Geothermal Resources Limited 63 Conyngham Street Glenside 5065 South Australia phone 61 8 8338 9292 fax 61 8 8338 9293 email [email protected] ABN 45 115 281 144

The Manager Company Announcements Office Australian Securities Exchange 10th Floor, 20 Bond Street SYDNEY NSW 2000 5 October 2011

Dear Sir/Madam

Off-market takeover bid by Havilah Resources NL for all of the shares of Geothermal Resources Limited

Please find enclosed, by way of lodgement pursuant to item 14 of subsection 633(1) of the Corporations Act 2001 (Cth), a copy of Geothermal Resources Limited's Target's Statement dated 5 October 2011, prepared in response to Havilah Resources NL's Bidder's Statement dated 4 October 2011 as served on Geothermal today.

Yours faithfully Geothermal Resources Limited

Ken Williams Deputy Chairman

Enquiries should be directed to Mr Ken Williams, Deputy Chairman, on (08) 83389292

63 Conyngham Street Glenside SA 5065 Ph: 08 8338 9292 Fax: 08 8338 9293 Email: [email protected] www.Geothermal-resources.com.au A.C.N. 115 281 144

TARGET'S STATEMENT

in response to the off-market takeover offer by

HAVILAH RESOURCES NL

(ACN 077 435 520)

to acquire all the ordinary shares issued by

Geothermal Resources Limited

(ACN 115 281 144)

The independent director of Geothermal recommends you ACCEPT the Offer in the absence of a superior offer and a Material Adverse Event.

This is an important document and should be read in its entirety. If you do not understand it or are in doubt as to how to act you should consult your legal, financial or other professional adviser immediately.

Legal Adviser to Geothermal

IMPORTANT INFORMATION

Target's Statement

On 26 August 2011 Havilah Resources NL (Havilah) announced a takeover bid for all the issued shares in Geothermal Resources Limited (Geothermal). On 4 October 2011 Havilah lodged the Bidder"s Statement dated 4 October 2011 with the Australian Securities and Investments Commission and served the Bidder"s Statement on Geothermal. On 5 October 2011 Havilah served a replacement Bidder"s Statement (also dated 4 October 2011) on Geothermal. This Target"s Statement dated 5 October 2011 is given by Geothermal in response to the Bidder"s Statement dated 4 October 2011, under Part 6.5 of Chapter 6 of the Corporations Act, in compliance with Section 638 of the Corporations Act. A copy of this Target's Statement has been lodged with the Australian Securities and Investments Commission and the Australian Securities Exchange. Neither the Australian Securities and Investments Commission, the Australian Securities Exchange, nor any of its officers take any responsibility for the content of this Target"s Statement.

Disclaimer Regarding Forward Looking Statements

This Target"s Statement contains various forward-looking statements. All statements other than statements of historical fact are forward-looking statements, including statements as to the implied value of the Offer. Geothermal Shareholders should note that those forwardlooking statements are inherently subject to uncertainties in that they may be affected by a variety of known and unknown risks, variables and factors which could cause actual values or results, performance or achievements to differ materially from the expectations described in such forward-looking statements. These risks, variables and factors include, but are not limited to, those risks identified in Section 7 of this Target"s Statement.

Geothermal does not give any assurance that the anticipated results, performance or achievements expressed or implied in those forward-looking statements will be achieved.

None of Geothermal, Geothermal"s officers and employees, any person named in this Target"s Statement with their consent or any person in the preparation of this Target"s Statement, makes any representation or warranty (express or implied) as to the accuracy or likelihood of fulfilment of any forward looking statement, or any events or results expressed or implied in any forward looking statement, except to the extent required by law. Geothermal Shareholders are cautioned not to place undue reliance on forward looking statements. The forward looking statements in this Target"s Statement reflect views held only as at the date of this Target"s Statement.

Disclaimer as to Information

The information on Havilah in this Target"s Statement has been prepared by Geothermal using publicly available information (including that contained in the Bidder"s Statement). The information in this Target"s Statement concerning Havilah has not been independently verified by Geothermal. Accordingly, subject to the Corporations Act, Geothermal does not make any representation or warranty, express or implied, as to the accuracy or completeness of such information.

Independent Expert's Report

The Independent Expert"s Report set out in Annexure A of this Target"s Statement has been prepared by the Independent Expert for the purposes of this Target"s Statement and the Independent Expert takes full responsibility for that report. Geothermal does not accept or assume any responsibility for the accuracy or completeness of the Independent Expert"s Report, other than factual information provided by Geothermal to the Independent Expert for the purposes of the Independent Expert"s Report.

Rounding

A number of figures, amounts, percentages, prices, estimates, calculations of value and fractions in this Target"s Statement are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this Target"s Statement.

Privacy

Geothermal has collected your information from the Geothermal register of shareholders for the purpose of providing you with this Target"s Statement. The type of information Geothermal has collected about you includes your name, contact details and information on your shareholding in Geothermal. Without this information, Geothermal would be hindered in its ability to issue this Target"s Statement. The Corporations Act requires the name and address of shareholders to be held in a public register. Your information may be disclosed on a confidential basis to Geothermal"s related bodies corporate and external service providers (such as the share registry of Geothermal and print and mail service providers) and may be required to be disclosed to regulators such as the Australian Securities and Investments Commission. If you would like the details of your information held by Geothermal, please contact Computershare Investor Services Pty Limited at:

Level 5, 115 Grenfell Street Adelaide, South Australia 5000 Ph: +61 8 8236 2300

Notice to Foreign Shareholders

The distribution of this Target"s Statement may, in some jurisdictions, be restricted by law or regulation. Accordingly, persons who come into possession of this Target"s Statement should inform themselves of, and observe, those restrictions. Any failure to comply with such restrictions may constitute a violation of applicable laws or regulations.

This Target"s Statement has been prepared in accordance with Australian law and the information contained in this Target"s Statement may not be the same as that which would have been disclosed if this Target"s Statement had been prepared in accordance with the law and regulations outside Australia.

No Account of Personal Circumstances

This Target"s Statement does not take into account the individual investment objectives, financial situation and particular needs of each Geothermal Shareholder and it does not contain personal financial and taxation advice. Geothermal encourages you to seek independent financial and taxation advice before making a decision as to whether or not to accept the Offer for your Geothermal Shares.

Information Line

Havilah has set up an information line for Geothermal Shareholders to address any questions you may have in relation to the Offer (see the Bidder"s Statement).

CORPORATE DIRECTORY

Directors

Keith Robert Johnson (Chairman) Christopher William Giles (Director) Kenneth Graham Williams (Director) Martin Simon Janes (Director)

Company Secretary

Edward James Grose

Registered Office

63 Conyngham Street GLENSIDE SA 5065

Internet Address

www.geothermal-resources.com.au

ASX codes

Geothermal Shares GHT

Solicitors to Geothermal

Watsons Lawyers Ground Floor, 60 Hindmarsh Square ADELAIDE SA 5000

	DEPUTY CHAIRMAN'S LETTER 1
	SUMMARY OF THE HAVILAH OFFER 3
	HOW TO ACCEPT THE OFFER 5
	ESTIMATED DATES FOR KEY EVENTS 6
1.	WHY YOU SHOULD ACCEPT THE OFFER 7
2.	GEOTHERMAL DIRECTOR RECOMMENDATION 10
3.	YOUR CHOICES AS GEOTHERMAL SHAREHOLDERS 11
4.	IMPORTANT INFORMATION ABOUT HAVILAH'S OFFER 13
5.	ABOUT HAVILAH 19
6.	ABOUT GEOTHERMAL 20
7.	OTHER IMPORTANT CONSIDERATIONS FOR GEOTHERMAL SHAREHOLDERS 21
8.	ADDITIONAL INFORMATION 24
9.	GLOSSARY 31
	APPENDIX A – KEY TERMS OF TAKEOVER BID IMPLEMENTATION AGREEMENT 34
	APPENDIX B – INDEPENDENT EXPERT'S REPORT 36

63 Conyngham Street Glenside SA 5065 Ph: 08 8338 9292 Fax: 08 8338 9293 Email: [email protected] www.Geothermal-resources.com.au A.C.N. 115 281 144

DEPUTY CHAIRMAN'S LETTER

5 October 2011

Dear Geothermal Shareholder,

On 26 August 2011 Geothermal and Havilah announced a proposed merger, by way of a conditional off-market takeover by Havilah for all the shares in Geothermal not currently held by Havilah (representing approximately 41.32% of Geothermal"s issued share capital). The proposed Merger is to proceed by way of a share for share offer. Havilah is offering Geothermal Shareholders 1 Havilah Share for every 4 Geothermal Shares held.

Havilah is an ASX listed mineral exploration company, exploring for copper, gold, iron ore, cobalt, tin and other base metals. Havilah controls more than 6500 km² of continuous tenements in the highly mineralised Curnamona Province in north-eastern South Australia. Havilah has identified significant mineral deposits at its six major projects all within the Curnamona Province.

The proposed Merger, which will, among other things, give Geothermal Shareholders exposure to Havilah"s portfolio of projects, has the support of Martin Janes, Geothermal"s independent director, who recommends that you ACCEPT Havilah"s Offer, subject to there being no superior proposal, and no Material Adverse Event having occurred. Mr Janes" reasons for recommending that shareholders accept the Offer (outlined in section 1 of this Target"s Statement) are as follows:

1. the Offer represents a substantial premium to the value of Geothermal Shares prior to the Announcement;
1. the Independent Expert has concluded that the Offer is fair and reasonable to Geothermal Shareholders;
1. if the Merger succeeds Geothermal Shareholders are likely to benefit from being a shareholder in a larger more widely held company that has greater resources to manage both companies" projects;
1. Havilah is better placed to raise the substantial development capital required to develop Geothermal"s projects and secure government funding;
1. if the Merger does not proceed, Geothermal Shareholders face the prospect of significant dilution from future capital raisings to fund and develop its projects;
1. if the Merger does not proceed, there is a risk that Geothermal"s share price will fall upon the lapsing of the Havilah bid; and
1. Havilah"s 58.68% shareholding in Geothermal is a significant deterrent to any alternative bidder.

Each Director intends to accept the Offer in respect of all Geothermal Shares respectively controlled by them, subject to there being no superior proposal, and no Material Adverse Event having occurred.

SUMMARY OF THE HAVILAH OFFER

The following provides an overview of the Offer. You should read this Target"s Statement and the Bidder"s Statement in full before making any decision whether to accept the Offer.

OFFER	Havilah is offering to acquire all Geothermal Shares by way of an off-market takeover bid.
OFFER CONSIDERATION	Havilah is offering Geothermal Shareholders 1 new Havilah Share for every 4 Geothermal Shares held.
	The Offer values all the Geothermal Shares at approximately A\$4,620,0241
	In respect of Foreign Holders of Geothermal Securities see 12.9 of the Bidder"s Statement consideration will be offered for your Geothermal Shares.	for an explanation as to what
HAVILAH SHARES	The terms of the Havilah Shares are set out in section 5 of the Bidder"s Statement.
	There are approximately 82 million Havilah Shares on issue as at 4 October 2011.
	Havilah is an ASX listed mineral Information on Havilah is set out in section 3 of the Bidder"s Statement.	exploration company.
	If you wish to sell the Havilah Shares you receive under the Offer, you should contact your stockbroker to discuss how to arrange the sale.

CONDITIONS OF THE	In summary, the Offer is conditional on:
OFFER	Havilah and its Associates having a Relevant Interest in at least 90% (by number) of all Geothermal Shares;
	the exercise or cancellation of all Geothermal Options;
	receipt of all required regulatory approvals;
	no legal restraint or prohibition adversely affecting the Offer;
	Geothermal conducting its business in the ordinary course;
	no material adverse change in relation to Geothermal;
	no prescribed occurrence in relation to Geothermal; and
	representations regarding Geothermal"s issued securities remaining true and correct.
	If the conditions of the Offer are not satisfied or waived by the Closing Date, the Offer will lapse and you will retain your Geothermal Shares.

¹ Valuation is based on an implied value of the Offer of 12.88 cents per Geothermal Share, which is calculated based on the closing price of Havilah Shares on 19 August 2011, (being the last ASX trading day before each company entered a trading halt), the issued share capital of Geothermal on that same date, and taking into account the ratio of Havilah Shares to Geothermal Shares offered under the Offer. Note the implied value of the Offer will fluctuate with movements in the market value of Havilah Shares.

INDEPENDENT EXPERT'S REPORT	The Independent Expert, Value Adviser Associates, has concluded that the Offer is fair and reasonable to Geothermal Shareholders (see Independent Expert"s Report in Appendix B of this Target"s Statement)
INDEPENDENT DIRECTOR'S RECOMMENDATION	The independent Director of Geothermal, Mr Martin Janes, recommends that you ACCEPT the Offer subject to there being no superior proposal, and no Material Adverse Event having occurred.
CLOSING DATE	The Offer is due to close at 7pm Adelaide time on 14 November 2011 unless it is withdrawn or extended by Havilah.
FURTHER INFORMATION	Havilah has set up an information line for Geothermal Shareholders to address any questions you may have in relation to the Offer (see the Bidder"s Statement). If you require further information, please call +61 8 8338 9292.

HOW TO ACCEPT THE OFFER

You should read this Target"s Statement and the Bidder"s Statement in full before making a decision on whether to accept the Offer.

ADDRESS FOR ACCEPTANCE OF OFFER	The Bidder"s Statement contains a personalised Acceptance Form and reply paid envelope. The completed Acceptance Form and all other documents required by the instructions on the Acceptance Form should be sent to:
	Postal Address
	Computershare Investor Services Pty Ltd, GPO Box 1326, Adelaide SA 5001
	Delivery address
	Computershare Investor Services Pty Ltd, Level 5, 115 Grenfell Street, Adelaide SA 5000
HOW TO ACCEPT THE	In relation to your Geothermal Shares:
OFFER	 If your Geothermal Shares are held on a CHESS sub register, contact your Controlling Participant (typically your stockbroker) and instruct them to initiate acceptance on your behalf or complete and sign the Acceptance Form in accordance with the instructions on it and mail it, together with all other documents required by the instructions on the Acceptance Form, to the address shown above.
	 If your Geothermal Shares are held on an issuer sponsored sub-register, complete and sign the Acceptance Form in accordance with the instructions on it and mail it, together with all other documents required by the instructions on the Acceptance Form, to the address shown above.
	See section 12.6 of the Bidder"s Statement for full details on how to accept the Offer.
CLOSING DATE FOR ACCEPTANCE	Your acceptance of the Offer must be completed before the end of the Offer Period (i.e. before 7:00pm Adelaide time on 14 November 2011), unless the Offer Period is extended.
	You should be aware that if you accept the Offer, you will give up your rights to sell your Geothermal Shares on the ASX, or otherwise deal in your Geothermal Shares, including by way of acceptance of any superior offer that may emerge, unless the Offer is withdrawn or, in certain limited circumstances, you are allowed to withdraw your acceptance.

ESTIMATED DATES FOR KEY EVENTS

Key Events	Estimated Date
Announcement of the proposed Merger	26 August 2011
Date of Bidder"s Statement	4 October 2011
Date of Target"s Statement	5 October 2011
Register Date	10 October 2011, 7.00pm (Adelaide time).
Bidder"s Statement and Target"s Statement to be sent to Geothermal Security Holders	13 October 2011
Conditions Notice Date	7 November 2011
Scheduled closing date of Offer	14 November 2011, 7.00pm (Adelaide time).

1. WHY YOU SHOULD ACCEPT THE OFFER

1.1 Summary of Reasons

The independent Director of Geothermal, Mr Martin Janes, recommends that Geothermal Shareholders ACCEPT the Offer, subject to there being no superior proposal, and no Material Adverse Event having occurred, for the following reasons:

(a) the Offer represents a substantial premium to the value of Geothermal Shares prior to the Announcement;
(b) the Independent Expert has concluded that the Offer is fair and reasonable to Geothermal Shareholders.
(c) if the Merger succeeds Geothermal Shareholders are likely to benefit from being a shareholder in a larger more widely held company that has greater resources to manage both companies" projects;
(d) Havilah is better placed to raise the substantial development capital required to develop Geothermal"s projects and secure government funding;
(e) if the Merger does not proceed, Geothermal Shareholders face the prospect of significant dilution from future capital raisings to fund and develop its projects;
(f) if the Merger does not proceed, there is a risk that Geothermal"s share price will fall upon the lapsing of the Havilah bid; and
(g) Havilah"s 58.68% shareholding in Geothermal is a significant deterrent to any alternative bidder.

Each of the Directors currently intend to accept or procure acceptance of the Offer in respect of all the Geothermal Shares they own or control, subject to there being no superior proposal, and no Material Adverse Event having occurred, for the reasons outlined above.

Each of these reasons is discussed in more detail below.

1.2 The Offer represents a substantial premium to the value of Geothermal Shares prior to the Announcement

The consideration under the Offer comprises 1 Havilah Share for every 4 Geothermal Shares.

Based on the closing price of Havilah Shares on ASX on Friday, 19 August 2011, being the last ASX trading day before each company entered a trading halt (Last Trading Day), the implied value of the Offer is 12.88 cents per Geothermal Share, which represents a 40% premium to 9.2 cents, the closing price of Geothermal Shares on ASX on the Last Trading Day.

Based on the VWAP of Havilah Shares on ASX for the 60 ASX trading days up to and including the Last Trading Day, the implied value of the Offer is 16.58 cents per Geothermal Share, which represents a 29.5% premium to 12.8 cents, the VWAP of Geothermal Shares on ASX for the 60 ASX trading days up to and including the Last Trading Day.

Based on the VWAP of Havilah Shares on ASX for the 90 ASX trading days up to and including the Last Trading Day, the implied value of the Offer is 16.07 cents per Geothermal Share, which represents a 43.9% premium to 11.17 cents, the VWAP of

Geothermal Shares on ASX for the 90 ASX trading days up to and including the Last Trading Day.

Geothermal Shareholders should be aware that the prices of Geothermal and Havilah Shares (and the implied value of the Offer) may fluctuate upwards or downwards prior to the close of the Offer.

1.3 The Independent Expert has concluded that the Offer is fair and reasonable

Geothermal engaged Value Adviser Associates as an independent expert to provide a report as to whether the Offer is fair and reasonable to Geothermal Shareholders. The Independent Expert assessed the value of Geothermal Shares to be \$0.12 per share, and assessed the value of the consideration (Havilah Shares) to be \$0.15 to \$0.50 per equivalent Geothermal Share.

As the value of the consideration to be received by Geothermal Shareholders under the Offer equals or exceeds the value of Geothermal Shares, in the opinion of the Independent Expert, the Offer is fair and, consistent with ASIC Regulatory Guide 111, also reasonable.

The Independent Expert"s Report dated 30 September 2011 is set out in Appendix B to this Target"s Statement.

1.4 Havilah is a larger more widely held company

As at 4 October 2011, Havilah had 82,948,891 shares on issue held by 2,090 shareholders, with a market capitalisation of \$42,303,934² . This compares to 35,869,753 Geothermal Shares on issue as at that same date held by 1,019 shareholders (of which Havilah held 58.68%), with a market capitalisation of \$3,586,975³ . There is also significantly more liquidity in Havilah Shares than Geothermal Shares, which is by comparison very thinly traded. Accordingly, if the Merger succeeds Geothermal shareholders will be shareholders in a larger and more widely held and liquid company.

1.5 Havilah has greater resources and is better placed to raise capital and secure government funding

Havilah has greater resources available to it to manage and advance Geothermal"s projects.

Geothermal"s cash reserves are limited and it has been unable to raise new capital or attract a funding partner. It was also unsuccessful in its application for a \$7 million Commonwealth Government Geothermal Drilling Program (GDP) grant, despite putting in a high quality, fully budgeted application. As a result, Geothermal has been unable to fund the further exploration required to get its project to development stage.

According to Havilah"s most recent quarterly report (lodged with ASX on 31 August 2011), Havilah held approximately \$2,609,000 in cash at the end of the July 2011 quarter, compared to Geothermal"s cash reserves of \$293,000 as at the end of the same quarter (according to Geothermal"s most recent quarterly report lodged with ASX on 15 August 2011). Havilah also has greater access to equity funding due the diversity and quality of its asset portfolio and the advanced stage of development of its exploration projects. This is most recently evidenced by the agreement reached by Havilah with MMG pursuant to which MMG will, subject to obtaining foreign investment approval, take a placement of 4,000,000 Havilah Shares at an issue price of \$1.25 to raise \$5 million.

² Based on the closing price of Havilah Shares of \$0.510 as at 4 October 2011 (being the last practicable day before the date of this Target's Statement)

³ Based on the closing price of Geothermal Shares of \$0.100 as at 4 October 2011 (being the last practicable day before the date of this Target's Statement)

The increased cash reserves and access to equity funding means there is more likely to be finances available to fund the further exploration and future development of Geothermal"s projects and attract government funding.

1.6 Prospect for significant dilution if the Merger does not proceed

If the Merger is not successful and no superior proposal emerges, Geothermal will likely need to undertake significant capital raisings to increase its cash reserves to fund its existing projects. This may result in a significant dilution of existing shareholdings if Geothermal is unable to find a funding partner for its projects.

1.7 Risk of fall in share price if the Merger does not proceed

If the Merger is not successful and no superior proposal emerges, it is possible that the price of the Geothermal Shares could fall back to or below the levels they were traded at prior to the Announcement Date.

Since Havilah"s Offer, Geothermal Shares have traded at a VWAP of \$0.131 for the period from 26 August 2011 (being the date of the Announcement of the Offer) to 4 October 2011, being the ASX trading day immediately preceding the date of this Target"s Statement.

1.8 Havilah's shareholding a deterrent to any alternative bidder

Havilah"s majority shareholding in Geothermal (58.68%) is a significant deterrent to any other company considering a takeover of Geothermal, and would necessitate the support of Havilah to be successful. As such, the likelihood of another bidder emerging with a superior proposal is remote.

2. GEOTHERMAL DIRECTOR RECOMMENDATION

2.1 The Geothermal Directors

As at the date of this Target"s Statement, the Geothermal Directors are:

Name	Position
Keith Robert Johnson	Chairman
Christopher William Giles	Director
Kenneth Graham Williams	Director
Martin Simon Janes	Director

2.2 Recommendation

The independent Director of Geothermal, Mr Martin Janes, recommends that you ACCEPT the Offer in respect of all your Geothermal Shares, subject to there being no superior proposal, and no Material Adverse Event having occurred. The reasons for this recommendation are set out in Section 1 of this Target"s Statement. Mr Janes" fiduciary duties in respect of the recommendation requires him to consider all relevant circumstances, including any superior proposal.

Messrs Johnson, Giles and Williams have abstained from making a recommendation in relation to the Offer. Messrs Johnson, Giles and Williams all hold directorships and shares in each of Havilah and Geothermal, and therefore consider that it is not appropriate to make a recommendation to Geothermal Shareholders in relation to the Offer.

2.3 Directors' current intentions

2.4 Personal circumstances

It is not possible for Mr Janes" recommendation to take into account the personal circumstances of each Geothermal Shareholder, such as the size or nature of your holding, your investment strategy or your tax position. Accordingly, and particularly for smaller Geothermal Shareholders, you should seek advice from your financial, taxation or other professional adviser before making any decision in relation to your holding of Geothermal Shares.

In considering whether to accept the Offer, the Geothermal Directors encourage you to:

read the whole of this Target"s Statement and the Bidder"s Statement;
have regard to your individual risk profile, portfolio strategy, tax position and financial circumstances;
ensure that you understand the consequences of accepting the Offer;
consider the choices available to you, as detailed in Section 3 of this Target"s Statement;
obtain financial advice from your broker or financial adviser in relation to the Offer; and
obtain taxation advice on the effect of accepting the Offer.

3. YOUR CHOICES AS GEOTHERMAL SHAREHOLDERS

3.1 Choices for Geothermal Shareholders

Geothermal Shareholders have three choices available to them in relation to the Offer for the Geothermal Shares they hold. These choices are summarised below.

Note that the independent director of Geothermal, Mr Martin Janes, recommends that you ACCEPT the Offer for all of your Geothermal Shares subject to there being no superior proposal, and no Material Adverse Event having occurred.

Each of the Directors currently intend to ACCEPT the Offer in respect of the Geothermal Shares they own or control subject to there being no superior proposal, and no Material Adverse Event having occurred.

(1) Accept the Offer

Geothermal Shareholders may elect to accept the Offer and receive 1 Havilah Share for every 4 Geothermal Shares held. See Section 4.10 of this Target"s Statement for explanation on how fractional entitlements will be dealt with.

Geothermal Shareholders who accept the Offer and send in all documents required by the Acceptance Form will receive their Havilah Shares up to one month after that acceptance, unless the Offer is still conditional when acceptance occurs, and in that case Havilah Shares will be received up to one month after the Offer becomes unconditional. In any event Havilah Shares under the Offer will be received no later than 21 days after the end of the Offer Period, provided the Offer becomes unconditional.

If you accept the Offer you will not be able to sell your Geothermal Shares to anyone else, either on the ASX or by accepting any superior proposal that may emerge unless either the Offer is unsuccessful or the Offer is extended by a period of more than one month while it is still conditional (refer to section 4.11 of this Target"s Statement).

The tax implications of accepting the Offer depend on a number of factors and will vary according to your personal circumstances. A general description of the taxation consequences of accepting the Offer are set out in section 10 of the Bidder"s Statement and referred to in Section 7.4 of this Target"s Statement.

(2) Sell your Geothermal Shares on market through the ASX

During the Offer Period, Geothermal Shareholders may elect to sell their Geothermal Shares on market through the ASX for cash, provided they have not already accepted the Offer for those Geothermal Shares. Geothermal Shareholders who sell their Geothermal Shares on market through the ASX, will receive a cash amount according to the prevailing market value of the Geothermal Shares, less any brokerage payable.

Those Geothermal Shareholders who elect to sell their Geothermal Shares on market through the ASX will lose the right to participate in the Offer or any other proposal that may emerge, and may receive less than the value of the Havilah Shares offered pursuant to the Offer.

Geothermal Shareholders who sell their Geothermal Shares on market through the ASX may be liable for capital gains tax on sale (consult your financial and taxation adviser for further information in relation to this) and may incur a brokerage charge.

(3) Take no action

Geothermal Shareholders who do not wish to accept the Offer in relation to their Geothermal Shares and do not wish to sell their Geothermal Shares on market through the ASX may do nothing, in which case they will have rejected the Offer.

If you choose to do nothing and Havilah becomes entitled to compulsorily acquire your Geothermal Shares under the Corporations Act (as it intends to do, as discussed in section 7 of the Bidder"s Statement), you would receive the same consideration as Geothermal Shareholders who accepted the Offer, but some time later. Refer to section 4.13 of this Target"s Statement for details on compulsory acquisition.

4. IMPORTANT INFORMATION ABOUT HAVILAH'S OFFER

4.1 Havilah's Offer

Havilah is offering to acquire all of your Geothermal Shares, including any Geothermal Shares which become registered in your name in the register of shareholders of Geothermal during the period from the Register Date to the end of the Offer Period due to the conversion of, or exercise of rights attached to, other securities convertible into Geothermal Shares which are on issue on the Register Date, for the consideration detailed in section 4.2 and on and subject to the terms and conditions of Havilah"s Offer, which are set out in Section 13 of the Bidder"s Statement.

The Offer extends to any person who becomes registered or entitled to be registered as the holder of any of your Geothermal Shares during the period from the Register Date to the end of the Offer Period.

4.2 Havilah Offer consideration

The consideration being offered by Havilah under the Offer is 1 Havilah Share for every 4 Geothermal Shares.

4.3 Conditions of the Offer

The Offer is subject to certain conditions, the full details of these conditions are set out in section 13 of the Bidder"s Statement. In summary, the Offer is subject to the following:

(a) Havilah and its Associates having a Relevant Interest in at least 90% of the Geothermal Shares;
(b) receipt of all required regulatory approvals;
(c) no legal restraint or prohibition adversely affecting the Offer;
(d) Geothermal conducting its business in the ordinary course;
(e) no material adverse change in relation to Geothermal;
(f) no prescribed occurrence occurs in relation to Geothermal without the prior written approval of Havilah; and
(g) representations regarding Geothermal"s issued securities continue to be true and correct.

The Offer is also conditional upon all Geothermal Options being exercised or cancelled at least 7 days before the Conditions Notice Date. As at the date of this Target"s Statement, there is a total of 2,425,000 Geothermal Options on issue of which 2,000,000 are held by Geothermal Directors (other than Mr Martin Janes). The balance of the Geothermal Options were issued to employees of Geothermal or its Related Bodies Corporate under Geothermal"s Employee Share Option Plan. The details of these options are set out in Section 8.5 of this Target"s Statement.

Each of the Directors (other than Mr Martin Janes, who does not hold Geothermal Options) intend to exercise their Geothermal Options and accept the Offer in respect of those Shares issued on the exercise of their Geothermal Options, subject to, there being no superior proposal and no Material Adverse Event having occurred. The holders of the employee options have not indicated their intent at this stage.

If any of the existing Geothermal Options held by the Directors are exercised in satisfaction of the condition of the Offer that all existing Geothermal Options are cancelled or exercised, this will add up to \$300,000⁴ to the capital base of Geothermal.

Of the 425,000 Options issued pursuant to Geothermal"s Employee Share Option Plan, 200,000 will expire on 19 October 2011 unless exercised prior to that date.

Pursuant to the Takeover Bid Implementation Agreement, both Geothermal and Havilah have agreed to use their respective reasonable endeavours to procure the Geothermal Options are exercised or cancelled 7 days before the Conditions Notice Date.

As at the date of this Target"s Statement, the Geothermal Directors are not aware of any matter which would cause a breach of any of the conditions attaching to the Offer.

4.4 Notice of status of conditions

Section 12.15 of the Bidder"s Statement indicates that Havilah will give a Notice of Status of Conditions to the ASX and Havilah on 7 November 2011. Havilah is required to set out in its Notice of Status of Conditions:

(a) whether the Offer is free of any or all of the Conditions;
(b) whether, so far as Havilah is knows, any of the conditions have been fulfilled; and
(c) Havilah"s voting power in Geothermal.

