Form 603

Corporations Act 2001 Section 671B

Notice of initial substantial holder

To Company Name/Scheme	Grange Resources Limited (Grange)
ACN/ARSN	ACN 009 132 405
Details of substantial holder (1) 1. Name ACN/ARSN (if applicable)	See Annexure "A"
The holder became a substantial holder on (d/m/y)	28/9/2007

2. Details of voting power

The total number of votes attached to all the voting shares in the company or voting interests in the scheme that the substantial holder or an associate (2) had a relevant interest (3) in on the date the substantial holder became a substantial holder are as follows:

Class of securities (4)	Number of securities	Person's votes (5)	Voting power (6)
Ordinary shares	9,065,556	9,065,556	7.87%

$3.$ Details of relevant interests

The nature of the relevant interest the substantial holder or an associate had in the following voting securities on the date the substantial holder became a substantial holder are as follows:

Holder of relevant interest	Nature of relevant interest (7)	Class and number of securities
Rio Tinto Limited (Rio Tinto)	Relevant interest under s608(1) of the 65,556 ordinary shares Corporations Act as registered holder pursuant to the completion of a scheme of arrangement for the Barrick Mines group in 1992.
Hamersley Holdings Limited (Hamersley)	Relevant interest under s608(1) of the Corporations Act as registered holder pursuant to completion of the Sale Agreement dated 10 August 2007 between Rio Tinto Exploration Pty Limited and Grange a copy of which is attached to this form as Annexure "B".	9,000,000 ordinary shares
Each other substantial shareholder	Deemed relevant interest under the Corporations Act, in respect of the relevant interests held by Rio Tinto and Hamersley.	9,065,556 ordinary shares

$\ddot{\phantom{a}}$ Details of present registered holders

The persons registered as holders of the securities referred to in paragraph 3 above are as follows:

Holder of relevant interest	Registered holder of securities	Person entitled to be registered as holder (8)	Class and number of securities
Rio Tinto	Rio Tinto	Rio Tinto	65,556 ordinary shares
Hamerslev	Hamerslev	Hamerslev	9,000,000 ordinary shares

5. Consideration

The consideration paid for each relevant interest referred to in paragraph 3 above, and acquired in the four months prior to the day that the substantial holder became a substantial holder is as follows*:

Holder of relevant	Date of acquisition (d/m/y)	Consideration (9)		Class and number
interest		Cash	Non-cash	of securities
Hamersley	28/9/2007		In consideration for the issue of shares in Grange, Rio Tinto Exploration Limited will sell Exploration Licence E70/2512 and associated mining information to Grange on the terms of the Sale Agreement (see Annexure "B")	9,000,000 ordinary shares

* The shares held by Rio Tinto were acquired in 1992.

6. Associates

The reasons the persons named in paragraph 3 above are associates of the substantial holder are as follows:

Name and ACN/ARSN (if applicable)	Nature of association
See Annexure "A"	------

7. Addresses

The addresses of persons named in this form are as follows:

----- Name	------------ ____ Address - - -
See Annexure "A" _________	-- -----

Signature

print name	Stephen Ernest Nigel Creese		capacity General Counsel
	sign here Kephen		$70010$ date 2/10/2007

Annexure "A" to Form 603

This is Annexure "A" of 1 page referred to in Form 603 prepared by Rio Tinto Limited (ACN 004 458 404) and Hamersley Holdings Limited (ACN 009 132 405) in respect of Grange Resources Limited signed by me and dated $2/10/2007$

General Counsel

Rio Tinto Group

$(a)$ Rio Tinto Limited (ACN 004 458 404) of Level 33, 120 Collins Street, Melbourne VIC 3000;
$(b)$ Hamersley Holdings Limited (ACN 008 446 222) of Level 22, 152-158 St Georges Terrace, Perth WA 6000;
Subsidiaries of Rio Tinto Limited (ACN 004 458 404) other than Hamersley Holdings Limited $(c)$ (ACN 008 446 222);
$(d)$ Each of Rio Tinto PLC of 6 St James's Square, London, SW1Y4LD, UK, and its wholly owned subsidiaries:
$(i)$ Tinto Holdings Australia Pty Limited (ACN 004 327 922) of Level 33, 120 Collins Street, Melbourne VIC 3000;
$(ii)$ Rio Tinto Australian Holdings Limited, 6 St James's Square, London, SW1Y4LD, UK;
$(iii)$ Rio Tinto Pacific Holdings Limited, 6 St James's Square, London, SW1Y4LD, UK
$(iv)$ Rio Tinto International Holdings Limited, 6 St James's Square, London, SW1Y4LD, UK; and
$(e)$ Rio Tinto PLC's subsidiaries other than listed at paragraphs $(d)(i)-(iv)$ above,

(each a Substantial Shareholder).

Rio Tinto Limited (ACN 004 458 404) gives this notice on its own behalf and on behalf of each of the Substantial Shareholders.

Annexure "B" to Form 603

This is Annexure "B" of 1 page referred to in Form 603 prepared by Rio Tinto Limited (ACN 004 458 404) and Hamersley Holdings Limited (ACN 009 132 405) in respect of Grange Resources Limited signed by me and dated 2/10/2007

Ephen Creese.

General Counsel

SALE AGREEMENT

This is true and complete copy of the
Sale Agreement dated 10 August 2007 which
Is Annexure "B" of Form 603 to Grange Resources Limited dated 2 October 2007

Phen (Tres

Sale Agreement

Rio Tinto Exploration Pty Limited

Grange Resources Limited

Sale of Southdown Assets

Level 37 QV.1 Building 250 St Georges Terrace Perth WA 6000 Australia Tel 61 8 9488 3700 Fax 61894883701 www.aar.com.au

FRANCISCO PROFESIONESIA ENTERNA DENGAN TERRA EN ENERGIA EN ENERGIA EN ENERGIA EN ENERGIA EN ENERGIA EN ENERGIA

1.		Definitions and Interpretation	1
	1,1	Definitions	1
	1.2	Interpretation	$\cdot$ 4
2.		Sale and Purchase
	2.1	Sale of Southdown Assets	5
	2.2	Consideration	5
	2.3	RTE Nominee	5 5
3.		Conditions Precedent	5
	3.1	Conditions precedent	5
	3.2	Waiver of Conditions Precedent	6
	3,3	Responsibility for procedure and notification	6
	3,4	Failure of Conditions Precedent	$\overline{\mathbf{r}}$
4.		Pre-completion activities/conduct	7
	4.1	Approval of issue of Grange Shares and Grange Options	$\overline{7}$
	4.2	Preparation and execution of Transfer documentation	8
	4.3	Caveat	8
	4.4	Covenants by RTE - Exploration Licence	8
	4.5	Covenants by Grange	9
	4,6	Conduct of Proceedings of the Tenement Objections	9
	4.7	Shareholder approval not obtained	10
5.		Completion	10
	5.1	Place for Completion	10
	5.2	Effect of Completion	10
	5.3	Delivery by RTE	11
	5.4	Payment of the Cash Price	11
	5.5 5.6	Grange Shares	11
	5.7	Option Deed Effect of Completion	11
	5.8	Post Completion steps	12
	5.9	Access Agreements for Mineral Exploration	12
	5.10	RTE Acknowledgement - Southdown	12
6.		Grange Shares - Escrow Restrictions	13
	6.1	Escrow Period	13 13
	6.2	Permitted Dealings	13
7.		Warranties	14
	7.1	Warranties by RTE	14
	7.2	Warrantles by Grange	15
	7.3	Mutual Warranties	15
	7.4	Indemnities	15
	7.5	Acknowledgements of RTE or the RTE Nominee	16
	7.6	Acknowledgements by Grange	16

$\mathcal{L}(\mathbf{y}^{(i)})$ .

Jdrm A0108892766v4 605879000 10.8.2007

Page (i)

THE REAL PROPERTY OF PERSONS AND THE REAL PROPERTY.

	7.7 Survival	17
	7.8 Claims and demands	17
8.	Confidentiality	17
	8.1 Confidential information not to be disclosed	17
	8.2 Permitted disclosure	17
	8.3 Conditions to disclosure 8.4	18
	ASX statement 8.5	18
	Injunctive relief 8.6.	19
	Confidentiality obligations to survive 8.7 Law of Confidentiality	19
9.	Entire Agreement	19
10.	Notices	19
		19
11.	GST $\mathcal{L}^{\mathcal{L}}$	20
12.	Amendment	20
13.	Remedies	20
14.	$\mathcal{L}^{\mathcal{L}}$ Costs and stamp duty	20
15.	Further Assurances	21
16.	Governing Law	21
17.	Severance	21
18.	No merger	٠ 21
19.	No Waiver	21
20.	Consequential loss excluded	21
21.	Counterparts	22
	Schedule 1	23
	Schedule 2	24
	Schedule 3
	Grange Warranties	25 25
	Schedule 4
	Option Deed	28 28
	Schedule 5	29
	Mining Information	າດ

$\bar{z}$

$\bar{\phantom{a}}$

Date.	10 August 2007
Parties
1.	Rio Tinto Exploration Pty Limited (ABN 76 000 057 125) of 37 Belmont Avenue, Belmont WA 6104 (RTE).
2.	Grange Resources Limited (ABN 80 009 132 405) of Level 11, 200 St Georges Terrace Perth WA 6000 (Grange).
Recitals
A	RTE is the owner of the Exploration Licence and the Mining Information (the Southdown Assets).
B	RTE has agreed to sell all its right title and interest in the Southdown Assets to Grange, and Grange has agreed to buy the Southdown Assets from RTE, on the terms and conditions set out in this Agreement.
C	In consideration of the sale and purchase of the Southdown Assets Grange has agreed to:
	(a) pay the Cash Price to RTE;
	(b) issue and allot the Grange Shares to RTE or the RTE Nominee; and
	(c) grant the Grange Options pursuant to the Option Deed.

It is agreed as follows.

Definitions and Interpretation 1.

$1.1$ Definitions

The following definitions apply unless the context requires otherwise.

ASIC means the Australia Securities and Investments Commission.

ASX means ASX Limited ACN 008 624 691.

Access Agreements for Mineral Exploration means the following:

the Access Agreement for Mineral Exploration dated 24 August 2005 between RTE $\left( a\right)$ and Regnar Nymann of Skovstredet 4, Stensgard, 4912 Harpelunde, Denmark Europe in respect of Lot 6836 on Deposited Plan 209199 (Vol 1423 Fol 726);
the Access Agreement for Mineral Exploration dated 24 August 2005 between RTE $(b)$ and Peter Nymann of Post Office Box 326, Gnowangerup WA 6335 in respect of Lot 6857 on Deposited Plan 209408 (Vol 1898 Fol 691) and Lot 1 on Diagram 39513 (Vol 1350 Fol 224);
the Access Agreement for Mineral Exploration dated 1 April 2005 between RTE and $(c)$ Bruce Maxwell Mitchell Wright and Eleanor Glen Wright of 'Narpyn' PO Box 24, Mount Barker WA 6324 in respect of Lot 6828 on Deposited Plan 209199 (Vol 1719 Fol 975); and
the Access Agreement for Mineral Exploration dated 10 May 2005 between RTE $(d)$ and Gorman & Sons Pty Ltd of 463 Sandalwood Road, Wellstead WA 6328 in respect of Lot 6855 on Deposited Plan 209414 (Vol 2089 Fol 20).

