LEVEL 11 SHAW HOUSE 49-51 YORK STREET SYDNEY NSW 2000 AUSTRALIA TELEPHONE: FACSIMILE: EMAIL ADDRESS: WEB ADDRESS.

61 2 9299 4366 61 2 9299 1817 [email protected] http://www.gullewa.com ACN 007 547 480 ABN 30 007 547 480

FACSIMILE TRANSMISSION

TO:	AUSTRALIAN STOCK EXCHANGE LIMITED	FROM:	DAVID DEITZ
ATTN:	COMPANY ANNOUNCEMENTS OFFICE	DATE:	11 FEBRUARY 2003
REF. NO.		PAGES:	37 (including this page)
FAX NO:	1300 300 021
SUBJECT:	NOTICE OF GENERAL MEETING

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Committee

CONFIDENTIALITY NOTICE: THE DOCUMENTS ACCOMPANYING THIS TRANSMISSION CONTAIN CONFIDENTIAL INFORMATION INTENDED FOR A SPECIFIC INDIVIDUAL AND PURPOSE. THE INFORMATION IS PRIVATE, AND IS LEGALLY PROTECTED BY LAW. IF YOU ARE NOT THE INTENDED RECIPIE

11 February 2003

Company Announcements Office Australian Stock Exchange Limited Level 4 Exchange Centre 20 Bridge Street SYDNEY NSW 2000

Via Facsimile: 1300 300 021

Dear Sirs

NOTICE OF GENERAL MEETING

We enclose Notice of General Meeting which was mailed to all shareholders today.

Yours faithfully DAVIO DEITZ Chairman

Encl

Ref: S:loffice.sec)GULLEWA\Announcements\2003\ABXCaps-11.2.2003-NoticeofGenMtg.doc

Level 11 Shaw House 49-51 York Street Sydney NSW 2000 AUSTRALIA Telephone: 61 2 9299 4366 61 2 9299 1817 Fax.

Email: [email protected]

Web Address: http://www.gullewa.com $\bullet$

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GULLEWA LIMITED $ACN$ 007 547 480 $\mathbf{x}2^{(n)}\mathbf{w}_1^{(n)}$ $\mathcal{L}{\mathbf{q}}$ , and $\mathcal{L}_{\mathbf{q}}$

NOTICE OF GENERAL MEETING

PROXY FORM

EXPLANATORY MEMORANDUM

AND

INDEPENDENT EXPERT'S REPORT

The Independent Expert has concluded the transaction described in these Meeting Materials is fair and reasonable to the non-associated shareholders of Gullewa Limited.

Date of Meeting Friday, 14 March 2003

Time of Meeting 10:30 am

Place of Meeting Horwath (NSW) Pty Limited Level 10, 1 Market Street Sydney NSW 2000

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GULLEWA LIMITED ACN 007 547 480

÷

NOTICE OF GENERAL MEETING

NOTICE IS HEREBY GIVEN that a General Meeting of the shareholders of Gullewa Limited ACN 007 547 480 ("Company") will be held at Horwath (NSW) Pty Limited, Level 10, 1 Market Street, Sydney on Friday, 14 March 2003 at 10:30 am [Eastern Daylight Saving Time], for the purpose of transacting the following business referred to in this Notice of General Meeting.

An Explanatory Memorandum containing information in relation to the following Resolution accompanies this Notice of Meeting.

AGENDA

Resolution 1 – Participate in Placement of Shares in Allegiance Mining NL (ordinary resolution)

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

"That pursuant to and in accordance with Listing Rule 10.1 of the Listing Rules of Australian Stock Exchange Limited and for all other purposes the Company is authorised to subscribe for 17,111,111 shares in Allegiance Mining NL ACN 059 676 783 ("Allegiance") at 4.5 cents each, representing a total investment in Allegiance of \$770,000, the full details of which are set out in the Explanatory Notes accompanying this Notice of Meeting."

Notes to Resolution 1:

The Company will disregard any votes cast on this resolution 1 by a person who is a party to the transaction (ie. Allegiance Mining NL) and any associate of that person. However, the Company need not disregard a vote if:

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

on the proxy form to vote as the proxy decides.

Other business

To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act 2001 (Cth).

BY ORDER OF THE BOARD

David Deitz Chairman 6 February 2003

PROXIES

Votes at the General Meeting may be given personally or by proxy, attorney or representative.
A shareholder entitled to attend and vote at the above meeting may appoint not more than two $\bullet$ proxies to attend and vote at this meeting. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the shareholders voting rights.
A proxy may but need not be a shareholder of the Company. $\bullet$
The instrument appointing of a proxy must be in writing, executed by the appointor or his/her attorney duly authorised in writing or, if such appointer is a corporation, either under seal or under hand of an officer or his/her attorney duly authorised.
The instrument of proxy (and the power of attorney or other authority, if any, under which it is $\bullet$ signed) must be lodged by person, post, courier or facsimile and reach the Registered office of the Company at least 48 hours prior to the meeting. For the convenience of shareholders a Proxy Form is enclosed.

For the purposes of section 1074E(2) of the Corporations Act 2001 and regulation 7.11.37 of the Corporations Regulations 2001, the Company determines that members holding ordinary shares at the close of business on Wednesday, 12 March 2003 will be entitled to attend and vote at the General Meeting.

Corporations

A corporation may elect to appoint a representative in accordance with the Act in which case the Company will require written proof of the representative's appointment which must be lodged with, or presented to the Company before the meeting.

GULLEWA LIMITED ACN 007 547 480

EXPLANATORY MEMORANDUM

This Explanatory Memorandum is intended to provide shareholders with information to assess the merits of the resolution contained in the accompanying Notice of General Meeting of Gullewa Limited ("Company").

An Independent Expert's Report prepared by Terence Willsteed & Associates, Consulting Mining Engineers (a copy of which is attached as Annexure A to this Explanatory Memorandum) comments on whether the transaction the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company.

Shareholders should note that Terence Willsteed & Associates has concluded that the proposal the subject of Resolution 1 is fair and reasonable to the non-associated shareholders of the Company.

The directors of the Company ("Directors") recommend shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolution.

Introduction

÷,

On 24 January 2003, the Company and Allegiance entered into an agreement pursuant to which the Company agreed to subscribe for 17,111,111 fully paid ordinary shares in the capital of Allegiance at the issue price of 4.5 cents per share (representing a total investment of \$770,000).

The parties agreed, amongst other things, that it was a condition precedent of the agreement that the Company obtain the approval of the Company's shareholders for the proposed subscription of shares in Allegiance before 31 May 2003. Accordingly, this Meeting has been convened to seek shareholder approval of the proposed subscription by the Company of shares in Allegiance.

Resolution $1$ – Placement of shares in Allegiance (ordinary resolution)

Resolution 1 seeks shareholder approval for the participation by the Company in a placement of 17,111,111 fully paid ordinary shares in Allegiance for the issue price of 4.5 cents per share.

Allegiance currently has 211,320,292 fully paid ordinary shares on issue. The Company already holds 6,116,217 fully paid ordinary shares in Allegiance (representing approximately 2.89% of the total issued share capital in Allegiance). If the proposed subscription by the Company for an additional 17,111,111 shares in Allegiance proceeds, Allegiance will have on issue 228,431,403 shares of which Gullewa will hold 23,227,328 (representing 10.17% of the total issue shares in Allegiance).

Messrs David Deitz and Eddie Lee, directors of Gullewa, are also directors of Allegiance.

$\pm$

Mr Deitz holds an indirect interest in approximately 7.4% of the issued share capital in Allegiance.

Listing Rule 10.1

Listing Rule 10.1 of the Listing Rules of the Australian Stock Exchange Limited ("Listing Rules") prohibits a listed company from acquiring a substantial asset from a substantial shareholder (ie. a shareholder who is entitled to at least 10% of the voting securities of the company) without first obtaining shareholder approval.

An asset is substantial if its value or the value of the consideration for it is 5% or more of the sum of the equity interests of the Company.

Allegiance is currently entitled to approximately 19.9% of the voting securities of the Company, accordingly it will be considered a substantial shareholder for the purposes of Listing Rule $10.1$ .

The consideration payable by the Company for 17,111,111 fully paid shares Allegiance is \$770,000, which represents more than 5% of the equity interests of the Company. Accordingly, the Allegiance shares to be subscribed for by Gullewa will be considered a substantial asset for the purposes of Listing Rule 10.1.

It follows that shareholder approval in accordance with Listing Rule 10.1 will be required before the proposed subscription of Allegiance shares by Gullewa can proceed.

The Independent Expert's Report prepared by Terence Willsteed & Associates has been prepared in accordance with the requirements of Listing Rule 10.10.

Directors Recommendation

The board of directors of the Company recommend shareholders vote in favour of Resolution 1.

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ANNEXURE A

INDEPENDENT EXPERT'S REPORT

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$\sim$

$\ddot{\phantom{a}}$

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TERENCE WILLSTEED & ASSOCIATES CONSULTING MINING ENGINEERS

POSTAL ADDRESS: P O BOX N284 GROSVENOR PLACE, SYDNEY NSW 1220 13/1, THE QUAY, 2 PHILLIP STREET, SYDNEY NSW 2000

E-mail: [email protected]

[02] 9251 3804 TELEPHONE: FACSIMILE: rozi 9251 3788

PRINCIPAL: TV WILLSTEED, BE(HIN) HONS BA CP(HIN) FAUSIMM MMICA MSME TV WILLSTEED & ASSOCIATES PTY LTD

44 001 859 712 ABN:

23 January 2003

$\hat{\Theta}$

The Directors Gullewa Limited Level 11, Shaw House 49-51 York Street Sydney NSW 2000

Dear Sirs.

INDEPENDENT EXPERT REPORT OF THE PROPOSAL TO TAKE UP A PLACEMENT OF SHARES IN ALLEGIANCE MINING NL

Terence Willsteed & Associates (TWA), Consulting Mining Engineers, have been requested to prepare an Independent Expert Report as to the fairness and reasonableness of the proposed acceptance by Gullewa Limited (Guilewa) to acquire a placement of 17,111,111 ordinary fully paid shares in Allegiance Mining NL (Allegiance) at 4.5 cents per share. Directors of Gullewa have resolved to call a meeting of shareholders to seek their approval of this proposal, as required by Listing Rule 10.1 of the Australian Stock Exchange Limited (the ASX).

