ORE RESOURCES LIMITED - Proxy Solicitation & Information Statement 2012

TERRANOVA MINERALS NL

ACN 148 966 545

NOTICE OF GENERAL MEETING

General Meeting of the Company will be held at 10:00am (WST) on 2 November 2012 at The Heritage Boardroom, The Melbourne Hotel, 942 Hay St, Perth WA 6000.

This Notice of General Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.

Should you wish to discuss any matter please do not hesitate to contact the Company by telephone on +61 8 9486 4036.

TERRANOVA MINERALS NL ACN 148 966 545

NOTICE OF GENERAL MEETING

Notice is hereby given that a general meeting of Shareholders of Terranova Minerals NL ( Company ) will be held at 10:00am on 2 November 2012 at the Heritage Boardroom, The Melbourne Hotel, 942 Hay St, Perth WA 6000 (WST) ( Meeting ).

The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form form part of this Notice.

The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders on 31 October 2012 at 5pm (WST).

Terms and abbreviations used in this Notice and Explanatory Memorandum are defined in Section 9.

AGENDA

1. Resolution 1 – Approval of Acquisition of Manica Gold Project

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

“That, subject to Resolutions 2 and 3 being passed, and for the purposes of Listing Rule 11.1, section 611 item 7 of the Corporations Act, and for all other purposes, Shareholders approve the acquisition of the Manica Gold Project through the acquisition by the Company’s wholly owned subsidiary, Auroch Minerals Mozambique Pty Ltd ( Auroch Minerals ), of Mistral Resource Development Corporation and Explorator Limitada ( Acquisition ), for:

(a) the issue of 25,000,000 Shares ;

(b) payment of $2,000,000 ;

(d) payment of deferred consideration of $4,000,000,

to Pan African or as directed by Pan African and consequently the Company be authorised to make a significant change to the scale and nature of its activities on the terms and conditions in the Explanatory Memorandum accompanying this Notice."

Stantons International Securities has prepared an independent expert’s report on the proposed Acquisition and has concluded that the proposed Acquisition is fair and reasonable to the existing Shareholders. Refer to Section 3.12 for further information.

Voting Exclusion

The Company will disregard any votes cast on this resolution by a person (and any associate of such 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.

However, the Company will not disregard a vote if:

(a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) 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.

2. Resolution 2 – Authority to Issue Placement Shares

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

"That, subject to Resolution 1 being passed, pursuant to and in accordance with Listing Rule 7.1 and for all other purposes, Shareholders approve and authorise the Directors to allot and issue up to 26,666,667 Shares ( Placement Shares ) each at an issue price of $0.30 ( Placement ) on the terms and conditions in the Explanatory Memorandum accompanying this Notice.”

Voting Exclusion

The Company will disregard any votes cast on this resolution by a person who may participate in the issue of the Placement Shares and a person who might obtain a benefit (except a benefit solely in their capacity as holder of ordinary securities) if the resolution is passed and any associates of those persons.

However, the Company will not disregard a vote if:

(a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or
(b) 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.

3. Resolution 3 – Change of Company Name

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

"That, subject to Resolution 1 being passed, with effect from the date that ASIC alters the details of the Company’s registration in accordance with section 157 of the Corporations Act, the name of the Company be changed to Auroch Minerals NL."

4. Resolution 4 – Appointment of Jan Nelson as a Director

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

"That, in accordance with Article 13.3 of the Constitution, and with effect from Completion of the Acquisition, Jan Nelson be appointed as a Director."

5. Resolution 5 – Appointment of Glenn Whiddon as a Director

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

"That, in accordance with Article 13.3 of the Constitution, and with effect from Completion of the Acquisition, Glenn Whiddon be appointed as a Director."

6. Resolution 6 – Appointment of Dean Cunningham as a Director

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

"That, in accordance with Article 13.3 of the Constitution, and with effect from Completion of the Acquisition, Dean Cunningham be appointed as a Director."

Dated 28 September 2012

BY ORDER OF THE BOARD

Matthew Foy Company Secretary

TERRANOVA MINERALS NL ACN 148 966 545

EXPLANATORY MEMORANDUM

1. Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at the Heritage Boardroom, The Melbourne Hotel, 942 Hay St, Perth, Western Australia on 2012 at 10:00am (WST).

This Explanatory Memorandum should be read in conjunction with, and forms part of, the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions set out in the Notice.

A Proxy Form is located at the end of the Explanatory Memorandum.

2. Action to be taken by Shareholders

Shareholders should read the Notice and this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.

2.1 Proxies

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a 'proxy') to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company in accordance with the instructions thereon. Lodgment of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

Please note that:

(a) a member of the Company entitled to attend and vote at the General Meeting is entitled to appoint a proxy;
(b) a proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed Proxy Form provides further details on appointing proxies and lodging Proxy Forms.

3. Summary of Transaction

3.1 Background

On 29 August 2012 the Company announced that it had entered into a conditional agreement to acquire the Manica Gold Project ( Manica Project ) through the Company acquiring 100% of Explorator Limitada and Mistral Resource Development Corporation, wholly owned subsidiaries of Pan African Resources Plc ( PAR ) ( Acquisition ).

Under the terms of the Acquisition, the Company has agreed to pay cash, issue Shares and Deferred Consideration Shares and pay Deferred Consideration as consideration to Pan African.

Pan African does not currently hold any Shares in the Company.

Following Completion of the Acquisition and the Placement, Pan African will hold up to the following number of Shares and exercise the following voting power in the Company:

	Number of Shares	Voting Power
Pan African	25,000,000	38.08%(1)(2)

(1) Assumes 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 33.04%.
(2) Assumes that none of the Partly Paid Shares are paid in full. If the Partly Paid Shares are paid in full then Pan African’s voting power will be 29.60% assuming 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If the Partly Paid Shares are paid in full and 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 26.46%.

If all of the Deferred Consideration Shares are issued (and assuming the Company does not issue any further Shares other than pursuant to the Placement), Pan African will hold the following number of Shares and exercise the following voting power in the Company:

	Number of Shares	Voting Power
Pan African	96,666,668(1)	58.19%(2)

(1) On achievement of the BFS Milestone and Capacity Milestone the Company may elect to pay cash rather than issuing Shares. If the Company elects to pay cash then Pan African will hold 65,133,334 Shares.
(2) Assumes the Partly Paid Shares are paid in full and 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement.

As a consequence of Pan African’s voting power in the Company on Completion of the Acquisition and voting power if all of the Deferred Consideration Shares are issued, the Company will need Shareholder approval to complete the Acquisition. Specifically, Shareholder approval is required pursuant to Item 7 of section 611 of the Corporations Act because the Acquisition will result in Pan African acquiring ownership of more than 20% of the issued share capital of the Company.

3.2 Manica Project

The Manica Project comprises a single mining lease, Concessiio Mineira 3990C ( Mining Concession ). The Mining Concession has been granted for 25 years from 3 March 2011 with an option to extend for a further 25 years.

The Manica Gold Project is located in central Mozambique, approximately 270km by sealed highway from the port city of Beira on the Indian Ocean. The project is positioned in the Beira Corridor which contains major road and rail infrastructure linking Zimbabwe to Beira (Figure 1).

The area surrounding Manica is well known for hosting gold mines such as Penhalonga, Rezende, Monarch and Old West. An estimated 2 million ounces of gold has been extracted from the Rezende Mine and surrounding deposits. These are along strike extensions of the Manica Gold Project. The reefs in these

mines have typically been classified as porphyry mineralisation within

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Figure 1: Project location

quartz-diorites where gold is hosted in quartz veins. The reefs include Rezende, Penhalonga, King's Daughter, Liverpool, Kent, Violet, Elgin and Golden Gate. The gold and associated minerals were thought to be products of a magmatic product deep in the quartz-diorite stock.

Gold Resource

The 2011 Mineral Resource statement prepared by ExplorMine Consultants and audited by SRK Consulting is summarised in Table 1 below.

		Total Resources(JORC)	Total Resources(JORC)
	Category	Tons (000’)	Grade Au (g/t)	Gold (kg)	Gold (oz)
	Measured	11,561	1.73	19,978	642,000
	Indicated	12,945	1.77	22,959	740,000
	Inferred	26,028	1.89	49,345	1,589,000
	Total Manica Resource	50,534	1.83	92,282	2,971,000 oz
Table 1: Manica Gold Project Resource

Exploration Potential

Currently only 2km out of a potential total mineralised strike length of 27km along two shear zones has been explored. Historical exploration strategies have prioritised the delineation of known gold occurrences rather than the identification and development of new resources. This presents the Company with a highly prospective area within which it can perform future exploration.

==> picture [424 x 271] intentionally omitted <==

Figure 2: Manica Gold Project Prospects and Targets

The Northern Shear zone consists of the following prospects:

Guy Fawkes;
Vinganca; and
Boa Esperanza.

The Southern Shear consists of the following prospects:

Dot’s Luck;
Fair Bride; and
Try Again.

The Northern Shear passes through mineralisation at Guy Fawkes through to the Boa Esperanza prospect. The Company plans to primarily focus on the exploration of the Northern Shear as a potential source of substantial additional free milling gold whilst the initial exploration programme will concentrate on the identification of additional oxide material at the Guy Fawkes Prospect moving east towards Boa Esperanza.

The Southern Shear, which is the Manica Gold Project’s secondary exploration target zone, passes through the Dot’s Luck and Fair Bride mineralisation. At Dot’s Luck, there is free gold in the oxidised zone and sulphide-hosted gold at depth. At Fair Bride, the most advanced target, a combined measured, indicated and inferred resource of 2.66Moz of gold at a grade of ~1.8 g/t has been delineated. The Fair Bride project is primarily comprised of sulphide material and it is anticipated that additional mineralisation within the Southern Shear will have similar characteristics.

Fair Bride Prospect – Resource
Category Tons (000’) Grade Au (g/t) Oxide (oz) Sulphide (oz)	Total (oz)
Measured 11,561 1.73 77 566,000	642,000
Indicated 10,795 1.64 11 559,000	570,000
Inferred 24,598 1.83 2 1,447,000	1,449,000
Total Fair Bride Resource 46,954 1.83 90,000 2,572,000	2,661,000 oz

Table 2: Fair Bride Prospect Resource

The 12 month exploration plan commencing Q1 2013 provides for:

detailed infill geological mapping and soil geochemical sampling;
airborne electromagnetic and magnetic gradient surveys of the whole property;
identification and prioritisation of targets generated by the geophysical, geochemical and geological mapping and interpretation exercises;
drilling and/or trenching of prioritised targets;
revision of existing JORC code compliant resource statements;
metallurgical test work on oxide and transitional ore; and
testing of oxide material in Target 1 on the Northern Shear (Figure 2).

Historical Data

The Project has an extensive historical database which includes digital borehole data, geological mapping and sections. An extensive 3D geostatistical database including 3D structural models have been compiled.

Several phases of exploration work have been undertaken at the Manica Gold Project which has historically been divided into two prospective areas:

Northern Shear zone (Guy Fawkes, Vinganca and Boa Esperanza Prospects); and
Southern Shear zone (Dot’s Luck, Try Again and Fair Bride Prospects).

Table 3 (below) details the historical test work undertaken on these areas.

	Exploration Work	Area
2001	Soil geochemical survey and geological mapping (surface & underground)	South Portion of Project area
2002	RC drilling of 2,270m	Fair Bride and Try Again prospects
2003	IP survey covering 8km2	Fair Bride- Dot’s Luck target zone
	IP survey covering 7 km2	Boa Esperanza prospect
	RC drill programme of 3,102m	Fair Bride prospect
2004	RC drilling of 1,358m	Fair Bride – Dot’s Luck target zone
	Diamond borehole drilling of 1,759m	8 holes at Fair Bride – Dot’s Luck target zone 2 holes at the Guy Fawkes prospect
2005	RC drilling of 1,514m	Fair Bride prospect
	Dipole- Dipole IP survey	Fair Bride prospect

2006	Diamond borehole drilling of 584.85m plus 4 large diameter holes	Fair Bride prospect
	Detailed 1:2,000 geological mapping	Fair Bride, Dot’s Luck, Boa Esperanza and Guy Fawkes prospects
	Interpretation of the 2005 Dipole-Dipole survey	Fair Bride prospect
	Channel-sampling of historical adits, pits and trenches	Dot’s Luck
2007 – 2008	Diamond drilling of 759m	Fair Bride and Dot’s Luck prospects
	RC drilling of 2,264m	Fair Bride and Dot’s Luck prospects
	Diamond drilling of 576m	Guy Fawkes Prospect
	RC drilling of 3,455m	Guy Fawkes Prospect

Table 3: Historical Exploration Work

Further information in respect of the Acquisition is contained in the Company's ASX announcement dated 29 August 2012.

Competent Person Statement

The information in this report that relates to Mineral Resources and exploration results is based on information reviewed by Dr W.D. Northrop who is a consultant to ExplorMine and is appointed as an independent geologist to the Company’s project team. He is registered by the South African Council for Natural Scientific Professions as a Professional Natural Scientist in the field of practice of Geological Science, Registration Number 400164/87, and as such is considered to be a Competent Person. Dr Northrop has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Dr Northrop consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

3.3 Capital Raising and Use of Funds

The Company intends to undertake a placement of up to 26,666,667 Shares each at an issue price of $0.30 to raise a minimum of $5,000,000 (being 16,666,667 Shares) and a maximum of $8,000,000 to fund initial working capital on the Manica Project pursuant to a prospectus to be issued by the Company (refer to Section 4.2 for further details). Resolution 3 seeks Shareholder approval for this placement (refer to Section 5 for further details).

The Company intends to use the existing working capital of the Company and funds raised by the Capital Raising as follows:

	Amount ($)
Existing Cash	3,350,000
Capital Raising	5,000,000
Total Cash	8,350,000
ExplorationandProjectDevelopment	5,075,000
Administration	925,000

ConsiderationCash	2,000,000
Costs ofthe Offer	350,000
Total Expenditure	8,350,000

3.4 Commercial Terms

On 28 August 2012 the Company and its wholly owned subsidiary, Auroch Minerals, entered into the Sale Agreement with Pan African ( Sale Agreement ) to acquire the Manica Gold Project by the acquisition of Explorator Limitada and Mistral for consideration as follows:

(a) 25,000,000 Shares to be issued to Pan African (or as directed by Pan African) ( Consideration Shares );
(b) $2,000,000 cash to Pan African ( Consideration Cash );
(c) Deferred consideration of:
(i) 20,066,667 Shares to be issued to Pan African (or as directed by Pan African) upon the delineation of at least 400,000 ounces of a JORC Inferred gold Resource of Oxide Ore with a cut off grade of 1.25g/t being defined on the Mining Concession (including the existing 90,000 ounces of JORC Inferred gold Resource of Oxide Ore at a cut off grade of 1.25g/t that has already been delineated on the Mining Concession);
(ii) 20,066,667 Shares to be issued to Pan African (or as directed by Pan African) upon the delineation of at least 1,000,000 ounces of a JORC Inferred gold Resource of Oxide Ore with a cut off grade of 1.25g/t being defined on the Mining Concession (including the existing 90,000 ounces of JORC Inferred gold Resource of Oxide Ore at a cut off grade of 1.25g/t that has already been delineated on the Mining Concession and any ounces of JORC Inferred gold Resource of Oxide Ore that satisfied the 400koz Milestone);
(iii) 24,366,667 Shares to be issued to Pan African (or as directed by Pan African) upon completion of a positive Bankable Feasibility Study ( BFS ) on either the oxide or sulphide ore on the Mining Concession which recommends the construction of a mine with at least a ten year life and production scope of 50,000 ounces per annum and at any time after completion of the BFS the Board of TNV elects to commence construction of the mine as recommended in the BFS and has financing arranged for the construction of the mine or at the Company’s election $7,310,000 in cash, paid as directed by Pan African; and
(iv) 7,166,667 Shares to be issued to Pan African (or as directed by Pan African) upon production of either oxide or sulphide ore at the plant constructed by Explorator Limitada to process ore from the Mining Concession at the capacity specified in the Bankable Feasibility Study, or at the Company’s election, $2,150,000 in cash, paid as directed by Pan African; and

( Deferred Consideration Shares )

(d) Deferred consideration of:
(i) $1,000,000 to Pan African upon achievement of the 400koz Milestone;
(ii) $1,000,000 to Pan African upon achievement of the 1,000koz Milestone;
(iii) $1,000,000 to Pan African upon achievement of the BFS Milestone;
(iv) $1,000,000 to Pan African upon achievement of the Capacity Milestone.

( Deferred Consideration ).

Resolution 1 seeks Shareholder approval for the:

(a) issue of the Consideration Shares; and
(b) issue of the Deferred Consideration Shares.

Refer to Section 4 for further details.

The Acquisition is conditional upon, and subject to, a number of conditions. These conditions have either been satisfied or substantially satisfied, with the exception of the following conditions which remain outstanding at the date of this Notice:

(a) the Company obtaining all necessary regulatory and shareholder approvals required in relation to the Acquisition including re-compliance with Chapters 1 and 2 of the Listing Rules;
(b) completion of the Capital Raising; and
(c) Dean Cunningham confirming he will assume the role of Chief Executive Officer upon Completion.

There were additional conditions in the Sale Agreement that have been satisfied prior to the date of this Notice.

The Sale Agreement includes standard commercial warranties that are usual for a transaction of this type including warranties from Pan African in respect of Mistral, Explorator Limitada and the title and standing of the Manica Gold Project. Pan African is responsible for the management and development of the Manica Gold Project prior to Completion.

Pan African has acknowledged that some or all of the Consideration Shares may be escrowed in accordance with the requirements of ASX. The Company has confirmed with the ASX that the Consideration Shares to be issued to Pan African or its nominee will be subject to ASX imposed escrow.

3.5 Corporate Structure

The corporate structure of the Company on Completion will be as follows:

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3.6 Information on the Company and its existing Projects

The Company was admitted to the Official List of the ASX on 1 September 2011. Since listing, the Company has initiated the expenditure programme detailed in the prospectus for the initial public offer of its Shares. Following completion of the Acquisition, the Company intends to focus on the Manica Gold Project and will conduct a strategic review in order to maximize the possible value from its existing gold projects which may include continuing with the exploration programmes on the projects (in a scaled down manner) and seeking farm-outs or disposal of the assets which will be determined following the Company’s strategic review of these assets.

If the Acquisition is not approved by Shareholders, then the Company will continue with its existing gold projects as previously contemplated.

3.7 Effect of the Acquisition on the Company

(a) Capital Structure

Below is a table showing the Company’s current capital structure and the possible capital structure on completion of the Placement (assuming $5 million is raised), Completion and upon issue of the maximum possible Deferred Consideration Shares and assuming no further capital raising and none of the Partly Paid Shares are paid in full prior to the date that all of the Deferred Consideration Shares have been issued.

	Shares	Partly Paid Shares
Balance at the date of this	23,000,001	19,800,000
Notice
Balance following completion of	39,666,668(1)	19,800,000
the Placement
Balance following Completion	64,666,668	19,800,000
of the Acquisition
Balance following issue of the	136,333,336(2)	19,800,000
Deferred Consideration Shares

(1) Assumes 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. May include up to an additional 10,000,000 Shares if $8,000,000 is raised under the Placement.
(2) Assumes all of the Deferred Consideration Shares are issued prior to the expiry date.

The table above shows the possible capital structure of the Company that will give Pan African the maximum voting power. For details of other scenarios possible as a result of various combinations of Shares to be issued under the Placement, if existing Partly Paid Shares are paid in full, and if various combinations of the Deferred Consideration Shares are issued refer to page 19 of the Independent Expert’s Report.

(b)
Pro Forma Balance Sheet following the Acquisition

Set out below is an unaudited consolidated statement of financial position (balance sheet) of the Company as at 30 June 2012, adjusted for administration and exploration costs expenses for the period 1 July 2012 to 31 October 2012 estimated at $250,000 each along with a pro-forma consolidated statement of financial position following completion of the Acquisition and assuming the following:

(i) 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement and allowing for costs of the Placement of $300,000;
(ii) Completion of the Acquisition with issue of the Consideration Shares at a market based issue share price of $0.30 and a deemed market value $7,500,000;
(iii) The payment of an estimated $100,000 indirect costs relating to the Acquisition and preparation of this Notice and which have all been expensed; and

(iv) AUS/US$ exchange rate of 1 for 1.

Current Assets Cash Receivables/prepayments Non Current Assets Plant and equipment Capitalised exploration costs Total Assets Current Liabilities Trade and other payables Employee entitlements Total Current Liabilities Total liabilities Net Assets Equity Issued capital Reserves Accumulated losses Net Equity	Terranova (as adjusted) 30 June 2012 $000’s Terranova Consolidated Pro-forma 30 June 2012 $000’s 3,242 5,842 42 42
	3,284 5,884
	- - 193 9,693
	193 9,693
	3,477 15,577
	56 56 - -
	56 56
	56 56
	3,421 15,521
	4,417 16,617 - - (996) (1,096)
	3,421 15,521

(i) Ordinary Shares

At a general meeting of shareholders or classes or shareholders each shareholder entitled to vote may vote in person or by proxy, attorney or representative. On a poll every person present who holds ordinary Shares or a proxy, attorney or representative of a holder of ordinary Shares shall, in respect of which he is appointed a proxy, attorney or representative, have one vote for the ordinary Share.

(ii) Partly Paid Shares

The holder of a Partly Paid Share will be entitled to exercise any vote attaching to a Partly Paid Share at general meetings of members in accordance with the Constitution. Under the Constitution, on a poll, Partly Paid Shares have a vote prorate to the proportion of the total issue price paid up. Amounts paid in advance of a call will be ignored when calculating the proportion. Each Partly Paid Share was issued at a price of $0.20 of which $0.01 was paid on issue. There have been no further payments on any Partly Paid Shares. Therefore each holder of Partly Paid Shares has one vote for every 20 Partly Paid Shares held.