Assumed Liabilities means:

Liabilities arising or incurred in connection with the Southdown Assets after the $(a)$ Completion Date; and
Liabilities arising or incurred in connection with: $(b)$
the Access Agreements for Mineral Exploration; $($
the conditions and endorsements attaching to the Exploration Licence; $(i)$
any environmental or rehabilitation liabilities arising from exploration $(iii)$ work in respect of the Exploration Licence;
any contracts with third parties for exploration work in respect of the $(r)$ Exploration Licence; and
any claims in respect of Native Title affecting the land underlying the $(v)$ Exploration Licence;

but excludes:

any Liability of RTE or any other member of the Rio Tinto Group arising as a $\mathbf{c}$ consequence of a failure to comply with any law; and
any tax or penalties for which RTE or any other member of the Rio Tinto Group is $(d)$ liable.

Business Day means a week day on which banks are generally open for business in Perth WA.

Cash Price means, unless adjusted under clause 4.7(b), the amount of \$1 million.

Completion means the completion of the sale and purchase of the Southdown Assets, the payment of the Cash Price, the issue and allotment of the Grange Shares and, except where clause 4.7 applies, the execution of the Option Deed and Option Certificates, in each case in accordance with clause 5.

Completion Date means the fifth Business Day after the date when the Conditions Precedent have been satisfied or waived or such later date as may be agreed between the parties.

Conditions Precedent has the meaning given in clause 3.1.

Confidential Information means the terms and conditions of any Transaction Document and all information provided under or in connection with a Transaction Document. It does not include information which:

Allens Arthur Robinso

is in or comes into the public domain otherwise than by disclosure in breach of a $(a)$
(other than in respect of the terms and conditions of a Transaction Document) is (b) already known to the person at the date of disclosure;
$\left( c\right)$
is acquired from a third party who is entitled to disclose that information; or $(d)$ is independently developed by the person receiving the information.

Consent Order has the meaning given in clause 5.3(e).

Corporations Act means the Corporations Act 2001 (Cth).

dispose means, except for the purposes of clause 4.4, has the meaning given in the Listing

Escrow Period means the period commencing on the Completion Date and ending on the first anniversary of the Completion Date.

Exploration Licence means Exploration Licence E70/2512.

Grange Options means the options to be granted on Completion under the Option Deed. Grange Shares means, unless adjusted under clause 4.7, 9 million ordinary shares each fully paid in the capital of Grange, to be issued by Grange in accordance with this

Grange Warranties means the warranties given by Grange in clauses 4.1(a), 7.2 and 7.3.

Interim Consent Order has the meaning given in clause 4.6(a).

Liabilities means debts or liabilities of any kind, including those which are prospective or contingent and the amount of which for the time being not ascertained or ascertainable.

Listing Rules means the listing rules of ASX.

Mining Act means the Mining Act 1978 (WA), and for the avoidance of doubt includes transitional provisions under the Mining Amendment Act 2004.

Mining Information means the information relating to the Exploration Licence listed in

Mining Regulations means Mining Regulations 1981 (WA).

Native Title means a right, interest or entitlement to the occupation or use of land by indigenous inhabitants in accordance with the laws and customs of the indigenous inhabitants that is recognised in the place where the Exploration Licences are situated by

One Year Options has the meaning given in the Option Deed.

Option Certificate has the meaning given in the Option Deed.

Option Deed means the deed substantially in the form of Schedule 4.

Option Securities means the ordinary shares to be issued by Grange on exercise of the Grange Options in accordance with the Option Deed.

RTE Nominee has the meaning given in clause 2.3.

RTE Warranties means the warranties given by RTE in clauses 7.1 and 7.3.

Related Corporation has the meaning given to Related Body Corporate in the Corporations Act, but on the basis that in the case of any member of the Rio Tinto Group, the term extends to include any other member of the Rio Tinto Group.

Rio Tinto Group means Rio Tinto Limited (ABN 96 004 458 404), Rio Tinto plc and their respective Related Corporations.

Security Interest means any mortgage, charge, piedge, lien, encumbrance, arrangement for retention of title or other interest having the effect of providing security, whether existing or agreed to be granted or created, and includes any arrangement of any kind or any other right of, or arrangement with, any creditor to have its claim satisfied in priority to other creditors with, or from the proceeds of, any asset.

Southdown Assets has the meaning given in Recital A.

Southdown Project has the meaning given in clause 5.9.

Southdown Proposal has the meaning given in clause $4.1(a)$ .

Subsidiaries has the meaning given in the Corporations Act.

Tenement Objections means objections;

5H/067 to Miscellaneous Licence application 70/97; $(a)$
6H/067 to Miscellaneous Licence application 70/98; (b)
7H/067 to Miscellaneous Licence application 70/100; and $\mathbf{(c)}$
$(d)$ 11H/067 to Miscellaneous Licence application 70/101.

Three Year Options has the meaning given in the Option Deed,

Transaction Documents means this Agreement and the Option Deed.

Transfer Document has the meaning given in clause 4.2.

Warranties means the RTE Warranties and the Grange Warranties or either of them as the context may require.

$1.2$ Interpretation

Headings are for convenience only and do not affect interpretation. The following rules of interpretation apply unless the context requires otherwise.

The singular includes the plural and conversely. $(a)$
A gender includes all genders. (b)
Where a word or phrase is defined, its other grammatical forms have a $(c)$ corresponding meaning.
A reference to a person includes a body corporate, an unincorporated body or $(d)$ other entity and includes any of them.
A reference to a clause, annexure or schedule is to a clause of, or annexure or $(e)$ schedule to this Agreement.
A reference to any party to this Agreement or any other agreement or document $(f)$ includes the party's successors and permitted assigns.
A reference to any agreement or document is to that agreement or document as $\left( \mathbf{g} \right)$ amended, novated, supplemented, varied or replaced from time to time, except to the extent prohibited by this Agreement or that other agreement or document.
A reference to any legislation or to any provision of any legislation includes any $\mathbf{a}$ modification or re-enactment of it, any legislative provision substituted for it and all regulations and statutory instruments issued under it.
A reference to dollars or $\oint$ is to Australian currency. $\bf{r}$
Mentioning anything after include, includes or including does not limit what (j) else might be included.

$2.$ Sale and Purchase

$2.1$ Sale of Southdown Assets

RTE agrees to sell the Southdown Assets to Grange and Grange agrees to buy the Southdown Assets from RTE with effect from the Completion Date on the terms and conditions set out in this Agreement.

$2.2$ Consideration

In consideration of the sale and purchase of the Southdown Assets under clause 2.1, Grange agrees that, on Completion, it will:

$(a)$ pay the Cash Price to RTE;
issue and allot the Grange Shares to RTE or the RTE Nominee; and $(b)$
subject to clause 4.7, grant the Grange Options pursuant to the Option Deed. $(c)$

$2.3$ RTE Nominee

RTE may, at least two Business Days prior to Completion, by notice in writing to Grange, nominate one or more Related Corporations to receive the Grange Shares or enter into the Option Deed (RTE Nominee).

$3₁$ Conditions Precedent

$3.1$ Conditions precedent

This Agreement other than this clause and clauses 4 and 7 to 20 is conditional on the prior satisfaction of the following conditions:

Grange's shareholders approving of the issue of the Grange Shares and grant of the $_(a)$ Grange Options under the Transaction Documents in accordance with Listing Rule 7.1, in a meeting held in accordance with Listing Rule 7.3;

any consent, approval and/or registration that is required under the Mining Act to $(b)$ give effect to this or the transactions contemplated by this Agreement being received or effected:
the Treasurer of the Commonwealth of Australia either: $\left( c \right)$
ceases to be empowered to make an order under Part II of the Foreign $\bf{r}$ Acquisitions and Takeovers Act 1975 (Cth) in respect of the parties entering into the Transaction Documents or the acquisition of the Grange Shares or the exercise of the Grange Options pursuant to the Option Deed by RTE or the RTE Nominee as contemplated by the Transaction Documents; or
gives advice in writing of a decision by or on behalf of the Treasurer stating (ii) or to the effect that the Commonwealth Government has no objection to the parties entering into the Transaction Documents or to the acquisition of the Grange Shares or the exercise of the Grange Options pursuant to the Option Deed by RTE or the RTE Nominee as contemplated by the Transaction Documents; and
$\phi$ there being no material breach of any of the Warranties,

(collectively, the Conditions Precedent).

$3.2$ Waiver of Conditions Precedent

RTE may, without the consent of Grange, by notice in writing, waive the $(a)$ Conditions Precedent referred to in clauses 3.1(c) or (d) (in relation to Grange Warranties).
Grange may, without the consent of RTE, by notice in writing, waive the Condition $(b)$ Precedent referred to in clause 3.1(d) (in relation to RTE Warranties).
The Conditions Precedent referred to in clauses 3.1(a) and (b) cannot be waived. $\bf(c)$
$3.3$ Responsibility for procedure and notification
Each party shall co-operate with each other and use their respective reasonable $(a)$ endeavours to satisfy the Conditions Precedent as soon as practicable after the date of this Agreement.
$(b)$ Each party shall:
- keep the other party reasonably informed in a timely manner; and $\Omega$
- otherwise consult with the other party, $(ii)$

in relation to that party's efforts to satisfy the Conditions Precedent.

If a consent or approval contemplated by the Conditions Precedent is obtained on $(c)$ terms and conditions that are not reasonably acceptable to the affected party, the Conditions Precedent will not be satisfied in accordance with this Agreement unless and until the affected party has secured a replacement consent or approval on terms reasonably acceptable to it on or prior to the date referred to in clause 3.4.

Each party shall notify the other party promptly after it becomes aware that any of $(d)$ the Conditions Precedent have either been satisfied or waived or have not been satisfied.

$3.4$ Failure of Conditions Precedent

Subject to clause 4.7, if any of the Conditions Precedent are not satisfied or waived $(a)$ by 30 September 2007 or such longer period as the parties may agree, any party may terminate this Agreement by notice to the other party.
$(b)$ If:
$\ddot{\textbf{(i)}}$ Grange breaches clause 4.1(a); or
one or more directors of Grange withdraws his or her recommendation $(ii)$ that the shareholders approve the Southdown Proposal or fails to approve the Southdown Proposal in respect of any shares in Grange that they own or control,

RTE may terminate this Agreement by notice to Grange.

Termination under this clause will be without prejudice to any of the rights or $(c)$ obligations of a party which have accrued under this Agreement as at the date of termination.

4. Pre-completion activities/conduct

$4.1$ Approval of issue of Grange Shares and Grange Options

Grange represents and warrants in favour of RTE that on or prior to the date of this $\left( 2\right)$ Agreement it held a meeting of its board of directors at which a quorum of directors was present and acting throughout. In that meeting, the directors present at that meeting unanimously resolved to:
convene a meeting of shareholders for the purposes of satisfying the $\bf{r}$ Condition Precedent in clause 3.1(a) and requiring that the relevant notice of meeting;
- recommend that the shareholders approve (subject to RTE's $(A)$ obligation to sell and assign the Southdown Assets to Grange on Completion) the issue and allotment of the Grange Shares and the grant of the Grange Options to RTE or the RTE Nominee (the Southdown Proposal); and
- state that it is the directors' current intention to approve the (B) Southdown Proposal in respect of any shares in Grange that they own or control; and
subject to shareholder approval, approve the delivery by Grange to RTE or $(ii)$ the RTE Nominee of a holding statement for the Grange Shares.
The shareholders meeting referred to in paragraph (a) (i) must be convened and $(b)$ held by no later than the week commencing 24 September 2007 or such later date as the parties may agree.
$\mathbf{(c)}$ Grange must:
prepare and lodge on a prompt and timely basis, all documents required $\boldsymbol{\Omega}$ by the Listing Rules as necessary for the consummation of the transactions contemplated by the Transaction Documents;
use all reasonable efforts to take, or cause to be taken, all other action and $(ii)$ do, or cause to be done, all other things necessary or appropriate in connection with the meeting of shareholders and the shareholder approvals referred to in paragraph (a); and
immediately notify RTE if at any time before the Completion Date, Grange $(iii)$ becomes aware of any third party objecting to, challenging, interfering with or obstructing (or proposing to object to, challenge, interfere with or obstruct), any of the transactions contemplated by the Transaction Documents.

