KINGSROSE MINING LIMITED

ABN 49 112 389 910

NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT

General Meeting to be held at 10.30 am (WDST) on 21 January 2009 at Esplanade River Suites, 112 Melville Parade, Como, WA 6152

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

Should you wish to discuss the matters in this Notice of General Meeting please do not hesitate to contact the Company Secretary, Mrs. Jeannette Smith, on (08) 9316 2711.

Notice of General Meeting

Notice is hereby given that a General Meeting of Kingsrose Mining Limited (the Company ) will be held at Esplanade River Suites, 112 Melville Parade, Como, WA 6152 on 21 January 2009 at 10.30 am (WDST).

Special Business

1 Resolution 1 – Acquisition of MMG

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of Listing Rules 10.1 and 10.11, section 208 of the Corporations Act and for all other purposes, the Shareholders approve the acquisition of all of the shares in MMG and the issue of the Consideration Shares in the Company to Icon, pursuant to the Share Purchase Agreement.”

Voting Exclusion Statement

The Company will disregard any votes cast on a resolution by:

Icon, ACH, Dr Andrews, Mr Phillips and Mr Morris; and
any of their associates.

However the Company need not disregard a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution and it is not cast on behalf of a related party or associate of the kind referred to above.

2 Resolution 2 – Payment of loans

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of section 208 of the Corporations Act and for all other purposes, the Shareholders approve the payment by PTNM of the sums totalling A$7.59 million to or for the benefit of the related parties described in the Explanatory Statement.”

Voting Exclusion Statement

The Company will disregard any votes cast on a resolution by:

Icon, ACH, Dr Andrews, Mr Phillips and Mr Morris; and
any of their associates.

3 Resolution 3 – Issue of the Consideration Shares

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of item 7 of section 611 of the Corporations Act and for all other purposes, the Shareholders approve the acquisition by Icon of the Consideration Shares and the acquisition by ACH of up to 29.76% of the Consideration Shares upon the Consideration Shares being distributed in specie to Icon’s shareholders.”

Voting Exclusion Statement

The Company will disregard any votes cast on a resolution by:

Icon, ACH, Dr Andrews and Mr Phillips; and
any of their associates.

4 Resolution 4 – Equity capital raising

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of Listing Rule 7.1 and for all other purposes, approval and authority is given by the Shareholders for the Company to allot and issue such number of shares as the Directors shall determine at a price which is at least 80% of the average market price for shares in that class (which average is calculated over the last 5 days on which sales in the shares were recorded before the day on which the issue was made or, if there is a prospectus, Product Disclosure Statement or offer information statement relating to the issue, over the last 5 days on which sales in the shares were recorded before the date the prospectus, Product Disclosure Statement or offer information is signed) in order to raise an amount of up to A$15 million.”

Voting Exclusion Statement

The Company will disregard any votes cast on this resolution by any person who may participate in the proposed issue and any person who may obtain a benefit in the capacity as holder of ordinary shares or an associate of such person.

However the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form or it is cast by the person chairing the General Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

5 Resolution 5 – Royalty guarantees

To consider and, if thought fit, pass the following resolution as a special resolution:

“That:

(a) for the purposes of section 260B(2) of the Corporations Act and for all other purposes, approval and authority is given by the Shareholders for MMG to agree with Icon to assume the obligations of Icon to pay royalties; and
(b) for the purposes of sections 260B(1) and 208 of the Corporations Act and for all other purposes, approval and authority is given by the Shareholders for the Company to provide guarantees in respect of MMG’s obligations to pay royalties if required by royalty holders,

as provided in the Royalty Arrangements Deed, which may involve the provision of a financial benefit to Icon, which is a related party of the Company.”

Voting Exclusion Statement

The Company will disregard any votes cast on a resolution by:

Icon, ACH, Dr Andrews, Mr Phillips and Mr Morris; and
any of their associates.

6 Resolution 6 – Advances of funds

To consider and, if thought fit, pass the following resolution as an ordinary resolution:

“That for the purposes of section 208 of the Corporations Act and for all other purposes, approval be given by the Shareholders for the Company to advance funds to any of its subsidiaries (and for any of its subsidiaries to advance funds to each other) and in so doing to provide a financial benefit to related parties, as described in the Explanatory Statement, in their capacities as creditors of the subsidiaries.”

Voting Exclusion Statement

The Company will disregard any votes cast on a resolution by:

Icon, ACH, Dr Andrews, Mr Phillips and Mr Morris; and
any of their associates.

Explanatory Statement

The Explanatory Statement accompanying this Notice of General Meeting is incorporated in and comprises part of this Notice of General Meeting.

Shareholders are specifically referred to the Glossary in the Explanatory Statement which contains definitions of capitalised terms used both in this Notice of General Meeting and Explanatory Statement.

Proxies

Please note that:

(a) a member of the Company entitled to attend and vote at the General Meeting is entitled to appoint a proxy;
(b) a proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms.

“Snap-shot” Time

The Company may specify a time, not more than 48 hours before the meeting, at which a “snap-shot” of Shareholders will be taken for the purposes of determining Shareholder entitlements to vote at the meeting.

The Company’s Directors have determined that all Shares of the Company that are quoted on ASX at 5:00pm (WDST) on 19 January 2009 shall, for the purposes of determining voting entitlements at the General Meeting, be taken to be held by the persons registered as holding the Shares at that time.

Corporate Representative

Any corporate Shareholder who has appointed a person to act as its corporate representative at the General Meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company in advance of the meeting or handed in at the meeting when registering as a corporate representative. An appointment of corporate representative form is available upon request from the Company Secretary.

By Order of the Board of Directors

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Mrs. Jeannette P. Smith Company Secretary Kingsrose Mining Limited

16 December 2008

Explanatory Statement

_____________

This Explanatory Statement has been prepared for the information of Shareholders of the Company in relation to the business to be conducted at the General Meeting. The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the Resolutions in the accompanying Notice of General Meeting.

This Explanatory Statement should be read in conjunction with the Notice of General Meeting. Capitalised terms in this Explanatory Statement are defined in the Glossary.

1 Company overview

1.1 Company overview

The Company was incorporated on 6 January 2005 as a proprietary company and subsequently became a public company. Following an initial public offering in November 2007, the Company was admitted to the official list of the ASX in December 2007.

Currently, the principal business of the Company is the operation, in joint venture with Reed Resources Ltd, of the Sand Queen Gold Mine in Western Australia.

1.2 Directors

The Company’s Directors are:

John Christopher Morris (Non-Executive Chairman of Directors) David Frank Hatch (Managing Director) Michael John Andrews (Non–Executive Director) James William Phillips (Non-Executive Director) Dennis Wayne Franks (Non-Executive Director)

1.3 Independent Board Committee

Dr Andrews, Mr Phillips and Mr Morris have an interest in the transaction the subject of the Resolutions.

Consequently, on 18 March 2008, the Board passed a resolution to establish an independent board committee consisting of Mr Hatch and Mr Franks, to direct completion of the due diligence relating to the Project the subject of the transaction and to manage the transaction in the interests of the Company’s non-related Shareholders (the Independent Board Committee or IBC ).

2 Background to the Resolutions

2.1 Overview of transaction

On 28 April 2008, the Company made an announcement to the ASX regarding its intention to acquire an interest in the Way Linggo Gold and Silver Mine Project in Sumatra, Indonesia ( Project ).

Subsequent announcements regarding the Project were made on 29 April 2008 and 10 September 2008. Information about the Project is also contained in the Annual Report for Shareholders, Quarterly Activities Reports and Market Update and Acquisitional Growth Presentation (from May 2008) and High Margin Acquisitional Growth Presentation made at the Company’s Annual General Meeting held on 25 November 2008. Shareholders are encouraged to access this information, which is available from the ASX website, for details regarding the Project.

The Project is being undertaken by PT Natarang Mining, a company incorporated in Indonesia ( PTNM ), pursuant to a Contract of Work dated 2 December 1986 between the Republic of Indonesia and PTNM ( Contract of Work or COW ).

The Company intends to acquire an interest in the Project by acquiring all of the shares in MM Gold Pty Ltd ( MMG ) (formerly named Pacific Goldfields Pty Ltd) from its parent company, Icon Enterprises Limited, a company incorporated in the British Virgin Islands ( Icon ). MMG holds all of the shares in Natarang Offshore Pty Ltd ( NOPL ). NOPL holds 85% of the shares in PTNM. Thus, by acquiring all of the shares in MMG, the Company will acquire an 85% interest in the Project.

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

Icon Enterprises
Limited (BVI)
100%
MM Gold Pty Ltd
(Australia)
100%
Natarang Offshore
Pty Ltd (Australia)
85%
PT Natarang Mining
(Indonesia)
COW
----- End of picture text -----

In order to acquire an interest in the Project by acquiring all of the shares in MMG from Icon, arrangements are also required in respect of outstanding loans and royalty payments related to the Project which are payable by PTNM. These arrangements, together with the acquisition terms, are outlined in paragraph 4 below.

2.2 Reports

The IBC has obtained an independent expert’s report from Stantons International Securities Pty Ltd, a copy of which is included with this Explanatory Statement ( Independent Expert’s Report ). The Company urges Shareholders to carefully read and consider the Independent Expert’s Report to understand the scope of the report, the methodology applied and sources of information and assumptions made.

The Independent Expert obtained an independent valuation (and a subsequent updated valuation) of the Project from Snowden Mining Industry Consultants Pty Ltd ( Snowden ), a copy of which is included with this Explanatory Statement ( Snowden Valuation Report ). The Company urges Shareholders to carefully read and consider this report in conjunction with the Independent Expert’s Report.

2.3 Shareholdings and directors

The transaction involves a number of parties, some of which are parties related to the Company, as outlined below.

(a) Icon shareholders and directors

The shareholders of Icon are:

Advance Concept Holdings Limited ( ACH ) 76% (a company incorporated in the British Virgin Islands)

Orris International Limited ( Orris ) 4% (a company incorporated in the British Virgin Islands) Goldcrest Corporation Pty Ltd ( Goldcrest ) 10% Zelman Pty Ltd ( Zelman ) 10% (as trustee for the Wally Unger Superannuation Fund)

The directors of Icon are Mr Phillips (who is a beneficiary of a trustee shareholder of ACH), Vincent Yu (who controls Orris) and Mr Morris (who is an associate of Goldcrest). Dr Andrews (a shareholder of ACH) is the general manager of Icon.

Orris and Zelman are non-related parties to the Company.

(b) ACH shareholders and directors

The shareholders of ACH are:

Dr Andrews 50% Shinewin Nominees Ltd 50% (as trustee for Mr Phillips)

The directors of ACH are Dr Andrews, Mr Phillips and Mr Yu.

(c) MMG shareholders and directors

The sole shareholder of MMG is Icon (100%). The directors of MMG are Dr Andrews and Colin Edward Walker.

(d) NOPL shareholders and directors

The sole shareholder of NOPL is MMG (100%). The directors of NOPL are Dr Andrews and Mr Walker.

(e) PTNM shareholders and directors

The shareholders of PTNM are:

NOPL 85% Bapak Herryansyah 15%

The directors of PTNM are Mr Herryansyah and Dr Andrews.

3 Project Information

3.1 Overview

The Project is located approximately 80 kilometres west of Bandar Lampung, in Lampung Province, Sumatra, Indonesia. The Project is undertaken by PTNM pursuant to the COW. The intention of the Company in acquiring MMG (and thus the 85% interest in PTNM held by NOPL, MMG’s wholly owned subsidiary) is to complete the construction and development of the mine and undertake mining and processing of ore at the mine site.

The Company (through the IBC) commenced the due diligence process in March 2008. At this time, the Way Linggo geological resource was not JORC compliant. Various technical evaluation and sampling works were then conducted by PTNM, at the cost and direction of the Company.

The Independent Expert commissioned Snowden to prepare the Snowden Valuation Report, which involved a site visit to Way Linggo in May 2008. This report was subsequently updated on 1 September 2008, and this resulted in the Way Linggo resource being re-classified into

the higher confidence JORC compliant resource. This report was also updated again on 26 November 2008.

Some preliminary works have been undertaken and the Company estimates that completion of the construction will cost approximately US$10 million. These funds will be provided through the funds raised by the proposed issue of shares referred to Resolution 4, a project finance facility ( Project Loan ), or a combination of those things. The Company is in the process of seeking commitments for the Project Loan from prospective financiers.

If the transactions referred to in this Explanatory Statement are approved and the Company completes the transactions contemplated in the Share Purchase Agreement (refer paragraph 4.1), the Company will endeavour to complete construction by the end of September 2009 subject to completing the funding arrangements described in the preceding paragraph.

3.2 Ownership of the Project

As stated previously, MMG owns the entirety of the share capital of NOPL. NOPL in turn holds 425,000 shares in PTNM, being 85% of the shares in PTNM. Mr Herryansyah, an Indonesian citizen, owns the remaining 15% of the shares in PTNM.

The directors of PTNM are Mr Herryansyah and Dr Andrews. Mr Herryansyah is also the President Director and is responsible for the day to day administration.

The shares in PTNM owned by NOPL are currently pledged by NOPL to Goldcrest and Zelman to secure loans, the benefit of which have ultimately been provided to PTNM.

Mr Herryansyah has recently acquired the 15% interest in PTNM from the estate of the late Julius Tahija. The transfer of shares to Mr Herryansjah has been approved by the Minister of Energy and Mineral Resources and the Capital Investment Co-ordinating Board. Registration of the transfer of these shares is in process with the relevant Indonesian authorities.

A joint venture agreement relating to PTNM was put in place after PTNM was established. The joint venture agreement broadly corresponds to a shareholders agreement and includes the following provisions:

(a) Funding to be approved by a simple majority of shareholders.
(b) Where expenditure is incurred after commencement of commercial mining operations, it shall contribute to any expenditure proportionately if project finance is not obtained.
(c) Representation on the Board according to prescribed percentage of shareholding. A shareholder holding 51% shall be entitled to nominate a majority of directors.
(d) Work programs and budgets for exploration and development are to be prepared by the President Director and approved by the Board.
(e) Changes to the constitution of PTNM and expansion of business beyond the COW will require the approval of all shareholders.

Although the joint venture agreement contemplates that shareholders will contribute to funding proportionately, in practical terms the Company will undertake funding to make the Project operational through loans (which in effect will provide the current Indonesian shareholder with a carried interest).

3.3 The Contract of Work

(a) Overview

The COW Operating Period is valid for 30 years from the date from commencement of the first mining operation, which (as explained below) commenced on 1 September 2004. The term of the COW expires on 31 August 2034 unless an extension is approved by the Ministry.

The COW was entered into on 2 December 1986 by the Government of Indonesia and PTNM. It is the document which gives PTNM the right to explore, develop and

undertake mining operations at the Project. The COW is a contractual right rather than the grant of mining tenements. The COW requires the payment of Dead Rent which is not material and royalties to the Indonesian Government (see paragraph 3.4 below).

The COW provides that activities or operations on the Project shall progress through various stages:

(i) General Survey Period;
(ii) Exploration Period;
(iii) Feasibility Studies Period;
(iv) Construction Period; and
(v) Operating Period.

During the Operating Period, the Company will undertake mining activities.

PTNM has progressed through the General Survey Period, the Exploration Period and the Feasibility Studies Period. As noted in paragraph 3.1 above, construction has not yet been completed.

(b) Current Status

PTNM entered the Operating Period under the COW with effect from 1 September 2004. The background to this is as follows.

PTNM obtained a suspension or deferment to it entering the construction stage 6 times. On 14 January 2005, the Indonesian Ministry of Energy and Mineral Resources ordered that the Operating Period retrospectively commence with effect from 1 September 2004.

The Indonesian Directorate of Minerals and Coal Concessions of the Directorate General of Minerals, Coal and Geothermal Resources (the relevant Indonesian government agency) ( DMCC ) issued a warning letter to PTNM dated 23 September 2004. The DMCC requested PTNM to immediately enhance its activity to the production stage and fulfil reporting and financial obligations under the COW, otherwise the COW would be declared in default. As noted, the Project is not yet operational and is not yet in its production stage, although significant expenditure has occurred on site infrastructure and underground development.

PTNM has obtained the principle Indonesian Government approvals for it to enter the Operations Period under the COW, however it has not yet commenced production. In this connection, the Project is located in protected forest areas so there are also particular Indonesian Government approvals required to permit mining operations in such areas to commence – refer paragraph 3.5 below. The Indonesian Minister of Energy and Mineral Resources ( MEMR ) has the ability to terminate the COW for failure to comply with obligations in the COW (for example in respect of financial and reporting obligations). MEMR has taken action to terminate contracts of work in other projects for various reasons.

Indonesian counsel has advised the Company that as PTNM has not yet commenced production operation activities, if the delay in production resulted in its failure to fulfil its obligations under the COW, there is a risk that MEMR may ultimately terminate the COW. In its quarterly reports to the relevant Indonesian Government agency, PTNM has reported that the operation and production stage has not yet been implemented and the construction activity is scheduled to be completed by the end of September 2009.

(c) Restrictions on Transfer

The COW may only be transferred with the consent of the Indonesian Government. Also, shareholdings in PTNM may only be transferred with the approval of the

Indonesian Government. It is principally for this reason that the acquisition is taking place at the level of MMG. Indonesian counsel has advised that Indonesian Government consent is not required in respect of the acquisition at the MMG level.

(d) Divestment Requirements

The COW requires progressive divestment of foreign interests in PTNM over a period of time as specified in the COW, with the result that Indonesian shareholders ultimately own 51% and foreign shareholders own 49%.

The COW provides that the foreign investor shall first offer the shares to be divested to the Indonesian Government and if the Government does not take up the interest the interests may be offered to Indonesian nationals or Indonesian companies.

The divestment must commence by the end of the fourth full calendar year following commencement of the Operation Period, according to the following schedule specified in the COW. As noted, the Indonesian Ministry of Energy and Mineral Resources ordered that the Operation Period commence on 1 September 2004 and the divestment schedule has been prepared on this basis.

Date by which divestment must be made	Percentage to be divested
31 December 2009 [see comments below]	15%
31 December 2010	8%
31 December 2011	7%
31 December 2012	7%
31 December 2013	7%
31 December 2014	7%

Thus, by 31 December 2014, the level of foreign investment will be reduced to 49% and Indonesian investment will be 51%.

As previously noted, 15% of PTNM is already held by Mr Herryansjah, who is an Indonesian citizen. The first divestment beyond 15%, being 8%, must take place by 31 December 2010.

Indonesian counsel has advised that although there are precedents to support a suspension of divestment requirements for a year, even if this could be obtained the aggregate divestment must take place by the following year. There is no assurance that the suspension would be granted in this case.

Indonesian counsel has advised that it is unlikely that PTNM could re-negotiate the divestment schedule.

The COW is silent as to the position where there is no take up of the shares to be divested either from the Indonesian Government or private Indonesian interests.

Consideration is payable to PTNM for mandatory divestment and the COW makes provision for the determination of that consideration. In essence, it is the higher of:

(i) the current replacement value of PTNM’s investment under the COW;
(ii) the price at which shares in PTNM would be accepted for listing on the Jakarta Stock Exchange; or
(iii) the value of shares in PTNM based upon a fair value.

If the amount of the consideration cannot be agreed, then the COW also makes provision for the valuations described above to be determined by independent valuation.

The details of the divestment requirements are set out in the COW, a copy of which can be obtained by Shareholders (see paragraph 11 below).

3.4 Royalties

Royalties are payable to the Indonesian Government (under the COW) and to private sector parties who were formerly involved in the Project and disposed of their interest.

(a) Indonesian Government Royalties

The royalty payable to the Indonesian Government in respect of gold and silver is fixed to the sales price of gold and silver and varies between 1% and 2% with a 2% royalty for a gold price of US$400 or greater and a silver price of US$15 or greater. The details of the Indonesian Government Royalties are set out in the COW, a copy of which can be obtained by Shareholders (see paragraph 11 below).

(b) Private Sector Royalties

The following private sector royalties are payable in respect of the Project:

(i) A royalty created in 1991 currently payable by MMG to Consolidated Press Holdings Ltd, an Australian public company, and guaranteed by Icon. The royalty is payable in respect of ore treated following commencement of commercial production ( 1991 Royalty ).
(ii) A royalty created in 1995 currently payable by Icon. In summary, this is a 1.85% Net Smelter Royalty ( NSR ) on production of gold, silver and base metals. The royalty is capped at US$3,500,000. A prepayment of US$250,000 was payable on creation of the royalty (which has been paid) and a further US$250,000 is payable within 7 days of the sooner of completion of a bankable feasibility study or commencement of commercial operations (this sum has not been paid) ( 1995 Royalty ).
(iii) A royalty created in 2003 payable by Icon to AuIron Energy Ltd, an Australian company, being a 2% NSR on gold only. At any time until 1 year following the commencement of commercial production Icon may purchase the royalty on the first 250,000 ounces of gold for US$300,000 ( 2003 Royalty ).

The way in which these royalties are to be dealt with in the context of the proposed transaction is covered in paragraph 4.3 below.

3.5 Other regulatory requirements

Most of the area of the COW is located in protected forest areas. Open pit mining has been generally banned in this forest classification, however 13 mining companies (including PTNM) have been authorised under a Presidential Decree to carry out open pit mining in such protected forest areas.

Under the applicable forestry regulations, to undertake mining operations, PTNM is required to obtain a “borrow and use” permit ( Borrow and Use Permit ) from the Indonesian Minister of Forestry for the surface area of land disturbed by mining operations. A Borrow and Use Permit requires PTNM to observe a number of conditions, including acquiring and delivering to the Indonesian Government substitute forest areas.

An area of 40 hectares will be required for the mine infrastructure and PTNM is required to provide double the area for re-forestation as compensation. PTNM has already acquired this land and is in the process of transferring the land to the Minister of Forestry.

PTNM was granted an in principle Borrow and Use Permit by the Minister of Forestry in January 2008. Under the terms of this in principle permit, PTNM cannot commence mining operations until the final approval has been issued. The in principle approval requires that PTNM must meet the various conditions imposed within 2 years (i.e. January 2010).

In July 2008, the Ministry of Forestry issued a new borrow and use of forestry area regulation to provide that companies affected by the Presidential Decree referred to above could apply for a dispensation to enable them to undertake work prior to the final Borrow and Use Permit being issued. The dispensation will be given after the fulfilment of all obligations set forth in the in principle permit (except for the land compensation obligation). Under the new regulation the dispensation will be in effect for a year and may be extended for the duration of the in principle permit.

In August 2008, PTNM submitted applications for both a “dispensation” in accordance with this new forestry regulation and also its final Borrow and Use Permit.

As noted in paragraph 4.1 below, the agreement relating to the proposed acquisition of MMG is made subject to a number of conditions precedent. The conditions precedent include completion of due diligence to the satisfaction of the Company, including matters relating to the progress, status and effect of the permissions or permits from the Indonesian Ministry of Forestry.

The conditions precedent must be met by 28 February 2009, or such later date as may be agreed. The IBC will determine at that time whether, depending on if the final Borrow and Use Permit, or any dispensation has been granted to enable PTNM to commence mining operations, to proceed with the proposed acquisition.

4 Transaction Agreements

The Company has entered into three agreements to give effect to the transaction outlined above in paragraph 2.1: a Share Purchase Agreement, a Loan Arrangements Deed and a Royalty Arrangements Deed. The key terms of these agreements are set out below.

The Company has also entered into some other loan arrangements – see paragraph 4.4 below.

4.1 Share Purchase Agreement

On 10 September 2008, the Company entered into an agreement for the acquisition of the shares in MMG with Icon, the Icon shareholders (ACH, Orris, Goldcrest and Zelman) ( Icon Shareholders ) and the additional warrantors (Mr Morris, Walter Unger, Mr Phillips, Dr Andrew and Mr Yu) ( Additional Warrantors ) (together, the Icon Shareholders and Additional Warrantors are the Warrantors ). Due to changing economic conditions, the agreement was subsequently varied on 26 November 2008 (as varied, the Share Purchase Agreement ).

The Share Purchase Agreement provides for:

(a) the acquisition by the Company from Icon of 221 issued fully paid shares of A$1.00 each in the capital of MMG ( Sale Shares ), which represent all of the total shares issued by MMG; and
(b) the allotment by the Company to Icon of an aggregate of 42,500,000 fully paid shares in the Company ( Consideration Shares ).

The Share Purchase Agreement contains conditions precedent. It is subject to:

(a) the Company obtaining all necessary approvals from its shareholders under the Listing Rules and Corporations Act (including but not limited to under Listing Rules 7.1, 10.1 and 10.11 and sections 208, 260B and item 7 of section 611 of the Corporations Act) to the transactions contemplated in the Share Purchase Agreement;
(b) various loan agreements being put in place:
(i) a loan agreement between PTNM and NOPL, for the repayment of monies owed by PTNM to NOPL or the Company for funds used to make payments under the Loan Arrangements Deed and advances (following the date of the agreement) relating to the development of the Project;
(ii) a loan agreement between MMG and NOPL, for the repayment of monies owed by NOPL to MMG (including monies advanced by the Company, either directly or via MMG to NOPL, and which may be on lent to PTNM) to enable PTNM to make (or make on PTNM’s behalf) the payments and advances referred to above; and
(iii) loan agreements between the Company and MMG (or if the Company requires, MMG, NOPL and/or PTNM) relating to funding intended to be provided by the Company to enable PTNM to make (or make on PTNM’s behalf), the payments and advances referred to above;
(c)
the warranties being correct at Completion;
(d) the Company completing due diligence to its satisfaction, including matters relating to the progress, status and effect of the permissions or permits from the Indonesian Ministry of Forestry; and
(e) execution of the Loan Arrangements Deed (as varied).

If the conditions precedent are not met by 28 February 2009 ( Conditions Satisfaction Date ) (or within such longer period as agreed in writing), either Icon or the Company may terminate the Share Purchase Agreement. Except for the condition relating to due diligence, the conditions may not be waived.

The Company is entitled to carry out due diligence in relation to MMG and its subsidiaries and respective businesses during the period from the date of execution of the Share Purchase Agreement to the Conditions Satisfaction Date (or completion, whichever occurs earlier). If the Company gives a notice to Icon during the Due Diligence Period that it is not satisfied with its due diligence enquiries and does not want to proceed with the acquisition, the Share Purchase Agreement will terminate on that date.

In terms of encumbrances over MMG, the Share Purchase Agreement includes a warranty from the Warrantors that MMG and its subsidiaries (being NOPL and PTNM) are not subject to any encumbrances except for:

(a) the Goldcrest Pledge (a share pledge dated 13 December 2006 made by NOPL in favour of Goldcrest by which NOPL pledged 212,500 shares in PTNM to Goldcrest to secure repayment of the Goldcrest Loan (which loan is detailed in clause 4.2 below of this Explanatory Statement));
(b) the Zelman Pledge (a share pledge dated 13 December 2006 made by NOPL in favour of Zelman by which NOPL pledged 212,500 shares in PTNM to Zelman to secure repayment of the Zelman Loan (which loan is detailed in clause 4.2 below of this Explanatory Statement));
(c) the charges registered against NOPL by Goldcrest and Zelman to further secure repayment of the Goldcrest Loan and the Zelman Loan respectively; and
(d) the charge over the assets and undertaking of NOPL granted to the Company and the Indonesian security granted by PTNM over 2 ball mills owned by it, including motors, gear boxes and spares and a primary and secondary crusher, in each case pursuant to a loan facility made by the Company to NOPL and an associated loan facility granted by NOPL to PTNM (see clause 4.4 below of this Explanatory Statement).

As part of completion under the Share Purchase Agreement, parties to the Share Purchase Agreement who are also parties to the Loan Arrangements Deed must complete their respective obligations under the Loan Arrangements Deed which are due for performance at the date of completion.

On Completion, Icon is required to deliver to the Company an executed Restriction Agreement, under which the Consideration Shares are the subject to escrow for 12 months (or such longer period as the ASX may require). Icon agrees to a holding lock being placed on the Consideration Shares for this escrow period. The warranties given by the Warrantors in the Share Purchase Agreement are several and not joint and the liability of the Warrantors:

(a) is limited to their respective interests in Icon; and
(b) the liability of the Additional Warrantors will be reduced to the extent recovery has been made by Icon from that party’s related Icon shareholder (so no double recovery).

A number of warranties relating to the Project are qualified to the best of the actual knowledge of the Warrantors, and where warranties are qualified on this basis the Warrantors warrant that they have given the warranty after having made reasonable enquiries. There are limitations on the extent to which claims can be made in respect of warranties including the following:

(a) claims can only be made within 2 years after completion; and
(b) matters which have been disclosed during due diligence or which the Company becomes aware of are excluded.

Icon and the Warrantors agree to (subject to the various limitations on the warranties) indemnify the Company from and against all expenses, claims, costs, losses, liabilities or damages which the Company sustains by reason of a breach of warranty by Icon or the Warrantors.

The Share Purchase Agreement also provides for the Company to claim for any tax which has not been fully provided for by MMG, NOPL or PTNM (limited to 85% of such claim).

4.2 Loan Arrangements Deed

On 10 September 2008, the Company entered into a deed concerning the loan arrangements relating to PTNM with PTNM, Singapore Mining Ventures Pte Limited (a company incorporated in Singapore and controlled by Dr Andrews) ( SMV ), Icon, ACH, Goldcrest, Zelman, Mr Phillips, Dr Andrews, MMG, NOPL, PT Promincon Indonesia (a company incorporated in Indonesia) ( PTPI ), Promincon Pte Limited (a company incorporated in Singapore) ( Promincon ) and Mr Herryansyah. Due to changing economic conditions, the deed was subsequently varied on 26 November 2008 (as varied, the Loan Arrangements Deed ).

Under the terms of the Loan Arrangements Deed, PTNM is required to pay the various sums referred to below to the relevant parties. The various parties which made available funds which were ultimately provided to PTNM and are repaid pursuant to the terms of the Loan Arrangements Deed will provide releases to PTNM, NOPL, MMG and the Company for claims in respect of the amounts repaid.

The IBC has undertaken a preliminary assessment of the withholding tax issues associated with the Loan Arrangements Deed and do not believe that there are any material withholding tax issues.

The Loan Arrangements Deed contains conditions precedent. It is subject to:

(a) the conditions precedent in the Share Purchase Agreement being met or waived;
(b)
completion taking place under the Share Purchase Agreement;
(c) the shareholders and directors of each of ACH, Icon, Goldcrest, Zelman, SMV, Promincon and PTPI passing unanimous resolutions authorising them to enter into the Loan Arrangements Deed and to provide the releases contemplated; and
(d) the directors of each of ACH, Icon, Goldcrest, Zelman, SMV, Promincon and PTPI providing a certificate to the Company confirming that the relevant company is solvent.

The total payable under the arrangements referred to above and provided for in the Loan Arrangements Deed is A$7.59 million. Details of the loans and payment of costs and expenses are as follows:

(a) Goldcrest and Zelman Loans

Goldcrest, a company associated with Mr Morris, loaned Icon A$1,000,000 ( Goldcrest Loan ), under a loan agreement between Icon, Goldcrest and ACH dated 13 December 2006 ( Goldcrest Loan Agreement ). Icon is obliged to pay the legal costs of Goldcrest in connection with this loan, which is the amount of A$80,000, pursuant to the Goldcrest Loan Agreement.

Goldcrest also advanced to Icon an additional amount of A$100,000 to enable Icon to pay a loan extension fee relating to the Third Party Interim Loan (see below). This additional amount is deemed to be advanced under the Goldcrest Loan Agreement.

Zelman loaned Icon A$1,000,000 ( Zelman Loan ), under a loan agreement between Icon, Zelman and ACH ( Zelman Loan Agreement ).

These loans are outstanding and, subject to the terms of the Loan Arrangements Deed, are repayable in accordance with the Goldcrest Loan Agreement and Zelman Loan Agreement respectively.

(b) Third Party Interim Loan

Icon obtained a loan from a third party ( Third Party Interim Loan ) in the amount of A$1,000,000 under a loan agreement between an unrelated third party lender, Icon, Mr Phillips, Dr Andrews, Mr Morris and Walter Unger dated 7 July 2008 ( Third Party Interim Loan Agreement ) and has incurred costs in relation to the loan in the amount of A$214,718 (A$100,000 of which is a loan extension fee that was paid for Icon by Goldcrest and is repayable to Goldcrest, as described above).

The Third Party Interim Loan is outstanding and, subject to the terms of the Loan Arrangements Deed, is repayable in accordance with the Third Party Interim Loan Agreement.

(c) Amounts payable by Icon and expenses incurred by Icon

As a result of loans described above, the following amounts are repayable by Icon:

(i) Goldcrest Loan (A$1,000,000), repayable to Goldcrest;
(ii) Zelman Loan (A$1,000,000), repayable to Zelman;
(iii) legal costs of Goldcrest (A$80,000), repayable to Goldcrest;
(iv) additional amount (for loan extension fee) (A$100,000), repayable to Goldcrest; and
(v) Third Party Interim Loan (A$1,000,000).

