Lachlan Star Limited — Capital/Financing Update 2006

Mar 30, 2006

Toodyay Resources Ltd

ABN 88 000 759 535

Level 1, 33 Ord Street West Parth WA 6005. PO Box 637 West Perth WA 6872 Telephone: +61 8 9420 9300 Facsimile: +61 8 9481 2690

27 March 2006

Australian Stock Exchange Limited Exchange Plaza 2 The Esplanade PERTH WA 6000

Attention: Tony Walsh-Assistant Manager, Issuers (Perth)

Dear Tony

TOODYAY RESOURCES LTD - REINSTATEMENT TO OFFICIAL QUOTATION

The board of directors of Toodyay Resources Ltd (Toodyay Resources) request that Australian Stock Exchange Limited (ASX) reinstate Toodyay Resources' securities to official quotation as soon as practicable.

We confirm that Toodyay Resources is in compliance with the Listing Rules and, in particular, Listing Rule 3.1 and the market is fully informed.

Please note the following matters:

• As part of the recapitalisation, Toodyay Resources completed a consolidation of $(a)$ its capital. Holding statements for the securities, post consolidation, have been despatched by the Company's share registry.
• The holding statements for the additional securities issued by the Company have $(b)$ also be despatched by the Company's share registry;
• The Receivers and Managers retired on 2 March 2006, the Company was $(c)$ removed from liquidation on 2 March 2006 and Company was released from external administration on 2 March 2006. A copy of the termination certificate was announced to the ASX on 3 March 2006; and
• Toodvay Resources has completed a capital raising of \$1,961,000. An Appendix $(d)$ 3B in relation to the various share and unlisted option issues has been lodged with ASX.

Use of Funds - Expenditure Budget

The expenditure budgets outlined below have been prepared to meet the commitments of the Company. It is noted that programs and budgets are dependant on results. These programs can therefore change depending on the results of the work.

It is proposed that the funds raised will be applied as follows:

Use of Funds - Expenditure Budget

	теаг 1	rear 4
Total funds raised	1,961,000
Utilised as follows:
Review, evaluation and development of the assets of
the Company (refer Section 2.3)	250,000	150,000
Review and evaluation of new projects	200,000	200,000
Total general working capital budget	450,000	350,000
Repayment of loan funds arranged by Ascent Capital
for payment to the Deed Administrator to satisfy	700,000
obligations under the Deed of Company Arrangement
(Working Capital Loans)
Working capital including expenses associated with the
Recapitalisation Proposal (part of which has been	250,000	211,000
funded by Ascent Capital)
Total funds utilised	1,400,000	561,000

• 1) Repayment of the Working Capital Loans.
• 2) The expenses of this Issue and the recapitalisation are estimated at \$125,000.
• 3) The estimated use of funds is contingent upon positive progress and results from the expenditure in line with the Company's objectives and strategy. The Directors reserve the right to expend the funds of the Company for the above purpose or for related or other purposes in line with the Company's objectives and strategy. The final expenditure of funds may vary from the above depending upon the circumstances in which the business develops and operates.
• 4) The Company proposes to allocate capital towards the review and evaluation of new projects. The Company will assess complementary opportunities in the mining and oil and gas industries. These opportunities may be by way of direct investment, joint venture or staged investment based on the project meeting agreed hurdles or milestones. If no complementary opportunities are identified then the Directors reserve the right to allocate this capital towards other business sectors. In the event that a major acquisition is identified, the Company will seek Shareholder approval to change the nature and scale of its activities. At this stage, the Directors have not identified nor given consideration to any other business sector.

Terms and conditions of 1 cent Unlisted Options - 31 December 2008

The material terms and conditions of the Options offered pursuant to the Options Offer are as follows:

• $(a)$ each Option entitles the holder, when exercised, to one (1) Share;
• the Options are exercisable at any time on or before 31 December 2008: $(b)$
• $(c)$ the exercise price of the Options is 1 cent each:
• subject to the Corporations Act, the Constitution and the ASX Listing Rules, the $(d)$ Options are fully transferable;
• $(e)$ the Options are exercisable by delivering to the registered office of the Company a notice in writing stating the intention of the Option holder to exercise a specified number of Options, accompanied by an Option certificate, if applicable, and a cheque made payable to the Company for the subscription monies due, subject to the funds being duly cleared funds. The exercise of only a portion of the Options held does not affect the holder's right to exercise the balance of any Options remaining:
• all Shares issued upon exercise of the Options will rank pari passu in all $(f)$ respects with the Company's then issued Shares. The Company does not intend to seek quotation of the Options:
• there are no participating rights or entitlements inherent in the Options and $(g)$ holders will not be entitled to participate in new issues of Options to Shareholders during the currency of the Options. However, the Company will ensure that, for the purpose of determining entitlements to any issue, Option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give Option holders the opportunity to exercise the Options prior to the date for determining entitlements to participate in any such issue;
• $(h)$ in the event of any reconstruction (including consolidation, subdivision, reduction or return of capital) of the issued capital of the Company prior to the expiry date of the Options, all rights of the Option holder will be varied in accordance with the ASX Listing Rules; and
• in the event the Company makes a pro rata issue of securities, the exercise price $(i)$ of the Options will change in accordance with the formula set out in ASX Listing Rule 6.22.2.

