HARTSHEAD RESOURCES NL — Audit Report / Information 2011

Nov 28, 2011

==> picture [451 x 317] intentionally omitted <==

Figure 3-15 Lower Jurassic plate tectonic reconstruction showing potential area of source rocks

The Lower Jurassic has been penetrated to the north of the Mazagan permit at DSDP site 547[6] , location shown in Figure 3-16. [Note DSDP sites 415 and 416 are closer to the block, but wells here only reached the Late Albian and Upper Jurassic Tithonian, respectively[7] ]. The Lower Jurassic section includes black shales within a nodular limestone/dolomite matrix. The black shales have only a fair hydrocarbon potential as a whole; organic contents of the better shale facies are mostly around 1% TOC. However, a few samples have much higher TOC: 4-7%[8] . These appear to be kerogen type II to III, with a considerable proportion of terrestrially derived organic matter. In this well, the oil window is reached at some 770m sub-seabed.

Upper Jurassic (Oxfordian) transgressive shales have sourced the oils and gas condensate fields of the onshore western Essaouira Basin[9] . Oil within the onshore Sidi Rhalem field (Essaouria Basin) and MO-2 field, Cap Judy (Tarfayat Basin) are also reported elsewhere to be linked to a Lower Jurassic Toarcian source. Small field sizes are probably in part due to highly localized source kitchen areas. Recent uplift has frozen generation; peak burial appears to be early Tertiary (pre-Atlas uplift).

6 Deroo,G., Herbin, J.P. and Roucaché, J. 1984 30. Organic geochemistry of Cenozoic and Mesozois sediments from Deep Sea Drilling sites 544 to 547, Leg 79, Eastern North Atlantic

7 Lancelot, Y & Winterer, E. L. 19080 1. Introduction and summary of results, Deep Sea Drilling Project Leg 50

8 Rullkotter, J. et al, 1980 32. geochemistry and petrography of organic matter in sedimentation from Deep Sea Drilling Project sites 545 and 547, Mazagan Escarpment

9 Morabet, A.M., Bouchta, R. & Jabour, H. 1998. An overview of the petroleum systems of Morocco. In: MacGregor, D.S., Moody, R.T.J & Clark-Lowes, D. D.(eds) 1998. Petroleum Geology of North Africa. Geological Society, London, Special Publication No. 132, 283-296.

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
22
----- End of picture text -----

Units shallower than the Jurassic are less likely to provide hydrocarbon charge. Analysis of Shark-1 well showed no source intervals were encountered down to TD near base Aptian. No material source intervals were encountered. This is consistent with results at DSDP sites 415 and 416. Nevertheless, given the paucity of the data, it remains possible that the Cretaceous could have higher organic carbon content in some locations, and contribute where mature. In DSDP site 545, a significant section of the Cretaceous Cenomanian to Late Aptian section has TOC values from 0.5 to above 2%, and the lower portion of the Late Albian at site 547 has values between 1 and 2% TOC.

Maximum TOC and HI for both the Lower Jurassic and the Upper Jurassic are shown in Figure 3-17.

==> picture [310 x 315] intentionally omitted <==

Figure 3-16 Location of Deep Sea Drilling Project (DSDP) wells

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
23
----- End of picture text -----

==> picture [418 x 326] intentionally omitted <==

==> picture [36 x 326] intentionally omitted <==

Maximum TOC – black values; maximum HI red values

Figure 3-17 Jurassic maximum source rock parameters (Vanco)

3.4.2 Maturation and charge

Maturation modelling by Pura Vida calibrated to Shark-1 using a Type II source suggests that both oil and gas are expelled within the permit, but in terms of barrels of oil equivalent (BOE), oil dominates the expelled hydrocarbons (Figure 3-18). However, we would expect that a significantly higher proportion of generated gas would be modelled if a Type III kerogen were used as input.

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
24
----- End of picture text -----

==> picture [438 x 249] intentionally omitted <==

Figure 3-18 Modelled hydrocarbons expulsion (Pura Vida)

The Middle Miocene reservoirs lie between 2500m and 3100m absolute depth, equivalent to between 1000m and 1600m depth below sediment surface. As such, the expected temperature is likely to be low, considered to be some 28 degrees C. Biodegradation may thus be expected. From modelling work, Pura Vida have concluded that the degree of biodegradation is likely to be relatively minor (estimated ~30% by volume, and cumulative oil gravity ~36 degrees API). However, due to significant uncertainties, this remains a material risk.

The presence of small oil discoveries (Figure 3-5), and hydrocarbon shows in many wells (Figure 3-19) closer to the coast provides encouragement of a working petroleum system.

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
25
----- End of picture text -----

==> picture [442 x 512] intentionally omitted <==

Note: Map shows previous permits (for reference, Shark B-1 well lies in southern half of Ras Tafelney permit)

Figure 3-19 Hydrocarbon shows offshore Morocco (Vanco)

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
26
----- End of picture text -----

4 STRUCTURAL DEFINITION

4.1 Seismic Data

The Mazagan permit has a limited 2D seismic grid totalling about 5000 km, and there are two 3D seismic surveys totalling 3659 km[2] over the eastern half of the block (Figure 4-1). The larger of the two surveys is the Ras, an elongate north-south grid covering 3025 km[2] . The smaller northern Vanco survey lies in the northeast of the permit, and covers 719 km[2] . Note that at present, Pura Vida do not have access to the 2D data.

Original operators Vanco undertook petrophysical and amplitude-versus-offset studies aimed at the Albian (younger Upper Cretaceous and Tertiary reservoirs were not modelled). These concluded that the expected depths and porosities for the Albian would not provide AVO responses (although recent work by DownUnder Geophysics concludes that a response could be expected).

The original phase of the data is ‘quadrature’, that is that acoustic impedance (AI) contrast boundaries relate to zero crossings. Pura Vida undertook a simple phase rotation of -90 degrees such that low AI boundaries (such as downhole shale to sand) would correspond to seismic troughs.

==> picture [354 x 304] intentionally omitted <==

Notes (1) Red polygons - 3D surveys, grey lines 2D seismic lines (2) permit boundary has subsequently been changed in north and (3) Pura Vida do not currently have access to the 2D seismic data

Figure 4-1 Seismic data in the Cape Tafelney permit and vicinity

4.2 Seismic Interpretation and Mapping

Pura Vida have interpreted a number of seismic horizons across the 3D survey, including water bottom, Middle Miocene Channel (key event for primary target), Lower Tertiary, Top Cretaceous,

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
27
----- End of picture text -----

Upper Cretaceous Maastrictian, Upper Cretaceous Campanian, Top Albian, Top autochtonous salt, a nominal Jurassic event (for deeper prospectivity). Well ties in the immediate vicinity are limited to that provided by Shark-1 which had a TD near base Aptian, providing good ties down to this level. The only other well within the Mazagan permit is that at DSDP site 415, with a TD near the top of the Albian. This is tied by two regional seismic lines, but RISC has not seen these data. There are no seismic ties available through the Lower Cretaceous and into the Jurassic.

RISC reviewed the interpretation and considers it reasonable. Faulting is relatively minor.

4.3 Depth Conversion

Pura Vida used a two-layer method for each of the Tertiary and one for the Cretaceous plays. The relationship was linear for Vave versus Isochron from water bottom using the Shark B-1 checkshot data. Water velocity was constant at 1500 m/s. This simple approach is entirely sufficient for the prospectivity defined for the Mazagan permit. The stratigraphically constrained and defined major prospect, Toubkal (see below), is not dependent on depth conversion.

4.4 Seismic Attributes and Prospect Identification

Prospectivity in the Mazagan permit is defined for the Middle Miocene and the Lower Cretaceous/Jurassic.

The Middle Miocene play is an amplitude-defined play, and the definition of prospectivity relies primarily on the distribution of raised amplitudes. Seismic inversion has not been undertaken on the block, but the seismic amplitudes provide obvious indications of differences in lithology and/or fluid (see below). The east-west orientation of the raised amplitudes (Figure 4-2) strongly suggests an association with sediment influx and transport across the block, in a similar way to Plio-Pleistocene and Recent depositional processes (Figure 3-14). The Toubkal prospect is the main amplitudedefined play. In addition, small structural closures against salt diapirs define the Amchad and Zagora prospects. These also have amplitude support.

An arbitrary seismic line through the permit shows these various features in relation to the Shark-1 well, and illustrates the daipir province (Figure 4-3).

The deeper Lower Cretaceous/Jurassic play is entirely structurally defined. There is no amplitude support.

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
28
----- End of picture text -----

==> picture [450 x 519] intentionally omitted <==

Figure 4-2 Mid Miocene Channel event - seismic amplitude for whole Ras 3D seismic survey

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
29
----- End of picture text -----

==> picture [449 x 236] intentionally omitted <==

Figure 4-3 South (left) to north (right) arbitrary seismic line through Mazagan permit

Pura Vida undertook some preliminary rock property modelling to determine the likely origin of the raised amplitudes. A swathe of data was taken from the eastern area of high amplitudes through to the northwest, in an approximate dip alignment (Figure 4-4). Calibration of seismic response is very uncertain, due to lack of offset wells with the range of sand and fluid properties that are proposed. However, this early work provided some encouragement that the highest amplitudes are more likely to represent a gas fill, the moderately raised amplitudes may relate to an oil fill, and lower/background amplitudes may relate to water-bearing sand or shale.

==> picture [198 x 132] intentionally omitted <==

==> picture [105 x 24] intentionally omitted <==

----- Start of picture text -----

Gas Oil Brine
2:1 2:1
----- End of picture text -----

==> picture [208 x 226] intentionally omitted <==

Figure 4-4 Preliminary seismic modelling (Pura Vida) through Toubkal Prospect

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
30
----- End of picture text -----

A detailed independent study has recently been undertaken by specialist geophysical contractors DownUnder GeoSolutions[10] . Wells Shark B-1, Amber-1 and nearshore well Souss-1 were used as inputs. Souss-1 was included specifically as it included Miocene turbidite sands that were absent in the other wells, and which represent the best available equivalent lithology to that forecast for the Mazagan prospects. Petrophysical analysis was initially undertaken to provide a reliable input dataset. These wells were then analysed to derive fluid properties and trends reflecting end member lithologies for stochastic forward modeling, at different depths. A large number of lithology and fluid scenarios were defined. This forward modeling is intended to capture the expected range of rock properties and the expected range of seismic responses. The work results in a series of depth– dependent multi-variate rock property distributions that quantify the inherent scatter in rock and fluid properties.

The key outcome of the modeling work is that there are significant differences between the responses of the clean sand with different fluid fills, which supports the initial work by Pura Vida, and which thus provides encouragement that these may be able to be distinguished on seismic data. However, calibration is very limited, and the responses of a silty sand, as opposed to a clean sand, suggests differentiation may be more difficult. This can be seen in both of plots of acoustic impedance against Vp/Vs (Figure 4-5), and reflectivity (Figure 4-6 and Figure 4-7). Differences in general decrease with depth, but the shallow depth of the Miocene target augurs well for discrimination. The current work assumes that the sands are high net-to-gross and that hydrocarbon saturation is high (So = 75%, Sg = 80%). Neither of these may actually be true, and in particular it is possible (work not yet undertaken) that a small gas saturation (e.g. Sg = 10%) may give a comparable response to a high saturation oil fill. It is instructive that the AVO support claimed for the Amber prospect turned out to be a lithology effect (although Pura Vida report that amplitudes do not in any case conform to structure).

Despite these concerns, the rock property modeling does provide encouragement that different fluid fills may be able to be differentiated within the seismic data. DownUnder GeoSolutions concludes that fluid discrimination for both oil and gas cases for all reservoirs is good across the depth range. We therefore support the principle of using relative seismic amplitudes to guide prospect definition.

Establishing a direct relationship between the modeled properties and the seismic amplitude is however difficult in the current absence of clear calibration. As noted previously, sands were absent at the Middle Miocene Channel level in the Shark B-1 well. This is consistent with the background amplitudes at this location and support this area being a sand bypass zone. However, there are many other levels penetrated by this well (indeed represented targets for this well) which do show raised amplitudes, but which do not represent sand (as in Figure 3-4). Future work should make the link between the current rock property modeling and the actual seismic data, to establish more clearly the ranges of amplitudes that are most likely to relate to a gas, oil and brine fills or non-reservoir lithologies.

10 DownUnder GeoSolutions 7 Sep 2011 Stochastic Modelling Report (Preliminary)

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
31
----- End of picture text -----

==> picture [218 x 186] intentionally omitted <==

==> picture [218 x 185] intentionally omitted <==

Figure 4-5 Modelled acoustic impedance versus Vp/Vs for clean sand and silty sands in claystone

==> picture [452 x 264] intentionally omitted <==

Figure 4-6 Modelled reflectivity for shallow clean sand in claystone, showing AVO response

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
32
----- End of picture text -----

==> picture [452 x 258] intentionally omitted <==

Figure 4-7 Modelled reflectivity for shallow silty sand in claystone, showing AVO response

4.5 Analogue – Jubilee Field

Hydrocarbons in turbidite/debris flows within a stratigraphic trap delineated by seismic amplitudes are a well-understood play type, and known in numerous deep water basins across the world. We support Pura Vida's use of the Jubliee Field, Ghana as an analogue.

The Jubliee Field lies 60 km offshore Ghana in 1250m water. Discovered in June 2007, this giant oil field has hydrocarbons within Upper Cretaceous fans (Figure 4-8, Figure 4-9). According to Operator Tullow Oil, the field has 'estimated recoverable resources of up to 1 billion barrels'[11] . The accumulation is areally extensive and mapped from 3D seismic amplitudes (Figure 4-10); strong brightening of amplitudes are due to sand presence and/or fluid content[12] . Oil is stratigraphically trapped, with updip and lateral margins controlled by sand pinchouts (Figure 4-10 and Figure 4-11). The amplitude appearance is comparable to that at Toubkal but, importantly, we note that the updip termination of high amplitudes and/or a geometrically defined unit has not yet been demonstrated in the Toubkal prospect.

The Jubilee reservoir is reported as exceptional quality and consists of stacked, laterally continuous deepwater turbidite channel and fan sequences approaching 250m in thickness. Continuing exploration and appraisal has confirmed additional nearby fields (Figure 4-8).

11 www.tullowoil.com

12 Tullow Oil October 2008 Jubilee Field subsurface overview (D Hanley); presentation for Capital Markets Day

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
33
----- End of picture text -----

==> picture [352 x 261] intentionally omitted <==

Figure 4-8 Jubilee Field, Ghana - possible analogue for Miocene prospectivity in Mazagan permit (Tullow Oil)

==> picture [451 x 198] intentionally omitted <==

Note updip sand pinchout for Turonian Mahogany

Figure 4-9 Schematic geological cross-section offshore Ghana

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
34
----- End of picture text -----

==> picture [343 x 450] intentionally omitted <==

Figure 4-10 Jubliee Field – RMS near offset stack amplitude in Mahogany Fan, and example seismic line (Anardarko 2011[13] )

13 Jewell, G. (Anadarko) April 2011 Exploration of the Transform Margin of West Africa: Discovery Thinking – Jubilee and Beyond & Exploration of the Tano Basin and Discovery of the Jubilee Field, Ghana: A New Deepwater Game-Changing Hydrocarbon Play in the Transform Margin of West Africa

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
35
----- End of picture text -----

==> picture [367 x 244] intentionally omitted <==

Figure 4-11 Jubilee Field limits

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
36
----- End of picture text -----

5 PROSPECTIVE RESOURCES

5.1 Miocene Prospects

5.1.1 Prospective Area

Toubkal

At the mapped Middle Miocene level, the 3D dataset across the Mazagan permit shows a number of areas of raised amplitudes. These have a tendency to trend east-west, and their geometry is consistent with channels with variably constrained margins. The Toubkal Prospect is defined by the main central area of raised amplitudes. A distinct area close to the seismic data edge has particularly high amplitudes; there are other areas of equivalent high amplitudes but less clearly limited. The package of raised amplitudes varies considerably in thickness, and mapping of a realistic base has not yet been possible. More importantly, the updip limit of any raised amplitudes and/or termination of a related seismic package is not yet defined; the most updip portion lies adjacent to the seismic data boundary to the east.

We have based our prospect areas on selected levels of raised amplitude. The initial play has been defined by Pura Vida precisely at an interpreted Middle Miocene top channel event. This shows variably raised amplitudes across an east-west channelised zone. However, raised amplitudes are clearly present locally in many other areas, within sections mainly up to 50ms, but sometimes significantly more than 100 ms, below this event. We therefore also investigated mean RMS amplitudes across a series of windows. Our final amplitude window covered a zone 5ms above the picked horizon to 10 ms below the picked horizon. There is in fact relatively little difference between the various extractions.

==> picture [448 x 215] intentionally omitted <==

Figure 5-1 Arbitrary seismic line through Toubkal prospect

The limits to the raised amplitudes are interesting, and clearly are providing some information about changes in lithology and/or fluid content (Figure 5-2), and this is supported by independent rock property modeling, described above. On the basis that the highest reflectivity would be associated with gas, the moderately raised amplitudes could be associated with oil fill. The limit of the raised amplitudes to the northwest is broadly concordant with structure, and suggests that it may reflect a

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
37
----- End of picture text -----

hydrocarbon-water contact (~3000mss). In this area, a considerably thicker package than just the Middle Miocene Channel event appears to demonstrate amplitude cut-off at a consistent depth, providing encouragement for hydrocarbon fill (Figure 5-3).

