HIGH PEAK ROYALTIES LIMITED — Capital/Financing Update 2011

Aug 11, 2011

==> picture [190 x 50] intentionally omitted <==

11 August 2011

Company Announcements Platform Australian Securities Exchange Level 4 20 Bridge Street SYDNEY NSW 2000

By mail

Dear Sir/Madam

NON-RENOUNCEABLE RIGHTS ISSUE - NOTICE PURSUANT TO PARAGRAPH 708AA (2)(F) OF THE CORPORATIONS ACT 2001 ("ACT")

On 2 August 2011 Torrens Energy Ltd (ASX:TEY) ( Company ) announced that it will be offering eligible shareholders the opportunity to acquire additional fully paid ordinary shares in the capital of the Company ( Shares ) via a non-renounceable rights issue ( Rights Issue ) on the basis of one (1) Share for every three (3) Shares held at the record date of 23 August 2011.

Shares under the Rights Issue will be offered at 4.5 cents per Share. The maximum number of Shares which may be issued under the Rights Issue is 21,220,947 to raise $954,943.

The entitlement issue is fully underwritten by Cygnet Capital Pty Ltd, with John Canaris, David Eiszele and Howard McLaughlin (directors of the Company) participating as partial sub-underwriters.

An Offer Document will be mailed to eligible shareholders 25 August 2011 together with personalised Entitlement and Acceptance Forms. For informational purposes, a sample copy of this Offer Document has been attached to this notice.

NOTICE UNDER s708AA OF THE ACT

The Company hereby notifies ASX under paragraph 708AA(2)(f) of the Act that:

• (a) the Company will offer the Shares for issue without disclosure to investors under Part 6D.2 of the Act;

• (b) the Company is providing this notice under paragraph 2(f) of section 708AA of the Act;

• (c) the Company has complied with the provisions of Chapter 2M of the Act as they

TORRENS ENERGY LIMITED ABN 79 118 065 704 RENEWABLE SUSTAINABLE GEOTHERMAL ENERGY A: 338 Hay Street, Subiaco WA 6008 PO Box 1505 Subiaco WA 6904 T: +61 8 6380 1003 F: +61 8 6380 1026 W: www.torrensenergy.com

1

apply to the Company;

• (d) the Company has complied with section 674 of the Act;

• (e) other than as set out in the Offer Document, there is no information:

• (i) that has been excluded from a continuous disclosure notice in accordance with the ASX Listing Rules; and

• (ii) that investors and their professional advisers would reasonably require for the purpose of making an informed assessment of:

  • (A) the assets and liabilities, financial position and performance, profits and losses and prospects of the Company; or

  • (B) the rights and liabilities attaching to the Shares; and

• (f) the Rights Issue is not expected to have any impact on the control of the Company.

Yours faithfully

==> picture [114 x 56] intentionally omitted <==

John Canaris MANAGING DIRECTOR

2

TORRENS ENERGY LIMITED ACN 118 065 704

OFFER DOCUMENT

For a non-renounceable Entitlement issue of one (1) Share for every three (3) Shares held by Shareholders registered at 5:00pm (WST) on 23 August 2011 at an issue price of 4.5 cents per Share to raise up to approximately $954,943 ( Offer ).

IMPORTANT NOTICE

This document is not a prospectus. It does not contain all of the information that an investor would find in a prospectus or which may be required in order to make an informed investment decision regarding, or about the rights attaching to, the New Shares offered by this document.

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its content or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser without delay.

This Offer opens on 25 August 2011 and closes at 5:00pm WST on 8 September 2011.

Valid acceptances must be received before that time.

Please read the instructions in this document and on the accompanying Entitlement and Acceptance Form regarding the acceptance of your Entitlement.

IMPORTANT NOTES

No person is authorised to give any information or to make any representation in connection with the Offer which is not contained in this Offer Document. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with the Offer.

Eligibility

Applications for New Shares by Eligible Shareholders can only be made on an original Entitlement and Acceptance Form, as sent with this Offer Document. The Entitlement and Acceptance Form sets out an Eligible Shareholder's Entitlement to participate in the Offer.

Overseas shareholders

This Offer does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Offer Document.

It is not practicable for the Company to comply with the securities laws of overseas jurisdictions having regard to the number of overseas Shareholders, the number and value of the Shares these Shareholders would be offered and the cost of complying with regulatory requirements in each relevant jurisdiction. Accordingly, the Offer is not being extended and Shares will not be issued to Shareholders with a registered address which is outside Australia or New Zealand.

Shareholders resident in New Zealand should consult their professional advisors as to whether any government or other consents are required, or other formalities need to be observed, to enable them to take up their Entitlements under the Offer.

Privacy Act

If you complete an application for Shares, you will be providing personal information to the Company (directly or by the Company’s share registry). The Company collects, holds and uses that information to assess your application, service your needs as a Shareholder, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company’s share registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or its share registry if you wish to do so at the relevant contact numbers set out in this Offer Document.

