ORA BANDA MINING LTD - Proxy Solicitation & Information Statement 2015

EASTERN GOLDFIELDS LIMITED

(FORMERLY SWAN GOLD MINING LIMITED)

ACN 100 038 266

NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT

TIME : 11am WST DATE : Wednesday, 30 December 2015 PLACE : 9 Mumford Place, Balcatta WA 6021

This Notice of General Meeting and Explanatory Statement should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting. Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company, Mr Michael Jardine, on +61 8 6241 1832.

CONTENTS PAGE

Notice of General Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	14
Glossary	61
Annexure A – Summary of Employee Option Plan	63
Annexure B – Terms of Financier Options	65
Annexure C – Independent Expert’s Report	66
Proxy Form

NOTICE OF GENERAL MEETING

Notice is given that a general meeting of the Shareholders of Eastern Goldfields Limited ( EGL or the Company ) (formerly known as Swan Gold Mining Limited) will be held at 9 Mumford Place, Balcatta WA 6021 on Wednesday, 30 December 2015 commencing at 11am WST to consider, and if thought fit, to pass the Resolutions set out below.

Terms used in this Notice of General Meeting and accompanying Explanatory Statement are defined in the glossary to this document.

The Explanatory Statement which accompanies and forms part of this Notice of General Meeting describes the matters to be considered at the General Meeting.

BUSINESS OF THE MEETING

1. RESOLUTION 1 – APPROVAL OF PLACEMENT

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 66,666,667 Shares at a price of $0.15 each to sophisticated and professional investors on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

2. RESOLUTION 2 – APPROVAL FOR CONVERSION OF DEBT (RELATED PARTIES)

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 10.11, and for all other purposes, approval is given for the Company to issue up to 90,390,313 Shares at a deemed price of $0.15, to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

3. RESOLUTION 3 – APPROVAL FOR CONVERSION OF DEBT (UNRELATED PARTIES)

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 7.1, and for all other purposes, approval is given for the Company to issue up to 47,371,287 Shares at a deemed price of $0.15, to the Other Lenders Nominee (or the Unrelated Other Lenders) on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

4. RESOLUTION 4 – APPROVAL FOR CONVERSION OF DCM DEBT

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purpose of Listing Rule 10.11, and for all other purposes, approval is given for the Company to issue up to 28,000,000 Shares at a deemed price of $0.15, to Investmet on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

5. RESOLUTION 5 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT AND DCM DEBT (RELATED PARTIES)

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purpose of Listing Rule 10.11, and for all other purposes, approval is given for the Company to issue up to 19,795,701 Shares at a deemed price of $0.15, to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

6. RESOLUTION 6 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT (UNRELATED PARTIES)

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purpose of Listing Rules 7.1, and for all other purposes, approval is given for the Company to issue up to 7,920,813 Shares at a deemed price of $0.15, to the Other Lenders Nominee (or Unrelated Other Lenders) on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

7. RESOLUTION 7 – APPROVAL FOR CONVERSION OF INVESTMET LOAN

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purposes of Listing Rule 10.11, and for all other purposes, approval is given for the Company to issue up to 15,487,592 Shares at an issue price of $0.15 to the parties and on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

8. RESOLUTION 8 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF INVESTMET LOAN

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

“That, for the purpose of Listing Rule 10.11, and for all other purposes, approval is given for the Company to issue up to 2,053,061 Shares at an issue price of $0.15, to the parties and on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

9. RESOLUTION 9 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. MICHAEL FOTIOS

To consider and, if thought fit, to pass, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 10.14, and for all other purposes, approval be given for the issue of a maximum of 15,000,000 Options to Executive Director Mr. Michael Fotios under the Option Plan, for the purpose of and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

10. RESOLUTION 10 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. ALAN STILL

To consider and, if thought fit, to pass, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 10.14, and for all other purposes, approval be given for the issue of a maximum of 3,600,000 Options to Non-Executive Director, Mr. Alan Still under the Option Plan, for the purpose of and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

11. RESOLUTION 11 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. CRAIG READHEAD

To consider and, if thought fit, to pass, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 10.14, and for all other purposes, approval be given for the issue of a maximum of 3,600,000 Options to Non-Executive Director, Mr. Craig Readhead under the Option Plan, for the purpose of and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

12. RESOLUTION 12 – APPROVAL TO ISSUE SHARES TO INVESTMET IN LIEU OF FEES

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That for the purposes of Listing Rule 10.11, and for all other purposes, Shareholders approve the issue of up to 87,717 Shares at a deemed price of $0.15 each to Investmet, for the purpose and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

13. RESOLUTION 13 – APPROVAL TO ISSUE SHARES TO MR MICHAEL FOTIOS IN LIEU OF FEES

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That for the purposes of Listing Rule 10.11, and for all other purposes, Shareholders approve the issue of up to 2,493,333 Shares at a deemed price of $0.15 each to Mr Michael Fotios, for the purpose and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

14. RESOLUTION 14 – APPROVAL TO ISSUE SHARES TO WHITESTONE IN LIEU OF FEES

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That for the purposes of Listing Rule 10.11, and for all other purposes, Shareholders approve the issue of up to 7,851,997 Shares at a deemed price of $0.15 each to Whitestone, for the purpose and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

15. RESOLUTION 15 – APPROVAL TO ISSUE SHARES TO DELTA IN LIEU OF FEES

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That for the purposes of Listing Rule 10.11, and for all other purposes, Shareholders approve the issue of up to 3,973,109 Shares at a deemed price of $0.15 each to Delta, for the purpose and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

16. RESOLUTION 16 – APPROVAL TO ISSUE OPTIONS TO FINANCIER

To consider and, if thought fit, to pass, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1, and for all other purposes, approval be given for the issue of up to 27,500,000 Options to a financier of the Company, for the purpose of and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

17. RESOLUTION 17 – SELECTIVE SHARE BUY-BACK

To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That, for the purposes of Section 257D(1)(a) of the Corporations Act and for all other purposes, approval is given for the Company to selectively buy-back and cancel 8,892,922 Shares currently held by Stirling Gold, on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

18. RESOLUTION 18 – APPROVAL FOR INVESTMET AND MR MICHAEL FOTIOS TO INCREASE THEIR RELEVANT INTEREST IN THE COMPANY

To consider, and if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“Conditional upon Resolutions 2, 4, 5, 7, 8, 12, 13, 14, and 15 being passed, that, for the purposes of Section 611 (Item 7) of the Corporations Act and for all other purposes, approval is given for Investmet, Mr Michael Fotios and their associates to acquire a relevant interest in the issued voting shares of the Company in excess of the threshold prescribed by Section 606(1) of the Corporations Act on the terms and conditions set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

Independent Expert’s Report: Shareholders should carefully consider the Independent Expert’s Report prepared by BDO for the purposes of shareholder approval required under Section 611 (Item 7) of the Corporations Act for this Resolution 18. The Independent Expert’s Report comments on the fairness and reasonableness of the transaction to the nonassociated shareholders in the Company. The Independent Expert has determined that the transaction is fair and reasonable to the non-associated shareholders of the Company.

19. RESOLUTION 19 – APPROVAL TO ISSUE SHARES TO 2015 LENDERS

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve converting loan agreements up to an aggregate of $10,000,000 and the issue of up to 66,666,667 Shares at a deemed price of $0.15 each upon conversion of the principal and interest of such loans to the 2015 Lenders on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

20. RESOLUTION 20 – RATIFICATION OF INTERIM PLACEMENT

To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution :

“That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders approve and ratify the issue of 10,666,667 Shares at an issue price of $0.15 each to the parties, and on the terms set out in the Explanatory Statement.”

Voting exclusions apply to this Resolution. See below.

BY ORDER OF THE BOARD OF DIRECTORS

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SHANNON COATES Company Secretary

30 November 2015

VOTING EXCLUSIONS

The following voting exclusions apply.

Resolution 1 – Approval of Placement

The Company will disregard any votes cast on Resolution 1 by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 2 – Approval for Conversion of Debt (Related Parties)

The Company will disregard any votes cast on Resolution 2 by Investmet, Delta, The Fotios Family Trust, the Other Lenders Nominee, the Related Other Lenders, and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 3 – Approval for Conversion of Debt (Unrelated Parties)

The Company will disregard any votes cast on Resolution 3 by the Other Lenders Nominee, the Unrelated Other Lenders, any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 4 – Approval for Conversion of DCM Debt

The Company will disregard any votes cast on Resolution 4 by Investmet and any person who might obtain a benefit, except a benefit solely in their capacity as a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 5 – Approval for Conversion of Interest Component of Debt and DCM Debt (Related Parties)

The Company will disregard any votes cast on Resolution 5 by Investmet, Delta, the Fotios Family Trust, the Other Lenders Nominee, the Related Other Lenders, and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 6 – Approval for Conversion of Interest Component of Debt (Unrelated Parties)

The Company will disregard any votes cast on Resolution 6 by the Other Lenders Nominee, the Unrelated Other Lenders, any person who may participate in the proposed issue and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 7 – Approval for Conversion of Investmet Loan

The Company will disregard any votes cast on Resolution 7 by Investmet, Delta, Fotios Family Trust and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 8 – Approval for Interest Component of Investmet Loan

The Company will disregard any votes cast on Resolution 8 by Investmet, Delta, Fotios Family Trust and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

– Resolutions 9, 10 and 11 Approval to issue Options to Directors

The Company will disregard any votes cast on Resolutions 9, 10 and 11 by a Director (except one who is ineligible to participate in the Option Plan) and any of their Associates. However, the Company will not disregard any votes cast on this Resolution by such a person if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

The Company will also disregard any votes cast on Resolutions 9, 10 and 11 by a member of the KMP of the Company or their closely related parties, acting as proxy for another person, where the Proxy Form does not specify how the proxy is to vote, with the exception that votes cast by the Chairman as proxy appointed in writing where the appointment expressly authorises the Chairman to exercise the proxy even though the Resolutions are connected with the remuneration of a member of the KMP of the Company, will not be excluded.

If you are a member of the KMP of the Company or a closely related party of such person (or are acting on behalf of any such person) and purport to cast a vote (other than as a proxy as permitted in the manner set out above), that vote will be disregarded by the Company (as indicated above) and you may be liable for an offence for breach of voting restrictions that apply to you under the Corporations Act.

Resolution 12 – Approval to issue Shares to Investmet in lieu of fees

The Company will disregard any votes cast on Resolution 12 by Investmet and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 13 – Approval to issue Shares to Mr Michael Fotios in lieu of fees

The Company will disregard any votes cast on Resolution 13 by Mr Michael Fotios and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

The Company will also disregard any votes cast on Resolution 13 by a member of the KMP of the Company or their closely related parties, acting as proxy for another person, where the Proxy Form does not specify how the proxy is to vote, with the exception that votes cast by the Chairman as proxy appointed in writing where the appointment expressly authorises the Chairman to exercise the proxy even though the Resolution is connected with the remuneration of a member of the KMP of the Company, will not be excluded.

Resolution 14 – Approval to issue Shares to Whitestone in lieu of fees

The Company will disregard any votes cast on Resolution 14 by Whitestone and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 15 – Approval to issue Shares to Delta in lieu of fees

The Company will disregard any votes cast on Resolution 15 by Delta and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 16 – Approval to issue Options to Financier

The Company will disregard any votes cast on Resolution 16 by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 17 – Selective Share Buy-back

The Company will disregard any votes cast on Resolution 17 by Stirling Gold and any of its Associates.

Resolution 18 – Approval for Investmet and Mr Michael Fotios to increase their relevant interest in the Company

The Company will disregard any votes cast on Resolution 18 by Investmet, Mr Michael Fotios and any of their Associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 19 – Approval to issue Shares to 2015 Lenders

The Company will disregard any votes cast on Resolution 19 by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Ordinary Securities, if the Resolution is passed and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Resolution 20 – Ratification of Interim Placement

The Company will disregard any votes cast on Resolution 20 by any person who participated in the issue and any Associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

ENTITLEMENT TO ATTEND AND VOTE

You will be entitled to attend and vote at the General Meeting if you are registered as a Shareholder of the Company as at 4.00 pm (WST) / 7.00pm (AEDT) on Monday, 28 December 2015. This is because, in accordance with the Corporations Regulations 2001 (Cth), the Board has determined that the Shares on issue at that time will be taken, for the purposes of the General Meeting, to be held by the persons who held them at that time. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

HOW TO VOTE

Voting in person

Shareholders who plan to attend the Meeting are asked to arrive at the venue 15 minutes prior to the time designated for the Meeting if possible, so that their holding may be checked against the Company’s register of members and attendances recorded.

Corporate representatives

A body corporate, which is a Shareholder or which has been appointed as a proxy, may appoint an individual to act as its corporate representative at the Meeting in accordance with section 250D of the Corporations Act. The appropriate appointment document must be produced prior to admission. A form of the certificate can be obtained from the Company’s registered office.

Voting by proxy

A Shareholder who is entitled to attend and cast a vote at the Meeting may appoint a proxy. A proxy need not be a Shareholder and may be an individual or body corporate. If a body corporate is appointed as a proxy it must appoint a corporate representative in accordance with section 250D of the Corporations Act to exercise its powers as proxy at the Meeting (see above).

A Shareholder who is entitled to cast two or more votes may appoint two proxies to attend the Meeting and vote on their behalf and may specify the proportion or a number of votes each proxy is appointed to exercise. If a Shareholder appoints two proxies and the appointment does not specify the proportion or number of the Shareholder’s votes each proxy may exercise, each proxy may exercise half of the votes (disregarding fractions). If you wish to appoint a second proxy, you may copy the enclosed proxy form or obtain a form from the Company’s registered office.

To be effective for the scheduled meeting a proxy appointment (and any power of attorney or other authority under which it is signed or otherwise authenticated, or a certified copy of that authority) must be received at an address or fax number below no later than 11am (WST) on Monday, 28 December 2015, being 48 hours before the time of the Meeting. Any proxy appointment received after that time will not be valid for the scheduled meeting.

In person at Level 1, 24 Mumford Street, Balcatta WA 6021

By post to Level 1, 24 Mumford Street, Balcatta WA 6021

By facsimile to +61 8 6241 1811

By scan and email to [email protected]

For further information concerning the appointment of proxies and the ways in which proxy appointments may be submitted, please refer to the enclosed proxy form.

Voting by attorney

A Shareholder may appoint an attorney to attend and vote on their behalf. For an appointment to be effective for the Meeting, the instrument effecting the appointment (or a certified copy of it) must be received by the Company at one of the addresses listed above for the receipt of proxy appointments at least 48 hours prior to the commencement of the Meeting.

Chairman as proxy

If you appoint a proxy, the Company encourages you to consider directing them how to vote by marking the appropriate box on each of the proposed Resolutions.

If a Shareholder entitled to vote on a Resolution appoints the Chairman of the Meeting as their proxy (or the Chairman becomes their proxy by default) and the Shareholder does not direct the Chairman how to vote on the Resolution:-

The Chairman intends to vote in favour of the Resolution, as proxy for that Shareholder on a poll; and
For Resolutions 9, 10, 11 and 13 the Shareholder will be taken to have given the Chairman express authority to vote as the Shareholder’s proxy on the relevant resolution even though the resolution is connected directly or indirectly with the remuneration of a member of the KMP for the Company and even though the Chairman is a member of the KMP, unless the Shareholder expressly indicates to the contrary in the proxy appointment.

If you do not want to put the Chairman in the position to cast your votes in favour of any of the proposed Resolutions, you should complete the appropriate box on the Proxy Form, directing your proxy to vote against, or to abstain from voting, on the Resolution.

Other members of KMP as proxy

If a Shareholder appoints a Director (other than the Chairman) or another member of KMP (or a Closely Related Party of any such person) as their proxy and does not direct the proxy how to vote on Resolutions 9, 10, 11 and 13 by marking the ‘For’, ‘Against’ or ‘Abstain’ box opposite the relevant Resolution on the proxy appointment, the proxy will not be able to exercise the Shareholder’s proxy and vote on their behalf on the relevant Resolution.

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company’s General Meeting.

The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the Resolutions in the accompanying Notice of General Meeting.

This Explanatory Statement should be read in conjunction with the Notice of General Meeting preceding this Explanatory Statement. Capitalised terms in this Explanatory Statement and not otherwise defined, are defined in the glossary to this document.

If you have any questions regarding the matters set out in this Explanatory Statement or the preceding Notice of General Meeting, please contact the Company, Mr Michael Jardine, your stockbroker or other professional adviser.

BUSINESS OF THE MEETING

1. BACKGROUND TO RESOLUTIONS 1 - 20

1.1 Recapitalisation and the business of the Company

The Company is in the process of recapitalising its balance sheet with a view to its securities being reinstated to quotation on the ASX ( Recapitalisation ). As part of the Recapitalisation, the Company intends to, among other things, raise at least $6,000,000 and up to $10,000,000 in equity (or debt/equity hybrid) funding ( Capital Raising ).

Subject to investor demand, the Company intends the Capital Raising to comprise of one or a combination of the following:

(a) a placement of Shares to professional and sophisticated investors under a prospectus in accordance with section 710 of the Corporations Act ( Placement ); and
(b) converting loan arrangements with professional and sophisticated investors ( 2015 Lenders ).

The Company expects to lodge the prospectus for the Placement with ASIC prior to the date of the Meeting.

The Company has also undertaken a separate placement of Shares at the same issue price as the Capital Raising (being $0.15) to professional and sophisticated investors to raise up to an additional $1.6 million for working capital purposes ( Interim Placement ) as announced to the ASX 27 November 2015.

The Company is also seeking to reduce its outstanding debts and strengthen its balance sheet as part of the Recapitalisation. Alongside the Placement, the converting loan arrangements with the 2015 Lenders, and conversion of the Debt and the DCM Debt, and interest accruing upon those debt facilities, the Company has been in discussions with debt providers to provide project finance and is confident that it will obtain project finance which will be available following the Recapitalisation.

Following completion of the Recapitalisation, the Board will seek to continue operations on the Davyhurst Gold Project and the Mt Ida Gold Project ( Projects ), complete refurbishment of the Davyhurst Plant, complete further regional exploration and also consider new resource project opportunities. Additionally the Company will actively seek out complementary and non-complementary assets, investments and businesses that will generate additional Shareholder value.

The strategic focus of the Company will be on the drilling up of the current resources and reserves at Davyhurst, targeting a return to production as soon as practicable. The initial tasks will therefore be on the completion of the current evaluation of the tenement assets of the Company. This will determine the exploration program required in order to firm up and expand the current estimated resource base. This exploration program will include some initial auger drilling programs across a number of tenements that have already commenced, and extend to step out drilling of known resources and previously mined open pits.

The methodical extension of the resource base, necessary to back up a robust production plan, will also include the assessment and possible acquisition of known resources in proximity of the Davyhurst Plant.

In summary the strategy will aim to firm up the current resource base, conduct exploration drilling for organic discoveries and target identified resources for acquisition before bringing the Davyhurst Plant back into operation as soon as practicable.

1.2 Capital structure of the Company

The capital structure of the Company assuming the issue of all the Shares and Options the subject of Resolutions 1 – 16, 18-20 and completion of the buy-back of Shares the subject of Resolution 17, is set out below.

Event	Shares
Shares on issue at the date of this Notice of Meeting	102,516,890
Shares to be issued under the Placement (Resolution 1) and/or to 2015 Lenders (Resolution 20)1	66,666,667
Shares to be issued upon conversion of Debt2 (Resolutions 2 and 3)	137,761,600
Shares to be issued upon conversion of DCM Debt3 (Resolution 4)	28,000,000
Shares to be issued upon conversion of Interest Component under the Debt and DCM Debt4 (Resolutions 5 and 6)	27,716,514
Shares to be issued upon conversion of Investmet Loan (Resolution 7)	15,487,592
Shares to be issued upon conversion of interest component of Investmet Loan (Resolution 8)4	2,053,061
Shares to be issued in lieu of fees (Resolutions 12 to 15)	14,406,156
Shares to be bought back from Stirling Gold (Resolution 17)	-8,892,922
Total number of Shares	385,715,558

	Options
Options on issue at the date of this Notice of Meeting	-
Options to be issued to Directors under the Option Plan (Resolutions 9 - 11)	25,800,000
Options to be issued to debt financier (Resolution 16)	27,500,000
Total number of Options	53,300,000

Notes

1 The Company intends to raise at least $6,000,000 and up to $10,000,000 from one or a combination of the Placement and the converting loan arrangements with the 2015 Lenders.
2 Investmet, Delta and Fotios Family Trust have stated their intention to convert the entire amount of the Debt if the only the minimum amount under the Capital Raising ($6 million before costs) is achieved, and to convert all of the Debt except an aggregate amount of $2 million (to be repaid in cash) if the maximum amount under the Capital Raising ($10 million before costs) is achieved. If the Company raises an amount between the minimum and the maximum, the amount of Debt to be converted will be calculated pro rata on a straight line basis.
3 Investmet has stated its intention to convert the entire amount of the DCM Debt.
4 The number of Shares to be issued on conversion of the interest components have been calculated on the basis of the entire amount of Debt, DCM Debt and Investmet Loan (plus interest) being converted as at 31 January 2016.

1.3 Control of the Company

Investmet and its Associates currently have a relevant interest in 40.2% of the Shares. Investmet and its Associates may receive Shares in accordance with the conversion of the Debt or DCM Debt (including interest), conversion of the Investmet Loan, and issue of shares in lieu of fees, as contemplated in a number of Resolutions in this Notice of Meeting.

Michael Fotios, an Executive Director and Company Secretary of the Company, is a director of Investmet and currently has voting power in excess of 20% in Investmet, and controls Investmet. Accordingly, by virtue of section 608(3)(a) and 608(3)(b) of the Corporations Act, Michael Fotios has a relevant interest in the Shares in which Investmet has a relevant interest.

Investmet and its Associates will only convert the Debt, DCM Debt and Investmet Loan (including interest) owing to it into Shares to the extent it is permitted to do so under the Corporations Act (including through a shareholder approved acquisition pursuant to Section 611 (Item 7) of the Corporations Act as contemplated under Resolution 18).

1.4 Placement under Prospectus

As detailed in section 1.1, the Company intends to prepare a prospectus in accordance with section 710 of the Corporations Act for the purposes of the Placement ( Prospectus ). The Prospectus will contain an offer to investors of up to approximately 66,666,667 Shares at $0.15 per Share to raise up to $10,000,000 before costs.

The Placement is open to investors with a registered address in Australia and New Zealand.

If you are considering applying for Shares, you should read the Prospectus in its entirety to make an informed decision on the prospects of the Company and the rights attaching to the Shares.

Existing Shareholders of the Company are advised to read the Prospectus and contact the Company on +61 8 6241 1832 to express an interest in subscribing for Shares under the Placement.

The Prospectus will contain full details of the Placement and is expected to be released over the coming weeks prior to the date of the Meeting.

2. RESOLUTION 1 – APPROVAL OF PLACEMENT

2.1 Background

As detailed in section 1.1, the Company is intending to raise a minimum of $6,000,000 and a maximum of $10,000,000 by one or a combination of the Placement and converting loan agreements with the 2015 Lenders (see Resolution 19).

Accordingly, Resolution 1 seeks Shareholder approval for the issue of up to 66,666,667 under the Placement at an issue price of $0.15 per Share.

The Shares proposed to be issued, for which approval is sought under Resolution 1, comprise approximately 65% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

2.2 Listing Rule 7.1

Listing Rule 7.1 provides that, unless an exemption applies, a company must not, without prior approval of shareholders, issue or agree to issue Equity Securities if the Equity Securities will in themselves or when aggregated with the Equity Securities issued by the company during the previous 12 months, exceed 15% of the number of Ordinary Securities on issue at the commencement of that 12 month period.

The issue of the Shares pursuant to Resolution 1 will (if the maximum amount is issued) exceed the 15% limit and therefore requires the approval of Shareholders.

2.3 Information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided for approval under Listing Rule 7.1.

(a) Maximum number of securities to be issued

The Company intends to issue up to 66,666,667 Shares.

(b) Date of issue

The Shares will be issued as soon as possible but in any case no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The Shares will be issued at a price of $0.15 per Share.

(d) Identity of persons to whom securities will be issued
The Shares will be issued to sophisticated and professional investors (as those terms are defined in the Corporations Act).

None of these subscribers will be related parties of the Company.

(e) Terms of the securities

The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing Shares on issue. The Company will apply to ASX for official quotation of the Shares.

(f)

Use of funds

The intended use of funds raised (based on a minimum and maximum scenario) is set out below:

Use of funds	$6,000,000	$10,000,000
Reserve Definition Drilling	-	$750,000
Plant Refurbishment	-	$750,000
Working Capital	$1,474,562	1,734,562
Repayment to Stirling under Stirling Settlement Deed (Resolution 17)1	$350,000	$350,000
Repayment to creditors associated with Mr Michael Fotios	$750,0001	$2,750,0002
Repayment to third party trade creditors3	$3,065,438	$3,065,438
Cost of Placement	$360,000	$600,000
Total	$6,000,000	$10,000,000

Notes

1 As outlined in the Explanatory Statement to Resolution 17, the Company and Stirling entered into the Stirling Settlement Deed whereby the Company would, among other things, pay an amount of $1,479,000 to Stirling in satisfaction of the Stirling Debt. The Company has made part payment of the settlement sum, and Mr Michael Fotios has paid Stirling an amount of $750,000 on behalf of the Company in part payment of the settlement sum. Upon completion of the Placement (in both the minimum and maximum raising scenarios) make a payment of $350,000 to Stirling, and repay Mr Fotios $750,000, both in connection with the Stirling Debt.
2 Investmet, Delta and Fotios Family Trust (being entities associated with Mr Fotios) have stated their intention to convert the entire amount of the Debt if the only the minimum amount under the Capital Raising ($6 million before costs) is achieved, and to convert all of the Debt except an aggregate amount of $2 million (to be repaid in cash) if the maximum amount under the Capital Raising ($10 million before costs) is achieved. If the Company raises an amount between the minimum and the maximum, the amount of Debt to be converted will be calculated pro rata on a straight line basis.
3 This repayment relates to amount owing to trade creditors in the ordinary course of the Company's business and is not related to the Debt, DCM Debt, Stirling Debt or Investmet Loan.

(g) Voting exclusion statement

A voting exclusion statement for Resolution 1 is included in the Notice.

2.4 Board recommendation

The Board recommends that Shareholders vote in favour of Resolution 1. The Board considers that through the Placement the Company will make a significant step towards a substantial recapitalisation and re-quotation of the Company’s Shares on the ASX.

3. RESOLUTION 2 - APPROVAL FOR CONVERSION OF DEBT (RELATED PARTIES)

3.1 Background

As set out in the Company’s Notice of 2013 Annual General Meeting, Investmet, Delta, Fotios Family Trust and Other Lenders Nominee made payments on behalf of EGL totalling $20,664,240 in relation to certain debts owed by EGL.

Resolution 2 seeks Shareholder approval for the issue of up to 90,390,313Shares in aggregate to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) upon conversion of the principal amount of the Debt owing to it (assuming the parties elect to convert all of the Debt owing to it).

Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee have indicated their intention to convert the entire amount of the Debt (plus accrued interest) owing to it. Details regarding the circumstances in which the Debt may be converted are set out in section 4.10 of the Company’s Notice of 2013 Annual General Meeting which was lodged with the ASX on 4 June 2014 and is available on the ASX website.

As this resolution proposes the issue of Shares to related parties, namely Investmet Delta, Fotios Family Trust, or the Other Lenders Nominee for the benefit of the Related Other Lenders, this resolution seeks shareholder approval for the issue of Shares upon conversion of the Debt to these related parties for the purpose of Listing Rule 10.11.

The Shares proposed to be issued, for which approval is sought under Resolution 2, comprise approximately 86.81% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

3.2 Listing Rule 10.11

Listing Rule 10.11 provides a general restriction, subject to specified exceptions, against issuing Equity Securities to a related party without shareholder approval.

Shareholder approval is therefore sought under Listing Rule 10.11 as Resolution 2 proposes the issue of Shares to related parties of the Company, namely:

(a) Investmet, which is a related party by virtue of being an entity which controls the Company; and
(b) Delta, which is a related party by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director; and
(c) The Fotios Family Trust, which is a related party by virtue of Mr Michael Fotios being the trustee of the trust; and
(d) the Other Lenders Nominee, who holds a portion of the Debt for the benefit of the Related Other Lenders,

therefore satisfying the related party tests set out in section 228 of the Corporations Act.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

3.3 Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11.

(a) Name of persons to receive securities and maximum number of securities to be issued

The related parties to receive Shares and the number of Shares to be issued are contained in the table below.

Related party	Proportion of Debt held	Maximum number of Shares to be issued
Investmet	$4,858,547	32,390,3131
Delta	$6,900,000	46,000,0002
The Fotios Family Trust	$1,800,000	12,000,0003
Total	$13,558,547	90,390,313

Notes

1 Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company. Investmet and its Associates will only convert up to so much of the Debt owing to it to the extent permitted by the Corporations Act.
This figure represents the number of Shares that may be issued to Delta on conversion of the aggregate Debt held by Delta in its own name and the Shares that may be issued to the Other Lenders Nominee (for the benefit of Delta) or to Delta as a member of the Debt Syndicate.
This figure represents the number of Shares that may be issued to the Fotios Family Trust on conversion of the aggregate Debt held by the Fotios Family Trust in its own name and the Shares that may be issued to the Other Lenders Nominee (for the benefit of the Fotios Family Trust) or to the Fotios Family Trust as a member of the Debt Syndicate.
(b) Date of issue

The Shares to be issued to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) the subject of Resolution 2 will be issued on a date no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

(c)

Relationship with the Company

The relationship of the related parties with the Company is outlined in section 3.2 above.

(d) Issue price

The deemed issue price of Shares issued on conversion will be $0.15 per Share.

(e)
Terms of issue

(f) Voting exclusion statement

A voting exclusion statement for Resolution 2 is included in the Notice.

(g) Use of funds

No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the principal amount of the Debt but assuming conversion of the entire amount of the Debt owed to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (for the benefit of the Related Other Lenders), the liability of approximately $13,558,547owed by the Company will be extinguished.

3.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. Section 229 of the Corporations Act includes as an example of a “financial benefit”, the issuing of securities or the granting of an option to a related party.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

One of the nominated exceptions to the prohibition includes the provision of a financial benefit on terms that would be reasonable in the circumstances if the Company and the related party were dealing at arm’s length (or on terms less favourable than arm’s length).

Given that Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) will be issued Shares pursuant to the conversion of the Debt on the same arm’s length terms as parties who are not related parties of the Company (pursuant to Resolution 3), the Board considers that Chapter 2E of the Corporations Act does not apply.

3.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 2. The Directors consider that the proposed conversion of the Debt will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

4. RESOLUTION 3 - APPROVAL FOR CONVERSION OF DEBT (UNRELATED PARTIES)

4.1 Background

Resolution 3 seeks Shareholder approval for the issue of up to 47,371,287 Shares in aggregate to the Other Lenders Nominee (or the Unrelated Other Lenders) upon conversion of the principal amount of the Debt owing to it (assuming the Other Lenders Nominee elects to convert all of the Debt owing to it).

The Other Lenders Nominee has indicated its intention to convert the entire amount of the Debt (plus accrued interest) owing to it (for the benefit of the Unrelated Other Lenders). Details regarding the circumstances in which the Debt may be converted are set out in section 4.10 of the Company’s Notice of 2013 Annual General Meeting which was lodged with the ASX on 4 June 2014 and is available on the ASX website.

The Shares proposed to be issued, for which approval is sought under Resolution 3, comprise approximately 46.2% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

4.2 Listing Rule 7.1

The issue of the Shares pursuant to Resolution 3 will (if the maximum amount is issued) exceed the 15% limit and therefore requires the approval of Shareholders.

Accordingly, approval is being sought under Listing Rule 7.1 for the issue of Shares to the Other Lenders Nominee (or the Unrelated Other Lenders).

4.3 Information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided for approval under Listing Rule 7.1.

(a) Maximum number of securities to be issued

The maximum number of Shares in aggregate to be issued on conversion of the Debt owing to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders) is 47,371,287.

(b) Date of issue

The Shares to be issued to the Other Lenders Nominee (or the Unrelated Other Lenders) the subject of Resolution 3 will be issued on a date no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The deemed issue price of Shares issued on conversion of the Debt will be $0.15 per Share.

(d) Identity of persons to whom securities will be issued
The Shares will be issued to the Other Lenders Nominee (or the Unrelated Other Lenders).
(e) Terms of the securities

(f) Use of funds

No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the principal amount under the Debt but assuming conversion of the entire amount of the Debt owed to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders) the subject of this Resolution 3, the liability of approximately $7,105,693owed by the Company will be extinguished.

(g) Voting exclusion statement

A voting exclusion statement for Resolution 3 is included in the Notice.

4.4 Board recommendation

The Directors recommend that Shareholders vote in favour of Resolution 3. The Directors consider that the proposed conversion of the Debt will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

5. RESOLUTION 4 - APPROVAL FOR CONVERSION OF DCM DEBT

5.1 Background

On 27 March 2013 Investmet made a payment of $4.2 million to DCM in consideration of DCM assigning to Investmet, a debt owed by EGL to DCM ( DCM Debt ). Further details regarding the DCM Debt are set out in Section 4 of the Notice of 2013 Annual General Meeting which was lodged with the ASX on 4 June 2014 and is available on the ASX website.

Resolution 4 seeks Shareholder approval for the issue of 28,000,000 Shares in aggregate to Investmet upon conversion of the principal amount of the DCM Debt.

Investmet has indicated its intention to convert the entire DCM Debt, subject to compliance with the Corporations Act.

The Shares proposed to be issued, for which approval is sought under Resolution 4, comprise approximately 27.31% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of the Interim Placement, and Resolutions or contemplated in this Notice).

5.2 Listing Rule 10.11

Listing Rule 10.11 provides a general restriction, subject to specified exceptions, against issuing Equity Securities to a related party without shareholder approval.

Shareholder approval is therefore required under Listing Rule 10.11 as Resolution 4 proposes the issue of Shares to a related party of the Company, namely Investmet, who is a related party of the Company by virtue of being an entity which controls the Company, therefore satisfying the related party test set out in section 228 of the Corporations Act.

As Shareholder approval is being sought under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

5.3 Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11.

(a) Name of person to receive securities

The Shares will be issued to Investmet (or its nominee).

(b) Maximum number of securities to be issued
The maximum number of Shares to be issued to Investmet (or its nominee) is 28,000,000.

Investmet will only convert up to so much of the DCM Debt owing to it to the extent permitted by the Corporations Act (including through a shareholder approved acquisition pursuant to Section 611 (Item 7) of the Corporations Act as contemplated under Resolution 18)..

The Shares to be issued to Investmet on conversion of the DCM Debt will be issued on a date no later than 1 month after the date of the Meeting (or such later

date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

(d) Relationship with the Company

Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company and is an entity which controls the Company and as such is a related party of the Company.

(e) Issue price

The deemed issue price of Shares issued on conversion of the DCM Debt will be $0.15 per Share.

(f) Terms of issue

(g) Voting exclusion statement

A voting exclusion statement for Resolution 4 is included in the Notice.

(h) Use of funds No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the principal amount of the DCM Debt but assuming conversion of the entire amount of the DCM Debt owed to Investmet, the liability of approximately $4,200,000 owed by the Company will be extinguished.

5.4 Corporations Act

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

Given that Investmet will be issued Shares pursuant to the conversion of the DCM Debt on the same arm’s length terms as parties who are not related parties of the Company, the Board considers that Chapter 2E of the Corporations Act does not apply.

5.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 4. The Directors consider that the proposed conversion of the DCM Debt will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

6. RESOLUTION 5 - APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT AND DCM DEBT (RELATED PARTIES)

6.1 Background

As detailed in section 4.10 of the Notice of 2013 Annual General Meeting, which was lodged with the ASX on 4 June 2014 and is available on the ASX website , the Company entered into the Facility Agreement under which Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee may elect to have the principal component and/or the interest component of the Debt and DCM Debt repaid by the issue of Shares.

Resolution 5 seeks Shareholder approval for the issue of 19,795,701 Shares upon conversion of the interest component of the Debt and DCM Debt ( Interest Component ) owing to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (for the benefit of the Related Other Lenders).

In accordance with the Facility Agreement, interest has been accruing on the Debt and DCM Debt since 1 July 2013, at an interest rate of 6% per annum. Interest has been capitalised on the interest payment date (being the last day of an interest period, being a period which is 30 days or any other period that Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee agree with the Company) and added to the amounts owing under the Facility Agreement, unless the Company elects to make an interest payment in cash on an interest payment date.

The maximum amount of interest accrued on the Debt and DCM Debt owing to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (for the benefit of the Related Other Lenders) the subject of this Resolution 5 will be $2,969,355, calculated on the basis of the entire amount of Debt and DCM Debt (plus interest) owing to those parties being converted as at 31 January 2016 ( Maturity Date ).

Details regarding the circumstances in which the Interest Component may be converted are set out in section 4.10 of the Notice of 2013 Annual General Meeting.

As this resolution proposes the issue of Shares to related parties, namely Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee for the benefit of the Related Other Lenders, this resolution seeks shareholder approval for the issue of Shares upon conversion of the Interest Component to these related parties for the purpose of Listing Rule 10.11.

Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee have each indicated their intention to convert the entire Interest Component owing to them, subject to compliance with the Corporations Act.

The Shares proposed to be issued, for which approval is sought under Resolution 5, comprise approximately 19.3% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

6.2 Listing Rule 10.11

Listing Rule 10.11 provides a general restriction, subject to specified exceptions, against issuing Equity Securities to a related party without shareholder approval.

Shareholder approval is therefore sought under Listing Rule 10.11 as Resolution 5 proposes the issue of Shares to related parties of the Company, namely:

(a) Investmet, who is a related party by virtue of being an entity which controls the Company;
(b) Delta, which is a related party by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director; and
(c) The Fotios Family Trust, which is a related party by virtue of Mr Michael Fotios being the trustee of the trust;

(d) the Other Lenders Nominee, who holds a portion of the Debt for the benefit of the Related Other Lenders,

therefore satisfying the related party test set out in section 228 of the Corporations Act.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

6.3 Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11.

(a) Name of persons to receive securities and maximum number of securities to be issued

The related parties to receive Shares and the number of Shares to be issued are contained in the table below.

Related party	Proportion of Interest Component held	Shares to be issued
Investmet	$1,514,653	10,097,6871
Delta	$1,153,729	7,691,5272
The Fotios Family Trust	$300,973	2,006,4873
Total	$2,969,355	19,795,701

Notes

1 Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company. Investmet, Delta and Fotios Family Trust will only convert up to so much of the Interest Component owing to it to the extent permitted by the Corporations Act.
Delta holds Debt both in its own name and as a member of the Debt Syndicate. This figure represents the number of Shares that may be issued to Delta on conversion of the interest payable in respect of the aggregate Debt held by Delta in its own name and by the Other Lenders Nominee for the benefit of Delta as a member of the Debt Syndicate.
The Fotios Family Trust holds Debt both in its own name and as a member of the Debt Syndicate This figure represents the number of Shares that may be issued to the Fotios Family Trust on conversion of the interest payable in respect of the aggregate Debt held by the Fotios Family Trust in its own name and by the Other Lenders Nominee for the benefit of the Fotios Family Trust as a member of the Debt Syndicate.

(b) Date of issue

The Shares to be issued to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (or the Related Other Lenders) will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The relationship of the related parties with the Company is outlined in section 6.2 above.

(d) Issue price

The deemed issue price of Shares issued on conversion will be $0.15 per Share.

(e) Terms of issue The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing Shares on issue.
(f) Voting exclusion statement

A voting exclusion statement for Resolution 5 is included in the Notice.

(g) Use of funds No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the Interest Component but assuming conversion of the possible maximum amount of the Interest Component owed to Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (for the benefit of the Related Other Lenders), the liability of approximately $2,969,355 which may be owed by the Company at the Maturity Date will be extinguished.

6.4 Corporations Act

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

Given that Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee (for the benefit of the Related Other Lenders) will be issued Shares pursuant to the conversion of the Interest Component on the same arm’s length terms as parties who are not related parties of the Company (pursuant to Resolution 6), the Board considers that Chapter 2E of the Corporations Act does not apply.

6.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 5. The Directors consider that the proposed conversion of the Interest Component will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

7. RESOLUTION 6 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT (UNRELATED PARTIES)

7.1 Background

Resolution 6 seeks Shareholder approval for the issue of 7,920,813 Shares upon conversion of the interest component of the Debt ( Interest Component ) owing to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders).

In accordance with the Facility Agreement, interest has been accruing on the Debt since 1 July 2013, at an interest rate of 6% per annum. Interest has been capitalised on the interest payment date (being the last day of an interest period, being a period which is 30 days or any other period that Investmet, Delta, Fotios Family Trust and the Other Lenders Nominee agree with the Company) and added to the amounts owing under the Facility Agreement, unless the Company elects to make an interest payment in cash on an interest payment date.

The maximum amount of interest accrued on the Debt owing to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders) the subject of this Resolution 6 will be $1,188,122, calculated on the basis of the entire amount of Debt (plus interest) owing to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders) being converted as at 31 January 2016 ( Maturity Date ).

Details regarding the circumstances in which the Interest Component may be converted are set out in section 4.10 of the Notice of 2013 Annual General Meeting.

The Other Lenders Nominee has indicated its intention to convert the entire Interest Component owing to it for the benefit of the Unrelated Other Lenders, subject to compliance with the Corporations Act.

The Shares proposed to be issued, for which approval is sought under Resolution 6, comprise approximately 7.73% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of the Interim Placement, and Resolutions or contemplated in this Notice).

7.2 Listing Rule 7.1

The issue of the Shares pursuant to Resolution 6 will (if the maximum amount is issued), when aggregated with other Equity Securities issued during the previous 12 months, exceed the 15% limit and therefore requires the approval of Shareholders.

Accordingly, approval is being sought under Listing Rule 7.1 for the issue of Shares to the Other Lenders (or the Unrelated Other Lenders).

7.3 Information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided for approval under Listing Rule 7.1.

(a) Maximum number of securities to be issued
Assuming that the Company does not elect to make any interest payment in cash on an interest payment date, the maximum number of Shares to be issued on conversion of the Interest Component owing to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders) is 7,920,813 Shares.
(b) Date of issue
The Shares to be issued to the Other Lenders Nominee (or the Unrelated Other Lenders) will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The deemed issue price of Shares issued on conversion of the Interest Component will be $0.15 per Share.

(d) Identity of persons to whom securities will be issued
The Shares will be issued to the Other Lenders Nominee (or the Unrelated Other Lenders).
(e) Terms of the securities
The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing Shares on issue.
(f) Use of funds
No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the Interest Component but assuming conversion of the possible maximum amount of the Interest Component owed to the Other Lenders Nominee (for the benefit of the Unrelated Other Lenders), the liability of approximately $1,188,122 which may be owed by the Company at the Maturity Date will be extinguished.
(g) Voting exclusion statement

A voting exclusion statement for Resolution 6 is included in the Notice.

7.4 Board recommendation

The Directors recommend that Shareholders vote in favour of Resolution 6. The Directors consider that the proposed conversion of the Interest Component will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

8. RESOLUTION 7 - APPROVAL FOR CONVERSION OF INVESTMET LOAN

8.1 Background

On 1 November 2014, the Company entered into an unsecured loan facility agreement with Investmet, Delta and Fotios Family Trust for an aggregate amount of approximately $2.5 million with the funds under the facility to be used for general corporate purposes ( Investmet Loan ).

