Nova Minerals Ltd — Capital/Financing Update 2002

Nov 14, 2002

QUANTUM RESOURCES LIMITED

ABN 84 006 690 348

PROSPECTUS

for a renounceable rights issue of approximately 218,017,218 New Shares at an issue price of 2 cents per New Share together with one New Option (at no issue price) with every New Share allotted to raise approximately \$4,360,344.

IMPORTANT NOTICE

The New Shares and attached New Options offered by this Prospectus are of a highly speculative nature. This Prospectus is important and requires your immediate attention. Applicants should read this Prospectus in its entirety before deciding whether to apply for the New Shares and New Options offered by this Prospectus. If you have any questions or are in doubt as to the course you should follow, you should consult your stockbroker or other, professional investment adviser before accepting the Offer.

PERSONS TO WHOM OFFER IS AVAILABLE

This Prospectus may be accessed in electronic form (including on the internet). In that case, the offer is only available to persons receiving an electronic version of this Prospectus within Australia. Further, this Prospectus does not constitute an offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. There is no facility for on-line applications.

Signed pursuant to Section 351 of the Corporations Act for and behalf of QUANTUM RESOURCES LIMITED by

. . . . . . . . . . . . . . . . . . . . Peter James Lee Secretary

QUANTUM RESOURCES LIMITED

PROSPECTUS

IMPORTANT DATES FOR RENOUNCEABLE RIGHTS ISSUE OF NEW SHARES AND NEW OPTIONS

(Please note these dates are indicative only and are subject to change)

Rights trading commences	20 November 2002
Record date for determining entitlement to New Shares and New Options	26 November 2002
Last day for despatch of Prospectus and entitlement and acceptance forms	29 November 2002
Rights trading ends	13 December 2002
Acceptances and renunciations close (8pm Melbourne Time)	20 December 2002
Advice to ASX of acceptances and any undersubscription	31 December 2002
Holdings updated on register. Deferred settlement trading ends	15 January 2003
Last date for placement of shortfall	20 March 2003

CORPORATE DIRECTORY

Directors

Mr Joseph Gutnick Dr David Tyrwhitt Mr Paul Ehrlich

Secretary

Mr Peter Lee

Registered Office

Level 8 580 St Kilda Road Melbourne Victoria 3004 Australia Telephone: (03) 8532 2840 Facsimile: (03) 8532 2805

Share Registry

Computershare Investor Services Pty Limited Level 12, 565 Bourke Street Melbourne Victoria 3000 Australia Tollfree: 1300 850 505 Telephone: (03) 9615 5970 Facsimile: (03) 9473 2529

Auditors

PKF Level 11, CGU Tower 485 LaTrobe Street Melbourne Victoria 3000 Australia

Lawyers to the Offer

Schetzer Brott & Appel 52 Market Street Melbourne Victoria 3000 Australia

For a renounceable rights issue of approximately 218,017,218 New Shares on the basis of one New Share for every one Ordinary Share held at an issue price of 2 cents per New Share together with one New Option (at no issue price) with every New Share allotted to raise approximately \$4,360,344.

QUANTUM RESOURCES LIMITED

This Prospectus is dated 15 November 2002 and was lodged with ASIC on that date.

ASIC takes no responsibility for the contents of this Prospectus.

This Prospectus expires on the date being 13 months from the date of the Prospectus.

THE NEW SHARES AND NEW OPTIONS ISSUED PURSUANT TO THIS PROSPECTUS AND ANY ORDINARY SHARES ISSUED AS A CONSEQUENCE OF THE EXERCISE OF. NEW OPTIONS ISSUED PURSUANT TO THIS PROSPECTUS SHOULD BE CONSIDERED HIGHLY SPECULATIVE AND ANY INVESTMENT SHOULD BE CONSIDERED ONLY AFTER READING THE RISK FACTORS AND PROSPECTUS IN. THIS ITS ENTIRETY.

HOW TO USE THIS PROSPECTUS

This document contains information about the issue bv. OUANTUM RESOURCES LIMITED of New Shares and New Options to Shareholders. If you decide to apply for New Shares and New Options this Prospectus tells you how to do so.

If, after reading this Prospectus, you have any questions, you should contact your stockbroker or other professional investment adviser before accepting the offer.

NO OFFER IN THE UNITED STATES AND OTHER COUNTRIES

The New Shares and New Options offered by this Prospectus are not offered and may not be issued in any place in which, or to any person to whom, it would not be lawful to make such an offer or issue. The New Shares and New Options have not been, and will not be, registered under

the laws of any other country, including the United States of America Securities Act of 1933 and will not be offered or issued to persons in any country other than Australia and New Zealand. Accordingly, neither this Prospectus nor the Entitlement and Acceptance Form will be sent into or distributed in any country other than Australia and New Zealand. Any offer or issue of the New Shares and New Options within the United States of America or any country other than Australia and New Zealand by any dealer (whether or not participating in the offering) may violate laws of the relevant country.

DEFINITIONS

In this Prospectus the first letter of any word or each word in any phrase may consistently appear in a capitalised form, that may indicate that such word or phrase may be defined in the Part 5 entitled "Definitions and Glossary". Users of this Prospectus should refer to Part 5 to cross establish whether or not it is a defined word or phrase is defined.

EXPOSURE PERIOD

The Prospectus may also be viewed online at www.qur.com.au during the Exposure Period. A read-only version of this Prospectus is available at this site and there is no facility for online applications.

A paper copy of this Prospectus will be made available upon request during the Exposure Period. Paper copies of this Prospectus made available during this period will not contain an Application Form.

In accordance with Chapter 6D of the Corporations Act, this Prospectus is subject to an exposure period of 7 days from the date of lodgement with ASIC. The period may be extended by ASIC by a further period of up to 7 days.

PROSPECTUS

The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. The examination may result in the identification of deficiencies in this If deficiencies Prospectus. are detected, any application that has been received may need to be dealt with in accordance with section 724 of the Corporations Act. Applications received prior to the expiration of the Exposure Period will not be processed until after the Exposure Period.

This Prospectus is divided into five Parts:

PART 1 - SUMMARY INFORMATION

• The Offer $1.1$
• Offer Period $1.2$
• $1.3$ How to apply for the New Shares and New Options
• $14$ Rights Trading
• $1.5$ Number of New Shares and New Options Offered
• $1.6$ Directors may Place any New Shares and New Options not taken up by Shareholders
• Rights and Liabilities Attaching $1.7$ to New Shares and New Options
• Rights of Employee $1.8$ Optionholders
• 1.9 Purpose of the Rights Issue
• $1.10$ Profit Outlook
• $1.11$ Risk Factors Relating to the Rights Issue and Prospects of the Company
• Application Monies $1.12$
• ASX Quotation $1.13$
• $1.14$ Issue of New Shares and New Options
• Proposed Capital Structure $1.15$
• $1.16$ Consolidated Pro-Forma Statement of Financial Position.

PART 2 - INFORMATION ABOUT THE COMPANY'S PROJECTS

• $2.1$ Strategy
• $2.2$ Project Reviews
• $2.3$ Other Projects

PART 3 - RIGHTS ISSUE DETAILS

• $3.1$ General Information
• $3.2$ Rights and Liabilities of New Options
• $3.3$ Rights and Liabilities Attaching to New Shares

PART 4 - ADDITIONAL INFORMATION

• $4.1$ Provision of Further Information about the Company
• 4.2 Directors and Management
• 4.3 Material Contracts
• 4.4 Risk Factors
• 4.5 Rights and Liabilities Attaching to Ordinary Shares
• Directors' Interests in the 4.6 Securities of the Company
• 4.7 Directors' Interests in Contracts with the Company
• 4.8 Directors' Fees and Benefits
• Other Interests of Directors $4.9$
• 4.10 Interests of Other Parties
• 4.11 Consents and Disclaimers
• 4.12 Directors' Authorisation

PART 5 - DEFINITIONS AND GLOSSARY

All financial information in this Prospectus is expressed in Australian dollars (\$) except where otherwise stated.

15 November 2002

Dear Shareholder

The Company recently commenced preliminary exploration on its Tuckabianna Project in Western Australia and is planning exploration proposals for its exciting Gawler Project in South Australia.

