exploration for the possible bedrock source of the gold mineralisation. $(iv)$

Further details of the Project, the mining industry in Madagascar, location and access, recent exploration activities and regional geology are set out in the Independent Geologists Report attached as Schedule 2 to this Explanatory Statement.

ASX Listing Rule 7.1

Shareholder approval is being sought pursuant to Listing Rule 7.1 for the issue of the 2,000,000 Shares and 2,000,000 Options. This Rule generally prohibits a company from issuing more than 15% of its share capital within a 12 months period without shareholder approval. Listing Rule 7.3 specifies that certain information be provided to shareholders in respect of such approval.

Information required by ASX Listing Rule 7.3 for the purposes of shareholder approval under ASX Listing Rule 7.1 is provided below:

1. The maximum number of securities to be issued under Resolution 1 is 2,000,000 Shares in the Company and 2,000,000 Options to acquire Shares in the Company;
$2.$ The securities will be issued within 10 days after the date of the Meeting;
1. The Shares are to be issued at a deemed issue price of 8 cents each and the options issued for nil consideration free of charge;
The 2,000,000 Shares and 2,000,000 Options are to be issued to KMM; 4.
1. The Shares to be issued are fully paid ordinary shares which will, from their date of allotment, rank pari-passu in all respects with all other fully paid ordinary shares in the Company then on issue. The terms of the options are set out in Annexure A to this Explanatory Statement:
1. There are no funds to be raised by the issue; and
$\overline{7}$ The Shares and Options will be allotted within 10 days after the date of the Meeting.

ASX Listing Rule 10.1

Shareholder approval is also being sought pursuant to Listing Rule 10.1 for this transaction.

ASX Listing Rule 10.1 requires a company to obtain prior shareholder approval before acquiring a substantial asset (representing more than 5% of the equity interests of the Company) from a substantial holder or an associate of a substantial holder. The acquisition of the Kelimaizina Project from KMM involves such an acquisition from an associate (KMM) of a substantial holder ("Coniston Pty Ltd").

ASX Listing Rule 10.10.2 requires that the Company provide an independent expert's report addressing whether the transaction the subject of shareholder approval under ASX Listing Rule 10.1, is fair and reasonable to disinterested shareholders. The report prepared by Stanton Partners Corporate Pty Ltd and included as Schedule 1 to the Notice of Meeting is provided to Shareholders for this purpose. An independent geologist's report and valuation of the Kelimaizina Project prepared by Malcolm Castle is included as Schedule 2.

Escrow of Consideration Shares and Options

ASX has ruled that the shares and options to be issued to KMM will be classified as restricted securities and will be held in escrow for a period of 12 months from the later of the date of issue or when ASX receives both a restriction agreement and written confirmation from the share registry that a holding lock will be placed on the restricted securities.

Section 611 Item 7 of the Corporations Act

Shareholder approval is also being sought pursuant to Section 611 Item 7 of the Corporations Act.

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

from 20% or below to more than 20%; or a)
b) from a starting point above 20% and below 90%.

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

An entity has a relevant interest in securities if it:

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

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

There are various exceptions to the prohibition in section 606, including under section 611 item 7 of the Corporations Act. Section 611 item 7 provides an exception to the prohibition in section 606, in circumstances where the shareholders of the company approve an acquisition of shares by virtue of an allotment or acquisition at a meeting at which no votes are cast by parties involved in the proposed acquisition, including their associates.

Pursuant to the terms of the Acquisition Agreement, the Company has agreed (subject to shareholders approval) to allot and issue a total of 2,000,000 Shares and 2,000,000 Options to KMM. An associate of KMM, Coniston Pty Ltd ("Coniston") currently holds 4,150,000 Shares representing 16% of the voting power of the Company. Both KMM and Coniston are controlled by Mr James del Piano. Shareholder approval under Item 7 of Section 611 of the Corporations Act is required for the issue of the 2,000,000 Shares to, and the exercise of 2,000,000 Options by, KMM because KMM and its associates will acquire a relevant interest in those Shares, which along with the interest of Coniston, will be in excess of 20% of the issued capital of the Company.

The following information is required to be provided to shareholders under ASIC Policy Statement 74. Shareholders are also referred to the Independent Expert's Report prepared by Stanton Partners Corporate Pty Ltd, which forms part of this Explanatory Statement.

For the purposes of Item 7 of Section 611 of the Corporations Act and Policy Statement 74, the following information is disclosed:

The identity of the acquirer is KMM. KMM is a private company, controlled by Mr James del Piano, a) which provides management services to public companies and invests in listed securities.

Coniston, an associate of KMM is also controlled by Mr del Piano. Coniston invests in property and listed securities. It also has mineral exploration interests in Western Australia.

Mr James del Piano, LLB, is a private investor in property and listed securities with over 25 years experience investing in the mining industry.

b) KMM currently holds directly holds no Shares or Options in the Company. Coniston, an associate of KMM and Mr del Piano currently directly holds 4,150,000 shares representing 16% of the voting power of the Company. Assuming the 200,000 Shares the subject of Resolution 2 are issued, if the 2,000,000 Shares are issued to KMM, KMM will directly hold 7.11% of the voting power of the Company and KMM, Coniston and Mr del Piano will hold a relevant interest in 21.86% of the voting power of the Company. If the 2,000,000 Options are exercised by KMM and assuming no other options are exercised, KMM will directly hold 13.27% of the voting power of the Company and KMM, Coniston and Mr del Piano will hold a relevant interest in 27.04% of the voting power of the Company. The relevant interests of the parties are discussed in further detail in section 2 of the Expert's report.

c) There are no new proposed directors as a result of the proposed transaction.
d) Future intentions of the Acquirers for Golden Deeps Ltd