Preparation and execution of Transfer documentation $4.2$

Grange must, promptly following the date of this Agreement, prepare such instrument of transfer of the Exploration Licence as may be required under the Mining Act for registration under that Act (the Transfer Document), and provide a copy of that Transfer Document to RTE.

4.3 Caveat

Grange acknowledges that it will not be permitted to lodge any caveats under the Mining Act to protect its interests under this Agreement in respect of the Exploration Licence until such time as the Completion Date has occurred.

$4,4$ Covenants by RTE - Exploration Licence

$(a)$ RTE covenants that from the date of this Agreement to the Completion Date it will in all respects hold and administer the Exploration Licence with due regard to the interests of Grange under this Agreement and, in particular, will conduct its affairs in relation to the Exploration Licence in a businesslike and usual manner and, except as provided in this Agreement, shall not dispose of the whole or any part of the Exploration Licence.
RTE must use its best endeavours to spend prior to Completion the minimum (b) allowable expenditure required to keep the Exploration Licence in good standing under the Mining Act and Mining Regulations of \$85,000 for the tenement year ended 28 October 2007.
$\left( c\right)$ RTE must:
on Completion, advise Grange in writing the amount of allowable $\Omega$ expenditure expended in relation to the Exploration Licence for the tenement year ended 28 October 2007; and
no later than 3 December 2007, provide all necessary receipts, invoices $(ii)$ and other documents in RTE's possession or control to enable Grange to complete a Form 5 for the purposes of the Mining Act and Mining Regulations.
$\overline{d}$ If RTE has not expended \$85,000 in allowable expenditure under the Mining Act and Mining Regulations at Completion, RTE agrees to undertake such further work by 28 October 2007 as to have expended \$85,000 in allowable expenditure in relation to the Exploration Licence.
In the event that RTE requires access to the area the subject of the Exploration $(e)$ Licence and associated mining information (including the Mining Information) after Completion to comply with the paragraph (d), Grange will allow RTE to access the area the subject of the Exploration Licence and information for the purpose of undertaking further work in relation to the Exploration Licence on reasonable request by RTE.

4.5 Covenants by Grange

Grange covenants that from the date of this Agreement to the Completion Date, except as expressly consented to by RTE in writing:

Grange will continue to conduct its business in the ordinary and usual course and $(a)$ not otherwise, with due regard to the interests of RTE under the Transaction Documents;
(ታ) Grange will not:
$\bf{r}$ reduce its share capital or transfer an amount to its share capital account from any of its other accounts;
(ii) enter into any agreement or legally binding commitment to give to any person any right to invest in or acquire shares or any security convertible into or exerciseable for shares in Grange or any Subsidiary of Grange and will not issue, redeem or cancel any ordinary shares or other securities in Grange or any of its Subsidiaries; or
$(iii)$ sell or give any option, right to purchase, mortgage, lien or other form of security or encumbrance over any such shares or securities;
Grange will not merge or consolidate with any other corporation or agree to do so; $\mathbf{(c)}$ and
$\langle d \rangle$ Grange will not make any change in its constitution.

4.6 Conduct of Proceedings of the Tenement Objections

Within five Business Days of the date of this Agreement, a minute of consent orders $(a)$ seeking to vacate the second direction of Warden GN Calder made 15 June 2007 in the form set out in Schedule 1 is to be executed by Grange and RTE and filed with the Warden's Court Officer (the Interim Consent Order).
If this Agreement has not terminated pursuant to clause 3.4 and Completion has $(b)$ not occurred prior to the date of listing of the Tenement Objections for mention

before the Mining Warden on 12 November 2007, the parties will attend the hearing, advise the Warden that this Agreement has been entered into and the status of satisfaction of the Conditions Precedent and seek orders to vacate the hearing date in February 2008.

4.7 Shareholder approval not obtained

Notwithstanding any other provision of this Agreement, if shareholder approval as contemplated in clause 4.1(a) is not obtained to the issue and allotment of Grange Shares and the grant of the Grange Options under the Transaction Documents, or if that approval is not obtained by the date contemplated in clause 4.1(b), the following will apply.

The number of Grange Shares to be issued to RTE or the RTE Nominee on $(a)$ Completion will be 15,829,740.
$(b)$ The Cash Price payable under this Agreement will be the greater of:
(i) \$1 million; and
the amount calculated in accordance with the following formula: $(ii)$

$CP = $34$ million - [GS x MP]

Where:

$C P$ means the cash price
means the number of Grange Shares to be issued on Completion under GS paragraph (a)
MP means the closing price for Grange ordinary shares quoted on ASX on the day prior to Completion.
$(c)$ Clause 5.6 of this Agreement will no longer apply.
Without limiting clause 15, each party agrees to do anything necessary or desirable $\mathbf{d}$ to give full effect to this clause 4.7.

5. Completion

5.1 Place for Completion

Completion shall occur on the Completion Date at the offices of Allens Arthur Robinson in Perth or such other place that Grange and RTE may agree.

5.2 Effect of Completion

On Completion taking effect in accordance with this clause:

$(a)$ Grange will:
be entitled to exclusive ownership and possession of, the Exploration $\boldsymbol{\omega}$ Licence; and
assume the risks of, and Assumed Liabilities in connection with, the $(1)$ Exploration Licence; and

$(b)$ RTE or the RTE Nominee will obtain title to and property in the Grange Shares and Grange Options.

$5.3$ Delivery of Information

RTE shall ensure that the following documents are delivered to Grange on or $(a)$ before Completion.
The Transfer Documents and any other documents reasonably required by $\left($ Grange to transfer the Exploration Licence to Grange, in each case executed by RTE.
The instrument of title issued in respect of the Exploration Licence to the $(1)$ extent it is within RTE's custody or control.
$(i$ ii) The Mining Information specified in items 1 to 8 of Schedule 5 (where it is not practicable to deliver that information. RTE can make that information available to Grange).
Deeds of Assignment in favour of Grange in respect of the Access $(i)$ Agreements for Mineral Exploration, executed by RTE, which Deeds must also be executed by Grange on Completion.
In the event that the Interim Consent Order has not been filed, a copy of $(v)$ that order, executed by RTE or its solicitors.
$(vi)$ The consent order in the form set out Schedule 2, executed by RTE or its solicitors (the Consent Order).
$(b)$ RTE will make the Mining Information specified in item 9 of Schedule 5 available to Grange on an as is, where is basis. The parties will discuss and agree in good faith an appropriate time or times, subsequent to Completion, for that Mining Information to be made available by RTE to Grange for collection.

$5.4$ Payment of the Cash Price

On Completion Grange shall pay the Cash Price to RTE by telegraphic transfer in immediately available funds to an account nominated by RTE before Completion.

5.5 Grange Shares

On Completion:

Grange must issue and allot the Grange Shares and deliver a holding statement $(a)$ relating to the Grange Shares to RTE or the RTE Nominee; and
$(b)$ RTE or the RTE Nominee authorises the directors of Grange to place its name on Grange's register of members in respect of Grange Shares.

5.6 Option Deed

Unless clause 4.7 applies, on Completion, Grange shall deliver to RTE:

a duly executed Option Deed, with RTE or the entity nominated by RTE under $(a)$ clause 2.3 as counterparty; and

duly executed Option Certificates for the Grange Options issued pursuant to $(b)$ clause 2.3 of the Option Deed.

$5.7$ Effect of Completion

The steps described in clauses 5.2 to 5.6 will be regarded as occurring $(a)$ simultaneously, and none of the steps will be considered to have been completed until all the other steps have been completed.
If Grange or RTE fail to fully comply with its obligations under this clause 5, $(b)$ without prejudice to any other rights it may have in respect of that failure, each party must do everything reasonably required by the other party to reverse any action taken under this clause 5.

5.8 Post Completion steps

Following Completion, Grange must: $(a)$
take all necessary steps to ensure a security bond is lodged with the $\bf{r}$ Department of Industry and Resources (if one is required) to replace any security bond which was lodged by RTE in connection with the Exploration Licence; and
$(ii)$ use all reasonable endeavours to ensure RTE's security bond is refunded or released to the Department of Industry and Resources as soon as possible.
$\dot{\mathbf{a}}$ Within five Business Days after Completion, Grange must execute and file the Consent Order with the Warden.
Within five Business Days of Completion, Grange must (at its cost) apply for $\mathbf{(c)}$ quotation of the Grange Shares on ASX, and will use its best endeavours to obtain such quotation.
$(d)$ Grange must lodge a notice in accordance with section 708A(5)(e) of the Corporations Act in relation to the issue of the Grange Shares within five Business Days of the issue of the Grange Shares.

5.9 Access Agreements for Mineral Exploration

Grange and RTE must, as soon as practicable after the Completion Date, use their $(a)$ respective best endeavours to ensure that the relevant landowners execute the Deeds of Assignment referred to in clause 5.3(d).
$(b)$ Notwithstanding paragraph (a), Grange must, as soon as practicable after the Completion Date, notify the relevant landowners that their Access Agreement for Mineral Exploration has been assigned to Grange for the purposes of section 20 of the Property Law Act 1979 (WA).
$\left( c\right)$ From the Completion Date until the signatures referred to in paragraph (a) are obtained, and without limiting any other provision of this Agreement, Grange must indemnify RTE for any costs and expenses incurred by RTE in connection with any Access Agreement for Mineral Exploration.

5.10 RTE Acknowledgement - Southdown

$(a)$ RTE acknowledges that Grange intends to develop the Exploration Licence in conjunction with adjoining tenements held by Grange, and that Grange will be seeking third party participation (including by way of joint venture partner) in such development (the Southdouri Project). As a consequence, Grange may subsequent to Completion sell an interest in the Southdown Project to a third party and is likely to hold less than a majority participating interest in the Southdown Project.
$(b)$ Without prejudice to paragraph (a), in the period between the date of this Agreement and Completion, Grange agrees to consult with RTE prior to making any public announcement in connection with any third party participation in the Southdown Project and Grange shall consider in good faith any proposed deferral of such announcement or any reasonable amendment or addition to the proposed announcement.

Grange Shares - Escrow Restrictions 6.

6.1 Escrow Period

During the Escrow Period, RTE or the RTE Nominee (as applicable) must not:

dispose of, or agree or offer to dispose of, any or all of the Grange Shares; $(a)$
create, or agree or offer to create, any Security Interest in any or all of the Grange (b) Shares; or
do or omit to do any act which may have the effect of transferring effective $\mathbf{(c)}$ ownership or control of any of the Grange Shares,

(referred to in clause 6.2 as a deal or dealing).

6.2 Permitted Dealings

Notwithstanding clause 6.1, RTE or the RTE Nominee (as applicable) may deal with any or all of the Grange Shares during the Escrow Period as follows:

in connection with a sale, assignment, transfer or disposal to a Related $⁽²⁾$ Corporation of RTE;
in acceptance of an off-market or market bid made for the ordinary shares in $(b)$ Grange;
in connection with a scheme of arrangement involving the ordinary shares in (c) Grange; or
if Grange has given RTE or the RTE Nominee (as applicable) its prior written $(d)$ consent to that dealing.

