METALS AUSTRALIA LTD — AGM Information 2006

Oct 15, 2006

METALS AUSTRALIA LTD (Formerly AUSTRALIAN UNITED GOLD LTD) ABN 38 008 982 474 NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of Members of Metals Australia Limited (formerly Australian United Gold Limited), will be held at the University Club of Western Australia Pty Ltd at the University of WA. 35 Stirling Highway, Crawley, Western Australia on Thursday, 23 November 2006 at 9:00am.

BUSINESS OF THE MEETING

Accounts and reports:

• 1. To receive and consider the financial statements and the reports of the directors and the auditors for the year ended 30 June 2006.
• 1. To adopt the remuneration report for the financial year ended 30 June 2006.

This is an opportunity for shareholders to comment and ask questions about the remuneration report detailed on page 8 of the Annual Report. The vote on the proposed resolution is advisory only, and will not bind the directors or the Company however the Board will take the outcome of the votes into consideration, when reviewing future practices of the Company.

Ordinary business:

To consider and if thought fit to pass the following resolutions as ordinary resolutions:

Re-election of a Director 3.

That David Zukerman, who retires by rotation in accordance with the company's constitution, be re-elected a director of the company.

1. Ratification of previous issue of 100,000,000 options

That for the purposes of ASX listing Rule 7.4 and for all other purposes, the prior issue of 100,000,000 options exercisable at 5 cents each, on or before 30 September 2009 to RM Capital Pty Ltd on 10 October 2006 is ratified and approved.

NOTES

The Company will disregard any votes cast on this resolution by the parties who participated in the issue and any associate of them. 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 meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. Details of the option issue are contained in the attached Explanatory Statement.

BY ORDER OF THE BOARD

Norman Grafton COMPANY SECRETARY 13 October 2006

$\mathbf{1}$ . INTRODUCTION

This Explanatory Statement has been prepared for the information of members of Metals Australia Limited in connection with the business to be conducted at the Annual General Meeting of the Company to be held at the University Club of WA Pty Ltd, at the University of WA, 35 Stirling Highway, Crawley, Western Australia on Thursday, 23 November 2006 at 9:00am.

This Explanatory statement forms part of and should be read in conjunction with the accompanying Notice of Annual General Meeting.

$2.$ RESOLUTION 4 - RATIFICATION OF PREVIOUS ISSUE OF100 MILLION OPTIONS

ASX Listing Rule 7.4

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such ratification is to restore a Company's maximum discretionary power to issue further shares up to 15% of the issued capital of the Company without requiring shareholder approval.

On 29 June 2006, the Company announced to the ASX that an Option Underwriting agreement had been concluded with RM Capital Pty Ltd. On 16 August 2006, the Company further announced that the terms of the Agreement had been renegotiated and that the underwriters had agreed that the \$155,000 fee would be settled by the issue of 100 million options and a cash payment of \$115,000 in lieu of the previously agreed fee.

This revised option issue did not require prior shareholder approval under Listing Rule 7.1.

Information required by ASX Listing Rule 7.5 for the purposes of shareholder approval under ASX Listing Rule 7.4 is provided below:

• The number of securities issued was 100,000,000 options to acquire shares in the Company; $1.$
• $\overline{2}$ . The 100,000,000 options were issued for a total consideration equivalent to \$40,000;
• 1. The options were issued on the terms and conditions as outlined in Appendix A;
• 1. The options were issued to RM Capital Pty Ltd on 10 October 2006;
• 1. There were no funds raised by the issue. The issue was in part consideration of the fee payable to RM Capital Pty Ltd for underwriting the shortfall in the exercising of the Company's options which expired on 30m June 2006.

3. DEFINITIONS

ASX	means Australian Stock Exchange
ASX Listing Rules	means the official listing rules of ASX
MLS or Company	means Metals Australia Limited, ABN 38 008 982 474
Option	means an option to acquire a Share on the terms outlined in "Appendix A".

APPENDIX "A" Terms and Conditions of Options

The Options granted will entitle the holder to subscribe for and be allotted Shares as follows:

• A certificate will be issued for the Options. $(a)$
• $(b)$ The Options shall expire on 30^th September 2009 ("Expiry Date")
• $(c)$ Subject to condition (n) the Option is a right in favour of the option holder to subscribe for one fully paid ordinary share in the capital of the Company ("Share")
• $(d)$ Shares allotted to option holders on exercise of Options shall, be issued at a price of 5 cents each ("Exercise Price").
• $(e)$ The Exercise Price of Shares the subject of the Options shall be payable in full on exercise of the Options.
• Options shall be exercisable by the delivery to the registered office of the Company of a notice in $(f)$ writing stating the intention of the option holder to:
• exercise all or a specified number of Options; and $(i)$
• $(ii)$ pay the subscription monies in full for the exercise of each Option.
• $(q)$ The notice must be accompanied by an Option certificate and a cheque made payable to the Company for the subscription monies for the Shares. An exercise of only some Options shall not affect the rights of the option holder to the balance of the Options held by him.
• The Company shall allot the resultant Shares and deliver the share certificate or holding statement $(h)$ within five business days of the exercise of the Option.
• The Options shall be freely transferable. $(i)$
• $(i)$ Shares allotted pursuant to an exercise of Options shall rank, from the date of the allotment, equally with existing ordinary fully paid Shares of the Company in all respects.
• $(k)$ The Company shall in accordance with the Listing Rules make application to have Shares allotted pursuant to an exercise of Options listed for official quotation.
• In case of any entitlements issue (other than bonus issue) the Exercise Price of an Option may be $\langle$ l reduced according to the following formula:

$$
O' = O \t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t\t
$$

• $O'$ = the new Exercise Price of the Option.
• $\circ$ $=$ the old Exercise Price of the Option.

APPENDIX "A" Continued Terms and Conditions of Options

The Options granted will entitle the holder to subscribe for and be allotted Shares as follows:

• $(m)$ A certificate will be issued for the Options.
• The Options shall expire on 30^th September 2009 ("Expiry Date") $(n)$
• $(0)$ Subject to condition (n) the Option is a right in favour of the option holder to subscribe for one fully paid ordinary share in the capital of the Company ("Share")
• Shares allotted to option holders on exercise of Options shall, be issued at a price of 5 cents each $(p)$ ("Exercise Price").
• $(q)$ The Exercise Price of Shares the subject of the Options shall be payable in full on exercise of the Options.
• Options shall be exercisable by the delivery to the registered office of the Company of a notice in $(r)$ writing stating the intention of the option holder to:
• exercise all or a specified number of Options; and $(i)$
• $(ii)$ pay the subscription monies in full for the exercise of each Option.
• $(s)$ The notice must be accompanied by an Option certificate and a cheque made payable to the Company for the subscription monies for the Shares. An exercise of only some Options shall not affect the rights of the option holder to the balance of the Options held by him.
• The Company shall allot the resultant Shares and deliver the share certificate or holding statement $(t)$ within five business days of the exercise of the Option.
• The Options shall be freely transferable. $(u)$
• $(v)$ Shares allotted pursuant to an exercise of Options shall rank, from the date of the allotment, equally with existing ordinary fully paid Shares of the Company in all respects.
• The Company shall in accordance with the Listing Rules make application to have Shares allotted $(w)$ pursuant to an exercise of Options listed for official quotation.
• In case of any entitlements issue (other than bonus issue) the Exercise Price of an Option may be $(x)$ reduced according to the following formula:

$$
O' = O \t\t -\frac{E[P - (S + D)]}{N + 1}
$$

• $O'$ = the new Exercise Price of the Option.
• $\circ$ = the old Exercise Price of the Option.

METALS AUSTRALIA LTD (Formerly AUSTRALIAN UNITED GOLD LTD) ABN 38 008 982 474 FORM OF PROXY

The Secretary, Metals Australia Ltd. 1st Floor, 8 Parliament Place, West Perth, WA, 6005

	I/We.
	of
being a holder of	shares in the capital of Metals Australia Ltd hereby appoint
	$\ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ldots \ld$
	of

or failing him, the Chairman of the meeting as my/our proxy to vote on my/our behalf at the Annual General Meeting of the Company to be held on Thursday, 24 November 2006 and at any adjournment thereof, in the manner indicated below, or in the absence of indication as he or she thinks fit.

A statement of the Chairman's voting intentions in relation to undirected proxies.

If you do not wish to direct your proxy how to vote, please place a mark in the box. $\Box$

By marking this box you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

The Chairman intends to vote for the resolutions.

2.	To adopt remuneration report	For		Adainst	O	Abstain	$\Box$
Ordinary Business
3.	To re-elect Mr David Zukerman as a Director	For		Adainst	o	Abstain	□□
4.	Ratification of previous issue of 100,000,000 options	For		Adainst		Abstain	o

(Shareholders to indicate by a tick in the box above how a proxy holder is to vote in respect of the above resolutions).

Signed by the said member this day of 2006.

Shareholders Signature or
Director

. . . . . . . . . . . . . . . . . . . . Director Secretary

Attendance and Voting Eligibility

For the purposes of the meeting, securities will be taken to be held by the persons who are registered holders at 9.00am on Wednesday 23, November 2006. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

Proxies

A member of the Company entitled to attend and vote at the meeting shall be entitled to appoint not more than two other persons (whether members of the company or not) as the member's proxy or proxies, to attend and vote on the member's behalf. Where two proxies are appointed the appointments shall be of no effect unless each proxy is appointed to represent a specified proportion of the member's voting rights. Forms of proxy must be deposited at the registered office of the company in West Perth not less than forty-eight (48) hours before the time appointed for the holding of the meeting.