The Gawler Project is located within the Gawler Craton of South Australia, which hosts the Challenger gold deposit (operated by Dominion Mining Limited). The Company believes this project may have potential for both Challenger style gold mineralisation and Olympic Dam style copper-gold mineralisation. Initial exploration at the Gawler Project will consist of a detailed geological and geophysical appraisal of the project area, followed by surface geochemistry, detailed geophysics and reconnaissance drilling programs, as appropriate.

The Tuckabianna Project is located approximately 20 kilometres south-east of Cue in Western Australia. The Company recently completed the first phase of a reconnaissance exploration program. A total of 67 soil samples were collected at Tuckabianna during the quarter, with results up to 233 parts per billion ("ppb") gold returned. These results will be integrated with data collected from reviews of previous exploration and further work will be planned to focus on targets that may be generated. Exploration will include follow-up and in fill soil sampling to define and enhance soil anomalies such that a reconnaissance drill program can be carried out.

The Company's project acquisition strategy is designed to continue to supply quality projects for the mineral royalty business. The Company has already acquired over 6,000 square kilometres of mineral exploration Tenements in Western Australia. Northern Territory, South Australia and Victoria. Typically these projects will be farmed out to other explorers. However, the Company may elect to sole fund exploration on specific properties to the point where a major partner is attracted to fund detailed exploration and possible mine development.

With the US gold price increasing by some 15 percent in the last year and some exciting exploration news coming from junior explorers in Australia, the Company is well positioned to benefit from a resurgence in market interest for gold exploration companies

The Company recently announced a New Shares and New Options issue to Shareholders on the basis of one New Share for every one Ordinary Share held on 26 November 2002 together with one New Option (at no issue price) with every New Share allotted (the "Offer"). The Prospectus provides information on the Company's current and proposed exploration activities and sets out details of the Offer and the proposed use of the funds to be raised by the Offer. The funds to be raised from the issue of the New Shares and New Options will be used to:

• enable the Company to continue to conduct its exploration program; ٠
• acquire new opportunities that may arise; ۰
• partially repay existing borrowings; and ۰
• provide working capital to the Company. $\bullet$

CHAIRMAN & MANAGING DIRECTOR'S LETTER

This issue of New Shares and New Options is a renounceable rights issue. As a shareholder on 26 November 2002, you are entitled to rights to the New Shares and you may sell these rights if you do not wish to take up the New Shares. The rights can be sold either on ASX or off-market between 20 November 2002 and 13 December 2002. Please consult your stockbroker or other professional adviser if you have any queries about this.

If you wish to take up the New Shares and New Options, you will need to follow the instructions on the Entitlement and Acceptance Form accompanying this Prospectus and pay 2 cents for each New Share and accompanying New Option (for no issue price).

You will be able to exercise your New Options by paying 5 cents per option at any time after 1 July 2003 until 30 November 2012. The effect of exercising your New Options is that you will be issued with the same number of fully paid ordinary shares in the Company. These new shares will rank equally with Ordinary Shares on issue.

By participating in this Offer, you are being presented with the opportunity of leveraging off the expertise of the Company's team and therefore positioning yourself to be part of the exciting quest for a major minerals discovery in Australia.

Yours faithfully

JIGUTNICK Chairman & Managing Director

PART 1 SUMMARY INFORMATION

The information contained in Part 1 is not intended to be comprehensive. Accordingly you should read Part 1 in conjunction with the entire Prospectus.

$1.1$ THE OFFER

The Company is making a renounceable rights issue of New Shares and New Options ("the Rights Issue") to Shareholders on the basis of one New Share for every one Ordinary Share held on 26 November 2002 at an issue price of 2 cents per New Share together with one New Option (at no issue price) with every New Share allotted. The New Options will have an exercise price of 5 cents per New Option. For a description of the rights attaching to these New Shares and New Options see Part 3.2, and 4.5.

$1.2$ OFFER PERIOD

The Prospectus will be dispatched by no later than 29 November 2002 and the Rights Issue will close on 20 December 2002 unless closed earlier or extended at the discretion of the Directors.

$1.3$ HOW TO APPLY FOR THE NEW SHARES AND NEW OPTIONS

An Entitlement and Acceptance Form for the New Shares and New Options accompanies this Prospectus.

If you decide to apply:

• $\mathbf{1}$ Complete the original Entitlement and Acceptance Form that accompanies this Prospectus. Detailed instructions for completing the form appear on the reverse side of the form. Photocopies will not be accepted. Write in LARGE CAPITAL LETTERS.
• $(2)$ Pay by cheque made payable to "QUANTUM RESOURCES LIMITED" and crossed "Not Negotiable".
• 3) Mail the completed Entitlement and Acceptance Form and cheque to Computershare Investor Services Pty Limited. The form and cheque must arrive by 8.00pm (Eastern Standard Summer Time) on 20 December 2002.

$1.4$ RIGHTS TRADING

The Company's Ordinary Shares are quoted on ASX.

The rights to New Shares will be tradeable by Shareholders both on ASX and off-market between 20 November 2002 and 13 December 2002. The dates may be varied in accordance with the ASX Listing Rules.

$1.5$ NUMBER OF NEW SHARES AND NEW OPTIONS OFFERED

Approximately 218,017,218 New Shares with an attaching New Option will be offered. In accordance with the terms of existing options on issue, the Company has given optionholders notice allowing them to exercise their options in order to participate in the Rights Issue. Accordingly the number of New Shares and New Options to be issued under the Rights Issue is an estimate and may change if existing optionholders exercise existing options.

$1.6$ DIRECTORS MAY PLACE ANY NEW SHARES AND NEW OPTIONS NOT TAKEN UP BY SHAREHOLDERS

The Directors reserve the right to place, at their discretion, any New Shares and New Options not taken up by Shareholders ("Shortfall Securities") within three months of the closing date of the Rights Issue on the same terms and conditions as those New Shares and New Options issued to Shareholders under the Rights Issue and as allowed by Exception 3 in ASX Listing Rule 7.2.

The Rights Issue is not underwritten.

The placement of Shortfall Securities will take place using the Placement Application Form which accompanies this Prospectus. Persons wishing to participate in the allocation of Shortfall Securities should complete the Placement Application Form in accordance with the instructions contained on it. The Directors retain the right to exercise their discretion in placing the Shortfall Securities including the basis of allocation of Shortfall Securities to any one or more applicants.

$1.7$ RIGHTS AND LIABILITIES ATTACHING TO NEW SHARES AND NEW OPTIONS

The New Shares issued pursuant to the Prospectus and the Ordinary Shares issued pursuant to the exercise of the New Options will rank pari passu in respect of future dividends (if any) payable and in all respects with existing Ordinary Shares. A summary of the rights and liabilities attaching to the New Shares and Ordinary Shares issued as a result of the exercise of the New Options are set out in Part 4.5. The rights and liabilities of the New Options are set out in Part 3.2.

$1.8$ RIGHTS OF EMPLOYEE OPTIONHOLDERS

Employee Optionholders are not entitled to participate in the Rights Issue. However the terms of the Employee Options provide that if the Company makes a pro-rata issue of securities other than a bonus issue then the exercise price of Employee Options shall be reduced according to the formula in ASX Listing Rules.

$1.9$ PURPOSE OF THE RIGHTS ISSUE

The funds raised by the Rights Issue will be used in accordance with the annual budgets outlined below to:

\$

• $\bullet$ enable the Company to continue to conduct its exploration program;
• acquire new opportunities; $\bullet$
• partially repay existing borrowings; and $\bullet$
• provide working capital to the Company.

The bud-get for operations for the period to 30 June 2004 is as follows:

Exploration	2,453,905
Estimated costs of Prospectus including legal, printing and mailing	50,000
Administration and working capital	557,714
Total	3,061,619

PART 1 SUMMARY INFORMATION

Although it is the Directors' current intention to use the funds as set out above. they reserve the right to reassess the proposed use of funds. Those funds may also be used to pursue other exploration and research opportunities that may arise from time to time.

If the maximum number of New Shares and New Options offered are issued. the funds raised will be expected to be sufficient to cover the Company's budgetary requirements for two years after the completion of the Rights Issue. The Company will require further funds after the remainder of the funds raised are used to continue with its exploration and potential development activities and the Company plans to finance these ongoing activities from either debt or equity.

If the maximum number of securities offered are not taken up, the funds raised will be applied to the budget items stated above as determined by the Directors and on terms that may be negotiated and agreed with relevant third parties.

If all the New Options are issued and later exercised, the additional amount raised, will be \$4,360,344.