$\overline{7}$ . Warranties

$7.1$ Warranties by RTE

Except as disclosed and consented to by Grange, or as would be disclosed by a $(a)$ search at the relevant land titles office, mines department or other public records office of the instruments of title relating to the Exploration Licence, RTE represents and warrants to Grange that:
as at the date of this Agreement and as at Completion, the Exploration $\boldsymbol{\omega}$ Licence and the Mining Information is held by RTE legally and beneficially free from any Security Interest except those arising by operation of law or as disclosed on the instruments of title for the Exploration Licence; and
$(ii)$ as at Completion, to the best of RTE's knowledge and belief:
- $(A)$ except to the extent clause 4.4(d) applies, it has complied with the conditions attaching to the Exploration Licence (as varied from time to time) in all material respects and RTE is not aware of any facts, circumstances or unremedied breaches which would give rise to cancellation, forfeiture, suspension or early termination of the Exploration Licence;
- (B) it has complied with all laws applicable to its ownership of, and to the work it has conducted on, the Exploration Licence;
- $\circ$ there is no material litigation, arbitration or governmental proceedings against RTE in respect of the Exploration Licence (except for the avoidance of doubt, the Tenement Objections);
- $(D)$ it has not granted any option or right of pre-emption in respect of the Exploration Licence to any other person; and
- it is not a related party (within the meaning of section 228 of the $(\mathbf{L})$ Corporations Act) of Grange;
$(b)$ This clause 7.1 does not, and will not, constitute any representation or warranty in respect of:
$\boldsymbol{\omega}$ Native Title or in respect of the rights of any person as to Native Title and any such representation or warranty which could otherwise be implied in this Agreement is excluded.
$(i)$ the renewal of the Exploration Licence beyond the current term; or
$(iii)$ exemption from the requirements of section 65 of the Mining Act or the status of any application for relief from that section; and
$(c)$ RTE does not accept liability for errors or omissions (whether by reason of negligence or otherwise) in the Mining Information or for any loss or damage suffered as a result of Grange relying on that information.

$7.2$ Warranties by Grange

Grange represents and warrants to RTE that each of the statements in Schedule 3 is true and correct in all material respects as at the dates specified in that Schedule.

7.3 Mutual Warranties

RTE represents and warrants to Grange, and Grange represents and warrants to RTE, both for its benefit and for the benefit of any RTE Nominee, that each of the following statements is true and correct in all material respects as at the date of this Agreement and at Completion:

$\left( 2 \right)$ (Status) It is a corporation duly incorporated and validly existing under the laws of the place of its incorporation.
(Power) It has the power to enter into and perform its obligations under the (b) Transaction Documents, to carry out the transactions contemplated by the Transaction Documents and to carry on its business as now conducted or contemplated.
(Corporate authorisations) It has taken all necessary corporate action to $(c)$ authorise the entry into and performance of the Transaction Documents and to carry out the transactions contemplated by the Transaction Documents.
$(d)$ (Documents binding) The Transaction Documents and any document entered into in connection with the Transaction Documents is its valid and binding obligation enforceable in accordance with its terms, subject to any necessary stamping and registration.
(No contravention) Neither the entry into nor performance by it of a Transaction $(e)$ Document nor any transaction contemplated under a Transaction Document violates in any material respect any provision of any judgment binding on it, its constituent documents, any law or any document, agreement or other arrangement binding on it or its assets.

7.4 Indemnities

RTE shall indemnify Grange against all proceedings, claims, damages, expenses, $(a)$ losses or Liabilities of any nature in respect of the Southdown Assets as a result of anything occurring prior to the Completion Date or in respect of any breach of the RTE Warranties.
Grange shall indemnify RTE against all proceedings, claims, damages, expenses, (b) losses or Liabilities of any nature as a result of any breach of the Grange Warranties.
$\mathbf{c}$ Grange shall indemnify RTE against all proceedings, claims, damages, expenses or losses of any nature in respect of the Exploration Licence as a result of anything occurring on or after the Completion Date (other than any breach of the RTE Warranties).

7.5 Acknowledgements of RTE or the RTE Nominee

RTE or the RTE Nominee (as applicable) acknowledges and agrees that:

no disclosure document will be lodged with ASIC in connection with the offer or $\left( a\right)$ issue of the Grange Shares:
$(b)$ neither this Agreement nor any offer to subscribe for the Grange Shares made by Grange constitutes financial product advice and that Grange has not had regard to RTE's or the RTE Nominee's (as applicable) particular objectives, financial situation and needs:
$(c)$ without prejudice to RTE's and RTE Nominee's reliance on the terms of this Agreement and on the Grange Warranties an investment in Grange is speculative and involves risk and that RTE or the RTE Nominee has considered such risk in deciding to acquire the Grange Shares:
$\langle d \rangle$ other than as provided for in this Agreement (including as warranted in this Agreement by Grange) and except to the extent that liability cannot by law be excluded, none of Grange, or any of its respective related bodies corporate or associates, or any directors, officers, employees or advisers of Grange, or any of its respective related bodies corporate or associates, accept any responsibility, and disclaim all liability, in relation to the offer of the Grange Shares:
other than as expressly warranted in this Agreement by Grange, it relies on its own $(e)$ assessment of Grange and its prospects and has conducted its own investigations with respect to the Grange Shares or Grange, including the particular tax consequences of acquiring, owning or disposing of the Grange Shares in light of RTE's or RTE Nominee's (as applicable) particular situation as well as any consequences arising under the laws (including taxation laws) of any jurisdiction; and
(f) other than as expressly warranted in this Agreement by Grange, does not rely on any forecasts, projections, opinions of future performance or other statements relating to Grange, and acknowledges that no warranty is given or representation made by Grange that any such forecast, projection or opinion will be met or achieved.

$7.6$ Acknowledgements by Grange

Grange acknowledges and agrees that:

$(a)$ other than as provided for in this Agreement (including as warranted in this Agreement by RTE) and except to the extent that liability cannot by law be excluded, none of RTE, or any of its respective related bodies corporate or associates, or any directors, officers, employees or advisers of RTE, or any members of the Rio Tinto Group, accept any responsibility, and disclaim all liability, in relation to the sale of the Southdown Assets:
$(b)$ other than as expressly warranted in this Agreement by RTE, it relies on its own assessment of the Southdown Assets and has conducted its own investigations with respect to the Southdown Assets, including the particular tax consequences of

acquiring or owning the Southdown Assets in light of Grange's particular situation. as well as any consequences arising under the laws (including taxation laws) of any jurisdiction; and

$\mathcal{L}$ other than as expressly warranted in this Agreement by RTE, it does not rely on any forecasts, projections, opinions of future performance or other statements relating to the Exploration Licence, and acknowledges that no warranty is given or representation made by RTE that any such forecast, projection or opinion will be met or achieved.

$7.7$ Survival

The Warranties shall not merge on, nor be extinguished by, Completion, exercise of any Grange Option, or any other event.

$7.8$ Claims and demands

$(a)$ The aggregate of all claims and demands that may be made by Grange in respect of the Warranties (including any claim for indemnification under clause 7.4) shall not exceed \$17 million.
ውን The aggregate of all claims and demands that may be made by RTE in respect of the Warranties (including any claim for indemnification under clause 7.4) shall not exceed \$5 million.

8. Confidentiality

$8.1$ Confidential Information not to be disclosed

Each party (a Disclosing Party) undertakes that it will not:

$(a)$ disclose Confidential Information of the other party to any person;
$(b)$ or allow or make it possible for any person to observe such Confidential Information; or
$\left( c\right)$ use Confidential Information of the other party,

except with the prior approval of the other party or as permitted by this clause 8.

8.2 Permitted disclosure

A Disclosing Party may disclose Confidential Information of another party:

$(a)$ (related entity) to any Related Corporation of the Disclosing Party, provided that the Disclosing Party uses its best endeavours to ensure that all matters so disclosed are kept confidential;
(employees, etc) to employees, officers and agents of the Disclosing Party whose $(b)$ duties in relation to the Disclosing Party or under a Transaction Document necessarily require the disclosure, provided that the Disclosing Party uses its best endeavours to ensure that all matters so disclosed are kept confidential;
(professional advisers) to professional advisers and consultants of the Disclosing $(c)$ Party whose duties in relation to the Disclosing Party or under a Transaction Document necessarily require the disclosure;
(protecting the Exploration Licence) if and to the extent that it may be $(d)$ reasonably required to disclose that information to any governmental authority in connection with applications for government consents which are necessary to transfer or protect any party's interests in the Exploration Licence or otherwise in relation to this Agreement; or
$(e)$ (compulsory disclosure) if and to the extent required under any necessarily applicable legislation or other legal requirement or under the rules or regulations of any recognised stock exchange which are necessarily applicable to the Disclosing Party or its Related Corporations.

8.3 Conditions to disclosure

Any disclosure under clause 8.2(c) (other than a disclosure in good faith to the $(a)$ legal advisers of the Disclosing Party) may only be made subject to the person to whom disclosure is to be made covenanting and agreeing, in a form reasonably acceptable to both parties, to keep such Confidential Information confidential; and
$(b)$ Any disclosure under clause 8.2(d) or 8.2(e), including for the avoidance of doubt any public announcement regarding the existence or content of a Transaction Document or any public announcement relating to the results of any exploration on the Exploration Licence prior to Completion, may only be made after the Disclosing Party has:
$(1)$ given at least 48 hours notice to the other party about the proposed disclosure:
$(ii)$ considered in good faith any reasonable amendments or additions to the proposed disclosure requested by the other party; and
$(iii)$ provided all assistance and co-operation that the other party considers necessary to prevent or minimise that disclosure.

$8.4$ ASX statement

The parties acknowledge that Grange will make an announcement(s) to the ASX $(a)$ immediately upon execution of this Agreement in relation to the Southdown Proposal.
$(b)$ The announcement(s) contemplated under paragraph (a) will be in the form reasonably acceptable to RTE and will, amongst other things, state that the directors of Grange will unanimously recommend that the shareholders in Grange approve the Southdown Proposal (and that it is their current intention to approve the Southdown Proposal in respect of any shares in Grange that they own or control).

8.5 Injunctive relief

Each of the parties acknowledges that monetary damages alone would not be adequate compensation to the other party for breach of this clause 8 and each party has the right to seek specific performance or injunctive relief as a remedy for any such breach or threatened breach, in addition to any other remedies available at law or in equity under this Agreement or otherwise.

8.6 Confidentiality obligations to survive

The provisions of this clause 8 will survive and continue to bind a party notwithstanding that party ceases to be a party of this Agreement.

$B.7$ Law of Confidentiality

The confidentiality undertaking contained in this Agreement shall be in addition to and shall in no way derogate from the obligations of the parties in respect of secret and confidential information at law, in equity or under any statute or trade or professional custom or use except as otherwise provided for in this clause.

9. Entire Agreement

The Transaction Documents contain the entire agreement of the parties with respect to their subject matter. The Transaction Documents set out the only conduct relied on by the parties and supersedes all earlier conduct by the parties with respect to their subject matter.

$10^{\circ}$ Notices

Any notice given under this Agreement:

must be in writing addressed to the intended recipient at the address shown below $(a)$ or the address last notified by the intended recipient to the sender.

$\boldsymbol{\theta}$	to:	Rio Tinto Exploration Pty Limited	37 Belmont Avenue, Belmont WA 6104 Attention: Company Secretary Fax No: 08 9270 9221
(ii)	to:	Grange Resources Limited	Level 11, 200 St Georges Terrace, Perth WA 6000 Attention: Company Secretary Fax No: 08 9321 1523

$(b)$ must be signed by a person duly authorised by the sender; and

$(c)$ will be taken to have been given or made (in the case of delivery in person or by post or fax) when delivered, received or left at the above address, but if delivery or receipt occurs on a day which is not a Business Day or if the communication is sent or is later than 4pm (local time) on a Business Day it will be taken to have been duly given or made at the commencement of the following Business Day.