This Independent Expert Report has been prepared having regard to the Australian Securities & Investment Commission (ASIC) Policy Statements 74, "Acquisitions Agreed to by Shareholders", and 75, "Independent Expert Reports to Shareholders" (which sets out the ASIC's views on the meaning of "fair" and "reasonable"), ASIC Practice Notes 42 (which deals with Independence of Expert Reports) and 43 (which deals with Valuation Reports and Profit Forecasts), and to the Listing Rules of the ASX. We understand that this report will form part of the Notice of Meeting documentation to be sent to Gullewa shareholders, as required by ASX Listing Rules. This report has been prepared by Alan Battaglene, BE[Min], MAusIMM, Consulting Mineral Economist and T V Willsteed, BE[Min] Hons, BA, CP[Min], FAusIMM, MMICA, Consulting Mining Engineer.

To determine the fair value of Allegiance shares it was necessary to prepare a valuation of the Company's exploration prospects. Appendix 1 to this report sets out our technical review and valuation of the Allegiance exploration areas which has been prepared by T V Willsteed, BE[Min] Hons, BA, FAusIMM, MMICA, Consulting Mining Engineer and R C Pyper, BSc, FAusIMM, GAICD, Consulting Geologist. Information used to prepare the valuation report is drawn from other independent technical reports and from technical reports by Allegiance management, as well as from discussion with directors and management of Allegiance. The economic appraisals are based on conditions existing in January 2003. Valuation estimates are expressed in constant Australian dollars and assume an exchange rate of US\$0.60 to the Australian dollar.

The Allegiance exploration and mining lease tenement areas are listed in the Schedule of Tenements attached to Appendix 1. We have not carried out a property search to confirm the tenement status and tenure of the tenements. They have been previously recorded and confirmed in statutory reports by the Company to the shareholders.

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$\pm$

$\div$

The valuation has been prepared independently and in accordance with the VALMIN Code of the Australasian Institute of Mining & Metallurgy (AusIMM). We believe all material facts are presented and that sufficient analysis is described to meet the transparency requirements of the Code. A site visit to the Tasmanian Avebury nickel prospect was made prior to the preparation of the valuation report.

BACKGROUND TO THE PROPOSED TRANSACTION.

The directors of Gullewa have decided, subject to the approval of Gullewa shareholders in General Meeting, to take up a placement of 17,111,111 Allegiance fully paid ordinary shares at 4.5 cents each, for a total investment of \$770,000. ASX Listing Rule 10.1 is applicable to this transaction for the following reasons:

Allegiance holds 20,722,374 shares in Gullewa, equal to 19.9% of Guilewa issued shares;
The proposed transaction represents the purchase of a "substantial asset" by Gullewa because the $\bullet$ \$770,000 investment represents more than 5% of Gullewa equity interests as set out in Gullewa consolidated balance sheet as at 30 June 2002.

PROJECT AND VALUATION SUMMARY

The Allegiance mineral interests include the Avebury nickel exploration project in Tasmania, and gold and base metal exploration projects in Tasmania and New South Wales. Conceptual engineering and economic estimates have been carried out for the development of the relatively advanced Avebury project. The methodologies used in the technical valuations, and the reasons for their use, are explained in Appendix 1.

The following Valuation Summary indicates the estimated valuation range of the Allegiance mineral interests.

		Valuation Range [AS000]
Project/Prospect	Low	High	Most Likely
Avebury Nickel	13,500	25,000	19,000
Other Tasmanian areas	1,500	2,000	1,750
Nymagee	200	400	300
Total	15,450 ٧ ×.	27,600	21,250
	$\sim 10$ $\sim$ A 10

The Allegiance mineral interests are valued in a range of A\$15.45 million to A\$27.6 million, with a most likely value of A\$21.25 million.

ASSESSMENT OF SHARE VALUE

SHARE PRICE DETERMINATION

The foregoing valuation of Allegiance mineral interests provides the basis for the following assessment of the fair value of Allegiance shares. This assessment provides a net asset valuation, the calculation of which is detailed in Schedule A appended to the end of this report. The methodology employed involves adjustment of the most recently available Allegiance Consolidated Balance Sheet to include the above TWA valuation of the mineral assets, and other adjustments required to reflect the Company's current situation. The main other adjustment made involved the provision of an estimate of net cash expenditure by the Company since the date its most recently published accounts. Explanations of these adjustments are set out as Notes to Schedule A.

The range of share values resulting from these calculations is summarised below:

VALUE PER SHARE		Low Valuation 彑	High Valuation (\$)	Most Likely Valuation (\$)
Allegiance mineral interests Net other assets (‡) Total Valuation		15,450,000 1,041,601 16,491,601	27,600,000 1,041,601 28,641,601	21,250,000 1,041,601 22,291,601
	(cents per share)	7.80	13.55	10.55

FAIRNESS AND REASONABLENESS OF THE GULLEWA PROPOSAL

Subject to approval of its shareholders, Gullewa has agreed to take up a placement of 17.11 million Allegiance shares at 4.5 cents per share. Gullewa currently holds 6,116,217 shares in Allegiance, equivalent to 2.89% of currently issued Allegiance shares. When the proposed placement is completed, Allegiance will have on issue 228,431,403 shares of which Gullewa will hold 23,227,328 or 10.17%.

FAIRNESS

As set out above, the assessed most likely valuation of Allegiance shares, is 10.55 cents per share. The range of fair values arrived at is from 7.8 cents per share to 13.55 cents per share.

The definition of fairness, from the viewpoint of a Gullewa shareholder requires that the offer price for an asset should be equal to or less than the asset's assessed fair value. In this instance, the price of 4.5 cents per Allegiance share being paid by Gullewa is less than half the assessed most likely fair value. It is therefore concluded for this transaction that the price of 4.5 cents per Allegiance share being paid by Gullewa represents fair value to Gullewa shareholders.

OTHER CONSIDERATIONS AND REASONABLENESS

Market price:

Over the 13 month period the Allegiance share price has ranged between a high of 6.5 cents (February 2002), and a low of 2.9 cents (July 2002), and the last sale price on 24 January 2003 was 6 cents. The price of 4.5 cents per Allegiance share being paid by Gullewa is less than the current market price, which has risen over the past few days. Until recently the Allegiance share price was fairly steady at around 4.5 to 4.7 cents for most of the second half of 2002. The placement price of 4.5 cents per Allegiance share for this transaction is considered reasonable with regard to market price from the viewpoint of Guilewa sharehiolders.

$\epsilon^{\prime}$

Premium for Control: $\frac{4}{3}$

The placement of 17.11 million shares with Gullewa will increase the number of Allegiance shares on issue from 211,320,294 to 228,431,403, an 8.1% increase. When combined with the 2.89% of existing Allegiance issued shares currently held, the placement will result in Gullewa holding 10.17% of the expanded Allegiance issued capital. Although the increased Gullewa shareholding will qualify as a significant shareholding, 10.17% of Allegiance will not deliver control of Allegiance to Gullewa. Therefore the question of a premium for control does not apply to this transaction.

Other Considerations:

The \$770,000 cost of the placement of Allegiance shares proposed by Gullewa for this transaction represents a major investment by the company. The assessed worth of this proposed investment is considerably higher than its cost. Gullewa resources appear sufficient to maintain the company's ongoing operations after completion of the proposal. The injection of cash by Gullewa into Allegiance should enable the progression of development of the Avebury project.

CONCLUSION

Based on the above review of estimates and assessment of comparative values and other considerations, we believe that the transaction in which Gullewa has agreed to make a significant investment in Allegiance is fair and reasonable.

QUALIFICATIONS

Terence Willsteed & Associates is a Mining Engineering Consultancy, which has had considerable experience in the valuation of mining interests and investments, and in advising both prospective purchasers and sellers of such interests and investments. The persons responsible for this report are:

TV Willsteed

BE(Min)Hons, BA, CP(Min), AUSIMM, MMICA Consulting Mining Engineer

Mr Willsteed is the Principal of Terence Willsteed & Associates. He has had extensive experience in the mining industry over 40 years, the last 25 years of which have been as a consultant to the industry. He holds a First Class Mine Managers Certificate of Competency, and has been extensively involved in mineral project evaluation and management. He is licensed as an Investment Adviser by the ASIC.

Alan Battagiene

BE(Min), MAUSIMM, Consulting Mineral Economist

Mr Battaglene has had over 40 years experience since graduation of which the first 14 years were in operating positions in the mining, oil and contracting industries, and the last 32 years have been in mining investment analysis and mineral economics consultancy activities.

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DECLARATION

This report has been prepared for inclusion in the Independent Expert Report. This report is designed to assist Gullewa shareholders to assess the value of the placement of 17.11 million shares in Allegiance which the directors of Gullewa have agreed to take up at a cost of \$770,000, and was not prepared for any other purpose.

The statements and opinions contained in this report are given in good faith but, in the preparation of this report, TWA has relied substantially on information provided by the Directors and Management of Gullewa and Allegiance. We do not have reason to doubt the information so provided.

Neither the whole nor any part of this report, nor any references thereto, may be included in or with or attached to any document, circular, resolution, letter or statement without the prior written consent of TWA.

DISCLAIMER OF INTERESTS

At the date of this report, TWA, T V Willsteed and Alan Battaglene do not have, nor have had any relationship with Allegiance nor with Gullewa.

TWA has no relevant interest in, nor any interest in the acquisition or disposal of any securities or assets of Allegiance or Gullewa. TWA have no pecuniary or other interest that could be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the valuation of the mineral interest of Allegiance.

Neither TWA, T V Willsteed nor Alan Battaglene has received or may receive any pecuniary or other benefits, whether direct or indirect or in connection with the preparing of this report other than normal consultancy fees based on fee time at normal professional rates plus out-of-pocket expenses.

Appendix 1 and Schedule A attached form part of this report.

Yours faithfully.