Icon also incurred costs in relation to the Third Party Interim Loan in the amount of A$214,718 (A$100,000 of which is the loan extension fee).

(d)

Icon Loans to SMV

Icon made loans to SMV under a loan agreement between Icon and SMV dated 2 January 2007 as amended in or about November 2008 ( Icon-SMV Loan Agreement ) in the following amounts:

(i) the amount of the Goldcrest Loan (A$1,000,000);
(ii) the amount of the Zelman Loan (A$1,000,000);
(iii) the amount of the Third Party Interim Loan, less the costs (except for the loan extension fee) (A$885,282); and
(iv) funds advanced to Icon for the purposes of the Project by Dr Andrews, Mr Phillips and ACH (A$2,626,940).

These loans are outstanding and, subject to the terms of the Loan Arrangements Deed, are repayable in accordance with the Icon-SMV Loan Agreement.

SMV also agreed to pay the following amounts to Icon pursuant to the Icon-SMV Loan Agreement:

(i) the amount of the costs in relation to the Third Party Interim Loan (except for the loan extension fee) (A$114,718);
(ii) the amount of the legal costs of Goldcrest (A$80,000); and
(iii) the amount of the additional amount (for loan extension fee) (A$100,000).

These amounts are outstanding and, subject to the terms of the Loan Arrangements Deed, are repayable in accordance with the Icon-SMV Loan Agreement.

(e)

SMV Loans to PTNM

SMV on lent to PTNM the money loaned to it by Icon under the Icon-SMV Loan Agreement under a loan agreement between SMV and PTNM dated 2 January 2007 as amended in or about November 2008 ( SMV-PTNM Loan Agreement ).

These loans are outstanding and, subject to the terms of the Loan Arrangements Deed, are repayable in accordance with the SMV-PTNM Loan Agreement.

Pursuant to the SMV-PTNM Loan Agreement, PTNM also agreed to pay to SMV the amounts above payable by SMV to Icon pursuant to the Icon-SMV Loan Agreement.

These amounts are outstanding and, subject to the terms of the Loan Arrangements Deed, are repayable in accordance with the SMV-PTNM Loan Agreement.

(f)

SMV Settlement Sum

Taking into account the arrangements discussed in the paragraphs above, the amount repayable to SMV is A$5,806,940 ( SMV Settlement Sum ). This amount is comprised of:

(i) the amount of the Goldcrest Loan (A$1,000,000), which will ultimately be repaid to Icon, and then Icon will repay Goldcrest;
(ii) the amount of the Zelman Loan (A$1,000,000), which will ultimately be repaid to Icon, and then Icon will repay Zelman;
(iii) the amount of the Third Party Interim Loan (A$1,000,000), which will be ultimately repaid to Icon (so Icon can effectively recoup the costs of the Third Party Interim Loan, other than the loan extension fee), and then Icon will repay the Third Party Interim Loan;
(iv) the funds advanced to Icon for the purposes of the Project by Dr Andrews, Mr Phillips and ACH (A$2,626,940);
(v) the amount of the legal costs of Goldcrest A$80,000), which will ultimately be repaid to Icon, and then Icon will repay Goldcrest; and
(vi) the amount of the additional amount (for loan extension fee) (A$100,000), which will ultimately be repaid to Icon, and then Icon will repay Goldcrest.

(g) Payment of Icon costs by the Company

Icon incurred legal costs in connection with the transactions contemplated in the Share Purchase Agreement. The Company has agreed to pay to Icon on completion under the Share Purchase Agreement an amount equal to the amount of these costs up to the amount of A$90,000.

(h)

Dr Andrews Loan to PTNM

Dr Andrews has loaned PTNM A$186,985, all of which is outstanding and repayable as contemplated in the Loan Arrangements Deed ( MA Settlement Sum ).

(i) Other Payments to Dr Andrews and Mr Phillips and/or ACH and/or Icon

Some or all of Dr Andrews, Mr Phillips, ACH and Icon have incurred or paid costs and expenses in connection with the Project and the funding of PTNM for the purposes of the Project amounting in aggregate to A$909,060 (funded through Icon) ( Icon Settlement Sum ) on the basis that PTNM would reimburse the costs and expenses, but that amount remains outstanding.

These claims cannot be fully substantiated from PTNM’s records.

(j) Unpaid Purchase Price for Equipment

Mr Herryansyah has sold equipment to PTNM, the purchase price being A$328,358 and which has not yet been paid ( HYH Settlement Sum ).

PTPI has sold equipment to PTNM, the purchase price being A$268,657, and which has not yet been paid ( PTPI Settlement Sum ).

PTPI is a subsidiary of Promincon, which is a company controlled by Dr Andrews and Mr Phillips.

The Loan Arrangements Deed also acknowledges that (as referred to in clause 4.4 below in this Explanatory Statement) prior to execution of the deed, the Company made a secured loan to NOPL in the amount of A$330,000 which NOPL on lent to PTNM for the purpose of enabling PTNM to fund expenditure in relation to the Project ( KRM Loan ).

In terms of repayment of these various loans and expenses, the Loan Arrangements Deed provides that:

Payment of portion of SMV Settlement Sum

(a) Subject to the provisions in paragraph (b) below, PTNM shall pay to SMV part of the SMV Settlement Sum as follows (in this order of priority):
(i) an amount equal to the amount of the Third Party Interim Loan will be repaid on the due date for repayment (being 8 February 2009), or if the Third Party Interim Loan cannot be fully repaid on that date, then it will be repaid from the proceeds of an additional loan to be made by the Company to PTNM (as provided in paragraph (b) below;)
(ii) an amount equal to the loan extension fee in relation to the Third Party Interim Loan incurred by Icon (or on its behalf) on completion (under the Sale Purchase Agreement); and
(iii) an amount equal to the legal costs of Goldcrest in relation to the Goldcrest Loan Agreement payable by Icon on completion (under the Sale Purchase Agreement).
(b) PTNM is only required to make these payments on the due dates mentioned to the extent that the Company has provided sufficient funds (assuming the Company has been able to raise those funds by loan or otherwise) to enable PTNM to satisfy those payment obligations. To the extent PTNM is not required to make these payments for this reason, PTNM must make the payments as soon as is reasonably possible having regard to the availability of funds and the then current liabilities of PTNM (other than to other various parties under the Loan Arrangements Deed), or in accordance with the

requirements regarding the payment of Settlement Sums and the accelerated payment of Settlement Sums (as discussed below), whichever is earlier.

(c) The Company is required to use all reasonable endeavours having regard to its proper commercial interests to raise sufficient funds for the purpose of providing funds to PTNM to enable PTNM to make the payments referred to in paragraph (a) above on the dates referred to in paragraphs (a) and (b) above (as applicable).

Payment by SMV to Icon

SMV shall pay the amount received under paragraph (a) above to Icon immediately upon receipt to enable Icon to repay the Third Party Interim Loan (and recoup its costs), the loan extension fee to Goldcrest and the legal costs of the Goldcrest Loan to Goldcrest.

Payment by Icon to Goldcrest

Immediately upon receipt of the sums referred to above, Icon shall pay to Goldcrest from the sums received:

(a) the legal costs of the loan from Goldcrest payable by Icon; and
(b) the loan extension fee in relation to the Third Party Interim Loan paid by Goldcrest.

Payment of Settlement Sums

(a) The Parties to the Loan Arrangements Deed acknowledge that it is proposed that the development and construction of the Project will be funded by a project finance facility ( Project Finance ), which will be obtained by PTNM or its parent entity from project lenders and the capacity of PTNM to repay monies due by it is dependant upon an equity raising, Project Finance, available cash flow to be derived from the Net Operating Surplus of the Project, the sale of any interest or of any assets used in relation to the Project, or a combination of any of those things.
(b) The Net Operating Surplus is defined in the Loan Arrangements Deed as follows:
(i) all monies received by PTNM from the sale of ore, metals and minerals from the Project in any form; and
(ii) all monies received by PTNM from the sale of any interest in the Project or of any asset used in or in relation to the Project,

after deduction of all operating costs of producing ore, metals or minerals as the case may be including reasonable overheads, royalties payable to Indonesian government authorities, financing costs and distributions to any reserve accounts required by the project lenders. However, if the project lenders require a cash sweep of all or any part of the Net Operating Surplus in or towards the payment or repayment of any monies due to the project lenders, then the Net Operating Surplus at any time is reduced by the amount of that sweep.

(c) Unless the project lenders require otherwise, PTNM shall retain for working capital the first A$1,000,000 of Net Operating Surplus following the commencement of commercial production from the Project (or such other amount as the project lenders require). After receipt of that amount, PTNM will apply an amount equal to 75% of the Net Operating Surplus received in each quarter (subject to the consent of the project lenders) to the payment of the balance of the Settlement Sums in the following order of priority:
(i) first in payment of amounts referred to under the paragraphs entitled “Payment of portion of SMV Settlement Sum” above which remain unpaid, if any, in the order of priority provided;
(ii) secondly in payment to SMV (or as SMV directs) of an amount equal to the total of amounts of the Goldcrest Loan and the Zelman Loan which remain outstanding and payable by Icon together with the amount of any interest

which SMV has advised PTNM is payable by SMV to Goldcrest and Zelman; and

(iii) thirdly in payment of the balance of the Settlement Sums to the Settlement Sum Recipients in the proportions the respective Settlement Sums (or such amounts of the Settlement Sums as have not been repaid) bear to one another as at the due date for payment provided in this clause.
(d) The Loan Arrangements Deed then provides that SMV shall pay the sums received under paragraph (c)(ii) above to Icon and Icon shall pay those sums to Goldcrest and Zelman equally until the Goldcrest Loan and the Zelman Loan (including interest) have been fully repaid.

Accelerated payment of Settlement Sums

(a) If the Company at any time after the date of the Loan Arrangements Deed raises funds (by way of equity capital or Project Finance or both) which in the aggregate exceeds the Australian dollar equivalent of US$10,000,000, then (subject to the prior consent of the project lenders) it has agreed that the excess will be applied through loans or otherwise to PTNM to payment of the outstanding balance due to the Settlement Sum recipients in the above order of priority.
(b) Notwithstanding any of the other provisions in the Loan Arrangements Deed, PTNM is required to pay the outstanding balance of each of the Settlement Sums to the respective Settlement Sum recipients on demand if:
(i) PTNM transfers or assigns all or any part of its interest in the Project to a third party other than a related body corporate without the consent of the Settlement Sum recipients;
(ii) any member of the Project Group (being the Company, MMG, NOPL and PTNM) ceases to hold the shares in any other member of the Project Group which it holds on the day following completion under the Share Purchase Agreement (except with the agreement of the Settlement Sum recipients; or
(iii) funding (by debt or equity or both) is not obtained within 30 months from the date of completion under the Sale Purchase Agreement or for any reason, commercial production from the Project has not commenced within 36 months of completion under the Sale Purchase Agreement unless active and reasonable endeavours are being made by one or more members of the Project Group to raise funds by equity or debt or to realise assets for the purpose, among other things, of enabling PTNM to repay the Settlement Sum recipients.
(c) Also, each of the Project Group members agrees with each Settlement Sum recipient that until the payment of the Settlement Sum to that Settlement Sum recipient, it will not grant security over any of its assets to any third person in respect of any liability or indebtedness or transfer or assign any of the shares held by it in another member of the Project Group without the consent of the Settlement Sum recipients, except to:
(i) another of the companies in the Project Group (including the securities to be granted by NOPL and PTNM in favour of the Company to secure the KRM Loan);
(ii) project lenders in connection with the Project; or
(iii) for the purpose of raising funds or realising assets as provided in paragraph (b)(iii) above).

4.3 Royalty Arrangements Deed

The Company entered into a deed concerning the royalty arrangements relating to the Project with Icon and MMG on 10 September 2008 ( Royalty Arrangements Deed ).

Under the Royalty Arrangements Deed, Icon and the Company have agreed to use reasonable endeavours to procure the agreement of the royalty holder to:

(a) the novation of the payment obligations under the 1995 Royalty and 2003 Royalty from Icon to MMG; and
(b) the release of Icon from liability under the 1995 Royalty and 2003 Royalty and, in relation to the 1991 Royalty, from liability as guarantor of MMG.

The Company has agreed (if required by the royalty holders) to guarantee the obligations of MMG. Also, MMG has agreed with Icon to assume its obligations under the royalties from completion under the Share Purchase Agreement.

The Royalty Arrangements Deed contains conditions precedent. It is subject to satisfaction of the conditions precedent in the Share Purchase Agreement, completion taking place under the Share Purchase Agreement, approval by the Company’s and MMG’s respective shareholders pursuant to section 260B of the Corporations Act and approval by the Company’s shareholders pursuant to section 208 of the Corporations Act (see Resolution 5).

4.4 Other Loan Arrangements

The Company has made a secured loan to NOPL of A$330,000 which NOPL has on-lent to PTNM for the purpose of enabling PTNM to fund short term expenditure in relation to the Project and to recoup due diligence costs incurred on behalf of the Company. Further, the Company may at its discretion provide further loans to NOPL for on-lending to PTNM for the same general purpose. The loan may be increased from time to time to assist with working capital requirements pending completion of an equity or debt raising.

All loans made by the Company referenced in the preceding paragraph are secured on a first ranking basis over the assets and undertaking of NOPL and by an Indonesian security granted by PTNM over 2 ball mills including motors, gear boxes and spares and a primary and secondary crusher, subject to Zelman and Goldman having priority security over the shares that NOPL owns in PTNM pursuant to the Zelman Pledge and the Goldman Pledge respectively (being referred to in paragraph 4.1).

All loans have been, or will be, made on arm’s length commercial terms.

5 Resolution 1: Acquisition of MMG

5.1 General

Resolution 1 seeks:

(a) Shareholder approval under Listing Rule 10.1 for the acquisition of a substantial asset from a related party;
(b) Shareholder approval under Listing Rule 10.11 for the issue of shares to a related party; and
(c) Shareholder approval under section 208 of the Corporations Act for the giving of financial benefits by the Company to related parties.

5.2 Listing Rule 10.1 approval

Listing Rule 10.1 requires the Company to obtain Shareholder approval in order to acquire a substantial asset from a related party. The acquisition by the Company of all of the shares in MMG from Icon pursuant to the Share Purchase Agreement falls within this requirement.

Under Listing Rule 10.10, a Company seeking Shareholder approval under Listing Rule 10.1 must include in its notice of meeting:

(a) a voting exclusion statement; and
(b) a report on the transaction from an independent expert, which report must state whether the transaction is fair and reasonable to Shareholders whose votes are not to be disregarded and, unless the opinion is that the transaction is fair and reasonable, the opinion must be displayed prominently in the notice of meeting and on the covering page of any accompanying documents.

A voting exclusion statement is included in the Notice of General Meeting.

The Independent Expert’s Report concludes (at point 10 of the report) that “ assuming the capital raising proposed under Resolution 4 is consummated or an alternative commercially acceptable debt/capital raising is in place, the proposals as outlined in paragraph 1.1 and Resolutions 1 and 3 are, on balance fair and considered reasonable to the shareholders of Kingsrose not associated with Icon and the interests of ACH.. However there is still a potential risk that forestry approval may not be granted or at least significantly delayed. Those shareholders who consider the risk to be high may not wish to approve the Proposed Transactions noted in Resolutions 1 and 3 ”.

5.3 Listing Rule 10.11 approval

Listing Rule 10.11 requires the Company to obtain Shareholder approval in order to issue Shares to a related party (unless one of the exceptions applies). The issue by the Company of the Consideration Shares to Icon pursuant to the Share Purchase Agreement falls within this requirement (none of the exceptions apply).

Listing Rule 7.1 also requires the Company to obtain Shareholder approval in order to issue Shares representing more than 15% of the Company’s shares on issue (unless one of the exceptions in Listing Rule 7.2 applies). Exception 14 in Listing Rule 7.2 is an issue made with Shareholder approval under Listing Rule 10.11 and provides that if approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

Under Listing Rule 10.13, the notice of meeting to approve the issue of the Shares must include certain information, which information is set out below.

(a) The name of the person

Icon.

(b) The maximum number of Shares to be issued (if known) or the formula for calculating the number of Shares to be issued to the person

An aggregate of 42,500,000 fully paid Shares in the Company.

(c) The date by which the Company will issue the Shares, which must not be more than 1 month after the date of the meeting

The Company intends to issue the Shares within 1 month after the date of the meeting or within 7 days of the date on which the conditions precedent to the Share Purchase Agreement have been satisfied, whichever is the later. If the conditions precedent satisfaction date falls more than 1 month after the date of the meeting, then a waiver will be sought from the ASX to permit the Consideration Shares to be issued at the later date.

(d) If the person is not a Director, a statement of the relationship between the person and the Director that requires that requires the approval to be obtained

Icon is a related party to the Company by virtue of its shareholders ACH and Goldcrest. ACH’s shareholders are Dr Andrews and Shinewin Nominees Ltd (as trustee for Mr Phillips). Mr Morris is an associate of Goldcrest. Dr Andrews, Mr Phillips and Mr Morris are all directors of the Company.

(e) The issue price of the Shares and a statement of the terms of the issue

The issue is contemplated in the Share Purchase Agreement and there are no other terms of issue. The issue of the Shares is the consideration for the acquisition

contemplated in the Share Purchase Agreement and in this regard, Shareholders are referred to the Independent Expert’s Report.

(f)

A voting exclusion statement

A voting exclusion statement is included in the Notice of General Meeting.

(g) The intended use of the funds raised

The Shares are consideration for the acquisition from Icon of all of the shares in MMG (a wholly owned subsidiary of Icon).

5.4 Corporations Act section 208 approval

Under section 218(1)(b) of the Corporations Act, an explanatory statement satisfying section 219 of the Corporations Act is required. Under section 219 of the Corporations Act, the explanatory statement must include certain information, which information is set out below.

(a) The related parties to whom the proposed resolution would permit financial benefits to be given

Icon is a related party of the Company as it is controlled by ACH which holds 76% of Icon’s issued capital.

Dr Andrews and Mr Phillips are directors of the Company and as such are related parties of the Company. Dr Andrews is a 50% shareholder of ACH. Mr Phillips is a beneficiary of a trustee shareholder of ACH (Shinewin Nominees Ltd, which is a 50% shareholder of ACH). ACH is controlled by Dr Andrews and Mr Phillips and consequently is a related party of the Company.

Mr Morris is a director of the Company and as such is a related party of the Company. Mr Morris is an associate of Goldcrest. Goldcrest is a 10% shareholder in Icon.

Margaret Morris is the spouse of Mr Morris and as such is a related party of the Company. Margaret Morris is an associate of Goldcrest.

(b) The nature of the financial benefits

The issue of the Consideration Shares.

(c) In relation to each Director, the Director’s recommendation about the proposed resolution and reasons for it (if the Director didn’t want to make a recommendation or was not available to consider it – why not)

Mr Hatch and Mr Franks are both in favour of the Resolution.

Each of the other Directors do not wish to make a recommendation as they have a material personal interest in the outcome of the proposed resolution.

(d) In relation to each such Director, whether the Director had an interest in the outcome of the proposed resolution (and if so, what it was)

Mr Hatch and Mr Franks do not have an interest in the outcome of the proposed resolution.

Mr Morris is an associate of Goldcrest. Goldcrest is a 10% shareholder in Icon.

Dr Andrews is a 50% shareholder in ACH. ACH is a 76% shareholder in Icon.

Mr Phillips is a beneficiary of a trustee shareholder of ACH (Shinewin Nominees Ltd, which is a 50% shareholder of ACH).

In addition, these three Directors have a financial interest as specified in Resolution 2 (see clause 6 below of this Explanatory Statement).

(e) All other information that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s interests to pass the proposed resolution and is known to the Company or to any of its Directors

Section 219(2) of the Corporation states that an example of this kind of information is information about what, from an economic and commercial view, are the true potential costs and detriments of, or resulting from, giving financial benefits as permitted by the proposed resolution, including opportunity costs, taxation consequences (such as liability to fringe benefits tax) and benefits forgone by whoever would give the benefits.

See the Independent Expert’s Report and the Snowden Valuation Report included with this Explanatory Statement (and the conclusion extracted in clause 5.2 above of this Explanatory Statement).

6 Resolution 2: Payment of loans

6.1 General

Resolution 2 seeks Shareholder approval under section 208 of the Corporations Act for the giving of financial benefits by the Company to related parties.

6.2 Corporations Act section 208 approval

Section 208 of the Corporations Act requires the Company to obtain Shareholder approval to give a financial benefit to a related party (unless one of the exceptions applies), which benefit must be given within 15 months after the approval. The proposed payment by PTNM of the sums totalling A$7.59 million to or for the benefit of the related parties described below, , falls within this requirement (none of the exceptions applies).

(a) The related parties to whom the proposed resolution would permit financial benefits to be given

Icon, Goldcrest, ACH, SMV and PTPI (both companies controlled by Dr Andrews), Mr Phillips and Dr Andrews.

(b) The nature of the financial benefits

Repayment of loans and the payment of certain costs in accordance with the Loans Arrangement Deed (see clause 4.2 of this Explanatory Statement).

(c) In relation to each Director, the Director’s recommendation about the proposed resolution and reasons for it (if the Director didn’t want to make a recommendation or was not available to consider it – why not)

Mr Hatch and Mr Franks are both in favour of the Resolution.

Each of the other Directors do not wish to make a recommendation as they have a material personal interest in the outcome of the proposed resolution.

(d) In relation to each such Director, whether the Director had an interest in the outcome of the proposed resolution (and if so, what it was)

Mr Hatch and Mr Franks do not have an interest in the outcome of the proposed resolution.

Mr Morris is an associate of Goldcrest. Goldcrest is a 10% shareholder in Icon.

Dr Andrews is a 50% shareholder in ACH. ACH is a 76% shareholder in Icon. Dr Andrews also controls SMV and PTPI.

Mr Phillips is a beneficiary of a trustee shareholder of ACH (Shinewin Nominees Ltd, which is a 50% shareholder of ACH).

(e) All other information that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s interests to pass the proposed resolution and is known to the Company or to any of its Directors

See the Independent Expert’s Report and the Snowden Valuation Report included with this Explanatory Statement (and the conclusion extracted in clause 5.2 above of this Explanatory Statement).

7 Resolution 3: Issue of the Consideration Shares

7.1 General

Resolution 3 seeks Shareholder approval under item 7 of section 611 of the Corporations Act for the issue of Shares exceeding 20% of the Company’s share capital to a party.

7.2 Corporations Act item 7 section 611 approval

Section 606(1) of the Corporations Act prohibits the issue of Shares exceeding 20% of the Company’s share capital to a party. The issue of the Consideration Shares by the Company to Icon, and the proposed distribution of the Consideration Shares by Icon to its shareholders (after the 12 month escrow period) fall within this prohibition.

Section 611 contains a list of acquisitions which are exempt from the prohibition in section 606(1). Item 7 provides that an acquisition which is approved previously by a resolution passed at a general meeting of the company in which the acquisition is made and complies with the specified requirements, which are set out below, is exempt from the prohibition.

(a) No votes are cast in favour of the resolution by the person proposing to make the acquisition and their associates or the persons (if any) from whom the acquisition is to be made and their associates.

A voting exclusion statement is included in the Notice of General Meeting to this effect.

(b) The Shareholders were given all information known to the person proposing to make the acquisition or their associates, or known to the Company, that was material to the decision on how to vote on the resolution, including:

(i) The identity of the person proposing to make the acquisition and their associates

Icon is the person proposing to make the acquisition. Icon’s shareholders are ACH, Zelman, Orris and Goldcrest. ACH’s shareholders are Dr Andrews and Shinewin Nominees Ltd (as trustee for Mr Phillips). Mr Morris is an associate of Goldcrest. Dr Andrews, Mr Phillips and Mr Morris are all directors of the Company.

(ii) The maximum extent of the increase in that person’s voting power in the Company that would result from the acquisition

Neither Icon nor ACH currently holds any Shares in the Company, so Icon’s voting power would increase from 0% to approximately 39.152%. If Icon distributes the Consideration Shares to its shareholders (assuming there are no changes to the percentage holdings of the Icon shareholders as set out in paragraph 2.3(a)), ACH’s voting power would increase from 0% to approximately 29.756%.

(iii) The voting power that person would have as a result of the acquisition

The Company’s current Share capital is 66,050,020 ordinary shares. After the acquisition by Icon of 42,500,000 in the Company, the Company’s Share capital would increase to 108,550,020 ordinary shares. Icon’s percentage holding in the increased Share capital of the Company would be approximately 39.152%.

If Icon distributes the Consideration Shares to its shareholders (assuming there are no changes to the percentage holdings of the Icon shareholders as set out in paragraph 2.3(a)), ACH’s voting power in the Company would be 29.756% following the distribution.

(iv) The maximum extent of the increase in the voting power of each of that person’s associates that would result from the acquisition

ACH’s voting power will increase from 0% to approximately 39.152% - ACH is deemed to have a relevant interest in Icon’s shares under section 608(3) of the Corporations Act (in excess of 20%).

The shareholders in Icon are proposing to enter into an agreement providing for the Consideration Shares to be distributed to the Icon shareholders following the expiry of any applicable escrow period under the ASX Listing Rules ( Distribution Agreement ). It is anticipated that the Distribution Agreement will be entered into prior to the issue of the Consideration Shares in which case each of the shareholders in Icon will, upon issue of the Consideration Shares to Icon, have a relevant interest in all the Consideration Shares and accordingly the voting power of each shareholder in Icon will be 39.152% pending the completion of the distribution.

(v) The voting power that each of the that person’s associates would have as a result of the acquisition

Same as for (iv) above.

7.3 ASIC Regulatory Guide 74

ASIC Regulatory Guide 74 states that shareholders of a company are entitled, as a minimum, to the information in paragraph 7.2 above and the following information:

(a) The identity of the allottee or purchaser and any person who will have a relevant interest in the Shares to be allotted or purchased

Icon (purchaser) and ACH (will have a relevant interest).

(b) Full particulars (including the number and percentage) of the Shares in the Company to which the allottee or purchaser is or will be entitled immediately before and after the proposed acquisition

Icon has no Shares in the Company before the proposed acquisition. Icon’s percentage holding in the increased Share capital of the Company after the proposed acquisition will be approximately 39.152%.

ACH has no Shares in the Company before the proposed acquisition; ACH’s percentage holding in the increased Share capital of the Company after the proposed acquisition will be approximately 29.756%.

(c) The identity, associations (with the allottee, purchaser or vendor, and with any of their associates) and qualifications of any person who it is intended will become a Director if Shareholders agree to the allotment or purchase

There is no present intention for any new Directors to be appointed if the resolution is approved and the transactions contemplated by the Share Purchase Agreement are completed.

(d) A statement of the allottee’s or purchaser’s intention regarding the future of the Company and if Shareholders agree to the allotment or purchase, and in particular:
(i) any intention to change the business of the Company

Icon and ACH have no intention to change the business of the Company or its subsidiaries other than to complete construction of the Project and undertake mining operations.

(ii) any intention to inject further capital into the Company, and if so how

Icon and ACH have at this stage no intention to inject any further capital into the Company.

(iii) the future employment of the present employees of the Company

Icon and ACH do not intend to make any particular decisions with regard to employees of the Company and its subsidiaries. It is envisaged that the Company and its subsidiaries will employ persons as necessary to meet the needs of the Company and its subsidiaries.

(iv) any proposal whereby any property will be transferred between the Company and the allottee, vendor or purchase or any person associated with any of them

Apart from the transactions relating to MMG referred to in this Explanatory Statement, there are no proposals to transfer any property from Icon or ACH to the Company.

(v) any intention to otherwise redeploy the fixed assets of the Company

There is no current intention to redeploy the fixed assets of the Company.

(e) Particulars of the terms of the proposed allotment or purchase and any other contract or proposed contract between the allottee or purchaser and the Company or vendor or any of their associates which is conditional upon, or directly or indirectly dependent on, Shareholders’ agreement to the allotment or purchase

The Share Purchase Agreement referred to in clause 4.1, the Loan Arrangements Deed referred to in clause 4.2 and the Royalty Arrangements Deed referred to in clause 4.3 are conditional upon Shareholders’ agreement to the allotment.

(f) When the allotment is to be made or the purchase is to be completed

Upon completion taking place under the Share Purchase Agreement.

(g) An explanation of the reasons for any proposed allotment

The proposed allotment is the consideration provided in the Share Purchase Agreement for the purchase of the Shares in MMG by the Company.

(h) The interests of the Directors in the Resolution

The Shares will be allotted to Icon as contemplated by the Resolution. Icon’s shareholders are ACH, Zelman, Orris and Goldcrest. ACH’s shareholders are Dr Andrews and Shinewin Nominees Ltd (as trustee for Mr Phillips). Mr Morris is an associate of Goldcrest. Dr Andrews, Mr Phillips and Mr Morris are all directors of the Company.

(i) The identity of the Directors who approved or voted against the proposal to put the Resolution to Shareholders

Mr Morris, Dr Andrews and Mr Phillips being directors of the Company have a material personal interest in the outcome of the proposed resolution. Pursuant to a resolution of Mr Hatch and Mr Franks, who have no material personal interest in the proposal, the other directors were permitted to attend and vote on the proposal. All directors then approved the proposal.

(j) The recommendation or otherwise of each Director as to whether nonassociated Shareholders should agree to the acquisition, and the reasons for that recommendation or otherwise

Mr Hatch and Mr Franks recommend that non-associated Shareholders agree to the acquisition.

Each of the other directors does not wish to make a recommendation as they have a material personal interest in the outcome of the proposed resolution.

(k) Any intention of the acquirer to change significantly the financial or dividend policies of the Company

The acquirer has no present intention of significantly changing the financial or dividend policies of the Company

(l) An analysis of whether the proposal is fair and reasonable when considered in the context of the interests of, the Shareholders other than those involved in the proposed allotment or purchase or associated with such persons

See the Independent Expert’s Report included with this Explanatory Statement (and the conclusion extracted in clause 5.2 above of this Explanatory Statement.

8 Resolution 4: Equity capital raising

8.1 General

Resolution 4 seeks Shareholder approval under Listing Rule 7.1 for the issue of Shares representing more than 15% of the Company’s shares on issue.

8.2 Listing Rule 7.1 approval

Listing Rule 7.1 requires the Company to obtain Shareholder approval in order to issue Shares representing more than 15% of the Company’s shares on issue (unless one of the exceptions in Listing Rule 7.2 applies). The Company’s proposed equity capital raising falls within this requirement (none of the exceptions applies).

Under Listing Rule 7.3, the notice of meeting to approve the issue of the Shares must include certain information, which information is set out below.

(a) The maximum number of Shares the entity is to issue (if known) or the formula for calculating the number of Shares the entity is to issue

The maximum number of shares to be allotted will be an amount which is sufficient to raise up to A$15,000,000 based on the price per Share determined by the Directors.

(b) The date by which the entity will issue the Shares (which must be no later than 3 months after the date of the meeting)

It is anticipated that, subject to Shareholder approval, the Shares will be issued on one date and in any event no later than 3 months after the date of the General Meeting, or such later date as approved by ASX by way of ASX granting a waiver under the Listing Rules.

(c) The issue price of the Shares, which must be either a fixed price or a minimum price

Under Listing Rule 7.3.3, the minimum price may be fixed or a stated percentage that is at least 80% of the average market price for securities in that class. The average is calculated over the last 5 days on which sales in the securities were recorded before the day on which the issue was made or, if there is a prospectus, Product Disclosure Statement or offer information statement relating to the issue, over the last 5 days on which sales in the securities were recorded before the date the prospectus, Product Disclosure Statement or offer information is signed.

The price at which the shares will be issued will be determined by the Directors based on market conditions at the time of issue. Because of the current volatility in market conditions it is not possible for the Directors to determine the issue price as at the date of this Explanatory Statement being circulated to Shareholders.

(d) The names of the allottees (if known) or the basis upon which the allottees will be identified or selected

Sophisticated investors who participate in a placement or rights issue by the Company, or a combination of those persons.

(e) The terms of the Shares

The Shares will rank equally in all respects with existing Shares on issue.

(f) The intended use of the funds raised

The funds are to be raised by the Company for the following purposes:

(i) completion of construction of the mine at the Project;
(ii) to fund repayment of the loans and costs pursuant to the terms of the Loan Arrangements Deed; and
(iii) to fund site exploration during the construction phase.
(g) The dates of allotment or a statement that allotment will occur progressively

See paragraph 8.2(b).

(h) A voting exclusion statement

A voting exclusion statement is included in the Notice of General Meeting.

(i) In the case of an agreement for the allotment of securities which is part of a public offer, a voting exclusion statement in relation to a party to the agreement, and an adequate summary of the agreement

Not applicable.