11. GST

Terms with an initial capital letter which have a defined meaning in A New Tax $\bf(a)$ System (Goods and Services Tax) Act 1999 (Cth) (GST Act) shall have that meaning in this clause except that Taxable Supply excludes the reference to section 84.5 of the GST Act.
If GST is payable on a Taxable Supply made under, by reference to or in $(b)$ connection with this Agreement, the amount of GST payable in respect of that supply must be paid as additional Consideration. This clause does not apply to the extent that the Consideration for the supply is expressly stated to be GST inclusive.
Any reference in the calculation of any amount payable under this Agreement to a $\mathbf{c}$ cost, expense or other liability incurred by a party must exclude the amount of any Input Tax Credit in relation to that cost, expense or other liability.
$(d)$ No additional amount is payable under paragraph (b) until the Recipient of the supply has received a Tax Invoice or Adjustment Note.
$(e)$ Where an Adjustment Event occurs in relation to a Taxable Supply made by the Supplier under or in accordance with this Agreement the Supplier will issue an Adjustment Note to the Recipient in respect of that supply within 14 days after becoming aware of the relevant adjustment.

$12.$ Amendment

This Agreement may be amended only by another agreement executed by all parties.

$13.$ Remedies

All remedies, rights, undertakings, obligations or agreements of the parties arising by law, this Agreement or otherwise shall be cumulative and none shall be in limitation of any other. Each party may follow any remedy to which that party is entitled by law, this Agreement or otherwise, concurrently or successively at that party's option.

14. Costs and stamp duty

$(a)$ Each party must bear its own costs or arising out of the negotiation, preparation and execution of the Transaction Documents.
(b) Grange shall bear all stamp duty (including fines, penalties and interest), transfer fees and other similar fees which may be payable on or in connection with this Agreement or any instrument executed under or transaction evidenced by this Agreement to the extent applicable to the sale and transfer of the Southdown Assets, including the Transfer Documents.

15. Further Assurances

Each party shall take all steps, execute all documents and do everything reasonably required by the other party to give effect to any of the transactions contemplated by the Transaction Documents.

16. Governing Law

This Agreement is governed by the laws of Western Australia. The parties submit to the non-exclusive jurisdiction of courts exercising jurisdiction there.

$17.$ Severance

Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction will be ineffective in that jurisdiction to the extent of the prohibition or unenforceability. That will not invalidate the remaining provisions of this Agreement nor affect the validity or enforceability of that provision in any other jurisdiction.

18. No merger

The rights and obligations of the parties will not merge on the completion of any transaction contemplated by this Agreement. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a. transaction.

No Waiver 19.

No failure to exercise and no delay in exercising any right, power or remedy under this Agreement will operate as a waiver. Nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of that or any other right, power or remedy. No waiver of any provision of, or consent to any departure from, this Agreement by any of the parties shall be effective unless in writing and then only in the specific instance and for the purpose for which it is given.

20. Consequential loss excluded

Notwithstanding any provision in this Agreement to the contrary, no party shall be liable to any other party under this Agreement (whether by way of damages or otherwise) for any indirect, consequential or economic loss, however arising. For the purposes of this clause, it is agreed that indirect, consequential or economic loss includes the following; loss of profit, loss of business opportunity, and payment of liquidated sums or damages under any other Agreement or Deed.

21. Counterparts

$\int$

$\frac{1}{4}$

ということインターこうじょうしょうかいこうしょうこうしょう

$\ddot{\phantom{1}}$

This Agreement may be executed in any number of counterparts. All counterparts taken together will be taken to constitute 1 agreement.

Allens Arthur Robinso

Schedule 1 BEFORE THE WARDEN IN OPEN COURT AT PERTH

OBJECTIONS 5H/067, 6H/067, 7H/067 and 11H/067 TO APPLICATIONS FOR MISCELLANEOUS LICENCES 70/97, 70/98, 70/100 and 70/101

BETWEEN

GRANGE RESOURCES LIMITED

Applicant

AND

RIO TINTO EXPLORATION PTY LIMITED

Objector

MINUTE OF ORDERS SOUGHT BY CONSENT

Date of document: August 2007

Filed on behalf of: The Objector

Date of filing: August 2007

Prepared by: Allens Arthur Robinson Lawyers 250 St George's Tce Perth WA 6000

DX 156 Perth Tel 9488 3700 Fax 9488 3701 Ref Jenny Thornton 605647288

BY CONSENT the parties seek orders that:

Direction 2 of the directions of Warden Calder SM made 15 June 2007 be vacated.

Allens Arthur Robinson

Solicitors for the Objector

Hunt & Humphry Solicitors for the Applicant

Allens Arthur Robinson

Schedule 2

BEFORE THE WARDEN IN OPEN COURT AT PERTH

OBJECTIONS 5H/067, 6H/067, 7H/067 and 11H/067
TO APPLICATIONS FOR MISCELLANEOUS LICENCES 70/97,
70/98, 70/100 and 70/101

BETWEEN

GRANGE RESOURCES LIMITED

Applicant

AND

RIO TINTO EXPLORATION PTY LIMITED

Objector

Date of document:	2007
Filed on behalf of:	The Objector
Date of filing:	2007

Prepared by: Allens Arthur Robinson Lawyers 250 St George's Tce Perth WA 6000

DX 156 Perth Tel 9488 3700 Fax 9488 3701 Ref Jenny Thornton 605647288

BY CONSENT the parties seek orders that:

Objections 5H/067, 6H/067, 7H/067 and 11H/067 be withdrawn. 1.
Any listings of Objections 5H/067, 6H/067, 7H/067 and 11H/067 for mention and $2.$ the listing for hearing on 7 & 8 February 2008 be vacated.
Applications for Miscellaneous Licences 70/79, 70/98, 70/100 and 70/101 be $3.$ remitted to the Mining Registrar.
There are no orders as to costs. 4.

Allens Arthur Robinson

Solicitors for the Objector

Hunt & Humphry Solicitors for the Applicant

Schedule 3

Grange Warranties

The following representations and warranties are given by Grange as at the date of $(a)$ this Agreement and the Completion Date.
(accuracy and completeness) All information relating to Grange and its $\boldsymbol{\omega}$ Subsidiaries and their respective operations provided to RTE or its advisers in connection with the proposed acquisition of the Grange Shares or Grange Options, and all information publicly disclosed by Grange, is true in all material respects and is not by omission or otherwise misleading in any material respect. Nothing has occurred which renders any of the material which has been disclosed to RTE or its advisers, or which has been publicly disclosed by Grange, inaccurate in any material respect.
(disclosure compliance) It has complied with all its disclosure $(ii)$ requirements under the Corporations Act and the Listing Rules and there is no material information or circumstance which Grange is not obliged to notify ASX about, pursuant to Listing Rule 3.1.
$(iii)$ (capitalisation) As of the date of this Agreement:
- the issued capital of Grange is 106,201,099 ordinary shares, $(A)$ 1,500,000 options exercisable at \$1.50 and expiring on 30 June 2008 and 1,000,000 options exercisable at \$2.50 and expiring on 30 June 2011; and
- Grange and/or its Subsidiaries have no outstanding obligations or (B) intent to issue, redeem or cancel any shares or options in Grange, and there exist no rights to acquire capital or voting rights in Grange other than as contemplated in the Transaction Documents.
(accounts) Grange has delivered to RTE true and complete copies of the $(iv)$ individual and consolidated accounts (including the statements, directors' reports, auditors' reports and notes attaching to or intended to be read with the accounts) of Grange and its Subsidiaries (the Group Members) for the financial year ending 30 June 2006 (the Accounts) and has disclosed the Accounts to the Australian Securities and Investment Commission and ASX.

To the best of Grange's knowledge and belief at the execution of this Agreement, the Accounts:

have been prepared in accordance with the Corporations Act (or $(A)$ previous applicable corresponding legislation) and applicable accounting standards;
of each Group Member show a true and fair view of: $(B)$
$(1)$ the assets and liabilities and of the state of affairs, financial position and results of each Group Member as at and up to 30 June 2006 in the financial year to which they relate; and
$(2)$ the profit or loss of each Group Member for the financial period ended on 30 June 2006;
$(O)$ except for changes to comply with the Australian equivalents to International Financial Reporting Standards, have been prepared in accordance with the same accounting policies as were applied in the corresponding accounts for the preceding 3 financial periods;
are not affected by any abnormal or extraordinary item, except as $(D)$ expressly disclosed in the Accounts;
take account of all gains and losses, whether realised or unrealised, $(\mathbb{E})$ arising from foreign currency transactions and on translation of foreign currency financial statements;
$(F)$ include reserves and provisions for taxation that are sufficient to cover all tax liabilities of each Group Member in respect of all periods up to 30 June 2006.
$(G)$ provide for all liabilities for long service leave and annual leave entitlements;
provide for all other liabilities (whether quantified, contingent or $(H)$ otherwise) of each Group Member at 30 June 2006; and
give full particulars in the notes of all contingent liabilities and $\omega$ commitments and any other liabilities which cannot be quantified.
$\boldsymbol{\omega}$ (conduct since 30 June 2006) Since 30 June 2006, to the best of Grange's knowledge and belief, each of the following has occurred.
(Conduct of business) The business of each Group Member has $(A)$ continued in the ordinary and usual course and not otherwise.
(Dealings) No Group Member has dealt with any person except at (B) arm's length. No property has been acquired by any Group Member for more than market value.
$\mathcal{C}$ (Capital expenditure) No Group Member has made any material capital expenditure, other than as referred to in the Accounts referred to in paragraph (iv) above or as disclosed to ASX.
(O) (Deferral of capital expenditure) No decision has been made to defer any capital expenditure of any Group Member that has a material adverse change in the financial condition or prospects of any Group Member.
$(E)$ (No material adverse change) There has been no material adverse change in the financial condition or prospects of any Group Member.
(Contracts) No contract has been terminated or has expired $(F)$ which could reasonably be expected to have a material adverse effect on the profitability of any business conducted by a Group Member.
$(G)$ (Authorisations) No authorisation from which any Group A Member benefits has been terminated or has expired and in either case could reasonably be expected to have a material adverse effect on the profitability of any business of a Group Member.
(material contracts) To the best of Grange's knowledge and belief, all (vi) contracts entered into by Grange that are material for the carrying on of its business are valid and enforceable in accordance with their terms and entry into the Transaction Documents will not result in any person having the right (whether actual or contingent) to terminate any material contract material to the carrying on Grange's business.
$(vii)$ (no litigation) Except as disclosed in the Accounts for the financial year ended 30 June 2006 or as disclosed to ASX, Grange is not aware (to the best of its knowledge and belief) of any facts or circumstances likely to lead to any prosecution, litigation or arbitration involving Grange or any person for whom Grange may be liable, and has not been threatened with any prosecution, litigation or arbitration involving Grange or any person for whom Grange may be liable. Grange is not involved in any proceeding before or investigation by any governmental agency or other body and no such proceeding or investigation is pending or threatened against Grange or any person for whom it may be liable.
(consents/approvals) Except for the admission of the Grange Shares and (viii) Option Securities to the official list of ASX, no consent, approval, authorisation, order, registration or qualification of or with any governmental agency or any other person is required for Grange to perform its obligations under the Transaction Documents.
The following representations and warranties are given by Grange as at the $(b)$ Completion Date.
$\Omega$ there will be no Security Interest on or over or affecting the Grange Shares and there will be no agreement or arrangement to give or create any such Security Interest; and
$(i)$ RTE shall receive valid and marketable title to the Grange Shares.