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

4

TABLE OF CONTENTS

1.	DETAILS OF THE OFFER .................................................................................................. 6
2.	ACTION REQUIRED BY SHAREHOLDERS ..................................................................... 15
3.	RISK FACTORS ............................................................................................................ 17
4.	CAPITAL STRUCTURE AND FINANCIAL INFORMATION .............................................. 21
5.	DEFINED TERMS .......................................................................................................... 23

5

1. DETAILS OF THE OFFER

1.1 The Offer

The Company is making a non-renounceable pro rata offer of New Shares at an issue price of 4.5 cents each on the basis of one (1) New Share for every three (3) Shares held on the Record Date ( Offer ) .

At the date of this Offer Document, the Company has 63,662,842 Shares and 3,150,000 unlisted Options on issue. The Company expects that up to approximately 21,220,947 New Shares will be issued under the Offer.

Where the determination of the Entitlement of any Eligible Shareholder results in a fraction of a New Share, such fraction will be rounded up to the nearest whole New Share.

1.2 Use of Funds

Completion of the Offer will result in an increase in cash reserves of up to approximately $954,943 (before the payment of costs associated with the Offer).

The Company intends to apply the funds raised from the Offer towards:

Item of Expenditure	Amount ($)
Maintenance of Parachilna Project	75,000
Evaluation of Port August pre-heat project	75,000
Costs of the offer	72,300
Review of potential resource opportunities	600,000
General Working Capital	132,643
TOTAL	954,943

1.3 Timetable

Event	Date
Announcement of Rights Issue	2 August 2011
Release of Offer Document, Cleansing Statement and Appendix 3B to ASX	12 August 2011
Notice sent to Security Holders	12 August 2011
Ex Date (date from which securities commence trading without the entitlement to participate in the Rights Issue)	17 August 2011
Record Date (date for determining entitlements of eligible shareholders	23 August 2011

6

to participate in the Rights Issue)
Offer Document Dispatched to Shareholders (expected date of dispatch of offer document, entitlement and acceptance forms)	25 August 2011
Entitlement Issue opens	25 August 2011
Closing Date 5pm (WST)*	8 September 2011
Securities quoted on a deferred settlement basis **	9 September 2011
Company to notify ASX of undersubscriptions (if any) **	13 September 2011
Dispatch holding statements **	16 September 2011

• Subject to the Listing Rules, the Directors reserve the right to extend the Closing Date for the Offer at their discretion. Should this occur, the extension will have a consequential effect on the anticipated date of issue for the New Shares.

** These dates are indicative only.

1.4 Entitlements and acceptance

The Entitlement of Eligible Shareholders to participate in the Offer will be determined on the Record Date. Your Entitlement is shown on the Entitlement and Acceptance form accompanying this Offer Document.

Acceptances must not exceed your maximum Entitlement (as shown on the Entitlement and Acceptance Form), although you may accept for a lesser number of New Shares should you wish to take up only part of your Entitlement. If your acceptance exceeds your Entitlement, acceptance will be deemed to be for your maximum Entitlement and any surplus application monies will be returned to you.

1.5

No rights trading

The rights to New Shares under the Offer are non-renounceable. Accordingly, there will be no trading of rights on the ASX and you may not dispose of your rights to subscribe for New Shares under the Offer to any other party. If you do not take up your Entitlement to New Shares under the Offer by the Closing Date, the Offer to you will lapse.

1.6

Underwriting

The Company has entered into an underwriting agreement with Cygnet Capital Pty Limited ( Underwriter ) pursuant to which the Underwriter has agreed to underwrite the Offer (subject to certain terms and conditions, including, without limitation, the performance of sub-underwriters) ( Underwriting Agreement ).

Under the terms of the Underwriting Agreement, the Underwriter is entitled to an underwriting commission of 6.0% of the value of any Shortfall Shares less those Shares that will be sub-underwritten by the Directors and, additionally, the

7

Company must pay or reimburse the Underwriter for its reasonable legal and other costs of and incidental to the Entitlement Issue. The Underwriter may appoint sub-underwriters to sub-underwrite the Offer. The Underwriter is responsible for paying all sub-underwriting fees, handling fees, brokerage and other charges incurred by them in procuring valid applications.

The Company has made a number of representations and warranties under the Underwriting Agreement, including that the Company has complied with its continuous disclosure requirements. The Company has indemnified the Underwriter and its Directors, officers, employees and advisers against losses arising if these representations and warranties are wrong.

The Underwriter is entitled to terminate the Underwriting Agreement upon the occurrence of anyone or more of the termination events ( Termination Event ), including:

• (a) ( Indices fall ): either the ASX All Ordinaries Index (XAO.ASX) or the S&P/ASX 200 Index (XEJ.ASX)is at any time after the date of the agreement 10% or more below its respective level as at the close of business on the Business Day prior to the date of the agreement;

• (b) ( Share Price ): at any time after the date of the agreement the Shares finish trading on the ASX under the ASX code of “TEY” on any two (2) consecutive trading days with a closing price that is less than 4.5 cents;

• (c) ( Offer Document ): the Company does not dispatch the Offer Document to Shareholders on the Dispatch Date or the Offer Document or the Offer is withdrawn by the Company;

• (d) ( Offer Materials ) a statement contained in the Offer Materials is or becomes misleading or deceptive or likely to mislead or deceive, or the Offer Materials omit any information they are required to contain (having regard to the provisions of section 708AA of the Corporations Act and any other applicable requirements);

• (e) ( Cleansing Notice ) the Cleansing Notice is defective, or supplementary cleansing notice is issued or is required to be issued under the Corporations Act (as modified by ASIC Class Order 08/35);

