HAMMER METALS LIMITED — Proxy Solicitation & Information Statement 2005

Aug 3, 2005

MIDAS RESOURCES LIMITED

ABN 87 095 092 158

NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT

• TIME: 10:00am (WST)
• DATE: Friday, 2 September 2005
• PLACE: The Celtic Club 48 Ord Street WEST PERTH WA 6005

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (08) 9481 5311.

CONTENTS

Notice of General Meeting (setting out the proposed resolutions)	З
Explanatory Statement (explaining the proposed resolutions)	.5.
Glossary

Proxy Form

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The General Meeting of the Shareholders of Midas Resources Limited which this Notice of Meeting relates to will be held at 10:00am (WST) on Friday, 2 September 2005 at:

The Celfic Club 48 Ord Street WEST PERTH WA 6005

YOUR VOTE IS IMPORTANT

The business of the General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the General Meeting on the date and at the place set out above. The meeting will commence at 10:00 am (WST)

VOTING BY PROXY

To vote by proxy, please complete and sign the proxy form enclosed with this notice of general meeting as soon as possible and either:

• send the proxy form by post to Midas Resources Limited, PO BOX 887, West $\alpha$ Perth, WA, 6872; or
• $(b)$ send the proxy form by facsimile to the Company on facsimile number (08) 9486 1502 (international: +61 8 9486 1502); or
• $\lfloor c \rfloor$ deliver to the registered office of the Company at 973 Wellington Street, West Perth, WA, 6005,

so that it is received not later than 10:00am (WST) on 31 August 2005.

Proxy forms received later than this time will be invalid.

NOTICE OF GENERAL MEETING

Notice is hereby given that the General Meeting of the shareholders of Midas Resources Limited ("the Company") will be held at The Celtic Club, 48 Ord Street, West Perth, Western Australia at 10:00am (WST) on Friday, 2 September 2005.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the General Meeting. The Explanatory Statement and the proxy form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Requiations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are reaistered Shareholders at the close of business on 31 August 2005.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

Special Business

Resolution 1 - Approval to Issue Shares

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That, pursuant to Rule 7.1 of the Listing Rules of Australian Stock Exchange Limited and all other purposes, the Company approves and authorizes the Directors to allot and issue up to 35,000,000 fully paid ordinary shares in the capital of the Company each at an issue price of not less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue and otherwise on the terms and conditions set out in the Explanatory Statement accompanyina this Notice of Meetina."

Short Explanation: Under the Listing Rules, the Company must seek shareholder approval prior to the issue of securities equal to more than 15% of its issued share capital. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed and any person associated with those persons. 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 cast 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 dictates.

Resolution 2 - Approval to Issue Shares

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That, pursuant to Rule 7.1 and 7.4 of the Listina Rules of Australian Stock Exchange Limited and all other purposes, the Company approves and authorizes the Directors to allot and issue up to 10,500,000 fully paid ordinary shares in the capital of the Company each at an issue price of not less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue, or an issue price of 5.5 cents per share. whichever is the higher gmount, and otherwise on the terms and conditions set out in the Explanatory Statement accompanying this Notice of Meeting."

Short Explanation:

The Company intends to issue the shares the subject of Resolution 2 following despatch of the notice of meeting to shareholders and before the date of the meeting. Accordingly the Company wishes to comply with both Listing Rules 7.1 (approval of a future issue outside the 15% threshold) and 7.4 (ratification of a past issue, to restore the 15% threshold) in connection with Resolution 2.

Under Listing Rule 7.1, the Company must seek shareholder approval prior to the issue of securities equal to more than 15% of its issued share capital. An equity issue can be ratified by shareholders in accordance with Listing Rule 7.4 which then allows the Company flexibility to issues shares up to the threshold of 15% of its total ordinary securities in any 12 month period. Please refer to the Explanatory Statement for details.

Voting Exclusion: The Company will disregard any votes cast on this resolution by any person who may participate or has participated in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if the Resolution is passed, and any person associated with those persons. 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 cast 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 dictates.

DATED: 1 AUGUST 2005

BY ORDER OF THE BOARD

GEOFFREY BALFE MANAGING DIRECTOR

MIDAS RESOURCES LIMITED ABN 87 095 092 158

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in relation to the business to be conducted at the General Meeting to be held at The Celtic Club, 48 Ord Street, West Perth, Western Australia on Friday, 2 September 2005 at 10:00am (WST).

The purpose of this Explanatory Statement is to provide information that the Directors believe to be material to Shareholders in deciding whether or not to pass the resolutions in the Notice of Meeting.

RESOLUTION 1 - APPROVAL TO ISSUE SHARES

The Resolution seeks shareholder approval to the issue of up to 35,000,000 Shares at a price of no less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue.

The purpose of the issue is to provide funding for the Company's emerging exploration activities in China and Alaska; ongoing exploration and development activities in Australia; and for general working capital.

