MERAH RESOURCES LTD ACN 146 035 127

PROSPECTUS

For the offer of up to 15,000,000 Shares at an issue price of $0.20 each to raise up to $3,000,000.

The minimum subscription is 12,500,000 shares at an issue price of $0.20 each to raise $2,500,000.

IMPORTANT INFORMATION

This is an important document. You should read this document in its entirety to assist in deciding whether or not to invest in the Company. You should also consult your professional advisers before deciding whether to invest in the Company. This Offer does not take into account your investment objectives, financial situation or particular needs. You should carefully consider the risk factors in Sections 4.4 and 7 in light of your circumstances.

THE SHARES OFFERED BY THIS PROSPECTUS SHOULD BE CONSIDERED SPECULATIVE.

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TABLE OF CONTENTS	TABLE OF CONTENTS
CORPORATE DIRECTORY ....................................................................................................... 4
IMPORTANT NOTICE ................................................................................................................ 5
2.1	Applicants Outside Australia ........................................................................................... 5
2.2	Electronic Prospectus ....................................................................................................... 5
2.3	Website ............................................................................................................................. 5
2.4	Exposure Period ............................................................................................................... 6
2.5	Diagrams .......................................................................................................................... 6
2.6	Definitions ........................................................................................................................ 6
2.7	Forward Looking Statements ........................................................................................... 6
CHAIRMAN’S LETTER .............................................................................................................. 7
INVESTMENT OVERVIEW ....................................................................................................... 8
4.1	The Company ................................................................................................................... 8
4.2	Business Model ................................................................................................................ 8
4.3	Key Investment Highlights .............................................................................................. 9
4.4	Key Risks ....................................................................................................................... 10
4.5	The Offer ........................................................................................................................ 14
4.6	Purpose of the Offer ....................................................................................................... 15
4.7	Use of Funds .................................................................................................................. 15
4.8	Pro Forma Capital Structure .......................................................................................... 16
4.9	Substantial Shareholders ................................................................................................ 17
4.10	Restricted Securities ....................................................................................................... 18
4.11	Financial Information ..................................................................................................... 18
4.12	Taxation ......................................................................................................................... 19
4.13	Dividend Policy .............................................................................................................. 19
4.14	Directors and Key Personnel .......................................................................................... 19
4.15	Corporate Governance ................................................................................................... 21
4.16	Disclosure of Directors’ Interests .................................................................................. 21
4.17	Agreements with Directors or other Related Parties ...................................................... 22
DETAILS OF THE OFFER ........................................................................................................ 24
5.1	Introduction .................................................................................................................... 24
5.2	Shares offered for Subscription ...................................................................................... 24
5.3	How to Apply for Shares ............................................................................................... 24
5.4	Allotment of Shares ....................................................................................................... 24
5.5	Full Subscription ............................................................................................................ 25
5.6	Minimum Subscription .................................................................................................. 25
5.7	ASX Listing ................................................................................................................... 25
5.8	Applicants outside Australia .......................................................................................... 25
5.9	Not Underwritten ........................................................................................................... 25
5.10	Commissions Payable .................................................................................................... 25
5.11	Risk Factors .................................................................................................................... 25
5.12	Queries ........................................................................................................................... 25
COMPANY AND PROJECT OVERVIEW .............................................................................. 27
6.1	Background .................................................................................................................... 27
6.2	Company Projects .......................................................................................................... 28
6.3	Exploration Work Programmes and Budgets ................................................................. 29
RISK	FACTORS .......................................................................................................................... 30
7.1	Introduction .................................................................................................................... 30
7.2	Key Risks ....................................................................................................................... 30
7.3	Operating Risks .............................................................................................................. 31
7.4	Resource Estimates ........................................................................................................ 31
7.5	Commercial Risk ............................................................................................................ 31
7.6	Exploration Risks ........................................................................................................... 31

	7.7	Commodity Price Volatility and Exchange Rate Risks ................................................. 31
	7.8	Insurance Risks .............................................................................................................. 32
	7.9	Environmental Risks ...................................................................................................... 32
	7.10	Access to Infrastructure ................................................................................................. 32
	7.11	General Economic Conditions ....................................................................................... 33
	7.12	Share Market Conditions ............................................................................................... 33
	7.13	Volatility in Global Credit and Investment Markets ...................................................... 33
	7.14	Government and Legal Risk .......................................................................................... 33
	7.15	Unforeseen Expenditure Risk ........................................................................................ 33
8.	CORPORATE GOVERNANCE ................................................................................................ 34
	8.1	Board Charter ................................................................................................................. 34
	8.2	Procedures for Selection and Appointment of Directors ............................................... 35
	8.3	Code of Conduct ............................................................................................................ 35
	8.4	Audit Committee Charter ............................................................................................... 35
	8.5	Securities Trading Policy ............................................................................................... 35
	8.6	Continuous Disclosure Policy ........................................................................................ 35
	8.7	Shareholder Communication Policy ............................................................................. 35
	8.8	Risk Management and Internal Compliance and Control Policy ................................... 36
	8.9	Performance Evaluation Practices ................................................................................. 36
	8.10	Diversity Policy .............................................................................................................. 36
	8.11	Remuneration Committee Charter ................................................................................. 36
	8.12	Nomination Committee Charter ..................................................................................... 36
	8.13	Corporate Governance – Exceptions to Corporate Governance Principles and
	Recommendations .......................................................................................................................... 36
9.	INDEPENDENT GEOLOGIST’S REPORT ............................................................................ 39
10.	INVESTIGATING ACCOUNTANT’S REPORT .................................................................... 63
11.	SOLICITORS’ REPORT ON TENEMENTS ........................................................................... 83
12.	MATERIAL CONTRACTS ........................................................................................................ 97
	12.1	Agreements with Directors and Related Parties ............................................................. 97
	12.2	Sale Agreement – Mt Adamson Project ......................................................................... 97
	12.3	Murchison Agreement – Bounty and McAuley Projects ............................................... 97
13.	ADDITIONAL INFORMATION ............................................................................................. 100
	13.1	Rights attaching to Securities ....................................................................................... 100
	13.2	Interests of Directors .................................................................................................... 108
	13.3	Interests of Experts and Advisers ................................................................................. 109
	13.4	Consents ....................................................................................................................... 110
	13.5	Expenses of the Offer ................................................................................................... 110
	13.6	Continuous Disclosure Obligations ............................................................................. 111
	13.7	Litigation ...................................................................................................................... 111
	13.8	Financial Forecasts and Cashflow Projections ............................................................. 111
	13.9	Privacy Statement ........................................................................................................ 111
	13.10	Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship .. 112
14.	GLOSSARY ................................................................................................................................ 113
15.	DIRECTORS’ STATEMENT AND AUTHORISATION ...................................................... 116

1. CORPORATE DIRECTORY

Directors

Solicitors

Richard Homsany Non-Executive Chairman

David Deloub Managing Director

Ian Prentice Non-Executive Director

Cardinals Lawyers and Consultants Suite 3, Ground Floor 57 Havelock Street WEST PERTH WA 6005 Telephone: +61 8 9213 3000 Facsimile: +61 8 9481 7479

Suzie Foreman Non-Executive Director

Company Secretary

Auditor

Suzie Foreman

HLB Mann Judd (WA Partnership) Level 4 130 Stirling Street PERTH WA 6000 Telephone: +61 8 9227 7500 Facsimile: +61 8 9227 7533

Registered Office

Investigating Accountant

Level 2 79 Hay Street SUBIACO WA 6008

HLB Mann Judd (WA Partnership) Level 4 130 Stirling Street PERTH WA 6000 Telephone: +61 8 9227 7500 Facsimile: +61 8 9227 7533

Contact Details

Independent Geologist

Telephone: +61 8 9200 4436 Malcolm Castle Facsimile: +61 8 9200 4437 PO Box 473 Email: [email protected] SOUTH PERTH WA 6951 Website: www.merahresources.com.au Telephone: +61 8 9474 9351

Proposed ASX Code

Share Registry*

MEH

Security Transfer Registrars Pty Ltd Alexandrea House Suite 1 770 Canning Highway APPLECROSS WA 6153 Telephone: +61 8 9315 2333 Facsimile: +61 8 9315 2233

*The name of this entity is included for information purposes only and it has not been involved in the preparation or issue of this Prospectus.

2. IMPORTANT NOTICE

This Prospectus is dated 2 February 2012 and was lodged with ASIC on that date. ASIC takes no responsibility for the contents of this Prospectus. No person or entity is authorised to give any information or make any representation in connection with the Offer which is not contained in this Prospectus. Any information or representation not contained in this Prospectus must not be relied on as having been authorised by the Company in connection with the Offer or this Prospectus.

No securities will be issued on the basis of this Prospectus later than 13 months after the date of this Prospectus. Application will be made to the ASX within seven (7) days after the date of this Prospectus for Quotation of the Shares offered under this Prospectus.

It is important that applicants read this Prospectus in its entirety and, if in any doubt about whether to apply for Shares, seek professional advice. The Shares the subject of this Prospectus should be considered speculative. None of the Company, the Directors or any other person gives any guarantee as to the success of the Company, the repayment of capital, the payment of dividends, the future value of the Shares or the price at which Shares will trade on the ASX.

2.1 Applicants Outside Australia

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. A failure to comply with these restrictions may violate applicable securities laws. This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. If you are resident a country other than Australia you should consult your professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by you that all relevant approvals have been obtained. No action has been taken by the Company to register or qualify the Shares or otherwise permit a public offering of the Shares the subject of this Prospectus in any jurisdiction outside of Australia.

2.2 Electronic Prospectus

Pursuant to ASIC Class Order 00/044, ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

This Prospectus will be issued in paper form and as an electronic prospectus which may be accessed on the internet at the Company’s website at www.merahresources.com.au. If you have received this Prospectus as an electronic prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company (see the Corporate Directory in Section 1 for the Company’s contact details) and the Company will send you, at no cost to you, either a hard copy or a further electronic copy of the Prospectus or both during the Offer period.

If you are accessing the electronic version of this Prospectus for the purpose of making an investment in the Company, you must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing an Application Form on to another person unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

2.3 Website

No document or information on the Company’s website is incorporated by reference into this Prospectus.

2.4 Exposure Period

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

This Prospectus will be circulated during the exposure period. The purpose of the exposure period is to enable this Prospectus to be examined by market participants prior to the raising of funds, which examination may result in the identification of deficiencies in the Prospectus. In that event any application that has been received will be dealt with in accordance with section 724 of the Corporations Act.

Applications will not be processed by the Company until after the exposure period. No preference will be given to applications received by the Company during the exposure period.