9 Resolution 5: Assumption of royalties by MMG and guarantees by the Company

9.1 General

Resolution 5 seeks:

(a) Shareholder approval under section 260B(2) of the Corporations Act for the giving of financial assistance by a company (being MMG) to a person to acquire shares in the company because the company will be a subsidiary of the Company immediately after the acquisition, which is a listed domestic corporation;
(b) Shareholder approval under section 260B(1) of the Corporations Act for the giving of financial assistance to a person to acquire Shares in the Company; and
(c) Shareholder approval under section 208 of the Corporations Act for the giving of financial benefits by the Company to a related party.

9.2 Corporations Act section 260B(2) approval

Section 260A of the Corporations Act provides that a company may financially assist a person to acquire shares in the company only if:

(a) giving the assistance does not materially prejudice the interests of the company or its shareholders or the company’s ability to pay its creditors;
(b) shareholder approval is given under section 260B of the Corporations Act; or
(c) the assistance falls within the exemptions.

The agreement of MMG to assume the obligation of Icon to pay certain royalties, as provided in the Royalty Arrangements Deed, potentially falls within the ambit of financial assistance being given by a company (being MMG) to a person to acquire shares in that company. Section 260B(1) of the Corporations Act provides that approval of the shareholders of MMG (the company for the purposes of section 260A) must be given in accordance with the requirements of section 260B(1).

In addition, section 260B(2) provides that if the company will be a subsidiary of a listed domestic corporation immediately after the acquisition of the shares referred to in section 260A occurs, the financial assistance must also be approved by a special resolution passed at a general meeting of that corporation.

Under section 260B(4), the notice of meeting called for the purpose of obtaining the approval must include with the notice of the meeting a statement setting out all the information known to the company that is material to the decision on how to vote on the resolution. However, the company does not have to disclose information if it would be unreasonable to require the company to do so because the company had previously disclosed the information to its shareholders.

9.3 Corporations Act section 260B(1) approval

The Company’s proposal to provide guarantees in respect of MMG’s obligations to pay royalties if required by royalty holders, as provided in the Royalty Arrangements Deed, falls within the ambit of financial assistance in connection with the proposed issue of the Consideration Shares. The assistance does not fall within the exemptions, and although the Company considers paragraph (a) above is not applicable, the Company seeks Shareholder approval pursuant to section 260B(1) of the Corporations Act in any event.

9.4 Corporations Act section 208 approval

provided in the Royalty Arrangements Deed, falls within this requirement (none of the exceptions applies).

(a) The related parties to whom the proposed resolution would permit financial benefits to be given

Icon.

(b) The nature of the financial benefits

The provision by the Company of guarantees in respect of MMG’s obligations to pay royalties if required by royalty holders, as provided in the Royalty Arrangements Deed (see clause 4.3 above of this Explanatory Statement).

(c) In relation to each Director, the Director’s recommendation about the proposed resolution and reasons for it (if the Director didn’t want to make a recommendation or was not available to consider it – why not)

Mr Hatch and Mr Franks are both in favour of the Resolution.

Each of the other Directors do not wish to make a recommendation as they have a material personal interest in the outcome of the proposed resolution.

(d) In relation to each such Director, whether the Director had an interest in the outcome of the proposed resolution (and if so, what it was)

Mr Hatch and Mr Franks do not have an interest in the outcome of the proposed resolution.

Mr Morris is an associate of Goldcrest. Goldcrest is a 10% shareholder in Icon.

Dr Andrews is a 50% shareholder in ACH. ACH is a 76% shareholder in Icon.

Mr Phillips is a beneficiary of a trustee shareholder of ACH (Shinewin Nominees Ltd, which is a 50% shareholder of ACH).

In addition, these three Directors have a financial interest as specified in Resolution 2 (see clause 6 above of this Explanatory Statement).

(e) All other information that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s interests to pass the proposed resolution and is known to the Company or to any of its Directors

See the Independent Expert’s Report and the Snowden Valuation Report included with this Explanatory Statement (and the conclusion extracted in clause 5.2 above of this Explanatory Statement

10 Resolution 6: Advances of funds

10.1 General

Resolution 6 seeks Shareholder approval under section 208 of the Corporations Act for the giving of financial benefits by the Company to related parties.

10.2 Corporations Act section 208 approval

Section 208 of the Corporations Act requires the Company to obtain Shareholder approval to give a financial benefit to a related party (unless one of the exceptions applies), which benefit must be given within 15 months after the approval. The Company’s proposal for the Company to advance funds to any of its subsidiaries (and for any of its subsidiaries to advance funds to each other) after completion of the Share Purchase Agreement and Loan Arrangements Deed falls within this requirement as inter-company advances may be reqarded as providing a financial benefit to Icon and the other outstanding creditors of PTNM, in their capacities as creditors of the subsidiaries, under the Loan Arrangements Deed.

(a) The related parties to whom the proposed resolution would permit financial benefits to be given

Icon which is controlled by ACH, which is in turn controlled by Dr Andrews as a 50% shareholder and Mr Phillips as a 50% shareholder. Goldcrest is controlled by Mr Morris. SMV and PTPI are each controlled by Dr Andrews, Icon, ACH, Dr Andrews, Mr Phillips, PTPI and Goldcrest are all creditors of PTNM under the Loan Arrangements Deed as described in clause 4.2 and so may receive financial benefit.

(b) The nature of the financial benefits

The Company’s advancing funds to any of its subsidiaries (and for any of its subsidiaries to advance funds to each other), in their capacities as creditors of the subsidiaries as described in paragraph (a) above.

(c) In relation to each Director, the Director’s recommendation about the proposed resolution and reasons for it (if the Director didn’t want to make a recommendation or was not available to consider it – why not)

Mr Hatch and Mr Franks are both in favour of the Resolution.

Each of the other Directors do not wish to make a recommendation as they have a material personal interest in the outcome of the proposed resolution.

(d) In relation to each such Director, whether the Director had an interest in the outcome of the proposed resolution (and if so, what it was)

Mr Hatch and Mr Franks do not have an interest in the outcome of the proposed resolution.

Mr Morris is an associate of Goldcrest. Goldcrest is a 10% shareholder in Icon.

Dr Andrews is an 50% shareholder in ACH. ACH is a 76% shareholder in Icon.

Mr Phillips is a beneficiary of a trustee shareholder of ACH (Shinewin Nominees Ltd, which is a 50% shareholder of ACH).

In addition, these three Directors have a financial interest as specified in Resolution 2 (see clause 6 above of this Explanatory Statement).

(e) All other information that is reasonably required by Shareholders in order to decide whether or not it is in the Company’s interests to pass the proposed resolution and is known to the Company or to any of its Directors

11 Documents available for inspection

Copies of the following documents are available for inspection at the Company’s office at Suite 3, Kearns Crescent, Applecross, Western Australia prior to the General Meeting:

(a) the COW;
(b) the Share Purchase Agreement;
(c) the Loan Arrangements Deed; and
(d) the Royalty Arrangements Deed.

Schedule 1 – Glossary

In the Notice of General Meeting and this Explanatory Statement, the following terms have the following meanings unless the context otherwise requires:

“ 1991 Royalty ” has the meaning given in paragraph 3.4(b)(i) of the Explanatory Statement.

“ 1995 Royalty ” has the meaning given in paragraph 3.4(b)(ii) of the Explanatory Statement.

“ 2003 Royalty ” has the meaning given in paragraph 3.4(b)(iii) of the Explanatory Statement.

“ ACH ” has the meaning given in paragraph 2.3(a) of the Explanatory Statement.

“ Additional Warrantors ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“A$” means the lawful currency of Australia.

“ASIC” means Australian Securities and Investments Commission.

“ASX” means ASX Limited (ABN 98 008 624 691) and where the context permits, the Australian Securities Exchange operated by ASX Limited.

“Board” means board of Directors of the Company.

“ Borrow and Use Permit ” has the meaning given in paragraph 3.5 of the Explanatory Statement.

“Business Day” means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that the ASX declares is not a business day.

“Company” means Kingsrose Mining Limited ABN 49 112 389 910.

“ Conditions Satisfaction Date ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“ Consideration Shares ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“ Contract of Work or COW ” has the meaning given in paragraph 2.1 of the Explanatory Statement.

“Corporations Act” means the Corporations Act 2001 (Cth).

“Directors” means the directors of the Company.

“ DMCC ” has the meaning given in paragraph 3.3(b) of the Explanatory Statement.

“ Dr Andrews ” has the meaning given in paragraph 1.2 of the Explanatory Statement.

“Explanatory Statement” means the explanatory statement to this Notice of General Meeting.

“ Goldcrest ” has the meaning given in paragraph 2.3(a) of the Explanatory Statement.

“ Icon ” has the meaning given in paragraph 2.1 of the Explanatory Statement.

“ Icon Shareholders ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“ Independent Board Committee or IBC ” has the meaning given in paragraph 1.3 of the Explanatory Statement.

“ Independent Expert ” means Stantons International Securities Pty Ltd.

“ Independent Expert’s Report ” has the meaning given in paragraph 2.2 of the Explanatory Statement.

“ Listing Rules ” means the listing rules of ASX.

“ Loan Arrangements Deed ” has the meaning given in paragraph 4.2 of the Explanatory Statement.

“ MEMR ” has the meaning given in paragraph 3.3(b) of the Explanatory Statement.

“ MMG ” means MM Gold Pty Ltd ACN 001 962 723.

“ Mr Franks ” has the meaning given in paragraph 1.2 of the Explanatory Statement.

“ Mr Hatch ” has the meaning given in paragraph 1.2 of the Explanatory Statement.

“ Mr Morris ” has the meaning given in paragraph 1.2 of the Explanatory Statement.

“ Mr Phillips ” has the meaning given in paragraph 1.2 of the Explanatory Statement.

“ Mr Walker ” has the meaning given in paragraph 2.3(c) of the Explanatory Statement.

“ Mr Yu ” has the meaning given in paragraph 2.3(a) of the Explanatory Statement.

“ NOPL ” has the meaning given in paragraph 2.1 of the Explanatory Statement.

“ Notice of General Meeting ” means this Notice of General Meeting and includes the Explanatory Statement and Proxy Form.

“ NSR ” means Net Smelter Royalty.

“ Orris ” has the meaning given in paragraph 2.3(a) of the Explanatory Statement.

“ Project ” has the meaning given in paragraph 2.1 of the Explanatory Statement.

“ Project Loan ” has the meaning given in paragraph 3.1.

“ PTNM ” has the meaning given in paragraph 2.1 of the Explanatory Statement.

“ PTPI ” has the meaning given in paragraph 4.2 of the Explanatory Statement.

“Resolution” means a resolution contained in this Notice of General Meeting.

“ Royalty Arrangements Deed ” has the meaning given in paragraph 4.3 of the Explanatory Statement.

“ Sale Shares ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

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

“Shareholder” means a shareholder of the Company.

“ Share Purchase Agreement ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“ SMV ” has the meaning given in paragraph 4.2 of the Explanatory Statement.

“ Snowden ” has the meaning given in paragraph 2.2 of the Explanatory Statement.

“ Snowden Valuation Report ” has the meaning given in paragraph 2.2 of the Explanatory Statement.

“ Warrantors ” has the meaning given in paragraph 4.1 of the Explanatory Statement.

“WST” means Australian Western Daylight Savings Time.

“ Zelman ” has the meaning given in paragraph 2.3(a) of the Explanatory Statement.

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27 November 2008

The Directors Kingsrose Mining Limited Suite 3, 16 Kearns Crescent APPLECROSS WA 6153

Dear Sirs

Re: KINGSROSE MINING LIMITED (“KINGSROSE” OR “THE COMPANY”) (ABN 49 112 389 910) ON THE PROPOSAL TO ISSUE SHARES PURSUANT TO SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT 2001 AND AUSTRALIAN SECURITIES EXCHANGE (“ASX”) LISTING RULE 10.1 AND 10.11 TO THE VENDOR OF MM GOLD PTY LTD AND POTENTIAL TRANSFER OF SHARES TO A RELATED PARTY

1. Introduction

1.1 We have been requested by the Directors of Kingsrose who comprise the Independent Board Committee to prepare an Independent Expert’s Report to determine the fairness and reasonableness relating to the proposal to issue 42,500,000 shares (“Consideration Shares”) to Icon Enterprises Limited (“Icon” or “the Vendor”). Icon Enterprises Limited (“Icon”) owns 100% of the shares in MM Gold Pty Ltd (“MMG”). In turn, MMG owns 100% of the shares in Natarang Offshore Pty Ltd (“NOPL”) and NOPL owns 85% of the shares in PT Natarang Mining (“PTNM”). MMG and NOPL are companies registered in Australia and PTNM is an Indonesian registered company. PTNM has ownership of a potential gold/silver mine known as the Way Linggo Gold and Silver Project in Indonesia (‘Mining Assets”) under a Contract of Work (“COW”) with the Indonesian Government. Further details on the Project are outlined in the November 2008 Explanatory Statement to Shareholders attached to the Notice of Meeting (“the Notice”) including risks that mining approvals may not be granted. It is our understanding that Icon proposes to undertake an in-specie distribution of the 42,500,000 Consideration Shares that will be issued to it if Resolutions 1 and 3 are passed and consummated to its shareholders approximately 12 months after receipt of the shares (the shares are to be escrowed from trading on ASX for a twelve month period). Thus the 42,500,000 Consideration Shares will ultimately be distributed by Icon to its shareholders and the Icon shareholders directly will own shares in Kingsrose. Advance Concept Holdings Pty Ltd (“ACH”), a company controlled by Michael Andrews (“Andrews”) a director of Kingsrose and James William Philips (“Phillips”) also a director of Kingsrose will via the in-specie distribution obtain an interest in 32,300,000 shares in Kingsrose that will result in the interests of ACH having a indirect beneficial interest in 17.60% of the ordinary share capital of Kingsrose (after the issue of say 75,000,000 shares to be issued

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pursuant to Resolution 4). A potential range of shareholding interests of Icon are set out in paragraph 1.6 below. ACH owns 76% of Icon. We are also reporting on the proposal that will allow the interests of ACH to potentially increase its shareholding in Kingsrose in excess of 20%. Further details are as noted below and in Resolutions 1 and 3 in the Notice and Explanatory Statement to Shareholders of Kingsrose (“the Explanatory Statement”) of November/December 2008. Andrews owns 50% of ACH and a trust in which Phillips is a beneficiary owns 50% of ACH. The total shareholding interests of Icon before the in specie distribution would be approximately 39.15% before shares were issued pursuant to Resolution 4 and the interests of ACH would be approximately 29.76%.

1.2 Pursuant to a Letter of Intent (“LOI”) of April 2008 with Messrs John Morris, Mike Andrews and Bill Philips (all directors of Kingsrose and such directors control companies that collectively have a beneficial interest in approximately 86% of the issued capital of Icon), Kingsrose was proposing, subject to various conditions including shareholders approval, to acquire a 100% interest in all of the issued capital of Icon that in turn has indirectly an 85% interests in the Mining Assets. However pursuant to the Share Purchase Agreement between Kingsrose and Icon of September 2008 Icon is to be the Vendor of the shares it holds in MMG which in turn owns 100% of NOPL and NOPL owns 85% of PTNM. The Share Purchase Agreement was subsequently varied in November 2008. The acquisition price per the Share Purchase Agreement is made up of the issue of 42,500,000 Consideration Shares in Kingsrose and the repayment of vendor and other loans to a maximum of up to $7,590,000. The Directors of Kingsrose advised at that time that at the current share price of 27 cents per share, the deemed consideration in relation to the 42,500,000 Consideration Shares would be valued at $11,475,000. In addition, Kingsrose will repay loans, advances, fees and asset purchases (see paragraph 5.4.1) made or deemed to be made by Icon’s shareholders and others indirectly to PTNM in a sum as noted below and Kingsrose will commit to fund completion of the Way Linggo Gold and Silver Project through to production and this is estimated by Kingsrose at approximately US$10,000,000. Resolution 3 and section 4.2 of the Explanatory Statement to the Notice outlines loans, advances and fees (“loans”) to be repaid by PTNM (or directly by Kingsrose) to various parties, including the interests of Andrews, Phillips and Morris relating to funds invested in project construction costs and working capital costs pertaining to Way Linggo. The repayment of loans to the related and associated parties is to total approximately up to $7,590,000, although only $1,270,000 will be repaid immediately and the balance of up to $6,320,000 will be paid out of cash flows from the Way Linggo Project. In addition, Kingsrose has agreed to guarantee certain royalty payments as outlined in the Explanatory Statement. The acquisition of all of the shares in MMG from Icon, the lending of up to $7,590,000 to PTNM and repayment of loans up to $7,590,000 to related and associated parties ($6,320,000 now to be out of cash flows from the Way Linggo Project and $1,270,000 to be paid in cash) and the guarantee of payment of royalties as outlined in Resolutions 1, 2, 3 and 5 and more fully described in the Explanatory Statement are known as the Proposed Transactions for the purposes of this report.
1.3 For the purpose of this report the proposed issue of 42,500,000 ordinary Consideration Shares to Icon (will be a number representing approximately 23.15% of the issued capital of Kingsrose at settlement after the issue of shares pursuant to other Resolutions noted in the Notice that includes the assumed issue of 75,000,000 shares to partly fund the payment of up to $7,590,000 loan repayments and $10,000,000 to fund the development costs and working capital

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

of the Way Linggo Project) and these funds will be provided through the funds raised by the proposed issue of shares referred to in Resolution 4 of up to $15,000,000, a project loan or a combination of both. The actual percentage may be less if the number of shares issued to raise $15,000,000 is at a price less than 20 cents per share (refer paragraph 1.6 for possible percentage interests). In the event that a capital raising is not successful or only partly successful, the Company may seek debt finance for the Way Linggo Gold/Silver Project or a combination of debt and share equity and the debt component may be up to $10,000,000. The issue of the Consideration Shares and the Proposed Transactions, along with the proposed issue of 32,300,000 of the Consideration Shares to ACH on completion of Icon undertaking an in-specie distribution of the Consideration Shares to its shareholders pursuant to the terms of the Acquisition Agreement are inter-alia subject to shareholders approval as part of Resolutions 1 and 3. Furthermore the lending of up to $7,590,000 to PTNM (directly and indirectly) and allowing PTNM to repay loans to the interests of Andrews, Phillips, Morris and others as more fully described in the Notice and Explanatory Statement are also subject to shareholders approval and forms part of Resolution 2. As noted in the Explanatory Memorandum, in the event that the $15,000,000 is not raised to make the full payments under the Loan Arrangement Deed, the loans totalling $6,590,000 are to be repaid from cash flow generated from the development of the Way Linggo Gold and Silver Project or from a future capital raising and $1,000,000 is to be repaid from cash resources to a party that is unrelated together with the recoupment of costs amounting to $270,000 to related parties.

1.4 Under Section 606 of The Corporations Act ("TCA"), a person must not acquire a relevant interest in issued voting shares in a company if because of the transaction, that persons or someone else's voting power in the company increases:
(a) From 20% or below to more than 20%; or
(b) From a starting point that is above 20% and below 90%.

Under Section 611 (Item 7) of the TCA, Section 606 does not apply in relation to any acquisition of shares in a company approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transaction pursuant to a Section 611 (Item 7) meeting.

If the Proposed Transactions proceed, Icon, as the Vendor of MMG, will be issued a total of 42,500,000 Consideration Shares in Kingsrose and Icon will own approximately 23.15% of the expanded issued capital of Kingsrose provided no listed or unlisted share options and existing Notes have been exercised. This percentage assumes the issue of 75,000,000 shares to fund the estimated $15,000,000 noted above. As noted above, the percentage may be less if the $15,000,000 is raised at less than 20 cents per share (that is most likely) and may be more if the $15,000,000 is not raised (Icon could own up to a maximum 39.15% immediately before the issue of shares pursuant to Resolution 4). Resolution 4 refers to the proposal to raise up to $15,000,000 by way of a share placement. Initially, the proposal was to raise funds at not less than 20 cents per share but due to a falling share market, the actual issue price has not been determined and in all probability will be well below 20 cents per share. There is also the possibility that part or all of the monies raised will be by debt but this has

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not been finalised although it is expected to be up to US$10,000,000. The percentage interests or potential interests of Icon, ACH, Andrews, Phillips and Morris prior to the capital raising as envisaged pursuant to Resolution 4 are outlined in paragraph 1.6 below.

1.5 The Company has considered that the Proposed Transactions amount to transactions with persons in a position of influence under ASX Listing Rule 10.1 as the Proposed Transactions involves issuing shares to Icon that is via a shareholding structure noted in paragraph 1 associated with three current directors of Kingsrose, namely John Morris (“Morris”), Andrews and Philips (collectively known as the “Associated Directors”). Interests associated with the Associated Directors indirectly have a beneficial interest of 86% of the issued shares in Icon. ASX Listing Rule 10.1 requires shareholders to approve transactions involving transactions with director related parties where the value of the transaction represents more than 5% of the equity interests of a company. In this case the Proposed Transactions would represent more than 5% of the current equity interests of Kingsrose. ACH is a company controlled by Andrews and Phillips and ACH owns 76% of Icon’s issued capital. The Directors of ACH include Messrs Andrews and Phillips and Andrews has a 50% shareholding in ACH and a company that is trustee for a trust in which Phillips is a beneficiary has a 50% shareholding in ACH. Thus indirectly, the interests of Andrews’ control 38% of Icon and the interests of Phillips control 38% of Icon. Goldcrest Corporation Pty Ltd (‘GCPL”) owns 10% of the issued capital of Icon and GCPL is controlled by Morris. ACH’s indirect relevant shareholding interest in Kingsrose would total 32,300,000 shares representing approximately 17.60% of the expanded issued capital of Kingsrose assuming the issue of 75,000,000 shares to fund the $15,000,000 noted above. As noted the final number of shares has not been determined as it will depend on the share price and market conditions. Part of the up to $15,000,000 capital raising may be by debt and this may be up to US$10,000,000. Refer paragraph 1.6 below on further potential shareholding interests of Icon, Andrews, Phillips and Morris. Indirectly, via GCPL being a shareholder in Icon, GCPL would indirectly have a relevant interest in a total of 4,250,000 shares in Kingsrose representing approximately 2.32% of the expanded issued capital of Kingsrose assuming the issue of 75,000,000 shares to fund the $15,000,000 noted above (approximately 3.92% if no shares issued under Resolution 4). The existing shareholdings in Kingsrose of interests associated with Messrs Andrews, Phillips and Morris as at 15 November 2008 total nil shares, nil shares and 1,000,000 shares respectively. The shareholdings will also be deemed to be associated with ACH and GCPL. Indirectly or directly, post the Proposed Transactions and issue of shares to raise up to $15,000,000, the indirect beneficial shareholding in Kingsrose of Andrews would total 16,150,000 shares (approximately 8.80%), Phillips indirect beneficial shareholding would be 16,150,000 (approximately 8.80%) and Morris’s beneficial shareholding interest would be 5,250,000 (approximately 2.86%). Without the issue of shares pursuant to Resolution 4, the indirect shareholding interests of Andrew’s, Phillip’s and Morris’s (before the in specie distribution of shares) would approximate 14.88%, 14.88% and 4.85% respectively. As noted, refer to paragraph 1.6 below for potential shareholding interests of Icon, Andrews, Phillips and Morris.
1.6 Therefore a Notice prepared in relation to a meeting of shareholders convened for the purposes of Section 611 (Item 7) of TCA and ASX Listing Rule 10.1 must be accompanied by an Independent Expert's Report stating whether the issue of 42,500,000 Consideration Shares to Icon as part of the Proposed Transactions noted under Resolutions 1 and 3 and the potential of ACH a company associated

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with Andrews and Phillips to obtain an indirect 29.76% beneficial interest in Kingsrose prior to the capital raising but may reduce to as much as 17.60% if 75,000,000 shares are issued pursuant to Resolution 4 as noted above (and possibly lower if more shares are issues pursuant to Resolution 4 and possibly higher if less than 75,000,000 shares are issued pursuant to Resolution 4) are fair and reasonable. To assist shareholders in making a decision on the issue of 42,500,000 Consideration Shares to Icon and the possible transfer of 32,300,000 shares to ACH that is controlled 50% by each of Andrews and Phillips as noted above, the directors of Kingsrose have requested that Stantons International Securities Pty Ltd (“SIS”) prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the issue of 42,500,000 Consideration Shares and the potential transfer of 32,300,000 of the Consideration shares to the interests of ACH are fair and reasonable to the nonassociated shareholders of Kingsrose (not associated with Icon and in particular the Associated Directors).

We set out below the potential shareholding interest of Icon in the event that $15,000,00 is raised at say 7.5 cents,10 cents, 12 cents and 15 cents (all pursuant to Resolution 4).

Raise $15,000,000 – Icon’s interest before in-specie distribution At 5.6 cents At 10 cents At 12 cents At 15 cents 11.29 % 16.44% 18.20% 20.38%

The shareholding interests of Andrews and Phillips (individually) post the in-specie distribution of 42,500,000 shares would be:

Raise $15,000,000 – Andrews and Phillips individually At 5.6 cents At 10 cents At 12 cents At 15 cents 4.29% 6.25% 6.92% 7.74%

The shareholding interests of Morris (including GCPL) would lie in the range as follows:

Raise $15,000,000 At 5.6 cents At 10 cents At 12 cents At 15 cents 1.39% 2.03% 2.25% 2.52%

There are two other Resolutions being put to the shareholders of Kingsrose. Resolution 4 relates to the issue of shares to raise up to $15,000,000 and Resolution 5 relates to the approval for MMG to perform the royalty obligations. We are not reporting on the fairness and reasonableness of Resolutions 4 and 5.

1.7 Apart from this introduction, this report considers the following:
Summary of opinion
Implications of the proposals
Corporate history and nature of business of Kingsrose
Future direction of Kingsrose
Basis of valuation of Kingsrose shares
Value of consideration
Basis of valuation of Icon
Conclusion as to fairness

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Reasonableness of the offer
Conclusion as to reasonableness
Sources of information
Appendix A and Financial Services Guide
1.8 In determining the fairness and reasonableness of the issue of 42,500,000 Consideration Shares as part of the Proposed Transactions, we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Statement 111. Regulatory Statement 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target”, and irrespective of whether the consideration is scrip or cash. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, where there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Regulatory Statement 111 also states that, where an acquisition of shares by way of an allotment is to be approved by shareholders pursuant to Section 611 (Item 7) of TCA, it is desirable to commission a report by an independent expert stating whether or not the proposal is fair and reasonable, having regards to the proposed allottee(s) (in this case Icon) and whether a premium for potential control is being paid by the allottee(s).

Accordingly, our report relating to the issue of 42,500,000 Consideration Shares to Icon (and in particular the indirect issue of 32,300,000 Consideration Shares to ACH and the potential for the interests of Andrews and Phillips to increase their shareholding) is concerned with the fairness and reasonableness of the proposals with respect to the existing non-associated shareholders of Kingsrose (not associated with Icon and the Associated Directors and ACH) and whether Icon and the interests of ACH are paying premiums for potential control.

1.9 In our opinion, assuming the capital raising proposed under Resolution 4 is consummated or an alternative commercially acceptable debt/capital raising is in place, the proposals as outlined in paragraph 1.1 and Resolutions 1 and 3 are, on balance fair and considered reasonable to the shareholders of Kingsrose not associated with Icon and the interests of ACH. However, there is still a potential risk that forestry approval may not be granted or at least significantly delayed. Those shareholders who consider the risk to be high may not wish to approve the Proposed Transactions noted in Resolutions 1 and 3.

The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the Independent Geologist's Valuation Report (Snowden Valuation Report) on the Mining Assets (85%) indirectly owned by Icon (held by PTNM) prepared by Snowden Mining Industry Consultants Pty Ltd (dated 26 November 2008) (“Snowden”) a copy of which is attached as an appendix to the Notice.

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2. Implications of the Proposals

2.1 As at 26 November 2008 there were 66,050,020 ordinary fully paid shares on issue in Kingsrose. The significant shareholders as at 17 November 2008 are believed to be:

KRM (WA) Pty Ltd Airedale (Asia) Pty Ltd Upper Mantle Investments Pty Ltd (McLillree Super Fund Account) Simon Cato World Power Pty Ltd Bond Street Custodians Pty Ltd	No. of fully paid shares 20,000,000 6,250,000 1,875,000 1,800,000 1,716,846 1,280,000 32,921,846	% of issued fully paid shares 30.28 9.47 2.83 2.73 2.60 1.93
		49.84

The top 20 shareholders at 17 November 2008 owned approximately 67.77% of the issued capital of the Company. KRM (WA) Pty Ltd and Airedale Pty Ltd own 10,000,000 and 5,625,000 listed share options in the Company out of 38,525,010 listed share options on issue.

2.2 If the Proposed Transactions are completed, the number of fully paid shares that would be owned by Icon as Vendor of MMG is 42,500,000. The percentage shareholding that may be owned by Icon would be approximately 23.15% assuming the issue of 75,000,000 shares pursuant to Resolution 4. In the absence of any shares issued pursuant to Resolution 4, Icon prior to an in-specie distribution would own approximately 39.15% of the expanded share capital of Kingsrose. The percentage will increase if less than 75,000,000 shares are issued and decrease if more than 75,000,000 shares are issued (refer possible shareholding interests under paragraph 1.6 of this report). The number of shares to be issued pursuant to Resolution 4 has not been finalised and some of the up to $15,000,000 raising envisaged may be financed by debt (possibly around $10,000,000). It is noted that there are on issue 11,000,000 Convertible Notes (“Notes”) that may be converted into ordinary fully paid shares in Kingsrose at 20 cents per share so that potentially a further 55,000,000 shares may be issued if all Notes are converted to shares. In addition, there are 38,525,010 share options listed on ASX exercisable at 20 cents each on or before 31 December 2012 and 5,500,000 unlisted share options exercisable at 25 cents each, on or before 31 December 2012. Interests of Andrews own nil shares and 1,000,000 25 cent unlisted share options, interests of Phillips own nil shares, 3,000,000 listed share options exercisable at 20 cents each and 6,000,000 of the Notes and interests of Morris own 1,000,000 shares and 1,000,000 25 cent unlisted share options and 500,000 listed 20 cent share options. Further potential shareholdings of Icon directly and the Associated Directors indirectly may therefore alter if share options are exercised and/or Notes converted to shares in Kingsrose. Airedale (Asia) Pty Ltd (“Airedale”) in which Philips is a director but not a shareholder owns 6,250,000 shares, 2,500,000 listed 20 cent share options and 5,000,000 Convertible Notes. This company is not controlled by Phillips. KRM is a company that acts as trustee for the Kingsrose Unit Trust and Phillips is a director of KRM but not a shareholder in KRM. KRM owns 20,000,000 shares and 10,000,000 listed 20 cent share options in Kingsrose. Both Airedale and KRM are not deemed to be an associate

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of Phillips for the purposes of voting on Resolutions 1 and 3. Airedale and KRM have no beneficial interest in the 42,500,000 shares which are part of the subject of the Proposed Transactions. ACH a company controlled by Andrews and Phillips, directors of Kingsrose and ACH will via the in-specie distribution obtain an interest in 32,300,000 shares in Kingsrose that will result in ACH having a beneficial interest in no less than 17.60% of the ordinary share capital of Kingsrose (Andrews and Phillips will have an approximate 8.80% each beneficial interest in Kingsrose) assuming the issue of 75,000,000 shares as noted above and 29.76% (14.88% to each of Andrews and Philips) if no shares are issued pursuant to Resolution 4. The actual percentages of Icon (pre in-specie distribution) may lie in the range of 11.29% and 25.22% as outlined in paragraph 1.6 of this report).

2.3 Kingsrose will own 100% of the issued capital of MMG and MMG owns 100% of NOPL and NOPL owns 85% of the issued capital of PTNM. PTNM has been granted a COW that gives it the right to mine an area known as the Way Linggo Gold and Silver Project in Indonesia. The Concession period is 30 years from the date of commencement of the Operating Period (as defined) and this means that the Concession Period expires 31 August 2034.
2.4 It is not expected that a new director will be appointed on completion of the Proposed Transactions.
2.5 Information on the Mining Assets (85% interest) to be indirectly acquired by acquiring MMG is outlined in the Explanatory Statement and the Snowden Valuation Report of 26 November 2008. Information on Kingsrose, Icon, MMG, NOPL and PTNM are also outlined in the Explanatory Statement attached to the Notice.

3. Corporate History and nature of Business of Kingsrose

3.1 Kingsrose is an ASX listed public company from 7 December 2007 after raising $6,000,000 via an initial public offering/prospectus and is currently a mineral explorer and gold producer on the joint ventured Sand Queen Gold Mine (underground mining potential only) as part of the Comet Vale area in Western Australia. The Company is earning a 50% interest in the Joint venture from Reed Resources Limited by paying all mining costs for underground mining to 243 metres. It may earn a 60% interest for underground mining after the first 243 metres. Under the terms of the JV Agreement, 25,000 ounces of gold production is required before 31 May 2009. If not achieved, Kingsrose’s interest reduces to nil.