• (f) ( New circumstance ) an obligation arises on the Company to give ASX a notice in accordance with subsection 708AA(12) of the Corporations Act (as inserted by ASIC Class Order 08/35), in relation to a matter that the Underwriter reasonably considers to be adverse, or a new circumstance that the Underwriter reasonably considers to be adverse, arises or becomes known which, if known at the time of issue of the Offer Materials and the Cleansing Notice would have been included in the Offer Materials or the Cleansing Notice;

• (g) ( Unable to issue Shares ): the Company is prevented from issuing the Rights Shares within the time required by the agreement, the Listing Rules, applicable laws, an order of a court of competent jurisdiction or any governmental semi-governmental agency or authority;

• (h) ( Withdrawal of consent to Offer Document ): any person (other than the Underwriter) who has previously consented to the inclusion of its, his or her name in the Offer Document or to be named in the Offer Document, withdraws that consent;

• (i) ( Proceedings ) ASIC or any other person proposes to conduct any enquiry, investigation or proceedings, or to take any regulatory action or to seek any remedy, in connection with the Offer or the Offer Materials, or publicly foreshadows that it may do so;

• (j) ( ASIC application ): an order is made under section 1324B or any other provision of the Corporations Act in relation to the Offer Document;

• (k) ( Takeovers Panel ): the Takeovers Panel makes a declaration that circumstances in relation to the affairs of the Company are unacceptable circumstances under Pt 6.10 of the Corporations Act, which in the Underwriter’s reasonable opinion has a Material Adverse Effect;

• (l) ( Hostilities ): there is an outbreak of hostilities or a material escalation of hostilities (whether or not war has been declared) after the date of the agreement involving one or more of Australia, New Zealand, Indonesia, Japan, Russia, the United Kingdom, the United States of America, or the Peoples Republic of China or any member of the European Union, other than hostilities involving Libya, Afghanistan, Iraq, Iran, Syria, Lebanon or Israel and the Underwriter believes (on reasonable grounds) that the outbreak or escalation is likely to result in either the ASX All Ordinaries Index (XAO.ASX) or the S&P ASX 200 Index (XEJ.ASX) falling by the percentage contemplated by clause 12.1(a) of the agreement;

• (m) ( Authorisation ) any Authorisation which is material to anything referred to in the Offer Document is repealed, revoked or terminated or expires, or is modified or amended in a manner unacceptable to the Underwriter acting reasonably;

• (n) ( Indictable offence ): a director of a Relevant Company is charged with an indictable offence;

• (o) ( Cleansing Statement ): the Company ceases to be capable of issuing, at the date of issue of any Shortfall Shares, a notice under Section 708A(5)(e) of the Corporations Act to allow secondary trading of any Shortfall Shares;

• (p) ( Sub-underwriters ): any of the Company Sub-Underwriters do not comply with their obligation under the sub-underwriting agreements or threaten to not comply with all of their respective obligations under the sub-underwriting agreements with the Underwriter; or

• (q) ( Termination Events ): subject one of the events below giving rise to a material adverse effect or liability of the Underwriter, any of the following events occurs:

• (i) ( Default ): default or breach by the Company under the agreement of any terms, condition, covenant or undertaking; ( Incorrect or untrue representation ): any representation, warranty or undertaking given by the Company in the agreement is or becomes untrue or incorrect in a material respect;

• (ii) ( Contravention of constitution or Act ): a material contravention by a Relevant Company of any provision of its constitution, the Corporations Act, the Listing Rules or any other applicable legislation or any policy or requirement of ASIC or ASX; or

9

• (iii) ( Adverse change ): an event occurs which gives rise to a Material Adverse Effect or any adverse change or any development including a likely Material Adverse Effect after the date of the agreement in the assets, liabilities, financial position, trading results, profits, forecasts, losses, prospects, business or operations of any Relevant Company;

• (iv) ( Error in Due Diligence Results ): it transpires that any of the Due Diligence Results or any part of the Verification Material was misleading or deceptive, materially false or that there was a material omission from them; or

• (v) ( Public statements ): without the prior approval of the Underwriter (such approval not to be unreasonably withheld), a public statement is made by the Company in relation to the Offer or the Offer Document, unless such public statement is required by law, the Listing Rules or a governmental agency;

• (vi) ( Misleading information ): any information supplied at any time by the Company or any person on its behalf to the Underwriter in respect of any aspect of the Offer or the Issue or the affairs of any Relevant Company is or becomes misleading or deceptive or likely to mislead or deceive;

• (vii) ( Change in Act or policy ): there is introduced, or there is a public announcement of a proposal to introduce, into the Parliament of Australia or any of its States or Territories any Act or prospective Act or budget or the Reserve Bank of Australia or any Commonwealth or State authority adopts or announces a proposal to adopt any new, or any major change in, existing, monetary, taxation, exchange or fiscal policy that has not been publicly disclosed or proposed as at the date of the agreement;

• (viii) ( Prescribed Occurrence ): a Prescribed Occurrence occurs;

• (ix) ( Suspension of debt payments ): the Company suspends payment of its debts generally;

• (x) ( Event of Insolvency ): an Event of Insolvency occurs in respect of a Relevant Company;