Annexure B

Company overview

Background

The Company was originally incorporated in New South Wales on 23 February 1970 as Devex Limited. On 20 November 1997 the company changed its name to Gympie Gold Limited. On 15 February 2006, the Company changed its name to "Toodyay Resources Ltd".

Gympie Gold was the holding company for a diversified resources group focused on exploration, production and marketing.

Suspension of Trading of Company Shares and Appointment of Administrator

On 29 December 2003, the Company made a request to ASX to suspend its securities from official quotation following the outbreak of fire at the Southland Colliery, an operation of the Company's subsidiary Southland Coal Pty Ltd.

On 30 December 2003, the directors of the Company appointed Murray Smith and Joseph Hayes of McGrathNicol+Partners as Administrators of the Company (Administrator) and certain subsidiaries pursuant to Section436A of the Corporations Act. On the same day, Andrew Love, Allan Lewis and Peter Geroff of Ferrier Hodgson were appointed as Joint and Several Receivers and Managers of the Company and group companies, Gympie Eldorado Mines Pty Ltd, Southland Coal Pty Ltd and Southland Mining Ltd.

On 28 July 2004, Gympie Gold creditors resolved that the Company enter into liquidation. The Administrators then became the Liquidators.

On 31 October 2005, Murray Smith and Joseph Hayes of McGrathNicol+Partners were reappointed as Administrators of the Company pursuant to leave granted by the Supreme Court of New South Wales. The purpose of the appointment was to enable a restructure of the Company and at a meeting of creditors held on 28 November 2005, the Administrator recommended to the creditors of the Company that, in the opinion of the Administrator, it was in the best interests of creditors to approve the execution of a deed of company arrangement. At this meeting, creditors, secured and unsecured, resolved to approve the execution of a deed of company arrangement with Ascent Capital to recapitalise the Company, which was subsequently executed on 6 December 2005 (Deed of Company Arrangement).

Nominees of Ascent Capital being Mr David Steinepreis, Mr Hugh Wamer and Mr Gary Steinepreis were appointed Directors of Gympie Gold on 22 December 2005.

At a meeting of Shareholders, held on 3 February 2006, Shareholders approved the recapitalisation of the Company. In addition, Ascent Capital arranged loan funds of \$700,000 to be made available to the Company to enable it to satisfy the terms of the Deed of Company Arrangement.

Accordingly, the Receivers and Managers retired on 2 March 2006, the Company was removed from liquidation on 2 March 2006 and Company was released from external administration on 2 March 2006.

Assets of the Company

Princhester Magnesite Project, Central Queensland - Industrial metal project

This project is located 95 kilometres north of Rockhampton and 10 kilometres south-east of the township of Marlborough, Central Queensland, Australia.

The Company holds 13 mining leases covering an area of approximately 130 hectares. In 1984, 91 hole air track drillholes were drilled on a 20 metre grid spacing over selected areas of shallow mineralisation for a total of 1030 metres. This was followed by four trial excavations of slots and pits into the magnesite lode.

In 1989, 95 vertical drillholes were drilled at 100 metre spacings and access lines were grid-mapped where bedrock was exposed by the dozing. Fully-fired analyses of magnesium, calcium, silica, iron, aluminium (expressed as oxides) and loss on ignition were done on all samples. This program delineated four areas of consistent magnesite lode. Resource estimates need to be verified to ensure compliance with JORC. Further work was undertaken in 1995 where 18 samples were collected from exposures and analysed for potential as a metal feedstock.

The mineralisation is a mixture of magnesite, quartz and magnesian silicates associated with serpentine.

The proposed work program will include an assessment of all the available data and test work to determine the project's potential.

Griffin Royalty - Oil & Gas project

Pursuant to the assignment of certain benefits under the Griffin Royalty Deed, the Company is entitled to receive a royalty from South East on gas sold by South East that originated in the Griffin Field. To date no amount has been received by way of royalty under the Griffin Royalty Deed.

Tubridgi Royalty – Oil & Gas project

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Pursuant to the assignment of certain benefits under the Tubridgi Royalty Deed, the Company is entitled to receive a royalty from South East on gas recovered by South East from the area within the L9 Licence. To date no amount has been received by way of royalty under the Tubridgi Royalty Deed.

31.MAR.2006 16:07 ASX PERTH

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Future of the Company

The Directors propose to continue and, over time, expand the exploration activities of the Company.

The Company proposes to raise sufficient working capital to carry out its mineral exploration business through its interest in the Princhester Magnesite Project, its oil and gas business through its Royalty Interest via the Griffin Royalty and Tubridgi Royalty. Pursuant to the terms of the Deed of Company Arrangement, the Company is obliged to take all reasonable steps over the next three years to realise these assets, with half of the proceeds after costs being paid to the Receivers or as directed by the Receivers. It is the Companies intention to develop these assets to maximise their realisable value.

As part of the working capital budget, the Company intends to pursue complementary acquisitions together with new projects within Australia and overseas by way of acquisition, development and/or earn-in.