If the Offer Period is extended by a period before the time by which the Notice of Status of Conditions is to be given, the date for giving the Notice of Status of Conditions will be taken to be postponed for the same period. In the event of such extension, Havilah will be required to give notice to ASX and Geothermal that states the new date for the giving of the Notice of Status of Conditions.

If a condition is fulfilled (so that the Offer becomes free of that condition) during the Offer Period but before the date on which the Notice of Status of Conditions is required to be given, Havilah must, as soon as practicable, give the ASX and Geothermal a notice that states that the particular condition has been fulfilled.

4.5 Lapse of Offer

The Offer will lapse if the Offer conditions are not freed or fulfilled by the end of the Offer Period. If the Offer lapses, all contracts resulting from the acceptance of the Offer and all acceptances that have not resulted in binding contracts will be void and you will be free to deal with your Geothermal Shares as you see fit.

4.6 Strategy of Havilah following the proposed Merger

The information contained in this Section 4.6 is extracted from section 7 of the Bidder"s Statement (with necessary changes made). The Geothermal Directors have no information which suggests to them that this information may be inaccurate or misleading. The Bidder"s Statement contains more detailed information than is contained in this Section 4.6.

⁴ Calculated on the assumption that the 2,000,000 Geothermal Options held by directors with an exercise price of \$0.15 per share would be exercised.

(1) Background to intentions

It is Havilah"s current intention to maintain Geothermal"s geothermal tenements and work towards their development as alternative energy sources. These assets, if brought to development, may be valuable for Havilah.

Geothermal has not been able to raise new capital or attract a funding partner for its assets. While Geothermal has estimated heat resources for the tenements, the economic climate is such that funding development will be a long term exercise requiring patience and persistence. Emerging Renewables Program grants will be applied for wherever applicable and these may be done in association with other parties to enhance the chances of success.

(2) Intentions following Havilah acquiring 90% or more of Geothermal shares

If Havilah acquires a Relevant Interest in 90% or more of the Geothermal Shares in Geothermal, it has the following intentions:

(a) Corporate Matters

Proceed with the compulsory acquisition of the outstanding Geothermal Shares in accordance with the provisions of the Corporations Act.

Make arrangements for Geothermal to be removed from the official list of ASX.

(b) Operations, Developments and Exploration

Geothermal"s activity will be managed internally by Havilah once the acquisition is complete and accounting systems adjusted to track the costs associated with the geothermal division of Havilah. The staff and executive directors of Havilah will manage and carry out work on Geothermal"s projects as Havilah management considers appropriate.

Only one geologist now works in Geothermal. It is Havilah"s intention that this employee will be transferred to Havilah. No loss of knowledge is anticipated.

(3) Intentions if Havilah acquires less than 90% of Geothermal Shares

The Offer is subject to a number of conditions, including a condition that Havilah and its Associates acquire a Relevant Interest in 90% or more of the Geothermal Shares on issue. Havilah does not currently intend to waive this condition. However, if it does not acquire 90% or more of the Geothermal Shares on issue, but waives that condition and obtains control of the Geothermal Board, then Havilah has the following intentions:

(i) Corporate Matters

Havilah intends to maintain Geothermal"s listing on ASX while it meets ASX requirements for maintaining a listing and it is cost effective to do so. If Havilah becomes entitled at some later time to exercise general compulsory acquisition rights under the Corporations Act, it would exercise those rights.

(ii) Assumption of control of Board and Management

Subject to the Corporations Act and the constitution of Geothermal, Havilah will seek to remove one member of the board of Geothermal to reflect Havilah"s proportionate ownership interest in Geothermal. Havilah will seek, through its nominees on the board of Geothermal, to implement the intentions detailed in section 7.3 of the Bidder"s Statement to the extent that they are consistent with Geothermal being a controlled entity of Havilah and are considered to be in the best interests of all Geothermal shareholders.

(iii) Other intentions

Subject to the above, it is the present intention of Havilah on the basis of the information concerning Geothermal which is known to it at the date of this document and the existing circumstances affecting the business of Geothermal, that:

(a) the business of Geothermal will be otherwise continued in substantially the same manner as it is presently being conducted;
(b) no other major changes will be made to the business of Geothermal;
(c) there will not be any other redeployment of the fixed assets of Geothermal; and
(d) the present employee of Geothermal will be employed by Havilah.

4.7 Offer Period

Unless the Offer is extended or withdrawn, it is open for acceptance from 13 October 2011 until 7:00pm Adelaide time on 14 November 2011.

The circumstances in which Havilah may extend or withdraw its Offer are set out in sections 4.8 and 4.9 of this Target"s Statement.

4.8 Extension of Offer Period

Havilah may extend the Offer Period at any time before giving the Notice of Status of Conditions (referred to in Section 4.4 of this Target"s Statement) while the Offer is subject to conditions. However, if all the conditions are satisfied or waived, Havilah may extend the Offer Period at any time before the end of the Offer Period.

Additionally, the Offer Period will be automatically extended if, within the last 7 days of the Offer Period Havilah improves the consideration offered under the Offer. If this occurs, the Offer Period will be automatically extended so that it ends 14 days after the date Havilah improves the consideration offered under the Offer.

4.9 Withdrawal of Offer

Havilah may not withdraw the Offer if you have already accepted it. Before you accept the Offer, Havilah may withdraw the Offer with the written consent of ASIC and subject to the conditions (if any) specified in such consent. If Havilah withdraws the Offer, all contracts arising from its acceptance will automatically be void.

4.10 Fractional Entitlements

If, as a result of accepting the Offer, a Geothermal Shareholder becomes entitled to a fraction of a Havilah Share, then the entitlement will be rounded down to the nearest whole Havilah Share. Refer to section 12.2 of the Bidder"s Statement for further details.

4.11 Effect of acceptance

The effect of acceptance of the Offer is set out in section 12.7 of the Bidder"s Statement. Geothermal Shareholders should read these provisions in full to understand the effect which acceptance will have on their ability to exercise the rights attaching to their Geothermal Shares and the representations and warranties which they give by accepting the Offer.

In particular Geothermal Shareholders should note that once a Geothermal Shareholder accepts the Offer, they will only be able to withdraw that acceptance in very limited circumstances. Specifically, Geothermal Shareholders may only withdraw acceptance of the Offer if:

(a) the Offer is still subject to a defeating condition; and
(b) Havilah varies the Offer in a way that postpones, for more than one month, the time when Havilah needs to meet its obligations under the Offer. This will occur if Havilah extends the Offer Period by more than one month whilst the Offer is still subject to conditions.

4.12 When you will receive consideration (in the form of Havilah Shares) for your Shares if you accept the Offer

In the usual case, you will be allocated the Havilah Shares in consideration for the sale of your Geothermal Shares on or before the later of:

(a) one month after the date the Offer becomes or is declared unconditional; and
(b) one month after the date you accept the Offer if the Offer is, at the time of acceptance, unconditional,

but in any event (assuming the Offer becomes or is declared unconditional), no later than 21 days after the end of the Offer Period. There are, however, certain exceptions to the above timeframes for receiving the Offer consideration. Refer to Section 12.8 of the Bidder"s Statement for full details of when you will receive the Offer consideration.

4.13 Compulsory Acquisition

If during or at the end of the Offer Period Havilah has (together with its associates) a Relevant Interest in at least 90% (by number) of Geothermal Shares, and has (together with is associates) acquired at least 75% (by number) of the Geothermal Shares Havilah has offered to acquire under the Offer, then pursuant to Part 6A.1 Division 1 of the Corporations Act, Havilah will be entitled to compulsorily acquire any Geothermal Shares in respect of which it has not received acceptance of the Offer.

Geothermal Shareholders should be aware that, if their Geothermal Shares are compulsorily acquired, they are not likely to receive payment until at least one month after the compulsory acquisition notices are dispatched to them.

If Havilah does not become entitled to compulsorily acquire Geothermal Shares in accordance with Part 6A.1 Division 1 of the Corporations Act, it may nevertheless become entitled to exercise general compulsory acquisition rights under Part 6A.2 Division 1 of the Corporations Act.

Havilah has indicated in section 7 of the Bidder"s Statement that it intends to proceed to compulsory acquisition of the outstanding Geothermal Shares, if it meets the required thresholds.

4.14 Foreign Holders

If you are a Foreign Holder, you should be aware that the Offer in jurisdictions outside Australia may be restricted by law, and you should seek advice and observe any such restrictions. Any such failure to comply with such restrictions may constitute a violation of applicable securities laws.

The Offer does not constitute an offer in any place in which, or to persons to whom, it would not be lawful to make an offer. Havilah in its absolute discretion will determine whether to issue Havilah Shares to Foreign Holders as consideration for the Offer, having regard to any such restrictions.

In respect of those Havilah Shares which Foreign Holders would have become entitled to receive but for the restrictions outlined above, Havilah will:

(a) arrange for the Havilah Shares to which you and all other Foreign Holders under the Offer would have been entitled but for Section 12.9 of the Bidder"s Statement to be issued to a nominee approved by ASIC;
(b) cause the nominee to offer for sale those Havilah Shares within 30 Business Days after the end of the Offer Period in such a manner, at such a price and on such other terms and conditions as are determined by the nominee;
(c) pay or procure the payment to you the amount ascertained in accordance with Section 12.9 of the Bidder"s Statement.

Refer to Section 12.9 of the Bidder"s Statement for a more detailed description on how entitlements will be calculated, the timing of the payment to Foreign Holders and any applicable restrictions.

5. ABOUT HAVILAH

Havilah is an ASX listed mineral exploration company, exploring for copper, gold, iron ore, cobalt, tin and other base metals in South Australia. Havilah was officially admitted to the ASX on 18 March 2002.

Havilah holds exploration licences covering more than 6,500 km² of the highly mineralised Curnamona Province in north-eastern South Australia. Exploration work has identified significant mineral deposits resulting in a substantial inventory of copper, gold, molybdenum, cobalt and iron. Regional exploration has been highly successful with the discovery of two new iron ore deposits in a newly emerging iron ore district in north eastern South Australia.

Please refer to Section 3 of the Bidder"s Statement and the Independent Expert"s Report set out in Appendix B to this Target"s Statement for more detailed information about Havilah"s projects, opportunities, board of directors and management.

6. ABOUT GEOTHERMAL

Investors should refer to Geothermal"s Quarterly Activities Report and Geothermal"s Quarterly Cashflow Report for the period ending 31 July 2011 for the recent operating and financial history of Geothermal, available at Geothermal"s website at www.geothermal-resources.com.au.

Geothermal is an ASX listed exploration company with the aim of discovering and developing geothermal resources based on abnormally high heat flows in parts of the Earth"s crust.

6.1 Principal assets

Geothermal holds three Geothermal Exploration Licences (GELs) in South Australia covering 4,499 km² .

Key features of Geothermal"s exploration projects are summarised below. These assets are more fully described on Geothermal"s website at www.geothermalresources.com.au, and in the Geothermal 2010 Annual Report which was issued on 22 October 2010.

(1) Frome Project GEL 181 (Geothermal 100%)

The Frome Project covers approximately 1,300 km² and is located in the Frome basin region of north-eastern South Australia.

Field exploration included the drilling and temperature logging of eight wells, two to depths of approximately 1,800 metres. The factual knowledge obtained from this work has been tied to a 27km seismic survey which Geothermal completed in the 2009-2010 financial year. This survey confirmed a thick sequence of insulating Cambrian and Proterozoic sediments overlying the hot fractured granite heat source at depths of up to at least 4 km. An Inferred Resource estimate for the thermal energy in place for the defined resource area at the Frome Project is 84,000 petajoules.

(2) Penola-Robe Project GELs 214 and 498 (Geothermal 100%)

The Penola-Robe Project covers approximately 3,200 km² and is located on the northern margin of the Otway Basin in the South East of South Australia. This region of South Australia is marked by abnormally high heat flows, especially within Geothermal"s tenement block. Thick porous sandstone formations contain groundwater heated by the hot underlying basement. Work on the Penola-Robe Project during the 2009-10 financial year was primarily directed towards identifying the best area to drill for a Hot Sedimentary Aquifer (HSA) geothermal reservoir within the target Pretty Hill Formation sedimentary aquifer. Geothermal has not yet drilled in this region.

The temperatures in the Penola-Robe Project are likely to be lower than at the Frome Project, however, the drilling risk is considered to be lower due to the knowledge available from the numerous petroleum drill holes in the region.

6.2 Operations

Geothermal is not currently actively exploring the Frome Project and the Penola-Robe Project due to a requirement for further funding. Geothermal"s operations are currently limited to tenement maintenance and computer modelling studies.

7. OTHER IMPORTANT CONSIDERATIONS FOR GEOTHERMAL SHAREHOLDERS

All the information set out in this Target"s Statement should be carefully considered, together with the risks normally associated with companies of a similar nature to Havilah and, in particular, those risks described in section 9 of the Bidder"s Statement.

This Section 7 outlines some of the other important considerations and risks for Geothermal Shareholders who choose to accept the Offer as recommended by the independent Director of Geothermal, Mr Martin Janes, subject to there being no superior proposal and no Material Adverse Event having occurred. If any one of the risks identified in the Bidder"s Statement or any of the following risks materialise, then Havilah"s financial condition, prospects and share price could be materially and adversely affected.

7.1 The value of the Offer is not fixed

In making his recommendation, the independent Director of Geothermal, Mr Martin Janes, has considered, among other things, the implied value of the Offer. As at the following dates, the implied value of the Offer was:

\$0.1288 per Geothermal Share as at 19 August 2011 (being the last trading day prior to each company entering into a trading halt in respect of the Offer); and
\$0.1275 per Geothermal Share as at 4 October 2011.

The implied values of the Offer have been calculated taking into account the terms of the Offer and the price of the Havilah Shares quoted on the ASX as at the above specified dates.

Please note that the implied value of the Offer as stated in this Target"s Statement is calculated as at particular dates but the implied value of the Offer will fluctuate with movements in the market value of Havilah Shares. The market value of Havilah Shares will change over time and may fluctuate for a variety of reasons, including movements in the price of iron ore, copper, gold and other commodities, exchange rate movements, changes in the operating performance of Havilah"s assets, changes in the political risk profile of Havilah"s assets, or other factors which impact the operating or financial performance of Havilah. Geothermal Shareholders are urged to obtain updated quotes on the price of Geothermal Shares and Havilah Shares. You can access these prices online and free of charge as follows:

Geothermal: Australian Stock Exchange, code GHT http://www.asx.com.au
Havilah: Australian Stock Exchange, code HAV http://www.asx.com.au

The implied value of the Offer for Geothermal Shares at any given time can be calculated using this simple formula:

Implied Value = (NHS/NGS) x HAV Share price

Where:

NHS is the number of Havilah Shares offered under the Offer (i.e. 1)

NGS is the number of Geothermal Shares to be exchanged under the Offer (eg. 4 Geothermal Shares)

For example, the implied value of \$0.1288 in relation to Geothermal Shares was obtained using this calculation:

(1/4) x \$0.515 (HAV Share price on 19 August 2011⁵ )

7.2 Form of consideration offered to Geothermal Shareholders

Havilah has not included a cash component in the Offer. Therefore, Geothermal Shareholders will not immediately realise value on their investment. Rather, Havilah is offering Havilah Shares as consideration for Geothermal Shares. As a result, the value of the Offer to Geothermal Shareholders will be affected by an increase or decrease in the price of Havilah Shares.

There are risks associated with any investment in the share market and Geothermal Shareholders should be aware they will bear the risk of an investment in Havilah Shares if they are to accept the Offer.

The Havilah Share price may be affected in the short term due to the issue of Havilah Shares to accepting Geothermal Shareholders. This will depend on factors that cannot be predicted by the Geothermal Directors, such as how the market perceives the proposed Merger in terms of adding value to Havilah and how many Geothermal Shareholders attempt to realise their investment by selling their Havilah Shares.

If Geothermal Shareholders accept the Offer they will not receive their Havilah Shares immediately. Havilah Shares under the Offer will be received up to one month after acceptance, unless the Offer is still conditional when acceptance occurs, and in that case Shares will be received up to one month after the Offer becomes unconditional. In any event Havilah Shares under the Offer will be received no later than 21 days after the end of the Offer Period (provided the Offer becomes unconditional). During the period from when a Geothermal Shareholder accepts the Offer, that Geothermal Shareholder will not be able deal in its Geothermal Shares or in the Havilah Shares to be received under the Offer.

The independent Director of Geothermal, Mr Martin Janes, considers that the Offer is attractive despite these risks because of the size of the current premium and other benefits described in Section 1 of this Target"s Statement.

The latest price for Havilah Shares can be obtained from the ASX website (www.asx.com.au) using the code "HAV".

7.3 Other risks of the Offer

In the Bidder"s Statement Havilah has identified a number of risk factors in relation to the proposed Merger. Please refer to Section 9 of the Bidder"s Statement for further details in relation to these risk factors. If any one of these risks materialises, Havilah"s and the Merged Group"s business, financial condition, prospects and share price could be materially and adversely affected.

If the Merger does not succeed, and absent any ongoing financial support from Havilah, Geothermal"s existing cash reserves will not be sufficient to cover the expenditure required to further explore and develop its tenements or potentially the continued maintenance of its tenements. There is no assurance that Geothermal will be able to raise the capital it requires or that it will be able to find a funding partner when additional funding is required or that the terms associated with providing such funding will be satisfactory to Geothermal. There is also no assurance that it will be successful in any further application for a government grant, particularly if the likelihood of it being able to raise capital or find a funding partner is unknown. In the event that Geothermal fails to obtain sufficient funding when required, Geothermal may be forced to delay or eliminate plans for further exploration of its tenements, sell existing assets or further reduce its general operations.

⁵ The last ASX trading day prior to both companies being placed into a trading halt.

7.4 Geothermal Shareholder tax issues

The Australian taxation consequences of accepting the Offer in relation to your Geothermal Securities are set out in Section 10 of the Bidder"s Statement. Please note that the taxation information provided in the Bidder"s Statement is a general description of the Australian taxation consequences and does not take into account the specific consequences of any particular Geothermal Shareholder. It is recommended that Geothermal Shareholders seek their own professional advice in relation to the tax consequences applicable to their individual circumstances.

8. ADDITIONAL INFORMATION

8.1 Geothermal Directors' Relevant Interests and dealings in Geothermal Securities

(1) Relevant Interests in Geothermal Securities

The only Geothermal Securities on issue are Geothermal Shares and Geothermal Options. As at the date of this Target"s Statement, your Directors had a Relevant Interest in the following Geothermal Securities:

Name of Director	Number of Geothermal Shares	Number of Unlisted Geothermal Options
Mr Keith Robert Johnson	671,263	900,000
Mr Christopher William Giles	627,726	900,000
Mr Kenneth Graham Williams	86,307	200,000
Mr Martin Simon Janes	3,000	Nil

(2) Dealings in Geothermal Securities

No Geothermal director has acquired or disposed of a Relevant Interest in any Geothermal Shares or Geothermal Options within the period of four months immediately preceding the date of this Target"s Statement.

8.2 Geothermal Directors' Relevant Interests and dealings in Havilah Securities

(1) Relevant Interests in Havilah Securities

As at the date of this Target"s Statement, your Directors had a Relevant Interest in the following Havilah Securities:

Name of Director	Number of Havilah Shares	Number of Listed Havilah Options	Number of Unlisted Havilah Options
Mr Keith Robert Johnson	3,865,281	731,133	3,500,000
Mr Christopher William Giles	10,878,508	2,737,412	3,500,000
Mr Kenneth Graham Williams	214,297	53,575	800,000
Mr Martin Simon Janes	Nil	Nil	Nil

(2) Dealings in Havilah Securities

No Geothermal director acquired or disposed of a Relevant Interest in any Havilah Securities within the period of four months immediately preceding this Target"s Statement.

8.3 Benefits and Agreements with Geothermal Directors

(1) Benefits in connection with retirement from office

As a result of the Offer no benefit (other than a benefit which can be given without member approval under the Corporations Act) has been or will be given to a person in connection with the retirement of that person, or someone else, from a board or managerial or executive office in Geothermal or a related body corporate of Geothermal.

(2) Agreements connected with or conditional on the Offer

There is no agreement made between any Director and any other person in connection with or conditional on the outcome of the Offer other than:

(a) in the Directors" capacity as holders of Geothermal Shares, Havilah Shares or Geothermal Options; and
(b) the agreement by Geocom Pty Ltd and Maptek Pty Ltd to waive early termination fees referred to in section 8.10.
(3) Benefits from Havilah

None of the Directors of Geothermal have agreed to receive, or is entitled to receive, any benefit from Havilah in connection with or which is conditional on the outcome of the Offer other than in their capacity as a holder of Geothermal Shares and Havilah Shares.

(4) Interest of Directors in contracts with Havilah

None of the Directors have any interest in any contract entered into by Havilah other than:

(a) in their capacity as a holder of Havilah Shares;
(b) in their capacity as directors of Havilah;
(c) in the case of Messrs Giles and Johnson, in their capacity as owners of Geocom Pty Ltd and Maptek Pty Ltd respectively, being companies that have entered consultancy agreements and a management services agreements with Havilah.

8.4 Composition of the Boards

Messrs Williams, Johnson and Giles each hold directorships and shares in each of Havilah and Geothermal.

Mr Williams has not, on behalf of Havilah, participated, attended meetings of the board of directors of Havilah, or been involved in any negotiations relating to the Takeover Bid Implementation Agreement, the Offer or (subject to the below) the preparation of the Bidder"s Statement. Mr Williams has been involved in preparation of the Bidder"s Statement to the extent only that his involvement has been required to ensure that the due diligence investigations necessary to prepare the Bidder"s Statement have been undertaken and to approve the copy of the Bidder"s Statement for lodgement with ASIC pursuant to section 633 of the Corporations Act.

Similarly, Messrs Johnson and Giles have not participated, attended Board meetings, or been involved in any negotiations relating to the Takeover Bid Implementation Agreement, the Offer, or the adoption of this Target"s Statement on behalf of Geothermal. Messrs Johnson and Giles have been involved in preparation of the

Target"s Statement to the extent only that their involvement has been required in undertaking the due diligence investigations necessary to prepare and verify the Target"s Statement.

Each company has sought its own independent legal advice with respect to the Offer.

For the reasons outlined above, Messrs Johnson, Giles and Williams are of the opinion that it is not appropriate to make a recommendation to Geothermal shareholders in relation to the Offer, and as such, have abstained from making any such recommendation.

8.5 Issued capital

As at the date of this Target"s Statement, Geothermal"s issued capital consisted of 35,869,753 fully paid ordinary Shares.

Geothermal also had 2,425,000 Geothermal Options on issue as at the date of this Target"s Statement, as follows:

(a) 200,000 Geothermal Options with an exercise price of 31 cents and an expiry date of 19 October 2011;
(b) 25,000 Geothermal Options with an exercise price of 36 cents and an expiry date of 12 February 2012;
(c) 2,000,000 Geothermal Options with an exercise price of 15 cents and an expiry date of 3 January 2015; and
(d) 200,000 Geothermal Options with an exercise price of 15 cents and an expiry date of 6 July 2015.

8.6 Substantial holders

Based on the substantial holding notices provided to Geothermal as at the day prior to the date of this Target"s Statement, the only substantial holder of Geothermal Shares is Havilah holding 21,046,878 Geothermal Shares, representing 58.68% of Geothermal"s issued share capital.

8.7 Continuous disclosure

Geothermal is a disclosing entity under the Corporations Act and is subject to regular reporting and disclosure obligations under the Corporations Act and the Listing Rules. These obligations require Geothermal to notify the ASX of information about specified matters and events as they occur for the purpose of making that information available to the market. In particular, Geothermal has an obligation (subject to limited exceptions) to notify the ASX immediately on becoming aware of any information which a reasonable person would expect to have a material effect on the price or value of Geothermal Shares.

Copies of the documents filed with the ASX may be obtained from the ASX website at www.asx.com.au and Geothermal"s website at www.geothermal-resources.com.au.

In addition, Geothermal will make copies of the following documents available for inspection at Geothermal"s offices which are located at 63 Conyngham Street, Glenside SA 5065 (between 9:00am and 5:00pm on Business Days):

(a) Annual Report 2010, lodged with the ASX on 22 October 2010;
(b) Half Year Accounts for the period ending 31 January 2011, lodged with the ASX on 8 April 2011;
(c) Geothermal"s Constitution, lodged with the ASX on 20 March 2006; and
(d) any document lodged by Geothermal with the ASX between the lodgement of the Annual Report 2010 and the date of this Target"s Statement.

Copies of documents lodged with ASIC in relation to Geothermal may be obtained from, or inspected at, an ASIC office.

8.8 Changes in financial position

So far as is known to any Geothermal Director, the financial position of Geothermal has not materially changed since 31 January 2011⁶ and the date of this Target"s Statement, other than due to the impact of:

(a) The retention of the Independent Expert to prepare the Independent Expert"s Report in Appendix B of this Target"s Statement at a cost of \$30,000;
(b) Legal fees payable to Watsons Lawyers for advice in relation to the Takeover Bid Implementation Agreement and the Offer and preparation of this Target"s Statement estimated to be \$50,000;
(c) The retention of the independent Directors, Mr Martin Janes, whose fees will be \$12,000 per annum plus \$1,200 per day for additional work over and above normal director"s duties; and
(d) Fees payable in the amount of approximately \$6,500 for the provision of taxation advice in relation to the Offer.

If, as the Directors have indicated they intend to do, the existing Geothermal Options held by Geothermal Directors are exercised in satisfaction of the condition of the Offer that all existing Geothermal Options are cancelled or exercised, this will add up to \$300,000⁷ to the capital base of Geothermal.

Due to Geothermal"s limited cash reserves and difficulty accessing funding, on 19 August 2011 Havilah provided Geothermal with a letter of support, guaranteeing that Havilah would provide Geothermal with financial support (if required) for a period of not less than one year to support the "going concern" requirements of the auditors.

In addition, the Australian Taxation Office (ATO) are conducting an income tax audit of Geothermal. The audit issue is the immediate deduction for capital expenditure claimed by Geothermal in its income tax returns for the four years ended 31 July 2010. The ATO contend Geothermal"s activities are not eligible for the immediate deduction under what is generally termed the mining industry provisions. It is noted these provisions have been amended effective from 1 July 2012 to allow these types of expenditures to be deductible under the mining industry provisions.

Geothermal has responded to the ATO views and, without prejudice to the positions adopted in the returns, considers that there is a strong case for an alternative basis for claiming deductions for the disputed expenditures. This alternative basis would not give rise to an income tax liability for any of the years under review. The ATO has not yet responded to Geothermal"s alternative position.

Geothermal intends to fully defend the claims made by the ATO. However, if the ATO were to successfully deny the deductions claimed by Geothermal it would be liable for income tax, penalties and interest in the amount of approximately \$400,000. However,

⁶ Being the date of Geothermal's most recent audited financial report (Half Year Accounts for the period ending 31 January 2011)

⁷ Calculated on the assumption that only the 2,225,000 Geothermal Options with an exercise price of \$0.15 per share would be exercised and the remaining 200,000 would lapse on 19 October 2011.

if limited amendment periods apply to Geothermal this liability would reduce by approximately 50%.

8.9 Takeover Bid Implementation Agreement

Geothermal has entered into a Takeover Bid Implementation Agreement with Havilah dated 25 August 2011 (Takeover Bid Implementation Agreement), under which Havilah agreed to make the Offer, Geothermal agreed to comply with certain exclusivity obligations and the parties agreed to exchange confidential information for the purposes of preparing the Bidder"s Statement and this Target"s Statement. A complete copy of the Takeover Bid Implementation Agreement was released to the ASX on 26 August 2011.

The key terms of the Takeover Bid Implementation Agreement are summarised in Appendix A of this Target"s Statement.

8.10 Material Contracts

Geothermal has identified material contracts to which Geothermal is a party as containing change of control or change of ownership provisions which may be triggered as a result of the Offer or which may be terminated if the Merger succeeds. A summary of those contracts and the relevant provisions is set out below.

(1) Renewable Energy Development Initiative (REDI) Program Grant Agreement (REDI Agreement)

In July 2006, Geothermal was awarded a REDI Grant by the Australian Government Department of Industry, Tourism and Resources (AusIndustry). This grant was for \$2.4 million in support of Geothermal"s work on the Frome Project in South Australia.

The REDI Agreement provides that the Commonwealth may immediately terminate the agreement if there is a change in control or ownership of Geothermal which the Commonwealth reasonably considers has an adverse effect on Geothermal"s ability to comply with its obligations under the agreement. A possible consequence of termination is that the Commonwealth may require Geothermal to repay so much of the grant as it reasonably determines.

The Offer will not result in a "change of control", given that Havilah already holds more than 58% of the issued share capital in Geothermal, and as such, already holds a controlling interest in Geothermal. However, the Offer, if successful, will result in a "change of ownership".

However, Messrs Williams and Janes are of the view that the change of ownership that will occur if the Offer is successful will not have an adverse effect on Geothermal"s ability to comply with its obligations under the REDI Agreement, and as such, will not trigger a termination right for the Commonwealth under the agreement.

(2) Consultancy Agreements between Geocom Pty Ltd (Geocom), Maptek Pty Ltd (Maptek) and Geothermal (Consultancy Agreements) and Management Services Agreement between Geothermal and Maptek (Management Services Agreement)

Geothermal entered into Consultancy Agreements with Geocom (a company wholly owned by Dr Giles) and Maptek (a company wholly owned by Dr Johnson) in August 2005. Geothermal also entered into a Management Services Agreement with Maptek in August 2005.

Both the Consultancy Agreements and the Management Services Agreement contain a "termination payout" clause whereby Geothermal would be entitled to terminate the agreement provided it pays Geocom or Maptek (as appropriate) a lump sum payment equivalent to the amount which Geocom or Maptek would have received had the agreement continued to the end of its term.

Dr Giles, Geocom, Dr Johnson and Maptek have all agreed that they will waive any termination payments due by Geothermal due to early termination of the Consultancy Agreements or Management Services Agreement, subject to fulfilment or waiver of the conditions of the Offer.