$\ddot{\phantom{0}}$

Schedule 4

Option Deed

[Hamersley Holdings Limited]

Grange Resources Limited

Options for Ordinary Shares in Grange Resources

Level 37 QV.1 Building 250 St Georges Terrace
Perth WA 6000 Australia Tel 61 8 9488 3700 Fax 61894883701 www.aar.com.au

$\cdot$

$\overline{\phantom{a}}$

$\ddot{\phantom{1}}$

.
Allens Arthur Robinson

1.	Definitions and Interpretation	1
2,	Grant of the Grange Options
3.	Warranties and Undertakings	3
4.	Assignment	3
5.	Entire Agreement	4
6.	Notices	5
7.	GST	5
8.	No Merger	6
9.	Amendment	6
10.	Remedies	6
11.	Costs and stamp duty	6
12.	Further Assurances	6
13.	Governing Law	7
14.	Severance	7
15.	No Waiver	7 ٧ 7
16.	Counterparts	7
	Schedule 1	8
	Grange Option Terms and Conditions	8
	Schedule ₂	15
	Option Certificate	15
	Schedule 3	16
	Option Exercise Notice	16

Date	2007
Parties
1.	Grange Resources Limited (ABN 80 009 132 405) of Level 11, 200 St Georges Terrace Perth WA 6000 (the Company).
2.	[Hamersley Holdings Limited (ABN 50 008 446 222) of Level 22, Central Park, 152-158 St Georges Terrace, Perth, Western Australia 6000.] (the Grantee). [Note: insert name of any entity nominated by RTE under clause 2.3 of the Sale Agreement]
Recitals
(A)	The Company and RTE entered into the Sale Agreement on 10 August 2007.
(B)	Clause 5.6 of the Sale Agreement contemplates that the Company and the Grantee will enter into this Deed on Completion.

It is agreed as follows.

1. Definitions and Interpretation

$1.1$ Definitions

Terms used in this Deed and defined in the Sale Agreement have the meaning given in that Agreement. The following definitions apply unless the context requires otherwise.

Expert means an independent chartered accountant:

$(a)$ agreed by the Company and the Grantee: or
failing prompt agreement, nominated (at the request of either the Company of the $(b)$ Grantee) by the President for the time being of the Institute of Chartered Accountants in Australia.

Grange Option means a One Year Option or a Three Year Option.

Nominee means a person nominated by an Option Holder in an Option Exercise Notice as the person to whom the Option Securities are to be issued on Settlement.

One Year Options has the meaning given in clause 2.2(a).

One Year Option Escrow Period means the period commencing on the Completion Date and ending ten months after the Completion Date.

One Year Option Exercise Price means, in respect of each One Year Option, a subscription price per Option Security equal to \$1.95 (as may be adjusted in accordance with paragraph 6 of Schedule 1).

One Year Option Period has the meaning given in clause 2.2(a).

Option Certificate means a certificate evidencing the Grantee as the registered holder of one or more of the Three Year Options or One Year Options, substantially in the form set out in Schedule 2.

Option Exercise Notice means a notice given pursuant to paragraph 2.1 of Schedule 1, and setting out the details required under paragraph 2.3 of Schedule 1.

Option Holder means each registered holder of any one or more Grange Options from time to time.

Options Register means the register of Grange Options evidencing the Option Holder in respect of each Grange Option.

Option Securities means any ordinary shares in the capital of the Company to be issued by the Company on exercise of a One Year Option or a Three Year Option (as applicable), in accordance with this Deed.

RTE means Rio Tinto Exploration Pty Limited.

Reorganisation means, in relation to the Company:

any consolidation, subdivision, cancellation, return or reduction of capital; or $(a)$
ው) any other reorganisation affecting the Company's capital.

Sale Agreement means the agreement for the sale of the Southdown Assets entered into between the Company and RTE dated 10 August 2007.

Settlement means the completion of the subscription for any Option Securities on exercise of a One Year Option or a Three Year Option (as applicable), which occurs on the Settlement Date.

Settlement Date has the meaning given in paragraph 2.3(d) of Schedule 1.

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

Subscription Price means the One Year Option Exercise Price or the Three Year Option Exercise Price (as applicable).

Three Year Options has the meaning given in clause 2.1(a).

Three Year Option Escrow Period means the period commencing on the Completion Date and ending on the first anniversary of the Completion Date.

Three Year Option Exercise Price means, in respect of each Three Year Option, a subscription price per Option Security equal to \$1.50 (as may be adjusted in accordance with paragraph 6 of Schedule 1).

Three Year Option Period has the meaning given in clause 2.1(a).

$1.2$ Interpretation

Clause 1.2 of the Sale Agreement applies as if it were set out in this Deed.

2. Grant of the Grange Options

$2.1$ Three Year Options

The Company irrevocably and unconditionally grants to the Option Holder, $(a)$ 9 million options, each option entitling the Option Holder to subscribe for one ordinary share, fully paid in the capital of the Company at the price of \$1.50 per share (the Three Year Options), and otherwise on the terms and conditions set out in Schedule 1 and this Deed. Each Three Year Option is exercisable at any time during the period commencing on the Completion Date and ending on the third anniversary of the Completion Date (the Three Year Option Period).
The number of options granted under paragraph (a) is subject to any adjustment $\mathbf{a}$ under paragraph 6 of Schedule 1 as at the Settlement Date.

$2.2$ One Year Options

The Company irrevocably and unconditionally grants to the Option Holder, $(a)$ 8.5 million options, each option entitling the Option Holder to subscribe for one ordinary share, fully paid in the capital of the Company at the price of \$1.95 per share (the One Year Options), and otherwise on the terms and conditions set out in Schedule 1 and this Deed. Each One Year Option is exercisable at any time during the period commencing on the Completion Date and ending on the first anniversary of the Completion Date (the One Year Option Period).
The number of options granted under paragraph (a) is subject to any adjustment $(b)$ under paragraph 6 of Schedule 1 as at the Settlement Date.

$2.3$ Option Certificates

On execution of this Deed, the Company will execute and issue to the Grantee an Option Certificate in respect of each of the Three Year Options and the One Year Options.

$2.4$ No Quotation

The Grange Options will not be quoted on ASX.

$3.$ Warranties and Undertakings

$3.1$ Mutual warranties

The Grantee represents and warrants to the Company, and the Company represents and warrants to the Grantee that each of the following statements is true and correct in all material respects as at the date of this Deed and at each Settlement Date:

$(a)$ (Status) It is a corporation duly incorporated and validly existing under the laws of the place of its incorporation.
$(b)$ (Power) It has the power to enter into and perform its obligations under this Deed, to carry out the transactions contemplated by this Deed and to carry on its business as now conducted or contemplated.
$\mathbf{(c)}$ (Corporate authorisations) It has taken all necessary corporate action to authorise the entry into and performance of this Deed and to carry out the transactions contemplated by this Deed, including in the case of the Company, the issue and allotment of the Grange Options..
$(d)$ (Documents binding) This Deed and any document entered into in connection with this Deed is its valid and binding obligation enforceable in accordance with its terms, subject to any necessary stamping and registration.

$3.2$ Company's Indemnity

The Company shall indemnify the Grantee and each Option Holder against all proceedings, claims, damages, expenses, losses or Liabilities of any nature as a result of any breach of any warranty or other provision of this Deed.

$3.3$ Undertaking in relation to benefit

The Company undertakes to the Grantee (for its benefit and for the benefit of all $(a)$ Option Holders for the time being) that the Grange Options will be held subject to and with the benefit of the provisions of this Deed, including the terms and conditions set out in Schedule 1, all of which:
will be binding upon the Company and the Option Holders and all $\bf{r}$ persons claiming through or under them respectively; and
will enure for the benefit of all Option Holders, each of whom will be $(i)$ entitled to sue for the performance and observance of such provisions so far as its Grange Options are concerned.
If and to the extent that an Option Holder is unable to enforce this Deed, the (b) Grantee will be taken to hold the benefit of this Deed on trust for the Option Holder and may enforce this Deed on behalf of the Option Holder.

$3.4$ Warranties by the Company

The Company represents and warrants on each Settlement Date as follows.

$\bf(a)$ (Security Interests) There will be no Security Interest on or over or affecting the Option Securities and there will be no agreement or arrangement to give or create any such Security Interest.
$(b)$ (title) The Option Holder shall receive valid and marketable title to the Option Securities.

4. Assignment

$4.1$ Assignment by the Company

The Company cannot assign, charge, encumber or otherwise deal with or transfer any of its rights or obligations under this Deed, or attempt or purport to do so, without the prior written consent of the Grantee. The consent of the Grantee may be withheld by it in its absolute discretion without giving any reason for doing so.

$4.2$ Assignment by the Grantee

Without limiting Schedule 1, the Grantee may assign, charge, encumber or otherwise deal with or transfer any of its rights or obligations under this Deed in favour of any person with whom it is entitled to deal in respect of the Grange Options under paragraphs 9.2, 9.4 or 10.1 of the Schedule provided that any proposed assignee must agree in favour of the Company to be bound by the provisions of this Deed, which agreement must be in a form reasonably acceptable to the Company.

$4.3$ Notice

The Grantee must give the Company notice of any assignment pursuant to clause 4.2 as soon as practicable after any such assignment. Failure to do so will not invalidate or in any way affect the effectiveness of any such assignment.

5. Entire Agreement

The Transaction Documents contain the entire agreement of the parties with respect to its subject matter. It sets out the only conduct relied on by the parties and supersedes all earlier conduct by the parties with respect to its subject matter.

6. Notices

Any notice given under this Deed:

$(a)$ must be in writing addressed to the intended recipient at the address shown below or the address last notified by the intended recipient to the sender.

(i)	to:	[Hamersley Holdings Limited ₁	[Level 22, Central Park 152-158 St Georges Terrace Perth WA 6000. Attention: Company Secretary
			Fax No: 08 9327 2720]
(i)	to:	Grange Resources Limited	Level 11, 200 St Georges Terrace, Perth WA 6000 Attention: Company Secretary Fax No: 08 9321 1523

$\phi$ must be signed by a person duly authorised by the sender; and
$\mathbf{c}$ will be taken to have been given or made (in the case of delivery in person or by post or fax) when delivered, received or left at the above address, but if delivery or receipt occurs on a day which is not a Business Day or if the communication is sent or is later than 4pm (local time) on a Business Day it will be taken to have been duly given or made at the commencement of the following Business Day.

7. GST

$\left( a\right)$ Terms with an initial capital letter which have a defined meaning in A New Tax System (Goods and Services Tax) Act 1999 (Cth) (GST Act) shall have that meaning in this clause except that Taxable Supply excludes the reference to section 84.5 of the GST Act.
$(b)$ If GST is payable on a Taxable Supply made under, by reference to or in connection with this Deed, the amount of GST payable in respect of that supply must be paid as additional Consideration. This clause does not apply to the extent that the Consideration for the supply is expressly stated to be GST inclusive.
Any reference in the calculation of any amount payable under this Deed to a cost, $(c)$ expense or other liability incurred by a party must exclude the amount of any Input Tax Credit in relation to that cost, expense or other liability.
$(d)$ No additional amount is payable under paragraph (b) until the Recipient of the supply has received a Tax Invoice or Adjustment Note.

8. No Merger

The rights and obligations of the parties will not merge on the completion of any transaction contemplated by this Deed. They will survive the execution and delivery of any assignment or other document entered into for the purpose of implementing a transaction.

