GREENWING RESOURCES LTD — Capital/Financing Update 2006

Aug 23, 2006

formerly known as Resource Finance & Investments Limited (RFI)

SHORT FORM PROSPECTUS

THIS PROSPECTUS HAS BEEN ISSUED TO FACILITATE THE SECONDARY TRADING OF SHARES ISSUED PURSUANT TO A PLACEMENT. IT HAS ALSO BEEN ISSUED TO PROVIDE INFORMATION ON THE OFFER OF TEN SHARES AT AN ISSUE PRICE OF SIXTEEN CENTS TO RAISE ONE DOLLAR AND SIXTY CENTS

IMPORTANT NOTICE

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. The Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type but refers to other documents, the information of which is deemed to be incorporated in this Prospectus.

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your professional adviser.

This Offer should be considered speculative and read in conjunction with the risk factors outlined in this Prospectus

TABLE OF CONTENTS

		Page
	IMPORTANT INFORMATION
	Short Form Prospectus
Section 1	DETAILS OF THE OFFER
1.1	Summary of Important Dates
1.2	Background to the Offer
1.3	The Offer……………………………………………………………………………………………
1.4	Acceptance
1.5	Proceeds of the Offer
1.6	Stock Exchange Listing
1.7	Market Prices of Shares on ASX
1.8	Pro-forma Capital Structure and Pro-forma Financial Position
	Post the Offer
Section 2	INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS
2.1	Short Form Prospectus
2.2	Summary of Information Deemed to be Incorporated 4
Section 3	COMPANY OVERVIEW
3.1	Overview and Reference to IPO Prospectus
3.2	Review of Operations Subsequent to the IPO Prospectus 10
3.3	Tenements Acquired and Relinquished
3.4	Material Contracts
Section 4	EFFECT OF THE OFFER ON THE COMPANY
4.1	Capital Structure
4.2	Financial Position
	Section 5 RIGHTS ATTACHING TO THE NEW SHARES
Section 6	ADDITIONAL INFORMATION
6.1	Interests of Directors
6.2	Interests of Experts and Advisors
6.3	Forecasts
6.4	Litigation
Section 7	CONSENTS
Section 8	DIRECTORS' STATEMENT
Section 9	GLOSSARY
	Section 10 CORPORATE DIRECTORY
	APPLICATION FORM

IMPORTANT INFORMATION

This Prospectus is dated 24 August 2006 and was lodged with ASIC on that date. Neither ASIC nor ASX take any responsibility for the contents of this Prospectus.

No new securities will be allotted or issued pursuant to this Prospectus later than 13 months after the date of this Prospectus.

Applicants should read this document in its entirety and, if in any doubt, consult with their professional advisors before deciding whether to apply for New Shares. There are risks associated with an investment in Bass Metals Ltd and the ordinary shares offered under this Prospectus must be regarded as a speculative investment. The New Shares issued carry no quarantee with respect to return on capital investment, payment of dividends or the future value of the Shares.

The New Shares issued pursuant to this Prospectus will be issued on the terms and conditions set out in Section 5 of this Prospectus.

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

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer. The distribution of this Prospectus in iurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Certain terms and abbreviations used in this Prospectus have defined meanings which are explained in the Glossary of this Prospectus.

Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act 2001. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type. Rather, the Prospectus incorporates by reference information contained in documents that have been lodged with ASIC.

This Prospectus refers to various information and documents listed in Section 2.2 of this Prospectus collectively referred to as the "Incorporated Documents". In referring to the Incorporated Documents the Company:

• identifies the Incorporated Documents as being relevant to the offer of the New Shares under $(a)$ this Prospectus and containing information that will provide investors and their professional advisers information to assist them in making an informed assessment of:
• the rights and liabilities attaching to the Shares: $(i)$
• the capacity of the Company to issue the Shares; and $(ii)$
• the assets and liabilities, financial position and performance, profits and losses and $(iii)$ prospects of the Company;
• refers investors and their professional advisers to Section 2 of this Prospectus which $(b)$ summarises the information in the Incorporated Documents deemed to be incorporated in this Prospectus;
• informs investors and their professional advisers that they are able to obtain, free of charge, a $(c)$ copy of the Incorporated Documents by contacting the Company at its registered office during normal business hours during the Offer Period; and
• $(d)$ advises that the information in the Incorporated Documents will be primarily of interest to investors and their professional advisers or analysts.

Section 1 DETAILS OF THE OFFER

$1.1$ Summary of Important Dates

Date of Prospectus	24 August 2006
Prospectus Lodged with ASIC and ASX	24 August 2006
Opening Date	24 August 2006
Closing Date	25 August 2006
Allotment and issue of New Shares	25 August 2006
Despatch of holding statements for New Shares	25 August 2006

The dates in the table above are indicative only. Subject to the Listing Rules, the Directors reserve the right to vary the dates without prior notice.

$1.2$ Background to the Offer

On 10 August 2006 the Company announced that it had received firm offers to subscribe for 20,000,000 Shares at an issue price of \$0.16 per share ("Placement Shares") to raise a total of \$3.2 million from a group of sophisticated and professional investors pursuant to sections 708(8) and 708(11) respectively of the Corporations Act. The Placement was subject to Shareholder approval, which was granted at a General Meeting of shareholders, held on 10 August 2006. The Placement Shares were issued on 16 August 2006.

This Prospectus has been issued to facilitate secondary trading of the Placement Shares, as these Placement Shares were issued without disclosure to investors under Part 6D.2 of the Corporations Act. A Prospectus is required under the Corporations Act to enable persons who were issued Placement Shares to on-sell those shares within 12 months of their issue. The Company did not issue the Placement Shares with the purpose of the persons to whom they were issued selling or transferring their securities, or granting, issuing or transferring interests in those securities within 12 months of the issue but this Prospectus provides them the ability to do so should they so wish.

$1.3$ The Offer

This Prospectus is for the offer of ten (10) New Shares in the Company at an issue price of \$0.16 per Share, consistent with the Placement Shares. The New Shares will rank equally with the Shares currently on issue.

$1.4$ Acceptance

The Offer may only be accepted by validly completing the Application Form accompanying this Prospectus. The issue of the New Shares will take place as soon as practicable after the Closing Date.

Proceeds of the Offer $1.5$

One dollar and sixty cents (\$1.60) will be raised from the granting of the New Shares. The proceeds from the offer will be used for general working capital of the Company.

$1.6$ Stock Exchange Listing

Within seven (7) Business Days after the date of the issue of the Prospectus, the Company intends to apply for a listing of the New Shares on ASX. If granted, the quotation of the New Shares will commence as soon as practicable after allotment.

$1.7$ Market Prices of Shares on ASX

Since listing on ASX on 22 October 2005, the highest market sale price of Shares on ASX was \$0.27 on 18 April 2006 and the lowest was \$0.14 on 30 March 2006. The Company's last trading price prior to the lodgement of this Prospectus was \$0.22 on 23 August 2006.

Pro-forma Capital Structure and Pro-forma Financial Position post the $1.8$ Offer

The pro-forma capital structure and pro-forma financial position of the Company post the Offer are set out in Section 4 of this Prospectus.

Section 2 INFORMATION DEEMED TO BE INCORPORATED IN THIS PROSPECTUS

$2.1$ Short Form Prospectus

This Prospectus is a short form prospectus issued in accordance with Section 712 of the Corporations Act. This means that this Prospectus does not of itself contain all the information that is generally required to be set out in a document of this type. however it incorporates by reference information contained in a document that has been lodged with ASIC.

Pursuant to Section 712(1) of the Corporations Act, the Incorporated Documents comprising sections 2 to 8 of the Company's Prospectus dated 16 August 2005 (IPO Prospectus), the 30 June 2005 Financial Report and the 31 December 2005 Half Year Report are expressly incorporated into this Prospectus.

The information to be incorporated by reference into this Prospectus is summarised below in sub-section 2.2 and will primarily be of interest to investors and their professional advisers or analysts.

The Company informs Applicants and their professional advisers that they are able to obtain, free of charge, a copy of the Incorporated Documents by contacting the Company at its registered office during normal business hours during the Offer Period. The Incorporated Documents are also available by searching ASIC's records or on the Company's website at www.bassmetals.com.au or the ASX website at www.asx.com.au.

$2.2$ Summary of Information Deemed to be Incorporated

Set out below is a summary of the information contained in the Incorporated Documents to assist Applicants and their professional advisers to determine whether. for the purposes of making an informed investment decision in relation to the New Shares, they should obtain a copy of the Incorporated Documents.

The Sections referred to below are a reference to sections in the Incorporated Documents (as the case may be) of the Company.

IPO Prospectus $(a)$

Section 2 - Business Overview (Page 13)

This section contains an overview of the Company's business strategy to develop a significant minerals business from its projects in Tasmania.