(iii) Voting Power of Current Capital

The voting power of the Company’s current capital is shown in the table below.

Type of share	Number of shares	Aggregate voting power of type of share
Ordinary Shares	23,000,001	95.87%
Partly Paid Shares	19,800,000	4.13%

(d) Pan African Voting Power

Pan African does not currently hold any Shares in the Company.

The following table outlines the voting power of Pan African under various scenarios depending on whether the Deferred Consideration Shares have been issued.

In addition, Shanduka Gold (Pty) Limited, which holds approximately 25% of Pan African, will also be deemed to have the voting power set out below.

Event causing the Share issue	Number of Shares issued to Pan African	% of Share capital held by Pan African on issue of the Shares
Prior to Completion of the Acquisition	Nil	0%
On Completion of the Acquisition and Placement	25,000,000	38.08%(1)(2)
On achievement of the Milestones prior to the expiry date of the Deferred Consideration Shares (assuming no further capital raisings)	96,666,668(3)	70.39%(4)(5)

(1) Assumes 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 33.04%
(2) Assumes that none of the Partly Paid Shares are paid in full. If the Partly Paid Shares are paid in full then Pan African’s voting power will be 29.60% assuming 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If the Partly Paid Shares are paid in full and 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 26.46%.
(3) Assumes all of the Deferred Consideration Shares are issued to Pan African prior to the expiry date. On achievement of the BFS Milestone and Capacity Milestone the Company may elect to pay cash rather than issuing Shares. If the Company elects to pay cash then Pan African will be issued 40,133,334 Deferred Consideration Shares.
(4) Assumes 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 65.62%
(5) Assumes that none of the Partly Paid Shares are paid in full. If the Partly Paid Shares are paid in full then Pan African’s voting power will be 61.91% assuming 16,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $5,000,000 under the Placement. If the Partly Paid

Shares are paid in full and 26,666,667 Shares are allotted and issued each at an issue price of $0.30 to raise $8,000,000 under the Placement then Pan African’s voting power will be 58.19%.

As a consequence of Pan African’s voting power in the Company on Completion of the Acquisition, the Company will need Shareholder approval to complete the Acquisition. Specifically, Shareholder approval is required pursuant to Item 7 of section 611 of the Corporations Act because the Acquisition will result in Pan African acquiring ownership of more than 20% of the issued share capital of the Company.

(e) Pan African’s Voting Power Increase/Decrease

Pan African’s voting power in the Company may change as follows:

(i) Increase in Pan African’s voting power:
(A) Acquisition of Shares by Pan African on and off market. Pan African could increase its Shareholding under the creep provisions of the Corporations Act allowing it to acquire 3% every 6 months.
(B) Cancellation of Shares held by Shareholders other than Pan African.
(ii) Decrease in Pan African’s voting power:
(A) Disposal of Shares held by Pan African.
(B) Issue of Shares by the Company to Shareholders other than Pan African.
(C) Issue of a proportion of Deferred Consideration Shares rather than all of the Deferred Consideration Shares.
(D) Payment in full of the Partly Paid Shares by the holders of the Partly Paid Shares.

3.8 Advantages of the Acquisition

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder's decision on how to vote on Resolution 1. Refer to sections 9.2 – 9.8 of the Independent Expert’s Report for further advantages:

(a) If the Acquisition is approved, Shareholders will be exposed to the potential upside from the Mining Concession.
(b) The Company will be able to increase its value if it is able to achieve exploration success in gold from the Manica Gold Project.
(c) The Company’s ability to raise funds and attract expertise will be improved.
(d) The Acquisition may encourage new investors in the Company because the Company is acquiring a new project. This improvement in the attractiveness of an investment in the Company may lead to an increased liquidity of Shares and greater trading depth than currently experienced by Shareholders.
(e) Shareholders may be exposed to further debt and equity opportunities that they did not have prior to the Acquisition.

3.9 Disadvantages of the Acquisition

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder's decision on how to vote of Resolution 1. Refer to sections 9.9 – 9.13 of the Independent Expert’s Report for further disadvantages:

(a) Should the Acquisition be completed, the Company's Shareholders will have their voting power reduced. As such, the ability of the existing Shareholders to influence decisions, including the composition of the Board or the acquisition or disposal of assets will be reduced accordingly.
(b) Following the issue of the Shares as the consideration under the Sale Agreement, Pan African will become the largest shareholder of the Company. In this scenario, Pan African may have the ability to significantly influence or control the Company.
(c) The Company will be exposed to the risks associated with the Manica Gold Project (refer to Section 3.11 for further information).

3.10 Timetable

An indicative timetable for the completion of the Acquisition, preparation of the Prospectus, the Placement and re-compliance with Chapters 1 and 2 of the Listing Rules.

Event	Date*
Lodgment of the Prospectus	19 October 2012
Opening of the offer of the Placement Shares pursuant to the Prospectus	19 October 2012
Shareholder Meeting (Shares suspended from trading on ASX)	25 October 2012
Closing of the offer of the Placement Shares pursuant to the Prospectus	25 October 2012
Re-compliance with ASX Listing Rules	26 October 2012 – 7 November 2012
Completion and allotment of the Placement Shares pursuant to the Prospectus	7 November 2012
Despatch of holding statements	7 November 2012
Expected date of Reinstatement to trading on ASX	12 November 2012

*Dates in the above table are indicative only.

3.11 Risk Factors

The Company has undertaken the requisite due diligence process (including title, legal, technical and other risks). While this process is undertaken to identify any material risks specific to Mistral Resource Development Corporation, Explorator Limitada and the Manica Gold Project, it should be noted that the usual risks associated with companies with a small

market capitalisation undertaking exploration and development activities of large scale projects in the gold sector are expected to remain after the completion of due diligence.

Shareholders and investors should also be aware that the Sale Agreement to acquire Mistral Resource Development Corporation and Explorator Limitada is conditional on a number of events (refer to Section 3.4 above). Accordingly there is a risk that the Acquisition may not be completed.

Investing in a company involves risks of various kinds, some of which are within the realms of influence of the Company and some, arising from external factors, which may be beyond the control of the Company. A summary of the risks associated with the Acquisition and ongoing exploration and development of the Manica Gold Project are outlined in Schedule 1.

3.12 Independent Expert's Report

The Directors resolved to appoint Stantons International Securities as an independent expert and commissioned it to prepare a report to provide an opinion as to whether or not the proposal in Resolution 1 is fair and reasonable to the existing Shareholders.

What is fair and reasonable must be judged by the independent expert in all the circumstances of the proposal. This requires taking into account the likely advantages to Shareholders if the proposal is approved and comparing them with the disadvantages to them if the proposal is not approved.

Stantons International Securities has concluded that the proposed Acquisition is fair and reasonable to the existing Shareholders.

The Company strongly recommends that you read the Independent Expert's Report in full, a copy of which is in Annexure A to this Explanatory Memorandum.

3.13 Section 611 Corporations Act

(a) Section 606 of the Corporations Act prohibits a person acquiring a relevant interest in the issued voting shares of the Company if, because of the acquisition, that person’s or another person’s voting power in the Company increases from:
(i) 20% or below to more than 20%; or
(ii) a starting point that is above 20% and below 90%.
(b) The voting power of a person in the Company is determined by reference to section 610 of the Corporations Act. A person’s voting power in the Company is the total of the votes attaching to the Shares in the Company in which that person and that person’s associates (within the meaning of the Corporations Act) have a relevant interest.
(c) Under section 608 of the Corporations Act, a person will have a relevant interest in Shares if:
(i) the person is the registered holder of the Shares;
(ii) the person has the power to exercise or control the exercise of votes or disposal of the Shares; or

(iii) the person has over 20% of the voting power in a company that has a relevant interest in Shares, then the person has a relevant interest in said Shares.
(d) For the purpose of determining who is an associate you need to consider section 12 of the Corporations Act. Any reference in chapters 6 to 6C of the Corporations Act to an associate is as that term is defined in section 12. The definition of 'associate' in section 12 is exclusive. If a person is an associate under section 11, 13 or 15 of the Corporations Act then it does not apply to chapters 6 to 6C. A person is only an associate for the purpose of chapter 6 to 6C if he is an associate under section 12.
(e) A person (second person) will be an associate of the other person (first person) if:
(i) the first person is a body corporate and the second person is:
- (A) A body corporate the first person controls;
- (B) A body corporate that controls the first person: or
- (C) A body corporate that is controlled by an entity that controls the first person;
(ii) the second person has entered, or proposes to enter into, a relevant agreement with the first person for the purpose of controlling or influencing the composition of the board of a body corporate or the conduct of the affairs of a body corporate; and
(iii) the second person is a person with whom the first person is acting or proposes to act, in concert in relation to the affairs of a body corporate.
(f) The Corporations Act defines 'control' and 'relevant agreement' very broadly as follows:
(i) Under section 50AA of the Corporations Act control means the capacity to determine the outcome of decisions about the financial and operating policies of the Company. In determining the capacity you need to take into account the practical influence a person can exert and any practice or pattern of behaviour affecting the financial or operating policies of the Company.
(ii) Under section 9 of the Corporations Act relevant agreement means an agreement, arrangement or understanding:
- (A) whether formal or informal or partly informal and partly informal;
- (B) whether written or oral or partly written and partly oral; and
- (C) whether or not having legal or equitable force and whether or not based on legal or equitable rights.
(g) Associates are determined as a matter of fact. For example where a person controls or influences the Board or the conduct of the Company’s business affairs, or acts in concert with a person in relation to the entity’s business affairs.

(h) Section 611 of the Corporations Act has exceptions to the prohibition in section 606 of the Corporations Act. Item 7 of section 611 of the Corporations Act provides a mechanism by which Shareholders may approve an issue of Shares to a person which results in that person’s or another person’s voting power in the Company increasing from:
(i) 20% or below to more than 20%; or
(ii) a starting point that is above 20% and below 90%.
(i) To comply with the requirements of the Corporations Act (as contained in ASIC Regulatory Guide 74), the Company provides the information in Section 4 of the Explanatory Memorandum to Shareholders in relation to Resolution 1.

3.14 Directors’ Recommendation

Based on the information available, including:

(a) the information contained in this Explanatory Memorandum; and
(b) the Independent Expert's Report in Annexure A,

the Directors consider that Resolution 1 is fair and reasonable insofar as shareholders are concerned in the best interests of the Company and recommend that Shareholders vote in favour of Resolution 1.

Each of the Directors voted for the proposal to be put to Shareholders.

Each of the Directors who holds Shares in the Company (or whose associated entities hold Shares) and is entitled to vote will vote their Shares in favour of the Acquisition.

Other than as set out below, the Directors do not have any material personal interest in the outcome of the Resolution other than their interests arising solely in their capacity as Shareholders of the Company.

4. Resolution 1 – Approval of Acquisition of Manica Gold Project

4.1 General

Resolution 1 seeks:

(a) Shareholder approval under Chapter 11 of the Listing Rules to the Company changing the scale of its activities; and
(b) Shareholder approval under item 7 of section 611 of the Corporations Act to issue securities exceeding 20% of the Company’s fully diluted share capital to a party.

A company is not required to obtain Shareholder approval under Listing Rule 7.1 where Shareholder approval is granted under item 7 of section 611 of the Corporations Act. Accordingly, Shareholder approval to issue the Consideration Shares to Pan African is not required pursuant to Listing Rule 7.2 exception 16.

Resolution 1 is an ordinary resolution. Resolution 1 is subject to the approval of Resolutions 2 and 3.

4.2 Chapter 11 Approval

Chapter 11 of the Listing Rules requires Shareholder approval of any significant change in the nature or scale of the Company's activities. The acquisition of the Manica Gold Project by the Company will have the effect of increasing the scale of the Company's activities. As a result, pursuant to Chapter 11 of the Listing Rules, the Company is required to:

(a) notify ASX of the proposed change;
(b) obtain Shareholder approval of the Acquisition;
(c) re-comply with the admission requirements of Chapters 1 and 2 of the Listing Rules as if the Company were applying for admission to the official list of ASX , if required by the ASX. The ASX has confirmed that the Company will need to comply with the requirements of Chapters 1 and 2 of the Listing Rules. The Company proposes to prepare a prospectus ( Prospectus ) and complete the Placement (refer to Section 5 for further details) to meet the requirements of the re-compliance.

Resolution 1 seeks Shareholder approval to allow the Company to complete the Acquisition thereby increasing the scale of its activities (not its nature).

See Section 3 of this Explanatory Memorandum for further information on the Acquisition and the likely effect that the Acquisition will have on the Company.

As announced by the Company on 21 September 2012, the ASX has granted the Company a waiver from Listing Rule 7.3.2 to the extent necessary for the Company to issue the Deferred Consideration Shares more than three months after the date of the Meeting, provided that the Deferred Consideration Shares are issued no later than four years from the date of the Meeting.

A voting exclusion is included in the Notice.

4.3 Information required by item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74

The information that Shareholders require under item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74 is as follows:

(a) The identity of Pan African and any person who will have a relevant interest in the Consideration Shares to be allotted to Pan African

Pan African is a public company incorporated in England and Wales and listed on the AIM Market of the London Stock Exchange and the Johannesburg Stock Exchange.

Shanduka Gold (Pty) Limited has a relevant interest in the Consideration Shares to be allotted to the Vendor because it holds approximately 25% of Pan African.

(b) Full particulars (including the number and percentage) of the shares in the Company to which Pan African will be entitled immediately before and after the acquisition

Pan African does not hold any Shares in the Company prior to Completion of the Acquisition.

Refer to Section 3.5 for full particulars (including the number and percentage) of the Shares in which Pan African and Shanduka Gold (Pty) Limited will have a relevant interest in immediately before and after completion of the Acquisition and after issue of the Deferred Consideration Shares (assuming all of the Deferred Consideration Shares are issued).

(c) The identity, associations (with the Company, Pan African or any of their associates) and qualifications of any person who is intended to become a director if Shareholders agree to the acquisition

Pan African has nominated Jan Nelson and Dean Cunningham be appointed to the Board of the Company. Shareholder approval of these appointments is being sought pursuant to Resolutions 4 and 6. Refer to Section 8 for information on the qualifications of each of these nominees.

(d) Pan African’s intentions regarding the future of the Company if Shareholders agree to the Acquisition and the allotment of the Consideration Shares and Deferred Consideration Shares in consideration for the Acquisition

Pan African will be a Shareholder in the Company following Completion of the Acquisition and:

(i) other than as set out in Section 3, there is no intention to change the business of the Company;
(ii) there is no intention to inject further capital into the Company (other than as disclosed in this Notice);
(iii) there is no intention to change the future employment of the present employees of the Company;
(iv) there is no proposal whereby any property will be transferred between the Company, Pan African or any parties associated with Pan African; and
(v) there is no intention to otherwise redeploy any of the fixed assets of the Company.
(e) Particulars of the terms of the proposed allotment of Shares and any contract or proposed contract between Pan African and the Company or any of their associates which is conditional upon, or directly or indirectly dependent on, Shareholders agreement to the allotment of Shares to Pan African in consideration of the acquisition

Other than the Sale Agreement there are no contracts or proposed contracts between Pan African and the Company or any of their associates which are conditional upon, or directly or indirectly dependent on, Shareholders agreement to the allotment of the Consideration Shares and Deferred Consideration Shares to Pan African in consideration of the Acquisition.

(f) When the allotment of Shares to Pan African as consideration under the Sale Agreement is to be made

The Consideration Shares and Deferred Consideration Shares will be issued to Pan African on Completion of the Acquisition. Completion is expected to occur shortly after approval of the Acquisition by Shareholders.

(g) An explanation of the reasons for the proposed allotment of the Consideration Shares and Deferred Consideration Shares to Pan African

The Consideration Shares and Deferred Consideration Shares will be issued to Pan African on Completion as part of the consideration for the Acquisition.

(h) The interests of the Directors in Resolution 1

None of the Directors have an interest in Resolution 1.

(i) Identity of the Directors who approved or voted against the proposal to put Resolution 1 to Shareholders and the Explanatory Memorandum

All of the Directors approved the proposal to put Resolution 1 to Shareholders.

(j) Any intention of Pan African to change significantly the financial or dividend policies of the Company

Pan African does not intend to change significantly the financial or dividend policies of the Company at this time.

(k) Recommendation or otherwise of each Director as to whether Shareholders should agree to the proposed allotment and the reasons for the recommendation or otherwise

Refer to section 3.14 of this Explanatory Memorandum.

(l) An analysis of whether the proposed allotment of Consideration Shares and Deferred Consideration Shares to Pan African in consideration of the Acquisition is fair and reasonable when considered in the context of the interests of the Shareholders other than Pan African.

Refer to section 3.12 of this Explanatory Memorandum.

5. Resolution 2 – Authority to Issue Placement Shares

Resolution 2 seeks Shareholder approval pursuant to Listing Rule 7.1 for the allotment and issue of the Placement Shares each at an issue price of $0.30.

The Company intends to undertake a placement pursuant to the Prospectus of up to 26,666,667 Shares each at an issue price of $0.30 to raise a minimum of $5,000,000 (being 16,666,667 Shares) and a maximum of $8,000,000 to fund initial working capital on the Manica Project.

Obtaining Shareholder approval of the issue of the Placement Shares means that this issue will not reduce the Company's 15% placement capacity under Listing Rule 7.1 should the Company undertake the Placement.

Resolution 2 is an ordinary resolution and is subject to the passing of Resolution 1.

5.1 Specific information required by Listing Rule 7.3

For the purposes of Listing Rule 7.3 information regarding the issue of the Placement Shares is provided as follows:

(a) The maximum number of Shares the Company intends to issue under Resolution 2 is 26,666,667.
(b) The Company will issue and allot the Placement Shares no later than three months after the date of the Meeting (or such longer period of time as ASX may in its discretion allow).
(c) The Placement Shares will be issued at an issue price of $0.30.
(d) The Placement Shares will be issued to sophisticated and professional investors who are not related parties of the Company.
(e) The Shares to be issued are fully paid ordinary shares and will rank equally in all respects with the Company’s existing Shares on issue.
(f) The funds raised from the Placement will be used to fund the Acquisition and provide working capital to be used as specified in Section 3.3.
(g) The Placement Shares will be allotted progressively.
(h) A voting exclusion statement is included in the Notice.

6. Resolution 3 – Change of Company Name

As part of the Acquisition, the Directors have determined to change the Company name to Auroch Minerals NL. Resolution 3 seeks Shareholder approval for the change of name in accordance with section 157 of the Corporations Act.

Resolution 3 is a special resolution.

If the proposed change of name is available, that change of name will take effect from when ASIC alters the details of the Company’s registration.

7. Resolutions 4, 5 and 6 – Appointment of Directors

7.1 Background

Pan African has nominated Jan Nelson and Dean Cunningham as its nominees to be appointed as Directors. Glenn Whiddon has also nominated to be appointed as a Director. The existing Directors of the Company will retire from the Board following Completion.

Article 13.3 of the Constitution provides that the Company in general meeting may by ordinary resolution appoint any person as a Director provided that the person or some Shareholder intending to propose his or her nomination has, at least 30 Business Days before the meeting, left at the Registered Office a notice in writing duly signed by the nominee giving his or her consent to the nomination and signifying his or her candidature for the office or the intention of the Shareholder to propose the person and this notice is given to each Shareholder as part of the notice of meeting at which the election is to take place.

Accordingly, Jan Nelson, Glenn Whiddon and Dean Cunningham seek approval to be appointed as Directors with effect from Completion of the Acquisition.

7.2 Candidate Director’s Profile – Jan Nelson (Resolution 4)

Mr Nelson will be a Non-Executive Director. Mr Nelson is currently the Chief Executive Officer of Pan African, whose South African based precious metals mining operations produce approximately 95,000 ounces of gold and 12,000 ounces of PGM per annum. Mr Nelson holds an honours degree in geology and has over 15 years’ experience. He has held positions in mine management and operations with Harmony Gold Mining Company Limited, Hunter Dickenson and Gold Fields Limited.

7.3 Candidate Director’s Profile – Glenn Whiddon (Resolution 5)

Mr Whiddon will be a Non-Executive Chairman. Mr Whiddon has a background in banking and corporate advisory, working for the Bank of New York in Sydney, Melbourne, Geneva and Moscow. In 1994 he established a boutique merchant bank in Moscow, providing corporate advice and undertaking direct investments. Mr Whiddon is currently Non-Executive Chairman of ZYL Limited (ASX:ZYL), Non-Executive Director of Agri Energy Limited (ASX:AAE) and is a director of Statesman Resources Limited (TSX-V:SRR).

7.4 Candidate Director’s Profile – Dean Cunningham (Resolution 6)

Mr Cunningham will be appointed as Executive Director and Chief Executive Officer of the Company. Mr Cunningham is a Mining Engineer and Corporate Financier with 25 years’ experience. Mr Cunningham is currently the Executive Director, Corporate Finance for Basil Read where he is responsible for the acquisition activity, in conjunction with capital raisings and investor relations. He simultaneously held the position of Chief Executive Officer at TWP Investments, the investment arm of TWP Holdings, a mining, processing and energy consultancy company based in South Africa, Peru and Australia. Mr Cunningham has first-hand working knowledge of the Manica Gold Project having been mandated by Pan African Resources to evaluate options for the advancement of the Project over the past two years.

8. Definitions

$ means Australian Dollars.

1,000koz Milestone means delineation of at least 1,000,000 ounces of a JORC Inferred gold Resource of Oxide Ore with a cut off grade of 1.25g/t being defined on the Mining Concession (including the existing 90,000 ounces of JORC Inferred gold Resource of Oxide Ore at a cut off grade of 1.25g/t that has already been delineated on the Mining Concession and any ounces of JORC Inferred gold Resource of Oxide Ore that satisfied the 400koz Milestone).