9. Amendment

This Deed may be amended only by another agreement executed by all parties.

10. Remedies

All remedies, rights, undertakings, obligations or agreements of the parties arising by law. this Deed or otherwise shall be cumulative and none shall be in limitation of any other. Each party may follow any remedy to which that party is entitled by law, this Deed or otherwise, concurrently or successively at that party's option.

11. Costs and stamp duty

$(a)$ Each party must bear its own costs or arising out of the negotiation, preparation and execution of this Deed.
The Company shall bear all stamp duty (including fines, penalties and interest), $(b)$ transfer fees and other similar fees which may be payable on or in connection with this Deed or any instrument executed under or transaction evidenced by this Deed.

Property

$12.$ Further Assurances

Each party shall take all steps, execute all documents and do everything reasonably required by the other party to give effect to any of the transactions contemplated by this Deed.

13. Governing Law

This Deed is governed by the laws of Western Australia. The parties submit to the non-exclusive jurisdiction of courts exercising jurisdiction there.

14. Severance

Any provision of this Deed which is prohibited or unenforceable in any jurisdiction will be ineffective in that jurisdiction to the extent of the prohibition or unenforceability. That will not invalidate the remaining provisions of this Deed nor affect the validity or enforceability of that provision in any other jurisdiction.

$15.$ No Walver

No failure to exercise and no delay in exercising any right, power or remedy under this Deed will operate as a waiver. Nor will any single or partial exercise of any right, power or remedy preclude any other or further exercise of that or any other right, power or remedy. No waiver of any provision of, or consent to any departure from, this Deed by any of the parties shall be effective unless in writing and then only in the specific instance and for the purpose for which it is given.

16. Counterparts

This Deed may be executed in any number of counterparts. All counterparts taken together will be taken to constitute 1 Deed.

Schedule 1

Grange Option Terms and Conditions

1. Title and Rights

$1.1$ Options Register and Option Certificates

The Company must create and maintain the Options Register in accordance with the Corporations Act, and must update the Options Register on the exercise or transfer of a Grange Option in accordance with the terms contained in this Schedule 1. Title to the Grange Options passes by registration of a transfer in the Options Register.

$1.2₂$ Subscription Rights

Bach Grange Option gives the holder the right to subscribe for one ordinary share in the capital of Grange at the Subscription Price, provided that the Subscription Price and the number of ordinary shares to which the Grange Options relate will be subject to adjustment as provided in paragraph 6.

$2.$ Exercise of the Grange Options

$2.1$ Exercise by Notice

A Three Year Option may be exercised by the Option Holder giving notice to the $(a)$ Company at any time during the Three Year Option Period. On exercise of a Three Year Option, the Option Holder may direct the Company to issue the Option Security to a Nominee in place of itself. Any Three Year Option not exercised during the Three Year Option Period will automatically lapse on the expiry of the Three Year Option Period. For the avoidance of doubt, the exercise of a Three Year Option does not prevent the Option Holder from exercising any other Grange Options it may hold.
A One Year Option may be exercised by the Option Holder by giving notice to the $(b)$ Company at any time during the One Year Option Period. On the exercise of a One Year Option, the Option Holder may direct the Company to issue the Option Security to a Nominee in place of itself. Any One Year Option not exercised during the One Year Option Period will automatically lapse on the expiry of the One Year Option Period. For the avoidance of doubt, the exercise of One Year Option does not prevent the Option Holder from exercising any other Grange Options it may hold.

$2.2$ Contents of notice

Any notice pursuant to paragraph 2.1 must:

be substantially in the form set out in Schedule 3; $\alpha$

specify the number of Grange Options being exercised and the number of Option $(b)$ Securities to be issued:
specify the Subscription Price payable to the Company on Settlement Date, $\left( c\right)$ calculated by multiplying the Subscription Price and the Option Securities specified in that notice (as adjusted under paragraph 6 of this Schedule);
specify a time and date on which Settlement is to take place (which date must be $(d)$ not less than 2 Business Days and no more than 10 Business Days after the date on which that notice is given) (the Settlement Date);
specify whether the Option Securities are to be issued to the Option Holder or to $(e)$ its Nominee and, in the case of the latter, set out the name, place of incorporation or registration (if applicable) and registered office or relevant address of the Nominee: and
be dated and signed by an authorised officer of the Option Holder (and, where the $(1)$ Option Securities are to be issued to a Nominee, counter-signed by an authorised officer of the Nominee).

3. Settlement

データーデータル

$3.1$ Date and place of Settlement

Completion of the exercise of a One Year Option or a Three Year Option will take place at the registered office of the Company on the Settlement Date specified in the relevant Option Exercise Notice (or at such other time, date or place as the Company and the Option Holder may agree).

$3.2$ Obligations of the Company

On Settlement and subject to payment of the relevant Subscription Price to the Company, the Company will:

$(a)$ issue and allot the Option Securities:
enter the Option Holder or its Nominee (as the case may be) into the register of $(b)$ members of the Company as the registered holder of the Option Securities;
execute and lodge with ASX an Appendix 3B form applying for quotation of the $\mathbf{(c)}$ Option Securities, and the Company must use its best endeavours to obtain such quotation;
execute and lodge all documents, and take all action necessary or desirable, to $(d)$ ensure that the Option Securities are immediately and freely tradeable without the need for any further disclosure under Chapter 6D of the Corporations Act, which may include execution and lodgment with ASX of a notice in accordance with section 708A(5)(e) of the Corporations Act in relation to the issue of the Option Securities: and
subject to the Corporations Act and Listing Rules, issue a holding statement in $(e)$ respect of the Option Securities in the name of the Option Holder or its Nominee (as the case may be) and deliver it to that person.

$3.3$ Obligation of the Option Holder

On Settlement, the Option Holder must:

pay, or procure the payment of, the relevant Subscription Price to the Company; $\bf{a}$ and
deliver to the Company, the Option Certificate or if the Option Certificate has been (b) lost, mutilated or destroyed, a declaration to that effect, accompanied by an indemnity in favour of the Company against any loss, costs or expenses which might be incurred by the Company as a consequence of its relying on the declaration that the Option Certificate has been lost, mutilated or destroyed.

4. Ranking and Quotation

4.1 Undertakings given by the Company

The Company undertakes to each Option Holder that on each Settlement Date:

the Option Securities will be issued fully paid, will rank pari passu with existing $(a)$ issued Shares (including in relation to dividend rights) and will be immediately and freely tradeable (subject to restrictions required or imposed under applicable laws); and
the Option Holder will acquire good marketable title to the Option Securities, free $(b)$ and clear of any Security Interest.

$4.2$ Dividend Rights

The Option Security issued pursuant to the exercise of a Grange Option is only entitled to receive a dividend where that Grange Option is exercised and the Option Security issued on or before the record date for that dividend.

No Participation in New Issues of Shares 5.

$5.1$ Participation Rights

The Option Holder may only participate in new issues of securities by the Company if the Option Holder exercises the Grange Option and becomes the holder of Shares on or prior to the record date for the new issue of Shares.

$5.2$ Notification of New Issues of Shares

The Company must give the Option Holder at least 10 Business Days prior written notice of the record date for a new issue of Shares and the proposed terms of the issue.

5.3 Notification of declaration of dividends

The Company must give the Option Holder at least 10 Business Days prior written notice of any determination that a dividend will be payable in respect of Shares and the proposed terms of the dividend (including amount, record date and members entitled to receive the dividend).

6. Adjustments

$6.1$ Pro-rata issue or bonus issue

If there is a pro-rata issue or bonus issue to the holders of Shares between the date of this Deed and the later of the Settlement Date, or expiry of a Grange Option, the Subscription Price or the number of Shares over which the Grange Options are exercisable will be adjusted in accordance with Listing Rule 6.22.

6.2 Effect of Reorganisation

If a Reorganisation of the Company's capital occurs between the date of this Deed and the later of the Settlement Date or expiry of a Grange Option, the Subscription Price or the Shares over which the Grange Options are exercisable will be adjusted to take account of the Reorganisation in accordance with Listing Rule 7.22.

$6.3$ Auditor report on adjustment

If an adjustment is required pursuant to paragraphs 6.1 or 6.2, the Company must procure that its auditors for the time being report as to the appropriate adjustments to be made, and the Company must give notice of such adjustments to the Option Holders within 5 Business Days after the date on which it receives that report. Any adjustment determined by the auditor under or as contemplated by this paragraph 6.3 is not final or binding on the Option Holders or the Company, and is subject to dispute resolution pursuant to paragraph 8.

7. Fractions of Shares

No fractions of a Share will be issued on the exercise of any Grange Option and no refund will be made to an Option Holder exercising their rights in respect of that part of the subscription moneys which represent such a fraction (if any), provided that if more than one Grange Option is exercised at the same time by the same Option Holder then, for the purposes of determining the number of Shares issuable upon the exercise of such Grange Options and whether (and, if so, what) fraction of Shares arises, the number of Shares arising on the exercise of each Grange Option is to first be aggregated.

Resolution of Disputes on Adjustments 8.

$8.1$ Adjustment Disputes

This paragraph 8 applies to any disputes between an Option Holder and the Company in relation to any adjustment contemplated by paragraph 6 (for the purposes of this paragraph 8, an Adjustment Dispute).

8.2 Reference to Expert

If an Adjustment Dispute has not been resolved within 15 Business Days of it arising, it must be referred to an Expert for resolution.

8.3 Expert's instructions

The Expert must be instructed to:

decide the dispute within the shortest practicable time; and $\bf{a}$
deliver a report containing his or her opinion with respect to the matters in (b) dispute and clearly stating the reasons for the decision.

$8.4$ Procedure

The Expert will determine the procedure for dispute resolution. The relevant Option Holder and the Company will provide all information and assistance reasonably requested by the Expert for the purpose of resolving the dispute.

$8.5$ Conclusiveness of report

The Expert will act in the capacity of an independent expert, not as an arbitrator. The Expert's decision will be conclusive and binding on the relevant Option Holder and the Company, except in the case of manifest error.

8.6 Costs

The Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company of the Company

The relevant Option Holder and the Company will each hear their own costs arising from the resolution of a dispute under this paragraph 8. The relevant Option Holder and the Company will share the costs of the Expert in equal proportions or as the Expert may otherwise determine.

9. Escrow Restrictions

9.1 Three Year Option Escrow Period

Subject to paragraph 9.2, during the Three Year Option Escrow Period, an Option Holder must not:

dispose of, or agree or offer to dispose of, any or all of the Three Year Options; $(a)$
create, or agree or offer to create, any security interest in any or all of the Three (b) Year Options; or
do or omit to do any act which may have the effect of transferring effective $(c)$ ownership or control of any of the Three Year Options,

(referred to in paragraph 9.2 as a deal or dealing).

$9,2$ Three Year Option Permitted Dealings

An Option Holder may deal with any or all of the Three Year Options during the $\left( 2\right)$ Three Year Option Escrow Period as follows:
in connection with a sale, assignment, transfer of disposal to a Related $\left( i\right)$ Corporation of the Grantee;
$(ii)$ in acceptance of an off-market or market bid made for the ordinary shares in the Company;
(iii) in connection with a scheme of arrangement involving the ordinary shares in the Company; or
$(iv)$ if the Company has given the Grantee its prior written consent to that dealing.
ው) An Option Holder may, during the Three Year Option Escrow Period, give an Option Exercise Notice in respect of any or all of the Three Year Options, however any Option Securities issued and allotted to an Option Holder will be subject to the restrictions set out in paragraph 9.1 (subject to paragraph 9.2(a)) as if references in those paragraphs to "Three Year Options' were references to those 'Option Securities'.