The Company established ownership of (or a majority joint venture interest in) a highly strategic land position of approximately 1000km² comprising the advanced Hellyer Project and five large regional project areas within the highly mineralised Mt Read Volcanic belt (MRV). The Directors consider that the tenement position offers a number of excellent development and exploration opportunities. The "Stepping Stones to Growth" strategy involves assessment and if appropriate development of these opportunities for the benefit of all stakeholders. The Company has formed key

alliances with Geoinformatics Exploration Inc. and Zinifex Limited to facilitate its exploration activities in the region.

The IPO Prospectus provides information relating to the mineral exploration tenements which are divided into the Hellver Project, which includes the advanced Oue River and Mt Charter prospects and five regional projects as summarised below:

Hellver Project - comprises a large strongly mineralised alteration system hosting the Hellyer, Que River and Mt Charter deposits. Of immediate interest for further drilling is the shallow mineral resource at Que River and the widespread gold mineralisation at Mt Charter as well as several highly ranked volcanic hosted massive sulphide ("VHMS") and gold targets.

The S-Lens hosts a shallow, modest sized JORC compliant Mineral Resource (370,000t at 1.7% copper, 4.2% zinc and 64g/t silver) with potential for resource extensions to the south down plunge and to the north near surface. The Company considers that the Que River area may lead to early production.

The Mt Charter gold prospect occurs within a large 1 km long alteration zone – of the same alteration style and within the same host sequence as the Hellver deposit to the north. Gold assays above 1.0 g/t and high silver values in rock chips and in drill holes occur consistently over an area of approximately 500m by 250m (12.5 ha). The gold mineralisation has not been the subject of detailed drilling or evaluation and the Company considers that there is excellent potential to delineate a viable JORCcompliant resource.

East Henty Regional Project - comprises the Selina and Lynchford exploration licences. The Directors consider these licence areas to be prospective for Henty style aold and Mt Lyell type gold-copper mineralisation.

Lovetea Regional Project – comprises five exploration licences prospective for:

• VHMS Hellver-Que River style targets along northern extensions of the Hellver $\bullet$ stratigraphy and structures;
• intrusive related skarn mineralisation with several targets generated by recent inversion modelling of the granite contacts, supported by geochemistry; and,
• Structurally hosted gold mineralisation with several unresolved gold prospects never followed up with systematic gold exploration methods.

Mt Bischoff Regional Project - comprises three exploration licences adjacent to the historic Mt Bischoff and Cleveland tin deposits and encompassing the historic Magnet Ag-Pb-Zn deposit. The Company also considers the tenements to be prospective for nickel, gold, magnetite-iron and platinum group metals as indicated by historic occurrences and favourable geology.

Rosebery Regional Project - comprises two exploration licences covering prospective portions of the MRV belt to the north of the Rosebery base metal deposit. The tenement immediately adjacent to Zinifex's Rosebery mine contains several highly ranked VHMS targets.

Oonah Zinc Project - comprises a single exploration license located approximately 5km northwest of Zeehan township. The 23km² licence contains in excess of 44 known base metal occurrences three of which produced significant amounts of base and precious metals and many of which have not been drilled.

Section 3 - Management and Corporate Governance (Page 34)

This section contains information relating to each of the four directors of the Company, Company Secretary and Exploration Manager and also summarises the primary responsibilities of the Board.

Section 4 - Independent Geologist's Report (Page 39)

This section consists of the report prepared by the Independent Geologist. Snowden Mining Industry Consultants Pty Ltd ("Snowden") dated 1 August 2005. The Report describes in detail the geological setting and historical mining and exploration on the mining tenements of the Company. The Report also sets out details of proposed exploration programs and budgets on the mining tenements.

Snowden concluded "from its review of RFI's (Bass Metals) western Tasmanian project areas that they are of merit and worthy of further exploration" and "Snowden considers RFI's (Bass Metals) exploration strategy to be justified and is satisfied that the proposed exploration programmes have been well defined and are appropriate".

Section 5 - Solicitor's Report on Mining Tenements (Page 101)

Section 5 consists of a report prepared by Price Sierakowski, on the mining tenements in which the Company held an interest as at 1 August 2005. The Report details the status of the mining tenements and any agreements covering those interests.

Price Sierakowski also completed a review and summary of material contracts the Company was a party to at the date of the IPO Prospectus.

Section 6 – Independent Accountants Report (Page 113)

Section 6 comprises the Independent Accountants Report prepared by Bentleys MRI Perth Partnership ("Bentleys MRI") dated 15 August 2005. The Report was included in the IPO Prospectus to assist investors and their financial advisers in making an assessment of the financial position of the Company.

The Independent Accountant's Report contains audited statements of financial position of the Company as at 30 June 2005 and a pro-forma statement of the financial position as at 30 June 2005 reflecting the position of the Company on the basis that various transactions occur, including the issue of all the Shares offered under the IPO Prospectus.

Section 7 - Risk Factors (Page 125)

This section notes that an investment in the Company is speculative and involves many risks which may be higher than the risks associated with an investment in other companies. These risks include share market fluctuations, commodity price and exchange rate volatility, exploration and mining risks, security of tenure, native title and land access, and aboriginal sites of significance.

The Directors considered that specific risks associated with the Company which may adversely affect the Company's financial position, prospects and share price included:

• exploration and operational risks: $\bullet$
• mining title, environmental bonds and special operating conditions which could $\bullet$ be imposed:
• risks associated with Mineral Resource estimates;
• costs of conducting exploration; and, $\bullet$
• risks associated with third party agreements.

Section 8 - Additional Information (Page 129)

Section 8 sets out additional information required to be disclosed in the Prospectus includina:

• Company Information: $\bullet$
• Rights and Liabilities Attaching to Shares: $\bullet$
• Terms of Options: $\bullet$
• Continuous Disclosure Documents available for Inspection: $\bullet$
• Interests of Directors: $\bullet$
• Interests of Experts and Advisors: $\bullet$
• Consents: $\bullet$
• Expenses of the Offer; $\bullet$
• Electronic Prospectus: $\ddot{\bullet}$
• Forecasts: ۰
• Litigation: $\bullet$
• Taxation; and $\bullet$
• Proposed Name Change. $\bullet$

$(b)$ 30 June 2005 Financial Report

Directors' Report (Page 2)

This section of the Financial Report includes an update on Director appointments during the period, a Review of Operations, brief biographies of the Company's Directors, attendance at Directors' meetings and a summary of significant events that have occurred since the balance date of 30 June 2005.

Statement of Financial Performance (Page 9)

This section sets out the statement of financial performance of the Company for the period 7 July 2004, the day the Company was incorporated, to 30 June 2005.

Statement of Financial Position (Page 10)

This section sets out the statement of financial position of the Company as at 30 June 2005.

Statement of Cash Flows (Page 11)

This section sets out the statement of cash flows form the Company for the period 7 July 2004 to 30 June 2005.

Notes to the Financial Statements (Page 12)

This section sets out the notes to the financial statements for the period 7 July 2004 to 30 June 2005. This section includes the Company's summary of significant accounting policies, exploration and evaluation costs, interests in joint ventures, cash, trade and other creditors, recoverable amount of non current assets, earnings per share, income tax, goods and services tax and International Financial Reporting Standards.

Directors' Declaration (Page 36)

This section contains the Directors' declaration in respect of the financial statement and the ability of the Company to pay its debts as and when they become due and pavable.

Independent Audit Report (Page 38)

This section contains the Independent Audit Report to the members of the Company.

Half Year Report - 31 December 2005 $(c)$

Directors' Report (Page 2)

This section of the Half Year Report contains the names of the Directors and a review of operations and corporate activities of the Company and a summary of the results of operations for the half year ended 31 December 2005.

Income Statement (Page 9)

This section sets out a condensed Income Statement of the Company for the half vear ended 31 December 2005.

Balance Sheet (Page 10)

This section sets out the condensed Balance Sheet of the Company as at 31 December 2005.

Statement of Changes in Equity (Page 11)

This section sets out a condensed statement of changes in equity for the half year to 31 December 2005.

Statement of Cash Flows (Page 12)

This section sets out the condensed statement of cash flows for the Company for the half year ended 31 December 2005.

Notes to Financial Statements (Page 13)

This section sets out the notes to the financial statement for the half vear ended 31 December 2005. This section includes the basis of preparation of the half year financial report, the impact of adopting Australian equivalents to IFRS, operating loss. earnings per share and share capital movements.

Directors' Declaration (Page 25)

This section contains the Directors' declaration in respect of the financial statements and the ability of the Company to pay its debts as and when they become due and payable.

