GWR GROUP LIMITED — Proxy Solicitation & Information Statement 2008

Aug 18, 2008

General Meeting

I am writing to you further to my letter sent to you last month enclosing a number of documents in relation to a general meeting of the Company to be held on Friday, 29 August 2008 at 2.00pm in the Swan Room at the Parmelia Hilton Hotel in Perth.

Since that time you will have received correspondence from Portman Limited in relation to that meeting. I am taking the opportunity to write to you again both to update you in relation to a number of important matters that have occurred in recent weeks in relation to your Company that may be relevant to your decision as to how to vote at the general meeting, and also to respond to issues raised by Portman Limited.

Update on Company activities

As announced to ASX over the last few weeks the Company has made important progress in a number of key areas including the following:

• 1 An increase in the total inferred mineral resource at Wiluna West to 119Mt grading 58.9% Fe, representing an increase in 33Mt over the previously reported resource of 86Mt grading 60.1% Fe.
• $\overline{2}$ The signing of an offtake agreement and a share placement agreement at \$1.85 a share, a 15% premium to the market, with Hunan Valin Steel Tube & Wire Co Ltd of China.
• 3 The appointment of Mr David Rose, former Chief Operating Officer for Rio Tinto Iron Ore, as Chief Executive Officer.

Issues raised by Portman Limited

Mr Mehan, the managing director of Portman Limited, has written to you setting out Portman's recommendation on voting at the general meeting with reference to three key issues.

Statements about the proposed Board changes

In his letter to you Mr Mehan has stated:

'As we have previously stated, Portman has only one purpose in nominating Mr Richard Mehan to join the Golden West Board as a non-executive director and Mr Paul Piercy to become an independent non-executive director. That purpose is to boost the iron ore experience on the Golden West Board which, in Portman's view, will provide the best opportunity to deliver long term value to all Golden West shareholders.'

The appointment of Mr Rose as CEO after an exhaustive executive search by Downing Teal has delivered to your Company an executive of the highest calibre with extensive iron ore experience. Mr Rose will be working full-time for your Company, unlike Mr Mehan who is managing director of Portman or Mr Piercy who has only been nominated to act as a non-executive director.

In relation to Mr Mehan's statement I also draw your attention to the following statements made by Portman and Mr Mehan in relation to this matter which are not consistent with Mr Mehan's most recent statement to you.

PMM ASX release 30/6/08:

"Portman is proposing the election of Mr Paul Piercy as an independent non-executive Chairman and Mr Richard Mehan as a non-executive director."

The West Australian 1/7/08:

"Mr Mehan said 'that if Portman's motions were successful, the new-look Golden West board would seek to appoint a managing director to increase the board size to five."

Acquisition of Joyner's Find tenements

Mr Mehan has recommended you vote against the acquisition of the Joyner's Find tenements.

As set out in the Explanatory Memorandum to the Notice of General Meeting sent to you:

• $\mathbf{1}$ The proposed acquisition relates to two mining leases containing an inferred iron resource and is essential to the successful mining of GWR's own Joyner's Find tenement. Failure to acquire these leases would constrain GWR's access to over half of its own Joyner's Find resource.
• $\overline{2}$ The proposed purchase price of the tenements is \$5 million in cash and the issue of 5 million fully paid shares which, based on the closing price for the Company's shares on the date prior to finalisation of the Explanatory Memorandum, valued the total consideration at \$12.5 million.
• 3 The independent valuation prepared for the Company determined the tenements to have a stand alone value of \$10.15 million and an additional value to the Company of \$18.2 million.

Mr Mehan has criticised Golden West for paying an \$820,000 non refundable deposit.

On 12 August 2008 Portman announced it had reached an agreement with Iron Mountain Mining Limited to purchase prospective exploration tenements. Portman's announcement does not suggest that they will be seeking shareholder approval for this acquisition. On 13 August 2008 Iron Mountain Mining Limited announced that it had accepted a letter of offer from Portman covering the acquisition of one exploration licence and one application for an exploration licence for a total of \$10 million together with a royalty. The deal includes an initial payment of \$3 million. In that same announcement Iron Mountain Mining Limited confirmed that it does not have a JORC resource on the relevant tenement.