==> picture [432 x 357] intentionally omitted <==

Figure 5-2 Implications of raised Mid Miocene Channel RMS amplitudes

Limits to the amplitude to the southwest (Figure 5-2) generally cross-cut depth contours, such that a primarily lithological interpretation is probable here - in other words, the amplitude cut-off represents the sand limit in this area. In the eastern area, close to the area of very high (‘gas’) amplitudes there is also broad structural concordance, but this is at a shallower depth than that to the west. The possible explanations here are that it also represents a sand limit, which is coincidentally aligned with the depth contours (although an association of depositional limits with pre-existing structure may exist), or that it too represents a fluid contact, but which is in separate sand package that is not in communication with the main area to the west.

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
38
----- End of picture text -----

==> picture [439 x 243] intentionally omitted <==

Figure 5-3 Amplitude termination at common depth at edge of Toubkal prospect

We defined our P10 area for Toubkal on the basis of main change in amplitude, using a reasonably smooth standard colour bar (Figure 5-4). Our P50 area was a relatively arbitrary but realistic mid case defined to capture all the main raised amplitude area. These two values were then combined in a log normal distribution to define the full distribution. The implied P90 area is about 60% of the P50 area. Both P10 and P50 areas are limited to the west at the edge of the 3D seismic data; the raised amplitudes clearly continue beyond the mapped area. The zone of raised amplitude is more constrained in the east, at the other edge of the seismic data but, as noted, still appear to continue updip, placing a risk on up-dip seal. Pura Vida report that 2D lines to the east of the 3D data demonstrate that the raised amplitudes are not present, implying sealing is likely. However, RISC has not seen these data.

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
39
----- End of picture text -----

==> picture [447 x 427] intentionally omitted <==

Red polygon (260 km[2] ) - P10, blue polygon (156 km[2] ) - P50

Figure 5-4 Mid Miocene Channel RMS amplitude defining Toubkal Prospect, with depth contours

Amchad and Zagora

These features are structural closures against the sides of different diapirs (Figure 5-5). They are also supported by raised amplitudes, although these do not cover the full structural closure. Zagora displays a thicker package of raised amplitudes that show good cut-off at common depth (Figure 5-6), and is in our view a stronger prospect. This feature would benefit from more detailed mapping in order to define both top and base, and thus a more accurate estimation of gross rock volume.

We have defined ranges of areas to cover the P90-P10 range based on these closures and amplitudes (Figure 5-7, Figure 5-8). We have excluded those portions of the structural closures which have background amplitudes, on the basis of the modelling described earlier, in that they are very unlikely to be hydrocarbon-bearing. Nevertheless, our designation of the raised amplitude

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
40
----- End of picture text -----

areas as P90, rather than P50, does accept that both Amchad and Zagora are clear closed structural features.

Note that there is also a closed structural feature to the west of Zagora (Figure 5-5). However, as this shows no amplitude lift, it is not considered as prospective.

==> picture [478 x 420] intentionally omitted <==

Figure 5-5 Mid Miocene TWT structure showing Amchad and Zagora Prospects

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
41
----- End of picture text -----

==> picture [355 x 312] intentionally omitted <==

Figure 5-6 Termination of amplitudes at common depth - Zagora prospect

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
42
----- End of picture text -----

==> picture [465 x 457] intentionally omitted <==

Red polygon (13.0 km[2] ) - P10, blue polygon - P90 (4.2 km[2] )

Figure 5-7 Mid-Miocene Depth Structure with RMS amplitude overlay - Amchad Prospect

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
43
----- End of picture text -----

==> picture [364 x 358] intentionally omitted <==

Red polygon (10.8 km[2] ) - P10, blue polygon (4.5 km[2] )- P90

Figure 5-8 Mid-Miocene Depth Structure with RMS amplitude overlay - Zagora Prospect

5.1.2 Thickness

With no wells to provide control, gross thicknesses are very uncertain. The vertical extent of the raised amplitudes should provide guidance, but as noted earlier, these are highly variable. We have used a range of 10m (P90) to 50m (P10) for Toubkal. Locally there is potential for a greater thickness, but it should be borne in mind that the range used is an average over the entire prospect. A similar thickness is used for Amchad. However, the Zagora prospect displays a more consistent thicker package of raised amplitudes, so we have used a range of 20m (P90) to 80m (P10). However, we have incorporated a degree of fill factor to account for the volumetric wedge effect at the prospect edges.

5.1.3 Rock and Fluid Properties

Rock properties are also very uncertain. We have used a wide net-to-gross of 30-50-70%. Although there is no well control, the very shallow depth means that porosities are likely to be high. Our range is 25-30-35%. Water saturation is considered to be commensurately low: 30% (P90) to 10% (P10).

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
44
----- End of picture text -----

No oil properties are available. The shallow depth could mean that the dissolved gas component is small, but the predicted type II to III kerogen is likely to provide a material gas component, so we have adopted Pura Vida’s own formation volume factor range of 1.3-1.5-1.8 rb/stb.

5.1.4 Recovery Factor

We have used a reasonable range of 25-35-45% for the recovery factor.

A summary of all volumetric inputs is given in the table below.

	Volumetric Inputs – Toubkal Prospect	Volumetric Inputs – Toubkal Prospect	Volumetric Inputs – Toubkal Prospect	Volumetric Inputs – Toubkal Prospect
Property	Distribution	P90	P50	P10	Mean	Most- likely
Area, km2	Log normal	94	156	260	169
Gross thickness, m	log normal	10	22	50	27
Gross rock volume, km2m	(output)	1348	3489	9065	4585
Net-to-gross, %	Beta	30	50	70	50	50
Average porosity, %	Beta	25	30	35	30	30
Average water saturation, %	Beta	30	20	10	20	20
Formation volume factor, stb/rb	Beta	1.8	1.53	1.3	1.54	1.5
Recovery factor, %	Beta	25	35	45	35	35

Values in bold are inputs (Beta distribution requires a P90 (or minimum), most-likely and P10 (or maximum) values as inputs

Table 5-1 Volumetric inputs – Toubkal Prospect

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
45
----- End of picture text -----

	Volumetric Inputs – Amchad Prospect	Volumetric Inputs – Amchad Prospect	Volumetric Inputs – Amchad Prospect	Volumetric Inputs – Amchad Prospect	Volumetric Inputs – Amchad Prospect
Property	Distribution	P90	P50	P10	Mean
Area, km2	Log normal	4.2	7.4	13.0	8.1
Gross thickness, m	log normal	10	22	50	27
Gross rock volume, km2m	(output)	62	166	443	221
Rock and fluid properties	As per Toubkal

Table 5-2 Volumetric inputs – Amchad Prospect

	Volumetric Inputs – Zagora Prospect	Volumetric Inputs – Zagora Prospect	Volumetric Inputs – Zagora Prospect	Volumetric Inputs – Zagora Prospect	Volumetric Inputs – Zagora Prospect
Property	Distribution	P90	P50	P10	Mean
Area, km2	Log normal	4.5	6.9	10.7	7.4
Gross thickness, m	log normal	20	40	80	46
Geometric factor, %	Beta	70	80	90	90
Gross rock volume, km2m	(output)	98	221	504	272
Rock and fluid properties	As per Toubkal

Table 5-3 Volumetric inputs – Zagora Prospect

5.2 Lower Cretaceous Prospects

Prospectivity at Lower Cretaceous level is considered secondary to that at the Miocene, but nevertheless offers opportunity for hydrocarbons within turbidite sands, such as those sands seen in the DSDP wells and the Canary Islands.

5.2.1 Prospective Area and Rock and Fluid Properties

Three dip-closed salt-cored features are mapped at Albian level (Figure 5-9): Jbel Musa, Jbel Ayachi

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
46
----- End of picture text -----

and Jbel Lakhdar. Due to the parallel nature of the bedding at this level (see example seismic line through Jbel Ayachi; Figure 5-10), closures at this level are taken as representative of that over the whole of the Lower Cretaceous.

Nearby well control is minimal for the Lower Cretaceous; the values chosen represent reasonable ranges. Full details of volumetric inputs are given in Table 5-4.

==> picture [400 x 351] intentionally omitted <==

Figure 5-9 Albian TWT Map showing Lower Cretaceous structural leads

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
47
----- End of picture text -----

==> picture [452 x 247] intentionally omitted <==

Albian is red horizon in centre of section; location of section see Figure 5-9

Figure 5-10 Seismic inline and crossline through Jbel Ayachi lead

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
48
----- End of picture text -----

	Volumetric Inputs – Lower Cetaceous Prospects	Volumetric Inputs – Lower Cetaceous Prospects	Volumetric Inputs – Lower Cetaceous Prospects	Volumetric Inputs – Lower Cetaceous Prospects
Property	Distribution	P90	P50	P10	Mean	Most- likely
Area, km2 Jbel Musa	Log normal	16	20	25	20
Area, km2 Jbel Ayachi, Jbwl Lakhdar	Log normal	14	16	18	16
Gross thickness, m	log normal	5	16	50	24
Gross rock volume, km2m Jbel Musa	(output)	97	315	1017	475
Gross rock volume, km2m Jbel Ayachi, Jbwl Lakhdar	(output)	79	251	806	376
Net-to-gross, %	Constant	100	100	100	100	100
Average porosity, %	Beta	10	17	25	15	17
Average water saturation, %	Beta	40	25	10	25	25
Formation volume factor, stb/rb	Beta	1.8	1.5	1.3	1.54	1.5
Recovery factor, %	Beta	25	35	45	35	35

Table 5-4 Volumetric inputs – Lower Cretaceous prospects

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
49
----- End of picture text -----

5.3 Undiscovered hydrocarbons and Prospective Resources

The following tables provide RISC’s view of the undiscovered oil in-place and prospective oil resources for the Mazagan prospects.

Reservoir	Prospect/lead	Gross Unrisked Undiscovered Oil In-place, MMstb	Gross Unrisked Undiscovered Oil In-place, MMstb	Gross Unrisked Undiscovered Oil In-place, MMstb	Gross Unrisked Undiscovered Oil In-place, MMstb
		P90	P50	P10	Mean
Miocene	Toubkal*	560	1630	4700	2260
	Zagora	39	103	267	134
	Amchad	26	77	229	109
Albian	Jbel Musa	44	155	551	249
	Jbel Ayachi	36	124	435	197
	Jbel Lakhdar**	36	124	435	197

*Figures to nearest 10 MMstb to avoid misleading precision

**Jbel Ayachi and Jbel Lakkdhar are effectively equal in size

Table 5-5 Mazagan permit - unrisked undiscovered oil in-place

Reservoir	Prospect/lead	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb
		Low Estimate	Best Estimate	High Estimate	Mean Estimate
Miocene	Toubkal*	180	560	1670	790
	Zagora	13	35	95	47
	Amchad	8	26	81	38
Albian	Jbel Musa	14	53	195	87
	Jbel Ayachi	12	43	153	69
	Jbel Lakhdar**	12	43	153	69

*Figures to nearest 10 MMstb to avoid misleading precision

** Jbel Ayachi and Jbel Lakkdhar are effectively equal in size

Table 5-6 Mazagan permit - unrisked prospective oil resources

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
50
----- End of picture text -----

6 CHANCE OF SUCCESS

6.1 Risking methodology

Prospectivity in deep water offshore Morocco is minimally explored, and although it clearly offers potential, it also constitutes frontier territory. As presented in our report, two potential plays are defined. Both of these are unproved, and both therefore carry play risks. On the other hand, prospect risks are specific to the various features, and assume that the play is proven.

RISC uses a standard spreadsheet which incorporates fixed probabilities for a matrix of combinations of quality/quantity of data (i.e. confidence in our view, based upon the data available) against probability of outcome. Play risks comprise the regional development of source (presence of mature source interval, with generation, expulsion and migration prior to trap development), reservoir and top seal; prospect risks comprise charge, trap (geometry), reservoir (presence and effectiveness) and seal (trap integrity including fault seal and stratigraphic pinchout where relevant).

The Miocene play is based on hydrocarbons stratigraphically trapped within channelised gravity flows. However, there are essentially no structural closures within the mapped acreage, and the recognition of this Miocene level as a play is completely dependent on the presence of raised seismic amplitudes and their proposed association with hydrocarbon fill.

Within the petroleum industry different methods have been adopted in the application of direct hydrocarbon indicators (DHI) within the exploration process, with the least precision in frontier areas. In general, the uplift given to the chance of success by the presence of a DHI is applied at the end of the risking process. This is an appropriate approach when there is a mapped geometry that limits the potential accumulation, such as a structural closure or clear updip termination of a seismic package (a common scenario for gravity flows). However, in the case of the Miocene play defined by Pura Vida, there is no mapped updip pinchout of a seismic unit, partly because there is no mapping of a sediment package which is seen to thin and terminate, but also because the raised amplitudes appear to extend beyond the edge of the available 3D seismic data volume. Therefore without these raised amplitudes, there would be no play, so we have therefore incorporated the DHI element into our play risk.

An alternative way of considering this is by a hypothetical situation where an adjacent block had a similar play where raised amplitudes had been tested and indeed found to be oil. This now would prove the play, and make prospect risks on directly comparable features in the Mazagan block very attractive.

The Lower Cretaceous/Jurassic play involves simple structural features without amplitude support, so the conventional play and prospect approach is applicable.

6.2 Miocene : Play Risk

Source – moderate risk (‘more likely than not’), no material shows in nearby Shark-1, although given no reservoirs this is not definitive. Small fields do however exist more proximal to coast, with shows in other wells, including Amber-1 to the south. Direct evidence of Lower Jurassic source is very limited, and at considerable distance from the Mazagan permit; closest is distant DSDP site 547 with some source quality Lower Jurassic. However, association has been made between the nearshore and onshore fields with a Toarcian source. In addition, the rock property modelling provides encouragement that the raised seismic amplitudes are hydrocarbon-related. Probability 0.8

Reservoir – moderate risk; no sands within Shark-1 as this well did not penetrate likely sand fairways.

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
51
----- End of picture text -----

However, the model of a Miocene channel at this level is supported by seismic amplitudes. DSDP well 416 has turbidites through the Eocene to Miocene interval. Probability 0.7

Seal – moderate risk; top seal is likely to be certain, but given definition of play as amplitudesupported pinchout, lateral seal (and base seal), including updip lateral seal is unproven. Raised seismic amplitudes provides support that seal is working. Probability 0.8

6.3 Miocene : Prospect Risk

(N.B. as noted earlier, probabilities assume that the play is proven)

Charge – high confidence, very likely to occur; however charge is required through the Cretaceous chaotic ‘mass transport zone’, which is likely to form a good seal. Occasional faults through this unit are expected to provide a migration route. The lack of amplitude support on the simple unfaulted four-way dip closure to the west of Zagora can be reasonably interpreted as implying that charge was in contrast possible up the diapir walls to provide the charge (and observed amplitude support) for Zagora and Amchad. However, a biodegradation risk is present for all features. Probability 0.85, applicable to all prospects.

Reservoir – moderate confidence, very likely to occur; no nearby wells with Miocene sands. However, stratigraphic model implies sands are regionally present. Probability 0.7, applicable to all prospects

Trap – high confidence, virtually certain, given play as defined; trap geometry defined by 3D. Toubkal prospect involves a different trap geometry (large channelised sand fairway with updip limit undefined, albeit restricted width) to Amchad & Zagora (structural closures against salt diapirs). However, as defined these are given the same probability. Probability 0.95

Seal - moderate confidence, likely to occur (Toubkal) to very likely to occur (Amchad and Zagora); amplitudes are defined as probably hydrocarbon-related, so seal is implied as probably working. Note however that raised amplitudes at lower levels in Shark-1, some of which appear to be crestally associated, were discovered to relate to impedance contrasts between non-reservoir lithologies. Probability 0.75 Toubkal, 0.85 Amchad and Zagora

The various chances of success, including total probabilities, are summarised in Table 6-1.

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
52
----- End of picture text -----

Exploration Risk Assessment – Miocene Play	Exploration Risk Assessment – Miocene Play	Exploration Risk Assessment – Miocene Play	Exploration Risk Assessment – Miocene Play	Exploration Risk Assessment – Miocene Play	Exploration Risk Assessment – Miocene Play
Play Chance	Source	Reservoir	Seal		Overall Play POS
	0.8	0.7	0.8		0.45
Prospect Chance	Charge	Reservoir	Trap	Seal	Overall Prospect POS
	0.85	0.75	0.95	0.75 (Toubkal) 0.85 (Amchad, Zagora)	0.40 (Toubkal) 0.51 (Amchad, Zagora)
					Overall POS 0.20 (Toubkal) 0.23 (Amchad, Zagora)

Table 6-1 Mazagan permit Miocene prospectivity – probability of success

Lower Cretaceous : Play Risk

Source – moderate risk (‘more likely than not’), no material shows in nearby Shark-1, although given no reservoirs this is not definitive. Small fields do however exist more proximal to coast, with shows in other wells. Direct evidence of Lower Jurassic source is limited, with no nearby wells. Closest is distant DSDP site 547 with some source quality Lower Jurassic. However, this proposed source would be immediately below the reservoir. Probability 0.7

Reservoir – moderate-high risk; well control very limited. DSDP site 416 has turbidites from the Tithonian (at TD) to the Hauterivian. Probability 0.5

Seal – certain; top seal is not proven but extremely likely, given shale-dominated section, including ubiquitous mass transport zone, seen in Shark-1. Probability 1.0

Lower Cretaceous : Prospect Risk

Charge – high confidence, very likely to occur, given reservoir overlies proposes source. Probability 0.85, applicable to all prospects

Reservoir – low confidence, equally likely to occur or not occur; no nearby wells deep enough to penetrate Lower Cretaceous / Jurassic. Stratigraphic model implies sands are regionally present, but material risk will still remain even if a future nearby well were to encounter reservoir. Probability 0.50, applicable to all prospects

Trap – high confidence, virtually certain; trap geometry defined by 3D, and all prospects are clear four-way dip closures. Probability 0.95, applicable to all prospects

Seal - moderate confidence, very likely to occur; parameter remains at moderate confidence given that it has not yet been drilled in the area. Probability 0.75, applicable to all prospects.