Independent Review Report (Page 26)

This section contains the independent review report by Bentleys MRI, and the auditor's independence declaration under section 307C of the Corporations Act.

Section 3 COMPANY OVERVIEW

$3.1$ Overview and Reference to IPO Prospectus

The Company issued an IPO Prospectus dated 16 August 2005 for the Initial Public Offering of 17,500,000 Shares at 20 cents each raising \$3,500,000.

The Company was admitted to the Official List on 17 October 2005 with Official Quotation of its shares commencing on 20 October 2005.

The Company was originally registered and listed as Resource Finance and Investments Limited (RFI) and changed it name to Bass Metals Ltd on 18 January 2006. The Company's Shares and listed Options trade under the ASX symbols of BSM and BSMO respectively.

$3.2$ Review of Operations Subsequent to the IPO Prospectus

3.2.1 Advanced Projects

3.2.1.1 Mt Charter Gold Project

Exploration Results

The Mt Charter gold project is an extensive outcropping gold-silver mineralised system that until Bass Metals involvement has never been systematically evaluated as a gold project. Drilling and sampling in the area by previous explorers was directed towards the discovery of Hellyer-type base metals deposits, but during the course of this historic work significant gold-silver results were returned. Bass Metals was attracted to the prospect by the large areal extent of significant surface gold samples and wide gold-silver mineralised drill intercepts highlighting the potential of a large scale gold-silver deposit.

In October 2005 Bass Metals completed a first pass soil programme designed to test the extent of the gold mineralisation and provide information on the possible trends of the gold-silver mineralisation. This programme highlighted a large coherent goldin-soil anomaly extending for over 700 metres in a northwest-southeast trend defined at a 100ppb gold contour. This contour encloses several higher order (500ppb gold) contours which surround the area of historic drilling and new extensions not vet drill These are high grade gold in soil anomalies with coherent anomalies tested. outlined at a 1000ppb (1 g/t) gold contour. The anomalies remain open to the north, north east and south west.

Encouraged by these high tenor gold-in-soil results Bass Metals commenced diamond core drilling in late October to test the central area of the indicated gold mineralisation to confirm the soil anomalies and verify some of the previous drill hits. A five hole diamond core drilling programme was completed in early December. The results of this drilling programme are included in Table 1 below; MCD20 to MCD24.

່າ. ດີ ລີເກີ From	viu vul viij Τo	Down hole	Gold	Silver	*Gold	Zinc	Lead	Insitu
		interval (m)			Equiv.			Bulk
(m)	(m)		(g/t)	(g/t)	(g/t)	(%)	(%)	Density
								(g/cm $^3$ )
MCD20 1.7	54.2	52.5	1.9	39	2.7	nsr*	nsr	2.8
MCD21
0	80.0	80.0	1.6	61	2.8	nsr*	nsr	3.2
MCD22
56.0	71.4	15.4	2.1	38	2.9	4.8	1.9	3.6
83.9	91.9	8.0	2.1	27	2.6	2.9	1.0	3.7
49.2	98.6	Within a broader zone defined at a 0.5 g/t Au cut-off 49.4	1.4	22	1.8	2.6	1.0
MCD23
84.0	85.0	1.0	4.6	16	4.9	nsr	nsr	3.0
		Within a broader zone defined at a 0.5 g/t Au cut-off
83.0	88.6	5.6	1.4	8	1.6	nsr	nsr	2.8
	MCD24 - No significant intercepts
MCD26	MCD25-No significant intercepts
12.0	32.0	20.0	2.0	47	2.9	0.8	0.5	3.0
37.0	96.0	59.0	1.3	31	1.9	0.9	0.3	3.0
		Within a broader zone defined at a 0.5 g/t Au cut-off
4.0	96.0	92	1.3	33	1.9	0.8	0.3	3.0
	And includes a zinc rich zone of >1% Zn
37	52	15	1.5	40	2.3	2.3	0.7	$\overline{\phantom{a}}$
MCD27 7.0	35.0	28.0	1.2	41	2.0	2.0	1.0	3.2
40.0	49.0	9.0	$\overline{1.3}$	$\overline{32}$	1.9	0.6	nsr	3.1
		Within a broader zone defined at a 0.5 g/t Au cut-off
3.0	54.0	51.0	1.1	33	1.7	1,3	0.6	3.1
	And includes a zinc rich zone of >1% Zn
15	35	20	1.3	47	2.2	2.6	1.3	$\scriptstyle\star$
MCD28 73.0	78.0	5.0	1.8	14	2.1	0.8	0.2	3.1
91.0	96.0	5.0	1.1	$\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\overline{\over$	1.2	0.2	nsr	2.9
101.0	105.0	4.0	1.1	10	1.3	1.9	0.4	3.4
		Within a broader zone defined at a 0.5 g/t Au cut-off
73.0	174.0	101.0	0.7	8	0.8	0.5	nsr	2.9
MCD29
4.8	39.0	34.2 Within a broader zone defined at a 0.5 g/t Au cut-off	1.4	27	1.9	0.5	0.2	3.3
4.8	56.5	51.7	1.1	22	1.5	0.3	nsr	3.0
MCD30
17.0	28.0	11.0	1.5	27	2.0	0.6	0.2	3.1
35.0	40.0	5.0 Within a broader zone defined at a 0.5 g/t Au cut-off	1.0	25	1.5	0.5	0.2	3.2
16.0	43.0	27.0	1.0	21	1.4	0.4	nsr	2.4
80.0	84.0	4.0	1.3	29	1.9	0.3	nsr	3.0
MCD31
0	6	6	1.3	32	1.9	0.7	0.2	2.9
111	117	6	1.1	14	1.4	1.9	0.4	3.7
0	52	52	1.0	19	Includes 4m from 40m at 5.6% Zn all occurring within a broader zone defined at 0.5 g/t assay cut-off	0.8	0.4	2.9
MCD32
0	6.	6	1.3	32	1.9	0.7	0.8	3.2
111	117	6	1.1	14	1.4	1.9	0.4	3.7
153	164	11	1.1	19	1.5	1.0	0.4	3.3
MCD33 11	19	8	1.5	27	2.0	0.3		۰
129	134.8	5.8	1.4	28	1.9	1.0	0.4	۰
MCD34
17	89	72	1.8	73	3.2	0.8	0.2	3.4
					Includes 4m from 42m at 3.6% Zn within a broader zone defined at a 0.5 g/t Au assay cut off
14	106	92	1.6	62	2.8	0.7	0.2	3.4

Table 1: Summary of assay results for Mt Charter Drilling Programmes to date.
(1.0 g/t gold cut-off)

* nsr indicates no significant result

A second programme comprising 12 drill holes was completed between April and July 2006. The objective was to gain sufficient data density to enable the estimation of a JORC compliant Mineral Resource. The results from this drilling are summarised in Table 1 above (MCD25 to MCD36) for assays received to date.

Details of the completed programme are presented in Table 2 below. All drill hole collars have been located by survey control. A drill hole location plan is presented in Figure 1.

Hole	Grid North	Grid East	Depth(m)	Inclination	Progress/results
MCD020	4631	4254	100.6	$-60$	Complete/received
MCD021	4629	4318	120.2	$-60$	Complete/received
MCD022	4738	4309	120.2	$-60$	Complete/received
MCD 023	4735	4201	100.7	$-60$	Complete/received
MCD 024	4630	4177	100.2	$-60$	Complete/pending
MCD025	4590	4261	134.8	$-60$	Complete/received
MCD026	4690	4342	119.8	$-60$	Complete/received
MCD027	4690	4342	106.6	$-35$	Complete/received
MCD028	4790	4283	188.8	$-52$	Complete/received
MCD 029	4789	4358	131.8	$-43$	Complete/received
MCD030	4841	4355	89.8	$-45$	Complete/received
MCD031	4740	4354	110.3	$-44$	Complete/received
MCD032	4729	4274	185.9	$-59$	Complete/received
MCD 033	4690	4265	134.8	$-63$	Complete/received
MCD034	4628	4319	142.2	$-33$	Complete/received
MCD035	4691	4304	376.5	$-61$	Complete/pending
MCD036 $0.44 \pm 0.04$	4602 the company of the company of the com-	4320	116.4	$-40$	Complete/pending

Table 2: Mt Charter Drilling Programme

All holes are drilled grid (local) east.

Mt Charter - Summarv

The Bass Metals' drilling programme results received to date have confirmed a wide shallow zone of gold-silver and zinc mineralisation.

The work programme for the first half of 2006 included detailed 3-dimensional geological modelling to understand the controls and geometry of the mineralisation and further drilling for which assay results are still outstanding. An extensive programme of metallurgical test work has commenced and results for this are still pending.