The Company's resource and infrastructure

In his letter to you Mr Mehan has stated that:

'Portman is surprised Golden West has entered into an offtake agreement at such an early stage of its Wiluna West Project'; and

'Portman is also surprised that Golden West has summarised a pricing schedule which is purported to apply before the commencement of operations at Oakajee port, as it has not outlined an alternative rail and port system from which it would propose to ship ore from Wiluna West before Oakajee becomes operational.'

The purpose of entering into an off take agreement at this time is that such an agreement is essential to conclude any binding relationship with an infrastructure company for the building of a railway to Wiluna West. It also seems prudent to fix a pricing structure at a time when Chinese steel mills are prepared to pay a premium for Mid West iron ore in order to diversify their sources.

Portman has recently said on a number of occasions their only objective was to bring iron ore experience to the board of GWR and that they were not interested in control of the company or its resource.

I would like to draw your attention to the following statements made by Mr Mehan and Portman in relation to your Company's resource and relevant infrastructure:

The West Australian 5/04/2008:

Mr Mehan said that Portman constantly monitored the sector and saw the availability of the Golden West stock as am opportunity to grab some of the company that had 'the potential to be a big producer and link into Portman's existing infrastructure'.

To board members of GWR 8/04/2008: 'Portman is not an investor, we are interested in the resource.'

AAP as reported in the Kalgoorlie Miner 3/07/2008:

GWR's Wiluna West iron ore project is considered one of the most prospective in the region but is dependent on the construction of a new rail to port infrastructure ... Mr Mehan said 'an alternative was to create a 290km spur line from Wiluna to the existing Kalgoorlie to Esperance rail line'.

The Financial Review 14/07/2008: Mr Mehan said 'there would be benefits from combing the two iron ore projects'.

AAP as reported in The Geelong Advertiser 17/07/2008:

Mr Mehan said that Portman had invested \$28 million in GWR to increase its exposure to iron ore but that it was possible Portman would pursue a joint venture with Golden West.

Recommendations

As set out in my previous letter to you and explained in the Explanatory Memorandum:

• 1 The non-executive directors of your Company, namely Mr John Lester and myself, recommend that shareholders vote against the resolutions proposing the removal of Messrs Markopoulos and Wilson as directors (resolutions 1 and 2).
• $\overline{2}$ Your Board recommends that shareholders vote against the election of Mr Mehan and Mr Piercy as directors (resolutions 3 and 4).
• 3 Each of your directors except Mr Lester recommend that shareholders vote in favour of his reelection and the grant of options to him (resolutions 5 and 6).
• 4 Your Board recommends shareholders vote in favour of all other resolutions (resolutions 7 to 12).

I have attached for your convenience a further copy of the proxy form for the meeting completed in accordance with these recommendations. If you have not already lodged a proxy (or you have lodged a proxy but would like to change your vote) and you wish to accept these recommendations, you can sign the enclosed proxy and return it to the Company's share registry or its registered office in accordance with the instructions on the proxy form.

Both myself and my fellow directors would welcome the opportunity to discuss any queries or comments shareholders have either in relation to the general meeting. To this end shareholder queries can be directed to any of the Board members by telephone to (08) 9201 9202 or by email to admin@goldenwestresources.com.

Yours sincerely

Alan Rudd Director

GOLDEN WEST RESOURCES LTD ABN 54 102 622 051 PROXY FORM

Appointment of Proxy

I/We appoint as proxy to vote in accordance with the following directions (or if no directions have been given, as the proxy or Chairman see fit) at the General Meeting of the Company to be held at the Swan Room, Parmelia Hilton Hotel, 14 Mill Street, Perth, Western Australia on Friday, 29 August 2008, at 2:00pm (WST) (and at any adjournment thereof).

or the Chairman of the meeting

Name and address of person you are appointing as your first proxy (if not the meeting Chairman) and/or failing him

Appointing a Second Proxy

		Name and address of person you are ' appointing as your second proxy (if not the meeting Chairman)

Proxy 1 is appointed to represent _ _% of my voting right, or if 2 proxies are appointed, Proxy 1 represents _% and Proxy 2 represents $\overline{\phantom{a}}$ % of my total votes. My total voting right is $\overline{\phantom{a}}$ shares.

Note: If the appointment does not specify the proportion or number of votes that the proxy may exercise, each proxy may exercise half the votes.