Whether the New Options are exercised will depend upon a number of factors including the market price of the Company's Ordinary Shares from time to time.

Any additional amounts that may be raised as a result of the exercise of the New Options will be used by the Company for such other purposes as determined by the Directors. A firm decision on amounts to be used for these purposes will be dependent on both the actual amounts raised, over which the Company has no control, and the status of the Company's projects at the relevant time and other requirements of the Company at the time of exercise.

Reconciliation of Potential Funds to be raised to Budget for Operations

	5
Funds to be raised if Rights Issue is fully subscribed	4,360,344
Less repayments of loan funds outstanding to Chevas *	1,298,725
Potential funds available for budget	3,061,619

$\star$ This is an amount equal to the sum required to be paid by Edensor to the Company in the event that Edensor fully takes up its entitlements to subscribe for New Shares under the Offer. The amount proposed to be repaid to Chevas from the funds raised under the Offer will not however, exceed the amount subscribed by Edensor for New Shares under the Offer. As detailed above, all monies (being a maximum amount of \$1,298,725) subscribed by Edensor will be used to repay debt owed by the Company to Chevas and will not be available for exploration or other operational purposes.

$1.10$ PROFIT OUTLOOK

There can be no assurance that a commercially viable project will result from the Company's exploration or research activities. As a result the Company is not able to advise on its profit outlook.

RISK FACTORS RELATING TO THE RIGHTS ISSUE AND PROSPECTS OF $1.11$ THE COMPANY

Applicants should appreciate that mineral exploration is a high risk enterprise. which only occasionally provides rewards and where new economic discoveries are rare. There is no assurance that exploration of the Company's projects will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no quarantee that it can be profitably exploited.

Risk factors include:

• $\bullet$ highly speculative nature of mineral exploration and development;
• $\bullet$ mining risks;
• dependence on AXIS Consultants Pty Ltd for management services;
• native title:
• $\bullet$ ALRA Land:
• consequences of inability to raise funds;
• operating losses from operations;
• no profitable mining operations; $\bullet$
• access to third party Tenements;
• share market risk;
• retention/attraction of key personnel; $\bullet$
• insurance risks;
• volatility in the price of minerals;
• possible volatility in the market price of our shares; $\bullet$
• future sale or availability of the Company's shares may exert a $\bullet$ downward pressure on the Company's share price;
• future dilution due to future capital requirements; and
• negative publicity may adversely affect the Company's share price.

In light of the above, no undertaking can be given that the New Shares and New Options offered under this Prospectus will not decrease in value. Shareholders should read this Prospectus in its entirety and, if unclear about any aspects, consult their professional advisers before deciding whether to subscribe. Neither the Company nor the Directors warrant the future performance of the Company or any return on any investment made pursuant to this Prospectus.

Shareholders should appreciate that any take up of their entitlements to subscribe for New Shares and New Options under this Prospectus is highly speculative and that their investment under the Offer cannot be guaranteed.

For a more detailed explanation of certain of these and other risk factors, see Part 4.4.

APPLICATION MONIES $1.12$

Application monies received will be held until allotment of the New Shares and New Options in a bank account in accordance with the Corporations Act. On such allotment any interest paid on this account will be retained by the Company.

$1.13$ ASX QUOTATION

The Company will make application for quotation of the New Shares and New Options on ASX within seven days after the date of this Prospectus.

In the event that ASX does not grant permission for quotation within three months after the date of this Prospectus, any issue of the New Shares and New Options whenever made, on an application pursuant to the Prospectus, is void and the Company shall as soon as practicable repay any money received by it pursuant to the Prospectus as required by the Corporations Act.

The Company will make application for quotation on ASX of the Ordinary Shares issued pursuant to the exercise of the New Options.

$1.14$ ISSUE OF NEW SHARES AND NEW OPTIONS

The Company may issue the New Shares and New Options progressively at any time after receipt of your Entitlement and Acceptance Form in accordance with the Corporations Act and ASX Listing Rules.

$1.15$ PROPOSED CAPITAL STRUCTURE

Assuming all the New Shares and New Options offered by this Prospectus are issued, the capital structure of the Company will be as follows:

	Number
Issued and Paid Up Capital
Ordinary Shares on issue	218,017,218
New Shares to be issued under this Prospectus (approximately $-$ see Parts 1.5 and 1.6)	218,017,218
	436,034,436
Options On Issue
Options expiring 31 October 2010	43,758,906
Employee options expiring 24 March 2010	2,150,000
Options expiring 30 April 2012	32,856,523
New Options over Ordinary Shares to be issued under this Prospectus	218,017,218
Total Options	296,782,647

PART 1 SUMMARY INFORMATION

1.16 CONSOLIDATED PRO-FORMA STATEMENT OF FINANCIAL POSITION

The payment of the issue price of 2 cents per New Share will have an effect on the Company's Consolidated Statement of Financial Position. The audited Consolidated Statement of Financial Position as at 30 June 2002, unaudited Consolidated Statement of Financial Position at 30 September 2002 and an unaudited pro-forma Consolidated Statement of Financial Position as at that date, adjusted for the funds raised from the Rights Issue assuming all the New Shares are taken up are set out below:

	30 June 2002	30 September 2002	30 September 2002 Pro-forma*
	(Audited) A\$000	(Unaudited) A\$000	(Unaudited) A\$000
CURRENT ASSETS
Cash assets	44	16	2,997
Receivables	4	11	11
	48	27	3,008
NON-CURRENT ASSETS
Exploration expenditure	237	245	327
Other financial assets	265	226	226
Receivables	10	10	10
	$\overline{512}$	481	563
TOTAL ASSETS	560	508	3,571
CURRENT LIABILITIES
Payables	138	126	89
	138	126	89
NON CURRENT LIABILITIES Interest bearing liabilities (1)	1,528	1,090
	1,528	1,090
TOTAL LIABILITIES	1,666	1,216	89
NET ASSETS (LIABILITIES)	(1, 106)	(708)	3,482
EQUITY
Contributed equity	49,818	49,818	54,178
Reserves	6,013	6,672	6,672
Accumulated losses	(56, 937)	(57, 198)	(57, 368)
TOTAL EQUITY	(1, 106)	(708)	3,482

Notes to the Statement of Financial Position as at 30 September 2002

• includes amounts owing to AXIS Consultants of \$934,000 and Chevas of $1 -$ \$156,000.
• $\star$ adjusted for loans from Chevas in October and November 2002 used for working capital purposes and subsequent repayment of amounts owing to AXIS Consultants and Chevas.

$2.1$ STRATEGY

The Company has now acquired over 6,000 square kilometres of Tenements in Western Australia, Northern Territory, South Australia and Victoria. The Company intends to sole fund exploration on selected properties to the point where a major partner is attracted to fund detailed exploration and possible mine development. Other properties will be farmed out to third party exploration and mining companies with the Company retaining an equity or royalty interest.

The Company intends to use a portion of the funds raised under the terms of this Prospectus to conduct exploration on two of its project areas, namely:

• Gawler Project
• Tuckabianna Project $\bullet$

In addition the Company intends to use funds raised to expand its portfolio of mineral properties and further develop its mineral royalties business.

$2.2$ PROJECT REVIEWS 2.2.1 Gawler Project

The Company has a 100 percent interest in two exploration licences on the Gawler Craton in South Australia. The Gawler Craton attracted significant investor interest in 1995 following the discovery of the Challenger gold deposit. Considerable exploration activity followed with further gold mineralisation being found in a number of areas. The Challenger gold deposit has a reported mineral resource of 1.7 million tonnes grading 8.5 grams per tonne for 0.46 million ounces. Dominion Mining Limited operate the mine, which commenced production in October 2002. The Company's Wildingi licence is located approximately 60 kilometres to the north-east of the Challenger deposit and adjacent to Dominion's Golf Bore prospect. The Golf Bore mineralisation partially extends onto the Company's Wildingi licence and a review of existing exploration data has highlighted a number of targets within this zone that may warrant drill testing.

PART₂ INFORMATION ABOUT THE COMPANY'S PROJECTS

The Gawler Craton has demonstrated its potential for mineral discoveries, as supported by recent significant copper/gold drilling results in the region. These results highlight the region's potential to host additional Olympic Dam style copper-gold deposits. This potential may extend to the Company's Halfmoon licence.