2.5 Diagrams Any diagram appearing in this Prospectus is illustrative only and may not be drawn to scale.

2.6 Definitions

Throughout this Prospectus abbreviations and defined terms are used. Defined terms are generally identifiable by the use of an upper case first letter. Those relevant to mineral exploration are contained in the Glossary located in the Independent Geologist’s Report in Section 9, and other abbreviations and defined terms are contained in the Glossary in Section 14.

2.7 Forward Looking Statements

This Prospectus contains forward looking statements which are identified by words such as ‘may’, ‘could’, ‘believes’, ‘estimates’, ‘targets’, ‘expects’ or ‘intends’ and other similar words that involve risks and uncertainties.

These statements relate to intentions and future acts and events. They are not guarantees of future performance and involve known and unknown risks, uncertainties, assumptions and other important factors, many of which are beyond the control of the Company, the Directors and the Company’s management, which could cause these future acts, events and circumstances to differ from the way or manner in which they are expressly or implicitly portrayed in this Prospectus. Some of these risk factors are set out in the Key Risks in Section 4.4 and the Risk Factors in Section 7.

The Company does not intend to update or review forward looking statements, or to publish prospective financial information in the future, regardless of whether new information, future events or any other factors affect the information contained in this Prospectus, except where required by law.

The Company cannot and does not give any assurance that the results, performance or achievements expressed or implied by the forward looking statements contained in this Prospectus will actually occur, and potential investors are cautioned not to place undue reliance on these forward looking statements.

3. CHAIRMAN’S LETTER

Dear Investor

On behalf of the directors of Merah Resources Limited (the Company or Merah ), I am pleased to present this Prospectus and invite you to become a shareholder in the Company.

Merah was incorporated for the purpose of identifying, evaluating and acquiring various investment opportunities in the resources sector that are considered by the Board to add potential Shareholder value. The Company has acquired 100% of the Mt Adamson Project and secured an option to earn an 80% interest in the Bounty and McAuley Projects by meeting certain expenditure and other conditions by way of a farm in. The Company intends to exercise the option upon its admission on a conditional basis to the official list of the ASX.

Merah is seeking to raise up to $3,000,000 by the issue of up to 15,000,000 Shares at an issue price of $0.20 each with a minimum subscription of $2,500,000 by the issue of 12,500,000 Shares at an issue price of $0.20 each, for the purpose of exploration on the Mt Adamson, Bounty and McAuley Project areas (collectively known as the Lawlers Project ), located in the North Eastern Goldfields region of Western Australia. The Mt Adamson Project is prospective for gold and base metals and the Bounty and McAuley Projects are prospective for gold.

After the Company exercises its option under the Murchison Agreement it plans to actively explore the three project areas in the immediate term by targeted and cost effective work programmes with the objective of discovering mineralisation that has the potential to be defined as a JORC Code compliant mineral resource.

The Board and management of the Company are experienced with broad technical, operational, legal and corporate expertise in mineral exploration, finance, project acquisition, development and operations, in listed public companies.

In addition to exploring the Lawlers Project after the Listing Date, the Company’s objective still remains to identify, evaluate and, if warranted, acquire additional resource projects and assets in Australia and/or overseas that are considered by the Board to add potential value to the Company and its Shareholders.

This Offer presents investors with the opportunity to share in the future of the Company. However all investors should be aware of the speculative nature of mineral exploration and mining. Please read this Prospectus carefully, especially the key risk factors in the Investment Overview in Section 4.4 and the Risk Factors in Section 7, and seek professional advice if necessary prior to making your informed decision to invest.

On behalf of the Directors I commend this investment opportunity to you and look forward to welcoming you as a Shareholder.

Yours sincerely

==> picture [125 x 80] intentionally omitted <==

Richard Homsany Chairman 2 February 2012

4. INVESTMENT OVERVIEW

The information contained in this Section is a summary only and is not intended to provide comprehensive details of the Offer. You should read this Prospectus in full including the Independent Geologist’s Report in Section 9, the Investigating Accountant’s Report in Section 10 and the Solicitors’ Report on Tenements in Section 11 and, if in any doubt, you should consult with your professional advisers before deciding whether to apply for Shares.

Merah is an exploration company and you should consider that an investment in the Company is speculative.

4.1 The Company

Merah was incorporated on 27 August 2010 with the purpose of identifying, evaluating and, if warranted, acquiring resource projects and assets in Australia and/or overseas that are considered by the Board to add potential Shareholder value.

The Company’s initial focus will be on exploration for gold and base metals on the Lawlers Project. Once the Company lists on the ASX it may acquire additional resource projects and assets that contain, or are prospective for, minerals other than gold and base metals consistent with its objective.

4.2 Business Model

The Company is a speculative exploration company. Under the Sale Agreement it acquired a 100% interest in the Mt Adamson Project (consisting of one granted exploration licence), located 28 kilometres west of Leinster, for $15,000 plus GST and the issue and allotment of 500,000 Shares. Upon being admitted to the official list of the ASX on a conditional basis the Company intends to exercise the option it has secured under the Murchison Agreement ( Option ) to earn an 80% interest in the Bounty and McAuley Projects (each consisting of one granted prospecting licence) which are located 5 kilometres north of the Mt Adamson Project. The Mt Adamson, Bounty and McAuley Projects are collectively known as the Lawlers Project.

After exercising its Option ( Exercise Date ) in order to earn an 80% interest in the Bounty and McAuley Projects the Company is required to:

(a) Issue and allot 150,000 Shares to the vendor on the Company exercising the Option.
(b) Expend a minimum of $50,000 on reverse circulation drilling (including assaying and associated costs) on the Bounty and McAuley Projects within 12 months after the Exercise Date.
(c) Expend a minimum of a further $250,000 on the Bounty and McAuley Projects in the 24 months from the Exercise Date. It will issue and allot 500,000 Shares to the vendor if it elects to continue to farm in after the first 12 months from the Exercise Date.
(d) Sole fund expenditure through to a decision to mine based on a bankable feasibility study on the Bounty and McAuley Project area within 48 months from the Exercise Date.

If the Company fails to meet any of these requirements it will be deemed to have withdrawn from the Murchison Agreement and will not have earned any interest in either the Bounty Project or the McAuley Project. Further information on the Sale Agreement and the Murchison Agreement is contained in the Material Contracts summary in Section 12.

After exercising its Option the Company will invest Shareholder funds in gold and base metals exploration on its Lawlers Project with the aim of defining mineralisation on the Tenements. The Company’s business model depends on the success of its exploration programmes. Favourable results from exploration will increase the value of the Lawlers Project and should in turn increase the value of the Shares.

A summary of the Mt Adamson Project, Bounty Project and McAuley Project is set out in Section 6 and more detailed information is contained in the Independent Geologist’s Report in Section 9. Further information about the Tenements is contained in the Solicitors’ Report on Tenements in Section 11.

The Company intends to continue to identify, evaluate and if warranted, acquire additional resource projects and assets in Australia and/or overseas if the Board considers that they have the potential to add Shareholder value. The Company will be looking to acquire these additional interests by way of direct project acquisition, farm in, joint venture or direct equity in the project owners, and may include minerals or prospectivity for minerals other than gold and base metals. In the short to medium term, the Company intends to achieve the following objectives:

review exploration data obtained from previous holders of the Tenements or the area of the Tenements;
implement a active, targeted and cost effective detailed work programme on the Tenements incorporating geological mapping, surface sampling and drill testing of identified targets; and
undertake sufficient exploration expenditure on the Bounty and McAuley Projects within 24 months from the Exercise Date to meet its commitments under the Murchison Agreement to that date and to enable the Company to assess whether to continue with its farm in under the Murchison Agreement so as to earn an 80% interest in those projects in a further 24 month period.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

Over the medium to long term the Company’s objective is to develop mining operations on its projects. Continuing work programmes and projects will be subject to initial results and funds may be diverted to other prospective existing or additional projects if the Board considers it to be warranted. The Company does not currently have a JORC Code compliant resource on any of its Tenements. The Lawlers Project consists of tenements of a speculative nature. There is limited previous exploration and exploration targets are of a conceptual nature. In the medium to long term the Company also intends to continue to identify and evaluate potential additional resource projects and assets in Australia and/or overseas.

There are many participants in the gold and base metals industry whose success is driven by various factors such as the initial identification of projects on the basis of prospectivity, the quality of work performed prior to exploration, the competence, experience and qualifications of company personnel and geological matters. All of these factors combined increase the likelihood of successful exploration.

The Board and management of the Company are experienced, qualified and capable of delivering an effective exploration and acquisition strategy. The Company expects to have competition for the acquisition of additional resource projects and assets and the funding of its Projects. Its ability to minimise or mitigate all of the risk factors set out in Section 4.4 of this Investment Overview and Section 7 is also a matter affecting its success. The Company’s successful achievement of its objectives also depends on exploration success and the retention of key personnel. No assumptions can be made that the Company will be able to successfully explore or mine its Projects. Until it achieves commercial viability in this way, it is very likely to incur operating losses.

4.3 Key Investment Highlights

(a) Merah is an Australian based exploration company established to acquire, explore and, if warranted, develop, resource projects in Australia and/or overseas that are considered by the Board to add potential Shareholder value.

(b) The Company has entered into and acquired the following interests in three resource projects (each comprising one granted tenement) located in the North Eastern Goldfields Region of Western Australia:

A 100% interest in the Mt Adamson Project, located 28 kilometres west of Leinster, pursuant to the Sale Agreement.
An option to earn an 80% interest in the Bounty Project and the McAuley Project, both located 5 kilometres north of the Mt Adamson Project, on meeting certain expenditure and other conditions pursuant to the Murchison Agreement by way of a farm in. Merah can only exercise its option upon its conditional admission to the official list of the ASX.

You should refer to Section 12 for further information on the Sale Agreement and the Murchison Agreement.

(c) The Mt Adamson, Bounty and McAuley Projects, collectively known as the Lawlers Project, secure a combined area of 48.2 square kilometres. The Bounty and McAuley Projects are considered prospective for gold mineralisation, while the Mt Adamson Project is considered prospective for gold and base metal mineralisation. Further details of the Lawlers Project are summarised in Section 6 and more detailed information is contained in the Independent Geologist’s Report in Section 9.
(d) The Mt Adamson Project is at a relatively early stage of exploration however the area is considered prospective for gold and base metals mineralisation, both in shears and quartz veins within greenstones and quartz veins within granites. The presence of numerous major structures and large gold deposits in the vicinity of the Mt Adamson Project highlights the prospectivity of the area.
(e) The Bounty and McAuley Projects are at a relatively early stage of exploration, albeit that gold mineralisation has been identified and exploited on both of the tenements forming these projects between 1900 and 1910, with only limited systematic modern exploration completed to date.
(f) The Board and management of the Company are experienced, with broad technical, operational, legal and corporate expertise in mineral exploration, finance, project acquisition, development and operation, in listed public companies.
(g) The Directors are confident that the regions of Western Australia in which the Tenements are located and the resources industry generally will offer the Company significant potential to create value for Shareholders.
(h) The Company also intends to identify, evaluate and, if warranted, acquire potential additional resource projects and assets in Australia and/or overseas that are considered by the Board to add potential value to the Company.