The Mt Charter deposit is well located in terms of sealed roads, power and processing infrastructure and subject to the completion of a Mineral Resource estimate and metallurgical test work the Directors consider that the project has excellent potential to develop into a mining operation.

Figure 1: Mt Charter Drill Hole Location Plan

3.2.1.2 Que River Project

Exploration Results

Que River was a high grade base metals mine with a total endowment of 3.3 million tonnes at 13.3% zinc, 195 a/t silver 3.3 a/t gold 7.4% lead and 0.7% copper. Ore from the mine was trucked to Rosebery for processing and the mine was closed in 1991 as the reserves were depleted and the Hellyer Mine came on stream. Copper rich mineralisation such as occurs at S-lens was left because Rosebery did not have a copper recovery circuit at the time.

Que River mineralisation is hosted in a series of stacked and folded massive sulphide lenses. Bass Metals considers that there is excellent potential to delineate further resources on known, unmined massive sulphide lenses such the S-Lens and Nico lens as well as to make new lens discoveries

Since listing the Company has completed an extensive drilling programme at S-Lens. Results available to date are summarised in Table 3 and drill hole details are provided in Table 4.

From (	To $(m)$	Down Hole Length (m)	Horizontal Width (m)	Cu $(\%)$	$Zn(\%)$	Ag(g/t)	Au(g/t)	$Pb(\%)$
QRD1223
32	34.8	2.8	2.0	3.9	3.0	93	0.35	0.9
Within a zone comprising
32	40.4	8.4	5.9	1.3	$2.0\,$	35	0.2	0.4
QRD1224
97.7	102.4	4.7	3.4	1.7	0.2	34	0.2	0.2
108.7	113.1	4.4	3.2	0.7	12.5	57	0.2	3.3
Within a zone comprising
97.7	113.1	16.4	11.8	0.8	3.6	33	0.2	1.0
QRD1225
72.8	79.3	6.5	3.2	3.4	0.6	67	0.4	0.1
QRD1226
113.20	118.7	3.3	2.70	1.1	0.1	16	0.3	0.1
QRD1227
196.5	198.7	2.2	0.7	1.2	50.1	10	0.2	< 0.1
217.6	219.6	2.0	0.6	1.2	50.1	11	0.1	< 0.1
229.5	232.7	3.3	1.0	2.4	0.1	16	0.1	< 0.1
QRD 1228-1230
No significant intercepts
QRD1231
16.8	21.3	4.5	3.9	1.6	.01	33	0.4	< 0.1
QRD1232
30.35	31.2	0.85	0.5	2.3	0.1	121	0.3	0.2
38.65	39.7	1.05	0.6	2.5	0.1	32	0.3
229.5	232	3.3	1.0	2.4	$\tilde{\phantom{a}}$	16	$\blacksquare$	$\scriptstyle\star$
QRD1233
18.5	18.9	0.4	0.35	2.4	$\tilde{\phantom{a}}$	83	1.5	0.2
QRD1234
32.5	35.7	3.2	2.1	3.2	0.7	103	0.58	0.3

Table ?: S.I and Summary of Adeay Regulte

Interval selection was broadly based on lower assay cuts of 0.5% for Cu and 1.0% for Zn and Pb over intervals greater than 1.0 metre and is designed to provide a quide to the width and tenor of the mineralised system.

Mineralisation in the main S-Lens target position comprises veins and disseminated chalcopyrite, sphalerite and galena within a vertical massive to semi-massive pyrite zone hosted by altered volcanics and volcaniclastics. Overall the drill results from within the Mineral Resource envelope have been positive confirming and enhancing the widths and grades intersected in historic adjacent drill holes.

Drill holes QRD1226 to QRD1230 were designed to test for southerly extensions to the S-Lens Mineral Resource. The drill holes appear to have intersected the S-Lens massive sulphide position and extensions to the Mineral Resource are possible, but given the widths and grades further drilling in this area currently has a lower priority.

Drilling is continuing on the shallower portions of the Mineral Resources and mineralised targets which could form part of the Que River mining plan currently being assessed.

				apic **: O-LCH3 E H3t E a33 Diamond Drimny Frogrammc
Number	Grid North (m)	Grid East (m)	Hole Depth	Planned hole depth (m)	Progress/results
QRD 1223	7347	5257	$-45$	80	Complete/received
QRD 1224	7324	5240	$-60$	143.5	Complete/received
QRD1225	7324	5241	$-45$	98	Complete/received
QRD1226	7250	5221	$-61$	173.3	Complete/received
QRD1227	7250	5221	$-70$	250	In Progress-158m
QRD 1227	7250	5221	$-70$	266.8	Complete/received
QRD 1228	7250	5222	$-45$	110.6	Complete/received
QRD1229	7300	5220	$-45$	138.5	Complete/received
QRD1230	7276	5208	$-62$	229.6	Complete/received
QRD1231	7375	5276	$-30$	47.6	Complete/received
QRD1231	7375	5276	$-30$	47.6	Complete/received
QRD1232	7375	5276	$-54$	63.7	Complete/received
QRD1233	7325	5269	$-30$	49.8	Complete/received
QRD1234	7325	5268	$-58$	65.8	Complete/received
QRD1235	7349	5257	$-59$	98.8	Complete/pendina
QRD1236	7322	5241	$-53$	110	Complete/pending
ORD1237	7485	5277	$-39$	50.5	Complete/pendina
QRD1238	7485	5276	$-58$	85	Complete/pendina
QRD1239	7512	5284	$-30$	45	Complete/pending
QRD1240	7513	5283	$-56$	74.5	Complete/pendina
QRD1241	7525	5288	$-30$	44.6	Complete/pendina
QRD1242	7525	5286	$-58$	65	Complete/pending
ORD1243	7400	5274	$-42$	56.7	Complete/pendina
QRD1244	7400	5274	$-58$		In progress

Que River Mining Study (QRMS)

The Company considers that the Mineral Resources and targets identified at Que River have excellent potential to develop into a mining operation. A mining study has been underway since the start of the year, which subject to a positive outcome could see production commencing this calendar year. To facilitate the possible start of mine production and to ensure the Company maintains its current focus on exploration activities it has signed a Letter of Intent with Mancala Pty Ltd, a specialist mining contractor whose principals are familiar with the former Que River mining operations and have experience in western Tasmania mining these styles of deposits by both open cut and underground methods. Mancala is currently working with Bass Metals to complete the QRMS. The following section summarises progress on the QRMS since the IPO Prospectus.

Targets and Mineral Resources a.

A plan showing the location of currently defined Mineral Resources and targets is presented in Figure 2.

The current Mineral Resources at Que River are summarised in Table 5, these are reported in compliance with the JORC Code.

Table 5: Que River Mineral Resource Summary Nico Mineral Resource

JORC Resource	Tonnes	Density			MEAN GRADES
Category		(g/cm 3 )	Zn (%)	Pb(%)	Ag $(d)$	Au $(g/t)$	Cu (%)
Indicated	33,000	3.7	9.0	5.4	130	1.0	0.3
Inferred	69.000	3.6	8.3	4.6	102	0.9	0.4
TOTAL	102.000	3.6	8.5	4.9	110	0.9	0.4

S-Lens Mineral Resource

JORC Resource	Tonnes	Density	MEAN GRADES
Category		(g/cm 3 )	Cu (%)	Zn (%)	Pb (%)	Au $(g/t)$	a/t Au
Indicated	164,000	3.9	1.5	5.3			0.3
Inferred	206,000	3.9	1.9	3.3	-2	59	0.3
TOTAL	370.000	3.9		4.2	1.4	64	0.3

These Mineral Resource estimates were completed by Dr Gary McArthur of McArthur Ore Deposit Assessments Pty Ltd (MODA) who has consented to the inclusion of his estimate in this Prospectus.

Targets for shallow mineralisation have to date been identified at PQ South and QR 32 and the Company is confident of identifying further targets as it continues detailed assessment work through the entire Que River lens system.

Figure 2: Que River Project Location Plan

PO South

A shallow potentially open pitable target has been identified at the southern end of the Que River lens system at PQ south. In this area the lens is estimated to be 9 to 16 metres wide with very high zinc, lead and silver grades with a strong gold credit as indicated by the intercepts shown in Figure 3, and tabulated in Table 6. The intercepts are quoted from historic diamond drill holes used by the previous operator. to estimate its ore reserves at PQ South based on interval selection criteria comprising a minimum 3 metres horizontal width averaging greater than 5% Pb+Zn content.

True Width	Zn	Pb	Ag	Au
(m)	(%)	(%)	(g/t)	(g/t)
13	26	13	12	8.1
13	16	9	9	8.2
10.5	19	10	10	7.6
4	21	12	8	6.2
$8.8\,$	7	3	2	1.1
3.3	18	11	6	6.6
15.7	20	$12 \,$	10	7.9
14.6	12	7	5	6
14.2	19	11	10	6.8

Table 6: Summary of drill intercepts from Figure 3.