The Company understands KMM and its associates have the following intentions for the Company:

i) It will remain in the resource exploration industry.
ii) The current Board of Directors; Messrs DN Zukerman, A Clemen and B McCullagh will continue and at this time there is no intention to increase the Board.
it will maintain its gold exploration activities in Western Australia and upon approval of the iii) Kelimaizina Gold Project to prepare a drilling programme there based on the soil sampling results obtained by KMM.
At this time it is not intended to inject further capital into the Company. iv)
The Company has no employees but engages consultants when required which KMM and its $V$ associates intends to maintain.
vi) It is not the intention of KMM or its associates to change significantly the financial or dividend policies of the Company.
vii) It is not the intention of KMM or its associates to re-deploy any assets or property of the Company.
$\Theta$ Allotment of the Shares and Options is to be effected within 10 days of Shareholders approval.
f) The Directors of the Company have no interest in the outcome of the proposed issue of Shares and Options to KMM.
The Directors of the Company have commissioned Stanton Partners Corporate Pty Ltd to $g)$ prepare a report on the question of whether the proposal is fair and reasonable to shareholders not associated with KMM and its associates. An independent Geologist's Report and Valuation prepared by Malcolm Castle has also been commissioned. Those reports are attached to this Explanatory Statement. Shareholders are urged to read the Independent Expert's Report and Independent Geologist's Report and Valuation.
h) The Directors intend to vote and cause their associates to vote in favour of Resolution 1.
D. No votes can be cast on Resolution 1 by KMM or its associates.

Financial Effect of the Acquisition

a) Proforma Capital Structure

Set out below is a proforma capital structure of the Company taking into account the transaction contemplated by Resolution 1 including the issue of the 200,000 Shares and 200,000 Options to Tansearch Pty Ltd under Resolution 2.

Shares
Shares currently on issue	25,940,020
Shares to be issued to KMM pursuant to Resolution 1 ¹	2,000,000
Shares to be issued to Tansearch Pty Ltd	200,000
Total	28,140,020
Options
Options on issue
Options to be issued to KMM	2,000,000
Options to be issued to Tansearch Pty Ltd	200,000
Total	2,200,000

The options are exercisable @ 10c before 30 June 2009. Note on capital structure movements:

$(1)$
Shares to be issued to KMM and Tansearch Pty Ltd are at a deemed issue price of 8 cents per Share.

b) Proforma Statement of Financial Position

Set out below is an unaudited Statement of Financial Position of the Company as at 31 May 2004 along with a pro-forma Statement of Financial Position as contained in the Independent Expert's report assuming the following:

Accounting for the investments in other listed companies at 30 June 2004 market values; $\bullet$
The acquisition of the Kelimaizina Project from KMM by way of an issue of 2,000,000 Shares at a $\bullet$ market cost of 8.5 cents (and 2,000,000 Options not costed) plus the reimbursement of \$82,000 to KMM.
The issue of 200,000 Shares at a market price of 8.5 cents (and 200,000 Options not costed) and $\bullet$ expensed; and
Assuming the incidental acquisition costs of the Kelimaizina Project are \$20,000 but are $\bullet$ expensed.

	Golden Deeps 31 May 2004 \$000's	Pro-forma 31 May 2004 \$000's
Current Assets
Cash	2,032	1,930
Receivables	7	7
Investments	107 2,146	107 2,044
Non Current Assets
Plant	3	3
Capitalised exploration costs		252
Receivable - Bonds	133	133
	136	388
Total Assets	2,282	2,432
Current Liabilities
Payables	10	10
Provisions
	10 ₁	10
Total Liabilities	10	10
Net Assets	2,272	2,422

Equity
Contributed equity Accumulated losses	8,203 (5,931)	8,390 (5,968)
Net equity	2,272	2,422

Independent Expert's Report

Additional information relevant to the proposed acquisition is contained in the Independent Expert's Report attached as Schedule 1 to the Explanatory Statement and the Independent Geologist's Report and Valuation attached as Schedule 2 to the Explanatory Statement.

Conclusion and Directors' Recommendation

All the current Directors are considered independent for the purposes of Resolution 1, as they do not have any personal interest in the outcome of that resolution. They have the same interest as other non-associated shareholders in the Company to the extent that they, or companies associated with them, hold shares in the Company.

The Directors are unanimously of the opinion that the proposed transaction is in the best interests of the Company and its shareholders and accordingly recommend that shareholders vote in favour of Resolution 1.

The Directors recommendation that you vote in favour of Resolution 1 is based on the following reasons:

The Kelimaizina Project has been the subject of successful eluvial mining in the past and recent ė soil sampling has extended the area of gold mineralistion.
Metallurgical tests on the samples have shown the mineralisation is predominantly free gold and gravity separation would be easily achievable with a simple milling and gravity circuit.
Additional exploration potential exists in the bedrock source below the current laterite and old $\bullet$ workings.
The independent expert has concluded that the transaction is fair and reasonable to the non- $\bullet$ associated shareholders.

Resolution 2 - Approval of Share and Option Issue

The Company has agreed to issue 200,000 Shares and 200,000 Options to Tansearch Pty Ltd as a fee for facilitating the acquisition by the Company of the Kelimaizina Gold Project.

Tansearch is unrelated to any Directors of the Company. KMM or their associates.

Resolution 2 (which is conditional upon the passage of Resolution 1) seeks shareholder approval to the issue of the 200,000 Shares and 200,000 Options to Tansearch.

ASX Listing Rules

As noted above. Listing Rule 7.1 generally prohibits a company from issuing more than 15% of its share capital within a 12 months period without shareholder approval. Listing Rule 7.3 specifies that certain information be provided to shareholders in respect of such approval.

Information required by ASX Listing Rule 7.3 for the purposes of shareholder approval under ASX Listing Rule 7.1 is provided below:

1. The maximum number of securities to be issued is 200,000 Shares and 200,000 Options in the Company:
$\overline{2}$ . The Shares and Options in the Company are proposed to be issued and allotted on the approval of Shareholders and in any case no later than 10 days after the date of the Meeting;
1. The Shares are deemed to be issued at 8 cents each and the Options issued for no consideration;
1. The Shares and Options are to be issued to Tansearch Pty Ltd:
1. The Shares to be issued are fully paid ordinary shares which will, from their date of allotment, rank pari-passu in all respects with all other fully paid ordinary shares in the Company then on issue. The terms of the Options are set out in Annexure A to this Explanatory Statement;
1. There are no funds to be raised by the issue; and
1. The Shares and Options will be allotted on the approval of Shareholders and in any case no later than 10 days after the date of the Meeting.

The Directors unanimously recommend Shareholders vote in favour of this Resolution.