400koz Milestone means delineation of at least 400,000 ounces of a JORC Inferred gold Resource of Oxide Ore with a cut off grade of 1.25g/t being defined on the Mining Concession (including the existing 90,000 ounces of JORC Inferred gold Resource of Oxide Ore at a cut off grade of 1.25g/t that has already been delineated on the Mining Concession).

Acquisition has the meaning in Resolution 1.

Article means an article of the Constitution.

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) and, where the context permits, the Australian Securities Exchange operated by ASX.

Auroch Minerals means Auroch Minerals Mozambique Pty Ltd (ACN 159 952 084).

Bankable Feasibility Study means a formal technical, resource and project development study which assesses the viability of developing and mining a deposit identified within the area comprising the Mining Concession upon which a decision to mine is based, prepared in accordance with best practice industry standards.

BFS Milestone means completion of a positive Bankable Feasibility Study on either the oxide or sulphide ore on the Mining Concession which recommends the construction of a mine with at least a ten year life and production scope of 50,000 ounces per annum and at any time after completion of the Bankable Feasibility Study the Board of TNV elects to commence construction of the mine as recommended in the Bankable Feasibility Study and has financing arranged for the construction of the mine.

Board means the board of Directors.

Capacity Milestone means production of either oxide or sulphide ore at the plant constructed by Explorator Limitada to process ore from the Mining Concession at the capacity specified in the Bankable Feasibility Study.

Capital Raising means the Company completing a capital raising of at least $5,000,000 at a price per Share as agreed to by Pan African and the Company, being not less than $0.30 per Share.

Chairman means the chairman of this Meeting.

Closely Related Party has the meaning in section 9 of the Corporations Act.

Completion means the completion of the sale and purchase of the Explorator Limitada and Mistral in accordance with the Sale Agreement.

Consideration Cash has the meaning in Section 3.4(b).

Consideration Shares has the meaning in Section 3.4(a).

Constitution means the current constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Deferred Consideration has the meaning in Section 3.4(d).

Deferred Consideration Shares has the meaning in Section 3.4(c).

Director means a director of the Company.

Explanatory Memorandum means the explanatory memorandum attached to the Notice.

Explorator Limitada means Explorator Limitada, a company incorporated in Mozambique registered in “Conservatoria dos Registos e Notariado do Chimoio, Mozambique”, book C-3, page 160, under the number 416 owned by Mistral and Pan African which holds the gold exploration licence for the Manica property in Mozambique.

Independent Expert’s Report means the independent expert’s report prepared by Stantons International Securities in Annexure A of this Notice.

Key Management Personnel means a person having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company.

Listing Rules means the listing rules of ASX.

Manica Gold Project or Manica Project means the exploration and development of the Mining Concession by Explorata Limitada as described in section 3.2.

Meeting has the meaning in the introductory paragraph of the Notice.

Mining Act means the Mozambique Mining Law 14/2002, of 26 June 2002, and includes the regulations.

Mining Concession means:

(a) 3990C Concessao Mineira granted to Explorator;
(b) any other mining concession or mining concessions which may be granted in lieu or relate to the same ground as the mining concession referred to in paragraph (a); and
(c) includes all rights to mine and other privileges appurtenant to the mining concession referred to in paragraph (a).

Mistral means Mistral Resource Development Corporation, a company incorporated in the British Virgin Islands with registration number 552594.

Notice means this notice of meeting.

Option means an option to acquire a Share.

Oxide Ore means gold bearing oxide/transitional ore where gold recovery exceeds 80% of total contained gold by using the metallurgical processes of milling, gravity separation and/or cyanide leaching and the gold can be recovered for a cash operating cost of US$700/oz of gold or less.

Pan African means Pan African Resources Plc, a company incorporated in England and Wales with registration number 3937466.

Participant means an Employee who has accepted an Invitation to participate in the Auroch Share and Option Plan.

Partly Paid Share means a partly paid ordinary share in the capital of the Company.

Placement has the meaning in Resolution 2.

Placement Shares has the meaning in Resolution 2.

Prospectus has the meaning in Section 4.2.

Proxy Form means the proxy form attached to the Notice.

Resolution means a resolution contained in this Notice.

Sale Agreement means the share sale and purchase agreement between the Company, Auroch Minerals, Pan African and Mistral dated 28 August 2012.

Schedule means a schedule to this Notice.

Section means a section contained in this Explanatory Memorandum.

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

Shareholder means a shareholder of the Company.

Stantons International Securities means Stantons International Pty Ltd (trading as Stantons International Securities).

WST means Western Standard Time, being the time in Perth, Western Australia.

In this Notice, words importing the singular include the plural and vice versa.

Schedule 1 – Risk Factors of the Acquisition

1. Introduction

There are a number of risks associated with the Acquisition that may have an impact on the financial returns received by Shareholders. These risks are important for Shareholders to understand.

Shareholders are already exposed to a number of risks through their existing shareholding in the Company. A number of these risks are inherent in investing in securities generally and also inherent in any mining company such as that of the Company.

The risk factors include, but are not limited to, those detailed below. Additional risks not presently known to the Company, or if known, not considered material, may also have an adverse impact.

The Directors believe that the advantages of the Acquisition outweigh the associated extent of the risks.

2.

Risks specific to the Projects

(a) Country Risk

The Projects are based in Mozambique. Mozambique is a developing country with a multiparty democracy which has successfully evolved over the past into having established and expanding mining industries.

There are, however, risks attaching to exploration and mining operations in a developing country which are not necessarily present in a developed country. These include economic, social or political instability or change, hyperinflation, currency non-convertibility or instability and changes of law affecting foreign ownership, government participation, taxation, working conditions, rates of exchange, exchange control, exploration licensing, export duties as well as government control over mineral properties.

Any future material adverse changes in government policies or legislation in Mozambique that affect foreign ownership, mineral exploration, development or mining activities, may affect the viability and profitability of the Projects.

(b) Tenement Title

The Company’s mining exploration activities are dependent upon the grant, or as the case may be, the maintenance of appropriate licences, which may be withdrawn or made subject to limitations. The maintaining of tenements, obtaining renewals, or getting tenements granted, often depends on the Company being successful in obtaining required statutory approvals for its proposed activities and that the licences, concessions, leases, permits or consents it holds will be renewed as and when required. There is no assurance that such renewals will be given as a matter of course and there is no assurance that new conditions will not be imposed in connection therewith.

(c) Legal System in Mozambique

The legal system operating in Mozambique may be less developed than more established countries, which may result in risk such as:

(i) political difficulties in obtaining effective legal redress in the courts whether in respect of a breach of law or regulation, or in an ownership dispute;
(ii) a higher degree of discretion on the part of governmental agencies;
(iii) the lack of political or administrative guidance on implementing applicable rules and regulations;
(iv) inconsistencies or conflicts between and within various laws, regulations, decrees, orders and resolutions; or
(v) relative inexperience of the judiciary and court in such matter.

The commitment to local business people, government officials and agencies and the judicial system to abide by legal requirements and negotiated agreements may be more uncertain, creating particular concerns with respect to licences and agreements for business. These may be susceptible to revision or cancellation and legal redress may be uncertain or delayed. There can be no assurance joint ventures, licences, license application or other legal arrangements will not be adversely effected by the actions of the government authorities or others and the effectiveness of and enforcement of such arrangements cannot be assured.

(d) Significant Shareholder

Following completion of the Acquisition, Pan African will hold approximately 38% of the Shares, and be the Company’s largest shareholder. Consequently, Pan African may have the ability to influence the election of Directors, the appointment of new management and the potential outcome of all matters submitted to a vote of Shareholders. The interests of Pan African may differ from our interests and the interests of other Shareholders.

3. Mineral Industry Risks

(e) Exploration and Development Risks

The tenements are in the early stages of exploration and potential investors should understand that mineral exploration, development and mining are high-risk enterprises, only occasionally providing high rewards. In addition to the normal competition for prospective ground, and the high average costs of discovery of an economic deposit, factors such as demand for commodities, stock market fluctuations affecting access to new capital, sovereign risk, environmental issues, labour disruption, project financing difficulties, foreign currency fluctuations and technical problems all affect the ability of a company to profit from any discovery.

The quantities and grades included in the mineral resources stated in this notice are estimates and may not prove to be an accurate indication of the quantity or grade of gold that has been identified or that the Company will be able to extract. No assurance can be given that any particular level of recovery from mineral resources or reserved will in fact be realised or that an identified mineral resource will ever qualify as commercially viable which can be legally and economically exploited

There is no assurance that exploration of the mineral interests to be acquired pursuant to the Acquisition, or any other projects that may be acquired by the Company in the future, will result in the discovery of an economically viable mineral deposit. Even if an apparently viable mineral deposit is identified, there is no guarantee that it can be profitably exploited.

(f) Operational Risks

The operations of the Company following completion of the Acquisition may be affected by various factors including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration or mining, operational and technical difficulties encountered in mining, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment, fire, explosions and other incidents beyond the control of the Company.

These risks and hazards could also result in damage to, or destruction of, production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. While the Company currently intends to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that the Company will be able to obtain such insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims.

(g) Payment Obligations

Under the licences comprising the Projects the Company will become subject to payment and other obligations. In particular, licence holders are required to expend the funds necessary to meet the minimum work commitments attaching to the licences. Failure to meet these work commitments will render the licence liable to be cancelled. Further, if any contractual obligations are not complied with when due, in addition to any other remedies that may be available to other parties, this could result in dilution or forfeiture of the Company’s interest in the Projects.

(h) Commodity Price Volatility and Foreign Exchange Risk

In the event that the Company achieves exploration success leading to production, the revenue it will derive through the sale of commodities exposes the potential income of the Company to commodity price risks.

Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand for coal and/or uranium, forward selling by producers, and production cost levels in major metal-producing regions.

Moreover, commodity prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, the commodity as well as general global economic conditions. These factors may have an adverse effect on the Company’s exploration, development and production activities, as well as on its ability to fund those activities.

Furthermore, international prices of various commodities are denominated in United States Dollars and a portion of the Company’s capital expenditure and ongoing expenditure is denominated in either United States Dollars or Mozambiquen Metical, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States Dollar, the Mozambiquen Metical and the Australian Dollar as determined in international markets.

(i) Dependence on key personnel

The Company is reliant on a number of key personnel employed by the Company. Loss of such personnel may have a materially adverse impact on the performance of the Company. While there can be no assurance given as to the continued availability of such key personnel, the Company has put in place employment contracts and equity participation programs with senior executives.

(j) Environmental Risks

Gold mining is an industry that has become subject to increasing environmental responsibility and liability. The potential for liability is an ever present risk. Future legislation and regulations governing coal and/or uranium production may impose significant environmental obligations on the Company in relation to coal and/or uranium mining. The Company intends to conduct its activities in a responsible manner which minimises its impact on the environment, and in accordance with applicable laws.

The operations and proposed activities of the Company are subject to regulations concerning the environment. The Government and other authorities that administer and enforce environmental laws determine these requirements. As with all exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if mine development proceeds. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with applicable laws.

The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Company from being able to develop potentially economically viable mineral deposits.

Although the Company believes that it is in compliance in all material respects with all applicable environmental laws and regulations, there are certain risks inherent to its activities, such as accidental spills, leakages or other unforeseen circumstances, which could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations, which may be adopted in the future, including whether any such laws or regulations would materially increase the Company's cost of doing business or affect its operations in any area.

There can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Company to incur significant expenses and undertake significant investments in such respect which could have a material adverse effect on the Company's business, financial condition and results of operations.

4. General Risks

(k) Economic Risk

Changes in the general economic climate in which the Company will operate following completion of the Acquisition may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include the level of direct and indirect competition against the Company, industrial disruption and the rate of growth of gross domestic product in Australia and Mozambique and other jurisdictions in which the Company may acquire mineral assets

(l) Future Capital Needs and Additional Funding

The future capital requirements of the Company will depend on many factors including the results of future exploration and business development activities. The Company believes its available cash and resources following the Acquisition should be adequate to fund its exploration work program, business development activities and other Company objectives.

Should the Company require additional funding there can be no assurance that additional financing will be available on acceptable terms, or at all. Any inability to obtain additional finance, if required, would have a material adverse effect on the Company’s business and its financial condition and performance.

(m) Changes in Government Policies and Legislation

Any material adverse changes in government policies or legislation of Australia, Mozambique or any other country that the Company may acquire economic interests may affect the viability and profitability of the Company.

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PROXY FORM

THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCK BROKER OR LICENSED PROFESSIONAL ADVISOR.

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TERRANOVA MINERALS NL

REGISTERED OFFICE:

ABN: 91 148 966 545

Level 8 225 St Georges Terrace Perth WA 6000

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SHARE REGISTRY: Security Transfer Registrars Pty Ltd All Correspondence to: PO BOX 535, APPLECROSS WA 6953 AUSTRALIA 770 Canning Highway, APPLECROSS WA 6153 AUSTRALIA T: +61 8 9315 2333 F: +61 8 9315 2233 E: [email protected] W: www.securitytransfer.com.au

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Code: TNV Holder Number:

SECTION A: Appointment of Proxy

I/We, the above named, being registered holders of the Company and entitled to attend and vote hereby appoint:

OR

The meeting Chairperson The name of the person you are appointing (mark with an "X") (if this person is someone other than the Chairperson of the meeting).

or failing the person named, or if no person is named, the Chairperson of the Meeting, as my/our Proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the Proxy sees fit) at theGeneral Meeting of the Company to be held at 10.00am WST on 2 November 2012 at The Heritage Boardroom, The Melbourne Hotel, 942 Hay Street, Perth Western Australia and at any adjournment of that meeting.

SECTION B: Voting Directions to your Proxy

Please mark "X" in the box to indicate your voting directions to your Proxy.

Resolution

For Against Abstain*

Approval of Acquisition of Manica Gold Project.
Authority to Issue Placement Shares.
Change of Company Name.
Appointment of Jan Nelson as a Director.
Appointment of Glenn Whiddon as a Director.
Appointment of Dean Cunningham as a Director.

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If no directions are given my proxy may vote as the proxy thinks fit or may abstain.

If you mark the Abstain box for a particular item, you are directing your Proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

If you wish to appoint the Chairperson as your proxy and you do not wish to direct the Chairperson how to vote, please mark "X" in the box.

By marking this box, you acknowledge that the Chairperson may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him/her other than as a proxy holder will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution. The Chairperson of the Meeting intends to vote undirected proxies in favour of the resolution.

SECTION C: Please Sign Below

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Security Holder Security Holder 2 Security Holder 3 Sole Director and Sole Company Secretary Director Director / Company Secretary

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Reference Number:

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2321029818

TNV

My/Our contact details in case of enquiries are:

NAME

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TELEPHONE NUMBER ( )

NOTES

1. Name and Address

This is the name and address on the Share Register of TERRANOVA MINERALS NL. If this information is incorrect, please make corrections on this form. Shareholders sponsored by a broker should advise their broker of any changes. Please note that you cannot change ownership of your shares using this form.

2. Appointment of a Proxy

If you wish to appoint the Chairperson of the Meeting as your Proxy please mark "X" in the box in Section A. Please also refer to Section B of this proxy form and ensure you mark the box in that section if you wish to appoint the Chairperson as your Proxy.

If the person you wish to appoint as your Proxy is someone other than the Chairperson of the Meeting please write the name of that person in Section A. If you leave this section blank, or your named Proxy does not attend the meeting, the Chairperson of the Meeting will be your Proxy. A Proxy need not be a Shareholder of TERRANOVA MINERALS NL.

3. Directing your Proxy how to vote

To direct the Proxy how to vote place an "X" in the appropriate box against each item in Section B. Where more than one Proxy is to be appointed and the proxies are to vote differently, then two separate forms must be used to indicate voting intentions.

4. Appointment of a Second Proxy

You are entitled to appoint up to two (2) persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy form may be obtained by telephoning the Company's share registry +61 8 9315 2333 or you may photocopy this form.

To appoint a second Proxy you must:

(a) On each of the Proxy forms, state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each Proxy may exercise, each Proxy may exercise half of your votes; and
(b) Return both forms in the same envelope.

5. Signing Instructions Individual: where the holding is in one name, the Shareholder must sign.

Joint Holding: where the holding is in more than one name, all of the Shareholders must sign.

Power of Attorney: to sign under Power of Attorney you must have already lodged this document with the Company's share registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: where the Company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the Company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be lodged with the Company before the meeting or at the registration desk on the day of the meeting. A form of the certificate may be obtained from the Company's share registry.

6. Lodgement of Proxy

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than 10.00am WST on 31 October 2012, being 48 hours before the time for holding the meeting. Any Proxy form received after that time will not be valid for the scheduled meeting.

Security Transfer Registrars Pty Ltd PO BOX 535 Applecross, Western Australia 6953

Street Address: Alexandrea House, Suite 1 770 Canning Highway Applecross, Western Australia 6153

Telephone +61 8 9315 2333 Facsimile +61 8 9315 2233 Email [email protected]

PRIVACY STATEMENT

Personal information is collected on this form by Security Transfer Registrars Pty Ltd as the registrar for securities issuers for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal details may be disclosed to related bodies corporate, to external service providers such as mail and print providers, or as otherwise required or permitted by law. If you would like details of your personal information held by Security Transfer Registrars Pty Ltd or you would like to correct information that is inaccurate please contact them on the address on this form.

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9622029819

Annexure A – Independent Expert’s Report

PO Box 1908 West Perth WA 6872 Australia

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia

19 September 2012

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204 ABN: 41 84 144 581 519 AFS Licence No: 418019 www.stantons.com.au

The Directors Terranova Minerals NL Level 8, 225 St Georges Terrace PERTH WA 6000

Dear Sirs

Re: Terranova Minerals NL (“TERRANOVA” OR “THE COMPANY”) (ACN 148 966 545) ON THE PROPOSAL TO ISSUE SHARES TO PAN AFRICAN RESOURCES PLC (“PAN AFRICAN”) AS PART CONSIDERATION FOR A SUBSIDIARY OF TERRANOVA TO ACQUIRE GOLD PROSPECTS IN MOZAMBIQUE BY ACQUIRING ALL OF THE SHARES IN MISTRAL RESOURCES DEVELOPMENT CORPORATION (“MISTRAL”) AND 2% OF Explorator Limitada (“Explorator”) FROM PAN AFRICAN - MEETING PURSUANT TO SECTION 611 (ITEM 7) OF THE CORPORATIONS ACT 2001 (“TCA”) AND ASX LIMITED (“ASX”) LISTING RULE 11.11

1. Introduction

1.1 We have been requested by the directors of Terranova to prepare an Independent Expert’s Report to determine the fairness and reasonableness of issuing shares to Pan African as noted below as part of a proposal by Terranova to issue shares and pay cash to acquire 100% of the issued capital of Mistral from Pan African and a 2% interest in the share capital of Explorator from Pan African. Resolution 1 to the Notice of Meeting (“Notice”) and sections 3 and 4 of the Explanatory Memorandum attached to the Notice (“EM”) provide further details. Mistral, a wholly owned subsidiary of Pan African (a company listed on the alternative investment market of the London Stock Exchange (“AIM”) in the UK and also on the Johannesburg Stock Exchange (“JSE”) in South Africa) owns 98% of Explorator and 2% of Explorator is owned directly by Pan African. Explorator is the owner of the Manica Gold Project in Mozambique (“Mozambique Mineral Assets”). The Acquirer of Mistral and Explorator will be Auroch Minerals Mozambique Pty Ltd (“AMM”) a wholly owned subsidiary of Terranova. Terranova plans to change its name to Auroch Minerals NL in the near future (subject to shareholders’ approval).
1.2 It is proposed that Terranova through AMM will acquire 100% of the shares in Mistral and 2% of the shares in Explorator from Pan African. Further details on the Mozambique Mineral Assets (that to date is only the Manica Gold Project) are referred to in the SRK Consulting (Australasia) Pty Ltd (“SRK”) Valuation Report noted in paragraph 1.14 below and as an Appendix attached to the Notice and EM.
1.3 For the purpose of this report the proposed acquisition of all of the shares in Explorator is known as the Acquisition. Based on the Share Sale and Purchase Agreement (“SPA”) of 28 August 2012, the purchase considerations to acquire 100% of the issued capital of Mistral and 2% of Explorator are as follows:

Initial Consideration

A cash payment of $2,000,000 to Terranova (‘”Consideration Cash Payment”); and 25,000,000 ordinary shares (“Consideration Shares”) in Terranova to be issued to Pan African or nominee at the same price (not less than 30 cents each) that Terranova will issue shares under a Capital Raising planned to be undertaken in the fourth quarter of 2012 (and is one of the conditions that is required to be finalised to complete the Acquisition).

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In addition, the Company will issue certain shares as part of the Deferred Consideration as and when the milestones described below are met.

Deferred Consideration (on meeting prescribed Milestones as noted below)

BFS Milestone (or Milestone 3) means completion of a positive Bankable Feasibility Study on either the oxide or sulphide ore on the Mining Concession which recommends the construction of a mine with at least a ten year life and production scope of 50,000 ounces per annum and the Board of Explorator elects to commence construction of the mine as recommended in the Bankable Feasibility Study and has financing arranged for the construction of the mine within four years.

Capacity Milestone (or Milestone 4) means production of either oxide or sulphide ore at the plant constructed by Explorator to process ore from the Mining Concession at the capacity specified in the Bankable Feasibility Study within four years.

20,066,667 Class 1 Deferred Consideration Shares (in effect ordinary shares)

On meeting the 400koz Milestone within four years of Completion of the Acquisition, the Company will pay $1,000,000 cash to Pan African and issue 20,066,667 ordinary shares in Terranova (known in this report as the Class 1 Deferred Consideration Shares).