TERENCE WILLSTEED & ASSOCIATES

TV WILLSTEED Principal

TO. 1300300021

TERENCE WILLSTEED & ASSOCIATES

CONSULTING MINING ENGINEERS

POSTAL ADDRESS: P O BOX N284 GROSVENOR PLACE, SYDNEY NSW 1220 13/1, THE QUAY, 2 PHILLIP STREET, SYDNEY NSW 2000

APPENDIX 1

E-mail: [email protected]

PRINCIPAL: TV WILLSTEED, BE(NIK) HORS & OPHIA) YAUSTHIN MATCA MSME TV WILLSTEED & ASSOCIATES PTY LTD

[02] 9251 3804 TELEPHONE: [02] 9251 3788 FACSIMILE:

44 001 859 712 ABN:

23 January 2003

$\rightarrow$

The Directors Gullewa Limited Level 11 Shaw House 49-51 York Street SYDNEY NSW 2000

Dear Sirs.

INDEPENDENT TECHNICAL REVIEW AND VALUATION OF THE MINERAL INTERESTS OF ALLEGIANCE MINING NL

Terence Willsteed & Associates [TWA], Consulting Mining Engineers, have been requested to prepare an independent technical review and valuation of the mineral interests of Allegiance Mining NL [Allegiance]. The valuation has been prepared to assist the Independent Expert to advise the directors of Gullewa Limited [Gullewa] in their responsibilities to provide an analysis for the purpose of determining a fair and reasonable price for Allegiance shares.

This report provides a summary description and valuation of the mineral interests of Allegiance. The geological descriptions and resource estimates contained within the valuation are taken from the data base provided by Allegiance and have been reviewed in the technical summary. The Tasmanian project areas have been inspected prior to the preparation of this report.

The Allegiance exploration and mining lease tenement areas are listed in the Schedule of Tenements contained in this report. We have not carried out a property search to confirm the tenement status and tenure of the tenements. They have been previously recorded and confirmed in statutory reports by Allegiance.

The technical review and valuation has been prepared by R C Pyper, BSc, FAusIMM, GAICD, Consulting Geologist and TV Willsteed, BE[Min] Hons, BA, FAusIMM, MMICA, Consulting Mining Engineer. The information used to prepare this report is drawn from the other independent technical reports and from technical reports by Allegiance management, as well as from discussion with directors and management of Allegiance. The economic appraisals are based on conditions existing in January 2003. All valuation estimates are expressed in constant Australian dollars.

The practice notes and policy statements issued by the Australian Securities and Investment Commission in relation to the preparation of independent expert reports and valuations have been followed, including:

· Practice Note 42:
· Practice Note 43:
-Independent Expert's Reports;

Valuation Reports and Profit Forecasts;
Policy Statement 56: Prospectuses, and
Policy Statement 75:
Independent Expert Reports to Shareholders.

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The valuation has been prepared independently and in accordance with the VALMIN Code of the AusIMM. The description of project areas and review of site activities is summarised in this report as well as the results of Scoping Studies, which have been prepared by independent consultants on behalf of Allegiance. We believe all material facts are presented and that sufficient analysis is described to meet the transparency requirements of the Code. Ore Resource estimates are referenced, which have been estimated in accordance with the Joint Ore Reserves Code [JORC Code].

We do not doubt the authenticity or substance of previous investigation reports. We have not carried out an audit of the available information. We have relied on previous proposals for possible project development and exploration, where applicable, and have taken this into account for valuation purposes, with qualifications applied where necessary. $\sim 100$

PROJECT AND VALUATION SUMMARY

The Allegiance mineral interests include the Nymagee base metal and gold exploration project in New South Wales and the Avebury Nickel Project and Tasmanian Exploration Projects located near Zeehan, Tasmania.

The Avebury Nickel Project is the most significant Allegiance mineral asset with Indicated and Inferred Resources of 4.0 million tonnes [t] at 1.5% Ni containing 61,500 t of nickel, and with a higher grade content defined of 1.26 million t at 2.0% Ni, containing 25,200 t nickel. Scoping studies have been completed to establish economic criteria for the development of the Avebury deposits, based on underground extraction and on site processing to produce a high grade, premium quality nickel concentrate. For valuation purposes, a preliminary cash flow analysis has been prepared based on a projected production model processing 300,000 tonnes per year for a period of 7 years utilising higher-grade ore for initial production.

The Tasmanian Exploration Projects include four-exploration licence areas, as well as the exploration areas outside of the defined resource areas in the Avebury Nickel Project, covering 121sq km. Significant nickel, base metal, gold and platinum group elements [PGE] mineralisation has been intersected in previous drilling and old workings. Opportunities to locate further economic mineralisation appears to be good, and many of the possible resources extensions are not closed off. Sulphide discoveries throughout the exploration area have not been tested for strike and depth potential.

The Nymagee Project includes two exploration licences with a total area of 41 square kilometres [sq km], which surround a previous copper producer, the Nymagee Mine, covered by four mining leases and a private land lease, which has been purchased by Allegiance. In the Nymagee area, two untested magnetic anomalies have been delineated one of which requires further work. In the Nymagee Mine Leases area, several areas where potential remains for delineation of additional sulphides and for gold-base metals targets have been identified including zones of open-cuttable gold mineralisation. In the Nymagee Mine North prospect area there is potential for discovering lenses of massive sulphide and stringer/vein mineralisation.

A valuation range has been derived from the cash flow analysis for the Avebury Nickel Project. A base case net present value of \$22.3 million is estimated at a 10% discount rate. A value range has been estimated from a sensitivity analysis covering cost and revenue ranges and for discount factors from 7.5% to 15%. A value range of \$13.5 million to \$25 million is indicated as reasonable for the Avebury Nickel Project based on the sensitivity analysis, with a most likely value of \$19 million.

The total Allegiance mineral interests are estimated to have a most likely technical value of \$21.25 million. This Project is substantially dependent on the development of the Tasmanian Nickel Project. Planning for this Project appears to be well managed, with an experienced group of professional staff, and the project economics appear to be viable in current and medium term future economic circumstance.

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TECHNICAL REVIEW OF ALLEGIANCE PROJECTS

TASMANIAN PROJECTS

INTRODUCTION

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The following tenements are held 100% by Allegiance, with a 2% net smelter return royalty held by Rio Tinto Ltd. $\sim$ $\sim$ $\mathcal{A}_\mathcal{A}$

Tenement [EL]	Area sq km	Name -	Known Mineralised Zones
28/1988	16	Avebury	Burbank, Avebury, East Avebury, Viking, Bismark
22/1997	14	Trial Harbour	Burbank, Viking [western extension]
43/1992		Melba Flats	Nickel Reward and other sulphidic gabbros.
5/2002	24	East Renison	Altered ultramatics and Ni sulphide occurrences.
14/2001	61	Heaziewood	Magnetic anomaly over ultramatics affected by Meredith Granite.

AVEBURY NICKEL PROJECT

El. 28/1988, originally covering 129 sq km, was granted in December 1988 for a period of 10 years. It has been progressively reduced since then down to 29 sq km by 1998, when special extensions, each of two years, were granted so that evaluation programmes could continue. A further reduction has since been made to 16 sq km, splitting the tenement in two to cover the main mineralised zones

LOCATION AND INFRASTRUCTURE

The Avebury deposit is located some 8 km west of Zeehan, a small mining town just off the main west coast highway, with all normal town amenities and close to the railway line to Burnie. The access road comprises about 9 km of well-formed gravel and 3 km of rougher gravel. Within the drilled area there are currently only tracks suitable for 4WD. Power reaches the Comstock tenement, about 4 km away.

HISTORICAL

The Paleozoic rocks of the West Coast of Tasmania have a disproportionate share of Australia's mineral wealth. Tin, tungsten, copper, lead, silver and zinc discoveries have all supported substantial mining operations, some of which have run for over 100 years. Tectonically emplaced bodies of ultramatic rocks, prime targets for nickel and PGE are widespread, however nickel production, such as from the Trial Harbour sulphide bodies, have been very limited.

Nickel mineralisation in the area was unknown until Conzinc Riotinto of Australia [CRA] began exploration of the area in 1988, searching for zinc. Following aeromagnetic surveys in the mid 1990s they defined several prominent anomalies. Three diamond drillholes located the anomalous sulphides at Avebury. CRA [now Rio Tinto] then entered into a joint Venture with Allegiance and have diluted their interest down to a 2% net smelter royalty [NSR]. Since 1998, Allegiance has spent approximately \$5 million on exploration and evaluation of the deposit. This work has included metallurgical testing, scoping studies and nearly 20,000m of core drilling. $\mathbf{A}_{\mathrm{out}}$

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GEOLOGICAL MODEL

The geological/geophysical setting of the Avebury nickel deposits has led to a new exploration model, which includes:

Ultramafic host rocks strongly affected by intrusion of the Heemskirk Granite
Major fault structures flanking the ultramafic for solution access $\bullet$
Late stage magnetite-sulphide mineralisation $\bullet$
The presence of anomalous near surface Ni and Zn.

The geological modelling of the Avebury sulphide occurrence has since been applied to the region by Although only limited exploration has been carried out it would strongly indicate that other Allegiance. substantial nickel sulphide deposits may be found." $\mathbf{r}$

GEOLOGY AND MINERALISATION

The Avebury nickel deposit does not fit within the general classification of nickel deposits and is much younger than most deposits. Mineralisation occurs within a tightly folded Cambrian ultramafic sill, which has a linear strike length of around 15 km. The prime target area is the top and flanks of a west plunging anticlinal structure disrupted by a northwest trending fault. The moderately to steeply dipping ultramafic has been intruded into a sequence of Cambrian metamorphic sediments, now extensively hornfelsed. Folding, metamorphism and metasomatism occurred during the intrusion of the Devonian Heemskirk granite, which appears to have played a significant role in the orebody genesis. Mineralisation extends across the fault and is present on both limbs of the anticline, giving rise to four principal zones of mineralisation, Viking North and South and Avebury Central and North.

The nickel mineralisation has been traced for some 500m along strike and 400m depth. Nickel is principally in pentlandite, a non-magnetic iron-nickel sulphide. It has a highly variable association with pyrrhotite, which is also nickel bearing, and with extensive magnetite present as veinlets and blebs throughout. Some arsenic is present, regarded as a contaminant in nickel concentrates. The nickel sulphides are relatively coarse grained, which has enhanced the metallurgical recovery.