4.4 Key Risks

You should be aware that subscribing for Shares the subject of this Prospectus involves a number of risks to the business, assets and operations of the Company that potentially influence the operating and financial performance of the Company.

You should read this Prospectus in its entirety and, in particular, consider the key risk factors set out below and the Risk Factors in Section 7 before deciding whether to apply for Shares under this Prospectus.

You are urged to consider those risks carefully and, if necessary, also consult your professional advisers with any questions before deciding whether to invest in the Company.

You should also note that the key risks below and the Risk Factors in Section 7 are not an exhaustive list of all risks faced by the Company or by investors in the Company.

Some risks can be mitigated by the use of appropriate safeguards and appropriate systems and controls by the Company, however some are unpredictable and outside the control of the Company and the extent to which they can be mitigated or managed is very limited or not possible.

Set out below are key and specific risks that the Company is exposed to and that may have a direct influence on the Company and its activities or assets, therefore affecting the value of an investment in the Company.

Option to Acquire the Bounty and McAuley Projects

Under the Murchison Agreement the Company has an option to acquire an 80% interest in the Bounty Project and the McAuley Project by way of a farm in through meeting certain expenditure and other conditions. That option cannot be exercised until the Company receives conditional approval to be admitted to the official list of the ASX. If the Company does not exercise this option, it will not be entitled to acquire any interest in either the Bounty Project or the McAuley Project.

Contractual and Joint Venture Risk

Merah is not the registered owner of the tenements comprising the Bounty and McAuley Projects. While Merah has entered into the Murchison Agreement with the registered holder, under which Merah has the option to earn an 80% interest in each of these projects, there is a risk that the Company may fail to satisfy the conditions required to acquire the 80% interest and consequently forfeit its rights to acquire any interest in the Bounty and McAuley Projects. Merah will not acquire an interest in the Bounty and McAuley Projects until it has incurred significant exploration expenditure in connection with those projects, as well as expenditure sufficient to enable Merah to make a decision to mine based upon a bankable feasibility study.

In order to acquire an interest in the Bounty and McAuley Projects the Company is required to spend $50,000 on those tenements in the first year after exercising its option, spend a further $250,000 by the end of the second year and then sole fund development on those projects up to a decision to mine based on a bankable feasibility study within four years after exercising its option under the Murchison Agreement. The Company intends to satisfy these expenditure commitments but if it fails to do so the Company will not earn any interest in either the Bounty Project or the McAuley Project. In the experience of the Directors and management of the Company, a bankable feasibility study requires a substantial sum of money to prepare and complete. Due to these substantial costs the Company will need to raise additional capital after year two of the farm in period to continue its farm in under the Murchison Agreement in order to earn its 80% interest in the Bounty and McAuley Projects in a further 24 month period. If it is not able to raise sufficient further funds it will not be able to earn an 80% interest in those projects which may have a material adverse effect on the Company’s operations and performance, and the value of the Shares. Further details of the Murchison Agreement are included in Section 12.

The Company’s ability to achieve its objectives and earn an interest in the Bounty and McAuley Projects is also dependent upon it and the registered holder of those tenements complying with their respective contractual obligations under the Murchison Agreement, and the registered holder complying with the terms and conditions of the Tenements and any other relevant legislation. Any failure to comply with these obligations may result in the Company not being able to earn an 80% interest in the Bounty and McAuley Projects which may have a material adverse effect on the Company’s operations and performance and the value of the Shares.

The Directors are not able to presently assess the risk of financial failure or default by its potential joint venture participant under the Murchison Agreement or the insolvency or other failure by any of the contractors engaged by the Company for any exploration or other activity. Any such failure could adversely affect the operations and performance of the Company. In the event that the Company’s joint venture partner under the Murchison Agreement fails to contribute its share of expenditure after formation of the joint venture, which can only form after Merah makes a decision

to mine based on a bankable feasibility study, the joint venture partner’s participating interest in the joint venture will be diluted until such time as its participating interest decreases below 5%, at which time the participating interest in the joint venture will convert to a 1% gross production royalty. The only right available to the Company to protect its interests in the Bounty and McAuley Projects is lodgement of a caveat over the tenements that comprise those projects pursuant to the Mining Act. A caveat would prevent the registration of any transfer of, or mortgage over, those tenements without first giving notice to the Company. As at the date of this Prospectus the Company has not yet lodged a caveat over these tenements.

The Company has no current reason to believe that the registered owner of the Bounty and McAuley Projects will not meet and satisfy its obligations under the Murchison Agreement.

Exploration Risks

None of the Tenements currently contain a JORC Code compliant resource and there is no guarantee that a JORC Code compliant resource will be discovered on any of the Tenements.

You should be aware that mineral exploration and development are high risk undertakings due to the high level of inherent uncertainty. There can be no assurance that exploration of the Tenements, or of any other tenements that may be acquired by the Company in the future, will result in the discovery of economic mineralisation. Even if economic mineralisation is discovered there is no guarantee that it can be commercially exploited.

The future exploration activities of the Company may be affected by a range of factors including geological conditions, limitations on activities due to seasonal weather patterns, unanticipated operational and technical difficulties, industrial and environmental accidents, native title process, changing government regulations and many other factors beyond the control of the Company.

The success of the Company will also depend on the Company having access to sufficient development capital, being able to maintain title to the Projects and obtaining all required approvals for its activities. In the event that exploration programmes prove to be unsuccessful this could lead to a diminution in the value of the Projects, a reduction in the cash reserves of the Company and possible relinquishment of part or all of the Projects.

Access Risk - Native Title and Aboriginal Heritage

The Tenements, or tenements in which the Company will in the future acquire an interest, might extend over areas in which legitimate common law native title rights of indigenous Australians may exist. The ability of the Company to gain access to its Tenements and to conduct exploration, development and mining operations remains subject to native title rights and the terms of any registered native title agreements.

The Tenements overlap a native title claim which is still in the process of mediation. If native title does exist in those areas the ability of the Company to gain access to the Tenements (through obtaining the consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations, may be adversely affected. The Directors will closely monitor the potential effect of native title claims involving tenements in which the Company has or may have an interest.

There are a number of registered Aboriginal heritage sites within the area of the Tenements. It is possible that some areas of the Tenements may not be available for exploration due to Aboriginal heritage issues (whether in respect of registered sites or not).

Details of these Aboriginal heritage sites and the pending native title claim are set out in the Solicitors’ Report on Tenements in Section 11. Under Western Australian and Commonwealth legislation the Company may need to obtain the consent of the holders of such interests before commencing activities on affected areas of the Tenements. These consents may be delayed or given on conditions which are not satisfactory to the Company.

Reliance on Key Personnel

The responsibility of overseeing the day to day operations of the Company depends on its management and its key personnel. The Company is aware of the need to have sufficient management to properly supervise the exploration and, if exploration is successful, the development of the Projects. As the Projects and the Company’s prospects progress and develop, the Board will continually monitor the management requirements in the Company and look to employ or engage additional personnel when and where appropriate to ensure proper management of the Company projects. However there is a risk that the Company may not be able to secure personnel with the relevant experience at the appropriate time which may impact on the Company’s ability to complete all of its planned exploration programmes within the expected timetable. Furthermore, you should be aware that no assurance can be given that there will be no adverse effect on the Company if one or more of its existing Directors or management personnel cease their employment or engagement with the Company.

Limited Operating History

Having been incorporated on 27 August 2010, the Company does not have any operating history on which an evaluation of its prospects can be made and has limited historical financial performance. The Lawlers Project has had limited previous exploration and exploration targets are of a conceptual nature. The Company will only commence its own detailed exploration activities on its Tenements once it has been admitted to the official list of the ASX and exercised its option under the Murchison Agreement. The Directors are experienced and have broad expertise with exploration companies, however no assurances can be given that the Company will achieve commercial viability through the successful exploration and/or mining of the Tenements or any other tenements acquired by the Company. Until the Company is able to realise value from its Projects or any project it may in the future acquire an interest in, it is likely to incur ongoing operating losses.

Additional Requirements for Capital

The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the Offer. In particular a bankable feasibility study, which the Company is required to undertake in order to earn its 80% interest in the Bounty and McAuley Projects, requires a substantial sum of money to prepare and complete. Any additional equity financing will dilute existing shareholdings, and debt financing (if available) may involve restrictions on future financing and operating activities. If the Company is unable to obtain additional financing as needed or unable to obtain it on acceptable terms (whether or not due to the Company’s circumstances or economic and share market conditions or both), it may be required to reduce the scope of its operations and scale back its exploration programmes. This could have a material adverse effect on the Company’s activities, its ability to continue to farm in to the Bounty and McAuley Projects after year two and the value of the Shares.

Exploration Costs

The exploration costs of the Company (summarised in Section 4.7 and further detailed in the Independent Geologist’s Report in Section 9) are based on certain assumptions with respect to the method and timing of exploration. By their nature these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company’s operating and financial performance and the value of the Shares.

Title Risk

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

The Tenements, and other tenements in which the Company may acquire an interest in, will be subject to renewal, which is usually at the discretion of the relevant authority. If a Tenement is not renewed the Company may lose the opportunity to discover mineralisation and develop the Tenement. The exploration licence comprising the Mt Adamson Project (E36/675) expires on 11 March 2014 and the prospecting licences comprising the Bounty Project (P36/1730) and the McAuley Project (P36/1742) both expire on 8 March 2015. The Company cannot guarantee that the Tenements will be renewed beyond their current expiry date and there is a material risk that, in the event the Company is unable to renew any of the Tenements beyond their current expiry date, all of part of the Company’s interests in the Lawlers Project may be relinquished. Further information about the Tenements is contained in the Solicitors’ Report on Tenements in Section 11.

Additional Projects and Acquisitions

The Company will identify and evaluate additional projects and assets in the resources sector in Australia and/or overseas. If any are considered by the Board to have the potential to add Shareholder value, the Company will seek to acquire them by way of direct project acquisition, farm in, joint venture or direct equity in the project owners.

