GWR GROUP LIMITED — Capital/Financing Update 2007

Dec 11, 2007

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11 December 2007

Dear Optionholder

NON‐RENOUNCEABLE RIGHTS ISSUE

On 11 December 2007, Golden West Resources Limited (“ GWR ”) announced a non‐renounceable pro‐rata rights issue whereby eligible shareholders will be offered the opportunity to subscribe for 1 new fully paid ordinary share (“ Share ”) for every 15 Shares held at an issue price of $1.85 per Share, to raise approximately $11,638,720 (“ Rights Issue ”).

Each shareholder registered on GWR’s register of members as at 5.00pm (Perth time) on 20 December 2007 (“ Record Date ”) and whose registered address is in Australia or New Zealand (“ Eligible Shareholder ”) will be entitled to subscribe for 1 Share for every 15 Shares held as at the Record Date, at a price of $1.85 per Share.

The purpose of this letter is to advise you that should you wish to participate in the Rights Issue, you must be an Eligible Shareholder as at the Record Date. If you are not already a shareholder and wish to participate in the Rights Issue, you must first exercise all or any of your Options on or before the Record Date (5.00 pm (Perth time) on 20 December 2007).

Following completion of the Rights Issue (assuming full subscription and none of GWR’s existing options are exercised), GWR will have issued approximately an additional 6,291,200 Shares (subject to rounding) and will have a total of approximately 100,659,202 Shares and the following options on issue:

• 14,263,879 unlisted options exercisable at $2.00 each on or before 31 December 2010;

• 8,500,000 unlisted options exercisable at $3.00 each on or before 31 December 2011;

• • 800,000 unlisted options exercisable at $0.25 each on or before 30 June 2008;

• 800,000 unlisted options exercisable at $0.30 each on or before 30 June 2008; and

• 1,050,000 unlisted options exercisable at $0.40 on or before 30 June 2008.

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The exact number of Shares issued under the Rights Issue will depend on the number of Shares on issue at the Record Date (which in turn depends on how many of GWR’s existing options are exercised prior to this date) and the effect of dealing with fractional entitlements.

The Rights Issue will be conducted under section 708AA of the Corporations Act, which allows the offer to be made without the issue of a prospectus.

The Company will however dispatch a Rights Issue Offer Document, setting out the terms of the Rights Issue and enclosing a personalised Entitlement and Acceptance Form. Eligible Shareholders will be sent a copy of the Rights Issue Offer Document together with a personalised Entitlement and Acceptance Form on 28 December 2007.

As the price of the new Shares offered under the Rights Issue is at a discount to the market price, the rights to subscribe for the new Shares have a value and it is important that Eligible Shareholders determine whether they take up their rights. Further details of the actions required by shareholders under the Rights Issue will be set out in the Rights Issue Offer Document.

The proposed timetable for the Rights Issue is set out below:

Rights Issue announcement, Appendix 3B	11 December 2007
Letter to optionholders detailing the Rights Issue	11 December 2007
Notice to shareholders of Rights Issue terms	13 December 2007
“Ex” date	14 December 2007
Record date	20 December 2007
Dispatch of Rights Issue Offer Document and personalisedEntitlement and Acceptance Forms	28 December 2007
Acceptances close at 5.00pm (Perth time) (closing date)	21January 2008
Allotment of Shares, dispatch of holdings statement andlodge section 708A cleansing notice	30 January 2008

The dates in the above timetable are indicative only and GWR reserves the right, subject to the Corporations Act, the ASX Listing Rules and any other applicable law, to vary the dates of the Rights Issue, including to extend the Rights Issue, close the Rights Issue early or accept late applications, either generally or in particular cases, without notifying you.

Applications for Shares under the Rights Issue may only be made on the Entitlement and Acceptance Form which accompanies the Rights Issue Offer Document. For further information on the Rights Issue you should contact your professional adviser or GWR.

Yours sincerely

John Palermo Company Secretary