The various chances of success, including total probabilities, are summarised in Table 6-2.

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
53
----- End of picture text -----

	Exploration Risk Assessment – Lower Cretaceous / Jurassic Play	Exploration Risk Assessment – Lower Cretaceous / Jurassic Play	Exploration Risk Assessment – Lower Cretaceous / Jurassic Play	Exploration Risk Assessment – Lower Cretaceous / Jurassic Play
Play Chance	Source	Reservoir	Seal		Overall Play POS
	0.7	0.5	1.0		0.35
Prospect Chance	Migration	Reservoir	Trap	Seal	Overall Prospect POS
	0.85	0.50	0.95	0.75	0.30
					Overall POS 0.11

Table 6-2 Mazagan permit Lower Cretaceous / Jurassic prospectivity – probability of success

==> picture [595 x 126] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist’s Report on Mazagan Permit, Morocco
September 2011
54
----- End of picture text -----

7 SUMMARY OF PROSPECTIVE RESOURCES

Reservoir	Prospect/lead	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb	Gross Unrisked Prospective Oil Resources, MMstb
		Low Estimate	Best Estimate	High Estimate	Mean Estimate	Chance of Success
Miocene	Toubkal	180	560	1670	790	0.20
	Zagora	13	35	95	47	0.23
	Amchad	8	26	81	38	0.23
Albian	Jbel Musa	14	53	195	87	0.11
	Jbel Ayachi	12	43	153	69	0.11
	Jbel Lakhdar	12	43	153	69	0.11

Table 7-1 Mazagan permit - Summary of prospective resources

==> picture [595 x 127] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
55
----- End of picture text -----

8 APPENDIX 1 - SUMMARY OF SPE-PRMS RESERVES AND RESOURCES DEFINITIONS

Abbreviation	Definition
SPE-PRMS	Petroleum Resources Management System, approved by the Board of the SPE March 2007 and endorsed by the Boards of Society of Petroleum Engineers, American Association of Petroleum Geologists, World Petroleum Council and Society of Petroleum Evaluation Engineers.
Proved Reserves	Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be a 90% probability that the quantities actually recovered will exceed the estimate. Often referred to as 1P, also as “Proven”.
Probable Reserves	Probable Reserves are those reserves, additional to Proved, that are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered from the underlying project will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be a 50% probability that the actual quantities recovered will exceed the 2P estimate.
Possible Reserves	Possible Reserves are those reserves, additional to 2P, which analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the underlying project have a low probability of exceeding the sum of Proved plus Probable plus Possible (3P) reserves. When probabilistic methods are used, there should be a 10% probability that the actual quantities recovered will exceed the 3P estimate.
Contingent Resources	Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects, but which are not currently considered to be commercially recoverable due to one or more contingencies.
Prospective Resources	Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations.

==> picture [595 x 130] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
56
----- End of picture text -----

9 APPENDIX 2 - LIST OF TERMS

The following lists, along with a brief definition, abbreviated terms that are commonly used in the oil and gas industry and which may be used in this report.

Abbreviation	Definition
1P	Equivalent to Proved reserves or Proved in-place quantities, depending on the context.
1Q	1st Quarter
2P	The sum of Proved and Probable reserves or in-place quantities, depending on the context.
2Q	2nd Quarter
2D	Two Dimensional
3D	Three Dimensional
4D	Four Dimensional – time lapsed 3D in relation to seismic
3P	The sum of Proved, Probable and Possible Reserves or in-place quantities, depending on the context.
3Q	3rd Quarter
4Q	4th Quarter
AFE	Authority for Expenditure
Bbl	US Barrel
BBL/D	US Barrels per day
BCF	Billion (109) cubic feet
BCM	Billion (109) cubic meters
BFPD	Barrels of fluid per day
BOPD	Barrels of oil per day
BTU	British Thermal Units
BOEPD	US barrels of oil equivalent per day

==> picture [595 x 128] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
57
----- End of picture text -----

Abbreviation	Definition
BWPD	Barrels of water per day
°C	Degrees Celsius
Capex	Capital expenditure
CAPM	Capital asset pricing model
CGR	Condensate Gas Ratio – usually expressed as bbl/MMscf
Contingent Resources	Those quantities of petroleum estimated, as of a given date, to be potentially recoverable from known accumulations by application of development projects but which are not currently considered to be commercially recoverable due to one or more contingencies. Contingent Resources are a class of discovered recoverable resources as defined in the SPE-PRMS.
CO2	Carbon dioxide
CP	Centipoise (measure of viscosity)
CPI	Consumer Price Index
DEG	Degrees
DHI	Direct hydrocarbon indicator
Discount Rate	The interest rate used to discount future cash flows into a dollars of a reference date
DST	Drill stem test
E&P	Exploration and Production
EG	Gas expansion factor. Gas volume at standard (surface) conditions / gas volume at reservoir conditions (pressure & temperature)
EIA	US Energy Information Administration
EMV	Expected Monetary Value
EOR	Enhanced Oil Recovery
ESP	Electric submersible pump

==> picture [595 x 130] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
58
----- End of picture text -----

Abbreviation	Definition
EUR	Economic ultimate recovery
Expectation	The mean of a probability distribution
F	Degrees Fahrenheit
FDP	Field Development Plan
FEED	Front End Engineering and design
FID	Final investment decision
FM	Formation
FPSO	Floating Production Storage and offtake unit
FWL	Free Water Level
FVF	Formation volume factor
GIIP	Gas Initially In Place
GJ	Giga (109) joules
GOC	Gas-oil contact
GOR	Gas oil ratio
GRV	Gross rock volume
GSA	Gas sales agreement
GTL	Gas To Liquid(s)
GWC	Gas water contact
H2S	Hydrogen sulphide
HHV	Higher heating value
ID	Internal diameter
IRR	Internal Rate of Return is the discount rate that results in the NPV being equal to zero.

==> picture [595 x 128] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
59
----- End of picture text -----

Abbreviation	Definition
JV(P)	Joint Venture (Partners)
Kh	Horizontal permeability
km2	Square kilometres
Krw	Relative permeability to water
Kv	Vertical permeability
kPa	Kilo (thousand) Pascals (measurement of pressure)
Mstb/d	Thousand Stock tank barrels per day
LIBOR	London inter-bank offered rate
LNG	Liquefied Natural Gas
LTBR	Long-Term Bond Rate
m	Metres
MDT	Modular dynamic (formation) tester
mD	Millidarcies (permeability)
MJ	Mega (106) Joules
MMbbl	Million US barrels
MMscf(d)	Million standard cubic feet (per day)
MMstb	Million US stock tank barrels
MOD	Money of the Day (nominal dollars) as opposed to money in real terms
MOU	Memorandum of Understanding
Mscf	Thousand standard cubic feet
Mstb	Thousand US stock tank barrels
MPa	Mega (106) pascal (measurement of pressure)
mss	Metres subsea

==> picture [595 x 130] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
60
----- End of picture text -----

Abbreviation	Definition
MSV	Mean Success Volume
mTVDss	Metres true vertical depth subsea
MW	Megawatt
NPV	Net Present Value (of a series of cash flows)
NTG	Net to Gross (ratio)
ODT	Oil down to
OGIP	Original Gas In Place
OOIP	Original Oil in Place
Opex	Operating expenditure
OWC	Oil-water contact
P90, P50, P10	90%, 50% & 10% probabilities respectively that the stated quantities will be equalled or exceeded. The P90, P50 and P10 quantities correspond to the Proved (1P), Proved + Probable (2P) and Proved + Probable + Possible (3P) confidence levels respectively.
PBU	Pressure build-up
PJ	Peta (1015) Joules
POS	Probability of Success
Possible Reserves	As defined in the SPE-PRMS, an incremental category of estimated recoverable volumes associated with a defined degree of uncertainty. Possible Reserves are those additional reserves which analysis of geoscience and engineering data suggest are less likely to be recoverable than Probable Reserves. The total quantities ultimately recovered from the project have a low probability to exceed the sum of Proved plus Probable plus Possible (3P) which is equivalent to the high estimate scenario. When probabilistic methods are used, there should be at least a 10% probability that the actual quantities recovered will equal or exceed the 3P estimate.

==> picture [595 x 128] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
61
----- End of picture text -----

Abbreviation	Definition
Probable Reserves	As defined in the SPE-PRMS, an incremental category of estimated recoverable volumes associated with a defined degree of uncertainty. Probable Reserves are those additional Reserves that are less likely to be recovered than Proved Reserves but more certain to be recovered than Possible Reserves. It is equally likely that actual remaining quantities recovered will be greater than or less than the sum of the estimated Proved plus Probable Reserves (2P). In this context, when probabilistic methods are used, there should be at least a 50% probability that the actual quantities recovered will equal or exceed the 2P estimate.
Prospective Resources	Those quantities of petroleum which are estimated, as of a given date, to be potentially recoverable from undiscovered accumulations as defined in the SPE-PRMS.
Proved Reserves	As defined in the SPE-PRMS, an incremental category of estimated recoverable volumes associated with a defined degree of uncertainty Proved Reserves are those quantities of petroleum, which by analysis of geoscience and engineering data, can be estimated with reasonable certainty to be commercially recoverable, from a given date forward, from known reservoirs and under defined economic conditions, operating methods, and government regulations. If deterministic methods are used, the term reasonable certainty is intended to express a high degree of confidence that the quantities will be recovered. If probabilistic methods are used, there should be at least a 90% probability that the quantities actually recovered will equal or exceed the estimate. Often referred to as 1P, also as “Proven”.
PSC	Production Sharing Contract
PSDM	Pre-stack depth migration
PSTM	Pre-stack time migration
psia	Pounds per square inch pressure absolute
p.u.	Porosity unit e.g. porosity of 20% +/- 2 p.u. equals a porosity range of 18% to 22%
PVT	Pressure, volume & temperature
QA/QC	Quality Assurance/ Control
rb/stb	Reservoir barrels per stock tank barrel under standard conditions

==> picture [595 x 130] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
62
----- End of picture text -----

Abbreviation	Definition
RFT	Repeat Formation Test
Real Terms (RT)	Real Terms (in the reference date dollars) as opposed to Nominal Terms of Money of the Day
Reserves	RESERVES are those quantities of petroleum anticipated to be commercially recoverable by application of development projects to known accumulations from a given date forward under defined conditions. Reserves must further satisfy four criteria: they must be discovered, recoverable, commercial, and remaining (as of the evaluation date) based on the development project(s) applied. Reserves are further categorised in accordance with the level of certainty associated with the estimates and may be sub-classified based on project maturity and/or characterized by development and production status.
RT	Measured from Rotary Table or Real Terms, depending on context
SC	Service Contract
scf	Standard cubic feet (measured at 60 degrees F and 14.7 psia)
Sg	Gas saturation
Sgr	Residual gas saturation
SRD	Seismic reference datum lake level
SPE	Society of Petroleum Engineers
SPE-PRMS	Petroleum Resources Management System, approved by the Board of the SPE March 2007 and endorsed by the Boards of Society of Petroleum Engineers, American Association of Petroleum Geologists, World Petroleum Council and Society of Petroleum Evaluation Engineers.
s.u.	Fluid saturation unit. e.g. saturation of 80% +/- 10 s.u. equals a saturation range of 70% to 90%
stb	Stock tank barrels
STOIIP	Stock Tank Oil Initially In Place
Sw	Water saturation
TCM	Technical committee meeting

==> picture [595 x 128] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
63
----- End of picture text -----

Abbreviation	Definition
Tcf	Trillion (1012) cubic feet
TJ	Tera (1012) Joules
TLP	Tension Leg Platform
TRSSV	Tubing retrievable subsurface safety valve
TVD	True vertical depth
US$	United States dollar
US$ million	Million United States dollars
WACC	Weighted average cost of capital
WHFP	Well Head Flowing Pressure
Working interest	A company’s equity interest in a project before reduction for royalties or production share owed to others under the applicable fiscal terms.
WPC	World Petroleum Council
WTI	West Texas Intermediate Crude Oil

==> picture [595 x 130] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
64
----- End of picture text -----

AUSTRALIA HEAD OFFICE AUSTRALIA BRISBANE OFFICE UNITED KINGDOM OFFICE

==> picture [595 x 128] intentionally omitted <==

----- Start of picture text -----

Independent Technical Specialist's Report on Mazagan Permit, Morocco
September 2011
65
----- End of picture text -----

9. INVESTIGATING ACCOUNTANT’S REPORT

104

663245_2.DOCX

INVESTIGATING ACCOUNTANT’S REPORT Pura Vida Energy NL

18 November 2011

==> picture [595 x 282] intentionally omitted <==

==> picture [595 x 281] intentionally omitted <==

38 Station Street Subiaco, WA 6008 PO Box 700 West Perth WA 6872 Australia

Tel: +61 8 6382 4600 Fax: +61 8 6382 4601 www.bdo.com.au

==> picture [92 x 37] intentionally omitted <==

18 November 2011

The Directors Pura Vida Energy NL Level 8, 225 St Georges Terrace PERTH WA 6000

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT

1. Introduction

We have prepared this Investigating Accountant’s Report (“ Report ”) on historical financial information of Pura Vida Energy NL ( “Pura Vida” or “ the Company ”) for inclusion in the Prospectus. Broadly, the Prospectus will offer up to 20 million shares at an issue price of $0.20 each to raise up to $4 million before costs (“ the Offer ”). No oversubscriptions will be accepted by the Company.

Expressions defined in the prospectus have the same meaning in this Report.

2. Basis of Preparation

This Report has been prepared to provide investors with information on the Statement of Comprehensive Income, Statement of Changes in Equity and the Statement of Financial Position and the pro-forma Statement of Financial Position as noted in Appendices 1, 2 and 3.

This Report does not address the rights attaching to the shares to be issued in accordance with the Prospectus, nor the risk associated with the investment, and has been prepared based on the complete Offer being achieved. Neither BDO Corporate Finance (WA) Pty Ltd nor its related entities (“ BDO ”) has been requested to consider the prospects for the Company, the shares on offer and related pricing issues, nor the merits and risks associated with becoming a shareholder and accordingly has not done so, and does not purport to do so. BDO accordingly takes no responsibility for these matters or for any matter or omission in the Prospectus, other than responsibility for this Report. Risk factors are set out in the Prospectus.

3. Background

Pura Vida is an unlisted public company which was incorporated on 28 April 2011 for the primary purposes of acquiring an interest in, and exploring, the Mazagan Offshore Area. The Mazagan Offshore Area comprises six exploration blocks off the Atlantic coast of Morocco representing a total area of approximately 10,900 km[2] . The area lies about 80 km from the coast near the town of Essaouira, Morocco.

Pura Vida’s Board of Directors consists of Damon Neaves as Managing Director, Bevan Tarratt as Non Executive Chairman and David Ormerod as Technical Director.

On 18 October 2011, the Company entered into an agreement with the Office National Des Hydrocarbures Et Des Mines ( “ONHYM” ) in relation to the Mazagan Offshore Area ( “Petroleum Agreement” ). Under the Petroleum Agreement, the parties agreed that their respective percentage interest in the exploration permits will be:

• (a) Pura Vida – 75%; and

• (b) ONHYM – 25%.

ONHYM’s 25% interest will be free carried through to the discovery of a commercial exploitable Hydrocarbon deposit and Pura Vida has agreed to perform and fund the minimum exploration work program as set out in the Petroleum Agreement. It is estimated that the first two years of planned commitments is approximately US$3.66 million.

If a commercial exploitable hydrocarbon deposit is discovered the parties have the right to obtain an Exploitation Concession with duration of up to 25 years. The parties will have the same percentage interest in any Exploitation Concession. Pura Vida is also required to pay the State of Morocco a discovery bonus of US$1 million within 30 days of any Exploitation Concession being granted. Further bonuses will also be payable when average production levels increase. Royalty rates will also be payable to the State of Morocco by both parties based on the value of their percentage interest in any oil and gas production from Exploitation Concessions.

Pursuant to the Petroleum Agreement, Pura Vida has provided ONHYM with an irrevocable bank guarantee of US$3 million in order to secure the completion of the minimum exploration work commitments set out in the Petroleum Agreement during the initial two year period.