Under the terms of the Investmet Loan agreement, the loan may at the lenders’ election be converted into shares at a price which is the lower of $0.15, and the issue price of Shares under the first equity fundraising undertaken by the Company following the date of the agreement to raise at least $3 million.

The lenders have elected to convert the Investmet Loan.

Resolution 7 seeks Shareholder approval for the issue of up 15,487,592 Shares to the lenders of the Investmet Loan, upon conversion of the principal amount of the Investmet Loan owing to them.

As this Resolution proposes the issue of Shares to related parties, namely Investmet, Delta and Fotios Family Trust, this resolution seeks shareholder approval for the issue of Shares upon conversion of the Investmet Loan to the lenders for the purpose of Listing Rule 10.11.

The Shares proposed to be issued, for which approval is sought under Resolution 7, comprise approximately 17.1% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

8.2 Listing Rule 10.11

Listing Rule 10.11 provides a general restriction, subject to specified exceptions, against issuing Equity Securities to a related party without shareholder approval.

Shareholder approval is therefore sought under Listing Rule 10.11 as Resolution 7 proposes the issue of Shares to related parties of the Company, namely:

(a) Investmet, which is a related party by virtue of being an entity which controls the Company; and
(b) Delta, which is a related party by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director; and
(c) Fotios Family Trust, which is a related party by virtue of Mr Michael Fotios being the trustee of the trust,

therefore satisfying the related party tests set out in section 228 of the Corporations Act.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

8.3 Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11.

(a) Name of persons to receive securities and maximum number of securities to be issued

The related parties to receive Shares and the number of Shares to be issued are contained in the table below.

Related party	Proportion of Investmet Loan (principal)	Shares to be issued
Investmet	$1,000,000.00	6,666,6671
Delta	$735,843.16	4,905,621
The Fotios Family Trust	$587,295.60	3,915,304
Total	$2,323,138.76	15,487,592

Notes

Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company. Investmet will only convert up to so much of the Investmet Loan owing to it to the extent permitted by the Corporations Act.
(b) Date of issue

The Shares to be issued to the related parties the subject of Resolution 7 will be issued on a date no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The relationship of the related parties with the Company is outlined in section 8.2 above.

(d) Issue price

The issue price of Shares to be issued on conversion of the Investmet Loan will be $0.15 per Share.

(e) Terms of issue
The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue.
(f) Voting exclusion statement

A voting exclusion statement for Resolution 7 is included in the Notice.

(g) Use of funds No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the principal amount of the Investmet Loan but assuming conversion of the entire amount of the Investmet Loan, the liability of $2,323,138 owed by the Company will be extinguished.

8.4 Corporations Act

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

Given that the related parties will be issued Shares pursuant to the conversion of the Investmet Loan on the same arm’s length terms as parties who are not related parties of the Company, the Board considers that Chapter 2E of the Corporations Act does not apply.

8.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 7. The Directors consider that the proposed conversion of the Investmet Loan will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

9. RESOLUTION 8 - APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF INVESTMET LOAN

9.1 Background

As detailed in section 8.1 , the Company entered into an unsecured loan facility agreement with Investmet. Delta and Fotios Family Trust under which the lenders may elect to have the principal component and/or the interest component of the Investmet Loan repaid by the issue of Shares.

The lenders have elected to convert the principal and interest component of the Investmet Loan.

Resolution 8 seeks Shareholder approval for the issue of 2,053,061 Shares upon conversion of the interest component of the Investmet Loan owing to the lenders.

In accordance with the Investmet Loan agreement, interest has been accruing on the Investmet Loan since 1 November 2014, at an interest rate of 10% per annum. Interest has been capitalised on the last day of each month and added to the amounts owing under the Investmet Loan agreement.

The maximum aggregate amount of interest accrued on the Investmet Loan owing to the lenders the subject of this Resolution 8 will be $307,959, calculated on the basis of the entire amount of the Investmet Loan (plus interest) owing being converted as at 31 January 2016.

As this resolution proposes the issue of Shares to related parties, namely Investmet, Delta and Fotios Family Trust, this resolution seeks shareholder approval for the issue of Shares upon conversion of the interest component of the Investmet Loan to the lenders for the purpose of Listing Rule 10.11.

The Shares proposed to be issued, for which approval is sought under Resolution 8, comprise approximately 2% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

9.2 Listing Rule 10.11

Listing Rule 10.11 provides a general restriction, subject to specified exceptions, against issuing Equity Securities to a related party without shareholder approval.

Shareholder approval is therefore sought under Listing Rule 10.11 as Resolution 8 proposes the issue of Shares to related parties of the Company, namely:

(a) Investmet, which is a related party by virtue of being an entity which controls the Company; and
(b) Delta, which is a related party by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director; and
(c) Fotios Family Trust, which is a related party by virtue of Mr Michael Fotios being the trustee of the trust,

therefore satisfying the related party tests set out in section 228 of the Corporations Act.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

9.3 Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11.

(a) Name of persons to receive securities and maximum number of securities to be issued

The related parties to receive Shares and the number of Shares to be issued are contained in the table below.

Related party	Proportion of interest component of Investmet Loan	Shares to be issued
Investmet	$132,562	883,7451
Delta	$97,545	650,297
The Fotios Family Trust	$77,853	519,019
Total	$307,959	2,053,061

Notes

1 Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company. Investmet will only convert up to so much of the Investmet Loan owing to it to the extent permitted by the Corporations Act.

(b) Date of issue

The Shares to be issued to the related parties the subject of Resolution 8 will be issued on a date no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

The relationship of the related parties with the Company is outlined in section 9.2 above.

(d) Issue price

The issue price of Shares to be issued on conversion will be $0.15 per Share.

(e) Terms of issue
The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue.
(f) Voting exclusion statement

A voting exclusion statement for Resolution 8 is included in the Notice.

(g) Use of funds
No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the interest component of the Investmet Loan but assuming conversion of the entire amount of the Investmet Loan owed to Investmet, the liability of approximately $307,959 owed by the Company will be extinguished.

9.4 Corporations Act

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

9.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 8. The Directors consider that the proposed conversion of the Investmet Loan will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX.

10. RESOLUTIONS 9 - 11 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR MICHAEL FOTIOS, MR ALAN STILL AND MR CRAIG READHEAD

10.1 Background

The Directors considered that it was desirable to establish an employee equity incentive plan in order to:

(a) reward employees of the Company;
(b) assist in the retention and motivation of employees of the Company; and
(c) provide an incentive to employees of the Company to grow shareholder value by providing them with an opportunity to receive an ownership interest in the Company.

Accordingly, on 30 May 2014, the Directors adopted the Employee Option Plan ( Option Plan ) under which Directors, executives and other employees may be offered the opportunity to be granted Options.

The Option Plan is designed to provide incentives to the employees and Directors of the Company and to recognise their contribution to the Company’s success. Under the current circumstances the Directors consider that the Option Plan is a cost effective and efficient incentive for the Company as opposed to alternative forms of incentives such as increased cash based remuneration. To enable the Company to secure employees and Directors who can assist the Company in achieving its objectives, it is necessary to provide remuneration and incentives to such personnel. The Option Plan is designed to achieve this objective, by encouraging continued improvement in performance over time and by encouraging personnel to acquire and retain shareholdings in the Company.

As Directors of the Company may receive securities in the Company under the Option Plan, prior shareholder approval will therefore be required before a Director or related party of the Company can participate in an issue of Options under the Option Plan.

Accordingly, Shareholders are being asked to approve Resolutions 9 - 11 to allow Options to be issued under the Option Plan to Messrs Michael Fotios, Alan Still, and Craig Readhead, as set out below.

The Board has determined that the grant of Options under the Option Plan to Messrs Fotios, Still and Readhead is an appropriate form of long term incentive based remuneration. The Board considers that Messrs Fotios, Still and Readhead are essential to the operation of the Company’s ongoing business.

Accordingly, the Company is proposing, subject to obtaining Shareholder approval, to issue Options under the Option Plan up to the maximum amounts as set out in the table in section 10.3 below.

In determining the remuneration packages of Messrs Fotios, Still, and Readhead, including this proposed issue of Options, the Board considered the scope of their roles, the business challenges facing the Company and market practice for the remuneration of executive officers in positions of similar responsibility.

10.2 Regulatory requirements

Resolutions 9 - 11 seek Shareholder approval in order to comply with the requirements of Listing Rule 10.14.

Listing Rule 10.14 provides that a company must not issue securities to a director of the company under an employee incentive scheme unless the issue has been approved by holders of Ordinary Securities. If approval is given by Shareholders under Listing Rule 10.14, separate Shareholder approval is not required under Listing Rule 10.11 (which provides a restriction against issuing securities to directors without shareholder approval).

Under Resolutions 9 - 11, the Company seeks approval from Shareholders for the issue of Options to the Directors, Messrs Fotios, Still and Readhead who by virtue of their position as Directors are related parties of the Company.

10.3 Information required by Listing Rule 10.15A

In compliance with the information requirements of Listing Rule 10.15A for the purposes of approval under Listing Rule 10.14, Shareholders are advised of the following information:

(a) Relationship with the Company

The Options are proposed to be issued to Messrs Fotios, Still and Readhead, each a Director and is, as such, a related party of the Company.

(b) Maximum number of securities to be issued
The maximum number of Options that may be acquired by each Director under the Option Plan pursuant to Resolutions 9 - 11, and the terms of the Options is set out below:

Director	Number of Options	Number of Options	Total
	Exercisable at $0.168 expiring 2 years after date of issue	Exercisable at $0.189 expiring 4 years after date of issue
Mr. Michael Fotios	7,500,000	7,500,000	15,000,000
Mr. Alan Still	1,800,000	1,800,000	3,600,000
Mr. Craig Readhead	1,800,000	1,800,000	3,600,000
TOTAL			25,800,000

The exercise price of an Option may be paid using the Cashless Exercise Facility (see item 5 of Annexure A for further details).

Each Option will be granted to the Directors under the Option Plan for nil consideration.

(d) Previous issues of securities

The Company has not previously issued any securities under the Option Plan.

(e) Eligible persons
All Directors, senior executives, employees, contractors, or consultants of the Company or an associated body corporate are eligible to participate in the Option Plan.
(f) Voting exclusion statements

Voting exclusion statements for Resolutions 9 - 11 are included in the Notice.

(g) Loans in relation to acquisition of Options
No loans are being provided by the Company for the acquisition of Options under the Option Plan.

(h) Annual Report disclosure

Details of any Options issued under the Option Plan will be published in each annual report of the Company relating to a period in which Options have been issued, and that approval for the issue of Options was obtained under Listing Rule 10.14.

Any additional persons who become entitled to participate in the Option Plan after the Resolutions are approved and who are not named in this Notice will not participate until approval is obtained under Listing Rule 10.14 (if required).

(i) Issue date

The latest date that the Company will issue Options under Resolutions 9 - 11 will be no later than 3 years after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Options on the same date, however the exact date of issue is unknown at this stage.

The Company contemplates that Shares issued upon vesting and exercise of Options may be issued to Directors in more than one tranche.

10.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of “financial benefits” to “related parties” by a public company. Chapter 2E prohibits a public company from giving a financial benefit to a related party of the public company unless either:

(a) the giving of the financial benefit falls within one of the nominated exceptions to the provisions; or
(b) prior shareholder approval is obtained to the giving of the financial benefit.

A “related party” is widely defined under the Corporations Act, and includes the directors of the company under section 228 of the Corporations Act. As such, the Directors of the Company are related parties of the Company for the purposes of section 208 of the Corporations Act.

A “financial benefit” is construed widely and in determining whether a financial benefit is being given, section 229 of the Corporations Act requires that any consideration that is given is disregarded, even if the consideration is adequate. It is necessary to look at the economic and commercial substance and the effect of the transaction in determining the financial benefit. Section 229 of the Corporations Act includes as an example of a financial benefit, the issuing of securities or the granting of an option to a related party.

The issue of the Options under Resolutions 9 - 11 constitute the provision of a financial benefit to a related party.

One of the nominated exceptions to the prohibition includes the provision of a financial benefit that constitutes reasonable remuneration to a related party as an officer or employee.

The Board considers that the proposed issue of Options under the Option Plan to Directors constitutes “reasonable remuneration” within the meaning of section 211 of the Corporations Act and therefore Shareholder approval is not required for the giving of the financial benefit to the Directors constituted by the issue of the Options.

10.5 Board recommendation

The Directors (other than the relevant Director the subject of the relevant Resolution) recommend that Shareholders vote in favour of Resolutions 9 - 11 on the basis that the grant of the Options will allow the Company to incentivise the Directors by aligning their interests with that of the Company, as well as preserving the Company’s limited cash reserves.

11. RESOLUTION 12 – APPROVAL TO ISSUE SHARES TO INVESTMET IN LIEU OF FEES

11.1 Background

Investmet provides a number of corporate services to the Company. As at the date of this Notice, the Company owes Investmet approximately $13,158 in consideration for the provision of such services.

The Company has agreed to issue 87,717 Shares to the value of $13,158 calculated on the basis of an indicative price of $0.15 per Share to Investmet in consideration for providing corporate services to the Company. Investmet is a related party of the Company by virtue of being an entity which controls the Company and therefore satisfying the related party test set out in section 228 of the Corporations Act. Resolution 12 seeks approval to issue Shares to Investmet.

11.2 Listing Rules

Listing Rule 10.11 provides that, unless a specified exception applies, a Company must not issue or agree to issue Equity Securities to a related party without the approval of ordinary shareholders. A “related party”, for the purposes of the Listing Rules, has the meaning given to it in the Corporations Act, and includes the directors of a company.

As such, Shareholder approval is sought under Listing Rule 10.11 as Resolution 12 proposes the issue of Shares to Investmet, who is related party of the Company by virtue of being an entity which controls the Company.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

11.3 Information required by Listing Rule 10.11

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11:

(a) Name of persons to receive securities and maximum number to be issued
The Company will issue Shares to Investmet. The maximum number of Shares to be issued is 87,717.

Investmet as at the date of this Notice is a substantial Shareholder of the Company by virtue of it and its Associates having a relevant interest in 41,238,671 Shares, being 40.2% of the Shares on issue in the Company. Investmet will only be issued Shares in lieu of fees to the extent permitted by the Corporations Act.

(b) Date of issue

The date by which the Company will issue the Shares will be not more than one month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

Investmet is a related party of the Company by virtue of being an entity which controls the Company.

(d) Issue price

The Shares will be issued for nil consideration for Investmet providing corporate services to the Company.

The number of Shares to be issued has been calculated using an indicative value of $0.15 per Share.

(e) Terms of issue

The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue. The Company will apply to ASX for official quotation of the Shares.

(f) Voting exclusion statements

A voting exclusion statement for Resolution 12 is included in the Notice.

(g) Intended use of funds raised No funds will be raised as the Shares are being issued as consideration for Investmet providing corporate services to the Company. However, the issue of Shares will allow the Company to provide consideration for services provided while retaining its cash reserves.

11.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. The issue of Shares to Investmet constitutes the provision of a financial benefit to a related party. Section 229 of the Corporations Act includes as an example of a “financial benefit”, the issuing of securities or the granting of an option to a related party.

A “related party” is widely defined under the Corporations Act, and includes an entity which controls the Company.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

The Board considers the issue of Shares to Investmet in consideration of corporate services provided to the Company to be on arm’s length terms, and accordingly that Chapter 2E of the Corporations Act does not apply.

11.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 12 as the issue of Shares as consideration will allow the Company to retain its cash reserves.

12. RESOLUTION 13 – APPROVAL TO ISSUE SHARES TO MR MICHAEL FOTIOS IN LIEU OF FEES

12.1 Background

As at the date of this Notice, the Company owes approximately $374,000 by way of unpaid Directors’ and consultant’s fees to Mr Michael Fotios.

The Company has agreed to issue 2,493,333 Shares to the value of $374,000 calculated on the basis of an indicative price of $0.15 per Share to Mr Michael Fotios (or his nominee) in lieu of paying such Director’s and consultant’s fees. Michael Fotios is a related party of the Company by virtue of being a Director of the Company, therefore satisfying the related party test set out in section 228 of the Corporations Act. Resolution 13 seeks approval to issue Shares to Mr Michael Fotios.

12.2 Listing Rules

As such, Shareholder approval is sought under Listing Rule 10.11 as Resolution 13 proposes the issue of Shares to Mr Michael Fotios, who is related party of the Company by virtue of being a Director of the Company.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

12.3 Information required by Listing Rule 10.11

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11:

(a) Name of persons to receive securities and maximum number to be issued

The Company will issue Shares to Mr Michael Fotios (or his nominee) to the value of $374,000. The maximum number of Shares to be issued is 2,493,333.

Mr Michael Fotios as at the date of this Notice has a relevant interest in 41,238,671 Shares held by Investmet (by virtue of controlling Investmet), being 40.2% of the Shares on issue in the Company. Mr Fotios will only be issued Shares in lieu of fees to the extent permitted by the Corporations Act.
(b) Date of issue

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

Mr Michael Fotios, is a related party of the Company by virtue of being a Director of the Company.

(d) Issue price

The Shares will be issued for nil consideration in lieu of unpaid Director’s and consultant’s fees.

The number of Shares to be issued has been calculated using an indicative value of $0.15 per Share.

(e) Terms of issue

The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue. The Company will apply to ASX for official quotation of the Shares.

(f) Voting exclusion statements

A voting exclusion statement for Resolution 13 is included in the Notice.

(g) Intended use of funds raised

No funds will be raised as the Shares are being issued in lieu of Director’s and consultant’s fees. However, the issue of Shares will allow the Company to provide consideration for services provided while retaining its cash reserves.

12.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. The issue of Shares to Mr Michael Fotios (or his nominee), constitutes the provision of a financial benefit to a related party. Section 229 of the Corporations Act includes as an example of a “financial benefit”, the issuing of securities or the granting of an option to a related party.

A “related party” is widely defined under the Corporations Act, and includes an entity controlled by a related party of the Company.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

One of the nominated exceptions to the prohibition includes the provision of a financial benefit that constitutes reasonable remuneration to a related party as an officer or employee.

The Board considers that the proposed issue of Shares in lieu of Director’s and consultant’s fees to Mr Michael Fotios (or his nominee) constitutes “reasonable remuneration” within the meaning of section 211 of the Corporations Act and therefore Shareholder approval is not required for the giving of the financial benefit to Mr Michael Fotios constituted by the issue of the Shares.

12.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 13 as the issue of Shares as consideration will allow the Company to retain its cash reserves.

13. RESOLUTION 14 – APPROVAL TO ISSUE SHARES TO WHITESTONE IN LIEU OF FEES

13.1 Background

Whitestone provides drilling services to the Company. As at the date of this Notice, the Company owes Whitestone approximately $1,177,800 in consideration for the provision of such services.

The Company has agreed to issue 7,851,997 Shares to the value of $1,177,800 calculated on the basis of an indicative price of $0.15 per Share to Whitestone in consideration for providing drilling services to the Company. Whitestone is a related party of the Company by virtue of being an entity which is controlled by Investmet which is a related party of the Company therefore satisfying the related party test set out in section 228 of the Corporations Act. Resolution 14 seeks approval to issue Shares to Whitestone.

13.2 Listing Rules

As such, Shareholder approval is sought under Listing Rule 10.11 as Resolution 14 proposes the issue of Shares to Whitestone, who is related party of the Company by virtue of being an entity which is controlled by Investmet which is a related party of the Company.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

13.3 Information required by Listing Rule 10.11

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11:

(a) Name of persons to receive securities and maximum number to be issued

The Company will issue Shares to Whitestone to the value of $1,177,800. The maximum number of Shares to be issued is 7,851,997.

(b) Date of issue

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

(c) Relationship with the Company
Whitestone is a related party of the Company by virtue of being an entity which is controlled by Investmet which is a related party of the Company.
(d) Issue price

The Shares will be issued for nil consideration for Whitestone providing drilling services to the Company.

The number of Shares to be issued has been calculated using an indicative value of $0.15 per Share.

(e) Terms of issue
The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue. The Company will apply to ASX for official quotation of the Shares.
(f) Voting exclusion statements

A voting exclusion statement for Resolution 14 is included in the Notice.

(g) Intended use of funds raised No funds will be raised as the Shares are being issued as consideration for Whitestone providing drilling services to the Company. However, the issue of Shares will allow the Company to provide consideration for services provided while retaining its cash reserves.

13.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. The issue of Shares to Whitestone (or its nominee), constitutes the provision of a financial benefit to a related party. Section 229 of the Corporations Act includes as an example of a “financial benefit”, the issuing of securities or the granting of an option to a related party.

A “related party” is widely defined under the Corporations Act, and includes an entity controlled by a related party of the Company.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

The Board considers the issue of Shares to Whitestone in consideration of drilling services provided to the Company to be on arm’s length terms, and accordingly that Chapter 2E of the Corporations Act does not apply.

13.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 14 as the issue of Shares as consideration will allow the Company to retain its cash reserves.

14. RESOLUTION 15 – APPROVAL TO ISSUE SHARES TO DELTA IN LIEU OF FEES

14.1 Background

Delta provides corporate and administrative services to the Company. As at the date of this Notice, the Company owes Delta approximately $595,966 in consideration for the provision of such services.

The Company has agreed to issue 3,973,109 Shares to the value of $595,966 calculated on the basis of an indicative price of $0.15 per Share to Delta in consideration for providing corporate and administrative services to the Company. Delta is a related party of the Company by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director, therefore satisfying the related party test set out in section 228 of the Corporations Act. Resolution 15 seeks approval to issue Shares to Delta.

14.2 Listing Rules

As such, Shareholder approval is sought under Listing Rule 10.11 as Resolution 15 proposes the issue of Shares to Delta, who is related party of the Company by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director of the Company.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1.

14.3 Information required by Listing Rule 10.11

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided for approval under Listing Rule 10.11:

(a) Name of persons to receive securities and maximum number to be issued

The Company will issue Shares to Delta to the value of $595,966. The maximum number of Shares to be issued is 3,973,109.

(b) Date of issue

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

Delta is a related party of the Company by virtue of being an entity controlled by Mr Michael Fotios who is a related party of the Company by virtue of being a Director.

(d) Issue price

The Shares will be issued for nil consideration for Delta providing corporate and administrative services to the Company.

The number of Shares to be issued has been calculated using an indicative value of $0.15 per Share.

(e) Terms of issue

The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing ordinary Shares on issue. The Company will apply to ASX for official quotation of the Shares.

(f) Voting exclusion statements

A voting exclusion statement for Resolution 15 is included in the Notice.

(g) Intended use of funds raised No funds will be raised as the Shares are being issued as consideration for Delta providing corporate and administrative services to the Company. However, the issue of Shares will allow the Company to provide consideration for services provided while retaining its cash reserves.

14.4 Corporations Act

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. The issue of Shares to Delta (or its nominee), constitutes the provision of a financial benefit to a related party. Section 229 of the Corporations Act includes as an example of a “financial benefit”, the issuing of securities or the granting of an option to a related party.

A “related party” is widely defined under the Corporations Act, and includes an entity controlled by a related party of the Company.

Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either:

the giving of the financial benefit falls within an exception to the provision; or
prior shareholder approval is obtained to the giving of the financial benefit and the benefit is given within 15 months after shareholder approval is obtained.

The Board considers the issue of Shares to Delta in consideration of corporate and administrative services provided to the Company to be on arm’s length terms, and accordingly that Chapter 2E of the Corporations Act does not apply.

14.5 Board recommendation

The Directors (other than Mr. Michael Fotios) recommend that Shareholders vote in favour of Resolution 15 as the issue of Shares as consideration will allow the Company to retain its cash reserves.

15. RESOLUTION 16 – APPROVAL TO ISSUE OPTIONS TO FINANCIERS

15.1 Background

As detailed in section 1.1 of this Explanatory Statement, the Company has been in discussions with debt providers to provide project finance, and is confident that it will obtain project finance which will be available following the Recapitalisation.

Discussions with debt providers regarding the terms of any financing are ongoing, however the Company considers it highly likely that a term of any financing arrangements will be that the Company issues to the financier up to 27,500,000 Options with an exercise price of the lower of:

(a) $0.16875; and

(b) 112.5% of the lowest price of any third-party equity investment into the Company made in the nine months prior to the issue date of the Options.

The Options will expire 44 months from the date of issue.

Accordingly, Resolution 16 seeks Shareholder approval for the issue of up to 27,500,000 Options.

The Company will make an announcement to the ASX regarding the identity and details of any financing arrangement following the execution of definitive financing documentation.

15.2 Listing Rule 7.1

The issue of the Options pursuant to Resolution 16 will (if the maximum amount is issued) exceed the 15% limit and therefore requires the approval of Shareholders.

15.3 Information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided for approval under Listing Rule 7.1.

(a) Maximum number of securities to be issued

The Company intends to issue up to 27,500,000 Options.

(b) Date of issue

The Options will be issued as soon as possible but in any case no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).

The Company expects to issue all of the Options on the same date, however the exact date of issue is unknown at this stage.

(b) Issue price

The Options will be issued for nil consideration.

The exercise price for the Options is detailed in section 15.1 above.

The Options will be issued to a party who the Company has entered financing arrangements with for the provision of project finance. As at the date of this Notice, the Company has not entered definitive financing documentation with any debt provider however the Company is confident that it will obtain project finance which will be available following the Recapitalisation

The financier will not be a related party of the Company.

(d) Terms of the securities

The Options will be issued on the terms and conditions set out in Annexure B.

The Company will not apply to ASX for official quotation of the Options.

(e) Use of funds

As set above, the Company expects the issue of the Options to be a term of any debt financing arrangements that the Company enters into. No funds will be raised by the issue of the Options.

(f) Voting exclusion statement

A voting exclusion statement for Resolution 16 is included in the Notice.

15.4 Board recommendation

The Board recommends that Shareholders vote in favour of Resolution 16.

16. RESOLUTION 17 – SELECTIVE SHARE BUY-BACK

16.1 Background

The Company currently owes $5,000,000 to Stirling under a secured debt arrangement, governed by the Facility Agreement ( Stirling Debt ).

The Security Trustee holds the security in relation to the Stirling Debt on behalf of Investmet, Stirling and the third parties under the Security Trust Deed.

Stirling also holds 8,892,922 Shares through its wholly owned subsidiary Stirling Gold in connection with the Stirling Debt ( Stirling Shares ).

16.2 Stirling Debt

Under the Facility Agreement, the Stirling Debt was due to be paid by the Company to Stirling on 1 July 2014. In addition, interest has been accruing on the Stirling Debt since 1 July 2013 at an interest rate of 6% per annum.

The Company has not repaid the Stirling Debt (or interest) to Stirling.

The Company and Stirling have entered into an agreement for the payment of a sum of $1,479,000 (plus GST) ( Settlement Sum ) in satisfaction of the Stirling Debt ( Deed of Settlement ).

The Deed of Settlement further contemplated the parties undertaking a selective buy-back of the Stirling Shares by the Company for a sum of $50,000 (plus GST) ( Buy-Back )

The Deed of Settlement has been negotiated with Stirling as part of the efforts of the Company to reduce its outstanding debts and move closer to the re-instatement of its Shares on the ASX.

16.3 Share Buy-Back

The Buy-Back is being undertaken by way of a selective share buy-back pursuant to section 257D of the Corporations Act.

Section 257A of the Corporations Act provides that a company may buy back its own shares if:

(a) the buy-back does not materially prejudice the company’s ability to pay its creditors; and
(b) the company follows the procedures laid down in Division 2 of Part 2J.1 of the Corporations Act.
Pursuant to Section 257D(1) of the Corporations Act, a share buy-back must be approved by either:
(a) a special resolution passed at a general meeting of the company, with no votes being cast in favour of the resolution by any person whose shares are to be bought back or by their associates; or
(b) a resolution agreed to, at a general meeting by all ordinary shareholders.

Pursuant to Section 257D(2) of the Corporations Act, the Company must include with this Notice a statement setting out all information known to the Company that is material to the decision on how to vote on Resolution 17. However, the Company does not have to disclose information if it would be unreasonable to require the Company to do so because the Company has previously disclosed the information to Shareholders.

Section 257H(3) provides that immediately after the registration of the transfer to a company of shares bought back, the shares are cancelled.

Under section 257D(1)(a) of the Corporations Act, Stirling Gold and its Associates are not entitled to cast votes on Resolution 17. Any such votes will be disregarded.

If the Buy-Back does not proceed, Stirling Shares will not be bought back and cancelled, and Stirling Gold will remain a Shareholder of the Company.

ASIC Regulatory Guide 110 sets out what ASIC expects a company to provide when disclosing such information to shareholders with a notice of meeting. This information is set out below.

16.4 Details of the Buy-Back

Pursuant to and in accordance with Section 257D(2) of the Corporations Act and ASIC Regulatory Guide 110, the following information is provided in relation to the Buy-Back:

(a) As at the date of this Notice, the Company has 102,516,890 Shares on issue.
(b) The number of Shares subject to the Buy-Back is 8,892,922 or 8.67% of all Shares.
(c) The consideration to be paid by the Company under the Buy-Back will be $50,000 (plus GST).
(d) The reason for the Company undertaking the Buy-Back is that the Buy-Back was negotiated as part of a settlement agreement entered into with Stirling for the extinguishment of the Stirling Debt, which reduces the overall liabilities of the Company.
(e) The Buy-Back will be funded out of the Company’s cash reserves. The financial effect of the Buy-Back will be that the cash position of the Company will decrease by $50,000.

(f) The Shares bought back from Stirling Gold will be cancelled pursuant to section 257H of the Corporations Act. This will reduce the total Shares on issue from 102,516,890 to 93,623,968 (disregarding the issue of any Shares the subject of Resolutions contemplated in this Notice).
(g) The Buy-Back Shares represent approximately 8.67% of the Company's issued Share capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of the Resolutions contemplated in this Notice). The following table sets out the current issued share capital of the Company and the issued share capital of the Company in the event the Buy-Back is implemented (disregarding the issue of any Shares contemplated in this Notice):

	Shares
Shares on issue at the date of this Notice of Meeting	102,516,890
Shares to be bought back from Stirling Gold	-8,892,922
Total number of shares post completion of Buy-Back	93,623,968

If the Buy-Back is implemented, the Company’s largest shareholder Investmet and its Associates will have a relevant interest in approximately 44% of the Company’s issued Shares (as outlined in the table below), disregarding the effect of the issue of any Shares contemplated in this Notice.

Shareholder	Pre Buy-Back Shares (%)	Post Buy-Back Shares (%)
Stirling Gold	8,892,922 (8.67%)	-
Investmet and its Associates	41,238,671 (40.2%)	41,238,671 (44%)
Other Shareholders	52,385,397 (51.1%)	52,385,397 (56%)
Total	102,516,890 (100%)	93,623,968 (100%)

Director Mr Michael Fotios has a relevant interest in the Shares held by Investmet by virtue of section 608(3)(a) and 608(3)(b) of the Corporations Act as he has voting power in excess of 20% of Investmet and controls Investmet.

(h) The Directors consider that the main advantages for the Company and its Shareholders in approving the Buy-Back are:

(i) it was negotiated as part of an overall agreement to extinguish the Company’s existing debt of $5 million owed to Stirling which strengthens the Company’s balance sheet;
(ii) it provides the Company an opportunity to buy back 8.67% of the Company for relatively low consideration; and
(iii) there will be a lesser number of Shares on issue, and accordingly each continuing Shareholder’s percentage ownership in the Company will increase.

The Directors do not consider there to be any material disadvantages to the Company in undertaking the Buy-Back.

16.5 Other material information

There is no other information known to the Company that is material to the decision as to how to vote on Resolution 17. No Director or Associate of a Director is participating in the Buy-Back.

Any Shareholder who has any doubt about the information provided in the Notice and the Explanatory Statement, or the action that they should take, should consult their financial, taxation or other professional adviser.

16.6 Board recommendation

Each of the Directors is independent from, and not an associate of, Stirling or Stirling Gold and believes that the Buy-Back as proposed by Resolution 17 will not prejudice the Company’s ability to pay its creditors.

Each of the Directors recommends that Shareholders vote in favour of Resolution 17.

17. RESOLUTION 18 – APPROVAL FOR INVESTMET AND MR MICHAEL FOTIOS TO INCREASE THEIR RELEVANT INTEREST IN THE COMPANY

17.1 Background

As outlined throughout this Notice of Meeting, the Company is seeking approval to, among other things, issue Shares to its major shareholder Investmet and other entities associated with Mr Michael Fotios.

Investmet currently has a relevant interest in 44.9% of the Shares of the Company.

Michael Fotios, an Executive Director and Company Secretary of the Company, is a director of Investmet and currently has voting power in excess of 20% in Investmet and controls Investmet. Accordingly, by virtue of section 608(3)(a) and 608(3)(b) of the Corporations Act, Mr Fotios has a relevant interest in the Shares in which Investmet has a relevant interest.

Resolution 18 seeks Shareholder approval pursuant to Item 7 of Section 611 of the Corporations Act in order for Investmet, and Mr Fotios to acquire a relevant interest in the issued voting shares of the Company in excess of the threshold prescribed by Section 606(1) of the Corporations Act as a result of the completion of certain transactions contemplated in this Notice of Meeting.

17.2 Conditional resolution

Resolution 18 is conditional upon Resolutions 2, 4, 5, 7, 8, 12, 13, 14, and 15 also being passed. If Resolutions 2, 4, 5, 7, 8, 12, 13, 14, and 15 are not all passed, the issue of Shares to Investmet, Mr Fotios and entities associated with Mr Fotios may still occur, but only to the extent Investmet, Mr Fotios and the other entities may increase their voting power in the Company as permitted by another manner under the Corporations Act.

17.3 Section 606 of the Corporations Act

Section 606 of the Corporations Act – Statutory Prohibition

Pursuant to Section 606(1) of the Corporations Act, a person must not acquire a relevant interest in issued voting shares in a listed company if the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person and because of the transaction, that person’s or someone else’s voting power in the company increases:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%.

Voting Power

The voting power of a person in a body corporate is determined in accordance with Section 610 of the Corporations Act. The calculation of a person’s voting power in a company involves determining the voting shares in the company in which the person and the person’s associates have a relevant interest.

Associates

For the purposes of determining voting power under the Corporations Act, a person (second person) is an “associate” of the other person (first person) if:

(a) the first person is a body corporate and the second person is:
(i) a body corporate the first person controls;
(ii) a body corporate that controls the first person; or
(iii) a body corporate that is controlled by an entity that controls the person;
(b) the second person has entered or proposed to enter into a relevant agreement with the first person for the purpose of controlling or influencing the composition of the company’s board or the conduct of the company’s affairs; or
(c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the company’s affairs. Investmet does not have any associates with any additional relevant interests in the Company’s Shares.

Relevant Interests

Section 608(1) of the Corporations Act provides that a person has a relevant interest in securities if they:

(a) are the holder of the securities;
(b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or
(c) have power to dispose of, or control the exercise of a power to dispose of, the securities.

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

In addition, Section 608(3) of the Corporations Act provides that a person has a relevant interest in securities that any of the following has:

(a) a body corporate in which the person’s voting power is above 20%;
(b) a body corporate that the person controls.

Investmet and Mr Michael Fotios

Investmet

Investmet currently has a relevant interest in 44.9% of the Shares of the Company.

In addition, Investmet will also have a relevant interest in all of the issued voting shares in the Company held by Whitestone following certain transactions contemplated by this Notice of Meeting (see Resolution 14), by virtue of section 608(3)(b) of the Corporations Act, as Investmet controls Whitestone.

Mr Michael Fotios

Mr Fotios is a director of Investmet and currently has voting power in excess of 20% in Investmet. Accordingly, by virtue of section 608(3) of the Corporations Act, Mr Fotios has a relevant interest in the Shares in which Investmet has a relevant interest.

In addition, Mr Fotios’ will also have a relevant interest in all of the issued voting shares in the Company held by the following entities upon completion of certain transactions contemplated by this Notice of Meeting:

(a) Delta, by virtue of section 608(3)(b) of the Corporations Act, as Mr Fotios controls Delta;
(b) Whitestone, by virtue of section 608(3)(b) of the Corporations Act, as Mr Fotios controls Whitestone; and
(c) Fotios Family Trust, by virtue of sections 608(1) and (2) of the Corporations Act, as Mr Fotios controls the Fotios Family Trust (in his capacity as Trustee).

Accordingly, it is likely that Investmet and Mr Fotios will increase their relevant interests in the Company from a starting point that is above 20% and below 90% as a result of certain transactions contemplated in this Notice, which is prima facie prohibited under Section 606 of the Corporations Act.

17.4 Section 611 Item 7 of the Corporations Act

Item 7 of Section 611 of the Corporations Act provides an exception to the prohibition described in section 17.3 above, whereby a person may acquire a relevant interest in a company’s voting shares with shareholder approval where no votes were cast in favour of the resolution by the acquirer (or disposer) or their associates.

Pursuant to various Resolutions contemplated in this Notice, Investmet and Mr Fotios may potentially acquire the following relevant interests and voting power in Shares:

Event	Shares to be issued	Relevant interest	Total Shares	Voting Power
Investmet
Current	-	41,238,671	102,516,890	40.20%
Shares to be issued to Investmet upon conversion of Debt (Resolution 2)	32,390,313	73,628,984	134,907,203	54.60%
Shares to be issued to Investmet upon conversion of DCM Debt (Resolution 4)	28,000,000	101,628,984	162,907,203	62.40%
Shares to be issued to Investmet upon conversion of Interest Component of Debt and DCM Debt	10,097,687	111,726,671	173,004,890	64.60%

(Resolution 5)
Shares to be issued to Investmet upon conversion of Investmet Loan (Resolution 7)	6,666,667	118,393,338	179,671,557	65.89%
Shares to be issued to Investmet upon conversion of Interest Component of Investmet Loan (Resolution 8)	883,745	119,277,082	180,555,301	66.06%
Shares to be issued to Investmet in lieu of fees (Resolution 12)	87,717	119,364,799	180,643,018	66.08%
Shares to be issued to Whitestone in lieu of fees (Resolution 14)	7,851,997	127,216,796	188,495,015	67.49%
Mr Michael Fotios
Current	-	41,238,671	102,516,890	40.20%
Shares to be issued to Investmet upon conversion of Debt (Resolution 2)	32,390,313	73,628,984	134,907,203	54.60%
Shares to be issued to Delta upon conversion of Debt (Resolution 2)	46,000,000	119,628,984	180,907,203	66.10%
Shares to be issued to Fotios Family Trust upon conversion of Debt (Resolution 2)	12,000,000	131,628,984	192,907,203	68.20%
Shares to be issued to Investmet upon conversion of DCM Debt (Resolution 4)	28,000,000	159,628,984	220,907,203	72.20%
Shares to be issued to Investmet upon conversion of Interest Component of Debt and DCM Debt (Resolution 5)	10,097,687	169,726,671	231,004,890	73.50%
Shares to be issued to Delta upon conversion of Interest Component of Debt (Resolution 5)	7,691,527	177,418,198	238,696,417	74.30%

Shares to be issued to Fotios Family Trust upon conversion of Interest Component of Debt (Resolution 5)	2,006,487	179,424,685	240,702,904	74.50%
Shares to be issued to Investmet upon conversion of Investmet Loan (Resolution 7)	6,666,667	186,091,352	247,369,571	75.23%
Shares to be issued to Delta upon conversion of Investmet Loan (Resolution 7)	4,905,621	190,996,973	252,275,192	75.71%
Shares to be issued to Fotios Family Trust upon conversion of Investmet Loan (Resolution 7)	3,915,304	194,912,277	256,190,496	76.08%
Shares to be issued to Investmet upon conversion of Interest Component of Investmet Loan (Resolution 8)	883,745	195,796,021	257,074,240	76.16%
Shares to be issued to Delta upon conversion of Interest Component of Investmet Loan (Resolution 8)	650,297	196,446,319	257,724,538	76.22%
Shares to be issued to Fotios Family Trust upon conversion of Interest Component of Investmet Loan (Resolution 8)	519,019	196,965,338	258,243,557	76.27%
Shares to be issued to Investmet in lieu of fees (Resolution 12)	87,717	197,053,055	258,331,274	76.28%
Shares to be issued to Mr Fotios in lieu of fees (Resolution 13)	2,493,333	199,546,388	260,824,607	76.50%
Shares to be issued to Whitestone in lieu of fees (Resolution 14)	7,851,997	207,398,385	268,676,604	77.19%
Shares to be issued to Delta in lieu of fees (Resolution 15)	3,973,109	21,1371,494	272,649,713	77.52%

17.5 Specific Information Required by Section 611 Item 7 of the Corporations Act and ASIC Regulatory Guide 74

The following information is required to be provided to Shareholders under the Corporations Act and ASIC Regulatory Guide 74 in respect of obtaining approval for Item 7 of Section 611 of the Corporations Act. Shareholders are also referred to the Independent Expert’s Report prepared by BDO annexed to this Explanatory Statement.

Investmet and Mr Fotios

Investmet is a well-funded unlisted public company managed by experienced industry professionals and supported by private high net worth investors (including its directors and management). It was created to pursue a variety of investment opportunities in resource projects with strong future demand growth and to incubate, develop and enhance the value of these investments through financial, technical and corporate support.

Investmet is currently a substantial shareholder of the Company as a consequence of the recapitalisation and purchase of debts that occurred in 2013.

Investmet is managed by Executive Chairman Michael Fotios, who is a geologist specialising in economic and structural geology, with extensive experience in exploration throughout Australia and overseas.

Other than as disclosed elsewhere in this Explanatory Statement, the Company understands that Investmet and Mr Fotios:

(a) have no intention of making any significant changes to the business of the Company;
(b) have no intention of injecting further capital into the Company;
(c) have no intention of making changes regarding the future employment of the present employees of the Company;
(d) do not intend to redeploy any fixed assets of the Company; and
(e) do not intend to transfer any property between the Company and Investmet.

These intentions are based on information concerning the Company, its business and the business environment which is known to Investmet and Mr Fotios at the date of this document.

Final decisions regarding these matters will only be made by Investmet and Mr Fotios in light of material information and circumstances at the relevant time. Accordingly, the statements set out above are statements of current intention only, which may change as new information becomes available to it or as circumstances change.

Relevant Interests and Voting Power

As at the date of this Notice, Investmet and Mr Fotios have a voting power of 40.2% of the Company. As outlined in section 17.4 above, in the event that Resolutions 2, 4, 5, 7, 8, 12, 13, 14, and 15 contained in this Notice are passed and implemented, Investmet and Mr Fotios’ voting power in the Company may potentially increase to a maximum of 67.49% and 77.48% respectively.

However, as there are further transactions contemplated in this Notice of Meeting (such as the issue of Shares to persons not associated with Investmet or Mr Fotios) it is highly likely that Investmet and Mr Fotios’ voting power would be reduced to the extent the Resolutions for those transactions are passed (if applicable) and the transactions are completed. Outlined below is the potential reduction of Investmet and Mr Fotios’ voting power from the maximum outlined above, based on a number of scenarios which are listed chronologically (anticipated).