8.11 Other information reasonably required by Geothermal Shareholders and their professional advisers to make an informed assessment

This Target"s Statement is required to include all the information that Geothermal Shareholders and their professional advisers would reasonably require to make an informed assessment of whether to accept the Offer, but:

only to the extent to which it is reasonable for investors and their professional advisers to expect to find this information in this Target"s Statement; and
only if the information is known to any of the Geothermal Directors.

The Geothermal Directors are of the opinion that the information that Geothermal Shareholders and their professional advisers would reasonably require to make an informed assessment of whether to accept the Offer is:

the information contained in the Bidder"s Statement dated 4 October 2011;
the information contained in this Target"s Statement;
Geothermal"s Quarterly Activities Report and Quarterly Cashflow Report for the periods ending 30 April 2011 and 31 July 2011; and
the information contained in Geothermal"s releases to the ASX prior to the date of this Target"s Statement and news releases and public announcements made by Havilah to the ASX since the Announcement Date.

8.12 ASIC modifications

Geothermal has not sought any modifications to, or exceptions from, the Corporations Act by ASIC in respect of the Offer or this Target"s Statement.

8.13 Consents

(1) Watsons Lawyers

Watsons Lawyers has given and not withdrawn its consent before the date of this Target"s Statement to being named in this Target"s Statement as legal adviser to Geothermal in the form and context in which it is so named. Watsons Lawyers do not make or purport to make any statement that is included in this Target"s Statement and there is no statement in this Target"s Statement which is based on any statement of Watsons Lawyers. Watsons Lawyers specifically disclaim responsibility for any statement included in this Target"s Statement.

(2) Independent Expert

The Independent Expert has consented to the:

(i) inclusion of the Independent Expert"s Report as Appendix B to this Target"s Statement; and
(ii) inclusion in this Target"s Statement of statements made by the Independent Expert or said to be based on the Independent Expert"s Report, and to all references to those statements, in the form and context in which they are respectively included,

and has not withdrawn that consent before this Target"s Statement was lodged with the ASX.

The Independent Expert has not caused or authorised the issue of this Target"s Statement and takes no responsibility for any part of it other than the Independent Expert"s Report and the references to its name.

(3) Competent persons statements

Geothermal"s technical exploration and mining information contained in this Target"s Statement was compiled by Dr Christopher Giles. Dr Giles is a member of the Australian Institute of Geoscientists and is employed by the Company on a consulting contract. Dr Giles has sufficient experience which is relevant to the style of geothermal play under consideration to qualify as a Competent Person as defined in Edition 2 (2010) of the "Geothermal Reporting Code, 2010". Dr Giles consents to the inclusion in this Target"s Statement of the matters based on his information in the form and context in which it appears.

(4) Directors

This Target"s Statement contains statements which are made by, or statements said to be based on statements made by, Geothermal Directors. Each of the Geothermal Directors has consented to the inclusion of each statement they have made in the form and context in which the statement appears and have not withdrawn that consent as at the date of this Target"s Statement.

(5) ASIC Class Order 01/1543

As permitted by ASIC Class Order 01/1543 this Target"s Statement contains statements which are made, or based on statements made, in documents lodged by Havilah with ASIC or given to the ASX, or announced on the Company Announcements Platform on the ASX, by Havilah. Pursuant to the Class Order, the consent of Havilah is not required for the inclusion of such statements in this Target"s Statement. Any Geothermal Shareholder who would like to receive a copy of any of those documents may obtain a copy (free of charge) during the Offer Period by contacting the Havilah shareholder line on +61 8 8338 9292.

As permitted by ASIC Class Order 03/635, this Target"s Statement may include or be accompanied by certain statements:

(a) fairly representing a statement by an official person; or
(b) from a public official document or a published book, journal or comparable publication.

In addition, as permitted by ASIC Class Order 07/429, this Target"s Statement contains share price trading data sourced from the ASX without its consent.

9. GLOSSARY

9.1 Defined terms

In this Target"s Statement, the following words have these meanings unless the contrary intention appears:

Acceptance Form means the form entitled "Acceptance Form" which you will have received in the package which contained this Target"s Statement and the Bidder"s Statement.

Announcement means the announcement issued by Geothermal entitled "Havilah Resources Takeover Offer for Geothermal Resources" dated 26 August 2011.

Announcement Date means 26 August 2011 being the date the Announcement was lodged with ASX.

ASIC means the Australian Securities and Investments Commission.

Associate has the meaning given in Division 2 of Part 1.2 of the Corporations Act as if section 12(1) of the Corporations Act includes reference to the Takeover Bid Implementation Agreement.

ASX means ASX Limited or the financial market operated by it, as the context requires.

Bidder's Statement means Havilah"s Offer Document and Bidder"s Statement dated 4 October 2011.

Board means the Board of Directors of Geothermal.

CHESS sub-register means Clearing House Electronic Sub-register System, an electronic book-entry register of holdings of approved securities, managed by ASX Settlement Corporation Pty Ltd, a wholly owned subsidiary of the Australian Securities Exchange.

Conditions Notice Date means the conditions notice date under the Offer.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a Director of Geothermal.

Foreign Holder means a holder of Geothermal Securities whose address shown in the Geothermal register of members is in a place outside of Australia and its external territories and New Zealand.

Geothermal means Geothermal Resources Limited (ACN 115 281 144) of 63 Conyngham Street, Glenside SA 5065.

Geothermal Directors means all the Directors of Geothermal collectively, from time to time.

Geothermal Option means an unlisted option to subscribe for a Geothermal Share granted by Geothermal.

Geothermal Securities means one or more Geothermal Shares and/or one or more Geothermal Options.

Geothermal Share means one fully paid ordinary share in the issued capital of Geothermal.

Geothermal Shareholder means the holder of one or more Geothermal Shares.

Havilah means Havilah Resources NL (ACN 077 435 520) of 63 Conyngham Street, Glenside SA 5065.

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

Havilah Shareholder means the holder of one or more Havilah Shares.

Independent Expert means Value Adviser Associates.

Interest means the interest Havilah has in Geothermal Shares by way of acceptance of the Offer.

Issuer Sponsored Holding means those shares held on the register that records uncertificated holdings of shares under Listing Rule 8.2.

JORC means the Joint Ore Reserves Committee.

JORC Code means the code published by the Joint Ore Reserves Committee which provides minimum standards for public reporting.

Listing Rules means the Listing Rules of the ASX.

Material Adverse Event means any change, event, effect, occurrence or state of facts that is, or would reasonably be expected to be, material and adverse to the assets, liabilities (including contingent liabilities that may arise through outstanding, pending, or threatened litigation or otherwise), business, operations, financial condition or prospects of Havilah or any of its subsidiaries taken as a whole.

Merged Group means Havilah and each of its subsidiaries following its acquisition of all or a majority of the Geothermal Shares not held by Havilah.

Merger means the proposed off-market takeover of Geothermal by Havilah.

Notice of Status of Conditions means Havilah"s notice disclosing the status of the conditions to the Offer which is required to be given by section 630(3) of the Corporations Act.

Offer means Havilah"s offer to acquire all the Geothermal Shares.

Offer Period means the period during which the Offer will remain open for acceptance in accordance with the terms of the Offer.

Official List means the Official List of ASX.

Options Condition means the condition in clause 10 of the Takeover Bid Implementation Agreement.

Register Date means the date set by Havilah under section 633(2) of the Corporations Act, being 10 October 2011 at 7.00pm Adelaide time.

Relevant Interest has the meaning given in sections 608 and 609 of the Corporations Act.

Related Body Corporate has the meaning given in section 50 of the Corporations Act.

Takeover Bid means Havilah"s offer to acquire all the Geothermal Shares.

APPENDIX A – KEY TERMS OF TAKEOVER BID IMPLEMENTATION AGREEMENT

In summary, the key terms of the Takeover Bid Implementation Agreement entered into between Geothermal and Havilah on 25 August 2011 are as follows:

(1) No Solicitation

From the date of execution of the Takeover Bid Implementation Agreement until the end of the Offer Period, Geothermal and its officers, employees, agents and professional advisers must not solicit, initiate, participate in any discussions or disclose any non-public information relating to a proposal that may result in another person (or entity) other than Havilah:

(a) acquiring voting power of more than 10% in Geothermal;
(b) acquiring a substantial interest in the assets of Geothermal; or
(c) otherwise acquiring control of (or merging with) Geothermal (Competing Proposal).

Until the end of the Offer Period, Geothermal must immediately notify Havilah if it receives a Competing Proposal.

(2) Takeover Offer

(a) As soon as reasonably practicable after the Announcement Date, Havilah must serve on Geothermal the Bidder"s Statement which includes an offer on the terms and conditions no less favourable to shareholders than the Offer Terms outlined in the schedule to the Takeover Bid Implementation Agreement, and must use its reasonable endeavours to co-ordinate despatch of the Bidder"s Statement to Geothermal Shareholders at the same time as the Target"s Statement is despatched.
(b) The independent director of Geothermal, Mr Martin Janes, will recommend that Geothermal Shareholders accept Havilah"s Offer; and Mr Martin Janes and Mr Kenneth Williams will announce that they will accept Havilah"s Offer in respect of any Geothermal Shares they own or control, subject in each case to:
(i) the Independent Expert stating that the Takeover Bid is fair and reasonable to Geothermal Shareholders other than Havilah;
(ii) there being no superior proposal; and
(iii) no Material Adverse Event having occurred.

(3) Facilitation Of Offer

(a) During the Offer Period, Geothermal will support and promote the Takeover Bid, including meeting with shareholders, analysts, management, customers, press and other parties if requested to do so by Havilah, subject to:
(i) the Independent Expert stating that the Takeover Bid is fair and reasonable to Geothermal Shareholders other than Havilah;
(ii) there being no superior proposal; and
(iii) no Material Adverse Event having occurred.
(b) Geothermal agrees not to do anything which will be likely to result in any of the conditions of the Takeover Bid being breached (or not being capable of being satisfied).
(c) From the date of execution of the Takeover Bid Implementation Agreement until the end of the Offer Period, each of Havilah and Geothermal must:
(i) conduct its business in the usual and ordinary course consistent with past practice;
(ii) maintain the value of its business, assets and relationships with suppliers, customers and employees; and
(iii) not dispose of the whole or any part of its business for an amount greater than \$50,000 in the case of Geothermal and \$1,000,000 in the case of Havilah.

(4) Options

Both Havilah and Geothermal will use their reasonable endeavours to procure the Geothermal Options are exercised or cancelled at least 7 days before the Conditions Notice Date, and Havilah will provide Geothermal will such assistance as it is reasonably able to provide to procure the exercise or cancellation of the Options.

(5) Termination

The Takeover Bid Implementation Agreement may be terminated by a party (by immediate notice to the other party) if:

(a) the other party is in material breach of the Takeover Bid Implementation Agreement, and that breach is not remedied within 10 business days of it receiving notice of the breach from the other party;
(b) Havilah withdraws the Offer, or the Offer lapses for any reason (including nonsatisfaction of a condition of the Offer); or
(c) a Material Adverse Event occurs.

APPENDIX B – INDEPENDENT EXPERT'S REPORT

Geothermal Resources Limited

Independent Expert's Report in relation to proposed takeover by Havilah Resources NL

30 September 2011

CONFIDENTIAL

Value Adviser Associates Pty Ltd

Melbourne Brisbane Adelaide Level 2 Level 20, AMP Place Level 2 65 Southbank Boulevard 10 Eagle Street 99 Frome Street Southbank VIC 3006 Brisbane QLD 4000 Adelaide SA 5000 tel 61 3 9626 4300 tel 617 3221 4857 tel 61 8 8111 4035 fax 61 3 9626 4301 fax 617 3221 6152 fax 61 8 8111 4098

www.vaassociates.com.au

Outline of the Havilah Offer	1
Price and structure 1
Operational framework if Offer is accepted 2
What would change if the Havilah offer is accepted? 2
What would not change if the Havilah offer is accepted? 2
Other Material Information 2
Scope of the Report	4
Purpose of the Report 4
Meaning of "Fair and Reasonable" 4
Shareholder's Decision 5
Taxation Implications 5
Profile of Geothermal	6
History and Overview 6
Financial Information 7
Capital Structure 9
Share Price Performance 11
Material Contracts 14
Tax Dispute with ATO 15
Profile of Geothermal Energy Industry	16
Overview 16
Electricity Generation Using Geothermal Energy 16
Geothermal Energy Market in Australia 17
Geothermal Technology 18
Geothermal Companies in Australia 19
Key Success Factors 21
Cost of Electricity Generation using Geothermal Energy 22
Market Value of Geothermal	28
Definition of Market Value 28
Valuation Methodology and Approach 28
Market Value of Geothermal 29 Valuation Cross Checks 31

Profile of Havilah History and Overview 33	33
Advanced Pre-Development Projects 34
Exploration Projects 39
Curnamona Energy Limited 39
Financial Information 40
Information about Havilah Securities 42

Industry Analysis	47
Gold 47
Copper 48
Cobalt 49
Molybdenum 50
Iron Ore 51
Market Value of Havilah	53
Definition of Market Value 53
Valuation Methodology and Approach 53
Market Value of Havilah 54
Valuation Summary 57
Valuation Cross Check 58
Evaluation of the Havilah Offer	60
Fairness 60
Reasonableness 60
Appendix 1 – Statement of Qualifications and Declarations	0
Appendix 2 – Valuation Methodologies	2
Capitalisation of Earnings 2
Discounted Cash Flow 3
Net Realisable Value of Assets 3
Market Based Assessments 4
Recent Offers 4
Appendix 3 – Description of Comparable Companies and Transactions	5
Comparable Company Resources 7
Appendix 4 – Sources of Information	9
Appendix 5 – Financial Services Guide	13

Glossary

Term	Meaning
ABARE	Australian Bureau of Agricultural and Resource Economics
ACIL	ACIL Tasman Pty Ltd
AEMO	Australian Energy Market Operator
AGL	AGL Energy Limited
ASIC	Australian Securities & Investments Commission
ASX	Australian Stock Exchange
Au	Gold
Bidder's Statement	Refers to document provided by Havilah to VAA named "Bidders Statement Clean 26Sep"
CCGT	Combined cycle gas turbine
Co	Cobalt
CO2-e	Carbon Dioxide equivalent
Corporations Act	Corporations Act, 2001
CPRS	Carbon Pollution Reduction Scheme
Cu	Copper
D	Debt
D/E	Debt to Equity Ratio
DSO	Direct Shipping Ore
E	Equity
EGS	Enhanced Geothermal System
ERP	Emerging Renewables Program
eU3O8	Equivalent uranium
Fe	Iron
FIRB	Foreign Investment Review Board
FOB	Free on Board
g/t	Grams per tonne
GAA	Geothermal Alliance Agreement
GDP Grant	Geothermal Drilling Program Grant
GEL	Geothermal Exploration Licence
Geodynamics	Geodynamics Limited
Geothermal or GHT	Geothermal Resources Limited
GJ	Gigajoule = 109 Joules
Green Rock	Green Rock Energy Limited
Havilah	Havilah Resources NL

Term	Meaning
HOA	Heads of Agreement
JORC	Joint Ore Reserves Committee
Kd	Cost of Debt
Ke	Cost of Equity
km	Kilometre
kW	Kilowatt
kWh	Kilowatt hour
LCOE	Levelised Cost of Electricity
LRMC	Long Run Marginal Cost
MMA	McLennan Magasank Associates
Mo	Molybdenum
Mt	Megatonnes = 106 tonnes
Mtpa	Million tonnes per annum
MW	Megawatt
MWh	Megawatt hour = 103 kWh
NEM	National Electricity Market
O&M	Operations & Maintenance
P&E	Plant & Equipment
Panax	Panax Geothermal Limited
Petratherm	Petratherm Limited
PJ	Petajoule = 1015 Joules = 2.78 x 108 kWh
Ppm	Parts per million
RD&D	Research, development and demonstration
REDI	Renewable Energy Development Grant
Sn	Tin
Target's Statement	Refers to document provided by Geothermal to VAA named "Target Statement_Draft_15092011_Watsons Draft_clean"
TBIA	Takeover Bid Implementation Agreement
Torrens	Torrens Energy Limited
Tpa	Tonnes per annum
TRUenergy	TRUenergy Pty Ltd
UN	United Nations
USD	United States dollar
VAA	Value Advisor Associates Pty Ltd
VWAP	Volume Weighted Average Price
WACC	Weighted Average Cost of Capital

Melbourne Brisbane Adelaide Level 2 Level 20, AMP Place Level 2 65 Southbank Boulevard 10 Eagle Street 99 Frome Street Southbank VIC 3006 Brisbane QLD 4000 Adelaide SA 5000 tel 61 3 9626 4300 tel 61 7 3221 4857 tel 61 8 8111 4035 fax 61 3 9626 4301 fax 61 7 3221 6152 fax 61 8 8111 4098

www.vaassociates.com.au ABN 54 131 852 607

30 September 2011

The Independent Directors Ken Williams and Martin Janes Geothermal Resources Limited 63 Conyngham Street Glenside SA 5065

Dear Sirs

Independent Expert's Report in relation to the takeover offer by Havilah Resources NL

Introduction and Purpose of the Report

On 26 August 2011, Havilah Resources NL ["Havilah"] announced its intention to make a takeover offer ["the Offer"] for all of the ordinary shares in Geothermal Resources Limited ["Geothermal"] on the basis of one Havilah share for every four Geothermal shares. The Havilah Offer is subject to a number of conditions, including Havilah acquiring a minimum 90 per cent of the ordinary shares in Geothermal.

The directors have prepared a target's statement [the "Target's Statement"]. Geothermal's independent director, Mr Martin Janes, has recommended that the shareholders of Geothermal accept the Offer, subject to there being no superior proposal, and no material adverse event having occurred in respect to Havilah.

There is a legal requirement (Section 640 of the Corporations Act) for an independent expert's report to be prepared in respect of the Offer; as Havilah holds greater than 30% of Geothermal's issued capital and has three common directors on the Geothermal board. The directors of Geothermal have requested Value Adviser Associates Pty Ltd ["VAA"] to prepare an independent expert's report ["IER"] to assist the shareholders of Geothermal in assessing the merits of the Offer. This report sets out VAA's opinion as to whether the Offer is fair and reasonable to the shareholders of Geothermal.

Assessment framework

Regulatory Guide 111 – Content of Expert Reports ["RG111"] sets out the assessment framework (paragraph 111.10 et seq) that requires the expert to separately determine if the offer is fair and, in the event that it is not, whether it is reasonable.

Under RG111 an offer is 'fair' if the value of the offer price or consideration is equal to or greater than the value of the securities the subject of the offer.

An offer is 'reasonable' if it is fair. It might also be 'reasonable' if, despite being 'not fair', the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid before the close of the offer.

Summary of Opinion

We have assessed the value of Geothermal shares to be \$0.12 per share. We have assessed the value of the consideration (Havilah shares) to be \$0.15 to \$0.50 per equivalent Geothermal share.

As the value of the consideration to be received by Geothermal shareholders under the offer equals or exceeds the value of Geothermal shares, in the opinion of Value Adviser Associates, the Havilah Offer is fair. Consistent with RG111 the offer is also, therefore, reasonable.

Other Matters

This report constitutes general financial product advice only and has been prepared without taking into consideration the individual circumstances of the shareholders of Geothermal. The decision to accept or reject the Havilah Offer is a matter for individual shareholders. Shareholders of Geothermal should consider the advice in the context of their own circumstances and preferences. Shareholders of Geothermal who are in doubt as to the action they should take in relation to the Havilah Offer should consult their own professional adviser.

VAA has prepared a Financial Services Guide in accordance with the Corporations Act, 2001. This is included in Appendix 5 to this report.

Our opinion is made as at the date of this letter and reflects circumstances and conditions as at that date. This letter must be read in conjunction with the full report.

Yours faithfully

Michael Churchill Mark Gemmola

CEO Senior Corporate Adviser

Outline of the Havilah Offer

On 26 August 2011, Geothermal Resources Limited ["Geothermal"] announced that it had entered into a binding Takeover Bid Implementation Agreement ["TBIA"] with Havilah Resources NL ["Havilah"]. Havilah is offering one of its ordinary shares for every four shares in Geothermal [the "Havilah Offer" or "the Offer"].

Havilah is currently the major shareholder of Geothermal with 58.68% (21,046,878) of Geothermal's total shares as at 6 September 2011.

The full details of the takeover bid are set out in the TBIA dated 25 August 2011 that has been lodged with the Australian Securities Exchange ["ASX"] and is annexed to Geothermal's ASX announcement of the Offer on 26 August 2011.

The Havilah Offer is subject to a number of conditions outlined in Schedule 1 of the TBIA, including the following:

Before the end of its Offer Period1, Havilah and its associates have relevant interests in at least 90% (by number) of all shares;
Before the end of its Offer Period, Havilah has obtained any regulatory approval required in respect of its intended ownership of Geothermal and its operation of the business for Geothermal; and
Between the Announcement Date and the end of the Offer Period (each inclusive), no Material Adverse Change² occurs.

The key elements of the Offer as outlined in the Bidder's Statement are as follows:

Price and structure

Havilah offers to purchase all Geothermal shares on the issue of 1 Havilah share to Geothermal shareholders for every 4 Geothermal shares held;
Havilah Shares to be issued under the Offer will rank equally in all respects with existing Havilah Shares on issue at the Register Date;
With regard to material events since 31 January 2011, on 19 August 2011 Havilah issued a letter³ of support for Geothermal Resources guaranteeing that Geothermal would be provided with financial support (if required) by Havilah to support the 'going concern' requirements of the auditors;
If Havilah acquires a relevant interest of 90% or more of the shares of Geothermal, it intends to:
Proceed with the compulsory acquisition of the outstanding shares; and
Make arrangements for Geothermal to be removed from the official list of the ASX.
If Havilah does not acquire 90% or more of the shares of Geothermal, and waives its condition to acquire 90% or more, it intends to maintain Geothermal's listing on ASX while it meets ASX requirements for maintaining a listing and it is cost effective to do so. If Havilah becomes entitled at some

¹ Defined on page 3 of the TBIA

² As defined in the TBIA and set out on page 3 of the Bidder's Statement

³ The "Geothermal Resources Short Term Support Letter"

later time to exercise general compulsory acquisition rights under the Corporations Act, it would exercise those rights.

• If Havilah acquires all Geothermal Shares, Havilah will remain the entity listed on the ASX and will be the ultimate holding company for all companies within the new Merged Group.

Operational framework if Offer is accepted

Havilah intends to maintain Geothermal's geothermal tenements and work towards their development as alternative energy sources;
If Havilah acquires a relevant interest of 90% or more of the shares of Geothermal, it intends to:
Manage Geothermal's activity internally;
Adjust the accounting systems to track the costs associated with the geothermal division;
Note that since Geothermal is already a partly-owned subsidiary of Havilah the accounts of Havilah are already consolidated to include the accounts of Geothermal;

What would change if the Havilah offer is accepted?

The one geologist now employed by Geothermal would be transferred to Havilah;
One member of the Board of Geothermal would be removed;

What would not change if the Havilah offer is accepted?

The business of Geothermal will otherwise continue in substantially the same manner as it is presently being conducted;
No other major changes will be made to the business of Geothermal;
There will not be any other redeployment of the fixed assets of Geothermal;
The current Havilah dividend policy will be maintained. Once some of Havilah's project generate surplus profits, directors will consider paying some surplus funds as dividends to shareholders.
It should be noted that notwithstanding the current intentions of Havilah, there may be future (currently unforseen) changes introduced to operations, dividend payments and financing.

Other Material Information

No Geothermal Shares have been purchased by or issued to Havilah in the four months before the release of the Bidder's Statement;
The Offer extends to new Geothermal shares, as follows:
For the purposes of section 633(2) of the Corporations Act, the date for determining the people to whom this Bidder's Statement is sent is the Register Date;
Should any Geothermal Options be exercised after the Register Date and prior to the close of the Offer, then the Offer will extend to any person who

becomes registered or entitled to be registered as the holder of Geothermal Shares before the close of the Offer;

If additional Geothermal Shares are issued after the end of the Offer Period, subject to Havilah being entitled to compulsorily acquire Geothermal Shares under Chapter 6A of the Corporations Act, Havilah may compulsorily acquire any Geothermal Shares issued after the end of the Offer Period.
No Havilah Shares will be issued on the basis of this document and the Offer contained in this document after the date that is 13 months after the date of the Bidder's Statement;

Scope of the Report

Purpose of the Report

Section 640 of the Corporations Act, 2001 (the "Corporations Act") requires that a target's statement made in response to a takeover offer for shares in an Australian public listed company must be accompanied by an independent expert's report if:

the bidder's voting power in the target is 30 per cent or more; or
for a bidder who is, or includes, an individual the bidder is also a director of the target; or
for a bidder who is, or includes, a body corporate a director of the bidder is also a director of the target.

The IER must state whether, in the opinion of the independent expert, the takeover offer is fair and reasonable to the target company's shareholders and provide reasons for forming that opinion.

Havilah has a relevant interest of 21,046,878 Geothermal shares as at 6 September 2011. These shares represent 58.68% of the issued share capital of Geothermal.

Havilah disclosed in the Bidder's Statement that it has three directors in common with Geothermal.

Accordingly, there is a legal requirement for an independent expert's report to be prepared in respect of the Offer.

All amounts are expressed in Australian dollars unless otherwise stated.

Meaning of "Fair and Reasonable"

There is no legal definition provided for "fair and reasonable". In preparing this report, VAA has had regard to relevant regulatory guides issued by ASIC, with particular reference to ASIC Regulatory Guide 111: Content of expert reports.

ASIC Regulatory Guide 111 establishes certain guidelines in respect of independent expert's reports prepared for the purposes of the Corporations Act. ASIC Regulatory Guide 111 sets out the view of ASIC on the operation of Section 640 of the Corporations Act and comments on the meaning of "fair and reasonable" in the context of a takeover offer. Specifically, ASIC Regulatory Guide 111 states that:

an offer is "fair" if the value of the offer price or consideration is equal to, or greater than, the value of the securities that are the subject of the offer. This comparison should be made assuming 100 per cent ownership of the target and should not consider the percentage holding of the bidder or its associates in the target; and
an offer is "reasonable" if it is "fair". An offer may also be "reasonable" if, despite not being "fair", there are sufficient reasons for security holders to accept the offer in the absence of any higher bid before the close of the offer. ASIC has identified the following as some of the factors which an expert might consider when deciding whether a bid is reasonable:
the bidder's pre-existing voting power in securities in the target;
other significant security holding blocks in the target;

the liquidity of the market in the target's securities;
taxation losses, cash flow or other benefits through achieving 100 per cent ownership of the target;
any special value of the target to the bidder, such as particular technology, the potential to write off outstanding loans from the target, etc;
the likely market price if the offer is unsuccessful; and
the value to an alternative bidder and likelihood of an alternative offer being made.

Shareholder's Decision

This report constitutes general financial product advice only and has been prepared without taking into consideration the individual circumstances of Shareholders. The decision to accept or reject the Havilah Offer is a matter for individual shareholders. Shareholders should consider the advice in the context of their own circumstances, preferences and risk profiles. Shareholders should also have regard to the Bidder's Statement, the Target's Statement [and its supplementaries] in relation to the Havilah Offer. Shareholders who are in doubt as to the action they should take in relation to the Offer should consult their own professional adviser.

Taxation Implications

In the event that a Shareholder disposes of their shares pursuant to the Havilah Offer, they will face taxation consequences.

Section 10 of the Bidder's Statement provides general taxation information for Geothermal shareholders. While this does not constitute taxation advice, VAA recommends the information to Geothermal shareholders.

If in doubt as to the taxation implications relating to the Havilah Offer, Shareholders should consult their own financial or taxation adviser.

Profile of Geothermal

History and Overview

Havilah was formed in late 1996 to explore for gold and other metals in South Australia. When compiling geological data for its mineral exploration programmes in north-eastern South Australia, Havilah became aware that an area west of its mineral tenements had the key features for a potential hot rock geothermal energy source. Recognising that this resource could potentially supply energy to its proposed development at Kalkaroo, Havilah applied for a single Geothermal Exploration Licence ["GEL"] over what it believed was the key area. Subsequently, and after conducting further research, it was decided to apply for three adjoining GELs.

Havilah did not have the financial resources nor the specialist technical expertise required to mount a geothermal exploration programme. Consequently, Havilah decided to sponsor the formation and public listing of a new specialist geothermal exploration and development company, in order to raise new capital for the specific purpose of exploring for hot rock geothermal energy.

Geothermal Resources Limited was incorporated in 2006 and entered into an agreement with Havilah whereby it purchased ownership of GEL 181, and the relevant technical data compiled by Havilah. The company was listed on the Australian Stock Exchange on 14 March 2006. Upon listing, Havilah owned 64% of Geothermal's shares.

Geothermal's major assets upon incorporation were four GELs in the Frome basin region of north-eastern South Australia and four GELs in the Crower project area (later renamed the Penola-Robe project area) located on the northern onshore margin of the Otway Basin in south-eastern South Australia.

The Frome project area currently consists of GEL 181 which covers 1,305 square kilometres. The tenements cover a buried Cambrian basin known as the Moorowie sub-basin that is underlain by relatively radiogenic Precambrian volcanic and intrusive basement rocks of the Curnamona Craton.

Geothermal undertook a strategic drilling program in the Frome Basin region with the assistance of a \$2.4 million Renewable Energy Development Initiative ("REDI") grant received in July 2006. Initial drilling comprised eight exploration wells mainly within a 1,000 square kilometre region above the interpreted granite body.

These wells have been drilled to varying depths with the deepest wells to date being Frome 12 and Frome 13 (to 1,761 and 1,809 metres depth, respectively). Systematic downhole temperature logging has been completed, allowing accurate determination of the geothermal gradient in each well.

The original geological concept of a buried granitic heat source in the Frome area was proven by the intersection of granite at 1,471 metres depth in Frome 12, some 50 km from the nearest basement granite outcrop. Drill core from this granite shows clear evidence of frequent and regular subhorizontal fracturing.

The Penola-Robe project area consists of GELs 214 and 498 which cover 3,214 square kilometres. No new drilling in this region has been undertaken by Geothermal to date.

Geothermal's Frome project is a Hot Rock geothermal resource type and the Penola-Robe is a Hot Sedimentary Aquifer resource type. A description of these is provided on page 18.