ANNEXURE 'A'

GOLDEN DEEPS LIMITED TERMS AND CONDITIONS OF OPTIONS OPTION TERMS AND CONDITIONS

The terms and conditions of the Options are as follows:

$(a)$ A holding statement will be issued for the Options.
$(b)$ Golden Deeps Limited ("Golden Deeps") do not intend to apply for the Options to be quoted on the ASX.
The Options will expire at 5:00pm Western Standard Time on 30 June 2009 ("Expiry Date"). $(c)$
The option is a right in favour of the option holder to subscribe for one share in the capital of $(d)$ Golden Deeps.
Shares allotted to option holders on exercise of Options shall be issued at 10 cents each $(e)$ ("Exercise Price"). The Exercise Price of the shares the subject of the Options shall be payable in full on exercise of the Options.
$(f)$ The Option Holder may exercise Options any time prior to the Expiry Date by delivering to the registered office of Golden Deeps, to be received by Golden Deeps prior to the Expiry Date:
$(i)$ a notice in writing stating the intention of the option holder to exercise all or a specified number of Options; and
$(ii)$ the holding statement and a cheque made payable to Golden Deeps for the subscription monies for the shares.
An exercise of only some Options shall not affect the rights of the option holder to the balance of $(q)$ the Options held by the option holder.
$(h)$ Golden Deeps shall allot the resultant shares and deliver the holding statement within five business days of the exercise of the Option.
$(i)$ The Options shall be freely transferable.
Shares allotted pursuant to an exercise of Options shall rank, from the date of allotment, equally $(i)$ with existing ordinary fully paid shares of Golden Deeps in all respects.
$(k)$ In the event of any reconstruction (including consolidation, subdivisions, reductions or return) of the issued capital of Golden Deeps, the rights of the Options shall be reconstructed (as appropriate) in accordance with the Listing Rules.
$\langle \mathsf{I} \rangle$ The Options will not give any right to participate in dividends, bonus issues or entitlement issues until shares are allotted pursuant to the exercise of the relevant Options. There is no right to change the exercise price of Options if the Company completes a bonus or entitlements issue.

GOLDEN DEEPS LTD A.B.N. 12 054 570 777 GLOSSARY OF TERMS

In this Explanatory Statement:

"ACN"	Australian Company Number
"ASIC"	Australian Securities and Investments Commission
"ASX"	Australian Stock Exchange Limited (ACN 008 624 691)
	"ASX Listing Rules" or "Listing Rules" The Official Listing Rules of ASX as amended from time to time.
"Company"	Golden Deeps Ltd (ACN 054 570 777)
"Corporations Act"	The Corporations ACT 2001 (Commonwealth)
"Director"	A director of Golden Deeps Ltd.
"Experts Report"	The report dated July 2004 by Stanton Partners Corporate Pty Ltd which is annexed to this Explanatory Statement.
"Notice of Meeting"	The notice convening the Meeting, which accompanies this Explanatory Statement.
"Option"	An option to subscribe for a Share at an exercise price of 10 cents per Share on or before 30 June 2009 and otherwise on the terms set out in Annexure "A" to this Explanatory Statement.
"Resolution"	Resolution in the Notice of Meeting.
"Share"	A fully paid ordinary share in the capital of the Company.
"Shareholder"	The registered holder of a Share in the Company.

GOLDEN DEEPS LTD A.B.N. 12 054 570 777 FORM OF PROXY

Facsimile No: 08-94817835

The Secretary, Golden Deeps Ltd 1st Floor, 8 Parliament Place, WEST PERTH WA 6005

I/We, , , , , , , , , , , , , , , , , , , of.................................... being a holder of shares in the capital of Golden Deeps Ltd hereby appoint ,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, of....................................

or failing him, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the General Meeting of the Company to be held on Friday, 17^th September 2004 and at any adjournment thereof, in the manner indicated
below, or in the absence of indication as he or she thinks fit.

A statement of the Chairman's voting intentions in relation to undirected proxies.

If you do not wish to direct your proxy how to vote, please place a mark in the box. $\Box$

By marking this box you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

The Chairman intends to vote for the resolutions.

Ordinary Business

Approval issue of Shares and Options - KMM	For □		Against ロ		Abstain □
Approval issue of Shares and Options - Tansearch		For	-8	Against □		Abstain

(Shareholders to indicate by a tick in the box above how a proxy holder is to vote in respect of the above resolutions).

Signed by the said member this	day of	2004.
Shareholders Signature	Witness
or
The Common Seal of the member was hereunto affixed in accordance with its Constitution	Director
	. Director Secretary

Attendance and Voting Eligibility

For the purposes of the meeting, securities will be taken to be held by the persons who are registered holders at 9:30am on Wednesday, 15^th September 2004. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

Proxies

A member of the Company entitled to attend and vote at the meeting shall be entitled to appoint not more than two other persons (whether members of the company or not) as the member's proxy or proxies, to attend and vote on the member's behalf. Where two proxies are appointed the appointments shall be of no effect unless each proxy is appointed to represent a specified proportion of the member's voting rights. Forms of proxy must be deposited at the registered office of the company in Perth not less than forty-eight (48) hours before the time appointed for the holding of the meeting.

Schedule 1:

Expert's Report of Stanton Partners Corporate Pty Ltd

STANTON PARTNERS CORPORATE PTY LTD

A.C.N 063 036 331 1 HAVELOCK STREET WEST PERTH 6005 WESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188 FACSIMILE: (08) 9321 1204

e-mail: [email protected]

29 July 2004

The Directors Golden Deeps Limited Level 1 8 Parliament Place WEST PERTH WA 6005

Dear Sirs

GOLDEN DEEPS LIMITED ("GOLDEN DEEPS" OR "COMPANY") (ACN 054 570 777) ON Re: THE PROPOSAL TO ACOUIRE THE KELIMAIZINA GOLD PROJECT IN MADAGASCAR FROM KALGOORLIE MINE MANAGEMENT PTY LTD PURSUANT TO LISTING RULE 10.1 AND SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT

1. Introduction

$1.1$ We have been requested by the Directors of Golden Deeps to prepare an Independent Expert's Report to determine the fairness and reasonableness relating to the proposal on the Kelimaizina Project in Madagascar as noted below and in resolution 1 in the Notice of Meeting of Shareholders and Explanatory Statement to Shareholders of Golden Deeps of August 2004.
$1.2_z$ It is proposed that Golden Deeps will acquire a 100% interest in the Kelimaizina Gold Project from Kalgoorlie Mine Management Pty Ltd ("KMM"), a company that is the appointed Manager of Golden Deeps and associated with a substantial shareholder' in Golden Deeps. For the purpose of this report the proposed acquisition is known as the Proposed Transaction.