Event	Shares to be issued	Relevant Interest	Total Shares	Voting Power
Investmet
Current	-	41,238,671	102,516,890	40.20%
Shares to be issued under Placement and/or to 2015 Lenders	66,666,667	41,238,671	169,183,557	24.40%
Shares to be issued to upon conversion of Debt	137,761,600	114,867,655	306,945,157	37.40%
Shares to be issued upon conversion of DCM Debt	28,000,000	142,867,655	334,945,157	42.70%
Shares to be issued upon conversion of Interest Component of Debt and DCM Debt	27,716,514	152,965,342	362,661,671	42.20%
Shares to be distributed by Investmet as part of Debt conversion (no new Shares issued)	9,022,540	143,942,802	362,661,671	39.70%
Shares to be issued upon conversion of Investmet Loan	15,487,592	150,609,469	378,149,263	39.83%
Shares to be issued upon conversion of Interest Component of Investmet Loan	2,053,061	151,493,213	380,202,324	39.85%
Shares to be issued in lieu of fees	14,406,156	159,432,927	394,608,480	40.40%
Shares to be bought back from Stirling Gold	-8,892,922	159,432,927	385,715,558	41.33%
Mr Michael Fotios
Current	-	41,238,671	102,516,890	40.20%
Shares to be issued under Placement and/or to 2015 Lenders	66,666,667	41,238,671	169,183,557	24.40%
Shares to be issued to upon conversion of Debt	137,761,600	131,628,984	306,945,157	42.90%
Shares to be issued upon conversion of DCM Debt	28,000,000	159,628,984	334,945,157	47.70%
Shares to be issued upon conversion of Interest Component of Debt and DCM Debt	27,716,514	179,424,685	362,661,671	49.50%
Shares to be distributed by	9,022,540	170,402,145	362,661,671	47.00%

Investmet as part of Debt conversion(no new Shares issued)
Shares to be issued upon conversion of Investmet Loan	15,487,592	185,889,737	378,149,263	49.16%
Shares to be issued upon conversion of Interest Component of Investmet Loan	2,053,061	187,942,798	380,202,324	49.43%
Shares to be issued in lieu of fees	14,406,156	202,348,954	394,608,480	51.28%
Shares to be bought back from Stirling Gold	-8,892,922	202,348,954	385,715,558	52.46%

Particulars of proposed acquisition and timing

The Shares to be issued to Investmet, Mr Fotios and their associated entities are the subject of Resolutions 2, 4, 5, 7, 8, 12, 13, 14, and 15. The particulars and timing for the issue and transfer of those Shares are outlined in the relevant Explanatory Memorandum for each Resolution.

Reason for the proposed issues

The reasons for the proposed issues of Shares to Investmet, Mr Fotios and their associated entities are outlined in the relevant Explanatory Memorandum for each Resolution.

Advantages of the transactions

(a) Debts of approximately $24.5 million owing to Investmet and other entities associated with Mr Fotios will be extinguished and security granted over the assets of the Company in connection with the certain of the debts will be released.
(b) The extinguishment of debts and transactions contemplated by this Notice of Meeting may result in the Company’s projects being developed to their full potential.
(c) Continuing to have Investmet and Mr Fotios as a significant shareholder may be an incentive other investors to invest in the Company going forward.

Disadvantages of the transactions

(a) Existing Shareholders will be diluted as a result of the issue of Shares pursuant to the proposal.
(b) The value of the Shares may be in excess of the deemed price of $0.15 per Share, particularly if the Carnegie and Mt Ida Gold Projects can increase their reserves and resources and move towards development.

Directors Interests

Other than Mr Fotios, the current Directors of the Company Mr Craig Readhead and Mr Alan Still do not have any interest in the outcome of Resolution 18.

Independent Expert’s Report

The Independent Expert’s Report assesses whether the acquisition of Shares outlined in Resolution 18 is fair and reasonable to the Shareholders who are not associated with Investmet.

The Independent Expert’s Report also contains an assessment of the advantages and disadvantages of the proposed acquisition the subject of Resolution 18. This assessment is designed to assist all Shareholders in reaching their voting decision. The Independent Expert has provided the Independent Expert’s Report and has provided an opinion that the proposal as outlined in Resolution 18 is fair and reasonable to the Shareholders of the Company not associated with Investmet and Mr Fotios. It is recommended that all Shareholders read the Independent Expert’s Report in full.

The Independent Expert’s Report is attached as Annexure C to this Notice of Meeting.

17.6 Board recommendation

The Directors of the Company, other than Mr Fotios recommend that Shareholders vote in favour of Resolution 18 on the basis that is the transactions contemplated in this Notice of Meeting are likely to result in the Company’s Shares being readmitted to quotation on the Official List of the ASX, the Company’s liabilities and obligations to creditors will be discharged and the Company will have sufficient capital moving forward to effectively explore its assets.

18. RESOLUTION 19 – APPROVAL TO ISSUE SHARES TO 2015 LENDERS

18.1 Background

In connection with the re-quotation of the Company’s securities on the ASX, the Company intends to enter into a number of secured converting loan facility agreements with various third party lenders ( 2015 Lenders ) to raise up to an aggregate of $10,000,000 of funds.

As noted in section 1.1, the Company intends to raise a minimum of $6,000,000 and a maximum of $10,000,000 by one or a combination of the Placement and converting loan agreements with the 2015 Lenders.

The principal and interest (or principal alone) under the converting loan facility agreements may, at the Company’s sole discretion, be repaid by the issue of Shares upon the conversion of the Debt. Accordingly, as this Notice of Meeting is also seeking Shareholder approval for the conversion of the Debt, the Company is intending to repay the 2015 Lenders by the issue of Shares concurrent to the issue of Shares upon the conversion of the Debt.

In accordance with the terms of the converting loan facility agreements, the loans may be converted at a conversion price equal to the price of Shares issued for conversion of the Debt. The issue of Shares pursuant to conversion of the debt owing to the 2015 Lenders is subject to receipt of Shareholder approval. Accordingly, Resolution 19 seeks Shareholder approval for the entry into the converting loan agreements and the issue of up to 66,666,667 Shares at an issue price of $0.15 per Share representing the aggregate principal and interest owing to the 2015 Lenders (as at 31 January 2016).

The Shares proposed to be issued upon conversion, for which approval is sought under Resolution 19, comprise approximately 65% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice of General Meeting and excluding any securities the subject of Resolutions contemplated in this Notice).

18.2 Listing Rule 7.1

The issue of the Shares pursuant to Resolution 19 will (if the maximum amount is issued) exceed the 15% limit and therefore requires the approval of Shareholders.

18.3 Information required by Listing Rule 7.3

Pursuant to and in accordance with Listing Rule 7.3, the following information is provided for approval under Listing Rule 7.1.

(a) Maximum number of securities to be issued

The Company intends to issue up to 66,666,667 Shares.

(b) Date of issue

The Company expects to issue all of the Shares on the same date, however the exact date of issue is unknown at this stage.

(b) Issue price

The Shares will be issued at a price of $0.15 per Share.

(c) Identity of persons to whom securities will be issued
The Shares will be issued to sophisticated and professional investors who comprise the 2015 Lenders (as those terms are defined in the Corporations Act). None of 2015 Lenders are related parties of the Company.
(d) Terms of the securities The Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares and will rank equally in all respects with all of the existing Shares on issue. The Company will apply to ASX for official quotation of the Shares.
(e) Use of funds No funds will be raised as the Shares are being issued on conversion of and in satisfaction of the principal amount and/or interest amount of the debts owed to the 2015 Lenders, but assuming conversion of the entire amount owed to the 2015 Lenders, the liability of up to approximately $10,000,000 owed by the Company will be extinguished.
(f) Voting exclusion statement

A voting exclusion statement for Resolution 19 is included in the Notice.

18.4 Board recommendation

The Directors consider that the proposed conversion of the debts owed to the 2015 Lenders will assist with the successful recapitalisation of the Company and re-quotation of the Company’s Shares on the ASX. The Board recommends that Shareholders vote in favour of Resolution 19.

19. RESOLUTION 20 – RATIFICATION OF INTERIM PLACEMENT

19.1 Background

As detailed in section 1.1, and announced to the ASX on 27 November 2015, the Company recently undertook the Interim Placement, pursuant to which it issued 10,666,667 Shares to professional and sophisticated investors to raise $1.6 million before costs.

The purpose of Resolution 20 is for Shareholders to ratify the issue of 10,666,667 Shares which were issued to investors without Shareholder approval under the Company’s 15% placement capacity under Listing Rule 7.1.

19.2 Listing Rule 7.1 and 7.4

Listing Rule 7.1 provides that, unless an exemption applies, a company must not, without prior approval of shareholders, issue or agree to issue Equity Securities if the Equity Securities will in themselves or when aggregated with the ordinary securities issued by the company during the previous 12 months, exceed 15% of the number of ordinary securities on issue at the commencement of that 12 month period.

Listing Rule 7.4 states that an issue by a company of securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purpose of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and the company’s members subsequently approve it.

Under Resolution 20, the Company seeks from Shareholders approval for, and ratification of, the issue of the securities set out in section 19.3 so as to limit the restrictive effect of Listing Rule 7.1 on any further issues of Equity Securities in the next 12 months.

The securities issued, for which approval and ratification is sought under Resolution 20, comprise 10.4% of the Company’s fully diluted issued capital (based on the number of Shares on issue as at the date of this Notice disregarding the issue of any Shares the subject of Resolutions contemplated in this Notice).

19.3 Information required by Listing Rule 7.5

In compliance with the information requirements of Listing Rule 7.5, Shareholders are advised of the following information:

(a) Number of securities allotted

Under Resolution 20, the Company seeks from Shareholders approval for, and ratification of 10,666,667 Shares.

(b) The price at which the securities were issued

The Shares were issued for $0.15 per Share.

The Shares are fully paid ordinary shares in the capital of the Company on the same terms and conditions as the Company’s existing Shares and rank equally in all respects with the existing Shares.

The Company will apply to the ASX for official quotation of the Shares in connection with the Recapitalisation.

(d) Allottees of the securities

Allottees of the Shares were professional and sophisticated investors who participated in the Interim Placement.

(e) The use of the funds raised

The purpose of the issue was to raise funds for working capital purposes.

(f) Voting exclusion statement

A voting exclusion statement for Resolution 20 is included in the Notice.

19.4 Board recommendation

The Board believes that the ratification of these issues is beneficial for the Company as it allows the Company to ratify the above issues of securities and retain the flexibility to issue further securities representing up to 15% of the Company’s share capital during the next 12 months. Accordingly, the Board recommends Shareholders vote in favour of Resolution 20.

GLOSSARY

2015 Lenders has the meaning given to that term in section 18.1 of the Explanatory Statement.

Associate has the meaning given to that term in the Listing Rules or the Corporations Act (as the context requires).

ASX means ASX Limited ACN 008 624 691, or the financial market operated by it as the context requires.

BDO means BDO Corporate Finance (WA) Pty Ltd.

Board means the current board of directors of the Company.

Cashless Exercise Facility has the meaning given to that term in clause 5 of Annexure A.

Chair or Chairman means the chair of the Meeting.

Company means Eastern Goldfields Limited (formerly Swan Gold Mining Limited) ACN 100 038 266.

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

DCM means DCM DECOmetal GmbH.

DCM Debt has the meaning given to that term in section 5.1 of the Explanatory Statement.

Debt has the meaning given to that term in section 4.7 of the Explanatory Statement to the Notice of 2013 Annual General Meeting.

Debt Syndicate means the syndicate of lenders who have a beneficial interest in that portion of the Debt held by the Other Lenders Nominee for the benefit of those lenders.

Delta means Delta Resource Management Pty Ltd ACN 118 613 175.

Directors mean the current directors of the Company.

Equity Securities has the meaning given to that term in the Listing Rules.

Explanatory Statement means the explanatory statement accompanying the Notice.

Facility Agreement means the loan facility agreement in relation to the Debt, Stirling Debt and DCM Debt between the Company, Investmet, Stirling, the Other Lenders Nominee and the Other Lenders dated 14 April 2014.

General Meeting or Meeting means the meeting convened by the Notice.

Independent Expert’s Report means the independent expert’s report prepared by BDO attached as Annexure C to this Notice of Meeting.

Interim Placement has the meaning given to that term in section 1.1 of the Explanatory Statement.

Investmet means Investmet Limited ACN 125 585 935.

Investmet Loan has the meaning given to that term in section 8.1 of the Explanatory Statement.

KMP means Key Management Personnel and has the meaning given to that term in the Corporations Act.

Listing Rules means the Listing Rules of ASX as amended from time to time.

Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share.

Option Plan has the meaning given to that term in section 10.1 of the Explanatory Statement.

Ordinary Securities has the meaning set out in the Listing Rules.

Other Lenders Nominee means M6 Securities Pty Ltd ACN 138 546 433.

Placement has the meaning given to that term in section 1.1 of the Explanatory Statement.

Prospectus has the meaning given to that term in section 1.4 of the Explanatory Statement

Proxy Form means the proxy form accompanying the Notice.

Recapitalisation has the meaning given to that term in section 1.1 of the Explanatory Statement.

Related Other Lenders means Delta and the Fotios Family Trust in their capacity as members of the Debt Syndicate.

Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires.

Security Trustee means the Other Lenders Nominee in its capacity as security trustee under the Security Trust Deed.

Security Trust Deed means the security trust deed between the Company, the Security Trustee and others 27 March 2013.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Stirling means Stirling Resources Limited ACN 009 659 054.

Stirling Debt has the meaning given to that term in section 16.1 of the Explanatory Statement.

Stirling Gold means Stirling Gold Pty Ltd ACN 134 037 513.

Unrelated Other Lenders means the members of the Debt Syndicate, other than the Related Other Lenders.

Whitestone means Whitestone Minerals Pty Ltd ACN 136 481 877.

WST means Western Standard Time as observed in Perth, Western Australia.

ANNEXURE A – SUMMARY OF EMPLOYEE OPTION PLAN

1. Eligibility

The Board may, in its absolute discretion, invite an eligible employee to participate in the Option Plan. An eligible employee includes a director, senior executive or employee of the Company or an associated body corporate of the Company.

2. Terms of Options

(a) Each Option will be granted to eligible employees under the Option Plan for nil consideration.
(b) Each Option will entitle its holder to subscribe for and be issued, one fully paid ordinary share in the capital of the Company (upon vesting and exercise of that Option).
(c) Options will not be listed for quotation on the ASX, however, the Company will apply for official quotation of the Shares issued upon the exercise of any vested Options.
(d) The grant date and expiry date of an Option shall be as determined by the Board when an offer to participate in the Option Plan is made.
(e) The exercise price of an Option shall be as determined by the Board when an offer to participate in the Option Plan is made.
(f) A participant is not entitled to participate in or receive any dividend or other Shareholder benefits until its Options have vested and been exercised and Shares have been allocated to the participant as a result of the exercise of those Options.
(g) There are no participating rights or entitlements inherent in the Options and participants will not be entitled to participate in new issues of securities offered to Shareholders of the Company during the currency of the Options.
(h) Following the issue of Shares following exercise of vested Options, participants will be entitled to exercise all rights of a Shareholder attaching to the Shares, subject to any disposal restrictions advised to the participant at the time of the grant of the Options.

3. Performance conditions

When granting Options, the Board may make their vesting conditional on the satisfaction of a performance condition within a specified period. The Board may at any time waive or change a performance condition or performance period in accordance with the Option Plan rules if the Board (acting reasonably) considers it appropriate to do so.

4. Vesting

The Options will vest following satisfaction of the performance conditions or such other date as determined by the Board in its discretion.

Subject to the Option Plan rules, the Board may declare that all or a specified number of any unvested Options granted to a participant which have not lapsed immediately vest if, in the opinion of the Board a change of control in relation to the Company has occurred, or is likely to occur, having regard to the participant’s pro rata performance in relation to the applicable performance conditions up to that date.

Subject to the Option Plan rules, the Board may in its absolute discretion, declare the vesting of an Option where the Company is wound up or passes a resolution to dispose of its main undertaking.

If there is any internal reconstruction or acquisition of the Company which does not involve a significant change in the identity of the ultimate Shareholders of the Company, the Board may declare in its sole discretion whether and to what extent Options, which have not vested by the day the reconstruction takes place, will vest.

5. Cashless Exercise Facility

Participants may, at their election, elect to pay the exercise price for an Option by setting off the exercise price against the number of Shares which they are entitled to receive upon exercise ( Cashless Exercise Facility ). By using the Cashless Exercise Facility, the

participant will receive Shares to the value of the surplus after the exercise price has been set off.

If a Participant elects to use the Cashless Exercise Facility, the participant will only be issued that number of Shares equivalent in value to the number of Options exercised using the Cashless Exercise Facility, multiplied by the excess of the Share price on the exercise date (determined as the volume weighted average price of Shares on the ASX over the one week up to and including the exercise date) over the exercise price .

6. Disposal restrictions

A participant may not transfer an Option granted under the Option Plan without the prior consent of the Board.

7. Overriding restrictions

No issue or allocation of Options and/or Shares will be made to the extent that it would contravene the Constitution, Listing Rules, the Corporations Act or any other applicable law.

8. Lapse

(a) An Option will immediately lapse upon the first to occur of:
(i) its expiry date;
(ii) the performance condition(s) (if any) not being satisfied prior to the end of the performance period(s);
(iii) the transfer or purported transfer of the Option in breach of the Option Plan rules;
(iv) if the Option has not vested, the day that is 30 days following the date the participant voluntarily or for a bona fide reason ceases to be employed or engaged by the Company or an associated body corporate;
(v) termination of the participant’s employment or engagement with the Company or an associated body corporate for cause; or
(vi) 6 months after an event which gives rise to a vesting under the Option Plan rules.
(b) Where a participant ceases to be employed or engaged by the Company or an associated body corporate by reason of their death, disability, bona fide redundancy, and the Options have vested, they will remain exercisable by that participant’s estate or legal representative until the Options lapse in accordance with the Option Plan rules or if they have not vested, the Board will determine as soon as reasonably practicable after the date the participant ceases to be employed or engaged, how many (if any) of those participant’s Options will be deemed to have vested and will be exercisable by that participant’s estate or legal representative.

ANNEXURE B – TERMS OF FINANCIER OPTIONS

1. Entitlement

Each Option will entitle the holder to subscribe for one Share in the Company. All Shares issued upon the exercise of the Options will rank equally in all respects with the Company's then existing Shares.

2. Exercise Price

Each Option shall entitle the Option holder to acquire one fully paid ordinary share upon payment to the Company of the exercise price ( Exercise Price ) being the lower of:

(a) $0.16875; and
(b) 112.5% of the lowest price of any third-party equity investment into the Company made in the nine months prior to the issue date of the Options.

3. Notice of Exercise

The Options may be exercised at any time prior to the expiry date which is 44 months from the date of issue ( Expiry Date ). The Options may be exercised in whole or in part, by completing and delivering a duly completed form of notice of exercise to the registered office of the Company together with the payment of the Exercise Price in immediately available funds for the number of Shares in respect of which the Options are exercised. An Option not exercised on or before the Expiry Date will lapse.

Shares issued pursuant to the exercise of the Options will be allotted and issued, and a holding statement provided to the holders of Options in respect of those Shares, on the above terms and conditions not more than 15 Business Days after the receipt of a duly completed form of notice of exercise and the Exercise Price in immediately available funds in respect of the Options exercised.

4. Quotation of Options and Shares on Exercise

Application will not be made to ASX for official quotation of the Options. Application will be made for official quotation of the Shares issued upon exercise of Options not later than 10 Business Days after the date of allotment.

5. Transfer of Options

The Options are not transferable.

6. Participation Rights or Entitlements

There are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate in new issues of securities offered to shareholders during the currency of the Options. However, the Company must give notice to the holders of Options of any new issue before the record date for determining entitlements to the issue in accordance with the Listing Rules so as to give Option holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.

7. Reorganisation of Share Capital

In the event of a reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the Option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

8. Bonus Issues

If, from time to time, before the expiry of the Options the Company makes a pro rata issue of Shares to Shareholders for no consideration, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the Option holder would have received if the Option had been exercised before the date for calculating entitlements to the pro rata issue.

9. Pro Rata Issues

There will be no change to the Exercise Price of the Option or the number of Shares over which the Option is exercisable in the event of the Company making a pro rata issue of Shares or other securities to the holders of Shares in the Company (other than bonus issue).

ANNEXURE C – INDEPENDENT EXPERT’S REPORT

EASTERN GOLDFIELDS LTD (formerly SWAN GOLD MINING LTD) Independent Expert’s Report OPINION: FAIR AND REASONABLE

27 November 2015

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Financial Services Guide

27 November 2015

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 (‘ we ’ or ‘ us ’ or ‘ ours ’ as appropriate) has been engaged by Eastern Goldfields Ltd to provide an independent expert’s report on the proposal for Investmet Limited and Mr Fotios to participate in a number of transactions including conversion of debts and increase their relevant interest above the 20% threshold in section 606 of the Corporations Act 2011 (Cth). You will be provided with a copy of our report as a retail client because you are a shareholder of Eastern Goldfields Limited.

Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client, a Financial Services Guide (‘ FSG ’). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

Who we are and how we can be contacted;
The services we are authorised to provide under our Australian Financial Services Licence, Licence No. 316158;
Remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
Any relevant associations or relationships we have; and
Our internal and external complaints handling procedures and how you may access them.

Information about us

BDO Corporate Finance (WA) Pty Ltd is a member firm of the BDO network in Australia, a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International). The financial product advice in our report is provided by BDO Corporate Finance (WA) Pty Ltd and not by BDO or its related entities. BDO and its related entities provide services primarily in the areas of audit, tax, consulting and financial advisory services.

We do not have any formal associations or relationships with any entities that are issuers of financial products. However, you should note that we and BDO (and its related entities) might from time to time provide professional services to financial product issuers in the ordinary course of business.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence that authorises us to provide general financial product advice for securities to retail and wholesale clients.

When we provide the authorized financial services we are engaged to provide expert reports in connection with the financial product of another person. Our reports indicate who has engaged us and the nature of the report we have been engaged to provide. When we provide the authorised services we are not acting for you.

General Financial Product Advice

We only provide general financial product advice, not personal financial product advice. Our report does not take into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice.

BDO CORPORATE FINANCE (WA) PTY LTD

Financial Services Guide

Page 2

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Fees, commissions and other benefits that we may receive

We charge fees for providing reports, including this report. These fees are negotiated and agreed with the person who engages us to provide the report. Fees are agreed on an hourly basis or as a fixed amount depending on the terms of the agreement. The fee payable to BDO Corporate Finance (WA) Pty Ltd for this engagement is approximately $27,000.

Except for the fees referred to above, neither BDO, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

Remuneration or other benefits received by our employees

All our employees receive a salary. Our employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report. We have received a fee from Eastern Goldfields Limited for our professional services in providing this report. That fee is not linked in any way with our opinion as expressed in this report.

Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

Complaints resolution

Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing addressed to The Complaints Officer, BDO Corporate Finance (WA) Pty Ltd, PO Box 700 West Perth WA 6872.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service (‘ FOS ’). FOS is an independent organisation that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial service industry. FOS will be able to advise you as to whether or not they can be of assistance in this matter. Our FOS Membership Number is 12561. Further details about FOS are available at the FOS website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399 Email: [email protected]

Contact details

You may contact us using the details set out on page 1 of the accompanying report.

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1.	Introduction	1
2.	Summary and Opinion	1
3.	Scope of the Report	4
4.	Profile of Eastern Goldfield	6
5.	Outline of the Transaction	13
6.	Profile of Investmet and Fotios	17
7.	Economic analysis	18
8.	Industry analysis	20
9.	Valuation approach adopted	22
10.	Valuation of EGL prior to Transaction	24
11.	Valuation of EGL following the Transaction	29
12.	Is the Transaction fair?	34
13.	Is the Transaction reasonable?	35
14.	Conclusion	39
15.	Sources of information	39
16.	Independence	39
17.	Qualifications	40
18.	Disclaimers and consents	40

Appendix 1 – Glossary and copyright notice Appendix 2 – Valuation Methodologies Appendix 3 – Comparable Companies

Appendix 4 – Comparable Transactions

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27 November 2015

The Directors Eastern Goldfields Limited Level 1, 24 Mumford Place BALCATTA WA 6021

Dear Directors

INDEPENDENT EXPERT’S REPORT

1. Introduction

Eastern Goldfields Limited ( ‘EGL or ‘ the Company’ ) is in the process of recapitalising its balance sheet with a view to its securities being reinstated to quotation on the Australia Securities Exchange ( ‘ASX’ ), ( ‘Recapitalisation’ ).

As part of the Recapitalisation, the Company intends to issue up to 170,132,823 fully paid ordinary EGL shares ( ‘Shares’ ) in aggregate to Investmet Limited ( ‘Investmet’ ), Mr. Michael Fotios ( ‘Fotios’ ) as trustee of the Fotios Family Trust ( ‘Fotios Family Trust ’), Delta Resource Management Pty Ltd ( ‘Delta’ ) and Whitestone Minerals Pty Ltd ( ‘Whitestone’ ):

upon conversion of the outstanding principal and interest amounts of debt owing to the respective parties; and
in lieu of fees for various services provided to the Company by Investmet, the Fotios Family Trust, Delta and Whitestone.

Investmet and Fotios currently hold 40.2% of the issued capital of EGL. The issue of 78,126,129 additional Shares to Investmet, 20,934,143 additional Shares to the Fotios Family Trust, 63,220,554 additional Shares to Delta and 7,851,997 additional Shares to Whitestone will result in Investmet and Fotios increasing their voting power from above 20% to a level less than 90%. Therefore, the Company has determined to seek shareholder approval for the increase in voting power by Investmet and Fotios under item 7 of section 611 of the Corporations Act 2001 (Cth) ( ‘Corporations Act’ or ‘ the Act’ ).

2. Summary and Opinion

2.1 Purpose of the report

The directors of EGL have requested that BDO Corporate Finance (WA) Pty Ltd (‘ BDO ’) prepare an independent expert’s report (‘ our Report ’) to express an opinion as to whether or not the issue of 170,132,823 Shares in aggregate to Investmet, the Fotios Family Trust, Delta and Whitestone ( ‘the Transaction’ ) is fair and reasonable to the non-associated shareholders of EGL (‘ Shareholders ’).

BDO Corporate Finance (WA) Pty Ltd ABN 27 124 031 045 AFS Licence No 316158 is a member of a national association of independent entities which are all members of BDO (Australia) Ltd ABN 77 050 110 275, an Australian company limited by guarantee. BDO Corporate Finance (WA) Pty Ltd and BDO (Australia) Ltd are members of BDO International Ltd, a UK company limited by guarantee, and form part of the international BDO network of independent member firms. Liability limited by a scheme approved under Professional Standards Legislation (other than for the acts or omissions of financial services licensees) in each State or Territory other than Tasmania.

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Our Report is prepared pursuant to section 611 of the Corporations Act and is to be included in the Notice of Meeting and Explanatory Statement ( ‘Notice of Meeting’ ) for EGL in order to assist the Shareholders in their decision whether to approve the Transaction.

2.2 Approach

Our Report has been prepared having regard to Australian Securities and Investments Commission (‘ ASIC ’) Regulatory Guide 111 ‘Content of Expert’s Reports’ (‘ RG 111 ’) and Regulatory Guide 112 ‘Independence of Experts’ (‘ RG 112 ’).

In arriving at our opinion, we have assessed the terms of the Transaction as outlined in the body of this report. We have considered:

How the value of an EGL share prior to the Transaction on a control basis compares to the value of an EGL share following the Transaction on a minority basis;
The likelihood of an alternative offer being available to EGL;
Other factors which we consider to be relevant to the Shareholders in their assessment of the Transaction; and
The position of Shareholders should the Transaction not proceed.

2.3 Opinion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that the Transaction is fair and reasonable to the Shareholders of EGL.

2.4 Fairness

2.4.1. The Transactions on a standalone basis

In section 12 we determined that the value of a share in EGL prior to the Transaction on a control basis and the value of a share following the Transaction on a minority basis are compared below:

		Low	Preferred	High
	Ref
		$	$	$
Value of an EGL share prior to the Transaction (control)	10.3	Nil	Nil	Nil
Value of an EGL share following the Transaction (minority)	11.1	Nil	Nil	Nil

The above pricing indicates that, in the absence of any other relevant information, the low, high and preferred values of an EGL share following the Transaction on a minority interest basis are equal to the low, high and preferred values of an EGL share prior to the Transaction on a control basis.

2.4.2. The Transactions on a consolidated basis

We have also compared the value of a share in EGL prior to the Transaction to the value of a share in EGL following the Transaction if the Remaining Resolutions are approved and if the Maximum Capital Raising is achieved ( ‘Transaction on a consolidated basis’ ), as shown below:

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		Low	Preferred	High
	Ref
		$	$	$
Value of an EGL share prior to the Transaction (control)	10.3	Nil	Nil	Nil
Value of an EGL share following the Transaction on a	11.4	0.016	0.021	0.026
consolidated basis (minority)

We note from the table above that the value of an EGL share prior to the Transaction on a control basis is significantly lower than the value of an EGL share following the Transaction if the Remaining Resolutions are approved and if the Maximum Capital Raising is achieved on a minority basis.

The above valuation ranges are graphically presented below:


Value	of an EGL share prior to the Transactions on a
	control basis
Value	of an EGL share following the Transactions	on
	a consolidated basis on a minority basis
		0.00	0.01	0.02	0.03

Source: BDO analysis

The above pricing indicates that, in the absence of any other relevant information, the low, high and preferred values of an EGL share following the Transaction on a consolidated basis and on a minority interest basis are equal to or greater than the low, high and preferred values of an EGL share prior to the Transaction on a control basis.

2.5 Reasonableness

We have considered the analysis in section 13 of this report, in terms of both

advantages and disadvantages of the Transaction; and
other considerations, including the position of Shareholders if the Transaction does not proceed and the consequences of not approving the Transaction.

In our opinion, the position of Shareholders if the Transaction is approved is more advantageous than the position if the Transaction is not approved. Accordingly, in the absence of any other relevant information and we believe that the Transaction is reasonable for Shareholders.

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The respective advantages and disadvantages considered are summarised below:

ADVANTAGES AND DISADVANTAGES
Section Advantages	Section	Disadvantages
13.1.1 The Transaction is fair	13.2.1	Dilution of Shareholders’ interest
13.1.2 The extinguishment of the debts owing to Investmet, Fotios, Delta and Whitestone may result in the Company’s projects being developed to their full potential	13.2.2	Presence of a significant controlling shareholder may reduce the attractiveness of the Company’s shares to potential investors
13.1.3 Strengthens the Company’s balance sheet	13.2.3	Practical level of control
13.1.4 Strengthens the Company’s relationship with its cornerstone investor
13.1.5 No changes to current operating arrangements
13.1.6 Debt, DCM Debt and Investmet Loan will need to be repaid
13.1.7 Preserving cash reserves due to settling of fees by the issue of shares

3. Scope of the Report

3.1 Purpose of the Report

Section 606 of the Corporations Act ( ‘Section 606’ ) expressly prohibits, subject to certain exceptions, the acquisition of relevant interest in voting shares by a party who already holds (with associates) more than 20% of the voting power of a public company. The Transaction is a control transaction and is covered by Section 606 because as at the date of our Report, Investmet and Fotios hold 40.2% of the issued capital of EGL. Pursuant to the Transaction, the Company is seeking Shareholder approval for Investmet and Fotios to increase their holding through the issue of Shares to Investmet, the Fotios Family Trust, Delta and Whitestone which may result in Investmet and Fotios holding 77.5% of the issued capital of EGL. This is discussed further in section 5 of our Report.

Section 611 of the Corporations Act ( ‘Section 611’ ) permits an acquisition which results in a person increasing their voting power from above a point that is 20% to less than 90% if the shareholders of that entity have agreed to the issue of such shares. This agreement must be by resolution passed at a general meeting at which no votes are cast in favour of the resolution by any party who is associated with the party acquiring the shares, or by the party acquiring the shares. Section 611 states that shareholders of the company must be given all information that is material to the decision on how to vote at the meeting.

RG 74 states that the obligation to supply shareholders with all information that is material can be satisfied by the non-associated directors of EGL, by either:

undertaking a detailed examination of the Transaction themselves, if they consider that they have sufficient expertise; or
by commissioning an Independent Expert's Report.

The directors of EGL have commissioned this Independent Expert's Report to satisfy this obligation.

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3.2 Regulatory guidance

Neither the Listing Rules nor the Corporations Act defines the meaning of ‘fair and reasonable’. In determining whether the Transaction is fair and reasonable, we have had regard to the views expressed by ASIC in RG 111. This regulatory guide provides guidance as to what matters an independent expert should consider to assist security holders to make informed decisions about transactions.

This regulatory guide suggests that where the transaction is a control transaction, the expert should focus on the substance of the control transaction rather than the legal mechanism to affect it. RG 111 suggests that where a transaction is a control transaction, it should be analysed on a basis consistent with a takeover bid.

In our opinion, the Transaction is a control transaction as defined by RG 111 and we have therefore assessed the Transaction as a control transaction to consider whether, in our opinion, it is fair and reasonable to Shareholders.

3.3 Adopted basis of evaluation

RG 111 states that a transaction is fair if the value of the offer price or consideration is greater than the value of the securities subject of the offer. This comparison should be made assuming a knowledgeable and willing, but not anxious, buyer and a knowledgeable and willing, but not anxious, seller acting at arm’s length. When considering the value of the securities subject of the offer in a control transaction the expert should consider this value inclusive of a control premium. Further to this, RG 111 states that a transaction is reasonable if it is fair. It might also be reasonable if despite being ‘not fair’ the expert believes that there are sufficient reasons for security holders to accept the offer in the absence of any higher bid.

Having regard to the above, BDO has completed this comparison in two parts:

A comparison between the value of an EGL share prior to the Transaction on a control basis and the value of an EGL share following the Transaction (on a standalone basis and on a consolidated basis) on a minority basis (fairness – see Section 12 ‘Is the Transaction Fair?’); and
An investigation into other significant factors to which Shareholders might give consideration, prior to approving the resolution, after reference to the value derived above (reasonableness – see Section 13 ‘Is the Transaction Reasonable?’).

3.4 APES 225 compliance

This assignment is a Valuation Engagement as defined by Accounting Professional & Ethical Standards Board professional standard APES 225 ‘Valuation Services’ (‘ APES 225 ’).

A Valuation Engagement is defined by APES 225 as follows:

‘an Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.’

This Valuation Engagement has been undertaken in accordance with the requirements set out in APES 225.

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4. Profile of Eastern Goldfield

4.1 History

EGL, formerly Swan Gold Mining Limited and Monarch Gold Mining Company Limited, is an exploration and production company based in Balcatta, Western Australia. The Company listed on the ASX on 29 October 2002. The Company changed its name to Eastern Goldfields Limited on 11 November 2015.

The Company has been suspended from quotation since 18 June 2008. Between 10 July 2008 and 26 February 2010, the Company was in external administration.

Currently, the members of the Board of Directors are:

Mr Michael Fotios – Executive Chairman and Company Secretary;
Mr Alan Still – Non-Executive Director; and
Mr Craig Readhead – Non-Executive Director.

4.2 Projects

The Company primarily explores for gold, nickel sulphide, and other base metal deposits. EGL holds a 100% interest in the Davyhurst Gold Project ( ‘Davyhurst’ ) and the Mt Ida Gold Project ( ‘Mt Ida’ ).

Davyhurst which is located approximately 120 kilometres ( ‘km’ ) north-west of Kalgoorlie comprises the Riverina and Siberia deposits. Davyhurst comprises 72 mining leases, 55 prospecting licences and 18 exploration licenses covering a total area of 1,293 km[2] . Davyhurst is host to the Davyhurst Processing facility which includes a 1.2Mtpa Carbon-in-Pulp (CIP) plant and other associated infrastructure.

Mt Ida is located approximately 200km north-west of Kalgoorlie and 70km north-west of Menzies, covering part of the prospective Ularring Greenstone Belt. Mt Ida comprises 3 mining leases, 47 prospecting licences and 4 exploration licences covering a total area of 180 km[2] . Mt Ida is a high grade deposit with historical production in excess of 500,000 tonnes at a grade in excess of 15g/t Au.

Davyhurst and Mt Ida have a combined mineral resource estimate of 18.9Mt at a grade of 2.5g/t Au for 1.4 million ounces of gold. Currently, both projects have been placed under care and maintenance.

Please refer to The Independent Technical Specialist Report prepared by Agricola Mining Consultants Pty Ltd ( ‘Agricola’ ) in Appendix Four for further details regarding EGL’s projects.

4.3 Debt Facilities

As at 30 September 2015, the Company had the following outstanding debts:

a secured debt of $18.07 million and an unsecured debt of $2.59 million of which $11.15 million is in favour of Investmet, Delta and the Fotios Family Trust ( ‘Debt’ ) and $9.52 million is in favour of certain third party lenders (which included Delta and the Fotios Family Trust) ( ‘Other Lenders Nominee’ ) under a syndicated debt arrangement ( ‘Other Lenders Debt Portion’ );
an unsecured debt of $4.20 million in favour of Investmet ( ‘DCM Debt’ );
a secured debt of $5.0 million in favour of Stirling Resources Pty Ltd ( ‘Stirling’ ) ( ‘Stirling Debt’ ); and

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an unsecured debt of $2.5 million in favour of Investmet, the Fotios Family Trust and Delta ( ‘Investmet Loan’ ).

The above debts are governed by a Facility Agreement entered into on 17 April 2014 between EGL, Investmet, Stirling, DCM DECOmetal GmbH ( ‘DCM’ ) and others comprising four elements:

Debt Conversion

Investmet can elect to convert the Debt (in whole or part) into fully paid ordinary EGL shares ( ‘Shares’ ). In the event that Investmet chooses to convert the Debt, Stirling will be entitled to convert a portion of the Stirling Debt[1] in proportion to the amount of the Debt that Investmet converts.

In the event that he Company does not have enough unallocated funds upon repayment of the debts and conversion of the Debt and Stirling Debt in order to meet the reinstatement requirements of the ASX, Stirling may elect to convert such amount of the Stirling Debt as would be required in order for the Company to meet the ASX’s reinstatement requirements.

Investmet may also elect to convert the DCM Debt (in whole or part) into Shares[2] .

Repayment on Capital Raising

Upon completion of an equity raising by the Company to raise funds to ensure that the Company has sufficient funds to satisfy any financial conditions imposed by the ASX in relation to the re-quotation of the Company’s securities:

I. Investmet is to elect to convert part or all of the Debt outstanding at the completion of the capital raising, provided that no more than $5.0 million of the Debt is remaining immediately after;
II. Stirling may elect to convert part or all of the Stirling Debt outstanding at the completion of the Equity Raising provided that no more than $2.50 million of the Stirling Debt remains immediately after. In the event that Stirling does not convert any or all of the Stirling Debt up to $2.5 million in accordance with its right of conversion, Stirling agrees to act in good faith and convert any such amount of the Stirling Debt up to $2.50 million that would result in the Company being able to meet the ASX reinstatement requirements; and
III. Investmet may elect to have the DCM Debt repaid (in whole or part) in cash from the proceeds of the Equity Raising or by the issue of Shares, or elect to have all or part of the DCM Debt remaining after the capital raising.

Repayment and conversion on maturity date

On 1 July 2014 ( ‘Maturity date’ ), the Company was required to repay the Debt and Stirling Debt (and interest) outstanding on the Maturity Date by the issue of Shares or in cash, at the election of the Company, provided that:

I. Investmet had the option to elect for no more than $5.0 million of the Debt to remain immediately after the Maturity Date; and
II. Stirling had the option to elect for no more than $5.0 million of the Stirling Debt to remain immediately after the Maturity Date.

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Further, Investmet also had the option to elect for the DCM Debt (and interest) outstanding on the Maturity Date to be repaid by, at the election of Investmet, the issue of Shares or cash. Investmet was also entitled to elect that all or part of the DCM Debt remains immediately after the Maturity Date.

In respect of the Stirling Debt, the Company recently negotiated a settlement ( ‘Settlement Deed’ ) with Stirling such that the principal and interest will be extinguished for a cash consideration of $1.48 million (plus GST) ( ‘Settlement Sum’ ) . Further, under the Settlement Deed, EGL will also undertake a selective buy back all of 8,892,922 shares held by Stirling Gold Pty Ltd ( ‘Stirling Gold’ ), a wholly owned subsidiary of Stirling for $50,000.

Notes:

1 Striling Debt: Investmet paid $2.59 million to Stirling and, in turn, Stirling assigned to Investmet $2.59 of the $7.59 debt owed by EGL to Stirling. EGL continues to owe $5.0 million (and interest) to Stirling.

2 DCM Debt : EGL intended to pay $4.20 million to DCM. However, Investmet paid the$4.20 million to DCM in consideration of DCM assigning to Investmet the debt owed by EGL to DCM. EGL continues to owe $4.20 million to Investmet.

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4.4 Historical Balance Sheet

Statement of Financial Position	Audited as at Audited as at
	30-Jun-14 30-Jun-13
	$ $
CURRENT ASSETS
Cash and cash equivalents	215,699 235,603
Trade and other receivables	772,758 5,525,343
Prepayments	- 11,746
Inventory	- 63,459
TOTAL CURRENT ASSETS	988,457 5,836,151
NON-CURRENT ASSETS
Property, plant and equipment	3,000,000 3,000,000
Trade and other receivables	64,160 -
TOTAL NON-CURRENT ASSETS	3,064,160 3,000,000
TOTAL ASSETS	4,052,617 8,836,151

CURRENT LIABILITIES
Trade and other payables	1,409,917 1,647,872
Loans and borrowings	31,706,201 30,114,240
Provisions	58,242 26,761
TOTAL CURRENT LIABILITIES	33,174,360 31,788,873

NON-CURRENT LIABILITIES
Provisions	4,148,100 4,148,100
TOTAL NON-CURRENT LIABILITIES	4,148,100 4,148,100
TOTAL LIABILITIES	37,322,460 35,936,973
NET ASSETS	(33,269,843) (27,100,822)

EQUITY
Contributed equity	167,965,331 167,665,331
Reserves	5,292,614 5,292,614
Accumulated losses	(206,527,787) (200,101,070)
Non-controlling interest	- 42,300
TOTAL EQUITY	(33,269,842) (27,143,125)

Source: Audited financial statements for the financial years ended 30 June 2014 and 30 June 2013.

We have not been provided with financial statements of the Company for the financial year ended 30 June 2015.

For the year ended 30 June 2014, the audit report in the financial statements included an emphasis of matter regarding the Company’s ability to continue operating as a going concern. As at 30 June 2014, the Company’s current liabilities exceed its current assets by $32.19 million and the Company recorded a loss of $6.47 million for the financial year ended 30 June 2014. The ability of the Company to meet its debt as and when they fall due is primarily dependent on the Directors meeting the terms and conditions under

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the Investmet transaction and successfully recapitalising the Company. Failure to do so may result in EGL being unable to meet its debts as and when they fall due and realise its assets and settle its liabilities in the ordinary course of business.

Commentary on Historical Balance Sheet

Current trade and receivables balance decreased from $5.53 million as at 30 June 2013 to $0.77 million as at 30 June 2014. The decrease was primarily caused by a security deposits of $5.20 million not available for use until the Company was released from any rehabilitation obligations in regard to tenements to which the security deposit related. This was partially offset by a $0.73 million R&D tax credit received by the Company.
Management has advised, as at the date of our Report, the Company has been released from any rehabilitation obligations in regard to the tenements to which the security deposit related.
Non-current trade and receivables relates to $64,160 reclassified from cash to security deposit. As mentioned above, the security deposit was not available for use until the Company was released from any rehabilitation obligations in regards to tenements to which the security deposit related. Management has advised, as at the date of our Report, the Company has been released from any rehabilitation obligations in regard to the tenements to which the security deposit related.
The breakdown of loans and borrowings over the two year period is as shown below. Refer to section 5.3 for further details regarding the respective loans and borrowings.

Loans and borrowings	Audited as at Audited as at
	30-Jun-14 30-Jun-13
	$ $
DCM debt (assigned to Investmet)	4,459,047 4,200,000
Sitrling debt	5,308,389 5,000,000
Syndicated debt (assigned to Investmet)	21,938,765 20,664,240
Other – unsecured	- 250,000
Total loans and borrowings	31,706,201 30,114,240

Current provisions relate to annual employee benefits such as annual leave, and long service leave. Non-current provisions relate to rehabilitation costs at Davyhurst and Mt Ida.