The shares to be issued are fully paid ordinary shares in the Company ranking equally with the existing fully paid ordinary shares in the Company. The issue of these shares will be equal to approximately 49.9% of the Company's current share capital, assuming no further issues of securities by the Company [and excluding those issued under Resolution $21.$

Listing Rule 7.1

Listing Rule 7.1 provides, in summary, that without the prior approval of shareholders of the Company, a listed company must not issue or agree to issue securities in any 12 month period where the securities proposed to be issued represent more than 15% of the Company's shares then on issue.

The Company currently has on issue 70,185,633 ordinary fully paid shares. If the shares the subject of this Resolution are passed, the 15% threshold will be exceeded. Accordingly, shareholder approval pursuant to Listing Rule 7.1 is sought.

Listing Rule 7.3

In compliance with Listing Rule 7.3, the following information is provided to shareholders.

• the maximum number of shares to be issued is 35,000,000 Shares: $(\alpha)$
• the Company will issue the Shares on a dater no later than 3 months after the $(b)$ date of this meeting or such later date as permitted by an ASX waiver or modification of the ASX Listing Rules;

• $|C|$ the Shares will be allotted at an issue price of not less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue:

• $(d)$ the names of the allottees are presently unknown, but the Shares will be issued to such persons who the Company and the Directors think fit from time to time and who fall within one or more of the classes of exemptions specified in section 708 of the Corporations Act 2001 providing that no allottees are related parties or associates of the Company:

• $(e)$ the terms and conditions of the Shares to be allotted will be the same, in all respects, as existing fully paid ordinary shares in the capital of the Company on issue at the time of allotment, as set out in Annexure A. The Company will apply to ASX for official quotation of the Shares; and
• $(f)$ the purpose of the issue is to raise funds to continue funding the exploration and development of the Company's projects:
• in China, to fund:
  • the establishment of the Company's Chinese subsidiary Midas Mining China Limited (MMCL) recently registered in Shenzen, through the provision of capital. MMCL is licensed to explore and develop deposits throughout the Peoples Republic of China and will be the Company's principal operating entity in China. MMCL funds will, in turn, be used to fund the following:
  • due $\prod$ the diliaence assessment and related exploration and evaluation activities associated with the acquisition of an interest of up to 55% in the Dongliang mine lease (containing the Dongliang gold deposit) in Kuancheng county, Hebei province, from a subsidiary of China National Gold Group Corporation (CNGGC) and exclusive rights to acquire an interest of up to 80% in other projects held by CNGGC in Kuanchen county. The acquisition is subject to a number of conditions including the satisfactory completion of due diligence by the Company; shareholder approval; and the raising of any necessary additional funding; and
  • exploration activities in the Shimian gold project, a $(ii)$ joint venture between the Company and Brigade 407, located in Sichuan county, Sichuan Province: and
  • the evaluation of other resource opportunities in $(iii)$ China.
• in Alaska, to fund ongoing exploration of the Uncle Sam gold joint venture project in the prospective Tintina gold belt;
• in Australia, to fund ongoing exploration of the Company's gold projects in Western Australia (Lake Carey) and Queensland (Connors Range, Ukalunda).
• and for general working capital purposes.

The Board believes that the proposed issue is beneficial for the Company and recommends Shareholders vote in favour of the resolution. It will allow the Company to retain the flexibility to issue further securities representing up to 15% of the Company's share capital during the next 12 months.

RESOLUTION 2 - APPROVAL TO ISSUE SHARES

Resolution 2 seeks shareholder approval to the issue of up to 10,500,000 Shares at a price of no less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue, or an issue price of 5.5 cents per share, whichever is the higher amount. The Company intends to issue the Shares following dispatch of the notice of meeting, but before the date of the Meeting. In order to comply with ASX requirements, for the purpose of the Notice of Meeting, Resolution 2 seeks approval of the shareholders in advance, for the purpose of Listing Rule 7.1, but for the purposes of considering Resolution 2 at the Meeting, the shareholders will be asked to ratify the issue under Listing Rule 7.4. This is because the Board has identified that there is an opportunity to issue shares within its existing 15% capacity in the intervening period between dispatch of the Notice of Meeting and the date of the Meeting, but the identity and the price of such an issue has not yet been established with sufficient certainty to enable the Company to include in the Notice of Meeting a resolution seeking ratification of the issue under Listing Rule 7.4 alone. The Company wishes to preserve its ability to issue 15% of its ordinary share capital in the future without being affected by the issue of Shares the subject of Resolution 2. Accordingly, for the purposes of the Notice of Meeting the approval sought is an advance approval under Listing Rule 7.1 and for the purposes of the convened Meeting the approval sought is a ratification approval under Listing Rule $7.4.$

The purpose of the issue is to provide funding for the Company's emerging exploration activities in China and Alaska: onaoina exploration and development activities in Australia; and for general working capital.

The shares to be issued are fully paid ordinary shares in the Company ranking equally with the existing fully paid ordinary shares in the Company. The issue of these shares will be equal to approximately a maximum of 14.96% of the Company's current share capital, assuming no further issues of securities by the Company, and excluding those issued under Resolution 1.

Listing Rule 7.1 provides, in summary, that without the prior approval of shareholders of the Company, a listed company must not issue or agree to issue securities in any 12 month period where the securities proposed to be issued represent more than 15% of the Company's shares then on issue.