Initial exploration will consist of a detailed geological and geophysical appraisal of the Company's project areas. This will be followed by surface geochemistry, detailed geophysics and reconnaissance drilling programs as appropriate.

2.2.2 Tuckabianna Project

The Tuckabianna Project is located approximately 20 kilometres southeast of Cue. The Tuckabianna Project area hosts a number of gold exploration targets. At the Comet East Prospect, previous drilling has delineated a mineralised zone some 500 metres long. The best drilling result within this zone was 2 metres grading 6.43 grams per tonne gold from 63 metres. The Company intends to assess this anomalous zone further and conduct follow-up drilling if warranted.

PART 2 INFORMATION ABOUT THE COMPANY'S PROJECTS

Recently the Company completed the first phase of a planned reconnaissance program. A total of 67 soil samples were collected, with results up to 233 ppb gold returned. These results will be integrated with data collected from reviews of previous exploration and further work will be planned to focus on targets that are generated.

Further exploration will include follow-up geochemical sampling, aeromagnetic surveys and interpretation and drilling of targets that may be generated where appropriate.

OTHER PROJECTS $2.3$

Quantum's mining royalties business is based on acquiring a portfolio of prospective mineral properties with the view to generating profits through royalty and/or farm-out agreements with third party mining and exploration companies. The Company proposes to continue to pursue this business model, by selectively acquiring new projects in areas that have the potential to deliver value for shareholders. In some cases the Company may elect to sole fund exploration in order to add value and attract a partner to conduct detailed exploration and possible mine development. The Company continually reviews its commitment to each of its various Tenements and projects. From time to time, as a result of this review process, the Company may withdraw from further involvement in projects.

In 2000, the Company entered into an agreement with Anaconda whereby Anaconda have a right to develop any nickel or cobalt opportunities discovered by the Company on its tenement holdings The Company and Anaconda are currently in commercial dispute as to the status of this agreement and various caveats lodged by Anaconda, in purported compliance with this agreement, against Tenements of the Company.

$3.1$ GENERAL INFORMATION

$3.1.1$ Overseas Shareholders

The New Shares and New Options offered under the Rights Issue by this Prospectus are not offered and may not be issued in any place in which, or to any person to whom, it would not be lawful to make such an offer or issue.

3.1.2 New Zealand Shareholders

New Zealand Shareholders are permitted to take up or sell their entitlements as the making of the Rights Issue to New Zealand Shareholders is permitted by the laws in that country.

3.1.3 Other Overseas Shareholders

It is not practicable for the Company to make the offer under the Rights Issue to Shareholders resident in countries other than Australia and New Zealand and, for that reason, no Entitlement and Acceptance Forms will be sent to Shareholders with addresses in countries other than Australia and New Zealand.

Arrangements will be made to sell the entitlements of Shareholders with registered addresses in those countries to which offers will not be made. Any such sale will be at such prices and otherwise in such manner as a nominee appointed by the Company may in its absolute discretion determine. Neither the Company nor the nominee will be liable for a failure to sell such entitlements at any particular price. Proceeds of the sale will be distributed to the Shareholders for whose benefit the entitlements have been sold in proportion to their entitlement net of expenses.

An explanatory note will be sent to each of those Shareholders who will not receive an offer under the Rights Issue. The explanatory note provides details of the Offer, advises that the Company will not make the offer to them, and advises how the entitlements, to which they would have been entitled, will be dealt with.

$3.2$ RIGHTS AND LIABILITIES OF NEW OPTIONS

• $3.2.1$ The New Options are exercisable after 1 July 2003. The Directors reserve the right to allow Optionholders to exercise the New Options at any time after their issue. If the Directors make this decision all Optionholders will be notified in writing. Notwithstanding these arrangements New Options must be exercised by 5:00pm Melbourne time on 30 November 2012 ("the Expiry Date"). New Options not exercised on or before the Expiry Date will automatically lapse.
• 3.2.2 To exercise all or some of the New Options a duly completed form of application for Ordinary Shares on exercise of New Options ("Notice of Exercise") must be delivered to Computershare Investor Services Pty Limited and received by it prior to the Expiry Date and each exercise must be for a minimum parcel of 500 New Options or, in the event that a holder holds less than 500 New Options, then the entire New Option parcel.
• $3.2.3$ The New Options entitle the holder to subscribe (in respect of each New Option held) for an Ordinary Share at an exercise price per New Option of 5 cents.
• 3.2.4 Upon the exercise of the New Options by Notice of Exercise to the Company and receipt of all relevant documents and payment, Ordinary Shares will be issued ranking pari passu with the then issued Ordinary Shares. The Directors

will make application for the quotation on ASX of the Ordinary Shares issued pursuant to the exercise of the New Options.

• 3.2.5 Unless otherwise determined by the Directors, any Notice of Exercise of a New Option received by Computershare Investor Services Pty Ltd will be deemed to be a Notice of Exercise of the New Option on the last business day of the month in which such Notice of Exercise is received.
• 3.2.6 New Options do not participate in new issues of capital which may be offered to Shareholders during the currency of the New Options prior to the exercise of the New Option. Prior to any new pro rata issue of Ordinary Shares being offered to Shareholders. Optionholders will be notified of the issue by the Company and will be afforded ten business days before the record date (to determine entitlements to the issue) to exercise their New Options.
• 3.2.7 It is a condition of the New Options that, in the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, the New Options will be reorganised as required by ASX Listing Rules on a reorganisation of capital.
• 3.2.8 The New Options may be transferred at any time prior to their expiry.
• 3.2.9 Optionholders will be required to obtain a Notice of Exercise for New Options from the share registry.
• 3.2.10 Adjustments to the number of Ordinary Shares over which New Options exist and/or the New Option exercise price may be made if there is a change to the capital structure of the Company by way of pro rata issue for cash or a bonus issue. The method of adjustment shall be in accordance with ASX Listing Rules. However, subject to approval of ASX, if the Company makes a pro rata bonus issue of Ordinary Shares to Shareholders, the total number of Options will be increased by the same ratio as the increase in the total number of Ordinary Shares and the exercise price of New Options will be amended in inverse proportion to that ratio.
• 3.2.11 All Optionholders will be entitled to attend meetings and receive and will be sent all reports and accounts required to be laid before members of the Company in General Meetings and all notices of General Meetings of Members but will not be entitled to participate in the Meetings unless they are, otherwise registered as holders of Ordinary Shares.

$3.3$ RIGHTS AND LIABILITIES ATTACHING TO NEW SHARES

The rights and liabilities attaching to the New Shares to be issued are summarised in Part 4.5 of this Prospectus.

4.1 PROVISION OF FURTHER INFORMATION ABOUT THE COMPANY

As a listed public company, the Company is subject to regular reporting and disclosure obligations under the Listing Rules of ASX and the Corporations Act. ASX maintains files containing publicly disclosed information about all listed The Company's file is available for inspection at ASX in companies. Melbourne, Australia, during normal working hours. In addition, copies of documents lodged by, or in relation to, the Company with ASIC may be obtained from, or inspected at, an office of ASIC.

Since lodging the Company's accounts to 30 June 2002, the Company has made the following announcements to ASX:

Date of Announcement Announcement 15 October 2002 Notice of Annual General Meeting, Explanatory Memorandum and Proxy Form 25 October 2002 Lodgement of printed 2002 Annual Report

• 31 October 2002 Lodgement of September 2002 Quarterly Report
• 1 November 2002 Announcement to ASX of Rights Issue
• 14 November 2002 Announcement of results of Annual General Meeting

The Company will provide, free of charge upon request prior to the close of the Rights Issue, copies of the Company's financial report for the year ended 30 June 2002 lodged with ASIC and the announcements made to ASX and ASIC referred to above.

If Bay Resources proceeds to execute formal agreements with the Tibet Bureau of Geology and Minerals Exploration Development in the Peoples Republic of China in relation to a joint venture covering approximately 40,000 square kilometres of the Xigaze copper belt in Tibet, the Company will become entitled to a fee of 250,000 fully paid ordinary shares in Bay Resources. Bav Resources is a Delaware corporation whose securities are traded on the over the counter market and quoted on the OTC Bulletin Board. The last sale price of securities in Bay Resources as at the date of this Prospectus, was US\$3.00. If the Company becomes entitled to the fee, the Company will make an announcement to ASX

None of the information referred to in this Part 4.1 is taken to be included in this Prospectus or is issued with this Prospectus.