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4.5 Historical Statement of Comprehensive Income

Statement of Comprehensive Income	Audited for the Audited for the
	year ended 30-Jun-14 year ended 30-Jun-13
	$ $
Revenue
Revenue	43,793 74,117
Other income	2,152,525 6,718,037
Expenses
Employee and directors - remuneration expense	(438,194) (635,832)
Site care and maintenance costs	(88,807) (349,045)
Administration expenses	(1,044,157) (981,022)
Other expenses	(36,061) (46,375)
Finance costs	(1,923,206) (69,134)
Depreciation	- (80,614)
Exploration expenditure	(5,109,647) (2,794,848)
Impairment of property, plant and equipment	(25,263) (5,222,925)
Capitalised exploration written off	- (21,499,000)
Loss from continuing operations before income tax	(6,469,017) (24,886,641)
Income tax expense
Loss from continuing operations after income tax	(6,469,017) (24,886,641)
Foreign currency translation differences
Total comprehensive loss for the year	(6,469,017) (24,886,641)

Source: Audited financial statements for the financial years ended 30 June 2014 and 30 June 2013.

Commentary on Historical Balance Sheet

Revenue earned during the financial year ended 30 June 2014 and 30 June 2013 relate to interest earned.
Other income of $6.72 million earned during the financial year ended 30 June 2013 primarily comprised gain on loan forgiveness of $6.53 million. EGL owed $13.477 million to Territory Trust of which $6.95 million was reassigned to Investmet and $6.53 million was forgiven.
Profit on sale of tenement related to the sale of Lady Bountiful deposit to Norton Gold Fields Limited, Paddington Gold Pty Ltd and Neil Edward Newman for a consideration of $1.4 million on 14 November 2013.
Finance costs increased from $0.07 million for the financial year ended 30 June 2013 to $1.92 million for the financial year ended 30 June 2014 primarily due to the additional interest expense of $1.84 million capitalised against the Debt, DCM Debt and Stirling Debt.
As the Davyhurst processing facility has been placed under care and maintenance over the two year period, the Company obtained a market valuation report from an independent third party which contained an upper, preferred and lower valuation based on a trade sale. The carrying

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value of property, plant and equipment has been impaired to reflect the lower valuation obtained in the independent valuation report to ensure the carrying value reflects the inherent risk of pricing uncertainty due to the nature of the second hand market conditions and cover costs to sell.

4.6 Capital Structure

The share structure of EGL as at 25 September 2014 is outlined below:

	Number
Total ordinary shares on issue	91,850,223
Top 20 shareholders	73,848,936
Top 20 shareholders - % of shares on issue	80.40%

Source: 2014 Annual Report

The ordinary shares held by the most significant shareholders as at 25 September 2014 are detailed below:

Name	Number of Ordinary Shares Held	Percentage of Issued Shares (%)
Investmet Limited	41,238,671	44.90%
Stirling Gold Pty Ltd	8,623,822	9.39%
MGMC Pty Ltd	4,372,339	4.76%
Mrs Susan Kiernan	4,000,000	4.35%
Subtotal	58,234,831	63.40%
Others	33,615,392	36.60%
Total ordinary shares on Issue	91,850,223	100.00%

Source: 2014 Annual Report

On 27 November 2015 the Company undertook a share placement issuing 10,666,667 Shares at an issue price of $0.15. Therefore, as at the date of our Report the number of EGL shares on issue is 102,516,890.

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5. Outline of the Transaction

5.1 The Recapitalisation

EGL is in the process of recapitalising its balance sheet with a view to its securities being reinstated to quotation on the ASX. As part of the Recapitalisation, the Company intends to, among other things, raise at least $6.0 million and up to $10.0 million in equity (or debt/equity hybrid) funding ( ‘Capital Raising’ ). Subject to investor demand, the Company intends the Capital Raising to comprise of one or a combination of the following:

a placement of shares to professional and sophisticated investors under a prospectus in accordance with section 710 of the Corporations Act; and
converting loan arrangements with professional and sophisticated investors.

On 27 November 2015 the Company undertook a separate placement of Shares at an issue price of $0.15 per share to raise an additional $1.60 million for working capital purposes ( ‘Interim Placement’ ).

The Company is also seeking to reduce its outstanding debts through:

the issue of up to 90,390,313 Shares at a deemed price of $0.15 to Investmet, the Fotios Family Trust and Delta upon conversion of the principal component of the Debt ( ‘Resolution 2’) ;
the issue of up to 47,371,287 Shares at a deemed price of $0.15 to the Other Lenders Nominee upon conversion of the principal component of the Other Lenders Debt Portion ( ‘Resolution 3’) ;
the issue of up to 28,000,000 Shares at a deemed price of $0.15 to Investmet upon conversion of the principal component of the DCM Debt ( ‘Resolution 4’) ;
the issue of up to 19,795,699 Shares at a deemed price of $0.15 to Investmet, the Fotios Family Trust and Delta upon conversion of the interest component of the Debt and DCM Debt ( ‘Resolution 5’) ;
the issue of up to 7,920,813 Shares at a deemed price of $0.15 to Other Lenders Nominee upon conversion of the interest component of the Other Lenders Debt Portion ( ‘Resolution 6’) ;
the issue of up to 15,487,592 Shares at a deemed price of $0.15 to Investmet, the Fotios Family Trust and Delta upon conversion of the principal component of the Investmet Loan ( ‘Resolution 7’) ;
the issue of up to 2,053,061 Shares at a deemed price of $0.15 to Investmet, the Fotios Family Trust and Delta upon conversion of the interest component of the Investmet Loan ( ‘Resolution 8’) ;
the issue of up to 87,717 Shares at a deemed price of $0.15 to Investmet in lieu of fees for corporate services ( ‘Resolution 12’) ;
the issue of up to 2,493,333 Shares at a deemed price of $0.15 to Fotios in lieu of unpaid Director’s fees and consultant’s fees ( ‘Resolution 13’) ;
the issue of up to 7,851,997 Shares at a deemed price of $0.15 to Whitestone Minerals Pty Ltd in lieu of fees for drilling services ( ‘Resolution 14) ;
the issue of up to 3,973,109 Shares at a deemed price of $0.15 to Delta in lieu of fees for corporate and administrative services ( ‘Resolution 15’) ; and

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the selective buy-back ( ‘Share Buy-back’ ) of 8,892,922 Shares currently held by Stirling ( ‘Resolution 17’) .

Further details of the Recapitalisation can be found in the Notice of Meeting and Explanatory Statement.

5.2 The Transaction

The issue of 170,132,823 Shares in aggregate to Investmet, the Fotios Family Trust, Delta and Whitestone under Resolutions 2, 4, 5, 7, 8, 12, 13, 14 and 15 comprise the Transaction.

Resolution 2, Resolution 4 and Resolution 5:

Investmet, the Fotios Family Trust and Delta made payments on behalf of EGL totalling $20,664,240 in relation to Debts owed by EGL. On 27 March 2013 Investmet also made a further payment of $4.2 million to DCM in consideration of DCM assigning to Investmet the DCM Debt owed by EGL. Subsequently, Investmet assigned a portion of this debt to the Fotios Family Trust and Delta.

As part of the agreement entered into, Investmet, the Fotios Family Trust and Delta may elect to have the principal component and/or the interest component of the Debt and DCM Debt repaid by the issue of shares.

Under Resolution 2, the Company intends to issue up to 90,390,313 Shares in aggregate to Investmet, the Fotios Family Trust and Delta upon conversion of the principal amount of the Debt owing to them.

Under Resolution 4, the Company intends to issue up to 28,000,000 Shares in aggregate to Investmet upon conversion of the principal amount of the DCM Debt owing to it.

Under Resolution 5, the Company intends to issue of up to 19,795,701 Shares in aggregate to Investmet, the Fotios Family Trust and Delta upon conversion of the interest component of the Debt and DCM Debt. In accordance with the agreement, interest has been accruing on the Debt and DCM Debt since 1 July 2013, at an interest rate of 6% per annum.

Upon approval of Resolution 2, Resolution 4 and Resolution 5, the liability of approximately $20.73 million owed by the Company will be extinguished.

The number of Shares to be issued to Investmet, the Fotios Family Trust and Delta under Resolution 2, Resolution 4 and Resolution 5 are shown below:

Related Party	Portion of Debt held	Maxmium number of Shares to be issued
	($)
Investmet	10,573,200	70,488,000
Fotios Family Trust	2,100,973	14,006,487
Delta	8,053,729	53,691,527
TOTAL	20,727,902	138,186,014

Source: Notice of Meeting

Resolution 7 and Resolution 8

As set out in section 4.3 of our Report, on 1 November 2014 the Company, Investmet, the Fotios Family Trust and Delta entered into an unsecured loan facility agreement for an amount of $2.50 million with the funds under the facility to be used for general corporate purposes. As part of the agreement, Investmet,

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the Fotios Family Trust and Delta may elect to have the principal component and/or the interest component of the Investmet Loan repaid by the issue of shares

Under Resolution 7, the Company intends to issue of up to 15,487,592 Shares in aggregate to Investmet, the Fotios Family Trust and Delta upon conversion of the principal amount of the Investmet Loan owing to it.

Under Resolution 8, the Company intends to issue of up to 2,053,061 Shares upon conversion of the interest component of the Investmet Loan owing to Investmet, the Fotios Family Trust and Delta. In accordance with the agreement, interest has been accruing on the Investmet Loan since 1 November 2014, at an interest rate of 10% per annum.

Upon approval of Resolution 7 and Resolution 8, the liability of approximately $2.63 million owed by the Company will be extinguished.

The number of Shares to be issued to Investmet under Resolution 7 and Resolution 8 are shown below:

Related Party	Portion of Debt held	Maxmium number of Shares to be issued
	($)
Investmet	1,132,562	7,550,412
Fotios Family Trust	665,149	4,434,323
Delta	833,388	5,555,918
TOTAL	2,631,099	17,450,653

Source: Notice of Meeting

Resolution 12, Resolution 13, Resolution 14 and Resolution 15

As at the date of our Report, the Company owes:

Investmet - approximately $13,158 in consideration for the provision of corporate services;
Fotios - approximately $374,000 by way of unpaid Directors’ fees and consultant’s fees to Fotios;
Whitestone – approximately $1,177,800 in consideration for the provision of drilling services; and
Delta - approximately $595,966 in consideration for the provision of corporate and administrative services.

Under Resolution 12, the Company intends to issue up to 87,717 Shares as consideration for Investmet providing corporate services to the Company.

Under Resolution 13, the Company intends issue up to 2,493,333 Shares in lieu of Director’s fees.

Under Resolution 14, the Company intends to issue up to 7,851,997 Shares as consideration for Whitestone providing drilling services to the Company.

Under Resolution 15, the Company intends issue up to 3,973,109 Shares as consideration for Delta providing corporate and administrative services to the Company

The number of Shares to be issued to Investmet, Fotios, Whitestone and Delta under Resolution 12, Resolution 13, Resolution 14 and Resolution 15 are shown below:

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Related Party	Amount of fees owed	Maxmium number of Shares to be issued
	($)
Investmet	13,158	87,717
Fotios	374,000	2,493,333
Whitestone	1,177,800	7,851,997
Delta	595,966	3,973,109
TOTAL	2,160,924	14,406,156

Source: Notice of Meeting

5.3 Shareholding of EGL following the Transaction

As at the date of our Report, Investmet is a substantial Shareholder of the Company holding a relevant interest in 41,238,671 Shares, being 40.2% of the Shares of EGL on issue. Delta is a related party as it is controlled by Fotios who is also a related party of the Company by virtue of being a Director. The Fotios Family Trust is also a related party through Fotios who is the Trustee of the Fotios Family Trust. Whitestone is also a related party of the Company by virtue of being an entity which is controlled by Investmet which is a related party of the Company.

The following table shows the number of Shares that may be issued to Investmet and Fotios following the approval of the Transaction:

	Investmet & Fotios	Other Shareholders	Total
Issued shares as at the date of our Report	41,238,671	61,278,219	102,516,890
% holdings	40.23%	59.77%	100.00%
Shares to be issued following the Transaction
Resolution 2, 4 and 5	138,186,014	-	138,186,014
Resolution 7 and 8	17,540,653	-	17,540,653
Resolution 12 , 13, 14 and 15	14,406,156	-	14,406,156
Number of shares following to the Transaction	211,371,494	61,278,219	272,649,713
*% holdings following the Transaction*	*77.52%*	*22.48%*	*100.00%*

Source: BDO analysis

We have also analysed the shareholding of Investmet and Fotios following the Transaction if the maximum Capital Raising of $10.0 million ( ‘Maximum Capital Raising’ ) is achieved and if Resolutions 3, 6 and 17 ( ‘Remaining Resolutions’ ) are approved by Shareholders as shown below:

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	Investmet & Fotios	Other Shareholders	Total
Issued shares as at the date of our Report	41,238,671	61,278,219	102,516,890
% holdings	40.23%	59.77%	100.00%
Shares to be issued following the Transaction
Resolution 2, 4 and 5	138,186,014	-	138,186,014
Resolution 7 and 8	17,540,653	-	17,540,653
Resolution 12 , 13, 14 and 15	14,406,156	-	14,406,156
Capital Raising	-	66,666,667	66,666,667
Remaining Resolutions	-	46,399,178	46,399,178
Shares to be distributed by Investmet (no new shares issued)	(9,022,540)	9,022,540	-
Number of shares following the Transaction on a consolidated basis	202,348,954	183,366,604	385,715,558
*% holdings following the Transaction*	*52.46%*	*47.54%*	*100.00%*

Source: BDO analysis

As described in the Notice of Meeting, 9,022,514 Shares are to be distributed by Investmet to Other Lenders Nominees as part of the conversion of the various debts owed by EGL.

6. Profile of Investmet and Fotios

Investmet is an unlisted public company managed by experienced industry professionals and supported by private high net worth investors (including its directors and management).

Investmet was created to pursue a variety of investment opportunities in mineral resource projects with strong future demand growth and to incubate, develop and enhance the value of these investments through financial, technical and corporate support.

Michael Fotios is the founder and current Executive Chairman of Investmet. Fotios has qualifications in geology, specialising in economic geology with extensive experience in exploration throughout Australia working with gold, base metals, tantalum, tin and nickel from exploration to feasibility, Fotios has held the position of managing director of a number of listed companies in the past and has substantial interests in the mining and exploration industry. Fotios is also the current Executive Chairman and Secretary of EGL.

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7. Economic analysis

7.1 Global Overview

Growth of global economic activity remains moderate. In the euro area, economic activity has continued to improve gradually, although activity still remains low. In the United States of America ( ‘USA’ ), recent data suggest that the slowdown of economic activity at the beginning of year was temporary, with economic growth returning to the pace recorded at the end of 2014.

In China, economic activity, particularly in resource intensive sectors has continued to moderate since the first half of this year. In response, the Chinese government has adjusted various policy settings to provide more support and growth. A more accommodative monetary policy, including reductions in benchmark interest rates and reserve requirement rations, together with the announcement of further approvals for infrastructure investment, should provide some support to growth in coming quarters.

The Japanese economy has recovered since late last year. However, in the rest of east Asia, growth has declined to be slightly below the decade-average in the first half of 2015. The slowdown in economic growth has been driven by a weaker growth in exports within the region, as domestic demand growth remained robust.

Advanced economies have continued to recover while growth in emerging economies has eased over the recent months. Concerns regarding spillovers from developments in Greece have subsided, with focus shifting towards the reaction of financial markets to a potential increase in policy rates by the Federal Reserve. Despite fluctuations in the global financial markets associated with the respective developments in China and Greece, long-term borrowing rates for most sovereigns and creditworthy private borrowers remain low.

Following a sharp and long-lasting fall, oil prices have risen slightly in recent months. This has weakened disinflationary forces in many countries, fuelling an increase in price growth in the euro area. However, price growth in the global economy remains very low, and in some European economies it is still negative. In these conditions, major central banks are keeping interest rates close to zero and the European Central Bank continues with its asset purchase programme.

7.2 Australia

In the light of significant structural changes, the Australian economy has continued to grow over the past year, but at a rate somewhat below its longer-term average. Following strong growth in the March quarter, recent data indicates that growth to be in excess of 3% by 2017. The rate of unemployment, though elevated, has had little change recently. Overall, the economy is likely to be operating with a degree of spare capacity for some time yet. With very slow growth in labour costs, inflation is forecast to remain consistent with the Reserve Bank of Australia (‘ RBA ’) target over the next one to two years, despite a lower exchange rate.

Low interest rates in Australia are acting to support borrowing and spending. Credit is recording moderate growth overall, with stronger borrowing by businesses and growth in lending to the housing market broadly steady over recent months. Dwelling prices continue to rise strongly in Sydney, though trends have been more varied in a number of other cities. The RBA is working with other regulators to assess and contain risks that may arise from the housing market. In other asset markets, prices for equities and commercial property have been supported by lower long-term interest rates. The Australian Dollar continues to adjust to the significant declines in key commodity prices.

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At its most recent meeting, the RBA decided to leave the cash rate unchanged at 2.0%. However, Glenn Stevens has stated that the RBA expects to increase its policy rate in the coming periods.

The Australian dollar has declined noticeably against a rising US dollar over the past year, though less so against a basket of currencies. Further depreciation seems both likely and necessary, particularly given the significant declines in key commodity prices. A lower exchange rate is likely to be needed to achieve balanced growth in the economy.

7.3 Commodities

Uncertainty about the state of the Chinese economy has caused a new increase in commodity price volatility. The price of crude oil has decreased even further following concerns that demand from China would fall. Other commodities such as copper and steel have also experienced a drop in prices.

On the other hand, demand for gold has increased as investors perceive gold as a safe haven asset. Precious metals have also seen a small increase in prices, partly reflecting low levels of inflation globally and speculation of a potential increase in rates by the US Federal Reserve. Iron ore prices have also recently recovered reflecting speculation that a potential depreciation of the Chinese renminbi would result in increased currency competitiveness amongst steel producers in the country.

Copper prices have declined as a result of weakened Chinese export and industrial figures. The effect of the news of soft industrial production activity in Germany on copper prices was offset by strike action in two Chilean mines owned by Codelco (world’s biggest copper producer) which restricted copper supplies.

The strengthening of the US dollar, improvements in the US economy and speculation surrounding a potential increase in US rates by the Federal Reserve were all factors in the decline of gold prices earlier in the year. More recently, gold has benefited from safe-haven demand caused by the devaluation of the Chinese renminbi and concerns surrounding the Asian stock market.

Source: www.rba.gov.au Statement by Glenn Stevens, Governor: Monetary Policy Decision 3 November 2015

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8. Industry analysis

8.1 Gold

Gold is both a commodity and an international store of monetary value. Once mined, gold continues to exist indefinitely, often melted down and recycled to produce alternative or replacement products. This characteristic means that gold demand is supported by both mine production and gold recycling.

As illustrated in the chart below, gold mine production was approximately 3,114 ounces in 2014 and gold consumption was 4,278 ounces. Demand for gold has consistently exceeded supply over the last 10 years, and the escalated level of economic and financial uncertainty during recent years has caused investors to move capital from risky assets to gold assets, which are perceived to be a good store of monetary value. As a result, total gold demand increased at a CAGR of 4% between 2008 and 2014, but then decreased by 14.6% in 2014. Over the same period, demand as a percentage of supply was on average greater than 150%.

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----- Start of picture text -----

Gold Supply and Demand
6000 180%
160%
5000
140%
4000 120%
100%
3000
80%
2000 60%
40%
1000
20%
0 0%
Gold Mine Supply Gold Demand Demand as % Supply
Metric tonnes
Demand as % Supply
Gold Demand/Supply Mined
----- End of picture text -----

Source: Bloomberg and BDO analysis

Until the late 1980’s, South Africa produced approximately half of the total gold produced. More recently however, gold production has become geographically segmented, as shown in the chart below, with production dominated by China, Australia and the United States.

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Global Gold Production - 2014

China Australia 15% United States Russia 34% Peru 9% South Africa Papua New Guinea 7% Canada Mexico 7% Ghana 3% 5% Uzbekistan 3% 5% 5% 4% Others 2%

Source : Bloomberg and BDO analysis

Gold Prices

The price of gold fluctuates on a daily basis depending on global demand and supply factors. The softening of gold prices over the last two years is reflective of the recovery of global economic conditions. The value of gold peaked at US$1,900 per ounce on September 2011. This peak was largely caused by the debt market crisis in Europe, but it was also driven by the Standard and Poor’s downgrade of the US credit rating. This sent global stock markets tumbling and a flood of investors towards safer havens such as gold.

Prices contracted in December 2011 reaching a low of US$1,545 per ounce followed by a recovery in 2012, reaching US$1,790 per ounce on 4 October 2012 before declining to US$1,675 per ounce on 31 December 2012. Gold prices have modestly declined over 2013 and 2014. More recently, gold prices from January 2015 through to October 2015 have averaged US$1,177 per ounce, ranging from a low of US$1,085 per ounce on 5 August 2015 to a high of US$1,302 per ounce on 22 January 2015. More recently, the price of gold has dropped to US$1,069 per ounce on 23 November 2015.

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----- Start of picture text -----

Gold Spot and Forecast Price
2,000
1,600
1,200
800
400
-
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Gold Spot Pirce Gold Forecast Price
Gold Price (US$/Ounce)
----- End of picture text -----

Source: Bloomberg, Consensus Economics and BDO analysis

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According to Consensus Economics, gold prices are forecast to stabilise in the short to medium term, followed by a moderate increase with a long term nominal price forecast of approximately US$1,288 per ounce.

9. Valuation approach adopted

There are a number of methodologies which can be used to value a business or the shares in a company. The principal methodologies which can be used are as follows:

Capitalisation of future maintainable earnings (‘ FME ’)
Discounted cash flow (‘ DCF ’)
Quoted market price basis (‘ QMP ’)
Net asset value (‘ NAV ’)
Market based assessment such as a Resource Multiple

A summary of each of these methodologies is outlined in Appendix 2.

Different methodologies are appropriate in valuing particular companies, based on the individual circumstances of that company and available information.

It is possible for a combination of different methodologies to be used together to determine an overall value where separate assets and liabilities are valued using different methodologies. When such a combination of methodologies is used, it is referred to as a ‘sum-of-parts’ ( ‘Sum-of-Parts’ ) valuation.

9.1 Valuation of an EGL share prior to the Transaction

In our assessment of the value of an EGL shares we have chosen to employ the following methodologies:

Sum-of-Parts

We have employed the Sum-of-Parts method as our primary approach, which estimates the fair market value of the company by separately valuing each asset and liability of the company. The value of each asset may be determined using different methods. The component parts of EGL are valued using the NAV method, having consideration to the:

value of EGL’s interest in the Projects (having reliance on an independent specialist valuation opinion);
value of EGL’s other exploration assets (having reliance on an independent specialist valuation opinion); and
value of other assets and liabilities of EGL (applying the cost approach under the NAV method).

Other methodologies adopted

We have analysed the resource multiple observed for companies listed on the ASX with gold projects as their primary focus as the secondary method in assessing the value of an EGL share. The resource multiple is a market based approach which seeks to arrive at a value for the Company by reference to its total reported resources and to the enterprise value per tonne of the reported resources of comparable listed companies. The resource multiple represents the value placed on the resources of comparable companies by a liquid market.

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Methodologies chosen

We have chosen these methodologies for the following reasons:

we have adopted the Sum-of-Parts combined with the NAV approach as our primary valuation method because the Company’s mineral assets, are not producing assets and no revenue or cash flows are currently generated by these assets;
as EGL’s projects are not currently generating any income nor are there any historical profits that could be used to represent future earnings, the FME approach is not appropriate;
the resource multiple methodology was selected over the DCF methodology given that we do not consider the DCF methodology appropriate as EGL has ceased production as Davyhurst and Mt Ida, and hence, no forecast cash flows have been provided to us; and
as EGL has been suspended from quotation since 18 June 2008, the QMP basis is not a relevant methodology.

Independent Technical Expert

In valuing EGL’s assets, we have relied on the independent specialist valuation performed by Agricola in accordance with the Code of Technical Assessment of Mineral and Petroleum Assets and Securities for Independent Expert Reports ( ‘the Valmin Code’ ) and the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves ( ‘JORC Code’ ).

We are satisfied with the valuation methodologies adopted by Agricola which we believe are in accordance with industry practices and compliant with the requirements of the Valmin Code. A copy of Agricola’s valuation report is attached in Appendix Six.

9.2 Valuation of an EGL share following the Transaction

In our assessment of the value of EGL’s shares following the Transaction, we have adopted the Sum-ofParts methodology, by aggregating the estimated fair market values of its underlying assets and liabilities, having consideration to the:

value of EGL’s interest in the Project (having reliance on an independent specialist valuation opinion);
value of EGL’s other exploration assets (having reliance on an independent specialist valuation opinion);
effect of the Transaction on the cash balance of EGL;
effect of the Transaction on the liabilities of EGL;
effect of the Transaction on the number of issued capital of EGL; and
value of other assets and liabilities of EGL (applying the cost approach under the NAV method)

We have also analysed the value of an EGL share following the Transaction if the Maximum Capital Raising of $10.0 million is achieved and if the Remaining Resolutions are approved by the Shareholders, using the same approach as outlined above.

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10. Valuation of EGL prior to Transaction

10.1 Sum-of-Parts valuation of EGL

The value of EGL’s assets on a going concern basis is reflected in our valuation below:

	30-Jun-14 Low value Preferred value High value
Notes	$m $m $m $m
CURRENT ASSETS
Cash and cash equivalents 1	0.22 1.66 1.66 1.66
Trade and other receivables 2	0.77 0.004 0.004 0.004
TOTAL CURRENT ASSETS	0.99 1.66 1.66 1.66
NON-CURRENT ASSETS
Property, plant and equipment 3	3.00 - - -
Trade and other receivables	0.06 0.06 0.06 0.06
Value of Davyhurst and Mt Ida 4	- 14.72 16.89 18.90
TOTAL NON-CURRENT ASSETS	3.06 14.78 16.95 18.96
TOTAL ASSETS	4.05 16.44 18.61 20.62

CURRENT LIABILITIES
Trade and other payables 5	1.41 3.10 3.10 3.10
Loans and borrowings 6	31.71 42.72 42.72 42.72
Provisions	0.06 0.06 0.06 0.06
TOTAL CURRENT LIABILITIES	33.18 45.88 45.88 45.88
NON-CURRENT LIABILITIES
Provisions	4.15 4.15 4.15 4.15
TOTAL NON-CURRENT LIABILITIES	4.15 4.15 4.15 4.15
TOTAL LIABILITIES	37.33 50.03 50.03 50.03
VALUE	(33.28) (33.59) (31.42) (29.41)
Shares on issue	102,516,890 102,516,890 102,516,890
Value per share ($)	(0.33) (0.31) (0.29)

Source: BDO analysis

Other than the items detailed below, we have been advised that there has not be a significant change in the net assets of EGL since 30 June 2014. We have verified the movements in the material balances between 30 June 2014 and 31 October 2015.

The table above indicates the net asset value of an EGL share prior to the Transaction is nil.

The following adjustments were made to the net assets of EGL as at 30 June 2014 in arriving at our valuation.

Note 1: Cash and cash equivalents

We have adjusted the cash and cash equivalents balance since 30 June 2014 for the following material movements:

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Cash and cash equivalent	$m
Cash balance as at 30 June 2014	215,699
Less: Cash movement between 30 June 2014 and 31 October 2015	(153,559)
Add: Cash raised from Interim Placement	1,600,000
Adjusted cash and cash equivalents balance	1,662,140

Cash and cash equivalents decreased from $215,699 as at 30 June 2014 to $62,140 as at 31 October 2015. Management has advised the decrease in cash was primarily as a result of the payments of shire rates and annual tenement expenditure commitments.

As outlined in section 5.3 of our Report, on 27 November 2015 the Company undertook the Interim Placement, pursuant to which EGL issued 10,666,667 Shares to professional and sophisticated investors at an issue price of $0.15 per share to raise $1.6 million.

Note 2: Current trade and other receivables

Current trade and other receivables increased from $772,758 as at 30 June 2014 to $3,583 as at 31 October 2015.

Note 3: Property, plant and equipment

Management has advised, property, plant and equipment of $3.0 million represents spare parts and inventory at Davyhurst and Mt Ida. Therefore, we have removed the entire property, plant and equipment balance as it has been accounted for in the Independent Technical Expert’s value of Davyhurst and Mt Ida.

Note 4: Valuation of Davyhurst and Mt Ida

We have instructed Agricola to provide an independent market valuation of Davyhurst and Mt Ida. Agricola has derived a preferred valuation for the mineral resources using the Comparable Transactions method. The Comparable Transactions method requires allocating a dollar value to the mineral resources in the ground and applying appropriate discounts for JORC Category, operating factors and average acquisition cost for mineral projects.

For the exploration potential of the mineralisation, Agricola has relied on the Geo-factor Rating method. The Geo-factor Rating method systematically assesses four key technical attributes of a tenement to arrive at a series of factors that are multiples together to produce a prospectivity rating.

The range of values for Davyhurst and Mt Ida as calculated by Agricola is set out below:

	Low value	Preferred value	High value
Mineral Asset Valuation - Davyhurst & Mt Ida	$m	$m	$m
Value of EGL’s Mineral Resources
Davyhurst	12.56	14.36	16.03
Mt Ida	1.75	2.00	2.23
Value of EGL’s Exploration Potential
Davyhurst	0.31	0.40	0.49
Mt Ida	0.10	0.13	0.15
Total Value of Davyhurst and Mt Ida	14.72	16.89	18.90

Source: Independent valuation report by Agricola

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The table above indicates a range of values between $14.72 million and $18.90 million with a preferred value of $16.89 million.

Note 5: Trade and other payables

Trade and other payables increased from $1.41 million as at 30 June 2014 to $3.10 million as at 31 October 2015. Management has advised the increase in trade and other payables was primarily as a result of annual tenement expenditure commitments of approximately $4.5 million (part of which was paid for in cash).

Note 6: Loans and borrowings

Management has advised, loans and borrowings balance has increased to $42.72 million as at 31 October 2015, comprising:

	As at 31-Oct-15
Loans and borrowings	$m
Debt	20,664,240
Stirling Debt	5,000,000
DCM Debt	4,200,000
Investmet Loan	2,323,139
3rdParties1	3,065,438
Fotios & Associates2	2,160,923
Accrued interest on above loans	5,301,472
TOTAL LOANS & BORROWINGS	42,715,212

Source: EGL Management

1This relates to amounts owing to trade creditors in the ordinary course of the Company’s business and is not related to the Debt, DCM Debt, Stirling Debt or Investmet Loan.

1Investmet, the Fotios Family Trust and Delta have stated their intention to convert all the debt except an aggregate amount of approximately $2.0 million which is to be repaid in cash from the funds raised under the Maximum Capital Raising.

10.2 Resource multiple

10.2.1. Comparable trading resource multiple

The trading resource multiple is a market based approach which seeks to arrive at a value for a company by reference to its total reported resources and to the enterprise value per tonne of the reported resources of comparable listed companies. The resource multiple represents the value placed on the resources of comparable companies by a liquid market.

The methodology that we adopted to complete out comparable trading multiples analysis includes the following work:

identifying ASX listed companies with gold projects;
collecting information about total reserves and resources along with the grade of gold for each broadly comparable company;
calculating the contained reserves and resources for each broadly comparable company;
applying a control premium of 35%; and

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calculating an enterprise value (adjusted for debt) to total contained reserves and resources ratios for each broadly comparable company.

Further details on the comparable companies assessed in our analysis can be found in Appendix Three.

10.2.2. Trading resource multiple valuation

We have analysed the trading resource multiples segmented by stages of development, namely, the average trading resource multiple for gold explorers and developers and gold producers, as set out below:

Trading	resource	multiple	Explorers and Developers ($/oz contained Au)	Producers ($/oz contained Au)
Average			14.02	69.77
Median			9.38	41.5

Source: Bloomberg and BDO analysis

As seen in the above table, the average trading resource multiple for gold explorers and developers and gold producers including a premium for control are $14.02/ounce of contained gold and $69.77/ounce of contained gold respectively.

We note the number of companies in our analysis in Appendix Three are diversified, particularly the gold explorers, with many holding tenements prospective for minerals other than gold. We also note that a number of the companies are considerably larger than EGL, particularly the gold producers, and hold projects outside of Australia.

We note that EGL has ceased production at Davyhurst and Mt. Therefore, to arrive at a valuation range for the mineral resources of EGL, we considered a range of resource multiples from explorers to producers. We are aware that the current intention following the completion of the Re-capitalisation, is to continue operations on Davyhurst and Mt Ida and complete refurbishment of the Davyhurst plant with the aim to return to production as soon as practicable. Therefore, in determining a resource multiple range for EGL we consider the resource multiple based on gold exploration and developing companies to be an appropriate cross check to our value range.

10.2.3. Transaction resource multiple valuation

We have also considered transaction resource multiples estimated from transactions of gold projects in care and maintenance, where adequate information on the transaction has been disclosed to calculate relevant multiples.

Further details on the comparable transactions assessed in our analysis can be found in Appendix Four.

The results of our comparable transaction resource multiples are summarised below:

Transcation	$/oz Au
Average	14.77
Median	11.04
Maximum	37.13
Minimum	1.84

Source: Bloomberg and BDO analysis

The median and average transaction multiples for comparable companies to EGL are $11.04/ounce contained gold and $14.77/ounce contained gold (on a controlling basis) respectively.

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We note the transaction resource multiples are in the same range as the trading multiples for gold explorers and developers.

10.2.4. Trading resource multiple adopted

Applying a resource multiple in the range of 12.0 to 15.0 with a midpoint of 13.5 to the resources EGL, this results in the inferred values per share as follows:

	Low	Midpoint	High
Contained resource (ounces)
Davyhurst	1,372,000	1,372,000	1,372,000
Mt Ida	140,000	140,000	140,000
Resource multiple ($/oz of contained Au)	12.0	13.5	15.0
Assessed enterprise value of EGL ($m)	18.14	20.41	22.68
Add: Cash and cash equivalents (section 10.1)	1.66	1.66	1.66
Less: Loans and borrowings (section 10.1)	(42.72)	(42.72)	(42.72)
Assessed equity value of EGL ($m)	(22.92)	(20.65)	(18.38)
Number of shares on issue	102,516,890	102,516,890	102,516,890
Value per share($)	(0.22)	(0.20)	(0.18)

Source: BDO analysis

Therefore, our valuation of EGL share based on the resource multiple method and including a premium for control is nil.

10.3 Assessment of EGL’s Value

The results of the valuations performed are summarised in the table below:

	Low	Preferred	High
	$	$	$
Sum-of-Parts (Section 10.1)	(0.33)	(0.31)	(0.29)
Resource Multiple (Section 10.2)	(0.22)	(0.20)	(0.18)

Source: BDO analysis

Based on the results above we consider the value of an EGL share prior to the Transaction to be nil.

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11. Valuation of EGL following the Transaction

11.1 Sum-of-Parts Valuation of EGL

As discussed in section 9.2, we have relied on the Sum-of-Parts methodology in determining the value of an EGL share following the approval of the Transaction on a standalone basis.

Our valuation of EGL following the Transaction on a standalone basis is summarised below:

		30-Jun-14	Low value	Preferred value	High value
	Notes	$m	$m	$m	$m
CURRENT ASSETS
Cash and cash equivalents	1	0.22	1.66	1.66	1.66
Trade and other receivables	2	0.77	0.004	0.004	0.004
TOTAL CURRENT ASSETS		0.99	1.66	1.66	1.66
NON-CURRENT ASSETS
Property, plant and equipment	3	3.00	-	-	-
Trade and other receivables		0.06	0.06	0.06	0.06
Value of Davyhurst and Mt Ida	4	-	14.72	16.89	18.90
TOTAL NON-CURRENT ASSETS		3.06	14.78	16.95	18.96
TOTAL ASSETS		4.05	16.44	18.61	20.62
CURRENT LIABILITIES
Trade and other payables	5	1.41	3.10	3.10	3.10
Loans and borrowings	6	31.71	19.36	19.36	19.36
Provisions		0.06	0.06	0.06	0.06
TOTAL CURRENT LIABILITIES		33.18	22.52	22.52	22.52
NON-CURRENT LIABILITIES
Provisions	7	4.15	4.15	4.15	4.15
TOTAL NON-CURRENT LIABILITIES		4.15	4.15	4.15	4.15
TOTAL LIABILITIES		37.33	26.67	26.67	26.67
VALUE		(33.28)	(10.23)	(8.06)	(6.05)
Shares on issue			272,649,713	272,649,713	272,649,713
Value per share ($) - controlling basis			(0.037)	(0.029)	(0.022)
Minority Discount			23%	20%	17%
Value per share ($) - minority basis			(0.029)	(0.024)	(0.018)

Source: BDO analysis

The table above indicates the net asset value of an EGL share following the Transaction on a standalone basis and on a minority basis is nil.

The following adjustments were made to the net assets of EGL as at 30 June 2014 in arriving at our valuation of the Company following the Transaction.

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Note 1: Cash and cash equivalents

As stated in section 10.1 of our Report, we have adjusted the cash and cash equivalents balance as at 30 June 2014 for the following material movements:

Cash and cash equivalent	$m
Cash balance as at 30 June 2014	215,699
Less: Cash movement between 30 June 2014 and 31 October 2015	(153,559)
Add: Cash raised from Interim Placement	1,600,000
Adjusted cash and cash equivalents balance	1,662,140

Note 2: Current trade and receivables

As stated in section 10.1 of our Report, current trade and other receivables increased from $772,758 as at 30 June 2014 to $3,583 as at 31 October 2015.

Note 3: Property, plant and equipment

As stated in section 10.1 of our Report, we have removed the entire balance of property, plant and equipment of $3.0 million as it has been accounted for in the Independent Technical Expert’s value of Davyhurst and Mt Ida.

Note 4: Valuation of Davyhurst and Mt Ida

As stated in section 10.1 of our Report, we have Agricola to provide an independent market valuation of Davyhurst and Mt Ida.

The range of values for Davyhurst and Mt Ida as calculated by Agricola is set out below:

	Low value	Preferred value	High value
Mineral Asset Valuation - Davyhurst & Mt Ida	$m	$m	$m
Value of EGL’s Mineral Resources
Davyhurst	12.56	14.36	16.03
Mt Ida	1.75	2.00	2.23
Value of EGL’s Exploration Potential
Davyhurst	0.31	0.40	0.49
Mt Ida	0.10	0.13	0.15
Total Value of Davyhurst and Mt Ida	14.72	16.89	18.90

Source: Independent valuation report by Agricola

The table above indicates a range of values between $14.72 million and $18.90 million with a preferred value of $16.89 million.

Note 5: Trade and other payables

As stated in section 10.1 of our Report, trade and other payables increased from $1.41 million as at 30 June 2014 to $3.10 million as at 31 October 2015.

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Note 6: Loans and borrowings

As stated in section 5.2 of our Report,

under Resolution 2, approximately $13.56 million of the principal amount of the Debt owed by the Company to Investmet, the Fotios Family Trust and Delta will be extinguished;
under Resolution 4, approximately $4.20 million of the principal amount of the DCM Debt owed by the Company to Investmet will be extinguished;
under Resolution 5, the liability of approximately $2.97 million owed by the Company as the interest component of the Debt and DCM Debt owed to Investmet, the Fotios Family Trust and Delta will be extinguished;
under Resolution 7, the entire principal amount of the Investmet Loan of $2.32 million owed by the Company to Investmet, the Fotios Family Trust and Delta will be extinguished; and
under Resolution 8, the liability of approximately $0.31 million owed by the Company as the interest component of the Investmet Loan to Investmet, the Fotios Family Trust and Delta will be extinguished.

Management has advised, loans and borrowings balance has increased to $42.72 million as at 31 October 2015. Therefore, we have adjusted the loans and borrowings balance as at 31 October 2015 for the above mentioned material movements, as shown below:

Loans and borrowings	$
Loans and borrowings as at 31 October 2015	42,715,212
Debt extinguished	(13,558,547)
DCM Debt	(4,200,000)
Interest component of Debt and DCM Debt	(2,969,355)
Investmet Loan	(2,323,139)
Interest component of Investmet Loan	(307,959)
Adjusted loans and borrowings balance following the Transaction	19,356,212
11.2 Number of Shares
As analysed in section 5.3 of our report, the number of shares on issue following the Transactions is
272,649,713, as set out below:
Number of Shares following the Transaction	Number
Number of shares currently on issue	102,516,890
Shares to be issued to Investmet under the Transaction	78,126,129
Shares to be issued to Delta under the Transaction	63,220,554
Shares to be issued to the Fotios Family Trust under the Transaction	20,934,143
Shares to be issued to Whitestone under the Transaction	7,851,997
Total number of EGL shares following the Transaction	272,649,71 3

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11.3 Minority discount

The net asset value of an EGL share following the Transactions is reflective of a controlling interest. This suggests that the acquirer obtains an interest in the company which allows them to have an individual influence in the operations and value of that company. Therefore, if the Transaction is approved, Shareholders may become minority interest shareholders in EGL as Investmet and Fotios may hold a controlling interest, meaning their individual holding will not be considered significant enough to have an individual influence in the operations and value of the Company.

Therefore, we have adjusted our valuation of an EGL share following the Transactions, to reflect a minority interest holding. A minority interest discount is the inverse of a premium of control and is calculated using the formula 1 – (1/1+control premium). As discussed in Appendix Five of our Report, we consider the appropriate control premium for EGL to be in the range of 20% to 30%, giving rise to a minority interest discount in the range of 17% to 23%.

11.4 Value of EGL following the Transaction on a consolidated basis.

We have also analysed the value of an EGL share following the Transaction on a consolidated basis.

		30-Jun-14	Low value	Preferred value	High value
	Notes	$m	$m	$m	$m
ASSETS
Cash and cash equivalents	1	0.22	5.45	5.45	5.45
Other current assets		0.77	0.004	0.004	0.004
Non-current assets		3.06	14.78	16.95	18.96
TOTAL ASSETS		4.05	20.23	22.40	24.41
LIABILITIES
Loans and borrowings	2	31.71	4.90	4.90	4.90
Other current liabilities		1.47	3.16	3.16	3.16
Non-current liabilities		4.15	4.15	4.15	4.15
TOTAL LIABILITIES		37.33	12.21	12.21	12.21
VALUE		(33.28)	8.02	10.19	12.21
Shares on issue	3		385,715,558	385,715,558	385,715,558
Value per share ($) - controlling basis			0.021	0.026	0.032
Minority Discount			23%	20%	17%
Value per share ($) - minority basis			0.016	0.021	0.026

Source: BDO analysis

The table above indicates the net asset value of an EGL share following the Transaction if the Maximum Capital Raising is achieved and if the Remaining Resolutions are approved, on a minority basis is between $0.016 and $0.021 with a preferred value of $0.026.

The following adjustments were made to the net assets of EGL as at 30 June 2014 in arriving at our valuation.

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Note 1: Cash and cash equivalents

We have adjusted the cash and cash equivalents balance since 30 June 2014 for the following material movements:

Cash and cash equivalent	$m
Cash balance as at 30 June 2014	215,699
Less: Cash movement between 30 June 2014 and 31 October 2015	(153,559)
Add: Cash raised from Interim Placement	1,600,000
Add: Cash raised from Maximum Capital Raising	3,834,562
Less: Consideration for Share Buy-back	(50,000)
Adjusted cash and cash equivalents balance	5,446,702

As stated in section 11.1 of our report, cash and cash equivalents decreased from $215,699 as at 30 June 2014 to $62,140 as at 31 October 2015.