There can be no guarantee that any proposed acquisition will be secured, completed or successful. If the proposed acquisition is not completed, monies advanced or due diligence costs may not be recoverable, which may have a material adverse effect on the Company. This could affect the growth of the Company. If the Company is able to acquire such projects, there is a risk that if these projects do not perform to expectations such adverse performance will be detrimental to the performance of the Company and therefore the value of Shares and returns delivered to Shareholders

If the Company identifies and proceeds with the acquisition of an additional resource project or asset, the Company may be required to re-comply with Chapters 1 and 2 of the Listing Rules. This will cause the Shares to be suspended from Quotation in which event the Shares cannot trade on the ASX during this period. The length of any suspension will be subject to the requirements of the ASX and the time needed by the Company to comply with those requirements.

Liquidity Risk

A significant number of the 12,250,001 Shares on issue prior to the completion of the Offer (which constitutes approximately 45% of the total Shares on issue on completion of the Offer on an undiluted basis and assuming Full Subscription) are likely to be classified as restricted securities by the ASX and therefore be escrowed. This may cause a liquidity risk for the Shares given a large percentage of the Shares may not be traded for up to 24 months. Furthermore, there is no guarantee that there will be an ongoing liquid market for Shares. If illiquidity arises, there is a real risk that Shareholders will be unable to realise their investment in the Company. Further details of the Shares on issue are contained in the Pro Forma Capital Structure in Section 4.8.

4.5 The Offer

Under this Prospectus the Company offers for subscription 15,000,000 Shares at an issue price of $0.20 per Share to raise up to $3,000,000 with the minimum subscription being 12,500,000 Shares at an issue price of $0.20 per Share to raise $2,500,000.

The Shares issued under this Prospectus are new Shares which will rank equally with the Shares already on issue.

Indicative timetable

Lodgement of Prospectus with ASIC 2 February 2012 Opening Date 9 February 2012 Closing Date 5:00pm WST on 20 March 2012 Expected Dispatch of Holding Statements 27 March 2012 Expected Date for Shares to Commence Trading on ASX 3 April 2012

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Date, or close the Offer early, without notice.

4.6 Purpose of the Offer

The purpose of the Offer is to provide the Company with additional funding for a detailed exploration programme on the Tenements, to facilitate an application by the Company for admission to the official list of the ASX, to meet the costs of the Offer and to fund administration costs and new project evaluation, so as to position the Company to seek to achieve the objectives set out in Section 4.2 above.

4.7 Use of Funds

The Company intends to apply its existing cash reserves and the funds raised from the Offer over the first two years after the Listing Date as follows:

Item	Minimum Subscription $2.5 million	Percentage of Funds	Full Subscription $3.0 million	Percentage of Funds
Pre-Offer Cash and Receivables1	$133,410		$133,410
Funds Raised from the Offer	$2,500,000		$3,000,000
Total Funds Available	$2,633,410		$3,133,410
ALLOCATION OF	FUNDS– YEARS 1 and 2
Year 1
Exploration expenditure – Mt Adamson Project2	$147,077	5.58%	$316,000	10.08%
Exploration expenditure – Bounty and McAuleyProjects2	$157,500	5.98%	$341,500	10.90%
Estimated Expenses of the Offer3	$273,068	10.37%	$304,671	9.73%
Administration costs4	$521,455	19.80%	$521,455	16.64%
Total Year 1	$1,099,100	41.73%	$1,483,626	47.35%
Year 2
Exploration expenditure – Mt Adamson Project2	$381,750	14.50%	$447,250	14.27%
Exploration expenditure – Bounty and McAuleyProjects2	$513,750	19.51%	$579,500	18.50%
Administration	$521,455	19.80%	$521,455	16.64%

costs4
New project evaluation5	$117,355	4.46%	$101,579	3.24%
Total Year 2	$1,534,310	58.27%	$1,649,784	52.65%
TOTAL YEARS 1 & 2	$2,633,410	100%	$3,133,410	100%

1 Refer to the Investigating Accountant’s Report in Section 10 for further information.

2 Refer to the Independent Geologist’s Report in Section 9 for further information on planned exploration activities and expenditure budgets for the Projects and the budget summary in Section 6.3.

3 Refer to Section 13.5 for further details.

4 These expenses include wages and superannuation of employees and Directors, rent and outgoings, accounting fees, legal fees, ASX listing fees, auditing fees, insurance, Share Registry fees, travel expenses and all other items of a general administrative nature.

5 The Company will identify and evaluate investment opportunities in resource projects and assets (including minerals other than gold and base metals) in Australia and/or overseas.

In the event that the Company raises more than the Minimum Subscription, the additional funds raised will be first applied towards the increased expenses of the Offer, followed by increased exploration expenditure, with any remaining funds to be used for working capital and additional project evaluation purposes.

The above table is a statement of current intentions as of the date of lodgement of this Prospectus with ASIC. As with any budget, intervening events (including exploration results) and new circumstances have the potential to affect the actual application of funds. In particular, exploration expenditure will be reviewed on an ongoing basis depending on the nature of the results from work programmes. The Board reserves the right to alter the way funds are applied on this basis. The Company may raise additional funds within two years after listing on the ASX to the extent required to increase and accelerate the exploration programmes on the Projects, or to acquire or invest in suitable additional projects and assets in the resources sector in Australia and/or overseas, as determined by the Board.

4.8 Pro Forma Capital Structure

The capital structure of the Company following completion of the Offer is summarised below[1] :

Shares	Minimum	Percentage	Full	Percentage
	Subscription $2.5 million	of Shares (undiluted)	Subscription $3.0 million	of Shares (undiluted)
Shares on issue at date of	12,250,001	49.20%	12,250,001	44.71%
Prospectus2
Vendor consideration3	150,000	0.60%	150,000	0.55%
Shares offered under the	12,500,000	50.20%	15,000,000	54.74%
Prospectus
Total Shares on issue at	24,900,001	100%	27,400,001	100%
completion of the Offer

The Company also has on issue at the date of this Prospectus, and will have at completion of the Offer:

(a) 7,000,000 Options on issue exercisable at $0.20 each on or before 31 August 2015, the terms and conditions of which are set out in Section 13.1(b); and

(b) 3,000,000 Performance Rights on issue to its Managing Director, the terms and conditions of which are set out in Section 13.1(c).

A further 500,000 Shares ( Vendor Shares ) will be issued and allotted to the vendor if the Company, having exercised its option under the Murchison Agreement, elects to continue to farm in to the Bounty and McAuley Projects after year one of the farm in. Further details of the Murchison Agreement are set out in Section 12.

The above table assumes none of the Options and Performance Rights will have been exercised, and none of the Vendor Shares issued, at the completion of the Offer.

Notes:

1 Refer to the Investigating Accountant’s Report in Section 10 for further details.
2 The Shares on issue as at the date of this Prospectus are as follows:
(a) 1 founder Share issued to a Director at $1.00.
(b) 10,000,000 Shares were issued at $0.02 per Share to seed investors of the Company on 4 May 2011, of which Directors have a relevant interest in 1,500,000 Shares.
(c) 1,750,000 Shares were issued at $0.02 per Share to seed investors on 24 October 2011, of which a Director has a relevant interest in 875,000 Shares.
(d) 500,000 Shares issued to the vendor of the Mt Adamson Project as consideration under the Sale Agreement. The Sale Agreement is summarised in Section 12.2.

The rights attaching to the Shares are summarised in Section 13.1(a).

3 Further details of the Murchison Agreement are set out in Section 12.3. 150,000 Shares are to be issued to the vendor under the Murchison Agreement if Merah exercises its option under that agreement when Merah is admitted to the official list of the ASX on a conditional basis, and a further 500,000 Shares are to be issued (not included in the above table) if Merah elects to continue to farm in to the Bounty and McAuley Projects after year one of the farm in.

The seed investor Shares were issued in order to finance initial Company expenditure. These Shares were issued at a discount to the issue price of the Shares offered under this Prospectus to reflect the increased risk associated with an investment in the Company at the time of their issue. On 14 September 2011, 1,500,000 Options were issued and allotted to Directors and related parties of the Company at no issue price. On the same date 5,000,000 Options were issued and allotted to promoters and 500,000 Options were issued and allotted to a related entity of a Director, at a subscription price of $0.0001 for facilitating the Offer, ASX listing, fund raising and related matters.

4.9 Substantial Shareholders

Set out in the table below are the Shareholders holding 5% or more of the Shares on issue both at the date of this Prospectus and upon completion of the Offer on an undiluted basis (that is, assuming none of the Options and Performance Rights on issue at the date of this Prospectus are exercised). The table assumes Full Subscription, that no existing substantial Shareholder subscribes for and is allotted additional Shares pursuant to the Offer and that none of the Options and Performance Rights will have been exercised at completion of the Offer.

Name	No. Shares	% at date of Prospectus	% on
	Held	(undiluted)	Completion of
			Offer at Full
			Subscription
			(undiluted)
Ausepen Pty Ltd	875,000	7.14	3.19
Glennfield Pty Ltd <Glennfield	875,000	7.14	3.19
Family A/C>
Mr Jason Eveleigh	875,000	7.14	3.19
Karakoram No2 Pty Ltd <Super	875,000	7.14	3.19
fund A/C>
Pitt Street Absolute Return Fund	875,000	7.14	3.19
Pty Limited

Mr Peter Sedy Hixon Pty Ltd Chess Capital Partners Pty Ltd Mr David Deloub1 Mr Michael John Hynes Mr Ian Prentice2 Total	875,000 7.14 3.19 875,000 7.14 3.19 875,000 7.14 3.19 875,000 7.14 3.19 875,000 7.14 3.19 1,300,001 10.61 4.74
	10,050,001 82.04% 36.68%

1 The Managing Director.

2 A Director, who has a relevant interest in the number of Shares stated above.

Set out in the table below are the Shareholders holding 5% or more of the Shares on issue both at the date of this Prospectus and after completion of the Offer on a fully diluted basis (that is, assuming the exercise of all of the Options and Performance Rights on issue at the date of this Prospectus). The table assumes Full Subscription and that no existing substantial Shareholder subscribes for and is allotted additional Shares pursuant to the Offer. The fully diluted capital structure of the Company at the date of this Prospectus is 22,250,001 Shares and at completion of the Offer (assuming Full Subscription) is 37,750,001 Shares.

Name		Shares	Options	Performance	No.	Shares	% at	% at	date of	% on
				Rights	Held	(Fully	Prospectus			Completion
					Diluted)		(Fully			of Offer at
							Diluted)			Full
										Subscription
										(Fully
										Diluted)
Chess		875,000	5,000,000	Nil	5,875,000				26.40	15.56
Capital
Partners
Pty Ltd
Mr David		875,000	Nil	3,000,000	3,875,000				17.41	10.26
Deloub1
Mr	Ian	1,300,001	1,000,000	Nil	2,300,001				10.34	6.09
Prentice2
Total		3,050,001	6,000,000	3,000,000	12,050,001			54.15%		31.91%

The Managing Director. 2 A Director, who has a relevant interest in the number of Securities stated above.