The purchase consideration payable to KMM is:

2,000,000 shares in Golden Deeps at a deemed issue price of 8 cents each;
2,000,000 options in Golden Deeps, exercisable at 10 cents each on or before 30 June 2009; and
Reimbursement of previous expenditure of \$82,000 being the cash expenditure (including option, purchase and legal payments) incurred on the Kelimaizina tenements between November 2003 and June 2004.

Furthermore, 200,000 shares and 200,000 options are to be issued to a non-related party for facilitating the acquisition.

KMM acquired the two mineral tenements comprising the Kelimaizina Project in Madagascar from Calibra Resource Engineers Madagascar SARL ("Calibra") under an option agreement that has now been finalised. The tenements are purported to be registered in the name of Calibra Resource and Engineers SARL. The sale included a 25% net profit interest on alluvial and eluvial production and a 1% net smelter return interest on production from hard rock mining. On 27 July 2004, Golden Deeps entered into a contract with KMM to acquire the Kelimaizina Project on the terms noted above. It is assumed that the Kelimaizina Project will need to be acquired via a Madagascan registered company controlled by Golden Deeps and at least one of the directors of the Madagascan company will be a Madagascan resident.

$1.3$ For the purposes of Listing Rule 10.1, a substantial shareholder is defined as a person and a person's associates who had a relevant interest prior to the Proposed Transaction of at least 10% of the voting shares of the Company. At the date of this report Coniston Pty Ltd ("Coniston") owns 16.0% of the ordinary shares in Golden Deeps. Coniston is a company controlled by Mr J Del Piano who also controls KMM. Furthermore, KMM provides administrative and management services to Golden Deeps. We have been advised that Coniston and KMM are deemed related parties and act in concert with each other.

Under Section 606 of The Corporations Act ("TCA"), a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that persons or someone else's voting power in the company increases:

From 20% or below to more than 20%; or $(a)$
From a starting point that is above 20% and below 90%. $(b)$

Under Section 611 (Item 7) of the TCA, Section 606 does not apply in relation to any acquisition of shares in a company approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transaction pursuant to a Section 611 (Item 7) meeting.

If the Kelimaizina Project proceeds, Coniston and KMM combined will control approximately 21.86% of the issued capital of Golden Deeps. However, if only KMM exercises its share option $(2,000,000)$ to be issued pursuant to the acquisition) and no other share issues are made, Coniston and KMM combined may increase there shareholding in Golden Deeps to 27.04%. For the purposes of this report we have referred to Coniston and KMM as the Coniston Group.

Therefore a notice prepared in relation to a meeting of shareholders convened for the purposes of Listing Rule 10.1 and Section 611 (Item 7) of TCA must be accompanied by an Independent Expert's Report stating whether the Proposed Transaction noted under resolution 1 is fair and reasonable. To assist shareholders in making a decision on the Proposed Transaction, the directors have requested that Stanton Partners Corporate Pty Ltd prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the Proposed

Transaction is fair and reasonable to the non-associated shareholders of Golden Deeps (not associated with the Coniston Group).

$1.5$ Apart from this introduction, this report considers the following:
Summary of opinion ۰
Implications of the proposals ٠
Corporate history and nature of business of Golden Deeps $\bullet$
Future direction of Golden Deeps
Basis of valuation of Golden Deeps shares and options ٠
Value of consideration
Basis of valuation of the Kelimaizina Project
Conclusion as to fairness $\bullet$
Reasonableness of the offer
Conclusion as to reasonableness $\bullet$
Sources of information $\bullet$
Appendix A
1.6 In determining the fairness and reasonableness of the Kelimaizina Project acquisition, we have had regard for the definitions set out by the Australian Securities and Investments Commission ("ASIC") in its Policy Statements 75 and 74. Policy Statement 75 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). Policy Statement 74 states that, where an acquisition of shares by way of an allotment is to be approved by shareholders pursuant to Section 611 (Item 7) of TCA, it is desirable to commission a report by an independent expert stating whether or not the proposal is fair and reasonable, having regards to the proposed allottee (in this case KMM) and whether a premium for potential control is being paid by the allottee.

Accordingly, our report relating to the Kelimaizina Project acquisition is concerned with the fairness and reasonableness of the proposals with respect to the existing non-associated shareholders of Golden Deeps (not associated with the Coniston Group) and whether the Coniston Group is paying a premium for potential control.

1.8 In our opinion, the proposals as outlined in paragraph 1.2 and resolution 1 are fair and reasonable to the shareholders of Golden Deeps not associated with the Coniston Group.

The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the July 2004 Independent Geologist's Valuation Report prepared by Malcolm Castle, a copy of which is attached as an appendix to the Notice of Meeting and Explanatory Statement.

$2.$ Implications of the Proposals

2.1 As at 29 July 2004, there were 25,940,020 ordinary fully paid shares on issue in Golden Deeps. The significant fully paid shareholders as at 30 June 2004 were believed to be:

	No. of fully paid shares	% of issued fully paid
		shares
Coniston Pty Ltd (associated with KMM)	4,150,000	16.00
ANZ Nominees Pty Ltd	1,606,230	6.19
Peat Corp Pty Ltd	1,280,000	4.93
Sancoast Pty Ltd	1,000,000	3.86
Paso Holdings Pty Ltd	973,927	3.75
Intercorp Pty Ltd	907,661	3.50
	9,917,818	38.23

The top 20 shareholders currently own approximately 57.47% of the Company.

