KING RIVER RESOURCES LIMITED — Capital/Financing Update 2007

Sep 17, 2007

ANNEXURE A

TERMS OF OPTIONS

The terms and conditions of the Class A Options are:

General $\mathbf{1}$ .

• No monies will be payable for the issue of the options. $1.1$
• $1.2$ A certificate will be issued for the options.
• The options shall expire at 5 pm on 30 June 2012 ("Expiry Date"). $1.3$
• Each option shall carry the right to subscribe for one fully paid ordinary $1.4$ share in the Company ("Share").
• $1,5$ Options may be exercised in whole or in part in parcels. An exercise of only some options shall not affect the rights of the Optionholder, to the balance of the options held by the Optionholder.
• The Shares allotted on the exercise of the options shall be issued at an exercise 1.6 price of \$0.20 each equal to the offer price of any Initial Public Offer undertaken by the Company for the purposes of seeking admission to the Australian Stock Exchange ("Exercise Price").
• The Exercise Price for the options being exercised shall be payable in full on $1.7$ exercise of those options.
• 1.8 Subject to clauses 1.9 and 2.2 the options may be exercised by the Optionholder on or after the admission of the Company to the Official List of the ASX.

("Exercise Conditions"). For the avoidance of doubt, in the event that the Company is not admitted to the Official List of the ASX, the options shall not be exercisable.

• 1.9 Notwithstanding clause 1.8, all options may be exercised:
• during a Bid Period; or $(a)$
• $(b)$ at any time after a Change of Control Event has occurred; or
• $(c)$ on an application under section 411 of the Corporations Act, if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of, or in connection with, a scheme for the reconstruction of the Company or its amalgamation with any other company.

("Bid Period") in relation to a takeover bid in respect of shares in the Company, means the period referred to in the definition of that expression in section 9 of the Corporations Act provided that where a takeover bid is publicly announced prior to the service of a bidder's statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement.

("Change of Control Event") means a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in the Company to give it or them the ability and that ability is successfully exercised, in a general meeting, to replace all or a majority of the Board.

1.10 The Board may, at its discretion, by notice to the Optionholder reduce, waive or vary (provided such variation is not adverse to the Optionholder) the Exercise Conditions in whole or in part at any time.

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1.11	Options are only exercisable by the delivery to the registered office of the Company of a notice in writing. The notice must specify the number of options being exercised and must be accompanied by:
	(a)	the option certificate for those options, for cancellation by the Company; and
	(b)	payment for the Exercise Price for each Share to be issued on exercise of the options specified in the notice.
	The notice is only effective (and only becomes effective) when the Company has received value for the full amount of the Exercise Price (for example, if the Exercise Price is paid by cheque, by clearance of that cheque) by the Expiry Date.
1.12	The Company shall allot the resultant Shares and deliver the holding statements within 10 Business Days of the exercise of the options.
1.13	Options may be exercised into Shares to be held in the name of the Optionholder's nominee.
1.14	The options shall not be listed for Official Quotation.
1.15	Subject to the Corporations Act, ASX Listing Rules and the Constitution of the Company, the options are freely transferable.
1.16	Shares allotted pursuant to an exercise of options shall rank, from the date of allotment, equally with existing Shares of the Company in all respects.
1.17	The Company shall, in accordance with the Listing Rules, make application to have Shares allotted pursuant to an exercise of options listed for Official Quotation, if the Company is listed on the ASX at the time.
1.18	The Optionholder is not entitled to participate in any new issue of securities to existing holders of Shares in the Company unless:
	(a)	the Optionholder has become entitled to exercise the options under clause 1.8; and
	(b)	the Optionholder exercises the options before the record date for the determination of entitlements to the new issue of securities and participates as a result of being holders of Shares.
		The Company must give the Optionholder, in accordance with the Listing Rules, notice of any new issue of securities before the record date for determining entitlements to the new issue.
1,19	If there is a bonus share issue ("Bonus Issue") to the holders of Shares, the number of Shares over which an option is exercisable will be increased by the number of Shares which the Optionholder would have received if the option had been exercised before the record date for the Bonus Issue ("Bonus Shares"). The Bonus Shares must be paid up by the Company out of the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank pari passu in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares.
1.20	If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise of any options, the Exercise Price of an option will be adjusted in the manner provided for in the Listing Rules (whether or not the Company is listed on the ASX at the time).
1.21	If, prior to the expiry of any options, there is a reorganisation of the issued capital of the Company, then the rights of Optionholder (including the number of options to which each a Optionholder is entitled and the Exercise Price) is changed to the extent necessary to comply with the Listing Rules

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applying to a reorganisation of capital at the time of the reorganisation (whether or not the Company is listed on the ASX at the time).

The options will not give any right to participate in dividends until Shares are $1.22$ allotted pursuant to the exercise of the relevant options.

$2.$ Lapse of Options

• Options not validly exercised on or before the Expiry Date will automatically $2.1$ lapse.
• If at any time prior to the Expiry Date an Optionholder dies, the deceased $2.2$ Optionholder's Legal Personal Representative may:
• elect to be registered as the new holder of the deceased $(a)$ Optionholder's options,
• whether or not he or she becomes so registered, exercise those (b) options in accordance with and subject to these terms as if he were the Optionholder of them; and
• if the deceased Optionholder had already given the Company a $(c)$ notice of exercise of his or her options, pay the Exercise Price in respect of those options.