Most of the nickel mineralisation, which does not reach the surface, has been concentrated in a generally pale coloured, highly altered zone of tremolite-carbonate-serpentinite along the upper margin of the ultramafic. Mineralisation within the potentially economic zone can be >50m thick within a lower grade envelope [<0.5% Ni] up to 100m wide. It exhibits a sharp contact with the enclosing sediments. The outer margin is richer in nickel than the inner disseminated margin and for resource calculations two zones have been defined, an outer zone averaging 2% Ni and an inner averaging 1.5% Ni. All sulphide mineralisation eventually dies out as a thick lower zone of black serpentinite is intersected.

NORTH AVEBURY DEPOSIT

Mineralisation, which comes to within 70m of the surface, is known along an east trending strike length of 400m and is up to 30m thick. It extends down dip for some 300m and is open to the west and down dip.

CENTRAL AVEBURY

Nickel mineralisation occurs along the southern faulted contact of the northern ultramafic. Insufficient work has been undertaken to assume continuity of mineralisation at present but two holes in this area have intersected significant mineralisation:

Hole A 001 intersected 10.7m [down hole length] averaging 1.64% Ni, including 0.4m at 24.8 % Ni. These values were within a 30m zone grading 0.93% Ni.
Hole A018 intersected 13.2m at 1.41% Ni.

$+$

East Avebury

$\rightarrow$

East Avebury is located 800m east of Avebury and is of similar prospectivity. The zone is barely tested.

VIKING NORTH DEPOSIT

This apparent faulted extension of the North Avebury comprises an east trending zone of high grade mineralisation in a saddle shaped zone at the top of the southern ultramafic and comes to within 200m of the surface. Mineralisation is up to 50m thick and dips from 45° to vertical. It is known to extend over a strike length of 300m and has been traced 100m down dip. Tt is open to the west and down dip.

VIKING SOUTH

The southern limb of the Viking mineralisation is open down dip to the southwest and along strike to the west where the most westerly hole, A035, intersected 24.1m at 1.0% Ni including 17m at 2.1% Ni. Mineralisation includes an upper high grade zone which will be a target for early production.

Pink Eye Marker

Outside the ultramatic unit are other occurrences of nickel sulphides whose continuity has not been established and which have not been included in the resource. Principal among these is a concordant zone, known as the Pink Eye Marker Unit. It carries high cobalt values and lies within the metamorphics about 30m above the hanging wall of the southern ultramafic. Down-hole intersections of the marker comprise:

Hole A 038 0.2m at 8.85% Ni, 0.36% Co
1.3m at 8.15% Ni, 0.12% Co Hole A039

mines as a more are

Hole A025 10.0m at 0.03% Ni, 0.30% Co, including 1m at 0.81% Ni, 1.13% Co.

CRIMSON CREEK FORMATION

Antal

Above the hanging wall of the high grade rim of the Viking mineralisation are significant intersections of nicke! which cannot yet be correlated to define a resource. These appear to extend over a strike length of 75 m and down hole intersections include:

AUIT.	⇒um at 1.5% Ni

$A02 -$ 4.4m at 0.53% Ni
A028 4.0m at 1.27% Ni.

RESOURCES

Resources were calculated by McKeown Mining Pty Ltd and are summarised in the table below. A total of 45 diamond drill holes and five wedged holes defined the resource, which was calculated using DATAMINE software. Manual calculations of the resource were in good agreement with the results. Nickel grades were interpolated into block models using the nearest neighbour method. Blocks within 25m of a crosssection and showing one or more drill noles fall into the indicated classification, the rest are inferred.

$\mathbf{v}_i$ $\Delta$

$\tilde{\tau}$

Deposit	Category	Tonnes*	Cutoff % Ni	% NI/Co	Contained t Ni
North Avebury	Indicated	1,260,000	0.8	1.5/0.04	18,900
Viking	Indicated	1,880,000	1.0	1.5/0.03	28,200 47,100
Sub-total	Indicated	3,140,000		1.5/0.03
North Avebury	Interred	200,000	0.8	1.8/0.05	3,600
Viking	Inferred	720,000	1.0	1.5/0.03	10.800
Sub-total	Inferred	$-920,000$	*******	1.6	14,400
TOTAL		4,060,000	- 2

* Relative density 3.0 g/cc

Higher grade zones are present within the above resource as shown below.

Deposit	Category	Tonnes*	Cutoff % Ni	% Ni/Co	Contained t Ni
North Avebury	Inferred	630,000	1.3	2.0	12,600
Vikina	Inferred	630.000		2.0	12.600
Total		1,260,000		2.0	25,200

After comparison with the nearby Renison Tin Mine, a cost structure cut-off grade of 0.8% Ni was used in resource calculations for North Avebury and of 1.0% at Viking, where the shape of the mineralised zone is not so amenable to extraction. The contact with the sediments defined the outer zone limits of the resource calculation. The inner lower grade nickel boundary was defined at >0.7% Ni after log probability plots were drawn up. Grade banding is apparent near the top of the Viking mineralisation, which implies that selective mining will be possible allowing an increased head grade to be mined in the early years.

REGIONAL EXPLORATION

Burbank

This prospect is located near Trial Harbour in an area underlain by a fault-bounded slice of altered ultramafics. Where they outcrop, large gossanous zones have been developed. Geochemical sampling confined to the outcrop area, outlined a 200m by 70m zone of values ranging around 1% to 1.5% Ni and 0.1% to 0.4% Zn. This is significantly bigger and higher in grade than the anomaly associated with Avebury and may reflect the close proximity of sulphides to the surface.

The upper zone was tested by six short holes totalling 130m. Drilling located both anomalous Ni and Zn in intensely altered pale coloured ultramafics, with broad zones of 1% to 1.5% Ni and 0.2% to 0.4% Zn. Petrological work has suggested that the Ni and Zn have been derived from underlying sulphides. Deeper drilling is required to test this zone.

Melba Flats

This prospect is located about 6 km north of Zeehan where gabbro dykes have been intruded along a fault close to the Heemskirk Granite. Five high-grade Ni-Cu sulphide zones with associated Au and PGE have been identified by surface exposure, old workings and recent drilling. Past production via shallow workings on high-grade ore shoots worked between 1910 and 1950 is estimated to be 10,000 t at 6% to 10% Ni, 3% to 5% Cu.

$\frac{1}{\sqrt{2}}$

$\vec{\tau}$

The Nickel Reward prospect is at the south end of the dyke system. At least three mineralised gabbro dykes are present which have been disrupted by two cross faults. Earlier drilling programmes gave intersections up to 5.1m at 6.9% Ni and 2.3% Cu, and as little, if any, past mining appears to have been undertaken, a target resource of 250 t/vertical metre [t/m] is possible. Seven cored holes by Allegiance all intersected mineralisation with best values of 3.65m at 4.36% Ni, 2.86% Cu in hole MF 11 and 5.8m at 4.6% Ni, 1.8% Cu, 0.17 g/t Au and 1.5 g/t PGE in MF 19. Mineralisation extends over a 30m strike by 2m thick zone.

The Vaudeau prospect to the north of Nickel Reward, produced some 4000 t at 10% Ni and 5% Cu from workings down to 36m. The down plunge extension of the lode appears to be untested by previous drilling and a resource potential of 100 t/m is possible however two holes by Allegiance failed to locate depth extensions. $\mathbf{r}$

At South Cuni, some 1200 t of 10% to 12% Ni and 5% to 6% Cu was mined via a number of shallow shafts to a maximum depth of about 25m and strike length of 30m. There is the possibility of a down-plunge resource potential however two drill holes by Allegiance failed to intersect grades of interest.

At the North Cuni prospect, old records indicate that possibly 200 t was extracted with grades up to 17% Ni and 7% Cu. Workings on the 24 m level were 1m wide and extended for 70m. One CRA hole intersected 0.8m A7.8% Ni, 10.3% Cu, 1.9 g/t Au, 2.8 g/t PGE. There is a target zone of 200 t/m.

Along strike of North Cuni the gabbro swings to the northeast and two gabbro dykes are present. The upper dyke gave narrow but high-grade samples from two hole intersections including 0.5m at 7.7% Ni, 2.9% Cu, 1.1 g/t Au and 2.1 g/t PGE. A possible strike length of 40m to 50m is indicated.

At Genets Winze, further to the north values up to 0.7m at 9.3% Ni, 4.5% Cu, 0.8 g/t Au and 2.2 g/t PGE were obtained from previous drilling. A shallow resource of about 15,000 t could be present.

PROSPECTIVITY

Opportunities to locate further economic mineralisation appear to be excellent. At Avebury, drilling has not dosed off many of the possibilities for extension. Elsewhere, drilling has located sulphides but has not tested the strike and depth potential. The main targets are summarised as:

North Avebury. Mineralisation is open to the east and down dip.
Central Avebury. Insufficient drilling has been undertaken to assume continuity of promising mineralisation and the area is not part of the current resource.
East Avebury. This zone is geologically analogous to Avebury and is largely untested. It is not $\bullet$ . $\bullet$ part of the current resource.
Viking South. Mineralisation is open to the west and down dip.
Viking North. Mineralisation is open to the west and down dip.
Pink Eye Marker. Continuity has not yet been established for this high cobalt zone but mineable widths and grades are present. Intersections include 0.2m at 8.85% Ni, 0.36% Co and 1.3m at 8.15% Ni, 0.12% Co.
Crimson Creek Formation. Significant intersections of nickel immediately above the current resource block appear to extend over a strike length of 75 m at mineable graces and widths. Intersections include 3.0m at 1.5% Ni, 4.4 m at 0.53% Ni and 4.0m at 1.27% Ni.
Burbank. Airborne magnetics indicates that the Avebury host rock formations extend in a series of tight folds to the west. Burbank lies on one of the folds. Shallow drilling has located broad zones of anomalous nickel [1% to 1.5% Ni], believed to be derived from deeper sulphide mineralisation. Deeper drilling is required to test this zone.
Melba Flats. Several high-grade shoots of Ni-Cu-PGE sulphides have been tested by recent drilling. Average grades greater than 5% Ni and 2% Cu with gold and PGE credits are present. The shoots can support a small mining operation with exploration potential along strike and down plunge of the shoots.
Regional targets. EL 14/01 covers a large magnetic anomaly in ultramatic rocks, which are interpreted as having been intruded, faulted and altered by the Meredith Granite. Its geological and geophysical signature fits the current exploration model and the area has not been explored for nickel.