$2.2$ If the Kelimaizina Project acquisition is completed, KMM would own 2,000,000 shares and 2,000,000 share options (exercisable at 10 cents each, on or before 30 June 2009) representing a 7.11% interest in the expanded capital of the Company (before the exercise of any share options). The Coniston Group would own 21.86%. If only KMM exercised its share options, KMM would own only 13.27% of the issued capital of Golden Deeps. The Coniston Group would own 27.04% of the expanded issued capital. KMM would pay \$200,000 to the Company to exercise the 2,000,000 options.
2.3 The current Board of Directors is not proposed to change in the near future and no change is contemplated as a result of the acquisition of the Kelimaizina Project.
2.4 Although not being paid to KMM, a non-related party is to receive 200,000 shares and 200,000 options (exercisable at 10 cents each, on or before 30 June 2009).
2.5 KMM is also to be reimbursed \$82,000 for past exploration costs and costs incurred by KMM in exercising the option to acquire the Kelimaizina Project from Calibra.

3. Corporate History and Nature of Business

$3.1$ Golden Deeps is on the Mining Board of the ASX and is currently a mineral explorer. The Company has a number of interests in mineral tenements including inter-alia, the following areas of interest:
Garden Gully, near Coolgardie Western Australia a gold play $\bullet$
Blue Funnel, north-west of Kalgoorlie in Western Australia a gold play.
Twin Hills near Menzies in Western Australia a gold play; and
Victory Dam 26km east of Kalgoorlie a gold play.

4. Future Directions of Golden Deeps

$4.1$ We have been advised by the directors and management of Golden Deeps that:
There are no proposals currently contemplated either whereby Golden Deeps $\bullet$ will acquire any further properties or assets from The Coniston Group (however Golden Deeps will issue shares to KMM as outlined above) or where Golden Deeps would transfer any of its property or assets to the Coniston Group (other than through KMM acting as manager for Golden Deeps at the rate of \$200,000 per annum);
The composition of the Board will not change in the short term; $\bullet$
$\bullet$ . No dividend policy has been set and it is not proposed to be set until such time as the Company is profitable and has a positive cash flow; and
The Company will endeavour to enhance the value of its interests in the current $\bullet$ gold properties and will evaluate the Kelimaizina Project in Madagascar if acquired.

5. Basis of Valuation of Golden Deeps Shares and Options

5.1 Shares
5.1.1 In considering the proposals to acquire the Kelimaizina Project, we have sought to determine if the considerations payable by Golden Deeps to KMM are fair and reasonable to the existing non-associated shareholders of Golden Deep.
5.1.2 The offer would be fair to the existing non-associated shareholders if the value of the assets (tenement interests known as the Kelimaizina Project) being acquired by Golden Deeps are greater than the implicit value of the shares, options and cash being offered as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on Golden Deeps shares and options for the purposes of this report.
$5.1.3$ The valuation methodologies we have considered in determining a theoretical value of a Golden Deeps share are:
Capitalise maintainable earnings/discounted cash flow;
Takeover bid the price at which an alternative acquirer might be willing to $\bullet$ offer:
Adjusted net backing and windup value; and ۰
The weighted average market price of Golden Deeps shares. $\bullet$
$5.2$ Capitalise maintainable earnings and discounted cash flows.
Due to Golden Deeps operations, a lack of profit history arising from business 5.2.1 undertakings and the lack of a reliable future cash flow from a current business activity, we have considered these methods of valuation not to be relevant for the purpose of this report.

5.3 Takeover Bid

It is possible that a potential bidder for Golden Deeps could purchase all or part of 5.3.1 the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Golden Deeps have formed the view that there is unlikely to be any takeover bids made for Golden Deeps in the immediate future. The Coniston Group's interest in Golden Deeps is currently 16.0% (refer paragraph 2.1 of this report), however after the acquisition of the Kelimaizina Project, the Coniston Group's interest increases to 21.86% before the exercise of any share options.

5.4 Adjusted Net Asset Backing

5.4.1 We set out below an unaudited Statement of Financial Position of Golden Deeps as at 31 May 2004 along with a pro-forma Statement of Financial Position assuming the following:
Accounting for the investments in other listed companies at 30 June 2004 market values;
The acquisition of the Kelimaizina Project from KMM by way of an issue of 2,000,000 shares at 8.5 cents each (and 2,000,000 share options not costed) plus the reimbursement of \$82,000 to KMM;
The issue of 200,000 shares at a market cost of 8.5 cents each (and 200,000 options not costed); and expensed; and
Assuming the incidental acquisition costs of the Kelimaizina Project are \$20,000 but are expensed.

	Golden Deeps 31 May 2004 \$'000's	Pro-forma 31 May 2004 \$000's
Current Assets
Cash	2,032	1,930
Receivables	7	7
Investments	107	107
	2,146	2,044
Non Current Assets
Plant	3	3
Capitalised exploration costs		252
Receivables-Bonds	133	133
	136	388
Total Assets	2,282	2,432
Current Liabilities
Payables	10	10
Provisions
	10	10

	Golden Deeps 31 May 2004 \$2000's	Pro-forma 31 May 2004 \$000's
Total Liabilities	10	10
Net Assets	2,272	2,422
Equity Contributed Equity Accumulated losses Net Equity	8,203 (5,931) 2,272	8,390 (5,968) 2,422

5.4.2 Based on the book values, this equates to a value per fully paid ordinary share post the Proposed Transaction (28,140,020 shares on issue) of approximately 8.6 cents (ignoring the value, if any, of non-booked tax benefits). The book net tangible asset backing as at 31 May 2004 equates to 8.7 cents.
$5.4.3$ We have accepted the amounts for all current assets, current liabilities, fixed assets and listed investments. However, the most significant assets of Golden Deeps are their interests in various gold exploration projects in Western Australia.
5.4.4 No detailed review was made by us on the assets and liabilities disclosed in the statement of financial position as at 31 May 2004. We have been assured by the management of Golden Deeps that they believe the carrying value of all current assets, fixed assets, listed investments and liabilities at 31 May 2004 are fair and not materially misstated.
5.4.5 No independent valuations have been prepared on the mineral prospects of Golden Deeps (other than the Kelimaizina Project proposed to be acquired) and we do not consider it necessary to obtain an independent valuation of the mineral prospects for the purposes of this report (other than relying on the independent valuation of the Kelimaizina Project prepared by Malcolm Castle in July 2004). We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between Golden Deeps and other parties. The latest quarterly report on the Company's prospects was for the quarter to 30 June 2004 and was released to the market on 27 July 2004 by lodging the report with the ASX. We also note it is not the present intention of the Directors of Golden Deeps to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value (as adjusted), is just that, theoretical. The shareholders, existing and future, must acquire shares in Golden Deeps based on the market perceptions of what the market considers a Golden Deeps share to be worth.