The Company will announce to the ASX details of its top 20 Shareholders after completion of the Offer and prior to the Shares commencing trading on the ASX.

4.10 Restricted Securities

Generally, Securities on issue at the date of this Prospectus and issued to promoters or related parties will be escrowed for a period of 24 months from the date of the Company’s admission to the official list of the ASX. It is expected that a percentage of the Securities issued to seed investors and the vendors of the Projects will be escrowed for 12 months from the date of issue of the Securities. During the period in which these Securities are prohibited from being transferred, assigned or otherwise disposed of, trading in Shares may be less liquid which may impact on the ability of a Shareholder to dispose of Shares in a timely manner.

The Company will announce to the ASX details of the number and duration of the Shares, Options and Performance Rights that the ASX require to be held in escrow prior to the Shares commencing trading on the ASX.

4.11 Financial Information

Having been incorporated on 27 August 2010, the Company does not have any operating history on which an evaluation of its prospects can be made and has limited historical financial

performance. The Company will only commence its own detailed exploration activities on its Tenements once it has been admitted to the official list of the ASX. Accordingly the Company is not able to disclose any key financial ratios other than its balance sheet and pro forma financial position which are included in the Investigating Accountant’s Report contained in Section 10. Potential investors should read this report in full.

4.12 Taxation

The acquisition and disposal of Shares will have tax consequences which will differ depending upon the individual financial affairs of each investor. You are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability or responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

4.13 Dividend Policy

The Company has not declared a dividend since its incorporation and, at the date of this Prospectus, does not intend to pay any dividends in the two year period following the date of this Prospectus. During this period the Board expects to incur significant expenditure on the exploration and development of its Projects and in identifying, evaluating and, if warranted, acquiring other resource projects or assets in Australia and/or overseas that have the potential to add Shareholder value. The extent, timing and payment of dividends by the Company in the future will be at the discretion of the Directors and will depend on a number of factors including future earnings, the operating results and financial condition of the Company, future capital requirements, general business and other factors considered relevant by the Directors. No assurances in relation to the payment of dividends, or the franking credits attached to such dividends, can be given.

4.14 Directors and Key Personnel

Mr Richard Homsany

Non-Executive Chairman

B.Comm., LL.B (Hons), Grad. Dip. FINSIA, CPA, F Fin

Mr Homsany has significant experience in the resources industry, including working for North Ltd, which was acquired by Rio Tinto Ltd in 2001, and board experience with publicly listed resource companies in Australia and Canada. In his recent role as a Corporate Partner at an international law firm Mr Homsany focused on the Energy & Resources sector including advising clients on capital raisings, mergers & acquisitions, finance, joint ventures, divestments and corporate matters. Mr Homsany is the Executive Vice President, Australia of the Toronto Stock Exchange listed Mega Uranium Ltd and is a Certified Practising Accountant. He is the chairman of the ASX listed copper and nickel explorer Redstone Resources Limited and the Toronto Stock Exchange (Venture Exchange) listed gold and iron ore explorer Central Iron Ore Limited. Mr Homsany is a director of the Health Insurance Fund of Australia Limited and chairs meetings of its Audit and Risk Committee. He is the principal of Cardinals Lawyers and Consultants and has been admitted as a solicitor for over 18 years.

Mr Homsany does not expect that his directorships with other companies or other business activities will interfere with his ability to act as non-executive Chairman.

David Deloub

Managing Director

B.Ec (Hons), BA, Grad. Dip. Bus, Grad. Dip. FINSIA

Mr Deloub has 22 years of experience in the finance and corporate sectors and holds a degree in economics and post graduate qualifications in banking and finance.

Prior to joining Merah Mr Deloub was the Chief Financial Officer at the ASX listed Neptune Marine Services Limited. He was also a director of Patersons Capital Partners, a boutique advisory firm focused on providing strategic and financial advice to ASX listed small cap companies. Mr Deloub also has considerable finance and business development experience both in Australia and abroad where he has held senior finance positions at Alinta Limited domestically and at Alcoa Inc, based in New York.

Mr Ian Prentice

Non-Executive Director

B.SC (Geol) Grad. Dip. FINSIA, M.AusIMM

Mr Prentice is a geologist with over 20 years of mining industry experience including, management of an ASX listed exploration and mining company. He has experience in all facets of exploration and mining across a range of commodities with a number of mid to large cap mining companies. He has also gained an insight into a broad range of commercial aspects of publicly listed exploration and mining companies, from capital raisings through to investor communication.

He is a director of the ASX listed exploration company Killara Resources Limited, and of geological consulting company Zephyr Consulting Group Pty Ltd.

Mr Prentice was previously a director of the ASX listed gold exploration and production company Gleneagle Gold Limited, a company to which administrators were appointed on 3 May 2007 whose appointment ceased on 3 August 2007. Receivers and managers were appointed on 3 May 2007, whose appointment ceased on 30 July 2007. Gleneagle Gold Limited was subsequently restructured and recapitalised pursuant to a Deed of Company Administration, with deed administrators being appointed on 27 July 2007 who resigned on 10 March 2008. Mr Prentice ceased to be a director of Gleneagle Gold Limited on 4 March 2008.

Mr Prentice does not expect that his directorships with other companies or other business activities will interfere with his ability to act as non-executive Director.

Ms Suzie Foreman

Non-Executive Director

B.Bus (Hons), CA

Ms Foreman is a chartered accountant with over 15 years of commercial experience within the United Kingdom and Australia. Ms Foreman has 9 years’ combined experience with KPMG and a boutique accounting firm specialising in the provision of audit and corporate services and also has extensive skills in the areas of financial and management reporting, due diligence and ASX and ASIC corporate and regulatory compliance. Ms Foreman has been involved in the listing of ten exploration companies on the ASX and AIM markets in the last five years with capital raisings exceeding $50 million in aggregate. Ms Foreman is also company secretary to three ASX listed exploration companies - Red Fork Energy Limited, Jameson Resources Limited and Killara Resources Limited. Ms Foreman is a director of corporate advisory company Athena Corporate Pty Ltd.

Ms Foreman was previously company secretary of the ASX listed gold exploration and production company Gleneagle Gold Limited, a company to which administrators were appointed on 3 May 2007 whose appointment ceased on 3 August 2007. Receivers and managers were appointed on 3 May 2007 whose appointment ceased on 30 July 2007. Gleneagle Gold Limited was subsequently restructured and recapitalised pursuant to a Deed of Company Administration, with deed administrators being appointed on 27 July 2007 who resigned on10 March 2008. Ms Foreman ceased to be company secretary of Gleneagle Gold Limited on 4 March 2008.

Ms Foreman does not expect that her directorship with another company or other business activities will interfere with her ability to act as non-executive Director.

4.15 Corporate Governance

The Board endorses the Corporate Governance Principles and Recommendations (Second Edition) published by the ASX Corporate Governance Council. The Company has adopted corporate governance charters and policies that reflect the Corporate Governance Principles and Recommendations to the extent appropriate having regard to the circumstances of the Company.

The Company’s corporate governance charters and policies as at the date of this Prospectus are summarised in Section 8. Copies of these charters and policies can be accessed at the Company’s website at www.merahresources.com.au.

4.16 Disclosure of Directors’ Interests

Directors are not required under the Constitution to hold any Securities. As at the date of this Prospectus, the Directors have relevant interests in Securities as follows:

Director	No. of	No. of	No. of
	Shares	Options	Performance Rights
Richard Homsany	-	500,000	-
David Deloub	875,000	-	3,000,000
Ian Prentice	1,300,001	1,000,000	-
Suzie Foreman	200,000	500,000	-

Options

Each Option is unquoted and exercisable at $0.20 on or before 31 August 2015. The other terms and conditions of the Options are set out in Section 13.1(b).

Performance Rights

The Performance Rights are unquoted and are divided into three separate equal tranches of 1,000,000 Performance Rights with exercise conditions ( Exercise Conditions ) as follows:

(a) Each Performance Right A will convert into one (1) Share upon the Company achieving a market capitalisation equal to or greater than $10 million based on a volume weighted average price on or before 31 October 2013 for a period of no less than 30 consecutive trading days;
(b) Each Performance Right B will convert into one (1) Share upon the Company achieving a market capitalisation equal to or greater than $20 million based on a volume weighted average price on or before 31 October 2015 for a period of no less than 30 consecutive trading days;
(c) Each Performance Right C will convert into one (1) Share upon the Company achieving a market capitalisation equal to or greater than $40 million based on a volume weighted average price on or before 31 October 2016 for a period of no less than 30 consecutive trading days;

Mr Deloub must complete a continuous period of service as an employee of the Company from the date of issue of the Performance Rights until the date that is three (3) months from the date on which the relevant Exercise Condition is satisfied in order for the corresponding Performance Rights to be exercisable. The other terms and conditions of the unquoted Performance Rights are set out in Section 13.1(c).

Each Director is entitled to such remuneration from the Company as the Directors decide and the total amount provided to all non-executive Directors must not exceed in aggregate the amount fixed by the Company in a general meeting The aggregate remuneration for all non-executive Directors has been set at an amount not to exceed $250,000 per annum.

All Directors are entitled to be paid all travelling and other expenses properly incurred by them in attending, participating in and returning from meetings of the Directors or any committee of the Directors or general meeting of the Company or otherwise in connection with the business of the Company.

Nothing in this Prospectus will be taken to preclude Directors, officers or employees of Merah from applying for Shares pursuant to this Prospectus. The Directors are not required to hold any Shares under the Constitution.

4.17 Agreements with Directors or other Related Parties

Details of agreements between the Company and related parties of the Company are set out below. The Board considers that the agreements between the Company and each Director under which the Directors receive remuneration for their services to the Company as an officer or employee did not require Shareholder approval as such remuneration is reasonable in the parties’ circumstances in accordance with section 211 of the Corporations Act except for the issue and allotment of the Performance Rights to the Managing Director for which prior Shareholder approval was sought and obtained. Shareholder approval was not sought prior to entering into the agreements with the related parties of the Company as the Board considered that the benefits under the agreements were reasonable in the circumstances if the parties were dealing at arms’ length in accordance with section 210 of the Corporations Act.

The Board considers there are no additional risks to the Company as a result of the Director and related party agreements.

The Company has a Code of Conduct it observes when entering into related party transactions, a summary of which is set out in Section 8.3.