Figure 3: Long Section of PQ South

The PQ south area was one of the first areas mined when Que River went into production in 1980. The target tonnage estimate is between 30,000 to 50,000 tonnes comprising the pillars left behind and other remnant ore positions indicated by drilling and which the historic mine plans represent as not being mined. The grade range for the target is consistent with the assays quoted above; from say 3 to 15% Zn. The Company understands from discussions with personnel involved in the original mine operations that the southern shallow stopes proved very problematical to mine and that several of the stopes were abandoned prematurely $-$ this material is not included in the target tonnage estimate. The underground stability problems would not affect the proposed open pit enabling Bass Metals and Mancala to recover this abandoned material should it be encountered

The Company is now estimating Mineral Resources to report compliant with the JORC Code and developing its mine plan. Until this work is completed these estimates should be regarded as conceptual in nature.

QR32

The QR32 lens was partially mined from underground in the late 1980's but. significant resource potential remains. Significant true width intersections in the QR32 target include:

• 14 metres at 5.5% Zn, 3.5% Pb, 85 g/t Ag, 1.0 g/t Au ~120 m, below surface $\bullet$ $(QR1000)$ ;
• 8.8 metres at 3.8% Zn, 2.5% Pb, 69 g/t Ag, 0.9 g/t Au ~100 m, below surface (QR1096):
• 4.8 metres at 6.7% Zn, 4.6% Pb, 142 g/t Ag ~25 m, below surface (QR1084); ٠
• 1.7 metres at 4.4% Zn, 3.3% Pb, 85 g/t Ag ~35 m, below surface (QR1084); $\bullet$
• 0.9 metres at 5.1% Zn, 2.2% Pb, 70 g/t Ag, 1.1 Au ~70 m below surface (QR1084):

The Directors consider that there is good potential to build on the existing shallow 500,000 tonne JORC compliant resource base with further work on other potentially open pitable targets such as PQ South and QR32.

$b₁$ Mining Evaluation

The Company has outlined two Mineral Resources at S-Lens and Nico Lens totalling approximately 500,000 tonnes which were the subject of a scoping level mining study.

The scoping study results were encouraging and provided the impetus to conclude a mining alliance with Mancala and in collaboration with Mancala a detailed mining plan is being evaluated.

$C_{\lambda}$ Processing

The Company is in discussions with both Intec Ltd and Zinifex Limited to negotiate access to their processing facilities located at Hellver and Rosebery respectively. At Hellyer, Intec has reported to the ASX on 31 July 2006 that its joint venture with Polymetals Mining Services Pty Ltd is on track to restart the Hellyer Mill in late September 2006 to process Hellyer tailings at a rate of 1.5mtpa to produce a bulk Zn-Pb concentrate. The Rosebery plant has been operating for nearly 80 years, treating mainly Rosebery Zn-Pb-Cu-Ag-Au ore to produce zinc, lead and copper concentrates as well as gold bullion.

To achieve maximum exploitation of the Mineral Resources at Que River the Company aims to deliver ore to both of these plants.

The discussions on mill access are ongoing and are not completed. Whilst the Directors believe that a commercial outcome is possible it is not assured.

d. Permitting and Approvals

The Company is advanced on meeting its requirements under the Tasmanian approvals and permitting process. A Notice of Intent has been submitted which is based on the scoping study mine plan. The core component of the Company's Development Proposal and Environmental Management Plan ("DPEMP") is an environmental management plan which clearly demonstrates a sustainable plan for management of the environmental risks which in this case are largely related to acid mine drainage issues. This plan will be submitted for approval to the Waratah Wynvard Council and the Dept. of Tourism. Arts and the Environment (DTAE).

As part of the DPEMP approval process the Company undertook baseline water studies for the Que and Southwell river catchment areas which identified a significant environmental legacy associated with the site due to the previous mining operations. In consultation with the relevant government departments a strategy is being developed whereby re-commencing mining operations which incorporate effective environmental management plans will reduce this legacy issue as well as manage any new environmental impacts. A water settlement dam already exists at Que River and can be utilised to contain and treat run-off water to both catchment areas by standard pH neutralisation techniques.

A co-operative agreement is being sought between all stakeholders which recognises the existing issues and should allow Bass Metals to start mining and therefore reduce future emissions from the lease. These discussions are ongoing and the Company believes that given the staged approach to mining which is largely confined to the footprint of the previous operation and the overall net positive environmental impact that approvals will be received in a timely manner; however this is not assured and remains a risk to the development.

3.2.2 Hellyer Exploration Alliance

The Hellyer Exploration Alliance (HEA) between Bass Metals and Zinifex Limited is a \$2.0 million exploration programme, equally funded by both parties and managed by Bass Metals with the aim to discover new large scale. Hellyer type massive sulphide base metal deposits on the Hellyer Project leases. During the alliance period, which expires 2 August 2007 Zinifex has the right to select up to 3 Special Project Joint Venture Areas (SPJVA) where it must sole fund all evaluation work up to completion of a bankable standard feasibility study to earn a 70% interest in each SPJVA. Further updates on the HEA are provided in Section 3.4 of this Prospectus.

Since the IPO Prospectus the HEA, has in collaboration with Geoinformatics Exploration Inc. (TSX.V:GXL), undertaken an exhaustive programme of data compilation, processing and geological modelling and recently completed the target generation and definition process. A fundamental control on the development of Hellyer style mineralisation has been the presence of the main "ore host horizon" known as the Mixed Sequence or Dacite Horizon and its association with specific regional faults. New geophysical data processing techniques and detailed geological

modelling contributed to a revised interpretation of the regional trend of this unit opening up new areas prospective for mineralisation. A probabilistic target generation process was applied on the new geological model generating over 26 target zones.

The HEA has selected 13 target areas and compiled a \$1.9 million work programme which includes approximately 7,000 metres of diamond drilling to validate and test these targets. Two of these drill holes have been completed: one on a target area near Mt Charter and the other on the Hellver East target. At Hellver East, HED1 was aimed at the Hellyer East target area to validate the model and test this portion of the extensive Hellyer East target area. It was very encouraging that this first drill hole intercepted alteration styles and minor base metal sulphides which occur proximal to the Hellver deposit.

3 further drill holes are planned to map out and test the Hellyer East target area as well as down hole electromagnetic surveys. All assays for HED1 are pending.

MCD35 drilled at Mt Charter was extended by approximately 230 metres down hole to test for the newly interpreted position of the Dacite host sequence. The contact position was intersected within 46 metres (at 346 metres down hole) of the predicted contact depth providing considerable support for the revised geological model as a targeting tool in this area.

Bass Metals and Zinifex plan to complete a further 7,000 metres of diamond drilling on a continuous basis with a second drill rig which mobilised to site in mid July. The drilling to date has validated the new geological model and intersected alteration which could be proximal to a new base metal deposit.

3.2.3 Regional Exploration

Bass Metals fourth major exploration initiative is its regional tenement holding. In the IPO Prospectus the Company presented its Project Pyramid (Figure 4 page 15) as a core part of it growth strategy to "organically" generate new targets from regional prospects whilst maintaining active programmes on advanced prospects. The Company listed with a large land bank, which it has added to since that time through three new applications and a major tenement acquisition from Saracen Mineral Holdings Limited ("Saracen").

Recognising the risk of becoming overwhelmed by the expanse of land and the volume of historical technical data Bass Metals formed an exploration alliance with Geoinformatics where they contribute their data compilation and assessment skills over all of Bass Metals regional tenements. Further updates on this Alliance and Joint Venture agreement are provided in Section 3.4.

The regional targeting work is continuing along with the completion of the Saracen tenement acquisition which is expected to settle in September 2006. The IPO Prospectus grouped the regional tenements into 5 Regional Projects as defined in Section 2.2.a of this Prospectus but given the diverse results from the current targeting work tenements are generally referred to on an individual basis and the regional project nomenclature is no longer utilised. The following section provides updates on the regional exploration initiative since the IPO Prospectus.

Regional Targeting

This work has been on going for the past 8 months and the Company is now close to completing:

• compilation, capture and integration of geology, geophysics, geochemistry, mineral occurrence and drill data from over 1300 historic open file reports:
• integration of this data into a 3 dimensional spatial dataset:
• construction of 3 dimensional geological models of each of the 14 project areas: and.
• application of contemporary Monte Carlo style mineral deposit targeting techniques to identify and rank target areas.

At this stage, approximately 60 targets prospective for large scale gold, base metals. tin and nickel deposits are emerging. This does not include the two new tenement groups currently being added to the portfolio - the Saracen leases and the Pinnacles lease. An example of one of the higher ranked targets is the North Rosebery Project a 75:25. Bass Metals - Geoinformatics joint venture.