• (xi) ( Judgment against a Relevant Company ): a judgment in an amount exceeding $100,000 is obtained against a Relevant Company and is not set aside or satisfied within 7 days;

• (xii) ( Litigation ): litigation, arbitration, administrative or industrial proceedings are after the date of the agreement commenced or threatened against any Relevant Company, other than any claims foreshadowed in the Offer Document;

• (xiii) ( Board and senior management composition ): there is a change in the composition of the Board or a change in the senior management of the Company before Completion without the prior written consent of the Underwriter (such consent not to be unreasonably withheld);

10

• (xiv) ( Change in shareholdings ): there is a material change in the major or controlling shareholdings of a Relevant Company or a takeover offer or scheme of arrangement pursuant to Chapter 5 or 6 of the Corporations Act is publicly announced in relation to a Relevant Company;

• (xv) ( Timetable ): there is a delay in any specified date in the Timetable which is greater than 7 Business Days;

• (xvi) ( Force Majeure ): a Force Majeure affecting the Company's business or any obligation under the Agreement lasting in excess of 7 days occurs;

• (xvii) ( Certain resolutions passed ): a Relevant Company passes or takes any steps to pass a resolution under section 254N, section 257A or section 260B of the Corporations Act or a resolution to amend its constitution without the prior written consent of the Underwriter;

• (xviii) ( Capital Structure ): any Relevant Company alters its capital structure in any manner not contemplated by the Offer Document, excluding the issue of any Shares upon exercise of options, such options having been disclosed to the ASX as at the date of the agreement;

• (xix) ( Market Conditions ): a suspension for more than 2 trading days or material limitation in trading generally on ASX occurs or any material adverse change or disruption occurs in the existing financial markets, political or economic conditions of Australia, the United Kingdom, the United States of America or other international financial markets; or

• (xx) ( Material Breach ): if the Company fails to rectify any material breach of the Mandate having been given 10 business days notice in writing by the Underwriter of such breach having occurred.

Defined terms above have the meaning given to them in the Underwriting Agreement.

1.7 Shortfall

If you do not wish to take up any part of your Entitlement you are not required to take any action. That part of your Entitlement not taken up will form part of the Shortfall and will revert to the Underwriter.

The offer of the Shortfall is a separate offer pursuant to this Offer Document. The issue price of any Shares offered pursuant to the Shortfall Offer shall be 4.5 cents, being the price at which the Entitlement has been offered to Shareholders pursuant to this Offer Document. The Shortfall shall be placed at the direction of the Underwriter pursuant to the Underwriting Agreement).

1.8 Directors Interest and Participation

Each Director’s interest in the securities of the Company at the date of this Offer Document and their Entitlement is set out in the table below.

11

Director	Shares	Entitlement
Mr Dennis Gee	300,000	100,000
Mr John Canaris	3,125,000	1,041,667
Mr David Eiszele	130,000	43,334
Mr Howard McLaughlin	Nil	Nil

In addition:

• (a) each of director has agreed to take up their full Entitlements; and

• (b) each of John Canaris, David Eiszele and Howard McLaughlin have agreed to sub-underwrite a portion of the Shortfall as follows:

• (i) John Canaris up to a maximum of 5,155,044 Shares;

• (ii) David Eiszele up to a maximum of 2,222,222 Shares; and

• (iii) Howard McLaughlin up to a maximum of 666,667 Shares.

No fees will be paid to any Directors who sub-underwrite the Offer.

1.9

Effect of the Rights Issue on Voting Power in the Company

The issue of New Shares under the Offer will not have an effect on the control of the Company.

1.10 Market Price of Shares

The highest and lowest market sale prices of the Company’s Shares on ASX during the three months immediately preceding the date of release of this Offer Document and the respective dates of those sales were:

Highest: $0.085 on the 12[th] of July 2011 Lowest: $0.040 on the 28[th] of June 2011

The latest available closing sale price of the Company’s Shares on ASX prior to the printing of this Offer Document was $0.060 on 11[th] August 2011.

1.11 Opening and Closing Dates

The Offer opens on the Opening Date, being 25 August 2011. The Company will accept Entitlement and Acceptance Forms until 5:00 pm WST on the Closing Date, being 8 September 2011, or such other date as the Directors in their absolute discretion shall determine, subject to the Listing Rules.

1.12 Issue and dispatch

The expected dates for issue of New Shares offered by this Offer Document and dispatch of holding statements is expected to occur on the dates specified in the Timetable set out in Section 1.3.

12

It is the responsibility of applicants to determine the allocation prior to trading in the New Shares. Applicants who sell New Shares before they receive their holding statements will do so at their own risk.

1.13 ASX listing

Application for official quotation by ASX of the New Shares offered pursuant to this Offer Document will be made within 7 days after the Closing Date of this Offer Document.

The fact that ASX may grant official quotation to the New Shares is not to be taken in any way as an indication of the merits of the Company or the New Shares now offered for subscription.

1.14 CHESS

The Company will apply to ASX to participate in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

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

Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

1.15 Overseas Eligible Shareholders

No Offer will be made to Eligible Shareholders resident outside Australia and New Zealand.

New Shares to which any Eligible Shareholders who are not resident in Australia or New Zealand would otherwise be entitled will form part of the Shortfall issued to the Underwriter or their nominees (or alternatively may be placed at the discretion of the Directors in the event that the Underwriting Agreement is terminated).