Managing Director Executive Service Agreement

On 5 September 2011 the Company entered into an employment agreement with Mr David Deloub pursuant to which Mr Deloub was appointed Managing Director ( Employment Agreement ). Pursuant to the terms of the Employment Agreement, Mr Deloub will be paid an amount of $200,000 per annum plus statutory superannuation to be reviewed annually. The Company also agreed (subject to any required Shareholder approval) to grant Mr Deloub 3,000,000 Performance Rights exercisable upon the satisfaction of the Exercise Conditions in three (3) equal tranches. Shareholder approval for the grant of these Performance Rights was obtained at the Company’s 2011 annual general meeting on 29 November 2011. The Company will also pay reasonable travel and other incidental costs incurred by Mr Deloub while performing his duties under the Employment Agreement. Either Mr Deloub or the Company may terminate the Employment Agreement at any time by giving not less than three (3) months notice in writing.

The Employment Agreement also contains additional provisions which are considered usual in an agreement of this type.

Non-Executive Directors’ Agreements

The Company has entered into an agreement with Mr Richard Homsany to provide services to the Company as non-executive Chairman under which he will receive fees of $40,000 per annum plus statutory superannuation from 1 May 2011, increasing to $60,000 per annum plus statutory superannuation from the Listing Date. The Company has also entered into agreements with each of Mr Ian Prentice and Ms Suzie Foreman to provide services to the Company as non-executive Directors, under which they will each receive $20,000 per annum plus statutory superannuation from 1 May 2011, each increasing to $30,000 per annum plus statutory superannuation from the Listing Date. These agreements also contain additional provisions which are considered usual in agreements of this type.

Directors’ deeds of indemnity, insurance and access

The Company has entered into a deed of indemnity, insurance and access ( Deed ) with each Director under which the Company indemnifies each Director to the extent permitted by law against any liability arising as a result of the Director acting in their capacity as an officer of the

Company ( Officer ). Until the later of seven (7) years after the date the Officer ceases to be an Officer or the date all claims commenced before that seven (7) year period have been finally resolved and no appeal is possible ( Access Period ) the Company must maintain insurance policies insuring the Directors against liability incurred in connection with their office to the maximum extent permitted by law and to the extent it is able to do so on reasonable commercial terms. During the Access Period the Company must maintain and provide the Officer with access to certain documents. The Deed also requires the Directors to disclose their dealings in Securities.

The Deed provides for advances to Officers for amounts for which the Officer is or is entitled to be indemnified under the Deed. If the Company advances an amount to the Officer and it is later established that the Officer is not entitled to be indemnified for those costs, the Officer must repay the amount to the Company.

Shareholder approval was not sought prior to entering into each Deed as the Board considered that the Deed confers benefits that are reasonable in the circumstances of the Company in accordance with section 211 of the Corporations Act. The Board considers that there are no additional risks to the Company as a result of each Deed.

The Deed also contains additional provisions which are considered usual in agreements of this type.

Agreements with other Related Parties

The Company has entered into an agreement with Zephyr Consulting Group Pty Ltd ( Zephyr ) under which Zephyr agrees to provide the Company with office space and administrative support services commencing on 1 December 2011. The Company will pay Zephyr $7,200 plus GST per month for these services. The agreement may be terminated by either party by 30 days’ notice to the other. Ian Prentice, who is a non-executive Director, is a shareholder and director of Zephyr.

The Company has entered into an agreement with Athena Corporate Pty Ltd ( Athena ) under which Athena agrees to provide compliance management services to the Company in respect of the Offer. Ms Suzie Foreman, who is a non-executive Director, is a shareholder and director of Athena. Under that agreement Athena will assist in the co-ordination of the Prospectus (including due diligence requirements) and all compliance matters up to the Listing Date. The Company will pay Athena normal charge out rates and the Company estimates it will pay Athena approximately $15,000 plus GST for these services. Suzie Foreman, who is a Director and the Company Secretary, is a director and shareholder of Athena. The Company has also entered into an agreement engaging Athena to provide accounting, corporate and company secretarial services to the Company commencing on the Listing Date. The Company will pay Athena $3,850 plus GST per month for these services. Both agreements may be terminated by either party by 30 days’ notice to the other, subject to fees that are due and payable being paid.

The Company has engaged Cardinals Corporate Pty Ltd, trading as Cardinals Lawyers and Consultants ( Cardinals ) to provide legal services to the Company in relation to the Offer and provision of the Solicitors’ Report on Tenements in Section 11. The Company will pay Cardinals normal charge out rates and the Company estimates it will pay Cardinals approximately $28,000 plus GST and disbursements for these services. Subsequently fees will be charged in accordance with normal charge out rates. Richard Homsany, who is the Chairman, is the director and shareholder of Cardinals.

All of the above agreements also contain additional provisions which are considered usual in agreements of their type.

5. DETAILS OF THE OFFER

5.1 Introduction

The information set out in this Section 5 is not comprehensive and should be read together with the other information in this Prospectus.

5.2 Shares offered for Subscription

Under this Prospectus the Company offers for subscription up to 15,000,000 Shares at an issue price of $0.20 per Share to raise a total of up to $3,000,000 with a minimum subscription of 12,500,000 Shares at an issue price of $0.20 per Share to raise $2,500,000.

The Shares offered under this Prospectus are new Shares which will rank equally with the existing Shares on issue. The rights attaching to the Shares are summarised in Section 13.1(a).

5.3 How to Apply for Shares

Applications for Shares offered under this Prospectus must be made using the Application Form, which is attached to this Prospectus.

Payment for the Shares must be made in full at the issue price of $0.20 per Share. Applications must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares. Completed Application Forms and accompanying cheques must be mailed to:

Merah Resources Limited C/- Security Transfer Registrars Pty Ltd PO Box 535 APPLECROSS WA 6953

or delivered to:

Merah Resources Limited C/- Security Transfer Registrars Pty Ltd Alexandrea House Suite 1 770 Canning Highway APPLECROSS WA 6153

Cheques should be made payable to “Merah Resources Limited– Subscription Account ” and crossed “Not Negotiable”. Completed Application Forms must reach one of the above addresses by no later than the Closing Date. Detailed instructions on how to complete the Application Form are set out on the reverse of that form.

The Company reserves the right to close the Offer early without notice.

5.4 Allotment of Shares

Subject to the Minimum Subscription being reached and the ASX granting conditional approval for the Company to be admitted to the official list of the ASX, allotment of Shares offered by this Prospectus will take place as soon as practicable after the Closing Date.

Following allotment, statements of Shareholdings will be dispatched to successful applicants. It is your responsibility to determine your allocation prior to trading in Shares. If you sell Shares before receiving your holding statement you do so at your own risk.

Prior to allotment, all application monies shall be held by the Company on trust. The Company will retain any interest earned on the application monies irrespective of whether the allotment of Shares takes place.

The Directors reserve the right to allot Shares in full for any application or to allot any lesser number of Shares or to decline any application. Where the number of Shares allotted is less than

the number applied for, or where no allotment is made, the relevant part of the application monies will be refunded to the applicant as soon as practicable after the allotment date.

5.5 Full Subscription

The full subscription to the Offer is $3,000,000 through the issue of 15,000,000 fully paid ordinary shares at an issue price of $0.20 per Share.

There are no over subscriptions.

5.6 Minimum Subscription

The minimum subscription to be raised under this Prospectus is $2,500,000 through the issue of 12,500,000 Shares at an issue price of $0.20 per Share. If the Minimum Subscription is not reached within four (4) months after the date of this Prospectus the Company will thereafter either repay all application monies received or will issue a supplementary prospectus or replacement prospectus and allow applicants one (1) month to withdraw their applications and be repaid their application monies. No interest will be paid on these monies.

5.7 ASX Listing

The Company will apply to the ASX within seven (7) days after the date of this Prospectus for admission to the official list of the ASX and for Quotation of the Shares offered under this Prospectus. If the ASX does not grant permission for Quotation of the Shares within three (3) months after the date of this Prospectus, or such longer period as is varied by ASIC, the Company will not issue or allot any Shares offered for subscription under this Prospectus and will repay all application monies received as soon as practicable thereafter.

The ASX takes no responsibility for the contents of this Prospectus. The fact that the ASX may grant Quotation of Shares is not to be taken in any way as an indication of the merits of the Company or the Shares offered under this Prospectus.

5.8 Applicants outside Australia

This Prospectus does not and is not intended to constitute an offer in any place or jurisdiction in which, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. Applicants outside Australia should refer to Section 2.1 for further information.

5.9 Not Underwritten

The Offer is not underwritten.

5.10 Commissions Payable

The Company reserves the right to pay a commission of up to 6% (exclusive of goods and services tax) of amounts subscribed to any licensed securities dealers or Australian Financial Services licensee in respect of applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian Financial Services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian Financial Services licensee.

5.11 Risk Factors

You should be aware that subscribing for Shares the subject of this Prospectus involves a number of risks. The key risks are set out in Section 4.4 of the Investment Overview and other Risk Factors are set out in Section 7. Potential investors are urged to consider those risks carefully, and if necessary consult their professional advisers before deciding whether to invest in the Company. The risk factors set out in Section 4.4 and Section 7, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly an investment in the Company should be considered speculative.

5.12 Queries

This Prospectus provides information for potential investors to decide if they wish to invest in the Company and should be read in its entirety. If you have any questions about investing in the

Company after reading this Prospectus, please contact your stockbroker, financial planner, accountant, lawyer or independent financial adviser.

6. COMPANY AND PROJECT OVERVIEW

6.1 Background

The Company was incorporated on 27 August 2010 for the purpose of evaluating and acquiring various investment opportunities in the resources sector that are considered by the Board to add potential Shareholder value. An experienced Board with a broad range of resources industry expertise has been assembled to direct the activities of the Company.

The Company entered into and completed the Sale Agreement to acquire 100% of the Mt Adamson Project and has entered into the Murchison Agreement for an option to earn an 80% interest in the Bounty and McAuley Projects by way of a farm in through meeting certain expenditures and other conditions. This option can only be exercised by the Company after it has received conditional approval to be admitted to the official list of the ASX.

The Mt Adamson Project, the Bounty Project and the McAuley Project (together “ the Projects ” or “ the Lawlers Project ”) are located in the North Eastern Goldfields province of the Archaean Yilgarn Craton in Western Australia which is host to globally significant gold and nickel deposits, as well as significant base metal mineralisation. The Bounty and McAuley Projects are considered prospective for gold mineralisation, while the Mt Adamson Project is considered prospective for gold and base metal mineralisation.

The Company also intends to identify, evaluate and, if warranted, acquire other resource projects and assets in Australia and/or overseas, with a view to the further exploration or development of, or investment in, the projects and assets acquired.

The location of the Lawlers Project is shown below.

==> picture [221 x 306] intentionally omitted <==

Map 1: Project Location Plan

Details of the Projects are summarised in this Section 6 and a more detailed description of each individual Project, and previous work undertaken on the Tenements or the area of the Tenements

and proposed exploration work and budgets are set out in the Independent Geologist’s Report in Section 9. Further information on the Sale Agreement and the Murchison Agreement is contained in Section 12. Details of the Tenements are provided in the Solicitors’ Report on Tenements in Section 11.