Financial Information

Historical Financial Performance

The financial performance for the period 2006 to 2010 and for the half-year 2011 is summarised in TABLE 1:

TABLE 1 GEOTHERMAL RESOURCES LIMITED – AUDITED STATEMENT OF FINANCIAL PERFORMANCE

Geothermal Resources Limited						31 January
Income statement for the financial year ended 31 July	2006	2007	2008	2009	2010	2011
Revenue	63,067	159,156	129,795	102,733	79,238	112,092
Other Income	-	-	-	-	-	158,363
Management fees	(59,500)	(163,200)	(163,200)	(172,837)	(173,482)	(86,741)
Insurance expense	(2,791)	(12,503)	(6,063)	(3,410)	(3,694)	(2,247)
Salary expense	(2,517)	-	-	-	-	(52,982)
Printing expense	-	(5,866)	(14,570)	(6,000)	(3,223)	(4,500)
Annual leave expense	-	(9,378)	(17,361)			(612)
Share-based payments	(16,000)	(17,528)	(23,518)	(31,102)	(12,138)	(76,322)
Legal fees	(1,555)	-	-	-	-	(2,361)
Directors fees	(10,960)	(20,000)	(20,000)	(20,000)	(20,000)	(7,333)
Consulting fees	-	-	-	-	(21,100)	(10,000)
ASX listing fees	(10,560)	(18,835)	(29,749)	(22,985)	(15,840)	(1,783)
Shareholder administration expenses	(12,671)	(19,563)	(21,658)	(17,338)	(13,547)	(15,306)
Audit fees	(9,250)	(18,000)	(26,700)	(27,500)	(33,500)	(7,000)
Finance costs - Interest on finance leases	-	(4,491)	(5,100)	(3,817)	(1,166)	(95)
Depreciation and amortisation expense	-	(17,179)	(37,960)	(31,983)	(25,713)	(10,322)
Exploration expenditure written off	-	-	-	-	(59,740)	-
Motor vehicle expense						(1,034)
Staff training						-
Other expenses	(6,478)	(8,739)	(15,369)	(28,178)	(12,882)	(4,896)
Loss before tax	(69,215)	(156,126)	(251,453)	(262,417)	(316,787)	(13,079)
Income tax expense	(40,739)	(2,817)	-	(11,227)	-	-
Net loss for the year	(109,954)	(158,943)	(251,453)	(273,644)	(316,787)	(13,079)
Other comprehensive income	-	-	-	-	-	-
Total comprehensive income for the year	(109,954)	(158,943)	(251,453)	(273,644)	(316,787)	(13,079)

Note: the period accounted for 2006 financial year is 14th July 2005 to 31st July 2006 Note: the income to 31 January 2011 is for the half year

The following key points should be noted in respect of the financial performance set out above:

Non-operating revenue mainly includes interest received, and rendering of services. Reduction in interest received in 2010 is due to the reduction in bank deposits by \$700,000. Services revenue is referred to as "Revenue from a contract to provide services is recognised by reference to the stage of completion of the contract".
The largest component of costs is management fees, which has been over 40% of total expenses each year. However, in practice, the largest cash expenditure, as noted below, is the exploration and evaluation costs. These costs are capitalised and therefore do not show up in the Income Statement.
The Net Loss for the year has increased from \$109,954 (FY2006) to \$316,787 (FY2010);

Forecasts

No profit forecasts are available for Geothermal.

Financial Position

The financial positions of Geothermal as at 31 January 2011, 31 July 2010 and for previous financial years are summarised in TABLE 2. No annual financial statements are available as yet for the year ended 31 July 2011.

We have been advised by Geothermal that there has been no material change to the financial position of Geothermal since the last published financial statements.

TABLE 2 GEOTHERMAL RESOURCES LIMITED – AUDITED STATEMENT OF FINANCIAL POSITION

Geothermal Resources Limited						31 January
Balance sheet as at 31 July	2006	2007	2008	2009	2010	2011
Current Assets
Cash and cash equivalents	2,761,935	2,255,679	1,813,363	1,180,812	366,278	206,329
Trade and other receivables	26,586	162,322	21,466	75,107	8,280	223,938
Other	1,861	4,930	567	-	-	-
Total Current Assets	2,790,382	2,422,931	1,835,396	1,255,919	374,558	430,267
Non-Current Assets
Exploration and evaluation expenditure	216,108	920,978	1,656,603	3,698,636	4,486,266	4,505,403
Plant and equipment	-	181,622	149,090	120,993	100,734	90,412
Total Non-Current Assets	216,108	1,102,600	1,805,693	3,819,629	4,587,000	4,595,815
TOTAL ASSETS	3,006,490	3,525,531	3,641,089	5,075,548	4,961,558	5,026,082
Current Liabilities
Trade and other payables	92,790	244,112	126,723	97,996	68,438	69,107
Borrowings	-	21,742	23,327	36,387	-	-
Provisions	-	9,378	26,739	31,960	11,397	12,009
Total Current Liabilities	92,790	275,232	176,789	166,343	79,835	81,116
Non-Current Liabilities
Borrowings	-	60,011	36,387	-	-	-
Other	-	422,287	887,847	1,718,058	1,995,225	1,995,225
Total Non-Current Liabilities	-	482,298	924,234	1,718,058	1,995,225	1,995,225
TOTAL LIABILITIES	92,790	757,530	1,101,023	1,884,401	2,075,060	2,076,341
NET ASSETS	2,913,700	2,768,001	2,540,066	3,191,147	2,886,498	2,949,741
Equity
Issued capital	3,007,654	3,003,370	3,003,370	3,896,993	3,896,993	3,896,993
Reserves	16,000	33,528	57,046	88,148	100,286	176,608
Accumulated losses	(109,954)	(268,897)	(520,350)		(793,994) (1,110,781) (1,123,860)
TOTAL EQUITY	2,913,700	2,768,001	2,540,066	3,191,147	2,886,498	2,949,741

Source: Geothermal Resources Limited, Annual Reports 2006, 2007, 2008, 2009 & 2010

The following key points should be noted in relation to the above statements of financial position:

The major asset is capitalised exploration expenditure;
The other non-current liabilities relate to deferred income (government grants received) for exploration activities. As noted in the Geothermal 2010 Annual Report4:

Government grants are assistance by government in the form of transfers of resources to the Group in return for past or future compliance with certain conditions relating to the operating activities of the Group. Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attached to them and the grant will be received. Government grants whose primary condition is to assist with exploration activities are recognised as deferred income in the statement of financial position

⁴ Geothermal Resources Limited, Annual Report 2010, Note 1(f), p26

and recognised as income on a systematic basis when the related exploration and evaluation expenditure is written off or amortised.

Cash Flows

The cash flows for the half year ended 31 January 2011, the year ended 31 July 2010 and for previous financial years are summarised in TABLE 3.

TABLE 3 GEOTHERMAL RESOURCES LIMITED – AUDITED STATEMENT OF CASH FLOWS

Geothermal Resources Limited						31 January
Cash flow statement for the financial year ended 31 July	2006	2007	2008	2009	2010	2011
Cash flow from operating activities
Other receipts from customers	-	-	923	50,092	62,524	117,729
Payments to suppliers	(121,396)	(327,660)	(224,234)	(379,669)		(339,397) (226,465)
Interest and other costs of finance paid	-	-	-	(3,817)	(1,166)	(95)
Net cash used in operating activities	(121,396)	(327,660)	(223,311)	(333,394)		(278,039) (108,831)
Cash flow from investing activities
Interest received	62,964	159,281	128,950	56,461	22,267	4,991
Payments for exploration and evaluation	(105,608)	(536,016)		(886,048) (2,023,514)	(794,088)	(56,108)
Proceeds from government grants	-	322,287	565,560	830,211	277,167	-
Net cash inflow from acquisition	-	-	-	2	-	-
Proceeds from sale of prospects	-	-	-	-	-	-
Payments for plant and equipment	-	(109,133)	(5,428)	(3,886)	(5,454)	-
Net cash used in investing activities	(42,644)	(163,581)		(196,966) (1,140,726)	(500,108)	(51,117)
Cash flow from financing activities
Repayment of borrowing	-	-	(22,039)	(23,327)	(36,387)	-
Proceeds from issue of equity securities	3,000,003	-	-	902,320	-	-
Payments for share issue costs	(74,028)	(7,101)	-	(37,424)	-	-
Repayment of finance lease liabilities	-	(7,914)	-	-	-	-
Net cash (used in) / provided by financing activities	2,925,975	(15,015)	(22,039)	841,569	(36,387)	-
Net decrease in cash	2,761,935	(506,256)	(442,316)	(632,551)		(814,534) (159,948)
Cash at beginning of financial year	-	2,761,935	2,255,679	1,813,363	1,180,812	366,278
Cash at end of financial year	2,761,935	2,255,679	1,813,363	1,180,812	366,278	206,330
Source: Geothermal Resources Limited, Annual Reports 2006, 2007, 2008, 2009 & 2010

Note: the cash flow to 31 January 2011 is for the half year

The following key points should be noted in respect of the cash flows set out above:

The main cash inflow during the period 2006 to 2010 is from capital raising, and government grants;
The main cash outflow during the period 2006 to 2010 is due to exploration and evaluation, and plant and equipment; and
Net cash flow from operating activities: has declined by \$156,643 from 2006 to 2010 mainly driven by payments to suppliers.

Capital Structure

The total number of ordinary shares on issue at 6 September 2011 was 35,869,753.

Options

The balance of share options that have been granted to directors and employees of Geothermal as reported in the 2010 Annual Report at 31 July 2010 and subsequently in a notice to the ASX on 19 July 2011 is provided in TABLE 4.

TABLE 4 GEOTHERMAL RESOURCES LIMITED – SHARE OPTIONS

Grant Date	Number	Exercise Price	Expiry Date
19 October 2006	200,000	0.31	19 October 2011
12 February 2007	25,000	0.36	12 February 2012
3 January 2011	2,000,000	0.15	3 January 2015
6 July 2011	200,000	0.15	6 July 2015

Source: Target's Statement

Major Shareholders

TABLE 5 sets out the top twenty shareholders in Geothermal as at 6 September 2011.

TABLE 5 GEOTHERMAL RESOURCES LIMITED – MAJOR SHAREHOLDERS

Holder Name	Amount Held	% Held
Havilah Resources NL	21,046,878	58.68%
Mrs. Selvie Tjowasi	636,932	1.78%
MR. Janaki Semerdziev	571,000	1.59%
Statmin Super Fund A/C	545,513	1.52%
IFG Trust (Jersey) Limited	505,811	1.41%
Trindal Pty Ltd / Trindal Superfun A/C	419,101	1.17%
Mr. Malcome Arnold Haines (Kymdog Super Fund A/C)	396,285	1.10%
Mrs. Jennifer Haines (Kymdog Super Fund A/C)
Mr Philip Arthur Rogerson (The Rogerson Super Fund A/C)	307,184	0.86%
Mrs Kathryn Gae Rogerson (The Rogerson Super Fund A/C)
Miss Christina Rogerson (The Rogerson Super Fund A/C)
IFG Trust (Jersey) Limited	294,189	0.82%
Fergus & Co Pty Ltd (Fergus Investment A/C)	265,000	0.74%
Troon Securities Pty Ltd	236,000	0.66%
Mrs Liliana Teofilova	231,000	0.64%
Mr Michael Carajias	201,662	0.56%
Mr John Henry Gilpin Hirst	200,000	0.56%
Mr Kong King Mu	166,993	0.47%
Mr Thomas Joseph Hartigan (Hartigan Super Fund A/C)	150,000	0.42%
Mrs Felicity Clinton Hartigan (Hartigan Super Fund A/C)
Dancing Rock Pty Ltd (Dancing Rock Super Fund)	121,479	0.34%
Mr Nick Dyki	112,771	0.31%
Mrs Lorraine Elenor Dyki
Sedico Pty Ltd (Super Fund A/C)	105,908	0.30%
Dr Archleigh Helen Anstey (Anstey Family Super A/C)	100,000	0.28%
Mr Harry Louis Richards Anstey (Anstey Family Super A/C)
Top 20 holders of Ordinary shares	26,613,706	74.19%
Other	9,256,294	25.81%
Total Shares as at 6 September 2011	35,870,000	100.00%

As can be seen in the above table, the top 20 shareholders in Geothermal accounted for approximately 74 per cent of the total issued capital as at 6 September 2011.

Havilah is the major shareholder of Geothermal, holding almost 59% of the total issued capital as at 6 September 2011.

Havilah Director's interests in Geothermal Shares

As at the date of the Bidder's Statement, the Directors of Havilah had the following relevant Interests in Geothermal Shares:

TABLE 6 HAVILAH DIRECTOR'S INTERESTS IN GEOTHERMAL SHARES
--------------------------------------------------------------	--

Director	Number of Geothermal Shares	Number of Geothermal Options (unlisted)
K R Johnson	671,263	900,000
C W Giles	627,726	900,000
K G Williams	86,307	200,000
M S Janes	3,000	nil
Total	1,388,296	2,000,000

Source: Bidder's Statement

Dividends and Capital Management

Geothermal has not paid any dividends to date.

Share Price Performance

FIGURE 1 sets out Geothermal's share price history between 21/03/2006 and 22/08/2011.

FIGURE 1 GEOTHERMAL RESOURCES LIMITED – HISTORICAL SHARE PRICE (2006 TO 2011)

Source: Bloomberg

A detailed view of the share price over the past three months is provided in FIGURE 2. A short spike (175% increase) in the share price occurred in the days following the Australian Government's announcement of the proposed carbon tax. However, since then the share price has reverted to its pre-announcement level.

FIGURE 2 GEOTHERMAL RESOURCES LIMITED – HISTORICAL SHARE PRICE (LAST 3 MONTHS)

Source: Bloomberg

FIGURE 3 shows the trading volume of Geothermal shares over the past 12 months. The average number of shares traded per day over that period is approximately 27,000. While a significant spike in trading volume occurred on 21 April 2011, there was no observable change in the share price of Geothermal as a result.

FIGURE 3 GEOTHERMAL RESOURCES LIMITED – HISTORICAL SHARE PRICE AND TRADING VOLUME

Source: Bloomberg

The following summarises key events and announcements that may have affected share price movements over the period from 2006 to 2011:

On 20 July 2007 Geothermal announced that it had been successful in its Renewable Energy Development Initiative ("REDI") grant application. The grant, awarded by the Australian Government, was for \$2.4 million (a 50% matching contribution) on the Frome project in South Australia.
On 26 September 2007 Geothermal announced the results of temperature logging in the hole at Frome 3. The logging inferred that suitably high temperatures (over 200oC) are likely to be present at around 4,000 metres and within economic drilling depths.
On 8 December 2008 Geothermal announced that temperature measurements in Frome 12 provided indications that the temperature gradient was very similar to

that in Frome 3 indicating that a temperature approaching 200oC could be achieved at depths of 4,000 metres.

On 19 May 2009 Geothermal offered eligible shareholders the opportunity to participate in a share purchase plan to purchase up to \$15,000 worth of fully paid ordinary shares at an issue price of 32 cents per share, which was an 18% discount to the closing price for the five days prior to the announcement.
On 30 June 2009 Geothermal announced that the share purchase plan had raised \$902,320.
On 13 July 2007 Geothermal announced its resource estimates for the Frome project in accordance with the Geothermal Reporting Code 2008.
On 14 December 2009 Geothermal announced that it was not successful in its application for a GDP grant for its Frome Hot Fractured Rock project in north eastern South Australia;
On 12 July 2011 the Australian Government announced the details of its proposed carbon tax policy, which appears to have caused an immediate increase in the Geothermal share price the following day from \$0.085 per share to \$0.18 per share.

VAA makes the following additional comments in relation to the historical and more recent share price performance of Geothermal shares:

In early to mid-2007 the Geothermal share price increased significantly from about \$0.30 per share to a maximum of \$2.27 per share. Geothermal received two queries from the ASX seeking explanations on the magnitude of the share price movements. On both occasions, Geothermal stated that it did not have any information that would explain the movements but that the following factors may partially explain the price increases:
Positive sentiment about geothermal resources across the industry which coincided with a well-publicised debate about future energy supply options for Australia; and
Positive sentiment about the success of Geothermal's proposed drilling program at the Frome project.
The share prices of other geothermal development companies have followed similar paths to that of Geothermal as shown in the following chart. Prices of most geothermal companies increased through 2006 and 2007 before falling steadily through 2008 to 2010.

FIGURE 4 GEOTHERMAL DEVELOPMENT COMPANIES – SHARE PRICE COMPARISON

Source: ASX

Material Contracts

Geothermal has material contracts⁵ to which Geothermal is a party and which contain change of control or change of ownership provisions which may be triggered as a result of the Offer or which may be terminated if the takeover succeeds:

REDI Program Grant Agreement of \$2.4 million related to the Frome Project provides that the Commonwealth may immediately terminate the agreement if there is a change in control or ownership of Geothermal which the Commonwealth reasonably considers has an adverse effect on Geothermal's ability to comply with its obligations under the agreement. A possible consequence of termination is that the Commonwealth may require Geothermal to repay so much of the grant as it reasonably determines. However, Messrs Williams and Janes are of the view that the change of ownership that will occur if the Offer is successful will not have an adverse effect on Geothermal's ability to comply with its obligations under the REDI Agreement, and as such, will not trigger a termination right for the Commonwealth under the agreement.

VAA considers that the view expressed by Messrs Williams and Janes is reasonable.

Consultancy Agreements between Geocom Pty Ltd, Maptek Pty Ltd and Geothermal and Management Services Agreement between Geothermal and Maptek contain a 'termination payout' clause whereby Geothermal would be entitled to terminate the agreement provided it pays Geocom or Maptek (as appropriate) a lump sum payment equivalent to the amount which Geocom or Maptek would have received had the agreement continued to the end of its term. If the Offer is successful, the Consultancy Agreements and the Management Services Agreement would no longer be required and it is the Director's intention that they would be terminated. Dr Giles, Geocom, Dr Johnson and Maptek have all agreed that they will waive any termination payments due by Geothermal if the

⁵ Summarised at Section 8.10 of the Target's Statement

Consultancy Agreements or Management Services Agreement are terminated early as a result of the Takeover Bid being successful.

Tax Dispute with ATO

Section 8.8 of the Target Statement makes reference to a dispute between Geothermal and the Australian Tax Office ["ATO"] in regards to the deductibility of capital expenditure claimed by the Company in its income tax returns for the four years ended 31 July 2010. if the ATO were to successfully deny the deductions claimed by the Company it would be liable for income tax, penalties and interest in the amount of approximately \$400,000. However, if limited amendment periods apply to the Company this liability would reduce by approximately 50%.

Profile of Geothermal Energy Industry

Overview

Geothermal energy is the energy stored as heat in the earth. Energy is brought to the surface by extracting hot water that is circulating amongst the sub surface rocks, or by pumping cold water into the hot rocks and returning the heated water to the surface, to drive steam turbines to produce electricity.

It is useful to distinguish between hydrothermal and other geothermal resources:

Hydrothermal resources use naturally occurring hot water or steam circulating through permeable rock. These systems are usually based on hydrothermal aquifers commonly associated with active or young volcanic systems. Australia lacks hydrothermal resources as it has no active volcanism on the mainland.
Hot Sedimentary Aquifers are found in areas where high temperatures are reached at depths shallow enough for natural porosity and permeability in sedimentary rocks to be preserved so that fluid circulation can occur without artificial enhancement.
Hot Rock geothermal resources occur when heat is trapped in a region of rock (typically granite) which is covered by a layer of naturally insulating material. The heat is generated by the natural decay over millions of years of radiogenic elements such as uranium. Artificial/engineered enhancement is required for fluid circulation.

Australia has good Hot Rock geothermal energy potential, as well as a significant potential for Hot Sedimentary Aquifer resources. Geothermal systems that are similar to Australia's Hot Sedimentary Aquifer systems have been used elsewhere in the world for electricity generation and direct-use applications for over 20 years.

There are three basic requirements for a geothermal resource:

a persistent heat source (or sink);
a heat transfer and transport medium (usually water and/or steam); and
sufficient permeability/transportability within the buried geothermal reservoir for the fluid to be able to pass through and gain (or lose) heat.

Electricity Generation Using Geothermal Energy

Hydrothermal systems are currently utilised in several countries for electricity generation. Geothermal power plants can provide base-load capacity 24 hours a day and have very high long-term capacity and availability factors. Electricity generation from geothermal water was pioneered at Larderello, Italy in 1904, and this steam field has been in continuous production since that time. Other geothermal electricity generation occurs in the USA, Philippines, Mexico, Indonesia, Iceland, New Zealand, Japan, Germany, Austria and others.

Electricity generation using Hot Rock geothermal resources has only been developed on a commercial scale at one site, Landau in Germany, to date. However, considerable research is being undertaken into developing the technology to convert geothermal energy in these resources into base load electricity.

The most likely approach to generate electricity using Hot Rock and Hot Sedimentary Aquifer geothermal resources will be to use a binary cycle power plant. These use a heat

exchanger to transfer energy from the geothermally-heated fluid to a secondary fluid that has a lower boiling point and higher vapour pressure than steam at the same temperature. The working fluid is vaporised as it passes through the heat exchanger, and then expanded through a turbine to generate electricity. It is then cooled and condensed to begin the cycle again. The cooled geothermal fluid is also recirculated into the ground: the system comprises two closed loops. The following diagram demonstrates this process.

FIGURE 5 BINARY CYCLE POWER PLANT

Source: ABARE, 2010

Important elements of Hot Rock and Hot Sedimentary Aquifer geothermal energy developments are the definition of the geothermal resource by deep drilling and establishing a geothermal reservoir in the geothermally-heated rocks. For the hot fluid to flow through the production well requires the geothermal reservoir to be permeable. This occurs naturally in Hot Sedimentary Aquifer reservoirs but not in Hot Rock reservoirs. The artificial creation of geothermal reservoirs in the hot rocks for water to flow through is commonly called 'engineered or enhanced geothermal systems' ["EGS"] and involves fracturing the hot rock in a process known as hydrofracturing. Once the reservoir in the hot rock is created and the flow of water established in a closed loop, the geothermal resource can be used to generate electricity.

There have been two geothermal energy projects to date in Australia that demonstrated geothermal electricity generation technologies in the Great Artesian Basin. In 1986, Mulka Station in South Australia used a hot artesian bore to produce a maximum 0.02 MW of power. However, as the project utilised a working fluid in the power plant that was subsequently banned, it ceased operation. Electricity generation from geothermal energy in Australia is currently limited to one pilot power plant producing 80 kW net at Birdsville in south west Queensland. The plant uses a binary-cycle power system, and sources hot (98°C) waters at relatively shallow depths from the Great Artesian Basin.

Geothermal Energy Market in Australia

Australia's geothermal potential has only recently been appreciated and as a consequence there is incomplete knowledge of where geothermal potential exists. It is likely that further data acquisition will lead to increases in the geothermal resource base. To date, eight companies have declared identified geothermal resources in 28 leases across four States totalling 2.6 million PJ of heat.

The Australian Code for Reporting of Exploration Results, Geothermal Resources and Geothermal Reserves (2008) has been developed to provide a common framework for categorising geothermal resources and reserves for the information of potential investors.

Exploration for geothermal resources is rapidly increasing. The first geothermal exploration licence in Australia was granted in 2000 and by January 2010, 54 companies held 409 leases over an area of 432,000 square kilometres. Committed exploration work programs, to be undertaken in every State, amount to more than \$1 billion for the period 2002–2014.

Geothermal Technology

Australia's geothermal industry is still in the research and development phase. It is not expected that any major breakthroughs are needed to prove up the technology. Rather there is a need for progression of projects through all stages from resource definition to production and marketing. Project economics is the main factor that has potential to impede the development of the geothermal industry.

While this is the view of industry, there are many technological issues that require considerable work before geothermal generation could be considered sufficiently reliable to make it commercial. An Australian Government report on the framework for the development of geothermal resources identified many of the technical issues that need to be overcome, including:

Drilling depths and hard rocks. Hot Rock systems in Australia require drilling to depths possibly down to 6 km. At such depths the cost of drilling rises sharply. Also Hot Rock systems are associated with hard rocks where conventional technology results in low rates of penetration and high costs.
High temperatures. The pressure rating of wellheads and casing is significantly degraded at higher temperatures. Cooling of drill bits is much less effective in the Hot Rock situation, which results in a more rapid failure of seals and bearings.
High pressures. The combination of pressure and temperature places unusual demands on well design, casing, wellheads, pumps and heat exchangers and complicates the drilling process, for example in controlling pressures while running casing.
Zonal Isolation. Differential stimulation of stacked reservoirs and the management of production will require zonal isolation equipment and methods that operate at high temperatures and pressures.
Lost circulation and corrosive fluids. Hot Rock environments can create conditions where there is lost circulation, excessive drill bit wear and corrosive fluids. These conditions mean that the correct design of drill bits, corrosion resistant casing, drilling mud and cement slurries, is critical in achieving successful geothermal well completion.
Downhole communication. While relatively mature in the oil and gas industry, the high temperatures encountered in the geothermal sector often cause major problems for the electronics required for real time downhole communication and instrumentation, including collection of subsurface data on temperature, stress regimes and other drilling and rock parameters.
Fracturing. Hydraulic fracturing will be the most likely form of downhole reservoir stimulation. If reservoirs of large heat exchange capacity are to be created and accessed with a small number of wells to be economic, it will be necessary to produce multiple fracture zones from each well with appropriate permeability and fracture orientation to enable long term sustainable energy extraction. The ability

to do this has not yet been demonstrated. A critical missing element in being able to do so is a high temperature recoverable packer for isolating one zone at a time.

Geothermal Companies in Australia

Apart from Geothermal, the following companies have actively drilled in seeking to develop geothermal resources in Australia.

Geodynamics Limited

Geodynamics Limited ("Geodynamics") is an EGS geothermal energy developer that holds geothermal licences over highly prospective areas in South Australia, New South Wales and Queensland, Geodynamics' current focus is on commercialising the extraction of energy from its geothermal tenements near Innamincka in South Australia's Cooper Basin, where the world's hottest known deep granite resources exist.

Geodynamics has shown temperatures in excess of 270°C at 4,911 m depth in granite buried beneath approximately 3,800 m of sediment. Geodynamics achieved proof-ofconcept of sustained fluid flow between an injection and production well and the surface in March 2009. The company has announced plans for a 25 MW commercial demonstration plant to be operational by December 2013 and this is being supported by a grant of \$90 million through the Australian Government's Renewable Energy Demonstration Program. The estimated thermal resource in the 1,962 square kilometres of lease area in the Cooper Basin is approximately 400,000 PJ, with an estimated energy resource to support power development of between 5,000 and 10,000 MW.

Origin Energy and Tata Power are major shareholders in Geodynamics.

Petratherm Limited

Petratherm Limited have partnered with Beach Petroleum and TRUenergy on the Paralana Hot Rock project in the Mount Painter–Frome Embayment area of South Australia. The geological model here is a variant on the Hot Rock model. Petratherm intends to create a 'heat exchanger within insulator' meaning fracturing within the metasedimentary insulating rocks rather than the heat-producing granite.

The project received a \$7 million grant through the Australian Government's Geothermal Drilling Program, and completed the Paralana 2 well to a depth of 4 km in November 2009. An independent assessment has estimated a total inferred geothermal resource of 230,000 ±40,000 PJ.

The companies' immediate plan is for a 30 MW demonstration project to provide power to local consumers (particularly uranium mines) and this is being supported by a grant of \$63 million through the Renewable Energy Demonstration Program. Petratherm has a long term development plan to deliver a minimum of 260 MW of base-load power into the Australia Electricity Market (AEM) Grid from the Paralana site.

Torrens Energy Limited

Torrens Energy Limited ("Torrens") is a geothermal exploration company in South Australia. To date Torrens has spent \$6.6 million on geothermal activities, of which \$2.7 million has been received from Renewable Energy Development Initiative ("REDI") for 3D temperature field modelling.

Torrens drilled the Treebeard 1A well at Parachilna to 1,807m and confirmed high heat flow with modelled temperatures in excess of 200°C at 4,500m, and seismic surveying in the area indicates sediment thicknesses of between 3,000 to 4,500 m. Torrens' primary target is a basement (i.e. granite) hosted reservoir and it has estimated an Inferred geothermal resource of 150,000 PJ within the basement. Torrens has currently deferred its plan to drill a

4.5 km confirmation well at Parachilna. This project was being supported by a \$7 million Geothermal Drilling Program grant; however, on the 8 August 2011 they mutually terminated their GDP grant agreement with the Federal Government.

In 2008, Torrens entered into a Geothermal Alliance Agreement ("GAA") with AGL Energy Limited ("AGL"), to jointly commercialise geothermal sites within the AEM.

Green Rock Energy Limited

Green Rock Energy Limited ("Green Rock") is an Australian based company that has geothermal projects in Australia and Europe and petroleum projects in Western Australia.

Green Rock has drilled one deep (approximately 2,000 m) exploration well, Blanche No. 1, only 10 km away from the Olympic Dam and 5 km from a 275 kV and 132 kV transmission line connected to the NEM grid

The well provides good information on subsurface temperatures and an indication of the temperature gradient within the Roxby Downs Batholith granite body. The inferred temperature at 5,500 m is 190°C. Green Rock have discussed plans for drilling to the east of Blanche 1 where the sediment cover is interpreted to be thicker.

Green Rock have conducted mini-hydrofracturing experiments within Blanche No. 1 and successfully demonstrated the ability to enhance fractures within the granite, and to do so at multiple levels using removable packers. This demonstrated the ability to create subhorizontal fracture networks including at deeper levels, and is an important step in testing expected reservoir conditions prior to more expensive drill testing.

Panax Geothermal Limited

Panax Geothermal Limited ("Panax") is a Brisbane based geothermal exploration and development company with Australian and International interests. Panax is targeting only conventional geothermal resources, which means its focus is only on naturally occurring hot water or brine which is contained in existing reservoir rocks (i.e. Hot Sedimentary Aquifers).

Panax is currently developing projects in the Otway Basin (Limestone Coast and Penola Projects), the Cooper Basin (Hutton and Tirrawarra Projects), Indonesia (Sokoria and Dairi Prima Projects) and India (Puga Project).