4. Future Directions of Kingsrose

4.1 We have been advised by the directors and management of Kingsrose that:
There are no proposals currently contemplated either whereby Kingsrose will acquire any further properties or assets from Icon (however Kingsrose will issue 42,500,000 Consideration Shares to Icon as outlined above) or where Kingsrose would transfer any of its property or assets to Icon;
The composition of the Board will not change in the short term;

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The Company proposes via its indirect interest in the Indonesian Mining Assets to enter into gold/silver production at the Way Linggo Gold and Silver Project (see significant risks as noted in the Explanatory Statement);
No dividend policy has been set and it is not proposed to be set until such time as the Company is profitable and has a positive cash flow;
The Company intends to continue its investment in the underground gold mining Sand Queen Joint Venture with Reed Resources Limited;
The Company plans to undertake a fund raising by way of an issue of shares to raise up to $15,000,000, although part of the amount may be by debt (possibly up to US$10,000,000). $1,000,000 of the amount raised will be used to repay a $1,000,000 loan of costs to an unrelated party and $270,000 recoupment of costs and $6,320,000 will be repaid out of cash flows from the Way Linggo Project. In addition, Kingsrose will lend approximately $10,000,000 to PTNM to assist in financing the remaining development cost of the Way Linggo Gold and Silver Project if it proceeds along with working capital that inter-alia, is subject to Indonesian Government approval that may be at risk.

5. Basis of Valuation of Kingsrose Shares

5.1 Shares

5.1.1 In considering the proposals to determine the value of the Consideration Shares to be issued to acquire an indirect 85% interest in the Mining Assets from Icon (via acquiring all of the issued capital of MMG from Icon), we have sought to determine if the consideration payable by Kingsrose to Icon is fair and reasonable to the existing non-associated shareholders of Kingsrose.
5.1.2 The offer would be fair to the existing non-associated shareholders if the value of the assets (shares in MMG and in effect an indirect interest in 85% of the Mining Assets) being acquired by Kingsrose is greater than the implicit value of the 42,500,000 Consideration Shares and being offered as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on Kingsrose’s shares prior to the Proposed Transactions for the purposes of this report.
5.1.3 The valuation methodologies we have considered in determining a theoretical value of a Kingsrose ordinary share are:
Capitalised maintainable earnings/discounted cash flow;
Takeover bid - the price at which an alternative acquirer might be willing to offer;
Adjusted net asset backing and windup value; and
The weighted average market price of Kingsrose shares.
5.2 Capitalise maintainable earnings and discounted cash flows.
5.2.1 Due to Kingsrose’s operations, a lack of profit history arising from business undertakings and the lack of a reliable future cash flow from a current business activity, we have considered these methods of valuation not to be relevant for the purpose of this report. It is feasible that the Sand Queen Gold Mine Joint Venture may in the long run turn out to be profitable and cash flow positive to Kingsrose, however there is currently insufficient data to undertake a formal discounted cash

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flow valuation or of capitalising maintainable earnings. However, we note that Kingsrose will own 100% of MMG which in turn will own 100% of NOPL that owns 85% of PTNM that owns and plans to commercialise the Mining Assets in Indonesia. The Way Linggo Gold and Silver Project of PTNM is expected to be profitable and provide positive cash flows.

5.3 Takeover Bid
5.3.1 It is possible that a potential bidder for Kingsrose could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Kingsrose have formed the view that there is unlikely to be any takeover bids made for Kingsrose in the immediate future. However after the completion of the Proposed Transactions, Icon’s interest would be approximately 23.15% (before the conversion of any Notes and share options) but after the issue of say 75,000,000 shares to raise up to $15,000,000 as envisaged in Resolution 4 (39.15% before shares issue pursuant to Resolution 4 and possibly between 11.29% and 23.15% as noted in paragraph 1.6 above).
5.4 Adjusted Net Asset Backing
5.4.1 We set out below an audited consolidated balance sheet of Kingsrose as at 30 June 2008 along with a pro-forma consolidated balance sheet assuming the following:
The acquisition of all of the issued capital of MMG from Icon by way of an issue of 42,500,000 ordinary shares at 28.4 cents each (consideration deemed to be $12,070,000);
The repayment by Kingsrose of say $7,590,000 of loans made or deemed to be made by Icon shareholders and others to PTNM (notwithstanding that up to $6,590,000 will be repaid out of cash flows from the Way Linggo Project);
Assuming the incidental acquisition costs (including legal, expert reports, mailing and printing of the Notice etc) of the Proposed Transaction and the Notice are $100,000 but are expensed;
The issue of say 150,000,000 shares pursuant to a Prospectus at 10 cents each to raise a gross $15,000,000 and expensing against share equity capital raising costs of approximately $1,000,000; and
Assuming further losses of say $1,500,000 to 30 September 2008.

Current Assets Cash Trade and other receivables Inventory Non Current Assets Plant and equipment Capitalised acquisition costs Total Assets	Kingsrose Consolidated 30 June 2008 $’000’s 3,138 77 529 3,744 745 444 1,189 4,933	Kingsrose Pro-forma Consolidated 30 June 2008 (as adjusted) $000's 7,948 161 529
		8,638
		2,088 18,766
		20,854
		29,492

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Current Liabilities Payables and accruals HP Loans Provisions Total Current Liabilities Non Current Liabilities Rehabilitation provision Other loans Convertible Notes Total Non Current Liabilities Total Liabilities Net Assets Represented by: Issued capital Reserves Accumulated losses Net Equity	Kingsrose Consolidated 30 June 2008 $’000’s 686 93 97 876 100 100 229	Kingsrose Pro-forma Consolidated 30 June 2008 (as adjusted) $000's
		775 93 97
		965
		100 100 229
	429 1,305 3,628 12,508 2,483 (11,363) 3,628	429
		1,394
		28,098
		38,578 2,483 (12,963)
		28,098

5.4.2 Based on the book values, this equates to a value per fully paid ordinary share post the Proposed Transaction (assumes 258,550,200 ordinary shares on issue) of approximately 10.8 cents (ignoring the value, if any, of non-booked tax benefits and losses incurred post 30 June 2008). Using the preferred valuation of the Acquisition Assets of $23,285,000, the adjusted book value would be approximately 12.6 cents. The net book tangible asset backing as at 30 June 2008 (as adjusted) prior to the proposed acquisition and other proposed share issues, equates to approximately 5.4 cents (66,050,020 shares on issue). The minority interest in PTNM has been absorbed by the Kingsrose Group on consolidation as it is not expected that the minority party will fund losses. The above net asset figure could alter depending on the number of shares issued under Resolution 4. If we assumed that the 42,500,000 shares were issued at the 17 November 2008 share price of 7.5 cents and that $15,000,000 was raised at say 5.6 cents per share (80% of the market value of 7 cents as at 26 November 2008), the net pro-forma net assets would total approximately $12,156,000 and the asset backing per share (376,407,163 shares on issue) would approximate 3.2 cents. The asset backing per share could be lower if the Consideration Shares and Placement Shares are issued below 5.6 cents each and the amount raised was less than $15,000,000.
5.4.3 We have accepted the amounts for all current assets and current liabilities. No detailed review was made by us on the assets and liabilities disclosed in the unaudited adjusted consolidated balance sheet as at 30 June 2008. We have been assured by the management of Kingsrose that they believe the carrying value of all current assets, non current assets and liabilities at 30 June 2008 are fair and not materially misstated.
5.4.4 For accounting purposes, the consideration for the issue of Kingsrose shares to acquire the shares in MMG (effectively indirectly acquiring 85% of the Mining Assets owned by PTNM) from Icon will be booked at market value and not any perceived technical value. Accordingly, for the reasons outlined above, we

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believe that for the purpose of this report, it is not appropriate to use any technical value of a Kingsrose share in assessing whether the proposal to acquire the shares in MMG from Icon is fair and reasonable.

5.5 Market Price of Kingsrose Fully Paid Shares
5.5.1 Between 7 December 2007 (date of listing on ASX) to the one day prior to the date of the announcement of the Proposed Transaction with Icon (28 April 2008) the shares in Kingsrose have traded in the following range:

2007	High Cents	Low Cents	Last Sale Cents	Volume Trade (000’s)
December (7 to 31st)	40	31.5	35	2,419
2008
January	34	23	23	874
February	29	22	27.5	575
March	35	22	25	2,303
April(to27th)	36	24	34	2,113

The weighted average share price for the 18 days prior to the 28 April 2008 approximated 28.4 cents compared with the deemed consideration of 27 cents for the 42,500,000 Consideration Shares. It is feasible that the share price rise in the week prior to the announcement may have reflected speculation of the announcement of the Proposed Transaction as the shares rose from the mid 20’s to trade in the 30’s for the last few days.

It is noted that a probable indirect acquisition of 85% of PTNM and a possible consideration payable was discussed at a Board meeting on 18 March 2008 when the shares in Kingsrose were trading in the mid 20’s. Since the announcement of the Proposed Acquisition on 28 April 2008, the shares in Kingsrose have traded in the range of 8 cents to 40 cents. It is noted that as at 25 November 2008 the last sale was at 7 cents.

5.5.2 Generally, the market is a fair indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher.

In the case of Kingsrose, current liquidity is reasonable but may later on be required to:

undertake a capital raising of some significance (or a series of smaller capital raisings) and / or
sell or dilute its interest in existing mining interests.

It is our understanding that a capital raising of approximately up to a gross $15,000,000 is planned for the first quarter of 2009 (may be a combination of debt and share equity). Section 8 of the Explanatory Statement attached to the Notice refers to a planned capital raising.

It is noted that over the past several years, the vast majority of mineral exploration companies listed on the ASX are trading at significant discounts or premiums to

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appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of Kingsrose, the monthly volume of trades on the ASX, although not large is reasonable and large enough to argue that an orderly market exists for the Company’s shares. The “market” arguably is fully informed of the Company’s activities and in view of the immediate and near future lack of a minable gold or base metal mine in Australia or overseas, it is our opinion appropriate to use a range of recent pre-announcement trading market values as fair values to attribute to the ordinary shares (shares to be restricted for 12 months) to be issued to Icon.

5.5.3 The future value of a Kingsrose share will depend upon, inter alia:
The future prospects of its indirect 85% interest in the Mining Assets (via acquiring MMG) if acquired;
The state of the gold and silver markets (and prices) overseas;
The state of Australian and overseas stock markets;
Membership of the Board;
General economic conditions; and
Liquidity of shares in Kingsrose
5.5.4 The shares in the Company have traded up to a high of 36 cents in the days prior to the announcement. The 18 day VWAP has been calculated at approximately 28.4 cents and this may be the figure to be used to ascribe values to the 42,500,000 Consideration Shares for the purposes of this report and ultimately the book value of the shares in MMG (and ultimately the value ascribed to the tenements owned by the MMG Group). The range of fair values to be ascribed to the Consideration Shares on a pre announcement approach is in the range of 25 cents to 35 cents.
5.5.5 Arguably the Consideration Shares to be issued to Icon have a lesser value, as they are to be restricted from trading for a period of 12 months. A discount of 10% to 20% per annum is commonly applied to shares that have a restriction on trading and if this applied to the Consideration Shares to be issued to Icon, the discounted market value may approximate in the range of $7,140,000 (20% discount to the low price of 21 cents per share) to $13,387,500 (10% discount to the high price of 35 cents per share). We were informed that in setting the consideration of 42,500,000 shares, a share price of approximately 27 cents was used being the share price at the time of negotiations with Icon representatives. If this was used the deemed consideration for 42,500,000 shares would be $11,475,000. The weighted average trading price of a Kingsrose share for the 18 trading days of final signing of the agreement was approximately 28.4 cents and based on this share price the consideration would be $12,070,000. In accordance with Australian Equivalents of International Accounting Standards (“A-IFRS”), the final consideration for the 42,500,000 Consideration Shares may be the share price at the date the Consideration Shares are issue to Icon. This will depend as to whether the acquisition of MMG (and ultimately an 85% interest in the Mining Assets) is deemed to be an acquisition of a going concern business. Based on a 14 cent share price as at 8 October 2008, the total deemed issued price for the Consideration Shares would be $5,950,000 and based on the 17 November 2008 share price of 10 cents, the total deemed issue price for the Consideration Shares would be $4,250,000 and using the low price of 7 cents on 25/26 November 2008, the consideration for the 42,500,000 shares would equate to $2,975,000.

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6. Value of Consideration

6.1 Based on pre announcement share prices the consideration range (to acquire all the shares in MMG) would be:

42,500,000 ordinary shares at pre-announcement prices (no discount for escrow) Additional costs of acquisition Loan funds deemed capital (maximum) Total consideration Share price assumed to be (cents) If the post announcement share prices are used (after 28 April 2008), the consideration would be: 42,500,000 ordinary shares Additional cost of acquisition Loan funds deemed capital Total consideration Share price (not discounted) assumed to be (cents)	Low $ 10,625,000 100,000 7,590,000 18,315,000 25 Low 2,975,000 100,000 7,590,000 10,665,000 7.0	Preferred or Deemed $ 12,070,000 100,000 7,590,000 19,760,000 28.4 Mid Point 7,862,500 100,000 7,590,000 15,552,500 18.5	High $ 14,875,000 100,000 7,590,000
			22,565,000
			35
			High 12,750,000 100,000 7,590,000
			20,440,000
			30

The $7,590,000 has been treated as part of the Acquisition notwithstanding that only $1,270,000 will be paid out of up front cash resources and the balance of up to $6,320,000 will be repaid out of cash flows from the Way Linggo Project.

As noted above, we do not consider it appropriate to use the post announcement of the Proposed Acquisitions share price as without the transaction the share price of Kingsrose shares would probably retreat to below 10 cents per share as investors have arguably factored in a proposal that Kingsrose would acquire the Way Linggo Project (85% interest) or some other gold project. However, we do note that under IFRS, the share consideration may be as low as $2,975,000 (plus the Debt obligation of $7,590,000). If we used the range of fair values pre 28 April 2008, the consideration for the shares would lie in the range of $10,625,000 and $14,875,000. With the additional costs noted above and treating the loan of up to $7,590,000 (albeit only $1,270,000 will be repaid up front and up to $6,320,000 repaid out of cash flows) as part of the acquisition cost, the total preannouncement consideration would lie in the range of $18,315,000 and $22,565,000 with a preferred pre announcement consideration value of $19,760,000. However the agreed consideration for the 42,500,000 shares was at the time of signing the LOI $11,475,000 (27 cents per share) and with the $7,590,000 loan payout plus maximum on costs of $100,000, the total consideration is estimated at a maximum of $19,165,000. It is noted that the Directors, at the time of negotiation of the acquisition with Icon representatives, allocated 42,500,000 ordinary shares which at a share price of 27 cents per share were deemed to have a value of $11,475,000 before on costs and loans of up to

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of $7,590,000. Notwithstanding the above comments, from an accounting point of view, the total consideration may lie in the range of $10,665,000 and $20,440,000 (including loans and on costs) due to the fall in the share price over the past few months.

7. Basis of Valuation of the Shares in MMG (and the indirect 85% interest in the Mining Assets owned by PTNM)

7.1 The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market. In the case of valuing the shares in MMG, we have considered that in valuing the 85% interest in the Mining Assets of PTNM that in effect is the only significant asset of NOPL (Icon owns 100% of shares in MMG and MMG owns 100% of the shares in NOPL and NOPL owns 85% of PTNM and PTNM owns 100% of the Mining Assets) the discounted cash flow (“DCF”) methodology is relevant for the purposes of this report. In effect, the valuation is an adjusted asset backing approach whereby the only significant mining asset of the NOM Group is the Mining Assets valued on a DCF basis.
7.2 The Company, in conjunction with us has commissioned Snowden to prepare a valuation report on the Mining Assets (“Snowden Valuation Report”) that are the only significant assets of the Icon Group. The Snowden Valuation Report dated 26 November 2008 should be read in its entirety and a full copy of the Snowden Valuation Report is attached as an appendix to the Notice and Explanatory Statement to Shareholders. The Snowden Valuation Report ascribes a range of values to the Mining Assets and for the purposes of our report we have used various valuations referred to in the Snowden Valuation Report.
7.3 We have used and relied on the Snowden Valuation Report on the Mining Assets (85% to be indirectly acquired from the Vendors) and have satisfied ourselves that:
Snowden has used suitably qualified personnel and has relevant experience in assessing the merits of mineral projects and preparing mineral asset valuations;
Snowden is sufficiently independent from Kingsrose and the Vendors;
• Snowden has employed sound and recognised methodologies in the preparation of the Snowden Valuation Report on the Mining Assets.
7.4 Snowden has provided a range of values of the Mining Assets and 85% of the values are as follows:

Mining Operations Mineral Resources and identified mineralisation Exploration Total of Valuation (85%)	Low US$000’s 7,210 370 2,240 9,820	Preferred US$000’s 12,270 1,120 2,910 16,300	High US$000’s 13,690 1,870 3,580
			19,140

In Australian dollar terms using a US/AUS exchange rate of say US$0.70 equals Aus$1, the above values equate to:

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Total of Valuation (85%)	Low AUS$000’s 14,028	Preferred AUS$000’s 23,285	High AUS$000’s
			27,342

The un-audited consolidated balance sheet of MMG (incorporates 100% of the shares in NOPL and NOPL owns 85% of PTNM) and the un-audited balance sheet of MMG as at 30 April 2008, are noted below. The un-audited balance sheets have been converted into Australian dollars on the basis of US97 cents equals Aus$1.00. In addition, the consolidated balance sheet has been adjusted to reflect the estimated additional loans that are to be made to PTNM between 1 May 2008 and the date of acquisition of MMG as advised to us, to make the loans a total of $7,590,000. The assets and liabilities disclosed below would be higher in Australian dollar terms due to the strengthening US dollar against the Australian dollar over the past month. As at 17 November 2008, one Australian dollar was worth approximately US$0.6450.

Current Assets Cash Receivables and prepayments Non Current Assets Receivables from subsidiary Investments in subsidiary Fixed assets at WDV Deferred exploration costs Total Assets Current Liabilities Payables Non Current Liabilities Loans to related/other parties Total Liabilities Net Assets Equity Issued capital (including share premium) Reserves – capital Reserves - FX Accumulated losses Net Assets	MMG Consolidated 30 April 2008 $000’s - 84 84 - - 1,343 14,252	MMG only 30 April 2008 $000’s - -
		-
		12,781 46 - -
	15,595 15,679 89	12,827
		12,827
		7
	89	7
	7,590	-
	7,590 7,679 8,000 2,857 10,335 1,261 (6,453) 8,000
		7
		12,820
		2,857 10,335 - (372)
		12,820

We have been informed that all necessary due diligence on the Mining Assets has been completed to the best ability of the Kingsrose Independent Board Committee directors. However, no guarantee can be given as to the long-term value of the Mining Assets. This will depend on many factors, including inter-alia:

Future commercial success or otherwise of the Mining Assets;
Foreign and Australian stock exchange and gold/silver markets;

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Ability to raise capital to undertake exploration and any development of the Mining Assets;
The political climate on mining gold/silver in Indonesia.

No detailed review was made by us on the assets and liabilities disclosed in the unaudited adjusted balance sheets as at 30 April 2008. We have been assured by the management of Kingsrose that they believe the carrying value of all current assets and liabilities at 30 April 2008 as adjusted are fair and not materially misstated. However via MMG’s 100% shareholding in NOPL and NOPL’s 85% shareholding in PTNM has an indirect 85% interest in the Mining Assets. The net value of the MMG Group (consolidated) and adopting the range of values as noted in the Snowden Valuation Report is in the range of approximately $14,028,000 to $27,342,000 with the preferred value of $23,285,000 (using a US/AUS conversion rate of US70 cents equals Aus$1.00. Since preparing a draft of this report, the US$ to AUS$ has moved so that as at 25 November 2008, one AUS dollar equates to approximately US$0.6449. The value of the interest in the Way Linggo Project is thus higher in Australian dollar terms. No adjustment has been made to the above figures and we have taken a conservative view in this regard. Snowden’s opinion of the market value of the Way Linggo Project has been prepared at an effective valuation date of 25 November 2008.

8. Conclusion as to Fairness

8.1 The proposal to acquire MMG (and the MMG Group) and in effect an initial 85% interest in the Mining Assets for the consideration noted in paragraph 1.1 is believed fair to Kingsrose’s non-associated shareholders if the value of the consideration offered is equal to or less than the value of the MMG Group being acquired.
8.2 Due to the nature of the business of Kingsrose, valuations are dependent upon the value placed on the mineral interests of Kingsrose and the potential of the Mining Assets of the MMG Group. The valuation of mineral interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation. The assumptions used in the Snowden Valuation Report are contained in that report.
8.3 We have examined below the values attributable to MMG that is proposed to be acquired and the value of the consideration offered by Kingsrose to Icon may be:

Assessed values based on independent valuations of the effective interests in the Mining Assets (via shares in MMG) (refer paragraph 7.4) Pre announcement value of consideration (including acquisition costs) being offered by Kingsrose (refer paragraph 6.1)	Low Values $ 15,366,000 18,315,000	Preferred or Agreed Values $ 24,623,000 19,760,000	High Values $ 28,680,000
			22,565,000

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The Company is to acquire loans of up to $7,590,000 from various parties associated with Andrews, Philips and others by paying out loans of $7,590,000 that are expected to be owing by PTNM at the date of acquisition of MMG. These loans (except for $1,270,000) are planned to be repaid to Kingsrose by PTNM (via NOPL and MMG) out of the expected cash flow from mining operations. However in the absence of obtaining Indonesian Government approval to mine the Way Linggo Gold and Silver Project, the loans of up to $7,590,000 may not be repaid and in fact the whole investment would be at risk. Using the 5 September 2008 share price of 21 cents the consideration payable (including the $7,590,000 loans and incidental costs) totals $16,615,000 compared with a mid range value of assets being acquired of $24,623,000. Using the 8 October 2008 and 17 November 2008 share prices of 15 cents and 10 cents respectively, the consideration payable (including the $7,590,000 loans and incidental costs) of $14,065,000 and $11,940,000. The preferred pre announcement value of an 85% interest (and reducing) in the Way Linggo Gold and Silver Project is $19,760,000. The post announcement value say using share prices between 8 cents and 30 cents with a mid point value of 18.5 cents (but noting that the share price as at 26 November 2008 is 7 cents) results in a range of values for the 42,500,000 shares, the debt of $7,590,000 plus the $100,000 of costs at between $10,665,000 and $20,440,000 with a mid point consideration of $15,552,500.

8.4 On a market value approach which is considered more relevant for the reasons outlined in section 5 of this report and assuming the capital and/or debt raising of up to $15,000,000, the proposed issue of 42,500,000 Consideration Shares and paying out the loans made by Icon indirectly to PTNM of up to $7,590,000 are, on balance considered fair. If the in-specie distribution of the Consideration Shares proceeds, the beneficial interests of ACH increases to approximately 17.60% (assuming 75,000,000 shares are issued pursuant to Resolution 4 and between approximately 8.58% and 19.16% depending on the amount raised and the share issue price) and in our view the increase in shareholding is considered fair. It should also be acknowledged that part of the shares to be issued to Icon for the indirect acquisition of the Mining Assets are to be classified as ‘restricted securities’ and escrowed from trading for a period of 12 months. Using the share price of a Kingsrose share as at 26 November 2008 (7.0 cents), the total consideration (including on costs and additional loan funds) would approximate $20,665,000 (and $16,100,000 using a 20 cent share price) and this is still below the deemed preferred net fair value of the MMG Group of approximately $24,623,000. There is still a potential risk that forestry approval may not be granted or at least significantly delayed. Those shareholders who consider the risk to be high may not wish to approve the Proposed Transactions noted in Resolutions 1 and 3.

9. Reasonableness of the Offers

9.1 We set out below some of the advantages and disadvantages and other factors pertaining to the Proposed Transactions (including the issue of 42,500,000 Consideration Shares to acquire 100% of the issued capital of MMG).

Advantages

9.2 Based on the Snowden Valuation Report on the Mining Assets, the Proposed Acquisition of MMG is on balance fair (see below for risks).

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9.3 The Company has only one other significant asset prior to the Proposed Acquisition. The Company has only a limited number of mineral areas of interest and requires new areas of interest to augment its existing mineral interests. There is some renewed interest from investors in companies that are expecting to increase their gold production in the near term and have the potential to provide a positive cash flow from gold/silver mining activities.
9.4 The capital raising and Proposed Acquisitions gives the Company an indirect initial 85% investment in the Mining Assets that are expected and planned (but with no certainty that this will eventuate) to be cash flow positive and ultimately provide profits to the expanded Kingsrose Group with a possibility that dividends may flow to the Kingsrose shareholders in the future.
9.5 There is currently in the market place an interest in companies involved in gold production (with associated cash flows) and exploration, although there have been a number of failures in Australia in recent months. The Company may be able to raise further funds by way of share equity as a result of acquiring 85% of the Mining Assets that are expected to be profitable and cash flow positive (via acquiring the MMG Group) from Icon.
9.6 The directors have outlined a number of perceived advantages of the proposed transaction, although we cannot be certain as to whether the advantages noted by them in the Explanatory Statement to Shareholders attached to the Notice will eventuate. However, on the face of it they appear reasonable.
9.7 Based on the audited 30 June 2008 adjusted book asset backing approach, the share consideration proposal is approximately at 5.4 cents per ordinary share and well below a market value (pre announcement) approach.

Disadvantages

9.8 The number of fully paid ordinary shares on issue would initially rise by 117,500,000 shares (comprising the issue of 42,500,000 Consideration Shares to Icon and say 75,000,000 shares to new investors to partly fund the repayments of up to $7,590,000 loan repayments and US$10,000,000 to fund the development costs and working capital of the Way Linggo Project and these funds will be provided through the funds raised by the proposed issue of shares referred to in Resolution 4, a project loan or a combination of both. $6,320,000 of the loans is proposed to be paid out of cash flows from the Way Linggo Project. If the shares to raise capital are issued at less than 20 cents the expected maximum shares on issue would be 376,407,163 (assumes an issue price of 5.6 cents), an increase of 310,357,143. The existing shareholders, in the absence of a rights issue will be diluted, although the Company will arguably be financially stronger. The up to $15,000,000 may be raised as all equity, part debt and part equity or all debt. The mix will depend on market conditions. Initial consideration is being given to obtaining debt finance of around $10,000,000. If all or a substantial amount of debt is incurred, the risk is increased.
9.9 The Mining Assets may not turn out to be as commercially viable as expected and losses may be incurred or projected cash flows and profit reduced. The Company may not be in a position to repay debts as and when they fall due in the absence of positive cash flows from the Mining Assets (by exploitation or sale).

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9.10 Icon as Vendor of MMG could control between 11.29% and 23.15% of the issued capital of Kingsrose before the exercise of any of the share options on issue and before conversion of any of the Notes. Icon is in effect paying a premium for deemed control (greater than 20%) in that the initial 85% interest in the Mining Assets (via shares in MMG) have a greater value than the Kingsrose shares being received as consideration (assuming 27.0 cents or 28.4 cents as the deemed pre announcement fair value). However, the value of the shares on a post announcement basis using share prices in October and to 26 November 2008 lies between 7 cents and 15 cents. The Associated Directors collectively would have an indirect shareholding interest in Kingsrose of approximately 20.46% if 75,000,000 shares are issued pursuant to Resolution 4. The percentages noted above in relation to Icon, Andrews, Phillips and Morris may increase if less than 75,000,000 shares are issued as noted above and decrease of more than 75,000,000 shares are issued to raise up to $15,000,000. It is not expected that Icon before distributing its Kingsrose shares to its shareholders will have more than 23.15% of the issued capital of Kingsrose following the passing and consummation of Resolutions 1 to 4.
9.11 Kingsrose may need to raise further working capital to spend on exploration and evaluation of the Mining Assets and other mining assets it may acquire. It is proposed that up to a further US$10,000,000 will be advanced to PTNM by Kingsrose up to the planned production date by way of the proposed issue of shares referred to in Resolution 4, a project loan or a combination of both. Any future capital raisings may further dilute the current non associated shareholders interests in Kingsrose.
9.12 The Mining Assets involves gold/silver mining and exploration in Indonesia that may not be acceptable to some shareholders and it carries, inter-alia, political risk.

Other Factors

9.13 PTNM under the COW will need to divest part of its interest in the Mining Assets to Indonesian participants at the rate of 15% at end of the fifth year (2010) , 23% at end of the sixth year, 30% at the end of the seventh year, 37% at the end of the eighth year, 44% by the end of the ninth year and 51% by the end of the tenth year. The consideration payable is the highest of three calculations outlined in the COW and one includes selling to Indonesian Participants at the end of each of the relevant years at in effect at fair market value on a going concern basis. The financial affect cannot be determined at this point of time. However, Snowden has taken into account the reduction in interests in arriving at the range of valuations. The fair value payments for the divestment amounts have been calculated as the proportion of the written down value of the original investment inflated by 10% annual inflation. The actual proceeds may be different and this can affect the overall valuation of the Mining Assets.
9.14 It is our understanding that Icon (as Vendor of MMG) proposes to undertake an inspecie distribution of the 42,500,000 shares that will be issued to it if Resolution 2 is passed and consummated to its shareholders within 12 months of receipt of the shares. Thus the 42,500,000 shares will be distributed by Icon to its shareholders and the Icon shareholders directly will own shares in Kingsrose. The beneficial interests of Andrews and Phillips via their direct or indirect 50% interest each in ACH will own approximate 8.80% each of the issued capital of Kingsrose following the Proposed Transactions completion and capital raising of $15,000,000

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

(assumes that no more than 75,000,000 shares issued pursuant to Resolution 4). Refer paragraph 1.6 above for potential shareholdings.

9.15 As noted in the Explanatory Statement there is a risk that the Indonesian Government may not approve mining at Way Linggo as the tenement areas are substantially in native forests. Without necessary approvals the value of the Way Linggo Gold and Silver project would be substantially less than that disclosed in the Snowden Valuation Report and mining would not occur.
9.16 The vast majority of the consideration payable to Icon (approximately 70% by way of 42,500,000 Consideration Shares with a possible pre announcement value of $12,070,000 and as low as $2,975,000 using the 26 November 2008 share price) is been paid by way of shares and the cash at risk is up to $16,090,000 (repayment of loans $7,590,000 and US$10,000,000 of advances to develop the Way Linggo Project). It is in the best interests of Icon and ultimately the major shareholders of Icon that the Way Linggo Gold and Silver Project proceeds to development and to do this the major associated shareholders in Andrews and Phillips will be working diligently to get Indonesian Government approvals so mining and processing can proceed.
9.17 The Company has agreed to guarantee any future royalty payments payable by MMG on the Way Lingo Gold and Silver Project. As MMG will be a wholly owned subsidiary, the onus of guaranteeing the royalties is not an arduous one and in any event it is expected that the royalties will be payable out of cash flow from production if the Way Linggo Gold and Silver Project goes into production.

10. Conclusion as to Reasonableness

10.1 In our opinion, assuming the capital raising proposed under Resolution 4 is consummated or an alternative commercially acceptable debt/capital raising is in place, the proposals as outlined in paragraph 1.1 and Resolutions 1 and 3 are, on balance fair and considered reasonable to the shareholders of Kingsrose not associated with Icon and the interests of ACH. However, there is still a potential risk that forestry approval may not be granted or at least significantly delayed. Those shareholders who consider the risk to be high may not wish to approve the Proposed Transactions noted in Resolutions 1 and 3.

11. Sources of Information

11.1 In making our assessment as to whether the Proposed Transactions are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company, Icon and its subsidiaries and the Mining Assets that is relevant to the current circumstances. In addition, we have held discussions with the management of Kingsrose about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the independent directors and management of Kingsrose.
11.2 Information we have received includes, but is not limited to:
Draft July to November 2008 Notice of General Meeting of Shareholders of Kingsrose and draft Explanatory Statement to Shareholders;

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

Discussions with management and directors of Kingsrose and the legal advisers to Kingsrose;
Shareholding details of Kingsrose as supplied by the Company’s share registry
- at 17 November 2008;
Audited Consolidated Balance Sheet of Kingsrose as at 30 June 2008;
The Prospectus of 18 March 2008 and 1 November 2007;
The Letter of Intent between the Company and Messrs Morris, Andrews and
- Philips relating to the Proposed Transaction;
The Share Purchase Agreement between Kingsrose and the Vendor of
- September 2008 and subsequent amendment;
The updated Independent Valuation Report of Snowden dated 26 November
- 2008 relating to the Mining Assets;
Correspondence with Snowden personnel;
The Loan Arrangement Deed between the Company and various parties;
Information on Kingsrose as lodged with ASX from listing to 26 November 2008;
Un-audited balance sheets for MMG and NOPL as at 30 June 2008 and PTNM
- as at 30 April 2008;
Forecasted cash flows regarding mineral exploitation on the Mining Assets; and
Other information on planned loans to be made to PTNM between 1 May 2008 and date of settlement.
11.3 Our report includes Appendix A and our Financial Services Guide attached to this report. The Snowden Valuation Report that is attached to the Explanatory Statement to Shareholders should also be read in its entirety.