$4.2$ DIRECTORS AND MANAGEMENT

$4.2.1$ Directors

Mr Joseph Gutnick, FAusIMM, FAIM, MAICD, Chairman and Managing Director

Mr Gutnick has been a Director of the Company since 1987 and is currently Chairman and Managing Director of four listed public companies in Australia. He is also President of Bay Resources Ltd that is listed on the over the counter market in the USA and Executive Chairman of Tahera Corporation, a company that is listed on the Toronto Stock Exchange. He was responsible for overseeing the development and operation of a number of major gold mines in Australia. Mr Gutnick was awarded the Diggers award at the 1997 Diggers and Dealers Industry Awards. Age 50

Dr David Tyrwhitt, PhD(Geology), BSc(Hons), FSEG(USA), FAusiMM, CPGeo. FIMM(London).

Non-Executive Director

Dr Tyrwhitt has been a Director of the Company since 1999 and has more than 40 years experience in the mining industry. He is currently a Director of five listed public companies which are in the mining and exploration sector. He worked for over 20 years with Newmont Mining Corporation in Australia. South East Asia and the United States. During that time he was responsible for the discovery of the Telfer Gold Mine in West Australia. He was Chief Executive of Newmont Australia Limited between 1984 and 1988 and Chief Executive Officer of Ashton Mining Limited between 1988 and 1991. He established his own consultancy in 1991 and worked with Normandy Mining Limited on a number of mining projects in South East Asia. Age 64.

Mr Paul Ehrlich, LLB(Hons), LLM Non-Executive Director

Mr Ehrlich is an attorney of 20 years experience in the fields of commercial law and commercial litigation. From 1989 to 2001 Mr Ehrlich was a partner in a national Australian law firm. He has expertise in a range of corporate areas including mergers and acquisition (with an emphasis on public company takeovers, litigation and trade sales), securities law, public raisings, IPO's, government privatisation, corporate reconstructions, mining law, project finance and the negotiation and drafting of complex contractual and commercial arrangements. Mr Ehrlich also specialises in areas of complex corporate litigation. Mr Ehrlich was appointed a Director in April 2002. Age 44.

4.2.2 Management

Name	Age	Position
Peter Lee BBus, CA, FCIS, MAICD	45	General Manager Corporate & Company Secretary
David Prentice MBA, Grad Dip BA DipCart	39.	General Manager Commercial

$4.3$ MATERIAL CONTRACTS

$4.3.1$ Arrangements with AXIS Consultants - Summary of Service Deed dated 25 November 1988

AXIS Consultants provides management and geological services to the Company and provides certain facilities and equipment for the use of the Company in order for the Company to conduct its business. Services include but are not limited to provision of geologists and administrative staff, payroll facilities and employee records required by law and by usual accounting procedures, provision of all types of insurance in accordance with prudent business practice, provision of legal, financial and accounting advice and services, provision of stationery, furniture, furnishings, library facilities, reference books, periodicals, transport, secretarial facilities, telephone answering services, photocopying, duplicating facilities, and office and other accommodation.

The Company must not obtain these services other than from AXIS Consultants or itself perform or provide the services contemplated by the Deed unless it first requests AXIS Consultants to provide the services and AXIS Consultants fails to do so within one month after the request.

The Company pays AXIS Consultants, for the services provided, at cost and may add a fee of up to 15% thereof. AXIS Consultants provides an invoice to the Company for services rendered and the Company is required to pay this invoice within 21 days of the date of the invoice.

The Company is required to indemnify AXIS Consultants for all costs. expenses, claims, outgoings, damages and liabilities incurred, resulting or arising directly or indirectly from the provision or termination of services, facilities and equipment to the Company pursuant to the Service Deed and includes any breach by the Company of the Service Deed or any lease agreement or other agreement with AXIS Consultants or any breach by AXIS Consultants of any lease or other agreement, such breach having been caused by, resulting or arising from some act or omission by the Company.

The Company is required to maintain all equipment provided by AXIS Consultants for the use by the Company in carrying out its business in a good state of repair, ensure such equipment is only used by properly qualified or licensed personnel and ensure that all equipment is safe for use and operation.

Either party may terminate the Service Deed by 60 days prior written notice to the other party.

Should the Company wish to terminate the Service Deed, the Company must set out in the notice of termination any of the staff employed by AXIS Consultants whose services have been provided wholly for the conduct of the Company's business that the Company wishes to offer employment to after the termination of the Service Deed and those items of equipment for which the Company desires to retain possession. Should the Company give such notice, AXIS Consultants is required to terminate the employment of such staff and the Company offer employment to those staff. AXIS Consultants is required to arrange for the transfer of any equipment to the Company which the Company desires to retain. Any cost involved in terminating staff or transferring equipment will be to the cost of the Company. At the request of AXIS Consultants, the Company has provided a floating charge over the assets of the Company to AXIS Consultants as security for the indebtedness of the Company. This charge ranks behind the charge provided to Chevas (see Part $4.7.1$ ).

4.3.2 Loans to the Company from Chevas

A description of the loans to the Company from Chevas is set out in section $4.7.1.$

$4.4$ RISK FACTORS

4.4.1 Highly Speculative Nature of Mineral Exploration and Development

Mineral exploration is highly speculative in nature and involves risks. There can be no assurance that exploration efforts will be successful. Once minerals in commercially recoverable grades and quantities are discovered it may take several years until production is possible during which time the economic feasibility of production may still change. In addition, exploration discovery is inherently uncertain, and results can never be predicted with certainty. The risks of failure are higher when a project is at the early stages of the exploration path.

4.4.2 Mining Risks

The business of mineral exploration and mining is generally subject to a number of risks and hazards including environmental hazards, industrial accidents, encountering unusual or unexpected geologic formations, cave-ins, flooding and periodic interruptions due to inclement or hazardous weather conditions. Such risks could result in damage to, or destruction of, mineral properties, personal injury, environmental damage and possible legal liability. Although the Company maintains appropriate insurances within ranges of coverage consistent with industry practice, no assurance can be given that such insurance will continue to be available at economically feasible premiums.

4.4.3 Role of AXIS Consultants

The Company is substantially dependent upon AXIS Consultants for its senior management, exploration, financial and accounting, company secretarial, human resources, legal and other corporate headquarters functions. For example, the Company's Chairman and Managing Director and General Manager Corporate and Company Secretary and General Manager Commercial are employed by AXIS Consultants and, as such, are required by AXIS Consultants to devote substantial amounts of time to the business and affairs of the other clients of AXIS Consultants. There can be no assurance that these or other employees of AXIS Consultants will be available to the Company to permit the Company to conduct its business and affairs as currently proposed to be conducted.

Pursuant to the Service Agreement, AXIS Consultants provides the Company with office facilities, geological and administrative personnel and services, management staff and services. The Company is required to reimburse AXIS Consultants for any direct costs incurred by AXIS Consultants for the Company. In addition, the Company pays a proportion of AXIS Consultants's indirect costs based on a measure of the Company's utilisation of the facilities and activities of AXIS Consultants. This Service Agreement may be terminated by the Company or AXIS Consultants on 60 days' notice. Further details of arrangements with AXIS Consultants are provided in Part 4.3.1.

4.4.4 Native Title

Large areas of land in Australia are subject to native title claims and some of the Company's current Tenements are in areas that are or may be affected by those claims.

The Company takes reasonable measures to ensure that it has proper title to its properties prior to undertaking exploration, however there is no quarantee that title to any such properties will not be challenged given the untested nature of native title law in Australia. Compliance by the Company with all procedural requirements established by the Native Title Act 1993 (Commonwealth) (the "Native Title Act"), and all relevant authorities is the only way to limit the potential for native title to affect mining and/or exploration activity. The Company will be required from time to time to comply with the procedural requirements of the Native Title Act to secure the grant of exploration Tenements. This may result in the requirement to negotiate with native title claimants. The Company cannot predict the outcome of these negotiations which may result in delays or the inability to secure the grant of affected exploration Tenements.

In addition, if exploration proves successful and the Company wishes to conduct mining it will be required to make application to the relevant authorities for a mining lease or leases. This will result in a need for the Company to comply with the requirements of the Native Title Act and may require negotiation with native title claimants. Notwithstanding compliance with the Native Title Act there can be no assurance that the mining leases will be granted allowing mining to proceed. Further, compliance with procedures under the Native Title Act is not a matter entirely under the Company's control as compliance is required by all authorities including the relevant State Government. Historically State Governments in Australia have not always been found to have complied strictly with the required procedures. Even when Tenements are granted given the untested nature of native title rights in Australia there can be no guarantee of a Tenements' enduring validity.