4. Scope

You have requested BDO to prepare an Investigating Accountant's Report covering the following financial information:

• Pura Vida’s reviewed statement of Comprehensive Income for the period from 28 April 2011, being the date of incorporation, to 17 November 2011;

• the Statement of Financial Position, Statement of Changes in Equity and the pro-forma Statement of Financial Position as at 17 November 2011 reflecting the actual position as at that date, major transactions between that date and the date of our report and the proposed capital raising under the Prospectus; and

• the accounting policies applied by Pura Vida in preparing its financial statements.

The historical financial information set out in the appendices to this Report has been extracted from the financial statements of the Company for the period of incorporation to 17 November 2011.

The Directors are responsible for the preparation of the historical financial information including determination of the adjustments.

We have conducted our review of the historical financial information in accordance with the Australian Auditing and Assurance Standard ASRE 2405 “Review of Historical Financial Information Other than a Financial Report”. We made such inquiries and performed such procedures as we, in our professional judgment, considered reasonable in the circumstances including:

• a review of work papers, accounting records and other documents pertaining to balances in existence at 17 November 2011;

• a review of the assumptions used to compile the pro-forma Statement of Financial Position;

• a review of the adjustments made to the pro-forma historical financial information;

• a comparison of consistency in application of the recognition and measurement principles in Accounting Standards and other mandatory professional reporting requirements in Australia, and the accounting policies adopted by the Company disclosed in the appendices to this Report; and

• enquiry of Directors and others.

These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion.

Our review was limited primarily to an examination of the historical financial information, the pro-forma financial information, analytical review procedures and discussions with both management and directors. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical information or proforma financial information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

• support by another person, corporation or an unrelated entity has not been assumed;

• the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and

• the going concern basis of accounting has been adopted.

5. Conclusion

Statement on Historical Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe the historical financial information as set out in the Appendices to this report does not present fairly the financial performance for the period of incorporation to 17 November 2011 or the financial position as at 17 November 2011 in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia.

Statement of Pro-forma Financial Information

Based on our review, which was not an audit, nothing has come to our attention which would cause us to believe the pro-forma financial information does not present fairly the financial position of the Company as at 17 November 2011, in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia as if the proforma transactions had occurred on that date.

6. Subsequent Events

Apart from the matters dealt with in this Report, and having regard to the scope of our Report, to the best of our knowledge and belief, no other material transactions or events outside of the ordinary business of the Company have come to our attention that would require comment on, or adjustment to, the information referred to in our Report or that would cause such information to be misleading or deceptive.

7. Assumptions Adopted in Compiling the Pro-forma Statement of Financial Position

The pro-forma Statement of Financial Position post issue is shown in Appendix 2. This has been prepared based on the reviewed financial statements as at 17 November 2011 and the transactions and events relating to the issue of shares under this Prospectus:

• The issue of 20 million shares at an issue price of $0.20 cents per share to raise up to $4 million;

• Capital raising costs of the Offer totalling approximately $544,500 to be offset against contributed equity; and

• The repayment of Shareholder loans of $500,000 to Hemisphere Investment Partners.

8. Disclosures

BDO Corporate Finance (WA) Pty Ltd is the corporate advisory arm of BDO in Perth.

Neither BDO Corporate Finance (WA) Pty Ltd nor BDO, nor any director or executive or employee thereof, has any financial interest in the outcome of the proposed transaction except for the normal professional fee due for the preparation of this Report.

Consent to the inclusion of the Investigating Accountant’s Report in the Prospectus in the form and context in which it appears, has been given. At the date of this Report, this consent has not been withdrawn.

Yours faithfully

BDO Corporate Finance (WA) Pty Ltd

==> picture [204 x 41] intentionally omitted <==

Sherif Andrawes Director

APPENDIX 1

PURA VIDA ENERGY NL

STATEMENT OF COMPREHENSIVE INCOME

	Reviewed for the period from incorporation at 28-Apr-11 to 17-Nov-11 $
Interest income Expenses General and Administration Company formation fees Corporate services fees Fees and charges Employee benefits expense Travel and accommodation IT expenses Legal fees Loss before income tax expense Income tax benefit/(expense) Net Loss for the period	426 (76,646) (8,522) (40,000) (122,387) (204,374) (30,059) (13,336) (10,991)
	(505,889) -
	(505,889)

The Statement of Comprehensive Income is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

APPENDIX 2

PURA VIDA ENERGY NL

STATEMENT OF FINANCIAL POSITION

Notes	Reviewed as at Subsequent Pro-forma Pro-forma 17-Nov-11 Events Adjustments After issue $ $ $ $
CURRENT ASSETS Cash and cash equivalents 2 Trade and other receivables TOTAL CURRENT ASSETS NON CURRENT ASSETS Property plant & equipment Exploration expenditure TOTAL NON CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITES NON CURRENT LIABILITIES Borrowings 3 TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS/(LIABILITES) EQUITY Contributed equity 4 Accumulated losses TOTAL EQUITY	3,365,257 - 2,955,500 6,320,757 15,372 - - 15,372
	3,380,629 - 2,955,500 6,336,129 14,743 - - 14,743 38,100 - - 38,100
	52,843 - - 52,843
	3,433,472 - 2,955,500 6,388,972
	224,203 - - 224,203
	224,203 - - 224,203 567,992 - (500,000) 67,992
	567,992 - (500,000) 67,992
	792,195 - (500,000) 292,195
	2,641,277 - 3,455,500 6,096,777 3,147,166 - 3,455,500 6,602,666 (505,889) - - (505,889)
	2,641,277 - 3,455,500 6,096,777

The pro-forma Statement of Financial Position after Issue is as per the Statement of Financial Position before Issue adjusted for subsequent events and the transactions relating to the issue of shares pursuant to this Prospectus. The Statement of Financial Position is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

APPENDIX 3

PURA VIDA ENERGY NL

STATEMENT OF CHANGES IN EQUITY

Notes	Reviewed for the period ended Subsequent Pro-forma Pro-forma 17-Nov-11 Events Adjustments After issue $ $ $ $
Comprehensive income for the period Profit/(Loss) for the period Total comprehensive income for the period Transactions with equity holders in their capacity as equity holders Contributed equity, net of transaction costs 4 Total transactions with equity holders Balance	(505,889) - - (505,889)
	(505,889) - - (505,889)
	3,147,166 - 3,455,500 6,602,666
	3,147,166 - 3,455,500 6,602,666
	2,641,277 - 3,455,500 6,096,777

The Statement of Changes in Equity is to be read in conjunction with the notes to and forming part of the historical financial information set out in Appendix 4.

NOTES TO AND FORMING PART OF THE HISTORICAL FINANCIAL INFORMATION

APPENDIX 4

PURA VIDA ENERGY NL

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies adopted in the preparation of the historical financial information included in this Report have been set out below.

(a) Basis of preparation of historical financial information

The historical financial information has been prepared in accordance with the recognition and measurement, but not all the disclosure requirements of the Australian equivalents to International Financial Reporting Standards (“ AIFRS ”), other authoritative pronouncements of the Australian Accounting Standards Board, Australian Accounting Interpretations and the Corporations Act 2001.

(b) Going Concern

The historical financial information has been prepared on a going concern basis, which contemplates the continuity of normal business activity and the realisation of assets and the settlement of liabilities in the normal course of business.

The ability of the Company to continue as a going concern is dependent on the success of the fundraising under the Prospectus. The Directors believe that the Company will continue as a going concern. As a result the financial information has been prepared on a going concern basis. However should the fundraising under the Prospectus be unsuccessful, the entity may not be able to continue as a going concern. No adjustments have been made relating to the recoverability and classification of liabilities that might be necessary should the Company not continue as a going concern.

(c) Reporting Basis and Conventions

The report is also prepared on an accrual basis and is based on historic costs and does not take into account changing money values or, except where specifically stated, current valuations of non-current assets.

The following is a summary of the material accounting policies adopted by the company in the preparation of the financial report. The accounting policies have been consistently applied, unless otherwise stated.

(d) Revenue Recognition

Revenue is measured at the fair value of the consideration received or receivable. Amounts disclosed as revenue are net of returns, trade allowances and amounts collected on behalf of third parties. Interest income is recognised on a time proportion basis using the effective interest method.

(e) Income Tax

The income tax expense or revenue for the period is the tax payable on the current period’s taxable income based on the national income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction.

The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability.

No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss. Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities and when the deferred tax balances relate to the same taxation authority. Current tax assets and tax liabilities are offset where the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously. Current and deferred tax balances attributable to amounts recognised directly in equity are also recognised directly in equity.

(f) Impairment of Assets

At each reporting date, the Company reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the asset being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over its recoverable amount is expensed to the income statement. Impairment testing is performed annually for goodwill and intangible assets with indefinite lives. Where it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash generating unit to which the asset belongs.

(g) Cash and Cash Equivalents

For statement of cash flow presentation purposes, cash and cash equivalents includes cash on hand, deposits held at call with financial institutions, other short-term, highly liquid investments with original maturities of three months or less that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(h) Trade and Other Receivables

Trade receivables are recognised initially at fair value and subsequently measured at amortised cost, less provision for impairment. Trade receivables are due for settlement within 30 days from the date of recognition. Collectability of trade receivables is reviewed on an ongoing basis. Debts which are known to be uncollectible are written off.

An allowance account for doubtful receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms of receivables. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. Cash flows relating to short term receivables are not discounted if the effect of discounting is immaterial. The amount of the provision is recognised in the statement of comprehensive income. When a trade receivable for which an impairment allowance has been recognised becomes uncollectable in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in profit or loss.

(i) Trade and Other Payables

These amounts represent liabilities for goods and services provided to the Company prior to the end of the period which are unpaid. They are recognised initially at fair value and subsequently at amortised cost. The amounts are unsecured and are usually paid within 30 days of recognition.

(j) Contributed Equity

Ordinary shares are classified as equity. Costs associated with capital raisings (exclusive of GST) directly attributable to the issue of new shares or options are shown in equity as a deduction from the proceeds. If the entity reacquires its own equity instruments, eg as the result of a share buy-back, those instruments are deducted from equity and the associated shares are cancelled. No gain or loss is recognised in the profit or loss and the consideration paid including any directly attributable costs associated with capital raisings (net of income taxes) is recognised directly in equity.

(k) Provisions

Provisions are recognised when the Company has a present legal or constructive obligation as a result of past events; it is more likely than not that an outflow of resources will be required to settle the obligation; and the amount has been reliably estimated. Provisions are not recognised for future operating losses.

(l) Borrowings

Borrowings are initially recognised at fair value, net of transaction costs incurred. Borrowings are subsequently measured at amortised cost. Any difference between proceeds (net of transaction costs) and the redemption amount is recognised in the statement of comprehensive income over the period of the borrowings using the effective interest method.

Borrowings are classified as current liabilities unless the Company has an unconditional right to defer settlement of the liability for at least 12 months after the statement of financial position date.

(m) Goods and Services Tax (GST)

Revenues, expenses and assets are recognised net of GST except where GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item.

Receivables and payables are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the statement of financial position.

Cash flows are included in the statement of cash flow on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authorities are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(n) Exploration and Development Expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each identifiable area of interest. These costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves. Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves. A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Costs of site restoration are provided over the life of the facility from when exploration commences and are included in the costs of that stage. Site restoration costs include the dismantling and removal of mining plant, equipment and building structures, waste removal and rehabilitation of the site in accordance with clauses of the mining permits. Such costs have been determined using estimates of future costs, current legal requirements and technology on a discounted basis. Any changes in the estimates for the costs are accounted for on a prospective basis. In determining the costs of site restoration, there is uncertainty regarding the nature and extent of the restoration due to community expectations and future legislation. Accordingly, the costs have been determined on the basis that the restoration will be completed within one year of abandoning the site.

(o) Employee Benefits

Provision is made for the company’s liability for employee benefits arising from services rendered by employees to balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries, annual leave and sick leave which will be settled after one year, are measured at the amounts expected to be paid when the liability is settled, plus related on-costs. Other employee benefits payable later than one year are measured at the present value of the estimated future cash outflows to be made for those benefits.

Share-based payments

The Company provides benefits to employees (including directors) of the Company in the form of share options. The fair value of options granted is recognised as an employee expense with a corresponding increase in equity. The fair value is measured at grant date and spread over the period during which the employee becomes unconditionally entitled to the options. The fair value of the options granted is measured using Black Scholes valuation model, taking into account the terms and conditions upon which the options were granted.

The cost of equity-settled transactions is recognised, together with a corresponding increase in equity, on a straight line basis over the period from grant date to the date on which the relevant employees become fully entitled to the award (“vesting date”). The amount recognised as an expense is adjusted to reflect the actual number that vest.

The dilutive effect, if any, of outstanding options is reflected as additional share dilution in the computation of earnings per share.

(p) Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Fair value

Fair value is determined based on current bid prices for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arm’s length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the Company assesses whether there is objective evidence that a financial instrument has been impaired. Impairment losses are recognised in profit and loss.

(q) Provisions

Provisions are recognised when the Company has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

(r) Accounting estimates and judgements

In the process of applying the accounting policies, management has made certain judgements or estimations which have an effect on the amounts recognised in the financial information.

The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

Recoverability of capitalised exploration and evaluation expenditure

The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the company decides to exploit the related lease itself, or, if not, whether it successfully recovers the related exploration and evaluation asset through sale.

Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, costs of drilling and production, production rates, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices.

Valuation of share based payment transactions

The valuation of share-based payment transactions is measured by reference to the fair value of the equity instruments at the date at which they are granted. The fair value is determined using the Black Scholes model taking into account the terms and conditions upon which the instruments were granted.

NOTE 2. CASH AND CASH EQUIVALENTS	Reviewed 17-Nov-11 $	Pro-forma After issue $
Cash and cash equivalents Adjustments to arise at the pro-forma balance: Reviewed balance of Pura Vida at 17 November 2011 Pro-forma adjustments: Proceeds from shares issued under this Prospectus Capital raising costs Repayment of loan to Hemisphere Investment Partners Pro-forma Balance	3,365,257	6,320,757
		3,365,257 4,000,000 (544,500) (500,000)
		2,955,500
		6,320,757
NOTE 3. BORROWINGS	Reviewed 17-Nov-11 $	Pro-forma After issue $
Borrowings Adjustments to arise at the pro-forma balance: Reviewed balance of Pura Vida at 17 November 2011 Pro-forma adjustments: Repayment of loan to Hemisphere Investment Partners Pro-forma Balance	567,992	67,992
		567,992 (500,000)
		(500,000)
		67,992

Pura Vida has two loan facilities currently in place both provided by Hemisphere Investment Partners.

The first loan facility is for up to $700,000 from 17 October 2011 to 17 January 2012. The Company drew down the entire amount and has repaid $200,000 to date. Pura Vida is to pay 9.25% per annum on the amounts drawn down from the date of the draw down. Pura Vida intends to repay the remaining $500,000 in full from funds raised via the Prospectus.

The second loan facility is for up to $300,000 from 17 October 2011 to 17 January 2012. The Company has not drawn down any of this facility to date. Pura Vida is to pay 9.25% per annum on the amounts drawn down from the date of the draw down.

NOTE 4. CONTRIBUTED EQUITY	Reviewed Pro-forma 17-Nov-11 After issue $ $
Contributed equity Adjustments to arise at the pro-forma balance: Fully paid ordinary share capital Pro-forma adjustments: Proceeds from shares issued under this Prospectus Capital raising costs Partly paid share capital* Pro-forma Balance	3,147,166 6,602,666 Number of shares $ 20,250,001 2,917,985 20,000,000 4,000,000 - (544,500)
	40,250,001 6,373,485 22,918,133 229,181
	63,168,134 6,602,666

*Partly Paid Shares were issued at a price of $0.20 of which $0.01 was paid on issue. The Partly Paid Shares were issued in 3 tranches between June 2011 and November 2011. Subject to the Corporations Act and the Company’s Constitution, the Company shall only be entitled to make a call on the Partly Paid Shares on the date which is one (1) day before the five (5) years from the date of issue of the Partly Paid Shares. If a call is not paid when made, the Partly Paid Shares shall be subject to forfeiture in accordance with the procedure set out in Section 254Q of the Corporations Act.

Performance Rights on issue	Number
Performance Rights currently on issue Total Performance Rights on issue at completion of Offer	10,000,000
	10,000,000

5 million Performance Rights have been issued to both Damon Neaves and David Ormerod (Directors) and will convert into fully paid ordinary shares in the Company upon satisfaction of the following vesting conditions:

• (i) 50% will vest upon completion of an acquisition or acquisitions by the Company with a total transaction value (including without limitation acquisition price, spending requirements and/or deferred or contingent payments) of at least $10 million; and

• (ii) 50% will vest upon the Company’s market capitalisation exceeding $30 million for a period of 20 consecutive trading days based on the closing price of the Shares on ASX.

The Performance Rights will be issued for nil cash consideration and shall expire three years after the commencement date of each Director, being 17 August 2011 for Damon Neaves and 26 May 2011 for David Ormerod.

The Performance Rights are required to be expensed over the entire vesting period, however since they have only been issued recently no expense has been recorded.