North Roseberv

The North Rosebery prospect is located 4km north along strike from the Rosebery Mine. It appears to be located in structural flexure in close spatial association with the Rosebery fault and within the same suite of rocks, the Rosebery Shale as the Rosebery deposit and with possible felsic tuff which are also found at Rosebery. Previous work includes an IP Geophysical survey completed in the mid 1990's highlighting anomalies consistent with the both the Rosebery Shale but also unexplained high chargeability anomalies possibly indicative of mineralisation. Two drill holes completed in the 1970's to the north of the geophysical anomalies intersected elevated zinc values such as 39m at 0.08% Zn. 11m at 0.18% Zn and 37m at 0.16% Zn. Two rock chip samples were taken recently from within the target area with the fully results: NR01 - 1.3% Pb, 0.3% Zn, 136 g/t Ag and 0.14 g/t Au and NR02 -4.2% Zn and 10 g/t Ag. The convergence of geological features similar to the Rosebery deposit within 4 km of it and with anomalous geophysical and geochemical responses provides strong encouragement to further test the area for possible Rosebery style mineralisation.

Selina & Bonds Range Tenements

At Selina results from Bass Metals' work has identified two anomalous zones prospective for both gold and base metals mineralisation. The new anomalies occur in the central portion of the lease in the vicinity of the historic Lake Dora copper workings. On the western margin of the copper workings an anomalous lead-zinc zone approximately 4km long has been delineated and to the east of the line of copper workings a zone of gold anomalism along a 2km trend has been identified. The anomalies are based on a total of 378 soil samples taken at a 50 metre sampling interval on lines spaced at 200 metres north-south.

The compilation of historical data has also identified two large scale anomalous zones on the tenement; in the north at the Mt Selina area a lead-zinc zone approximately 1.5km long and in the south, an extensive zone of lead-zinc anomalism in the Beatrice area associated with felsic intrusive rocks.

The anomalies are important exploration targets: occurring in terrains prospective for major gold and base metal deposits as indicated by the proximal presence of the Henty gold mine (1 million ounces) and the world class Mt Lyell copper-gold mine.

A similar style of soil sampling programme is in progress on the Bonds Range exploration licence. Compilation of assay results for this programme is in progress. The Selina and Bonds Range exploration licences are held through a joint venture agreement with Adamus Resources Ltd. Further updates to the joint venture agreement are provided in Section 3.4.

New Tenements

Applications

Since the IPO Prospectus the Company has applied for three new exploration licences:

• Grass Ridge (EL38/2005): granted on 14 June 2006. The area covers discrete geophysical anomaly coincident with barite occurrences and possibly indicative of Hellver style mineralisation.
• Paradise River (EL36/2005): grant pending, covers potential southern extensions to the Savage River iron formation
• Pinnacles (EL16/2006); grant pending, area covers target for intrusive related mineralisation coincident with geophysical and geochemical anomalies from historic exploration work.

Saracen Tenements

On 5 July 2006 Bass Metals announced it had agreed to purchase a 100% interest in 3 exploration licenses from Saracen located immediately south of and contiguous with its Hellver Project and North Rosebery tenements. It is a major strategic acquisition for the Company involving a large ground position which covers existing resources, advanced drill targets and highly rated regional prospectivity. Details on the Tenement Sale and Purchase Agreement are provided in Section 3.4 of this Prospectus.

$3.3$ Tenements Acquired and Relinquished

Changes in the Company's tenements since the IPO Prospectus are summarised in Table 7 below.

Project	Tenement	Interest	Comment
Tenements Applied For
Grass Ridge	EL38/2005	75% BSM	Granted
Paradise River	EL36/2005	75% BSM	Grant pending a meeting with
Pinnacles	EL16/2006	75% BSM	local stakeholders
Tenements Acquired
Tullah	EL47/2003	100% BSM	Subject to settlement of
Mt Block	EL48/2003	100% BSM	acquisition from Saracen, expected to occur in September
Moxon Saddle	EL55/2004	100% BSM	2006.
Tenements Relinquished
Southwell	EL17/1999	100% BSM	Licence expired - originally pegged to cover limestone resources.

Table 7: Changes to Bass Metals Tenements since the IPO Prospectus.

$3.4$ Material Contracts

The Directors consider that certain documents entered into by the Company since the IPO Prospectus are material to the Offer or operation of the Company or otherwise are or may be relevant to prospective investors in the Company. A description of these material documents which have changed or been entered into since the IPO Prospectus is set out below.

Unless otherwise stated all amounts described in this section are exclusive of any goods and services tax payable.

Hellyer Exploration Alliance Agreement - Zinifex Australia Limited and Bass Metals Ltd ("HEA Agreement").

The HEA Agreement was executed on 2 August 2005. It covers only the Hellyer leases namely CML103M/1987, ML68M/1984, 10W/1980, RL11/1997 and EL24/2004. One tenement, EL17/1999 expired since the IPO Prospectus, and as it covered only limestone sources for a potential hydrometallurgical plant; no application was made to renew it.

The Parties had undertaken to complete a more detailed HEA by the end of February 2006. However this has still not occurred and the parties have extended the time in which to complete this several times as well as agreed several variations to the HEA which include:

• Variation to the definition of the excluded areas where Zinifex is not able to $a₁$ select Special Project Joint Venture Areas (SPJVA) around S-Lens to include any remnant resources or new mineralised extensions found within 200 metres of remnant resources already identified in the Que River mining area.
• Subject to Bass Metals completing the acquisition of EL48/2003 from $b.$ Saracen Metals Pty Ltd Zinifex's rights to select SPJVA's will extend outside of the current Tenements to the specific targets identified by the Hellyer

Corridor Intervention Project work undertaken with Geoinformatics on the northern portion of EL48/2004. These targets are tightly defined and this amendment reflects that the HEA generated these targets on the Saracen lease due to the interconnected nature of the tenements and the overlapping extent of the public domain data sets utilised. The number of SPJVA's which Zinifex can select remains unchanged at a maximum of three.

The HEA has been operating successfully since the IPO Prospectus; the compilation and interpretation work has been completed and an extensive drilling programme is underway. Both parties are funding the work which is being managed by Bass Metals. Final documentation of the HEA is expected to be completed by the end of August 2006.

Tasmanian Alliance Agreement - Geoinformatics and Bass Metals ("Alliance Aareement").

In accordance with the Alliance Agreement dated 10 May 2005 Geoinformatics is currently on time and budget with its Mt Read Volcanic Intervention Project and has received 450,000 Bass Metals Shares and 150,000 Options as part consideration for this work.

Staged Farm-in Pioneer Nickel Ltd (Pioneer) and Bass Metals ("Pioneer Agreement")

The Company entered into the Pioneer Agreement on 27 April 2005. The Company has undertaken exploration work on the tenements and considers that it has met its minimum expenditure commitment of \$100,000 and at this stage intends to continue work under the joint venture. Bass Metals is in the process of reporting its results and corresponding with Pioneer to formalise the joint venture processes.

Staged Farm-in Adamus Resources Ltd ("Adamus") and Bass Metals ("Adamus Agreement")

The Company entered into the Adamus Agreement on 27 April 2005. The Company has undertaken exploration work on the tenements and considers that it has met its earn-in commitments. Bass Metals is in the process of reporting its results and corresponding with Adamus to formalise the joint venture interests and ongoing joint venture processes.

Drilling Contract - Stacpoole Enterprises and Bass Metals ("Drilling Contract").

This contract was terminated by mutual agreement. Bass Metals has entered into long term drilling arrangements with Queenstown based Low Impact Diamond Drillings Specialists and currently has two of its drill rigs on the Company's tenements.

Que River Mining Alliance Letter of Intent - Mancala Pty Ltd and Bass Metals ("Mining Alliance")

The Company entered into the Mining Alliance through a Letter of Intent on 15 June 2006. The key terms include Mancala:

acquiring a 20% equity stake in a sublease around the Mineral Resources and Que River mine infrastructure:

• undertaking all mine geology, environmental, mining, haulage, off-take management and Occupational Health and Safety functions on the site; and,
• Mancala earning a fee which effectively covers its costs with the incentive coming from its equity stake to maximise profit through high grade ore mining and adding to the existing mine life.

The Alliance will be documented in more detail as the parties near completion of the detailed Que River mining plans. It is likely that the Alliance will be structured as an unincorporated joint venture.

Tenement Sale and Purchase - Saracen Metals Pty Ltd (Saracen Metals), Saracen Mineral Holdings Limited (Saracen) and Bass Metals.