This Limestone Coast area (over 3,500 square kilometres) targets hot sedimentary aquifers contained within four troughs or sub-basins in the Otway Basin in South Australia. The Penola Trough has a data base comprising 28 petroleum wells, including logs and core bottom hole temperatures, as well as 600 square kilometres of 3D seismic cover. The deepest petroleum exploration well is approximately 3,500m, which intersected greater than 500m of the target reservoir, the Pretty Hill Sandstone. The Penola Project has a measured geothermal resource of 11,000 PJ and Indicated resource of 32,000 PJ. The other Limestone Coast projects have inferred reserves of 200,000 PJ.

The Hutton Sandstone, which is part of the Great Artesian Basin, is known to produce water at high flow rates from bores under artesian pressure. Studies carried out on behalf of Panax indicate that the Hutton Sandstone reaches temperatures of 130 to 140°C at depths between 2,000 and 2,400 metres.

The Tirrawarra project is located about 35km north of Moomba and focuses on Hot Sedimentary Aquifers in the reservoir known from previous petroleum drilling. Panax's licence area covers Australia's largest on-shore oil field, comprising an extensive data base of well logs, core 2D and 3D seismic cover. The project's measured and indicated resources have been estimated at 11,000PJ and 30,000PJ respectively. Target Hot

Sedimentary Aquifer temperatures are in the range of 135˚C to 160˚C at depths of 2,750m – 3,500m.

Key Success Factors

Presently the cost of geothermal energy in Australia is not economic. However, the cost of electricity produced from Hot Rock and Hot Sedimentary Aquifer geothermal energy sources are expected to fall over the next 10 to 20 years as further work is undertaken by geothermal development companies and the technology matures.

The following factors are viewed as being key to the successful commercialisation of geothermal energy for electricity production in Australia.

Government Support

Government policies assisting geothermal energy research, development and demonstration ("RD&D") are crucial in assisting the development of geothermal energy in Australia. Current Government actions include completion of the Australian Geothermal Industry Development Framework and the associated Australian Geothermal Industry Technology Roadmap.

The Australian Government provides direct assistance through the \$50 million Geothermal Drilling Program, which allocated grants of \$7 million for seven proof-of-concept Hot Rock and Hot Sedimentary Aquifer projects. However, on the 8th of August 2011 four of these grants were mutually terminated. The Australian Government has also allocated a total of \$153 million in funding to assist two geothermal projects to progress from proof-of-concept to commercial demonstration stage from its \$435 million REDI Program. These programs, which provide funding to projects on a merit-basis, were aimed to accelerate the development of the geothermal industry by helping to address the key impediment to development of insufficient market investment. On 8 August 2011 the Federal Government announced its Emerging Renewables Program ["ERP"] as a 'continuously open application model' to reduce the cost of new technologies, improve skills across the renewable energy industry and leverage finance from the private sector.

Government assistance in this early stage of the industry's development will assist companies to finance the early stages of project activity and reduce the financial risk to investors. It should also have the longer term effect of lowering the technical risk of geothermal developments.

Technological Development

Presently the technology of geothermal generation using Hot Rock and Hot Sedimentary Aquifer resources is in the early stages of development. Further research is required in the areas of exploration, drilling enhancement of reservoirs (rock fracturing) and power generation technology, particularly for the exploitation of high temperature geothermal resources.

The development of the geothermal industry in Australia is not dependent on major technology breakthroughs since all of the required technology exists from the conventional geothermal and petroleum industries and it is largely a matter of a trial-anderror learning process in adapting this technology. Incremental technological adaptation and development rather than major technological breakthroughs are required to make the exploitation of geothermal energy resources economically viable in Australia.

Defining Geothermal Resources

Exploration for geothermal resources has only been undertaken in those areas having useful data since a good understanding of geology is a prerequisite for developing the resources. However, the AUSTHERM database of bottom hole temperatures mainly

contains the results obtained from petroleum drilling. This biases the dataset towards geological settings favourable for petroleum resources. However, geothermal resources are not limited to the same geological settings as petroleum resources. Also measurements of bottom hole temperatures from these drilling projects are not robust for predicting temperature at depth.

The availability of heat flow measurements and the knowledge of geology at depth are inadequate for efficient geothermal exploration in Australia. There is a need for government programs to increase the collection and dissemination of basic geo-scientific data to guide future geothermal exploration. This investment in a geothermal resources database will complement private sector activity in the geothermal industry and enhance prospects for future geothermal energy development in Australia.

Cost of Electricity Generation using Geothermal Energy

Geothermal energy has the potential to be a significant source of energy for generating base load electricity in Australia. One of the major factors affecting its development is the cost of generation relative to other sources of energy. There is no actual data available on the cost of large scale geothermal generation since the technology has not been commercially proven and developed to date. However, there are various publicly available reports comparing the forecast cost of geothermal generation with other forms of generation in Australia.

ACIL Tasman ("ACIL") prepared a report in 2009 titled "Fuel resource, new entry and generation costs in the NEM" for the National Electricity Market Management Company (now the Australian Energy Market Operator or AEMO). It compared the Long Run Marginal Cost ("LRMC") of electricity generation from existing generators, forecast new generators and new entrant technologies over the period from 2010 to 2029.

The LRMC of electricity generation provides a useful comparison of the relative attractiveness of each technology since plants with low LRMC will become economically viable at lower energy prices than plants with higher LRMC. Therefore, an analysis comparing the LRMC of geothermal power stations with alternative options for power generation will determine if and when geothermal power stations will become commercial.

A summary of the new entrant generation costs determined by ACIL is provided in TABLE 7. Given that costs can vary considerably due to locational factors, the table only compares costs of generation in South Australia, referenced to the regional electricity node at Adelaide. The costs are in constant 2009/10 dollars.

The table compares the LRMC of geothermal generation with the LRMC of combined cycle gas turbine ("CCGT") generation. CCGT is an established technology and is the likely new entrant when additional base load generation is required in South Australia. It therefore sets the current benchmark against which the competitiveness of geothermal energy is compared when assessing potential new sources of electricity generation. Two scenarios for the cost of CCGT are provided – one excluding the forecast cost of carbon emissions and one including the forecast cost of carbon emissions. The cost of generation using geothermal energy is not impacted by a price on carbon emissions because it is a renewable source of energy.

TABLE 7 LONG RUN MARGINAL COST OF ELECTRICITY (\$/MWH)

	2010/11	2019/20	2028/29
Geothermal	86.6	77.9	70.1
Combined Cycle Gas Turbine (excl carbon)	59.4	63.2	67.8
Combined Cycle Gas Turbine (incl carbon)	71.9	82.0	93.8

Source: ACIL Tasman, 2009

TABLE 7 indicates that currently the cost of geothermal generation is significantly higher than gas fired generation using CCGTs, even if there is a price on carbon. However, by 2020, the cost of geothermal generation is forecast to be lower than the cost of CCGT generation if a carbon price exists (forecast by ACIL to be \$38.75/tonne CO2-e⁶ in 2019/20) and almost comparable to the cost of CCGT generation without a carbon price by 2029/30.

The forecast declining real cost of geothermal generation occurs due to the expected declining capital cost of constructing a geothermal power station. The key assumptions made by ACIL in calculating the LRMC of geothermal energy are provided in TABLE 8.

TABLE 8 ACIL ASSUMPTIONS FOR CALCULATING COST OF GEOTHERMAL GENERATION

Assumption	Unit	Value
Generator Size	MW	500
Minimum Stable Generation Level	%	50%
Average Availability	%	90%
Auxiliary Load	%	2.5%
Thermal Efficiency (High Heating Value – sent out)	%	70%
Thermal efficiency (High Heating Value – sent out)	GJ/MWh	5.14
Fixed Operating and Maintenance Costs	\$/MW/year	35,000
Variable Operating and Maintenance Costs	\$/MWh	2.05
Economic Life	years	30
Capital Cost – 2011 (real 2010 dollars)	\$/kW	5,369
Capital Cost – 2020 (real 2010 dollars)	\$/kW	4,780
Capital Cost – 2029 (real 2010 dollars)	\$/kW	4,256

Source: ACIL Tasman, 2009

In January 2011 Worley Parsons prepared a report for the AEMO on cost curves for alternative forms of generation, including new technologies that have not yet been commercialised in Australia. The cost curves were developed for five scenarios contemplating different rates of technological change in the future.

Worley Parsons observed that the cost of a geothermal power plant cost is significantly more site-specific than for other power generation technologies. The cost is affected not only by the size and design of the power plant, but also the geothermal resource temperature and pressure, steam, impurity and salt content, and well depth. In addition, since most of the drilling and well testing equipment for geothermal resources is adapted

⁶ CO2-e refers to Carbon Dioxide equivalent gases as defined by the UN Kyoto Protocals

from the oil and gas industry a geothermal project will need to compete with the higher rewarding oil & gas projects for access to these services.

Worley Parsons quote a 2009 report by New Energy Finance on the proportion of costs for each stage in the development of a typical 50MW geothermal power station. It shows that at least 50% of the cost of a geothermal power station is for site specific factors including exploration, drilling and steam production. This is reproduced in the following chart.

FIGURE 6 BREAKDOWN OF ESTIMATED DEVELOPMENT COSTS FOR GEOTHERMAL POWER

Source: Worley Parsons, 2011

A major issue for geothermal projects in Australia is that the most active areas for geothermal opportunities are in very remote locations away from the main load centres. When competing with energy sources closer to the load centres, geothermal projects will need to factor in the cost of long distance high voltage transmission lines to deliver the power to the customer, which is likely to be prohibitive. Worley Parsons observe that as a result geothermal projects will most likely be developed for local power supply.

It should be noted that Geothermal's Frome Project resource allocation is located in close proximity to potential mines (including Havilah properties) which may represent major demand load.

The installed cost range for geothermal generation forecast by Worley Parsons is provided in TABLE 9.

Plant Type	Low	Mid-Point	High
Hot Rock	5,480	8,115	10,750
Hot Sedimentary Aquifer	5,100	6,700	8,300

Source: Worley Parsons, 2011

The capital costs assumed by ACIL in TABLE 8 are at the low end of the range of costs provided by Worley Parsons in TABLE 9, although there is insufficient detail in the respective reports to ascertain whether they are prepared on the same basis and are therefore directly comparable.

The charts below summarise the outputs of the Worley Parsons modelling. Worley Parsons observe that the range for the cost curves is expected to be large because of uncertainty over a number of key factors such as exchange rate, technological improvements, site suitability, productivity, etc. The cost curves that show downward trends are due mainly to a favourable exchange rate and strong technological improvements and curves that show an upward trend are due to a less favourable exchange rate. Variability in site related issues such as depth of well have not been considered by Worley Parsons since the drilling costs are very site specific and could have a significant impact on the project cost.

FIGURE 7 COST CURVE FOR GEOTHERMAL HOT ROCK GENERATION SYSTEM

Source: Worley Parsons, 2011

A third report was prepared by McLennan Magasank Associates ("MMA") in February 2009 for the Australian Geothermal Energy Association ("AGEA"). The MMA report compares the cost of geothermal generation with other forms of electricity generation. A summary of

the LRMC of generation technologies that would be relevant to new base load generation in South Australia are provided in TABLE 10. No site specific factors are taken into consideration and little detail on the assumptions adopted is provided in the report. MMA observes that the costs are accurate to ±50% for immature or as yet developed technologies such as geothermal generation.

In calculating the LRMC, MMA assume carbon prices as per Treasury's CPRS-5 scenario.

TABLE 10 LRMC OF GENERATION TECHNOLOGIES (\$/MWH) – MID 2008 DOLLARS

	2020	2030
Geothermal – Hot Rock	99	95
Geothermal – Hot Sedimentary Aquifer	97	93
CCGT – small	97	104
CCGT - large	88	95

Source: Worley Parsons, 2011

Summary of Cost Review

Based on the above literature review of the cost of geothermal generation, the following conclusions can be reached:

There is a very wide range of cost estimates for geothermal generation, reflecting the immature nature of the technology and the fact there are no commercially operating plants in Australia;
The cost of geothermal generation is very site-specific due to the high proportion of total generation costs in the production of the steam from the hot rocks or aquifers;
Currently geothermal generation is not economically viable compared to traditional forms of electricity generation (e.g. CCGT);
Geothermal generation also has to overcome various technical issues in order for it to become a reliable source of base load generation;
Based on the analysis of future costs, geothermal generation has the potential to be competitive with established forms of power generation such as CCGT technology but not within the short-term; and
Any consideration of whether geothermal generation is competitive with alternative forms of generation must be made on a location by location basis taking into account the specific cost of building a commercial geothermal generator and the cost of delivery to the customer.

Estimate of cost of Generation at Geothermal's Frome project.

As we conclude above, the cost of geothermal generation is very site specific. Therefore, based on the information provided by Geothermal, we have estimated an approximate levelised cost of generation for a power station at the Frome site to determine how it compares to the figures quoted by ACIL and MMA.

The levelised cost is the constant unit cost (per MWh) of a payment stream that has the same present value as the total cost of building and operating a generating plant over its life. Levelised cost is a simple and useful method of comparing the cost of different types of generation that have different capital and operating characteristics.

During discussions, Geothermal advised VAA that while no accurate forecasts of the cost of developing a generation plant at its Frome site, it estimated that a 5MW generator at the site would cost \$40 million including drilling, fracturing, and casing costs. This equates to a capital cost of \$8,000/kW, which is approximately at the mid-point of ACIL's forecast for Hot Rock generation (TABLE 9) but below the figure of \$5,369/kW used by ACIL in its calculations (TABLE 8).

In order to calculate the cost of generation for Geothermal's Frome project, we have used the other generation cost parameters provided by ACIL (TABLE 8).

ACIL determined that a nominal Weighted Average Cost of Capital ("WACC") of 10% should be used to calculate the LRMC of generation for new entrants. This was arrived at by adopting the following:

Cost of equity: K^e = 16.5%;
Cost of debt: K^d = 8%; and
Debt to equity ratio: D/E = 1.5.

For the purposes of our analysis, we also adopted a nominal discount rate of 10% (7% real).

Based on the assumptions above, the levelised cost of generation for a potential power station at Geothermal's Frome site is about \$100/MWh.

If investors required a higher rate of return, e.g. 13% nominal (10% real), due to the technological risk, the levelised cost increases to about \$130/MWh.

Market Value of Geothermal

Definition of Market Value

VAA has valued Geothermal on a market value basis. Business valuers typically define market value as:

"The price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing but not anxious seller acting at arm's length."

Our valuation of Geothermal is based on 100 per cent ownership, as required by ASIC Regulatory Guide 111, and thus incorporates a premium for control. When considering the value on a per share basis, we have adopted the number of fully diluted shares on issue.

Market value does not incorporate special value. Special value is the additional value that may accrue to a particular purchaser. In a competitive bidding situation, potential purchasers may be prepared to pay part, or all, of the special value that they expect to realise from the acquisition to the seller.

Valuation Methodology and Approach

Appendix 2 provides details of the principal methodologies available with which to value a project, a business or the shares in a company. We also provide an assessment of the applicability of each methodology to valuing Geothermal. Our conclusion is that many of the methodologies commonly adopted by valuers will not be appropriate to value Geothermal. A summary of the reasons is as follows:

Geothermal does not currently generate any operational revenue or earnings stream and has not done so in previous years;
The magnitude and timing of any future cash flows from Geothermal cannot be forecast with any degree of certainty. Any cash flow projections will be largely influenced by events that are difficult to predict such as Government legislation, drilling performance, rock temperatures, permeability/fracturing, development costs and electricity prices. Therefore, any forecast of future cash flows is so uncertain as to make them effectively meaningless in a valuation.
There is no active market for the assets of Geothermal. It would be difficult to determine a value of the tenements as geothermal power generation is a new technology with little or no precedent upon which to base a technical or market valuation.

In addition, our analysis in the preceding section indicated that the LRMC of generation for a Hot Rock generator at Geothermal's Frome site is between \$100/MWh and \$130/MWh. This is significantly above the LRMC of generation for a CCGT, which is about \$72/MWh (TABLE 7), assuming the cost of carbon is taken into account. Therefore, currently Geothermal's generator would not appear to be economic.

We observe that this may change in the future as carbon costs increase and the geothermal technology matures. Therefore, we conclude that Geothermal has what amounts to an option value. That is, if technological and economic circumstances change such that geothermal technology becomes economic compared to other forms of electricity generation, Geothermal has the option of extracting value from the geothermal resources at Frome and Penola-Robe by building one or more electricity generators.

We have not attempted to compare the geological quality of Geothermal's hot rock reservoir relative to other geothermal developers to understand the effect this may have on the likelihood of Geothermal developing a commercial power station. At present the geothermal industry's understanding of the optimum geological qualities (e.g. rock permeability, depth and temperature) for power generation is too immature for us to determine how this will impact on the value of Geothermal. We note that significant further development work is required across the geothermal industry for this issue to become clearer.

Our preferred valuation methodology for Geothermal is therefore a market based assessment where the market price of Geothermal reflects the option value inherent in the business.

Market Value of Geothermal

We summarise our market value of 100 per cent of Geothermal as follows.

We have calculated the volume weighted average price ("VWAP") of Geothermal's shares over various periods prior to the date that Havilah announced it had approached Geothermal with a proposal to acquire the remaining Geothermal shares (23 August 2011). This is presented in TABLE 11.

Period Prior to 23 August 2011	VWAP Geothermal Share Price (\$ per share)
1 week	\$0.09
1 month	\$0.11
3 months	\$0.13
6 months	\$0.11
12 months	\$0.11

TABLE 11 VOLUME WEIGHTED AVERAGE PRICE OF GEOTHERMAL SHARES

Source: VAA Analysis

The closing price prior to the trading halt before the preliminary announcement (22 August 2011) was \$0.09, although the last trade was executed on 9 August 2011, indicating the Geothermal shares are very thinly traded. Notwithstanding, we have not observed any evidence that the market is inefficient in the way it captures price relevant information.

We observe that the Geothermal share price had been reasonably volatile in the three months preceding the preliminary announcement by Havilah on 23 August 2011. At 30 May 2011 the share price was \$0.08 but this increased to \$0.22 on 15 July 2011 before decreasing back to \$0.09 on 8 August 2011.

Based on the above observations regarding the Geothermal share price, we have adopted a price of \$0.09 per share for the valuation of Geothermal. This has been the underlying price of Geothermal's shares throughout 2011. The 1 month and 3 month VWAPs were influenced by the short term price spike caused by the Federal Government's carbon tax announcement in July (FIGURE 2), but we note that since then the Geothermal share price has reverted back to \$0.09 per share.

The number of issued Geothermal shares as at 22 August 2011 was approximately 35,870,000. Adopting a share price of \$0.09 for Geothermal, values 100% of the issued capital of Geothermal at approximately \$3,228,300.

We have considered the value of the share options held by Geothermal's Directors and employees. A list of the outstanding share options is provided in TABLE 4. If the share options are exercised, the Geothermal receives consideration based on the exercise price and the number of the options.

The Geothermal share price as at 26 September 2011 is \$0.11 and has averaged \$0.13 throughout September 2011. In calculating the value of Geothermal, whist noting that some options are out of the money at our assessed value, we adopt a conservative position and assume that the options granted 6 July 2011 and 19 July 2011 will be exercised. This will add \$330,000 to the capital base of Geothermal.

On this basis, the total value of Geothermal is \$3,558,300. The number of issued Geothermal shares will increase to 38,070,000 if the options are exercised.

We have considered the potential tax liability arising from Geothermal's dispute with the ATO (described on page 16). Our understanding is that information relating to this issue has not yet been released publicly, but will be included in the Target's Statement and the 2011 Annual Report.

Our conclusion above was that the current share price value of Geothermal reflects the value of an option to develop the geothermal resources if technological and economic circumstances permit. The option value inherent in this resource is unlikely to change based on the outcome of the dispute, as long as Geothermal has sufficient cash to meet the liability if the ATO is successful in its claim. While as at 31 January 2011, Geothermal's cash balance was only \$206,000, we note that, absent the Offer, Havilah as the major shareholder in Geothermal had previously committed to provide financial support to Geothermal to pay its debts as and when they fall due7. We would expect this commitment to continue, and therefore, the option value inherent in Geothermal would not change.

We observe the outcome of this dispute is uncertain and, even if there is an adverse ruling to Geothermal, there may be little if any impact on its share price. As a result, we have not made any deduction to the valuation as a result of the potential tax liability.

In our valuation of Geothermal, we have also considered a premium for control, reflecting the value of 100 per cent of Geothermal's shares. This is in accordance with the requirements of ASIC Regulatory Guide 111. In the absence of a higher offer or the expectation of a higher offer, Geothermal shares would be expected to trade without a premium for control in the event that the Havilah offer closes unsuccessfully.

In considering an appropriate control premium to add to the VWAP of Geothermal shares, we have relied on an analysis conducted by VAA of 70 transactions over the past 10 years where the acquirer already had 50% or more of the target and moved to acquire all of the remaining shares to reach 100% ownership of the target.

The average premium to the share price at the date of announcement of the takeover offer of the 70 transactions is 28%. On a value weighted basis, the average is 24%, with this strongly influenced by AMP's acquisition of AXA Australia, which represents more than 50% of the total value of transactions. The median control premium over the sample is 25%.

Based on this analysis, at the upper end of our valuation range, we believe that a control premium of 25% is appropriate for the valuation of Geothermal, notwithstanding that there is no apparent source of additional value to Havilah to support this premium. It should be noted that the a 25% control premium would require Havilah to have a favourable view of a number of factors including the viability of geothermal generation technology and its

⁷ Geothermal Resources Limited, Financial Report for the Half Year Ended 31 January 2011, p9

competitiveness as a source of energy for Havilah's prospective mines at Kalkaroo, Portia, Mutooroo and Maldorky.

Applying a 25% control premium to the value calculated above, results in a market value for 100% of Geothermal of \$4,447,875. Assuming the number of shares is 38,070,000, the value per share is \$0.12.

Valuation Cross Checks

We have considered the reasonableness of our valuation derived using the market based assessment by reference to the market capitalisation of the geothermal resources of other companies.

In order to cross check the valuation we have reviewed the geothermal exploration companies in Australia that can be considered comparable to Geothermal and calculated the implied value of the GELs. This has been calculated by deducting the values of cash and the book value of plant and equipment ["P&E"] from the market capitalisation value. We have also calculated the implied value of each company's GELs per petajoule ["PJ"] of estimated energy in the resource. The results are shown in TABLE 12.

Given the very wide range in results (\$2/PJ to \$69/PJ), the analysis appears to show that the market does not place any significance on the size of the energy resource in establishing the value of the geothermal exploration company. However, there is a narrower range in the implied value of the GELs across the companies (\$1.6 million to \$11.3 million). Four of the companies have the implied value of their GELs between \$1.6 million and \$3.7 million).

Company	Market Cap	Cash	Book Value of P&E	Implied market value of GELs	Resource	Implied market value of GELs
	\$m	\$m	\$m	\$m	(PJ)	\$/PJ
Geodynamics Limited	80.90	29.18	49.15	2.57	400,000	6.42
Petratherm Limited	14.22	2.72	0.20	11.30	230,000	49.12
Torrens Energy Limited	4.67	2.98	0.07	1.61	850,000	1.90
Green Rock Energy Limited	9.47	0.93	0.26	8.27	120,000	68.95
Panax Geothermal Limited	8.47	4.65	0.13	3.69	332,000	11.12
Geothermal Resources Limited	3.30	0.29	0.10	2.91	84,000	34.60

TABLE 12 MARKET VALUE OF GEOTHERMAL COMPANIES

Source: Bloomberg, company websites, VAA analysis

We have been unable to locate any independent analysis which informs the higher values for Petratherm and Green Rock. We observe that Green Rock, Panax and Torrens are close (5-10km) to the NEM grid while Petratherm is close to the Beverley uranium mine (which is off-grid) and about 40 km from the grid. Petratherm and Torrens have TRU Energy and AGL (respectively) as partners.

We concluded above that the value of Geothermal represented an option to develop the geothermal resource to produce electricity if the technology becomes commercial. This option value appears to be relatively consistent across each of the geothermal exploration companies and, as mentioned, independent of the size of the resource.

The probable reason that resource size is not a major factor in the value of the companies is that the amount of electricity generation potentially available from each site is dependent on many factors including the proximity to electricity customers and the characteristics of the resource. The energy resources are very large relative to electricity

demand⁸ and, even in the event geothermal generation becomes commercial, much of the total energy resources are unlikely to be commercially exploitable.

Based on the above table, since the implied market value of Geothermal's GELs is within the range of other geothermal exploration companies, we conclude that the valuation undertaken on the basis of market capitalisation is reasonable.

⁸ The total energy resource in TABLE 12 is almost 2,000PJ. If all of the resource was utilised for electricity generation it could provide more than 2,000,000 MW for 30 years. This is significantly greater than the current level of electricity demand in Australia (approximately 50,000 MW).

Profile of Havilah

History and Overview

Havilah formed in late 1996 to explore for gold and other metals in South Australia. In 1997 Lion Selection Group Ltd became a cornerstone investor in Havilah and subsequently invested \$1.9m. Havilah listed on the ASX on 21 March 2002, following a successful \$6m capital raising.

Since that time Havilah has acquired exploration licences in the Curnamona Province in north-eastern South Australia that covers more than 6,500 square kilometres. In November 2004 Havilah announced it had discovered a major copper-gold-molybdenum deposit at Kalkaroo plus growing mineral resources at several other projects, notably North Portia, Portia and Mutooroo.

In April 2005, Havilah sponsored the ASX listing of Curnamona Energy Limited ["Curnamona Energy"], a vehicle formed specifically to hold its Tertiary uranium exploration interests in the Curnamona Province. Havilah retains a 45.4% interest in Curnamona Energy. In June 2005, Havilah divested its original Gawler Craton properties in return for a 10% holding in Monax Mining Limited ["Monax Mining"].

Havilah sponsored the Initial Public Offering of Geothermal Resources Limited, a specialist geothermal exploration and development company, which listed on the ASX on 21 March 2006. Havilah currently holds 58.8% of Geothermal Resources.

The following diagram provides a summary of the Havilah company structure.

FIGURE 9 STRUCTURE OF HAVILAH

On 6 September 2011 Havilah announced that it had signed an Option and Joint Venture Agreement with MMG Exploration Pty Ltd ["MMG"] relating to exploration of all Havilah's Curnamona Craton exploration licences lying north of the Barrier Highway. The Agreement excludes Kalkaroo EL 4645 and ML 6354 covering the Portia and North Portia deposits. The

agreement relates to joint participation in any new development projects identified within the exploration licences.

Havilah will retain 100% ownership of the exploration licences and may continue with exploration of them on its own account. During the term of the Agreement, Havilah will be obliged to offer MMG a 60% participating interest in any new discoveries it makes for which it is seeking a development partner. In the event MMG elects to participate in a Havilah discovery, MMG will reimburse Havilah twice its verifiable exploration expenditure.

Subject to FIRB approval, MMG has also agreed to take a placement of 4,000,000 Havilah shares at an issue price of \$1.25 per share, raising \$5,000,000 for Havilah. The issue price per share is at more than 100% premium to the traded price prior to the announcement.

Advanced Pre-Development Projects

Havilah currently has 6 main projects within the Curnamona Craton and these are summarised below.

Kalkaroo Copper-Gold Project (100%)

Kalkaroo is a medium size copper-gold deposit containing over 320,000 tonnes of copper and almost 1 million ounces of gold.

Kalkaroo was explored by a number of major mining groups in the past including Placer, Newcrest Mining and MIM Exploration, who completed more than 45,000 metres of drilling in the region. Following a detailed evaluation of all historic exploration data, Havilah developed a 3D geological model of an interpreted copper resource envelope which it commenced drill testing in July 2004.

Over the following six months Havilah completed twenty-one 100m spaced drill traverses over a strike length of 2,000 metres and achieved wide ore grade copper and gold intersections. Subsequent drilling campaigns expanded the mineralisation to the west, in an area known as West Kalkaroo.

TABLE 13 KALKAROO JORC RESOURCES
	Unit	Measured	Inferred
Resources	Mt	62,500,000	4,500,000
Copper	%	0.52
Gold	g/t	0.48
Molybdenum	ppm		615
Contained Copper	tonnes	325,000
Contained Gold	ounces	967,742
Contained Molybdenum	tonnes		2,767.5

The JORC⁹ resources for Kalkaroo are provided in TABLE 13.

Source: Havilah

Heads of Agreement with Glencore

In 2007 Glencore International ["Glencore"] entered into a Heads of Agreement ["HOA"] with Havilah to fund a \$14 million feasibility study on the Kalkaroo project. As part of the

⁹ All JORC resources quoted in this report have been taken from Havilah Resources ASX releases, which have been prepared by competent persons.

HOA, Glencore had the option to arrange project financing for the subsequent mining joint venture taking a 14% interest in the project and the right to sell all products of the project by funding 100% of its development costs.

On 25 July 2011 Havilah advised that Glencore had decided not to participate in the project, thus triggering Havilah's right to repay the \$14 million of feasibility funding by the issue of A\$7 million of ordinary shares in Havilah and the balance of \$7 million is a conditional liability that will only be repaid from cashflows from Kalkaroo if the project proceeds.

However, a dispute has arisen between Havilah and Glencore regarding the price at which the shares in Havilah will be issued. Havilah's view is that the price should be based on the volume weighted average price ["VWAP"] of the shares on the ASX in the 20 days previous to the HOA. In a statement to the ASX on 25 July 2011, Havilah advises that this is calculated to be \$2.147 per share resulting in issue of 3,260,203 shares representing approximately 3.95% of Havilah's issued capital. Glencore's view is that the share price should be based on the VWAP of the shares on the ASX in the 20 days previous to the date of expiry of Glencore's option to participate. In its ASX statement, Havilah advises that this is calculated to be \$0.6894 per share resulting in issue of 10,153,756 shares representing approximately 12.3% of Havilah's issued capital.

Feasibility Study

Havilah completed a feasibility study into the Kalkaroo project in March 2010. Based on some 353 drillholes totalling 64,457 metres of drilling, Havilah's geologists developed a detailed geological model of the Kalkaroo deposit from which a JORC Measured resource of 62.5 million tonnes of 0.52% copper and 0.48 g/t gold was estimated.