The Company currently has on issue 70,185,633 ordinary fully paid shares. If the shares the subject of Resolution 2 are passed, the 15% threshold will not be exceeded. Shareholder approval pursuant to Listing Rule 7.1 is sought for the reasons set out above.

Listing Rules 7.3 and 7.4

In compliance with Listing Rules 7.3 and 7.4, the following information is provided to shareholders.

• the maximum number of shares to be issued is 10,500,000 Shares; $(a)$

• $(b)$ the Company will issue the Shares either prior to the Meeting or on a date no later than 3 months after the date of this meeting or such later date as permitted by an ASX waiver or modification of the ASX Listina Rules:

• $(C)$ the Shares will be allotted at an issue price of not less than 80% of the average market price of the Company's shares on the five (5) business days prior to date of issue, or an issue price of 5.5 cents per share, whichever is the higher amount.

• $(d)$ the names of the allottees are presently unknown, but the Shares will be issued to such clients of DJ Carmichael stockbrokers who the Company and the Directors think fit from time to time and who fall within one or more of the classes of exemptions specified in section 708 of the Corporations Act 2001 providing that no allottees are related parties or associates of the Company;
• the terms and conditions of the Shares to be allotted will be the same, in all $(e)$ respects, as existing fully paid ordinary shares in the capital of the Company on issue at the time of allotment, as set out in Annexure A. The Company will apply to ASX for official quotation of the Shares; and
• $(f)$ the purpose of the issue is to raise funds to continue funding the exploration and development of the Company's projects as set out in relation to Resolution 1.

The Board believes that the proposed issue is beneficial for the Company and recommends Shareholders vote in favour of the resolution. It will allow the Company to retain the flexibility to issue further securities representing up to 15% of the Company's share capital during the next 12 months.

GLOSSARY

ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).

ASX Listing Rules or Listing Rules means the Listing Rules of ASX.

Board means the board of Directors.

Company means Midas Resources Limited (ABN 87 095 092 158).

Constitution means the constitution of the Company.

Director means a director of the Company.

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

Shareholder means a shareholder of the Company.

WST means Western Standard Time.

THIS PAGE HAS BEEN LEFT BLANK INTENTIONALLY

PROXY FORM

APPOINTMENT OF PROXY MIDAS RESOURCES LIMITED ABN 87 095 092 158

$I/We$

being a shareholder of Midas Resources Limited entitled to attend and vote at the General Meetina, hereby

Appoint

Name of proxy

or failing the person so named or, if no person is named, the Chairman of the General Meeting or the Chairman's nominee, to vote in accordance with the following directions or. if no directions have been given, as the proxy sees fit at the General Meeting to be held at 10:00am (WST) on Friday, 2 September 2005 at The Celtic Club, 48 Ord Street, West Perth, Western Australia and at any adjournment thereof. If no directions are given, the Chairman will vote in favour of the resolution.

	Voting on Business of the General Meeting
		FOR	AGAINST	ABSTAIN
Resolution 1 Resolution 2	Approval to Issue Shares Approval to Issue Shares

If you do not wish to direct your proxy how to vote, please place a mark in this box

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of the interest. The Chairman will vote in favour of the resolution if no directions are aiven.

YOU MUST EITHER MARK THE BOXES DIRECTING YOUR PROXY HOW TO VOTE OR MARK THE BOX INDICATING THAT YOU DO NOT WISH TO DIRECT YOUR PROXY HOW TO VOTE. OTHERWISE THIS APPOINTMENT OF PROXY FORM WILL BE DISREGARDED.

If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

day of

Signed this

2005

Bv:

Individuals and joint holders

Signature
Signature
Signature

Companies (affix common seal if appropriate)

Director

Director/Company Secretary

Sole Director and Sole Company Secretary

MIDAS RESOURCES LIMITED ABN 87 095 092 158

Instructions for Completing 'Appointment of Proxy' Form

• $\mathbf{I}$ . A shareholder entitled to attend and vote at a meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the shareholder's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.
• $\mathfrak{D}$ . A duly appointed proxy need not be a shareholder of the Company. In the case of joint holders, all must sign.
• 1. Corporate shareholders should comply with the execution requirements set out on the proxy form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:
• directors of the company;
• a director and a company secretary of the company; or
• for a proprietary company that has a sole director who is also the sole company secretary - that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. $\ln$ particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

• $\overline{4}$ . Completion of a proxy form will not prevent individual shareholders from attending the meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the meeting in person, then the proxy's authority to speak and vote for that shareholder is suspended while the shareholder is present at the meeting.
• 1. Where a proxy form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.
• 1. To vote by proxy, please complete and sign the proxy form enclosed and either:
• $(a)$ send the proxy form by post to Midas Resources Limited, PO BOX 887, West Perth, WA 6872: or
• send the proxy form by facsimile to the Company on facsimile number (08) $(b)$ 9486 1502: or
• deliver to the registered office of the Company at 973 Wellington Street, $|C|$ West Perth, WA, 6005.

so that it is received not later than 10:00am WST on 31 August 2005.

Proxy forms received later than this time will be invalid.