MACH7 TECHNOLOGIES LIMITED — Capital/Financing Update 2012

Jun 14, 2012

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ASX Announcement

Safety Medical Enters Heads of Agreement to Acquire Brazilian Gold Project.

The Directors of Safety Medical Products Limited (“ Safety Medical ” or the “ Company ”) are pleased to announce that they have entered into a Heads of Agreement (“ Agreement ”) to acquire Kisara Gold Pty Ltd (“ Kisara ”), an Australian unlisted company, and its wholly owned Brazilian subsidiary Mineração Caiçara Ltda, holder of the Silvina Gold Project in the Bahia state of Brazil.

Silvina Gold Project

The Silvina Gold Project, which includes the Silvina Farm lease, 6 adjoining exploration leases and a further 2 exploration lease applications, is located in the region of Rio de Contas, situated in south-central portion of the Chapada Diamantina (see Figures 1 and 2). This part of Chapada Diamantina is known for hosting several types of gold mineralisation.

The Project has been acquired through a Government Tender process conducted by CBPM, Companhia Baiana de Pesquisa Mineral. CBPM is an exploration company wholly owned by the state government of Bahia, established in the 1970s to promote mineral development in the state.

The government tender for the development of the Silvina property was called in late 2011 and subsequently awarded to Mineracao Caiçara Ltda, a wholly owned subsidiary of Kisara Gold Pty Ltd.

The Tender documents included a report entitled “ Description, Geological Environment, Exploration History and Auriferous Potential of Silvina Area, Rio de Contas Region, Bahia (DNPM No 870.032/2006) ” by Gileno Amado Lopes – Geologist, CBPM.

Significant information contained within that report is noted below.

• Silvina is a prospective gold property located in the southern portion of the São Francisco Craton in Bahia State, Brazil and has seen limited exploration work since the 1970s.

• The main target at Silvina is an outcropping gold-bearing quartz vein observed to be 370m long and up to 40m wide. The vein is hosted by a diabase dyke which has intruded what appears to be a regional scale shear structure. There is evidence to suggest this structure continues for several kilometres. Caiçara has staked additional claims along the strike of this feature though claim boundaries must be field checked to determine the length of this structure contained within the Caiçara leases.

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Safety Medical Products Limited Level 24, St Martin’s Tower 44 St George’s Terrace Perth Western Australia, 6000 ACN 007 817 192 Phone: (08) 6211 5099 Fax: (08) 9218 8875 Website: www.safemed.com.au ASX Code: SFP

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• Artisanal mining has won gold from alluvial and eluvial sources close to outcrop and coarse gold has been observed in chip samples from within up to 30m of underground workings on the vein.

• Historical work completed by CBPM in the last 30 years includes geological mapping at 1:10,000 scale, excavation of ten trenches totaling approximately 269m, emplacement of a 500m long baseline along the strike of the vein (approx. azimuth 3150) and clearing of an exploration grid on 50m intervals off the baseline.

• Reported geochemical sampling includes 125 soil samples (50m x 25m grid) returning a high value of 92 parts per billion (“ppb”) gold, 52 channel samples from within excavated galleries returning up to 5.50 parts per million (“ppm”) gold and 47 channel samples from trenches returning up to 2.15 ppm gold.

A technical review of the project highlighted that the work done by CBPM covered only a small part of the project area. The review also highlighted the existence of the quartz veining and historic mines, noting that the area has the potential to host gold deposits. During the Due Diligence process the Company will be given fuller access to the historical geological information regarding the Silvina Gold Project and will update the market in relation to such information.

Figure 1 - Location of the Silvina Gold Project

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Figure 2 – Tenement map

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Figure 3 – Silvina geological features

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Acquisition Terms

The Agreement to acquire 100% of the issued capital of Kisara is made up of consideration as follows:

• Safety Medical has advanced an initial sum of $100,000 on signing of the Agreement;

• A further $39,900 is payable on settlement of the purchase, and the Agreement includes provision for the Company, at its discretion, to advance funds to assist Kisara in maintaining its tenement obligations, though it is not an obligation of the Company; and

• On both ASX and Shareholder approval, Performance Shares will be issued to the Kisara Shareholders on a pro-rata basis with their shareholdings, and will entitle the holder to acquire one share in the Company on certain milestones being reached in relation to definition of resources. Milestone payments are as follows:

Milestone	Performance Shares
Milestone 1- A JORC compliant Inferred Mineral Resource of 500koz at 1.8g/t Au Eq	120,000,000
Milestone 2- A JORC compliant Inferred Mineral Resource of 750koz at 1.8g/t Au Eq	90,000,000
Milestone 3- A JORC compliant Inferred Mineral Resource of 1,000koz at 1.7g/t Au Eq	70,000,000
Milestone 4- A JORC compliant Inferred Mineral Resource of 1,250koz at 1.7g/t Au Eq	20,000,000
Milestone 5- A JORC compliant Inferred Mineral Resource of 1,500koz at 1.6g/t Au Eq	20,000,000
Milestone 6- A JORC compliant Inferred Mineral Resource of 2,000koz at 1.6g/t Au Eq	40,000,000
Total	360,000,000

NB – The Performance Shares noted above entitle the holder to acquire one share for every performance right held and will be subject to approval by the ASX.