The market has either generally valued the vast majority of mineral exploration companies at significant discounts or premiums to appraised technical values and this has been the case for a number of years although we also note that there is an orderly market (albeit on low turnover) for Golden Deeps shares and the market is

kept fully informed of the activities of the Company. Furthermore, for accounting purposes, the consideration for the issue of Golden Deeps shares to acquire 100% of the Kelimaizina Project will be booked at market value and not any perceived technical value. Accordingly, for the reasons outlined above, we believe that for the purpose of this report, it is not appropriate to use any technical value of a Golden Deeps share in assessing whether the proposal to acquire the Kelimaizina Project is fair and reasonable. We believe a pre-announcement market-based approach is a more suitable basis of assessing whether the proposal is fair and/or reasonable.

5.5 Weighted Average Market Price of Golden Deeps fully paid shares
$5.5.1$ We set out below a summary of the fully paid share prices of Golden Deeps since 1 January 2004 to the date immediately prior to the announcement of the proposal to acquire the Kelimaizina Project (27 July 2004).

2004	High Cents	Low Cents	Last Sale Cents	Volume Trade (000's)
January	11.0	10.0	10.5	464
February	10.5	8.8	10.0	1,279
March	10.0	8.7	10.0	452
April	10.0	9.0	9.0	583
May	9.0	8.0	8.0	363
June	8.0	6.5	6.1	216
July (to $26th$ )	8.8	8.0	8.8	247

Since the announcement, Golden Deeps shares have traded at 9.1 cents each.

$5.5.2$ Generally, the market is a fair indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher.

In the case of Golden Deeps, current liquidity is reasonable for the ensuing year to meet ongoing administration costs and mineral exploration commitments. The Company, in the medium term will need to:

Undertake a capital raising of some significance (or a series of smaller capital raisings) and $/$ or
Sell or dilute its interest in existing mining interests.

It is noted that over the past several years, the vast majority of mineral exploration companies listed on the ASX are trading at significant discounts or premiums to appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of Golden Deeps, the monthly volume of trades on the ASX is small but large enough to argue that an orderly market exists for the Company's shares. The "market" arguably is fully informed of the Company's activities and in view of the immediate and near future (2004/2005) lack of a mineable gold or base

metal mine in Australia, it is our opinion appropriate to use a range of recent preannouncement trading market values as fair values to attribute to the 2,000,000 ordinary shares (possibly restricted for 12 months) to be issued to the Coniston Group (actual shares issued to KMM).

5.5.3 The future value of a Golden Deeps share will depend upon, inter alia:
The future prospects of its gold mineral prospects in Australia and overseas;
The state of the gold markets (and prices) in Australia and overseas; ۰
The state of Australian and overseas stock markets; $\bullet$
Membership of the Board: $\bullet$
General economic conditions; and $\bullet$
Liquidity of shares in Golden Deeps.
5.5.4 Using the last two months trade prices to 30 June 2004 and for the period to 26 July 2004), the value lies in the range of 6.1 cents to 9.0 cents and a preferred market value of 8.5 cents. As noted above, we are of the opinion that the preannouncement of proposal market based approach is more appropriate to use for the purposes of this report.
$5.5.5$ The above values apply to the 2,000,000 ordinary shares to be issued to KMM. Arguably the shares to be issued to KMM have a lesser value, as they will be restricted from trading for a period of 12 months. A discount of 10% to 20 % per annum is commonly applied to shares that have a restriction on trading and if this applied to the 2,000,000 shares to be issued to KMM, the discounted market value would approximate 6.8 cents to 7.65 cents assuming an 8.5 cents non-restricted share price. Using the 6.1 cent price at 30 June 2004 would result in a discounted range of 4.88 cents to 5.49 cents.

5.6 Options

$5.6.1$ The Company will also issue 2,000,000 options to KMM as part consideration to acquire the Kelimaizina Project. Using a Black Scholes option pricing model, results in the value of the options to be issued of around 4.96 cents. The basic assumptions used were:

Preferred market share price	8.5 cents
interest rate	5.755%
volatility factor	70%
exercise price	10 cents
option term	$4.833$ years

Under current Australian Accounting Standards, the options do not need to be costed as part of the acquisition price, however if this was undertaken, the 'additional' cost to acquire 100% of the Kelimaizina Project would be approximately \$99,200. In accordance with International Financial Reporting Standards ("IFRS"), the 'cost' of issuing the options would be accounted for as part of the consideration. Adoption of IFRS will come into affect in the year ended 30 June 2006 for most standards, however the proposed standard pertaining to the extractive industries will not come into affect until the year ended 30 June 2007. It

is noted that if KMM exercised the 2,000,000 options, Golden Deeps would receive \$200,000 additional cash funds.

6. Value of Consideration

6.1 Using 8.5 cents as the pre-announcement fair market issue price for the shares proposed to be issued to KMM results in a consideration payable (effectively to acquire 100% of the Kelimaizina Project) of \$252,000 (including cash of \$82,000). Although the accounting cost may only be the cost of issuing the shares plus the cash disbursement, the true cost is as follows:

	Low	Preferred	High
2,000,000 shares	122,000	170,000	180,000
2,000,000 options	99,200	99,200	99,200
Cash	82,000	82,000	82,000
Consideration payable to KMM	303,200	351,200	361,200
Share price assumed to be	$6.1$ cents	8.5 cents	9.0 cents
Additional consideration to other non
related parties
200,000 shares	12,200	17,000	18,000
$200,000$ options	9,920	9,920	9,920
	22,120	26,920	27,920
Total cost to Golden Deeps	325,320	378,120	389,120

$7.$ Basis of Valuation of the Kelimaizina Project

$7.1$ The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market.
$7.2$ The Company has commissioned Malcolm Castle ("Castle") to prepare a Valuation Report of the Kelimaizina Project owned by KMM. The Castle Valuation Report of July 2004 should be read in its entirety and a full copy of the Castle Valuation Report is attached as an appendix to the Notice of Meeting and Explanatory Statement to Shareholders. The Valuation Report ascribes a range of values to the interests to the Kelimaizina Project and for the purposes of our report, we have used the low, high and preferred market valuations referred to in the Castle Valuation Report.
$7.3$ We have used and relied on the Castle Valuation Report on the Kelimaizina Project and have satisfied ourselves that:
Mr Malcolm Castle is a suitably qualified geologist and has relevant $\bullet$ experience in assessing the merits of mineral projects and preparing mineral asset valuations:
Castle is independent from Golden Deeps and KMM; and $\bullet$
$\bullet$ Castle has employed sound and recognised methodologies in the preparation of the valuation report on the Kelimaizina Project.

