MATSA RESOURCES LIMITED — Capital/Financing Update 2011

Jul 11, 2011

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LIMITED

ABN 48 106 732 487

ASX Announcement

12 July 2011

Matsa Secures Up To AUD$8.6 Million Funding

HIGHLIGHTS

CORPORATE SUMMARY

• Agreement for equity funding of up to AUD$8.6 million with New York investment fund, SpringTree Special Opportunities Fund, LP (“SpringTree”)

• AUD$100,000 per month tranches (option to increase to AUD$500,000 per month) over 18 months

• Supplements already adequate liquidity position

• Provides additional working capital if required, to develop the Norseman Gold Project

• Funding secured on attractive terms

INTRODUCTION

Matsa Resources (ASX:MAT) ("Matsa" or the "Company") is pleased to announce it has entered into an agreement with a USbased institutional investment fund SpringTree Special Opportunities Fund, LP (“SpringTree”), managed by SpringTree Global Investors, LLC, to provide funding of up to AUD$8.6 million over 18 months.

The facility, which supplements Matsa's existing adequate liquidity position, will provide additional working capital if required, as the Company continues progress towards developing its flagship 1.47 million ounce Norseman Gold Project.

Executive Chairman Paul Poli

Director

Frank Sibbel

Director & Company Secretary Andrew Chapman Shares on Issue 122.35 million Unlisted Options 18.75 million @ 27.3c + Top 20 shareholders Hold 58% Share Price on 12 July 2011 23.5 cents Market Capitalisation $28.14 million

Head Office: Suite 11, 139 Newcastle Street, Perth Western Australia 6000 Kalgoorlie Office: Suite 1, Vosper House, 31-33 Dugan Street, Kalgoorlie 6430 Bangkok Office: Unit 1808, Pacific Place 2, Sukhumvit Road, Klongtoey, Bangkok reception@matsa.com.au www.matsa.com.au

Tel : +61 8 9230 3555 Fax: +61 8 9227 0370 Tel: +61 8 9021 7200 Fax: +61 8 9021 7277 Tel : +66 0 2653 0258 Fax : +66 0 2653 0258

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Matsa has secured the facility at a highly competitive rate with safeguards to minimise unnecessary dilution in the event of adverse market conditions.

Under the Agreement, SpringTree will invest AUD$100,000 on execution and will invest a further AUD$1.7 million to AUD$8.5 million in Matsa.

Executive Chairman Paul Poli said “the funding provides Matsa with additional working capital if required, as Matsa continues seeking a financier to partner it in developing the Norseman Gold Project.”

Matsa last week announced it was in talks with three potential Chinese investors, with further strong expressions of interest from others.

“Matsa already has an adequate liquidity position with approximately $1.5 million in cash as at 30 June 2011, and minimal debt. This funding from SpringTree will provide extra working capital if and as required to enable the Company to continue moving ahead with developing our Norseman Gold Project for the benefit of shareholders with confidence.

Our priority, as always, has been to ensure we achieve a result based on the best possible terms for our shareholders.

Significantly, we have negotiated a funding that provides real safeguards to prevent any unnecessary dilution in the event of a change in Matsa's outlook by having a $0.20 per share floor threshold at a very low cost to Matsa" added Mr Poli.

Summary of key features:

• Funding up to AUD$8.6 million over 18 months, comprising tranches

AUD$100,000 per month, increasing to AUD$500,000 per month on mutual consent if and when needed;

• The agreement enables Matsa to issue shares at prices that are linked to market prices prevailing at the time of their future issuance and potentially at premiums to their current share price, thereby minimising potential dilution for shareholders. It allows Matsa to take advantage of future growth in share prices. The price at which the shares will be issued in the monthly tranche will be 91.5% of the average of three consecutive daily volume weighted average prices (“VWAPs”) of Matsa shares during a specified period prior to the date of issuance of shares;

• Matsa can opt to refuse to issue shares in a particular month if the Company's share price falls below the floor price protection level of $0.20.

• Matsa will grant SpringTree 1,250,000 options with the exercise price equal to 120% of the average of the VWAPs per share during the 20 trading days prior to the date of execution of the agreement.

• The agreement attracts a $150,000 commitment fee payable in shares and is secured against 500,000 shares.

• The terms of the agreement do not permit shares to be issued, and there is no agreement to issue shares under the agreement, if shareholder approval is first required under the Listing Rules. The initial investment of $100,000 will proceed following the execution of the Agreement and does not require shareholder approval.

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• The terms of the Agreement allow the Company the freedom to enter into future debt or other financing arrangements and to raise additional equity as the Company sees fit. In addition, the agreement does not restrict the Company’s ability to enter into strategic industry partnerships and undertake acquisitions or dispositions of assets and shares in the future.

"This is another very positive development in Matsa's on-going strategy as we continue progressing towards developing our Norseman Gold Project," Mr Poli said.

“SpringTree has made a number of investments in ASX-listed resources companies in the past two years, and our portfolio has performed very well. We have been impressed with Matsa’s management team and progress to date. SpringTree hopes that its funding will enable Matsa to implement its growth plans and unlock the value of its Norseman Gold Project assets” said Phillip Valliere, Executive Vice President & Head of New Investments at SpringTree.

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BACKGROUND

About SpringTree Global Investors, LLC:

About Matsa:

Matsa is an ASX listed exploration and development company based in Western Australia. The Corporate office is located in Perth with offices in Kalgoorlie and Bangkok, Thailand.

SpringTree Global Investors LLC is a New Yorkbased asset management company that makes equity and equity-linked investments in public companies around the world, with a focus on small-cap to mid-cap companies requiring US$5 million - US$150 million in funding.

The Company aims to increase shareholder wealth through the discovery and development of mineral properties within Australia and South East Asia.

It is committed to developing its Norseman Gold Project (Resource Table is shown in Table 1 below) and associated magnetite by-product to generate cash flow for shareholder benefit.

For further Information please contact:

Paul Poli Frank Sibbel Executive Chairman Executive Director Phone +61 8 9230 3555 Fax +61 8 9227 0370 Email reception@matsa.com.au Web www.matsa.com.au

Mineral resources and reserves

The information in this report that relates to mineral resources and reserves, is based on information compiled by Richard Breyley, who is a member of the Australasian Institute of Mining and Metallurgy. Richard Breyley is a full time employee of Matsa Resources Limited. Richard Breyley has sufficient experience which is relevant to the style of mineralisation and the type of ore deposit under consideration and 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. Richard Breyley consents to the inclusion in the report of the matters based on his information in the form and context in which it appears .

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Figure 1 - Australian project locations

Norseman Gold Project Resources(>1g/t Au)
	Tonnes(Million)	Grade(g/t)	Ounces
Indicated
Mt HenrySeleneNorth ScotiaTotal	5.611.80.217.6	1.91.65.21.8	350,000600,00036,000990,000
Inferred
Mt HenrySeleneNorth ScotiaAbbotshallTotal	4.93.10.30.58.9	1.81.42.22.01.7	280,000140,00024,00030,000480,000
Grand Total	26.5	1.7	1,470,000

Table 1 - Norseman Gold Project Resources

1. All Resources are reported to a lower cut-off grade of 1.0g/t.

2. Rounding, conforming with the JORC code may cause computational errors.

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