On 5 July 2006 the Company signed a Sale and Purchase Agreement with Saracen and it's wholly owned subsidiary Saracen Metals, whereby Bass Metals will acquire a 100% interest in three, 100% owned Tasmanian Exploration Licences through the issue of 6.4 million Shares and the payment to Saracen of \$300,000. Settlement of the transaction is in process and expected to be completed in September 2006.

Section 4 EFFECT OF THE OFFER ON THE COMPANY

$4.1$ Capital Structure

The capital structure of the Company following completion of the Offer is summarised below (assuming that no Options are exercised):

Details of Number of Shares:

Current (includes 20,000,000 Placement Shares issued on 16 August 2006)

Listed	47,471,949
Unlisted	9,128,054
This Offer	10
TOTAL	56,600,013
Saracen Consideration Shares*	6,400,000
PRO-FORMA TOTAL	63,000,013

*The Company has undertaken, and Shareholders have recently approved the issue of a total of 6.4 million Shares ("Consideration Shares") to Saracen as part consideration for the acquisition of a 100% interest in three exploration licences from Saracen. The issue of the Consideration Shares will occur at settlement of the transaction which is subject to ministerial consent. Settlement is expected to occur in late September 2006.

Details of Number of Options:

31 July 2007 Options.
Listed Options exercisable at 25 cents each	6,104,375
Unlisted Options exercisable at 25 cents each	2,170,625
31 December 2007 Options
Unlisted Options exercisable at 25 cents each	3,075,000

$4.2$ Financial Position

Set out below is the pro-forma financial position of the Company based on the reviewed financial position as at 31 December 2005 after the following adjustments:

• $1₁$ The issue of 10 New Shares at \$0.16 each pursuant to the Offer. The estimated costs of this Prospectus are \$15,000 and will be paid from the Company's cash assets.
• The issue of 20,000,000 Shares at \$0.16 pursuant to the Placement raising $2.$ \$3,200,000 less costs of approximately \$130,000.
• The issue of 300,000 Shares and 100,000 31 December 2007 options $3₁$ pursuant to the Tasmanian Alliance Agreement dated 10 May 2005.
• Net cash expenditure on fixed assets, exploration and corporate overheads for $\mathbf{4}$ . the six months to 30 June 2006 of approximately \$1,450,000.

PROFORMA STATEMENT OF FINANCIAL POSITION

		Unaudited
	Reviewed 31/12/05	Pro-forma
CURRENT ASSETS	\$	\$
Cash assets Receivables Prepayments	2.731 91 32	4,334 91 32
TOTAL CURRENT ASSETS	2,854	4,457
NON-CURRENT ASSETS Receivables Plant & equipment Exploration and evaluation expenditure	132 30 2,361	132 49 3,361
TOTAL NON-CURRENT ASSETS	2,523	3,542
TOTAL ASSETS	5,377	7,999
CURRENT LIABILITIES
Payables Provisions TOTAL CURRENT LIABILITIES	257 3 260	257 3 260
TOTAL LIABILITIES	260	260
NET ASSETS	5,117	7,739
EQUITY
Contributed equity Option premium reserve Accumulated losses	5,471 158 (512)	8,586 158 (1,005)
TOTAL EQUITY	5,117	7,739

Section 5 RIGHTS ATTACHING TO THE NEW SHARES

The following is a general description of the more significant rights attaching to the New Shares. This summary is not exhaustive. Full details of provisions relating to rights attaching to the New Shares are contained in the Corporations Act. ASX Listing Rules and the Company's Constitution, a copy of which is available for inspection at the Company's registered office during normal business hours.

Ranking of Shares

At the date of this Prospectus, all Shares are of the same class and rank equally in all respects. Specifically, the New Shares issued pursuant to this Prospectus will rank equally with the existing Shares.

Voting Rights

Subject to any special rights or restrictions (at present there are none), at any meeting each member present in person or by proxy has one vote on a show of hands, and on a poll has one vote for each share held in the Company.

Dividend Rights

Subject to any special rights (at present there are none), any dividends that may be declared by the Company are payable on all Shares in proportion to the amount paid up.

Variation of Rights

The rights attaching to the Shares may only be varied by the consent in writing of the holders of three-quarters of the Shares, or with the sanction of a special resolution passed at a general meeting.

Transfer of Shares

Subject to the Company's Constitution, the Corporations Act or any other applicable laws of Australia and the ASX Listing Rules, the Shares are freely transferable. The Directors may refuse to register a transfer of Shares only in limited circumstances, such as where the Company has a lien on those Shares.

General Meetings

Each shareholder is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be furnished to shareholders under the Company's Constitution, the Corporations Act and the ASX Listing Rules.

Unmarketable Parcels

The Company's Constitution provides for the sale of unmarketable parcels subject to any applicable law and provided a notice is given to the minority shareholders stating that the Company intends to sell their relevant Shares unless an exemption notice is received by a specified date.

Rights on Winding Up

If the Company is wound up, the liquidator may, with the sanction of a special resolution:

• divide among the shareholders the whole or any part of the Company's $\bullet$ property; and
• decide how the division is to be carried out between the shareholders.

Subject to any special rights (at present there are none), any surplus assets on a winding up are to be distributed to shareholders in proportion to the number of Shares held by them irrespective of the amounts paid or credited as paid.

Section 6 ADDITIONAL INFORMATION

$6.1$ Interests of Directors

Other than as set out below or elsewhere in this Prospectus no Director has or has had, within two vears before lodgement of this Prospectus with ASIC;

• any interest in the formation or promotion of the Company; or in any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the Offer: or in the Offer: and
• no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any Director, either to induce him to become, or to qualify him as a Director, or otherwise, for services rendered by him in connection with the formation or promotion of the Company or the Offer.

Directors Holdings

As at the date of this Prospectus the Directors have relevant interests in Shares and Options as set out in the table below:

Director	Number of Shares Held Directly	Number of Options Held Directly	Number of Shares Held Indirectly	Number of Options Held Indirectly
Mr David Donald Boyer	493,000	27,500(a) 500,000 (b)	10,000	2500(a)
Mr Craig McGown	10,001	2,500(a)	879,530	37,500(a) 400,000 (b)
Mr Kieran Rodgers	48,108		8,025,946(c)	2,000,000(a)(c) 250,000(b)
Mr Michael Benjamin Rosenstreich	350,000	25,000(a) 1,400,000 (b)

• These options are exercisable at 25 cents on or before 31 July 2007. $(a)$
• $(b)$ These options are exercisable at 25 cents on or before 31 December 2007.
• Mr Rodgers is an executive of Intec Hellyer Metals Pty Ltd, a wholly owned subsidiary of Intec Ltd, $(c)$ which owns 8 million of the Shares tabulated above and 2 million July 2007 options comprising the vendor consideration for the purchase of the Hellyer leases and 0.25 million options issued as part of Director's remuneration. He was appointed to the Board to represent Intec's interest in accordance with the Tenement Acquisition Agreement as disclosed in the IPO Prospectus.

Directors Remuneration

The Constitution provides that each Director is entitled to such remuneration from the Company as the Directors decide, but the total amount provided to all non-executive directors must not exceed in aggregate the amount fixed by the Company in a general meeting. The aggregate remuneration for all non-executive directors has been set at an amount of \$250,000 per annum. The Directors have resolved that non-executive director's fees will be \$65,000 per annum for the Chairman and \$40,000 per annum for non - executive directors, inclusive of statutory superannuation contributions.

Remuneration and other terms of employment for the Managing Director is formalised in an employment agreement dated 28 July 2005 and valid for three vears. This agreement provides for a total package amount inclusive of prescribed superannuation and for participation in the Company's Share Purchase Plan and Employee Option Plan. The cash remuneration paid under the agreement is \$210,000 per annum.

Other Interests of Directors

Mr McGown is the Executive Chairman and, indirectly, a shareholder of DJ Carmichael Pty Limited and its wholly owned subsidiary Carmichael Capital Markets Pty Limited (jointly referred to as "Carmichael"), who acted as Sponsoring Broker to the IPO Prospectus. Total fees paid to Carmichael in relation to the IPO Prospectus comprised a \$20,000 management fee, a 5% broking fee on the amount subscribed which equated to \$175,000 and disbursements of approximately \$5,000. Carmichael has also acted as Corporate Advisor to the Company since incorporation. Total fees payable to Carmichael in relation to the Company's administration and general advisory work are approximately \$99,000. Carmichael acted as joint manager for the Placement for which it was paid fees of \$59,620.

Mr Rogers is an executive of Intec Hellyer Metals Pty Ltd, a wholly owned subsidiary of Intec Ltd. The Company is in discussions with Intec Ltd regarding utilisation of its Hellyer processing plant consistent with the Letter of Intent covering access to the Hellyer Mill signed on 29 April 2005. All discussions are on standard commercial basis and to date nothing has been finalised.

