62 Colin Street, West Perth, Western Australia 6005 Telephone: 61-8 9481 6422 Facsimile: 61-8 9481 6433

2 November 2004

Manager Announcements Company Announcements Office Australian Stock Exchange Limited Level 4 20 Bridge Street SYDNEY NSW 2000

Dear Sir/Madam

PROSPECTUS FOR ISSUE OF OPTIONS

Please find enclosed a copy of a prospectus dated 2 November 2004 for the issue of options to shareholders and investors who subscribed for shares under the share purchase plan and shortfall placement undertaken by Monarch Resources Limited (Company) in August 2004.

Under the terms of the share purchase plan and shortfall placement, the Company proposed to issue options on the basis of one option for every two shares subscribed for. The issue of the options was subject to shareholder approval (which was obtained on 10 September 2004) and the Company lodging a prospectus for the issue of the options.

Yours faithfully

FRANK CAMPAGNA Company Secretary

MONARCH RESOURCES LIMITED

ACN 100 038 266

PROSPECTUS

For the issue of 1,280,625 Options to acquire shares in the Company, for nil consideration, on the basis of one (1) option for every two $(2)$ shares subscribed for under the Share Purchase Plan and Placement.

LETTER FROM CHAIRMAN

2 November 2004

Dear Shareholder

On 19 July 2004, the directors of Monarch introduced a Share Purchase Plan offer for all shareholders of the Company.

Under the Share Purchase Plan, shareholders were able to purchase up to \$5,000 worth of Shares in Monarch at a subscription price of 16 cents per Share, being a 20% discount to the average market price of the shares in the 5 days before the date of the announcement of the Share Purchase Plan.

The Directors reserved the right to place any shortfall from the Share Purchase Plan. Any placement was to be on the same terms as the offer made to shareholders under the Share Purchase Plan.

As part of the Share Purchase Plan initiative, Monarch proposed to issue Options to those shareholders who subscribed for Shares under the Share Purchase Plan, on the basis of one (1) Option for every two (2) Shares subscribed for. The issue of these Options was subject to shareholder approval and the Company lodging a prospectus for the issue of the Options. I am pleased to confirm that shareholders approved the issue of the Options at a general meeting of the Company held on 10 September 2004.

A total of 2,561,250 Shares were issued in August 2004 pursuant to the Share Purchase Plan and a subsequent shortfall placement, raising \$409,800 for the Company. Those shareholders and investors who subscribed for Shares are now entitled to receive one Option for every two Shares subscribed for.

This Prospectus represents the offer document by which the Company will issue the Options. You do not need to take any action with respect to this Prospectus. The Options have been allotted and issued to you automatically, as part of the terms of your subscription for Shares under the Share Purchase Plan or the shortfall Placement.

Please contact the Company Secretary, Mr Frank Campagna, if you have any queries in relation to this Prospectus or the issue of Options to you.

Yours faithfully

Colin Smith Chairman

$\overline{2}$ . SUMMARY OF IMPORTANT DATES AND IMPORTANT NOTES

$2.1$ Summary of Important Dates

Lodgement of Prospectus with the ASIC and ASX	2 November 2004
Issue Date	5 November 2004
Expected date of Official Quotation of the Options	10 November 2004

$2.2$ Important Notes

This Prospectus is dated 2 November 2004 and a copy of this Prospectus was lodged with the ASIC on that date. The ASIC takes no responsibility for the content of this Prospectus.

The Expiry Date of the Prospectus is 13 months from the date of the Prospectus. No securities will be allotted or issued on the basis of this Prospectus after the Expiry Date.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus.

In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

This Prospectus is not available in electronic form.

$3.$ CORPORATE DIRECTORY

Directors

Colin L Smith Michael L Kiernan David M Macoboy Phillip P Botsis

Share Registry Computershare Investor Services Pty Limited Level₂ 45 St George's Terrace PERTH WA 6000

Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

Company Secretary Frank J Campagna

Solicitors to the Company

Steinepreis Paganin Level 14, Chancery House 37 St George's Terrace PERTH WA 6000

Registered Office

Auditors

62 Colin Street WEST PERTH WA 6005

Telephone: (08) 9481 6422 Facsimile: (08) 9481 6433

Ernst & Young Central Park 152 St George's Terrace PERTH WA 6000

$\boldsymbol{4}$ . DETAILS OF THE ISSUE

$4.1$ The Issue

By this Prospectus, the Company will issue to:

(a) all Shareholders who subscribed for Shares under the Share Purchase Plan; and
(b) Investors who subscribed for Shares under the Placement.