Thus, the deemed consideration on meeting the 400Koz Milestone is $7,020,000 (cash $1,000,000 and shares $6,020,000 based on a deemed issue price of 30 cents per share).

20,066,667 Class 2 Deferred Consideration Shares (in effect ordinary shares)

On meeting the 1,000koz Milestone within four years of Completion of the Acquisition, the Company will pay $1,000,000 cash to Pan African and issue 20,066,667 ordinary shares in Terranova (known in this report as the Class 2 Deferred Consideration Shares).

Thus, the deemed consideration on meeting the 1,000Koz Milestone is $7,020,000 (cash $1,000,000 and shares $6,020,000 based on a deemed issue price of 30 cents per share).

24,366,667 Class 3 Deferred Consideration Shares (in effect ordinary shares)

On meeting the BFS Milestone within four years of Completion of the Acquisition, the Company will pay $1,000,000 cash to Pan African and;

At the election of the Company (Terranova) within seven days of meeting the BFS Milestone, issue 24,366,667 ordinary shares to Pan African (or as directed by Pan African) (at a deemed value of 30 cents each for a deemed total value to the shares of $7,310,000) (known in this report as the Class 3 Deferred Consideration Shares);

TER6047A/ IER relating to acquiring Explorator

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The Company may pay cash of $7,310,000 as directed by Pan African.

Thus, the deemed consideration on meeting the BFS Milestone is $8,310,000 (cash $1,000,000 and shares $7,310,000).

7,166,667 Class 4 Deferred Consideration Shares (in effect ordinary shares)

On meeting the Capacity Milestone within four years of Completion of the Acquisition, the Company will pay $1,000,000 cash to Pan African and;

At the election of the Company (Terranova) within seven days of meeting the Capacity Milestone, issue 7,166,667 ordinary shares in Terranova and be issued as directed by Pan African (known in this report as the Class 4 Deferred Consideration Shares);

or

The Company may pay cash of $2,150,000 to other parties as directed by Pan African.

It is not known as to whether Pan African will participate in the Class 4 Deferred Shares.

Thus, the deemed consideration on meeting the Capacity Milestone is $3,150,000 (cash $1,000,000 and shares $2,150,000).

For the purposes of the SPA, the deemed issue price of ordinary shares issued if Milestones noted above are met (assuming the cash equivalents are not paid regarding the Class 3 and 4 Deferred Shares) is 30 cents per ordinary share.

If all four Milestones were met, the additional deemed consideration would be:

Either

Cash payments totalling $4,000,000 and 71,666,668 ordinary shares with a deemed value of $21,500,000 (total deemed additional consideration $25,500,000);

or

Cash payments totalling $13,460,000 and 40,133,334 ordinary shares with a deemed value of $12,040,000 (total deemed additional consideration $25,500,000).

Thus, potentially the total consideration may be a deemed $35,000,000 (but $25,500,000 is conditional on Milestones being achieved within four years of Completion of the Acquisition.

In the event that the Milestone Conditions are not met, no Deferred Consideration Shares (ordinary shares) will be issued.

1.4 Completion of the Acquisition is subject to a number of conditions (that can be waived) that must be completed within six months from the date of signing the SPA. These include, inter-alia;
Due diligence by both Terranova and Pan African;
Completion of a Capital Raising of at least $5,000,000 at a price not less than 30 cents per Terranova share (“Capital Raising Shares”);
The granting of regulatory approvals on terms acceptable to both parties;
The granting of all stock exchange approvals acceptable to both parties;
The approval of the Acquisition by the shareholders of Terranova;
The Company obtaining an expert’s report on the Acquisition of the shares in Mistral and 2% of the Explorator Quotas (effectively shares in Explorator) which states that the Acquisition is fair and reasonable;
Dean Cunningham confirming in writing that he will assume the role of Chief Executive Officer of Terranova following Completion of the Acquisition; and

TER6047A/ IER relating to acquiring Explorator

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The parties obtaining any approvals required under the Mining Act (as defined) to the change of control of Explorator and communicating in writing such change in control to the Mozambican mining authorities.

It is also proposed (but not a condition under the SPA) that;

The appointment of a chairman to be agreed by the parties, Dean Cunningham as director and chief executive officer, Jan Nelson (currently the chief executive officer of Pan African) and Glen Whiddon as non-executive directors. The existing directors of Terranova will step down on Completion of the Acquisition; and
The appointment of Francois Matos as Mozambique exploration manager (to enter into the Matos Service Agreement as defined), Gordon Koll as chief geologist (to enter into the Koll Service Agreement as defined), Jim Porter as a mining consulting engineer and Graeme Farr as a consulting metallurgist.
1.5 As part of the SPA and the Acquisition the following are proposed:
The 25,000,000 Consideration Shares to be issued as part consideration of the Acquisition will be escrowed for between 12 and 24 months as imposed by ASX; and
All company secretarial, financial and ancillary ASX related services shall be provided by Hemisphere Corporate Services Pty Ltd, a company associated with Benjamin Bussell a current director (chairman) of Terranova on an arms-length market related terms for a minimum period of 12 months post completion of the Acquisition.

Resolution 1 seeks shareholder approval to issue 25,000,000 Consideration Shares to Pan African, the payment of $2,000,000, the potential issue of 20,066,667 Class 1 Consideration Deferred Shares, the potential issue of 20,066,667 Class 2 Deferred Consideration Shares, the potential issue of 24,366,667 Class 3 Deferred Consideration Shares and the potential issue of 7,166,667 Class 4 Deferred Consideration Shares (all ordinary shares) and the payment of $4,000,000 Deferred Consideration Cash to Pan African or as directed by Pan African as noted above, in the event that the relevant Milestones noted above are met. Technically, we are only required to report on the potential share issues to Pan African pursuant to Section 611 (Item 7) of TCA but in order to do so we have had to consider the total consideration payable in relation to the Acquisition. Some of the Deferred Consideration Shares (ordinary shares) may be issued to third parties on the instructions from Pan African if certain Milestones are met.

1.6 In addition to resolution 1 on which we are reporting, there are five other resolutions being put to the shareholders of the Company. Resolution 2 relates to the proposal to issue up to 26,666,667 ordinary shares in the Company at 30 cents each to raise a maximum of a gross $8,000,000 (the SPA required a minimum of $5,000,000); resolution 3 relates to the proposal to change the name of the Company to Auroch Minerals NL; resolution 4 relates to the proposal to appoint Jan Nelson as a director of the Company; resolution 5 relates to the proposal to appoint Glen Whiddon as a director of the Company and resolution 6 relates to the proposal to appoint Dean Cunningham as a director of the Company.

Resolutions 1, 2 and 4 to 6 are all part of the Acquisition of Mistral and Explorator. As noted, we are only required to report on the merits or otherwise of resolution 1 under Section 611 of TCA. In order for us to report on the fairness and reasonableness of the issue of 20,000,000 Consideration Shares to Pan African and the potential issue of further ordinary shares, namely the 20,066,667 Class 1 Deferred Consideration Shares, 20,066,667 Class 2 Deferred Consideration Shares, 24,366,667 Class 3 Consideration Deferred Shares and the 7,166,667 Class 4 Deferred Consideration Shares (that may convert to a total of 71,666,668 fully paid ordinary shares), we are required to take into consideration the total initial consideration ($2,000,000 cash and 25,000,000 fully paid ordinary shares) and the Deferred Consideration (up to $4,000,000 cash and the issue of up to 71,666,668 Deferred Consideration Shares (ordinary shares) with a deemed value of $21,500,000 or the payment of up to $13,460,000 cash and the issue of up to 40,133,334 Deferred Consideration Shares (ordinary shares) in Terranova with a deemed value of $12,040,000).

TER6047A/ IER relating to acquiring Explorator

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1.7 Under Section 606 of The Corporations Act ("TCA"), a person must not acquire a relevant interest in issued voting shares in a company if 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%.

Under Section 611 (Item 7) of TCA, Section 606 does not apply in relation to any acquisition of shares in a company approved by resolution passed at a general meeting at which no votes were cast in favour of the resolution by the acquirer or the disposer or their respective associates. An independent expert is required to report on the fairness and reasonableness of the transaction pursuant to a Section 611 (Item 7) meeting.

If the Acquisition of Mistral and Explorator from Pan African proceeds, after the issue of the Capital Raising Shares as noted above and after the issue of the Consideration Shares, Pan African would own approximately 38.66% (25,000,000 Consideration Shares that would be issued) of the expanded fully paid issued capital of the Company (64,666,668 fully paid shares after the issue of 16,666,667 Capital Raising Shares to raise a gross $5,000,000 by way of a Capital Raising at the issue price of 30 cents per share) (38.08% voting power taking into account the partly paid shares on issue). If we took into account the partly paid shares on issue (19,800,000) and assumed they were fully paid up, Pan African’s percentage interest of all shares on issue would approximate 29.60%. Shanduka Gold (Pty) Ltd (“SGPL”) holds approximately 25% of the shares in Pan African and thus SGPL will also be deemed to have a voting power in any shares held by Pan African.

In the event that the maximum amount raised under the Capital Raising was a gross $8,000,000 at 30 cents per share, the number of shares issued under the Capital Raising would be 26,666,667 and post the Completion of the Acquisition (before the issue of Deferred Consideration Shares as noted above), the number of fully paid shares on issue would be 74,666,668 along with 19,800,000 partly paid shares. Under such a scenario Pan African would own approximately 33.48% of the fully paid shares on issue (33.04% voting power taking into account the partly paid shares on issue) and approximately 26.46% of all ordinary shares on issue (approximately 33.48% voting power assuming the partly paid shares on issue are fully paid up).

If the 400koz Milestone was met, in addition to the $1,000,000 paid to Pan African, Pan African would own an additional 20,066,667 fully paid shares and would then own 45,066,667 fully paid ordinary shares on issue (84,733,335 fully paid shares on issue under the minimum Capital Raising) representing approximately 53.19% of the expanded fully paid issued capital on issue (52.57% voting power taking into account the partly paid shares on issue) (approximately 43.11% if the 19,800,000 partly paid shares were fully paid up). This assumes all shares are issued to Pan African and no shares are issued to any other party. Pan African has the right to allocate some of the shares to third parties. If the maximum Capital Raising was made, Pan African would own 45,066,667 fully paid ordinary shares on issue (94,733,335 fully paid shares on issue under the maximum Capital Raising) representing approximately 47.57% of the expanded fully paid issued capital on issue (47.08% voting power taking into account the partly paid shares on issue) (approximately 39.35% if the 19,800,000 partly paid shares were fully paid up).

If the 1,000koz Milestone was met, in addition to the $1,000,000 paid to Pan African, Pan African would own an additional 20,066,667 fully paid shares and would then own 65,133,334 fully paid ordinary shares on issue (104,800,002 fully paid shares on issue) representing approximately 62.15% of the expanded fully paid issued capital on issue (61.51% voting power taking into account the partly paid shares on issue) (approximately 52.25% if the 19,800,000 partly paid shares were taken into account). This assumes all shares are issued to Pan African and no shares are issued to any other party. Pan African has the right to allocate some of the shares to third parties. If the maximum Capital Raising was made, Pan African would own 65,133,334 fully paid ordinary shares on issue (114,800,002 fully paid shares on issue under the maximum Capital Raising) representing approximately 56.74% of the expanded fully paid issued capital on issue (56.25% voting

TER6047A/ IER relating to acquiring Explorator

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power taking into account the partly paid shares on issue) (approximately 48.39% if the 19,800,000 partly paid shares were fully paid up).

If the BFS Milestone was met, in addition to the $1,000,000 paid to Pan African and Terranova elected to issue fully paid ordinary shares to Pan African and the MGE, Pan African would own an additional 24,366,667 fully paid shares and would then own 89,500,001 fully paid ordinary shares on issue (129,166,669 fully paid shares on issue) representing approximately 69.29% of the expanded fully paid issued capital on issue (68.76% voting power taking into account the partly paid shares on issue) (approximately 60.05% if the 19,800,000 partly paid shares were taken into account). This assumes all shares are issued to Pan African and no shares are issued to any other party. Pan African has the right to allocate some of the shares to third parties. If the maximum Capital Raising was made, Pan African would own 89,500,001 fully paid ordinary shares on issue (139,166,669 fully paid shares on issue under the maximum Capital Raising) representing approximately 64.31% of the expanded fully paid issued capital on issue (63.86% voting power taking into account the partly paid shares on issue) (approximately 56.30% if the 19,800,000 partly paid shares were fully paid up).

If the Capacity Milestone was met an additional $1,000,000 would be paid to Pan African and if Terranova elected to issue fully paid ordinary shares to another third party, Pan African’s shareholding could increase to 96,666,668 fully paid ordinary shares on issue (136,333,336 fully paid shares on issue) representing approximately 70.90% of the expanded fully paid issued capital on issue (61.91% voting power taking into account the partly paid shares on issue) (approximately 61.89% if the 19,800,000 partly paid shares were taken into account). This assumes all shares are issued to Pan African and no shares are issued to any other party. Pan African has the right to allocate some of the shares to third parties. If the maximum Capital Raising was made, Pan African would own 96,666,668 fully paid ordinary shares on issue (146,333,336 fully paid shares on issue under the maximum Capital Raising) representing approximately 66.06% of the expanded fully paid issued capital on issue (65.66% voting power taking into account the partly paid shares on issue) (approximately 58.19% if the 19,800,000 partly paid shares were fully paid up).

As noted above, SGPL holds approximately 25% of the shares in Pan African and thus SGPL will also be deemed to have a voting power in any shares held by Pan African.

1.8 Therefore a notice prepared in relation to a meeting of shareholders convened for the purposes of Section 611 (Item 7) of TCA must be accompanied by an Independent Expert's Report stating whether the issue of ordinary shares (20,000,000 Consideration Shares to the deemed value of $6,000,000) and the potential issue of up to 71,966,668 Deferred Consideration Shares (ordinary shares) to Pan African as part of the Acquisition noted under resolution 1 are fair and reasonable to the shareholders not associated with Pan African. As stated above, some of the Consideration Shares and Deferred Consideration Shares (ordinary shares) may be issued to third parties at the direction of Pan African and if shares are issued to third parties, the number and percentages held by Pan African noted above and elsewhere in this report will be reduced. The total initial consideration is $9,500,000 being $2,000,000 cash to Pan African and the issue of a total of 25,000,000 Consideration Shares. To assist shareholders in making a decision on the issue of fully paid ordinary shares (25,000,000 Consideration Shares) and up to 71,666,668 Deferred Consideration Shares (ordinary shares) to Pan African as part of the Acquisition, the directors have requested that Stantons International Securities prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the issue of fully paid ordinary shares (25,000,000 Consideration Shares) and the potential to issue up to 71,966,668 Deferred Consideration Shares (ordinary shares) to Pan African as part of the Acquisition are fair and reasonable to the non-associated shareholders of Terranova (not associated with Pan African).

To arrive at these conclusions we have had to consider the fairness and reasonableness of the Acquisition (of all of the shares in Mistral and 2% of the Explorator Quotas (ordinary shares in Explorator) as a whole.

TER6047A/ IER relating to acquiring Explorator

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1.9 Apart from this introduction, this report considers the following:
Summary of opinions
Implications of the proposals (Acquisition)
Corporate history and nature of business of Terranova, Mistral and Explorator
Future direction of Terranova
Basis of valuation of Terranova shares
Value of consideration
Basis of valuation of Explorator being acquired from Pan African
Conclusion as to fairness
Reasonableness of the offer
Conclusion as to reasonableness
Sources of information
Appendices A and Financial Services Guide
1.10 In determining the fairness and reasonableness of the acquisition of Mistral and Explorator (that owns the Mozambique Mining Assets more fully described above), we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target” and irrespective of whether the consideration is scrip or cash. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. It also states that, where an acquisition of shares by way of an allotment is to be approved by shareholders pursuant to Section 611 (Item 7) of TCA, it is desirable to commission a report by an independent expert stating whether or not the proposal is fair and reasonable, having regard to the proposed allottee(s) (in this case only Pan African) and whether a premium for potential control is being paid by the allottee(s) (in this case Pan African). Although the proposal with Pan African is not in relation to a takeover offer, we have noted the above matters and definitions for readers to have an understanding of fairness and reasonableness referred to in this report.

Accordingly, our report relating to the issue of shares to Pan African as part of the Acquisition is concerned with the fairness and reasonableness of the proposals with respect to the existing non-associated shareholders of Terranova (not associated with Pan African) and whether Pan African is paying a premium for potential control.

1.11 In our opinion, taking into account the factors noted elsewhere in this report including the factors (positive, negative and other factors) noted in section 9 of this report and based on the pre announcement Terranova share prices and the deemed issue price of 30 cents per ordinary share, the proposed issue of 25,000,000 shares and potential issue of up to 71,666,666 ordinary shares to Pan African as part of the Acquisition as outlined in paragraph 1.3 and resolution 1 in the Notice are, on balance, considered to be fair and reasonable to the non associated shareholders of Terranova (not associated with Pan African) at the date of this report.
1.12 The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the 18 June 2012 Independent Technical Valuation Report (“SRK Valuation Report”) on the Mozambique Mining Assets owned by Explorator prepared by SRK, a copy of which is attached as an Appendix to the Notice and EMS.

TER6047A/ IER relating to acquiring Explorator

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2. Implications of the Proposals

2.1 As at 18 September 2012, there were 23,000,001 fully paid ordinary shares on issue in Terranova and 19,800,000 partly paid shares paid to 1 cent each with uncalled capital of 19 cents per partly paid share (to be called within 5 years of date of issue that was in April 2011). The significant fully paid shareholders as at 3 September 2012 based on the top 20 shareholders list were believed to be:

Mimo Strategies Pty Ltd Paticoa Nominees Pty Ltd MJ & RF Norton Red Field Pty Ltd Fluffy Duck Pty Ltd Rowan Hall Pty Ltd Marshall Luke Wade William Henry Hernstadl	No. of fully paid shares % of issued fully paid shares 375,000 328,573 1.64 1.44 326,500 1.43 300,000 1.32 250,000 1.10 250,000 250,000 250,000 1.10 1.10 1.10
	2,330,073 10.23

The top 20 fully paid shareholders at 3 September 2012 owned approximately 20.98% of the ordinary fully paid issued capital of the Company. If the existing partly paid shares were fully paid up, the Company would receive $3,762,000 in cash funds. The holders of the existing partly paid shares are not legally required to pay all calls but if calls are not paid for by the partly paid shareholders, the partly paid shares would be forfeited and possibly auctioned.

2.2 The minimum movement in the fully paid issued capital of the Company could be:

Fully paid shares on issue 18 September 2012

Issue of Capital Raising Shares at 30 cents each
Shares (and conversion to fully paid ordinary shares)
Issue of the Consideration Shares at a
deemed 30 cents each

Shares on Issue post the Acquisition
and Capital Raising

(This is on legal Completion as defined in the SPA)
Potential issue of further fully paid shares
Conversion of all of the Class 1 Performance Shares

Conversion of all of the Class 2 Performance Shares

Conversion of all of the Class 3 Performance Shares

Conversion of all of the Class 4 Performance Shares

Potential fully paid shares on issue before paying up
the partly paid shares

Paying up the partly paid shares in full

Potential fully paid shares on issue

Minimum
Number
23,000,001
16,666,667
25,000,000
64,666,668
20,066,667
84,733,335
20,066,667
104,800,002
24,366,667
129,166,669
7,166,667
136,333,336
19,800,000
156,133,336

If the maximum Capital Raising was $8,000,000 (26,666,667 shares at 30 cents each), the ordinary shares on issue post the Acquisition would be 74,666,668 and there would be 19,800,000 partly paid shares. The maximum number of fully paid ordinary shares on issue, assuming the issue of all Deferred Consideration Shares (ordinary shares) and the paying up of the outstanding calls on the partly paid shares would be 166,133,336.

TER6047A/ IER relating to acquiring Explorator

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If the Acquisition is completed and all Consideration Shares are issued, Pan African would increase its ordinary fully paid shareholding interest from nil fully paid ordinary shares to up to 25,000,000 ordinary shares representing an approximate up to 38.66% interest in the expanded fully paid capital of the Company (38.08% voting power taking into account the partly paid shares on issue) (approximately 33.57% if the maximum Capital Raising was achieved) (approximately 33.04% if the maximum Capital Raising was achieved). If we took into account the partly paid shares on issue (19,800,000) and assumed they were fully paid up, Pan African’s percentage interest of all shares on issue could approximate up to 29.60% (approximately 26.46% if the maximum capital raising was achieved). As noted above, SGPL holds approximately 25% of the shares in Pan African and thus SGPL will also be deemed to have a voting power in any shares held by Pan African.

Section 1.7 of this report refers to the potential shareholding and percentage interest of Pan African if each class of Deferred Consideration Shares (ordinary shares) were issued by Terranova to Pan African (each Milestone Condition needs to be met). Pan African has the right to nominate third parties to be issued some of the Consideration Shares and Deferred Consideration Shares. As noted above, the Company will need to pay Pan African an initial $2,000,000. In the event that each Milestone is met an additional minimum of $1,000,000 is payable to Pan African ($4,000,000 in total). In relation to the BFS Milestone, Terranova has the option to pay cash of $7,310,000 to Pan African or to third parties as directed by Pan African or issue 24,366,667 fully paid ordinary shares to Pan African or to third parties as directed by Pan African. In relation to the Capacity Milestone, Terranova has the option to issue 7,166,667 fully paid ordinary shares to Pan African or pay cash of $2,150,000 to Pan African or to third parties as directed by Pan African.

2.3 The current Board of Directors is expected to change in the near future as a result of the Acquisition. It is proposed that the appointment of a chairman is to be agreed by the parties. Dean Cunningham is to be appointed as chief executive officer and a director and Jan Nelson and Glen Whiddon are to be appointed as non-executive directors. The existing Board of Messrs Benjamin Bussell, Matthew Foy and Robert Jewson will resign from the Board on Completion of the Acquisition.