On 27 November 2015 the Company undertook the Interim Placement, pursuant to which EGL issued 10,666,667 Shares to professional and sophisticated investors at an issue price of $0.15 per Share to raise $1.6 million.

As stated in section 5.1 of our Report, the Company intends to, undertake a Capital Raising of at least $6.0 million and up to $10.0 million in equity (or debt/equity hybrid). Assuming the Company achieves the Maximum Capital Raising the intended use of funds is:

$2.0 million on reserve definition drilling;
$1.25 million on plant refurbishment;
$0.02 million towards working capital;
$0.35 million as repayment of Stirling Debt;
$2.75 million as repayment to creditors associated with Fotios;
$3.07 million as repayment to third party creditors; and
Cost associated with the Maximum Capital Raising of $0.60 million.

We have allocated $6.17 of the above funds towards the repayment of the respective loans. The remaining balance of approximately $3.83 million has been allocated to cash.

Under Resolution 17, the Company will undertake a Share Buy-back of 8,892,922 Shares from Stirling for a consideration of $50,000.

Note 2: Loans and borrowings

As shown in section 11.1 of our Report, if the Transaction is approved approximately $23.36 million of the principal and interest component of the Debt, DCM Debt and Investmet Loan, collectively, will be extinguished.

Under Resolution 3, a further $7.11 million of the principal amount of the Debt owed by the Company to Other Lenders Nominee will be extinguished.

Under Resolution 6, the liability of approximately $1.19 million owed by the Company as the interest component of the Debt owed to Other Lenders Nominee will be extinguished.

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Further, as mentioned above, if Maximum Capital Raising is achieved the Company intends to use part of the funds to repay creditors associated with Fotios, third party creditors and Stirling.

We have adjusted the loans and borrowings balance as at 30 October 2015 for the following material movements:

Loans and borrowings	$
Loans and borrowings as at 31 October 2015	42,715,212
Debt extinguished	(20,664,240)
DCM Debt	(4,200,000)
Interest component of Debt and DCM Debt	(4,157,447)
Investmet Loan	(2,323,139)
Interest component of Investmet Loan	(307,959)
Stirling	(350,000)
Third party creditors	(3,065,438)
Fotios & Associates	(2,750,000)
Adjusted loans and borrowings balance following the Transaction	4,896,959
Source:Notice of Meeting and BDO analysis
Note 3: Number of Shares
As analysed in section 5.3 of our report, the number of shares on issue following the Transactions if the
Maximum Capital Raising of $10.0 million is achieved and if the Remaining Resolutions are approved is
385,715,558 as set out below:
Number of Shares following the Transaction	Number
Number of shares currently on issue	102,516,890
Shares to be issued to Investmet under the Transaction	78,126,129
Shares to be issued to Delta under the Transaction	63,220,554
Shares to be issued to the Fotios Family Trust under the Transaction	20,934,143
Shares to be issued to Whitestone under the Transaction	7,851,997
Shares to be issued under the Capital Raising	66,666,667
Shares to be issued to Other Lenders Nominee under the Transaction	55,292,100
Share buy-back	(8,892,922)
Total number of EGL shares	385,715,55 8

Source: Notice of Meeting

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12. Is the Transaction fair?

12.1.1. The Transaction on a standalone basis

The value of a share an EGL prior to the Transaction on a control basis and the value of a share following the Transaction on a minority basis are compared below:

		Low	Preferred	High
	Ref
		$	$	$
Value of an EGL share prior to the Transaction (control)	10.3	(0.33)	(0.31)	(0.29)
Value of an EGL share following the Transaction (minority)	11.1	(0.029)	(0.024)	(0.018)

The above pricing indicates that, in the absence of any other relevant information, the low, high and preferred values of an EGL share following the Transaction on a minority interest basis is nil and therefore equal to the low, high and preferred values of an EGL share prior to the Transaction on a control basis.

However, while the value of an EFL share following the Transaction on a minority basis is nil, it is less negative compared to the low, high and preferred values of an EGL share prior to the Transaction on a control basis. Therefore, we consider the Transaction to be fair to the Shareholders.

12.1.2. The Transaction on a consolidated basis

The value of a share an EGL prior to the Transaction on a control basis and the value of a share following the Transaction if the Remaining Resolutions are approved and the Maximum Capital Raising is achieved, on a minority basis are compared below:

		Low	Preferred	High
	Ref
		$	$	$
Value of an EGL share prior to the Transaction (control)	10.3	(0.33)	(0.31)	(0.29)
Value of an EGL share following the Transaction on a	11.4	0.016	0.021	0.026
consolidated basis (minority)

We note from the table above that the value of an EGL share prior to the Transaction on a control basis is significantly lower than the value of an EGL share following the Transaction if the Remaining Resolutions are approved and the Maximum Capital Raising is achieved on a minority basis.

The above valuation ranges are graphically presented below:

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Value of an EGL share prior to the Transactions on a control basis

Value of an EGL share following the Transactions on a consolidated basis on a minority basis

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----- Start of picture text -----

0.00 0.01 0.02 0.03
----- End of picture text -----

Source: BDO analysis

13. Is the Transaction reasonable?

13.1 Advantages of Approving the Transaction

We have considered the following advantages when assessing whether the Transaction is reasonable.

13.1.1. The Transaction is fair

The Transaction is fair. RG 111 states than an offer is reasonable if it is fair.

13.1.2. The extinguishment of the debts owing may result in the Company’s projects being developed to their full potential

If the Transaction (on a standalone basis) is approved, EGL will reduce the outstanding principal and interest owing on the Debt, DCM Debt and Investmet Loan, collectively, by $23.36 million.

If the Transaction is approved along with the Remaining Resolutions and if the Maximum Capital Raising is achieved, EGL will reduce the outstanding principal and interest owing on the Debt, DCM Debt, Investmet Loan, Stirling Debt and other amounts owing to third party creditors, collectively, by $37.82 million.

Therefore, if the Transaction along with the Remaining Resolutions is approved and the Maximum Capital Raising is achieved, the Company will be able to divert its cash expenditure towards completing the refurbishment of the Davyhurst Plant, completing further regional exploration and also towards the consideration of new project opportunities with the aim to return to production as soon as possible.

13.1.3. Strengthens the Company’s balance sheet

If the Transaction (on a standalone basis) is approved, EGL’s liabilities will decrease by $23.36 million, resulting in an equivalent improvement in EGL’s net asset position.

If the Transaction is approved along with the Remaining Resolutions and if the Maximum Capital Raising is achieved, EGL’s cash balance will increase to approximately $5.45 million and its liabilities will decrease by $37.82 million, resulting in a net improvement in EGL’s net asset position by approximately $43.05 million.

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13.1.4. Strengthens the Company’s relationship with its cornerstone investors

As at the date of our Report, Investmet and Fotio hold 40.2% of the issued capital of EGL. If Shareholders approve the Transaction, Investmet and Fotios will increase their shareholding interest to 77.5%. As such, the incentive for Investmet and Fotios to see EGL succeed will be even greater as any increase in the Company’s share price will generate larger scale returns for Investmet and Fotios and in turn generate returns for Shareholders.

13.1.5. No changes to current operating arrangements

There has been no indication from Investmet and Fotios that they seek to make significant changes to the current operating arrangements if the Transaction is approved. Investmet and Fotios have informed the Company that they:

have no intention of making any significant changes to the business of the Company;
have no intention to inject further capital into the Company;
have no intention of making changes regarding the future employment of the present employees of the Company;
do not intent to redeploy any fixed assets of the Company; and
do not intend to transfer any property between the Company and Investmet.

13.1.6. Debt, DCM Debt and Investmet Loan will not need to be repaid

Upon approval of Resolution 2, Resolution 4 and Resolution 5, the liability of approximately $20.73 million related to the Debt, DCM Debt and Investmet Loan owed by the Company will be extinguished.

In the event that the Transaction does not proceed, EGL will be required to repay the Debt, DCM Debt and Investmet Loan. Since the Maturity Date of the Debt, DCM Debt and Investmet Loan was 1 July 2014, unless Investmet, Fotios and the Company make other arrangements, these loans would be repayable immediately.

13.1.7. Preserving of cash reserves due to settling of fees by the issue of shares

Upon approval of Resolution 12, Resolution 13, Resolution 14 and Resolution 15 of the Transaction the Company will repay fees owed to Investmet, Fotios, Delta and Whitestone for services provided to the Company through the issue of Shares. Therefore, if the Transaction is not approved, the Company will owe:

Investmet - approximately $13,158 in consideration for the provision of corporate services;
Fotios - approximately $374,000 by way of unpaid Directors’ fees to Fotios;
Whitestone – approximately $1,177,800 in consideration for the provision of drilling services; and
Delta - approximately $595,966 in consideration for the provision of corporate and administrative services.

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Unless Investmet, Fotios, Delta, Whitestone and the Company make other arrangements, these loans would be repayable immediately, reducing the cash reserves of the Company.

13.2 Disadvantages of Approving the Transaction

13.2.1. Dilution of Shareholders’ interest

Under the terms of the Transaction, EGL will issue 170,132,823 Shares to Investmet, the Fotios Family Trust, Delta and Whitestone in aggregate. If the Transaction (on a standalone basis) is approved, Shareholders interest in the Company will be diluted from 59.8% as at the date of this report to 22.5%. The capacity of Shareholders to influence the operations of the Company will therefore be reduced.

However, if the Transaction and the Remaining Resolutions are approved by the Shareholders and if the Company achieves the Maximum Capital Raising, Shareholders interest in the Company will be diluted by 12.2% to 47.5%.

13.2.2. Presence of a significant controlling shareholder may reduce the attractiveness of the Company’s shares to potential investors

If the Transaction (on a standalone basis) is approved, Investmet and Fotios will hold up to 77.5% of the Company’s issued capital. With the presence of a significant controlling shareholder, the attractiveness of the Company’s shares to potential investors may reduce and the ability for Shareholders to receive a takeover premium in the future is also reduced. Similarly, the liquidity of the Company’s share may also reduce, meaning that it may be more difficult for Shareholders to realise their investment. The approval of the Transaction may also make it more difficult for the Company to obtain future equity funding from a party other than Investmet or Fotios.

However, if the Transaction and the Remaining Resolutions are approved by the Shareholders and if the Company achieves the Maximum Capital Raising, Investmet and Fotios’ will only increase their holding to 52.5% of EGL’s issued capital.

13.2.3. Practical level of control

When shareholders are required to approve an issue that relates to a company there are two types of approval levels. These are general resolutions and special resolutions. A general resolution requires 50% of shares to be voted in favour to approve a matter and a special resolution requires 75% of shares on issue to be voted in favour to approve a matter.

Currently, Investmet and Fotios is the largest single shareholder with 40.2% of the voting interest. This is insufficient for Investmet and Fotios to block a general resolution (50% majority required) or a special resolution (75% majority required). If the Transaction (on a standalone basis) is approved, Investmet and Fotios will increase their holding to 77.5% of EGL’s issued capital. This will allow them to block or pass general and special resolutions.

However, if the Transaction and the Remaining Resolutions are approved by the Shareholders and if the Company achieves the Maximum Capital Raising, Investmet and Fotios will only increase their holding to 52.5% of EGL’s issued capital. While this still allows them to block or pass general resolutions, they will not be able to block or pass a special resolution.

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13.3 Is the Transaction reasonable?

In determining whether the Transaction is reasonable, we have considered the factors discussed above.

In our opinion, the position of Shareholders if the Transaction is approved is more advantageous than the position of Shareholders if the Transaction is not approved. Accordingly, we believe that the Transaction is reasonable for Shareholders.

14. Conclusion

We have considered the terms of the Transaction as outlined in the body of this report and have concluded that the Transaction (on a standalone and consolidated basis) is fair and reasonable to the Shareholders of EGL.

15. Sources of information

This report has been based on the following information:

Draft notice of Meeting and Explanatory Statement on or about the date of this report;
Audited financial statements of EGL for the years ended 30 June 2014 and 30 June 2013;
Independent Techincal Valuation Report of EGL’s mineral assets dated 25 October 2015 performed by Agricola;
Share registry information;
Information in the public domain; and
Discussions with Directors and Management of EGL.

16. Independence

BDO Corporate Finance (WA) Pty Ltd is entitled to receive a fee of $27,000 (excluding GST and reimbursement of out of pocket expenses). The fee is not contingent on the conclusion, content or future use of this Report. Except for this fee, BDO Corporate Finance (WA) Pty Ltd has not received and will not receive any pecuniary or other benefit whether direct or indirect in connection with the preparation of this report.

BDO Corporate Finance (WA) Pty Ltd has been indemnified by EGL in respect of any claim arising from BDO Corporate Finance (WA) Pty Ltd's reliance on information provided by the EGL, including the non-provision of material information, in relation to the preparation of this report.

Prior to accepting this engagement BDO Corporate Finance (WA) Pty Ltd has considered its independence with respect to EGL, Investmet, Fotios and any of their respective associates with reference to ASIC Regulatory Guide 112 ‘Independence of Experts’. In BDO Corporate Finance (WA) Pty Ltd’s opinion it is independent of EGL, Investmet, Fotios and their respective associates.

A draft of this report was provided to EGL and its advisors for confirmation of the factual accuracy of its contents. No significant changes were made to this report as a result of this review.

BDO is the brand name for the BDO International network and for each of the BDO Member firms.

BDO (Australia) Ltd, an Australian company limited by guarantee, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of

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Independent Member Firms. BDO in Australia, is a national association of separate entities (each of which has appointed BDO (Australia) Limited ACN 050 110 275 to represent it in BDO International).

17. Qualifications

BDO Corporate Finance (WA) Pty Ltd has extensive experience in the provision of corporate finance advice, particularly in respect of takeovers, mergers and acquisitions.

BDO Corporate Finance (WA) Pty Ltd holds an Australian Financial Services Licence issued by the Australian Securities and Investment Commission for giving expert reports pursuant to the Listing rules of the ASX and the Corporations Act.

The persons specifically involved in preparing and reviewing this report were Sherif Andrawes and Adam Myers of BDO Corporate Finance (WA) Pty Ltd. They have significant experience in the preparation of independent expert reports, valuations and mergers and acquisitions advice across a wide range of industries in Australia and were supported by other BDO staff.

Sherif Andrawes is a Fellow of the Institute of Chartered Accountants in England & Wales and a Member of the Institute of Chartered Accountants in Australia. He has over twenty five years experience working in the audit and corporate finance fields with BDO and its predecessor firms in London and Perth. He has been responsible for over 250 public company independent expert’s reports under the Corporations Act or ASX Listing Rules and is a CA BV Specialist. These experts’ reports cover a wide range of industries in Australia with a focus on companies in the natural resources sector. Sherif Andrawes is the Chairman of BDO in Western Australia, Corporate Finance Practice Group Leader of BDO in Western Australia and the Natural Resources Leader for BDO in Australia.

Adam Myers is a member of the Australian Institute of Chartered Accountants. Adam’s career spans 18 years in the Audit and Assurance and Corporate Finance areas. Adam has considerable experience in the preparation of independent expert reports and valuations in general for companies in a wide number of industry sectors.

18. Disclaimers and consents

This report has been prepared at the request of EGL for inclusion in the Notice of Meeting which will be sent to all EGL Shareholders. EGL engaged BDO Corporate Finance (WA) Pty Ltd to prepare an independent expert's report to consider whether the issue of shares to Investmet and Fotios is fair and reasonable to the Shareholders of EGL.

BDO Corporate Finance (WA) Pty Ltd hereby consents to this report accompanying the above Notice of Meeting. Apart from such use, neither the whole nor any part of this report, nor any reference thereto may be included in or with, or attached to any document, circular resolution, statement or letter without the prior written consent of BDO Corporate Finance (WA) Pty Ltd.

BDO Corporate Finance (WA) Pty Ltd takes no responsibility for the contents of the Notice of Meeting other than this report.

We have no reason to believe that any of the information or explanations supplied to us are false or that material information has been withheld. It is not the role of BDO Corporate Finance (WA) Pty Ltd acting as an independent expert to perform any due diligence procedures on behalf of the Company. The Directors of the Company are responsible for conducting appropriate due diligence in relation to Investmet

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and Fotios. BDO Corporate Finance (WA) Pty Ltd provides no warranty as to the adequacy, effectiveness or completeness of the due diligence process.

The opinion of BDO Corporate Finance (WA) Pty Ltd is based on the market, economic and other conditions prevailing at the date of this report. Such conditions can change significantly over short periods of time.

With respect to taxation implications it is recommended that individual Shareholders obtain their own taxation advice, in respect of the Transaction, tailored to their own particular circumstances. Furthermore, the advice provided in this report does not constitute legal or taxation advice to the Shareholders of EGL, or any other party.

BDO Corporate Finance (WA) Pty Ltd has also considered and relied upon independent valuations for mineral assets held by EGL.

The valuer engaged for the mineral asset valuation, Agricola, possess the appropriate qualifications and experience in the industry to make such assessments. The approaches adopted and assumptions made in arriving at their valuation is appropriate for this report. We have received consent from the valuer for the use of their valuation report in the preparation of this report and to append a copy of their report to this report.

The statements and opinions included in this report are given in good faith and in the belief that they are not false, misleading or incomplete.

The terms of this engagement are such that BDO Corporate Finance (WA) Pty Ltd has no obligation to update this report for events occurring subsequent to the date of this report.

Yours faithfully

BDO CORPORATE FINANCE (WA) PTY LTD

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Sherif Andrawes Director

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Adam Myers

Director

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A endix 1 – Glossar of Terms pp y

Reference	Definition
The Act	The Corporations Act 2001 Cth
Agricola	Agricola Mining Consultants Pty Ltd
APES 225	Accounting Professional & Ethical Standards Board professional standard APES 225
	‘Valuation Services’
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange
BDO	BDO Corporate Finance (WA) Pty Ltd
Capital Raising	The Company intends to raise at least $6.0 million and up to $10.0 million in equity
	(or debt/equity hybrid) funding
The Company	Eastern Goldfields Limited
Corporations Act	The Corporations Act 2001 Cth
Davyhurst	Davyhurst Gold Project
DCM	DCM DECOmetal GmbH
DCM Debt	An unsecured debt of $4.20 million in favour of Investmet
DCF	Discounted Future Cash Flows
Debt	$11.05 million debt in favour of Investmet, Delta and the Fotios Family Trust
Delta	Delta Resources Management Pty Ltd
EBIT	Earnings before interest and tax
EBITDA	Earnings before interest, tax, depreciation and amortisation
EGL	Eastern Goldfields Limited
FME	Future Maintainable Earnings
FSG	Financial Services Guide
Fotios	Mr Michael Fotios

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Reference	Definition
Fotios Family Trust	The Fotios Family Trust
Interim Placement	On 27 November 2015 the Company undertook a separate placement of Shares at an
	issue price of $0.15 to raise an additional $1.60 million for working capital purposes
Investmet	Investmet Limited
Investmet Loan	An unsecured debt of $2.5 million in favour of Investmet, the Fotios Family Trust
	and Delta
JORC Code	The Australasian Code for Reporting of Exploration Results, Mineral Resources and
	Ore Reserves
Km	Kilometres
Maturity Date	1 July 2014
Maximum Capital Raising	Capital Raising of $10.0 million
Mt Ida	Mt Ida Gold Project
NAV	Net Asset Value
Nominee	M6 Securities Pty Ltd
Notice of Meeting	Notice of Meeting and Explanatory Statement
Other Lenders Nominee	Certain third party lenders (which included Delta and the Fotios Family Trust)
Other Lenders Debt Portion	$9.52 million debt in favour of Other Lenders Nominee
QMP	Quoted market price
RBA	Reserve Bank of Australia
Recapitalisation	Recapitalisation of the Company’s balance sheet with a view to its securities being
	reinstated to quotation on the ASX
Regulations	Corporations Act Regulations 2001 (Cth)
Remaining Resolutions	Resolutions 3, 6 and 17
Resolution 2	The issue of up to 90,390,313 Shares at a deemed price of $0.15 to Investmet, the
	Fotios Family Trust and Delta upon conversion of the principal component of the
	Debt

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Reference	Definition
Resolution 3	The issue of up to 47,371,287 Shares at a deemed price of $0.15 to the Other
	Lenders Nominee upon conversion of the principal component of the Other Lenders
	Debt Portion
Resolution 4	The issue of up to 28,000,000 Shares at a deemed price of $0.15 to Investmet upon
	conversion of the principal component of the DCM Debt
Resolution 5	The issue of up to 19,795699 Shares at a deemed price of $0.15 to Investmet, the
	Fotios Family Trust and Delta upon conversion of the interest component of the
	Debt and DCM Debt
Resolution 6	The issue of up to 7,920,813 Shares at a deemed price of $0.15 to Other Lenders
	Nominee upon conversion of the interest component of the Other Lenders Debt
	Portion
Resolution 7	The issue of up to 15,487,592 Shares at a deemed price of $0.15 to Investmet, the
	Fotios Family Trust and Delta upon conversion of the principal component of the
	Investmet Loan
Resolution 8	The issue of up to 2,053,061 Shares at a deemed price of $0.15 to Investmet, the
	Fotios Family Trust and Delta upon conversion of the interest component of the
	Investmet Loan
Resolution 12	The issue of up to 87,717 Shares at a deemed price of $0.15 to Investmet in lieu of
	fees for corporate services
Resolution 13	The issue of up to 2,493,333 Shares at a deemed price of $0.15 to the Fotios in lieu
	of unpaid Director’s fees
Resolution 14	The issue of up to 7,851,997 Shares at a deemed price of $0.15 to Whitestone
	Minerals Pty Ltd in lieu of fees for drilling services
Resolution 15	The issue of up to 3,973,109 Shares at a deemed price of $0.15 to Delta in lieu of
	fees for corporate and administrative services
Resolution 17	The selective buy-back of 8,892,922 Shares currently held by Stirling
Our Report	This Independent Expert’s Report prepared by BDO
RG 111	Content of expert reports (March 2011)
RG 112	Independence of experts (March 2011)
Section 411	Section 411 of the Corporations Act
Section 606	Section 606 of the Corporations Act

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Reference Definition	Reference Definition

Section 611 Section 611 of the Corporations Act

Settlement Deed Settlement negotiated between Stirling and the Company to repay the principal and interest of the Stirling Debt for a cash consideration of $1.48 million and through the buy back of 8,892,922 shares for $50,000

Settlement Sum Cash consideration of $1.48 million (plus GST)

Shares	Fully paid ordinary EGL shares

Shareholders	Shareholders of EGL not associated with Investmet, the Fotios Family Trust, Delta and Whitestone

Share Buy-back	The selective buy-back of 8,892,922 Shares currently held by Stirling

Stirling	Stirling Resources Pty Ltd

Stirling Debt	A secured debt of $5.0 million in favour of Stirling

Sum-of-Parts	Combination of different methodologies used together to determine an overall value of an entity where separate assets and liabilities are valued using different methodologies.

The Transaction The issue of 170,132,823 Shares in aggregate to Investmet, the Fotios Family Trust, Delta and Whitestone

The Transaction on a consolidated basis The Transaction if the maximum Capital Raising of $10.0 million is achieved and if Resolutions 3, 6 and 17 are approved by the Shareholders

USA United States of America

Valmin Code The Code of Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports

Valuation Engagement An Engagement or Assignment to perform a Valuation and provide a Valuation Report where the Valuer is free to employ the Valuation Approaches, Valuation Methods, and Valuation Procedures that a reasonable and informed third party would perform taking into consideration all the specific facts and circumstances of the Engagement or Assignment available to the Valuer at that time.

VWAP Volume Weighted Average Price

Whitestone Whitestone Minerals Pty Ltd

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The Directors

BDO Corporate Finance (WA) Pty Ltd

38 Station Street SUBIACO, WA 6008 Australia

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A endix 2 – Valuation Methodolo ies pp g

Methodologies commonly used for valuing assets and businesses are as follows:

1 Net asset value (‘NAV’) Asset based methods estimate the market value of an entity’s securities based on the realisable value of its identifiable net assets. Asset based methods include:

Orderly realisation of assets method
Liquidation of assets method
Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

Net assets on a going concern basis are usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity’s valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall Net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity’s value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when an entity is not making an adequate return on its assets, a significant proportion of the entity’s assets are liquid or for asset holding companies.

2 Quoted Market Price Basis (‘QMP’) A valuation approach that can be used in conjunction with (or as a replacement for) other valuation methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a ‘deep’ market in that security.

3 Capitalisation of future maintainable earnings (‘FME’) This method places a value on the business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

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The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax (‘ EBIT ’) or earnings before interest, tax, depreciation and amortisation (‘ EBITDA ’). The capitalisation rate or ‘earnings multiple’ is adjusted to reflect which base is being used for FME.

4 Discounted future cash flows (‘DCF’) The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

Considerable judgement is required to estimate the future cash flows which must be able to be reliably estimated for a sufficiently long period to make this valuation methodology appropriate.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows.

5 Market Based Assessment

The market based approach seeks to arrive at a value for a business by reference to comparable transactions involving the sale of similar businesses. This is based on the premise that companies with similar characteristics, such as operating in similar industries, command similar values. In performing this analysis it is important to acknowledge the differences between the comparable companies being analysed and the company that is being valued and then to reflect these differences in the valuation.

The resource multiple is a market based approach which seeks to arrive at a value for a company by reference to its total reported resources and to the enterprise value per tonne/lb of the reported resources of comparable listed companies. The resource multiple represents the value placed on the resources of comparable companies by a liquid market.

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A endix 3 – Com arable Com anies pp p p

The tables below set out the enterprise value as a multiple resource for the broadly comparable gold exploration and development and gold producing companies. We note the reserves and resources of the ASX listed companies are reported in compliance with the JORC Code.

Implied trading resource multiples of broadly comparable gold exploration and development companies

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Source: Bloomberg and BDO analysis

Implied trading resource multiples of broadly comparable gold producing companies

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Source: Bloomberg and BDO analysis

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Set out below is the synopsis of the gold exploration and development companies identified as comparable to EGL. Each of these companies trades on the ASX.

Company Name	Description
Azumah Resources Ltd	Azumah Resources Limited engages in the exploration and development of mineral
	properties. It primarily explores for gold deposits. The company primarily owns a 100%
	interest in the Wa Gold Project that is located in the northwest Ghana, West Africa. The
	company is based in West Perth, Australia.
Blackham Resources Ltd	Blackham Resources Limited explores and develops mineral properties in Australia. It
	holds interest in the Matilda Gold project, which consists of approximately 780 square
	kilometers of tenements, including Regent and the Matilda, and Williamson gold mines
	located in Western Australia. The company is based in West Perth, Australia.
Dacian Gold Ltd	Dacian Gold Limited explores and develops gold properties in Australia. It primarily
	focuses on the Westralia and Jupiter deposits at the Mt Morgans Gold project located in
	the Laverton district of Western Australia. The company was founded in 2011 and is
	based in Applecross, Australia.
Excelsior Gold Limited	Excelsior Gold Limited, together with its subsidiaries, engages in the exploration and
	development of gold properties in Western Australia. Its principal property is the
	Kalgoorlie North Gold Project, which covers an area of approximately 134 square
	kilometers of granted mining leases and prospecting licenses situated to the north of
	Kalgoorlie in Western Australia. The company is based in North Fremantle, Australia.
Focus Minerals Limited	Focus Minerals Limited engages in the exploration, mining, and development of gold
	deposits in Western Australia. It also explores for nickel deposits. The company holds
	interest in the Laverton Gold Project and Coolgardie Gold Project covering an area of
	1,650 square kilo meters of tenements located in Western Australia. It also holds
	interest in the Nepean Project located in the town of Coolgardie. The company is
	headquartered in East Perth, Australia. Focus Minerals Ltd is a subsidiary of Shandong
	Gold Group Co., Ltd.
Gold Road Resources Ltd	Gold Road Resources Limited engages in the exploration and development of mineral
	properties in Australia. It explores for gold, copper, and molybdenum deposits. The
	company focuses on developing the Yamarna Belt comprising Gruyere, Central Bore, and
	Attila-Alaric projects, which covers an area of 5,000 square kilometers located on the
	Yilgarn Craton in Western Australia. The company was formerly known as Eleckra Mines
	Limited and changed its name to Gold Road Resources Limited in November 2010. Gold
	Road Resources Limited was incorporated in 2007 and is based in West Perth, Australia.
Tanami Gold NL	Tanami Gold NL, together with its subsidiaries, engages in the mining and exploration of
	gold properties in Australia. The company’s principal project is the Central Tanami
	project located in the Northern Territory, Australia. Tanami Gold NL is based in
	Subiaco, Australia.
Gascoyne Resources Ltd	Gascoyne Resources Limited engages in the exploration and development of gold and
	base metal projects in Australia. The company holds exploration licenses and
	applications totaling approximately 4,500 square kilometers in the Gascoyne and
	Murchison regions of Western Australia. It principally owns 100% interest in the
	Glenburgh gold project that covers a tenement area of approximately 2,000 square
	kilometers located in the Southern Gascoyne region of Western Australia. The company
	is headquartered in West Perth, Australia.

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Company Name	Description
Hill End Gold Ltd	Hill End Gold Limited operates as a gold exploration and resource investment company
	in Australia. The company holds 100% interests in the Hargraves project located to the
	south-west of Mudgee in central New South Wales; the Hill End project located to the
	north of Bathurst in central New South Wales; the Mt Margaret project located to the
	south-east of Mudgee; and the Eurongilly project located to the east of Junee in
	southern New South Wales. Hill End Gold Limited is based in Sydney, Australia.
KalNorth Gold Miners Ltd	KalNorth Gold Mines Limited explores gold properties in Western Australia. The
	company operates through two segments, Mine Development and Mineral Exploration. It
	holds 100% interest in the Lindsays, Kurnalpi, Kalpini, and Spargoville projects located
	in the Kalgoorlie goldfields region, Western Australia. The company was formerly known
	as Carrick Gold Limited and changed its name to KalNorth Gold Mines Limited in October
	2012. KalNorth Gold Mines Limited is headquartered in Kalgoorlie, Australia.
Aphrodite Gold Limited	Aphrodite Gold Limited engages in the exploration and development of mineral
	properties in Australia. The company holds interest in the Aphrodite Gold Project in
	Australia. Aphrodite Gold Limited was founded in 2009 and is based in Melbourne,
	Australia.

Source: Bloomberg and Capital IQ

Set out below is the synopsis of the gold producing companies identified as comparable to EGL. Each of these companies trades on the ASX.

Company Name	Description
Evolution Mining Ltd	Evolution Mining Limited engages in identifying, developing, and operating gold
	related mining projects in Australia and New Zealand. It owns and operates seven
	gold mines in Cowal in New South Wales; Cracow, Pajingo, Mt Carlton, and Mt
	Rawdon in Queensland; and Edna May and Mungari in Western Australia. It primarily
	explores for gold, silver, and copper. The company was formerly known as Catalpa
	Resources Limited and changed its name to Evolution Mining Limited in November
	2011. Evolution Mining Limited is based in Sydney, Australia.
Northern Star Resources	Northern Star Resources Limited explores for gold and silver properties in Australia.
	It primarily engages in mining gold deposits at Paulsens, Plutonic, Kanowna Belle,
	Kundana, and Jundee operations, as well as the exploration of gold deposits in the
	Ashburton, Kalgoorlie, and Plutonic regions of Western Australia. The company also
	constructs and develops extensions to its gold mining operations. Northern Star
	Resources Limited is based in Subiaco, Australia.
Doray Minerals Limited	Doray Minerals Limited acquires, explores for, and develops gold properties in
	Australia. Its flagship property is the Andy Well gold project located to the north of
	Meekatharra in the Murchison region of Western Australia. The company also holds a
	100% interest in the Deflector project that contains gold-copper-silver deposits
	situated in the southern Murchison region of Western Australia. The company was
	founded in 2009 and is based in West Perth, Australia.

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Company Name	Description
Regis Resources Ltd	Regis Resources Limited, together with its subsidiaries, explores for, evaluates, and
	develops gold projects in Australia. The company has a 100% interest in the Duketon
	gold project that includes 251 granted exploration, prospecting, and mining licences
	covering 1,502 square kilometres and 37 general purpose and miscellaneous licences
	covering 1,185 square kilometres located to the north of Laverton in Western
	Australia. It also owns interests in the McPhillamys gold project that consists of four
	granted exploration permits covering 477 square kilometres located in the Central
	West region of New South Wales. Regis Resources Limited was founded in 1988 and
	is based in Subiaco, Australia.
St Barbara Ltd	St Barbara Limited engages in the exploration, development, production, mining,
	and sale of gold. The company also explores for copper ores. Its properties include
	the Gwalia underground mine located in Western Australia; and the Simberi gold
	mine situated in New Ireland province, Papua New Guinea. The company was
	incorporated in 1969 and is based in Melbourne, Australia.
Saracen Mineral Holdings Ltd	Saracen Mineral Holdings Limited engages in the gold mining and mineral
	exploration business in Australia. The company holds 100% interest in the Carosue
	Dam operations located in north-east of Kalgoorlie, Western Australia. It also holds
	interests in Thunderbox operations located in the Yandal belt and the Agnew-Wiluna
	belt in the North Eastern Goldfields of Western Australia. Saracen Mineral Holdings
	Limited is headquartered in Perth, Australia.
Ramelius Resources Ltd	Ramelius Resources Limited, together with its subsidiaries, engages in the
	exploration, mine development and operation, and sale of gold in Australia and the
	United States. It operates through Mt Magnet, Burbanks, and Exploration segments.
	The company primarily explores for gold and nickel deposits, as well as offers
	milling services. It holds interest in the Mt Magnet project located within the north-
	south striking Meekatharra-Mt Magnet greenstone belt of the Western Australian
	Murchison Province; and operates the Burbanks Treatment Plant that is located in
	the Eastern Goldfields region of Western Australia. The company’s operational
	projects also comprise Vivien deposit and Kathleen Valley gold mines in Western
	Australia. Ramelius Resources Limited is headquartered in East Perth, Australia.
Resolute Mining Ltd	Resolute Mining Limited produces gold, and prospects and explores for minerals. It
	operates two gold mines in Africa and Australia. The company primarily holds 80%
	interest in the Syama Gold Project located in the south of Mali, West Africa. It also
	produces silver. The company was formerly known as Resolute Limited and changed
	its name to Resolute Mining Limited in September 2001. The company is based in
	Perth, Australia.
Millenium Minerals	Millennium Minerals Limited engages in the mining, processing, and exploration of
	gold in Australia. It primarily holds interest in 16 tenements in the Nullagine gold
	project located in the East Pilbara region of Western Australia. The company is
	headquartered in West Perth, Australia.
Kingsgate Consolidated Ltd	Kingsgate Consolidated Limited engages in the exploration, development, and
	mining of gold and silver properties in Australia, Southeast Asia, and South America.
	The company owns and operates two gold projects, including the Chatree mine in
	Thailand; and the underground Challenger Gold mine in South Australia. It also holds
	interest in the Nueva Esperanza silver/gold project in Chile; and the Bowdens silver
	project in New South Wales, Australia. Kingsgate Consolidated Limited is based in
	Sydney, Australia.

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Company Name	Description
Silver Lake Resources	Silver Lake Resources Limited, together with its subsidiaries, operates as a gold
	producing and exploration company in Australia. The company holds interests in the
	Mount Monger goldfield that covers an area of 1,728 km2 located to the southeast of
	Kalgoorlie; the Murchison goldfield, which include Tuckabianna, Comet, Eelya, and
	Moyagee projects located between Mount Magnet and Cue areas; and the Great
	Southern Project covering an area of 2,500 km2 located in the southeast of Western
	Australia. It also holds interests in the Copper Lakes project that consists of an
	exploration license application covering an area of 267 km2 located to the southeast
	of Port Hedland. The company is headquartered in South Perth, Australia.
Phoenix Gold Limited	Phoenix Gold Limited explores for, develops, and produces gold properties in
	Australia. The company has interests in 279 tenements covering an area of 689
	square kilometers located in the Eastern Goldfields of Western Australia. Its flagship
	property is the Castle Hill gold project located to the northwest of Kalgoorlie in
	Western Australia’s Eastern Goldfields region. The company is headquartered in
	Kalgoorlie, Australia.

Source: Bloomberg and Capital IQ

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A endix 4 – Com arable Transactions pp p

The table below sets out the transaction value to resource multiple for comparable transactions of gold assets under care and maintenance.

Target Project/Company	Announcement date	Percentage acquired	Resourse Equivalent (Moz)	Transaction value (A$m)	Transaction multiple (A$/oz)
Bronzewing Gold Project	15-May-14	100.00%	1.00	12.94	$12.94
Tanami Gold Project	09-Feb-15	25.00%	0.70	19.99	$38.56
Hillgrove Mine	09-Nov-12	100.00%	1.60	34.08	$21.30
Meekatharra Gold Operations	11-Jan-11	100.00%	2.40	28.06	$11.69
Murchison Gold Project	07-Jan-14	100.00%	0.60	15.01	$25.02
Sandstone Property Project	14-Aug-12	100.00%	0.70	5.05	$7.22
Southern Cross Operations	09-Jan-13	100.00%	2.40	24.92	$10.38
Wiluna Gold Project	20-Jan-14	100.00%	2.90	5.33	$1.84
Thunderbox and Bannockburn Projects	21-Jan-14	100.00%	2.10	19.99	$9.52
				Minimum	$1.84
				Maximum	$38.56
				Median	$11.69
				Average	$15.39

Source: Bloomberg and BDO analysis

The table below set out the description of the transactions identified above.

Target Project/Company	Transaction Description
	Metaliko Resources Limited entered into an agreement to acquire
	Navigator Bronzewing Pty Ltd from Navigator Resources Limited for AUD 4
	million on May 14, 2014. Under the terms of the agreement, Metaliko will
	pay AUD 3 million cash to Navigator Resources and issue 33.33 million fully
Bronzewing Gold Project	paid ordinary shares at a deemed issue price of AUD 0.03 per share upon
	completion of the transactio. Metaliko is also required to arrange the
	release to the administrator of Navigator, AUD 7.08 million of bank
	deposits previously lodged by Navigator to cover DMP environmental
	bonds.
	Northern Star Resources Limited entered into a binding heads of
	agreement to acquire 25% stake in Central Tanami Project from Tanami
	Gold NL for AUD 20 million in cash and stock on February 26, 2015. Under
	the terms, Northern Star Resources Limited issued 4.3 million shares and
Tanami Gold Project	agreed to pay AUD 11 million in cash as consideration for the acquisition.
	Pursuant to completion, Northern Star Resources Limited will become the
	manager of joint venture Central Tanami Project and will then earn a
	further 35% by sole funding all expenditure and costs required to bring the
	project back into commercial production.
	Bracken Resources Pty Ltd entered into a binding sale and purchase
Hillgrove Mine	agreement to acquire Hillgrove Mines Pty Ltd from Straits Resources
	Limited for AUD 30.9 million. The consideration consists of a cash payment

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Target Project/Company	Transaction Description
	of AUD 27 million and replacement of AUD 3.9 million in environmental
	bonds.
	GMK Exploration Pty Ltd. signed an agreement to acquire 100% tenements
	and assets of Mercator Gold Australia Pty Ltd. from ECR Minerals Plc for
	AUD 26.5 million on January 12, 2011. Under the terms of the transaction,
	GMK Exploration will pay AUD 2 million within 48 hours of execution of the
Meekatharra Gold Operations	agreement, AUD 15 million on March 31, 2011, and AUD 8 million on June
	30, 2011. In addition, GMK Exploration will also issue greater of 2 million
	Reed Resources Ltd. shares or AUD 1.3 million worth shares of Reed prior
	to June 30, 2011. GMP will also be responsible for the holding costs
	associated with the tenements for the period up until the closing.
	Monument Mining Limited entered into a binding sales agreement to
	acquire Kentor Minerals (WA) Pty Ltd and assets of Jinka Minerals Ltd.
	from KGL Resources Limited and Jinka Minerals Ltd. for AUD 15 million on
Murchison Gold Project	December 27, 2013. The completion of the transaction was subject to obtaining approval from the Foreign Investment Review Board and several
	other conditions. The funds from the sale of the project were used to
	continue the exploration and development of the Jervois copper project in
	the Northern Territory.
	Southern Cross Gold Fields Ltd agreed to acquire Sandstone Gold Project
	assets from Troy Resources Limited for AUD 5.05 million in cash on August
	14, 2012. The consideration for the acquisition comprises of AUD 5 million
	cash, out of AUD 2.3 million, AUD 2.7 million is for replacing
Sandstone Property Project	environmental bonds, a 2% net smelter royalty on all non-nickel production from the Sandstone Tenements; and 43.665 million unlisted options in
	Southern Cross Gold Fields having an exercise price of AUD 0.10 and term
	of 5 years. In addition to the Sandstone plant and 100 person camp, the
	Sandstone Gold Project acquisition also includes a 1,100km2 tenement
	portfolio.
	St Barbara agreed to sell its Southern Cross operations to Chinese miner
	Hanking Gold Miining. The sale, was valued around $22.5 million and
Southern Cross Operations	included the mine and other related assets located at Southern Cross. Part
	of the sale included the assumption of the exisitng rehabilitation
	obligations applying to the tenement.
	Blackham Resources Limited signed an agreement to acquire Wiluna Gold
	Project from Apex Gold Pty Ltd and Apex Minerals NL for AUD 5.33 million
	on January 20, 2014. The consideration consists of deposit of AUD 0.2
	million paid upon signing of the sale agreement, AUD 1.8 million in cash on
	completion, AUD 1.3 million in cash (or shares at Blackham’s election) on
Wiluna Gold Project	production of 0.05 million oz from the Wiluna tenements and AUD 1.3
	million in cash (or shares at Blackham’s election) on production of 0.10
	million oz from the Wiluna tenements. Blackham will also take on the
	remaining rehabilitation obligations over the Wiluna Project and is
	required to replace the AUD 3.26 million in environmental bonds on
	transfer of the mining leases from the vendor.
	Saracen Mineral Holdings Limited entered into an agreement to acquire
Thunderbox and Bannockburn Projects	Thunderbox and Bannockburn Gold Mines and Operations from Lionore Australia Pty Limited for AUD 23 million on January 21, 2014. As per the
	terms of the deal, AUD 20 million cash will be paid on settlement, AUD 3

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Target	Project/Company	Transaction Description
		million cash upon the commencement of commercial production or after a
		period of 24 months following settlement, the prevailing gold price has
		exceeded AUD 1550/oz for a calendar month and 1.5% NSR Royalty on the
		Thunderbox Operations capped at AUD 17 million.
Source:	Bloomberg and Capital IQ

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A endix 5 – Control Premium pp

Control Premium

RG 111.25 suggest that when considering the value of a company’s shares for the purposes of approval under item 7 of section 611 the expert should consider a premium for control. An acquirer could be expected to pay a premium for control due to the advantages they will receive should they obtain 100% of another company. These advantages include the following:

Control over decision making and strategic direction;
Access to underlying cash flows;
Control over dividend policies; and
Access to potential tax losses.

Whilst Investmet and Fotios will not be obtaining 100% of EGL, RG 111 states that the expert should calculate the value of the target’s shares as if 100% control were being obtained. RG 111.27 states that the expert can then consider an acquirer’s practical level of control when considering reasonableness. This has been included in section 13 of our Report.