Options for nil consideration, on the basis of one (1) Option for every two (2) Shares issued under the Share Purchase Plan and the Placement. All of the Options will be issued on the terms set out in Section 6.1 of this Prospectus.

The Issue is not underwritten. No funds will be raised under the Issue.

$4.2$ Issue Date

The Issue Date of the Issue will be 5 November 2004 at 9.00 a.m. WST.

$4.3$ Issue of Options

Only Shareholders who subscribed for Shares under the Share Purchase Plan or Investors who subscribed for Shares under the Placement will receive Options under this Issue

You do not need to do anything to receive Options under the Issue. Your entitlement to Options has been calculated on the basis of Shares subscribed for under either the Share Purchase Plan or the Placement. The number of Options to which you are entitled to receive is shown on the enclosed Holding Statement.

4.4 ASX Listing

The Company's Shares and Options are currently traded on ASX. Application will be made within 7 days after the date of issue of this Prospectus to ASX for permission for the Options issued pursuant to this Prospectus to be listed for official quotation by ASX.

In the event that ASX does not grant permission for the official quotation of the Options within 3 months after the date of issue of this Prospectus (or such period as is varied by the ASIC), the issue of Options under this Prospectus will be void, and the Company will cancel the Options and will comply with the provisions of the Corporations Act.

$4.5$ Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. 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 law. No action has been taken to register or qualify the Options or otherwise permit a public offering of the securities the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of Applicants outside Australia to obtain all necessary approvals for the allotment and issue of Options pursuant to this Prospectus.

$4.6$ Clearing House Electronic Sub-Register System ("CHESS") and Issuer Sponsorship

Under CHESS, the Company will not issue certificates to investors. Instead, new Optionholders will receive a statement of their holdings in the Company. If an investor is broker sponsored. ASTC will send a CHESS statement.

$4.7$ Taxation

The Company does not propose to give any taxation advice and neither the Company, its Directors nor its officers accept any responsibility or liability for any taxation consequence to applicants. Applicants should consult their own professional tax advisers in regard to taxation implications of the Issue.

4.8 Risk Factors

Shareholders and Investors should be aware that a number of risks are involved in holding as an investment, securities the subject of this Prospectus. These risks are set out in Section 7 of this Prospectus and investors are urged to consider those risks carefully (and if necessary, consult their professional adviser).

The risk factors set out in Section 7, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Options. Accordingly, an investment in the Company should be considered speculative.

4.9 Privacy Act

You have provided personal information to the Company (directly or by the Company's share registry) by subscribing for Shares under the Share Purchase Plan or the Placement (as applicable). The Company collects, holds and will use that information to service your needs as a holder of securities in the Company, facilitate distribution payments and corporate communications to you as a Shareholder and carry out administration.

The information may also be used from time to time and disclosed to persons inspecting the register, bidders for your securities in the context of takeovers, regulatory bodies, including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the Company's share registry.

You can access, correct and update the personal information that we hold about you. Please contact the Company or its registry if you wish to do so at the relevant contact numbers set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules.

4.10 Enquiries

If you have any queries in relation to the Prospectus or the issue of Options to you please contact the Company Secretary, Mr Frank Campagna.

5. PURPOSE AND EFFECT OF THE ISSUE

$5.1$ Purpose of the Issue

The purpose of the Issue is to provide Options to:

Shareholders who subscribed for Shares under the Share Purchase Plan; and $(a)$
Investors who subscribed for Shares under the Placement. $(b)$

on the basis of one (1) Option for every two (2) Shares subscribed for. No funds will be raised under the Issue.

$5.2$ Effect of the Issue

The principal effect of the Issue will be to increase the number of Options on issue from 20,965,250 to 22,245,875 Options. In the event that all the Options are subsequently exercised prior to their expiry date, an amount of \$256,125 will be raised by the Company. These funds will be applied as general working capital for the Company.