It is proposed to make the following management appointments:

Francois Matos as Mozambique country/exploration manager;
• Gordon Koll as chief geologist;
Jim Porter as a mining executive; and
Graeme Farr as processing executive.

The Company on 28 August 2012 entered into a Service Agreement with Dean Cunningham, a proposed Director of the Company for Dean Cunningham to act as the managing director of the Company. The effective date is on Completion as defined in the SPA referred to above. Three months written notice is to be provided by either party to terminate the Service Agreement. The yearly basic salary payable is Rand 2,400,000 (approximately $276,000 per annum based on an AUS$/Rand exchange rate of AUS$1 equals Rand 8.701 as at 28 August 2012). It is planned that the following up to 1,400,000 shares will be issued following meeting the below noted vesting conditions:

Milestone	1	-	24 months service	350,000 shares
Milestone	3	-	400koz Milestone	308,000 shares
Milestone	3	-	1000koz Milestone	308,000 shares
Milestone	4	-	BFS Milestone	336,000 shares
Milestone	5	-	Capacity Milestone	98,000 shares

2.4 Mistral and Explorator will become legally wholly owned subsidiaries (via AMM) of Terranova and Pan African will become a significant shareholder in Terranova and parties nominated by Pan African will control the Board. Mistral will be 100% owned by AMM and Explorator will be 98% owned by Mistral and 2% by AMM.

TER6047A/ IER relating to acquiring Explorator

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3. Corporate History and Nature of Business

Terranova

3.1 Terranova is listed on the ASX since 1 September 2011. Its focus to date has been on mineral exploration in Australia. Its main areas of interest are:
The Crawford Copper-Bismuth Project in the Gascoyne Province of Western Australia;
The Peninsular Gold Project near Norseman in Western Australia; and
The Beete Gold Project near Norseman in Western Australia.

Explorator

3.2 A summary on Mistral and Explorator and Explorator’s Mozambique Mining Assets are noted in section 1.2 of this report, the SRK Valuation Report (on the Mozambique Mining Assets) and the EM.
3.3 Explorator that is 2% directly owned by Pan African and 98% owned by the BVI company, Mistral (which is 100% owned by Pan African) owns the gold project known as the Manica Gold Project. The Manica Gold Project is located in central Mozambique and is in a prefeasibility stage. The estimated capital cost to develop a mine at the Manica Gold Project (if it proceeds to a development status) (the Fair Bride Deposit) is estimated by Pan African at approximately US$21.54 million. In addition to the Fair Bride Deposit area (the Advanced Development Target), there is a Potential Development Target area below the existing Advanced Development Target.
3.4 It is our understanding that on Completion, Mistral and Explorator will have no material liabilities and Explorator will have as its only material asset its Mozambique Mining Assets (at 30 June 2012, the unaudited capitalised exploration costs are $597,934) comprising the Manica Gold Project. Mistral will only have as its main asset, ownership of 98% of Explorator.

4. Future Directions of Terranova

4.1 We have been advised by the directors and management of Terranova that:
There are no proposals currently contemplated either whereby Terranova will acquire any further properties or assets from Pan African, however Terranova will issue ordinary shares (the Consideration Shares) and potentially Deferred Consideration Shares (ordinary shares) to Pan African or to parties as directed by Pan African and pay cash to Pan African or to parties as directed by Pan African as outlined above in relation to the Acquisition) or where Terranova would transfer any of its property or assets to Pan African;
The composition of the Board and management will change in the short term as noted above and may issue new shares to Dean Cunningham as referred to in paragraph 2.3 above subject to shareholder approval and meeting certain milestone conditions;
The Company may, subject to prevailing market conditions seek to raise further working capital by way of share issues later in 2013 (in addition to the proposed Capital Raising of a minimum of $5,000,000 and a maximum of $8,000,000 as noted above);
No dividend policy has been set and it is not proposed to be set until such time as the Company is profitable and has a positive cash flow; and
The Company will endeavour to enhance the value of its interests in its existing gold and base metal projects and the Mozambique Mining Assets to be acquired from the Acquisition of Mistral and Explorator.

TER6047A/ IER relating to acquiring Explorator

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5. Basis of Valuation of Terranova Shares

5.1 Shares
5.1.1 In considering the proposals to acquire Terranova, we have sought to determine if the considerations payable by Terranova to Pan African (or nominees) are fair and reasonable to the existing non-associated shareholders of Terranova.
5.1.2 The offer would be fair to the existing non-associated shareholders if the value of the shares in Explorator (that has the interests in the Manica Gold Project) being acquired by Terranova is greater than the implicit value of the shares in Terranova being offered as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on Terranova shares for the purposes of this report.
5.1.3 The valuation methodologies we have considered in determining a theoretical value of a Terranova share are:
Capitalised maintainable earnings/discounted cash flow;
Takeover bid - the price at which an alternative acquirer might be willing to offer;
• Adjusted net asset backing and windup value; and
The market price of Terranova shares trading on ASX.
5.2 Capitalised maintainable earnings and discounted cash flows.
5.2.1 Due to Terranova’s current operations, a lack of profit history arising from business undertakings and the lack of a reliable future cash flow from a current business activity, we have considered these methods of valuation not to be relevant for the purpose of this report.
5.3 Takeover Bid
5.3.1 It is possible that a potential bidder for Terranova could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Terranova have formed the view that there is unlikely to be any takeover bids made for Terranova in the immediate future. We concur with this view in the absence of any evidence however, if the agreement to acquire Mistral and Explorator is consummated, then Pan African may control an initial approximate 38.66% of the expanded fully paid ordinary issued capital of Terranova if all of the Consideration Shares are issued to Pan African and prior to any issue of Deferred Consideration Shares (ordinary shares) in Terranova and the paying up of the 19,800,000 partly paid shares (approximately 33.48% of the fully paid ordinary shares if the maximum Capital Raising is achieved).
5.4 Adjusted Net Asset Backing
5.4.1 We set out below an unaudited consolidated statement of financial position (balance sheet) of Terranova as at 30 June 2012, adjusted for administration and exploration costs expensed for the period 1 July 2012 to 31 October 2012 estimated at $250,000 each along with a pro-forma consolidated statement of financial position assuming the following:
- The issue of say 16,666,667 shares at 30 cents each to raise a gross $5,000,000 and allowing for capital raising costs of $300,000;
- The acquisition of Mistral and Explorator by way of an issue of all of the 25,000,000 Consideration Shares at a market based issue share price of 30 cents (deemed market value $7,500,000) and the payment of the $2,000,000 (total initial consideration $9,500,000);
- The payment of an estimated $100,000 indirect costs relating to the Acquisition and preparation of the Notice and which have all been expensed; and
- � The AUS/US exchange rate of 1 for 1.

TER6047A/ IER relating to acquiring Explorator

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Current Assets Cash Receivables/prepayments Non Current Assets Plant and equipment Capitalised exploration costs Total Assets Current Liabilities Trade and other payables Employee entitlements Total Current Liabilities Total liabilities Net Assets Equity Issued capital Reserves Accumulated losses Net Equity	Terranova (as adjusted) 30 June 2012 $000’s Terranova Consolidated Pro-forma 30 June 2012 $000’s 3,242 5,842 42 42
	3,284 5,884
	- - 193 9,693
	193 9,693
	3,477 15,577
	56 56 - -
	56 56
	56 56
	3,421 15,521
	4,417 16,617 - - (996) (1,096) 3,421 15,521

In the event that the maximum Capital Raising of $8,000,000 (say a net $7,500,000) was achieved (at 30 cents per share), the number of shares on issue post the Acquisition would be 74,466,668 and the pro-forma statement of financial position net assets would approximate $18,321,000 (cash and issued capital would increase by approximately $2,800,000).

5.4.2 The book net tangible asset backing per fully paid ordinary share as at 30 June 2012 (as adjusted as noted above) equates to approximately 14.87 cents (23,000,001 ordinary fully paid shares on issue at that date) and approximately 16.87 cents on a fully diluted basis that assumes that the partly paid shares are paid up to make them fully paid shares$3,762,000 cash paid). If we took into account the minimum Capital Raising of a gross $5,000,000 and allowed for the capital raising costs, the net book asset backing per fully paid share would approximate 20.47 cents per share (39,666,668 fully paid shares on issue). If we took into account the maximum Capital Raising of a gross $8,000,000 and allowed for the capital raising costs, the net book asset backing per fully paid share would approximate 21.99 cents per share (49,666,668 fully paid shares on issue). The above proforma consolidated statement of financial position of Terranova has been prepared on the basis that the acquisition of Mistral and Explorator is not considered a business combination for accounting purposes under the accounting standard AASB-3R “Business Combinations” and is not prepared using reverse acquisition principles. Based on the book values, this equates to a book value per fully paid ordinary share post the Acquisition (64,666,668 fully paid ordinary shares on issue) of approximately 24.00 cents (ignoring the value, if any, of non-booked tax benefits). In the event that the maximum Capital Raising of a gross $8,000,000 was achieved at 30 cents per share, the net asset backing per fully paid share (74,666,668 fully paid ordinary shares) would approximate 24.53 cents.

5.4.3 We have accepted the amounts for all current assets and non current assets. We have been assured by the management of Terranova that they believe the carrying value of all current assets, fixed assets and liabilities at 30 June 2012 (as adjusted as noted above) are fair and not materially misstated.

TER6047A/ IER relating to acquiring Explorator

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5.4.4 We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between Terranova and other parties. We also note it is not the present intention of the directors of Terranova to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value (as adjusted), is just that, theoretical. The shareholders, existing and future, must acquire shares in Terranova based on the market perceptions of what the market considers a Terranova share to be worth.

The market has either generally valued the vast majority of mineral exploration companies at significant discounts or premiums to appraised technical values and this has been the case for a number of years although we also note that there is an orderly market for Terranova shares and the market is kept fully informed of the activities of the Company. It is noted that under IFRS, the value ascribed to the shares to be issued to vendors would be accounted for at the market value (as noted on ASX) of a company share at date of issue. It is noted that the cash reserves of Terranova although moderate are not high taking into account its exploration and administration commitments and over time, in the absence of further capital raisings, the Company would run out of cash reserves.

For accounting purposes under IFRS, the initial consideration (in the form of a total of 25,000,000 Consideration Shares and the $2,000,000 Consideration Cash Payment to acquire 100% of Mistral and Explorator) will be booked at the agreed acquisition price of $2,000,000 Consideration Cash Payment and $7,500,000 for the Consideration Shares (deemed value of 30 cents per fully paid share being the same issue price of the Capital Raising Shares to be issued to raise between $5,000,000 and $8,000,000) and not the fair value of Mistral and Explorator (in effect mainly the fair value of the Mozambique Mineral Assets). Completion of the Acquisition is subject to the raising of a minimum of $5,000,000 at a minimum issue price of 30 cents per share and thus it may be reasonable to allocate the proposed Capital Raising issue price to the initial Consideration Shares. Accordingly, for the reasons outlined above, we believe that for the purpose of this report, it is not appropriate to use any technical value of a Terranova share in assessing whether the proposal to acquire Mistral and Explorator is fair and reasonable.

Normally a pre-announcement market-based approach is a more suitable basis of assessing whether the proposed Acquisition is fair and/or reasonable but in this case the initial Acquisition cost has been fixed at $9,500,000 plus any ascribed value to the potential issue of four classes of Deferred Consideration Shares (ordinary shares) (and potential cash payable). Since 1 September 2011 (the date the Company’s fully paid shares commenced trading on the ASX and to 17 September 2012, the shares in Terranova have traded on ASX at between 21.0 cents and 40.0 cents (on 29 August 2012, post the announcement of the proposed Acquisition) with a last sale on 17 September 2012 of 35.5 cents (see table under paragraph 5.5.1).

5.5 Market Price of Terranova Fully Paid Ordinary Shares
5.5.1 We set out below a summary of the fully paid share prices of Terranova since 1 September 2011 to the date immediately prior to the announcement of the details of the consideration to acquire all of the shares in Explorator) being 28 August 2012.

	High Cents	Low Cents	Last Sale Cents	Volume Trade (000’s)
September 2011	27.0	22.5	25.0	377
October 2011	28.0	25.0	28.0	93
November 2011	28.0	25.0	28.0	430
December 2011	30.0	26.0	26.0	85
January2012	27.0	25.0	26.0	278
February2012	32.0	27.0	30.0	561
March 2012	31.0	29.5	30.0	471
April 2012	31.0	29.0	29.0	458
May2012	29.0	24.0	24.0	354
June2012	26.0	21.0	24.0	526

TER6047A/ IER relating to acquiring Explorator

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	High Cents	Low Cents	Last Sale Cents	Volume Trade (000’s)
July2012	29.0	24.0	29.0	342
August (to28th)	29.0	27.0	29.0	584

5.5.2 Generally, the market is a fair indicator of what a share is worth, however the theoretical technical value based on the underlying value of assets and liabilities may be lower or higher. In the case of Terranova, current cash liquidity is reasonable however the Company will eventually need to undertake a capital raising of some significance. The Company as part of recapitalising so it may acquire Mistral and Explorator is proposing to raise a minimum of $5,000,000 at a minimum issue price of 30 cents each. As noted above the pre announcement value of a Terranova share has over the few months to 28 August 2012 been around 30 cents. The market in general terms has retreated since early May 2012 and the share price of a Terranova share has also drifted downwards to trade below 30 cents as noted above (before the announcement of the Acquisition).

It is noted that over the past several years, the vast majority of mineral exploration companies listed on the ASX are trading at significant discounts or premiums to appraised technical values and in some cases have traded at a discount to cash asset backing. In the case of Terranova, the monthly volume of trades on the ASX is not that high but probably large enough to argue that an orderly market exists for the Company’s shares.

The “market” arguably is fully informed of the Company’s activities. It is our opinion, that in the absence of the deemed value for the Consideration Shares (to be $7,500,000) it would have been appropriate to use a range of recent pre-announcement trading market values as fair values to attribute to the Consideration Shares to be issued to Pan African.

5.5.3 The future value of a Terranova share will depend upon, inter alia:
The successful exploitation of the current mineral assets of the Company and/or the Mozambique Mineral Assets being acquired via the Acquisition;
The state of the gold and base metal markets (and prices) in Australia and overseas;
The cash position of the Company;
The state of Australian and overseas stock markets;
The potential risk of operating outside Australia;
Foreign exchange rates;
Membership and control of the Board and the quality of management;
General economic conditions; and
Liquidity of shares in Terranova.

5.6 Conclusion as to fair value of a Terranova Share

5.6.1 We consider the fair value of a Terranova share for the purposes of this report to mainly lie in the range of 24.0 cents and 31.0 cents in the absence of the Acquisition. For the purposes of this report however, we consider it appropriate to ascribe the proposed Capital Raising issue price of 30 cents to the Consideration Shares (that is the same as the deemed issue price as noted in the SPA).

TER6047A/ IER relating to acquiring Explorator

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6. Value of Consideration

6.1 Based on the Capital Raising share price the initial Consideration would be:

Consideration Cash Payment Consideration Shares Deferred Consideration Shares Performance Cash Share price assumed to be		$ 2,000,000 7,500,000 nil nil
		9,500,000 30.0 cents

No Deferred Consideration Shares (ordinary shares in the Company) are issued at Completion and the various classes of Deferred Acquisition Shares (ordinary shares) would only be issued on meeting the various Milestones noted in paragraph 1.3 above.

As discussed, the number of Consideration Shares to be issued will be at the same price that Terranova will issue shares under a Capital Raising planned to be undertaken in the fourth quarter of 2012 (and is one of the conditions that is required to be finalised to complete the Acquisition). At 30 cents (the proposed issue price under the Capital Raising), the value attributed to the 25,000,000 Consideration Shares is $7,500,000. Based on a share price of 40 cents (the high share price of a share in Terranova trading on ASX after the announcement on 29 August 2012), the Initial Consideration would equate to $12,000,000 (and $11,000,000 if a share price of 36 cents was used being the closing share price of a Terranova share traded on ASX on 6 September 2012).

6.2 It is unknown whether a JORC compliant resource over the established 90,000 ounces of inferred gold is capable of being established in relation to the Mozambique Mining Assets (Manica Gold Project), let alone one of the substantial targets prescribed by the Milestones 1 and 2. Any estimate as to the potential endowment of the Mozambique Mining Assets is highly speculative. It is always difficult to assess the fair value of deferred shares as there is to some extent some guess work or estimate as to whether the performance conditions attached to the Deferred Consideration Shares (ordinary shares when and if issued) will be met and the time taken before they are met. In addition, at the time of a Milestone condition being achieved, the share price of a company’s share may be different (higher or lower) than the price of an ordinary underlying share at the date of Completion of the Acquisition. They are contingent ordinary shares and they will only be issued on the relevant Milestones being met. Accordingly, as it is not possible to ascertain at this stage whether the Milestones noted above will be met we have ascribed nil values to the potential to issue Class 1 to 4 Deferred Consideration Shares (ordinary shares) and have ignored the potential payment of up to $4,000,000 in cash (or up to $13,460,000 cash and the issue of up to 40,133,334 Deferred Consideration Shares (3 and 4) (40,133,334 fully paid ordinary shares).
6.3 If we ascribed 30 cents each to the potential to issue Deferred Consideration Shares (ordinary shares), the deemed potential consideration would become $35,000,000 made up of:

Initial Consideration as above	9,500,000
Deferred Consideration 1
Cash	1,000,000
Class 1 Deferred Consideration Shares	6,020,000
Deferred Consideration 2
Cash	1,000,000
Class 2 Deferred Consideration Shares	6,020,000
Deferred Consideration 3
Cash	1,000,000
Class 3 Deferred Consideration Shares	7,310,000 (or payment of $7,310,000)

TER6047A/ IER relating to acquiring Explorator

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Deferred Consideration 4 Cash Class 4 Deferred Consideration Shares Total Deemed Consideration $	1,000,000 2,150,000 (or payment of $2,150,000) 35,000,000

If the Milestones are met, the value of the Class 1 to 4 Deferred Shares (ordinary shares) at the date of issue (Class 3 and 4 may be settled in cash of $7,310,000 and $2,150,000 respectively) may be substantially greater than the value of an ordinary share in Terranova as trading on ASX in April to 27 August 2012 (21 cents to 31 cents) and the 17 September 2102 share price of 35.5 cents. However, it would also be expected that the value of the Manica Gold Project would substantially increase as JORC reserves are proved up and would be far higher than the value attributable to the Manica Gold Project by SRK as noted in paragraph 7.6 below.

7. Basis of Valuation of Mistral and Explorator (and interests in the Mozambique Mineral Assets)

7.1 The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market.
7.2 Explorator is unlisted and is currently 100% owned directly or indirectly by Pan African a listed public company and therefore valuing the shares on a takeover basis and on a market based approach are not that relevant. There are no indications that other parties wished to acquire all of the shares in Explorator (and Mistral) other than Terranova.
7.3 The Company has commissioned SRK (Authors of the SRK Valuation Report were Anthony Stepcich and Trivindren Naidoo and peer supervised by Chris Woodfull) to prepare a valuation report of the Mozambique Mineral Assets owned by Explorator. The SRK Valuation Report of 18 June 2012 should be read in its entirety and a full copy of the SRK Valuation Report is attached as an Appendix to the Notice and EMS. The SRK Valuation Report ascribes a range of values to the Mozambique Mineral Assets and for the purposes of our report we have used the low, high and mid range valuations referred to in the SRK Valuation Report.
7.4 As the only significant asset of Explorator is its interest in the Mozambique Mineral Assets the most suitable methodology is to value the shares in Explorator on an asset backing basis using fair values for the Mozambique Mineral Assets. It is assumed that Mistral’s only asset is its 98% shareholding in Explorator.
7.5 We have used and relied on the SRK Valuation Report on the Mozambique Mineral Assets and have satisfied ourselves that:
SRK is a suitably qualified geological consulting firm and has relevant experience in assessing the merits of mineral projects and preparing mineral asset valuations (also the authors and peer supervisor of the report are suitably qualified and experienced);
SRK is independent from Terranova and Pan African; and
SRK has employed sound and recognised methodologies in the preparation of the SRK Valuation Report on the Mozambique Mineral Assets.
7.6 SRK has provided a range of market values of the interests in the Mozambique Mineral Assets. SRK has ascribed a range of values to the Mozambique Mineral Assets of Explorator as follows:

Mozambique Mineral Assets	Low US$ 45,100,000 45,100,000	Preferred US$ 55,200,000 55,200,000	High US$ 65,100,000
			65,100,000

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The above values are in US dollars and for the purposes of this report we have assumed a AUS/US exchange rate of AUS$1=US$1 notwithstanding that AUS$1 on 6 September 2012 approximates US$1.0226.

7.7 The unaudited consolidated statement of financial positions of Mistral and Explorator has not been summarised. The SPA states that at the date of acquisition of Mistral and Explorator, such companies will have no material current and non-current assets or liabilities other than Explorator having a 100% interest in the Manica Gold project (the Mozambique Mining Assets) (at a cost per 30 June 2012 unaudited accounts of $597,934).

Using the fair values of the Mozambique Mineral Assets ascribed by SRK in US dollars (being $45,100,000 to $65,100,000 with a preferred fair value of $55,200,000), the net fair value of Explorator is expected to lie in the range of $45,100,000 and $65,100,000 with a preferred fair value of $55,200,000. The AUS/US dollar exchange at 13 September 2012 AUS$1=US$1.046 but as it can fluctuate quite quickly we have used a 1 for 1 exchange rate.

7.8 Completion of the Acquisition was conditional on, inter-alia all necessary due diligence being undertaken on the ownership and asset interests of Mistral and Explorator. The due diligence was completed by Terranova. We advise that we have not undertaken any further steps to ascertain ownership of Mistral and Explorator and its assets and liabilities and the Mozambique Mineral Assets. As discussed, it is assumed that the only asset of Explorator will be the Manica Gold Project (the Mozambique Mining Assets).