Options on issue	Number
Options currently on issue Total Options on issue at completion of Offer	5,000,000
	5,000,000

2.5 million Options have been issued to both Damon Neaves and David Ormerod (Directors). These options have an exercise price of $0.40 each and are exercisable on a date which is five years after their date of issue. The Options shall vest (whichever occurs first):

• (i) after the Company has successfully completed an acquisition or acquisitions by the Company with a total transaction value (including without limitation acquisition price, spending requirements and/or deferred or contingent payments) of at least $10 million and in any event no earlier than that date which is 12 months after the commencement dates for each Director; or

• (ii) in the event that the Company terminates the Optionholder’s employment with the Company without cause, except where notice of termination is given within the first twelve months in which case the Options shall be forfeited by the Optionholder.

The Options are required to be expensed over the entire vesting period, however since they have only been issued recently no expense has been recorded.

NOTE 5: RELATED PARTY DISCLOSURES

Transactions with Related Parties and Directors’ Interests are disclosed in the Prospectus.

NOTE 6: COMMITMENTS AND CONTINGENCIES

Under the terms of the Petroleum Agreement, ONHYM’s 25% interest will be free carried through to the discovery of a commercial exploitable Hydrocarbon deposit. Pura Vida will perform and fund the minimum exploration work program which has an estimated cost for the first two years of planned commitments of US$3.66 million. If for any reason, other than an event beyond its control, Pura Vida has not completed the minimum exploration work program as set out in the Petroleum Agreement it will be required to pay a penalty equal to the estimated costs of that part of the minimum exploration work program that has not been completed.

Of the existing cash reserves, US$3 million is currently subject of the bank guarantee pursuant to the Petroleum Agreement. The Company expects that US$1 million of the bank guarantee will be released in the first half of 2012 upon completion of a drop core program and the balance will be returned upon completion of the remainder of the work commitments during the initial two year exploration period.

At the date of the report no other material commitments or contingent liabilities exist that we are aware of, other than those disclosed in the prospectus.

10. SOLICITOR’S REPORT ON TITLE

121

663245_2.DOCX

Naciri & Associés Allen & Overy

MEMORANDUM

To Damon Neaves Managing director Pura Vida Energy NL From Naciri & Associés Allen & Overy Our ref 0102885-0000001 CS:396928.1 Date 1 November 2011 Subject Moroccan Opinion / Pura Vida Energy Dear Sir,

We are acting as Moroccan counsel for Pura Vida Energy NL (" Pura Vida ") in connection with the review of its percentage interests in the area of interest for oil and gas exploration in Morocco named "Mazagan Offshore" (the " Area of Interest ").

1. OPINION DOCUMENTS

For the purpose of this opinion, we only examined the documents referred to in Schedule 1 (the " Opinion Documents ") of this opinion and we express herein no other opinion on any matter relating to any agreement, undertaking, obligation or document referred to in the Opinion Documents nor any other agreement, undertaking, obligation or document to which any party to the Opinion Documents may be bound other than the opinions expressly mentioned in this legal opinion.

2. ASSUMPTIONS

In rendering this opinion, we have assumed:

• (a) that Pura Vida (i) is an existing legal entity with legal personality in accordance with all applicable laws and (ii) has been validly incorporated with full power to legally carry out its business and to execute and perform its obligations under the exploration permits (the " Exploration Permits ");

• (b) that the entry into and performance of the petroleum agreement (the " Petroleum Agreement ") and association contract (" Association Contract ") and the granting of the Exploration Permits to Pura Vida does not and will not conflict with the constitutional documents of Pura Vida;

Naciri & Associés Allen & Overy is a partnership regulated by the Casablanca Bar.

Naciri & Associés Allen & Overy is affiliated with Allen & Overy LLP, a limited liability partnership registered in England & Wales. Allen & Overy LLP or an affiliated undertaking has an office in each of: Abu Dhabi, Amsterdam, Antwerp, Athens, Bangkok, Beijing, Belfast, Bratislava, Brussels, Bucharest (associated office), Budapest, Casablanca, Doha, Dubai, Düsseldorf, Frankfurt, Hamburg, Hong Kong, Jakarta (associated office), London, Luxembourg, Madrid, Mannheim, Milan, Moscow, Munich, New York, Paris, Perth, Prague, Riyadh (associated office), Rome, São Paulo, Shanghai, Singapore, Sydney, Tokyo, Warsaw and Washington, D.C.

• (c) that the persons authorized to sign the agreements referred to in the Opinion Documents on behalf of Pura Vida and its counterparties were duly appointed by a valid power of attorney and have exercised their powers in accordance with their duties under all applicable laws and constitutional documents of Pura Vida and said counterparties;

• (d) the genuineness of all signatures and the conformity to original documents of all copies provided to us for the purpose of this opinion;

• (e) that there is no, nor will be any, other agreement, undertaking or arrangement, whether oral or in writing, that could change, affect or supersede any of the terms of the Opinion Documents or the performance of their respective obligations by the parties to the Opinion Documents. The Opinion Documents represent and contain the entirety of the rights and undertakings of the parties as to the matters to which the Opinion Documents relate.

3. SCOPE OF OPINION

• (a) Scope of opinion : As requested by Pura Vida, this opinion shall assess the validity and the extent of Pura Vida’s percentage interests in the Exploration Permits held in the Area of Interest.

• (b) Express matters : this legal opinion is strictly limited to the matters expressly referred to in section 4 of this legal opinion, subject to the assumptions expressed in section 2 of this legal opinion construed as extending to any other matters whatsoever in connection with the legal rights referred to in the Opinion Documents or otherwise.

• (c) Moroccan Law : this legal opinion is strictly limited to Moroccan law and is subject to and must be construed in accordance with the provisions of Moroccan law, as applied and interpreted by the case law of the Moroccan Supreme Court in force and published as of the date hereof.

• (d) Facts : we do not express any opinion as to any matters of fact or the reasonableness of any statements of opinion or intention contained in the Opinion Documents. In particular, no opinion is given on any facts or events of any nature, or any actions undertaken by any person, in relation whether directly or not with the Opinion Documents or any facts, events, actions which may have an impact or an effect on the validity, enforceability (including against third parties) or binding nature of the Opinion Documents.

• (e) Technical matters, scope of works : we do not express any opinion as to any data, information, calculation and details of a factual, financial, accountancy, economic, technical or statistical nature in the Opinion Documents including their schedules, and in particular the technical matters and scope of works referred to in the Opinion Documents.

• (f) No up-dating : This opinion is given only as to Moroccan law as at the date of this opinion. We assume that no foreign law, procedure or rules affects the conclusions of this opinion. We shall have no duty to inform the above named-addressees or any other person of any changes in Moroccan law, or any other circumstance of which we would be informed or become aware, that would occur after the date of this legal opinion and that would impact the matters addressed herein.

0102885-0000001 CS:396928.1

2

4. OPINION

4.1 Surface areas covered by the Exploration Permits and respective percentage interests

Pursuant to Appendix 2 of the Petroleum Agreement, of the 6 Explorations Permits granted in respect of the Area of Interest, the surface areas covered by said permits is 10,896.6 sq/km.

Pursuant to clause 3.1 of the Petroleum Agreement dated 20 October 2011 relating to the Area of Interest, the parties agreed that their respective percentage interests in the 6 Exploration Permits were as follows:

• 25% for ONHYM;

• 75% for Pura Vida.

4.2 Legal requirements for the granting and the validity of an Exploration Permit and Outstanding Steps

Under Moroccan law, the granting of Exploration Permits (" permis de recherche ") and the validity of said permits is governed by the Law n°21-90 dated 1st April 1992 relating to the exploration and the operation of hydrocarbon deposits as amended and completed (the " Hydrocarbon Code ") and the Decree n°2-93-786 dated 3 November 1993 for the application of the Law n°21-90 relating to the exploration and the operation of hydrocarbon deposits as amended and completed (the " Decree ").

Section 4 paragraph 4 of the Hydrocarbon Code provides that : " The granting of exploration permits shall be preceded by the conclusion of a petroleum agreement with the State. "

Namely, the Petroleum Agreement and the Association Contract relating to the Area of Interest referred to as Mazagan Offshore have been entered into between Office National des Hydrocarbures et des Mines (" ONHYM ") and Pura Vida on 20 October 2011.

At this very stage, the outstanding procedural steps (the " Outstanding Steps ") in order for the Petroleum Agreement and related Exploration Permits to be valid and effective are as follows:

• (a) Joint order to be issued by the Ministry in charge of Energy and Ministry of Economy

Pursuant to Section 34 of the Hydrocarbon Code : " The petroleum agreement shall be approved by the administration ".

Moreover, Section 60 of the Decree provides that " The petroleum agreement shall be approved by a joint order issued by the Ministry in charge of Energy and the Ministry of Economy ".

In the absence of a joint order issued by the Ministry in charge of Energy and the Ministry of Economy in order to approve the Petroleum Agreement, said Petroleum Agreement shall not be construed as binding and enforceable among the parties.

Thus, the Exploration Permits shall not be regarded as legally valid and enforceable until the joint order is obtained.

In addition, the official granting of the Exploration Permits is also subject to the completion of the following procedural step:

• (b) Order to be issued by the Ministry in charge of Energy

0102885-0000001 CS:396928.1

3

Section 22 of the Hydrocarbon Code provides that : " The exploration permit shall only be granted to a sole legal entity or, in common, to several legal entities. It is granted by an " administrative act notified to the petitioner and published in the Official Gazette .

In the absence of an order issued by the Ministry in charge of Energy in the conditions set out in the above Sections, the Exploration Permit shall not be regarded as legally valid and enforceable.

Section 7 of the Decree further provides that : " The exploration permit is granted within sixty days following the date of filing of the application, by order of the Ministry in charge of energy, notified to the petitioner and published in the Official Gazette ."

Given the above, we will only be in a position to confirm the actual validity of the Exploration Permits after the completion of the Outstanding Steps which include :

• the approval of the Petroleum Agreement by joint order of the Ministry of Energy and Ministry of Finance ; and

• the notification to Pura Vida and publication in the Official Gazette of the order to be issued by the Ministry of Energy confirming the granting of the Exploration Permits to Pura Vida.

Pursuant to Section 7 of the Decree, the Outstanding Steps shall normally be completed within a maximum sixty (60) days period as from the filing of the application made by Pura Vida.

5. EXECUTIVE SUMMARY

Based upon the foregoing, it is our opinion, so far as the Laws of Morocco at the date hereof are concerned and subject to the assumptions set out below and to any matters not disclosed to us, that the Petroleum Agreement entered into between ONHYM and Pura Vida is valid and that subject to the completion of the Outstanding Steps defined in paragraph 4.2 above, Pura Vida will be the valid holder of the Exploration Permits relating to the Area of Interest.

6. BENEFIT

This opinion is based upon the Moroccan laws and regulations as of the date hereof, which are subject to any amendment, repeal or other modification of the applicable laws, regulations hereafter enacted or published.

Our engagement with respect to this opinion does not require and shall not be construed to constitute a continuing obligation on our part to update our opinions or notify or otherwise inform you of the amendment, repeal or other modification of the applicable laws, or regulations that served as basis for our opinion or laws and regulations hereafter enacted or published and which impact on this opinion.

This opinion is given for the sole benefit of Pura Vida. It is not assignable.

Yours faithfully,

Naciri & Associés Allen & Overy

0102885-0000001 CS:396928.1

4

SCHEDULE 1

LIST OF OPINION DOCUMENTS

• the Petroleum Agreement entered into between ONHYM (acting on behalf of the Moroccan State (“ ONHYM ”) and Pura Vida NL (“ Pura Vida ”) on 20 October 2011 relating to the area of interest referred to as Mazagan Offshore;

• the Association Contract entered into between ONHYM (acting on behalf of the Moroccan State (“ ONHYM ”) and Pura Vida NL (“ Pura Vida ”) on 20 October 2011 relating to the area of interest referred to as Mazagan Offshore.

0102885-0000001 CS:396928.1

5

11. BOARD, MANAGEMENT AND CORPORATE GOVERNANCE

11.1 Directors

Disclosure of the Directors and their background is contained at the beginning of this Prospectus in the Investment Overview section.

11.2 Corporate Governance

The Directors monitor the business affairs of the Company on behalf of Shareholders and have formally adopted a corporate governance policy which is designed to encourage Directors to focus their attention on accountability, risk management and ethical conduct.

To the extent applicable, our Company has adopted The Corporate Governance Principles and Recommendations (2nd Edition) as published by ASX Corporate Governance Council (Recommendations).

11.3 Board of Directors

The Company’s Board of Directors are responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

• (a) maintain and increase Shareholder value;

• (b) ensure a prudential and ethical basis for the Company’s conduct and activities; and

• (c) ensure compliance with the Company’s legal and regulatory objectives.

Consistent with these goals, the Board assumes the following responsibilities:

• (d) developing initiatives for profit and asset growth;

• (e) reviewing the corporate, commercial and financial performance of the Company on a regular basis;

• (f) acting on behalf of, and being accountable to, the Shareholders; and

• (g) identifying business risks and implementing actions to manage those risks and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

11.4 Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto, the Company is committed to the following principles:

• (a) the Board is to comprise Directors with a blend of skills, experience and attributes appropriate for the Company and its business; and

127

663245_2.DOCX

• (b) the principal criterion for the appointment of new Directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been committed to by the Board.

11.5 Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

11.6 Remuneration arrangements

The remuneration of an Executive Director will be decided by the Board, without the affected Executive Director participating in that decision-making process.

The total maximum remuneration of Non-executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of Non-executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $150,000 per annum.

The Board may award additional remuneration to Non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

11.7 External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

11.8 Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

11.9 Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

11.10 Departures from Recommendations

Following admission to the Official List of ASX, the Company will be required to report any departures from the Recommendations in its annual financial report.

The Company’s compliance and departures from the Recommendations as at the date of this Prospectus are set out on the following pages.

128

663245_2.DOCX

	PRINCIPLES AND RECOMMENDATIONS	COMMENT
1.	Lay solid foundations for management and oversight
1.1	Companies should establish the functions reserved to the board and those delegated to senior executives and disclose those functions.	The Company’s Corporate Governance Plan includes a Board Charter, which discloses the specific responsibilities of the Board.
1.2	Companies should disclose the process for evaluating the performance of senior executives.	The Company’s Corporate Governance Plan includes a section on performance evaluation practices adopted by the Company. The chair will monitor the Board and the Board will monitor the performance of any senior executives who are not Directors, including measuring actual performance against planned performance.
1.3	Companies should provide the information indicated in the_Guide_ to reporting on Principle 1.	Explanation of departures from Principles and Recommendations 1.1 and 1.2 (if any) are set out above. The Company will also explain any departures from Principles and Recommendations 1.1 and 1.2 (if any) in its future annual reports. No performance evaluation of senior executives has taken place to date as this process is conducted annually and the first year has not been completed. Future annual reports will disclose whether such a performance evaluation has taken place in the relevant reporting period and whether it was in accordance with the process disclosed. The Corporate Governance Plan, which includes the Board Charter, is posted on the Company’s website.
2.	Structure the board to add value
2.1	A majority of the board should be independent directors.	The majority of the Board are not independent directors.
2.2	The chair should be an independent director.	The chair is an independent director.
2.3	The roles of chair and chief executive officer should not be exercised by the same individual.	The Company has a Managing Director who is separate from the chair.

129

2.4	The board should establish a nomination committee.	No formal nomination committee has been established by the Company as yet. The Board, as a whole, currently serves as the nomination committee. The Company’s Corporate Governance Plan includes a Nomination Committee Charter, which discloses the specific responsibilities of the committee. Where necessary, the Board seeks advice of external advisers in connection with the suitability of applicants for Board membership.
2.5	Companies should disclose the process for evaluating the performance of the board, its committees and individual directors.	The Company’s Corporate Governance Plan includes a section on performance evaluation practices adopted by the Company. The chair will review the performance of the Board, its committees (if any) and individual directors to ensure that the Company continues to have a mix of skills and experience necessary for the conduct of its activities.
2.6	Companies should provide the information indicated in the_Guide_ to reporting on Principle 2.	The Company has provided details of each director, such as their skills, experience and expertise relevant to their position in this Prospectus and will also provide these details on its website and in future annual reports. Explanation of departures from Principles and Recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 (if any) are set out above. The Company will also explain any departures from Principles and Recommendations 2.1, 2.2, 2.3, 2.4 and 2.5 (if any) in its future annual reports. No performance evaluation of the Board, its committees and individual directors has taken place to date as this process is conducted annually and the first year has not been completed. Future annual reports will disclose whether such a performance evaluation has taken place in the relevant reporting period and whether it was in accordance with the process disclosed. The Corporate Governance Plan, which includes the Nomination Committee Charter, is posted on the Company’s website.