As at 30 June 2004, the Company had cash resources of \$149,843 (as set out in the Company's financial statements for the year ended 30 June 2004), which will be reduced by \$10,065 being the estimated expenses of the Issue. A further \$409,800 in equity funds was raised in August 2004 pursuant to the Share Purchase Plan and Placement.

Upon completion of the Issue the capital of the Company will be:

Shares	Number
Issued capital at the date of this Prospectus	45, 432, 252
Issued pursuant to this Prospectus
Post completion of Issue	45,432,252
Options	Number

Options on issue as at the date of this Prospectus	20,965,250

Issued pursuant to this Prospectus	1,280,625

RIGHTS ATTACHING TO SHARES AND OPTIONS 6.

The following is a summary of the more significant rights attaching to Shares and This summary is not exhaustive and does not constitute a definitive Options. statement of the rights and liabilities of shareholders in the Company. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Company's Constitution, a copy of which is available for inspection at the Company's registered office during normal business hours.

$6.1$ Terms of Options

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

$(a)$ each Option entitles the holder to one Share in the Company;
$(b)$ the Options are exercisable at any time prior to 5.00 pm WST on 31 July 2006 (Expiry Date) by completing an Option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered office of the Company;
$(c)$ the Option exercise price is \$0.20 per Option;
$(d)$ an Option does not confer the right to a change in exercise price of change in the number of underlying shares over which the Option can be exercised;
$(e)$ subject to the Corporations Act, the Listing Rules and the Company's Constitution, the Options are freely transferable;
$(f)$ all Shares issued upon exercise of the Options will rank pari passu in all respects with the Company's then issued Shares. The Company will apply for quotation of the Options and all Shares issued upon exercise of the Options on ASX;
there are no participating rights or entitlements inherent in the Options and $(g)$ holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and
if at any time the issued capital of the Company is reconstructed all rights of $(h)$ an Option holder are to be changed in a manner consistent with the Corporations Act and the Listing Rules.

$6.2$ Rights attaching to Shares

The following are the more important rights, privileges and restrictions attaching to the Shares that will be issued on exercise of Options:

$(a)$ subject to any special rights or restrictions for the time being attached to any class or classes of shares in the Company (at present there are none), at a general meeting every shareholder present in person or by proxy, representative or attorney will have a vote on a show of hands and, on a poll, one vote for each share held:
$(b)$ each shareholder will be entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, accounts and other documents required to be furnished to shareholders under the Constitution or the Corporations Act;
$(c)$ subject to any special rights of the holders of any shares as to a dividend declared shall be payable on all shares in proportion to the amount paid up or credited as paid up in respect of such shares;
$(d)$ subject to the rights of holders of shares with special rights in a winding-up (at present there are none), on a winding-up of the Company all monies and property that are to be legally distributed among holders of Shares will be distributed so that, to the greatest extent possible, the amount distributed is in proportion to the shares held by shareholders respectively, irrespective of the amounts paid up or credited as paid up in respect of the Shares. At the commencement of the winding up, shares classified by ASX as restricted securities shall rank, on a return of capital, after all other shares; and
$(e)$ subject to the Constitution and the Corporations Act, shares are freely transferable.

$\overline{z}$ RISK FACTORS

$7.1$ General

An investment in the Company is not risk free and investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

$7.2$ Economic Risks

General economic conditions, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company's exploration, development and future production activities, as well as on its ability to fund those activities.

$7.3$ Market conditions

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities and in particular, resources stocks. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

$7.4$ Exploration and Evaluation Risks

The success of the Company depends on the delineation of economically mineable reserves and resources, access to required development capital, movement in the price of commodities, securing and maintaining title to the Company's exploration and mining tenements and obtaining all consents and approvals necessary for the conduct of its exploration activities.

Exploration on the Company's existing exploration and mining tenements may be unsuccessful, resulting in a reduction of the value of those tenements, diminution in the cash reserves of the Company and possible relinquishment of the exploration and mining tenements.

$7.5$ Commodity Price and Exchange Rate Risks

To the extent the Company is involved in mineral production the revenue derived through the sale of commodities may expose the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic factors.

Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets.

7.6 Environmental Risks

The operations and proposed activities of the Company are subject to State and Federal laws and regulation concerning the environment. As with most exploration projects and mining operations, the Company's activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. The Company's attempts to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws.

$7.7$ Native Title and Title Risks

Interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, the Company could lose title to or its interest in tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments.