8. Conclusion as to Fairness

8.1 The proposal to acquire the shares in Mistral and Explorator (that owns the Mozambique Mineral Assets) for the considerations noted in paragraphs 1.3 and 6.1 is believed fair to Terranova’s non-associated shareholders if the value of the considerations offered is equal to or less than the value of the shares in Mistral and Explorator being acquired. It is assumed that Mistral’s only asset is its 98% shareholding in Explorator.
8.2 Due to the nature of the business of Explorator, valuations are dependent upon the value placed on the mineral interests (Mozambique Mineral Assets) of Explorator. The valuation of mineral interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.
8.3 We have examined below the values attributable to the shares proposed to be issued and the value of the consideration offered by Terranova to Pan African.

Assessed value of Explorator based on independent valuation of Mozambique Mineral Assets (rounded) Value of the initial consideration payable by Terranova as per paragraph 6.1	Low $ Preferred $ 45,100,000 55,200,000	Low $ Preferred $ 45,100,000 55,200,000	Low $ Preferred $ 45,100,000 55,200,000	High $ 65,100,000
		9,500,000	9,500,000	35,000,000

The actual consideration to Pan African and the MGE is the 25,000,000 Consideration Shares and the $2,000,000 Consideration Cash Payment. The Company has the potential to issue Class 1 to 4 Deferred Consideration Shares (ordinary shares) (and potential payment of further cash on meeting certain Milestones as noted in paragraph 1.3 above). If we ascribed 30 cents to each of the potential Class 1 to 4 Deferred Consideration Shares, the deemed consideration compared with the value of Explorator would be as follows:

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Assessed value of Explorator based on independent valuation of Mozambique Mineral Assets (rounded) Value of the considerations payable by Terranova as per paragraph 6.3		Low $ Preferred $ 45,100,000 55,200,000	Low $ Preferred $ 45,100,000 55,200,000	High $ 65,100,000
		35,000,000	35,000,000	35,000,000

8.4 The proposed Acquisition (in effect acquiring an interest in the Mozambique Mineral Assets) by way of the issue of Consideration Shares, the payment of the Consideration Cash Payment and the potential issue of the Class 1 to 4 Deferred Consideration Shares (ordinary shares) (and the contingent cash payments) as outlined in paragraph 1.3 above and resolution 1 (in relation to the shares component) to the Notice are considered on balance to be fair at the date of this report .
8.5 As noted above, the shares in the Company have traded post the 29 August 2012 announcement at between 34 cents and 40 cents (closing sale price on 17 September 2012 at 35.5 cents.

9. Reasonableness of the Proposals (Acquisition)

9.1 We set out below some of the advantages and disadvantages and other factors pertaining to the proposed Acquisition. In summary, we are of the opinion that the advantages outweigh the disadvantages at the date of this report.

Advantages

9.2 The Company further increases its exposure outside Australia to exposure to Mozambique gold assets and spreads the risk in case the existing mineral assets owned by the Terranova Group are not commercially successful. The Acquisition if successful could lead to potential gold operations or the ability for Terranova to on-sell or farm-out the Mozambique Mineral Assets to another mining company at a profit.
9.3 The Company may be able to raise further funds by way of share equity as a result of acquiring the Mozambique Mineral Assets (via acquiring all of the shares in Explorator). The Company on the strength of the proposed Acquisition is to raise a gross minimum of $5,000,000 at 30 cents per share (and the maximum Capital Raising can be a gross $8,000,000).
9.4 The proposed new board members bring further technical and business experience. Further detail on the proposed new directors has been announced to the market on 29 August 2012 and a summary is detailed in Section 7 of the EM.
9.5 There is an incentive to the new management and Pan African to make Terranova a viable mineral exploration and potential development company as Pan African could have a significant fully paid ordinary share interest in Terranova of an initial approximate 38.66% (assumes a Capital Raising of the minimum of $5,000,000 at 30 cents per share) (38.08% voting power taking into account the partly paid shares on issue) and could be as high as 61.91% of the ordinary shares on issue if 71,666,668 ordinary shares are issued to Pan African on issue of the Class 1 to 4 Deferred Shares (ordinary shares) to be issued to Pan African (and all partly paid shares are fully paid up) (approximate voting power of 70.44% if the partly paid shares were not paid up). As noted above, Pan African has the right to nominate third parties to receive some of the Consideration Shares and Deferred Shares.

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9.6 Diversification into a number of mineral areas in Mozambique by acquiring Mistral and Explorator may reduce the risk (but at the same time Terranova is taking on commitments).
9.7 The chances of the existing 19,800,000 partly paid shares being paid when called up may be enhanced as the uncalled capital is 19 cents per partly paid share and the proposed Capital Raising is to be undertaken at an issue price of not less than 30 cents per share. The payment of the uncalled capital would raise $3,762,000.
9.8 The Company may issue up to 26,666,667 new ordinary shares under the Capital Raising (to raise a gross $8,000,000) (and 16,666,667 shares to raise a gross $5,000,000) at an effective issue price of not less than 30 cents per share that is in excess of the highest share price of a Terranova share traded on ASX since listing on 1 September 2011 (except for several small trades as high as 32 cents) to the day before the announcement of the proposed Acquisition.

Disadvantages

9.9 The number of fully paid ordinary shares on issue could initially rise from 23,000,001 to 74,466,668 and up to 146,133,336 if all Class 1 to 4 Deferred Shares (ordinary shares) are issued (the Milestones need to be met). There are also 19,800,000 existing partly paid shares on issue that could be paid up to fully paid ordinary shares by the payment to the Company of $3,762,000. The existing fully paid shareholders interest in the expanded Terranova following the completion of the Acquisition reduces from 100% (pre Acquisition) to approximately 35.56% (excludes the partly paid shareholders) and may ultimately reduce to approximately 26.99% if all partly paid shares are paid up in full (assumes the minimum Capital Raising) (may reduce to approximately 14.73% if the Capital Raising is made at 30 cents per share and all Deferred Consideration Shares (ordinary shares) are issued to Pan African. If the $8,000,000 Capital Raising is achieved at 30 cents each, the existing fully paid shareholders interest could reduce to approximately 30.80% on Completion and as low as 13.84% if all Deferred Consideration Shares (ordinary shares) are issued on meeting the various Milestones (ignoring the voting power of the partly paid shares). However, the Company is acquiring Mistral and Explorator with an opportunity for the Mozambique Mineral Assets to be commercialised with gold production (but this cannot be guaranteed).
9.10 Currently, Pan African owns no shares in the Company and if resolution 1 is passed, Pan African could obtain a fully paid shareholding interest of between approximately 38.66% and 70.90% (voting power between 38.04% and 70.44%) (and between 29.60% and 61.89% including the partly paid shares being fully paid up) on the basis of a minimum Capital Raising of $5,000,000 at 30 cents per Capital Raising Share. Pan African could obtain a fully paid shareholding interest of between approximately 33.48% and 66.06% (voting power between 26.39% and 65.66%) (and between 26.46% and 58.19% including the partly paid shares being fully paid up) on the basis of a maximum Capital Raising of $8,000,000 at 30 cents per Capital Raising Share. Potentially, Terranova could become a legal subsidiary of Pan African. However this potential significant interest can also lead to an “overhang” in the market. Pan African is arguably paying a premium for control in that it is receiving consideration of an initial $9,500,000 (and may be $35,000,000 if the Deferred Consideration Shares were valued at 30 cents each) but is giving up Mozambique Mineral assets deemed to be currently valued at between $45,100,000 and $65,100,000 (preferred value $55,200,000) per the SRK Valuation Report.
9.11 In the event that the individual Milestones are met, Terranova will need to pay cash of $1,000,000 per Milestone and if it elects to pay cash instead of issuing the Class 3 and 4 Deferred Shares (ordinary shares), further cash payments would be required of $7,310,000 (BFS Milestone met) and $2,150,000 (Capacity Milestone met). Terranova may need to raise further significant working capital (over the $5,000,000 to $8,000,000 from the Capital Raising noted above) to spend on exploration, evaluation and possible development of the Mozambique Mineral Assets and meet potential cash payments noted above. The number of shares that may be issued to raise additional capital is not yet ascertained however any future capital raisings will further dilute the current non associated shareholders interests in Terranova. The ability to raise further capital to meet contingent payments cannot be assured.

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9.12 In general terms, investments in companies with mineral assets in Africa and surrounds are medium to high risk (including political, tax, foreign exchange and environmental risks) and for those shareholders who consider that the proposed Acquisition (acquisition of Mistral and Explorator) from Pan African is a risk worth taking, then the proposed Acquisition may be reasonable.
9.13 The Mozambique Mineral Assets may not turn out to be commercially viable and thus losses may be incurred.

Other Factors

9.14 There are annual exploration commitments in relation to the Mozambique Mineral Assets. Terranova may not have enough funds to meet ongoing commitments and some tenements may need to be sold or farmed out (although this is unlikely in the short term in view of the proposed Capital Raising).
9.15 It is noted that for accounting purposes in the books of Terranova, the Consideration Shares may be booked at $7,500,000 at the date the Consideration Shares are issued to Pan African but based on the post announcement of the Acquisition high price of 40 cents, the value would be $12,000,000. Terranova is the legal parent entity (but interposed will be a wholly owned subsidiary of Terranova, AMM). The ultimate future fair value of an investment in Mistral and Explorator is at this stage unknown and write downs in the investment may be required at a later stage (particularly if commercial success from the Mozambique Mineral Assets is not forthcoming).
9.16 SRK has ascribed a range of values to the Mozambique Mineral Assets owned by Explorator that is higher than the considerations payable by Pan African.
9.17 The value of the ordinary fully paid share at the dates of any issue of the Deferred Consideration Shares (ordinary shares) in Terranova may be higher than the assumed 30 cents per share as noted in the SPA. However, if the individual Milestones are met, it would be expected that the overall value of the Manica Gold Project would have increased from the assessed fair value range as noted in the SRK Valuation Report and as noted in paragraph 7.6 above.

10. Conclusion as to Reasonableness

10.1 After taking into account the factors referred to in 9 above (where in our opinion the advantages outweigh the disadvantages) and elsewhere in this report, we are of the opinion that the proposed Acquisition as noted in paragraph 1.3 and resolution 1 in the Notice may be considered, on balance, to be reasonable to the non-associated shareholders of Terranova. Thus the issue of up to 25,000,000 Consideration Shares and the potential to issue up to 71,666,668 Deferred Shares (ordinary shares) to Pan African as part of the Consideration as noted in resolution 1 is considered reasonable as at the date of this report.

11. Sources of Information

11.1 In making our assessment as to whether the proposed Acquisitions as noted in paragraph 1.3 and resolution 1 in the Notice are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company, the Mozambique Mineral Assets and Explorator that is relevant to the current circumstances. In addition, we have held discussions with the management of Terranova about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Terranova.

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11.2 Information we have received includes, but is not limited to:

Draft Notices’ of Terranova and draft Explanatory Statements to Shareholders prepared to 17 September 2012;
Discussions with management and directors of Terranova;
Details of historical market trading of Terranova ordinary fully paid shares recorded by ASX for the period 1 September 2011 to 17 September 2012;
Shareholding details of Terranova as supplied by the Company’s share registry as at 3
September 2012;
Un-audited consolidated statement of financial position of Terranova as at 31 December
2011, 31 March 2012 and 30 June 2012;
Annual Report of Terranova for the period ended 30 June 2011;
Announcements made by Terranova to the ASX from 1 September 2011 to 18
September 2012;
The Share Sale and Purchase Agreement between Terranova, AMM, Pan African and Mistral dated 28 August 2012;
The final Independent Valuation Report of SRK on the Mozambique Mineral Assets of 18 June 2012;
The cash flow forecasts of Terranova for 2012/13;
The estimated annual minimum mineral expenditure commitments relating to the Mozambique Mining Assets; and
Web site information from Pan African as it pertains to the Mozambique Mining Assets.

11.3 Our report includes Appendices A and our Financial Services Guide attached to this report.

Yours faithfully

STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren – FCA Director

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APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities dated 19 September 2012, relating to the acquisitions of Explorator as outlined in paragraph 1.3 of the report and resolution 1 in the Notice of Meeting to Shareholders and the Explanatory Statement proposed to be distributed to the Terranova shareholders in September or October 2012.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with Terranova and Pan African other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. There are no existing relationships between Stantons International Securities and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $25,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities does not hold any securities in Terranova, Pan African, Mistral or Explorator. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Australian Financial Services Licence (no 418019) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities. Stantons International Securities has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Terranova in order to assist them to assess the merits of the proposed Acquisition as outlined in resolution 1 the Explanatory Memorandum to Shareholders to which this report relates. This report has been prepared for the benefit of Terranova’s shareholders and does not provide a general expression of Stantons International Securities opinion as to the longer term value of Terranova, Explorator and their assets. Stantons International Securities does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of the Terranova Group or Mistral and Explorator (or any of the Pan African Group of companies). Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document,

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circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

DISCLAIMER

This report has been prepared by Stantons International Securities with due care and diligence. However, except for those responsibilities, which by law cannot be excluded, no responsibility arising in any way whatsoever for errors or omission (including responsibility to any person for negligence) is assumed by Stantons International Securities, Stantons International Audit and Consulting Pty Ltd, their directors, employees or consultants for the preparation of this report.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by Terranova and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Terranova has agreed:

(a) To make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Terranova may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by Terranova; and
(b) To indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Terranova or any of its officers providing Stantons International Securities any false or misleading information or in the failure of Terranova or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.
A draft of this report was presented to Terranova directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL AUDIT AND CONSULTING PTY LTD (Trading as Stantons International Securities) Dated 19 September 2012

Stantons International Securities ABN 84 144 581 519 and Financial Services Licence 418019 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. 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: 418019;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking 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. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, 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.

6. 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.

7. 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.

8. Associations and relationships

SIS is ultimately a wholly division of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd also trades as Stantons International that provides audit, corporate services, internal audit, probity, management consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1 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 Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints 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.

9.2 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 Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

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Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email [email protected]

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Manica Gold Project Valuation

Report Prepared for

Terranova Minerals NL

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Report Prepared by

SRK Consulting (Australasia) Pty Ltd TMN001 June 2012

SRK Consulting

Page i

Manica Gold Project Valuation

Terranova Minerals NL

Level 8 225 St Georges Terrace Perth, WA 6000

SRK Consulting (Australasia) Pty Ltd

Level 2 44 Market Street Sydney, NSW 2000

e-mail: [email protected] website: srk.com.au

Tel: +61 2 8079 1200 Fax: +61 2 8079 1222

SRK Project Number TMN001

June 2012

Compiled by

Peer Reviewed by

Anthony Stepcich Principal Consultant (Project Evaluations)

Chris Woodfull Principal Consultant (Geology)

Email: [email protected]

Authors:

Anthony Stepcich, Trivindren Naidoo.

STEP/WOOD

TMN001 Manica Gold Project Valuation Rev4

26 September 2012

SRK Consulting

Page ii

Executive Summary

This document is an Independent Valuation Report of the assets of Terranova Minerals NL (Terranova) which SRK Consulting Australia Pty Ltd (SRK) has prepared.

Summary of principal objectives

Terranova commissioned SRK to prepare an Independent Valuation Report. In undertaking this assessment, SRK reviewed all relevant data and reports available on the assets. A site visit was undertaken by SRK consultants as part an independent technical report completed in November 2011 for Pan African Resources Plc (PAR) on the Manica Gold Project in Mozambique. This report has been compiled in accordance with the VALMIN Code.

Outline of work programme

The following aspects of the Manica Gold Project were considered in the writing of this report:

Location, geographical conditions
Geological setting (including exploration history and adjacent mining)
Mineralisation
Mineral Resources
Exploration Valuation.

These studies involved the review of existing company reports and public literature of the local conditions. The Mineral Resource and Ore Reserve estimates were critically examined but not recalculated as this was outside the scope of this report. An Ore Reserve has not been reported for the Manica Gold Project

Focus on results

The three generally accepted Valuation approaches, as listed and defined in the CIMVAL Code, are:

Income Approach
Market Approach
Cost Approach.

The Market approach to valuation is generally accepted as the most suitable approach for valuation of a Mineral Resource Property or a Pre-Development Project. SRK favours the use of the Comparable Transaction method of valuation, a market-based approach, for the valuation of the Manica Project.

The Market Approach is based primarily on the principle of substitution and is also called the Sales Comparison Approach. The Mineral Property being valued is compared with the transaction value of similar Mineral Properties, transacted in an open market (CIMVAL, 2003). Methods include comparable transactions and option or farm-in agreement terms analysis.

SRK considered a database of 11 gold resource transactions pertaining to gold projects with a declared Resource base in southern and eastern Africa, that were conducted between January 2010 and March 2012. Of these 11 transactions, a total of 6 transactions were considered to be sufficiently comparable to the Manica Gold Project, and were analysed. Transactions pertaining to producing gold mines were not deemed relevant to the Manica Project, and South African empowerment deals were not deemed comparable. Four of the six comparable transactions

STEP/WOOD

TMN001 Manica Gold Project Valuation Rev4

26 September 2012

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Page iii

concerned Tanzanian gold projects, with the remaining two gold projects being from Kenya and Zimbabwe.

The results of this Comparable Transactions valuation are shown in the Table ES-1.

Table ES-1: Manica Valuation

Deposit	Criteria	Low	Preferred	High
		US$M	US$M	US$M
Fairbride Resources	Measured	$25.2	$28.0	$30.8
Fairbride Resources	Indicated	$9.6	$12.1	$14.5
Fairbride Resources	Inferred	$6.8	$10.5	$14.2
Subtotal Fairbride	Subtotal Value	$41.6	$50.6	$59.5

Dot's Luck Resources	Measured
Dot's Luck Resources	Indicated
Dot's Luck Resources	Inferred	$0.2	$0.4	$0.5
Subtotal Dot's Luck	Subtotal Value	$0.2	$0.4	$0.5

GuyFawkes Resources	Measured
GuyFawkes Resources	Indicated	$2.9	$3.6	$4.3
GuyFawkes Resources	Inferred	$0.3	$0.4	$0.5
Subtotal Guy Fawkes	Subtotal Value	$3.2	$4.0	$4.8

Boa Esperanza	Measured
Boa Esperanza	Indicated
Boa Esperanza	Inferred	$0.1	$0.2	$0.3
Subtotal Boa Esperanza	Subtotal Value	$0.1	$0.2	$0.3

Grand Total Manica	Grand Total Value	$45.1	$55.2	$65.1

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	Executive Summary ..................................................................................................................................... ii	Executive Summary ..................................................................................................................................... ii
	List	of Abbreviations ................................................................................................................................... vii
1	Introduction and Scope of Report .............................................................................. 1
	1.1	Purpose of the Report ......................................................................................................................... 1
	1.2	Reporting Standard ............................................................................................................................. 1
	1.3	Statement of SRK Independence ....................................................................................................... 1
	1.4	Representation .................................................................................................................................... 2
	1.5	Indemnities .......................................................................................................................................... 2
	1.6	Consents ............................................................................................................................................. 2
2	Background Information .............................................................................................. 3
	2.1	Location and Accessibility ................................................................................................................... 3
		2.1.1 Infrastructure ........................................................................................................................... 3
		2.1.2 Climate .................................................................................................................................... 3
		2.1.3 Physiography and Environmental Aspects ............................................................................. 4
3	Project Background ..................................................................................................... 5
	3.1	Geology ............................................................................................................................................... 6
	3.2	Mineral Resources .............................................................................................................................. 7
		3.2.1 Exploration History .................................................................................................................. 8
4	Resource Valuation .................................................................................................... 10
	4.1	Valuation Approaches ....................................................................................................................... 10
	4.2	Market ............................................................................................................................................... 11
	4.3	Analysis of Comparable Transactions .............................................................................................. 12
	4.4	Comparison with Yardstick Method .................................................................................................. 15
	4.5	Valuation ........................................................................................................................................... 15
		4.5.1 Measured Resources ............................................................................................................ 16
		4.5.2 Indicated Resources ............................................................................................................. 16
		4.5.3 Inferred Resources ................................................................................................................ 17
		4.5.4 Resources Valuation Summary ............................................................................................. 18
5	References .................................................................................................................. 20

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List of Tables

Table	3-1:	2011 Mineral Resource Statement for the Manica Gold Project ................................................. 7
Table	3-2:	Mineral Resource Statement for the Fair Bride prospect ............................................................ 8
Table	4-1:	Suggested Valuation Approaches for Different Types of Mineral Properties (CIMVAL) ........... 11
Table	4-2:	Comparable gold resource transactions in Southern and East Africa ....................................... 13
Table	4-3:	Manica Gold Project Valuation Summary from a deposit and resources classification
		perspective (US$M) ................................................................................................................... 18

List of Figures

Figure	2-1:	Location of Manica Exploration Project – Mozambique ............................................................... 4
Figure	4-1:	Gold Price in US$/oz between January 2010 and May 2012 .................................................... 11
Figure	4-2:	Implied US$/oz Transaction Price versus Monthly Average Gold Price .................................... 12
Figure	4-3:	Selected African gold resource transactions ............................................................................. 14
Figure	4-4:	Implied transaction prices as a percentage of the gold price .................................................... 15
Figure	4-5:	Valuation factors ........................................................................................................................ 16
Figure	4-6:	Manica Gold Project Valuation Ranges from a Resource classification only perspective
		(US$M) ....................................................................................................................................... 18

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Disclaimer

The opinions expressed in this Report have been based on the information supplied to SRK Consulting (Australasia) Pty Ltd (SRK) by Terranova Minerals NL (Terranova). The opinions in this Report are provided in response to a specific request from Terranova to do so. The opinions in this Report are provided in response to a specific request from Terranova to do so. SRK has exercised all due care in reviewing the supplied information. Whilst SRK has compared key supplied data with expected values, the accuracy of the results and conclusions from the review are entirely reliant on the accuracy and completeness of the supplied data. SRK does not accept responsibility for any errors or omissions in the supplied information and does not accept any consequential liability arising from commercial decisions or actions resulting from them. Opinions presented in this Report apply to the site conditions and features as they existed at the time of SRK’s investigations, and those reasonably foreseeable. These opinions do not necessarily apply to conditions and features that may arise after the date of this Report, about which SRK had no prior knowledge nor had the opportunity to evaluate.