$\div$

$\ddot{\phantom{a}}$

NYMAGEE NSW

Allegiance holds Exploration Licences [EL] 4232 and 4458, Mining Leases [ML] 53,90,5295 and 5828, and Private Land Lease 847 located near Nymagee in central NSW, which are subject to a 10% joint venture interest in other than precious metals and a 3% gross royalty in precious metal. In 2001, Allegiance entered into a farm-in agreement with Pasminco Ltd who will earn a 80% interest for expenditure of \$600,000 over 4 years.

The Nymagee project area lies in the south-eastern extremity of the Cobar Trough tectonic unit, surrounding the old copper mining centre of Nymagee, 75 kilometres [km] southeast of Cobar. In the Cobar area, a number of substantial base and precious metals deposits have been mined over the past 130 years, with recent metal production coming from the Peak [gold (Au), base metals], the CSA Mine [copper (Cu), minor zinc] and the Elura Mine [zinc (Zn)-lead (Pb)-silver (Ag)]. Most of the known deposits in the Cobar area were emplaced in dilation zones within tightly folded, fine to medium grained sediments of the Cobar Trough, close to its regionally faulted eastern margin.

Allegiance relinquished some less prospective ground northwest of Nymagee, to focus on the area immediately surrounding and along strike from the old Nymagee Mines. The company holds 41 sq km of the district, under two exploration licences and five mining leases. Historic recorded production from the Nymagee Mines was 24,800 t of Cu from 429,000 t of ore, at a copper grade of 5.8%. No attempt was made to recover lead and zinc during the main mining period [pre-World War 1], but the presence of narrow zones of lead-zinc mineralisation, along with zones of lower grade copper ore in the old workings, is well documented.

As in the Cobar district, the known base metal deposits at Nymagee occur in fractured, rightly folded, lowermost Devonian age sediments, associated with the regional-scale Rookery Fault system, along the eastern margin of the Cobar Trough. The host rocks abut older, 'basement' formations to the east [the Girilambone Beds and the Nymagee Igneous Complex), and are overlain by the gently folded Early Devonian Shume Formation sandstones. A review of previous work on the Nymagee Mine Leases indicated that the vast majority of drilling to data has not been assayed for gold. Gold assays have been reported for only four drill holes [a total of 54 samples] and several of these samples have returned anomalous Au. Significant sulphide-associated Au mineralisation has been intersected at Pasminco's Hera Prospect located approximately 5 km along strike from the Nymagee Mine area. Historic drill hole intervals with high Cu, Pb or Zn have been identified.

The Nymagee North prospect area lies immediately north along geological strike from the main historic mining area at Nymagee. A gravity survey undertaken over part of the prospect area produced two weak gravity highs, neither of which was closed off by the survey. Data compilation work has shown that the better defined of the two gravity anomalies, centred 250 metres [m] to 230m northwest of the old Higgins Shafts, is generally coincident with a group of bedrock copper, lead and zinc geo-chemical anomalies which were generated by shallow Rotary Air Blast [RAB] drilling carried out by several prior explorers. This gravity anomaly is also coincident with previously defined RMIP and induced polarisation anomalies. The juxtaposition of these features suggests that a zone of base metal mineralisation, which is more dense than its host rock, exists at depth, is essentially blind at the surface, and dips at a moderate to steep angle to the east.

The second gravity anomaly, outlined in the northwest corner of the survey area, was only partly defined by the set survey, and lies within an area which has poor prior RAB geochemical coverage and no recorded RMIP or induced polarisation surveys.

VALUATION OF ALLEGIANCE PROJECTS

VALUATION METHODLOGY

$\frac{4}{\sqrt{2}}$

The range of values which can be estimated for the Allegiance mineral interests are based on current market prices for equivalent properties, the geological potential of the properties taking into account the possibility of outlining potential resources, and the probability of present value being derived from recognised areas of mineralisation and production. The valuation also takes account of previous and planned expenditure and commitments, and the expenditures and investment made by other parties to earn, acquire or retain their interests. The range of value estimated for each project allows for the sensitivity of the project values to expected variations in commodity prices and exchange rates, and for the changes in property market value with changing investment expectations, and valuations estimated for acquisition and listing for similar projects in the same geological environment.

Where production is in progress or planned based on quantified reserves and resources, financial analyses derive the net present value for the projects. The valuation of exploration tenements, particularly those without any quantifiable resource, is highly subjective but a number of value indicator methods have been developed and are outlined below. To determine a fair market value for the mineral exploration interests under review, various methods are normally considered including Appraised Value Method, Comparable Transaction Method, Farm-In Commitment Method, and In-situ Mineral Valuation.

Appraised Value Method

The Appraised Value Method is considered one of the methods most applicable to appraising the value of exploration properties, which have neither viable ore reserves nor any commercial production possibilities on which to establish a value. Accordingly, the real value of an exploration property is its potential for the An objective way to value a property's exploration potential existence of an economically viable ore body. is to equate it to the cost of exploration work that is warranted to assess that potential.

Appraising an exploration property with this method assumes that a direct relationship exists between the amount of exploration work performed on the property and the value of that property and that an exploration programme will either enhance or diminish the value of the property,

Past and future expenditures on a property of merit will produce a current dollar value for that property that is at least equal to the total amount expended. Any expenditure considered as contributing to the value of the property are those, which are judged to be relevant, prudent, and which were incurred in accordance with normally accepted industry practices.

Evaluating the results of an exploration programme and their relevance to the appraisal process involves assessing such parameters as, the geological environment of the property and its exploration potential, the exploration procedures utilised and their applicability to the style of mineralisation being sought or expected, the overall scope of the work performed or planned, the effectiveness of the work conducted, and the depth and experience of the management team involved in area selection and exploration programme planning and implementation.

As a result of this evaluation process, the valuer must decide as to what degree the exploration efforts have enhanced or diminished the value of the property. Only those expenditures deemed relevant to the overall value of the property are retained and used in the valuation process. In cases where inconclusive results are obtained, a subjective judgement may be made by the appraiser either on the basis of his own experience or in consultation with other technical experts. It is important to consider the intention of the owners regarding their exploration plans for the property and in this regard any funds committed to exploration work in the future budget period must be taken into account when arriving at an appraised value.

$\hat{\tau}$

The expenditure on a project considered to be effective in terms of advandng the prospectivity of the areas is used. In conjunction with a subjective prospectivity enhancement multiplier, to derive a value of the project, which takes into account the valuer's judgment of prospectivity and the value of the database. Future planned committed expenditure is also considered as a measure of the estimated investment value of the property, to which a future exploration multiplier can be applied. In this review, we take into account expenditure of previous explorers and their joint venture partners and also past and current expenditure of Allegiance.

Comparable Transaction Method

One of the better methods in determining property value is by conducting a comparable transaction analysis with other recent transactions on equivalent properties, preferably within similar geographic and geological environments, with the same exploration potential and style of mineralisation, and at the same stage of Such a transaction should be between parties dealing at arms length. The date of the development. comparable transactions should be as close as possible to the property's valuation date as the time-related factors can affect the value. These transactions can be through a direct cash payment, a farm-in or option agreement or a combination of the above. Similar transactions can be compared and expressed in a number of ways, for instance, dollars per unit area, price paid per unit of mineral commodity in the ground, or on expenditure commitments.

Comparison of recent transactions of equivalent properties provides one of the better yardsticks to measure the value of the property because it relates the price to that which an informed investor would be willing to pay to obtain a similar property. In those cases where the transactions were not directly comparable, either a premium or a discount to the value is made as deemed appropriate.

Farm-In Commitment Analysis

An exploration property may have significant untested geological potential requiring a large exploration expenditure that the owner of the property cannot meet and as such will seek a joint venture partner to help with the exploration financing. It also may happen that an initial low budget exploration programme results in a significant discovery that requires the owner to seek a joint venture partner that can provide the financing necessary to develop it fully. In cases such as these, the Appraised Value Method tends to undervalue the property because of the low level of past exploration expenditures relative to the overall potential of the property.

A more appropriate approach in these instances is to consider the terms of an arm's length transaction for a farm-in option or agreement by a third party to earn an equity interest in the property. Such agreements can be used to calculate a value for the property. The terms of these agreements usually consist of a series of optional expenditure commitments over a number of years. The farm-in participants usually earn an equity interest in the project by paying all of the exploration expenditures during the earn-in period. Normally all expenditure commitments must be met in order to earn the equity. However, such farm-in commitments are not absolutely binding as usually there are rights to withdraw or in some cases there may be staged expenditure requirements earning an escalating equity interest.

A review of the terms of the agreement, as well as the geological potential of the property must be made in order to determine the value of a farm-in commitment and to assess the probabilities that some or all of the expenditure commitments will be met, particularly in a staged earn-in situation. In these cases a discount factor reflecting the estimated probabilities can be applied to the expenditure commitments.

In-situ Mineral Valuation

This method consists of valuing the commodity content of a tenement before it is mined. It is subjective, and therefore it is important that the valuation is based on considerable experience. The current market price of the commodity is discounted for factors such as mining losses, complexity of mineralogy, mining conditions, political risk, regional infrastructure support, etc.

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Estimation Risks

$\pm$

Estimation risks are to be taken into account in assessing mineral projects, the principal risks being summarised as follows:

Mining and Exploration Risks

The successful exploitation of mineral exploration resources and the design and construction of efficient mining facilities has inherent risks which can be hampered by force majeure circumstances, cost over-runs, inconsistent grades and other unforeseen events. The technical risks attached to resource project development and production is unknown until economic resources are outlined. $\mathcal{L}_{\rm{max}}$

General Economic Conditions

Production from mineral resources is subject to international market conditions, exchange rates and normal cost inflation. These matters would be considered if economic resources are outlined.

$\mathcal{L}^{\mathcal{L}}$

Environmental Impact Constraints

Exploration and development of any resources will be dependent on the projects meeting environmental guidelines. The grant development permits are dependent on approval of environmental management programmes.