This Offer Document and accompanying Entitlement and Acceptance Form do not, nor are they intended to, constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

1.16 Taxation implications

The Directors do not consider it appropriate to give Shareholders advice regarding the taxation consequences of subscribing for New Shares under this Offer Document. The Company, its advisers and its officers do not accept any responsibility or liability for any such taxation consequences to Shareholders.

Shareholders should consult their professional tax adviser in connection with subscribing for New Shares under this Offer Document.

13

1.17 Risk factors

An investment in New Shares should be regarded as speculative. In addition to the general risks applicable to all investments in listed securities, there are specific risks associated with an investment in the Company which are described in Section 3.

1.18 Enquiries concerning Offer Document

Enquiries concerning the Entitlement and Acceptance Form can be obtained by contacting Computershare by telephone on 1300 559 360.

Enquiries relating to this Offer Document should be directed to the Company Secretary by telephone on (08) 6380 1003.

14

2. ACTION REQUIRED BY SHAREHOLDERS

2.1 How to Accept the Offer

Your acceptance of the Offer must be made on the Entitlement and Acceptance Form accompanying this Offer Document. Your acceptance must not exceed your Entitlement as shown on that form. If it does, your acceptance will be deemed to be for the maximum Entitlement.

You may participate in the Offer as follows:

• (a) if you wish to accept your Entitlement in full:

• (i) complete the Entitlement and Acceptance Form, filling in the details in the spaces provided; and

• (ii) attach your cheque for the appropriate application monies (at 4.5 cents per Share); or pay via BPAY by following the instructions set out in the Entitlement and Acceptance Form; or

• (b) if you only wish to accept part of your Entitlement:

• (i) fill in the number of Shares you wish to accept in the space provided on the Entitlement and Acceptance Form; and

• (ii) attach your cheque for the appropriate application monies (at 4.5 cents per Share); or pay via BPAY by following the instructions set out in the Entitlement and Acceptance Form; or

• (c) if you do not wish to accept all or part of your Entitlement, you are not obliged to do anything.

All cheques must be drawn on an Australian bank or bank draft made payable in Australian currency to “Torrens Energy Limited – Share Account” and crossed “Not Negotiable” .

Your completed Entitlement and Acceptance Form and cheque must reach the Company no later than 5:00pm (WST) on the Closing Date.

If paying via BPAY, Applicants should be aware that their own financial institution may implement earlier cut off times with regards to electronic payment and it is the responsibility of the Applicant to ensure that funds are submitted through BPAY by the date and time mentioned above. If you elect to pay via BPAY, you must follow the instructions for BPAY set out in the Entitlement and Acceptance Form and you will not need to return the Entitlement and Acceptance Form.

The Offer is non-renounceable. Accordingly, a holder of Shares may not sell or transfer all or part of their Entitlement.

2.2 Entitlements not taken up

If you do not wish to accept any of your Entitlement, you are not obliged to do anything.

The number of Shares you currently hold and the entitlement attaching to those Shares will not be affected should you choose not to accept any part of your Entitlement.

15

2.3 Shortfall

The offer of the Shortfall is a separate offer pursuant to this Offer Document made to the Shareholders ( Shortfall Offer ). If there is a Shortfall, it will be dealt with by the Underwriter in accordance with the Underwriting Agreement.

16

3. RISK FACTORS

3.1 General

The Shares offered under this Offer Document should be considered speculative because of the nature of the Company’s business.

There are numerous risk factors involved with the Company’s business. Some of these risks can be mitigated by the use of safeguards and appropriate systems and controls, but some are outside the control of the Company and cannot be mitigated. Accordingly, an investment in the Company carries no guarantee with respect to the payment of dividends, return of capital or price at which securities will trade.

The following is a summary of the more material matters to be considered. However, this summary is not exhaustive and potential investors should examine the contents of this Offer Document in its entirety and consult their professional advisors before deciding whether to apply for the Shares.

Based on the information available, a non-exhaustive list of risk factors which may affect the Company’s financial position, prospects and the price of its listed securities include the following.

3.2 Specific Risks relating to the Company

Technical Risk

Specific risks to the Company relate to the technical risk that comes with the lack of high-resolution heat flow data, limited understanding of the thermal insulation ·and heat production properties of overlying sediments. The work done but Torrens Energy to date has minimised these risks through the development of 3D Modelling but until the Company has drilled a successful completion well to basement depth these risks will remain.

Reservoir Characteristics

Ground engineering for hot fractured rock (HFR) power generation is a risk faced by all companies involved in HFR exploration.

Advective heat transfer, the redistribution of heat, at target depts. remains untested. Reservoir characteristics such as fracture intensity, geometry, orientation and transmissivity can be engineered to a certain degree but the exact results of such an engineering program will not be known until it is undertaken.

First Mover

There is ongoing risk due to the unproven nature of HFR geothermal energy development. This is a risk that cannot be avoided as an industry leader operating in an emerging industry.

Induced Seismicity

The processes of reservoir engineering and heat exchange will result in low levels of induces seismicity. Such processes rarely if ever produce seismic activity above levels that are able to be felt by people. The International Energy Agency (IEA) as developed a draft protocol for best handling the issue induced seismicity. This protocol requires reviews of regulations and laws assessment of natural conditions, establishment of dialogue with both authorities and

17

stakeholders, scientific monitoring of events and establishment of procedures for damage evaluation. Torrens is prepared to go through a complete and transparent process as outlined in the IEA Protocol for handling this issue

3.3 General Risks

Economic Risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities.