130

3.	Promote ethical and responsible decision-making
3.1	Companies should establish a code of conduct and disclose the code or a summary of the code as to: • the practices necessary to maintain confidence in the company’s integrity • the practices necessary to take into account their legal obligations and the reasonable expectations of their stakeholders • the responsibility and accountability of individuals for reporting and investigating reports of unethical practices.	The Company’s Corporate Governance Plan includes a ‘Corporate Code of Conduct’, which provides a framework for decisions and actions in relation to ethical conduct in employment.
3.2	Companies should establish a policy concerning diversity and disclose the policy or a summary of that policy. The policy should include requirements for the board to establish measureable objectives for achieving gender diversity and for the board to assess annually both the objectives and progress in achieving them.	The Company’s Corporate Governance Plan includes a_‘Diversity Policy’_, which provides a framework for establishing measureable objectives for achieving gender diversity and for the Board to assess annually both the objectives and progress in achieving them.
3.3	Companies should disclose in each annual report the measureable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress in achieving them.	This disclosure has not yet been made as the first year has not been completed. Future annual reports will disclose the measureable objectives for achieving gender diversity set by the board in accordance with the diversity policy and progress in achieving them.
3.4	Companies should disclose in each annual report the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.	This disclosure has not yet been made as the first year has not been completed. Future annual reports will disclose the proportion of women employees in the whole organisation, women in senior executive positions and women on the board.

131

3.5	Companies should provide the information indicated in the_Guide_ to reporting on Principle 3.	Explanation of departures from Principles and Recommendations 3.1, 3.2, 3.3 and 3.4 (if any) are set out above. The Company will also explain any departures from Principles and Recommendations 3.1, 3.2, 3.3 and 3.4 (if any) in its future annual reports. The Corporate Governance Plan, which includes the Corporate Code of Conduct and Diversity Policy, is posted on the Company’s website.
4.	Safeguard integrity in financial reporting
4.1	The board should establish an audit committee.	No formal audit committee has been established by the Company as yet. The Board, as a whole, currently serves as the audit committee.
4.2	The audit committee should be structured so that it: • consists only of non-executive directors • consists of a majority of independent directors • is chaired by an independent chair, who is not chair of the board • has at least three members.	Whilst the audit committee is not structured in the manner set out in the Principles and Recommendations, the Board is of the view that the experience and professionalism of the persons on the Board is sufficient to ensure that all significant matters are appropriately addressed and actioned. Further, the Board does not consider that the Company is of sufficient size to justify the appointment of additional directors for the sole purpose of satisfying this recommendation as it would be cost prohibitive and counterproductive. As the operations of the Company develop the Board will reassess the formation of the audit committee.
4.3	The audit committee should have a formal charter.	The Company’s Corporate Governance Plan includes an Audit and Risk Committee Charter, which discloses its specific responsibilities.
4.4	Companies should provide the information indicated in the_Guide_ to reporting on Principle 4.	Explanation of departures from Principles and Recommendations 4.1, 4.2 and 4.3 (if any) are set out above. The Company will also explain any departures from Principles and Recommendations 4.1, 4.2 and 4.3 (if any) in its future annual reports. The Corporate Governance Plan, which includes the Audit & Risk Committee Charter, is posted on the Company’s website.

132

5.	Make timely and balanced disclosure
5.1	Companies should establish written policies designed to ensure compliance with ASX Listing Rule disclosure requirements and to ensure accountability at a senior executive level for that compliance and disclose those policies or a summary of those policies.	The Company has a continuous disclosure program in place designed to ensure compliance with ASX Listing Rule disclosure obligations and to ensure accountability at a senior executive level for compliance and factual presentation of the Company’s financial position.
5.2	Companies should provide the information indicated in_Guide to_ Reporting on Principle 5.	The Company has not currently departed from Principle and Recommendation 5.1. The Company will provide an explanation of any departures from Principle and Recommendation 5.1 (if any) in its future annual reports. The Corporate Governance Plan, which includes a continuous disclosure program, is posted on the Company’s website.
6.	Respect the rights of shareholders
6.1	Companies should design a communications policy for promoting effective communication with shareholders and encouraging their participation at general meetings and disclose their policy or a summary of that policy.	The Company’s Corporate Governance Plan includes a shareholders communication strategy, which aims to ensure that the shareholders are informed of all major developments affecting the Company’s state of affairs.
6.2	Companies should provide the information indicated in the_Guide_ to reporting on Principle 6.	The Company has not currently departed from Principle and Recommendation 6.1. The Company will provide an explanation of any departures from Principle and Recommendation 6.1 (if any) in its future annual reports. The Corporate Governance Plan, which includes a shareholders communication strategy, will be posted on the Company’s website.
7.	Recognise and manage risk
7.1	Companies should establish policies for the oversight and management of material business risks and disclose a summary of those policies.	The Company’s Corporate Governance Plan includes a risk management policy. The Board determines the Company’s “risk profile” and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal control.

133

7.2	The board should require management to design and implement the risk management and internal control system to manage the company’s material business risks and report to it on whether those risks are being managed effectively. The board should disclose that management has reported to it as to the effectiveness of the company’s management of its material business risks.	The Company’s Corporate Governance Plan includes a risk management policy. The Board will require either the Managing Director or the Chief Financial Officer at the relevant time to design and implement the risk management and internal control systems.
7.3	The board should disclose whether it has received assurance from the chief executive officer (or equivalent) and the chief financial officer (or equivalent) that the declaration provided in accordance with section 295A of the Corporations Act is founded on a sound system of risk management and internal control and that the system is operating effectively in all material respects in relation to financial reporting risks.	The Board will seek the relevant assurance from the Managing Director or Chief Financial Officer at the relevant time.
7.4	Companies should provide the information indicated in_Guide to_ Reporting on Principle 7.	The Company has not currently departed from Principle and Recommendation 7.1, 7.2 and 7.3. The Company will provide an explanation of any departures from Principle and Recommendation 7.1, 7.2 and 7.3 (if any) in its future annual reports. The Corporate Governance Plan, which includes a risk management policy, is posted on the Company’s website.
8.	Remunerate fairly and responsibly
8.1	The board should establish a remuneration committee.	The Board has not established a formal remuneration committee at this point in the Company’s development. It is considered that the size of the Board along with the level of activity of the Company renders this impractical and the Board, acting without the affected director participating in the decision making process, currently serves as a remuneration committee. The Company’s Corporate Governance Plan includes a Remuneration Committee Charter, which discloses its specific responsibilities.

134

8.2	The remuneration committee should be structured so that it: • consists of a majority of independent directors • is chaired by an independent director • has at least three members	Although no formal remuneration committee has been established, the Board currently serves as the remuneration committee. The Board is not comprised of a majority of independent directors, but is chaired by an independent director.
8.3	Companies should clearly distinguish the structure of non- executive directors’ remuneration from that of executive directors and senior executives.	The Board has distinguished the structure of non-executive director’s remuneration from that of executive directors and senior executives. The Company’s constitution provides that the remuneration of non-executive Directors will be not be more than the aggregate fixed sum set by the constitution and subsequently varied by resolution at a general meeting of shareholders. The Board is responsible for determining the remuneration of executive directors and senior executives (without the participation of the affected director). It is the Board’s objective to provide maximum stakeholder benefit from the retention of a high quality Board and executive team by remunerating executive directors and senior executives fairly and appropriately with reference to relevant employment market conditions and by linking the nature and amount of executive directors’ and senior executives emoluments to the Company’s financial and operational performance.
8.4	Companies should provide the information indicated in the_Guide_ to reporting on Principle 8.	Explanation of departures from Principles and Recommendations 8.1, 8.2 and 8.3 (if any) are set out above. The Company will also provide an explanation of any departures from Principles and Recommendations 8.1, 8.2 and 8.3 (if any) in its future annual reports. The Corporate Governance Plan, which includes the Remuneration Committee Charter, is posted on the Company’s website.

135

12. MATERIAL CONTRACTS

12.1 Petroleum Agreement with ONHYM

The Company has entered into a legally binding petroleum agreement (Petroleum Agreement) with ONHYM. The agreement relates to six (6) Exploration Permits comprising the Mazagan Offshore Area. Under the Petroleum Agreement, the parties agreed that their respective percentage interest in the Exploration Permits will be:

(a) Pura Vida – 75%; and

(b) ONHYM – 25%

The parties to the Petroleum Agreement have agreed to enter into an association contract which is summarised at section 12.2 of this Prospectus to govern their relationship and mutual obligations.

The initial duration of the Exploration Permits is two years, with the Company entitled to apply for an extension of the Exploration Permits for two further terms of 2 years, and then 4 years. When applying for an extension of the Exploration Permits, Pura Vida will be required to comply with the applicable laws which may require Pura Vida to relinquish part of the area of the Exploration Permits.

ONHYM’s interest will be free carried through to the discovery of a commercial exploitable Hydrocarbon deposit. Pura Vida has agreed to perform and fund the minimum exploration work program set out in the Petroleum Agreement during the term of the Exploration Permits. The estimated cost for the first two years of planned commitments is approximately US$3.66 million. If for any reason, other than an event beyond its control, Pura Vida has not completed the minimum exploration work program as set out in the Petroleum Agreement by the time set out in Petroleum Agreement it will be required to pay a penalty equal to the estimated costs of that part of the minimum exploration work program that has not been completed.

If a commercial exploitable hydrocarbon deposit is discovered the parties to the Petroleum Agreement have the right to obtain, upon their request, an Exploitation Concession covering the area of the deposit with a duration up to 25 years (with a possible extension of up to ten (10) years if such an extension is commercially justified). The parties will have the same percentage interests in any Exploitation Concession. The expenses for the development and exploitation of the deposit will be funded jointly by the parties in proportion to their respective interests in the Exploitation Concessions.

Pura Vida will be the operator of the project comprising the Mazagan Offshore Area in accordance with a further association contract to be entered into between Pura Vida and ONHYM, until the creation of a joint operating company or it otherwise ceases to be the operator.

The parties are required to pay the State of Morocco an annual royalty rate on the value of its percentage interest in any oil and gas production from Exploitation Concessions. Currently royalty rates on oil and gas production, both onshore and offshore at less than 200 metres of water, are set at 10% and 5%, respectively. The first 300,000 tons of oil and 300,000,000m[3] of gas from each exploitation licence at such depths are exempted from royalties. At offshore depths of 200 metres or more of water, oil and gas produced are subject to royalty rates of 7% and 3.5%, respectively, with the first 500,000 tons of oil and the

136

first 500,000,000m[3] of gas from each Exploitation Concession being exempted from royalties.

Pura Vida is also required under the Petroleum Agreement to pay the State of Morocco a discovery bonus for US$1,000,000 within 30 days of an Exploitation Concession being granted when a deposit of hydrocarbons is declared to contain commercial exploitable quantities and further bonuses when average production levels reach 20,000, 50,000 and 100,000boepd.

Pursuant to the Petroleum Agreement and the Association Agreement (summarised below), Pura Vida is required to provide ONHYM with an irrevocable bank guarantee in order to secure the completion of the minimum exploration work commitments set out in the Petroleum Agreement. Further detail regarding the terms of the bank guarantee is set out at Section 12.3 of this Prospectus.

Annually, Pura Vida is also required to contribute up to US$75,000 towards the training of ONHYM’s staff and technicians, and an additional US$25,000 annually for each Exploitation Concession which is granted.

Once any Exploitation Concession is granted, each party to the Petroleum Agreement is required to pay a proportion of the annual surface rental of any Exploitation Concession (equal to 1,000 Moroccan Dirhams per square kilometre) in proportion to their percentage interest in the Exploitation Concessions.

Further, the Petroleum Agreement provides compensation is payable to Pura Vida in the event of any adverse effect from a change in regulations.

Under the Petroleum Agreement, the parties agreed that the Company will not be responsible for or required to remedy any pre-existing environmental issues. The Company will be responsible for any damage caused to the environment arising from the exploration, development and exploitation activities it undertakes in the Mazagan Offshore Area.

Any dispute settled by arbitration in Paris before the International Centre for the Settlement of Investment Disputes or the International Chamber of Commerce under internationally accepted rules.

The Petroleum Agreement is effective upon approval by a joint order signed by the Ministers of Energy and Finance of Morocco.

12.2 Association Agreement

On 20 October 2011, the Company entered into a legally binding association agreement with ONHYM (Association Agreement), in accordance with the Petroleum Agreement, to set out the terms of their relationship and mutual obligations.

Under the Association Agreement the Company agreed to jointly undertake the exploration and exploitation of the Mazagan Offshore Area.

The Company will undertake the minimum exploration work program on the six (6) Exploration Permits comprising the Mazagan Offshore Area during the term of those permits in accordance with the Petroleum Agreement on behalf of the parties to the Association Agreement. If the Company decides not to extend the term of the Exploration Permits pursuant to the Petroleum Agreement or decides to abandon the Permits, it is required to notify ONYHM.

137

Under Moroccan law Pura Vida may be required to relinquish parts of the surface area of the Exploration Permits when it applies for an extension of the duration of those permits for a further term in accordance with Petroleum Agreement. Under the Association Contract, the Company is required to consult with ONHYM in connection with determining which parts of the Exploration Permits it should relinquish.

The Company will be appointed as the operator of the joint venture between the parties, and will be responsible for the conception, performance, management and supervision of all operations and activities carried out pursuant to the Petroleum Agreement within the Mazagan Offshore Area.

The minimum exploration work program during the initial term of the Exploration Permits as set out in the Petroleum Agreement is sole funded by the Company. Except for the minimum exploration work program, the Company will be required to undertake any joint operation within the limits of approved budgets and programs on behalf of the associated parties.

If commercial production is commenced from an Exploration Concession, granted in accordance with the Petroleum Agreement, within 2 years after commercial production commences on the Exploration Concession then the parties will form a jointly owned operating company to replace the Company as operator. The parties’ shares in the joint operating company will be proportionate to their respective interests in the Exploration Concession.

Pura Vida is required to cooperate with the personnel of ONHYM and to hire employees of ONHYM to carry-out its obligations. ONHYM will assist the Company in carrying out its operations under the Association Agreement, and will provide the Company with any technical information it holds in connection with Mazagan Offshore Area. It also agrees to facilitate any contracts with the Moroccan administration and authorities.

The Company may be removed or resign as operator. Its resignation or removal will not affect its right, title or interest in the Exploration Permits or Exploitation Concessions.

The operations and works of the operator are to be carried out by the operator under the supervision of a management committee. The management committee will comprise three representatives of each party, and a representative of ONHYM will chair the management committee.

In accordance with the Petroleum Agreement, the parties agreed that their respective percentage interest in the Exploration Permits at the commencement of the Association Agreement will be:

(a) Pura Vida – 75%; and

(b) ONHYM – 25%.

The Company will bear all costs (100%) of undertaking the minimum exploration work program during the initial term of the Exploration Permits on behalf to the parties pursuant to the Petroleum Agreement.

138

The parties will bear the costs of undertaking any development and exploitation works on a hydrocarbon deposit in the following proportions:

(a) Pura Vida – 75%; and

(b) ONHYM – 25%.

With the exception of those costs and expenses to be borne by the Company under the Petroleum Agreement, all other costs and expenses incurred in connection with the Petroleum Agreement and the Association Agreement by the Company in undertaking joint operations in connection with any Exploitation Concession will be borne by the parties in proportion to their respective percentage interests in the Exploitation Concession.

Pursuant to the Petroleum Agreement, Pura Vida is required to provide ONHYM with irrevocable bank guarantees in order to secure the completion of the minimum exploration work commitments set out in the Petroleum Agreement. Further detail regarding the terms of the bank guarantees is set out at Section 12.3 of this Prospectus.

If one of the parties to the Association Agreement wishes to abandon the Exploration Permits and Exploitation Concessions, the party abandoning must transfer its percentage interest in the Exploration Permits and Exploitation Concessions to the other party without compensation.

The parties may assign their interests under the Association Contract with the consent of the other parties and the Minister in Charge of Energy, and after entering any instrument of assignment required by the applicable Moroccan laws and codes and after the parties have completed the reprocessing of 3,000 square kilometres of 3D seismic data to pre-stack depth migration and detailed seismic inversion in accordance with the Petroleum Agreement.

If a party receives a bona fide offer for its interest, the other party or parties to the Association Agreement have a pre-emptive option to purchase their interest on the same terms of the offer received from the third party. If the pre-emptive option to purchase the interest a party is not exercised within the allowed time that interest may be sold to a third party.

Any drilling work undertaken by a party to the Association Agreement without the approval of the other party is undertaken at that party’s sole risk and cost.

12.3 Bank guarantee

Pursuant to the Petroleum Agreement and Association Agreement referred to in Section 12 of this Prospectus, Pura Vida is required to provide ONHYM with an irrevocable bank guarantee in order to secure the completion of the minimum exploration work commitments set out in the Petroleum Agreement during the initial two (2) year period of that agreement. This initial bank guarantee is for an amount of US$3,000,000 and must be provided by upon signing the Petroleum Agreement. Pura Vida has provided ONHYM with this bank guarantee.

The bank guarantee will be reduced by US$1,000,000 after the operator pursuant to the Association Agreement (initially the Company) has provided ONHYM with all the reports and documents produced as a result of the completion of the drop core exploration program on the Exploration Permits as set out in the Petroleum Agreement. The bank guarantee will be further reduced or released (as the case may be) upon completion of the remaining work commitments in the initial two (2) year period of the Petroleum Agreement.

139

If the Company opts to enter into further extension periods of the Petroleum Agreement, at the time of applying for that further period the Company will be required to provide further irrevocable bank guarantees to ONHYM in order to secure the completion of its minimum exploration work commitments during those further periods. The amount of those further bank guarantees is equal to twenty-five per cent (25%) of the estimated cost of work commitment to be completed during the period of the extension.

The bank guarantees may be further reduced or released (as the case may be) upon completion of the relevant work commitments and otherwise in accordance with the terms contained in the Petroleum Agreement.