The Board’s primary objective is for the Company to generate value for Shareholders by utilising the accumulated knowledge and experience of its Directors and management to develop active, targeted and cost effective exploration programmes for the projects the Company has acquired an interest in or will acquire an interest in, by managing the Company’s current portfolio of assets in order to realise their full economic potential and by identifying, evaluating and, if warranted, acquiring further resource projects and assets in Australia and/or overseas that are considered by the Board to add potential value to the Company.

6.2 Company Projects

MT ADAMSON PROJECT

The Mt Adamson Project is located on the eastern edge of the western limb of the Lawlers Anticline and is approximately 28 kilometres south of Leinster, 12 kilometres south south west of the Lawlers Gold Mine and about 320 kilometres north of Kalgoorlie. Access is south via the Leinster Road past the Agnew Hotel, then approximately 12 kilometres south past the historic Lawlers town-site then via the Pinnacles Station road to the project area.

The Mt Adamson Project consists of a single exploration licence (36/675) in which Merah acquired a 100% interest under the Sale Agreement.

The Mt Adamson Project is at a relatively early stage of exploration however the area is considered prospective for gold and base metals mineralisation, in both shears and quartz veins within greenstones and quartz veins within granites. The presence of numerous major structures and large gold deposits in the in the vicinity of the Mt Adamson Project highlights the prospectivity of the area.

BOUNTY AND MCAULEY PROJECTS

The Bounty and McAuley Projects are located approximately 5 kilometres north of the Mt Adamson Project. Access is via existing station and exploration tracks.

The Bounty Project and the McAuley Project together consist of two granted prospecting licences (36/1730 and 36/1742 respectively) covering an area of 19 hectares. The tenements are owned by Murchison Resources Limited. Merah has an option, subject to Merah being admitted to the official list of the ASX on a conditional basis, to enter in to a farm in agreement, whereby it has the exclusive right to earn an 80% interest in the Bounty and McAuley Projects by meeting certain expenditure and other conditions after which a joint venture with Murchison Resources Limited (who will then have a 20% participating interest in the joint venture) will be formed. Merah intends to exercise its option upon being admitted to the official list of the ASX on a conditional basis.

As with the Mt Adamson Project, the Bounty and McAuley Projects are located within the western limb of the Lawlers Anticline in the southern portion of the Agnew–Wiluna greenstone belt. Gold mineralisation at the Bounty and McAuley Projects occurs within shear hosted quartz veins and/or quartz breccias, with historic production (1900 – 1910) indicating the occurrence of high grade narrow vein style of gold deposits.

The Bounty and McAuley Projects are considered prospective for gold mineralisation, with historical production from modest sized high grade underground workings and previous exploration identifying high grade extensions to the previously mined deposits and the potential for definition of new zones of mineralisation.

The Bounty and McAuley Projects are at a relatively early stage of exploration, albeit that gold mineralisation has been identified and exploited on both of the tenements forming these projects between 1900 and 1910, with only limited systematic modern exploration completed to date.

6.3 Exploration Work Programmes and Budgets

The proposed work programmes and exploration budgets for each of the Projects are set out in the Independent Geologists’ Report in Section 9 and reflect the initial focus for the Company upon a successful listing and raising of capital.

The Lawlers Project is considered prospective for precious and base metal mineralisation, with compilation of previous exploration and further ground based exploration expected to assist in defining a number of drill targets. This is expected to lead to initial drill testing of the targets identified combined with infill reverse circulation drilling of known zones of mineralisation.

The suggested work is in multiple phases and subject to review based on results, interpretations, development of exploration targets and models and target prioritisation. This is an iterative process and will be driven by a number of factors including success of prior stages of exploration. As such, some flexibility in changes to the programmes and budgetary requirements will be required as results are received.

Field work for the first year of exploration is expected to include compilation of the previous exploration and public domain data, assessment and interpretation of the available aeromagnetic data, field mapping and surface sampling where appropriate and modelling and interpretation of the available drilling data. This would be expected to be followed by initial drill testing of targets identified and reverse circulation drilling to infill and test the extensions of the known zones of mineralisation.

Depending on the success of the first year exploration, it is anticipated that follow up work in the second year will consist primarily of follow up aircore drilling, targeted reverse circulation drilling of structural targets identified and infill and extensional reverse circulation and diamond drilling.

The proposed budget for the Projects for the first two years after the Listing Date is summarised in the following table. The budget is considered reasonable to explore the Projects for the first two years after the Listing Date consistent with the Company’s stated objectives, and exploration is warranted and justified on the basis of the historical exploration activity and demonstrated potential for discovery of gold and base metal mineralisation.

The Company proposes to fund its intended activities as outlined in the table below from the proceeds of the Offer. It should be noted that the budgets will be subject to modification on an ongoing basis depending on the results obtained from exploration undertaken. This will involve an ongoing assessment of the Company’s project interests and may lead to increased or decreased levels of expenditure on certain interests, reflecting a change in emphasis. Subject to the above, the following expenditure is proposed:

Project	Year 1 $	Year 1 $	Year 2 $	Year 2 $	Total $	Total $
	Minimum Subscription	Full Subscription	Minimum Subscription	Full Subscription	Minimum Subscription	Full Subscription
Mt Adamson	147,077	316,000	381,750	447,250	528,827	763,250
Bounty and McAuley	157,500	341,500	513,750	579,500	671,250	921,000

7. RISK FACTORS

7.1 Introduction

Subscribing for Shares involves a number of risks. Prospective investors in the Company should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for the Shares offered under this Prospectus.

Merah is an exploration company and you should consider that an investment in the Company is speculative. You should consult your professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.

The risk factors set out below and others not specifically referred to below must not to be taken as exhaustive of the risks faced by the Company or by investors in the Company.

These risk factors may materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Accordingly the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares. Some risks can be mitigated by the use of appropriate safeguards and appropriate systems and controls by the Company, however some are unpredictable and outside the control of the Company and the extent to which they can be mitigated or managed is very limited or not possible.

KEY RISKS SPECIFIC TO THE COMPANY

7.2 Key Risks

The key risks which the Directors consider are associated with an investment in the Company are:
(a) Option to Acquire the Bounty and McAuley Projects.
(b) Contractual and Joint Venture Risk.
(c) Exploration Risks.
(d) Access Risk - Native Title and Aboriginal Heritage.
(e) Reliance on Key Personnel.
(f) Limited Operating History.
(g) Additional Requirements for Capital.
(h) Exploration Costs.
(i) Title Risk.
(j) New Projects and Acquisitions.
(k) Liquidity Risk.

Details of these key risks are contained in Section 4.4 and have not been repeated in this Section 7.

INDUSTRY RISKS

7.3 Operating Risks

The current and future operations of the Company, including exploration, project appraisal and possible production activities may be affected by various factors which can limit or prevent such activities. Such factors may include failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in surveying, drilling, other exploration activities and/or production activities, difficulties in commissioning and operating plant and equipment, electrical or 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 skilled labour, consumables, spare parts, plant and equipment.

7.4 Resource Estimates

None of the Tenements contain a JORC Code compliant resource and there is no guarantee that a JORC Code compliant resource will be discovered on any of the Tenements. Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company’s operations and the value of the Shares.

7.5 Commercial Risk

The mining industry is competitive and there is no assurance that, even if commercial quantities of minerals are discovered by the Company on the Projects or future projects it may acquire an interest in, a profitable market will exist for sales of such minerals. There can be no assurance that the quality of any such minerals will be such that they can be mined economically.

7.6 Exploration Risks

The Tenements are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings.

There can be no assurance that exploration of the Tenements, or any other tenements that may be acquired by the Company in the future, will result in the discovery of an economic ore deposit. Even if an economic resource is discovered there is no guarantee that it can be commercially exploited.

7.7 Commodity Price Volatility and Exchange Rate Risks

If the Company achieves success leading to mineral production, the revenue it will derive through the sale of gold, base metals, nickel or any other minerals it may discover exposes the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic factors such as inflation expectations, interest rates and general global economic conditions.

Furthermore, international prices of various commodities are denominated in United States dollars whereas the income and expenditure of the Company are and will be taken into account in Australian currency. This exposes the Company to the fluctuations and volatility of the rate of

exchange between the United States dollar and the Australian dollar as determined in international markets.

If the price of commodities declines this could have an adverse effect on the Company’s exploration, development and possible production activities, and its ability to fund these activities, which may no longer be profitable.

7.8 Insurance Risks

Exploration for and development of minerals involves hazards and risks that could result in the Company incurring losses or liabilities that could arise from its operations. If the Company incurs losses or liabilities which are not covered by its insurance policies, the funds available for exploration and development will be reduced and the value and/or title to the Company’s assets may be at risk.

The Company intends to insure its operations in accordance with industry practice. However in certain circumstances the Company’s insurance may not be of a nature or level to provide adequate insurance cover. The occurrence of an event that is not covered or fully covered by insurance could have a material adverse effect on the business, financial condition and results of the Company.

Insurance against all risks associated with mining exploration and production is not always available and, where available, the costs can be prohibitive or not adequate to cover all claims.

7.9 Environmental Risks

The operations and proposed activities of the Company are subject to Western Australian and Commonwealth laws and regulations concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. Future legislation and regulations governing exploration, development and possible production may impose significant environmental obligations on the Company.

The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Company from being able to develop potential economically viable mineral deposits. 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 or to obtain them on terms acceptable to the Company may 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.

7.10 Access to Infrastructure

There is limited capacity and high demand for rail and port services for the export of mineral products in Australia at the present time. If the Company progresses to production there is no guarantee that appropriate and affordable rail and port capacity will be available, which could have an adverse effect on the Company. In the event of production the Company will also require the use of both power and water infrastructure. Due to high demand for power and water access there is a risk that the Company may not be able to procure such access which could have an adverse effect on the Company.

GENERAL RISKS

7.11 General Economic Conditions

General economic conditions, introduction of tax reform, new legislation, the general level of activity within the resources industry, movements in interest and inflation rates and currency exchange rates may have an adverse effect on the Company’s exploration, development and possible production activities, as well as on its ability to fund those activities.

7.12 Share Market Conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:
(a) general economic outlook;
(b) the introduction of tax reform or other new legislation (such as royalties);
(c) interest rates and inflation rates;
(d) currency fluctuations;
(e) changes in investor sentiment toward particular market sectors in Australia and/or overseas (such as the exploration industry or gold and/or nickel sectors within that industry);
(f) the demand for, and supply of, capital; and
(g) terrorism or other hostilities.