Yours faithfully

STANTONS INTERNATIONAL SECURITIES PTY LTD

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J P Van Dieren FCA Director

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

APPENDIX A

AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities Pty Ltd dated 27 November 2008, relating to the issue of 42,500,000 ordinary Consideration Shares as part consideration for acquiring MMG (and the MMG Group and in effect an initial 85% interest in the Mining Assets) from Icon and the in-specie distribution of shares that affects the shareholding interest of ACH as outlined in paragraph 1.1 of this report and the repayment of loans to related and associated parties and as outlined in Resolutions 1 and 3 in the Notice of Meeting and Explanatory Statement to Shareholders to be issued in December 2008.

At the date of this report, Stantons International Securities Pty Ltd does not have any interest in the outcome of the proposal. There are no relationships with Kingsrose or Icon and the Associated Directors other than acting as an independent expert for the purposes of this report. There are no existing relationships between Stantons International Securities Pty Ltd and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at $23,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities Pty Ltd nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities Pty Ltd or the author of this report does not hold any securities in Kingsrose. There are no pecuniary or other interests of Stantons International Securities Pty Ltd that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities Pty Ltd and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities Pty Ltd is the holder of an Australian Financial Services Licence (no 319600) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. A number of the partners of Stanton Partners and Stantons International Pty Ltd are the Directors’ of Stantons International Securities Pty Ltd. Stanton Partners, Stantons International Pty Ltd and Stantons International Securities Pty Ltd have extensive experience in providing advice pertaining to mergers, acquisitions and strategic and financial planning for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered. The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

DECLARATION

This report has been prepared at the request of the Directors of Kingsrose in order to assist them to assess the merits of the proposals as noted in Resolutions 1 and 3 to which this report relates. This report has been prepared for the benefit of Kingsrose’s directors and shareholders and does not provide a general expression of Stantons International Securities Pty Ltd’s opinion as to the longer term value of Kingsrose, Icon, MMG, NOPL, PTNM or the Mining Assets. Stantons International Securities Pty Ltd does not imply, and it should not be construed, that it has carried out any form of audit on the accounting or other records of Kingsrose, Icon, MMG, NOPL, PTNM or the Mining Assets. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, Resolution, letter or statement, without the prior written consent of Stantons International Securities Pty Ltd to the form and context in which it appears.

DISCLAIMER

This report has been prepared by Stantons International Securities Pty Ltd with due care and diligence. However, except for those responsibilities, which by law cannot be excluded, no responsibility arising in any way whatsoever for errors or omission (including responsibility to any person for negligence) is assumed by Stantons International Securities Pty Ltd, Stanton Partners, Stantons International Pty Ltd, its directors, partners, employees or consultants for the preparation of this report.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities Pty Ltd may rely on information provided by Kingsrose and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities Pty Ltd experience and qualifications), Kingsrose has agreed:

a) To make no claim by it or its officers against Stantons International Securities Pty Ltd (and Stantons International Pty Ltd) to recover any loss or damage which Kingsrose may suffer as a result of reasonable reliance by Stantons International Securities Pty Ltd on the information provided by Kingsrose; and
(b) To indemnify Stantons International Securities Pty Ltd (and Stantons International) against any claim arising (wholly or in part) from Kingsrose or any of its officers providing Stantons International Securities Pty Ltd any false or misleading information or in the failure of Kingsrose or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities Pty Ltd.

A draft of this report was presented to the Kingsrose directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

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FINANCIAL SERVICES GUIDE Dated 27 November 2008

1. STANTONS INTERNATIONAL SECURITIES PTY LTD

Stantons International Securities Pty Ltd ACN 128 908 289 ( “SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. FINANCIAL SERVICES GUIDE

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide ( “FSG” ). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 319600 ;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. FINANCIAL SERVICES WE ARE LICENCED TO PROVIDE

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares and options)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

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4. GENERAL FINANCIAL PRODUCT ADVICE

In our report we provide general financial product advice, not personal financial product 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.

5. BENEFITS THAT WE MAY RECEIVE

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. REMUNERATION OR OTHER BENEFITS RECEIVED BY OUR EMPLOYEES

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. REFERRALS

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. ASSOCIATIONS AND RELATIONSHIPS

Through a variety of corporate and trust structures, SIS is ultimately wholly owned by Stantons International Pty Ltd a professional advisory and accounting practice. Our directors may be directors in Stantons International Pty Ltd and/or Stantons International Services Pty Ltd.

From time to time, SIS, Stantons International Pty Ltd and Stantons International Services Pty Ltd and/or their related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

9. COMPLAINTS RESOLUTION

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Pty Ltd Level 1 1 Havelock Street WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited ( “FOSL” ). FOSL 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 FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 30021

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

10. CONTACT DETAILS

You may contact us using the details set out at the top of our letterhead on page 1 of this FSG.

Au:KIN5057A/Indepenedent Experts Report 27 November 2008

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87 Colin Street West Perth WA 6005 PO Box 77 West Perth WA 6872 Telephone +61 8 9213 9213 Facsimile +61 8 9322 2576 [email protected]

www.snowdengroup.com

Perth, Brisbane, Vancouver, Johannesburg, Cape Town, London, Belo Horizonte

26 November 2008

Stantons International Securities Pty Ltd Level 1/1 Havelock Street WEST PERTH WA 6005

Dear Sir

UPDATED INDEPENDENT VALUATION OF THE MINERAL ASSETS OF THE WAY LINGGO GOLD/SILVER PROJECT, SUMATRA, INDONESIA

At your request Snowden Mining Industry Consultants Pty Ltd (“Snowden”) has updated its previous valuation reports titled “Independent Valuation of the Way Linggo gold/silver project” and dated 2 July 2008 and 1 September 2008. Snowden understands that this report will be included in an Independent Experts Report to be prepared by Stantons International Securities Pty Ltd relating to Kingsrose Mining Limited’s (“Kingsrose”) proposed acquisition of an 85% interest in PT Natarang Mining (“PT Natarang”), the current holder of the project.

The objective of this report is to present a geological description, an outline of previous exploration activities, an overview of the currently defined Mineral Resources, consider technical-economic parameters and to provide an opinion on the value and the development potential of the project.

The findings and opinions presented in this report are based on carefully scrutinised information provided by PT Natarang and Kingsrose, known to us as at 25 November 2008. Furthermore, Snowden carried out a site visit to the Way Linggo project during May 2008. Snowden has held detailed discussions with PT Natarang’s management and senior mine personnel and specifically reviewed data from exploration activities, Mineral Resources and the relevant life-of-mine production plans. A listing of the documents referenced is provided at the end of this report.

This report is based on personal communication and unpublished reports provided by various parties, including published technical and various other reports. Whilst the authors have made every attempt to accurately convey this information, they cannot guarantee either the accuracy or the validity of the information.

Consent has been sought from PT Natarang’s representatives to include technical information and opinions expressed by them. None of the other entities referred to in this report have consented to the inclusion of any information or opinions and have only been referred to in the context of reporting, as a matter of fact, any relevant activities.

Snowden has based its findings upon information made known to it as at 25 November 2008. Snowden has endeavoured, by making reasonable enquiry of PT Natarang, to ensure that all material information in the possession of PT Natarang has been fully disclosed to Snowden. However, Snowden has not carried out any type of audit of the records of PT Natarang to verify that all material documentation has been provided. Kingsrose has agreed to indemnify Snowden from any liability arising from Snowden’s reliance upon information provided or not provided to it by PT Natarang or Kingsrose. A draft version of this report was provided to the directors of PT Natarang and Kingsrose along with a request to confirm that there are no material errors or omissions in the report and that the information in the report is factually accurate. Confirmation in those terms has been provided in writing to Snowden and has been relied upon by Snowden.

SNOWDEN MINING INDUSTRY CONSULTANTS PTY LTD ABN 99 085 319 562

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This report is provided subject to the following qualifications:

(a) it is assumed that PT Natarang has made available to Snowden all material information in PT Natarang’s possession or known to PT Natarang in relation to the technical, development, mining and financial aspects of the project and that PT Natarang has not withheld any material information and that information is accurate and up to date in all material respects;
(b) it is assumed that all geological reports and other technical documents provided by PT Natarang correctly and accurately record the result of all geological and other technical activities and testwork conducted to date in relation to the relevant tenements and accurately record any advice from relevant technical experts;
(c) it is assumed that PT Natarang has good and valid title to all tenements or other land tenure required by PT Natarang to explore, develop, mine and operate the project in the manner proposed;
(d) it is assumed that all necessary governmental consents and approvals (including regarding environmental issues) required to implement the various phases of the projects have been obtained or will be forthcoming without any material delay and on terms which will not cause any material change to any mining, exploration or other activities proposed and which will not cause any material change to the costs of such activities;
(e) it is assumed that PT Natarang will have access to sufficient working capital or other sources of finance to conduct the activities proposed by it;
(f) it is assumed that macro or other economic conditions will not cause any material change to the prices expected to be obtained for the mineral products expected to be produced and marketed from the project;
(g) it is assumed that all factual information provided by PT Natarang as to the project or their history or PT Natarang’s future intentions, financial forecasting or the effect of relevant agreements is correct and accurate in all material respects.

In relation to the above qualifications, Snowden has not undertaken any independent enquiries or audits to verify that the assumptions are correct and gives no representation that the assumptions are correct.

From Snowden’s assessment of the project, it is our opinion that the project is of considerable value. An updated Mineral Resource model has been developed that takes into consideration the additional data obtained from underground face sampling. The defined Mineral Resource has been estimated and classified in accordance with the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code). The updated Mineral Resource model provided the basis for the defined mining inventory with along with the remnant Mineral Resource was used to value the Way Linggo project.

Snowden recommends that a mining implementation plan, design and schedule be developed that is based on definitive analysis of the specific deposit characteristics, the proposed mining methodology, mining equipment and other relevant operational considerations.

Snowden has undertaken a high level review of the available metallurgical and processing data and notes that there are a number of issues which are currently ‘work in progress’ and require finalisation.

Snowden has based its valuation of the Way Linggo project upon information supplied up until 25 November 2008. Snowden’s opinion of the market value of the Way Linggo project has been prepared using United States dollars (US$) and an effective valuation date of 25 November 2008. Snowden’s valuation of Kingsrose’s 85% interest in the Way Linggo mineral assets, using the methodologies described in Section 13 of this report, is summarised in the following table.

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Kingsrose’s interest in the Way Linggo project valuation upon completion of the acquisition

Asset	Low (US$ M)	High (US$ M)	Preferred (US$ M)
Mining Operations Mineral Resources and identified mineralisation Exploration	7.21 0.37 2.24	13.69 1.87 3.58	12.27 1.12 2.91
TOTAL	9.82	19.14	16.30

This report has been prepared by Mr Karl Van Olden (Principal Consultant), Mr Wayne Ghavalas (Senior Consultant), Mrs Christine Standing (Principal Consultant) and Mr Damian Connelly (Associate Metallurgist) and reviewed by Mr Jeames McKibben (Divisional Manager – Corporate Services) of Snowden’s Perth and Brisbane offices in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Experts Reports (“the VALMIN Code”) and the 2004 JORC Code.

Snowden is an independent firm providing specialist mining industry consultancy services in the fields of geology, exploration, resource estimation, mining engineering, geotechnical engineering, risk assessment, mining information technology and corporate services. The company, with its principal office at 87 Colin Street, West Perth, Western Australia also operates from offices in Brisbane, Johannesburg, Cape Town, Vancouver, London and Belo Horizonte, and has prepared independent technical reports and valuations on a variety of mineral commodities in many countries.

Neither Snowden nor those involved in the preparation of this report have any material interest in PT Natarang or Kingsrose or in the mineral properties considered in this report. Snowden is remunerated for this report by way of a professional fee determined in accordance to a standard schedule of rates. Payment of fees and expenses is in no way contingent upon the conclusions drawn in this report.

Snowden has given, and has not before lodgement of Stantons International Securities Pty Ltd’s Independent Experts Report, withdrawn its written consent to being named as author of this report and to the inclusion of this report in its submission document.

Yours faithfully

Snowden Mining Industry Consultants Pty Ltd

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Mr W Ghavalas BSc (Eng), GradDip, MAusIMM Senior Consultant

Mrs C Standing BSc (Hons), MAusIMM, MAIG Principal Consultant

Mr J A J McKibben BSc (Hons), MBA, MAIG Divisional Manager

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	TABLE OF CONTENTS	TABLE OF CONTENTS
1.	EXECUTIVE SUMMARY ..............................................................................................................6
	1.1	SCOPE ..............................................................................................................................6
	1.2	LOCATION AND DESCRIPTION OF THE ASSETS.........................................................6
	1.3	OWNERSHIP.....................................................................................................................6
	1.4	GEOLOGY AND MINERALISATION.................................................................................6
	1.5	MINERAL RESOURCES ...................................................................................................7
	1.6	MINING ..............................................................................................................................7
	1.7	MINING INVENTORY........................................................................................................8
	1.8	FINANCIAL ANALYSIS .....................................................................................................8
	1.9	MINERAL PROCESSING AND METALLURGICAL TESTING .........................................8
	1.10	VALUATION.......................................................................................................................9
2.	INTRODUCTION AND TERMS OF REFERENCE.....................................................................10
	2.1	RESPONSIBILITY FOR THE COMPETENT PERSONS’ REPORT...............................10
3.	PROPERTY DESCRIPTION AND LOCATION ..........................................................................10
4.	PROJECT HISTORY AND OWNERSHIP ..................................................................................10
	4.1	OWNERSHIP HISTORY AND ROYALTIES....................................................................11
	4.2	DIVESTMENT..................................................................................................................11
5.	GEOLOGY SETTING AND MINERALISATION .........................................................................12
	5.1	REGIONAL GEOLOGY ...................................................................................................12
	5.2	PROJECT GEOLOGY.....................................................................................................12
	5.3	MINERALISATION ..........................................................................................................13
		5.3.1 Way Linggo.......................................................................................................13
		5.3.2 Other Targets ...................................................................................................14
	5.4	WEATHERING.................................................................................................................15
6.	WAY	LINGGO DEPOSIT............................................................................................................15
	6.1	EXPLORATION ...............................................................................................................15
		6.1.1 Trenching..........................................................................................................15
		6.1.2 Drilling...............................................................................................................16
		6.1.3 Adits..................................................................................................................16
	6.2	ANALYSIS .......................................................................................................................16
		6.2.1 Quality Control and Quality Assurance ............................................................17
	6.3	GEOLOGICAL LOGGING AND INTERPRETATION ......................................................17
	6.4	DENSITY .........................................................................................................................17
	6.5	DATA VERIFICATION.....................................................................................................17
		6.5.1 PT Natarang .....................................................................................................17
		6.5.2 Snowden...........................................................................................................19
7.	MINERAL RESOURCES ............................................................................................................20
	7.1	RESOURCE ESTIMATION .............................................................................................20
	7.2	RESOURCE CLASSIFICATION......................................................................................21
8.	MINING .......................................................................................................................................21
	8.1	MINING OPERATIONS ...................................................................................................21
	8.2	PREVIOUS MINING STUDIES........................................................................................21
	8.3	CURRENTLY PROPOSED MINING PLAN.....................................................................22
	8.4	MINING PLAN COMMENTS ...........................................................................................22
		8.4.1 Mining method selection...................................................................................22
		8.4.2 Mining rate........................................................................................................23
9.	MINING INVENTORY .................................................................................................................28
	9.1	MINING CUT-OFF GRADE .............................................................................................28
	9.2	MINING INVENTORY CONVERSION ASSUMPTIONS .................................................29
10.	WAY	LINGGO FINANCIAL ANALYSIS ......................................................................................30
	10.1	FINANCIAL MODEL ........................................................................................................30
	10.2	CAPITAL COST...............................................................................................................30
	10.3	OPERATING COST.........................................................................................................31
11.	MINERAL PROCESSING AND METALLURGICAL TESTING ..................................................33
12.	VALUATION CONSIDERATIONS ..............................................................................................34
	12.1	FAIR MARKET VALUE OF MINERAL ASSETS .............................................................34
	12.2	METHODS OF VALUING MINERAL ASSETS................................................................35
		12.2.1 Mineral assets with Mineral Resources and Ore Reserves .............................35

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	12.2.2 Mineral assets in the exploration stage............................................................36
	12.3 SNOWDEN’S VALUATION METHODOLOGY................................................................37
	12.3.1 Mining Inventory and Mineral Resources.........................................................37
	12.3.2 Exploration potential.........................................................................................38
13.	PROJECT VALUATION..............................................................................................................40
	13.1 MINING OPERATIONS ...................................................................................................40
	13.2 MINERAL RESOURCES .................................................................................................40
	13.3 EXPLORATION POTENTIAL ..........................................................................................41
	13.4 LIABILITIES .....................................................................................................................42
14.	TOTAL PROJECT VALUE..........................................................................................................42
15.	DECLARATIONS BY SNOWDEN MINING INDUSTRY CONSULTANTS PTY LTD.................42
	15.1 INDEPENDENCE ............................................................................................................42
	15.2 QUALIFICATIONS...........................................................................................................42
16.	BIBLIOGRAPHY .........................................................................................................................43
17.	GLOSSARY OF ABBREVIATIONS, DEFINITIONS AND TECHNICAL TERMS .......................44

LIST OF TABLES

Table	1.1	Mineral Resource based on a 2.5 g/t AuEq cut-off grade (Snowden, 2008) ................. 7
Table	1.2	Mining Inventory at AuEq cut-off grades........................................................................ 8
Table	1.3	Kingsrose’s interest in the Way Linggo project valuation upon completion of the
		acquisition ...................................................................................................................... 9
Table	6.1	Results from verification samples ................................................................................ 19
Table	7.1	Mineral Resource based on a 2.5 g/t AuEq cut-off grade (Snowden, 2008) ............... 20
Table	8.1	Hoist capacity calculation............................................................................................. 24
Table	8.2	Tramming capacity calculation..................................................................................... 24
Table	8.3	Vertical depletion rate .................................................................................................. 25
Table	9.1	Metal prices.................................................................................................................. 29
Table	9.2	Mining Inventory at AuEq cut-off.................................................................................. 30
Table	10.1	Capital expenditure estimate........................................................................................ 31
Table	10.2	Preferred case cash flow summary.............................................................................. 33
Table	12.1	Transactions involving gold resource projects in the Asia-Pacific region .................... 37
Table	12.2	Transactions involving gold exploration projects in the Asia-Pacific region................. 39
Table	13.1	Summary of Mining Operations valuation .................................................................... 40
Table	13.2	Mining Inventory at Low, High and Preferred scenarios .............................................. 40
Table	14.1	Kingsrose’s interest in the Way Linggo project valuation upon completion of the
		acquisition .................................................................................................................... 42

LIST OF FIGURES

		LIST OF FIGURES
Figure	6.1	Geological mapping of adit on 1,020 mRL (May 2008)................................................ 18
Figure	6.2	Geological mapping and gold results from face sampling on 1,065 mRL level ........... 19
Figure	8.1	Way Linggo schematic showing Feasibility Study mining method selection ............... 22
Figure	8.2	Way Linggo inclined hoist ............................................................................................ 25
Figure	8.3	Inclined hoist winding engine ....................................................................................... 26
Figure	8.4	Inclined hoist headframe and tip head ......................................................................... 26
Figure	8.5	Inclined hoist loading station........................................................................................ 27
Figure	8.6	Hand tramming underground ....................................................................................... 27
Figure	8.7	Rocker shovel loading site ........................................................................................... 28
Figure	8.8	Way Semung portal and tip site (under construction).................................................. 28
Figure	9.1	Break even cut-off grade.............................................................................................. 29
Figure	10.1	Way Linggo NPV attributable to Kingsrose (US$'000)................................................. 32
Figure	13.1	Valuation parameters for each valuation scenario....................................................... 40

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1. EXECUTIVE SUMMARY

1.1 SCOPE

Snowden Mining Industry Consultants Pty Ltd (“Snowden”) has updated its previous valuation reports, titled “Independent Valuation of the Way Linggo gold/silver project” and dated 2 July 2008 and 1 September 2008.

Snowden understands that this report will be included in an Independent Experts Report to be prepared by Stantons International Securities Pty Ltd relating to Kingsrose Mining Limited’s (“Kingsrose”) proposed acquisition of an 85% interest in PT Natarang Mining (“PT Natarang”), the current holder of the Way Linggo project.

Kingsrose is an Australian Securities Exchange (“ASX”) listed, resource company registered in Perth, Western Australia under company number ACN 49 112 389 910.

The authors and reviewers of this report are either Members of the Australasian Institute of Mining and Metallurgy (“AusIMM”) or Australian Institute of Geoscientists (“AIG”) and therefore, are obliged to prepare mineral asset valuations in accordance with the reporting requirements as set out in the VALMIN Code. The opinions expressed and conclusions drawn with respect to this valuation are appropriate at the valuation date, 25 November 2008. The valuation is only valid for this date and may change with time in response to variations in economic, market, legal or political conditions in addition to ongoing exploration results.

1.2 LOCATION AND DESCRIPTION OF THE ASSETS

The Way Linggo project is located approximately 80 km west of Bandar Lampung, in Lampung province, southern Sumatra, Indonesia. The Way Linggo deposit is a high grade underground gold and silver mine which is currently under construction. It is being operated under a Contract of Work (“CoW”) held by PT Natarang.

The Way Linggo project is centred on an extensive epithermal gold/silver system which was the subject of a Feasibility Study completed by PT Natarang in 1996. This study was based on data obtained from trenching and 11,283.5 m of diamond core drilling from 112 drillholes. In August 2008, Snowden updated the resource estimate for the project using the available drilling and trench data, in addition to data from a recent underground sampling programme.

The development of two mine access portals has been completed and the deposit has been intersected from the development adit at 1,065 mRL and at 1,020 mRL. A new mine office has been completed and a new camp is under construction. The camp under construction will provide accommodation for construction staff and ultimately production staff.

1.3 OWNERSHIP

The CoW for the Way Linggo project is held by the Indonesian company, PT Natarang. PT Natarang is indirectly owned 85% by Icon Enterprises Ltd (“Icon”), a British Virgin Island company controlled by Mr J William Phillips and Dr Mike Andrews (both directors of Kingsrose). The remaining 15% of PT Natarang is owned by a local Indonesian family. Kingsrose proposes to acquire all of Icon’s interest in PT Natarang either by acquiring all of the shares of Icon or one of its Australian subsidiaries through which it holds its interest in PT Natarang.

1.4 GEOLOGY AND MINERALISATION

The Way Linggo project is centred on an extensive epithermal gold/silver system in which mineralised quartz veins and associated wallrock alteration have been identified over a strike length of approximately 800 m. The Way Linggo area is dissected by a major river, the Semung Besar, which divides the system into:

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the North Vein, a single near vertical high grade quartz vein situated north of the river; and
the Central Vein Zone which includes the Southern Extension Vein and consists of a series of sub-parallel veins lying to the south.

The quartz veins are hosted in porphyritic dacite and lithic tuffs, which are variably altered in the immediate vicinity of the veins. Mineralisation is confined to the quartz vein host.

Between 1994 and 1996, a total of 112 diamond drillholes (for 11,283.5 m) were completed, including 61 drillholes (for 6,994 m) in the North Vein at the Way Linggo deposit. Within the mineralised zone at Way Linggo the drill sections are generally located on lines spaced at 20 m along the strike with a down dip spacing of approximately 30 m and to a depth of 150 m. These drilling programmes have identified a relatively regular quartz vein structure, with a strike length of approximately 350 m, dipping at approximately 85° southwest and plunging 45° along strike to the northwest. The mineralised vein varies in width from 2 to 12 m with an average width of 4.5 m. The vein is open at depth and along strike to the northwest where it plunges beneath a steep mountain ridge.

Additional mineralisation has been identified at the Harto’s and Panca’s Veins located adjacent to the Way Linggo deposit, and at Semung Kecil and Way Embe, 2 km to the east of the Way Linggo deposit. Anomalous areas within the project area have been identified from stream sediment, soil and rock chip geochemical sampling.

1.5 MINERAL RESOURCES

The current Mineral Resource for the Way Linggo deposit is based on a resource model developed by Snowden in August 2008 (Snowden, 2008). The Way Linggo Mineral Resource (inclusive of Ore Reserves) as estimated by Snowden in August 2008 is presented in Table 1.1.

Table 1.1 Mineral Resource based on a 2.5 g/t AuEq cut-off grade (Snowden, 2008)

	Classification	Tonnes kt	Au g/t	Ag g/t
North Vein	Measured	334	11.38	172
	Indicated	93	7.06	118
	Inferred	127	4.92	83
	Sub-total	554	9.17	143
Hangingwall Split and Central Vein Zone	Measured	-	-	-
	Indicated	75	5.26	69
	Inferred	40	4.24	46
	Sub-total	115	4.91	61
TOTAL		669	8.44	129

Note: Inclusive of Ore Reserves

Snowden is of the opinion that the supporting data is of a sufficient quality to support a Mineral Resource estimate and that the geological interpretation has been prepared in accordance to standard industry practice. Based on the results from the data verification undertaken by PT Natarang and Snowden and review of the QA/QC data, Snowden considers that the data collection, analysis, QA/QC procedures and geological interpretation at Way Linggo project are to current industry standards.

The adits at 1065 mRL and 1020 mRL, which successfully intersected the North Vein, provide a good validation of the drillhole data and geological interpretation. Both adits intersected the North Vein as predicted by the drillhole interpretation and show comparable grades.

1.6 MINING

A mining study was completed as part of the Way Linggo Feasibility Study in 1996, with plans for highly mechanised mining methods at a production rate of 100,000 tonnes per annum (“tpa”). Since that study, mining activities have been directed towards a smaller-scale and less mechanised mining method. A detailed mining plan for this new mining strategy has not been finalised and the mining activities addressed in this document are considered by Snowden to be at a conceptual planning stage.

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Following its review of available information, previous studies and physical inspection of current excavations, Snowden is of the opinion that a combination of flexible mining methods will be required to successfully recover the mineable portions of the defined Mineral Resource. The eventual methods are likely to be reasonably labour intensive with low levels of mechanisation which may require backfill.

Intensive ground support will be required where personnel access to the production areas is required.

The production rate is considered by Snowden to be achievable, with the rate at which material can be handled on the 1,020 mRL level and the inclined hoist capacity presenting the greatest risks to this target being reached.

1.7 MINING INVENTORY

The mining inventory for the North Vein has been estimated based on Snowden’s August 2008 Resource model at various gold equivalent cut-off grades which correspond to a range of gold prices. The equivalent grade is calculated using the silver to gold ratio of 60 g/t Ag is equal to 1.0 g/t Au. A mining recovery of 90% and a dilution of 15% has been assumed by Snowden to modify the resource numbers to reflect an estimate of the likely mining inventory. The inventory is classified according to the resource categories quoted in the August 2008 Resource model.

	Table 1.2 Mining Inventory at AuEq	Table 1.2 Mining Inventory at AuEq	cut-off grades
Cut-off AuEq (g/t)	Resource Category Tonnage (kt)	Au (g/t) Ag (g/t)	Au content (kg) Ag content (kg)
4	Measured 335 Indicated 84	10.1 153 6.7 112	3,400 51,330 560 9,380
	Total 419	9.5 145	3,960 60,710
5	Measured 332 Indicated 68	10.2 154 7.6 127	3,380 51,160 510 8,680
	Total 400	9.8 150	3,890 59,840
6	Measured 321	10.4 157	3,340 50,510
	Indicated 54	8.6 142	460 7,720
	Total 375	10.2 155	3,800 58,230
7	Measured 309 Indicated 49	10.6 161 8.9 149	3,282 49,708 438 7,326
	Total 358	10.4 159	3,720 57,034

1.8 FINANCIAL ANALYSIS

A cash flow analysis has been completed for the Way Linggo project taking into account the technical, economic and legislative considerations identified by PT Natarang and Kingsrose and the independent analysis and opinion of Snowden.

The cash flow attributable to Kingsrose has been discounted using a rate of 12% pa to arrive at a preferred Net Present Value (“NPV”) for the proposed mining operation.

High and low case scenarios have been derived to reflect the range, in Snowden’s opinion, of the possible project outcomes.

1.9 MINERAL PROCESSING AND METALLURGICAL TESTING

Snowden has undertaken a high level review of the available data and notes that there are a number of issues which are currently ‘work in progress’ and require finalisation. Snowden considers that the work completed to date has been completed to a Scoping Study level and notes that the following issues need to be addressed:

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Results indicate that mercury is present in the Way Linggo vein material, albeit in relatively low concentrations. As yet the mercury issues have not been fully addressed and have the potential to cause Occupational Health and Safety issues if not addressed fully. PT Natarang has advised Snowden that the mercury issue has been recognised and addressed in that gold room design will incorporate smelter off-gas handling to enable condensation of any mercury vapour and prevent release to the atmosphere. A form of sump downstream from the tailings dam will be constructed to enable the return of water to the dam to prevent any mercury in solution releasing to the environment.
The water balance for wet season and dry season has not been presented and would be important regarding the disposal of excess water during the wet season. PT Natarang has advised Snowden that this has been addressed by Laurion Consulting Inc. (“Laurion”) and that disposal of excess water is to the Semung River via a designed spillway. Laurion is the metallurgical consulting group which has completed the flowsheet development, the design of the process plant and the estimate of the capital and operating costs for the process plant.
The detoxification process needs a high shear mixer and further development.
Testwork need to be undertaken to determine if there are thiocyanates in the effluent. The proposed detoxification process does not destroy thiocyanates.
While leaching tests have demonstrated a high recovery of gold and silver this is only a part of the process. The Merrill-Crowe process requires clarified solutions and de-aeration of the pregnant liquor. Further testing is required to demonstrate precipitation at laboratory bench scale.
When sulphides are present, fouled solutions may result making the Merrill-Crowe process more difficult or requiring changes to the operating conditions. This potential issue should be tested at bench scale and addressed prior to commissioning.
Operating costs are at draft stage and it is Snowden’s opinion that these will increase above the estimates proposed by PT Natarang. An elevated operating cost has been used in the valuation model. The high Abrasive Index will result in frequent bowl and mantle changes and pump liner wear.

PT Natarang has advised Snowden that the Laurion metallurgists and process engineers are highly experienced in Merrill-Crowe and are fully aware of these factors and have given them full consideration in the design considerations. The level of detail provided to Snowden is insufficient to comment fully on the metallurgy and this is still a work in progress by PT Natarang.

1.10 VALUATION

PT Natarang’s mineral assets considered in this report comprise the Mining Inventory and remnant Mineral Resource at the Way Linggo deposit and the exploration potential contained in the adjacent tenement holding. The project area package covers an area of some 10,540 hectares (105.4 km[2] ).

Snowden has systematically established the technical value associated with Way Linggo’s Life-of Mine (“LoM”) plan and the market value of the mineral assets located within the Way Linggo project area as at 25 November 2008. Snowden’s opinion of the market value for the portion of the Way Linggo project assets owned by Icon is summarised in Table 1.3.

Table 1.3 Kingsrose’s interest in the Way Linggo project valuation upon completion of the acquisition

Asset	Low (US$ M)	High (US$ M)	Preferred (US$ M)
Mining Operations Mineral Resources and identified mineralisation Exploration	7.21 0.37 2.24	13.69 1.87 3.58	12.27 1.12 2.91
TOTAL	9.82	19.14	16.30

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2. INTRODUCTION AND TERMS OF REFERENCE

Snowden Mining Industry Consultants Pty Ltd (“Snowden”) has updated its previous valuation report titled “Independent Valuation of the Way Linggo gold/silver project” and dated 2 July 2008 and 1 September 2008.

Snowden understands that this report is to be included in an Independent Experts Report to be prepared by Stantons International Securities Pty Ltd relating to Kingsrose Mining Limited’s (“Kingsrose”) proposed acquisition of an 85% interest in PT Natarang Mining (“PT Natarang”), the current holder of the Way Linggo project.

Kingsrose is an Australian Securities Exchange (“ASX”) listed, resource company registered in Perth, Western Australia under company number ACN 49 112 389 910.

The authors and reviewers of this report are either Members of the AusIMM or AIG and therefore, are obliged to prepare mineral asset valuations in accordance with the Australian reporting requirements as set out in the VALMIN Code and the JORC Code. The opinions expressed and conclusions drawn with respect to this valuation are appropriate at the valuation date, 25 November 2008. The valuation is only valid for this date and may change with time in response to variations in economic, market, legal or political conditions in addition to ongoing exploration results.