9.3 One Year Option Escrow Perlod

Subject to paragraph 9.4, during the One Year Option Escrow Period, an Option Holder must not:

$(a)$ dispose of, or agree or offer to dispose of, any or all of the One Year Options;
$(b)$ create, or agree or offer to create, any security interest in any or all of the One Year Options; or
$\left( c\right)$ do or omit to do any act which may have the effect of transferring effective ownership or control of any of the One Year Options,

(referred to in paragraph 9.4 as a deal or dealing).

$9.4$ One Year Option Permitted Dealings

$\bf(a)$ An Option Holder may deal with any or all of the One Year Options during the One Year Option Escrow Period as follows:
$\left( i\right)$ in connection with a sale, assignment, transfer of disposal to a Related Corporation of the Grantee;
$(ii)$ in acceptance of an off-market or market bid made for the ordinary shares in the Company;
$(iii)$ in connection with a scheme of arrangement involving the ordinary shares in the Company; or
$(r)$ if the Company has given the Grantee its prior written consent to that dealing.
$(b)$ An Option Holder may, during the One Year Option Escrow Period, give an Option Exercise Notice in respect of any or all of the One Year Options, however any Option Securities issued and allotted to an Option Holder will be subject to the restrictions set out in paragraph 9.3 (subject to paragraph $9.4(a)$ ) as if references in those paragraphs to 'One Year Options' were references to those 'Option Securities'.

$9.5$ Ceasing to be a Related Corporation

In the event that a transferee pursuant to paragraph 9.2(b) or 9.4(b) ceases to be a Related Corporation of the Option Holder at any time during the One Year Option Escrow Period or the Three Year Option Escrow Period (as applicable), that transferee will transfer the Grange Options held by it to a person who is a Related Corporation of the Option Holder.

$10₁$ Transfers of Grange Options

10.1 Transfers by the Option Holder

$(a)$ An Option Holder may assign, charge, encumber or otherwise deal with or transfer any of its One Year Options at any time after the One Year Option Escrow Period, to any person.
(b) An Option Holder may assign, charge, encumber or otherwise deal with or transfer any of its Three Year Options at any time after the Three Year Option Escrow Period, to any person.

$10.2$ Effecting a transfer

Any transfer of a Grange Option pursuant to paragraph 9 or 10.1 may be effected by delivery to the Company, at a place where the Company's register of optionholders is kept, of:

$(a)$ an instrument of transfer which is:
$\ddot{\omega}$ in writing;
$(i)$ in any usual form or in any other form approved by the directors of the Company that is otherwise permitted by law;
$(iii)$ subject to the Corporations Act, executed by or on behalf of the transferor, and if required by the Company, the transferee;
$(iv)$ stamped, if required by any Western Australian law about stamp duty; and
(b) the Option Certificate in respect of that Grange Option,

and at which time the Company will reflect the transfer in the Options Register and issue a new Option Certificate in respect of that Grange Option in the name of the transferee in accordance with paragraph 1.1.

11. Miscellaneous

$11.1$ Governing Law

The Grange Options are governed by, and are to be construed in accordance with, the laws of Western Australia.

$11.2$ Notices

The provisions of the Company's constitution as to notices to shareholders apply mutatis mutandis to notices to Option Holders.

Schedule 2

Option Certificate

OPTION CERTIFICATE

Certificate No: [*insert number]

Option Holder: [*insert name]

No of Options: [*insert number]

THIS IS TO CERTIFY THAT [*insert name] of [*insert address] is/are the registered holder(s) of the above number of Grange Options, which options are constituted under the Option Deed (the Deed) dated [*insert date] between [*insert name of Grantee] and Grange Resources Limited (the Company), and are subject to the terms and conditions contained in Schedule 1 to that Deed.

Each Grange Option carries the right to subscribe for one new fully paid ordinary share in the Company at the Subscription Price.

Dated: [*insert date]

Executed in accordance with section 127 of the Corporations Act 2001 (Cth) by Grange Resources Limited:

Director Signature

Print Name

Director/Secretary Signature

Print Name

Schedule 3

Option Exercise Notice

To: The Company Secretary Grange Resources Limited Level 11 200 St Georges Terrace Perth WA 6000

Fax No: [* insert number]

This Notice is given pursuant to paragraph 2.3 of Schedule 1 to the Option Deed (the Deed) dated [*insert date] between [*insert name of Grantee] and Grange Resources Limited (the Company). Words used in this Notice have the meaning given to them in the Deed.

TAKE NOTICE that [*insert name of Option Holder] exercises [*insert number] [One Year | Three Year] Options in respect of the number of Option Securities set out below and requires that, on the Settlement Date, the Company issue such Option Securities to [*insert name of Option Holder | the Nominee set out below], in accordance with the Deed and following payment to the Company of the Subscription Price. Settlement is to take place at [*insert time] (Western Australia office time) on [*insert date] at the offices of the Company.

The number of Option Securities to which this Notice relates is [*insert number of Option Securities].

The Subscription Price payable to the Company in respect of this exercise of the [One Year | Three Year] Options is [*insert Australian dollar amount].

[The details of the Nominee to which this Notice relates are: [*insert name], of [*insert registered office | relevant address?

[*insert name of Option Holder | Nominee] consents to becoming a member of the Company, and agrees to be bound by the Company's constitution upon the issue of the Option Securities.

Dated: [*insert date]

Signed for and on behalf of [*insert name of Option Holder] by its authorised officer:

Authorised Officer's Signature
--------------------------------	--	--

Print Name

[Countersignature by Nominee:

Signed for and on behalf of [*insert name of Nominee] by its authorised officer:

Authorised Officer's Signature

Print Name]

Allens Arthur Robinsor

Executed by the parties.

[Hamersley Holdings Limited]

Executed in accordance with section 127 of the Corporations Act 2001 by [Hamersley Holdings Limited:]

Director Signature

Print Name

Director/Secretary Signature

Print Name

Grange Resources Limited

Executed in accordance with section 127 of the Corporations Act 2001 by Grange Resources Limited:

Director Signature

Print Name

Director/Secretary Signature

Print Name

Schedule 5

$\hat{\mathbf{A}}$

Mining Information

1.		Assays
		Core assay spread sheets
2.		Drilling
	(a)	Collar summaries
	(b)	Core loss summaries
	$\mathbf{c}$	Drilling summaries
3.		Environment
		EMP report with extensive appendices
4.		Geology
	(a)	Drill core photos: DD05SDN001-023
	(b)	Excel spreadsheets for each drill hole:
		$\boldsymbol{\omega}$	Alteration
		(ii)	Gyroscope
		(iii)	Lithology
		(iv)	Magnetic susceptibility
		(የ)	Mineralisation
		(የነ)	Shear
		(vil)	Specific gravity
		(viii)	Structure
5.	Geophysics
	$\left( a\right)$		Aeromagnetic survey
		$\ddot{\mathbf{0}}$	Located data - magnetics and radiometrics
		(i)	Logistics report
		(iii)	Grid, image and MapInfo files
		(iv)	Appraisal report (interpretive)
	(b)	Downhole Geophysics
		Comparison of Southdown's assay, density and magnetic susceptibilities
	$\left( c\right)$	Gravity survey
		$\boldsymbol{\theta}$	Located data
		(i)	Logistics report

б. Reports

1^st, 2^nd, and 3^rd statutory annual reports $(a)$
$(b)$ Report on any die back survey prior to drilling being undertaken within the road reserve in the area the subject of the Exploration Licence, to the extent that report is in the possession or control of RTE or any other member of the Rio Tinto Group.

$\overline{7}$ . Resource Study

Micromine strings for resource estimation

8. Correspondence.

$(a)$ AMDEL assay documents - raw, DPOs, etc
$(b)$ Correspondence with the Department of Industry and Resources directly referring to the Exploration Licence (including any correspondence in relation to ground disturbance approvals), to the extent such correspondence is in the possession or control of RTE or any other member of the Rio Tinto Group.

$9₁$ Samples

To the extent each of the following are within the possession or control of RTE or any other member of the Rio Tinto Group:

Drill core $(a)$
$(b)$ Drill chips
$\left( c \right)$ Sample pulps.

Aliens Arthur Robinsor

Executed by the parties.

Rio Tinto Exploration Pty Limited

CORATION The Executed in accordance with section 1 Common the Corporations Act 2001 by Rio Tint Seal Exploration Pty Limited: Director Signatu Director/Secretary Signature DAVID BRUCE CHAPPLE

Print Name

Print Name

Grange Resources Limited

Executed in accordance with section 127 of the Corporations Act 2001 by Grange Resources Limited:

Tarcellor

Director Signature

GROGENEY WEDLOCK.

Print Name

Director/Secretary Signature

NEIL ANDREN MARSTON

Print Name

AI assistant

GRANGE RESOURCES LIMITED. — Major Shareholding Notification 2007

65014_rns_2007-10-01_d60900fe-a22c-4adc-8896-a94856ed99c6.pdf

Form 603

Corporations Act 2001 Section 671B

Notice of initial substantial holder

2. Details of voting power

$3.$ Details of relevant interests

$\ddot{\phantom{a}}$ Details of present registered holders

5. Consideration

6. Associates

7. Addresses

Signature

Annexure "A" to Form 603

Rio Tinto Group

(each a Substantial Shareholder).

Annexure "B" to Form 603

Sale Agreement

Table of Contents

It is agreed as follows.

Definitions and Interpretation 1.

$1.1$ Definitions

Assumed Liabilities means:

$1.2$ Interpretation

$2.$ Sale and Purchase

$2.1$ Sale of Southdown Assets

$2.2$ Consideration

$2.3$ RTE Nominee

$31$ Conditions Precedent

$3.1$ Conditions precedent

$3.2$ Waiver of Conditions Precedent

4. Pre-completion activities/conduct

$4.1$ Approval of issue of Grange Shares and Grange Options

Preparation and execution of Transfer documentation $4.2$

4.3 Caveat

$4,4$ Covenants by RTE - Exploration Licence

4.5 Covenants by Grange

4.6 Conduct of Proceedings of the Tenement Objections

4.7 Shareholder approval not obtained

$CP = $34$ million - [GS x MP]

5. Completion

5.1 Place for Completion

5.2 Effect of Completion

$5.3$ Delivery of Information

$5.4$ Payment of the Cash Price

5.5 Grange Shares

5.6 Option Deed

$5.7$ Effect of Completion

5.8 Post Completion steps

5.9 Access Agreements for Mineral Exploration

5.10 RTE Acknowledgement - Southdown

Grange Shares - Escrow Restrictions 6.

6.1 Escrow Period

6.2 Permitted Dealings

$\overline{7}$ . Warranties

$7.1$ Warranties by RTE

$7.2$ Warranties by Grange

7.3 Mutual Warranties

7.4 Indemnities

7.5 Acknowledgements of RTE or the RTE Nominee

$7.6$ Acknowledgements by Grange

$7.7$ Survival

$7.8$ Claims and demands

8. Confidentiality

$8.1$ Confidential Information not to be disclosed

8.2 Permitted disclosure

8.3 Conditions to disclosure

$8.4$ ASX statement

8.5 Injunctive relief

8.6 Confidentiality obligations to survive

$B.7$ Law of Confidentiality

9. Entire Agreement

$10^{\circ}$ Notices

11. GST

$12.$ Amendment

$13.$ Remedies

14. Costs and stamp duty

15. Further Assurances

16. Governing Law

$17.$ Severance

GRANGE RESOURCES LIMITED. Major Shareholding Notification 2007

$3₁$ Conditions Precedent

$1.2₂$ Subscription Rights