$7.4$ Castle has provided a range of market values of the interests in the Kelimaizina Project. After taking into account the past exploration commitments, Castle has ascribed a range of values to the Kelimaizina Project as follows:

	L0W	Preferred	High

Kelimaizina Project	575,000	600,000	640,000

It is noted that a 25% net profits interest on alluvial and eluvial production and a 1% net smelter royalty on production from hard rock mining is payable. If an economic gold deposit is discovered and proves to be elluvial or alluvial and if the 25% interest was deducted from the range of fair values, the net effective 75% interest would lie in the range of \$431,250 to \$480,000 with a preferred fair value of \$450,000. However it would be expected that the overall fair value would rise if economic gold discoveries were made.

8. Conclusion as to Fairness

8.1 The proposal to acquire the Kelimaizina Project for the consideration noted in paragraph 1.2 is believed fair to Golden Deeps' non-associated shareholders if the value of the consideration offered is equal to or less than the value of the Kelimaizina Project being acquired.
8.2 Due to the nature of the business of Golden Deeps, valuations are dependent upon the value placed on the mineral interests of Golden Deeps. The valuation of mineral interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.
8.3 We have examined below the values attributable to the shares proposed to be issued and the value of the consideration offered by Golden Deeps to KMM as the vendor of the Kelimaizina Project.

Assessed "gross value" based on	Low S	Preferred S	High S
independent valuations of mineral interests	575,000	600,000	640,000
Value of consideration being offered by Golden Deeps using a
pre-announcement market based approach
Payable to KMM (refer paragraph
6.1)	303,200	351,200	361,200
Payable to others	22,120	26,920	27,920
	\$325,320	\$378,120	\$389,120

The above consideration figures exclude any discount that could be applied as the 2,000,000 shares may be escrowed for 12 months. The technical values before Castle applied a market premium, was in the range of \$395,000 to \$510,000 with a preferred technical value of \$455,000.

8.4 On a pre-announcement market value approach which is considered more relevant, for the reasons outlined in section 5 of this report, the Kelimaizina Project acquisition is considered fair. It should also be acknowledged that the shares to be issued to KMM for the acquisition of the Kelimaizina Project are likely to be classified as 'restricted securities' by the ASX and escrowed from trading for a period of 12 months.

9. Reasonableness of the Offer

9.1 We set out below some of the advantages and disadvantages and other factors pertaining to the Kelimaizina acquisition proposal.

Advantages

9.2 According to the Castle Valuation report "the Kelimaizina Gold Project has considerable exploration potential and with minimal expenditure could be brought into production". "The current eluvial gold mineralisation could generate a cash flow from a relatively basic gravity plant which is a low cost operation with relatively low environmental impact."
9.3 Castle has applied a 25% market premium to the technical value (low \$395,000, preferred \$455,000 and high \$510,000) given "the recent significant improvement in the market for advanced gold exploration properties and the low perceived country risk associated with investments in Madagascar." Castle in his valuation report also states that "the Kelimaizina Project would be very highly regarded by a prospective purchaser/investor as it represents a project with good potential to discover further mineralisation."
9.4 The consideration payable is fair as noted in section 8 of this report.

Disadvantages and Other Factors

9.6 If the 2,000,000 share options proposed to be issued to KMM are exercised, the Company would receive \$200,000 in new cash funds. The exercise price of 10 cents each is above the current share price (around 8.5 cents), however there may be an opportunity cost if the options are exercised (at 10 cents) whilst the share price of a fully paid Golden Deeps share is materially in excess of 10 cents. Normally, share placements in junior mineral exploration are made at between 80% and 100% of market price of a fully paid share.

9.7 The number of fully paid shares on issue rises by 2,200,000 to 28,140,020 (before exercise of any share options). This represents an 8.48% increase in the ordinary shares of the Company.
9.8 As the Kelimaizina Project is in Madagascar there is always some increase in political and country risk and the title laws may not be as effective as they are in Australia.
9.9 Currently, Coniston owns 16.00% of the Company and if resolution 1 is passed, the Coniston Group (including KMM) will increase its shareholding to 21.86% and potentially to 27.04% (if KMM exercises the 2,000,000 options and there are no other share issues). It is noted that KMM is the current manager of Golden Deeps and thus operational control is already in the hands of the Coniston Group. The Coniston Group is paying a premium for control in that it is receiving consideration of say \$351,200 (refer paragraph 6.1) but is giving up an asset deemed to be valued at \$600,000. However, all of the shareholders of Golden Deeps are benefiting as they are acquiring an asset that is valued at a figure that is greater than the consideration being paid.

10. Conclusion as to Reasonableness

$10.1$ After taking into account the factors referred to in 9 above and elsewhere in this report, we are of the opinion that the Kelimaizina Project proposals as noted in paragraph 1.2 and resolution 1 in the Notice may be considered reasonable to the non-associated shareholders of Golden Deeps.

11. Sources of Information

In making our assessment as to whether the Kelimaizina Project proposals as noted $11.1$ in paragraph 1.2 are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company and the Kelimaizina Project that is relevant to the current circumstances. In addition, we have held discussions with the management of Golden Deeps about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Golden Deeps.
11.2 Information we have received includes, but is not limited to:
Draft Notice of General Meeting of Shareholders of Golden Deeps and draft Explanatory Statement To Shareholders prepared in July 2004;
Discussions with management and directors of Golden Deeps;
Details of historical market trading of Golden Deeps ordinary fully paid shares recorded by ASX to 29 July 2004 (10.30 am);
Shareholding details of Golden Deeps as supplied by the company's share registry at 24 June 2004;
Annual report for Golden Deeps for 2002/03;

Unaudited management accounts of Golden Deeps to 31 May 2004;
Announcements made by Golden Deeps to the ASX from 1 January 2003 to 28 July 2004;
The Independent Valuation Report of Malcolm Castle dated July 2004 relating to the Kelimaizina Project;
Schedule of costs on the Kelimaizina Project by KMM; and
Discussions with the author of the Castle Valuation Report.
11.3 Our report includes Appendix A attached to this report.