Further, share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

• (a) general economic outlook;

• (b) interest rates and inflation rates;

• (c) currency fluctuations;

• (d) changes in investor sentiment toward particular market sectors;

• (e) the demand for, and supply of, capital; and

• (f) terrorism or other hostilities.

Share Market Conditions

There are general risks associated with any investment in the share market. The market price of the Shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

Exploration Success

The future profitability of the Company and the value of its securities is directly related to the results of exploration. The exploration tenements held by the Company are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings.

There can be no assurance that exploration of the Company’s tenements, or any other tenements that may be acquired in the future, will result in the discovery of an economic resource. Even if an apparently viable resource is identified, there is no guarantee that it can be economically exploited. In addition, the resources may become depleted, resulting in a reduction of the value of those tenements.

The exploration costs of the Company are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates

18

and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company’s viability.

Operating Risks

The operations of the Company may be affected by various factors, including failure to locate or identify geothermal or other mineral deposits; failure to achieve predicted grades in exploration and mining; operational and technical difficulties encountered in extraction; difficulties in commissioning and operating plant and equipment; mechanical failure or plant breakdown; unanticipated metallurgical problems which may affect extraction costs; adverse weather conditions; industrial and environmental accidents; industrial disputes; and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment.

Resource Estimates

Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company’s operations.

Environmental Risks

The operations and proposed activities of the Company are subject to State and Federal laws and regulation concerning the environment. As with most exploration projects and extraction operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws.

Title Risks and Native Title

Interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to or its interest in tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments.

It is also possible that, in relation to tenements which the Company has an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected. The Directors will closely monitor the potential effect of native title claims involving tenements in which the Company has or may have an interest.

19

Additional Requirements for Capital

The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the capital raising. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be.

Reliance on Key Management

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

Further risks specific to the Company

The current and future operations of the Company, including exploration, appraisal and production activities, may be affected by a range of factors, including:

• (g) geological conditions;

• (h) alteration to exploration and production programmes and budgets;

• (i) unanticipated operational and technical difficulties;

• (j) mechanical failure of operating plant and equipment, adverse weather conditions, industrial and environmental accidents, industrial disputes and other force majeure events;

• (k) unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment;

• (l) prevention or restriction of access by reason of political unrest, outbreak of hostilities or inability to obtain consents or approvals (including access agreements entered into with Native Title claimants); and

• (m) uninsured losses or liabilities.

3.4 Investment Speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the securities offered under this Offer Document. Therefore, the securities to be issued pursuant to this Offer Document carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those securities.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for securities pursuant to this Offer Document.

20

4. CAPITAL STRUCTURE AND FINANCIAL INFORMATION

4.1 Capital structure on completion of the Offer

	Number of Shares	Number of Options
Balance at the date of this Offer Document	63,662,842	4,150,000(2)
To be issued under the Offer(1)	21,220,947	Nil
Balance after the Offer	84,883,789	4,150,000

• (1) The number of Shares to be issued under the Offer assumes that no Options are exercised before the Record Date.

• (2) 1,000,000 Options exercisable at $0.10 on or before 31 January 2012, 1,000,000 Options exercisable at $0.40 on or before 24 February 2013 and 2,150,000 Options exercisable at $0.15 on or before 30 June 2015.

4.2 Consolidated balance sheet

Set out below is:

• (a) an unaudited consolidated statement of financial position of the Company as at 31 July 2011; and

• (b) an unaudited pro-forma consolidated statement of financial position of the Company as at 31 July 2011 incorporating the effect of the Offer.

These have been prepared on the basis of the accounting policies normally adopted by the Company and reflect the changes to its financial position. They have been prepared on the assumption that all Shares pursuant to the Offer in this Prospectus are issued.

The unaudited consolidated statements of financial position have been prepared to provide Shareholders with information on the assets and liabilities of the Company and pro-forma assets and liabilities of the Company as noted below. The historical and pro-forma financial information is presented in an abbreviated form, insofar as it does not include all of the disclosures required by Australian Accounting Standards applicable to annual financial statements.

21

Statement of Financial Position

Current Assets Cash and cash equivalents Receivables Other financial assets Total Current Assets Fixed Assets Property Plant & Equipment Exploration Total Fixed Assets Total Assets Current Liabilities Creditors Provisions Total Current Liabilities Total Liabilities Net Assets Shareholders Equity Issued Capital Reserves Retained Losses Total Shareholders Equity	As at 31 July 2011 Entitlement Issue 2,528,160 882,643 14,111 497,091 3,039,362 63,180 5,110,323 5,173,503 8,212,865 32,548 22,411 54,959 54,959 8,157,906 10,490,024 882,643 440,689 (2,772,807) 8,157,906	Pro Forma 3,410,803 14,111 497,091
		3,922,005
		63,180 5,110,323
		5,173,503
		9,095,508
		32,548 22,411
		54,959
		54,959
		9,040,549
		11,372,667 440,689 (2,772,807)
		9,040,549

22

5. DEFINED TERMS

Applicant refers to a person who submits an Entitlement and Acceptance Form.