4.4.5 ALRA Land

In addition some of the Company's Tenements in the Northern Territory are affected by land claimed under the Aboriginal Land Rights (Northern Territory) Act 1976 (Cth), ("the Land Rights Act"), ("ALRA Land").

An application for an exploration licence on ALRA Land requires various consents from both Territory and Commonwealth governments and the Land Council representing the Aboriginal traditional owners. The process for grant of mineral Tenements on ALRA Land is quite different to that under the Native Title Act. If consents are refused long delays are possible before the Company can re-apply for the Tenements.

Even where consent is ultimately given and the terms and conditions under which Tenements may be granted are agreed, a twelve-month negotiation period or longer to reach that point can be expected.

The Company is not able to predict with accuracy the time that may be necessary to complete negotiations or the terms and conditions that may apply to the grant of Tenements.

Notwithstanding this, the Company proposes to work with the relevant Land Councils to seek clearances from Aboriginal traditional owners for exploration work to be undertaken. In taking this approach the Company seeks to minimise the possibility of difficulties arising under the relevant Northern Territory and Commonwealth Aboriginal heritage legislation.

4.4.6 Consequences of Inability to Raise Funds

Given that the nature of the Company's operations is focused primarily on exploration activities into the discovery of the gold and base metals, the Company expects our future capital requirements to be substantial in order to continue and expand our exploration programs. The level and timing of future funding will depend on (i) the rate at which our exploration programs are conducted which can depend on the results of those exploration programs; (ii) the ability to convert good exploration results into cash positive mining operations; and (iii) general economic conditions at the time of future fund raising. Consequently, the Company's ability to fund its exploration programs will be dependent on its cash resources at any point in time and its ability to raise further funds.

If the Rights Issue is not fully subscribed, there is a possibility that, when the funds raised by the Rights Issue have been used, the Company may require further financial support from Mr Gutnick. If the funds raised by the Rights Issue are not sufficient to extinguish the Company's current liabilities, the Company may need further financial support from Mr Gutnick immediately. Mr Gutnick has provided ongoing financial support to the Company in the past and has invited the Company, as and when funds are required, to apply to him for funds. However, there is no certainty that Mr Gutnick will provide sufficient funds to the Company to enable the Company to meet its commitments at any time.

4.4.7 Operating Losses from Operations

The Company has made operating losses in each year since it commenced its exploration business. It expects to incur further operating losses over the next few years as its exploration activities continue unless it can discover a mineral deposit that can either be sold at a profit or commence a profitable mining operation. The Company's profit goals depend on a number of factors outside its control and there can be no assurance that it will ever achieve significant profitability.

4.4.8 No Profitable Mining Operations

The Company is an exploration company. It has not yet successfully discovered a profitable mining operation and there can be no assurance that any of the Company's exploration ventures will be successfully commercialised. The failure to establish a profitable mining operation would adversely affect the Company's financial performance.

4.4.9 Access to Third Party Tenements.

In cases where our rights to the tenement interests of third parties are subject to rights granted to us under various agreements, there can be no assurance that such agreements will not be terminated under certain conditions.

4.4.10 Share Market Risk

Regardless of the performance of the Company, the day to day performance of the share market and general share market conditions may effect the Company. The share market has in the past and may in the future be affected by a number of matters including:

• Commodity prices;
• Economic conditions in general terms and in particular to the industry that a business operates in:
• Interest rates:
• Market confidence:
• Supply and demand for money;
• Currency exchange rates;
• General economic outlook; and
• Changes in government policy.

4.4.11 Retention/Attraction of Key Personnel

The Company is heavily reliant upon the skills of its exploration team. The loss of any key personnel may have an adverse material effect on the Company's ability to conduct its exploration activities. The Company's ability to retain the services of the key personnel or find timely replacement for the loss of such key personnel is critical to its success. The Company does not maintain any "key person" insurance on our key personnel.

In addition, any future inability to hire and/or retain the services of additional technical personnel with appropriate qualifications may also have a negative impact on the material success of the Company's operations.

4.4.12 Insurance Risks

The Company maintains insurance coverage that is substantially consistent with industry practice. However, there is no quarantee that such insurance or any future necessary coverage will be available to us at economically viable premiums (if at all), or that, in the event of a claim, the level of insurance carried by the Company now or in the future will be adequate or that a liability or other claim would not materially and adversely affect our business.

4.4.13 Volatility in the Price of Minerals

Commodity prices are influenced by physical and investment demand for those commodities. Fluctuations in commodity prices may influence timing, viability and management projects in which the Company has an interest. The Company has a multi-commodity strategy. This may to some extent ameliorate commodity risk.

4.4.14 Possible Volatility in the Market Price of our Shares.

Although the Company is listed on the ASX, there is no assurance that an active trading market for its Ordinary Shares will be sustained. There is also no assurance that the market price for the Company's Ordinary Shares will not decline below the issue price. The market price of the Company's Ordinary Shares could be subject to significant fluctuations due to various external factors and events including the liquidity of the Company's Ordinary Shares in the market, difference between the Company's actual financial or operating results and those expected by investors and analysts, the general market conditions and broad market fluctuations. Furthermore, any stock market volatility and weakness could result in the Company's Ordinary Shares trading at prices significantly below the issue price, without regard to the Company's operating performance.

4.4.15 Future sale or availability of the Company's Ordinary Shares may exert a downward pressure on the share price

Any future sale or availability of the Company's Ordinary Shares may exert a downward pressure on the share price. The sale of a significant amount of the Company's Ordinary Shares in the public market after this Offer, or the perception that such sales may occur could materially adversely affect the market price of the Company's Ordinary Shares. These factors may also affect the Company's ability to sell additional equity securities in the future.

4.4.16 Future dilution due to Future Capital Requirements

The Company's working capital and capital expenditure needs may vary materially from those presently planned. If the Company does not meet our goals with respect to revenues, or costs are higher than anticipated, substantial additional funds may be required. Even if the Company exceeds its goals, the success may open new opportunities that may have to be filled quickly and this could also result in the need for substantial new capital. To the extent that funds generated from operations together with the proceeds from this Prospectus have been exhausted, the Company may have to raise additional funds to meet the new capital requirements. These additional funds may be raised by way of a limited placement or by a rights offering or through the issuance of new shares or through debt. If any Shareholders are unable or unwilling to participate in this additional round of fund raising, such Shareholders may suffer dilution in their investment.

4.4.17 Negative publicity may adversely affect our Share Price

Any negative publicity or announcement relating to any of our substantial shareholders or key personnel may adversely affect the stock performance of the Company, whether or not this is justifiable. This negative publicity or announcement may include involvement in legal or insolvency proceedings. failed attempts in takeovers, joint ventures or other business transactions.

$4.5$ RIGHTS AND LIABILITIES ATTACHING TO ORDINARY SHARES

4.5.1 General

The Ordinary Shares issued pursuant to this Prospectus and as a result of the exercise of New Options will, as from the date of their allotment, rank equally in all respects with all Ordinary Shares then on issue.

The rights and liabilities attaching to Ordinary Shares:

• are detailed in the Company's Constitution, a copy of which can be inspected free of charge during normal business hours at its registered office:
• in certain circumstances are regulated by the Corporations Act and other statutes ASX Listing Rules and general law.

A summary of the more significant rights and liabilities attaching to the Ordinary Shares is set out as Parts 4.5.2 to 4.5.10. This summary is neither exhaustive nor does it constitute a definitive statement of the rights and liabilities of Shareholders and Optionholders. To obtain such a statement persons should seek independent legal advice.

4.5.2 Reports and notices

Shareholders are entitled to receive all notices, reports, accounts and other documents required to be furnished to Shareholders under the Constitution of the Company, the Corporations Act and ASX Listing Rules.

4.5.3 General Meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to speak and to vote at general meetings of the Company.

Shareholders may requisition general meetings in accordance with both Sections 249D and 249F of the Corporations Act and the Constitution of the Company. Shareholders are entitled to receive and consider reports at the Company's Annual General Meeting.

4.5.4 Votina

Subject to the rights or restrictions for the time being attached to a class of shares in the Company at a general meeting of the Company, Shareholders may vote unless before or on the declaration of the result of the show of hands a poll is demanded in accordance with the Constitution of the Company in which case each shareholder present shall have one vote.