2.1 RESPONSIBILITY FOR THE COMPETENT PERSONS’ REPORT

Mr K Van Olden, Mr W Ghavalas, Mrs C Standing and Mr D Connelly are the principal authors of this Competent Persons’ Report which has been reviewed by Mr J McKibben of Snowden’s Corporate Services Division.

In preparing this report, the authors have relied on information provided by PT Natarang and Kingsrose and research papers published by various academic institutions. The authors have also had discussions with PT Natarang’s senior management regarding various aspects of the Way Linggo project. A site visit was undertaken by Mr K Van Olden and Mrs C Standing to the Way Linggo project area in May 2008.

3. PROPERTY DESCRIPTION AND LOCATION

The Way Linggo project is located approximately 80 km west of Bandar Lampung, in Lampung Province, southern Sumatra, Indonesia. Access to the project is by road and takes around 3.5 hours from Bandar Lampung, the provincial capital. The final 28 km from Kota Agung into the Way Linggo project area is by unsealed road, which has limited accessibility when wet.

The Way Linggo project is centred on an extensive epithermal gold/silver system in which mineralised quartz veins and associated wallrock alteration has been identified over a strike length of approximately 800 m. The Way Linggo area is dissected by a major river, the Semung Besar, which divides the vein system into the North Vein and Central Vein Zones.

The current Way Linggo camp and office are located to the south of the Semung Besar River within the river valley and forest area. A new office has been completed and a new camp, to provide accommodation for construction personnel and ultimately production staff, is being constructed. These are located to the north of the existing camp and are on higher ground within an area that has been cleared and is used for coffee cultivation.

The climate in southern Sumatra is largely tropical monsoon whilst rain can fall all year round but the months from June to October are typically dry.

4. PROJECT HISTORY AND OWNERSHIP

The Way Linggo property is held under a fourth generation CoW covering an area of 10,540 hectares. The CoW is held by the Indonesian company, PT Natarang. PT Natarang is owned 85% Natarang Offshore Pty Ltd, which itself is 100% owned by MM Gold. Icon Enterprises Ltd (“Icon”) holds 100% of

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the shares of MM Gold. Icon is a British Virgin Island company controlled by Mr J William Phillips and Dr Mike Andrews (both directors of Kingsrose). The remaining 15% of PT Natarang is owned by Mr. George Tahija and Dr Sjakon Tahija, and is currently in the process of being transferred to Indonesian businessman Bpk. Herryansjah. Kingsrose proposes to acquire Icon’s 85% interest in PT Natarang either by acquiring one of its Australian subsidiaries or all of the shares in Icon.

All government permits for construction and production have been issued, including the environmental and in principal forestry permits.

4.1 OWNERSHIP HISTORY AND ROYALTIES

PT Natarang, a foreign investment approved Indonesia company, was incorporated in 1986. It was one of eleven companies formed by Muswellbrook Energy and Minerals (“MEM”) to enter into a series of mining Contracts of Work in Indonesia. The original corporate structure of the company was Teweti Lampung Sumatera Limited 70%, Base (Lampung Sumatera) Limited 15% and PT Liwa Krui 15%. Teweti Lampung Sumatera Limited and Base (Lampung Sumatera) Limited were MEM companies and PT Liwa Krui was the Indonesian partner.

In 1989, MEM decided to divest its gold exploration projects. Five of the eleven CoWs, including the PT Natarang CoW, were deemed prospective and were combined to form part of a joint venture package. Ashton Mining Ltd (“Ashton”) entered into a farm-in arrangement for these CoWs and assumed management from April 1989. This farm-in was conditional upon MEM arranging to replace PT Liwa Krui, with Bpk. Julius Tahija and a loan agreement was entered into between MEM and Bpk. Julius Tahija.

In 1991, Ashton acquired an 85% interest in each CoW company and incorporated new Australian holding companies to hold its interests. Ashmem (Natarang) Pty Ltd (“Ashmem”) was formed to acquire the foreign interest in PT Natarang Mining from Teweti Lampung Sumatera Limited and Base (Lampung Sumatera) Limited. The share structure at this stage was Ashmem 85% and Bpk. Julius Tahija 15%.

In 1992, Ashton formed an Australian company, Aurora Gold Ltd (“Aurora”), to acquire all of its gold exploration and development projects. Ownership of 100% of the shares of Ashmem was assigned to Aurora Gold. Ashmem was subsequently renamed Natarang Offshore Pty Ltd (“NOPL”).

In 1995, Meekatharra Minerals Ltd (“MML”) acquired the shares of NOPL and assigned these to its wholly owned subsidiary MM Gold Pty Ltd (“MM Gold”). Consideration for the acquisition was a 1.85% net smelter royalty (“NSR”) on production of gold, silver and base metals from the PT Natarang CoW to Aurora Gold. A prepayment of US$250,000 against this royalty was made upon signing and a further US$250,000 prepayment is due upon the earlier of completion of a bankable Feasibility Study or commencement of construction. This payment has not yet been made.

In 2002, MML changed its name to AuIron Energy Ltd (“AuIron Energy”). In 2003, by an agreement between AuIron Energy and Icon, Icon acquired all the shares of MM Gold. Consideration for the share sale was a 2.0% NSR on gold only. At any time until one year following start of commercial production Icon can, at its election, “buy back” or purchase the NSR on the first 250,000 ounces of gold produced for US$300,000. Icon is 76% owned by Advanced Concept Holding Ltd, a company owned by Mr J. William Phillips and Dr Mike Andrews, 10% owned by Mr John Morris (Chairman of Kingsrose) and the remaining 14% held by other private individuals; collectively this consortium comprises the vendors of the Way Linggo project.

Royalties are required to be paid to the Indonesian Government. The royalty for gold and silver are fixed to the sales price of gold and silver and will vary between 1% and 2% with a 2% royalty for a gold price of US$400 per ounce or greater and a silver price of US$15 per ounce or greater.

These royalty amounts have been included in Snowden’s financial valuation model as described in Section 13.

4.2 DIVESTMENT

PT Natarang’s entitlement to the Way Linggo project is pursuant to a CoW dated 2 December 1986, made between the Indonesian Government and PT Natarang. The Indonesian Government ruled that PT Natarang entered the Operating Period on 1 September 2004.

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Progressive offer of divestment of part of the foreign holdings must take place within five years from the commencement of the Operating Period (i.e. by 31 August 2009). Fifteen percent of the company is already held by Indonesian interests. A further 8% (taking the Indonesian interests to 23%) must be offered for divestment by 31 August 2010. Further progressive shares tranches must be offered for divestment until 51% of the shares in PT Natarang have been offered to Indonesian parties by 31 August 2014. Divestment is initially offered to the Indonesian Government then if the Government does not accept the offer to Indonesian nationals or companies. Under the CoW the Divestment Shares are to be offered for sale to the Indonesian parties at a fair market value.

5. GEOLOGY SETTING AND MINERALISATION

5.1 REGIONAL GEOLOGY

The geology of southern Sumatra comprises a basement terrane comprising Pre-Cretaceous metamorphic rocks intruded by Cretaceous granitic plutons. Four distinct phases of island arc volcanism, of ages, have been superimposed on the margins of the Sumatra Platform, during the Tertiary and Quaternary periods. These phases of volcanic activity are represented by:

Late Oligocene to early Miocene andesitic volcanic rocks.
Middle Miocene to Pliocene andesitic volcanic rocks.
Quaternary rhyolitic ignimbrite eruptions from major caldera structures.
Recent andesitic volcanic rocks forming major strato-volcanic cones.

These volcanic sequences dominate the geology of the Barisan Mountains, a northwesterly trending linear mountain range running the length of Sumatra which rises to nearly 3,000 m and is approximately 100 km in width. These mountains are located between 25 km and 150 km inland of the west coast of Sumatra.

A major dextral strike-slip fault complex, the Trans-Sumatra Fault Zone, can be traced along the entire extent of the Barisan Mountains. This structure is the result of prolonged oblique subduction of the Indian-Australian Oceanic lithospheric plate beneath the Sundaland Craton which has continued from the Late Mesozoic until the present. This subduction has resulted in the formation of the oceanic trench to the west of the Nias Islands as well as the magmatism and volcanic activity observed in the Barisan Mountains.

The Trans-Sumatra Fault Zone has played a dominant role on the volcanic activity, structural geology and associated mineralisation in the region throughout the Tertiary and Quaternary periods. The TransSumatra Fault Zone occurs as a single, simple fault plane, however in many places multiple fault planes and splays have resulted from movement along the main fault zone.

Most of the epithermal quartz vein gold mineralisation discovered in southwestern Sumatra is associated with quartz veins located along structures related to the Trans-Sumatra Fault Zone. The Way Linggo project is located 3 km east of the Trans-Sumatra Fault Zone, adjacent to the termination of the Semangka Graben.

Quaternary sediments, derived largely from the Barisan Mountains, occur as a narrow (up to 50 km) zone along the southwestern coast, and constitute most of the area to the northeast of the mountain belt.

5.2 PROJECT GEOLOGY

The geology of the area surrounding the Way Linggo project area consists of predominantly of midMiocene to lower Pliocene volcanic units, comprising andesitic and dacitic tuffs and breccias which grade upwards into andesitic to basaltic tuffs, volcanic breccias, flows, dykes, and minor volcaniclastic sediments. Younger porphyritic dacite subvolcanic intrusives occur as a number of small stocks.

Pleistocene or younger dacitic to rhyolitic tuffs, tuff breccias and ignimbrites unconformably overlie the volcanic sequence in the topographically higher areas. These units grade into intermediate and basic lavas at stratigraphically higher levels. Propylitic alteration is regionally widespread in the older Tertiary andesitic and dacitic volcanic rocks and structurally controlled clay-pyrite alteration is observed locally.

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Banded chalcedonic quartz veins and stockworks, carrying precious metal mineralisation, are developed within the andesitic to dacitic volcanic rocks and within the porphyritic dacite stocks. The mineralisation is generally emplaced along northwest trending structures. Mineralisation has been delineated at the Way Linggo deposit and at Semung Kecil, 2 km to the east of Way Linggo.

The area around Way Linggo is underlain by a shallow dipping sequence of dacitic to andesitic pyroclastic rocks which have been intruded by a porphyritic hornblende dacite stock and minor andesitic dykes. These pyroclastic units are predominantly lapilli tuffs, with lesser amounts of volcanic breccias, ash tuffs and crystal tuffs. In the area south of the Semung Besar River the sequence is predominantly andesitic in composition. The porphyritic dacite stock which intrudes the pyroclastic sequence is an elongate northeast trending body with steeply dipping contacts.

5.3 MINERALISATION

Between 1986 and 1993 a number of regional drainage sampling programmes were conducted within the Way Linggo project area, resulting in the definition of the Way Linggo, Semung Kecil and Way Embe prospect areas. Subsequent prospect evaluation comprised standard grid soil sampling, detailed geologic mapping and geochemical sampling, petrographic studies, trenching, excavation of adits, ground magnetic surveys and diamond drilling programmes. Details of the exploration carried out over the Way Linggo deposit are discussed in Section 6.

5.3.1 Way Linggo

Epithermal gold-silver quartz vein mineralisation has been identified in three areas at Way Linggo: North Vein, Central Vein Zone and Panca’s Vein.

North Vein

The North Vein lies to the north of the Semung Besar River and is essentially a single high grade quartz vein hosted within a porphyritic dacite intrusive stock. This vein has been trenched and drill tested along a strike length of approximately 350 m and to a maximum depth of 180 m below surface.

The North Vein comprises a discreet, partly bifurcating vein. A number of other weakly developed subparallel, narrow veins and veinlets occur within a few metres of the wallrock contacts. The width of the North Vein varies from 2 to 12 m, averaging approximately 4.5 m. The surface outcrop of the North Vein has approximately 150 m strike length and the vein has been shown by drilling to plunge to the northwest at between 40[o ] and 45°.

The vein zone strikes southeast. Minor interpreted flexures in the vein have been interpreted which are the results of small offsets along east-west post-mineralisation faults. The vein dips vertically to subvertically to the southwest.

The mineralogy of the North Vein is dominantly quartz with subordinate adularia (up to 15%) and chalcedony. Sulphides are occasionally observed; pyrite is the most common sulphide mineral with very rare acanthite and sphalerite. Gold occurs as electrum within interstitial grains especially in the adularia-rich bands within the vein and is observed as inclusions in pyrite.

Wallrock alteration occurs over distances of up to 1 m from the vein and is typically adularia-clay (illitesmectite) or adularia-clay-pyrite. Varying degrees of silicification and quartz-vein stockworks occur marginal to the vein. Gold and silver values in wallrock adjacent to the North Vein are generally below detection levels.

Distally, the host rocks are weakly propylitically altered with selvages of clay alteration along narrow shear zones and 1 to 5 cm wide quartz veins.

Central Vein Zone and Southern Extension Vein

The Central Vein Zone is located along the southern projection of the North Vein and to the south of the Semung Besar River. This zone is characterised by widespread development of epithermal veins containing generally low grade gold and silver mineralisation in the range 0.5 to 3.0 g/t Au and 0 to 40 g/t Ag. Mapping has shown the Central Vein Zone extends over 400 m strike length and up to 200 m in width. One of the main veins in the Central Vein Zone is interpreted to be the extension of the

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North Vein, which is seen to have been offset laterally some 20 m to the west by faulting. This vein has been named the Southern Extension Vein.

At the northern end of the Central Vein Zone a number of drillhole intersections have returned veins of up to 5 m in width, some of which have grades of up to 21.15 g/t Au and 162 g/t Ag. The Southern Extension Vein has been intersected by drilling on 20 m spaced sections between 10,000 mN and 9,920 mN. An east-northeast trending fault zone has been interpreted to separate the North Vein from the Southern Extension Vein and the Central Vein Zone. It is probable that in the northern part of the Central Vein Zone individual veins have been disrupted by offsets along components of this fault zone.

Wallrock alteration within the Central Vein Zone area is characterised by high level epithermal alteration assemblages of clay-silica pyrite and peripheral propylitic chlorite, carbonate, pyrite alteration. The lapilli tuffs and volcanic breccia host rocks of the Central Vein Zone display extensive intense clay alteration and selective silicification extending up to 10 m from quartz veins. These zones commonly exhibit anomalous gold contents of up to 0.2 g/t Au.

The abundance of banded chalcedonic silica in the Central Vein Zone indicates that the veins possibly formed at lower temperatures (i.e. higher level) than the North Vein mineralisation. Twelve shallow drillholes and two deep drillholes were completed in the Central Vein Zone. A number of the shallow holes returned intersections in banded epithermal quartz veins with anomalous 1 to 3 g/t Au grades. Intersections of 2 m with an average grade of 4.07 g/t Au and 62 g/t Ag and 1.8 m with an average grade of 5.61 g/t au and 64 g/t Ag were also returned. Further drilling is required to evaluate the Central Vein Zone.

Panca’s Vein

Panca’s Vein is located in and adjacent to the Way Linggo stream, 100 m to the northeast of the Central Vein Zone. It comprises a zone of 0.3 to 0.4 m wide low grade epithermal veins within a 40 m wide zone of epithermal veining similar to the Central Vein Zone.

Four drillholes tested this zone and encountered narrow zones of low grade gold and silver mineralisation.

5.3.2 Other Targets

Adjacent to Way Linggo Deposit

During exploration of the Way Linggo deposit in the late 1990s two other targets were developed and drill tested; the Northeast CSAMT (Controlled Source Audio Frequency Magneto Telluric - geophysical survey) anomaly and the North Gossan.

The Northeast CSAMT anomaly is a geophysical target based on a linear CSAMT resistivity anomaly parallel to, and located approximately 200 m to the northeast of the North Vein. Four drillholes tested this target but did not intersect any significant mineralisation.

The North Gossan target was discovered through trenching a zone located 150 m to the northwest of the North Vein. A single drillhole (DDH-LJ36) was completed which intersected a silicified fault breccia with weak anomalous in gold grades of up to 0.8 g/t. No further work was completed.

During site works in 2008, an additional mineralised vein, Hartos’ Vein, was located to the north of North Vein. The vein material has similar characteristics to the North Vein. This epithermal vein is located beneath approximately 5 m of barren overburden and is sub-parallel to the main Way Linggo North Vein. The vein ranges in width from 5 to 6 m. Rock chip sampling indicates that the vein is mineralised across its width and returned 3 m with an average grade of 2 g/t Au and 56 g/t Ag.

Semung Kecil

The Semung Kecil prospect lies 2 km to the east of the Way Linggo deposit. Surface prospecting, including 1.3 km of trenches identified a series of steeply dipping, northwest trending, opaline chalcedonic silica veins (with a maximum width of 7.5 m) and minor stockwork development, surrounded by extensive alteration (silica-kaolinite-pyrite assemblage).

Surface channel sampling returned up to 2 m with an average grade of 10.6 g/t Au and grab samples of vein material returned values of up to 26.8 g/t Au. Preliminary scout diamond drilling from within a

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142 m long adit returned only mediocre results with the highest intersection being 1 m with an average grade of 1.03 g/t Au. In all instances target depths were not reached due to poor ground conditions.

Since 1994, PT Natarang has conducted a number of ground geophysical surveys and diamond drilling (totalling 1,371.85 m) over the 200 m wide and 900 m long mineralised zone. CSAMT lines have confirmed the existence of deeper resistive zones below mapped surface mineralisation. Diamond drilling intersected only small quartz veins within argillic altered volcanics and sediments. PT Natarang believes that this prospect warrants further exploration.

Way Embe

The Way Embe prospect area is interpreted to represent southern extension of the Semung Kecil mineralisation. Interpretation is based on magnetic lineations and this area has similar geochemical and geological features to those identified at Semung Kecil. Preliminary sampling of low temperature chalcedonic silica veins reported assay values to a maximum of 100.2 g/t Au and 47.6 g/t Ag.

A single drillhole was targeted to test the CSAMT resistive anomalies and interpreted structures. No significant intersections were reported. Further detailed ground geophysical surveys in conjunction with closely spaced shallow drillholes are warranted in order to test this target.

Regional geochemical anomalies

During 1994 a semi-detailed BLEG (Bulk Leach Extractable Gold) geochemical sampling programme was conducted over the Way Linggo project area at a sample density of one sample per square kilometre. A total of ten anomalous areas comprising 21 drainage systems were identified as being geochemically anomalous in gold.

A number of solitary lower order BLEG drainage and rock chip anomalies were also delineated. In the majority of cases mineralisation appears related to outcropping opaline-chalcedonic silica veins and subordinate stockwork, or surface expressions of the same system, including sinter terraces, or elevated As-Sb-Hg geochemical signatures. Such veining lies within north-northwest and eastnortheast trending extensional fractures and shears found in argillised Oligocene to Miocene volcanic inliers.

Follow-up geological mapping and detailed sediment sampling is required within these anomalous areas.

5.4 WEATHERING

In general there is a 2 to 3 m thick layer of intensely weathered material consisting of clays with varying size rock fragments over the entire Way Linggo prospect area. Beneath this horizon the host dacite and pyroclastic rocks exhibit a degree of weathering to a further 3 to 5 m. Fracture controlled oxidation is observed to a depth of 12 to 15 m below surface.

At Way Linggo the North Vein sub-crops along the steep eastern slope of the Way Tikus Valley to the north of the Semung Besar River. A number of trenches have exposed the vein on the hillside where it is up to 6 m wide. No significant secondary enrichment of gold or silver has been observed. The grade distribution within the mineralised zone is directly related to epithermal processes and has undergone little modification by supergene processes, although comparison silver values from trenches and drill core suggests that surface leaching of silver may have occurred.

Oxidation of the North Vein is restricted to the top 2 to 3 m of the vein due to the compact, fine grained nature of the quartz and adularia and the occurrence of the gold as micron sized particles within the quartz. Rare pyrite is observed in near surface samples and drillhole intersections.

6. WAY LINGGO DEPOSIT

6.1 EXPLORATION

6.1.1 Trenching

During exploration in 1990 a series of 11 trenches were excavated across the strike of the mineralisation at a nominal 100 m spacing. The trenches were channel-sampled over 2 m sample

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intervals and assayed for gold, silver and base metal mineralisation. Three of the trenches (Trench 5, 7 and 9) exposed the North Vein.

During October 1995, the trenches over the North Vein were re-excavated, along with a trench in the Southern Extension Vein and five new trenches. These trenches exposed the North Vein on approximate 20 m intervals along the extent of its outcrop for a distance of around 120 m. The trenches were mapped and rock saw channel sampled at intervals of close to 1 m. Two cuts were made at an average distance of 8 cm apart and to a depth of approximately 6 cm. Samples were assayed for gold, silver and base metal mineralisation.

6.1.2 Drilling

From 1994 to 1996, 112 diamond drillholes totalling 11,283.5 m were drilled at Way Linggo. Sixty-one of these were drilled to delineate the North Vein, 18 were drilled to delineate the Southern Extension Vein and with the remaining holes drilled to investigate the Central and Panca’s Veins, the CSAMT anomaly, the North Gossan and for geotechnical purposes. Thirty-eight drillholes (prefixed DDH-LL) were cored at HQ size for the first 120 to 150 m then reduced to NQ to the bottom of the hole. The drillholes prefixed DDH-LJ were collared at NQ size for the first 60 to 70 m and completed in BQ.

The overall core recovery in the quartz vein zone reportedly averaged 80.6%. Recoveries in the wallrock were generally excellent and exceeded 95%. Core loss has occurred in some of the high grade intersections due to the friable nature of the vein material. Underground mapping and sampling from the adits suggests that core loss may have occurred in altered, clay rich zones of the deposit.

Within the mineralised zone the drill sections are generally at 20 m spacing along the strike with a down dip spacing of approximately 30 m. The majority of drillholes were oriented perpendicular to the strike of the vein, however due to topographical constraints several were fan drilled from a single location to gain additional data in the southern part of the North Vein. All drillhole collars were surveyed and with the exception of three early drillholes (DDH-LL01, 02 and 03) downhole surveys were conducted every 30 m and at the bottom of the hole using either Eastman single shot or Sperry Sun down hole cameras. The three early drillholes (DDH-LL01, 02 and 03) were surveyed using a Tropari instrument and PT Natarang considers that survey data from these holes may not be reliable. The LJ series holes were generally short and no down hole surveying was undertaken.

PT Natarang noted a discrepancy between data from DDH-LL57 and an adjacent drillhole, DDH-LL16. PT Natarang considers that there may be an error in the survey data for DDH-LL57 and as a result data from this drillhole was not used for resource estimation purposes.

6.1.3 Adits

An access level was developed by PT Natarang through the North Vein deposit at 1,065 mRL to a total length of 50.25 m. This adit intersected the vein as predicted in two locations and intersected DDHLJ13. A second access has been developed through the North Vein deposit at 1,020 mRL and development from this has intersected the North Vein in three locations together with strike development of around 50 m. Detailed mapping and sampling of the vein has been undertaken in the adits.

6.2 ANALYSIS

Drill core exhibiting fracturing, stockworking, alteration or veining was sampled. Within these zones sample intervals were defined based on geological and alteration contacts and were collected over intervals of 0.1 to 5.5 m. Sampling within larger veins was based on 1 m intervals, although variations in colour, texture and mineralisation were used to select sample intervals and any veins of over 0.2 m were sampled separately. The maximum sample interval within the veins was 2 m.

Samples were sent to Jakarta for analysis at PT Inchcape Utama Services. The entire sample was dried, jaw crushed and then pulverised. Gold was determined by 50 g fire assay using an atomic absorption spectrophotometry (“AAS”) finish to a detection limit of 0.005 g/t Au. Silver, lead, zinc and copper were determined using AAS techniques following acid digestion of 0.25 g splits. Samples containing greater than 100 g/t Ag were repeated using a 1 g split.

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6.2.1 Quality Control and Quality Assurance

Quality control and quality assurance (“QA/QC”) procedures implemented for the Way Linggo samples included the submission of blanks samples, internal laboratory control procedures of duplicate analysis and analysis of standards, and analysis of duplicate samples at two independent laboratories.

Blank samples of barren rock were inserted by PT Natarang in sample batches immediately following selected mineralised intersections to detect any contamination during sample preparation. A total of 198 blank samples were analysed. Analysis of the results from this indicates that 78% of the blanks returned gold values of � 0.01 g/t, 19% returned values of 0.01 to 0.1 g/t Au and the remaining 3% returned values of 0.1 to 0.26 g/t Au, with a few identified as being possible contamination from previous samples. Ninety-six percent of the blanks returned values of � 1 g/t Ag and all the blanks retuned silver grades of less than 5 g/t.

During analysis five standards were inserted by the laboratory; two of these are for silver and base metals and three are for gold and a total of 147 analyses were undertaken on the standards.

Two inter-laboratory checks were undertaken and 188 pulp samples from vein and wallrock material were sent to Indoassay Laboratories in Balikpapan for analysis and 307 pulp samples from vein material were sent to PT Geoservices in Jakarta for repeat analysis. As for the primary laboratory additional blank samples were submitted to these laboratories. A review of the data from interlaboratory duplicate analysis and the original assay data indicates that the gold and silver data sets have high correlation coefficients.

6.3 GEOLOGICAL LOGGING AND INTERPRETATION

Geological interpretation was completed on 20 m spaced sections taking into account logging, mapping and assay data from drillhole and trench data. Sectional interpretations were linked from section to section to develop three dimensional models. Domain interpretation was based on the presence of quartz veining and, due to the style of mineralisation, there are some significant grades intersections present outside the interpreted mineralised domains which are of limited extension along strike.

Interpretation of the North Vein is relatively simple and defines one major vein system that is truncated by the Semung Besar River at 10,020 mN and the Southern Extension Vein is interpreted to extend for 75 m south of the river. Narrow sub-parallel quartz veins occur on the hangingwall of the North Vein and one of these has been interpreted and is referred to as the Hangingwall Split. The North Vein remains open at depth and down plunge to the northwest.

6.4 DENSITY

A total of 1,179 diamond drill core samples were tested by PT Natarang to evaluate the dry bulk in-situ density. The average of all measurements from the vein material was 2.33 t/m[3] and the average density of all wallrock samples was 2.45 t/m[3] .

An additional 70 measurements are reported by AMET (AMET, 1997) with a total of 718 measurements taken from vein material and 532 from wallrock material. This data set confirmed the density of the vein material, with a value of 2.32 t/m[3] , and returned a slightly lower density of 2.42 t/m[3] for the wallrock material.

6.5 DATA VERIFICATION

6.5.1 PT Natarang

During 2008, PT Natarang located 28 of the original 61 holes drilled to delineate the North Vein and from the drillhole casings was able to verify the collar locations and orientation of all of the 28 drillholes. PT Natarang has obtained additional topographical data and a revised, more detailed topographical surface has been generated.

An access level has been developed by PT Natarang through the North Vein deposit at 1,065 mRL to a total length of 50.25 m. This adit intersected the vein as predicted in two locations and intersected DDH-LJ13. A second access has been developed through the North Vein deposit at 1,020 mRL and development from this, as at May 2008 and observed by Snowden during the site visit, had intersected the North Vein as predicted in two locations (Figure 6.1). The northernmost intersection is located close

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to the intersection obtained from drillhole DDH-LL71. Detailed mapping and sampling of the vein has been undertaken in the adits.

Underground face sample results confirm the very high grade nature of the brecciated lode and assays from repeat sampling shows good reproducibility (Figure 6.2). Face sampling on the north side (mine grid) of the adit on the 1,065 mRL level returned 3.65 m at an average grade of 25 g/t Au and 211 g/t Ag and sampling on the south side (mine grid) of the adit returned 3.55 m at an average grade of 50 g/t Au and 214 g/t Ag from multiple composite samples.

Face sampling results from the 1,065 mRL adit have confirmed the location of the mineralised zone and the high grade intersection from DDH-LL13. Face sampling on the line of the drillhole returned results of 3.8 m at an average grade of 77 g/t Au and 203 g/t Ag. Results from DDH-LJ13 were 7.65 m (true width 3.8 m) at an average grade of 38 g/t au and 304 g/t Ag.

Face sampling results from the 1,020 mRL adit have confirmed the location of the mineralised zone and the high grade intersection from DDH-LL71. Face sampling on the north side (mine grid) of the adit on the 1,020 mRL level returned 5.0 m at an average grade of 53.8 g/t Au and 705 g/t Ag and sampling on the south side (mine grid) of the adit returned 5.17 m at an average grade of 18.64 g/t Au and 1,189 g/t Ag from multiple composite samples. These grades are higher than returned from DDH-LL71 (7.18 m, or 5.07 m true width, with an average grade of 14.39 g/t Au and 768 g/t Ag) and indicate that the resource model may have under estimated the grade within this area of the mineralised zone.

Examination of the mineralised zone in the adit indicates that a significant amount of epithermal clay is present in the brecciated lode and that drilling through this material is likely to result in significant core loss. If significant gold and silver mineralisation is present in the clay then this may have resulted in lower grades being returned from core samples from within the highly altered parts of the vein. Snowden recommends that a number of face samples are separated into clay and vein material to determine the gold and silver content of the clay and the vein material and determine whether grade bias exists.

Figure 6.1 Geological mapping of adit on 1,020 mRL (May 2008)

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Figure 6.2 Geological mapping and gold results from face sampling on 1,065 mRL level
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6.5.2 Snowden

During Snowden’s site visit in May 2008, a number of trenches over the North Vein were inspected. This included Trench 5 which lies directly above the vein intersection in the underground workings. The geology was verified against the trench mapping and, where the original flagging tape was present, sample intervals were verified with the trench maps. The sampling locations were generally visible and Snowden was able to confirm that a channel of approximately 8 cm wide and 6 cm deep had been cut and the material from within this channel removed.

Snowden examined the adits at 1,020 mRL and at 1,065 mRL located approximately 30 m and 75 m below surface respectively. Eight rock-chip samples collected for verification analysis of gold and silver and four samples were taken from the exposed ore zone from each of the two adits for analysis at Genalysis Laboratory Services in Perth, Western Australia. The assay results are included in Table 6.1 and all samples results confirm the levels of gold and silver mineralisation within the vein exposures.

Table 6.1 Results from verification samples

Verification sample number	Verification sample	Verification sample	Verification sample	PT Natarang	PT Natarang
	Au1	Au2	Ag	Au	Ag
MS50511 MS50512 MS50513 MS50514 MS50515 MS50516 MS50517 MS50518	0.38 29.49 26.88 5.64 82.50 97.34 30.73 45.13	- - - - - 112.09 32.73 43.16	20 84 231 202 561 793 81 7,792	0.34 23.40 31.20 4.81 79.00 207.00 24.50 40.50	10 52 356 120 814 1,540 87 3,800

PT Natarang provided Snowden with original drill logs, analysis data sheets and photographs of the drill core. Snowden conducted a number of checks of the drill logs, core photographs, the original assay sheets and the digital database and no material errors were noted.

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In 2001, the core storage facility at Way Linggo disintegrated and much of the core was lost. Scattered core is present around the existing camp site. PT Natarang has been able to retrieve 622 core samples from 32 drillholes that were collected for density measurements and have the drillhole name and sample interval marked on the drill core. Snowden conducted a number of checks of the core samples with the core photographs and the geological logs and no discrepancies were noted.

Based on its review of the existing core samples, core photograph, drill logs, trench mapping, inspection of the underground workings, underground mapping and interpreted cross-sections, Snowden has confirmed the geological interpretation used for estimation of the Mineral Resource.

Snowden visited the Intertek Indonesia (previously PT Inchcape Utama Services and now represented by PT Intertek Utama Services) laboratory facilities in Jakarta where the original analysis on the drill core and trench samples had been undertaken. Intertek are also undertaking the sample preparation and analysis of the rock-chip face samples being collected from the adits by PT Natarang. Intertek holds ISO 17025 accreditation for mineral analyses which ensures that international standards are maintained in the laboratories’ procedures, methodology, validation, QA/QC, reporting and record keeping.

Based on the results from the data verification undertaken by PT Natarang and Snowden and review of the QA/QC data, Snowden believes that the data collection, analysis, QA/QC procedures and geological interpretation at Way Linggo project are to current industry standards.

7. MINERAL RESOURCES

The current Mineral Resource for the Way Linggo deposit is based on a resource model developed by Snowden in August 2008 (Snowden, 2008). The August 2008 Mineral Resource (inclusive of Ore Reserves) for the North Vein and additional mineralisation was interpreted within the Hangingwall Split and the Central Vein Zone, including the Southern Extension Vein is presented in Table 7.1. This resource is based on a cut-off grade of 2.5 g/t AuEq, and was classified in accordance to the 2004 JORC Code. The Mineral Resource for the North Vein was used as the basis for the Mining Inventory. Based on current gold and silver prices, the equivalent gold grade was derived from a grade of 60 grams silver being equivalent to 1 gram gold.