A discrete inferred Molybdenum resource of 4.5 million tonnes of 615 ppm molybdenum was defined within a section of the main copper-gold ore body at Kalkaroo.

Based on detailed geological logging, the Kalkaroo resource has been subdivided into separate mineralogical/metallurgical domains. The tonnages and grades of the various ore types in each domain are listed in TABLE 14.

Mineral type	Cu_20%	Au_20 g/t	SG	Total Mass (tonnes)
Saprolite Gold	0.18	0.89	2.03	8,703,698
Native Copper	0.76	0.61	2.10	11,134,488
Chalcocite	0.62	0.39	2.47	20,354,395
Chalcopyrite	0.45	0.34	2.67	22,317,451
Total	0.53	0.48	2.38	62,510,031

TABLE 14 KALKAROO RESOURCE BY GEOLOGY

Source: Havilah

In July 2007, Glencore International joined with Havilah to fund a \$14 million feasibility study on the Kalkaroo project. Upon completion of the feasibility study and a review period, Glencore decided not to take a direct participating interest in the project. The mine plan and costing of the project development was developed by Glencore and Havilah.

The Glencore feasibility study was based on a plan to develop a 4.5 million tonnes per annum (Mtpa) processing plant to produce copper concentrate from a blended ore feed. However, given the stratification of ore minerals in the Kalkaroo deposit, Havilah believes that an alternative operating plan involving staging the capital works may be more optimal. Under this plan, initial mining and processing of ore is undertaken through

basic gravity driven processes to recover native copper and subsequently, a processing circuit is developed for the harder ores.

Mutooroo Copper-Cobalt Project (100%)

Mutooroo is a lode-style massive sulphide deposit located in South Australia about 60 km west of Broken Hill containing a JORC Measured + Indicated + Inferred Resource of 13.1 million tonnes of 1.48% copper plus appreciable cobalt, gold and sulphur.

The Mutooroo copper mine was worked in the period between 1887-1914, with reported production of some 6,000 tonnes of mostly hand-picked oxidised material, including 2,557 tonnes of 6.58% copper and a parcel of 218 tonnes of 19.3% copper.

More than 30 diamond drill holes were completed by Broken Hill South in the 1970s into the deeper sulphide bearing portion of the lode zone resulting in a sulphide copper resource estimate of 8.7 million tonnes of 1.9% copper, although this estimate may not comply with current JORC reporting requirements.

Since that time the prospect lay dormant until Havilah commenced exploration in 2005. Havilah's initial objective was to drill the largely untested top 200 metres of the lode system for an open pit deposit.

	Tonnes (Mt)	Copper (%)	Gold (g/t)	Cobalt (%)	Contained Copper (tonnes)	Contained Gold (ounces)	Contained Cobalt (kg)
Measured + Indicated + Inferred Sulphide	12,529,912	1.53	0.23	0.14	191,707	92,665	17,542,000
Measured Oxide	598,047	0.56	0.08	0.04

TABLE 15 MUTOOROO JORC RESOURCES

Source: Havilah

A preliminary plan for the Mutooroo copper-cobalt deposit was scoped by consultants Maptek in 2005 to determine the viability of developing the deposit using open pit mining techniques. The mine plan developed would result in total overburden removal of 25,780,000 m³ and total ore mined of 7,500,000 tonnes including oxidised ore. Mining schedules were based on producing 700,000 tonnes of ore per annum from the mine. The proposed mine will have an open cut pit around 1,000 metres long and up to 160 metres deep.

Metallurgical test work to date has identified two simple mineral processing options:

1. Bulk sulphide beneficiation where the heavy sulphides (pyrrhotite and the chalcopyrite) are separated by a simple gravity plant. Tertiary crushing only is required; and
1. A flotation plant, involving a ball mill circuit and separation of the chalcopyrite fraction and the pyrrhotite/pyrite fraction. At the smelter the pyrrhotite/pyrite component would be roasted to extract the cobalt and the copper, with the sulphur being used for sulphuric acid manufacture and the iron used as an iron ore feed.

Further detailed metallurgical studies will be required to determine mill requirements and estimated recovery factors.

Havilah is currently investigating three potential development options in order to maximise the value of the Mutooroo deposit. These are:

1. Construct a roaster with a throughput of approximately 500,000 tpa and market the acid by-product in South Australia, to take advantage of the high local demand. However, Havilah's studies indicate that the cost for this option is more than \$300 million, which will require a joint venture partner to assist in financing the project.
1. Use a combination of magnetic and gravimetric separation and ship the sulphide concentrate produced to an offshore smelter/roaster. This alternative requires significantly lower capital expenditure and would result in a lower net return to Havilah, but cash‐flow could be achieved earlier.
1. Given the high density of sulphides in the ore, a Direct Shipping Ore (DSO) option is also potentially viable.

Portia Gold Project (100%)

Portia has a JORC Inferred Resource of 67,000 ounce of gold in a 1-4 metre thick layer of silty material lying immediately on the bedrock. The average grade of gold is 2.9g/t in 720,000 tonnes of ore.

Copper mineralisation was first discovered in the area by Marathon Petroleum in the 1980s. The Pasminco-Werrie Gold joint venture followed up in the mid-to late 1990s and discovered widespread copper, gold, molybdenum, lead and zinc mineralisation in the Benagerie Dome. The joint venture completed a considerable amount of drilling and geophysical work and outlined numerous promising prospects, including Portia and North Portia.

Havilah acquired Pasminco's 70% interest in the joint venture from the receivers of Pasminco, and subsequently purchased the remaining 30% to give it 100% ownership of the entire area.

To date Havilah has completed more than 200 drill holes at Portia targeting both a rich eluvial or detrital gold layer that rests on weathered bedrock and the primary gold source in the underlying bedrock.

Initially Havilah assessed an open cut mine and the geotechnical slope angle required for the pit wall was recommended at a shallow angle. This low wall angle, coupled with a gold price of \$600 per oz, made open cut mining at Portia a marginal proposition. Extensive geotechnical work at Kalkaroo, where the same overburden material occurs, has resulted in a better understanding of the material and a steeper angle for the pit walls. These new parameters, plus an increased gold price, when applied to the Portia open cut mine design have improved the project economics.

The following diagram shows the profile of the proposed open cut mine at Portia.

FIGURE 10 PORTIA OPEN PIT GOLD MINE PROFILE

The proposed gold processing would be based on gravity methods only with no chemicals or reagents involved. The following diagram demonstrates the proposed process. Havilah has been granted a mining lease and is currently seeking approval of the Mining and Rehabilitation Plan.

Source: Havilah website

North Portia Copper-Gold Project (100%)

Located 400 metres north of the Portia Gold Project, North Portia contains a Indicated + Inferred JORC Resource of 11.3 million tonnes of 0.89% Cu, 0.44 g/t Au and 500 ppm Mo. This translates to a metal inventory of 101,000 tonnes copper, 175,000 oz gold and 5.65 million kg of molybdenum. A native title agreement and Mining Lease (ML 6346) are in place over the North Portia deposit.

Havilah has completed three rounds of percussion and air-core drilling that have specifically targeted the shallower secondary copper-gold resource outlined by earlier Pasminco – Werrie Gold drilling. This has returned high grades of copper and significant gold and molybdenum in the weathered zone.

Maldorky Iron Ore Project

Havilah recently discovered the Maldorky iron ore deposit in northeastern South Australia near the border with New South Wales. The Maldorky iron ore project lies 28 km south of the Transcontinental Railway, 300 km east of Port Pirie.

Drilling to date has outlined a JORC Indicated Resource of 147 million tonnes containing 30.1% iron, applying an 18% Fe cut‐off grade. This translates to 59 million tonnes of premium grade magnetite‐rich product (>60% Fe) containing very low levels of impurities.

The shallow dip of the iron formation and negligible overburden are favourable for a low cost open pit mining operation. Development of the project is also favoured by the flat open terrain suitable for construction of a 26 km long haul road between the project site and the railway line.

Exploration Projects

Havilah holds more than 7,000 km² of 100% owned exploration licences in the Curnamona Province of northeastern South Australia. Havilah operates its own RC drilling rig and its exploration team are continuously testing various prospects throughout this large area. Two of the more advanced promising exploration projects are briefly described below.

Prospect Hill Project

The Prospect Hill tin project is located in the northern Flinders Ranges of South Australia. Previous shallow drilling by Marathon Petroleum in the early 1980's established a JORC Inferred Resource of 172,000 tonnes of 1.15% tin. It remained unexplored for almost two decades until re-kindling of interest by the current high tin prices.

In October 2007 Havilah completed a 19 hole, 1,195 metre drilling programme and economic grades of tin mineralization were confirmed in several holes on the South Ridge prospect. A second round of drilling completed in July 2008 comprised 24 holes for 2,231 metres.

Havilah has utilised drill data from the South Ridge Prospect area to estimate a JORC Indicated Resource of 302,000 tonnes @ 0.64% Sn. Within this resource, 164,000 tonnes @ 0.89% Sn is contained within a preliminary open pit design.

Lilydale Iron Ore Project (100%)

Havilah's other recent discovery is the Lilydale iron ore project, which lies 50 km southeast of Yunta and is located on the Transcontinental Railway, some 200 km east of Port Pirie. A shallow drilling program carried out in February 2010, targeted the area of highest combined gravity and magnetic response, with encouraging results. Further drilling is planned in the near future.

Curnamona Energy Limited

Havilah owns a 45.4% stake in Curnamona Energy Limited.

Curnamona Energy Limited is exploring and developing Tertiary sand‐hosted uranium deposits within the world class Curnamona uranium province of South Australia. Its main asset is the 100% owned Oban deposit which contains 2,100 tonnes of eU3O⁸ within a

JORC Inferred Resource of 8.2 million tonnes of uranium mineralisation at an average grade of 260 ppm eU3O8.

Curnamona Energy is currently conducting field leach trial testing at Oban and exploring more than 8000 square kilometres of terrain prospective for tertiary sand hosted uranium deposits.

Financial Information

Historical Financial Performance

The financial performance for the period from financial year 2006 to 2010 and for the halfyear 2011 is summarised in TABLE 16. The annual accounts for financial year 2011 are not yet available.

TABLE 16 HAVILAH RESOURCES LIMITED – AUDITED STATEMENT OF FINANCIAL

PERFORMANCE
HAVILAH RESOURCES NL						31 January
Income statement for the financial year ended 31 July	2006	2007	2008	2009	2010	2011
Revenue	533,647	948,829	1,674,288	895,077	400,564	170,142
Other income	762,149	-	165,042	-	-	158,363
Depreciation and amortisation expense	(135,828)	(221,065)	(296,207)	(214,108)	(198,087)	(78,413)
Insurance expense	(65,882)	(41,628)	(59,143)	(156,307)	(103,250)	(51,818)
Annual leave expense	(39,893)	(58,884)	(70,272)	(28,419)	-	-
Management fee and consulting fee expense	(418,511)	(537,462)	(427,861)	(346,777)	(403,790)	(201,494)
Consultant fees						-
Legal fees	(2,693)	(58,646)	(66,970)	(9,022)	(18,105)	(13,156)
Directors fees	(52,500)	(65,000)	(55,000)	(45,000)	(45,000)	(22,500)
Audit and tax fees	(80,350)	(87,000)	(102,675)	(72,000)	(82,000)	(16,000)
ASX listing fees	(61,367)	(90,454)	(67,131)	(50,861)	(45,038)	(59,260)
Shareholder administration fees	(76,560)	(95,040)	(78,776)	(45,869)	(34,248)	-
Finance costs - Interest on finance leases	(10,769)	(36,636)	(44,914)	(34,869)	(30,987)	(13,324)
Printing expense	(16,570)	(18,725)	(47,851)	(18,269)	(7,008)	(13,500)
Subscriptions expense	-	-	-	-	-	(3,465)
Employee expense	-	-	-	-	-	(41,241)
Motor vehicle expense	-	-	-	-	-	(18,919)
Plant hire expense	-	-	-	-	-	-
Computer charges	(22,388)	(10,161)	(34,232)	(41,459)	(31,871)	(16,862)
Telecommunications expense	-	-	-	(51,236)	(2,873)	-
Salary expense	(50,259)	(102,398)	-	-	(16,742)	-
Exploration expenditure written off	(941,709)	-	-	(36,929)	(59,740) -
Share based payments	(273,745)		(411,980) (5,265,568)	(169,788)		(67,365) (1,147,785)
Share of loss of associate entity - using equity method	-	-	(1,134)	(148,020)	(199,318)	(258,262)
Impairment of other financial assets	-	-	(59,821)	(594,453)	(76,208)	-
Other expenses	(31,973)	(34,415)	(96,592)	(38,676)	(95,638)	(18,027)
Loss before tax	(985,201)			(920,665) (4,934,817) (1,206,985) (1,116,704) (1,645,521)
Income tax expense	37,685	483,621	(752,250)	(11,227)	-	13,275
Loss for the year	(947,516)			(437,044) (5,687,067) (1,218,212) (1,116,704) (1,632,246)

Source: Havilah Annual Reports 2006 to 2010

Note: The income to 31 January 2011 is for the half year

The following key points should be noted in respect of the financial performance set out above:

Revenue mainly comprises interest on bank deposits and services revenue;
The largest expense item in the Income Statement is the management fee and consulting fee. However, in practice, the largest cash expenditure, as noted below, is the exploration and evaluation costs. These costs are capitalised and therefore do not appear in the Income Statement.

Forecasts

No profit forecasts are available for Havilah.

Financial Position

The audited financial positions of Havilah as at 31 January 2011, 31 July 2010 and for previous financial years are summarised in TABLE 17. The annual financial accounts for financial year ended 31 July 2011 are not yet available.

TABLE 17 HAVILAH RESOURCES LIMITED – AUDITED STATEMENT OF FINANCIAL POSITION

HAVILAH RESOURCES NL						31 January
Balance sheet as at 31 July	2006	2007	2008	2009	2010	2011
Current Assets
Cash and cash equivalents			9,532,040 24,136,831 18,291,831 10,653,345		6,492,540	4,699,437
Trade and other receivables	78,093	249,619	207,498	133,045	28,640	281,205
Other	49,082	81,730	76,630	37,738	27,123	20,247
Total Current Assets			9,659,215 24,468,180 18,575,959 10,824,128		6,548,303	5,000,889
Non-Current Assets
Exploration and evaluation expenditure	6,131,662		9,978,452 21,629,498 29,064,082 32,750,661 34,006,164
Investment accounted for using the equity method	-	-	5,355,393	5,249,858	5,080,093	4,993,061
Other financial assets	1,443,400	3,508,400	941,078	346,625	270,417	314,667
Plant and equipment	736,067	1,143,733	954,464	759,712	747,315	770,541
Total Non-Current Assets			8,311,129 14,630,585 28,880,433 35,420,277 38,848,486 40,084,433
TOTAL ASSETS			17,970,344 39,098,765 47,456,392 46,244,405 45,396,789 45,085,322
Current Liabilities
Trade and other payables	407,051	1,777,273	2,056,615	296,117	268,887	261,990
Borrowings	99,176	139,849	153,500	173,817	143,688	134,078
Provisions	39,893	98,777	140,737	169,156	134,360	92,799
Other	-	-	-	-		14,000,000 14,000,000
Total Current Liabilities	546,120	2,015,899	2,350,852		639,090 14,546,935 14,488,867
Non-Current Liabilities
Borrowings	307,589	395,464	336,780	162,983	150,141	89,419
Provisions	-	-	-	-	-	49,087
Other	325,513		2,897,800 15,338,360 16,168,571		2,445,738	2,445,738
Total Non-Current Liabilities	633,102		3,293,264 15,675,140 16,331,554		2,595,879	2,584,244
TOTAL LIABILITIES	1,179,222		5,309,163 18,025,992 16,970,644 17,142,814 17,073,111
NET ASSETS			16,791,122 33,789,602 29,430,400 29,273,761 28,253,975 28,012,211
Equity
Issued capital			13,319,409 22,791,529 25,446,287 25,446,287 25,446,287 25,486,778
Reserves	3,417,092	5,180,438	8,202,633	8,403,598	8,495,501	9,813,956
Accumulated losses	-3,673,128	-1,040,370	-5,142,088	-5,894,706	-6,880,514	-8,507,356
Equity attributable to owners of the Company			13,063,373 26,931,597 28,506,832 27,955,179 27,061,274 26,793,378
Non-controlling interest	3,727,749	6,858,005	923,568	1,318,582	1,192,701	1,218,833
TOTAL EQUITY			16,791,122 33,789,602 29,430,400 29,273,761 28,253,975 28,012,211

Source: Havilah Annual Reports 2006 to 2010

The following key points should be noted in relation to the above statements of financial position:

The company has significant levels of cash from capital raisings that will be used to fund exploration and evaluation expenditure;
The non-current investments are investments in Curnamona Energy Limited and Geothermal; and
The other current liability relates to the Glencore agreement described earlier. This liability will be met by the issue of Havilah shares.

Cash Flows

The cash flows for the half year ended 31 January 2011, the year ended 31 July 2010 and for previous financial years are summarised in TABLE 18. The annual financial accounts for financial year ended 31 July 2011 are not yet available.

TABLE 18				HAVILAH RESOURCES LIMITED – STATEMENT OF CASH FLOWS
----------	--	--	--	-----------------------------------------------------	--	--	--

HAVILAH RESOURCES NL						31 January
Cash flow statement for the financial year ended 31 July	2006	2007	2008	2009	2010	2011
Cash flow from operating activities
Receipts from customers	15,305	69,921	220,835	281,991	156,330	156,330
Payments to suppliers		(2,667,013) (1,357,142)	(986,965)	(698,910)	(907,724)	(650,754)
Interest and other costs of finance paid	(10,769)	(36,636)	(44,914)	(34,869)	(30,987)	(30,987)
Net cash used in operating activities		(2,662,477) (1,323,857)	(811,044)	(451,788)	(782,381)	(525,411)
Cash flow from investing activities
Interest received	537,392	878,886	1,526,361	587,740	303,790	127,554
Payments for exploration and evaluation			(2,814,017) (3,392,420) (12,057,905) (9,281,711) (3,730,719) (1,266,527)
Government grant received for exploration activities	191,100	472,287	590,560	830,211	277,166	-
Cash and cash equivalents deconsolidated	-	3,000,000	14,000,000	-	-	-
Net cash inflow from acquisition	-	-	(450,219)	2	-	-
Payments for plant and equipment	(305,820)	(388,142)	(8,511,084)	(19,356)	(20,690)	(98,878)

Net cash used in investing activities	(2,391,345)	570,611		(4,902,287) (7,883,114) (3,170,453) (1,237,851)
Cash flow from financing activities
Proceeds from issue of equity securities	1,299,000	9,509,368	34,240	-	-	79,727
Proceeds from issue of equity securities by subsidiaries	3,000,000	6,411,300	-	887,320	-	-
Payment of costs associated with the issue of listed share	-	-	-	-	-	(39,236)
options pursuant to a prospectus dated 22 October 2010
Payments for share issue costs	-	(78,046)	-	-	-	-
Payments for share issue costs in subsidiaries	(119,760)	(372,593)	-	(37,424)	-	-
Repayment of borrowings	(40,484)	(111,992)	(165,909)	(153,480)	(207,971)	(70,332)
Other	-	-	-	-	-	-
Net cash (used in)/provided by financing activities		4,138,756 15,358,037	(131,669)	696,416	(207,971)	(29,841)
Net decrease in cash		(915,066) 14,604,791		(5,845,000) (7,638,486) (4,160,805) (1,793,103)
Cash at the beginning of the year	10,447,106	9,532,040		24,136,831 18,291,831 10,653,345		6,492,540

Source: Havilah Annual Reports 2006 to 2010

Note: The cash flow to 31 January 2011 is for the half year

The following key points should be noted in respect of the cash flows set out above:

Cash flow deficits from operating activities is mainly driven by payment to suppliers;
Cash flow deficits from investing is mainly driven by payment for exploration and evaluation, and cash flow incoming is from interest received and government grant received; and
There is a substantial amount of cash in the company accounts which will be used to fund additional exploration and development.

Information about Havilah Securities

Issued Securities

As at 16 September 2011, Havilah has:

82,823,891 fully paid ordinary shares on issue of which 82,423,891 Havilah Shares are quoted on ASX and may be freely traded;
20,149,472 Listed Options quoted on ASX. These options have an exercise date of the 30 October 2013 and an exercise price of \$0.50;
7,745,000 Director and Employee Options on issue which are not quoted on the ASX.

Dividends

Havilah has not paid any dividends. Havilah reviews its corporate dividend policy regularly and will continue to do so.

Rights and liabilities attaching to the Havilah Shares offered

A summary of the rights which relate to Havilah Shares are set out below. This summary does not purport to be exhaustive or constitute a definitive statement of the rights and liabilities of Havilah's Shareholders.

Voting

At a general meeting of Havilah on a show of hands, every member present in person, or by proxy, attorney or representative has one vote and upon a poll, every member present in person, or by proxy, attorney or representative has one vote for every Share held by them.

Dividends

The Shares will rank equally with all other issued Shares in the capital of Havilah and will participate in dividends out of profits earned by Havilah from time to time. Subject to the rights of holders of Shares of any special preferential or qualified rights attaching thereto, the profits of Havilah are divisible amongst the holders of Shares in proportion to the Shares held by them irrespective of the amount paid up or credited as paid up thereon. The Directors may from time to time pay to Shareholders such interim dividends as in their judgement the position of Havilah justifies.

Winding Up

Upon paying the application moneys, Shareholders will have no further liability to make payments to Havilah in the event of Havilah being wound up pursuant to the provisions of the Corporations Act.

Transfer of Securities

Generally, the Shares and Options in Havilah will be freely transferable, subject to satisfying the usual requirements of security transfers on the ASX. The Directors may decline to register any transfer of Shares but only where permitted to do so under its Constitution or the ASX Listing Rules.

Sale of Non-Marketable Holdings

The Company may take steps in respect of non-marketable holdings of Shares in Havilah to effect an orderly sale of those Shares in the event that holders do not take steps to retain their holdings in accordance with the Constitution and the ASX Listing Rules. For more particular details of the rights attaching to Havilah Shares, investors should refer to the Constitution of the Company.

Havilah employee share plan

Havilah operates an Employee share scheme as an incentive to employees and as a retention benefit to key employees.

Havilah Top 20 Shareholders

TABLE 19 sets out the top 20 shareholders in Havilah as at 8 September 2011.

TABLE 19 HAVILAH RESOURCES LIMITED – TOP 20 SHAREHOLDERS

Holder Name Shares Held

Trindal Pty Ltd (Trindal Super Fund A/C)	9,321,868
IFG Trust (Jersey) Limited	8,262,607
HSBC Custody Nominees (Australia) Limited	2,756,615
Mrs Selvie Tjowasi	2,027,800
Heilong Jiang Resources Limited	1,990,500
Statsmin Nominees Pty Ltd	1,876,149
Woolsthorpe Investments Limited	1,674,225
Trindal Pty Ltd	1,422,629
Macquarie Bank Limited (Metals & Energy Cap Div A/C)	1,337,833
Citicorp Nominees Pty Limited	1,288,836
UBS Wealth Management Australia Nominees Pty Ltd	1,246,397
Mr Brian Kenneth Murphy (Murphy's Super Fund A/C)	1,144,910
Prof Geoffrey Driscoll + Mrs Jan Driscoll (Driscoll Super Fund A/C)	1,100,000
Statsmin Nominees Pty Ltd (Statsmin Super Fund A/C)	1,066,000
Willstreet Pty Ltd	1,050,000
Sydney Fund Managers Ltd	1,000,000
Mrs Janet Moyes	819,978
Gregorach Pty Ltd	802,532
Dr Keith Robert Johnson	756,467
J P Morgan Nominees Australia Limited	639,285
Total number of shares held by the Top 20 shareholders	41,584,631

Source: Bidder's Statement

The top 20 shareholders in Havilah accounted for approximately 50.5% of the total issued capital as at 8 September 2011.

Director's interests in Havilah Shares

As at the date of the Bidder's Statement, the Geothermal Directors had the following Relevant Interests in Havilah Shares:

TABLE 20 GEOTHERMAL DIRECTOR'S INTERESTS IN HAVILAH SHARES

Director	Number of Havilah Shares	Number of Havilah Options	Number of Unlisted Havilah Options
K R Johnson	3,865,281	731,133	3,500,000
C W Giles	10,878,508	2,737,412	3,500,000
K G Williams	214,297	53,575	800,000
M S Janes	Nil	Nil	Nil
Total	14,958,086	3,522,120	7,800,000

Source: Bidder's Statement, Target's Statement

Share Price Performance

FIGURE 12 sets out Havilah's share price history between 1 June 2006 and 22 August 2011:

FIGURE 12 HAVILAH RESOURCES LIMITED – HISTORICAL SHARE PRICE

⁽Source: Bloomberg)

FIGURE 13 shows the trading volume of Havilah shares over the past 12 months. The average number of shares traded per day over that period is approximately 90,000. A significant spike in trading volume occurred in late May and early June 2011 and during that time a 40% increase in the share price of Havilah was observed. The increased trading volume and increase in share price occurred during a time where Havilah delivered several investor presentations in Australia and Singapore and an independent equities research company, BGF Equities, released a report that valued Havilah significantly above the prevailing share price.

FIGURE 13 HAVILAH RESOURCES LIMITED – HISTORICAL SHARE PRICE AND TRADING VOLUME

Source: Bloomberg

The following summarises key events and announcements that may have affected share price movements over the period from 01/06/2006 and 22/08/2011.

Positive news regarding the size of the Kalkaroo resource based on drilling results in January 2007;
Upgrades to the gold reserves at Portia announced to the market in February 2007;
In July 2007 Havilah announced that it had reached agreement for Glencore to fund a \$14 million feasibility study on the Kalkaroo copper project;

In March 2008 Havilah's Chinese joint venture partner in the Mutooroo copper cobalt project, Heilongjiang Resources Limited, agreed to convert its earn in interest in the project to a direct equity interest in Havilah;
In May 2008 Havilah announced high grade copper results from further drilling at Kalkaroo;
In November 2009 Havilah announced it had discovered iron ore following drilling at its Lilydale exploration tenement;
In August 2010 Havilah announced it had made a second iron ore discovery at Maldorky;
In July 2011 Glencore announced that it will sell its rights in the Kalkaroo mining tenements and the feasibility study to Havilah in consideration for the issue of \$7 million in ordinary shares in Havilah.

Industry Analysis

Gold

Based on its diversity of special properties, gold is considered the most useful mineral. Gold has a variety of uses including jewellery, decoration, electronics and health. Gold is also a store of wealth and more than half the world's gold is held by governments and banks.

Gold production, consumption and price movements

Gold is mainly consumed for jewellery manufacturing as evidenced by fabrication consumption being approximately 70% of supply over recent years.

TABLE 21 GOLD CONSUMPTION

	Unit	2006-2007	2007-2008	2008-2009	2009-2010	2010-2011f	2011-2012f
Supply	t	3,942	3,959	4,318	4,261	4,034	3,880
YoY Growth	%	na	0.43%	9.07%	-1.32%	-5.33%	-3.82%
Fabrication consumption	t	3,102	3,023	2,511	2,779	2,843	2,949
YoY Growth	%	na	-2.55%	-16.94%	10.67%	2.30%	3.73%
Fabrication consumption as % of supply	%	na	76.36%	58.15%	65.22%	70.48%	76.01%
Price	US\$/oz	639	823	874	1,092	1,372	1,593
YoY Growth	%	na	28.79%	6.20%	24.94%	25.64%	16.11%

Source: ABARE

Despite recent rises in the gold price, jewellery demand grew significantly in 2010, underpinned by rising household incomes in several developing economies. This trend is expected to continue and to provide support for a forecast rise of 2 per cent in total gold fabrication consumption to 2,843 tonnes in 2011.

Investment demand for gold, as a store of value in periods of economic uncertainty, has provided significant support for the gold price. The effects of natural disasters in Japan, political instability in the Middle East and ongoing uncertainty surrounding the increase in public sector debt in some major world economies have encouraged investors to invest in gold as a low-risk asset.

Rising oil prices and expansionary monetary policy in many developed economies have also provided support for investment in gold as a hedge against inflation. A decline in the value of the US dollar against other major international currencies over the past year has also contributed to the higher gold price. Because the gold price is denominated in US dollars, a weaker US dollar will lead to an increase in the purchasing power of investors outside the United States and contribute to an increase in the gold price.

The chart below shows the gold price over the past 20 years.

FIGURE 14 GOLD PRICE (USD/OUNCE)

Source: Bloomberg

Copper

Copper is a major industrial metal, ranked third after iron and aluminium in terms of quantities consumed due to its properties; singularly or in combination, of high ductility, malleability, and thermal and electrical conductivity, and its resistance to corrosion.

Copper production, consumption and price movements

Demand for copper is driven by electronics and electronic products, transportation, industrial machinery, and consumer, general products, and building construction which is the largest market; making copper a cyclical commodity.

Recent historical and short term forecast world copper production, consumption and prices are provided in TABLE 22.

	Unit					2006-2007 2007-2008 2008-2009 2009-2010 2010-2011f 2011-2012f
Production	kt	18,029	18,498	18,649	19,167	19,630	20,373
(Primary refined metal)
YoY growth	%	na	2.60%	0.82%	2.78%	2.42%	3.79%
Consumption	kt	18,108	18,094	18,243	19,135	19,808	20,437
YoY growth	%	na	-0.08%	0.82%	4.89%	3.52%	3.18%
Copper prices	US\$/t	7,087	7,791	4,936	6,634	8,702	9,781
YoY growth	%	na	9.93%	-36.64%	34.40%	31.17%	12.40%

TABLE 22 COPPER PRODUCTION, COMSUMPTION AND PRICES

Source: ABARE

The copper consumption and production in 2011 and 2012 is forecast to grow strongly, which is expected to lead to price increases of 31.17% in 2011 and 12.40% in 2012 respectively.

The chart below shows the copper price over the past 20 years.