Under the Corporations Act and the Company's Constitution, a company which is a Shareholder is allowed to appoint a representative to attend a meeting on behalf of the company. In essence, a representative is no different to a proxy holder at except that the form appointing a company representative must be lodged anytime before the commencement time of the meeting rather than 48 hours prior to the commencement of the meeting as is the case with proxies. On a poll, one vote is counted per Ordinary Share.

Shareholders have voting rights to elect Directors, determine Non-Executive Directors' remuneration in total, and approve matters as required by the Company's Constitution, ASX Listing Rules and by law including changes in the nature of the Company's business, sale of the Company's main undertaking. issue of Ordinary Shares if greater than fifteen per cent of the existing Ordinary Shares on issue and not on a pro-rata basis, reduction of capital, change of name and change of rights of Shareholders.

4.5.5 Dividends

Optionholders are not entitled to participate in dividends. Subject to the rights of holders of the Company shares with any special rights (at present there are none), Shareholders have no entitlement to a dividend other than that determined by Directors from time to time. The Directors may declare and pay, from the profits of the Company, dividends that are distributed to Shareholders according to the rights and interests of Shareholders. The Directors may determine the property to constitute the dividend and fix the time for distribution. Except to the extent that the terms of issue of Ordinary Shares provide otherwise, each dividend must be distributed according to the amount paid-up on the Ordinary Share in a manner calculated in accordance with the Company's Constitution.

4.5.6 Winding up

If the Company is wound up and, after distribution of assets to repay paid up capital, there remain assets available for distribution to Members (in that capacity), those assets will be distributed to Shareholders such that the amount distributed to a Shareholder in respect of each Ordinary Share is proportional to the amount paid up on that Ordinary Share compared with the total paid up capital of the Company.

4.5.7 Transfer of Shares

Generally, Ordinary Shares in the Company are freely transferable (subject to formal requirements) provided that the registration of the transfer does not result in a contravention of or failure to observe the provisions of a law of Australia (including ASX Listing Rules and SCH Business Rules).

4.5.8 Directors

The Company's Constitution contains provisions relating to the election and reelection of Directors (other than Managing Directors and alternate Directors).

4.5.9 Company may recover certain payments from Shareholder

If any law requires the Company to make any payment in respect of Ordinary Shares to any government or taxing authority as a consequence of nonpayment of any tax or duty by the holder of the Ordinary Shares (or if the holder is deceased, the holder's personal representative), the Company may recover the amount of the payment from the Shareholder or the Shareholder's personal representative.

4.5.10 Miscellaneous

Under the Company's Constitution, the Directors are empowered to issue ordinary shares with preferred, deferred or other rights.

The Company's Constitution contains other provisions usual for listed companies (including for the conversion of all or any of the shares in the Company into larger or smaller number) and has been lodged with ASIC and ASX.

$4.6$ DIRECTORS' INTERESTS IN THE SECURITIES OF THE COMPANY

As at 15 November 2002 the Directors had the following relevant interests in the securities of the Company.

Relevant Interest
Name	Ordinary	Employee	Options	Options
	Shares	Options	31/10/2010	30/4/2012
J I Gutnick	Nil	1,000,000	Nil	Nil
D S Tyrwhitt	Nil	Nil	Nil	Nil
P L Ehrlich	Nil	Nil	Nil	Nil

Edensor holds 64,936,241 Ordinary Shares, 30,002,916 options expiring 31 October 2010 and 24,741,562 options expiring 30 April 2012 in the Company. Mr J I Gutnick is a Director and shareholder of Edensor. Edensor is the trustee of the Gutnick Family Trust.

$4.7$ DIRECTORS' INTERESTS IN CONTRACTS WITH THE COMPANY

$4.7.1$ Loans to the Company from Chevas

Chevas has provided loan funds to the Company in order for the Company to meet its working capital obligations. The Loan Deed between Chevas and the Company dated 7 November 2002 documents the agreement between the two parties in regard to loans that had been provided by Chevas to the Company at that date and also any further funds that would be provided by Chevas. Under the Loan Deed, interest may be charged at a rate determined by Chevas in its sole and unfettered discretion from time to time, save that such rate shall not exceed that rate which is 2% higher than the ANZ Bank Bill Reference Rate from time to time. In the two years to the date of this Prospectus (until 7 November 2002) the loan from Chevas to the Company has been governed by a Memorandum of Loan dated 3 August 1989 and the interest rates charged by Chevas during that period varied from 8.00% to 9.95%. At the date of this Prospectus the interest rate being charged by Chevas is 8.60%. It is the intention of the Company to repay part of the loan to Chevas using funds raised by the Rights Issue. At the request of Chevas, the Company has provided a first ranking floating charge over the assets of the Company to Chevas as security for the indebtedness of the Company to Chevas.

4.7.2 Indemnity Deed and Access and Insurance Deed

At the 1999 Annual General Meeting of the Company, the members approved, inter alia, the following:

• the entry by the Company into an Indemnity Deed with each of the $\bullet$ Directors which will indemnify them against liability incurred to a third party (not being the Company or any related company) where the liability does not arise out of conduct including a breach of good faith. The Indemnity Deed will continue to apply for a period of 10 years after a Director ceases to hold office:
• the entry by the Company into a Director's Access and Insurance Deed with each of the Directors pursuant to which a Director can request access to copies of documents provided to the Director whilst serving the Company for a period of 10 years after the Director ceases to hold office. There will be certain restrictions on the Directors' entitlement to access under the proposed deed. In addition the Company will be obliged to use reasonable endeavours to obtain and maintain insurance for a former Director similar to that which existed at the time the Director ceased to hold office.

Other than as set out in this Prospectus, the Directors have no interests in contracts with the Company.

4.8 DIRECTORS' FEES AND BENEFITS

Historically, the remuneration of the Directors has been paid by AXIS Consultants and recovered from the Company relative to the level of activity. Total income received or receivable by Directors (past and present) including aggregate amounts paid to persons or superannuation funds in respect of the eventual retirement of Directors was \$269,385 for the two years to the date of this Prospectus.

In March 2000 the Company issued 1,000,000 Employee Options to Mr J I Gutnick. The Company loaned the issue price of those Employee Options to Mr Gutnick in accordance with the Employee Option Plan. Both the terms of the Employee Share Option Plan and the issue of 1,000,000 Employee Options to Mr Gutnick were approved by Shareholders of the Company at the 1999 Annual General Meeting.

At the date of this Prospectus there does not exist a contingent liability of the Company in respect of termination benefits under a service agreement with either Directors or persons who take part in the management of the Company.

Shareholders at the Company's 1999 Annual General Meeting approved the payment of fees to Non Executive Directors at a maximum of \$200,000 per annum to be allocated amongst existing and any future Non-Executive Directors as the Board of Directors agree.

4.9 OTHER INTERESTS OF DIRECTORS

Except as disclosed in the Prospectus no Director has, or has had within two years of lodgment of this Prospectus, any interest in:

• the formation or promotion of the Company:
• any property acquired or proposed to be acquired by the Company in ٠ connection with its formation or promotion or the Rights Issue; or
• the Rights Issue. $\bullet$

Except as disclosed in the Prospectus, no person has paid or agreed to pay any amount to any Director, or has given or agreed to give any benefit to any Director or any company or firm which with the Director is associated, to induce the Director to become, or to qualify as, a Director of the Company or otherwise for services rendered by the Director or any company or firm which with the Director is associated in connection with the formation or promotion of the Company or the Rights Issue.

4.10 INTERESTS OF OTHER PARTIES

Except as disclosed below, no person who is named herein as performing a function in a professional advisory capacity in connection with the preparation of or distribution of this Prospectus has, at the time of lodgment of this Prospectus with ASIC, or has had within two years of lodgment of this Prospectus, any interest in:

• the formation or promotion of the Company; ٠
• any property acquired or proposed to be acquired by the Company in $\bullet$ connection with its formation or promotion or the Rights Issue; or
• the Rights Issue. ٠

All amounts paid or agreed to be paid and the value of any benefit to such persons for services rendered in connection with the promotion or formation of the Company and the Rights Issue are set out below:

• no form of payment or benefit of any kind will be made or agreed to be $\bullet$ made to the person other than in cash;
• in the two years before lodgment of this Prospectus, PKF have been paid $\bullet$ fees for their professional services in the amount of \$35,200; and
• in the two years before lodgment of this Prospectus, Schetzer Brott & Appel ٠ have been paid fees for their professional services in the amounts of \$16,615. Fees to Schetzer Brott & Appel for professional services provided in connection with the Rights Issue up to the date of this Prospectus will be approximately \$7,500.