12.4 Corporate Advisory Mandate

On or about 14 October 2011, the Company entered into a corporate mandate with Hemisphere Corporate to act as corporate advisor to the Company with respect to the Offer (Corporate Advisory Mandate).

The Company has agreed to pay Hemisphere Corporate the following:

• (a) from 1 June 2011, a monthly corporate advisory fee of $10,000 payable in arrears on the last day of each month. This fee is to be capped at $60,000 (subject to any unforeseen events occurring) (Corporate Advisory Fee);

• (b) subject to the Company being admitted to the ASX and obtaining all Shareholder and regulatory approvals, a success fee of $150,000 to be paid within seven (7) days of the Company’s admission (Corporate Advisory Success Fee); and

• (c) all reasonable out of-pocket-expenses, including travel and accommodation, with such costs to be approved by the Company in advance.

Hemisphere Corporate is deemed a related party of the Company, pursuant to section 228 of the Corporations Act, by virtue of the fact that a 50% shareholder of Hemisphere Corporate, Mr Bevan Tarratt, is also a Director of the Company. The unrelated Directors, Messrs Neaves and Ormerod, have concluded the Corporate Advisory Mandate is on terms that would be reasonable in the circumstances if the public company and the related party were dealing at arm’s length, or on terms that are less favourable to the related party than these terms.

12.5 CPS Mandate

On 28 September 2011, the Company and Cunningham Peterson Sharbanee Securities Pty Ltd (CPS) executed a mandate (CPS Mandate). Pursuant to the CPS Mandate, the Company appointed CPS as lead broker and lead manager in relation to the Company raising a minimum of $1.5 million.

CPS agreed to raise funds and provide assistance with spread on a best endeavours basis.

CPS will provide the Company with introductions with a view to raising funds on behalf of the Company, general promotion and corporate advice.

The Company will pay CPS the following fees:

140

• (a) a fee of 5% plus GST on all funds raised by CPS; and

• (b) a corporate advisory fee of $50,000 plus GST in consideration of providing continuing support to Pura Vida throughout the term of the CPS Mandate.

The Company will reimburse CPS (in addition to the fees outlined above) for all reasonable expenses relating to travel and accommodation with regard to institutional and broker road shows organised and attended by a representative of CPS. Otherwise, CPS will only be reimbursed if prior written approval has been given by the Company.

CPS may terminate the CPS Mandate by 14 days notice in writing, after providing the Company 14 days to rectify the default and the Company does not rectify such default, if:

• (c) the Company commits or allows a material breach of any term of the CPS Mandate; or

• (d) if any warranty or representation made by the Company is not complied with or proves to be untrue.

CPS may terminate the CPS Mandate immediately by notice in writing if an insolvency event occurs in relation to the Company.

The CPS Mandate contains representations and warranties standard for an agreement of this nature.

12.6 Loan Agreement

On or about 17 October 2011, the Company and Hemisphere Investment Partners executed a loan agreement (Loan Agreement). Pursuant to the Loan Agreement, Hemisphere Investment agreed to provide the Company with a loan facility for up to $700,000 from 17 October 2011 until 17 January 2012.

The Company drew down the entire $700,000 and, as at the date of this Prospectus, has repaid $200,000 of this amount.

The Company is to pay interest at the rate of 9.25% per annum on the amounts drawn down from the date of the draw down.

The principal amount drawn down and any interest on that amount is to be repaid on 17 January 2011, unless both parties agree to an extension. The Company may repay the amounts drawn down at any earlier time.

The Company is required to pay the Hemisphere Investment Partners the following fees for the facility:

• (a) a fee equal to 3% of the total amount drawn down; and

• (b) a fee of $100,000 plus GST,

payable on the date that a drawn down occurs.

If any amount remains owing to Hemisphere Investment Partners pursuant to the Loan Agreement after 17 January 2012 (unless extended by agreement), Hemisphere Investment Partners may, at its option, convert any outstanding

141

amounts into equity in the Company at a deemed issue price of 16 cents per Share by giving written notice to the Company after 17 January 2012.

If shareholder approval is required in relation to any benefit given under the Loan Agreement, the date by which the payment of that benefit is due is deferred until the required shareholder approval is obtained

No security is required to be provided pursuant to the Loan Agreement. However, the Company has agreed that neither it nor its subsidiaries will create, purport or attempt to create any encumbrance (except any bank guarantee provided pursuant to the Petroleum Agreement) over the assets of the Company or its subsidiaries without the written consent of Hemisphere Investment Partners whist any of the draw down amounts or interest on those amounts is owed to Hemisphere Investment Partners.

The parties to the Loan Agreement agree the whole amount drawn down and any interest on it will be due for payment on the occurrence of an event of default and notice of Hemisphere Investment Partners to the Company. An event of default includes:

• (a) the occurrence of an insolvency event;

• (b) the Company ceases or threatens to cease to carry on the business (or a major part of its business), or ceases payment generally; or

• (c) execution or distress is issued against the Company in excess of $50,000 which is not withdrawn or satisfied within 14 days from issue; or

• (d) the Company or any of its subsidiaries contravene the pledge not to create an encumbrance over assets of the Company or its subsidiary without the consent of Hemisphere Investment Partners.

Each party is required to pay their own costs in connection with the Loan Agreement. The Company is responsible for the payment of any duty payable on the Loan Agreement.

Hemisphere Investment Partners is deemed a related party of the Company, pursuant to section 228 of the Corporations Act, by virtue of the fact that a 50% shareholder of Hemisphere Investment Partners, Mr Bevan Tarratt, is also a Director of the Company. The unrelated Directors, Messrs Neaves and Ormerod, have concluded the Loan Agreement is on terms that would be reasonable in the circumstances if the public company and the related party were dealing at arm’s length, or on terms that are less favourable to the related party than these terms.

12.7 Second Loan Agreement

On or about 17 October 2011, the Company and Hemisphere Investment Partners executed a loan agreement (Second Loan Agreement). Pursuant to the Loan Agreement, the Hemisphere agreed to provide the Company with a loan facility for up to $300,000 from 17 October 2011 until 17 January 2012.

The Company may draw down the facility upon written notice to Hemisphere Investment Partners who then advanced the amount specified in that notice to a bank account nominated by the Company.

As at the date of this Prospectus, the full amount of $300,000 is available to the Company to draw down under the Second Loan Agreement.

142

The Company is to pay interest at the rate of 9.25% per annum on the amounts drawn down from the date of the draw down.

The principal amount drawn down and any interest on that amount is to be repaid on 17 January 2011, unless both parties agree to an extension for a further period of 3 months. The Company may repay the amounts drawn down at any earlier time.

The Company is not required to pay the Hemisphere Investment Partners fees for the facility.

No security is required to be provided pursuant to the Loan Agreement. However, the Company has agreed that neither it nor its subsidiaries will create, purport or attempt to create any encumbrance (except any bank guarantee provided pursuant to the Petroleum Agreement) over the assets of the Company or its subsidiaries without the written consent of Hemisphere Investment Partners whist any of the draw down amounts or interest on those amounts is owed to Hemisphere Investment Partners.

The parties to the Loan Agreement agree the whole amount drawn down and any interest on it will be due for payment on the occurrence of an event of default and notice of Hemisphere Investment Partners to the Company. An event of default includes:

• (a) the occurrence of an insolvency event;

• (b) the Company ceases or threatens to cease to carry on the business (or a major part of its business), or ceases payment generally; or

• (c) the Company or any of its subsidiaries contravene the pledge not to create an encumbrance over assets of the Company or its subsidiary without the consent of Hemisphere Investment Partners.

Each party is required to pay their own costs in connection with the Second Loan Agreement. The Company is responsible for the payment of any duty payable on the Second Loan Agreement.

Hemisphere Corporate is deemed a related party of the Company, pursuant to section 228 of the Corporations Act, by virtue of the fact that a 50% shareholder of Hemisphere Corporate, Mr Bevan Tarratt, is also a Director of the Company. The unrelated Directors, Messrs Neaves and Ormerod, have concluded the Loan Agreement is on terms that would be reasonable in the circumstances if the public company and the related party were dealing at arm’s length, or on terms that are less favourable to the related party than these terms.

12.8 Other Agreements

Other material agreements with Directors are summarised at the beginning of this Prospectus.

143

13. ADDITIONAL INFORMATION

13.1 Litigation

As at the date of this Prospectus, our Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against our Company.

13.2 Rights attaching to Shares

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours.

(a) General meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution.

(b) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

• (i) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;

• (ii) on a show of hands, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder has one vote; and

• (iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

(c) Dividend rights

Subject to the rights of any preference Shareholders and to the rights of the holders of any shares created or raised under any special arrangement as to dividend, the Directors may from time to time declare a dividend to be paid to the Shareholders entitled to the

144

dividend which shall be payable on all Shares irrespective of the amount paid (up or credited as paid up) in respect of such Shares.

The Directors may from time to time pay to the Shareholders any interim dividends as they may determine. No dividend shall carry interest as against the Company. The Directors may set aside out of the profits of the Company any amounts that they may determine as reserves, to be applied at the discretion of the Directors, for any purpose for which the profits of the Company may be properly applied.

Subject to the ASX Listing Rules and the Corporations Act, the Company may, by resolution of the Directors, implement a dividend reinvestment plan on such terms and conditions as the Directors think fit and which provides for any dividend which the Directors may declare from time to time payable on Shares which are participating Shares in the dividend reinvestment plan, less any amount which the Company shall either pursuant to the Constitution or any law be entitled or obliged to retain, be applied by the Company to the payment of the subscription price of Shares.

(d) Winding-up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, divide among the shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he considers fair upon any property to be so divided, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders.

The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other securities in respect of which there is any liability.

(e)

Shareholder liability

As the Shares under the Prospectus are fully paid shares, they are not subject to any calls for money by the Directors and will therefore not become liable for forfeiture.

(f)

Transfer of Shares

Generally, Shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g) Variation of rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

If at any time the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of

145

the holders of three-quarters of the issued shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the shares of that class.

(h) Alteration of Constitution

The Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. In addition, at least 28 days written notice specifying the intention to propose the resolution as a special resolution must be given.

13.3 Rights attaching to Partly Paid Shares

The Directors may, subject to compliance with the Company’s Constitution, the Corporations Act and the Listing Rules, issue partly paid Shares that are or may become payable at a future time(s) in satisfaction of all or part of the unpaid issue price.

The following contains the full terms of the rights of the holders of Partly Paid Shares. This is not exhaustive nor does it constitute a definitive statement of the rights and liabilities attaching to Partly Paid Shares:

• (a) Each Partly Paid Share is issued at a price of $0.20 of which 1 cent is paid on issue with the balance of the issue price payable at the election of the holder at any time, and subject to points (b) and (c) below.

• (b) The holder shall have the right to pay calls in advance on the Partly Paid Shares issued. Any notice of payment of calls in advance by the holder (Payment Notice) shall be in writing and delivered to the registered office of the Company. The Payment Notice shall specify the number of Partly Paid Shares in respect of which such payment is being made, the amount per share which is being paid up, and shall be accompanied by the appropriate payment for the number of partly paid shares specified in the Payment Notice. The Directors of the Company must, within 3 days after receipt of the Payment Notice, accept payment, credit the amount paid up and issue the appropriate holding statement for fully paid shares in respect of any shares which have been fully paid up.

• (c) Subject to the Corporations Act and the Company’s Constitution, the Company shall only be entitled to make a call on the Partly Paid Shares on that date which is one (1) day before five (5) years from the date of issue of the Partly Paid Shares. If a call is not paid when made, the Partly Paid Shares shall be subject to forfeiture in accordance with the procedure set out in Section 254Q of the Corporations Act.

• (d) A statement of holding will be issued for the Partly Paid Shares and will be forwarded to the holder together with the terms and conditions of the Partly Paid Shares.

• (e) Dividends may be declared in respect of any of the Partly Paid Shares notwithstanding that the issue price of such Partly Paid Shares has not been paid in full. The Partly Paid Shares will participate in any dividends on the same basis as if the Partly Paid Shares were fully paid.

146

• (f) The holder will be entitled to exercise any vote attaching to a Partly Paid Share at general meetings of members in accordance with the Constitution of the Company. Under the Constitution, on a poll, partly paid shares have a vote pro rata to the proportion of the total issue price paid up. Amounts paid in advance of a call will be ignored when calculating the proportion.

• (g) Partly Paid Shares allotted to the holder will participate in all issues of securities (including issues of shares, options and convertible notes) made to shareholders of the Company pro-rata to the proportion of the total issue price paid up. In respect of an issue of bonus securities, amounts paid in advance of a call will be ignored when calculating the proportion.

• (h) The Company will ensure that, at least 6 business days before the record date to determine entitlement to any such new entitlements issue, the Company will announce to ASX details of the proposed new entitlements issue. This will afford the holder an opportunity to pay up all or some of the partly paid shares prior to the record date of any such new entitlements issue.

• (i) In the event of a reconstruction (including consolidation, sub division, reduction or return) of the issued capital of the Company, the number of partly paid shares shall be reconstructed in accordance with the Listing Rules.

• (j) Subject to the Partly Paid Shares becoming fully paid, the Company will apply for listing of the fully paid shares on the ASX.

• (k) ln the event of death of the holder, the right of the holder to pay up the Partly Paid Shares which are not at the time of the death of the holder fully paid up, will vest in the holder’s executor and/or administrator as the case may be and such executor and/or administrator shall have the same rights to pay up the Partly Paid Shares as such deceased holder would have had but for the holder’s death.

• (l) Upon becoming fully paid, each Partly Paid Share will rank equally in all respects with the other issued fully paid ordinary shares in the Company.

• (m) Subject to the ASX Listing Rules, the Partly Paid Shares, whilst partly paid, will be capable of transfer or assignment either in whole or in part without the approval of the Directors.

13.4 Employee Share Option Plan

The Company has established an employee share option plan (Scheme).

The full terms of the Scheme may be inspected at the registered office of the Company during normal business hours. A summary of the terms of the Scheme is set out below.

(a) Eligibility

The Board may invite full or part time employees and directors of the Company or an Associated Body Corporate of the Company to participate in the Scheme (Eligible Employee).

147

Eligible Employees do not possess any right to participate in the Scheme, as participation is solely determined by the Board.

(b) Offer of Scheme Options

The Scheme will be administered by the Board which may, in its absolute discretion, offer Scheme Options to any Eligible Employee from time to time as determined by the Board and, in exercising that discretion, may have regard to some or all of the following considerations:

• (i) the Eligible Employee’s length of service with the Company;

• (ii) the contribution made by the Eligible Employee to the Company;

• (iii) the potential contribution of the Eligible Employee to the Company; or

• (iv) any other matter the Board considers relevant.

(c) Number of Scheme Options

The number of Scheme Options to be offered to an Eligible Employee will be determined by the Board in its discretion and in accordance with the rules of the Scheme and applicable law.

(d) Conversion

Each Scheme Option is exercisable into one Share in the Company ranking equally in all respect with the existing issued Shares in the Company.

(e)

Consideration

Scheme Options issued under the Scheme will be issued for no consideration.

(f) Exercise price

The exercise price for Scheme Options offered under the Scheme will be determined by the Board.

(g) Exercise conditions

The Board may impose conditions, including performance-related conditions, on the right of a participant to exercise Scheme Option granted under the Scheme.

(h)

Exercise of Scheme Options

A participant in the Scheme will be entitled to exercise their Scheme Options in respect of which the exercise conditions have been met provided the Scheme Options have not lapsed and the exercise of the Scheme Options will not result in the Company contravening ASIC Class Order 03/184. A holder may exercise Scheme Options by delivering an exercise notice to the Company Secretary along with the Scheme Options certificate, and paying the applicable exercise price of the

148

Scheme Options multiplied by the number of Scheme Options proposed to be exercised.

Within ten Business Days of receipt of the required items, the Company will, subject to the ASX Listing Rules, issue to the participant the relevant number of Shares.

(i)

Cessation of employment

If the participant in the Scheme ceases to be an employee or director of, or render services to, the Company or an Associated Body Corporate for any reason (other than by death, permanent disability or permanent retirement from the workforce) prior to the lapse of the Scheme Options, and the exercise conditions attaching to the Scheme Options have been met, the participant will be entitled to exercise their Scheme Options in accordance with the Scheme for a period of up to 28 days after the date of the cessation event.

(j) Death, permanent disability or retirement

If the participant in the Scheme dies, becomes permanently disabled, resigns from their employment on the basis of retirement from the workforce, or is made redundant, prior to the lapse of the Scheme Options, the participant, or the participant’s legal personal representative, will be entitled to exercise their Scheme Options in accordance with the Scheme rules for the period commencing on the date of the cessation event and ending on the first to occur of the date of lapsing of the Scheme Options and the date which is six months after the date of the cessation event.

(k) Lapse of Scheme Options

Scheme Options held by a participant in the Scheme will lapse immediately if:

• (i) the Scheme Options have not been exercised by the date which is two years after the date of issue, or such other date as the Board determines in its discretion at the time of issue of the Scheme Options;

• (ii) the exercise conditions attaching to the Scheme Conditions are unable to be met; or

the holder ceases to be an employee or director of the Company or an Associated Body Corporate and the deadline set out in paragraph (i) or (j) has passed.