The terms of the Agreement to acquire Kisara are subject to due diligence, regulatory approvals and final documentation. Settlement of the purchase of Kisara will require the Company to recomply with Chapters 1 and 2 of the ASX Listing Rules, which cannot occur until the Company has received shareholder approval. The Company will make further announcements to the market in relation to re-compliance as required.

During the period until settlement of the acquisition Safety Medical has no obligation to spend money maintaining the tenements. Safety Medical Products however does propose to spend money on due diligence procedures in Brazil which may include some confirmatory work.

Following settlement of the acquisition, Kisara will be entitled to nominate a person for appointment to the Board of Safety Medical. At the date of this announcement, the Kisara shareholders have not decided who they will nominate.

Recompliance With Chapters 1 And 2 of the ASX Listing Rules

Following execution of the Share Sale Agreement, the Company will be required to recomply with Chapters 1 and 2 of the ASX Listing Rules prior to being able to settle the purchase. Safety Medical will call a meeting of shareholders, at which the shareholders will be asked to vote on the proposal to acquire Kisara. If the shareholders approve the transaction to acquire Kisara, the Company’s shares will be suspended from trading on the ASX until the requirements of Chapters 1 and 2 of the ASX Listing Rules have been satisfied.

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Proposed Timetable for Recompliance.

	Date*
Execution of Share Sale Agreement	30 June 2012
Dispatch of Notice of Meeting	29 August 2012
Lodgement of Prospectus with ASIC	15 September 2012
Meetingof Shareholders to Approve Acquisition	2 October 2012
Suspension of Company’s Shares from tradingon ASX	2 October 2012
Closure of Prospectus	16 October 2012
Satisfaction of all Requirements of Chapters 1 & 2	23 October 2012

• The above dates are indicative only and are subject to change. The Company will keep shareholders updated on the timing of the implementation of the transaction as it progresses

Prospectus Capital Raising

Safety Medical will prepare and issue a prospectus to raise sufficient funds to enable the recompliance with Chapters 1 & 2 of the ASX Listing Rules. It is anticipated that the Company will raise $2.5m in the prospectus capital raising. The capital raising will be conducted at $0.20 per share in accordance with the requirements of Chapters 1 & 2 of the ASX Listing Rules. Funds raised will be used to conduct exploration of the properties to be acquired, and to cover the ongoing administration costs of the Company.

Indicative Capital Structure.

	Number of Shares (Pre-Reconstruction)	Number of Shares (Post -Reconstruction)
Current Issued Capital	396,455,466 19,822,775
Shares to be issued in capital raising, completed as part of the recompliance with Chapters 1 & 2 of the ASX ListingRules	250,000,000 12,500,00
Total Shares on Issue following Completion and recompliance	646,455,466 32,322,775
Potential shares to be issued under the Share Sale Agreement(subject to satisfaction of Milestones)	360,000,000 18,000,000
Total Issued Shares assuming Milestones satisfied	1,006,455,466 50,322,775

NB The above table shows the Company’s pre and post reconstruction capital structure. The Company is most likely going to require to reconstruct its capital structure in order to comply with Chapters 1 and 2 of the ASX Listing Rules which require a capital raising at $0.20 per share. The above Table is based on a share price of $0.01 immediately prior to the issuance of the requisite Notice of Meeting, and consequently a reconstruction ratio of one share for every 20 held. However if the share price is at a higher price prior to the issuance of the Notice of Meeting then the reconstruction ratio will be reduced accordingly.

If shareholder approval is received at the general meeting, the Company will most likely undergo a capital consolidation to assist recompliance with Chapters 1 & 2 of the ASX Listing Rules at a ratio to be determined in the future. The Consideration Shares and shares to be issued under the capital raising will also be adjusted by the same ratio.

It should also be noted that in order to reach the Milestones shown on page 3, the Company may need to expend additional funds on exploration above those contemplated in the capital raising above. The funding of that exploration may be through further issues of shares in the Company which will increase the total number of shares on issue.

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Due diligence and Risk Factors

The Company will undertake a due diligence process in relation to the acquisition of Kisara. Whilst this process is undertaken to identify or eliminate material risks in relation to Kisara, its subsidiary and the tenements, it should be noted that following completion Safety Medical will be subject to the usual risks associated with mineral exploration.

Stephen Hewitt-Dutton

Director and Company Secretary 15 June 2012

Competent Persons Statement

The information in this report that relates to mineral resources and exploration results is based on information compiled and reviewed by Dale Britliffe, a Consulting Geologist to Safety Medical Products Limited. Mr. Britliffe is a member in good standing with the Association of Professional Engineers and Geoscientists of British Columbia, Canada (APEGBC) Non-Resident Licence #149983. APEGBC is a “Recognised Overseas Professional Organisation” (ROPO) as recognised by JORC.

Mr Britliffe has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves”. Mr. Britliffe has given his consent to the inclusion in this report of the matters based on the information in the form and context in which it appears.

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