We have reviewed the control premiums paid by acquirers of mining companies listed on the ASX since 2008. We have summarised our findings below:

Year	Number of Transactions	Average Deal Value (AU$m)	Average Control Premium (%)
2015	4	670.56	54.59
2014	13	135.34	43.81
2013	15	54.16	64.64
2012	19	131.07	49.97
2011	18	653.45	48.88
2010	24	805.80	46.75
2009	25	112.87	49.28
2008	8	591.43	38.87
	Median	363.38	49.08
	Mean	394.33	49.60

Source: Bloomberg and BDO analysis

The mean and median figures above are calculated based on the average deal value and control premium for each respective year. To ensure our data is not skewed we have also calculated the mean and medium of the entire data set comprising control transactions from 2008 onwards, as set out below.

Entire Data Set Metrics	Average Deal Value (AU$m)	Average Control Premium (%)
Median	44.74	39.38
Mean	370.29	49.62

Source: Bloomberg and BDO analysis

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In arriving at an appropriate control premium to apply we note that observed control premiums can vary due to the:

Nature and magnitude of non-operating assets;
Nature and magnitude of discretionary expenses;
Perceived quality of existing management;
Nature and magnitude of business opportunities not currently being exploited;
Ability to integrate the acquiree into the acquirer’s business;
Level of pre-announcement speculation of the transaction;
Level of liquidity in the trade of the acquiree’s securities.

The table above indicates the long term average control premiums paid by acquirers of all mining companies on the ASX is approximately 49.62%, with five control transactions paying a premium above 80% in 2013.

In assessing the sample of transactions which were included in the above table, we have noted transactions within the list which appear to be extreme outliers. These outliers include 13 transactions where the announced control premium was in excess of 100%. In a population where there are extreme outliers, the median often represents a superior measure of central tendency compared to the mean.

In determining the appropriate control premium appropriate for EGL, we reviewed control transactions of a similar nature and size. We considered this to be an appropriate approach, noting that the average control premium is influenced by factors such as whether the consideration is cash or scrip and the deal size. This was prominently observed during 2013 where the average deal size was $54.16 million and the average control premium was 64.64%.

As mentioned in section 4.4 of our Report, there is significant uncertainty regarding whether the Company will continue as a going concern. As at 30 June 2014, the Company’s current liabilities exceed its current assets by $32.19 million and the Company recorded a loss of $6.47 million for the financial year ended 30 June 2014. The ability of the Company to meet its debt as and when they fall due is primarily dependent on the Directors meeting the terms and conditions under the Investmet transaction and successfully recapitalising the Company. Failure to do so may result in EGL being unable to meet its debts as and when they fall due and realise its assets and settle its liabilities in the ordinary course of business.

Also, at the date of our Report Investmet and Fotio already holds a 44% interest in the issued capital of EGL. Following the Transaction, Investmet and Fotios will increase their holding up to 77.5% of the issued capital of EGL. Given that, EGL already have control from an ASIC Regulatory Guide perspective, we consider it unlikely that an acquirer would pay a premium for control in line with historical averages.

In the case of EGL, based on our research and considerations set out above, we believe that an appropriate control premium to apply to our valuation of Eastern Goldfields’ shares is between 20% and 30%.

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Appendix 6 – Independent Valuation Re ort p

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Malcolm Castle Agricola Mining Consultants Pty Ltd P.O. Box 473, South Perth, WA 6951 Mobile: 61 (4) 1234 7511 Email: [email protected] ABN: 84 274 218 871

25 October 2015

BDO Corporate Finance (WA) Pty Ltd 38 Station Street Subiaco, WA, 6008

Dear Sirs,

Re: INDEPENDENT VALUATION OF MINERAL ASSETS at the DAVYHURST and MT IDA PROJECTS

in WESTERN AUSTRALIA HELD BY SWAN GOLD MINING LIMITED

Agricola has been commissioned by the Directors BDO Corporate Finance (WA) Pty Ltd (“BDO”) to provide a Mineral Asset Valuation Report (“Report”) on the Mineral Assets at the Davyhurst and Mt Ida Projects in Western Australia held by Swan Gold Mining Limited (the “Company”). This report serves to comment on the geological setting and exploration results on the properties and presents a Technical and Market Valuation for the exploration assets based on the information in this Report.

The present status of the tenements in Western Australia is based on information made available by the Company and has been verified by Agricola. The Report has been prepared on the assumption that the tenements are lawfully accessible for evaluation.

Scope of the Valuation Report

Agricola Mining Consultants Pty Ltd (“Agricola”) prepared this Report utilizing information relating to operational methods and expectations provided to it by various sources. Where possible, Agricola has verified this information from independent sources. This Report has been prepared for the purpose of providing information to BDO and the Company but Directors of Agricola accept no liability for any losses arising from reliance upon the information presented in this Report.

This mineral asset valuation endeavours to ascertain the unencumbered price which a willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not too anxious purchaser could reasonably expect to have to pay for the property if the vendor and the purchaser had got together and agreed on a price in friendly negotiation.

This is commonly known as the Spencer Test after the Australian High Court decision upon which these principles are based and to which the Courts have used in their determinations of market

value of a property. In attributing the price that would be paid to the hypothetical vendor by the hypothetical purchaser it is assumed that the property will be put to its “highest and best use”.

The findings of the valuation report include an assessment of the technical value (i.e. the value implied by a consideration of the technical attributes of the asset) and a market value (which considers the influences of external market forces and risk).

Applying the Spencer Test may not be confined to a technical valuation exercise but may involve a consideration of market factors. In a highly speculative market during ‘boom’ conditions or a depressed market during ‘bust’ conditions the hypothetical purchaser may expect to pay a premium or receive a discount commensurate with the current market for mineral properties.

The main requirements of the Valuation Report are:

Prepared in accordance with the VALMIN Code 2005
Experience and qualifications of key personnel to be set out
Details of valuation methodologies
Reasoning for the selection of the valuation approach adopted
Details of the valuation calculations
Conclusion on value as a range with a preferred value

DECLARATIONS

Relevant codes and guidelines

This report has been prepared as a technical assessment and valuation in accordance with the Code for Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the “VALMIN Code”, 2005), which is binding upon Members of the Australasian Institute of Mining and Metallurgy (“AusIMM”) and the Australian Institute of Geoscientists (“AIG”), as well as the rules and guidelines issued by the Australian Securities and Investments Commission (“ASIC”) and the ASX Limited (“ASX”) which pertain to Independent Expert Reports (Regulatory Guides RG111 and RG112, March 2011).

Where mineral resources have been referred to in this report, the information was prepared and first disclosed under the ”Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”), prepared by the Joint Ore Reserves Committee of the AusIMM, the AIG and the Minerals Council of Australia 2004. Some of the information has not been updated since the estimation date to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

Under the definition provided by the VALMIN Code, the Mt Forrest Project is classified as ‘advanced exploration areas’ with identified mineral resources, which is inherently speculative in nature. The properties are considered to be sufficiently prospective, subject to varying degrees of risk, to warrant further exploration and development of its economic potential.

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Sources of Information

The statements and opinion contained in this report are given in good faith and this review is based on information provided by the title holders, along with technical reports by consultants, previous tenements holders and other relevant published and unpublished data for the area. Agricola has endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy and completeness of the technical data upon which this report is based. A final draft of this report was provided to the Company, along with a written request to identify any material errors or omissions in the technical information prior to lodgment.

In compiling this report, Agricola did not carry out a site visit to the Company’s Project areas. Based on previous visits and exploration work in the general area, its professional knowledge, experience and the availability of extensive databases and technical reports made available by various Government Agencies, Agricola considers that sufficient current information was available to allow an informed appraisal to be made without such a visit.

The independent valuation report has been compiled based on information available up to and including the date of this report. Consent has been given for the distribution of this report in the form and context in which it appears. Agricola has no reason to doubt the authenticity or substance of the information provided.

Qualifications and Experience

The person responsible for the preparation of this report is:

Malcolm Castle, B.Sc.(Hons), GCertAppFin (Sec Inst), MAusIMM

Malcolm Castle has over 40 years’ experience in exploration geology and property evaluation, working for major companies for 20 years as an exploration geologist. He established a consulting company over 20 years ago and specializes in exploration management, technical audit, due diligence and property valuation at all stages of development. He has wide experience in a number of commodities including uranium, gold, base metals, iron ore and mineral sands. He has been responsible for project discovery through to feasibility study in Australia, Fiji, Southern Africa and Indonesia and technical audits in many countries. He has completed numerous Independent Geologist’s Reports and Mineral Asset Valuations over the last decade as part of his consulting business.

Mr Castle is a qualified and competent witness in a court or tribunal capable of supporting his valuation reports or to give evidence of his opinion of market value issues.

Mr Castle completed studies in Applied Geology with the University of New South Wales in 1965 and has been awarded a B.Sc.(Hons) degree. He has completed postgraduate studies with the Securities Institute of Australia in 2001 and has been awarded a Graduate Certificate in Applied Finance and Investment in 2004.

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Competent Persons Statement

The information in this report that relates to Exploration Results and Mineral Resources of the Company has been reviewed by Malcolm Castle who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Castle has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as an Expert and Competent Person as defined under the VALMIN Code and in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr Castle consents to the inclusion in this report of the matters based on the information in the form and context in which they appear.

Independence

Agricola or its employees and associates are not, nor intend to be a director, officer or other direct employee of the Company and have no material interest in the Projects. The relationship with the Company is solely one of professional association between client and independent consultant. The review work and this report are prepared in return for professional fees of $6,000 plus GST based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this Report.

Valuation Opinion

Based on an assessment of the factors involved the estimate of the market value of the Davyhurst and Mt Ida Projects is in the range of A$14.7 million to A$18.9 million with a preferred value of A$16.9 million.

This valuation is effective on 25 October 2015.

Background notes and details of the Valuation process adopted by Agricola are included as an appendix to this Report.

Yours faithfully

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Malcolm Castle B.Sc.(Hons) MAusIMM, GCertAppFin (Sec Inst)

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TENEMENT SCHEDULE

Davyhurst Project
	No	Total Area, km2
Mining Leases	72	284.00
Prospecting Licences	55	71.86
Exploration Licences	18	937.61
Total Area		1293.46
Mt Ida Project
	No	Total Area, km2
Mining Leases	3	8.31
Prospecting Licences	47	50.27
Exploration Licences	4	130.49
Total Area		180.08
Details of the tenements are included at the end of this Report

The status of the granted tenements has been verified by Agricola, pursuant to paragraph 67 of the Valmin Code by reference to the on-line database of the Department of Mines and Petroleum, Western Australia. The granted tenements are believed to be in good standing at the date of this valuation as represented by the Company. Some future events such as the grant (or otherwise) of expenditure exemptions and plaint action may impact of the valuation and may give grounds for a reassessment.

PROJECT REVIEW

The Davyhurst Project , which includes the Riverina, and Siberia deposits, is situated approximately 120km northwest of Kalgoorlie. The Riverina deposit is located 45 km north of the Davyhurst plant and is connected directly to Davyhurst by a gravel road suitable for road train operation. The Siberia project area is about 40 km east of Davyhurst and 25 km west of the Goldfields Highway. The Davyhurst Project comprises operational and exploration prospects, including a mineral resource base at 30 June 2008 of 0.2 million tonnes at 2.8g/t Au in the Measured Resource category, 9.8 million tonnes at 2.2g/t Au in the Indicated Resource category and 8.6 million tonnes at 2.3g/t Au in the Inferred Category and Exploration Tenements (excluding Miscellaneous Licences) with an area of 1,293 km[2] .

The Mt Ida Project and associated assets are located 200 kilometres north-west of KalgoorlieBoulder and 70 kilometres north-west of Menzies. The Mt Ida deposits are situated 120km north of Davyhurst and are connected via gravel roads. The Mt Ida Project tenements cover part of the prospective Ularring Greenstone Belt. The Mt Ida Project comprises operational and exploration prospects, including a mineral resource base at 6 May 2010 of 135 ktonnes at 18.6g/t Au in the Measured category, 143 ktonnes at 9.3g/t Au in the Indicated Resource category and 39 ktonnes at 13.3g/t Au in the Inferred Resource Category and Exploration Tenements (excluding Miscellaneous Licences) with an area of 180 km[2] .

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The Davyhurst and Mt Ida Project areas are considered to be prospective for gold and base metals. Known deposit styles include high grade shear/vein hosted gold and base metal sulphides. Historically 300,000 ounces of gold have been mined from the various mines in the Copperfield/Mt Ida area. The most recent mining episode targeted the the Baldock lode. Numerous exploration opportunities remain on the known lode surfaces namely Meteor, Whinnen, Meteor North, Baldock South and Timoni lodes combined with the potential to make new discoveries.

MINERAL RESOURCES - DAVYHURST

A resource estimate in accordance with the JORC Code has been compiled for the Davyhurst Project. As at 30 June 2008, the Davyhurst Project contained mineral resource as detailed below:

PIT/PROJECT	MEASURED	MEASURED	INDICATED	INDICATED	INFERRED	INFERRED	TOTAL MATERIAL	TOTAL MATERIAL	TOTAL MATERIAL
	('000t)	(g/t Au)	('000t)	(g/t Au)	('000t)	(g/t Au)	('000t)	(g/t Au)	('000oz.)
CALLION			86	2.8	83	2.3	169	2.6	14
FEDERAL FLAG	32	2.0	112	1.8	238	2.5	382	2.3	28
GOLDEN EAGLE			345	2.5	311	2.6	656	2.5	54
LADY GLADYS			1,858	1.9	190	2.4	2,048	1.9	128
LIGHTS OF ISRAEL UNDERGROUND			74	4.3	180	4.2	254	4.2	35
MAKAI SHOOT			1,985	2.0	153	1.7	2,138	2.0	136
SALMON GUMS			199	2.8	108	2.9	307	2.8	28
WAIHI			805	2.4	109	2.4	914	2.4	71
WALHALLA			448	1.8	216	1.4	664	1.7	36
WALHALLA NORTH			94	2.4	13	3.0	107	2.5	9
MT BANJO			109	2.3	126	1.4	235	1.8	14
MACEDON					186	1.8	186	1.8	11
SAND KING			516	3.1	935	3.0	1,451	3.0	142
MISSOURI	98	1.7	831	2.0	909	2.2	1,838	2.1	123
PALMERSTON / CAMPERDOWN			118	2.3	174	2.4	292	2.4	22
BERWICK MOREING					50	2.3	50	2.3	4
BLACK RABBIT					434	3.5	434	3.5	49
THEIL WELL					18	6.0	18	6.0	3
IGUANA			690	2.1	2,032	2.0	2,722	2.0	177
LIZARD	106	4.0	75	3.7	13	2.8	194	3.8	24
RIVERINA AREA			941	2.4	1,644	2.5	2,585	2.5	205
FOREHAND			386	1.7	436	1.9	822	1.8	48
SILVER TONGUE			155	2.7	19	1.3	174	2.5	14
TOTAL	236	2.8	9,827	2.2	8,577	2.4	18,640	2.3	1,372

Davyhurst Mineral Resource Estimate

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DAVYHURST	Tonnes	Grade	Ounces
	('000t)	(g/t Au)	('000)
Measured	236	2.8	21
Indicated	9,827	2.2	691
Measured + Indicated	10,063	2.2	712
Inferred	8,577	2.4	660
TOTAL	18,640	2.3	1,372
Davyhurst	Mineral Resource	Summary

The information contained in this Mineral Resource summary has been compiled by the Company from a number of internal Mineral Resource estimation reports and this Report replicates information contained in the Company’s reports. So far as it relates to ore and mineralisation, this Report is based on information compiled by Mr Mark Nelson, who is a Member of the Australian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. Mr Nelson has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking, to qualify as a Competent Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Minerals Resources and Ore Reserves. Mr Nelson was a full time employee of the Company. This Report accurately reflects the information compiled by Mr Nelson.

The estimates are historical estimates and are not reported in accordance with the 2012 JORC Code and the inferred resources as referred to do not constitute any resources under the 2012 JORC Code;
A competent person has not done sufficient work to classify the historical estimates as mineral resources in accordance with the 2012 JORC Code; and
It is uncertain that following evaluation and/or further exploration work that the historical estimates will be able to be reported as mineral resources in accordance with the 2012 JORC Code.

The information contained in this Mineral Resource summary replicates information contained in the Company’s Davyhurst Mineral Resource Estimate.

The author of this Report is not aware of any new information or data that materially affects the information included in the Company’s reports referred to above and, in the case of mineral resources that all the material assumptions and technical parameters underpinning the estimates in the Information Memorandum continue to apply and have not materially changed. The form and context in which Mr Nelsoln’s findings are presented have not been materially modified.

MINERAL RESOURCES – MT IDA

A resource estimate in accordance with the JORC Code has been compiled for the Mt Ida Project and has been announced to the ASX in past releases and reports. As at 6 May 2010, the Mt Ida Project contains a Mineral Resource set out in the following table.

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MT IDA	Tonnes	Grade	Ounces
	(‘000)	(g/t Au)	(000)
Measured	135	18.6	81
Indicated	143	9.3	43
Measured + Indicated	279	13.8	124
Inferred	39	13.3	17
TOTAL	317	13.8	140
Mt Ida Project	Mineral Resources Summary

The information contained in this Mineral Resource summary replicates information contained in the Company’s ASX announcement entitled “Swan Gold targets July gold production”, released to the ASX on 6 May 2010. Insofar as it relates to the resources and reserves, has been prepared by Mr Robin Simpson of SRK Consulting, Mr Mark Nelson of Monarch and Mr Ian Price of Mining One Consultants. Mr Robin Simpson, Mr Mark Nelson and Mr Ian Price each have sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as Competent Persons as defined in the JORC Code. This Report accurately reflects the information compiled by Mr Simpson, Mr Nelson and Mr Price.

The estimates are historical estimates and are not reported in accordance with the 2012 JORC Code and the inferred resources as referred to do not constitute any resources under the 2012 JORC Code;
A competent person has not done sufficient work to classify the historical estimates as mineral resources in accordance with the 2012 JORC Code; and
It is uncertain that following evaluation and/or further exploration work that the historical estimates will be able to be reported as mineral resources in accordance with the 2012 JORC Code.

The information contained in this Mineral Resource summary replicates information contained in the Company’s Mt Ida Mineral Resource Estimate.

The author of this Report is not aware of any new information or data that materially affects the information included in the Company’s reports referred to above and, in the case of mineral resources that all the material assumptions and technical parameters underpinning the estimates in the Information Memorandum continue to apply and have not materially changed. The form and context in which Mr Nelson’s findings are presented have not been materially modified.

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VALUATION ASSESSMENT

MINERAL RESOURCES VALUATION by the COMPARABLE TRANSACTIONS METHOD

An estimate of the mineral resources at Davyhurst and Mt Ida has been compiled. Agricola considers it is appropriate to estimate the value the mineral resources based on the comparative transactions method.

The method requires allocating a dollar value to the mineral resources in the ground and applying appropriate discounts for JORC Category, operating factors and average acquisition cost for mineral projects. This may also apply to well-established zones of mineralisation that have not formally been categorised under the JORC code. An additional risk weighting may be appropriate in these circumstances. Further details of the valuation approach are included in the notes attached to this Report.

The Mineral Resources are assumed to encapsulate all the value the Mining Leases at the Davyhurst and Mt Ida Projects. The Prospecting Licences and Exploration Licences are considered to represent exploration potential.

Average Gold Price

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Consensus Commodity Price Forecast, Sources PCF Capital Group

Month	USD Price	AUD:USD	AUD Price
Apr-15	1,198.93	0.7729	1,551.25
May-15	1,198.63	0.7897	1,517.90
Jun-15	1,181.50	0.7709	1,532.62
Jul-15	1,128.31	0.7421	1,520.48
Aug-15	1,117.93	0.7309	1,529.48
Sep-15	1,124.77	0.7118	1,580.13

An average price for the Davyhurst and Mt Ida Projects has been selected at AUD1,540.

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Base Value

A discount factor is applied to the contained value to recognise the JORC category and allow for resource risk.

Resource Category Discounts
Measured Resource	80%
Indicated Resource	70%
Inferred Resource	60%
Exploration Target	45%
Material Inventory	30%

Allowances for operating factors are also included in the assessment. Higher discounts for Recovery and Mining are included in view of the depth on the material inventory and the likelihood of underground mining.

Operations Factors	Davyhurst	Mt Ida
Recovery	95%	95%
Mining	90%	90%
Processing	95%	95%
Rail	95%	95%
Port	100%	100%
Capex	90%	90%
Marketing	100%	100%
Total OperatingDiscount	69%	69%

The base value for the project is estimated by multiplying the contained value by the resource and operational discount factors.

Base Value = [Contained Value][Resource Discount][Operating Discounts]

Base Value A$M Davyhurst	Mt Ida
Measured 18.06	68.63
Indicated 517.01	31.80
Inferred 421.95	10.63
Exploration Target -	-
Total 957.02	111.06
A$ per ounce $694.43	$792.38

The Average Acquisition cost is estimated to be in the range of 2.5% to 5.6% with a preferred value of 3.4% of the discounted base value in accordance with the Spencer Test where the unencumbered price is agreed between a willing but not anxious vendor and purchaser. Further details of the valuation approach are included in the notes attached to this Report.

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Technical Value

Technical Value = [Base Value]*[Average Acquisition Cost%]

Total Project Technical Value, A$M Davyhurst	Mt Ida
Low 25.12	2.92
High 32.06	3.72
Preferred 28.71	3.33
% of contained value 1.35%	1.54%
A$ per ounce $20.83	$23.77

VALUATION ASSESSMENT – EXPLORATION POTENTIAL

EXPLORATION POTENTIAL VALUATION by the GEOFACTOR RATING METHOD

The exploration Licences and Prospecting Licences at Davyhurst and Mt Ida are classed as exploration projects. Several methods of valuation are available for such projects where a Mineral Resource has not yet been estimated in accordance with the JORC code. These include the use of valuations based on past exploration expenditure and valuations based on perceived prospectivity.

Exploration projects can be extremely variable and the use of comparable transactions is unlikely to produce a statistical spread of values for “similar” projects. This method can be used where a Mineral Resource has been estimated. The Prospectivity Exploration Multiplier (PEM) is based on past expenditure while the Kilburn Geoscience Rating (Geo-factor Rating) is based on opinions of the prospectivity hence tenements can have marked variation in value between the methods.

The ‘Geo-factor Rating’ method of valuation for exploration tenements is the preferred valuation method for the Company’s current tenement by Agricola as it focuses on the future prospectivity of the area.

The Geo-factor Rating method systematically assesses four key technical attributes of a tenement to arrive at a series of factors that are multiplied together to produce a prospectivity rating. The Basic Acquisition Cost (BAC) is the important input to the method and it is calculated by summing the application fees, annual rent, work required to facilitate granting (e.g. native title, environment etc) and statutory expenditure for a period of 12 months. This is usually expressed as average expenditure per square kilometre. Equity and grant status are also taken into account. Each factor then multiplied serially to the BAC. The ‘Base Value’ is multiplied by the prospectivity rating to establish the overall technical value of each mineral property.

Base Value

This represents the exploration cost for the initial period of the tenements. The current Base Acquisition Cost (BAC) for exploration projects or tenements at a similar stage is the average expenditure for the first year of the licence tenure. This is considered to be a BAC of AU$400 to AU$450 per square kilometre.

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The BAC was originally based on calculations of exploration expenditures and other costs for Western Australia. Agricola’s experience has confirmed this range to be appropriate for Australia and other parts of the world where exploration or valuations have been carried out by Agricola.

The BAC is designed for grass roots projects where no earlier work is available and only regional selection information is available. Where the Company in earlier work programs has received encouragement from earlier work then that aspect is addressed in the geofactors, which tend to upgrade the BAC based on earlier results and perceived prospectivity.

The assessment of value is based on the current equity and status for the various tenements as shown in the following table. Grant Factor for granted tenements is 100% and 60% for pending applications.

Base Value = [Area][Grant Factor][Equity]*[Base Acquisition Cost]

SWAN GOLD MINING LTD	Tenement Factors
Project Equity Km2	Status Grant
DAVYHURST
E16/0332 100% 40.74	GRANTED 100%
E16/0337 100% 11.24	GRANTED 100%
E16/0344 100% 27.92	GRANTED 100%
E16/0347 100% 2.96	GRANTED 100%
E16/0456 100% 77.70	GRANTED 100%
E16/0473 100% 38.56	GRANTED 100%
E16/0474 100% 32.60	PENDING 60%
E16/0475 100% 50.24	GRANTED 100%
E30/0332 100% 2.04	GRANTED 100%
E30/0333 100% 17.87	GRANTED 100%
E30/0334 100% 5.93	GRANTED 100%
E30/0335 100% 104.28	GRANTED 100%
E30/0336 100% 105.21	GRANTED 100%
E30/0338 100% 96.08	GRANTED 100%
E30/0449 100% 2.97	GRANTED 100%
E30/0454 100% 13.30	GRANTED 100%
E30/0464 100% 127.99	PENDING 60%
E30/0468 100% 180.00	PENDING 60%
PLs 100% 71.86	GRANTED 100%
MT IDA	100%
E29/0640 100% 109.33	GRANTED 100%
E29/0641 100% 2.52	GRANTED 100%
E29/0895 100% 3.80	GRANTED 100%
E29/0955 100% 14.83	PENDING 60%
PLs 100% 50.27	GRANTED 100%

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Prospectivity Assessment Factors

An assessment of the prospectivity of tenements was carried out. This includes a consideration of

Regional mineralisation, old and current workings and the validity of conceptual models.
Local mineralisation within the tenements and the application of conceptual models within the tenements.
Identified anomalies warranting follow up within the tenements.
The proportion of structural and lithological settings within the tenements and difficulty encountered by cover rocks and other factors.

	Rating	Address - Off Property	Mineralisation - On Property	Anomalies	Geology
Low	0.5	Very little chance of mineralisation, Concept unsuitable to environment	Very little chance of mineralisation, Concept unsuitable to environment	Extensive previous exploration with poor results - no encouragement	Unfavourable lithology over >75% of the tenement
Average	1	Indications of Prospectivity, Concept validated	Indications of Prospectivity, Concept validated	Extensive previous exploration with encouraging results - regional targets	Deep alluvium Covered favourable geology (40- 50%)
	2	Significant RC drilling leading to advance project status	RAB &/or RC Drilling with encouraging intercepts reported	Several well defined surface targets with some RAB drilling	Exposed favourable lithology (60- 70%)
High	3	Resource areas identified	Advanced Resource definition drilling - early stage	Several significant subeconomic targets - no indication of volume	Highly prospective geology (80 - 100%)

Assessments in each category are based on a set scale (see above and Appendix 1) and are multiplied together to arrive at a “prospectivity index.

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Prospectivity Index = [Off Site Factor][On Site Factor][Anomaly Factor]*[Geology Factor]

SWAN GOLD MINING LTD	Prospectivity Factors
Project Off Site On Site Anomaly Geology
Low High Low High Low High Low High
DAVYHURST
E16/0332 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0337 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0344 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0347 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0456 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0473 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0474 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E16/0475 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0332 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0333 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0334 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0335 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0336 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0338 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0449 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0454 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0464 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
E30/0468 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
PLs 1.50 1.60 1.20 1.30 1.00 1.10 1.25 1.35
MT IDA
E29/0640 1.85 1.95 1.25 1.35 1.25 1.35 1.25 1.35
E29/0641 1.85 1.95 1.25 1.35 1.25 1.35 1.25 1.35
E29/0895 1.85 1.95 1.25 1.35 1.25 1.35 1.25 1.35
E29/0955 1.85 1.95 1.25 1.35 1.25 1.35 1.25 1.35
PLs 1.85 1.95 1.25 1.35 1.25 1.35 1.25 1.35

TECHNICAL VALUE

An estimate of technical value has been compiled for the tenements based on the base acquisition cost, area, grant status, equity and ratings for prospectivity.

Technical Value = [Base Value]*[Prospectivity Index]

SWAN GOLD MINING LTD	SWAN GOLD MINING LTD
Project	Technical	Value, A$M
DAVYHURST	Low	High	Preferred
E16/0332	0.04	0.06	0.05
E16/0337	0.01	0.02	0.01
E16/0344	0.03	0.04	0.03
E16/0347	0.00	0.00	0.00
E16/0456	0.07	0.11	0.09
E16/0473	0.04	0.05	0.04

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E16/0474	0.02	0.03	0.02
E16/0475	0.05	0.07	0.06
E30/0332	0.00	0.00	0.00
E30/0333	0.02	0.03	0.02
E30/0334	0.01	0.01	0.01
E30/0335	0.09	0.15	0.12
E30/0336	0.10	0.15	0.12
E30/0338	0.09	0.13	0.11
E30/0449	0.00	0.00	0.00
E30/0454	0.01	0.02	0.02
E30/0464	0.07	0.11	0.09
E30/0468	0.10	0.15	0.12
PLS	0.07	0.10	0.08
Total	0.79	1.22	1.00
MT IDA
E29/0640	0.16	0.24	0.20
E29/0641	0.00	0.01	0.00
E29/0895	0.01	0.01	0.01
E29/0955	0.01	0.02	0.02
PLS	0.07	0.11	0.09
Total	0.25	0.38	0.32

The valuation for the Projects is not date specific and applies through a range of years depending on the exploration carried out and the results received. Monetary value is affected by the BAC.

Comparison with Yardstick (Rule of Thumb) Method

A review of technical value (which is not influenced by market conditions) of exploration areas carried out by Agricola over the last few years suggests that ground without resources can be categorized as a matter of convenience into four groups:

Advanced exploration areas located in a well mineralised area near existing mineral deposits with significant potential attract values well above $2000 per square kilometre
Exploration areas along strike or structurally related to estimated mineral resources. Such areas attract values in the range $1200 to $2000 per square kilometre.
Exploration areas in known mineral fields. Such areas attract values in the range of $700 to $1300 per square kilometre.
Exploration areas in green fields or early exploration domains remote from mineral resources. Such areas attract values in the range of $400 to $800 per square kilometre.

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Technical Value = [Base Value]*[Prospectivity Index]/Area

SWAN GOLD	MINING LTD	$ per	square km
	km2	Low	High
Davyhurst	1,009.47	780	1,204
Mt Ida	180.76	1,400	2,086

Based on the values estimated in this report, the Project falls in the range shown in the table, which are considered to be reasonable based on the high prospectivity of the Davyhurst and Mt Ida areas.

SUMMARY OF TECHNICAL VALUE

SWAN GOLD MINING LTD	SWAN GOLD MINING LTD
Project	Summary	Technical Value, A$M
	Low	High	Preferred
Mineral Resources
Davyhurst	25.12	32.06	28.71
Mt Ida	2.92	3.72	3.33
Subtotal	28.04	35.78	32.04
Exploration
Potential
Davyhurst	0.79	1.22	1.00
Mt Ida	0.25	0.38	0.32
Subtotal	1.04	1.59	1.32
Total	29.08	37.37	33.36

MARKET VALUE

In arriving at a fair market value for a particular exploration tenement, Agricola has considered the country risk and current market for exploration properties in Australia. Assessment of country risk and an assessment of the Business Climate have been provided by an independent specialist firm (source: www.coface.com). The rating for Australia is ‘A2’ for country risk and ‘A1’ for business climate, which are considered to be low. Strengths include geographic proximity to emerging Asia, mining resources, moderate public debt and specific geographic features which favour tourism. Weaknesses include vulnerable to commodities cycle and Chinese demand, substantial household debt (148% of disposable income), shortage of skilled labour, highly exposed to natural hazard and wide disparities between federated States. This rating will affect the market factor in assessing market value.

The current market value for mineral projects in Australia is considered to be depressed. A market discount of 50% has been applied to the Davyhurst Mineral Resource and 40% to the Mt Ida Deposit in recognition of the grade of the deposits.

A market discount of 60% has been applied to the Davyhurst and Mt Ida exploration potential for the Exploration licences and Prospecting licences.

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Market Value = [Technical Value]*[Adjusted Market Factor]

SWAN GOLD MINING LTD	SWAN GOLD MINING LTD	Market Value, A$M	Market Value, A$M
DAVYHURST	Market Factor	Low	High	Preferred
Mineral Resources
Davyhurst	50%	12.56	16.03	14.36
Mt Ida	60%	1.75	2.23	2.00
Subtotal		14.31	18.26	16.35
Exploration Potential
Davyhurst	40%	0.31	0.49	0.40
Mt Ida	40%	0.10	0.15	0.13
Subtotal		0.42	0.64	0.53
Total		14.73	18.90	16.88

Agricola has reviewed alternative comparative valuation methods as set out in Regulatory Guide 111: Content of expert reports (RG 111) at RG 111.65, which considers that "an expert should, where possible, use more than one valuation methodology. We consider this reduces the risk that the expert's opinion is distorted by its choice of methodology. We also consider that an expert should compare the figures derived from using the different methodologies and comment of any differences.".

Alternative methods such as Market Capitalisation (MCap) and Enterprise Value (EV) are not prohibited by RG111 to form the basis of comparable transaction analysis both MCap and EV include elements relating to corporate valuation such as cash and debt levels, management skills and reputation and many others which are independent of mineral asset values.

Agricola considers that the expectation of future gain is the main driver for mineral asset valuation of exploration projects as it endeavours to ascertain the unencumbered price which a willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not too anxious purchaser could reasonably expect to have to pay for the property if the vendor and the purchaser had got together and agreed on a price in friendly negotiation (the Spencer Test). The method set out in this report id considered appropriate for valuation of mineral resources.

VALUATION OPINION

Based on an assessment of the factors involved the estimate of the market value of the Davyhurst and Mt Ida Projects is in the range of A$14.7 million to A$18.9 million with a preferred value of A$16.9 million.

This valuation is effective on 23 October 2015.

Background notes and details of the Valuation process adopted by Agricola are included as an appendix to this Report.

Page | 17

TENEMENT LISTING

Davyhurst Project	Davyhurst Project
			EXPIRY
TENEMENT	STATUS	REGISTERED HOLDER Area_Km	DATE
Mining Leases
M16/0220	GRANTED	CARNEGIE GOLD PTY LTD 3.85	26/03/22
M16/0262	GRANTED	SIBERIA MINING CORPORATION PTY LTD 9.89	11/03/20
M16/0263	GRANTED	SIBERIA MINING CORPORATION PTY LTD 9.99	11/03/20
M16/0264	GRANTED	SIBERIA MINING CORPORATION PTY LTD 9.91	11/03/20
M16/0268	GRANTED	CARNEGIE GOLD PTY LTD 3.73	9/08/22
M16/0470	GRANTED	CARNEGIE GOLD PTY LTD 5.77	8/12/24
M24/0039*	GRANTED	CHARLES ROBERT GARDNER 7.46	15/01/27
M24/0051	GRANTED	SIBERIA MINING CORPORATION PTY LTD 0.92	4/10/26
M24/0115	GRANTED	SIBERIA MINING CORPORATION PTY LTD 1.87	10/06/29
M24/0159	GRANTED	SIBERIA MINING CORPORATION PTY LTD 4.00	8/02/30
M24/0208	GRANTED	SIBERIA MINING CORPORATION PTY LTD 4.17	17/05/30
M24/0290	GRANTED	SIBERIA MINING CORPORATION PTY LTD 7.90	14/06/31
M24/0352	GRANTED	SIBERIA MINING CORPORATION PTY LTD 4.26	12/06/32
M24/0376	GRANTED	SIBERIA MINING CORPORATION PTY LTD 3.19	18/02/33
M24/0427	GRANTED	SIBERIA MINING CORPORATION PTY LTD 0.04	13/12/35
M24/0633	GRANTED	SIBERIA MINING CORPORATION PTY LTD 0.43	19/04/25
M24/0754	GRANTED	SIBERIA MINING CORPORATION PTY LTD 0.05	10/01/20
M24/0755	GRANTED	SIBERIA MINING CORPORATION PTY LTD 1.64	27/11/28
M24/0830	GRANTED	SIBERIA MINING CORPORATION PTY LTD 0.10	29/08/33
M24/0845	GRANTED	SIBERIA MINING CORPORATION PTY LTD 8.97	24/03/25
M24/0846	GRANTED	SIBERIA MINING CORPORATION PTY LTD 6.07	24/03/25
M24/0847	GRANTED	SIBERIA MINING CORPORATION PTY LTD 8.12	24/03/25
M24/0848	GRANTED	SIBERIA MINING CORPORATION PTY LTD 7.89	24/03/25
M30/0001	GRANTED	CARNEGIE GOLD PTY LTD 0.07	8/05/26
M30/0005	GRANTED	CARNEGIE GOLD PTY LTD 6.60	21/10/27
M30/0007	GRANTED	CARNEGIE GOLD PTY LTD 4.72	26/06/26
M30/0016	GRANTED	CARNEGIE GOLD PTY LTD 0.01	15/12/28
M30/0021	GRANTED	CARNEGIE GOLD PTY LTD 0.65	16/03/28
M30/0034	GRANTED	CARNEGIE GOLD PTY LTD 1.97	11/06/29
M30/0039	GRANTED	CARNEGIE GOLD PTY LTD 3.35	17/05/30
M30/0042	GRANTED	CARNEGIE GOLD PTY LTD 0.50	1/12/29
M30/0043	GRANTED	CARNEGIE GOLD PTY LTD 1.36	2/11/29
M30/0044	GRANTED	CARNEGIE GOLD PTY LTD 0.08	29/10/29
M30/0048	GRANTED	CARNEGIE GOLD PTY LTD 9.49	17/05/30
M30/0059	GRANTED	CARNEGIE GOLD PTY LTD 1.06	28/03/30
M30/0060	GRANTED	CARNEGIE GOLD PTY LTD 1.34	21/01/30
M30/0063	GRANTED	CARNEGIE GOLD PTY LTD 7.31	21/04/30
M30/0072	GRANTED	CARNEGIE GOLD PTY LTD 9.60	3/11/30
M30/0073	GRANTED	CARNEGIE GOLD PTY LTD 8.71	3/11/30
M30/0074	GRANTED	CARNEGIE GOLD PTY LTD 3.59	3/11/30

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M30/0075	GRANTED	CARNEGIE GOLD PTY LTD	3.15	7/09/30
M30/0080	GRANTED	CARNEGIE GOLD PTY LTD	2.86	3/11/30
M30/0084	GRANTED	CARNEGIE GOLD PTY LTD	1.00	11/01/31
M30/0097	GRANTED	CARNEGIE GOLD PTY LTD	0.08	2/08/32
M30/0098	GRANTED	CARNEGIE GOLD PTY LTD	0.27	14/11/32
M30/0100	GRANTED	CARNEGIE GOLD PTY LTD	0.38	31/07/33
M30/0102	GRANTED	CARNEGIE GOLD PTY LTD	1.15	10/12/34
M30/0103	GRANTED	CARNEGIE GOLD PTY LTD	2.19	26/01/35
M30/0106	GRANTED	CARNEGIE GOLD PTY LTD	5.51	24/10/35
M30/0107	GRANTED	CARNEGIE GOLD PTY LTD	7.73	24/10/35
M30/0108	GRANTED	CARNEGIE GOLD PTY LTD	2.98	11/10/35
M30/0109	GRANTED	CARNEGIE GOLD PTY LTD	7.94	31/10/35
M30/0111	GRANTED	CARNEGIE GOLD PTY LTD	5.40	21/02/36
M30/0122	GRANTED	CARNEGIE GOLD PTY LTD	10.00	28/09/25
M30/0123	GRANTED	CARNEGIE GOLD PTY LTD	10.00	28/09/25
M30/0126	GRANTED	CARNEGIE GOLD PTY LTD	3.26	12/10/30
M30/0127	GRANTED	CARNEGIE GOLD PTY LTD	1.90	11/06/28
M30/0129	GRANTED	CARNEGIE GOLD PTY LTD	0.00	27/11/28
M30/0131	GRANTED	CARNEGIE GOLD PTY LTD	0.09	3/12/17
M30/0132	GRANTED	CARNEGIE GOLD PTY LTD	0.10	3/12/17
M30/0133	GRANTED	CARNEGIE GOLD PTY LTD	0.10	8/07/20
M30/0135	GRANTED	CARNEGIE GOLD PTY LTD	0.05	5/11/28
M30/0137	GRANTED	CARNEGIE GOLD PTY LTD	0.02	17/03/19
M30/0148	GRANTED	CARNEGIE GOLD PTY LTD	0.10	16/11/20
M30/0150	GRANTED	CARNEGIE GOLD PTY LTD	0.09	3/04/22
M30/0157	GRANTED	CARNEGIE GOLD PTY LTD	6.14	18/12/23
M30/0159	GRANTED	CARNEGIE GOLD PTY LTD	9.27	25/11/22
M30/0178	GRANTED	CARNEGIE GOLD PTY LTD	9.75	17/12/23
M30/0182	GRANTED	CARNEGIE GOLD PTY LTD	9.25	26/06/24
M30/0187	GRANTED	CARNEGIE GOLD PTY LTD	9.95	1/10/23
M30/0253	PENDING	CARNEGIE GOLD PTY LTD	2.67
		Total Area	284.00
Prospecting	Licences
P16/2514	GRANTED	CARNEGIE GOLD PTY LTD	0.24	18/12/16
P16/2774	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.35	16/01/17
P16/2775	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.16	16/01/17
P24/4182	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.43	19/02/16
P24/4750	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.10	19/01/18
P24/4751	GRANTED	SIBERIA MINING CORPORATION PTY LTD	0.92	19/01/18
P24/4752	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.64	10/02/18
P24/4753	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.90	10/02/18
P24/4754	GRANTED	SIBERIA MINING CORPORATION PTY LTD	1.77	10/02/18
P30/1012	GRANTED	INTERNATIONAL PETROLEUM LTD	1.98	10/09/16
P30/1013	GRANTED	INTERNATIONAL PETROLEUM LTD	1.99	10/09/16
P30/1014	GRANTED	INTERNATIONAL PETROLEUM LTD	1.99	10/09/16
P30/1015	GRANTED	INTERNATIONAL PETROLEUM LTD	1.99	10/09/16
P30/1016	GRANTED	INTERNATIONAL PETROLEUM LTD	1.99	10/09/16
P30/1017	GRANTED	CARNEGIE GOLD PTY LTD	0.44	1/09/16