(l) Participation in Rights Issues and Bonus Issues

The Scheme Options granted under the Scheme do not give the holder any right to participate in rights issues or bonus issues unless Shares are allotted pursuant to the exercise of the relevant Scheme Options prior to the record date for determining entitlements to such issue. The number of Shares issued on the exercise of Scheme Options will be adjusted for bonus issues made prior to the exercise of the Scheme Options.

149

(m) Reorganisation

The terms upon which the Scheme Options will be granted will not prevent the Scheme Options being reorganised as required by the ASX Listing Rules on the reorganisation of the capital of the Company.

(n)

Limitation on offers

If the Company makes an offer under the Scheme where:

• (i) the total number of Shares to be received on exercise of Scheme Options the subject of that offer exceeds the limit set out in ASIC Class Order 03/184; or

• (ii) the Offer does not otherwise comply with the terms and conditions set out in ASIC Class Order 03/184, the Company must comply with Chapter 6D of the Corporations Act at the time of that offer.

(o) Takeover bid, Scheme or Change in Control

Unless the holder agrees otherwise, all of a holder’s unvested Scheme Options vest automatically:

• (i) if a takeover bid is made, the takeover bid is declared unconditional and the bidder has acquired a relevant interest in more than 50% of the Company’s shares; or

• (ii) on the date of despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members or any class thereof pursuant to section 411 of the Corporations Act seeking approval for a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies; or

• (iii) on the date upon which a person or a group of associated persons becomes entitled, subsequent to the date of grant of the Scheme Option(s), to sufficient Shares to give it or them the ability, in general meeting, to replace all or allow a majority of the Board in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

13.5 Performance Rights Plan

The Company has established an employee performance rights plan (PRP).

The full terms of the PRP may be inspected at the registered office of the Company during normal business hours. A summary of the terms of the PRP is set out below.

• (a) Subject to any necessary approvals from the Company’s shareholders or as required by law or by the Listing Rules, the Board may, from time to time, at its absolute discretion, grant Performance Rights to any full time or part time employee of the Company (including a director or company secretary), who is determined by the Board to be eligible to

150

participate in the PRP (Eligible Participants), with effect from the date determined by the Board, upon the terms set out in the PRP and upon such additional terms and vesting conditions as the Board determines.

• (b) Each Performance Right will vest as an entitlement to one fully paid ordinary share in the capital of the Company (Share) provided that certain performance milestones are met. If the performance milestones are not met, the Performance Rights will lapse and the Eligible Participant will have no entitlement to any Shares.

• (c) The Company shall notify the Eligible Participant when the relevant vesting requirements have been satisfied and the Performance Right has vested. The Eligible Participant may then exercise their vested Performance Right by lodging with the Company a notice of exercise of the Performance Right and the certificate for the Performance Right. Within 10 days of receipt of a valid notice of exercise of Performance Rights, the Company will issue one Share to the Eligible Participant for each Performance Right exercised.

• (d) Subject to the Company being listed on the ASX, the Company will, as soon as practicable after the Shares being are allotted, apply to ASX for quotation of the Shares.

• (e) Shares resulting from the vesting of the Performance Rights shall, from the date of issue, rank pari passu with all other Shares on issue.

• (f) Performance Rights shall not be quoted on ASX.

• (g) Performance Rights shall not be transferred or assigned by an Eligible Participant except with the prior written consent of the Directors of the Company.

• (h) Subject to any rights an Eligible Participant may have in relation to a bonus issue or reorganisation, Eligible Participants are not entitled to participate in any new issue of securities of the Company as a result of their holding Performance Rights.

• (i) If Shares are issued pro rata to the Company’s shareholders generally by way of bonus issue (other than an issue in lieu of dividends or by way of dividend reinvestment) involving capitalisation of reserves distributable profits, the number of Performance Rights to which each Eligible Participant is entitled, will be adjusted in the manner determined by the Board to ensure that no advantage accrues to the Eligible Participant as a result of the bonus issue.

• (j) In the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company, the number of Performance Rights to which each Eligible Participant is entitled, or any amount payable on vesting of the Performance Rights, or both as appropriate, will be adjusted in the manner determined by the Board to ensure that no advantage or disadvantage accrues to the Eligible Participant as a result of such corporate actions.

• (k) Unless the Eligible Participant agrees otherwise, all of an Eligible Participant’s unvested Performance Rights vest automatically:

151

• (i) if a takeover bid is made, the takeover bid is declared unconditional and the bidder has acquired a relevant interest in more than 50% of the Company’s shares; or

• (ii) on the date of despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members or any class thereof pursuant to section 411 of the Corporations Act seeking approval for a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies; or

• (iii) on the date upon which a person or a group of associated persons becomes entitled, subsequent to the date of grant of the Performance Rights, to sufficient Shares to give it or them the ability, in general meeting, to replace all or allow a majority of the Board in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

• (l) The holder of Performance Rights does not have any entitlement to vote at a general meeting of Shareholders or to receive dividends.

13.6 Performance Rights issued to Mr Damon Neaves and Mr David Ormerod

The Performance Rights entitle the holder to Shares on the following terms and conditions:

• (a) Subject to the satisfaction of the vesting condition set out in paragraph (b) and (c) below, each Performance Right vests and converts to one Share.

• (b) Subject to paragraph (c) below, the Performance Rights shall vest and convert to Shares as follows:

• (i) 50% will vest upon completion of an acquisition or acquisitions by the Company with a total transaction value (including without limitation acquisition price, spending requirements and/or deferred or contingent payments) of at least $10,000,000; and

• (ii) 50% will vest upon the Company’s market capitalisation exceeding $30,000,000 for a period of 20 consecutive trading days based on the closing price of the Shares on ASX,

prior to the Expiry Date (as defined below) ((b)(i) and (ii) together, the Vesting Conditions and each a Vesting Condition).

• (c) Notwithstanding paragraph (b) above, each Performance Right shall vest and convert to one Share in the event that the Company terminates the holder’s employment with the Company without cause, except where notice of termination is given within the first twelve (12) months in which case the Performance Rights shall be forfeited by the holder.

• (d) The Performance Rights shall expire at 5.00 pm (WST) on that date which is three (3) years after the date on which the Performance Rights are

152

issued (Expiry Date)). Any Performance Right not vested before the Expiry Date shall automatically lapse on the Expiry Date and the holder shall have no entitlement to Shares pursuant to those Performance Rights.

• (e) The Performance Rights will be issued for nil cash consideration and no consideration will be payable upon the vesting of the Performance Rights on the satisfaction of the Vesting Condition.

• (f) Immediately following the Expiry Date the Company shall notify the holder of that proportion of Performance Rights that have vested and shall, unless otherwise directed by the holder, allot the associated number of Shares within 10 business days of the Expiry Date.

• (g) The Company will not apply for quotation of the Performance Rights on ASX. However, subject to the Company being listed on the ASX, the Company will apply for quotation of all Shares allotted pursuant to the vesting of Performance Rights on ASX within 10 business days after the date of allotment of those Shares.

• (h) All Shares allotted upon the vesting of Performance Rights will upon allotment rank pari passu in all respects with other Shares.

• (i) In addition to (a) to (h) above, all terms and conditions set out in the PRP apply to the Performance Rights. For further details of these terms, please see Section 13.5 of this Prospectus.

13.7 Terms of Options issued to Mr Damon Neaves and Mr David Ormerod

The Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Option gives the Optionholder the right to subscribe for one Share.

• (b) The Options shall vest (whichever occurs first):

• (i) after the Company has successfully completed an acquisition or acquisitions by the Company with a total transaction value (including without limitation acquisition price, spending requirements and/or deferred or contingent payments) of at least $10,000,000 and in any event no earlier than that date which is 12 months after the Commencement Date (in relation to Mr Damon Neaves, the “Commencement Date” being 17 August 2011 and in relation to Mr David Ormored, the “Commencement Date” being 26 August 2011); or

• (ii) in the event that the Company terminates the Optionholder’s employment with the Company without cause, except where notice of termination is given within the first twelve (12) months in which case the Options shall be forfeited by the Optionholder.

• (c) The Options will expire at 5.00pm (WST) on that date which is five years after their date of issue (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• (d) The amount payable upon exercise of each Option will be $0.40 per share (Exercise Price).

153

• (e) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (f) An Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:

• (i) a written notice of exercise of Options specifying the number of Options being exercised; and

• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised,

(Exercise Notice).

• (g) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (h) Within 10 business days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.

• (i) The Options are not transferable.

• (j) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.

• (k) The Company will not apply for quotation of the Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 business days after the date of allotment of those Shares.

• (l) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

• (m) There are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 business days after the issue is announced. This will give Optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

• (n) A Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

13.8 Fees and Benefits

Other than as set out in this Prospectus, no Director or proposed Director holds, or has held within the 2 years preceding lodgement of this Prospectus with the ASIC, any interest in:

154

• (a) the formation or promotion of the Company;

• (b) any property acquired or proposed to be acquired by the Company in connection with:

• (i) its formation or promotion; or

• (ii) the Offer; or

• (c) the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to a Director or proposed Director:

• (a) as an inducement to become, or to qualify as, a Director; or

• (b) for services provided in connection with:

• (i) the formation or promotion of the Company; or

• (ii) the Offer.

13.9 Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no:

• (a) Director of the Company;

• (b) person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus; or

• (c) promoter of the Company,

has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

• (i) the formation or promotion of the Company;

• (ii) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the offer of Shares under this Prospectus; or

• (iii) the offer of Shares under this Prospectus,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director of the Company or for services rendered in connection with the formation or promotion of the Company or the offer of Shares under this Prospectus.

RISC Operations Pty Ltd has acted as the Independent Geologist and has prepared an Independent Technical Specialist’s Report which has been included in Section 8 of this Prospectus. The Company estimates that it will pay a total of $45,000 for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, RISC Operations Pty Ltd has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus .

155

BDO Corporate Finance (WA) Pty Ltd has acted as Investigating Accountant and has prepared an Investigating Accountant’s Report which has been included in Section 9 of this Prospectus. The Company estimates it will pay BDO Corporate Finance (WA) Pty Ltd a total of $6,000 for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, BDO Corporate Finance (WA) Pty Ltd has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus.

Naciri & Associés Allen & Overy has acted as the Moroccan solicitors to the Company and has prepared a Solicitor’s Report on Title which has been included in Section 10 of this Prospectus. The Company estimates it will pay Naciri & Associés Allen & Overy a total of $6,000 (exclusive of taxes and out of pocket expenses) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Naciri & Associés Allen & Overy has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus.

Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer and has been involved in due diligence queries on legal matters. The Company estimates it will pay Steinepreis Paganin $55,000 (plus GST and any out of pocket expenses) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus.

Hemisphere Corporate has acted as corporate adviser to the Company. In respect of this work, Hemisphere Corporate will be paid such amount as detailed in Section 12.4. During the 24 months preceding lodgement of this Prospectus to ASIC, Hemisphere Corporate has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus.

CPS Securities has acted as lead manager to the Offer. In respect of this work, CPS Securities will be paid such amount as detailed in Section 12.5. During the 24 months preceding lodgement of this Prospectus to ASIC, CPS Securities has not received any fees in relation to the formation or promotion of the Company or the offer of Shares under this Prospectus.

13.10 Consents

Each of the parties referred to in this Section:

• (a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this Section; and

• (b) to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

RISC Operations Pty Ltd has given its written consent to being named as the Independent Geologist to the Company in this Prospectus and to the inclusion of the Independent Technical Specialist’s Report in Section 8 in the form and

156

context in which the report is included. RISC Operations Pty Ltd has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

BDO Corporate Finance (WA) Pty Ltd has given its written consent to being named as Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 9 in the form and context in which the report is included. BDO Corporate Finance (WA) Pty Ltd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Naciri & Associés Allen & Overy has given its written consent to being named as the Moroccan solicitor to the Company in this Prospectus. Naciri & Associés Allen & Overy has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Naciri & Associés Allen & Overy has given its written consent for the inclusion of the Solicitor’s Report on Title in Section 10 the form and context in which the overview is included. Naciri & Associés Allen & Overy has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as the Australian solicitor to the Company in this Prospectus. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Hemisphere Corporate Services Pty Ltd has given its written consent to being named as the Company’s Corporate Advisor in the Prospectus. Hemisphere Corporate Services Pty Ltd has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

CPS Securities has given its written consent to being named as the lead manager to the Offer in the Prospectus. CPS Securities has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

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

13.11 Continuous disclosure obligations

Following admission of the Company to the Official List, the Company will be a “disclosing entity” (as defined in Section 111AC of the Corporations Act) and, as such, will be subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company will be required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company’s securities.

Price sensitive information will be publicly released through ASX before it is disclosed to shareholders and market participants. Distribution of other information to shareholders and market participants will also be managed through disclosure to the ASX. In addition, the Company will post this information on its website after the ASX confirms an announcement has been made, with the aim of making the information readily accessible to the widest audience.

157

13.12 Electronic Prospectus

Pursuant to Class Order 00/44, the ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company and the Company will send you, for free, either a hard copy or a further electronic copy of this Prospectus or both. Alternatively, you may obtain a copy of this Prospectus from the website of the Company at http://www.puravidaenergy.com.au.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

13.13

Financial Forecasts

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

13.14 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will apply to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company.

Electronic sub-registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with statements (similar to a bank account statement) that set out the number of Shares allotted to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Electronic sub-registers also mean ownership of securities can be transferred without having to rely upon paper documentation. Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

13.15 Privacy statement

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of

158

takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASX Settlement Operating Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

159

14. DIRECTORS’ AUTHORISATION

This Prospectus is iss u ed by the Company and its issue has be e n authorised by a resolution of the Dir e ctors.

In accordance wit h Section 720 of the Corporations Act, e ach Director has consented to the lo d gement of this Prospectus with the ASIC.

==> picture [102 x 55] intentionally omitted <==

==> picture [10 x 55] intentionally omitted <==

Damon Neaves Managing Director For and on behalf o f Pura Vida Energy N L

160

15. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings:

A$ or $ means an Australian dollar.

Applicant means a person who submits a Application Form.

Application Form means the application form attached to or accompanying this Prospectus relating to the Offer.

ASIC means Australian Securities & Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691) or the financial market operated by it as the context requires.

ASX Listing Rules or Listing Rules means the official listing rules of ASX.

Blocks means the blocks which are covered by the Exploration Permits or any one of them, as the context requires.

Bcf means billion cubic feet.

Board means the board of Directors as constituted from time to time.

boepd means barrels of oil or oil equivalent per day.

Business Day means a week day when trading banks are ordinarily open for business in Perth, Western Australia.

Closing Date means the closing date of the Offer as set out in the indicative timetable in the Investment Overview in Section 3 of this Prospectus (subject to the Company reserving the right to extend the Closing Date or close the Offer early).

Company or Pura Vida means Pura Vida Energy NL (ACN 150 624 169).

Constitution means the constitution of the Company.

Corporate Advisory Fee means the fee payable to Hemisphere Corporate referred to in Section 12.2(a) of this Prospectus.

Corporate Advisory Success Fee means the fee payable to Hemisphere Corporate referred to in Section 12.2(b) of this Prospectus.

Corporations Act means the Corporations Act 2001 (Cth).

DHI’s or Direct Hydrocarbon Indicators means a type of seismic amplitude anomaly, seismic event, or characteristic of seismic data that can occur in a hydrocarbon-bearing reservoir.

Directors means the directors of the Company at the date of this Prospectus.

Exploration Permits means the exploration permits referred to in the Solicitor’s Report on Title in Section 10 of this Prospectus.

161

Exposure Period means the period of 7 days after the date of lodgement of this Prospectus, which period may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act.

Hemisphere Corporate means Hemisphere Corporate Services Pty Ltd (ACN 139 826 690).

Hemisphere Investment Partners means Hemisphere Investment Partners Pty Ltd (ABN 139 868 269).

Independent Technical Report means the Independent Technical Report included in Section 8 of this Prospectus.

km means kilometres.

Km[2] means square kilometres.

mmbbl means millions of barrels of oil.

mmcm means million cubic metres.

Offer means the offer of Shares pursuant to this Prospectus as set out in Section 5 of this Prospectus.

Official List means the official list of ASX.

Official Quotation means official quotation by ASX in accordance with the ASX Listing Rules.

ONHYM means Office of National Des Hydrocarbures et des Mines, a Moroccan government entity.

Option means an option to acquire a Share on the terms and conditions set out in Section 13.7 of this Prospectus.

Optionholder means a holder of Options.

Partly Paid Share means a partly paid share with an issue price of $0.20 of which $0.01 was paid upon issue.

Performance Rights means a performance right issued under the PRP with the terms and conditions set out in Section 13.6 of this Prospectus.

Petroleum Agreement means the agreement summarised in Section 12.1 of this Prospectus.

PRP means the Pura Vida Energy NL Performance Rights Plan.

Prospectus means this prospectus.

Scheme means the Company’s employee option scheme, the terms of which are summarised in section 13.4.

Scheme Option means an Option issued pursuant to the Scheme.

Section means a section of this Prospectus.

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

162

Shareholder means a holder of Shares.

US$ means a United States dollar, the legal currency of the United States of America.

WST means Western Standard Time as observed in Perth, Western Australia.

163