Native Title and Sacred Sites

The effect of various legislation is that mining tenement and exploration permit applications and any existing mining tenements or exploration permit renewal application may be affected by native title negotiation processes. This issue does not apply to the Tasmanian Projects.

Land Access

A mining company may be required to seek consent of landholders to obtain access to resources and for exploration. Legislation could restrict access to tenements. No such restrictions are foreseen at this stage with any of the projects reviewed in this Valuation.

VALUATION CRITERIA

Exploration Projects

For use in the valuation of the Allegiance projects, the following valuation criteria have been summarised including from a range of property valuations and acquisition agreements, for projects which are similar to the Allegiance projects.

Appraised Expenditure

An analysis of previous expenditure on the Allegiance project areas has been carried out to indicate an attributable value of the current data base and established facilities which would support proposed exploration and development programmes of new resource potential. The following expenditure information is attributable or has been estimated from previous exploration activities.

For the Nymagee Project, total expenditure of \$940,000 is estimated for the exploration licence areas and mining leases for the purchase and development of the recent data base resource areas.

For the Tasmanian Nickel areas, cutside of the current defined resources areas, total expenditure of \$940,000 is recorded. Exploration and investigations of the Avebury Nickel Project area has cost \$4.73 million to date.

$\omega$ .

PACIFICATION

$\pm$

Comparable Value

Nickel projects of comparable value are believed to be those where previously worked small scale, underground resources have been mined out and where a history of possible high grade extensions are indicated by records and preliminary exploration, including high grade exploratory drill intersections. The following cases are selected for comparison with the Allegiance projects, along with the recent recorded values of the projects:

	ן הסוווות כן
- Independence Gold NL acquisition of Long Nickel Project from WMC Ltd	15
- Jubilee Mines NL valuation of Ni exploration areas
- Mincor Resources NL valuation of Wannaway underground mine
[500,000 t at 3% Ni]	20.5
- Ni exploration areas
- Lion Ore Australia Ltd, acquisition 69% Interest Maggie Hays Project	16.7

Value comparison is also possible from previous acquisition costs for the separate exploration and production of projects within the Allegiance mineral interests, as well as from previous independent valuations of the Allegiance interests:

Nymagee - valuation for acquisition from Marbim Resources NL - \$300,000.

Farm-in Commitments

The Exploration Joint Venture Agreement for the Nymagee project areas includes the retention of a 10% interest by Allegiance following the expenditure of \$600,000 by Pasminco Ltd, to earn a 80% interest.

The Tasmanian Nickel Project areas have been farmed into by Allegiance based on the agreement with Rio Tinto for the expenditure of \$2.9 million on exploration to earn 100% interest. A 2% NSR interest is retained by Rio Tinto.

Other Valuation Criteria

For the Allegiance valuation the following factors are considered:

. All tenements are granted and are wholly owned by Allegiance. The minimum commitment expenditures and working conditions are subject to the terms of title.
Prospectivity and exploration progress on the Allegiance projects are reviewed above.
. Estimates of previous attributable expenditure on the tenement areas, based on the accumulated information available from past exploration programmes and proposed future expenditure, are considered, as well as the terms of farm-in agreements entered into with joint venture partners.
Equivalent farm-in expenditures are discounted for the normal time periods of expenditure.
Comparable project expenditure are assessed in the light of the equivalence to the Allegiance projects under review.
. The grouping of tenements and contiguous tenure over the whole Allegiance project areas provides additional advantage for a substantial exploration programme.
The sensitivity of the valuation, particularly relating to the risk factors listed above, is allowed for by estimating a range of valuation for each sector of the project.

$\Delta$

AVEBURY NICKEL PRODUCTION PROJECT

Production, cost and revenue forecasts have been estimated over the life of a possible production schedule for the Avebury Nickel Project and a conceptual cash flow model prepared as the basis for valuation.

The overall cash flow forecasts are based on Scoping Study [January 2001] estimates prepared by Allegiance which provided for a stand-alone operation producing high grade concentrates from an underground operation, with on-site processing. This model has been amended for this valuation to provide for modified November 2002 resource estimates, and allows for estimated higher operating costs. The estimates are believed to be realistic, in line with current performance for costs and output. The revenue base is dependent on achieving planned output and head grade. This is believed to be achievable, but some production risk is possible. $\sim 200$

The cash flow model prepared for this valuation provides for the repayment of capital expenditure from cash flow, without provision of project loan financing. The model provides for tax on the basis of a proportion of outstanding tax losses.

An alternative development model is currently being considered by Allegiance which will investigate the custom processing of the Avebury mine production at a regional base metal mill which has capacity available rather than the use of an on-site mill. Initial cost studies indicate that this option should be viable and would substantially reduce or delay initial plant capital expenditure. This option has not been independently investigated as yet, and is not considered for the economic analyses for this valuation.

The valuation provides for initial mine extraction from the higher grade [2% Ni] resource zone, followed by extraction from a proportion of the remaining Indicated Resources. Extraction of approximately 65% of the Indicated Resources is assumed to provide for an underground stoping recovery factor. Normal dilution factors are assumed for a combined stope and pillar and hydraulic fill mining system.

Net present value estimates have been prepared at discount factors 7.5%, 10%, 12.5% and 15%, to provide for a range of risk allowances compared to equivalent nickel projects and providing for development or technical risk factors. A base case discount rate of 10% is suggested as equivalent to other recent valuations of Ni projects, with 15% considered to provide for the risk element for an early stage project without detailed engineering.

Based on technical studies completed by Allegiance at a scoping study level, a base case valuation model has been developed using the following parameters:

Annual throughput Mine life In-situ resource grade	300,000 tpa 7 years 2.0% Ni [Years $1 - 3$ ] 1.5% Ni [Years 4 - 7]
Mine dilution	10% at 1% Ni reducing to 0.8% Ni
Mill recovery	89%
Nickel recovered	5100 tpa [Years $1-3$ ] 3830 tpa [Years $4 - 71$ ]
Concentrate grade	22% Ni
Concentrate production ۰.	. - 23140 dry tpa [Years $1 - 3$ ] 17400 " " [Years 4 - 7]
Shipped concentrate	$25150$ wet tpa [Years $1 - 3$ ] 18930 " " [Years 4 - 7]

$\frac{1}{2}$ .

$\sigma_{\rm c}$

Underground mining extraction would be a combination of bench and open stoping accessed by a single decline. Nickel concentrate would be recovered in a conventional sulphide flotation mill with a premium, high grade concentrate produced as indicated from initial test work. Concentrates would be road freighted to the port of Burnie for shipment to a smelter. Plant and infrastructure would be developed on a flat, relatively open area adjacent to the deposit, with the workforce of 80 to 90 personnel based in Zeehan.

Capital costs are estimated as follows, inclusive of 10% contingency, and engineering and construction costs.

	Years

Infrastructure
Mine

Exploration and Engineering
otals		32.2

Replacement capital of \$400,000 per year is allowed.

The model operating costs are estimated as follows:

Item	_\$/t ore
Mine	42.0
Mill	19.0
Geology and exploration
Environmental	0.6
Infrastructure	0.8
Administration	ፊዳ
TOTAL	70.90

The high Ni grade of the concentrates provides a premium product, and attractive sales arrangements are expected. Sales arrangements have been discussed with various concentrate purchasers. For valuation purposes, a possible revenue and charges basis is estimated as follows, assuming the delivery of concentrate FOB. Bumie:

Gross revenue payable	97.5% Ni in concentrate
Treatment charges	US\$200/dry tonne concentrate
Refining charge	US\$0.50/lb payable Ni
Read freight and handling
To Burnie	\$25/wet tonne concentrate.

Royalties are payable to Rio Tinto Limited [2%] and to Tasmanian Government [1.2%] on a net smelter return basis [NSR] and to the Tasmanian Government as a profit related royalty [maximum 3.8%].

The attached table summarises the cash flow model.

Sensitivity analyses have been completed over a nickel price range of US\$7000 to \$8000/t and Australian dollar exchange rates from US\$0.55 to \$0.65. Increased capital cost ranges and process recovery ranges are also included.

Recent nickel price rises have recently exceeded US\$8000/t, believed to be specifically related to reduced nickel stockpiles and production shortfall projections, as well as being related to the fall in US dollar exchange rates. This situation is not expected to change substantially in the short to medium term. The strengthening of the Australian dollar exchange rate, will partly counteract the revenue benefit for Australian producers.

$\frac{1}{2}$

VALUATION OF ALLEGIANCE MINERAL INTERESTS

The valuation of the Allegiance mining and exploration projects is based on the sum of the valuation of:

Avebury Project net cash flow.
Exploration tenements and unmined resources.

AVEBURY NICKEL PROJECT

ېتى

A valuation range has been derived from the cash flow analysis for the Avebury Nickel Project. A base case net present value of \$22.3 million is estimated at a 10% discount rate. A range of values has been estimated from the sensitivity analyses covering cost and revenue ranges and for discount factors from 7.5% to 15%.

A value range of \$13.5 million to \$25 million is indicated as reasonable for the Avebury Nickel Project based on the sensitivity and discount ranges, with a most likely value of \$19 million.

EXPLORATION PROJECTS VALUE

NYMAGEE PROJECT

The Nymagee Project includes EL's 4432 and 4458 covering 41 sq km, which surround a previous copper producer, the Nymagee Mine, including ML's 53.90.5295.5828 and a private land lease, which has been purchased by Allegiance.

In the Nymagee area, two untested magnetic anomalies have been delineated by the detailed aeromagnetics, one of which appears to have a bedrock rather than a cultural source and requires further work. In the Nymagee Mine Leases area, several areas where potential remains for delineation of additional sulphides and for gold-base metals targets that have been identified including possible zones of opencuttable gold mineralisation.

In the Nymagee Mine North prospect area there is potential for discovering deeper lenses of massive sulphide and stringer/vein mineralisation.

VALUATION

The valuation of the Allegiance interest in the Nymagee prospect is based on the following:

Area of tenements	41 sq km
Interest	Original 90% earned by Allegiance expenditure to feasibility and subject to 3% Gross Overriding Royalty on precious metals production, of which 80% is being farmed out on the basis of expenditure of \$600,000 over 4 years.
Expenditure Previous Purchase Exploration $\mathbf{A}$ .	$-5590,000$ \$350,000 $\bullet$ .
Proposed commitment	\$54,000 pa
Prospectivity	Accessibility to Nymagee mine targets and deeper sulphide potential.