FIGURE 15 COPPER PRICE (USD/TONNE)

Source: Bloomberg

The copper price reached a peak of \$8,800/tonne on 11 May 2006. Thereafter, due to the impact of global financial crisis, the price fell sharply before recovering steadily between 2009 and 2011. In early 2011 the copper price reached more than \$10,000/tonne, although it has fallen back more than 20% since then.

TABLE 23 shows that Australian mine output is expected to contribute 5.62% to world mine output in 2011 and 5.56% in 2012. In addition, Australian refined output is expected to contribute 2.51% to world refined output in 2011 and 2.47% in 2012.

Copper outlook	Unit	2011f	2012f
World mine output	kt	16,814	17,905
Australia mine output	kt	945	996
Australia as a % world	%	5.62%	5.56%
World refined output	kt	19,630	20,373
Australia refined output	kt	492	503
Australia as a % world	%	2.51%	2.47%

TABLE 23 FORECAST AUSTRALIAN COPPER OUTPUT

Source: ABARE

Cobalt

Cobalt is mainly extracted as a by-product of copper and nickel. Cobalt is used in magnets, ceramics, special glasses, and tools. It is a key alloying element in certain steels and alloys. The element when reacted with fatty acids is also a drier for oil based paints and varnishes. Cobalt is also essential to all animals, including humans. Trace amounts of cobalt are available in most diets.

Almost 50% of cobalt is used for batteries, and superalloys as shown below.

FIGURE 16 COBALT USES (%)

(Source: British Geological Survey)

From mid-2010 to 30/08/2011 Cobalt price has been fluctuating between \$34,000USD/MT and \$44,000USD/MT as shown in the following chart.

Molybdenum

Molybdenum is commonly a by-product of copper mining. It has the ability to withstand extreme temperatures and has a high resistance to corrosion. Molybdenum is widely used as an alloy agent in stainless steel. It is also used to manufacture aircraft parts and industrial motors. Production and consumption of molybdenum is shown below.

⁽Source: Bloomberg)

FIGURE 18 MOLYDENUM PRODUCTION AND CONSUMPTION

Source: London Metals Exchange

Over 60% of molybdenum production comes from North America and China, and over 60% is consumed for constructional steel and stainless steel.

The following chart shows the recent historical price of molybdenum.

FIGURE 19 MOLYBDENUM PRICE (USD/MT)

Source: Bloomberg

Iron Ore

Iron ores contains iron rich minerals from which metallic iron can be extracted economically. The principle minerals are Hematite (70% iron), and Magnetite (72% iron).

Demand for Iron ore is driven by the steel industry, making Iron ore a cyclical commodity. Exports are driven by Australia and Brazil and imports are driven by China, Japan and Korea.

Iron ore prices have risen sharply over the past 5 to 10 years, driven principally by the rapid industrialisation of China. In mid-February, iron ore spot prices were the highest on record, reaching US\$185 per tonne for 62 per cent iron ore content free on board ["fob"]. These record prices supported some June 2011 quarter contract prices reaching US\$172 per tonne, a 25 per cent increase from the previous quarter. In 2012, ABARE forecasts that contract prices will ease to an average of US\$146 per tonne, reflecting increased supply from Australia and Brazil.

TABLE 24 shows the recent increase in iron ore exports from Australia and TABLE 25 shows the recent increases in prices and the forecast softening of prices as new supply comes on stream.

TABLE 24 IRON ORE EXPORTS

	Unit	2009	2010	2011	2012
Australian Iron Ore Exports	Mt	363	402	414	459
YoY Growth	%	na	10.7%	3.0%	10.9%

Source: ABARE

TABLE 25 IRON ORE FORECAST PRICES

World Iron Ore Contract Prices		2009	2010	2011	2012	2013	2014	2015	2016
Nominal	US\$/t	68	112	149	129	116	109	104	102
Real	US\$/t	70	114	149	127	112	103	96	93

Source: ABARE

FIGURE 20 IRON ORE SPOT PRICE (USD/MT)

Source: Bloomberg

Market Value of Havilah

Definition of Market Value

Value Adviser Associates has valued Havilah on a market value basis. Our valuation is based on 100 per cent ownership, as required by ASIC Regulatory Guide 111, and thus incorporates a premium for control.

Valuation Methodology and Approach

Appendix 2 – Valuation Methodologies provides details of the principal methodologies available with which to value a project, a business or the shares in a company. However, many of these methodologies will not be appropriate to value Havilah for the following reasons:

Havilah does not currently generate any operational revenue or earnings stream and have not done so in previous years;
The magnitude and timing of any future cash flows from Havilah cannot be forecast with any degree of certainty. Any cash flow projections will be largely influenced by events that are difficult to predict such as the results of further exploration, mine plans, costs of project development, funding arrangements and future commodity prices. Therefore, any forecast of future cash flows is so uncertain as to make them effectively meaningless in a valuation.

Our approach in valuing Havilah is to consider each project and investment of the company and determine the preferred methodology for each. The total value of the company then becomes a sum-of-the-parts valuation. Our preferred valuation approach for each is summarised in TABLE 26. Further details are provided below.

Project / Investment	Approach
Kalkaroo	Apply benchmark value per tonne of copper equivalent to JORC resources
Mutooroo	Apply benchmark value per tonne of copper equivalent to JORC resources
North Portia	Apply benchmark value per tonne of copper equivalent to JORC resources
Portia	Apply benchmark value per tonne of gold equivalent to JORC resources
Maldorky	Apply benchmark value per tonne of iron-ore equivalent to JORC resources
Lilydale	Assign nil value
Prospect Hill	Apply benchmark ratio of EV to value of contained metal in resource
Curnamona Energy (45%)	Market valuation based on share price
Geothermal Resources (58%)	Market valuation based on share price

TABLE 26 PREFERRED VALUATION METHODOLOGY

The benchmark approach is our preferred methodology for valuing Havilah's resources that have JORC estimates of metal content. The benchmarks are derived from the

enterprise value of companies that are comparable to Havilah in terms of resource types and stages of development.

For Havilah's investment in Curnamona Energy, we have adopted a market valuation based on its share price.

For Havilah's investment in Geothermal Resources we have adopted 58% of the valuation calculated earlier in this document.

We have not attempted to value the exploration areas or exploration prospects, including the Lilydale project, for which there is no JORC resource. Therefore, we cannot estimate the value of the exploration projects, including Lilydale, with any reasonable robustness. In this circumstance, we believe it is reasonable to assign a nil value to all exploration projects. This should not be regarded as implying that there is no upside value to these assets.

Market Value of Havilah

We summarise our market value of 100 per cent of Havilah as follows.

We have undertaken a valuation of the JORC resources identified by Havilah using benchmarks from other copper, gold and iron ore exploration and development companies. The list of copper companies identified as comparable is provided in TABLE 36 in Appendix 3. The list of iron ore companies identified as comparable is provided in TABLE 38.

The approach we have taken is to calculate the enterprise value ["EV"] per tonne of copper equivalent for a range of comparable companies. The EV was calculated as at 22 August 2011 according to the following formula:

Enterprise Value = Market Capitalisation + Debt – Cash

These variables for each company were sourced from Bloomberg.

The mass of copper equivalent (in tonnes) for each company was calculated using benchmark prices for each commodity as at 22 August 2011. Where possible, spot prices quoted on the London Metals Exchange were used, although in some instances Bloomberg data was adopted.

Valuation of Havilah's Copper/Gold Tenements

We have calculated a benchmark value per tonne of copper equivalent based on the analysis in TABLE 27. We have adopted a value of \$100 per tonne of copper equivalent as appropriate for Havilah taking into account the stage of development of its resources, contained metal, and grade of copper. In arriving at this figure, we made the following observations:

Both Indophil Resources and Marengo Mining have low calculated EVs per tonne of copper equivalent. Their projects are located overseas, in Philippines and PNG respectively. Although Metminco has a large resource (4.4 million tonnes of copper equivalent), it also has a low EV per tonne of copper equivalent. Its project, Los Calatos is located in Chile. Therefore, it appears the market discounts the value of their resources for companies with resources located overseas.
Golden Cross Resources has the lowest EV of only \$13 per tonne of copper equivalent. It is not evident why this is the case, although it is one of only two companies on the list with a market capitalisation lower than its book value of equity.

Silver Swan Group has the highest EV per tonne of copper equivalent, although it is the smallest company in the list, with an EV of only \$4 million.
The average of the remaining companies is \$115 per tonne of copper equivalent. On a mass weighted basis, the EV is \$112 per tonne of copper equivalent.
In our opinion, the closest benchmark to Havilah in terms of copper grade and tonnes of copper equivalent is Rex Minerals. Its EV is \$100 per tonne of copper equivalent.

TABLE 27 ENTERPRISE VALUE PER COPPER EQUIVALENT

Name	Market Cap	Total Debt	Cash	Enterprise Value	Share of	Cu Equivalent	EV per
	(\$m)	(\$m)	(\$m)	(\$m)	Project	(tonnes)	tonne Cu eq
Golden Cross Resources Ltd	1 9	0	8	1 1	100%	828,869	1 3
Indophil Resources NL	324	0	151	173	35%	17,913,992	2 8
Copper Strike Ltd	2 0	0	1	1 9	100%	189,148	9 9
Marengo Mining Ltd	216	0	7 1	145	100%	3,973,286	3 6
Silver Swan Group Ltd	9	0	6	4	100%	23,145	166
Aussie Q Resources Ltd	3 5	0	2	3 3	100%	575,307	5 7
Metminco Ltd	293	7	2	297	100%	4,386,764	6 8
Empire Resources Ltd	1 0	0	1	9	100%	62,509	149
Rex Minerals Ltd	286	0	104	182	100%	1,771,557	103
Augur Resources Ltd	6 0	0	1	5 9	100%	363,645	163
Cudeco Ltd	484	0	4 5	438	100%	3,629,284	121

Source: Bloomberg, VAA Analysis

The resource prices adopted to determine the copper equivalent value were based on spot prices for each commodity as at 22 August 2011. These are shown in TABLE 28.

Mineral	Unit	Price per unit	Source
Copper	USD/t	8,800	LME
Gold	USD/oz	1,897	Bloomberg
Molybdenum	USD/t	32,500	LME
Silver	USD/oz	4 4	Bloomberg
Zinc	USD/t	2,140	LME
Nickel	USD/t	21,000	LME
Cobalt	USD/t	35,500	LME
Magnesium	USD/t	2,900	Bloomberg

TABLE 28 RESOURCE PRICES AS AT 22 AUGUST 2011

We have calculated a benchmark value per tonne of gold equivalent based on the analysis in TABLE 27. We have adopted a value of \$20 per ounce of gold equivalent as appropriate for Havilah. We calculated this as the average of the comparable gold companies, although Hill End Limited was excluded from the analysis since it's enterprise value per ounce is a significant outlier to the other observed values.

TABLE 29 ENTERPRISE VALUE PER GOLD EQUIVALENT

Name	MARKET CAP TOTAL DEBT		CASH	Enterprise Value	Share of	Au	EV per
	(\$m)	(\$m)	(\$m)	(\$m)	Project	(ounces)	ounce
Signature Metals Limited	4 2	0	7	3 6	100%	1,207,865	2 9
Montezuma Mining Company	1 6	0	4	1 3	100%	560,800	2 2
Lachlan Star Limited	4 6	1 1	5	5 2	100%	1,171,000	4 5
Hill End Limited	2 3	0	3	2 0	100%	234,400	8 7
Phoenix Gold Limited	2 2	0	0	2 2	100%	1,385,000	1 6
Millennium Minerals	3 1	0	1 7	1 5	100%	1,245,607	1 2
Aphrodite Gold	1 4	0	9	5	100%	1,033,000	5
Alloy Resources Limited	4	0	1	3	100%	98,700	3 2

Source: Bloomberg, VAA Analysis

The resultant valuation of Havilah's copper and gold resources using an enterprise value of \$100 per tonne of copper and \$20 per ounce of gold equivalent is provided in TABLE 30.

Mineral		Kalkaroo	Mutooroo	North Portia	Portia	Total
Copper	tonnes	325,000	191,700	101,101
Gold	ounces	967,742	92,700	234,522
Molybdenum	tonnes	2,768	0	5,680
Cobalt	tonnes	0	17,542	0
Copper Equivalent	tonnes	543,886	282,454	172,645
EV per tonne copper equivalent	\$ million	100
Gold Equivalent	ounces				67,000
EV per ounce gold equivalent	\$ million	2 0
Value	\$ million	54.4	28.2	17.3	1.3	101.2

TABLE 30 VALUATION OF HAVILAH'S COPPER/GOLD RESOURCES

Source: VAA Analysis

Valuation of Maldorky Project

We have adopted a similar approach to the valuation of Maldorky. We have calculated a benchmark value per tonne of iron ore equivalent based on the analysis in TABLE 31. We have adopted a value of \$520 per kilo tonne ["kt"] of iron ore equivalent as appropriate for Havilah taking into account the stage of development of its resources, contained metal, and grade of iron ore. In arriving at this figure, we made calculated the average EV per kt of iron ore of the comparable companies.

We compared the EV per kt or iron ore for different grades of iron ore but found no correlation. For example, the average grade of iron ore for Iron Clad Mining and Lincoln Minerals is about 26%, the average grade for Brockman Resources is 42% and for the others about 55%.

TABLE 31 ENTERPRISE VALUE PER IRON ORE EQUIVALENT

Name	Market Cap	Total Debt	Cash	Enterprise Value	Share of	Iron Ore	EV per
	(\$m)	(\$m)	(\$m)	(\$m)	Project	(kt)	kt Fe
Iron Clad Mining	4 2	0	0	4 2	100%	70,526	589
Brockman Resources	460	0	5 4	407	100%	705,491	577
Lincoln Minerals	1 6	0	3	1 3	100%	26,380	476
Cazaly Resources	4 1	0	3	3 8	100%	54,154	693
Iron Ore Holdings	179	0	1 7	161	100%	391,864	411
Flinders Mines	219	0	5 5	164	100%	414,201	395

Source: Bloomberg, VAA Analysis

The resultant valuation of Havilah's Maldorky project using an enterprise value of \$550 per kt of iron ore equivalent is provided in TABLE 30.

TABLE 32 VALUATION OF HAVILAH'S MALDORKY PROJECT

Maldorky Valuation
Iron Ore Resources	kt	147,000
EV per tonne iron ore	\$/kt	520
Enterprise Value	\$ million	76.4

Valuation of Prospect Hill Project

Havilah has identified a JORC Indicated resource of 302,000 tonnes @ 0.64% tin at Prospect Hill. However, as there are relatively few tin exploration companies in Australia we are unable to adopt the same valuation methodology as for the copper/gold prospects and Maldorky.

Instead our valuation approach for Prospect Hill is firstly to determine ratio of EV to value of contained metal based on the comparable copper companies identified earlier. Our analysis shows that the average ratio across the companies is 2%. Tin has a higher margin than copper - 0.64% tin at a tin price of USD24,000 per tonne¹⁰ is equivalent to \$154 per tonne whereas copper with a grade of 0.9% and a price of \$8,800 per tonne is equivalent to \$79 per tonne.

Applying the 2% ratio to the Prospect Hill resource at a tin price of USD24,000 per tonne and adjusting for the higher margin results in a valuation of the resource of \$2.0 million.

Curnamona Energy Limited

We have valued Havilah's 45.4% stake in Curnamona Energy using a market based assessment where the share market price of Curnamona Energy reflects the value of the business. We note that the shares in Curnamona Energy are traded on the ASX and, although daily volumes traded are not high, we have no reason to believe that the share price is not representative of Havilah's investment in the company. Also, we have reviewed Curnamona Energy's market announcements we have no reason to believe that the market has not been kept appropriately informed of all material issues relating to the company and the status of its operations.

The approach we have adopted to value Curnamona Energy is to calculate the VWAP of its shares over various periods prior to the date that Havilah announced it had made a proposal to Geothermal to acquire the remaining Geothermal shares (23 August 2011). This is presented in TABLE 33.

Period Prior to 23 August 2011	VWAP Curnamona Energy Share Price (\$ per share)
1 week	\$0.08
1 month	\$0.08
3 months	\$0.08
6 months	\$0.11
12 months	\$0.19

TABLE 33 VOLUME WEIGHTED AVERAGE PRICE OF CURNAMONA ENERGY SHARES

The closing price prior 22 August 2011 was \$0.08 per share, which was also the VWAP price over the previous week and month. Therefore, we have adopted this price for our valuation. The number of issued Curnamona Energy shares as at 22 August 2011 was 66.12 million. This values Curnamona Energy at \$5.29 million.

Havilah owns a 45.4% stake in Curnamona Energy. We calculate the value of this holding at \$2.4 million.

Geothermal Resources

Earlier we determined the market value of 100% of Geothermal's ordinary shares as at 22 August 2011 was \$4,447,875.

Havilah owns a 58% stake in Geothermal. We calculate the value of this holding at \$2.6 million.

Valuation Summary

A summary of our valuation of Havilah is provided in TABLE 34

¹⁰ Source: LME

TABLE 34 HAVILAH VALUATION SUMMARY

Project / Investment	Value (\$ million)
Kalkaroo	54.4
Mutooroo	28.2
North Portia	17.3
Portia	1.3
Maldorky	76.4
Lilydale	0.0
Prospect Hill	2.0
Curnamona Energy (45%)	2.4
Geothermal Resources (58%)	2.6
Valuation of Havilah	184.7

The total number of Havilah shares currently is 82,822,000.

Earlier we noted Glencore's decision not to participate in the project, thus triggering Havilah's right to repay the loan by the issue of A\$7 million of ordinary shares in Havilah. The dispute that has arisen regarding the pricing of these shares means that the number of shares that will be issued to Glencore is uncertain. Havilah's view is that Glencore should be issued with 3,260,203 shares. Glencore's view is that it should be issued with 10,153,756 shares.

We have taken a conservative view in our valuation of Havilah's shares and assumed that Glencore's view prevails and it will be issued with 10,153,756 shares. Once this occurs, the total number of Havilah shares will be 92,975,756

Based on a valuation of \$184.7 million for Havilah, this amounts to a value per share of \$1.99.

If Havilah's view prevails and Glencore is issued with 3,260,203 shares, this results in a value per share of \$2.15.

Valuation Cross Check

We have considered the reasonableness of our valuation derived using the market based assessment using a valuation cross check. The approach we have adopted is to calculate the VWAP of Havilah's shares over various periods prior to the date that Havilah announced its intention to acquire the remaining Geothermal shares (23 August 2011). This is presented in TABLE 35.

Period Prior to 23 August 2011	VWAP Havilah Share Price (\$ per share)
1 week	\$0.56
1 month	\$0.59
3 months	\$0.66
6 months	\$0.61
12 months	\$0.61

TABLE 35 VOLUME WEIGHTED AVERAGE PRICE OF HAVILAH SHARES

Source: VAA Analysis

The closing price prior to the trading halt before the announcement (22 August 2011) was \$0.52 per share. This is near the bottom of the range that the share price had traded in over the previous three months (\$0.48 to \$0.74).

Based on the above observations regarding the Havilah share price, we have adopted a price of \$0.59 per share for the valuation of Geothermal, representing the VWAP over the month prior to the announcement. The number of issued Havilah shares as at 22 August 2011 was 82,822,000. This values Havilah at \$48.9 million.

There is significant difference between the value of Havilah derived using the two approaches. However, this is not unreasonable given that Havilah is a mining exploration and development company that currently does not have any producing assets and, as yet, has not generated any revenue from mining. The wide valuation range reflects the uncertainty surrounding the future outcomes for each of Havilah's identified resources.

Evaluation of the Havilah Offer

Fairness

In forming our opinion, VAA has concluded that the market value of Geothermal is \$0.12 per share, on a fully diluted basis. Our valuation range represents the underlying market value of Geothermal on a controlling basis.

The Havilah Offer is one Havilah share per four Geothermal shares.

VAA has concluded the market value of Havilah is in the range of \$0.59 to \$1.99 per share, equivalent to an offer of \$0.15 to \$0.50 per Geothermal share.

As the Havilah Offer exceeds our valuation range for Geothermal, we consider the Havilah Offer is fair to the shareholders of Geothermal.

However, we observe that the upper range of our Havilah valuation, and therefore the upper range of the consideration, is significantly higher than the valuation based on the current share market price. For Geothermal Shareholders to realise this value from the Offer, share market investors in Havilah will need to recognise that greater value exists in Havilah's assets.

Reasonableness

ASIC Regulatory Guide 111 states that an offer is reasonable if it is fair.

Above we concluded that the offer is fair. Therefore, it is also reasonable.

Notwithstanding that there is no requirement to address reasonableness issues, we believe the Geothermal shareholders may wish to consider the following matters in making their assessment of whether to accept the offer.

Geothermal's cash resources are limited and insufficient to continue funding the minimum amounts necessary to maintain its GELs, absent ongoing financial support from Havilah.
Recent (informal) attempts at capital raising have failed to identify sufficient funding for commercialisation of the resources.
Geothermal shares are thinly traded.
Geothermal is a single asset company. Commercialisation of the resources is technically risky. In contrast, Havilah controls a number of mineral resources which are close to production.
Significant upside exists in the Havilah price as evidenced by the recent agreement to issue, subject to FIRB approval, Havilah capital at \$1.25 (see ASX announcement of 6 September 2011).
In VAA's assessment it is unlikely that an alternative, superior offer is likely to be made to Geothermal shareholders.
Value Adviser Associates is unable to provide definitive advice as to the likely share price of Geothermal in the event the offer from Havilah lapses. Share price movements are affected by many financial and economic events outside the control of Geothermal. However, we do make the following observations in relation to the value of Geothermal if it was to continue as a separately listed entity:

The value of Geothermal would continue to be strongly affected by the developments in the geothermal generation industry, particularly whether the technology can be proven and the cost of geothermal generation relative to alternative forms.
In the short term, we believe there is little upside potential in the Geothermal share price until there are significant advances in proving the technology and the costs of developing geothermal generation are reduced.
100% ownership of Geothermal may present benefit to Havilah in the form of tax loss grouping under the tax consolidation regime subject to the use of any existing losses Havilah may have available and generation of taxable income by the consolidated group.
Demand for geological expertise within Havilah is likely to ensure ongoing availability of Dr. Geoff Stoltz to the group if the takeover offer is successful. This may not otherwise be the case.
Shareholders should be aware that there is a possibility, but no certainty, that a superior offer will be made by Havilah or an alternative bidder. However, at this time there is no alternative bidder.

Implications if Havilah does not acquire 90% or more of the shares of Geothermal

Shareholders should be aware of the potential implications of not accepting the Havilah Offer in the event that Havilah acquires less than 90 per cent of Geothermal shares and waives its condition to acquire 90% or more.

The Bidder's Statement indicates that in this event, Havilah intends to maintain Geothermal's listing on ASX while it meets ASX requirements for maintaining a listing and it is cost effective to do so. If Havilah becomes entitled at some later time to exercise general compulsory acquisition rights under the Corporations Act, it would exercise those rights.

Risks to investments in Havilah

We have previously considered the key success factors for the geothermal energy industry.

With regard to the risks associated with acceptance of the Offer and the subsequent shareholding in the Havilah group, Geothermal shareholders need to consider the risks that may have an adverse impact on the future performance of the Merged group and the value of Havilah shares.

On the basis of our analysis of the industries associated with Geothermal and Havilah, and reviewing the assessment of risks provided in Section 9 of the Bidder's Statement, VAA considers the key investment risks to be:

Volatility in metal prices with potentially reduced prices;
The quality and quality of reserves is less than currently indicated;
Unanticipated geological conditions increase operational costs;
Approvals required for operations are not given or delayed;
Development consents are not forthcoming or difficult to acquire.

Geothermal Directors intend to accept the Offer

The Target's Statement indicates that the Geothermal Directors intend to accept the Offer in respect of all Geothermal shares respectively controlled by them, subject to, in the case of Messrs Williams and Janes, there being no superior proposal, and no material adverse event having occurred.

Appendix 1 – Statement of Qualifications and Declarations

Value Adviser Associates is qualified to provide this report. It is the corporate authorised representative of Capital Value Securities, which holds an Australian Financial Services Licence under the Corporations Act. The director of Capital Value Securities responsible for this report has not provided financial advice to either Geothermal or Havilah in relation to this takeover offer.

Prior to accepting this engagement, VAA considered its independence with respect to Geothermal and Havilah with reference to ASIC Regulatory Guide 112: Independence of experts. VAA has not undertaken any part assignments for either company. In our opinion, we are independent of Geothermal and Havilah.

This report has been prepared specifically for the non-associated shareholders of Geothermal. Neither VAA nor any member or employee thereof undertakes responsibility to any person, other than a non-associated shareholder of Geothermal, in respect of this report, including any errors or omissions howsoever caused.

The statements and opinions given in this report are given in good faith and the belief that such statements and opinions are not false or misleading. In the preparation of this report VAA has relied upon and considered information believed after due inquiry to be reliable and accurate. VAA has no reason to believe that any information supplied to it was false or that any material information has been withheld from it. VAA has evaluated the information provided to it by Geothermal, its advisors, as well as other parties, through inquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially mis-stated or would not afford reasonable grounds upon which to base this report. VAA does not imply and it should not be construed that it has audited or in any way verified any of the information provided to it, or that its inquiries could have verified any matter which a more extensive examination might disclose. The information we have had regard to in the preparation of this report is set out in Appendix 4 – Sources of Information.

The information provided to VAA has been evaluated through analysis, enquiry and review to the extent it considered necessary for the purposes of forming an opinion. Value Adviser Associates does not warrant that its enquiries have identified or verified all the matters that a formal audit or due diligence may disclose. Accordingly, this report and the opinions contained in it should be considered more in the nature of a commercial and financial review rather than a comprehensive audit or due diligence.

Geothermal has provided an indemnity to VAA for any claims arising out of any misstatement or omission in any material or information provided to it in the preparation of this report.

This report should be read in its entirety to ensure that no isolated statements, analyses or other factors are construed out of context. The preparation of an opinion is a complex process and subject to professional judgement. The overall opinion is not to partial analysis or summary.

VAA provided draft copies of this report to the independent directors and management of Geothermal for their comments as to factual accuracy, as opposed to opinions, which are the responsibility of VAA alone. Changes made to this report as a result of this review by the independent directors and management of Geothermal have not changed the methodology or conclusions reached by VAA.

VAA will receive a professional fee based on time spent in the preparation of this report, estimated at \$30,000 (exclusive of GST). This fee is not contingent on the outcome of the Offer. VAA will not be entitled to any other pecuniary or other benefit whether direct or indirect, in connection with the making of this report.

Mr Michael Churchill, a director of VAA, has assumed overall responsibility for this report. He has over 25 years' experience in providing financial advice and valuation advice and has professional qualifications appropriate to the advice being offered.

Mr Mark Gemmola, an employee of VAA, has also been involved in the preparation of this report. He has over 15 years of commercial and advisory experience in areas such as accounting and providing financial/valuation advice. Mark has professional qualifications appropriate to the advice being offered.

In the preparation of this report VAA has had regard to relevant Regulatory Guides issued by ASIC. It is not intended that the report should be used for any other purpose than to be sent to the Shareholders of Geothermal. In particular, it is not intended that this report should be used for any other purpose other than as an expression of its opinion as to whether or not the Offer is fair and reasonable for the Shareholders.

The financial forecasts considered in the preparation of this report reflect the judgement of directors and management of Geothermal based on present circumstances, as to both the most likely set of conditions and the course of action it is most likely to take. It is usually the case that some events and circumstances do not occur as expected or are not anticipated. Therefore, actual results during the forecast period will almost always differ from the forecast and such differences may be material. To the extent that our conclusions are based on forecasts, we express no opinion on the achievability of those forecasts.

VAA consents to the issue of this report in the form and context in which it is included in the Target's Statement to be sent to the Shareholders.

Appendix 2 – Valuation Methodologies

There are a number of valuation methodologies available with which to value a project, a business or the shares in a company. The principal methodologies used are:

capitalisation of earnings;
discounted cash flow;
net realisable value of assets;
market based assessments; and
recent offers.

Each of these methodologies is appropriate in certain circumstances. The decision as to which methodology to utilise generally depends upon the methodology most commonly adopted in valuing the asset in question and the availability of appropriate information.

Capitalisation of Earnings

The capitalisation of earnings methodology involves capitalising the earnings of a project, a business or a company at an appropriate multiple, which reflects the risks underlying the earnings together with growth prospects.

This methodology requires consideration of the following factors:

estimation of future maintainable earnings having regard to historical and forecast operating results, abnormal or non-recurring items of income and expenditure and other factors. Future maintainable earnings is generally based on net profit after tax, EBIT, EBITA or EBITDA;
determination of an appropriate earnings multiple reflecting the risks inherent in the business, growth prospects and other factors;
earnings multiples applied to net profit after tax are known as price earnings multiples and are commonly used in relation to listed public companies. Earnings multiples applied to EBIT, EBITA or EBITDA are known, respectively, as EBIT, EBITA or EBITDA multiples, and are commonly used in respect of companies comprising a number of businesses where debt cannot be precisely allocated or in acquisition scenarios where the purchaser is likely to control gearing;
an adjustment for financial debt, in the event maintainable earnings are based on EBIT, EBITA or EBITDA; and
an assessment of any surplus assets and liabilities, being those which are not essential to the generation of the future maintainable earnings.

This methodology is appropriate where a company or business is expected to generate a relatively stable record of earnings.

Neither Geothermal nor Havilah have profitable operations. Accordingly this methodology is not appropriate to employ in the assessment of value of either company.

Discounted Cash Flow

The discounted cash flow methodology involves calculating the net present value of cash flows that are expected to be derived from future activities. The forecast cash flows are discounted by a discount rate that reflects the time value of money and the risk inherent in cash flows.

This methodology is particularly appropriate in valuing projects, businesses and companies that are in a start-up phase and are expecting considerable volatility and/or growth in earnings during the growth phase, as well as businesses with a finite life (such as oil and gas fields). The utilisation of this methodology generally requires management to be able to provide long term cash flows for the subject company, asset or business.

Geothermal management have not prepared cashflow forecasts. A high level ("proof of concept") business plan has been prepared with respect to the Frome geothermal project.

Havilah has not prepared cashflow forecasts for any of its projects.