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P30/1018	GRANTED	CARNEGIE GOLD PTY LTD	0.22	1/09/16
P30/1020	GRANTED	CARNEGIE GOLD PTY LTD	0.39	1/09/16
P30/1021	GRANTED	BARRA RESOURCES LTD	2.00	1/09/16
P30/1023	GRANTED	CARNEGIE GOLD PTY LTD	0.05	1/09/16
P30/1024	GRANTED	BARRA RESOURCES LTD	1.21	1/09/16
P30/1025	GRANTED	CARNEGIE GOLD PTY LTD	0.17	1/09/16
P30/1026	GRANTED	CARNEGIE GOLD PTY LTD	1.93	1/09/16
P30/1027	GRANTED	CARNEGIE GOLD PTY LTD	1.12	1/09/16
P30/1033	GRANTED	CARNEGIE GOLD PTY LTD	1.87	1/09/16
P30/1034	GRANTED	CARNEGIE GOLD PTY LTD	0.76	1/09/16
P30/1038	GRANTED	CARNEGIE GOLD PTY LTD	0.11	1/09/16
P30/1040	GRANTED	CARNEGIE GOLD PTY LTD	1.68	1/09/16
P30/1042	GRANTED	CARNEGIE GOLD PTY LTD	1.59	31/03/16
P30/1043	GRANTED	CARNEGIE GOLD PTY LTD	1.94	31/03/16
P30/1051	GRANTED	CARNEGIE GOLD PTY LTD	1.74	21/09/16
P30/1056	GRANTED	CARNEGIE GOLD PTY LTD	0.26	19/05/16
P30/1060	GRANTED	CARNEGIE GOLD PTY LTD	0.73	20/04/16
P30/1074	GRANTED	CARNEGIE GOLD PTY LTD	0.73	5/01/18
P30/1100	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.97	22/02/19
P30/1101	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.92	24/07/17
P30/1102	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.54	22/02/19
P30/1103	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.90	22/02/19
P30/1104	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.40	24/07/17
P30/1105	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	2.00	24/07/17
P30/1107	GRANTED	CARNEGIE GOLD PTY LTD	1.96	3/12/17
P30/1108	GRANTED	CARNEGIE GOLD PTY LTD	1.90	3/12/17
P30/1109	GRANTED	CARNEGIE GOLD PTY LTD	1.06	3/12/17
P30/1110	GRANTED	CARNEGIE GOLD PTY LTD	0.69	3/12/17
P30/1111	GRANTED	CARNEGIE GOLD PTY LTD	0.49	3/12/17
P30/1112	GRANTED	CARNEGIE GOLD PTY LTD	1.90	3/12/2017
P30/1113	GRANTED	CARNEGIE GOLD PTY LTD	1.96	3/12/17
P30/1114	GRANTED	CARNEGIE GOLD PTY LTD	1.94	3/12/17
P30/1115	GRANTED	CARNEGIE GOLD PTY LTD	1.76	3/12/17
P30/1116	GRANTED	CARNEGIE GOLD PTY LTD	1.03	3/12/17
P30/1117	GRANTED	CARNEGIE GOLD PTY LTD	1.50	3/12/17
P30/1118	GRANTED	CARNEGIE GOLD PTY LTD	1.17	3/12/17
P30/1119	GRANTED	CARNEGIE GOLD PTY LTD	1.38	3/12/17
P30/1120	GRANTED	CARNEGIE GOLD PTY LTD	1.23	3/12/2017
P30/1121	GRANTED	CARNEGIE GOLD PTY LTD	0.22	3/12/17
P30/1122	GRANTED	CARNEGIE GOLD PTY LTD	0.55	3/12/17
		Total Area	71.86
Exploration	Licences
E16/0332	GRANTED	CARNEGIE GOLD PTY LTD	40.74	27/05/17
E16/0337	GRANTED	CARNEGIE GOLD PTY LTD	11.24	8/04/18
E16/0344	GRANTED	SIBERIA MINING CORPORATION PTY LTD	27.92	28/04/18
E16/0347	GRANTED	SIBERIA MINING CORPORATION PTY LTD	2.96	11/03/18
E16/0456	GRANTED	SIBERIA MINING CORPORATION PTY LTD	77.70	10/07/19
E16/0473	GRANTED	CARNEGIE GOLD PTY LTD	38.56	4/10/20

Page | 20

E16/0474	PENDING	CARNEGIE GOLD PTY LTD	32.60
E16/0475	GRANTED	CARNEGIE GOLD PTY LTD	50.24	4/10/20
E30/0332	GRANTED	CARNEGIE GOLD PTY LTD	2.04	1/09/18
E30/0333	GRANTED	BARRA RESOURCES LTD	17.87	1/09/18
E30/0334	GRANTED	CARNEGIE GOLD PTY LTD	5.93	20/04/18
E30/0335	GRANTED	CARNEGIE GOLD PTY LTD	104.28	18/12/18
E30/0336	GRANTED	CARNEGIE GOLD PTY LTD	105.21	1/07/18
E30/0338	GRANTED	CARNEGIE GOLD PTY LTD	96.08	19/05/18
		DELTA RESOURCE MANAGEMENT PTY
E30/0449	GRANTED	LTD	2.97	1/04/18
E30/0454	GRANTED	CARNEGIE GOLD PTY LTD	13.30	9/07/19
E30/0464	PENDING	CARNEGIE GOLD PTY LTD	127.99
E30/0468	PENDING	CARNEGIE GOLD PTY LTD	180.00
		Total Area	937.61
Mt Ida Project
				EXPIRY
TENEMENT	STATUS	REGISTERED HOLDER	Area_Km	DATE
Mining Licences
M29/0002	GRANTED	INTERNATIONAL PETROLEUM LTD	3.83	21/12/24
		CAPE LAMBERT RESOURCES LTD &
M29/0165	GRANTED	STUART LESLIE HOOPER	1.60	20/12/15
M29/0422	GRANTED	MT IDA GOLD PTY LTD	2.88	21/11/34
		Total Area	8.31
Prospecting Licences
P29/1938	GRANTED	MT IDA GOLD PTY LTD	1.99	16/09/16
P29/1939	GRANTED	MT IDA GOLD PTY LTD	1.59	16/09/16
P29/1940	GRANTED	MT IDA GOLD PTY LTD	1.67	16/09/16
P29/1941	GRANTED	MT IDA GOLD PTY LTD	1.86	10/09/16
P29/1942	GRANTED	INTERNATIONAL PETROLEUM LTD	1.77	10/09/16
P29/1943	GRANTED	INTERNATIONAL PETROLEUM LTD	1.96	10/09/16
P29/1944	GRANTED	MT IDA GOLD PTY LTD	1.99	10/09/16
P29/1945	GRANTED	INTERNATIONAL PETROLEUM LTD	1.88	10/09/16
P29/1946	GRANTED	MT IDA GOLD PTY LTD	1.98	10/09/16
P29/1947	GRANTED	MT IDA GOLD PTY LTD	1.95	10/09/16
P29/1948	GRANTED	MT IDA GOLD PTY LTD	1.96	10/09/16
P29/1949	GRANTED	MT IDA GOLD PTY LTD	1.87	10/09/16
P29/1950	GRANTED	MT IDA GOLD PTY LTD	1.65	10/09/16
P29/2291	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.10	25/07/17
P29/2292	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.08	26/06/17
P29/2293	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.42	26/06/17
P29/2294	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.11	26/06/17
P29/2295	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.49	26/06/17
P29/2296	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.85	26/06/17
P29/2297	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.51	31/03/18
P29/2298	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.45	25/07/17
P29/2299	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.17	26/06/17
P29/2300	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.12	26/06/17
P29/2301	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.16	26/06/17

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P29/2302	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.21	26/06/17
P29/2303	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	2.00	24/07/17
P29/2304	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	1.84	24/07/17
P29/2305	GRANTED	WAYNE CRAIG VAN BLITTERSWYK	0.92	24/07/17
P29/2310	GRANTED	MT IDA GOLD PTY LTD	0.80	6/10/17
P29/2311	GRANTED	MT IDA GOLD PTY LTD	0.10	6/10/17
P29/2312	GRANTED	MT IDA GOLD PTY LTD	1.56	6/10/17
P29/2313	GRANTED	MT IDA GOLD PTY LTD	1.50	6/10/17
P29/2314	GRANTED	MT IDA GOLD PTY LTD	1.45	6/10/17
P29/2315	GRANTED	MT IDA GOLD PTY LTD	1.50	6/10/17
P29/2316	GRANTED	MT IDA GOLD PTY LTD	2.00	6/10/17
P29/2317	GRANTED	MT IDA GOLD PTY LTD	2.00	6/10/17
P29/2318	GRANTED	MT IDA GOLD PTY LTD	2.00	6/10/17
P29/2319	GRANTED	MT IDA GOLD PTY LTD	0.85	3/11/17
P29/2320	GRANTED	MT IDA GOLD PTY LTD	0.21	3/11/17
P29/2321	GRANTED	MT IDA GOLD PTY LTD	0.14	3/11/17
P29/2322	GRANTED	MT IDA GOLD PTY LTD	0.75	3/11/17
P29/2323	GRANTED	MT IDA GOLD PTY LTD	0.24	4/11/17
P29/2324	GRANTED	MT IDA GOLD PTY LTD	0.24	31/10/17
P29/2325	GRANTED	MT IDA GOLD PTY LTD	0.20	31/10/17
P29/2326	GRANTED	MT IDA GOLD PTY LTD	1.26	3/11/17
P29/2327	GRANTED	MT IDA GOLD PTY LTD	0.72	3/11/17
P29/2328	GRANTED	MT IDA GOLD PTY LTD	0.21	31/10/17
		Total Area	50.27
Exploration	Licences
E29/0640	GRANTED	MT IDA GOLD PTY LTD	109.33	23/06/18
E29/0641	GRANTED	MT IDA GOLD PTY LTD	2.52	23/06/18
E29/0895	GRANTED	MT IDA GOLD PTY LTD	3.80	6/04/19
E29/0955	PENDING	SIBERIA MINING CORPORATION PTY LTD	14.83
		Total Area	130.49

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MINERAL ASSETS VALUATION FOR EXPLORATION TENEMENTS

M. Castle – Updated 25 May 2015

Agricola Mining Consultants Pty Ltd (“Agricola”) has prepared these notes as background to the Independent Valuation Report. The appendix is general in nature and references to Western Australia are an example of exploration expenditures. They are appropriate for other states and other countries based on Agricola’s experience in many areas of Australia and elsewhere. Parts of these notes may be repeated for clarity in the main report.

MINERAL ASSETS VALUATION FOR EXPLORATION TENEMENTS ................................................... 23 The Meaning of Value – Scope of the Report .................................................................................... 24 Judicial interpretation .................................................................................................................... 25 Regulatory Authorities ...................................................................................................................... 26 The VALMIN Code, 2005 ................................................................................................................ 26 Regulatory Guides RG111 and RG112, March 2011 ...................................................................... 28 The JORC Code, 2012 ..................................................................................................................... 29 VALUATION METHODOLOGY FOR EXPLORATION TENEMENTS..................................................... 29 Fair Market Value of Mineral Assets ................................................................................................. 29 Contemporaneous transactions in the asset ................................................................................. 32 DCF value ....................................................................................................................................... 32 Contemporaneous transactions in comparable assets ................................................................. 33 Potential for Further Discoveries ................................................................................................... 33 Past Expenditure ............................................................................................................................ 33 Yardstick (Rule of Thumb) Method ................................................................................................ 34 Share market trading in companies holding comparable exploration interests ........................... 34 Valuation of Development Projects by Discounted Cash Flow Methods ........................................... 34

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Valuation of Resources by Comparable Transactions ....................................................................... 37 Mergers and Acquisitions Activity ................................................................................................. 38 Sensitivity to Metal Price ............................................................................................................... 40 Geoscience Factor Method ................................................................................................................ 41 Area ................................................................................................................................................ 42 Basic Acquisition Cost .................................................................................................................... 42 Tenement Status ............................................................................................................................ 44 Equity ............................................................................................................................................. 44 Geoscience Factors ........................................................................................................................ 44 Prospectivity Enhancement Multiplier (“PEM”) ................................................................................ 45 Yardstick (Rule of Thumb) Method .................................................................................................... 46 Adjustments to the Technical Value – Market Value ........................................................................ 47 GLOSSARY OF TERMS ................................................................................................................. 48 VALUATION REFERENCES ........................................................................................................... 53

The Meaning of Value – Scope of the Report

A Mineral asset valuation should endeavour to ascertain the price that a willing but not anxious vendor could reasonably expect to obtain and a hypothetical willing but not too anxious purchaser could reasonably expect to have to pay for the property if the vendor and the purchaser had got together and agreed on a price in friendly negotiation.

The test for determining the market value is based on the consideration of a hypothetical negotiation, namely, what is the price that a willing but not anxious purchaser would have to offer to induce a willing but not anxious vendor to sell the property rather than the price which an anxious vendor would obtain upon a forced sale. This is the price that a hypothetical prudent purchaser would entertain, if he desired to purchase it for the most advantageous purpose for which the property was adapted.

This test contemplates a prudent purchaser who has informed himself or herself of all of the relevant attributes and advantages that the property enjoyed which means not just being conversant with the property in its existing state but also any profitable uses to which it might be put. This embodies the concept of the highest and best use of the property.

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Judicial interpretation

The High Court cast light on the ordinary meaning of 'market value' in 1907 in Spencer v. The Commonwealth of Australia. In this case, the Commonwealth had compulsorily acquired land for a fort at North Fremantle in Western Australia.

In discussing the concept of market value, Griffith CJ commented (page 432) that:

… the test of value of land is to be determined, not by inquiring what price a man desiring to sell could have obtained for it on a given day, i.e. whether there was, in fact, on that day a willing buyer, but by inquiring: What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?

Isaacs J subsequently expanded on the concept (page 441):

… to arrive at the value of the land at that date, we have … to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. We must further suppose both to be perfectly acquainted with the land and cognisant of all circumstances which might affect its value, either advantageously or prejudicially, including its situation, character, quality, proximity to conveniences or inconveniences, its surrounding features, the then present demand for land, and the likelihood as then appearing to persons best capable of forming an opinion, of a rise or fall for what reasons so ever in the amount which one would otherwise be willing to fix as to the value of the property.

In this case, the High Court recognised the principles of:

the willing but not anxious vendor and purchaser
a hypothetical market
the parties being fully informed of the advantages and disadvantages associated with the asset being valued (in the specific case, land)
both parties being aware of current market conditions.

This is commonly known as the Spencer test after the High Court decision upon which these principles are based and to which the Courts have used in their determinations of market value or property. ( Spencer v Commonwealth (1907) 5 CLR 418 at 432 per Griffiths CJ and 441 per Isaacs J.).

Although the Spencer test is based on both a hypothetical vendor and a hypothetical purchaser and therefore the market value from either hypothetical party’s point of view should be the same, in some cases emphasis has been placed on what would be the best price which the vendor could hope to obtain.

The question as of “special value” of particular property has often been raised in cases. However in reality this is only part of the Spencer test that in attributing the price that would be paid to the hypothetical vendor by the hypothetical purchaser it is to be assumed that the property will be put to its “highest and best use”.

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Applying the Spencer test may not be confined to a technical valuation exercise but may involve a consideration of market factors. In a highly speculative market during ‘boom’ conditions or a depressed market during ‘bust’ conditions the hypothetical purchaser may expect to pay a premium or receive a discount commensurate with market conditions.

The Spencer test has been applied in stamp duty cases in determining the value of the dutiable property.

These principles apply equally to mineral assets

Regulatory Authorities

Mineral asset valuations are prepared in accordance with the Code for Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the “VALMIN Code”, 2005) , which is binding upon Members of the Australasian Institute of Mining and Metallurgy (“AusIMM”) and the Australian Institute of Geoscientists (“AIG”), as well as the rules and guidelines issued by the Australian Securities and Investments Commission (“ASIC”) and the ASX Limited (“ASX”) which pertain to Independent Expert Reports ( Regulatory Guides RG111, 2011 and RG112, 2011 ).

Where mineral resources have been referred to in this report, the classifications are consistent with the ”Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (“JORC Code”), prepared by the Joint Ore Reserves Committee of the AusIMM, the AIG and the Minerals Council of Australia, effective 2012.

The VALMIN Code, 2005

The main requirements of the Valuation Report are

Prepared in accordance with the VALMIN code.
Details of valuation methodologies
Reasoning for the selection of the valuation approach adopted
Details of the valuation calculations
Conclusion on value

- Experience and qualifications of key personnel to be set out

Transparency - The report needs to explain how the valuation was done and the assumptions used in calculating the value. The objective is to provide sufficient information that other people can come up with the same answer. Transparency and Transparent means that the Material data and information used in (or excluded from) the Valuation of a Mineral Property, the assumptions, the Valuation approaches and methods, and the Valuation itself must be set out clearly in the Valuation Report, along with the rationale for the choices and conclusions of the Qualified Valuer.

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Materiality - This means the valuer has to ensure that all important data that could have a significant impact on the valuation is included in the report. Materiality and Material refer to data or information which contribute to the determination of the Mineral Property value, such that the inclusion or omission of such data or information might result in the reader of a Valuation Report coming to a substantially different conclusion as to the value of the Mineral Property. Material data and information are those, which would reasonably be required to make an informed assessment of the value of the subject Mineral Property.

Competence - The valuer must be competent at doing valuations. The person needs to be an expert in the particular exploration target being evaluated. Typically the person needs at least 5 years’ experience in that commodity. For Example :

Competent Persons Statement

The information in this report that relates to Exploration Results and Mineral Resources of the Company has been reviewed by Malcolm Castle who is a member of the Australasian Institute of Mining and Metallurgy. Mr Castle has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which they are undertaking to qualify as an Expert and Competent Person as defined under the VALMIN Code and in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr Castle consents to the inclusion in this report of the matters based on the information in the form and context in which they appear.

Independence - The valuer must act in a professional manner and not favour the buyer or the seller. In other words the price must be set at a “fair market value”. To achieve independence, the valuer must not receive any special benefit from doing the study. This subject is addressed fully in RG112 (112.42). Independence or Independent means that, other than professional fees and disbursements received or to be received in connection with the Valuation concerned, the Qualified Valuer or Qualified Person (as the case requires) has no pecuniary or beneficial (present or contingent) interest in any of the Mineral Properties being valued, nor has any association with the Commissioning Entity or any holder(s) of any rights in Mineral Properties which are the subject of the Valuation, which is likely to create an apprehension of bias. The concepts of “Independence” and “Independent” are questions of fact. For example, where a Qualified Valuer’s fees depend in whole or in part on an understanding or arrangement that an incentive will be paid based on a certain value being obtained, such Qualified Valuer is not Independent.

Reasonablenes - in reference to the Valuation of a Mineral Property, while not specifically mentioned in VALMIN, 2005, is a requirement in other jurisdictions. It means that other appropriately qualified and experienced valuers with access to the same information would value the property at approximately the same range. A Reasonableness test serves to identify Valuations, which may be out of step with industry standards and industry norms. It is not sufficient for a Qualified Valuer to determine that he or she personally believes the value determined is appropriate without satisfying an objective standard of proof

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Methodology - The decisions as to the valuation methodology or methodologies to be used and the content of the Report are solely the responsibility of the Expert or Specialist whose decisions must not be influenced by the Commissioning Entity. The Expert or Specialist must state the reasons for selecting each methodology used in the Report. Methods chosen must be rational and logical and be based upon reasonable grounds.

The Expert or Specialist should make use of valuation methods suitable to the Mineral or Petroleum Assets under consideration. Selection of the appropriate valuation method will depend on, inter alia:

(a) the purpose of the Valuation;
(b) the development status of the Mineral or Petroleum Assets;
(c) the amount and reliability of relevant information;
(d) the risks involved in the venture; and
(e) the relevant market conditions for commodities.

The Expert or Specialist should choose, discuss and disclose the selected valuation method(s) appropriate to the Mineral Assets under consideration in the Report, stating the reasons why the particular valuation methods have been selected in relation to those factors and to the adequacy of available data. It may also be desirable to discuss why a particular valuation method has not been used. The disclosure should give a sufficient account of the valuation methods used so that another Expert could understand the procedure used and assess the Valuation. Should more than one valuation method be used and different valuations result, the Expert or Specialist should comment on the reasons for selecting the Value adopted.

Regulatory Guides RG111 and RG112, March 2011

It is not the Australian Securities and Investment Commission – ASIC’s role or intention to limit the expert’s exercise of skill and judgment in selecting the most appropriate method or methods of valuation. However, it is appropriate for the expert to consider:

(a) the discounted cash flow method;
(b) the amount which an alternative acquirer might be willing to offer if all the securities in the target company were available for purchase;

ASIC does not suggest that this list is exhaustive or that the expert should use all of the methods of valuation listed above. The expert should justify the choices of valuation method and give a sufficient account of the method used to enable another expert to replicate the procedure and assess the valuation. It may be appropriate for the expert to compare the values derived by more than one method and to comment on any differences.

The complex valuations in an expert’s report necessarily contain significant uncertainties. Because of this an expert who gives a single point value will usually be implying spurious accuracy to his or her valuation. An expert should, however, give as narrow a range of values as possible. An expert report becomes meaningless if the range of values is too wide. An expert should indicate the most probable point within the range of values if it is feasible to do so.

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The expert should carry out sufficient enquiries or examinations to establish reasonable grounds for believing that any profit forecasts, cash flow forecasts and unaudited profit figures that are used in the expert’s report, and have been prepared on a reasonable basis. If there are material variations in method or presentation the expert should adjust for or comment on them in the report.

The expert should discuss the implications to his or her valuation if:

(a) the current market value of the subject of the report is likely to change because of market volatility (for example, boom or depression); or
(b) the current market value differs materially from that derived by the chosen method.

The JORC Code, 2012

The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (‘the JORC Code’) is a professional code of practice that sets minimum standards for Public Reporting of minerals Exploration Results, Mineral Resources and Ore Reserves.

The JORC Code provides a mandatory system for the classification of minerals Exploration Results, Mineral Resources and Ore Reserves according to the levels of confidence in geological knowledge and technical and economic considerations in Public Reports.

The JORC Code was first published in 1989, with the most recent revision being published late in 2012. Since 1989 and 1992 respectively, it has been incorporated in the Listing Rules of the Australian and New Zealand Stock Exchanges, making compliance mandatory for listing public companies in Australia and New Zealand.

The current edition of the JORC Code was published in 2012 and after a transition period the 2012 Edition came into mandatory operation from 1 December 2013.

Changes to the JORC Code 2012

Table 1 reporting on an ‘if not, why not?’ basis – Clauses 2, 5, 19, 27, 35 and the introduction of Table 1.
Competent Person Attributions – Clause 9
Exploration Targets – Clause 17
Pre-Feasibility required for Ore Reserves – Clause 29
Technical Studies definitions – Clause 37-40
Annual Reporting – Clause 15
Metal Equivalents – Clause 50
In situ values – Clause 51
Additional guidance on reporting in Table 1

VALUATION METHODOLOGY FOR EXPLORATION TENEMENTS

Fair Market Value of Mineral Assets

Mineral assets include, but are not limited to, mining and exploration tenements held or acquired in connection with the exploration, the development of, and the production from those tenements together with all plant, equipment and infrastructure owned or acquired for the development, extraction and processing of minerals in connection with those tenements.

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Mineral assets classification

Mineral assets classification	Mineral assets classification
Exploration areas	Mineralisation may or may not have been identified, but where a mineral resource has not been defined. Available information includes exploration results such as outcrop sampling, assays of drill hole intersections, geochemical results and geophysical survey results. Valuation Methods: *Geoscience* *Factor, Prospectivity* Enhancement Multiplier, Yardstick(Rule of Thumb).
Advanced exploration areas	Mineral resources have been identified and their extent estimated (possibly incompletely). This includes properties at the early stage of assessment. Available information includes estimates of Exploration Targets, Inferred Resources, Indicated Resources, Measured Resources in accordance with the JORC Code 2012 and the exploration results from the surrounding area or prospect used to compile the estimates. Additional value for exploration potential in the immediate area is not considered to be warranted. Valuation Methods:*Comparable Transactions*. Yardstick (Rule of Thumb)
Pre-development projects	A positive development decision has not yet been made. This includes properties where a development decision has been negative, properties on care and maintenance and properties held on retention titles. Available information includes Mineral Resource estimates in accordance with the JORC Code and a scoping study. If a recent and valid Pre Feasibility Study has been prepared an Ore Reserve may have been estimated with due regard to modifying factors. Valuation Methods: Comparable Transactions,*Discounted Cash* *Flow* (if Ore Reserves have been estimated)
Development projects	Committed to production, but which, are not yet commissioned or not initially operating at design levels. Available information includes a Feasibility Study with supporting technical studies. Valuation Methods:*Discounted Cash Flow*.
Operating Mines	Mineral properties, particularly mines and processing plants, which have been fully commissioned and are in production. Valuation Methods:*Discounted Cash Flow*.

Agricola’s preferred valuation method is shown in bold type.

The value of a mineral asset usually consists of two components,

The underlying or Technical Value (or stand alone value) which is an assessment of a mineral asset’s future net economic benefit under a set of appropriate assumptions, excluding any premium or discount for market, strategic or other considerations.
The Market Component, which is a premium relating to market, strategic or other considerations which, depending on circumstances at the time, can be either positive, negative or zero.

When the technical and market components of value are combined the resulting value is referred to as the market value. A consideration of country risk should also be taken into account for overseas projects.

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The value of mineral assets is time and circumstance specific. The asset value and the market premium (or discount) changes, sometimes significantly, as overall market conditions, commodity prices, exchange rates, political and country risk change.

Valuation is based on a calculation in which the geological prospectivity, commodity markets, financial markets, stock markets and mineral property markets are assessed independently.

Valuation of exploration properties is exceptionally subjective. If an economic resource is subsequently identified then a new valuation will be dramatically higher, or possibly lower. Alternatively if expenditure of further exploration dollars is unsuccessful then it is likely to decrease the value of the tenements. There are a number of generally accepted procedures for establishing the value of exploration properties and, where relevant, the use of more than one such method to enable a balanced analysis and a check on the result has been undertaken. The value will always be presented as a range with the preferred value identified. The preferred value need not be the median value, and will be determined by the Independent Valuer based on his experience.

The Independent Valuer, when determining a value for a mineral asset, must assess a range of technical issues prior to selection of a valuation methodology. Often this will require seeking advice from a specialist in specific areas. The key issues are:

geological setting and style of mineralisation
level of knowledge of the geometry of mineralisation in the district
results of exploration including geological mapping, costeaning and drilling of interpretation of geochemical anomalies
parameters used to identify geophysical and remote sensing data anomalies
location and style of mineralisation identified on adjacent properties
appropriate geological models
mining history, including mining methods
location and accessibility of infrastructure
milling and metallurgical characteristics of the mineralisation

In addition to these technical issues the Independent Expert needs to make a judgement about the market demand for the type of property, commodity markets, financial markets and stock markets. The technical value of a property should not be adjusted by a “market factor” unless there is a marked discrepancy between the technical value and the market value. When this is done the factor should be clearly identified.

Where there are identified Ore Reserves it is appropriate to use financial analysis methods to estimate the net present value (“NPV”) of the properties. This technique (the DCF Method) has deficiencies, which include assessment of only a very narrow area of risk, namely the time value of money given the real discount rate, and the underlying assumption that a static approach is applicable to investment decision making, which is clearly not the case.

When assessing value of exploration properties with no identified Ore Reserves it is inappropriate to prepare any form of financial analysis to determine the net present value. The valuation of

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exploration tenements or licences, particularly those without identified resources, is highly subjective and a number of methods are appropriate to give a guide as discussed below.

All of these valuation methods are relatively independent of the location of the mineral property. Consequently the valuer will make allowance for access to infrastructure etc when choosing a preferred value. It is observed that the Prospectivity Exploration Multiplier (“PEM”) is heavily based on the expenditure; while the Geoscience Factor is more heavily based on opinions of the prospectivity hence tenements can have marked variation in value between the methods. If the Geoscience Factor assessment is high and the PEM is low it indicates effective well focused exploration, if the Geoscience Factor is low and the PEM high it suggests that the tenement is considered to have lower prospectivity.

Truly Comparable Transactions are rare for early stage properties without defined drill targets. This is natural in a recession, as companies focus on brownfields exploration. Inflated prices paid for property in fashionable areas should not be discounted because they reflect the true market value of a property at the transaction date. If however, the market sentiment is not so buoyant then adjustments must be made.

Methodologies commonly used for the valuation of early stage or exploration assets in order of the evidentiary value provided by each include:

Contemporaneous transactions in the asset

Where a transaction has taken place around the valuation date in the mineral asset in question, this provides the best evidence of value. This may occur when a body of mineralisation or confined geological domain is split by a tenement boundary and one part is sold.

If a property in the recent past was the subject of an arms-length transaction, for either cash or shares (i.e. from a company whose principal asset was the mineral property) then this forms the most realistic starting point, provided that the deal is still relevant in today’s market. Complicating matters is the knowledge that properties rarely change hands for cash, except for liquidation purposes, estate sales, or as raw exploration property when sold by an individual prospector, or entrepreneur.

Any underlying royalty or net profits interests or rights held by the original vendor of the claims should be deducted from the resultant property value before determination of the company’s interest. Also, reductions in value should be made where environmental, legal or political sensitivities could seriously retard the development of exploration properties.

It should be noted again that exploration is cyclical, and in periods of low metal prices there is often no market, or a market at very low prices, for ordinary exploration acreage (inventory property) unless it is combined with a significant mineral deposit, or with other incentives.

DCF value

Where a financial model has been prepared which considers the exploration results to date, the costs involved in taking the project to production and the probability-weighted returns expected

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from the project, in the absence of a contemporaneous transaction in the actual exploration interest, this provides the best evidence as to the value of the exploration interest. This method requires that a reasonable estimate can be made of expected cash flows. In accordance with the JORC Code 2012, the estimation of an Ore Reserve must be based on a Pre Feasibility Study or a Feasibility Study. The DCF Method, therefore, is only possible then these studies are available and an Ore Reserve has been estimated. (DCF Method – see below)

Contemporaneous transactions in comparable assets

Where a transaction has taken place recently in an Asset of similar prospectivity in a similar or comparable mineral market, this provides evidence of value in the absence of an actual transaction or a financial model for the exploration interest. The comparison is typically made on the basis of a value per unit of contained resource. (Comparable Transactions Method – see below)

Potential for Further Discoveries

The Geoscience Factor method provides the most appropriate approach to utilise in the technical valuation of the exploration potential of mineral properties on which there are no defined resources. Kilburn, a Canadian mining engineer was concerned about the haphazard way in which exploration tenements were valued. He proposed an approach that essentially requires the valuer to justify the key aspects of the valuation process in a systematic and defendable manner. The valuer must specify the key aspects of the valuation process and must specify and rank aspects that enhance or downgrade the intrinsic value of each property. The intrinsic value is the base acquisition cost (“BAC”), which is the average cost incurred to acquire a base unit area of mineral tenement and to meet all statutory expenditure commitments for a period of 12 months. Different practitioners use slightly differing approaches to calculate the BAC and its use with respect to different tenement types.

The Geoscience Factor method systematically assesses and grades four key technical attributes of a tenement to arrive at a series of multiplier factors. The multipliers are then applied serially to the BAC of each tenement with the values being multiplied together to establish the overall technical value of each mineral property. A fifth factor, the market factor, is then multiplied by the technical value to arrive at the fair market value.

Past Expenditure

Where the other methods cannot be used, a valuer could also consider previous exploration expenditure , and apply a multiple to this based on its effectiveness and the valuer’s judgment as to the prospectivity of the project based on the results as at the valuation date. The application of this

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method is very subjective, and is best used for very early stage exploration interests without resources or significant drilling results. (Prospectivity Enhancement Method – see below)

Yardstick (Rule of Thumb) Method

Share market trading in companies holding comparable exploration interests

Where information on the exploration tenements is not directly observable, valuers sometimes consider the recent share market trading in companies holding comparable exploration interests. This method may require the valuer to apportion the value of the company between its various assets, to determine the proportion of the enterprise value of the company that should be attributed to the comparable exploration interest. Once the valuer has estimated the proportion of the market capitalization or enterprise value of the company that should be attributed to the comparable exploration interest, the value per unit of contained resource or the value per km[2] of tenement approaches can be applied. This typically provides weak evidence of the value of specific exploration interests due to the difficulty in apportioning the enterprise value of a listed company to specific exploration interests, and the likelihood that the share price may include other ‘noise’ unrelated to the exploration interest.

Market Capitalisation (MCap) and Enterprise Value (EV: Mcap + Debt – Cash) are often used in comparable transaction valuations, often quoted as EV per unit of Resource or reserve. These measures say nothing about the technical value of individual mineral assets and are usually influenced by many commercial and emotional factors both within and external to the Company.

It is fair to assume that a company’s share price is a reflection of the market value of the company and this is strongly influenced by the market value of mineral assets in the light of current market conditions. If a ‘willing but not anxious buyer’ were to make an offer for the company based on share price, appropriate due diligence has been completed and the offer may also include a premium for control.

MCap per unit and EV per unit for peer group companies may be a satisfactory measure of ‘reasonableness’ of the market value of the bundle of assets and should be viewed in that light and not as a direct measure of technical value.

Valuation of Development Projects by Discounted Cash Flow Methods

Agricola believes that the Discounted Cash Flow/Net Present Value method should never be applied to the valuation of a Mineral Property that is only at an exploration stage, based on the hypothetical cash flows from a postulated exploitation scenario. Valuers tend to consider before or after tax values only in the context of the DCF/NPV Method, with a general preference for determinations of after-tax value.

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Of course, some owners can use tax losses and structure their affairs to minimise the impact of corporate taxes, but others cannot do so. Hence, it should be clearly stated on what taxation basis the fair market value is determined. This is another reason why care must be taken when using project sales data as a comparable basis for assessing value. The ‘comparable’ projects may be in different places subject to different taxation regimes, in any event.

Discounted cash flow analysis

A discounted cash flow (“DCF”) analysis determines the Technical Value of a project by approximating the value if it were developed under the prevailing economic conditions.

Once a Mineral Resource has been assessed for mining by considering revenues and operating costs, the economically viable component of the resource becomes the Ore Reserve. When this is scheduled for mining, and the capital costs and tax regime are considered, the net present value (“NPV”) of the project is established by discounting future annual cash flows using an appropriate discount rate.

The resulting ’classical’ NPV has several recognised deficiencies linked to the fact that the approach assumes a static approach to investment decision making, however the NPV represents a fundamental approach to valuing a proposed or on-going mining operation and is widely used within the mining industry.

In terms of cash flow analysis, the DCF valuation technique is the most commonly used valuation tool. The technique has specific strengths over the methods considered in the market and cost approaches. These include its ability to consider the effects of royalties, leases, taxation and financial gearing on the resulting cash flow. In addition, the beneficial impact of unredeemed capital balances, assessed losses, depreciation and amortization on free cash flows can also be modelled.

Compiling cash flows on resources categorized as inferred, or those with even less geoscientific confidence (which in some cases are referred to as inventory), is prohibited by some international codes. It is only under exceptional circumstances that many securities exchanges will accept such cash flows and the effect of cash flow contributions from inferred resources on project performance should be demonstrated separately from those derived from other resource and reserve categories.

The DCF method is used to produce numerous quantitative results. On its own and as an investment tool, it is based on the principle that for any initial investment, the investor will look to the future cash flows of that entity to provide a minimum return. This return will be at least a predetermined return over the investor’s hurdle rate for that investment. The hurdle rate represents the minimum return of a project, below which the decision to invest or develop a new project will be negative, and above which the project will be developed. The hurdle rate should always be greater than the cost of capital for the investor.

For a mining project, in a macroeconomic environment that is sufficiently favourable and stable for this method to be applied, the critical input data will generally be incorporated in a life of mine (LoM) plan. The LoM plan, such as that accompanying a pre-feasibility, feasibility or a bankable feasibility study, will include:

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➤ reserve and resource estimates in accordance with the JORC Code

➤ forecast mining schedules of tonnage on a daily, monthly or annual basis

➤ forecast grade profiles and associated recoveries from a processing facility. This, together with the tonnage profile, allows the valuer to calculate the volume of saleable product

➤ estimated working costs, preferably unitized to either an amount per tonne mined or milled or an amount per unit of metal or product sold

➤ forecast capital expenditure profiles over the life of the operation, including ongoing or sustainable capital expenditure amounts and

➤ rehabilitation liabilities or trust fund contributions, retrenchment costs, plant metal lock-up and any other specific factor that will impact on costs or revenue.

Changes in working capital balances are generally calculated based on historical balance ratios, applied to forecast revenues and working costs. They impact on short term cash flows and therefore must be modelled into the cash flows. Naturally, any working capital locked up during the life of the operation will be released at the end of this life.

Once the economic inputs have been assumed, the DCF can be determined. This is often stated as EBITDA (Earnings before Interest, Taxation, Depreciation and Amortisation) and is frequently taken as the technical value of the project, subject to a consideration of sensitivity to the assumptions.

The resultant cash flow is then used to derive the net present value (NPV) of the operation at a predetermined discount rate or a range of discount rates. The derived NPV, on which the return on investment can be calculated, is used as a proxy for the operation’s implicit value. This is often compared with the value or returns the market attributes to the operation, if it is a listed entity, or compared with other investment opportunities in order to optimize investment or development schedules.

In any cash flow determination, the impact of inflation on the final result cannot be overstated. One only has to consider the effect of taxation as applied to real taxable income as opposed to being levied against nominal taxable income. Converting the final cash flows to real money terms, the values derived from two similar cash flows will be quite different. The unredeemed capital balance will last longer in the real terms case, incorrectly enhancing the value of the same project. The real cash flow lines in Table X must be compared to recognize the impact of taxation on real and nominal cash flows.

As a result of the difficulty in obtaining agreement on appropriate inflation forecasts to use in the specific valuation of a project, valuers often exclude a forecast on inflation rates. This in itself may be construed as an inflation assumption, in that inflation is taken to be zero per cent per year. However, this reflects an ideal world, which is unrealistic.

The resulting ’classical’ NPV has several recognised deficiencies linked to the fact that the approach assumes a static approach to investment decision making, assumption into the future which cannot be verified with any confidence and limited mine life. However the NPV represents a fundamental

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approach to valuing a proposed or on-going mining operation and is widely used within the mining industry.

As example of the shortcomings of the DCF Method a conceptual cash flow was modeled and NPV estimated at 8% over different time periods with the following outcome over 100 years:

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110%
100%
90%
80%
70%
60%
50%
0 20 40 60 80 100
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Percent of maximum NPV from 10 to 100 years.

The estimated NPV reached a maximum value in 60 years and no amount of future income adds to this value.

Valuation of Resources by Comparable Transactions

When only a resource or defined body of mineralisation has been outlined and its economic viability has still to be established (i.e. there is no ore reserve) then a Comparable Transactions approach is usually applied, often stated as a percentage of metal value. This can be applied to Mineral Resource estimates and Exploration Targets in accordance with the JORC code with appropriate discounts for risk in the different Mineral Resource categories and operational factors to differentiate between deposits.

Agricola Mining Consultants prefers the comparable transactions approach where mineral resources have been estimated. The DCF method is inappropriate because there is no Pre Feasiblity or Feasibility Study available and no Ore Reserves has been (or can be) estimated under the JORC Code. The Geoscientific Factor method (potential for further discoveries) and Past Expenditure methods are appropriate for exploration ground that is not advanced enough to estimate mineral resources. The contemporaneous transactions over adjacent ground may be appropriate but the absence of such information the only viable method (in Agricola’s opinion) is to compare the sale of other deposits on a 'dollar per unit' basis for the mineral resource estimated in accordance with the JORC Code. Agricola is not aware of a method to cross check the valuation for the technical value (as apposed to the Market value) under these circumstances except by comparison with earlier valuations.

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With metal projects the Comparable Transactions method requires allocating a dollar value to resource tonnes or ounces in the ground. The dollar value must take into account a number of aspects of the resources including:

The confidence in the resource estimation (the JORC Category)
The quality of the resource (grade and recovery characteristics)
Possible extensions of the resource in adjacent areas
Exploration potential for other mineralisation within the tenements
Presence and condition of a treatment plant within the project
Proximity of infrastructure, development and capital expenditure aspects

This approach can be taken with metals or bulk commodities sold on the spot market and where current price can be estimated with appropriate adjustments for impurities if required. Value is estimated as a percentage of contained value once appropriate discounts for uncertainty relating to resource categorisation are taken into account.

Resource Category Discounts Measured Resource 80% Indicated Resource 70% Inferred Resource 60% Exploration Target 45%

An example of appropriate discounts for operational factors is included below but these must be considered on a case-by-case basis.

Operations Factors	Base Metals	Iron Ore	Coal	Gold	Rare Earths
Recovery	75%	75%	70%	95%	60%
Mining	75%	90%	75%	90%	100%
Processing	80%	70%	70%	95%	50%
Rail	80%	90%	70%	95%	75%
Port	80%	90%	50%	100%	90%
Capex	80%	70%	75%	90%	50%
Marketing	75%	80%	75%	100%	75%
Total Operating Discount	17%	21%	7%	69%	7%

Mergers and Acquisitions Activity

A recent review of Mergers and Acquisitions over the last eight years covering the mining boom, the GFC and the recovery phase of the Mining Market indicates the price paid for gold assets.

Merger and	Acquisitions	Activity (CAD)
	2006	2007	2008	2009	2010	2011	2012	2013	2014
Gold Price	$709	$778	$920	$1,154	$1,277	$1,590	$1,665	$1,488	$1,303

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Producing Assets*	$74	$94	$115	$89	$207	$202	$200	$121	$120
Percent of Price	10.40%	12.10%	12.50%	7.70%	16.20%	12.70%	12.00%	8.10%	9.20%
Exploration Assets*	$54	$28	$31	$29	$71	$90	$47	$23	$17
Percent of Price	7.60%	3.60%	3.40%	2.50%	5.60%	5.70%	2.80%	1.50%	1.30%

*Estimated price paid per ounce of gold in the ground, updated December 31, 2014

Source: http://www.ibkcapital.com/capital-market-highlights/merger-acquisitionactivity/

The information is based on Canadian experience and closely replicates values reported in Australia and similar metal markets elsewhere. The ‘Apparent Acquisition Cost’ (“AAC”) for gold projects lies in the range of 1.5% to 7.6% of the gold price at the time. The data set does not differentiate between resource categories or variations in deposits type and individual assessment. It is implicit that this has been taken into account with risk related discounts. Information on sales internationally has shown a pattern for AAC. For the purpose of valuation the Average Acquisition Cost for the lower, preferred and higher value is selected at the 25[th] , 50[th] and 75[th] percentiles of the spread of values.

AAC Percentiles 2006 - 2014 - Exploration Assets	AAC Percentiles 2006 - 2014 - Exploration Assets	AAC Percentiles 2006 - 2014 - Exploration Assets
Percentile		10% 25% 50% 75% 90%
AAC		1.5% 2.5% 3.4% 5.6% 6.1%
AAC Percentiles 2006 - 2014 - Producing Assets
Percentile	10% 25% 50% 75% 90%
AAC	8.0% 9.2% 12.0% 12.5% 13.4%

The AAC method percentiles are derived from Canadian Merger and Acquisitions activity in the gold industry. The original database provided $/ounce values for producing and non-producing asset sales for a period of years and Agricola has recalculated this as a percentage of metal value so it can be related to current metal prices in other metals. The quoted prices are based on enterprise value (EV - Market Capitalisation plus debt minus cash) so they cannot be directly compared to technical value. A “top-down” approach is often taken to determine technical vale (for example for stamp duty assessment) where company specific elements such as cash, debt, goodwill, database value etc ate deducted from the EV. Agricola prefers a “bottom-up” approach in this Report where discount factors for resource category and operating factors are assessed for each deposit.

This, of course, is a subjective decision and AAC percentiles are used in conjunction with the resource category discounts and operational factors to "normalise' the rates for gold acquisitions to other metals. In the absence of a useful database of project sales for other metals this is considered to be a reasonable proxy for sales in most metal projects (the combination of AAC, discounts and Operational factors). Mineral asset sales are related to the current mineral price (or contained value) which is provided by the M & A database over the period 2006 - 2013 through a period of boom and

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bust and the valuation method is realistic when adjusted by factors that relate specifically to the metal involved and more specifically to the individual deposits.

Sensitivity to Metal Price

Valuation of mineral resources is estimated at a specific date as stated in the report and metal prices are estimated from current information available at that time. Metal markets may be quite volatile from time to time and it is appropriate to consider the effect of variations in metal price (which may change on a daily basis).

The two charts below represent the Commodity Matal Price index and the Commodity Price Index over the last decade. Both charts show a marked decline in 2008/09 (GFC) and a similar decline in recent years.

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There is an obvious need for reassessment of value if there is a significant change in metal/oxide prices.

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Geoscience Factor Method

The Geoscience Factor method attempts to convert a series of scientific opinions about a subject property into a numeric evaluation system. The success of this method relies on the selection of multiplying factors that reflect the tenement's prospectivity.

Agricola Mining Consultants prefers the Geoscientific Factor method (potential for further discoveries) for exploration ground that is not advanced enough to estimate mineral resources. The contemporaneous transactions over adjacent ground may be appropriate but the absence of such information the only viable method (in Agricola’s opinion) is to compare the sale of other deposits on a 'dollar per unit' basis for the mineral resource estimated in accordance with the JORC Code. Agricola uses Past Expenditure and yardstick (Rule of Thumb) methods as an appropriate way of cross checking the reasonableness of the valuation.