$\div$

	Most Likely	$$500,000$ .
	High	\$600,000 based on farm-in expenditure $\sim$
Value range:	Low	\$450,000 based on prospectivity enhancement multiplier of 0.5 of data base expenditure
Farm-in Value		\$600,000 to acquire 90% of Allegiance's original interest
Comparative Value		\$300,000 previous valuation [1998]

TASMANIAN EXPLORATION PROJECTS

The Tasmanian Exploration Projects include EL 43/1992 [Melba Flats], EL 22/1997 [Burbank], EL 14/2001 [Heazlewood] and EL 5/2002 [Renison] as well as the exploration areas outside of the defined resource areas in EL 28/1988 [Averbury].

Significant Ni, base metal, gold and PGE mineralisation has been intersected in previous drilling and old workings.

Opportunities to locate further economic mineralisation appear to be excellent, and many of the possible resources extensions are not closed off. Sulphide discoveries through the exploration area have not been tested for strike and depth potential. Suggested mineralisation targets are outlined above in the technical review of the projects.

VALUATION

The valuation of the Allegiance interest in the Tasmanian exploration areas is based on the following:

Area of tenements Interest		123 sq km 100% interest with 2% NSR royalty.
Expenditure Previous - Avebury	Other areas	\$4.73 million \$940,000
Proposed commitment		\$500,000 pa
Prospectivity		See above
Comparative Value		\$2 to \$5 million for Western Australian nickel exploration areas with associated production facilities.
Farm-in value		\$2.9 million expenditure to acquire 100% interest.
Value range:	Low	\$1.5 million based on the previous and committed expenditure.
	High	\$2.0 million based on a 2.0% enhancement factor on value of data base and comparison with similar valuations.
	Most Likely	\$1.75 million.

$\vec{q}$

SUMMARY VALUATIONS

The following summarises the valuations of the Allegiance mineral interests:

Project	Low [\$100]	High S 0001	Most Likely [\$'000]
ymadee	450	600	500
Avebury Nickel Project	13,500	25,000	19,000
Tasmanian Exploration	$-1500$	2,000	750
TOTAL	Text 15.450- .	27,600	21.250 ALC: ALC: NO

CONCLUSION

$\frac{1}{2}$

Based on the site review of operations and the data made available by Allegiance, the following conclusions are suggested in the context of a possible acquisition of an interest in Allegiance.

. The total Allegiance mineral interests are estimated to have a most likely technical value of \$21.25 million, in a range of \$15.45 million to \$27.6 million.
. The valuation is substantially dependent on the development of the Tasmanian Nickel Project. Planning for the operation appears to be well managed, with an experienced group of professional staff, and the project economics appear to be viable in current and medium term future economic circumstance.

QUALIFICATIONS

TV Willsteed

BE[MIN]Hons, BA, CPMIN, FAUSIMM, MMICA Consulting Mining Engineer

R C Pyper

BSc, FAUSIMM, GAICD Consulting Geologist

Mr Pyper is a geologist with 40 years of industry experience and nineteen years of consulting practice in precious metals, base metals, gemstones, clays and mineral sands. He has had extensive experience in ore reserves assessment and the valuation of mining operations and mineral exploration properties. Ċ.

$17$

DECLARATION

This report has been prepared for inclusion in the Independent Expert Report. This report is designed to assist shareholders to assess the value of the mineral interests of Allegiance and was not prepared for any other purpose.

The statements and opinions contained in this report are given in good faith but, in the preparation of this report, TWA has relied substantially on information provided by the Directors and Management of Allegiance. We do not have reason to doubt the information so provided.

DISCLAIMER OF INTERESTS

At the date of this report, TWA, Terence Willsteed and R C Pyper do not have, nor have had any relationship with Gullewa or Allegiance.

TWA has no relevant interest in, nor any interest in the acquisition or disposal of any securities or assets of Gullewa or Allegiance. TWA have no pecuniary or other interest that could be regarded as being capable of affecting its ability to give an unbiased opinion in relation to the valuation of the mineral interest of Gullewa or Allegiance.

Neither TWA nor T V Willsteed nor R C Pyper has received or may receive any pecuniary or other benefits, whether direct or indirect or in connection with the preparing of this report other than normal consultancy fees based on fee time at normal professional rates plus out-of-pocket expenses.

Yours faithfully,

TERENCE WILLSTEED & ASSOCIATES

TV WILLSTEED Principal

$\mathcal{L}^{\text{max}}{\text{max}}$ and $\mathcal{L}^{\text{max}}{\text{max}}$

$\label{eq:2.1} \frac{1}{\sqrt{2}}\int_{\mathbb{R}^3}\frac{1}{\sqrt{2}}\left(\frac{1}{\sqrt{2}}\right)^2\frac{1}{\sqrt{2}}\left(\frac{1}{\sqrt{2}}\right)^2\frac{1}{\sqrt{2}}\left(\frac{1}{\sqrt{2}}\right)^2\frac{1}{\sqrt{2}}\left(\frac{1}{\sqrt{2}}\right)^2.$

$\mathcal{L}^{\text{max}}{\text{max}}$ and $\mathcal{L}^{\text{max}}{\text{max}}$

$\in$

$\pm$

AVEBURY NICKEL PROJECT
Cash Flow
	Project	o	1	2	з	4	$\overline{\mathbf{5}}$	6	7	8
	Year
Production Schedule
Tonnes mined/milled	000t			300	300	300	300	300	300	300
Mined grace	l%Ni			0.019	0.019	0.019	0.014	0.014	0.014	0.014
Mill recovery	89%			88.9%	88.9%	88.9%	88.9%	88.9%	88.9%;	88.9%
Ni in conc sold	tonnes			5.092	5,092	5,092	3,831	3,831	3,831	3,831
Payable metal	97.50%			4.964	4:964	4.964	3735	3.735	3.735	3,735
Ni price	USS7500
Exchange rate	US\$0.60
Gross revenue	ASOOO			62.053	62,053	62.053	$-6,688$	46,688	46,688	46,688
ess: Realisation costs				17464	17,464	17.464	13 139	13,139	13.139	13,139
NSR based royalties	3.20%			1383	1,383	1.383	1.040	1.040	1,040	1.040
Net Mine Revenue (NSR)	1AS000			43.207	43,207	43,207	32,508	32,508	32.508	32,508
Operating costs	570.9/1			21,270	21,270	21,270	21,270	21,270	21,270	21,270
Pre-tax cash revenue				21.937	21,937	21.937	11,238	11,238	11.238	11,238
Less: Tas. Profits tax	15.8%NSR1			1,642	1,642	1,642	1,235	1,235	1,235	1,235
income tax	130%			4 3 3 4	4,334	4,334	1,246	1,246	1,246	1,246
Net Operating Cash Flow	1A5000			15,962	15,962	15,962	8.757	8,757	8,757	8,757
Less: Capital Expenditure	AS000	3,100	32,150		3,700	400	400	400	400	400.
Project Net Cash Flow	A5000	(3, 100)	(32.150)	15,962	12,262	15,562	8,357	8,357	8,357	8.357

$+$

REFERENCES

"Zeehan Nickel Project - El. 28/88" - Annual Report for Period Ending 31 December 2002, Newnham Exploration & Mining Services.

"Avebury Nickel Project Mineral Resource Report" - November 2002, McKeown Mining Pty Limited.

Trial Harbour, Burbank Prospect. EL 28/88 Annual Report for Period ending Dec.2002, L. Newnham.

Melba Flats EL 43/92. Shallow High Grade Resource Potential, 2001 Assessment, L. Newnham.

Melba Flats EL 43/92. Report on Drilling Programme Completed Sept.2001, L. Newnham.

Avebury Nickel Sulphide Project, Australian Nickel Conference, Perth October 2002, L. Newnham.

"Avebury Nickel Project - Scoping Study" - Newnham Exploration & Mining Services, January 2001.

"Avebury Nickel Project Mineral Resource Report", November 2000, McKeown Mining Pty Limited.

"Avebury Nickel Project Scoping Study - Mineral Resource Potential Report", Newnham Exploration & Mining Services, January 2001.

"Avebury Prospect Mine Scoping Study", December 2000, A J Bruce Consulting Pty Limited.

"Avebury Nickel Project Metallurgical Scoping Study for Allegiance Mining NL", Metcon Laboratories, December 2000.

"Avebury Nickel Project Scoping Study Infrastructure Development and Support Services", Newnham Exploration & Mining Services, January 2001.

"Avebury Nickel Project Scoping Study - Environment", NSR Environmental Consultants Pty Limited, December 2000.

"Avebury Nickel Project - Marketing Scoping Study", November 2000, John O'Shea and Associates.

"Avebury Nickel Project Marketing Scoping Study for Allegiance Mining NL", John E Butler, December 2000.

Allegiance Mining NL Annual Report, 31 December 2001.

Quarterly Report 31 March 2002
30 June 2002 $\mathbf{A}$
30 September 2002 Half Yearly Accounts 30 June 2002.

Gullewa Limited Annual Report 30 June 2002.

Quarterly Report 30 September 2002.

Nymagee Farm-In and Joint Venture Agreement, 10 June 2001.

Allegiance Mining NL Information Memorandum, 4 February 1998.

$\hat{\mathcal{F}}$

SCHEDULE OF TENEMENTS

Exploration Licence EL 28/1988 -Mt Zeehan [Avebury and Burbank Prospects], Tasmania

Area Tsa km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	Notes
16	100	Rio Tinto Exploration Pty Ltd	9/12/88	9/12/02	\$250,000	Rio Tinto 2% Net Smelter Rovalty

Exploration Licence EL 22/1997 - Trial Harbour, Tasmania

Area [sa km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	Notes
14	100	Mining Allegiance NL.	15/09/97	29/08/03	\$70,000 for 08/01 to 08/02	Rio Tinto 2% Net Smelter Royalty

Exploration Licence EL 43/1992 - Melba Flats, Tasmania

Агеа [sq km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	Notes
	100	Rio Tinto Exploration Pty Ltd	17/05/93	16/04/03	\$80.000 for 04/01 to 04/02	Rio Tinto 2% Net Smelter Rovalty .