Application refers to the submission of an Entitlement and Acceptance Form.

ASX means ASX Limited (ACN 008 624 691) or, where the context permits, the Australian Securities Exchange operated by ASX Limited.

Closing Date means 5.00pm WST 8 September 2011.

Company means Torrens Energy Limited (ACN 118 065 704).

Directors means the directors of the Company.

Eligible Shareholder means a Shareholder whose details appear on the Company's register of Shareholders as at the Record Date.

Entitlement means the entitlement to subscribe for one (1) New Share for every three (3) Shares held by an Eligible Shareholder on the Record Date and Entitlements has a corresponding meaning.

Entitlement and Acceptance Form means the Entitlement and Acceptance Form accompanying this Offer Document.

Listing Rules means the Listing Rules of the ASX.

New Share means a new Share proposed to be issued pursuant to this Offer.

Offer means the non-renounceable pro rata offer of New Shares at an issue price of 4.5 cents each on the basis of one (1) New Share for every three (3) Shares held on the Record Date pursuant to this Offer Document.

Offer Document means this Offer Document dated 12 August 2011.

Opening Date means 25 August 2011.

Record Date means 23 August 2011.

Section means a section of this Offer Document.

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

Shortfall means those Shares under the Offer not applied for by Shareholders under their Entitlement.

Shortfall Offer means the offer for the Shortfall pursuant to this Offer Document.

Shareholder means a holder of Shares.

WST means Australian Western Standard Time.

23

Appendix 3B New issue announcement

Rule 2.7, 3.10.3, 3.10.4, 3.10.5

Appendix 3B

New issue announcement, application for quotation of additional securities and agreement

Information or documents not available now must be given to ASX as soon as available. Information and documents given to ASX become ASX’s property and may be made public.

Introduced 1/7/96. Origin: Appendix 5. Amended 1/7/98, 1/9/99, 1/7/2000, 30/9/2001, 11/3/2002, 1/1/2003, 24/10/2005.

Name of entity

Torrens Energy Limited

ABN

79 118 065 704

We (the entity) give ASX the following information.

Part 1 - All issues

You must complete the relevant sections (attach sheets if there is not enough space).

1 +Class of+securities issued or to be issued 2 Number of+securities issued or to be issued (if known) or maximum number which may be issued 3 Principal terms of the+securities (eg, if options, exercise price and expiry date; if partly paid +securities, the amount outstanding and due dates for payment; if +convertible securities, the conversion price and dates for conversion)	Ordinary Fully Paid Shares
	21,220,947
	Same as the terms of existing Ordinary Fully Paid Shares

• See chapter 19 for defined terms.

24/10/2005 Appendix 3B Page 1

Appendix 3B New issue announcement

4 Do the+securities rank equally in all respects from the date of allotment with an existing+class of quoted+securities? If the additional securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 5 Issue price or consideration 6 Purpose of the issue (If issued as consideration for the acquisition of assets, clearly identify those assets) 7 Dates of entering +securities into uncertificated holdings or despatch of certificates 8 Number and +class of all +securities quoted on ASX (including the securities in clause 2 if applicable)	Yes	Yes
	4.5 cents per Ordinary Share
	The Ordinary Shares are being issued as part of a fully underwritten non-renounceable pro-rata issue.
	On or before 16 September 2011
	Number	+Class
	84,883,789	Ordinary Fully Paid Shares

• See chapter 19 for defined terms.

Appendix 3B Page 2

24/10/2005

Appendix 3B New issue announcement

Number +Class 9 Number and +class of all +securities not quoted on ASX (including the securities in clause 2 if applicable) Options expiring 31/12/12 @ $0.44 Options expiring 24/02/13 @ $0.40 Options expiring 30/06/15 @ $0.15 1,000,000 1,000,000 2,150,000 10 Dividend policy (in the case of a trust, distribution policy) on the increased capital (interests) Nil art 2 - Bonus issue or pro rata issue 11 Is security holder approval required? No 12 Is the issue renounceable or non- renounceable? Non-renounceable 13 Ratio in which the+securities will be offered One new share for every three shares held 14 +Class of+securities to which the offer relates Ordinary Fully Paid Shares 15 +Record date to determine entitlements 5pm (WST) 23 August 2011 16 Will holdings on different registers (or subregisters) be aggregated for calculating entitlements? No 17 Policy for deciding entitlements in relation to fractions Where fractions arise in the calculation of shareholders entitlement they will be rounded upto the nearest whole new share 18 Names of countries in which the entity has+security holders who will not be sent new issue documents Note: Security holders must be told how their entitlements are to be dealt with. Cross reference: rule 7.7. Only security holders with registered addresses in Australia or New Zealand will be eligible to participate. 19 Closing date for receipt of acceptances or renunciations 5pm (WST) 8 September 2011 20 Names of any underwriters Cygnet Capital Pty Ltd	Number	+Class
	Options expiring 31/12/12 @ $0.44 Options expiring 24/02/13 @ $0.40 Options expiring 30/06/15 @ $0.15	1,000,000 1,000,000 2,150,000
	Nil
	No
	Non-renounceable
	One new share for every three shares held
	Ordinary Fully Paid Shares
	5pm (WST) 23 August 2011
	No
	Where fractions arise in the calculation of shareholders entitlement they will be rounded upto the nearest whole new share
	Only security holders with registered addresses in Australia or New Zealand will be eligible to participate.
	5pm (WST) 8 September 2011 Cygnet Capital Pty Ltd

Part 2 - Bonus issue or pro rata issue

• See chapter 19 for defined terms.