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List of Abbreviations

Abbreviation	Meaning
ASL	Above Sea Level
ASIC	Australian Securities and Investment Commission
ASX	Australian Stock Exchange
Au	Gold
bcm	bank cubic metre
BD	Bulk Density
BFA	Bench Face Angle
BH	Borehole
B/H	Bench Height
BIF	Banded Iron Formation
BoD	Basis of Design
BSA	Bench Stack Angle
BSH	bench stack height
C	Cohesion
CTD	conventional tailings disposal
CAPEX	capital expenditure
CPR	Competent Persons Report
DFS	Definitive Feasibility Study
dmt	Dry metric tonne
DTM	digital terrain model
E	East
E–W	east-west
FEL	Front end loader
FoS	Factor of Safety
FS	Feasibility Study
Ga	Billion years ago
GDM	geotechnical domain model
GIS	geographic information system
GSBW	geotechnical safety berm width
g/t	grams per tonne
IRA	inter ramp angle
IP	Induced Polarisation
JORC Code	Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia (JORC), December 2004.
K	Thousand
kg	Kilogram
kj	Kilojoule
kl	Kilolitre
kt	kiloton

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Abbreviation	Meaning
kW	Kilowatt
l	Litre
LoM	Life of Mine
LOSA	limiting overall slope angle
l/s	Litres per second
m	Metre
M	Million
m3	cubic metre
mE	metres east
ml	Millilitre
Moz	million ounces
mN	metres north
m RL	metres reduced level
MRMR	Mining Rock Mass Rating
mS	metres south
Mt	million tonnes
Mtpa	million tonnes per annum
N	North
NE	Northeast
NPV	net present value
NW	North West
OB	Overburden
OPEX	operating expenditure
OS	Oversize
PAR	Pan African Resources plc
PFS	Pre-Feasibility Study
Q	Barton Q value
Q’	modified Q value
RMR	Rock Mass Rating
ROM	Run of Mine
RQD	Rock Quality Designation
S	South
SE	South East
SW	South West
t	Tonne
tpa	tonnes per annum
TSF	Tailings Storage Facility
TTD	Thickened Tailings Disposal
W	West
ZAR	South African Rand

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1 Introduction and Scope of Report

Terranova Minerals NL (Terranova or the Client) contacted SRK Consulting (Australasia) Pty Ltd (SRK) to undertake a valuation of the Manica Gold project (or the Project) in Mozambique.

The Manica Gold Project is owned by Explorator Limitada. Explorator Limitada is owned 98% by Mistral Resource Development Corporation and 2% by Pan African Resources Plc (PAR). Mistral Resource Development Corporation is a wholly owned subsidiary of PAR.

Terranova, via a wholly owned subsidiary, Auroch Minerals Mozambique Pty Ltd, is acquiring all of the share capital of Explorator Limitada and Mistral Resource Development Corporation from Pan African Resources Plc.

SRK has undertaken a valuation of the proposed Manica Gold Project that was the subject of the Independent Technical Review (ITR) prepared by SRK in November 2011.

The valuation values the Fair Bride, Dot’s Luck, Guy Fawkes and Boa Esperanza deposits using the comparable transactions method.

1.1 Purpose of the Report

The purpose of this report is to undertake a valuation of the Manica Gold Project.

1.2 Reporting Standard

This Report has been prepared to the standard of, and is considered by SRK to be, a Technical Assessment Report under the guidelines of the VALMIN Code.

The VALMIN Code is the code adopted by the Australasian Institute of Mining and Metallurgy (AusIMM) and the standard is binding upon all AusIMM members. The VALMIN Code incorporates the JORC Code for the reporting of Mineral Resources and Ore Reserves.

In this Report, identified Mineral Resources and Ore Reserves are quoted using categorisation in accordance with the JORC Code (2004). The information in this report that relates to Mineral Resources and exploration results is based on information reviewed by Dr W.D. Northrop who is a consultant for ExplorMine and is appointed as an independent geologist to the Company’s project team. He is registered by the South African Council for Natural Scientific Professions as a Professional Natural Scientist in the field of practice of Geological Science, Registration Number 400164/87, and as such is considered to be a Competent Person. Dr Northrop has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Dr Northrop consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

1.3 Statement of SRK Independence

Neither SRK nor any of the authors of this Report have any material present or contingent interest in the outcome of this Report, nor do they have any pecuniary or other interest that could be reasonably regarded as being capable of affecting their independence or that of SRK.

SRK has no prior association with Terranova in regard to the mineral assets that are the subject of this Report. SRK has no beneficial interest in the outcome of the technical assessment being capable of affecting its independence.

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SRK’s fee for completing this Report is based on its normal professional daily rates plus reimbursement of incidental expenses. The payment of that professional fee is not contingent upon the outcome of the Report.

1.4 Representation

Terranova has represented in writing to SRK that full disclosure has been made of all material information and that, to the best of its knowledge and understanding, such information is complete, accurate and true.

1.5 Indemnities

As recommended by the VALMIN Code, Terranova has provided SRK with an indemnity under which SRK is to be compensated for any liability and/or any additional work or expenditure resulting from any additional work required:

which results from SRK’s reliance on information provided by Terranova or to Terranova not providing material information; or
which relates to any consequential extension workload through queries, questions or public hearings arising from this Report.

1.6 Consents

SRK consents to this Report being included, in full, in the Independent Accountants Report which is to be included in the Independent Experts Report relating to the proposed transaction, in the form and context in which the technical assessment is provided, and not for any other purpose.

SRK provides this consent on the basis that the technical assessments expressed in the Summary and in the individual sections of this Report are considered with, and not independently of, the information set out in the complete Report and the Cover Letter.

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2 Background Information

The Manica Gold Project has a substantial Resource base and significant exploration potential. Since acquiring the Manica Gold Project in 2006, PAR has conducted extensive drilling along a select portion of the Andrada shear at Manica, and has delineated a 2.970 million gold ounce, JORC compliant resource.

PAR has commissioned a scoping study and a pre-feasibility study for the Manica Gold Project consisting initially of an open-pit mining operation.

2.1 Location and Accessibility

The following discussion on the Location and Accessibility of the deposit is taken from the November 2010 Competent Persons Report (CPR) by ExplorMine Consultants.

The Manica Gold Project Licence area is situated approximately 4 km north of the town of Manica, which lies approximately 270 km west northwest of the city of Beira. The 93/L Licence area is centred on latitude 18°53” South and longitude 32°54” East and lies close to the Mozambican border with Zimbabwe. The Zimbabwean town of Mutare is situated about 5 km from the MozambicanZimbabwean border. Refer Figure 2-1.

The Manica Gold Project is situated on the “Beira Corridor”, which is a principal road, rail and oil pipeline link between Zimbabwe and the Mozambican port of Beira on the Indian Ocean. The project area is easily accessible by dirt road 4 to 10 km from the town of Manica. Manica township can be reached by tar road either from Beira via the regional centre of Chimoio, a journey of about 270 km and three hours, or from Harare a distance of about 300 km. Scheduled air services link all the major regional centres of Johannesburg, Maputo, Harare, Beira and Chimoio.

2.1.1 Infrastructure

The “Beira Corridor‟ is the main link between the Mozambican port of Beira and Harare the capital of Zimbabwe. Transport infrastructure is good which includes tar roads, well maintained secondary gravel roads and rail. Scheduled air services link the major regional centres of Johannesburg, Maputo, Harare, Beira and Chimoio. Chimoio, 70 km east of Manica, has a regional airport. Electrical power is available via a 33 Kv power line, which is linked to the national power grid supplied by the Chicamba and Mavusi hydroelectric schemes in the region and more distantly by the Cabora Bassa hydroelectric scheme. Water is supplied from the Chicamba dam (Lake Chicamba), the Revue River and a large aquifer within extensive valley gravels. Telecommunications are well established in the area and mobile phone reception is present over much of the Manica Gold Project Licence area. Shops, supermarkets, fuel, hotel accommodation, and engineering services are available in Manica and Chimoio.

2.1.2 Climate

Mozambique is situated in the tropics and is characterised by warm to hot wet summer and mild dry winter seasons. The rainy season generally lasts from mid-November to late March, with annual rainfall in the order of 1000 to 1500 mm. The rainy season is known to limit dirt road access in certain areas within the Manica Gold Project area. Maximum average temperatures of 23° C occur in November and December, while mean minimum temperatures of about 7° C occur in July.

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2.1.3 Physiography and Environmental Aspects

The Manica area is located in an embayment within the East African Escarpment, with the topography rising steeply to the west, north and south, to the Zimbabwean border, which is defined by the escarpment. The Manica Gold Project area straddles the Revue River and associated alluvial flats at about 650 m elevation. To the north and south within the project areas low undulating hills rise up to between 850 m and 1200 m.

Vegetation in the area comprises mainly typical tropical African woodland and low bush. The lower hills and Revue River valley are utilized for mixed agriculture.

During past exploration, the bush has generally been cleared by means of hand as opposed to mechanical methods to reduce the impact on the environment. Drilling sites were rehabilitated and excavations and trenches are filled immediately after they cease to be of use.

==> picture [339 x 447] intentionally omitted <==

Figure 2-1: Location of Manica Exploration Project – Mozambique

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3 Project Background

The data and information used by SRK to prepare this valuation report provided by PAR, has been prepared by a number of consultants and was completed over different phases of the project.

The project is based on the July 2011 Mineral Resource model and CPR prepared by Bill Northrop for ExplorMine Consultants (ExplorMine). The July 2011 CPR is an update of the June 2010 CPR. This report has been prepared and reviewed against the Joint Ore Reserve Committee (JORC) Code Guidelines and resulted in Mineral Resources being declared.

The focus of PAR is the continued exploration of the region and the evaluation of the Fair Bride deposit to enable Ore Reserves to be reported, leading to commencement of mining and processing activities on site.

A preliminary assessment undertaken by Turgis Consulting for PAR in 2006 was updated in 2010. The most complete document is the Manica Gold Project Feasibility Study Report completed by Turgis Consulting in 2010 (Turgis 2010). The report follows on from the Manica Gold Project Conceptual Mining Evaluation completed by Turgis Consulting in October 2006 (Turgis, 2006).

The Turgis (2010) study supported the submission of the Mining Concession application to the Mozambique Government. The scope of the report was to support a 20 ktpm open pit operation from the Fair Bride deposit. A Mining Concession was granted to Explorator Limitada on 3[rd] March 2011 and is valid for 25 years and renewable for a further 25 years.

Following the release of the Turgis (2010) study, PAR commissioned independent consultants Minxcon Consultants (Minxcon) to undertake a more detailed Mining Study and TWP Holdings (Pty) Ltd (TWP) to undertake an evaluation of the processing options. The primary scope of the Mining Study is to undertake additional studies to determine the optimum scale of the operation.

The outcome of the Mining Study optimised net present values at a production scenario of 125 ktpm incorporating production from Fair Bride open pit. Ore processing options considered were Ultra-Fine Grind (“UFG”), Bio-oxidation (“BIOX”) and sale of concentrate. UFG was selected considering the anticipated lower capital cost requirement. Roasting was proposed later as an option under consideration and was not subject to optimization studies. The underground extension was tested at 80 ktpm and 125 ktpm throughput rates. It was found that 125 ktpm from underground was feasible based on a 3D underground model design and scheduling.

In June 2011 the Mineral Resource Model was updated by ExplorMine.

Minxcon re-optimised the Fair Bride deposit using the June 2011 Mineral Resource model, leading to an updated mining schedule for the Mining Study. An engineered Open Pit design has not been completed using the June 2011 Mineral Resource model.

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3.1 Geology

The Manica Project is situated on the eastern end of the OMM Greenstone Belt. The OMM belt is part of a major ENE to NE trending regional structure, the Mutare-Masvingo-Sandawana lineament.

The mining of gold along the OMM belt has been recorded since the 12[th] Century. The first Portuguese expedition reached the area in 1565 and the area of Manica (Mozambique) and Rezende (Zimbabwe) was incorporated by Colonel Paiva d’ Andrada in 1888. In 1889, the British took control of the deposits at Rezende.

An estimated 65t of gold has been extracted from the Rezende Mine and surrounding deposits. Approximately 12t of gold has been exploited from the Manica district, primarily from eight alluvial placers along the Revue River. Artisanal miners resumed the production of gold in 1990 from placer deposits in the Manica district.

There are an estimated 23 non-placer mines in the Manica district that extracted gold between 1900 and 1950. The gold was mainly extracted from the supergene zone, with the exception of some deeper mining to depths of 159 and 200 m in the sulphide zones.

The geology of Fair Bride comprises greywacke, chlorite schist, serpentinite and Banded Iron Formation (BIF). The geology forms a tight to isoclinal fold structure which has a faulted fold hinge in the east, and plunging to the west. The main mineralisation is located along a 7 km EW portion of the Andrada Shear Zone. The Dot’s Luck prospect is located on the western part of the Andrada shear zone.

The Guy Fawkes prospect is located on the Mutamburico Shear Zone. Gold mineralisation occurs within 1 m wide quartz veins, hosted in talc-carbonate schist and brecciated and sheared BIF, dipping steeply to the north.

The Boa Esperanza prospect comprises a highly tectonised and gossanous BIF, which dips at 75°. Rocks in the footwall comprise brecciated BIF within talc-chlorite schist. Gold mineralisation is genetically linked to granitoid intrusions and associated hydrothermal processes.

The mineralisation mainly occurs in BIF hosted quartz veins and shear zones, and also in alluvial sediment. The combination of granitoid intrusion and contemporaneous formation of faults and shear zones are the main factors leading to the concentration and accumulation of gold mineralisation.

Analogous Archaean orogenic gold deposits are widespread around the world, including in the Yilgarn Craton and accounts for almost 80% of gold production in WA. In similarity to the Manica area, common features include:

Structural control of gold deposition
Timing of metamorphism to gold mineralisation
Consistent metal association; and
Mixed aqueous-carbonic hydrothermal fluid.

These types of systems share many common features but each deposit has a set of unique geological characteristics. The diversity is a reflection of the very complex interplay of both physical and chemical processes at the sites of gold deposition at various depths in the crust.

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3.2 Mineral Resources

SRK reviewed the following two sets of Mineral Resource Estimates (MRE) for the Manica Gold Project:

1 2009 MRE of the Fair Bride, Dot’s Luck, Boa Esperanza and Guy Fawkes prospects; and
2 2011 revised MRE of the Fair Bride deposit as summarised in the following Mineral Resource Statement.

A summary of the 2011 Mineral Resource Estimate for the Manica Gold Project Mining Concession is given in Table 3-1.

Table 3-1: 2011 Mineral Resource Statement for the Manica Gold Project

		Cut-off Au (g/t)
			Tonnes (‘000)	Grade (g/t)	Gold (kg)	Gold (koz)
Category	Prospect


	Fair Bride	0.5	11,561	1.73	19,978	642
	Dot’s Luck
	Guy Fawkes
Measured
	Boa Esperanza


	Total		11,561	1.73	19,978	642
		0.5 < 300 m
	Fair Bride		10,795	1.64	17,719	570
		1.0 > 300 m

Indicated	Dot’s Luck
	Guy Fawkes	1.25	2,150	2.44	5,240	170
	Boa Esperanza


	Total		12,945	1.77	22,959	740
	Fair Bride	0.5	24,598	1.83	45,075	1,449
	Dot’s Luck	1.00	480	3.25	1,560	50
	Guy Fawkes	1.25	620	2.81	1,740	60
Inferred
	Boa Esperanza
		1.25	330	2.94	970	30

	Total		26,028	*1.89*	*49,345*	*1,589*
*Total Manica Project*			*50,534*	*1.83*	*92,282*	*2,971*

Notes

Tonnes and gold kgs have been rounded-off to the appropriate level of accuracy.
Tonnes quoted for Fair Bride include a 2% dilution factor.
The information in this report that relates to Mineral Resources and exploration results is based on information reviewed by Dr W.D. Northrop who is a consultant to ExplorMine and is appointed as an independent geologist to the Company’s project team. He is registered by the South African Council for Natural Scientific Professions as a Professional Natural Scientist in the field of practice of Geological Science, Registration Number 400164/87, and as such is considered to be a Competent Person. Dr Northrop has sufficient experience which is relevant to the styles of mineralisation and types of deposits under consideration and to the activity he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves". Dr Northrop consents to the inclusion in this report of the matters based on his information in the form and context in which it appears.

A breakdown of the Fair Bride Mineral Resource Estimate is summarised in Table 3-2.

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Table 3-2: Mineral Resource Statement for the Fair Bride prospect

Fair Bride	Resource Category	Cut-off g/t	Tonnes (‘000)	Grade (g/t)	Gold (kg)	Gold (Koz)
<300 m (Opencast)	Measured	0.5	11,561	1.73	19,978	642
>300 m (Underground)		0.5	-	-	-	-
<300 m (Opencast)	Indicated	0.5	7,464	1.49	11,157	359
>300 m (Underground)		1.0	3,331	1.97	6,562	211
<300 m (Opencast)	Inferred	0.5	2,707	1.34	3,620	116
>300 m (Underground)		0.5	21,891	1.89	41,455	1,333
Total (UG & OC)	Total	0.54	46,954	1.76	82,772	2,661
<300 m (Opencast)	Total	0.50	21,733	1.60	34,755	1,117
>300 m (Underground)	Total	0.57	25,221	1.90	48,017	1,544

3.2.1 Exploration History

Several phases of exploratory work have been undertaken within the current Manica Gold Project area post mining operations during the 1950’s, which are summarised as follows:

Phase 1:

In 1979, a German Group undertook a drilling programme of the Dots Luck prospect.
In 1987 and 1989, Lonrho drilled the Dot’s Luck prospect.
An additional Induced Polarisation (IP) survey to the immediate east of Dot’s Luck was carried out by Lonrho, which was then followed by sampling in a historic open pit in the vicinity of Fair Bride.

Phase 2:

In 2001, Explorator Limitada completed a gold soil geochemical survey and geological mapping (surface and underground) of most of the southern portion of the Manica Gold Project.
In 2002, this exploration work was followed by a reverse circulation (RC) drilling programme giving a total of 2,270 m were drilled, targeting the Try Again and Fair Bride historical workings and possible extensions.

Phase 3:

During early 2003, the Fair Bride – Dot’s Luck target zone, covering an area of 8 km[2] , and the Boa Esperanza prospect area, covering an area of 7 km[2] , were subjected to an IP survey.
In October 2003, a more extensive RC drilling programme commenced, drill testing various targets and following-up on positive results obtained during the 2002 drilling campaign. The 2003 drilling programme consisted of 35 RC holes giving a total of 3,102 m of drilling.
In the first quarter of 2004, an additional 14 RC and 10 diamond drill (DD) holes gave a total of 1,358 m and 1,759 m respectively within the 93/L license area. These drillholes were mainly concentrated in the Fair Bride – Dot’s Luck target zone. Two diamond drillholes were drilled in the Guy Fawkes area.

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Phase 4:

In 2005, an additional 16 RC drill holes were completed in January 2005 in the Fair Bride area totalling 1,514 m.
Dipole – Dipole IP survey work commenced in the Fair Bride area in September 2005 on 50 m line spacing, with stations 25 m apart. This geophysical work was completed \in December 2005.
During the first quarter of 2006, four large diameter (63.3 cm) diamond drill holes were drilled at the Fair Bride prospect, to provide metallurgical samples.
In 2006, detailed 1: 2000-scale geological surface mapping was completed at Fair Bride, Dot’s Luck, Boa Esperanza and Guy Fawkes. In addition, interpretation of the Dipole-Dipole IP survey conducted in 2005 was completed during 2006.
All of the historical underground (adits) and surface (pits and trenches) workings at the Dot’s Luck prospect were channel sampled.

Phase 5:

Infill and ore body delineation drilling was resumed in January 2007 and completed in July 2008. A total of 18,759 m diamond drilling and 2,264 m of RC drilling was completed at Fair Bride and Dot’s Luck. An additional 576 m of diamond drilling and 3,455 m of RC drilling were also completed at the Guy Fawkes prospect.

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4 Resource Valuation

The Manica Gold Project is situated within a mining concession (3990C Concessao Mineira) that was awarded last year for a period of 25 years, with the capacity to renew for a further 25 years.

The Manica Gold Project is a Pre-Development Project, as defined in the VALMIN Code, in that Mineral Resources have been identified and their extent estimated, but a decision to proceed with development has not been made. Mineral Resources have been declared, but Mineral Reserves have not been declared. It would be classified as a Mineral Resource Property under the CIMVAL Code.

SRK has previously reviewed the declared Mineral Resources associated with the Manica Gold Project (SRK, 2011) as part of a more general review of the Project. Refer to this report (SRK, 2011) for a description of the regional and local geology as well as the mineralisation associated with the project.

The 2011 Mineral Resource Statement for the Manica Project is provided in Table 3-1, with further detail on the Resources of the Fair Bride prospect provided in Table 3-2.

SRK’s Mineral Resource Estimate review (SRK, 2011) was at a high level and was limited to the following:

A review of the Competent Person’s Reports that detail the methods and assumptions used by the Competent Persons (CP) when estimating the resources;
A high level review of the exploration data used during the estimation process;
A high level review of the block models derived from the estimation process; and
A two-day site visit to the project area, including the core farm and each of the main deposits.