Table 7.1 Mineral Resource based on a 2.5 g/t AuEq cut-off grade (Snowden, 2008)

	Classification	Tonnes kt	Au g/t	Ag g/t
North Vein	Measured	334	11.38	172
	Indicated	93	7.06	118
	Inferred	127	4.92	83
	Sub-total	554	9.17	143
Hangingwall Split and Central Vein Zone	Measured	-	-	-
	Indicated	75	5.26	69
	Inferred	40	4.24	46
	Sub-total	115	4.91	61
TOTAL		669	8.44	129

Note: Inclusive of Ore Reserves

7.1 RESOURCE ESTIMATION

No additional drilling or trench sampling has been undertaken at Way Linggo since 1996 and the database used for the resource model in PT Natarang’s 1996 Feasibility Study has not changed since that time. Snowden used the database supplied by PT Natarang and incorporated data from a face sampling programme undertaken in the two adits during 2008. For the purposes of preparing the August 2008 Resource estimate, a wireframe model was developed to define the North Vein, the Hangingwall Split and part of the Central Vein Zone, including the Southern Extension Vein. Data from within each of these domains was composited to 1.0 m intervals.

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Grade estimation used a multiple indicator kriging algorithm and an elliptical search ellipse with the long axis oriented along the plunge of the mineralisation. Grade estimation of gold and silver was undertaken into parent blocks of 5 mE by 20 mN by 5 mRL. These blocks were sub-celled to a minimum of 1 mE by 5 mN by 1 mRL for volume control and more accurate definition of the vein extents. Block volumes were converted to tonnage estimates using the block density values. The density values were estimated into the parent blocks using an inverse distance algorithm to the power of two and blocks which were not estimated by the initial search were assigned the mean density value of 2.33 t/m[3] .

7.2 RESOURCE CLASSIFICATION

Based on review of the existing core samples, core photograph, drill logs, trench mapping, inspection of the underground workings, underground mapping and interpreted cross-sections, Snowden has confirmed the geological interpretation used for estimation of the Mineral Resource. Based on the results from the data verification undertaken by PT Natarang and Snowden and review of the QA/QC data, Snowden considers that the data collection, analysis, QA/QC procedures and geological interpretation at Way Linggo project are to current industry standards.

The adits at 1065 mRL and 1020 mRL, which successfully intersected the North Vein, provide a good validation of the historic drillhole data and geological interpretation. Both adits intersected the North Vein as predicted by the historic drillhole interpretation and show comparable grades.

Snowden (2008) classified the central portion of the North Vein, where the drill spacing is in the order of 20 m, as a Measured Resource, based on the guidelines of the 2004 JORC Code. All other domains were classified based on the number of samples used to estimate the block. A block estimated using greater than 20 samples, and not classified as Measured, was classified as an Indicated Resource, with the remaining blocks classified as an Inferred Resource.

8. MINING

8.1 MINING OPERATIONS

The North Vein is the single mining target and is exposed in surface outcrops and exploration trenches. The North Vein is steeply dipping (almost vertical) and ranges from less than 2 m up to 12 m in thickness, with an average thickness of 4.5 m. Currently the operation consists of two adits at elevations of 1,065 mRL (Way Tikkus Portal) and 1,020 mRL (Way Semung Portal). The underground development has progressed through the hangingwall and footwall respectively, to intersect the North Vein.

8.2 PREVIOUS MINING STUDIES

A Feasibility Study completed by Mancala in 1996 and reviewed by AMET in 1997 supported an underground operation with mechanised mining methods and access via a decline system. A geotechnical report, completed by Barret Fuller Partners (“BFP”) in 1996 defined five separate zones and the mining study proposed four differing mechanised mining methods for the identified zones in the deposit, based on the expected geotechnical conditions.

The proposed mining methods included the following:

Avoca
Bench and Fill
Open Stoping
Extraction under fill

Each of the mining methods had a particular dilution and recovery assumption assigned to it. The tonnage weighted average for the Feasibility Study was 16.4% dilution and 87% mining recovery. The AMET review of the Feasibility Study produced average assumptions of 13.8% dilution and 93.8% mining recovery.

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Figure 8.1 Way Linggo schematic showing Feasibility Study mining method selection

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8.3 CURRENTLY PROPOSED MINING PLAN

A surface hoist and rail skip system have been installed on the steep incline connecting the Way Semung portal up to the run of mine pad (“ROM”) on the footwall side of the deposit.

The currently proposed mining method is a selective, shrinkage-style mining method using hand-held pneumatic rock drills and Alimak access raises. PT Natarang proposes that this is a conservative approach that would address the expected poor ground conditions in the deposit. The majority of the ore is planned to be removed from the Way Semung portal at 1,020 mRL elevation and hoisted to the ROM pad where the ore will be trucked to the treatment plant. The portions of the orebody below the portal elevation are intended to be accessed through an underground incline shaft.

This method differs substantially from the Feasibility Study. PT Natarang is yet to complete any detailed mining plans for the extraction of the orebody using this methodology. The planned production rate has been reduced from 100,000 tonne per annum (“tpa”) in the Feasibility Study to the current 65,000 tpa.

8.4 MINING PLAN COMMENTS

8.4.1 Mining method selection

It is Snowden’s opinion that successful mining of the Way Linggo deposit will depend on the application of various mining methods as dictated by the ground conditions, mining width and mineral distribution within the orebody. There is currently insufficient information and analysis of the key mine design criteria to propose a definitive mining methodology, but the approach will most likely consist of a combination of the following methods:

Selective hand-held mining in a shrinkage or cut-and-fill configuration.
Long-hole bench mining using a small drill rig in a “shrinkage” or bench-and-fill configuration.
Long-hole mining using a small drill rig in an Alimak raise climber in a shrinkage-type operation.

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It is unlikely that highly mechanised mining methods, as described in the Feasibility Study, will add significant value to the project at the proposed production rates.

From the observed ground conditions and analysis completed in the Feasibility Study, it is likely that the predominant mining method will be a non-entry method. This will particularly be the case in the regions where the mining width exceeds five metres.

From observed ground conditions and analysis completed in the Feasibility Study, the ground support systems in development and production areas, where personnel access is required, will consist of a combination of surface support (e.g. shotcrete / mesh / timber sets and lagging / shotcrete arches) and tendons (e.g. split sets / grouted bars / cable bolts).

Backfill is likely to be required as part of the mining process regardless of the mining method employed. The backfill may take the form of waste rock, crushed aggregate or tailings. If tailings are used, the product would likely require the addition of a binder such as cement. Some pillars may have to be left in the orebody to maintain stability but reliance on pillars to avoid the placement of backfill could result in significant ore loss.

8.4.2 Mining rate

Materials movement

Preliminary analysis and a time and motion study (Johnson, 2008) have been completed to determine the capacity of the installed hoist. The analysis showed that the hoist is currently able to hoist some 54,000 tpa to 56,000 tpa. Construction has begun on a haul road from the Way Tikkus portal to the ROM pad. In the short term, this will enable the hoisting capacity to be supplemented by small trucks hauling ore generated above the 1,065 mRL elevation. Consideration is also being given to the installation of a larger hoist that will increase the hoisting speed of the 1.5 t skip from the current 1.0 m/s to 1.5 m/s. The increase in speed has been calculated by Johnston to increase the hoist capacity to approximately 74,000 tpa.

Snowden’s hoist capacity calculations are detailed below in Table 8.1. The current and proposed hoists are expected to have capacities of 56,000 tpa and 69,000 tpa respectively.

The proposed production schedule presented by PT Natarang and Kingsrose is 65,000 tpa from the second year of production and, as such, the proposed hoist modifications are essential to meeting production targets.

The provided schedule does not include any waste or low grade material. It is Snowden’s estimate that approximately 10% of material broken and hoisted will be low grade or waste material. A very small capacity exists to dump waste material at the portal site, but this is assumed to be negligible. It is therefore assumed, that to support a production rate of 65,000 tpa of ore, approximately 71,500 tpa will be hoisted. Provision for separate ore and waste handling will be required to prevent unintentional dilution.

Based on the calculations presented below, improvements on the assumed availability, effective working time and management focus will be required to achieve the necessary hoisting performance.

An estimate of hoisting capacity was completed using the following assumptions:

Skip capacity – 1.5 tonnes
Scenario 1 skip speed – 1.0 m/s
Scenario 2 skip speed – 1.5 m/s
Load time – 120 sec
Tip time – 60 sec
Availability – 90%
Utilisation – 90%
8 hours per week fixed maintenance and checks
Effective hours per shift – 8 hrs
Shifts per day – 2 shifts
Roster – 6 days out of 7

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18 public holidays
5% interference from weather

The capacity calculations are shown in Table 8.1 below. These correspond quite closely to the study completed in February 2008.

Table 8.1	Hoist capacity calculation	Hoist capacity calculation
Hoisting Capacity Calculation	Scenario 1	Scenario 2	Units
Capacity	1.5	1.5	t/skip
Average speed	1	1.5	m/s
Distance	220	220	m
Load time	120	120	s
Dump time	60	60	s
Cycle time	400	326.67	s
	6.67	5.44	minutes
Instantaneous Capacity	13.5	16.53	tph
Availability	90%	90%
Utilisation	90%	90%
Fixed maintenance	8	8	hrs/week
Work hours per day	16	16
Average hoist hours per work day	15	15
Days worked per year	280.25	280.25
Average hoist hours per year	4,164	4,164
Hoist performance	56,210	68,829	tpa

The loading and tramming of material from the underground workings to the hoist tip site is to be with hand-trammed 1.5 t rail cars loaded with an air powered rocker shovel. In order to match the capacity of the hoist, two rocker shovels and three rail cars will have to operate on a continuous basis. To operate at this rate, at least three ore loading sources will be required at any one time and three rail cars are to be in operation. Double track passing areas and passing spurs will be essential to ensure tramming operates continuously. There is no indication in the available planning information that the plan includes this configuration. Snowden does not expect this to be a significant additional cost to install.

Table 8.2 shows Snowden’s assumed tramming capacity calculation:

Table 8.2	Tramming capacity calculation
Activity
Load	135	s
Loaded tram	333	s
Average distance	500	m
Speed	1.5	m/s
Tip	30	s
Return tram	200	s
Average distance	500	m
Speed	2.5	m/s
Total	698	s
	11.6	min
Number of cars required to match
hoist (rounded up)	3	cars

As there is no storage capacity at the rail car tipping site, the tramming operation will have to directly match the hoist operating hours.

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Ore production

At the planned production rate of 65,000 tpa, the vertical depletion rate of stoping activities will reach a maximum of 21 vertical metres per year. This is within industry norms of 20 m to 50 m per year vertical depletion rate as described below (Table 8.3).

Table 8.3 Vertical depletion rate

Measure	Value	unit
Strike length	300	m
Ore thickness	4.5	m
Density	2.33	t/m3
Tonnes per metre	3,145	t/m
Annual production rate	65,000	tpa
Annual vertical advance rate	21	m/year

Milling rate

Work by Laurion and a technical review by GRD Minproc determined that the proposed mill throughput rate is approximately 50,000 tpa. Subsequently, PT Natarang has advised that another identical ball mill has been purchased that will enable milling capacity to be increased above the planned 65,000 tpa schedule with additional exploration success.

Production rate conclusion

It is Snowden’s opinion that the production rate in the proposed schedule (65,000 tpa ore) is achievable. The light gauge track installation and hand tramming of rail cars will be the biggest limitation to removing broken ore followed by the capacity of the hoist. The upgrade of tracks and introduction of a small locomotive should be considered as a production risk mitigation strategy.

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Figure 8.2 Way Linggo inclined hoist
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Figure 8.3 Inclined hoist winding engine

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Figure 8.4 Inclined hoist headframe and tip head

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Figure 8.5 Inclined hoist loading station
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Figure 8.6 Hand tramming underground

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Figure 8.7 Rocker shovel loading site

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Figure 8.8 Way Semung portal and tip site (under construction)

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9. MINING INVENTORY

9.1 MINING CUT-OFF GRADE

In Snowden’s base case financial model (discussed below) the average direct unit cost per tonne of ore milled is US$120/tonne. At a metallurgical recovery of 90% and a gold price ranging between US$650/oz and US$800/oz, the gold equivalent (AuEq) break even cut-off grade ranges between 6.4 g/t and 5.2 g/t as shown in Figure 9.1.

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Figure 9.1 Break even cut-off grade

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9.0
8.5
8.0
7.5
7.0
6.5
6.0
5.5
5.0
4.5
4.0
500 550 600 650 700 750 800 850 900
Gold Price (US$/oz)
AuEq (g/t)
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In producing Figure 9.1, the gold grade equivalent ratio of 1:60 (Au:Ag) has been kept constant. Table 9.1 shows the resulting silver price at a corresponding gold price.

	Table 9.1	Table 9.1	Metal prices
		Price Range	(US$/oz)
Gold price	600	650	700	750	800
Silver price	10.00	10.83	11.67	12.50	13.33

9.2 MINING INVENTORY CONVERSION ASSUMPTIONS

Snowden has interrogated the August 2008 Resource block model and applied the mining factors based on the mining scenarios discussed above.

Mining recovery

The mining recovery has been modelled at 90% of broken material. The 10% lost ore is assumed to be lost due to loading inefficiencies, drilling inaccuracy, orebody modelling inaccuracy, sampling inaccuracy, lost fines and spillage.

Unplanned dilution

Snowden has assumed that unplanned dilution will amount to 15% of mined tonnage and contain no grade. In a minimum mining width of 4.0 m this equates to 0.3 m on either side of the stoping excavation. There is a potential for substantially more dilution if blasting practices result in damage to weak low-grade material adjacent to the stopes. To maintain the low unplanned dilution level to 15%, strong grade control practices will need to be implemented.

Planned dilution

There has been no additional planned dilution accounted for in the mining inventory estimate. Planned dilution is assumed to be negligible due to the selective nature of the likely mining methods.

Mining Inventory

The mining inventory for the Way Linggo deposit is derived from the August 2008 Resource model and mining factors as discussed above. Only the material from the North Vein falling in either the measured or indicated resource category has been included in the mining inventory. Table 9.2 shows the mining inventory for at various cut-off grades.

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Table 9.2 Mining Inventory at AuEq cut-off

Cut off AuEq (g/t)	Resource Category Tonnage (kt)	Au (g/t) Ag (g/t)	Au content (kg) Ag content (kg)
4	Measured 335 Indicated 84	10.1 153 6.7 112	3,400 51,330 560 9,380
	Total 419	9.5 145	3,960 60,710
5	Measured 332 Indicated 68	10.2 154 7.6 127	3,380 51,160 510 8,680
	Total 400	9.8 150	3,890 59,840
6	Measured 321 Indicated 54	10.4 157 8.6 142	3,340 50,510 460 7,720
	Total 375	10.2 155	3,800 58,230
7	Measured 309 Indicated 49	10.6 161 8.9 149	3,282 49,708 438 7,326
	Total 358	10.4 159	3,720 57,034

10. WAY LINGGO FINANCIAL ANALYSIS

10.1 FINANCIAL MODEL

The financial model used in this valuation is based on a spreadsheet model supplied by Kingsrose. The valuation methodology is a discounted cash flow analysis of the after tax cash flow attributable to Kingsrose after acquiring an initial 85% ownership of the Way Linggo deposit.

PT Natarang have advised that under the terms of the shareholders loan agreement, 100% of after tax and royalty profit flows to the foreign partner, as repayment of loaned preproduction expenditures (the total up to commissioning) for nominally the first two years of full operation. This arrangement has been included in the Snowden financial valuation model.

10.2 CAPITAL COST

Snowden has been supplied with an estimate of the budgeted remaining capital expenditure (Table 10.1) to complete the establishment of the Way Linggo deposit.

The contingency applied to the capital estimate appears to be low (10%) when viewed in the light of the project status and detail of the project designs. However, the site establishment and initial development in the underground workings is well advanced and PT Natarang advises that substantial savings have been made in the purchase of second–hand equipment for the processing plant (two ball mills, screens, conveyors and apron feeder).

It is Snowden’s opinion that the budgeted capital expenditure is a realistic assessment of the amount required to bring the Way Linggo deposit into operation.

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Table 10.1 Capital expenditure estimate

Capital Items		US$ (000)
Corporate and management		330
Site administration and management		558
Camp and accommodation		188
Lampung and Banding logistics		30
Mining		1,093
Geology and survey		143
Process plant		2,884
Tailings dam		203
Power station		833
Civil works		234
Maintenance		37
Miscellaneous costs		161
Contingency	10.00%	669
Total Capital Items		7,363

10.3 OPERATING COST

Mining costs

The technical mining assessment completed by Johnston in February 2008 produced an estimate for a mining operating cost of US$40 per tonne milled. This included a contingency of 30%.

Designs for mining activities have not progressed beyond a conceptual stage, thus, making definitive assessment of mining cost, problematic. Based on the previously mentioned likely mining scenarios it is Snowden’s opinion that some costs that will likely be incurred were not included in the Johnston estimate. These include:

Waste development required to access the orebody on intermediate levels and below the 1,020 mRL.
Intensive ground support in the form of timber sets, shotcrete, shotcrete arches etc.
Backfill, which will be a likely requirement for any mining methods where hand-held shrinkage methods are not applicable.
Mining and hauling material that is below the break-even cut-off grade to low grade stockpiles or a waste dump.

Snowden’s preferred estimate is US$60 per tonne milled, which is consistent with the estimate used in Kingsrose’s financial model.

Processing costs

The processing operating cost includes the following:

Process plant operation
Reagents
Tailings disposal and storage facility management
Cyanide detoxification
Process water management
Loading ore at the ROM pad and truck haulage to the plant crusher.

Snowden’s preferred estimate for the processing cost is US$55 per tonne with an additional 5% for maintenance.

Royalties

Royalties as described in Section 4 have been included in the valuation model.

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Taxation and depreciation

Taxation has been accounted at 35% of operating profit less royalties. Depreciation on initial capital expenditure has been calculated at 25% of diminishing balance per year. An initial sunk capital amount of US$9.85 M has been added to the forecast capital expenditure.

Contract of Works divestment requirements

The CoW divestment requirement of -8% in 2010 and continuing at -7% per year until a residual foreign ownership of 49% is achieved, has been modelled.

The project cash flow has been attributed to Kingsrose on an annual basis according to the above mentioned shareholders loan agreement and the residual proportion of ownership. The anniversary date for divestment is 1 September each year from 2010 until 51% of ownership is held by an Indonesian entity. The financial model is constructed in annual periods and, thus, the annual cash flow has been pro-rated to the various parties assuming a 1 September transfer of ownership.

The fair value of the divestment portion under the CoW is the highest of:

Replacement cost of the Company’s investment.
Price at which shares will be accepted for listing on the Jakarta Stock Exchange.
Value of the shares based on a fair valuation of the Company as a going concern based upon future earnings, dividend projection and appropriate rate of return

Snowden has estimated the fair value of divestment based on the written down value of the original capital investment at the time of divestment (option 1) and on the discounted value of future project cash flow at the time of divestment (option 3).

Current knowledge of the relevant factors influencing future market conditions makes the use of option 2 inappropriate.

The highest calculated fair value amount arose from option 3. Therefore the fair-value payment for the divestment amount used in this valuation has been calculated as the divestment proportion of the discounted (12% p.a.) future project cash flow.

Operational Cash flow Valuation

The calculated mining inventories together with the corresponding metal prices were used in the financial model to produce a range of values that could be applied to the Way Linggo project. The discounted cash flow, of the after tax cash flow, attributable to Kingsrose (85%) at varying metal prices and cut-off grades is illustrated in Figure 10.1.

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Figure 10.1 Way Linggo NPV attributable to Kingsrose (US$'000)
20,000
18,000
16,000
14,000
12,000
10,000
8,000
6,000
4,000
Gold price : Cut-off grade
(US$/oz : AuEq g/t)
(US$'000)
Attributable NPV
600 : 6.9 650 : 6.4 700 : 5.9 750 : 5.5 800 : 5.2 850 : 4.9 900 : 4.6
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Mining Operations Preferred (or Base Case) scenario

The preferred scenario has been calculated by reducing the mining costs by 10%. This is to reduce the level of impact the conservative cost estimates have on the valuation. At this reduced cost, the resulting cut-off grade is 5.3 g/t AuEq at a gold price of US$750/oz. Table 10.2 shows the production, revenue and costs for the whole project in the Preferred scenario together with the resultant cash flow attributable to Kingsrose according to the level of ownership at the time.

		Table 10.2	Preferred	Preferred	case cash flow summary	case cash flow summary	case cash flow summary
		Year -1	Year 1	Year 2	Year 3	Year 4	Year 5	Year 6	Year 7	Total
Tonnes milled	t (000)	0.0	40.4	64.7	65.0	65.0	65.0	65.0	27.4	392.4
Equivalent gold production	oz (000)	0.0	17.6	26.9	22.0	21.2	21.2	21.2	8.9	139.1
Total project revenue	US$M	0.0	13.0	19.8	16.2	15.7	15.7	15.8	6.6	102.9
Total project
operating costs	US$M	0.1	6.2	8.8	9.0	9.0	9.0	8.6	3.5	54.2
(incl royalties)
Total project capital costs	US$M	7.9	0.3	0.3	0.3	0.3	0.3	0.0	0.0	9.4
Taxation	US$M	0.0	1.1	2.9	1.9	1.9	2.0	2.3	1.2	13.2
Total project cash flow	US$M	-7.9	5.3	7.8	5.1	4.5	4.4	4.9	1.9	26.0
Foreign ownership ratio	%	85%	85%	77%	70%	63%	56%	49%	49%
Divestment income	US$M	0.0	0.0	1.7	1.1	0.8	0.6	0.4	0.0	4.6
Attributable income	US$M	-7.9	5.3	9.2	4.8	3.9	3.2	3.0	0.9	22.4
Attributable NPV(12%)	US$M	12.3			IRR	72%

11. MINERAL PROCESSING AND METALLURGICAL TESTING

The processing circuit has been re-designed by Laurion from the conventional CIP plant anticipated in the Feasibility Study. Under the re-designed circuit the ore will be primary and secondary crushed and then passed through a ball mill grinding circuit. This will be followed by conventional cyanide leaching with CCD residue washing and a Merrill-Crowe precipitation process to enhance the recovery of precious metals, especially the high grade silver. The tailings will be detoxified before disposal into the tailings pond.

Metallurgical testwork carried out by Oretest in 1994 was reviewed by Laurion in January 2008 and by GRD Minproc in February 2008. Testwork was carried out at a variety of grind sizes with recoveries ranging from 90 to 92% for gold and 90 to 94% for silver.

Snowden has undertaken a high level review of the available data and notes that there are a number of issues which are currently ‘work in progress’ and require finalisation. Snowden considers that the work completed to date is at Scoping Study level and notes that the GRD Minproc review (GRD Minproc, 2008) was only a high level review looking for fatal flaws.

Snowden notes that the following issues need to be addressed:

Results indicate that mercury is present in the Way Linggo vein material, albeit in relatively low concentrations. As yet the mercury issues have not been fully addressed and have the potential to cause Occupational Health and Safety issues if not addressed. PT Natarang has advised Snowden that the mercury issue has been recognised and addressed in that gold room design will incorporate smelter off-gas handling to enable condensation of any mercury vapour and prevent release to the atmosphere. A form of sump downstream from

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the tailings dam will be constructed to enable the return of water to the dam to prevent any mercury in solution releasing to the environment.

The water balance for wet season and dry season has not been presented and would be important regarding the disposal of excess water during the wet season. Pt Natarang has advised Snowden that this has been addressed by Laurion and that disposal of excess water is to the Semung River via a designed spillway.
The detoxification process needs a high shear mixer and further development.
Testwork need to be undertaken to determine if there are thiocyanates in the effluent. The proposed detoxification process does not destroy thiocyanates.
While leaching tests have demonstrated a high recovery of gold and silver this is only a part of the process. The Merrill-Crowe process requires clarified solutions and de-aeration of the pregnant liquor. Further testing is required to demonstrate precipitation at laboratory bench scale.
When sulphides are present, fouled solutions may result making the Merrill-Crowe process more difficult or requiring changes to the operating conditions. This potential issue should be tested at bench scale and addressed prior to commissioning.
Operating costs are at draft stage and it is Snowden’s opinion that these will increase above the estimates proposed by PT Natarang. An elevated operating cost has been used in the valuation model. The high Abrasive Index will result in frequent bowl and mantle changes and pump liner wear.

Pt Natarang has advised Snowden that the Laurion metallurgists/process engineers are highly experienced in Merrill-Crowe and are fully aware of these factors and have given them full consideration in the design considerations. The level of detail provided to Snowden is insufficient to comment fully on the metallurgy and this is still a work in progress by PT Natarang.

12. VALUATION CONSIDERATIONS

12.1 FAIR MARKET VALUE OF MINERAL ASSETS

Mineral assets are defined in the VALMIN Code as all property including, but not limited to real property, mining and exploration tenements held or acquired in connection with the exploration, the development of and the production from those tenements together with all plant, equipment and infrastructure owned or acquired for the development, extraction and processing of minerals in connection with those tenements.

The VALMIN Code defines fair market value of a mineral asset as the estimated amount of money or the cash equivalent of some other consideration for which, in the opinion of the Expert or Specialist reached in accordance with the provisions of the VALMIN Code, the mineral asset should change hands on the valuation date between a willing buyer and a willing seller in an arms length transaction, wherein each party has acted knowledgeably, prudently and without compulsion.

In effect therefore, the valuation Expert is assumed to have the knowledge and experience necessary to establish a realistic value for a mineral asset. The real value of a tenement can only be established in an open market situation where an informed public is able to bid for an asset. The most open and public valuation of mineral assets occur when they are sold to the public through a public share offering by a company wishing to become a public listed resource company, or by a company raising additional finance. In this instance, the public is given a free hand to make the decision, whether to buy or not buy shares at the issue price, and once the shares of the company are listed, the market sets a price.

It is well known to most valuation Experts that where mineral tenement valuation is concerned there are two quite distinct markets operating in Australia. Almost without exception, the values achieved for mineral assets sold through public flotation are higher than where values are established through, say, the cash sale by a liquidator, or the sale by a small prospector to a large company neighbour, or through joint venture arrangements.

It is Snowden’s opinion that the fair market value of mineral assets should be valued by the Expert on the assumption that they are traded by vending them into a public float. Generally this will mean that

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the vendor is issued escrow shares (escrow period is usually two years). Importantly, this is a true cash sale situation, since the purchaser of the tenements (the public) is always expected to pay cash.

The VALMIN Code notes that the value of a mineral asset usually consists of two components; the underlying or technical value, and the market component which is a premium relating to market, strategic or other considerations which, depending on circumstances at the time, can be either positive, negative or zero. When the technical and market components of value are added together the resulting value is referred to as the market value.

The value of mineral assets is time and circumstance specific. The asset value and the market premium (or discount) changes, sometimes significantly, as overall market conditions, commodity prices, exchange rates, political and country risk change. Other factors that can influence the valuation of a specific asset include the size of the company’s interest, whether it has sound management and the professional competence of the asset’s management. All these issues can influence the market’s perception of a mineral asset over and above its technical value.

12.2 METHODS OF VALUING MINERAL ASSETS

12.2.1 Mineral assets with Mineral Resources and Ore Reserves

Where Mineral Resources and/or Ore Reserves have been defined, Snowden’s approach is to excise them from the mineral property and to value them separately on a value per resource tonne / metal unit basis or on the basis of a discounted cash flow (“DCF”). The value of the exploration potential of the remainder of the property can then be assessed. Where appropriate, discounts are applied to the estimated contained metal to represent uncertainty in the information.

In Snowden’s opinion, an Expert charged with the preparation of a development or production project valuation must give consideration to a range of technical issues as well as make a judgement about the ‘market’. Key technical issues that need to be taken into account include:

confidence in the Mineral Resource / Ore Reserve estimate;
metallurgical characteristics;
difficulty and cost of extraction;
economies of scale; and
proximity and access to supporting infrastructure.

Discounted cash flow analysis

A discounted cash flow analysis determines the technical value of a project by approximating the value if it were developed under the prevailing economic conditions.

Once a Mineral Resource has been assessed for mining by considering revenues and operating costs, the economically viable component of the resource becomes the Ore Reserve. When this is scheduled for mining, and the capital costs and tax regime are considered, the net present value (“NPV”) of the project is established by discounting future annual cash flows using an appropriate discount rate.

The resulting ’classical’ NPV has several recognised deficiencies linked to the fact that the approach assumes a static approach to investment decision making, however the NPV represents a fundamental approach to valuing a proposed or on-going mining operation and is widely used within the mining industry.

Comparable market value

When the economic viability of a resource has not been determined by scoping or high level studies, then a ’rule of thumb’ or comparable market value approach is typically applied. The comparable market value approach for resources is a similar process as to that for exploration property; however a dollar value per resource tonne or ounce in the ground is determined.

As no two mineral assets are the same, the Expert must be cognisant of the quality of the assets in the comparable transactions, with specific reference to:

the grade of the resource;

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the metallurgical qualities of the resource;
the proximity to infrastructure such as an existing mill, roads, power, water, skilled work force, equipment, etc;
likely operating and capital costs;
the amount of pre-strip (for open pits) or development (for underground mines) necessary;
the likely ore to waste ratio (for open pits); and
the overall confidence in the resource.

12.2.2 Mineral assets in the exploration stage

When valuing an exploration or mining property, the Expert is attempting to arrive at a value that reflects the potential of the property to yield a mineable Ore Reserve and which is, at the same time, in line with what the property will be judged to be worth when assessed by the market. Arriving at the value estimate by way of a desktop study is notoriously difficult because there are no hard and fast rules and no single industry-accepted approach.

It is obvious that on such a matter, based entirely on professional judgement, where the judgement reflects the Expert’s previous geological experience, local knowledge of the area, knowledge of the market and so on, no two valuers are likely to have identical opinions on the merits of a particular property and therefore, their assessments of value are likely to differ - sometimes markedly.

The most commonly employed methods of exploration asset valuation are:

multiple of exploration expenditure method (exploration based) also known as the premium or discount on costs method or the appraised value method;
joint venture terms method (expenditure based);
geoscience rating methods such as the Kilburn method (potential based); and
• comparable market value method (real estate based).

It is possible to identify positive and negative aspects of each of these methods. It is notable that most valuers have a single favoured method of valuation for which they are prepared to provide a spirited defence and, at the same time present arguments for why other methods should be disregarded. The reality is that it is easy to find fault with all methods since there is a large element of subjectivity involved in arriving at a value of a tenement no matter which method is selected. It is obvious that the Expert must be cognisant of actual transactions taking place in the industry in general to ensure that the value estimates are realistic.

In Snowden’s opinion, a geologist charged with the preparation of a tenement valuation must give consideration to a range of technical issues as well as make a judgement about the ‘market’. Key technical issues that need to be taken into account include:

geological setting of the property;
results of exploration activities on the tenement;
evidence of mineralisation on adjacent properties; and
proximity to existing production facilities of the property.

In addition to these technical issues the Expert has to take particular note of the market’s demand for the type of property being valued. Obviously this depends upon professional judgement. As a rule, adjustment of the technical value by a market factor must be applied most judiciously. It is Snowden’s view that an adjustment of the technical value of a mineral tenement should only be made if the technical and market values are obviously out of phase with each other.

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12.3 SNOWDEN’S VALUATION METHODOLOGY

12.3.1 Mining Inventory and Mineral Resources

Snowden has identified a component of the Mineral Resource as economically viable, and applied modifying mining factors to estimate a mining inventory. A detailed mining plan and schedule has not been developed for the project and this will be necessary before a JORC Code compliant Ore Reserve can be determined.

The mining schedule used in the financial valuation model comprises the depletion of the mining inventory at 65,000 tpa at the average gold and silver grades. The financial model includes revenue, direct and indirect operating costs, royalties, capital expenditure, depreciation, amortisation, divestment and taxation to determine a cash flow attributable to Kingsrose. The DCF results in a project NPV. Snowden considers the DCF method represents a robust method for determining the project’s value.

For the valuation of Way Linggo’s Mineral Resources that are not included in the Life of Mine Plan (“LOMP”), Snowden’s approach is to value these by assigning a dollar value per ounce of gold in the ground. To establish a benchmark market value for in-ground ounces, Snowden has completed a search of the publicly available information on recent market transactions involving gold resource projects over the preceding three year period (Table 12.1). Snowden’s search was restricted to gold assets in Asia-Pacific region and is not intended to be a definitive listing of all market transactions in this period. Snowden included only those transactions which offer comparability to the Way Linggo project in terms of reported tonnes, grade or the state of the mining operation as a whole. The level of disclosure and complexity of some of the transactions reviewed, limited Snowden’s ability to assign meaningful cash equivalent values and these were therefore disregarded for the purpose of this analysis.