4.11 CONSENTS AND DISCLAIMERS

Each of the parties referred to in this section:

• does not make, or purport to make, any statement in this Prospectus, nor is $\bullet$ any statement in this Prospectus based on any statement by any of those parties, other than as specified in this section; and
• to the maximum extent permitted by law, expressly disclaims and takes no $\bullet$ responsibility for any part of the Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this section.

Computershare Investor Services Pty Limited has given, and as at the date of this Prospectus has not withdrawn, its consent to be named as the Share Registrar in the form and context in which it is named.

PKF have given, and as at the date of this Prospectus have not withdrawn, their consent to be named in the Prospectus as Auditor in the form and context in which they are named.

Schetzer Brott & Appel have given, and as at the date of this Prospectus have not withdrawn, their consent to be named in the Prospectus as Lawyers to the Offer in the form and context in which they are named.

There are a number of persons referred to elsewhere in this Prospectus who are not experts and have not made statements included in this Prospectus. These persons did not consent to being named in this Prospectus and did not authorise or cause the issue of this Prospectus.

DIRECTORS' AUTHORISATION 4.12

Each of the Directors of the Company has consented to lodgment of this Prospectus with the ASIC.

DEFINITIONS

A.B.N.

Australian Business Number.

ALRA

(Northern Aboriginal Land Rights Territory) Act 1976 (Cth).

Anaconda

Anaconda Nickel Limited.

ASIC

Australian Securities and Investments Commission.

ASX

Australian Stock Exchange Limited.

AXIS Consultants

AXIS Consultants Pty. Ltd. A.B.N. 32 006 804 708 whose registered office is at Level 8, 580 St Kilda Road, Melbourne, Victoria Australia.

Bay

Bay Resources Ltd, a Delaware Corporation with a principal office at Level 8, 580 St. Kilda Road, Melbourne, Victoria 3004, Australia. Messrs Gutnick and Ehrlich and Dr Trywhitt are Directors of Bay Resources and Edensor is the holder of 78.8% of the ordinary shares in Bay Resources.

Chevas

Chevas Pty Ltd, a company of which Mr. J I Gutnick is a Director. Chevas is the trustee of the Chevas-Gutnick Trust, a discretionary trust connected with Mr JI Gutnick and his family.

Company

Quantum Resources Limited (ABN 84 006 690 348) (alternatively "Quantum or the Company").

Edensor

Edensor Nominees Pty Limited, a company of which Mr. J I Gutnick is a Director and Shareholder. Edensor is the trustee of the Gutnick Family Trust. a discretionary trust connected with Mr JI Gutnick and his family.

Employee Optionholders

Registered holders оf Emplovee Options.

Employee Options

Options to subscribe for Ordinary Shares issued pursuant to a prospectus dated 3 March 2000 and expiring on 24 March 2010

Member

A Shareholder.

New Share

A fully paid Ordinary Share to be issued pursuant to this Prospectus.

New Option

An option to subscribe for one fully paid Ordinary Share with an exercise price of 5 cents each to be issued pursuant to this Prospectus.

Offer

The offer of approximately 218,017,218 New Shares at an issue price of 2 cents per New Share together with one New Option (at no issue price) with every New Share pursuant to this Prospectus.

Optionholder

A successful subscriber for New Options.

Ordinary Share

A fully paid ordinary share in the capital of the Company.

Rights Issue

The proposed issue of New Shares and New Options pursuant to this Prospectus.

Shareholder

Shareholder means a registered holder of Ordinary Shares.

Tenements

Areas of land held or applied for by a company or individual to explore for minerals.

GLOSSARY OF GEOLOGICAL TERMS

This glossary of terms is provided to assist the reader in understanding some of the expressions used in this Prospectus.

Aeromagnetic

Refers to measurement of the magnetic qualities of rocks using a planemounted instrument.

Anomaly

A value higher or lower than the expected outlining a zone of potential exploration interest but not necessarily of commercial significance.

Base metals

Non precious metal usually referring to copper, lead and zinc.

Abbreviations:

ppb parts per billion THIS APPLICATION FORM MUST NOT BE USED BY SHAREHOLDERS TO ACCEPT THEIR ENTITLEMENT PURSUANT TO THE RIGHTS ISSUE. SHAREHOLDERS CAN ONLY ACCEPT THEIR ENTITLEMENT UNDER THE RIGHTS ISSUE BY COMPLETING THE ENTITLEMENT AND ACCEPTANCE FORM ACCOMPANYING THIS PROSPECTUS.

QUANTUM RESOURCES LIMITED

A.B.N. 84 006 690 348

Registered Office: Level 8, 580 St Kilda Road Melbourne Victoria 3004 Australia Ph: (613) 8532 2840

Share Registry:

Computershare Investor Services Pty Limited Level 12, 565 Bourke Street Melbourne Victoria 3000 Australia Ph: (613) 9615 5970

PLACEMENT APPLICATION FORM

Application for placement of the shortfall of the renounceable rights issue of Ordinary Shares at an issue price of 2 cents per Ordinary Share together with an attaching option (at no issue price) and with an exercise price of 5 cents and otherwise on the terms and conditions of the Prospectus to which this Placement Application Form is attached.

IMPORTANT: This document is important. If you do not understand it, you should consult your Sharebroker or other Professional Adviser.

Full name of applicant:

	(Mr/Mrs/Miss/Ms or Company Name) (Given Name(s))		,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, (Sumame)
	Address:
		(number and street)	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,
	(suburb or city)	(State/Province)	,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,,, (Country) (Postcode)
		HIN/SRN (if an existing shareholder):
	Tax File Number(s): (if in Australia)
		Applicant's telephone number for contact during business hours: (a) manufactured contains and the Applicant st
(1) (2) (3)	cheque(s) I/We agree to be bound by the Constitution of the Company.	I/We enclose my/our cheque(s) for the amount shown being payment at the rate of 2 cents per Share.	I/We, the abovenamed applicant, apply for massimmassimmassimmassimmassimes (insert number of shares applied for ) and lodge in full application moneys at \$0.02 per Share \$
			Individual Applicants Signed:
	Corporate Applicants
	Executed for the Applicant
	in accordance with its Constitution:		Director

RETURN OF THIS DOCUMENT TOGETHER WITH THE REQUIRED REMITTANCE WILL CONSTITUTE AN OFFER TO SUBSCRIBE FOR SECURITIES WHICH THE COMPANY MAY ACCEPT IN WHOLE OR IN PART. Please complete the following payment details.

Drawer	Bank	BSB No. or Branch Name	Amount
			. . - 17
			-J)
			. . -J)

LODGEMENT INSTRUCTIONS

To apply for a placement of shares:

• Complete the form overleaf
• Forward it together with your remittance (payable to: QUANTUM RESOURCES LIMITED) to Computershare Investor Services Pty Limited at:

Level 12, 565 Bourke Street OR. Melbourne Vic 3000 Australia

GPO Box 52 Melbourne Vic 3001 Australia

GENERAL INSTRUCTIONS

Signing instructions:

• The applicant and each joint applicant (if applicable) must sign.
• Companies need to sign in accordance with their Constitution and in any event in the presence of at least 2 Directors or one Director and Secretary. A Company with a Sole Director/Sole Secretary may sign by that person only.
• If signed by an Attorney, please forward the Power of Attorney to the Share Registry for noting, $\bullet$ unless already noted.

Only cheques or bank drafts in Australian dollars and drawn on a bank or financial institution in Australia will be accepted. Your cheque must be made payable to "QUANTUM RESOURCES LIMITED", and crossed "Not Negotiable".

Receipts for payment will not be forwarded.

Terms used in this Placement Application Form which are defined in the Prospectus, where the context permits, are afforded the defined meaning.

The Company reserves the right to waive strict compliance with the prescribed method of making your application, to the extent permitted by law.

IF YOU HAVE ANY ENQUIRIES CONCERNING YOUR APPLICATION, PLEASE CONTACT THE SHARE REGISTRY ON TELEPHONE: 1300 850 505 or (613) 9615 5970