$6.2$ Interests of Experts and Advisors

Except as disclosed in this Prospectus, no expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the 2 year period ending on the date of this Prospectus, any interest in:

• $(a)$ the formation or promotion of the Company; or
• property acquired or proposed to be acquired by the Company in connection $(b)$ with its formation or promotion or the Offer under this Prospectus; or
• the Offer under this Prospectus. $(c)$

Price Sierakowski acted as Solicitors to the Company in relation to the IPO Prospectus and in that capacity were involved in undertaking due diligence enquiries in relation to the legal matters and providing legal advice to the Company in relation to the IPO Prospectus Offer and preparing the Solicitors Report included in section 7 of the IPO Prospectus. Price Sierakowski were paid approximately \$25,500 for these services.

Blakiston & Crabb have acted as Solicitors to the Offer pursuant to this Prospectus and in that capacity have provided legal advice to the Company in relation to the Offer. In respect of this work, the Company will pay approximately \$6,000 for these services. Blakiston & Crabb have provided other professional services to the Company during the last two years totaling approximately \$30,000. Subsequent to the issue, fees will be charged in accordance with normal charge-out rates.

Snowden received professional fees of approximately \$34,000 for the provisions of their Independent Geologist's Report included in section 4 of the IPO Prospectus.

Bentleys MRI prepared the Independent Accountant's Report included in Section 6 of the IPO Prospectus and assisted in the conduct of the due diligence program related to the preparation of the IPO Prospectus. In respect of this work, the Company paid approximately \$9,500. In the past 2 years Bentleys MRI has been paid a further \$18,000 for accounting, audit and other services.

Unless otherwise stated all amounts disclosed in this section are exclusive of any goods and services tax payable.

6.3 Forecasts

The Directors have considered the matters set out in ASIC Policy Statement 170 and believe that they do not have a reasonable basis to forecast earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecasts or projected information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast.

6.4 Litigation

To the knowledge of the Directors there is no litigation threatened against the Company and no litigation threatened by the Company. The Directors are not presently aware of any circumstances likely to give rise to any of the above.

Section 7 CONSENTS

Each of the parties referred to in this Section:

• does not make, or purport to make, any statement in this Prospectus or on which a statement made in the Prospectus is based other than as specified in this Section: and
• to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this or the IPO Prospectus with the consent of that party as specified in this Section.

Security Transfer Registrars Pty Ltd has given its written consent to being named as the Company's share registry in this Prospectus and has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Blakiston & Crabb has given its written consent to being named as the Company's solicitors in this Prospectus and has not withdrawn its consent prior to the lodgement of the Prospectus with ASIC.

Price Sierakowski has given its written consent to the incorporation by reference into this Prospectus of its Solicitors Report in section 5 of the IPO Prospectus and all statements referring to that Report in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Bentleys MRI has given its written consent to being named as the Company's Auditor in this Prospectus, and to the incorporation by reference of the audited financial statements for the period from 7 July 2004 to 30 June 2005, the Independent Audit Report in relation to those audited financial statements, the reviewed financial statements for the half vear ended 31 December 2005 and the Independent Review Report in relation to those reviewed financial statements, in the form and context in which they are included, and has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Bentleys MRI has given its written consent to the incorporation by reference in this Prospectus of its Independent Accountant's Report in section 6 of the IPO Prospectus and to all statements referring to that Report in the form and consent in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Snowden has given its written consent to the incorporation by reference in this Prospectus of its Independent Geologist's Report in section 4 of the IPO Prospectus and to all statements referring to that Report in the form and context in which thev appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Dr Gary McArthur of McArthur Ore Deposit Assessments Pty Ltd has given his written consent to the inclusion of the Mineral Resource estimates in Section 3 of this Prospectus in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Mancala has given its written consent to being named in this Prospectus as an alliance partner for a proposed mining joint venture on the Company's Que River Mining Lease and to the inclusion of all statements in the Prospectus referring to its contribution to the Que River mining study in the form and context in which they appear, and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Intec Limited (including Intec Hellyer Metals Pty Ltd) has given its written consent to the inclusion of all statements in the Prospectus referring to it in the form and context in which they appear and has not withdrawn such consent before lodgement of the Prospectus with ASIC.

Zinifex Limited (including Zinifex Australia Limited) has given its written consent to being named in the Prospectus as an alliance and joint venture partner on the Company's Hellver project and the inclusion of all statements in the Prospectus referring to it in the form and context in which they appear and has not withdrawn such consent before lodgement of the Prospectus with ASIC.

Geoinformatics Exploration Inc has given its written consent to being named in this Prospectus as an alliance and joint venture partner on the Company's tenement interests in Tasmania and to the inclusion of all statements in the Prospectus referring to its contribution to the Company's exploration activities in the form and context in which they appear and has not withdrawn such consent before lodgement of this Prospectus with ASIC.

Section 8 DIRECTORS' STATEMENT

The Directors state that they have made all reasonable enquiries and on that basis have reasonable grounds to believe that any statements made by the Directors in this Prospectus are not misleading or deceptive and in that respect to any other statements made in this Prospectus by persons other than Directors, the Directors have made reasonable enguiries and on that basis have reasonable grounds to believe that persons making the statement or statements were competent to make such statements, those persons having given their consent to the statements being included in this Prospectus in the form and context in which they appear and have not withdrawn that consent before lodgement of this Prospectus with ASIC.

This Prospectus is issued by Bass Metals. The issue of this Prospectus has been authorised by the Directors and this Prospectus has been signed by Mr Michael Rosenstreich on behalf of the Directors.

Dated: 24 August 2006

Signed for and on behalf of Bass Metals

Director

Section 9 GLOSSARY

The following definitions apply throughout this document unless the context requires otherwise:

\$	means Australian dollars. All amounts in this Prospectus are in Australian dollars unless otherwise stated.
Applicant(s)	means the person(s) who submit valid Application Forms pursuant to this Prospectus.
Application	means a valid application made to purchase or subscribe for a specified number of Shares pursuant to this Prospectus.
ASIC	Australian Securities the Investments and means Commission.
ASX	means Australian Stock Exchange Limited.
ASX Listing Rules	means the official listing rules of ASX and any other rules of ASX which apply while the Company is a listed company, each as amended or replaced from time to time except to the extent of any express written waiver by ASX.
Bass Metals	Bass Metals Ltd ACN 109 933 995
Board	means the board of Directors as constituted from time to time.
Business Day	means Monday to Friday inclusive, except New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.
Closing Date	means 5.00 pm Western Standard Time 25 August 2006.
Company	Bass Metals Ltd ACN 109 933 995
Corporations Act	means the Corporations Act 2001 (Cwth).
Directors	means the directors of the Company.
Incorporated Documents	means various information and documents listed in Section 2.2 of this Prospectus incorporated by reference under section 712 of the Corporations Act.
Inferred Resource	Means that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence as determined under the JORC Code.
IPO Prospectus	means the Company's prospectus dated 16 August 2005.
JORC Code	Means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Mineral Resource or Resource	Means a concentration or occurrence of material of intrinsic economic interest in or on the earths crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction.
New Shares	means Shares offered pursuant to this Prospectus.
Offer	means the invitation made in this Prospectus to subscribe for New Shares.
Offer Period	means the period between the Opening Date and Closing Date (inclusive).
Official List	means the official list of ASX.
Opening Date	24 August 2006.
Options	means options to acquire Shares.
Official Quotation	has the same meaning as quotation in the ASX Listing Rules.
Placement Placement Shares	means the issue of 20,000,000 Shares at \$0.16 each raising \$3,200,000 completed on 16 August 2006.
Prospectus	means this prospectus dated 24 August 2006.
Share(s)	means a fully paid ordinary share(s) in the capital of the Company.
Shareholders	means a holder of Shares in the Company.
WST	means Western Australian Standard Time.

Section 10CORPORATE DIRECTORY

DIRECTORS	Don Boyer - Non-executive Chairman
	Kieran Rodgers - Non-executive Director
	Craig McGown- Non-executive Director
	Mike Rosenstreich – Managing Director
COMPANY SECRETARY	Tony Walsh
REGISTERED OFFICE	Suite 5, 2 Richardson Street WEST PERTH WA 6005
	Tel: 08 9322 8044 Fax: 08 9481 2846
	Website: www.bassmetals.com.au Email: admin@bassmetals.com.au
SOLICITORS	Blakiston & Crabb 1202 Hay Street WEST PERTH WA 6005
AUDITORS	Bentleys MRI Perth Partnership Level 1 10 Kings Park Road WEST PERTH WA 6005
SHARE REGISTRY	Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153
	Telephone: (08) 9315 0933 Facsimile: (08) 9315 2233