• 1 REMOVAL OF CONSTANTINO MARKOPOULOS AS A DIRECTOR
• APPOINTMENT OF PAUL PIERCY AS A DIRECTOR $\overline{2}$
• $\overline{3}$ REMOVAL OF MICHAEL REGINALD WILSON AS A DIRECTOR
• $\overline{\mathbf{4}}$ APPOINTMENT OF RICHARD MEHAN AS A DIRECTOR
• 5 RE-ELECTION OF JOHN HUGH LESTER AS A DIRECTOR
• ĥ APPROVAL OF ISSUE OF OPTIONS TO JOHN HUGH LESTER
• $\overline{7}$ APPROVAL OF ISSUE OF OPTIONS TO EMPLOYEES PURSUANT TO EMPLOYEE SHARE OPTION PLAN
• APPROVAL OF ACQUISITION OF JOYNER'S FIND TENEMENTS 8
• APPROVAL OF ISSUE OF SHARES AS PART OF JOYNER'S FIND $\Omega$ TENEMENT ACQUISITION
• 10 APPROVAL OF SHARE PLACEMENT
• $11$ APPROVAL OF OPTION PLACEMENT
• $12₂$ ADOPTION OF NEW CONSTITUTION

*If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item.

For	Against	Abstain*
	X
	$\boldsymbol{\mathsf{X}}$
	$\boldsymbol{\mathsf{X}}$
	X
X
X
X
X
χ
X
X
Χ

If the chair of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution, please place a mark in the box. By marking this box, you acknowledge that the Chair of the meeting may exercise your proxy even if he has an interest in the outcome of a resolution and that the votes cast by the Chair of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest. The Chair intends to vote any undirected proxies against resolutions 1 - 4 inclusive and in favour of all other resolutions. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on a resolution if the Chair is a person whose votes are required to be disregarded on that resolution, and your votes will not be counted in calculating the required majority if a poll is called on that resolution.

Contact Email address		Contact Telephone Number
Signature(s)
Shareholder 1	Shareholder 2	Shareholder 3
Director	Director/Secretary	Sole Director and Secretary

Proxies may be lodged either by facsimile to the Company's share registry on +61 8 9389 7871 or to the registered office on +61 08 9288 6001, or by mail or delivery to the share registry at Unit 2, 150 Stirling Highway, Nedlands, Western Australia, 6009, or to the registered office of the Company at Level 19, 1 William Street, Perth, Western Australia. To be valid, a proxy form must be received by the Company no later than 48 hours before the time appointed for the General Meeting. For assistance in completing this form, please refer to the next page of this form.

INSTRUCTIONS FOR COMPLETION OF THE PROXY FORM

Shareholders Name

This is the name of the shareholder as it appears on the Company's share register. For the purposes of this General Meeting, shares will be taken to be held by those persons who are the registered holders at 5:00pm WST Wednesday, 27 August 2008.

Appointment of Proxy

A shareholder entitled to attend and vote at the General Meeting is entitled to appoint not more than two persons (whether shareholders or not) as proxy or proxies to attend in the shareholder's place at the General Meeting. The proxy has the same right as the shareholder to speak and vote at the General Meeting. If you leave this section blank, the Chairman of the meeting will be your proxy.

Vote on Resolutions

You may direct your proxy how to vote by placing a mark in one of the boxes opposite the resolution/s you wish to direct your proxy to vote on. You can split your vote on any resolution/s by inserting the number/s of shares you wish to vote in the appropriate box/es. Please ensure you clearly mark the box by placing a mark or the number of shares you are voting.

Appointing a Second Proxy

If a shareholder appoints two proxies, each proxy may be appointed to represent a specific proportion of the shareholder's voting rights. If such appointment is not made then each proxy may exercise half of the shareholder's voting rights. Fractions shall be disregarded.

Contact Telephone

This will help us if there are any problems with your proxy form.

Signature(s)

Each shareholder must sign this form. If your shares are held in joint names, only one shareholder must sign but if a separate proxy form is lodged by more than one joint holder then the proxy lodged by the joint holder whose name appears first on the Company's share register will be valid to the exclusion of other proxies. If you are signing as an Attorney, then the Power of Attorney must accompany this form. Only duly authorised officer(s) can sign on behalf of a company. Please sign in the boxes provided which state the office held by the signatory.

Delivery of Proxy

To be effective, forms to appoint proxies must be received by the Company no later than 48 hours before the time appointed for the holding of this General Meeting, that is by 2:00pm (WST) Wednesday, 27 August 2008, by hand, post or facsimile.