Yours faithfully STANTON PARTNERS CORPORATE PTY LTD

$\eta_{\ell m}$ lu

J P Van Dieren Director

AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stanton Partners Corporate Pty Ltd dated 29 July 2004, relating to the Kelimaizina acquisition proposal as outlined in paragraph 1.2 of the report and resolution 1 in the Notice of Meeting to Shareholders of August 2004.

At the date of this report, Stanton Partners Corporate Pty Ltd does not have any interest in the outcome of the proposal. There are no relationships with Golden Deeps, KMM or Coniston other than acting as an independent expert for the purposes of this report. There are no existing relationships between Stanton Partners Corporate Pty Ltd and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at \$5,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stanton Partners Corporate Pty Ltd or John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report. Stanton Partners, the partners of who control Stanton Partners Corporate Pty Ltd are the auditors of Golden Deeps.

Stanton Partners Corporate Pty Ltd does not hold any securities in Golden Deeps, KMM or Coniston. There are no pecuniary or other interests of Stanton Partners Corporate Pty Ltd that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stanton Partners Corporate Pty Ltd and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stanton Partners Corporate Pty Ltd is the holder of an Investment Advisers Licence under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions. A number of the partners of Stanton Partners are the Directors' of Stanton Partners Corporate Pty Ltd. Stanton Partners and Stanton Partners Corporate Pty Ltd have extensive experience in providing advice pertaining to mergers, acquisitions and strategic and financial planning for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Golden Deeps in order to assist them to assess the merits of the Kelimaizina acquisition proposal (outlined in resolution 1) to which this report relates. This report has been prepared for the benefit of Golden Deeps directors and does not provide a general expression of Stanton Partners Corporate Pty Ltd's opinion as to the longer term value of Golden Deeps or the Kelimaizina Project. Stanton Partners Corporate Pty Ltd does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of Golden Deeps (other than Stanton Partners conducting an audit of Golden Deeps for the year ended 30 June 2003 and undertaking a half year audit review for the six months ended 31 December 2003). Stanton Partners are also the tax agents for Golden Deeps. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stanton Partners Corporate Pty Ltd to the form and context in which it appears.

DISCLAIMER

This report has been prepared by Stanton Partners Corporate Pty Ltd with due care and diligence. However, except for those responsibilities, which by law cannot be excluded, no responsibility arising in any way whatsoever for errors or omission (including responsibility to any person for negligence) is assumed by Stanton Partners Corporate Pty Ltd, Stanton Partners, its partners, employees or consultants for the preparation of this report.

DECLARATION AND INDEMNITY

Recognising that Stanton Partners Corporate Pty Ltd may rely on information provided by Golden Deeps and its officers (save whether it would not be reasonable to rely on the information having regard to Stanton Partners Corporate Pty Ltd experience and qualifications), Golden Deeps has agreed:

To make no claim by it or its officers against Stanton Partners Corporate Pty Ltd (and a) Stanton Partners) to recover any loss or damage which Golden Deeps may suffer as a result of reasonable reliance by Stanton Partners Corporate Pty Ltd on the information provided by Golden Deeps; and
(b) To indemnify Stanton Partners Corporate Pty Ltd (and Stanton Partners) against any claim arising (wholly or in part) from Golden Deeps or any of its officers providing Stanton Partners Corporate Pty Ltd any false or misleading information or in the failure of Golden Deeps or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stanton Partners Corporate Pty Ltd.

A draft of this report was presented to Golden Deeps directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

STANTON PARTNERS CORPORATE PTY LTD

A C N 063 036 331

1 HAVELOCK STREET WEST PERTH 6005 WESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188 FACSIMILE: (08) 9321 1204

e-mail: [email protected]

FINANCIAL SERVICES GUIDE Dated 29 July 2004

$1.$ STANTON PARTNERS CORPORATE PTY LTD

Stanton Partners Corporate Pty Ltd ABN 89 036 036 331 ("SPC" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

$2.$ FINANCIAL SERVICES GUIDE

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

This FSG includes information about:

who we are and how we can be contacted:
the services we are authorised to provide under our Australian Financial $\blacksquare$ Services Licence. Licence No: 231201:
• remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and $\blacksquare$
our complaints handling procedures and how you may access them. $\blacksquare$

$3₁$ FINANCIAL SERVICES WE ARE LICENCED TO PROVIDE

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

$\blacksquare$ Securities (such as shares and options)

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

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

$\overline{4}$ . GENERAL FINANCIAL PRODUCT ADVICE

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

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

5. BENEFITS THAT WE MAY RECEIVE

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

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

6. REMUNERATION OR OTHER BENEFITS RECEIVED BY OUR EMPLOYEES

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

$7.$ REFERRALS

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

8. ASSOCIATIONS AND RELATIONSHIPS

Through a variety of corporate and trust structures, SPC is ultimately wholly owned by and operates as part of Stanton Partners professional advisory and accounting practice. Our directors may be partners in Stanton Partners.

From time to time, SPC or Stanton Partners and/or Stanton Partners' related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

9. COMPLAINTS RESOLUTION

Internal complaints resolution process $9.1$

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stanton Partners Corporate Level 1 1 Havelock Street WEST PERTH WA 6005.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

$9.2$ Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Industry Complaints Service Limited ("FICS"). FICS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FICS are available at the FICS website www.fics.asn.au or by contacting them directly via the details set out below.

Financial Industry Complaints Service Limited PO Box 579 Collins Street West MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9621 2291

10. CONTACT DETAILS

You may contact us using the details set out at the top of our letterhead on page 1 of this FSG.

STANTON PARTNERS CORPORATE PTY LTD

A C N 063 036 331

1 HAVELOCK STREET WEST PERTH 6005 WESTERN AUSTRALIA

TELEPHONE: (08) 9481 3188 FACSIMILE: (08) 9321 1204

e-mail: [email protected]