The Geoscience Factor method is essentially a technique to define a value based on geological prospectivity. The method appraises a variety of mineral property characteristics:

location with respect to any off‐property mineral occurrence of value, or favourable geological, geochemical or geophysical anomalies;
location and nature of any mineralisation, geochemical, geological or geophysical anomaly within the property and the tenor (grade) of any mineralisation known to exist on the property being valued;
geophysical and/or geochemical targets and the number and relative position of anomalies on the property being valued;
geological patterns and models appropriate to the property being valued.

It is recognised that application of this method can be highly subjective, and that it relies almost exclusively on the geoscience ratings adopted by the valuer. As such, it is good practice for valuers using this method to provide sufficient discussion supporting their selection of the various multiplying factors to allow another suitably qualified geoscientist to assess the appropriateness of the factors selected.

The successful application of this method depends on the selection of appropriate multipliers that reflect the tenement prospectivity. Furthermore, there is the expectation that the outcome reflects the market’s perception of value, hence the application of the market factor. Agricola Mining Consultants prefers the Geoscience Factor approach because it endeavours to implement a system that is systematic and defendable. It also takes account of the key factors that can be reasonably considered to impact on the exploration potential. The keystone of the method is the BAC, which provides a standard base from which to commence a valuation. The acquisition and holding costs of a tenement for one year provides a reasonable, and importantly, consistent starting point. Presumably when a tenement is pegged for the first time by an explorer the tenement has been judged to be worth at least the acquisition and holding cost.

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It may be argued that on occasions an EL may be converted to a ML expediently for strategic reasons rather than based on exploration success, and hence it is unreasonable to value such a ML starting at a relatively high BAC compared to that of an EL.

It has also been argued that the method is a valuation-by-numbers approach. In Agricola’s opinion, the strength of the method is that it reveals to the public, in the most open way possible, just how a tenement’s value was systematically determined. It is an approach that lays out the subjective judgements made by the valuer.

Area

The area of a tenement is usually stated in terms of square kilometres as a matter of convenience and cosistency. A graticular boundary (or block) system was introduced for exploration licences in mid 1991 in W.A. and a block is defined as one minute of latitude by one minute of longitude. The square kilometres contained within a block varies from place to place. For instance, at Kunnanurra (Latitude 15 deg. S) one block equals 3.31 square kilometres, at Mt Isa (Latitude 20 deg. S) one block equals 3.22 square kilometres. at Carnarvon or Bundaberg (Latitude 25 deg. S) one block equals 3.11 square kilometres and at Albany or Adelaide (Latitude 35 deg. S) one block equals 2.81 square kilometres.

Prospecting Licences and Mining Leases are granted in Hectares (100 hectares equals one square kilometre.

Basic Acquisition Cost

The Basic Acquisition Cost (“BAC”) is the important input to the Geoscience Factor Method and it is estimated by summing the annual rent, statutory expenditure for a period of 12 months and administration fees for a first stage exploration tenement such as an Exploration Licence(the first year holding cost).

The notes are general in nature and references to Western Australia are an example of exploration expenditures. they are appropriate for other states and other countries based on Agricola’s experience in many areas of Australia and elsewhere.

The current holding cost for exploration projects is considered to be the average expenditure for the first year of the licence tenure. Exploration Licences in Western Australia, for example, attract a minimum annual expenditure for the first three years of $300 per square kilometre per year with a minimum of $20,000 and annual rent of $46.80. A 15% administration fee is taken into account to imply a holding cost of $400 per square kilometre. A similar approach based on expenditure commitments could be taken for Prospecting Licences and Mining Leases (effective 1 July 2014). The Benchmark minimum expenditure for Exploration Licences in the Northern Territory is $10,000 plus $150 per block.

The BAC was originally based on calculations of exploration expenditures and other costs for Western Australia. Agricola’s experience has confirmed this range to be appropriate for other parts of the world where exploration or valuations have been carried out.

Many overseas jurisdictions do not specify a minimum expenditure commitment but require that sufficient work be completed in the first year to allow granting of the tenement into the second

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year. This usually requires preparation of a report with results of exploration carried out. For example with a grass roots portfolio 500 square kilometres in the first year the expenditure (BAC) would be $200,000 to $225,000 which is appropriate for early work of desktop studies, field visits rock chip sampling and general research. Agricola believes an Australian company would consider this reasonable for the first phase of work in any country.

A company may well choose to spend more than that and budgets of $0.5 to $1.0 million are not uncommon but these budgets are usually based on significant previous encouragement such as scout drilling, aeromagnetic targets etc. The BAC is designed for grass roots projects where no earlier work is available and only regional selection information is available.

Where the Company in earlier work programs has received encouragement from earlier work then that aspect is addressed in the geofactors, which tend to upgrade the BAC based on earlier results and perceived prospectivity.

In Western Australia (from February 2006), an application for a Mining Lease required either a mining proposal or a statement describing when mining is likely to commence; the most likely method of mining; and the location, and the area, of land that is likely to be required for the operation of plant, machinery and equipment and for other activities associated with those mining operations. A mineralisation report is also required that has been prepared by a qualified person.

The mineralisation report must be completed by a qualified person and shall contain information of sufficient standard and detail to substantiate, to the satisfaction of the Director Geological Survey, that significant mineralisation exists within the ground applied for. A ‘qualified person’ means a person who is a member of the Australasian Institute of Mining and Metallurgy (AusIMM) or the Australian Institute of Geoscientists (AIG). Significant mineralisation means a deposit of minerals located during exploration activities and that there is a reasonable expectation that those minerals will be extracted by mining operations.

The implication of the mineralisation report suggests that Mining leases should be valued on the body of significant mineralisation (usually a Mineral Resource estimated in accordance with the JORC Code) and not on the basis of prospectivity. The preferred method for valuing resources is by comparable transactions (Market Based).

The Mineral Resources are assumed to encapsulate all the value for the tenements or prospects on which they occur and the exploration results considered for the estimate. A separate value for exploration potential for this tenement is not considered warranted.

It is recognised that further exploration potential may exist within the tenement boundaries but when a mineral resource has already been estimated in accordance with the JORC Code a hypothetical willing but not too anxious purchaser would be unlikely to consider additional value for surrounding untested ground. The possibility of undrilled extensions to mineral resources may be considered in the market factor assessment.

Mining Leases granted prior to 2006 and Prospecting Licences may not have a mineralisation report available and may cover old workings or simply an expedient or strategic method of securing ground at the expiry of an Exploration Licence rather than based on exploration success. While these

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Licences carry all the obligations set out in the Mining Act, from a valuation point of view they are equivalent to Exploration Licences and it is unreasonable to value such these MLs (or PLs) starting at a relatively high holding cost compared to that of an EL where only exploration results are available. These tenements should be considered on the basis of a BAC of $400 to $450 . To value these areas at the higher levels may not be considered to be reasonable under the VALMIN Code.

Tenement Status

Uncertainty may exist where a tenement is in the application stage. Competing applications may be present where a ballot is required to determine the successful applicant or Native Title issues and negotiations may add to the risk of timely grant. Other issues may also be present such as state parks or forestry and wildlife reserves, competing land use and compensation agreements. There is an inherent risk that the tenement may not be granted and this needs to be recognised in the base value assessment. A ‘grant factor’ of zero may be applied where there is no realistic chance of approval (e.g. sacred sites) and where no significant impediments are known the factor may increase to about 60% to reflect delays and compliance with regulations.

Equity

The equity a Company may hold in a tenement through joint venture arrangements or royalty commitments may be addressed in assessing base Value but it is often considered at the end of a valuations report.

Geoscience Factors

The multipliers or ratings and the criteria for rating selection across these four factors are summarised in the following table.

The selection of factors from the table must be tempered with an eye to the reasonableness of the outcome and an awareness of the inherent exploration risks in achieving progress to the next level. Some exploration licences are overly large and may cover several domains of prospective (or entirely unprospective) ground and this should be recognised in the Geology Factor. A conservative approach is considered mandatory.

Estimate of project value is carried out on a tenement-by-tenement basis and uses four calculations as shown below. The value estimate is shown as a range with a preferred value.

Base Value = [Area][Grant Factor][Equity]*[Base Acquisition Cost]

Prospectivity Index = [Off Site Factor][On Site Factor][Anomaly Factor]*[Geology Factor]

Technical Value = [Base Value]*[Prospectivity Index]

Market Value = [Technical Value]*[Market Premium/Discount Factor]

GEO-FACTOR RATING CRITERIA -GUIDELINES	GEO-FACTOR RATING CRITERIA -GUIDELINES	GEO-FACTOR RATING CRITERIA -GUIDELINES	GEO-FACTOR RATING CRITERIA -GUIDELINES

	Rating	Address - Off Property	Mineralisation - On Property	Anomalies	Geology
Low	0.5	Very little chance of mineralisation,	Very little chance of mineralisation,	Extensive previous exploration with	Unfavourable lithologyover

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		Concept unsuitable to environment	Concept unsuitable to environment	poor results - no encouragement	>75% of the tenement
	0.75				Unfavourable lithology over >50% of the tenement
Average	1	Indications of Prospectivity, Concept validated	Indications of Prospectivity, Concept validated	Extensive previous exploration with encouraging results - regional targets	Deep alluvium Covered favourable geology (40- 50%)
	1.5	RAB Drilling with some scattered results	Exploratory sampling with encouragement, Concept validated	Several early stage targets outlined from geochemistry and geophysics	Shallow alluvium Covered favourable geology (50- 60%)
	2	Significant RC drilling leading to advance project status	RAB &/or RC Drilling with encouraging intercepts reported	Several well defined surface targets with some RAB drilling	Exposed favourable lithology (60- 70%)
	2.5	Grid drilling with encouraging results on adjacent sections	Diamond Drilling after RC with encouragement	Several well defined surface targets with encouraging drillingresults	Strongly favourable lithology (70- 80%)
High	3	Resource areas identified	Advanced Resource definition drilling - early stage	Several significant subeconomic targets - no indication of volume	Highly prospective geology (80 - 100%)
	3.5	Along strike or adjacent to known mineralisation at Pre-Feasibility Stage	Resource areas identified	Subeconomic targets of possible significant volume - early stage drilling

Prospectivity Enhancement Multiplier (“PEM”)

Various valuation methods exist which make reference to historical exploration expenditure. One such method is based on a 'multiple of historical exploration expenditure'. Successful application of this method relies on the valuer assessing the extent to which past exploration expenditure is likely to lead to a target resource being discovered, as well as working out the appropriate multiple to apply to such expenditure.

Another such method is the 'appraised value method'. When adopting this approach, the valuer should only account for meaningful past exploration expenditure plus warranted future expenditures. Warranted future expenditures reflect a reasonable and justifiable exploration budget to test the identified potential of the target.

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PEM Factors Used in this valuation method

PEM Range	Criteria
0.2 – 0.5	Exploration (past and present) has downgraded the tenement prospectivity, no mineralisation identified
0.5 – 1.0	Exploration potential has been maintained (rather than enhanced) by past and present activityfrom regional mapping
1.0 – 1.3	Exploration has maintained, or slightly enhanced (but not downgraded) the prospectivity
1.3 – 1.5	Exploration has considerably increased the prospectivity (geological mapping, geochemical orgeophysical)
1.5 – 2.0	Scout Drilling has identified interesting intersections of mineralisation
2.0 – 2.5	Detailed Drilling has defined targets with potential economic interest.
2.5 – 3.0	A resource has been defined at Inferred Resource Status, no feasibility study has been completed
3.0 – 4.0	Indicated Resources have been identified that are likely to form the basis of a prefeasibilitystudy
4.0 – 5.0	Indicated and Measured Resources have been identified and economic parameters are available for assessment.

When historical expenditure approaches are adopted, it is good practice for valuers to provide full transparency in relation to all historical exploration expenditure on the subject property, details of those expenditures selected for use in the method (including details in relation to warranted future expenditures), and justification for any multiples applied.

Past expenditure on a tenement and/or future committed exploration expenditure can establish a base value from which the effectiveness of exploration can be assessed. Where exploration has produced documented results, a PEM can be derived which takes into account the valuer’s judgment of the prospectivity of the tenement and the value of the database.

Future committed exploration expenditure is discounted to 60% by some valuers to reflect the uncertainty of results and the possible variations in exploration programmes caused by future undefined events. Expenditure estimates for tenements under application are often discounted to 60% of the estimated value by some valuers to reflect uncertainty in the future granting of the tenement. The PEM Factors are defined in the table.

Yardstick (Rule of Thumb) Method

A Rule-of-Thumb method sometimes used for valuing Mineral Assets without identified Resources is based upon conversion of comparable sales data to a unit area (per km[2] or per ha). It is probably the most difficult comparative tool to justify. This Method has found greater acceptance in North America, where tenement sizes appear to be smaller and where there are many more transactions forming a deep and liquid market than elsewhere. In addition, dealing in tenements is not discouraged by the mining legislation, especially in the US with its historic focus on property rights. It is used in Canada and Australia, though to a much lesser extent.

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In Australia, many State jurisdictions grant large exploration tenements (say 300km2 maximum) on a graticular block system. This means a tenement is usually larger than geometrically necessary to cover the specific geologically prospective terrane. Also, most jurisdictions here require periodic significant reductions in the tenement’s size, so it is common to apply for more area than is actually needed to provide for this obligatory reduction. The sale of exploration tenements to third parties is discouraged (although sales, particularly if interests, certainly occur) because the basis of grant is that the applicants will carry out the granted tenement’s exploration obligations themselves. The State sees itself as the centralised, timely distributor of exploration rights, not the free market.

That said, some valuers still attempt to use this Rule-of-Thumb (based upon area) in Australia with an emphasis on market value. A review of technical value (which is not influenced by market conditions) of exploration areas carried out by Agricola over the last few years suggests that ground without resources can be categorized as a matter of convenience into four groups:

Advanced exploration areas located in a well mineralised area near existing mineral deposits with significant potential attract values well above $2000 per square kilometre
Exploration areas along strike or structurally related to estimated mineral resources. Such areas attract values in the range $1200 to $2000 per square kilometre.
Exploration areas in known mineral fields. Such areas attract values in the range of $700 to $1300 per square kilometre.
Exploration areas in green fields or early exploration domains remote from mineral resources. Such areas attract values in the range of $400 to $800 per square kilometre.

Adjustments to the Technical Value – Market Value

Mineral Assets are often bought and sold at a price that is different than their technical value or stand-alone value. To the extent that it exists, the amount of the transacted value differs from the technical value is often described as the 'acquisition premium or discount'.

The concept of market value implies the construction of a hypothetical transaction between willing, knowledgeable, but not anxious buyers and sellers. Therefore, when assessing the market value of resource projects, it is likely that valuers will consider whether it is appropriate to make an adjustment to the technical value of the project to reflect any observed 'acquisition premium or discount', or other adjustments. Such adjustments can either be implicit or explicit in the valuation method chosen. However, care should be taken not to treat as acquisition premium or discount something that is properly part of technical value, such as where assumed forward values for commodity prices are reflected in the technical value.

Particularly when valuing early stage exploration and development projects the technical value may be assessed for a project with reference to parameters that may be above or below those present in the financial markets as at the valuation date. Consequently, when applying these exploration valuation methods, it may be appropriate to reflect a series of high level adjustments to the technical value to account for differences in market conditions relative to those embedded within the method itself.

However, other valuation methods (particularly the DCF valuation method) are able to explicitly reflect a series of parameters that may apply to future financial market expectations. This is

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particularly the case if valuers adopt commodity price, exchange rate, inflation rate, and discount rate parameters which are forecast with reasonable confidence, and resource to reserve conversion, cost structure and capital expenditure parameters which are consistent with the expectations in the market. Doing so will limit the need to make further adjustments to the resulting stand alone value to account for such factors as 'market considerations'.

To the extent that valuers choose to apply further adjustments to their assessed stand alone value, it is good practice to clearly identify how they have applied the adjustments are applied, and the rationale for doing so.

GLOSSARY OF TERMS

‘Minerals Industry’ (also Extractive Industry) – Defined as encompassing those engaged in exploring for, extracting, processing and marketing ‘Minerals’ .
‘Price’ – The amount paid for a good or service and it is a historical fact. It has no real relationship with ‘Value’, because of the financial motives, capabilities or special interests of the purchaser; and the state of the market at the time.
Personal Property – Covers all items other than ‘Real Estate’ and may be tangible (like a chattel or goods) or intangible (like a patent or debt). It has a moveable character.
‘Real Property’ – A non-physical, legal concept and it includes all the rights, interests and benefits related to the ownership of ‘Real Estate’ and normally recorded in a formal document (eg, deed or lease). The rights are to sell, lease, enter, bequeath, gift, etc. There may be absolute single or partial ownership (subject to limitations imposed by Government, like taxation, planning powers, appropriation, etc). These rights may be affected by restrictive covenants or easements affecting title; or by security or financial interests, say conveyed by mortgages.
‘Real Estate’ – A physical concept, including land and all things that are a natural part of the land (eg, trees and Minerals). In addition it includes all things effectively permanently attached by people (eg, buildings, site improvements, and permanent physical attachments, like cooling systems and lifts) on, above or below the ground.

VALUATION AND VALUE

‘Value’ (also Valuation which is the result of determining ‘Value’) - The estimated likely future ‘Price’ of a good or service at a specific time, but it depends upon the particular qualified type of value (eg ‘Market Value’, ‘Salvage Value’, ‘Scrap Value’, ‘Special Value’, etc). There is also a particular value for tax and rating, or insurance purposes.
‘Market Value’ (IVS Definition) – The result of an objective Valuation of specific identified ownership rights to a specific asset as at a given date. It is the value in exchange not ‘Value-in-Use’ set by the market place. It is the “estimated amount for which a property should exchanged on the date of valuation between a willing buyer and a willing seller in an arm’s length transaction after proper marketing wherein the parties had acted knowledgeably, prudently, and without compulsion” .
‘Fair Value’ (IVS definition) – An accountancy term used for values envisaged to be derived under any and all conditions, not just those prevailing in an open market for the normal orderly disposal of assets. Being a transaction price it reflects both existing and alternative uses, too. It is also a legal term for values involved in dispute settlements which may not also meet the strict ‘Market Value’ definition. Commonly, it reflects the service potential of an asset ie, value derived by DCF/NPV analysis, not merely the result of comparable sales analysis. It is still the “amount for which an asset could be exchanged, or a liability settled, between knowledgeable willing parties in

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an arm’s length transaction” .

‘Highest-and-Best-Use’ – for physical property, it is the reasonably probable and legal use of property, which is physically possible, appropriately supported and financially feasible, that results in the highest value. In the case of personal property, it is the same with the additional qualification that the highest value must be in the appropriate market place, consistent with the purpose of the appraisal. It may be, in volatile markets, the holding for a future use.
‘Value-in-Use’ – in contrast to ‘ Highest-and-Best-Use ’, it is the specific value of a specific tangible asset that has a specific use to a specific user. It is not market-related. The focus is on the value that a specific property contributes to the enterprise of which it is a part (being part of a ‘Going Concern Valuation’ ). It measures the contributory value of a specified asset(s) used within that specific enterprise, although it is not the ‘Market Value' for that individual asset. It is the Valueto-the-Owner/Entity/Business in accountancy terms and may be the lower of net current replacement cost and its recoverable amount. It is also the net present value of the expected future net cash flows from the continued use of that asset, plus its disposal value at the end of its useful life ( ‘Scrap Value’ ). At the ‘Valuation Date’ , there must be recognition of its existing use by a particular user. This is in contrast to the alternative reasonable use to which an asset might be put by unspecified owner(s).
‘Going Concern Value’ – A business valuation concept rather than one relating to individual property valuation. It is the value of an operating business/enterprise (ie one that is expected to continue operating) as a whole and it includes goodwill, special rights, unique patents or licences, special reserves, etc. Apportionment of this total value may be made to constituent parts, but none of these components constitute a basis for ‘Market Value’ .
‘Forced Sale Value’ (Liquidated Value) – The amount reasonably expected to be received from the sale of an asset within a short time frame for completion that is too short to meet the ‘Market Value’ definition. This definition requires a reasonable marketing time, having taken into account the asset’s nature, location and the state of the market). Usually it also involves an unwilling seller and buyers who have knowledge to the disadvantage of the seller.
'Market Capitalization' - The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures. Frequently referred to as "market Cap" or MCap
'Enterprise Value - EV' - A measure of a company's value, often used as an alternative to straightforward market capitalization. Enterprise value is calculated as market cap plus debt, minority interest and preferred shares, minus total cash and cash equivalents. In the event of a buyout, an acquirer would have to take on the company's debt, but would pocket its cash. EV differs significantly from simple market capitalization in several ways, and many consider it to be a more accurate representation of a firm's value.
‘Market Premium’ - A control premium is an amount that a buyer is usually willing to pay over the current market price of a publicly traded company in order to acquire a controlling share in that company. The reason the buyer of a controlling interest is willing to offer a premium over the price currently established by other market participants is the additional prerogatives of control, including electing the company directors, firing and hiring key employees, declaring and distributing dividends, divesting or acquiring additional business assets, and entering into merger and acquisition transactions. The opposite of control premium is the minority discount.
‘ Investment Value’ (Worth) – this is the value of a specific asset to a specific investor(s) for identified investment objectives or criteria. It may be higher or lower than ‘Market Value’ and is associated with ‘Special Value’.
‘ Property-with-Trading-Potential‘ – refers to the valuation of specialised property (eg, hotel, petrol

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station, restaurant, etc) that is sold on an operating or going concern basis. It recognises that assets other than land and buildings are to be included in the ‘Market Value’ and it is often difficult to separate the component values for land and property.

‘Special Value’ – An extraordinary premium over and above the ‘Market Value’, related to the specific circumstances that a particular prospective owner or user of the property attributes to the asset. It may be a physical, functional or economic aspect or interest that attracts this premium. It is associated with elements of ‘Going Concern Value’ or ‘Investment Value’ since it also represents synergistic benefits. In a strict sense it could apply to very specialised or special purpose assets which are rarely sold on the open market, except as part of a business, because their utility is restricted to particular users. In some circumstances, it may be the lower value given by ‘Value –in–Use’.
‘Salvage Value’ – The expected value of an asset at the end of its economic life (ie, being valued for salvage disposal purposes rather than for its originally intended purpose). Hence, it is the value of property, excluding land, as if disposed of for the materials it contains, rather than for its continued use, without special repairs or adaptation.
‘Scrap Value’ (Residual Value) – The remaining value (usually a net value after disposal costs) of a wasting asset at the end of a prescribed or predictable period of time (usually the end of its effective life) that was ascertained upon acquisition.
‘Valuation Date’ - Means the reference date to which a Valuation applies. Depending on the circumstances, it could be different to the date of completion or signing of the Valuation Report or the cut-off date of the available data (VALMIN Code,).
‘Valuer’ (also Valuer [Canada] or Appraiser [USA]) – Either the ‘Expert’ or ‘Specialist’ (Qualified Person in Canada) who is the natural person responsible for the Valuation to determine the ‘Fair Market Value’ after consideration of the technical assessment of the ‘Mineral Asset’ and other relevant issues. They must have demonstrable ‘Competence’ (and ‘Independence’, when required).

JORC CODE

‘Competent Person - A ‘Competent Person’ is a minerals industry professional who is a Member or Fellow of The Australasian Institute of Mining and Metallurgy, or of the Australian Institute of Geoscientists, or of a ‘Recognised Professional Organisation’ (RPO), as included in a list available on the JORC and ASX websites. These organisations have enforceable disciplinary processes including the powers to suspend or expel a member. A Competent Person must have a minimum of five years relevant experience in the style of mineralisation or type of deposit under consideration and in the activity which that person is undertaking. If the Competent Person is preparing documentation on Exploration Results, the relevant experience must be in exploration. If the Competent Person is estimating, or supervising the estimation of Mineral Resources, the relevant experience must be in the estimation, assessment and evaluation of Mineral Resources. If the Competent Person is estimating, or supervising the estimation of Ore Reserves, the relevant experience must be in the estimation, assessment, evaluation and economic extraction of Ore Reserves. ( JORC 2012 )
‘Independent/Independence’ – Means that the person(s) making the Valuation have no ‘ Material’ pecuniary or beneficial (present or contingent) interest in any of the ‘Mineral Assets’ being assessed or valued, other than professional fees and reimbursement of disbursements paid in connection with the assessment or Valuation concerned; or any association with the commissioning entity, or with the owners or promoters (or parties associated with them) likely to create an apprehension of bias. Hence, they must have no beneficial interest in the outcome of the transaction or purpose of the technical assessment/Valuation of the ‘Mineral Asset’ (VALMIN

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Code). ASIC RG112, which deals with the Independence of Expert Reports, provides more detail on this concept. ( JORC 2012 )

‘Exploration results’ - Exploration Results include data and information generated by mineral exploration programmes that might be of use to investors but which do not form part of a declaration of Mineral Resources or Ore Reserves. The reporting of such information is common in the early stages of exploration when the quantity of data available is generally not sufficient to allow any reasonable estimates of Mineral Resources. Examples of Exploration Results include results of outcrop sampling, assays of drill hole intersections, geochemical results and geophysical survey results. (JORC 2012)
‘Exploration Target’ - An Exploration Target is a statement or estimate of the exploration potential of a mineral deposit in a defined geological setting where the statement or estimate, quoted as a range of tonnes and a range of grade (or quality), relates to mineralisation for which there has been insufficient exploration to estimate a Mineral Resource. Any such information relating to an Exploration Target must be expressed so that it cannot be misrepresented or misconstrued as an estimate of a Mineral Resource or Ore Reserve. The terms Resource or Reserve must not be used in this context. ( JORC 2012 )
‘Inferred Mineral Resource’ - An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade (or quality) are estimated on the basis of limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade (or quality) continuity. It is based on exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes. An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to an Ore Reserve. It is reasonably expected that the majority of Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration . ( JORC 2012 )
‘Indicated Mineral Resource’ - An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to assume geological and grade (or quality) continuity between points of observation where data and samples are gathered. An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral Resource and may only be converted to a Probable Ore Reserve. ( JORC 2012 )
‘Measured Mineral Resource’ - A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade (or quality), densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of Modifying Factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes, and is sufficient to confirm geological and grade (or quality) continuity between points of observation where data and samples are gathered. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proved Ore Reserve or under certain circumstances to a Probable Ore Reserve. ( JORC 2012 )
‘Modifying Factors’ - are considerations used to convert Mineral Resources to Ore Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors . ( JORC 2012 )

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‘Scoping Study’ - A Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources. It includes appropriate assessments of realistically assumed Modifying Factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a Pre-Feasibility Study can be reasonably justified. A Scoping Study must not be used as the basis for estimation of Ore Reserves. ( JORC 2012 )
‘Pre Feasibility Study’ - A Preliminary Feasibility Study (Pre-Feasibility Study) is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the Modifying Factors and the evaluation of any other relevant factors which are sufficient for a Competent Person, acting reasonably, to determine if all or part of the Mineral Resources may be converted to an Ore Reserve at the time of reporting. A Pre- Feasibility Study is at a lower confidence level than a Feasibility Study. ( JORC 2012 )
‘Feasibility Study’ - A Feasibility Study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable Modifying Factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a Pre- Feasibility Study. ( JORC 2012 )

VALMIN CODE

‘Mineral(s)’ – Any naturally occurring material found in or on the Earth’s crust, that is useful to and/or has a value placed on it by mankind. The term specifically includes coal, shale and materials used in building and construction, but excludes crude oil and natural gas ( VALMIN Code ).
‘Mineral Asset(s) ’ (Resource Assets or Mineral Properties) - All property including, but not limited to ‘Real Property’, intellectual property, mining and exploration tenements held or acquired in connection with the exploration, the development of and the production from those tenements; together with all plant, equipment and infrastructure owned or acquired for the development, extraction and processing of Minerals in connection with those tenements. Most can be classified as ‘Exploration Areas’, ‘Advanced Exploration Areas’, ‘Pre-Development Projects’, ‘Development Projects’ or ‘Operating Mines’ (VALMIN Code).
‘ Operating Mines’ – Mineral Properties, particularly mines and processing plants, which have been fully commissioned and are in production (VALMIN Code).
‘ Development Projects’ – Mineral Properties which have been committed to production, but which are not yet commissioned or not operating at design levels (VALMIN Code).
‘Advanced Exploration Areas’ and ‘Pre-development Projects’ – Mineral Properties where Mineral Resources have been identified and their extent estimated (possibly incompletely) but where a positive development decision has not been made. Mineral Properties at the early assessment stage, those for which a development decision has been negative, those on care and maintenance and those held on retention titles are all included in this category if Mineral Resources have been identified. This is even if no further valuation or technical assessment work, delineation or advanced exploration is being undertaken (VALMIN Code).
‘ Exploration Areas’ – Mineral Properties where mineralisation may or may not have been identified, but where a Mineral Resource has not been identified (VALMIN Code).

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‘ Fair Market Value’ (Market Value or Value) – The object and result of the Valuation. It is the estimated amount of money (or the cash equivalent of some other consideration) for which the ‘Mineral Asset’ should change hands on the ‘Valuation Date’. It must be between a willing buyer and a willing seller in an ‘arm’s length’ transaction in which each party has acted knowledgeably, prudently and without compulsion. It is usually comprised of two components, the underlying or ‘Technical Value’ and a premium or discount, relating to market, strategic or other considerations (VALMIN Code,).
‘Technical Value’ – An assessment of a ‘Mineral Asset’s’ future net economic benefit at the ‘Valuation Date’ under a set of assumptions deemed most appropriate by the ‘Valuer’ , excluding any premium or discount to account for market, strategic or other considerations ( VALMIN Code ,).
‘Expert’ – Means a ‘Competent’ ( and ‘Independent’, where relevant) natural person who prepares and has overall responsibility for the Valuation Report. He/she must have at least 10 years of relevant ‘ Minerals Industry’ experience, using a relevant ‘Specialist’ for specific tasks in which he/she is not ‘Competent’ . An ‘Expert’ must be a corporate member of an appropriate, recognised professional association having an enforceable Code of Ethics, or explain why not ( VALMIN Code ).
‘Specialist’ – Means a ‘Competent’ ( and ‘Independent’, where relevant) natural person who is retained by the ‘Expert’ to provide subsidiary reports (or sections of the Valuation Report) on matters on which the ‘Expert’ is not personally expert. He/she must have at least 5 years of suitable and preferably recent ‘ Minerals Industry’ experience relevant to the subject matter on which he/she contributes. A ‘Specialist’ must be corporate member of appropriate, recognised professional association having an enforceable Code of Ethics, or explain why not ( VALMIN Code ).
‘Material/Materiality’ - with respect to the contents and conclusions of a relevant Report, it means data and information of such importance that the inclusion or omission of the data or information concerned might result in a reader of the Report reaching a different conclusion than might otherwise be the case. ‘Material’ data (or information) is that which would reasonably be required in order to make an informed assessment of the subject of the Report. The Australian Society of Accountants’ Standard AAS5 indicates that ‘Material’ data (or information) is such that the omission or inclusion of it could lead to changes in total value of greater than 10% (between 5% and 10% it is discretionary). Also the Supreme Court of New South Wales has stated that something is ‘Material’ if it is significant in formulating a decision about whether or not to make an investment or accept an offer ( VALMIN Code ).
‘Transparent/Transparency’ - as applied to a valuation it means, as in the Concise Oxford Dictionary, “ easily seen through, of motive, quality, etc”. It applies to the factual information used, the assumptions made and the methodologies applied, all of which must be made plain in the Report ( VALMIN Code ).
‘Competence’ – it means having relevant expertise, qualifications and experience (technical or commercial), as well as, by implication, the professional reputation so as to give authority to statements made in relation to particular matters. ( VALMIN Code ).

VALUATION REFERENCES

ASIC, 2011, “Regulatory Guideline 111 – Content of Expert’s Reports”, March 2011

ASIC, 2011, “Regulatory Guideline 112 – Independence of Experts”, March 2011

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AusIMM, (2012), “Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code), prepared by the Joint Ore Reserves Committee (JORC) of the AusIMM, the Australian Institute of Geoscientists (AIG) and the Minerals Council of Australia (MCA)”, (The JORC Code) effective December 2013.

AusIMM. (2005), “Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the VALMIN Code)” 2005 Edition.

AusIMM, (1998), “Valmin 94 – Mineral Valuation Methodologies”.

Australian Taxation Office, 2014, “MRRT Starting Base – Valuations”

Barnett, D W and Sorentino, C, 1994. Discounted cash flow methods and the capital asset pricing model, in Proceedings Mineral Valuation Methodologies 1994 (VALMIN ‘94) pp 17‐35 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Baurens, S., 2010, “Valuation of Metals and Mining Companies” Basinvest, 7 Nov 2010

CANADIAN INSTITUTE OF MINING, METALLURGY AND PETROLEUM, (2014), “CIM Standards on Mineral Resources and Reserves-Definitions and Guidelines”. Prepared by the CIM Standing Committee On Reserve Definitions. Adopted by CIM Council August 20, 2000.

CIM, (2003) – “Standards and Guidelines for Valuation of Mineral Properties. Final Version, February 2003” Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVAL).

Edmonds, J, 2013, “Resource Capital Fund III LP v Commissioner of Taxation [2013] FCA 363, Federal Court of Australia, 26 April 2013

Goulevitch J and Eupene G S; 1994; Geoscience rating for valuation of exploration properties – applicability of the Kilburn Method in Australia and examples of its use; Proceedings of VALMIN 94; pages 175 to 189; The Australasian Institute of Mining and Metallurgy, Carlton, Australia.

Kilburn, LC, 1990, “Valuation of Mineral Properties which do not contain Exploitable Reserves” CIM Bulletin, August 1990.

Jessup, A. 2013, “Application of Stamp Duty to Mineral and Petroleum Transactions” AMPLA Limited Thirty-Seventh National Conference, Piper Alderman, October 2013

Lilford, E & Minnitt, R, 2002, “Methodologies in the Valuation of Mineral Rights” Journal SAIMM October 2002

Lilford, E & Minnitt, R, 2005, “A Comparative Study of Valuation Methodologies for Mineral Developments” Journal SAIMM January 2005

Lord, D. 2014, “How Right is your Valuation?”, SRK Consulting, AusIMM June 2014

Rudenno, V., (1998), “The Mining Valuation Handbook”.

Rudenno, V., (2009), “The Mining Valuation Handbook” 3[rd] Edition.

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Rudenno, V., (2012), “The Mining Valuation Handbook” 4[th] Edition.

Sorentino, C, 2000, “Valuation Methodology for VALMIN”, MICA, The Codes Forum

Spencer v. Commonwealth 5 CLR 418, 1907

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PROXY FORM

APPOINTMENT OF PROXY EASTERN GOLDFIELDS LIMITED (FORMERLY SWAN GOLD MINING LIMITED) ACN 100 038 266

2015 GENERAL MEETING

		2015 GENERAL MEETING
I/We
of
	being a Shareholder entitled to attend and vote at the Meeting, hereby
appoint
	Name of proxy
OR		the Chair as my/our proxy

or failing the person so named or, if no person is named, the Chair, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting to be held at 11am (WST), on Wednesday, 30 December 2015 at 9 Mumford Place, Balcatta WA 6021 , and at any adjournment thereof.

The Chair intends to vote undirected proxies in favour of all Resolutions in which the Chair is entitled to vote.

Voting on business of the Meeting	FOR	AGAINST	ABSTAIN	ABSTAIN
Resolution 1 – Approval of Placement
Resolution 2 – Approval for Conversion of Debt
(Related Parties)
Resolution 3 – Approval for Conversion of Debt
(Unrelated Parties)
Resolution 4 – Approval for Conversion of DCM Debt
Resolution 5 – Approval for Conversion of Interest
Component of Debt and DCM Debt (Related Parties)
Resolution 6 – Approval for Conversion of Interest
Component of Debt (Unrelated Parties)
Resolution 7 – Approval for Conversion of Investmet
Loan
Resolution 8 – Approval for Conversion of Interest
Component of Investmet Loan
Resolution 9 – Approval to Issue Options under Option
Plan to Mr Michael Fotios
Resolution 10 – Approval to Issue Options under Option
Plan to Mr Alan Still
Resolution 11 – Approval to Issue Options Under
Option Plan to Mr Craig Readhead
Resolution 12 – Approval to issue Shares to Investmet
in lieu of fees

Resolution 13 – Approval to issue Shares to Mr Michael Fotios in lieu of fees Resolution 14 – Approval to issue Shares to Whitestone in lieu of fees Resolution 15 – Approval to issue Shares to Delta in lieu of fees Resolution 16 – Approval to Issue Options to Financier Resolution 17 – Selective Share Buy-back Resolution 18 – Approval for Investmet and Mr Michael Fotios to increase their relevant interest in the Company Resolution 19 – Approval to issue Shares to 2015 Lenders Resolution 20 – Ratification of Interim Placement

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

Important for Resolutions 9, 10, 11 and 13

Chair authorised to exercise undirected proxies on remuneration related Resolutions - Where I/we have appointed the Chair as my/our proxy (or the Chair becomes my/our proxy by default) and I/we am/are entitled to vote on the relevant Resolutions I/we expressly authorise the Chair to exercise my/our proxy even though Resolutions 9, 10, 11 and 13 are connected directly or indirectly with the remuneration of a member of the KMP of the Company and even though the Chair is a member of the key management personnel for the Company.

% If two proxies are being appointed, the proportion of voting rights this proxy represe ~~nts is~~

Signature of Shareholder(s):

Signature of Shareholder(s): Individual or Shareholder 1 Sole Director/Company Secretary	Date: ______ Shareholder 2 Shareholder 3 Director Director/Company Secretary	Date: ______ Shareholder 2 Shareholder 3 Director Director/Company Secretary

		Director/Company Secretary

Contact Name: ________

Contact Ph (daytime): ________

INSTRUCTIONS FOR COMPLETING ‘APPOINTMENT OF PROXY’ FORM

( Appointing a proxy ): A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.
( Direction to vote ): A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.
( Signing instructions ):
(a) ( Individual ): Where the holding is in one name, the Shareholder must sign.
(b) ( Joint holding ): Where the holding is in more than one name, all of the Shareholders should sign.
(c) ( Power of attorney ): If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.
(d) ( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return:

In person at Level 1, 24 Mumford Street, Balcatta WA 6021

By post to Level 1, 24 Mumford Street, Balcatta WA 6021

By facsimile to +61 8 6241 1811

By scan and email to [email protected]

so that it is received not less than 48 hours prior to commencement of the Meeting being 11AM (WST) ON MONDAY, 28 DECEMBER 2015 .

Proxy Forms received later than this time will be invalid.

AI assistant

ORA BANDA MINING LTD — Proxy Solicitation & Information Statement 2015

65475_rns_2015-11-30_73d0126f-0bed-4c54-b652-e07f69994d5c.pdf

EASTERN GOLDFIELDS LIMITED

ACN 100 038 266

NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT

CONTENTS PAGE

NOTICE OF GENERAL MEETING

BUSINESS OF THE MEETING

1. RESOLUTION 1 – APPROVAL OF PLACEMENT

2. RESOLUTION 2 – APPROVAL FOR CONVERSION OF DEBT (RELATED PARTIES)

3. RESOLUTION 3 – APPROVAL FOR CONVERSION OF DEBT (UNRELATED PARTIES)

4. RESOLUTION 4 – APPROVAL FOR CONVERSION OF DCM DEBT

5. RESOLUTION 5 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT AND DCM DEBT (RELATED PARTIES)

6. RESOLUTION 6 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF DEBT (UNRELATED PARTIES)

7. RESOLUTION 7 – APPROVAL FOR CONVERSION OF INVESTMET LOAN

8. RESOLUTION 8 – APPROVAL FOR CONVERSION OF INTEREST COMPONENT OF INVESTMET LOAN

9. RESOLUTION 9 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. MICHAEL FOTIOS

10. RESOLUTION 10 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. ALAN STILL

11. RESOLUTION 11 – APPROVAL TO ISSUE OPTIONS UNDER OPTION PLAN TO MR. CRAIG READHEAD

12. RESOLUTION 12 – APPROVAL TO ISSUE SHARES TO INVESTMET IN LIEU OF FEES

13. RESOLUTION 13 – APPROVAL TO ISSUE SHARES TO MR MICHAEL FOTIOS IN LIEU OF FEES

14. RESOLUTION 14 – APPROVAL TO ISSUE SHARES TO WHITESTONE IN LIEU OF FEES

15. RESOLUTION 15 – APPROVAL TO ISSUE SHARES TO DELTA IN LIEU OF FEES

16. RESOLUTION 16 – APPROVAL TO ISSUE OPTIONS TO FINANCIER

17. RESOLUTION 17 – SELECTIVE SHARE BUY-BACK

18. RESOLUTION 18 – APPROVAL FOR INVESTMET AND MR MICHAEL FOTIOS TO INCREASE THEIR RELEVANT INTEREST IN THE COMPANY

19. RESOLUTION 19 – APPROVAL TO ISSUE SHARES TO 2015 LENDERS

20. RESOLUTION 20 – RATIFICATION OF INTERIM PLACEMENT

BY ORDER OF THE BOARD OF DIRECTORS

VOTING EXCLUSIONS

Resolution 1 – Approval of Placement

Resolution 2 – Approval for Conversion of Debt (Related Parties)

Resolution 3 – Approval for Conversion of Debt (Unrelated Parties)

Resolution 4 – Approval for Conversion of DCM Debt

Resolution 5 – Approval for Conversion of Interest Component of Debt and DCM Debt (Related Parties)

Resolution 6 – Approval for Conversion of Interest Component of Debt (Unrelated Parties)

Resolution 7 – Approval for Conversion of Investmet Loan

Resolution 8 – Approval for Interest Component of Investmet Loan

– Resolutions 9, 10 and 11 Approval to issue Options to Directors

Resolution 12 – Approval to issue Shares to Investmet in lieu of fees

Resolution 13 – Approval to issue Shares to Mr Michael Fotios in lieu of fees

Resolution 14 – Approval to issue Shares to Whitestone in lieu of fees

Resolution 15 – Approval to issue Shares to Delta in lieu of fees

Resolution 16 – Approval to issue Options to Financier

Resolution 17 – Selective Share Buy-back

Resolution 18 – Approval for Investmet and Mr Michael Fotios to increase their relevant interest in the Company

Resolution 19 – Approval to issue Shares to 2015 Lenders

Resolution 20 – Ratification of Interim Placement

ENTITLEMENT TO ATTEND AND VOTE

HOW TO VOTE

Voting in person

Corporate representatives

Voting by proxy

Voting by attorney

Chairman as proxy

Other members of KMP as proxy

EXPLANATORY STATEMENT

BUSINESS OF THE MEETING

1. BACKGROUND TO RESOLUTIONS 1 - 20

1.1 Recapitalisation and the business of the Company

1.2 Capital structure of the Company

Notes

1.3

Control of the Company

1.4

Placement under Prospectus

Existing Shareholders of the Company are advised to read the Prospectus and contact the Company on +61 8 6241 1832 to express an interest in subscribing for Shares under the Placement.

2. RESOLUTION 1 – APPROVAL OF PLACEMENT

2.1 Background

2.2 Listing Rule 7.1

2.3 Information required by Listing Rule 7.3

(e) Terms of the securities

(f)

Use of funds

Notes

(g) Voting exclusion statement

2.4 Board recommendation

3. RESOLUTION 2 - APPROVAL FOR CONVERSION OF DEBT (RELATED PARTIES)

3.1 Background

ORA BANDA MINING LTD Proxy Solicitation & Information Statement 2015