We understand that an independent valuation has been prepared of the Kalkaroo project based on a discounted cashflow employing assumptions developed by management and the valuer. This valuation has recently been provided to Havilah and VAA understands that the directors have accepted the valuation. The valuation indicates a range of values for the Kalkaroo project between \$40 million and \$190 million with an expected value of \$50 million. VAA has not verified the assumptions employed in the Kalkaroo valuation but notes that the credentials of the valuer, approach, methodology and data sources are likely to provide a reliable indication of the value of this project.

Save for the cashflow forecast prepared by the valuer of the Kalkaroo project, there are no cashflow forecasts available. Our review of the available information indicates that there is no reliable basis for estimating cashflows for any of the projects other than Kalkaroo.

Accordingly, no discounted cashflow valuations have been undertaken by VAA.

High level estimates of capital costs, production rates, metal prices and mine costs have been discussed with management and, where possible, cross-checked to the operating parameters of companies operating similar facilities in order to arrive at benchmark values, as discussed further below.

Net Realisable Value of Assets

The net realisable value of assets methodology involves the determination of the net realisable value of the assets of a business or company, assuming an orderly realisation of those assets. This value includes a discount to allow for the time value of money and for reasonable costs of undertaking the realisation. It is not a valuation on the basis of a forced sale, where assets may be sold at values materially different to their market value.

This methodology is appropriate where a project, a business or company is not making an adequate return on its assets or where there are surplus non-operational assets.

The absence of an observable market in GEL's prevents the use of this methodology with respect to Geothermal's principal assets. However, analysis of the comparable listed companies permits an estimate to be undertaken of the implied value of Geothermal's resource as compared with the comparable geothermal companies.

Market Based Assessments

Market based assessments relate to the valuation of companies, the shares of which are traded on a stock exchange. While the relevant share price could, prima facie, constitute the market value of the shares, such market prices usually reflect the prices paid for small parcels of shares and as such do not include a control premium relevant to a significant parcel of shares.

Recent Offers

Where a recent genuine offer has been made for a company, business unit or asset, that offer may be used as a basis for valuation of the company, business unit or asset.

Appendix 3 – Description of Comparable Companies and Transactions

Company	Details
Golden Cross Resources Ltd	Golden Cross Resources Ltd is a mineral explorer with a copper-gold focus. Its major activity is the Copper Hill copper-gold project in central NSW which contains 619,000 tonnes of copper and 1.64 million ounces of gold of which an estimated 85% falls within the optimum pit shell.
Indophil Resources NL	Indophil NL holds a 37.5% interest alongside Xstrata in one of the world's largest, low-cost copper deposits, the Tampakan copper gold project in the southern Philippines. On the latest estimate, the Tampakan project is a 2.4 billion tonne mineral resource containing 13.9 million tonnes of copper and 16.2 million ounces of gold.
Copper Strike Limited	Copper Strike is a mineral exploration and development company focused on finding and developing copper and related base metals in eastern Australia. Its most advanced project is at Einasleigh in North Queensland. Copper Strike recently sold its interest in the Walford Creek deposit (3,900 inferred tonnes copper) for \$2.5 million.
Marengo Mining Limited	Marengo Mining is an Australian-based resources company focused on developing the Yandera copper-molybdenum project in PNG.
Silver Swan Group Limited	Silver Swan Group is an Australian listed gold and base metals explorer with projects in the Murchison province, Western Australia and the Gawler Craton, South Australia. Silver Swan's principal focus is the Quinns area, located 55km south of Meekatharra, for volcanogenic massive sulphide (Cu-Zn-Ag-Au) mineralisation.
Aussie Q Resources Ltd	Aussie Q Resources Ltd is a mineral exploration company that holds ten (three under joint venture) highly prospective copper/molybdenum exploration permits in the Rawbelle district, centred 30 km to the west of the town of Monto approximately 150 km from Gladstone.
Metminco Limited	Metminco Limited is a base and precious metals company focused on Latin America with a portfolio of assets at various stages of development in Peru and Chile. Its major asset is the Los Calatos large scale copper molybdenum exploration project.
Empire Resources Limited	Empire Resources is a gold and copper-focused exploration company. Its major tenement position is at the Youanmi base metals province in Western Australia and has an indicated and inferred resource of 1.07 million tonnes at 1.82% copper and 0.78g/t gold.
Rex Minerals Limited	Rex Minerals is an Australian minerals exploration and development company with large-scale copper-gold projects on the Yorke Peninsula, South Australia. Rex Minerals has made an initial large-scale copper-gold discovery at the Hillside Project.
Discovery Minerals Limited	Discovery Metals' major asset is the Boseto Copper Project in north-west Botswana. Production at the site is expected to commence in the first half of 2012.
Augur Resources Limited	Augur Resources is a resource development company, with a focus on copper, gold and nickel projects within the Lachlan Fold Belt of central NSW. Augur discovered the Homeville nickel and cobalt deposit in 2008 that has JORC inferred resource of 12.2Mt at 0.91% nickel and 0.06% cobalt.
Cudeco Limited	Cudeco Limited is a Queensland based exploration company whose principal asset is the Rocklands copper project.

TABLE 36 COMPARABLE COMPANIES - COPPER

TABLE 37 COMPARABLE COMPANIES – GOLD

Company	Details
Signature Metals Limited	Signature Metals Limited explores and mines natural resources in areas of Africa.
Montezuma Mining Company	Montezuma Mining Company Limited acquires and explores for mineral interests in Australia and overseas. The Company mines for gold, copper lead-zinc, nickel, and copper-gold targets.
Lachlan Star Limited	Lachlan Star Limited is a mineral exploration company.
Hill End Limited	Hill End Gold Limited is involved in the exploration and production of gold.
Phoenix Gold Limited	Phoenix Gold Ltd. explores for gold. The Company has agreements to acquire properties in the Zuleika-Carbine and Kunanalling Shear Zones and the Ora Banda-Grants Patch in Australia.
Millennium Minerals	Millennium Minerals Limited mines, explores and develops metal resources in the East Pilbara region of Western Australia.
Aphrodite Gold	Aphrodite Gold Ltd. is a gold mining company. The Company was formed for the purpose of acquiring and bringing into production the Aphrodite Gold Project near Kalgoorlie in Western Australia.
Alloy Resources Limited	Alloy Resources Ltd. explores for minerals. The Company holds properties in gold mining areas in Western Australia.

TABLE 38 COMPARABLE COMPANIES – IRON ORE

Company	Details
Ironclad Mining	Ironclad Mining Limited explores for and produces minerals. The Company is focused on iron ore exploration and production.
Brockman Resources	Brockman Resources Limited explores for gold, nickel and base metals in Western Australia. The Company also has interest in the Credo Project that explores for gold in the Kalgoorlie region of Australia.
Lincoln Minerals	Lincoln Minerals Limited is a mineral exploration and production company. The Company explores for uranium, base metals (lead, zinc, copper, nickel, and silver), gold, iron ore, and iron oxide.
Cazaly Resources	Cazaly Resources Limited is a gold exploration and mining company operating in Western Australia. The Company's projects include the Kununalling Project, East Kalgoorlie Project and the Mt Vetters Project.
Iron Ore Holdings	Iron Ore Holdings Ltd. explores for iron ore. The Company operates in Western Australia.
Flinders Mines	Flinders Mines Limited is an iron ore exploration and development company. The Company focuses on iron ore in the Pilbara region of Western Australia. Flinders Mines Ltd also explores for diamond and phosphate in South Australia and the Northern Territory.

Comparable Company Resources

TABLE 39 below is a summary of the resources of the comparable copper companies:

Name		Copper Resources (tonnes)		Gold Resources (ounces)
	Measured	Indicated	Inferred	Measured	Indicated	Inferred
Golden Cross Resources Ltd	250,800	207,700	68,500	700,000	500,000	200,000
Indophil Resources NL	5,500,000	5,000,000	3,300,000	7,000,000	5,600,000	3,500,000
Copper Strike Ltd	0	133,400	24,150	0	59,968	4,051
Marengo Mining Ltd	453,592	861,825	1,632,932	0	0	2,200,000
Silver Swan Group Ltd	5,654	6,822	2,701	4,470	4,975	1,839
Aussie Q Resources Ltd	0	220,403	63,201	0	0	0
Metminco Ltd	0	432,900	3,015,500	0	0	0
Empire Resources Ltd	1,716	17,774	19,474	13,996	40,797	51,149
Rex Minerals Ltd	0	211,000	1,259,000	0	228,270	1,170,287
Augur Resources Ltd	0	0	48,949	0	0	57,987
Cudeco Ltd	230,000	140,000	130,000	140,000	90,000	100,000

TABLE 39	COMPARABLE COMPANY RESOURCES - COPPER
----------	---------------------------------------	--	--

Name		Molybdenum Resources (tonnes)		Silver Resources (ounces)
	Measured	Indicated	Inferred	Measured	Indicated	Inferred
Golden Cross Resources Ltd	0	0	0	0	0	0
Indophil Resources NL	63,180	62,790	48,000	0	0	0
Copper Strike Ltd	0	0	0	0	2,893,891	684,887
Marengo Mining Ltd	20,412	30,844	41,277	0	0	42,000,000
Silver Swan Group Ltd	0	0	0	65,267	74,173	27,991
Aussie Q Resources Ltd	0	49,230	13,581	0	9,220,589	2,792,268
Metminco Ltd	0	42,180	211,900	0	0	0
Empire Resources Ltd	0	0	0	4,414	65,850	70,875
Rex Minerals Ltd	0	0	0	0	0	0
Augur Resources Ltd	0	0	1,547	0	0	911,219
Cudeco Ltd	0	0	0	0	0	0

Name		Zinc Resources (tonnes)		Nickel Resources (tonnes)
	Measured	Indicated	Inferred	Measured	Indicated	Inferred
Golden Cross Resources Ltd	0	0	0	0	0	0
Indophil Resources NL	0	0	0	0	0	0
Copper Strike Ltd	0	0	0	0	0	0
Marengo Mining Ltd	0	0	0	0	0	0
Silver Swan Group Ltd	5,283	10,338	3,717	0	0	0
Aussie Q Resources Ltd	0	0	0	0	0	0
Metminco Ltd	0	0	0	0	0	0
Empire Resources Ltd	0	0	0	0	0	0
Rex Minerals Ltd	0	0	0	0	0	0
Augur Resources Ltd	0	0	0	0	0	110,000
Cudeco Ltd	0	0	0	0	0	0

Name		Cobalt Resources (tonnes)		Magnesium Resources (tonnes)
	Measured	Indicated	Inferred	Measured	Indicated	Inferred
Golden Cross Resources Ltd	0	0	0	0	0	0
Indophil Resources NL	0	0	0	0	0	0
Copper Strike Ltd	0	0	0	0	0	0
Marengo Mining Ltd	0	0	0	0	0	0
Silver Swan Group Ltd	0	0	0	0	0	0
Aussie Q Resources Ltd	0	0	0	0	0	0
Metminco Ltd	0	0	0	0	0	0
Empire Resources Ltd	0	0	0	0	0	0
Rex Minerals Ltd	0	0	0	0	0	0
Augur Resources Ltd	0	0	7,300	0	0	0
Cudeco Ltd	29,378	46,192	17,318	1,387,680	3,778,900	2,976,190

TABLE 40 provides a summary of the resources of the comparable gold companies:

Name	Tenement		Gold Resources (ounces Au)			Resources (Tonnes)			Gold Grade (g/t)
	Name		Measured Indicated	Inferred	Measured	Indicated	Inferred	Measured	Indicated	Inferred
Signature Metals Limited	Konongo	0	523,185	684,680	0	7,627,500	10,329,000	0.00	2.13	2.08
Montezuma Mining Company Peak Hill		0	430,000	84,000	0	9,170,000	10,920,000	0.00	1.46	1.50
	Jubilee	0	6,300	40,500	0	100,000	505,000	0.00	1.95	2.49
Lachlan Star Limited	Toro/Socorro	0	84,000	188,000	0	3,300,000	8,100,000	0.00	0.80	0.70
	Tres Perlaas	0	252,000	333,000	0	15,600,000	19,000,000	0.00	0.50	0.50
	Churrumata	0	16,000	219,000	0	600,000	8,700,000	0.00	0.80	0.80
	Chisperos	0	36,000	43,000	0	1,000,000	1,400,000	0.00	1.10	1.00
Hill End Limited	Big Nuggett	0	60,300	174,100	0	302,000	1,137,000	0.00	6.20	4.80
Phoenix Gold Limited	Kunanalling	38,000	40,000	130,000	490,000	780,000	2,110,000	0.00	1.60	1.90
	Castle Hill	20,000	270,000	237,000	180,000	5,460,000	4,910,000	0.00	1.50	1.50
	Ora Banda	0	97,000	300,000	0	1,520,000	5,120,000	0.00	2.00	1.80
	Carbine	0	41,000	94,000	0	510,000	1,330,000	0.00	2.50	2.20
	Zulieka	0	35,000	64,000	0	280,000	890,000	0.00	3.90	2.20
	Stockpiles	0	19,000	0	0	500,000	0	0.00	1.20	0.00
Millennium Minerals	Nullagine	625,956	410,031	209,620	17,540,000	10,540,000	6,330,000	1.11	1.21	1.03
Aphrodite Gold	Aphrodite	0	451,000	582,000	0	3,670,000	6,390,000	0.00	3.83	2.83
Alloy Resources Limited	Palomino	0	53,150	12,525	0	656,000	105,000	0.00	2.52	3.71
	Bronco	0	2,117	0	0	41,400	0	0.00	1.59	0.00
	Filly	0	8,091	0	0	161,300	0	0.00	1.56	0.00
	Filly SW	0	22,817	0	0	90,400	0	0.00	7.85	0.00

TABLE 40 COMPARABLE COMPANY RESOURCES – GOLD

TABLE 41 provides a summary of the resources of the comparable iron ore companies:

Name		Iron Ore Resources ('000 tonnes)
	Proved	Probable	Measured	Indicated	Inferred
Iron Clad Mining	0	0	0	70,526	0
Brockman Resources	0	0	71,968	542,088	91,436
Lincoln Minerals	0	0	0	2,151	24,229
Cazaly Resources	17,364	17,093	13,664	4,358	1,674
Iron Ore Holdings	0	0	0	149,184	242,680
Flinders Mines	0	0	0	153,426	260,775

TABLE 41 COMPARABLE COMPANY RESOURCES – IRON ORE

Appendix 4 – Sources of Information

In preparing this report, we have had regard to the following sources of information:

TABLE 42 INFORMATION PROVIDED BY GEOTHERMAL

Advanced Project Summaries by Havilah Resources

Altona Mining Ltd by Foster stock brokering on 18/04/2011

An Emerging Australian Copper‐ Gold Producer with a diversified portfolio of quality exploration assets by Havilah Resources website on 7th May 2011

Australian Commodities for June quarter 2011

Australian Geothermal Industry development frame work by AGEA IN 2008

Award of \$ 2.4 REDI grant from AusIndustry, Geothermal resources website on 20th July 2006

Bidders Statement Clean Amendments 12 September_cged

British Geological Survey

Chart 1. trends in world refined stocks and prices

Chinese co-operation to advance Maldorky Iron Project, from Havilah website on July 2011

Commodity Price Index by Scotiabank on 24/08/2011

Copper Industry note published by Patersons on 06/07/2011

Crower Project – South East SA, Geothermal resources website

CVs : Dr KEITH ROBERT JOHNSON, Terence John GRAHAM, MICHAEL A ROBERTS, Kenneth Williams, Dr. Geoffrey W Stolz, Dr. Geoffrey W Stolz and Dr KEITH ROBERT JOHNSON

Exploration update and planning for 2010, ASX media release from company website on 28th 01 2010

Figures 1 to 6 supplied by client

Frome 12 drilling terminated at 1761.2 metres, Geothermal resources website on 8/12/2008

FROME GEOTHERMAL PROJECT – PROJECT PLAN

FROME GEOTHERMAL PROJECT BUSINESS PLAN

FROME GEOTHERMAL PROJECT SOUTH AUSTRALIA Jan 2010

Frome Project - Statement of Estimated Geothermal Resources by Geothermal Resources on 13th July 2009

Frome Project - Statement of Estimated Geothermal Resources, Geothermal resources website on 13th July 2009

Frome projects : PROPOSED IMPLEMENTATION TIMETABLE from CY 2010 to 2014

Geodynamic - ASX ANNOUNCEMENT 28 JUNE 2011 : Company and Operations Update

Geodynamics Limited, Financial statements for FY 2011 and quarterly reports for 31st March 2011, from company website

Geodynamics Ltd - The Company profile, from the Australian Stock investments group

Geothermal corporate details including investment Highlights by Geothermal resources May 2009

Geothermal Development Project grant, Geothermal resources website on 14th December 2009

GEOTHERMAL ENERGY in AUSTRALIA, Geodynamics limited AR 2007

Geothermal Lexicon for resources and reserves definition and reporting, Edition 2 by AGEA in Nov 2010

Geothermal Resources AGM presentation 2010 by Dr Chris Giles on 7th Dec 2010

Geothermal Resources, Annual reports from 2006 to 2010, prospectus, half yearly report 2H011, and quarterly reports, 3Q2011 and 4Q2011 from company website

Glencore is Out – Havilah Retains 100% Control of Kalkaroo by BGF Equity research on 25th July 2011

Gold demand trends, by World gold council for 2010 and 2Q2011

Gold market update by NAB on 26th July 2011

Green Rock Energy Limited, Annual Report 2010, from Green Rock Energy Limited web site

Havilah AGM presentation on 7th Dec 2010, by Chairman Dr Bob Johnson

Havilah Investor Presentation on 7/02/2011

Havilah Resources : Deep Value Copper-Gold Asset Opportunity in South Australia by BGF Equity research on June 2011

Havilah Resources appears to be substantially undervalued by Stock analysis on 17 June 2011

Havilah Resources NL – Kalkaroo Project : Indicative Valuation Assessment on 8th July 2011

Havilah resources NL proposed takeover offer for geothermal resources limited by Havilah resources website on 26/08/2011

Havilah Resources, Annual reports from 2006 to 2010, prospectus, and quarterly report 4Q2011 from company website

Havilah to acquire Glencore's rights in Kalkaroo project, from Havilah website on July 2011

High temperature in Frome project drill holes, Geothermal resources website on 26/09/2007

http://minerals.usgs.gov/minerals/pubs/commodity/copper/

Index Mundi : Copper world mine production by country

Index Mundi : Iron Ore world prices from

http://www.indexmundi.com/commodities/?commodity=iron-ore&months=240

Iron ore background, from Mineral Information Institute

Iron ore spot prices hit record high in 2011 from The Australian (Business with Wall Street Journal) on 05th Jan 2011

Issues, Technologies, and Opportunities for Research, Development, Demonstration, and Deployment by Electric Power research Institute on Feb 2010

KALKAROO COPPER PROJECT executive summary by Havilah resources

LME Molybdenum from LME

Muldorky Iron Ore deposit – Resource statement by Havilah on 10th June 2011

Mutooroo Prospect, Scoping Study by Havilah Resources on 11th Oct 2005

New issue announcement – unlisted options on 15th July 2011

Nine Good Reasons to Invest - Presentation given at the Broken Hill 2011 Resources and Energy Symposium by Havilah resources on 25th may 2011

Option and JV Agreement with MMG Exploration on

Curnamona ELs and Proposed Share Placement by Havilah Resources on 6th September 2011

Panax Geothermal aims to become first grid connected geothermal power producer in Australia from Proactive Investor on 2/04/2009

Panax Geothermal Limited, Annual Report 2010 from company website

Petratherm Limited, Annual Report 2010, and Paralana Joint Venture Update (ASX Release), from company website

Portia – two stage open cut mining plan by Havilah resources NL

Portia Gold Project by Havilah resources from CY 2011 TO CY 2014

Proposed Takeover Offer for Geothermal Resources Limited by Havilah Resources NL BY Geothermal Resources on 26th august 2011

Published financial statements of below companies (used as comparables) :

Strike Resources Limited, Iron Ore Holdings Limited, Golden West Resources Limited, Flinders Mines Ltd, Centrex Metals Limited, Mineral resource estimation and ore reserves, Augur Resources Limited, Aussie Q Resources, Copper Strike Limited, CuDeco Limited, Empire Resources Limited, Golden Cross Resources Limited, Hillgrove resources Limited, Indophil resources NL, Marengo Mining Limited, Metminco, Rex Minerals, BC Iron Limited, and Silver Swan Group

S&P Commodity Trends Indicator by S&P on February 2008

2009 Mineral Year Book by USGS IN 2009

Shareholder share purchase plan to fund Frome project drilling, Geothermal resources website on 19/05/2009

Shares issued under share purchase plan, Geothermal resources website on 30/06/2009

Strategic Objectives for 2011 by Havilah Resources

Target Statement_Draft_28092011

Temperature logs from Frome 2 (Temp graph DWLBC), Frome 3 (Temp graph DWLBC), Frome 9 (Temp graph DWLBC), Frome 12 (Temp graph DWLBC, Temp graph GA, and Temp graph GHT) and 13 (Temp graph GHT)

The many uses of gold, from Geology.com

The potential of geothermal energy by CSIRO March 2011

Torrens Energy Limited, 4Q2011, Annual report 2010, and December 2010 - QUARTERLY ACTIVITIES REPORT (ASX announcement) from company website

USGS Copper statistics and information

Valuation of Maldorky Iron Ore Project - rough estimates

Well completion reports : Frome 2 (WCR report), Frome3A (WCR report), Frome9 (WCR report), Frome10 (WCR report), Frome11 (WCR report), Frome12 (WCR report), and Predicted Stratigraphy

TABLE 43 INFORMATION SOURCED BY VAA

ABARE, Australian Energy Resource Assessment, 2010

ABARE, Australian Commodities Outlook, June Quarter 2011

AEMO Cost Data Forecast For the NEM BY Worley Parsons on 31st Jan 2011

Australian code for reporting of Exploration results Geothermal resources and geothermal reserves by AGEA, 2nd Edition 2010

Australian electricity generation technology costs – reference case 2010, from Australian Government (Department of resource, energy and tourism) Nov 2010.

Australian energy resource assessment, by ABARE on 2010

Bloomberg

Comparative cost of Electricity generation technologies by AEGA in Feb 2009

Fuel resource, new entry and generation costs in the NEM from ACIL Tasman on April 2009

LME Industry usage in 2007

The Relative Costs of Engineered Geothermal System Exploration and Development in Australia by Gareth T. Cooper, Graeme R. Beardsmore, Benjamin S. Waining, Nicky Pollington, Jim P. Driscoll on 29th April 2010

Code for the Technical Assessment and Valuation of Mining and Petroleum Assets and Securities for Independent Expert Reports "The VALMIN Code", 2005 Edition

Web site – Geodynamics - www.geodynamics.com.au

Web site – Geothermal Resources Limited - www.geothermal-resources.com.au

Web site – Green Rock Energy - www.greenrock.com.au

Web site – Havilah - www.havilah-resources.com.au

Web site – Panax Geothermal - www.panaxgeothermal.com.au

Web site – Petratherm - www.petratherm.com.au

Web site – Torrens Energy - www2.torrensenergy.com

Appendix 5 – Financial Services Guide

Issue Date: September 2011

Value Adviser Associates Pty Ltd ABN 54 131 852 607 ("Value Adviser Associates" or "we" or "us" or "our" as appropriate) provides general advice in relation securities to retail clients as an authorised representative of Capital Value Securities Pty Ltd ABN 46 123 674 886 ("CVS" or "licensee") AFSL No 311705.

Financial Service Guide

In the above circumstances we are required to issue you, as a retail client, with a Financial Services Guide [FSG]. This FSG is designed to help retail clients make a decision as to their use of our general security advice.

This FSG includes information about:

1. Who we are and how we and the licensee can be contacted
1. The services we are authorised to provide under the licensee's Australian Financial Services Licence
1. Remuneration that we, the licensee and any associates receive in connection with our general advice
1. The licensee's complaints handling procedures and how you may access them.

The licensee has authorised this FSG.

Financial services we are authorised to provide

We hold Authorised Representative number 342572 authorising us to provide general security advice on behalf of the licensee.

General advice

We provide general advice, not personal advice because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

Benefits that we may receive

We charge fees for providing general advice. These fees will be agreed with, and paid by, the person who engages us. Fees will be agreed on either a fixed fee or time cost basis. Clients may request particulars within a reasonable time after receiving this Guide (and before any financial service is given).

Except for the fees referred to above, neither Value Adviser Associates, CVS nor any of their directors, employees or related entities receive any pecuniary benefit or other benefit directly or indirectly for or in connection with the provision of financial product advice.

Referrals

We do not pay commissions or provide other benefits to any person for referring customers to CVS or us in connection with the advice that we are authorised to provide.

Associations and relationships

CVS is ultimately controlled and operates as part of Value Adviser Associates professional advisory practice. Our Directors may be executive directors of CVS.

From time to time, we may provide professional services to financial product issuers in the ordinary course of our business.

Complaints resolution

Internal complaints resolution process

As a holder of an Australian Financial Services Licence, CVS is required to have a system for handling complaints from retail clients to whom it and its representatives provide financial product advice. All complaints must be in writing, addressed to: The Complaints Officer, Capital Value Securities Pty Ltd, Level 2, 65 Southbank Boulevard, Southbank, Vic 3006.

When CVS receives a written complaint it will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practicable and not more than 45 days after receiving the written complaint, it will advise the complainant in writing of its determination.

Referral to External Dispute Resolution Proposed Scheme

A complainant not satisfied with the outcome of the above process, or the licensee's determination, has the right to refer the matter to the Financial Ombudsman Service Ltd ["FOS"]. FOS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

Further details about FOS are available from the FOS website www.fos.org.au or by contacting them directly at: Financial Ombudsman Service Ltd. GPO Box 3, Melbourne Victoria 3001 or Toll free 1300 78 08 08 or by facsimile (03) 9613 6399.

Professional Indemnity insurance

Value Adviser Associates has Professional Indemnity insurance in place that covers claims in respect of current and former employees and representatives for services provided on behalf of Value Adviser Associates. This insurance satisfies the requirements under the Corporations Act relating to compensation arrangements.

Contact details

You may contact CVS at level 2, 65 Southbank Boulevard, Southbank Vic, 3006 or by phone (03) 9626 4300 or by facsimile (03) 9626 4301.

AI assistant

HAVILAH RESOURCES LIMITED — M&A Activity 2011

65038_rns_2011-10-04_c88d0e1d-2742-447d-82b4-c25e6d259636.pdf

Geothermal Resources Limited 63 Conyngham Street Glenside 5065 South Australia phone 61 8 8338 9292 fax 61 8 8338 9293 email [email protected] ABN 45 115 281 144

Off-market takeover bid by Havilah Resources NL for all of the shares of Geothermal Resources Limited

TARGET'S STATEMENT

HAVILAH RESOURCES NL

Geothermal Resources Limited

The independent director of Geothermal recommends you ACCEPT the Offer in the absence of a superior offer and a Material Adverse Event.

IMPORTANT INFORMATION

Target's Statement

Disclaimer Regarding Forward Looking Statements

Disclaimer as to Information

Independent Expert's Report

Rounding

Privacy

Notice to Foreign Shareholders

No Account of Personal Circumstances

Information Line

CORPORATE DIRECTORY

Directors

Company Secretary

Registered Office

Internet Address

ASX codes

Solicitors to Geothermal

TABLE OF CONTENTS

DEPUTY CHAIRMAN'S LETTER

SUMMARY OF THE HAVILAH OFFER

HOW TO ACCEPT THE OFFER

ESTIMATED DATES FOR KEY EVENTS

1. WHY YOU SHOULD ACCEPT THE OFFER

1.1 Summary of Reasons

1.2 The Offer represents a substantial premium to the value of Geothermal Shares prior to the Announcement

1.3 The Independent Expert has concluded that the Offer is fair and reasonable

1.4 Havilah is a larger more widely held company

1.5 Havilah has greater resources and is better placed to raise capital and secure government funding

1.6 Prospect for significant dilution if the Merger does not proceed

1.7 Risk of fall in share price if the Merger does not proceed

1.8 Havilah's shareholding a deterrent to any alternative bidder

2. GEOTHERMAL DIRECTOR RECOMMENDATION

2.1 The Geothermal Directors

2.2 Recommendation

2.3 Directors' current intentions

2.4 Personal circumstances

3. YOUR CHOICES AS GEOTHERMAL SHAREHOLDERS

3.1 Choices for Geothermal Shareholders

(1) Accept the Offer

(2) Sell your Geothermal Shares on market through the ASX

(3) Take no action

4. IMPORTANT INFORMATION ABOUT HAVILAH'S OFFER

4.1 Havilah's Offer

4.2 Havilah Offer consideration

4.3 Conditions of the Offer

4.4 Notice of status of conditions

4.5 Lapse of Offer

4.6 Strategy of Havilah following the proposed Merger

(1) Background to intentions

(2) Intentions following Havilah acquiring 90% or more of Geothermal shares

(3) Intentions if Havilah acquires less than 90% of Geothermal Shares

4.7 Offer Period

4.8 Extension of Offer Period

4.9 Withdrawal of Offer

4.10 Fractional Entitlements

4.11 Effect of acceptance

4.12 When you will receive consideration (in the form of Havilah Shares) for your Shares if you accept the Offer

4.13 Compulsory Acquisition

4.14 Foreign Holders

5. ABOUT HAVILAH

6. ABOUT GEOTHERMAL

6.1 Principal assets

(1) Frome Project GEL 181 (Geothermal 100%)

(2) Penola-Robe Project GELs 214 and 498 (Geothermal 100%)

6.2 Operations

7. OTHER IMPORTANT CONSIDERATIONS FOR GEOTHERMAL SHAREHOLDERS

7.1 The value of the Offer is not fixed

Implied Value = (NHS/NGS) x HAV Share price

(1/4) x \$0.515 (HAV Share price on 19 August 20115 )

7.2 Form of consideration offered to Geothermal Shareholders

7.3 Other risks of the Offer

HAVILAH RESOURCES LIMITED M&A Activity 2011

(1/4) x \$0.515 (HAV Share price on 19 August 2011⁵ )