Appendix 3B Page 3

1/1/2003

Appendix 3B New issue announcement

21 Amount of any underwriting fee or commission 22 Names of any brokers to the issue 23 Fee or commission payable to the broker to the issue 24 Amount of any handling fee payable to brokers who lodge acceptances or renunciations on behalf of+security holders 25 If the issue is contingent on +security holders’ approval, the date of the meeting 26 Date entitlement and acceptance form and prospectus or Product Disclosure Statement will be sent to persons entitled 27 If the entity has issued options, and the terms entitle option holders to participate on exercise, the date on which notices will be sent to option holders 28 Date rights trading will begin (if applicable) 29 Date rights trading will end (if applicable) 30 How do+security holders sell their entitlements_in full_through a broker? 31 How do+security holders sell part of their entitlements through a broker and accept for the balance?	The underwriter will be paid:  An underwriting fee of 6% of the 70% of the underwritten amount  A corporate advisoryfee of$15,000
	N/A
	N/A
	N/A
	N/A
	No prospectus will be issued, but an Offer Document and acceptance form will be despatched to eligible shareholders on 25August 2011.
	N/A
	N/A
	N/A
	N/A
	N/A

• See chapter 19 for defined terms.

Appendix 3B Page 4

1/1/2003

Appendix 3B New issue announcement

• 32 How do[+] security holders dispose of their entitlements (except by sale through a broker)?

N/A

• 33 +Despatch date

16 September 2011

Part 3 - Quotation of securities

You need only complete this section if you are applying for quotation of securities

• 34 Type of securities ( tick one )

• (a)[Securities described in Part 1 ]

• (b)[All other securities ]

Example: restricted securities at the end of the escrowed period, partly paid securities that become fully paid, employee incentive share securities when restriction ends, securities issued on expiry or conversion of convertible securities

Entities that have ticked box 34(a)

Additional securities forming a new class of securities

Tick to indicate you are providing the information or documents

• 35 If the[+] securities are[+] equity securities, the names of the 20 largest holders of the additional[+] securities, and the number and percentage of additional[+] securities held by those holders

• 36 If the[+] securities are[+] equity securities, a distribution schedule of the additional +securities setting out the number of holders in the categories

• 1 - 1,000

• 1,001 - 5,000 5,001 - 10,000 10,001 - 100,000 100,001 and over

• 37 A copy of any trust deed for the additional[+] securities

• See chapter 19 for defined terms.

Appendix 3B Page 5

1/1/2003

Appendix 3B New issue announcement

Entities that have ticked box 34(b)

38 Number of securities for which +quotation is sought 39 Class of +securities for which quotation is sought 40 Do the[+] securities rank equally in all respects from the date of allotment with an existing[+] class of quoted[+] securities? If the additional securities do not rank equally, please state:  the date from which they do  the extent to which they participate for the next dividend, (in the case of a trust, distribution) or interest payment  the extent to which they do not rank equally, other than in relation to the next dividend, distribution or interest payment 41 Reason for request for quotation now Example: In the case of restricted securities, end of restriction period (if issued upon conversion of another security, clearly identify that other security)

Number +Class 42 Number and +class of all +securities quoted on ASX ( including the securities in clause 38)

• See chapter 19 for defined terms.

Appendix 3B Page 6

1/1/2003

Appendix 3B New issue announcement

Quotation agreement

• 1 +Quotation of our additional +securities is in ASX’s absolute discretion. ASX may quote the[+] securities on any conditions it decides.

• 2 We warrant the following to ASX.

• The issue of the[+] securities to be quoted complies with the law and is not for an illegal purpose.

• There is no reason why those[+] securities should not be granted +quotation.

• An offer of the[+] securities for sale within 12 months after their issue will not require disclosure under section 707(3) or section 1012C(6) of the Corporations Act.

Note: An entity may need to obtain appropriate warranties from subscribers for the securities in order to be able to give this warranty

• Section 724 or section 1016E of the Corporations Act does not apply to any applications received by us in relation to any[+] securities to be quoted and that no-one has any right to return any[+] securities to be quoted under sections 737, 738 or 1016F of the Corporations Act at the time that we request that the[+] securities be quoted.

• If we are a trust, we warrant that no person has the right to return the +securities to be quoted under section 1019B of the Corporations Act at the time that we request that the[+] securities be quoted.

• 3 We will indemnify ASX to the fullest extent permitted by law in respect of any claim, action or expense arising from or connected with any breach of the warranties in this agreement.

• 4 We give ASX the information and documents required by this form. If any information or document not available now, will give it to ASX before +quotation of the +securities begins. We acknowledge that ASX is relying on the information and documents. We warrant that they are (will be) true and complete.

==> picture [100 x 47] intentionally omitted <==

Sign here: . .. .............................................. Date: .12 August 2011 Company secretary

Print name: Robert Hodby

== == == == ==

• See chapter 19 for defined terms.

24/10/2005 Appendix 3B Page 7