Retention Licence Application RL 4/1998 - Grieves Siding, Tasmania

Area (sa km)	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on. Payment Due	Expenditure Conditions	Notes
	100	Minino Allegiance NL	30/03/90	19/03/03	\$25,000	Rio Tinto 2% Net Smelter Rovalty

Exploration Licence Application EL 14/2001 - Heazlewood, Tasmania

Area [sq km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	. Notes
61	100.	Minina Allegiance NL	12/09/01 ______	14/09/06	\$81,000 for 14/09/01 to 14/09/03

$\frac{1}{2}$

$\tilde{\tau}$

Exploration Licence Application EL 5/2002 - East Renison, Tasmania

Area [sq km]	Allegiance Interest Heid [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	Notes
24	100	Mining Allegiance NL	19/06/02	10/05/03

Exploration Licence 4458 - Nymagee

Area [sq km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Payment due	Expenditure Conditions	Notes
11.5	50	Mining Allegiance Operations Ausmindex NL	26/11/92	16/03/93	\$12,000	Pasminco has right to acquire 80% interest which would reduce Allegiance's interest to 10%

Exploration Licence 4232 - Victoria Tank

Area "[sq km]	Allegiance Interest Held [%]	Title Holder	Date Granted	Expiry on/ Pavment due	Expenditure Conditions	Notes
28.7	50	Mining Allegiance Operations Ausmindex NL	17/03/92	16/03/93	\$17,000	Ditto

Nymagee Mine Area [Mining Leases]

Area [ha]	Allegiance Interest Held [50 %]	Title Holder	Date Granted	Expiry on/ Pavment due	Expenditure Conditions	Notes
4.87	53*	Mining Allegiance Operations	30/07/75	31/12/05	\$9,000	*Pasminco has right to acquire 80% interest
33.91	90	Ditto	05/11/75	Ditto	Ditto	Ditto
0.33	5295	Ditto	24/12/51	Ditto	Ditto	Ditto
1.54	5820	Ditto	25/10/62	Ditto		Ditto
12.7	$847$ ^*	Ditto	24/12/51	Ditto	\$9,000	Ditto

TO 1300300021

SCHEDULE A

VALUATION SUMMARY

Issued Securities:

$\rightarrow$

$\mathcal{L}$

211,320,294 ordinary fully paid cent shares

62,365,323 options, listed, exercisable at 20 cents each expired 31-12-2003

8,550,000 options, unlisted, exercisable at 20 cents each expired 31-12-2005

$\sim 10$

Information Relating to Shareholders:

As at 31 December 2002, the top 20 shareholders of Allegiance Mining NL [Allegiance] or [the Company] held 53.2% $\mathcal{O}{\mathcal{H}}$ held 53.2% of issued ordinary fully paid shares. $\mathcal{A}{\mathbf{q}}$ . $\mathcal{T}_\omega(\mathbb{R})$

Details of the top five shareholders at that date are as follows: $\mathbb{R}^2$

a creme of this typ time energy related at allar data did to construct the	. . $\mathbf{a}_i$ Shareholding
	Ordinary	Per Cent
Shareholder	fully paid shares	of Total
ANZ Nominees Limited	38.668.827	18.30%
Wilcone Pty Ltd	13.378.947	6.33%
D & D Nominees Pty Ltd	13.316.792	6.30%
Citicorp Nominees Pty Limited	6,557,227	3.10%
Merrill Lynch (Australia) Nominees Pty Limited	6,537,133	3.09%

VALUATION OF ALLEGIANCE MINING NL

as at 23 January 2003:

			Audited	Audited	Estimated
			Balance Sheet	Balance Sheet	Balance Sheet
Note	Balance Sheet Item		as at 31-12-2001	as at 30-06-2002	as at 23-01-2003
			鱼	鱼	$\mathbf{S}$
	Current assets:
	Cash		940,383	1,062,816	1,062,816
1	Adjustment (post June 2002 net cash expenditure)				(560,000)
	Receivables		156,862	167.164	167, 164
	Other Financial Assets-investments		125,422	43.240	43.240
	Total current assets		1.222,667	1.273.220	713.220
	Non-current assets:
2	Other Financial Assets-investments		465,008	415,220	350,000
	Property plant & equipment		14,232	11.620	12,000
3 4	Exploration Interests (as per AGM reports) valuation Adjustment (23/01/2003)		4,256,502	4,492,915	4.900,000 16,350,000
	Total non-current assets		4,735.742	4.919.755	21.612.000
	Total Assets		5,958,409	6,192,975	22,325,220
	Current Liabilities
5	Creditors		123	6.159	26,159
	Provisions		7,460	7.460	7,460
	Total current liabilities	$\epsilon$ : $\sim 10$	7,583	13.619	33,619
	Non-current Liabilities		o	٥	0
	Total Liabilities	۰.,	7,583	13,619	33,619
	Net Assets		5,950,826	6,179,356	22.291,601
		(cents/share)	322	3.06
	Valuation	(3)			22,291,601
		(cents/share)			10,55
	Issued fully paid shares		185,017,360	201,673,915	211,320,294

$\frac{1}{2}$

ALLEGIANCE MINING NL

	11-FEB-2003 18:43	61 2 92991817 FROM	ТO	1300300021	P.37/37
	SCHEDULE A (cont.)	VALUATION SUMMARY			ALLEGIANCE MINING NL
Notes: 1.		This adjustment represents the estimated net outflow of Allegiance cash over the period 30 June 2002 through 23
	January 2003, arrived at as follows:	Operating expenditure		870,000
		Less: Share issue proceeds		310,000
		Estimated net cash decrease,		560,000

2		The value of these investments (the Allegiance investment in issued shares and options in Gullewa Limited) have been adjusted to market prices as at 23 January 2003.
3 4		The lbook value of Allegiance exploration areas as at 23 January 2003 compared with the reported \$4.5 million as at 30 June 2003, has been increased by some \$400,000, the estimated increase reflecting activities over the period. Terence Willsteed & Associates [TWA] has prepared a current valuation of the Allegiance mineral exploration areas.
	the Allegiance mineral interests.	This adjustment represents the difference between the TWA "Preferred Valuation" and estimated the book value of
	apply:	If the range of TWA valuations for these interests is used, the following range of valuations per Allegiance share
	VALUE PER SHARE		Low	High	Preferred
			Valuation	Valuation	Valuation
			(5)	④	$\triangle$
	Allegiance mineral interests		15,450,000	27,600,000	21,250,000
	Net other assets		1,041,601	1,041,601	1,041,601
	Total Valuation	(3)	16,491,601	28,641.601	22,291,601
		(cents per share)	7.80	13.55	10.55
5		Provision for creditors has been increased to allow for third party costs associated with the subjet proposal.

$\mathcal{L}^{\text{max}}_{\text{max}}$

$\sim$ $\sim$

AI assistant

GULLEWA LIMITED — Proxy Solicitation & Information Statement 2003

65026_rns_2003-02-10_a3ec0b41-098d-4353-867b-ffd791501767.pdf

FACSIMILE TRANSMISSION

NOTICE OF GENERAL MEETING

NOTICE OF GENERAL MEETING

PROXY FORM

EXPLANATORY MEMORANDUM

INDEPENDENT EXPERT'S REPORT

GULLEWA LIMITED ACN 007 547 480

÷

NOTICE OF GENERAL MEETING

AGENDA

Resolution 1 – Participate in Placement of Shares in Allegiance Mining NL (ordinary resolution)

Notes to Resolution 1:

Other business

PROXIES

Corporations

GULLEWA LIMITED ACN 007 547 480

EXPLANATORY MEMORANDUM

Introduction

Resolution $1$ – Placement of shares in Allegiance (ordinary resolution)

Listing Rule 10.1

Directors Recommendation

ANNEXURE A

INDEPENDENT EXPERT'S REPORT

TERENCE WILLSTEED & ASSOCIATES CONSULTING MINING ENGINEERS

INDEPENDENT EXPERT REPORT OF THE PROPOSAL TO TAKE UP A PLACEMENT OF SHARES IN ALLEGIANCE MINING NL

BACKGROUND TO THE PROPOSED TRANSACTION.

PROJECT AND VALUATION SUMMARY

ASSESSMENT OF SHARE VALUE

SHARE PRICE DETERMINATION

FAIRNESS AND REASONABLENESS OF THE GULLEWA PROPOSAL

FAIRNESS

OTHER CONSIDERATIONS AND REASONABLENESS

Market price:

Premium for Control: $\frac{4}{3}$

Other Considerations:

CONCLUSION

QUALIFICATIONS

TV Willsteed

BE(Min)Hons, BA, CP(Min), AUSIMM, MMICA Consulting Mining Engineer

Alan Battagiene

BE(Min), MAUSIMM, Consulting Mineral Economist

DECLARATION

DISCLAIMER OF INTERESTS

TERENCE WILLSTEED & ASSOCIATES

INDEPENDENT TECHNICAL REVIEW AND VALUATION OF THE MINERAL INTERESTS OF ALLEGIANCE MINING NL

PROJECT AND VALUATION SUMMARY

TECHNICAL REVIEW OF ALLEGIANCE PROJECTS

TASMANIAN PROJECTS

INTRODUCTION

AVEBURY NICKEL PROJECT

LOCATION AND INFRASTRUCTURE

HISTORICAL

GEOLOGICAL MODEL

GEOLOGY AND MINERALISATION

NORTH AVEBURY DEPOSIT

CENTRAL AVEBURY

East Avebury

VIKING NORTH DEPOSIT

VIKING SOUTH

Pink Eye Marker

CRIMSON CREEK FORMATION

RESOURCES

REGIONAL EXPLORATION

Burbank

Melba Flats

PROSPECTIVITY

NYMAGEE NSW

VALUATION OF ALLEGIANCE PROJECTS

VALUATION METHODLOGY

Appraised Value Method

Comparable Transaction Method

Farm-In Commitment Analysis

In-situ Mineral Valuation

Estimation Risks

Mining and Exploration Risks

General Economic Conditions

Environmental Impact Constraints

GULLEWA LIMITED Proxy Solicitation & Information Statement 2003