4.1 Valuation Approaches

The three generally accepted Valuation approaches, as listed and defined in the CIMVAL Code, are:

Income Approach
Market Approach
Cost Approach.

The Income Approach is based on the principle of anticipation of benefits and includes all methods that are based on the income or cash flow generation potential of the Mineral Property (CIMVAL, 2003). Valuation methods that follow this approach include Discounted Cash Flow (DCF) modelling, Monte Carlo Analysis, Option Pricing and Probabilistic methods.

The Cost Approach is based on the principle of contribution to value (CIMVAL, 2003). Methods include the appraised value method and multiples of exploration expenditure, where expenditures are analysed for their contribution to the exploration potential of the Mineral Property.

The applicability of the various valuation approaches and methods vary depending on the stage of exploration or development of the property, and hence the amount and quality of the information available on the mineral potential of the property. Table 4-1 presents CIMVAL’s view on the applicability of the various valuation approaches for the valuation of mineral properties at the various stages of exploration and development.

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Table 4-1: Suggested Valuation Approaches for Different Types of Mineral Properties (CIMVAL)

Valuation Approach	Exploration Properties	Mineral Resource Properties	Development Properties	Production Properties
Income	No	In some cases	Yes	Yes
Market	Yes	Yes	Yes	Yes
Cost	Yes	In some cases	No	No

Source: (CIMVAL, 2003)

The Market approach to valuation is generally accepted as the most suitable approach for valuation of a Mineral Resource Property or a Pre-Development Project (Table 4-1).

The use of income-based methods, such as Discounted Cash Flow (DCF) modelling, is not generally accepted in situations where Ore Reserves, supported by suitably detailed mining studies, have not been declared. As Ore Reserves have not currently been declared for the Manica Gold Project, income-based methods of valuation are not considered suitable.

The use of cost-based methods, such as considering suitable multiples of exploration expenditure, are best suited to exploration properties, before Mineral Resources are reliably estimated. As current Mineral Resources, including Measured Resources for the Fair Bride deposit, have been declared for the Manica Project, cost-based methods of valuation are considered less suitable than market-based methods of valuation.

SRK favours the use of the Comparable Transaction method of valuation, a market-based approach, for the valuation of the Manica Project.

An alternative method would be the Yardstick (Rule of Thumb) method, which is also a marketbased approach.

4.2 Market

The variation in the gold price (in US$/oz) for the period January 2010 to May 2012 is illustrated in Figure 4-1.

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Figure 4-1: Gold Price in US$/oz between January 2010 and May 2012

Source: Infomine

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Broadly speaking, the gold price climbed from approximately $1,100/oz in January 2010 to a peak just short of US$1,900/oz in August 2011, and has traded around US$1,650/oz since then, with some volatility. The gold price on May 1. 2012 was US$1,665.99/oz.

4.3 Analysis of Comparable Transactions

Four of the six comparable transactions concerned Tanzanian gold projects, with the remaining two gold projects being from Kenya and Zimbabwe. Both the Kenyan and Zimbabwean projects were past producers, with the Kenyan project including Measured Resources, whereas the Zimbabwean Project included only Inferred Resources. Two of the Tanzanian projects included Indicated Resources, with the remaining two projects including only Inferred Resources.

The implied price paid ranged from a low of US$5.22/oz to a high of US$35.77/oz when all 6 transactions were included. The implied percentage of the gold price paid ranged from 0.4% to 2.65%. The Resource weighted average and the median were 1.41% and 1.08% of the gold price respectively, which would imply a price of US$23.48/oz and US$17.94/oz respectively, if these were factored to the May 1, 2012 gold price of US$1,665.99/oz.

The implied US$/oz prices of the 6 transactions fall into 3 groups, which correspond to projects with Inferred Resources only, projects with Indicated and Inferred Resources, and Past Producing projects (with or without declared Measured Resources).

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

Transactions and Average Gold Price
1800 40.00
1700 35.00
1600 30.00
1500 25.00
1400 20.00
1300 15.00
1200 10.00
1100 5.00
1000 -
Oct-09 Jan-10 May-10Aug-10 Nov-10 Feb-11 Jun-11 Sep-11 Dec-11 Apr-12 Jul-12
Gold Price Measured/ Past Producer Indicated Inferred
Gold Price ($/Oz)
Implied $/Oz for transaction
----- End of picture text -----

Figure 4-2: Implied US$/oz Transaction Price versus Monthly Average Gold Price

The projects with only Inferred Resources transacted in the implied range of US$5.22/oz to US$5.69/oz, which equates to 0.40% to 0.45% of the gold price. Factored to the May 1, 2012 gold price, this implies a range of US$6.67/oz to US$7.50/oz. The Resource weighted average is 0.44% of the gold price and the median is 0.42% of the gold price, which factor to US$7.26/oz and US$7.08/oz respectively.

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Table 4-2: Comparable gold resource transactions in Southern and East Africa

Project	Country	Project Stage	Resource Category	Date	Synopsis	Implied 100% Price ($M)	Grade (g/t)	Contained Gold (oz)	Implied $/oz	Implied Percentage of gold price
Migori	Kenya	Past Producer – Reserves Development	Measured, Indicated, Inferred	Sep- 10	In September 2010, Kansai agreed to sell its 85% interest in Migori to IPCM for a total cash sum of $38.9 million, to be paid in 3 unequal tranches.	45.76	1.16	1,279,587	35.77	2.65



Beehive	Zimbabwe	Past Producer – Reserves Development	Inferred	Jan- 12	In January 2012, Conquest Resources Ltd reported the sale of its gold properties and interests in Zimbabwe to Mayfair Mining and Minerals Inc. The consideration was 20 million fully paid common shares in the capital of Mayfair having a contractual value of $1.97 million.	2.19	5.7	65,973	33.18	2.03



Miyabi	Tanzania	Reserves Development	Indicated, Inferred	Apr- 11	In April 2011, Brightstar Resources executed an agreement with African Eagle allowing Brightstar to earn African Eagle’s 75% interest in the Miyabi project by sole funding exploration and completing a feasibility study. The company was required to spend $3 million in 30 months to earn 50%, increasing this to 75% by completing a feasibility study.	6.00	1.29	513,039	11.70	0.83


Nyanzaga	Tanzania	Reserves Development	Indicated, Inferred	Feb- 10	In February 2010, Barrick acquired all of Tusker’s outstanding shares in a total transaction value of $34.8 million. At the time, Tusker owned a 49% interest in Nyanzaga and was earning 68%. Barrick owned the remaining 51%.	71.02	1.3	4,263,189	16.66	1.32


Igurubi	Tanzania	Reserves Development	Inferred	Apr- 10	In April 2010, Peak Resources agreed terms with African Eagle Resources for the acquisition of a 75% interest in the Igurubi project, with shares to be issued in consideration upon certain milestones being reached. These terms allegedly valued the Igurubi project at around $4 million.	4.00	2.76	702,768	5.69	0.45


Kitongo	Tanzania	Reserves Development	Inferred	Jul- 10	In July 2010, Tasman purchased the Kitongo project by acquiring 100% of the shares of Carlton Resources Pty Ltd, with a consideration of $1.49 million payable to Iamgold in upfront and deferred payments.	1.49	2	285,499	5.22	0.40

Source: Data from MEG Database

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The projects with both Indicated and Inferred Resources transacted in the implied range of US$11.70/oz to US$16.66/oz, which equates to 0.83% to 1.32% of the gold price. Factored to the May 1, 2012 gold price, this implies a range of US$13.83/oz to US$22.05/oz. The Resource weighted average is 1.27% of the gold price and the median is 1.08% of the gold price, which factor to US$21.17/oz and US$17.94/oz respectively.

The projects with past producing deposits, with or without Measured Resources, transacted in the implied range of US$33.18/oz to US$35.77/oz, which equates to 2.03% to 2.65% of the gold price. Factored to the May 1, 2012 gold price, this implies a range of US$33.84/oz to US$44.14/oz. The Resource weighted average is 2.62% of the gold price and the median is 2.34% of the gold price, which factor to US$43.63/oz and US$38.99/oz respectively.

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Implied Transaction price/ounce and Contained
Ounces
45.00
40.00
35.00 1,279,587
65,973
30.00
25.00
20.00
4,263,189
15.00
513,039
10.00
5.00
702,768 285,499
-
Jul-09 Oct-09 Jan-10 May-10 Aug-10 Nov-10 Feb-11 Jun-11 Sep-11 Dec-11 Apr-12 Jul-12
Measured/Past Producer Indicated Inferred
Implied $/Oz
----- End of picture text -----

Figure 4-3: Selected African gold resource transactions

Note: Bubble size represents contained gold ounces at time of transaction.

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

Implied Percentage of Gold Price and Contained
Ounces
3.50
3.00
1,279,587
2.50
2.00 65,973
1.50
4,263,189
1.00
513,039
0.50
702,768 285,499
-
Jul-09 Oct-09 Jan-10 May-10 Aug-10 Nov-10 Feb-11 Jun-11 Sep-11 Dec-11 Apr-12 Jul-12
Measured/Past Producer Indicated Inferred
Implied Percentage of Gold Price
----- End of picture text -----

Figure 4-4: Implied transaction prices as a percentage of the gold price

Note: Bubble size represents contained gold ounces at time of transaction.

4.4 Comparison with Yardstick Method

In the Yardstick method of valuation, specified percentages of the spot price of the metal is used to value the Resources. Commonly used Yardstick factors are:

Not in reported resource: <0.5% of spot price
Inferred Resources: 0.5% to 1% of spot price  Indicated Resources: 1% to 2% of spot price  Measured Resources: 2% to 5% of spot price

These factors agree reasonably well with the factors derived from the analysis of the comparable transactions (0.44% for Inferred Resources, 1.27% for Indicated Resources and 2.62% for Measured Resources). Nevertheless, SRK prefers to base the valuation of the Manica Gold Project on the Comparable Transaction method, as this places more weight on recent transactions of comparable assets, and demonstrates recent market activity.

4.5 Valuation

SRK has valued the gold Resources of the Manica Gold Project on the basis of the confidence category of the Resources, with Measured, Indicated and Inferred Resources valued separately. The basis of the valuation was the contained gold implicit in the declared Resources.

The approach adopted has been a market-based approach, with the valuations based on multiplying the contained ounces by pricing factors derived from the analysis of comparable transactions, as presented in the previous section of this report. The pricing factors used in the valuation are summarised in Figure 4-5.

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Valuation Factors
60.00
48.00
50.00
43.63
40.00
39.27
30.00 25.40
21.95
21.17
20.00
18.59
9.80
16.93
10.00 15.24
7.26
- 4.72
Measured / Past Indicated Inferred All
Producer
High Preferred Low
US$/oz
----- End of picture text -----

Figure 4-5: Valuation factors

4.5.1 Measured Resources

The Measured Resources associated with the Manica Gold Project are restricted to the Fair Bride deposit, consisting of 11.5 Million tonnes at 1.73 g/t for 642 000 ounces of gold. This is at a cut-off of 0.5 g/t and only includes material from a depth of <300 m.

Based on SRK’s analysis of six comparable transactions, SRK has based the Preferred Value on the resource-weighted average implied US$/oz value of the past-producing assets, factored to the May 1, 2012 gold price, i.e. US$43.63/oz. The Low and High value range were calculated based on a 10% variation above and below this resource-weighted average, i.e. US$39.27/oz for the lower end range and US$48.00/oz for the higher end range.

The valuation of PAR’s 100% interest in the Measured Gold Resources of the Manica Project, including the Fair Bride Measured Resources, ranges from a low value of US$25.2M to a high value of US$30.8M with a preferred value of US$28.0M.

4.5.2 Indicated Resources

The Indicated Resources associated with the Manica Gold Project are restricted to the Fair Bride and Guy Fawkes deposits. The Fair Bride Indicated Resources consist of 10.8 Million tonnes at 1.64 g/t for 570 000 ounces of gold at a cutoff of 0.5 g/t for material at a depth <300 m and 1.0 g/t for material at a depth >300 m. The Guy Fawkes Indicated Resources consist of 2.15 Million Tonnes at 2.44 g/t for 170 000 ounces at a cutoff of 1.25 g/t. This gives a total of 12.9 Million Tonnes at 1.77 g/t for 740 000 ounces of gold.

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Based on SRK’s analysis of comparable transactions, SRK has based the Preferred Value on the resource-weighted average implied $/oz value of the assets including Indicated Resources, factored to the May 1, 2012 gold price, i.e. US$21.17/oz. The Low and High value range were calculated based on a 20% variation above and below this resource-weighted average, i.e. US$16.93/oz for the lower end range and US$25.40/oz for the higher end range.

The valuation of PAR’s 100% interest in the Indicated Gold Resources of the Manica Project, including the Fair Bride Indicated Resources and the Guy Fawkes Indicated Resources, ranges from a low value of US$12.5M to a high value of US$18.7M with a preferred value of US$15.6M.

4.5.3 Inferred Resources

The Inferred Resources associated with the Manica Gold Project consist of the Fair Bride Inferred Resources (24.6 Million Tonnes at 1.83 g/t for 1 449 000 ounces of gold at a 0.5 g/t cutoff), the Guy Fawkes Inferred Resources (0.6 Million Tonnes at 2.81 g/t for 60 000 ounces of gold at a cutoff of 1.25 g/t), the Dot’s Luck Inferred Resources (0.5 Million Tonnes at 3.25 g/t for 50 000 ounces of gold at a cutoff of 1.0 g/t) and the Boa Esperanza Inferred Resources (0.3 Million Tonnes at 2.94 g/t for 30 000 ounces of gold at a cutoff of 1.25 g/t). This gives a total of 26.0 Million Tonnes at 1.90 g/t for 1 589 000 ounces of gold.

Based on SRK’s analysis of comparable transactions, SRK has based the Preferred Value on the resource-weighted average implied US$/oz value of the assets including only Inferred Resources, factored to the May 1, 2012 gold price, i.e. US$7.26/oz. The Low and High value range were calculated based on a 35% variation above and below this resource-weighted average, i.e. US$4.72/oz for the lower end range and US$9.80/oz for the higher end range.

The valuation of PAR’s 100% interest in the Inferred Gold Resources of the Manica Project, including the Fair Bride Inferred Resources, the Guy Fawkes Inferred Resources, the Dot’s Luck Inferred Resources and the Boa Esperanca Inferred Resources, ranges from a low value of US$7.5M to a high value of US$15.5M with a preferred value of US$11.5M.

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4.5.4 Resources Valuation Summary

The Valuation Ranges of the Manica Gold Project for the Measured, Indicated and Inferred Resources respectively are illustrated in Table 4-3.

Table 4-3: Manica Gold Project Valuation Summary from a deposit and resources classification perspective (US$M)

Deposit	Criteria	Low	Preferred	High
		US$M	US$M	US$M
Fairbride Resources	Measured	$25.2	$28.0	$30.8
Fairbride Resources	Indicated	$9.6	$12.1	$14.5
Fairbride Resources	Inferred	$6.8	$10.5	$14.2
Subtotal Fairbride	Subtotal Value	$41.6	$50.6	$59.5

Dot's Luck Resources	Measured
Dot's Luck Resources	Indicated
Dot's Luck Resources	Inferred	$0.2	$0.4	$0.5
Subtotal Dot's Luck	Subtotal Value	$0.2	$0.4	$0.5

GuyFawkes Resources	Measured
GuyFawkes Resources	Indicated	$2.9	$3.6	$4.3
GuyFawkes Resources	Inferred	$0.3	$0.4	$0.5
Subtotal Guy Fawkes	Subtotal Value	$3.2	$4.0	$4.8

Boa Esperanza	Measured
Boa Esperanza	Indicated
Boa Esperanza	Inferred	$0.1	$0.2	$0.3
Subtotal Boa Esperanza	Subtotal Value	$0.1	$0.2	$0.3

Grand Total Manica	Grand Total Value	$45.1	$55.2	$65.1

Valuation Ranges

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35.0
30.8
30.0
28.0
25.0
25.2
18.7
20.0
15.5
15.6
15.0
11.5
10.0 12.5
5.0 7.5
0.0
Measured / Past Producer Indicated Inferred
High Preferred Low
Value ($M)
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Figure 4-6: Manica Gold Project Valuation Ranges from a Resource classification only perspective (US$M)

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TMN001: Manica Gold Project Valuation

Prepared by

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Anthony Stepcich
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Principal Consultant (Project Evaluations)

Reviewed by

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Chris Woodfull
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Principal Consultant (Geology)

All data used as source material plus the text, tables, figures, and attachments of this document have been reviewed and prepared in accordance with generally accepted professional engineering and environmental practices.

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5 References

CIMVAL (2003). Standards and Guidelines for Valuation of Mineral Properties , prepared by the Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVAL), 33pp.
Sal & Caldeira (2010). Introduction to the legal framework for mining in Mozambique – 2[nd] Edition , report prepared for and released by the Minister of Mineral Resources, Mozambique, 52pp.
SRK (2011). Independent Technical Experts Report, Manica Gold Project , report prepared for Pan African Resources PLC, 164pp.
VALMIN (2005). Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports – The VALMIN Code (2005 Edition) , prepared by the VALMIN Committee, 23pp.

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Distribution Record

SRK Report Client Distribution Record

Project Number: TMN001

Date Issued: 26 September 2012

	Name/Title		Company
	Pat Burke		Manica Gold Project Valuation

Rev No.	Date	Revised By	Revision Details
0	10 May 2012	A Stepcich	pdf of Draft Report
1	18 May 2012	A Stepcich	pdf of Report
2	18 June 2012	A Stepcich	pdf of Report
3	24 September 2012	A Stepcich	pdf of Report
4	26 September 2012	A Stepcich	pdf of Report

This Report is protected by copyright vested in SRK Consulting (Australasia) Pty Ltd. It may not be reproduced or transmitted in any form or by any means whatsoever to any person without the written permission of the copyright holder, SRK.

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AI assistant

ORE RESOURCES LIMITED — Proxy Solicitation & Information Statement 2012

65504_rns_2012-10-01_f889ee45-2417-4cf7-b20a-e212842f3b15.pdf

TERRANOVA MINERALS NL

NOTICE OF GENERAL MEETING

NOTICE OF GENERAL MEETING

AGENDA

1. Resolution 1 – Approval of Acquisition of Manica Gold Project

Voting Exclusion

2. Resolution 2 – Authority to Issue Placement Shares

Voting Exclusion

3. Resolution 3 – Change of Company Name

4. Resolution 4 – Appointment of Jan Nelson as a Director

5. Resolution 5 – Appointment of Glenn Whiddon as a Director

6. Resolution 6 – Appointment of Dean Cunningham as a Director

BY ORDER OF THE BOARD

EXPLANATORY MEMORANDUM

1. Introduction

2. Action to be taken by Shareholders

2.1 Proxies

3. Summary of Transaction

3.1 Background

3.2 Manica Project

Gold Resource

Exploration Potential

Historical Data

Competent Person Statement

3.3 Capital Raising and Use of Funds

3.4 Commercial Terms

( Deferred Consideration Shares )

( Deferred Consideration ).

3.5 Corporate Structure

3.6 Information on the Company and its existing Projects

3.7 Effect of the Acquisition on the Company

(a) Capital Structure

(ii) Partly Paid Shares

(iii) Voting Power of Current Capital

(d) Pan African Voting Power

3.8 Advantages of the Acquisition

3.9 Disadvantages of the Acquisition

3.10

Timetable

3.11 Risk Factors

3.12 Independent Expert's Report

3.13 Section 611 Corporations Act

3.14 Directors’ Recommendation

4. Resolution 1 – Approval of Acquisition of Manica Gold Project

4.1 General

4.2 Chapter 11 Approval

4.3 Information required by item 7 of section 611 of the Corporations Act and ASIC Regulatory Guide 74

(a) The identity of Pan African and any person who will have a relevant interest in the Consideration Shares to be allotted to Pan African

(b) Full particulars (including the number and percentage) of the shares in the Company to which Pan African will be entitled immediately before and after the acquisition

(c) The identity, associations (with the Company, Pan African or any of their associates) and qualifications of any person who is intended to become a director if Shareholders agree to the acquisition

(d) Pan African’s intentions regarding the future of the Company if Shareholders agree to the Acquisition and the allotment of the Consideration Shares and Deferred Consideration Shares in consideration for the Acquisition

(f) When the allotment of Shares to Pan African as consideration under the Sale Agreement is to be made

(g) An explanation of the reasons for the proposed allotment of the Consideration Shares and Deferred Consideration Shares to Pan African

(h) The interests of the Directors in Resolution 1

(i) Identity of the Directors who approved or voted against the proposal to put Resolution 1 to Shareholders and the Explanatory Memorandum

5. Resolution 2 – Authority to Issue Placement Shares

5.1 Specific information required by Listing Rule 7.3

6. Resolution 3 – Change of Company Name

7. Resolutions 4, 5 and 6 – Appointment of Directors

7.1 Background

7.2 Candidate Director’s Profile – Jan Nelson (Resolution 4)

7.3 Candidate Director’s Profile – Glenn Whiddon (Resolution 5)

7.4 Candidate Director’s Profile – Dean Cunningham (Resolution 6)

8. Definitions

Schedule 1 – Risk Factors of the Acquisition

1. Introduction

2.

(a) Country Risk

(b) Tenement Title

(c) Legal System in Mozambique

(d) Significant Shareholder

3. Mineral Industry Risks

(e) Exploration and Development Risks

(f) Operational Risks

(g) Payment Obligations

(h) Commodity Price Volatility and Foreign Exchange Risk

(i) Dependence on key personnel

ORE RESOURCES LIMITED Proxy Solicitation & Information Statement 2012