Table 12.1 Transactions involving gold resource projects in the Asia-Pacific region

Project	Transaction Details	Asset Details	Purchase price 100% basis (US$)	Implied value per oz Au (US$)
Archangel	In September 2008, Avocet	The 14 km~~2~~Archangel project is located in the Batangas	$5.33 M	$13.78
	Mining Plc obtained from	District of southern Luzon in the Philippines. Based on a
	Mindoro Resources Ltd the	February 2008 estimate, the project contains a near surface
	right to earn a 75% interest in	Indicated Resource of 3.4 Mt grading 0.88 g/t Au and 8.0 g/t
	the Archangel project for	Ag; and an Inferred Resource of 11.6 Mt grading 0.70 g/t Au
	US$4.0 M cash and by funding	and 3 g/t Ag. Avocet Mining Plc reported that the Resource
	all costs up to a decision to	estimate excluded almost two thirds of the drilled
	mine (novalueidentified).	mineralisation.
Phuoc	In July 2008, Zedex Minerals	The principal assets of Olympus is a majority interest in the	$75.19 M	$55.78
Son and	Ltd acquired an additional	70 km2Phuoc Son and 30 km2. Bong Mieu gold projects
Bong Mieu	17.36% interest (to 30.87%) in	located in central Vietnam. Phuoc Son underground
	Olympus Pacific Minerals Inc	development project contains a Proven Reserve of 0.23 Mt
	(‘Olympus’) by purchasing	grading 8.72 g/t Au and an Probable Reserve of 0.69 Mt
	40.33 M shares in a private	grading 7.48 g/t Au contained within a Measured Resource
	transaction with a market	0.16 Mt grading 12.76 g/t Au and an Indicated Resource of
	value of approximately	0.55 Mt grading 10.16 g/t Au. The project also contains an
	C$13.07 M.	Inferred Resource of 1.88 Mt grading 6.63 g/t Au. The Bong
		Mieu open pit mining project contains a Proven Reserve of
		0.15 Mt grading 2.96 g/t Au and a Probable Reserve of 0.32
		Mt grading 2.43 g/t Au contained within a Measured
		Resource of 0.82 Mt grading 2.41 g/t Au and an Indicated
		Resource of 2.07 Mt grading 2.03 g/t Au. The project
		contains an open pit Inferred Resource of 1.95 Mt grading
		1.46 g/t Au. In addition, Olympus reports that the Bong Mieu
		project contains a tungsten and fluorine gold equivalent
		Measured Resource of 0.04 Moz Au Eq, an Indicated
		Resource of 0.06 Moz Au Eq and an Inferred Resource of
		0.10 Moz Au Eq. Based on a 1996 historical underground
		‘measured and indicated’ estimate of 0.22 Mt grading 6.51
		g/t Au and an ‘inferred’ estimate of 1.22 Mt grading 8.1 g/t
		Au, the project also contains an exploration target in the
		order of 1.3 to 1.6 Mt grading 7 to 8 g/t Au. Olympus also
		has a 60% interest in the 362 km2Capcapo advanced gold
		explorationprojectlocatedinthenorthern Philippines.

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Project	Transaction Details	Asset Details	Purchase price 100% basis (US$)	Implied value per oz Au (US$)
East	In December 2007, Sino Gold	The Eastern Dragon project is located in the Heilongjiang	$14.16 M	$19.23
Dragon	Mining Ltd entered into an	Province, China. The project contains an exploration target
(China)	agreement with Rockmining	in the order of 2.3 Mt to 2.9 Mt grading 7 to 8 g/t Au.
	Group Co Ltd to acquire a	Previous exploration within the project area included
	72% interest in the Eastern	underground exploration adits suggesting the mineralisation
	Dragon project for US$90 M	is amenable to underground exploitation.
	cash.
Kainantu	In October 2007, Barrick Gold	The Kainantu project is located in Papua New Guinea. The	$141.50 M	$69.87
(PNG)	Corp acquired from Highlands	project contains a marginal underground mining operation
	Pacific Ltd a 100% interest in	which in 2006 had a Proven and Probable Reserve of
	the Kainantu project for	1.27 Mt grading 16 g/t Au within a Measured and Indicated
	US$141.5 M cash.	Resource of 1.35 Mt grading 17.83 g/t Au. In addition, the
		project contains an Inferred Resource of 1.76 Mt grading
		22.1 g/t Au. The wording the Barrick Gold Corp press release
		suggests that they placed most of the value on the
		explorationpotentialofthe project.
Damar	In April 2007, Moncoa	The Damar project is located adjacent to Moncoa	$3.94 M	$21.29
(Malaysia)	Corporation acquired from	Corporation’s Selinsing project in the Pahang State in
	Avocet Mining Plc a 51%	Malaysia. The project contains an Indicated Resource of
	interest in the Damar project	1.94 Mt grading 2.49 g/t Au and an Inferred Resource of
	for C$1.75 M cash, 6 M shares	0.57 Mt grading 1.62 g/t Au.
	(deemed C$0.03/share) and
	3 M C$0.65 warrants
	(excluded from this valuation)
	and by spending C$0.45 M on
	explorationover 2years.
Nabila	In February 2007, Geopacific	The discontiguous 422 km~~2~~Nabila project is located on Viti	$1.97 M	$13.59
(Fiji)	Resources NL acquired from	Levu in Fiji. The project contains a near surface epithermal
	Millennium Mining Fiji Ltd the	gold exploration target, based on estimates made in the early
	Nabila project for 4 M shares	1990s, in the order of 0.8 to 1.0 Mt grading 4 to 6 g/t Au. For
	(deemed A$0.56/share), 4 M	the purpose of this valuation the midpoint of the exploration
	A$0.50 5 year options	target is used.
	contingent on defining a
	Resource of 0.2 Moz Au and
	1 M A$1.00 10 year options
	contingent on defining a
	Reserve of over 1.0 Moz Au.
	For the purpose of this
	valuation the options are
	excluded.
Mojiang	In July 2006, Hodges	The 7.2 km2Mojiang gold mine is located approximately	$13.56 M	$52.88
(China)	Resources Ltd acquired from	240 km southwest of Kunming in the in the Yunnan Province,		(assuming
	Caledon Resources Plc an	China. The project is currently subject to small scale open		this option is
	option for a 70% interest in the	cut and underground mining operations. The project		exercised)
	Mojiang project for 3.033 M	contains an Inferred Resource of 2.4 Mt grading 3.21 g/t Au.
	shares (deemed
	A$0.22/share), A$12 M cash
	and a sliding scale NSR
	(excludedfromthisvaluation).
		Source: Alexander Research PtyLtd

Snowden investigated transactions that are of a similar size as the Way Linggo project and notes the following in regard to the comparability of the transactions:

the market has generally been paying between US$40 and US$70 per ounce for projects with Ore Reserves and defined Mineral Resources;
the market has generally been paying between US$10 and US$40 per ounce for deposits with Minerals Resources and/or well defined exploration targets.

12.3.2 Exploration potential

In arriving at a fair market value for the exploration potential at Way Linggo, Snowden has considered the current market for gold exploration properties in the Asia-Pacific region and a search for recent publicly available market transactions involving comparable gold exploration projects in the Asia-Pacific

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region over the preceding three year period. The transactions identified along with the implied cashequivalent values are summarised in Table 12.2.

Table 12.2 Transactions involving gold exploration projects in the	Table 12.2 Transactions involving gold exploration projects in the	Table 12.2 Transactions involving gold exploration projects in the	Table 12.2 Transactions involving gold exploration projects in the	Asia-Pacific region	Asia-Pacific region
					Purchase	Implied
Project	Transaction Details		Asset Details	Area (km2)	price 100% basis	value /km2
					(US$)	(US$)
Adong Bor	In September 2008, Mandarin		The 364 km~~2~~Andon Bor project is located	364	$4.12	$11,300
	Venture Equity Inc obtained from		Banteay Meanchey and Ouddar
	Transol Corporation Ltd the right		Meanchey Provinces of northwestern
	to earn a 51% interest in the		Cambodia. Transol Corporation Ltd
	Andong Bor project for US$0.6	M	reported that the project was previously
	cash, US$1.0 M in shares and by		subject to historic underground and open
	spending US$0.5 M on		pit gold mining activity dating back to the
	exploration over 2 years.		1880’s, French exploration in the 1960’s
			and more recently mining activity carried
			out byan undisclosed Korean company.
Seruyung	In February 2008, Avocet Mining		The Seruyung project is located in	40	$1.57 M	$39,200
(Indonesia)	Plc acquired from PT Sago Prima		northeastern Kalimantan, Indonesia. The
	Pratama the right to earn a 51%		project contains a high-sulphidation
	interest in the Seruyung project		epithermal exploration target, based on
	by spending US$0.8 M on		exploration drilling programmes in the late
	exploration (no time frame		mid 1990s and early 2000s, in the order of
	disclosed).		0.22 to 0.33 Moz Au (no grades
			disclosed). However, Avocet Mining Plc
			reports that the project has the potential to
			host upto 0.5 Moz Au.
Nam Thong (Laos)	In June 2007, Alloy Resources Ltd acquired from Nilandon		The Nam Thong project is located in Laos. The project currently comprises an 8 km2	208	$2.48 M	$11,900
	Mining Group the right to earn an		mining lease and a 200 km2exploration
	80% interest in the Nam Thong		licence in application. The project is
	project for US$1.25 M cash, 2 M		located at the junction between the
	shares (deemed C$0.125/share)		Truongson Foldbelt and the Loei Foldbelt,
	and US$0.5 M in exploration		both of which are known to host
	expenditure.		economically significant gold and copper
			mineralisationelsewhere.
Luxi	In December 2006 Starry Ltd		The Luxi project, located in the Yunnan	250	$5.95 M	$23,800
(China)	acquired from a Sparton		province in southern China, is primarily an
	Resources Inc and a Government		exploration project but it does contain a
	agency a 51% interest in the Luxi		modest gold resource of the Carlin style
	projectforC$3.497 Mcash.		goldmineralisation.
Mangshi	In November 2006, Mangus		The Mangshi project area is located within	114	$2.94 M	$25,800
(China)	International Resources Inc		the province of Yunnan in south-central
	acquired from First Fortune		China. The project area encapsulates two
	Investments Inc the right to earn		smaller mining permits where small scale
	a 90% interest in the Mangshi		heap leach mining operations are
	project for C$3.01 in exploration		conducted. The known gold
	expenditure over 4 years.		mineralisation within the project area is of
			the Carlinstyle.
Rushan	In July 2006, Goldrea Resources		The tenement package is proximal to	90	$1.80 M	$20,000
(China)	Corp acquired from China		Goldrea’s existing Rushan project area is
	Shandong No3 Mineral and		located within the Shandong province in
	Geological Exploration Institute		northeastern China. The project area
	(third brigade) the right to earn	a	contains small open pit and shallow
	70% interest in eight exploration		underground gold mines The known gold
	licences by spending C$1.4 M on		mineralisation is associated with the
	exploration over 4 years		contact between sediments and basement
			rocks.
Samay	In July 2006, Royalco Resources		The Samay project area is located on the	54	$1.70 M	$31,600
(Philippines)	Ltd acquired from Tambuli Mining		island of Luzon, in the northern
	Co the right to earn a 100%		Philippines. The project area has
	interest in the Samay project for		previously been subject to exploration
	US$1.75 M cash and an		diamond drilling programmes that have
	exploration commitment of		demonstrated the areas prospectivity of
	US$1.45M. Tambuli Mining Co		the area for high-sulphidation epithermal
	retains a clawback right to 51%	of	gold mineralisation.
	Samay should 0.8 Mt contained
	copperbe delineated.
		Source: Alexander Research PtyLtd

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Snowden’s analysis of the market transactions indicates that the implied value of an early stage gold exploration project generally lies in the range of US$10,000 / km[2] to US$25,000 / km[2] and more advanced exploration projects traded at higher multiples (i.e. generally around US$25,000 / km[2] to US$40,000 / km[2] ).

13. PROJECT VALUATION

Snowden has incorporated information from its review of the geological, mining and metallurgical factors of the Way Linggo project with the valuation considerations outlined above, to determine a technical value for the mineral assets included in the LoM depletion and a fair market value for the mineral assets contained within Way Linggo’s remnant Resource and exploration potential.

13.1 MINING OPERATIONS

As discussed above, a number of parameters have been adjusted in the financial model to develop low, high and preferred scenarios for the project NPV valuation. A discount rate of 12% per year has been used to calculate the NPV attributable to Kingsrose for the Way Linggo project.

Figure 13.1 Valuation parameters for each valuation scenario

Parameters	Units	Low	High	Preferred
Gold price	US$ / oz	650	800	750
Silver price	US$ / oz	10.83	13.33	12.50
Mining inventory	kt	368	395	392
Au grade	g/t	10.2	9.8	9.9
Ag grade	g/t	157	151	151

Snowden’s preferred value of the mining operation is US$12.27 M. The range between the low and high case scenarios is US$6.5 M, which equates to 53% of the preferred value. This range reflects the inherent uncertainty in the current level of detailed analysis, planning and knowledge of the deposit.

Table 13.1 Summary of Mining Operations valuation

Value (NPV) (US$M)	Value (NPV) (US$M)	Value (NPV) (US$M)
Low	High	Preferred
7.21	13.69	12.27

The mining inventory corresponding to the low, high and preferred scenarios is shown in Table 13.2.

Table 13.2 Mining Inventory at Low, High and Preferred scenarios

Estimate	Resource Category Tonnage (kt)	Au (g/t) Ag (g/t)	Au content (kg) Ag content (kg)
Low	Measured 316	10.5 159	3,317 50,189
	Indicated 52	8.7 145	451 7,562
	Total 368	10.2 157	3,768 57,752
High	Measured 330	10.3 155	3,372 51,030
	Indicated 65	7.8 130	500 8,488
	Total 395	9.8 151	3,872 59,518
Preferred	Measured 328	10.3 155	3,368 50,965
	Indicated 64	7.9 132	495 8,392
	Total 392	9.9 151	3,863 59,357

13.2 MINERAL RESOURCES

In order to generate a value for the remnant Mineral Resource, lying outside of the LoM model, Snowden has calculated the remnant Mineral Resources as being that portion of the Measured, Indicated and Inferred Resources remaining after depletion of the mining inventory at Way Linggo.

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Additional mineralisation identified within the Hangingwall Split and the Southern Extension Vein has also been considered.

In order to establish a fair market value for the remnant Mineral Resource and resource potential at Way Linggo, Snowden has taken the following points into consideration:

The remnant resource has been determined by subtracting the undiluted mining inventory from the reported Mineral Resource.
The Mineral Resource is based on the North Vein and additional mineralisation identified in the Hangingwall Split and the Southern Extension Vein.
A discount of 10% has been applied to the contained metal identified in the August 2008 Resource model as being Indicated under the 2004 JORC Code.
A discount of 25% has been applied to the contained metal identified in the August 2208 Resource model as being Inferred under the 2004 JORC Code.
Estimation of the contained ounces of gold uses an equivalent Au grade based on current gold and silver prices, with a grade of 60 gram silver being equivalent to 1 gram gold.

In consideration of the foregoing criteria and the transactions listed in Table 12.1, Snowden estimates that the market value of an in-ground gold ounce currently lies in the range of US$10 to US$50 and has a preferred value of US$30 per contained gold ounce for comparable gold projects with defined Mineral Resources and exploration potential. A higher value is placed on projects with Ore Reserves and defined Mineral Resources; however the Way Linggo Mining Inventory has been valued as a separate asset.

In Snowden’s opinion, the market value for the Way Linggo remnant Mineral Resources within the North Vein and the additional mineralisation identified within the Hangingwall Split and the Central Vein Zone lies in the range of US$0.44 M to US$2.20 M with a preferred value of US$1.32 M and based on Kingsrose’s interest (85%) in the Way Linggo project upon completion of the acquisition lies in the range of US$0.37 M to US$1.87 M with a preferred value of US$1.12 M.

13.3 EXPLORATION POTENTIAL

Snowden has undertaken a comparison with the comparable market transactions presented in Table 12.2 involving gold exploration projects in the Asia-Pacific region over the past three years to arrive at a current market value for exploration potential of the Way Linggo project. In forming its opinion, Snowden has considered the following factors from its assessment of the exploration data:

The project area package covers an area of some 10,540 hectares (105.4 km[2] ).
Much of the tenement package contains favourable stratigraphy and structural settings and has potential for the discovery of additional mineralised epithermal vein systems.
The project is at an advanced stage and contains a Mining Inventory and defined Mineral Resources that have been valued separately.
The mineralisation within the North Vein is open at depth and down plunge to the northwest.
Mineralisation has been located at the Semung Kecil and Way Embe prospects.
Additional epithermal veins have been identified adjacent to the Way Linggo deposit.
Rock chip, soil and CSAMT anomalies have been identified.

Snowden’s analysis of the market transactions identified in Table 12.2 indicates that the implied value of an early stage gold exploration project within the Asia-Pacific region generally lies in the range of US$10,000 / km[2] to US$25,000 / km[2] and more advanced exploration projects traded at higher multiples (i.e. generally around US$25,000 / km[2] to US$40,000 / km[2] ).

In Snowden’s opinion, the market value for the Way Linggo exploration potential lies in the range of US$3.08 M to US$6.42 M with a preferred value of US$4.75 M and based on Kingsrose’s interest (85%) in the Way Linggo project upon completion of the acquisition lies in the range of US$2.24 M to US$3.58 M with a preferred value of US$2.91 M.

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13.4 LIABILITIES

With the exception of the royalty payments, Snowden has not been made aware of any additional liabilities associated with this project. Snowden has incorporated the royalties payable to the Indonesian government in its DCF valuation.

14. TOTAL PROJECT VALUE

Snowden has established the technical value associated with Way Linggo’s LOMP and the market value of the mineral assets located within the Way Linggo project area as at 25 November 2008. Snowden’s opinion of the market value for Icon’s 85% interest in the Way Linggo mineral assets, which are to be acquired by Kingsrose is summarised in Table 14.1.

Table 14.1 Kingsrose’s interest in the Way Linggo project valuation upon completion of the acquisition

Asset	Low (US$ M)	High (US$ M)	Preferred (US$ M)
Mining Operations Mineral Resources and identified mineralisation Exploration	7.21 0.37 2.24	13.69 1.87 3.58	12.27 1.12 2.91
TOTAL	9.82	19.14	16.30

15. DECLARATIONS BY SNOWDEN MINING INDUSTRY CONSULTANTS PTY LTD

15.1 INDEPENDENCE

Snowden is an independent firm of consultants providing a comprehensive range of specialist technical and financial services to the mining industry in Australia and overseas, through offices in Perth, Brisbane, Johannesburg, Cape Town, Vancouver, London and Belo Horizonte. Our corporate services include technical audits, project reviews, valuations, independent expert reports, project management plans and corporate advice.

This report has been prepared independently and in accordance with the Code of the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Experts Reports and the 2004 Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. The authors do not hold any interest in Kingsrose, PT Natarang, Icon, or any of the other parties named in this report, or in any of the mineral properties which are the subject of this report. Fees for the preparation of this report are being charged at Snowden’s standard rates. Payment of fees and expenses is in no way contingent upon the conclusions drawn in this report.

Snowden personnel responsible for the preparation and review of this report were Mr Karl Van Olden (Principal Consultant), Mr Wayne Ghavalas (Senior Consultant), Mrs Christine Standing (Principal Consultant) and Mr Damian Connelly (Associate Metallurgist) and Mr Jeames McKibben (Divisional Manager – Corporate Services). Mr Ghavalas, Mr Van Olden, Mrs Standing and Mr Connelly are the principal authors, whilst Mr McKibben reviewed this report. Mr Van Olden and Mr Ghavalas reviewed the development strategy, Mining Inventory and mining operations, Mr Connelly undertook a high level review of the mineral processing and metallurgical testing and Mrs Standing reviewed the Mineral Resource and compiled the background, geological and exploration data. A site visit to the Way Linggo project area was conducted in May 2008 by Mr Van Olden and Mrs Standing.

In preparing the report, Mr Ghavalas, Mr Van Olden, Mrs Standing and Mr Connelly relied on information provided by PT Natarang and a number of reports and research papers published by various government and academic institutions. The authors have also held detailed discussions PT Natarang senior management.

15.2 QUALIFICATIONS

The principal personnel responsible for the preparation and review of this report are Mr K Van Olden (Principal Consultant), Mr Wayne Ghavalas (Senior Consultant), Mr Connelly (Associate Metallurgist),

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Mrs C Standing (Principal Consultant) and Mr J A J McKibben (Divisional Manager–Corporate Services).

Mr Karl Van Olden (BSc, GradDip Eng, MBA, MAusIMM) is a mining engineer with more than 15 years experience. He has managed JORC-standard ore reserve processes, mine planning on deep gold and nickel mine operations with substantial geotechnical considerations and managed technical disciplines in South Africa and Australia. He has experience in technical and operational reviews, capital and operating cost estimation, financial modelling and the evaluation of significant capital projects. Mr Wayne Ghavalas (BSc, GradDip Applied Finance and Investment, MAusIMM) Wayne is a mining engineer with 14 years experience. His mining experience includes operations, short and long term mine planning, scheduling and management. The majority of this experience is in long hole open stoping and remnant mining.

Mrs Christine Standing (BSc (Hons), MAusIMM, MAIG) is a professional geologist with over 26 years of experience in the exploration and mining industry. Mrs Standing has been consulting in resource estimation since joining Snowden in 1988, with skills encompassing resource evaluation studies, grade control and reconciliation studies, and application of statistical and geostatistical techniques to multielement studies. Mrs Standing is currently a Principal Consultant for the Corporate Services Division in Perth and is involved in independent technical reviews, audits and valuations of exploration assets.

Mr Damian Connelly (BAppSc, MMICA, MAusIMM) is a consulting engineer with over 35 years experience. He has extensive experience in the gold, copper, lead, zinc, uranium and iron ore industries. He has been involved in many projects including engineering, audit, due diligence, tenders and expert witness work and experience has been gained in plant operations feasibility studies, detailed design, construction and commissioning, and all unit operations. During the last 20 years Damian has worked as a consultant metallurgist for mining, banking and engineering companies. He is a Director and consulting engineer for Mineral Engineering Technical Services Pty Ltd (METS) who supply consulting and independent technical reviews for the metallurgical industry.

Mr Jeames McKibben (BSc (Hons), MBA, MAIG) has more than 14 years experience gained as an exploration geologist in Australia, Zambia and Morocco, and as a geologist/analyst with the government agency, Tasmania Development and Resources. Having completed his MBA at Macquarie University, Mr McKibben joined the Corporate Services Division at Snowden, where he is currently the Divisional Manager and is involved in independent technical reviews, audits and valuations of mining and exploration assets.

16. BIBLIOGRAPHY

AMET, 1997. Independent review of the mineral resources and ore reserves of the Way Linggo gold deposit. Advanced Mining and Exploration Technology Pty Ltd. Indonesia.

Barret Fuller Partners, 1996. Geotechnical Analysis of the Way Linggo project, 1996.

Cube Consulting, 2008. Kingsrose Mining Ltd, Way Linggo Prospect, Check Model Report, March 2008.

GRD Minproc, 2008. Way Linggo Project Technical Review, Revision C, dated 29 February 2008.

JORC, 1996. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves �JORC Code, 1996 edition).

JORC, 2004. Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves �JORC Code, 2004 edition).

Kingsrose, 2008. Financial model, Way Linggo Project Model Analysis (MBL) 290508.xls (spreadsheet), May 2008.

PT Natarang, 1996. Feasibility Study, Way Linggo Project, Section 3 Geology and Resource Calculations.

PT Natarang, 1996. Feasibility Study, Way Linggo Project, Section 4 Mining and Reserve Calculations.

PT Natarang, 1996. Feasibility Study, Way Linggo Project, Section 3 Metallurgy and Flowsheet Development.

PT Natarang, 2007. Conceptual mine planning for the Way Linggo Underground Gold / Silver Mine, February 2007.

Johnston, R., 2008. Technical Mining Assessment – Way Linggo, dated February 2008.

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PT Natarang, 2008. Way Linggo Project Progress 26[th] February 2008. Memorandum prepared by M. Andrews to J. Morris and W Unger dated 28/01/2008.

PT Natarang, 2008. Mercury in Way Linggo North Vein Ore. Memorandum prepared by M. Andrews to A. Thompson dated 6/04/2008.
PT Natarang, 2008. Exploration Drill Hole Locations – North Vein, Way Linggo Mine. Memorandum prepared by D. Faulkner to D. Hatch dated 18/04/2008.
PT Natarang, 2008. Brief Review of Exploration within the PTN NM CoW Area. Memorandum prepared by M. Andrews to File dated 09/06/2008.
Snowden, 2008. Kingsrose Mining Limited: Way Linggo Au-Ag Deposit – Project No. 7437, Mineral Resource Estimate and Mining Study, August 2008, Draft.

Wheeler, R. S., 1999. Alteration and Epithermal Zeolite-bearing Quartz Vein Mineralisation at the Way Linggo Au-Ag Deposit, Southwest Sumatra, Indonesia. M.Sc. Thesis, The University of Auckland, May 1999.

17. GLOSSARY OF ABBREVIATIONS, DEFINITIONS AND TECHNICAL TERMS

Abbreviations	As– arsenic, Au– gold,AuEq– gold equivalent grade based on gold and silver,Ag- silver, Hg – mercury,km– kilometre,m– metre,M– million,pa– per annum,Sb– antimony,t– tonne,t/m3– tonnes per cubic metre,ha– hectare,km2– square kilometres,tpa– tonnes per annum,g/t– grams per tonne.
AAS	Atomic absorption spectrometry – an instrumental technique for detecting concentrations of atoms.
acanthite	A blackish to lead-gray silver sulphide mineral, Ag2S.
adularia	A variety of transparent or translucent orthoclase.
agglomeration	A method of concentrating valuable minerals based on their adhesion properties.
alteration	A physical or chemical change to original rock minerals.
andesite	A volcanic rock of intermediate chemical composition.
basalt / basaltic	A dark, fine-grained basic extrusive igneous rock composed primarily of plagioclase, pyroxene with or without olivine.
base metal	A generic term that collectively refers to elements of copper, lead, zinc and nickel.
BLEG	Bulk Leach Extractable Gold: a method of sampling and analysis designed to enhance the quality of data from stream sediment sampling.
breccia	A coarse-grained clastic rock composed of broken, angular rock fragments in a fine-grained matrix.
calcite	A common crystalline form of natural calcium carbonate, CaCO3.
caldera	A large crater formed by volcanic explosion or by collapse of a volcanic cone.
carbonate	Minerals containing calcium and/or magnesium carbonate.
CCD	Continuous Countercurrent Decantation used for residue washing.
chalcedony / chalcedonic	An extremely fine-grained form of silica.
CIL	Carbon-in-leach: a process for recovering gold from rock where the gold is dissolved by cyanide in the same tank as it is absorbed onto carbon.
CIP	Carbon-in-pulp: a process of recovering gold from rock where the gold is dissolved by cyanide in a series of tanks and the carbon onto which the gold is absorbed is passed in a counter current.
colloform	Irregular, more or less spherical or kidney-shaped in form.
colluvium/colluvial	Weathered material transported by gravity.
CoW	Contract of Work.
dacite	The extrusive equivalent of quartz diorite.
diamond drilling	Method of obtaining a cylindrical core of rock by drilling with a diamond impregnated bit.
dilution	Waste mined as ore.
dip	Geological measurement – the angle at which bedding or a structure is inclined from the horizontal.
dyke	Along and relatively thin sheet-like body of igneous rock that, while in molten state, intruded a fissure in older rocks.
electrum	A naturally occurring alloy of silver and gold.
Epithermal deposit	A mineral deposit consisting of veins and replacement bodies, usually in volcanic or sedimentary rocks, containing precious metals or, more rarely, base metals.
gossan	A ferruginous deposit commonly derived from the weathering of sulphide ores and often showing relict crystalline textures.
graben	A down-faulted block f rock.
ranite / granitic	An acid igneous rock occurring in the for of batholiths containing quartz and a high proportion of feldspar.
hornblende	A rock-forming amphibole group mineral which forms part of the mafic component of igneous rocks.
ignimbrite	A volcanic rock formed by solidification from flows comprising a mixture of very hot rock fragments and hot gases.
illite	A clay mineral.

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Indicated Mineral Resource	An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological and/or grade continuity but are spaced closely enough for continuity to be assumed. (JORC 2004)
Inferred Mineral Resource	An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological and/or grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes which may be limited or of uncertain quality and reliability. (JORC 2004)
JORC Code	The Australasian Code for Reporting of Mineral Resources and Ore Reserves (the JORC Code’ or ‘the Code’), which sets out minimum standards, recommendations and guidelines for Public Reporting of exploration results, Mineral Resources and Ore Reserves in Australasia. This code is prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Australian Mineral Industry Council (JORC).
lapilli	Shards of fragments of volcanic rocks.
lithic	Rocks formed from rock fragments derived from older rocks.
magmatism	Related to bodies of molten rock within the earth.
MAIG, FAIG	A post-nominal that signifies the holder is Member/Fellow of the Australian Institute of Geoscientists (“AIG”). Under the JORC reporting code, a ‘competent person’ must be at a minimum a member of the AIG or the AusIMM.
MAusIMM, FAusIMM	A post-nominal that signifies the holder is Member/Fellow of the Australian Institute of Mining and Metallurgy (“AusIMM”). Under the JORC reporting code, a ‘competent person’ must be at a minimum a member of the AIG or the AusIMM.
MBA	Master of Business and Administration.
Measured Mineral Resource	A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity. (JORC 2004)
Merrill-Crowe	A process in which gold id s recovered from cyanide solution by precipitation onto zinc shavings.
Mesozoic	A geological era from 245 to 65 million years ago.
metamorphism / metamorphic	The process by which changes are brought about in earth’s crust by the agencies of heat, pressure and chemically active fluids. Metamorphic rocks are produced by this process.
metasomatism/ metasomatic	A metamorphic process whereby existing minerals are totally or partially transformed into new minerals by the replacement of their chemical constituents, usually by fluids of material from an external source. Metasomatic rocks are produced by this process.
mineralisation	An accumulation of potentially economic minerals, especially sulphides.
Miocene	A geological time classification for rocks between 5.5 and 24 million years old.
Oligocene	The third of the epochs into which the Tertiary period is ordinarily divided.
kriging	Grade estimation technique.
Pleistocene	The first geologic epoch of the Quaternary Period.
plunge	The angle from the horizontal of a geological feature viewed in a vertical plane parallel to its strike.
pluton	A body of igneous rock that has formed beneath the surface of the earth by the consolidation of magma.
porphyry / porphyritic	Rocks containing conspicuous phenocrysts in a fine-grained matrix.
Probable Ore Reserve	A ‘Probable Ore Reserve’ is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors These assessments demonstrate at the time of reporting that extraction could reasonably be justified. (JORC, 2004)
propylitic	A style of hydrothermal alteration dominated by a characteristic mineral assemblage.
Proved Ore Reserve	A ‘Proved Ore Reserve’ is the economically mineable part of a Measured Mineral Resource. It includes diluting materials and allowances for losses which may occur when the material is mined. Appropriate assessments and studies have been carried out, and include consideration of and modification by realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. These assessments demonstrate at the time of reporting that extraction could reasonably be justified. (JORC, 2004)
pseudomorph	A mineral which has the outward form of another mineral.
pyrite	A hard, shiny mineral, FeS2.
quartzite	A metamorphic rock comprised largely or entirely of quartz.
Quaternary	A geological period dating from about 2 million years ago to the present.
rhyolite / rhyolitic	A fine-grained, extrusive igneous rock which has the same chemical composition as granite.
rock chip sampling	The collection of selective or representative samples of rock fragments within a limited area for analysis.
SAG mill	Semi-autogenous grinding ball mill in which the rock being ground assists in the grinding process.
shear zone	A generally linear zone of stress along which deformation has occurred by translation of one part of a rock body relative to another part.

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silicification	Process by which a significant proportion of the original constituent minerals have been replaced by silica.
smectite	A clay mineral; a hydrous silicate of alumina
sphalerite	A zinc sulphide (Zn, Fe)S.
splay	A fracture which is subsidiary to a major fault and usually oblique to it.
stockwork	A network of veins.
strike	The direction of bearing of a bed or layer of rock in the horizontal plane.
sulphide	A type of mineral composed of metal or metals combined with sulphur.
Tertiary	A geological time period from 70 to 2 million years ago.
tuff	Rock which contains fragments of other rocks and minerals sourced from eruptive volcanic activity.
volcanoclastic	Descriptive of a clastic sediment containing material of volcanic origin.
wallrock	Rock units on either side of an orebody.
weathering	The process by which rocks are broken down and decomposed by the action of wind, rain, changes in temperature, plants and bacteria.

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