It is also possible that, in relation to tenements which the Company has an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be affected.

The Directors closely monitor the potential effect of native title claims involving tenements in which the Company has or may have an interest.

$7.8$ Changes to Accounting Standards

For reporting periods beginning on or after 1 January 2005, the Company must comply with International Financial Reporting Standards (IFRS). These changes will affect the way certain items are reported in the Company's financial statements. The most significant changes to accounting treatment under the IFRS as it applies to the Company are likely to be related to the accounting for exploration and evaluation expenditure on mineral tenements, accounting for income tax and the recognition of equity-based compensation to employees as an expense in respect of the services received. This will result in a change to the current accounting policy, under which no expense is recognised for equity-based compensation.

8. ADDITIONAL INFORMATION

$8.1$ Continuous Disclosure Obligations

The Company is a "disclosing entity" (as defined in Section 111AC of the Corporations Act) for the purposes of Section 713 of the Corporations Act and, as such, is subject to regular reporting and disclosure obligations. Specifically, like all listed companies, the Company is required to continuously disclose any information it has to the market which a reasonable person would expect to have a material effect on the price or the value of the Company's securities. The Shares that will be issued on conversion of the Options will be in the same class of Shares that have been quoted on the official list of ASX during the 12 months prior to the issue of this Prospectus.

In general terms "transaction specific prospectuses" are only required to contain information in relation to the effect of the issue of securities on the Company and the rights attaching to the securities. It is not necessary to include general information in relation to all of the assets and liabilities, financial position, profits and losses or prospects of the issuing company.

Having taken such precautions and having made such enquires as are reasonable, the Company believes that it has complied with the general and specific requirements of ASX as applicable from time to time throughout the 12 months before the issue of this Prospectus which required the Company to notify ASX of information about specified events or matters as they arise for the purpose of ASX making that information available to the stock market conducted by ASX.

Information that is already in the public domain has not been reported in this Prospectus other than that which is considered necessary to make this Prospectus complete.

The Company, as a disclosing entity under the Corporations Act, states that:

it is subject to regular reporting and disclosure obligations; $(a)$
$(b)$ copies of documents lodged with the ASIC in relation to the Company may be obtained from, or inspected at, the offices of the ASIC; and
$(c)$ it will provide a copy of each of the following documents, free of charge, to any person on request between the date of this Prospectus and the Issue Date:
$(i)$ the annual financial report most recently lodged by the Company with the ASIC;
$(ii)$ any half year financial report lodged with the ASIC by the Company after the lodgement of the annual financial report referred to in (i) and before the lodgement of this Prospectus with the ASIC; and
$(iii)$ any continuous disclosure notices given by the body after the lodgement of that annual financial report and before the lodgement of the copy of the Prospectus with ASIC.

Copies of all documents lodged with the ASIC in relation to the Company can be inspected at the registered office of the Company during normal office hours.

For details of documents lodged with ASX since the date of lodgement of the Company's latest annual financial report refer to the table set out below.

Date	Description of announcement
01.11.04	Appendix 3B - expiry of escrow period on restricted securities
27.10.04	Quarterly activities and cash flow report

ASX maintains files containing publicly available information for all listed companies. The Company's file is available for inspection at ASX during normal business hours

$8.2$ Consents

The following consents have been given in accordance with the Corporations Act and have not been withdrawn as at the date of lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as solicitors to the Company and has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Computershare Investor Services Pty Ltd has given its written consent to being named as the Company's share registry and has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Ernst & Young has given its written consent to being named as the Company's auditors' and has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

None of the entities referred to in this Section 7.2 have authorised or caused the issue of this Prospectus and do not accept any liability to any persons in respect of any false or misleading statement in, or omission from, any part of this Prospectus.

$8.3$ Directors' Interests

Other than as set out below or elsewhere in this Prospectus, no Director nor any organisation in which such a Director is a partner or director, has or had within 2 years before the lodgement of this Prospectus with the ASIC, any interest in:

$(a)$ the promotion or formation of the Company;
$(b)$ property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the issue of Options pursuant to this Prospectus; or
the issue of Options pursuant to this Prospectus, $(c)$

and no amounts have been paid or agreed to be paid (in cash or shares or otherwise) to any Director or to any organisation in which any such Director is a partner or director, either to induce him to become, or to qualify him as, a Director or otherwise for services rendered by him or by the firm in connection with the promotion or formation of the Company.

Each Directors' interests in Shares and Options at the date of this Prospectus are:

Director	Shares	Options
Colin Smith	1,162,500	550,000
Michael Kiernan	13,030,002	6,515,001
David Macoboy	1,131,250	550,000
Phillip Botsis	1,531,250	1,000,000

The Constitution of the Company provides that the Directors may be paid for their services as Directors, a sum not exceeding such fixed sum per annum as may be determined by the Company in general meeting, where notice of the amount of the suggested increase and the maximum sum that may be paid shall have been given to shareholders in the notice convening the meeting.

In the last two years, \$131,558 in 2004 and \$83,419 in 2003 has been paid by the Company by way of remuneration for services provided by the Directors, companies associated with the Directors or their associates in their capacity as directors, consultants or advisers. Directors, companies associated with the Directors or their associates are also reimbursed for all reasonable expenses incurred in the course of conducting their duties which include, but are not in any way limited to, out of pocket expenses, travelling expenses, disbursements made on behalf of the Company and other miscellaneous expenses.

$8.4$ Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no expert nor any organisation in which such expert has an interest, has or had within 2 years before the lodgement of this Prospectus with the ASIC, any interest in:

$(a)$ the promotion or formation of the Company;
property acquired or proposed to be acquired by the Company in connection $(b)$ with its formation or promotion or the offer of Securities pursuant to this Prospectus; or
$(c)$ the offer of Securities pursuant to this Prospectus,

and no amounts have been paid or agreed to be paid (in cash or shares or otherwise) to any expert or to any firm in which any such expert is a partner, either to induce him to become, or to qualify him as, an expert or otherwise for services rendered by him or by the firm in connection with the promotion or formation of the Company.

Steinepreis Paganin act as solicitors to the Company. Steinepreis Paganin will be paid approximately \$5,000 for services provided in relation to this Prospectus.

8.5 Estimated Expenses of Issue

The estimated expenses of the Issue are as follows:

	ப
ASX Fees	2,055
ASIC Fees	2,010
Legal and other expenses	6,000
Total	\$10,065

8.6 Market Price of Fully Paid Shares

The Company is a disclosing entity for the purposes of the Corporations Act and its Shares are enhanced disclosure securities quoted on ASX.

The highest and lowest market sale prices of the Company's Shares on ASX during the 3 months immediately preceding the date of lodgement of this Prospectus with the ASIC and the respective dates of those sales were:

Highest:	\$0.22 per Share on 29 October 2004.
----------	--------------------------------------

Lowest: \$0.13 per Share on 4 August 2004.

The latest available closing sale price of the Company's Shares on ASX prior to the lodgement of this Prospectus with the ASIC was \$0.20 on 1 November 2004.

$8.7$ Directors' Consent

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented in writing to the lodgement of this Prospectus with the ASIC.

Michael Kiernan For and on behalf of Monarch Resources Limited

GLOSSARY

Applicant means a Shareholder or Investor who subscribed for Shares under either the Share Purchase Plan or the Placement (as applicable).

ASIC means the Australian Securities and Investments Commission.

ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).

Business Day means a day on which trading takes place on the stock market of ASX.

Company or Monarch means Monarch Resources Limited (ACN 100 038 266).

Constitution means the Company's Constitution as at the date of this Prospectus.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means directors of the Company at the date of this Prospectus.

Dollar or "\$" means Australian dollars.

Investor means an investor under the Placement.

Issue means the proposed issue of Options referred to in the "Details of the Issue" section of this Prospectus.

Issue Date means the date the Options will be issued under this Prospectus as set out in Section 4.2.

Listing Rules or ASX Listing Rules means the Listing Rules of ASX.

Option means an option to acquire a Share at an exercise price of \$0.20 each on or before 31 July 2006.

Placement means the placement of part of the shortfall from the Share Purchase Plan.

Prospectus means this Prospectus.

Securities means Shares and Options.

Share means a fully paid ordinary share in the capital of the Company and where the context permits means the Shares the subject of the Issue.

Shareholder means a shareholder of the Company.

Share Purchase Plan means the share purchase plan of the Company dated 19 July 2004.

WST means Western Standard Time.