The market price of the Shares can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular, which influences are beyond the Company’s control and which are unrelated to the Company’s performance. Neither the Company nor the Directors warrant the future performance of the Company or Shares and subsequently any return on an investment in the Company. Shareholders who decide to sell their Shares after the Company is admitted to the official list of the ASX may not receive the entire amount of their original investment.

7.13

Volatility in Global Credit and Investment Markets

Global credit, commodity and investment markets have recently experienced a high degree of uncertainty and volatility. The factors which have led to this situation have been outside the control of the Company and may continue for some time resulting in continued volatility and uncertainty in world stock markets (including the ASX). This may impact the price at which the Shares trade regardless of operating performance and affect the Company’s ability to raise additional equity and/or debt to achieve its objectives, if required.

7.14 Government and Legal Risk

The introduction of new legislation or amendments to existing legislation by governments (including introduction of tax reform), developments in existing common law or the respective interpretation of the legal requirements in any of the legal jurisdictions which govern the Company’s operations or contractual obligations, could impact adversely on the assets, operations and ultimately the financial performance of the Company and its Shares. The same adverse impact is possible by the introduction of new government policy or amendments to existing government policy.

7.15 Unforeseen Expenditure Risk

Expenditure may need to be incurred that has not been considered in this Prospectus. Although the Company is not aware of any such additional expenditure requirements, if such expenditure is subsequently incurred this may adversely affect the expenditure proposals and activities of the Company, as the Company may be required to reduce the scope of its operations and scale back its exploration programmes. This could have a material adverse effect on the Company’s activities and the value of the Shares.

8. CORPORATE GOVERNANCE

The primary responsibility of the Board is to represent and advance Shareholders’ interests and to protect the interests of stakeholders. To fulfill this role the Board is responsible for the overall corporate governance of the Company. The Board recognises the need for the Company to operate with the highest standards of behaviour and accountability.

The Board has adopted the corporate governance policies summarised below. Copies of the policies are available in full on the Company’s website at www.merahresources.com.au. As the Company’s activities increase in size, scope and/or nature, the Company’s corporate governance policies will be reviewed by the Board and amended as appropriate.

To the extent they are appropriate having regard to the Company’s circumstances the Company has adopted the Corporate Governance Principles and Recommendations (Second Edition) as published by the ASX Corporate Governance Council.

The responsibilities of the Board include:

protection and enhancement of Shareholder value;
formulation, review and approval of the objectives and strategic direction of the Company;
monitoring the financial performance of the Company by reviewing and approving budgets and monitoring results;
approving all significant business transactions including acquisitions, divestments and capital expenditure;
ensuring that adequate internal control systems and procedures exist and that compliance with these systems and procedures is maintained;
the identification of significant business risks and ensuring that such risks are adequately managed;
the review of performance and remuneration of executive Directors and key staff;
the establishment and maintenance of appropriate ethical standards; and
evaluating and, where appropriate, adopting with or without modification the Corporate Governance Principles and Recommendations.

The Company has considered the Corporate Governance Principles and Recommendations to determine an appropriate system of control and accountability to best fit its business and operations commensurate with those guidelines.

The Company seeks to follow the Corporate Governance Principles and Recommendations where appropriate for its size and operations. In cases where the Company determines it would be inappropriate to follow the Corporate Governance Principles and Recommendations due to its circumstances, the Company will provide reasons for that in its annual report.

The Board will consider on an ongoing basis its corporate governance procedures and whether they are sufficient given the Company’s circumstances including its nature of operations and size.

8.1 Board Charter

The Board is responsible for guiding and monitoring the Company on behalf of Shareholders to whom they are accountable. The Board is responsible for the strategic direction, policies and procedures of the Company and establishing goals for management and the operation of the Company.

The Board has adopted a Board Charter, which sets out requirements for the selection and reappointment of Directors, composition of the Board, the role of the Chairman and Board

committees and Board performance review. Details of the Board composition are set out in Section 4.14.

8.2 Procedures for Selection and Appointment of Directors

The Board will ensure that it has the appropriate range and expertise to properly fulfill its responsibilities. The Procedures for Selection and Appointment of Directors set out the steps to be undertaken where the Board considers there is a need to appoint another Director and the basis for assessment of candidates. All Directors are expected to maintain the skills required to discharge their obligations to the Company and are encouraged to undertake continuing professional education.

8.3 Code of Conduct

The Code of Conduct sets out the general principles and standards which the Board, officers and employees are encouraged to adopt when dealing with each other, Shareholders, other stakeholders and the general community. The Company is to comply with all laws, customs and business practices where it operates. The Company will recognise the rights of individuals and create a culture of treating people fairly and with respect. In their dealings the Board, officers and employees will value integrity and will not engage in deceptive, coercive or misleading practices.

The Code of Conduct sets out directives for Directors, officers and employees relating to conflicts of interests, protection and use of the Company's assets and confidentiality. Where the interests of associates, the personal interest of a Director or a Director’s family does or may conflict with those of the Company, it requires the Director to immediately disclose any conflict and either eliminate the conflict or manage such conflict in an appropriate and lawful manner.

8.4 Audit Committee Charter

The Audit Committee is responsible for assisting the Board to monitor and review the integrity of the financial reporting of the Company and matters of significance affecting financial reporting and compliance. The Board has adopted an Audit Committee Charter which outlines the composition of the Audit Committee, its responsibilities, authorities, reporting procedures and oversight of the risk management system. As at the date of this Prospectus there is no Audit Committee separate to the full Board. The full Board considers the matters and issues that would fall to the Audit Committee.

8.5 Securities Trading Policy

The Company has in place a Securities Trading Policy which imposes trading restrictions on Securities by Directors, officers, and employees (including associates) and, where considered appropriate, contractors and consultants of the Company. In addition to the overriding prohibition under the Corporations Act against dealing in Securities when a person is in possession of inside information, the policy also contains a prohibited period within which trading is prohibited except in exceptional circumstances and subject to obtaining prior written clearance. Those subject to trading restrictions under the policy are required to obtain written clearance prior to trading at all times and must not engage in short term or speculative trading of Securities.

8.6 Continuous Disclosure Policy

The Company has adopted a Continuous Disclosure Policy to ensure that it complies with its obligations under the Listing Rules and the Corporations Act and which sets out the requirements for notification and the procedures for disclosure. The Board has designated the Company Secretary as the person responsible for overseeing and coordinating disclosure of information to, and communicating with, the ASX. All relevant information provided to the ASX will be posted on the Company’s website once the ASX confirms the announcement has been made, to ensure that the information is easily accessible.

8.7 Shareholder Communication Policy

The Company has adopted a Shareholder Communication Policy which outlines the processes through which the Company will endeavour to ensure effective communication with Shareholders and provide timely and accurate information to all Shareholders about the Company and its corporate strategies.

The Company supports Shareholder participation in general meetings. Mechanisms for enabling Shareholder participation will be reviewed regularly to encourage the highest level of Shareholder participation.

8.8 Risk Management and Internal Compliance and Control Policy

The Board determines the Company’s risk profile and is responsible for overseeing and approving risk management strategy and policies, internal compliance and internal controls. The Company’s process of risk management and internal compliance and control includes continuously identifying and reacting to risks that might impact upon the achievement of the Company’s goals, formulating risk management strategies to manage identified risks and monitoring the performance of risk management systems and internal compliance and controls.

8.9 Performance Evaluation Practices

The Board has established processes to review its performance and the performance of individual Directors and committees of the Board annually. As part of the annual review of the performance of the Board, the appropriate size, composition and terms and conditions of appointment to and retirement from the Board are considered. The level of remuneration for non-executive Directors is considered with regard to practices of other public companies and the aggregate amount of fees approved by Shareholders. The Board also conducts an annual review of the Board which considers such factors as the appropriate criteria for Board membership collectively, interactions between the Board and management and particular goals and objectives of the Board for the next year.

8.10 Diversity Policy

The Board has adopted a Diversity Policy which sets out the Company's commitment to ensuring a diverse mix of skills and talent exists amongst its Directors, officers and employees, to contribute to the achievement of its corporate objectives. The Company considers diversity includes, but is not limited to, gender, age, experience, ethnicity and cultural background. The Diversity Policy provides a framework for the Company to achieve stated diversity objectives. The Board is committed to workplace diversity with a particular focus on supporting the representation of women at the senior level of the Company and on the Board. The Board is responsible for developing measureable objectives and strategies to meet its diversity objectives, and the Diversity Policy sets out the Company’s diversity strategies. The Board is also responsible for implementing, monitoring and reporting on the measureable objectives annually.

8.11 Remuneration Committee Charter

The Remuneration Committee is responsible for, amongst other things, reviewing and recommending to the Board strategies in relation to executive remuneration, reviewing the effectiveness of performance incentive plans and making recommendations to the Board in respect of all equity based remuneration plans. The Board has adopted a Remuneration Committee Charter which sets out the composition of the Remuneration Committee, its responsibilities and duties, meeting requirements and reporting procedures. As at the date of this Prospectus there is no Remuneration Committee separate to the full Board. The full Board considers the matters and issues that would fall to the Remuneration Committee.

8.12 Nomination Committee Charter

The Nomination Committee is responsible for, amongst other things, reviewing the composition of the Board and ensuring that it has an appropriate mix of skills and experience to properly fulfill its responsibilities. The Board has adopted a Nomination Committee Charter which sets out the composition of the Nomination Committee, its responsibilities and duties, meeting requirements and reporting procedures. As at the date of this Prospectus there is no Nomination Committee separate to the full Board. The full Board considers the matters and issues that would fall to the Nomination Committee.

8.13 Corporate Governance – Exceptions to Corporate Governance Principles and Recommendations

The Company sets out below those matters of corporate governance where the Company’s practice departs from the Corporate Governance Principles and Recommendations as the Board presently

considers they are not appropriate having regard to the current size and scope of operations of the Company.

Principle 2: Structure the Board to Add Value

Recommendation 2.1 - A majority of the board should be independent directors

The Board does not have a majority of independent Directors. Currently the Board is comprised of one independent Director, Mr Ian Prentice and three non-independent Directors, Mr David Deloub, who is the Managing Director, Mr Richard Homsany, who also provides legal services to the Company and Ms Suzie Foreman, who also provides accounting, corporate and company secretarial services to the Company through Athena Corporate Pty Ltd.

The Board considers that the composition of the Board is adequate for the Company’s current size and scale of operations, and includes an appropriate mix of skills and expertise relevant to the Company’s business.

While the Company does not presently comply with Recommendation 2.1, the Company may consider appointing further independent Directors in the future. The Company believes that given the current size and scope of its operations, non-compliance by the Company with this Recommendation 2.1 will not be detrimental to the Company.

Independence is measured having regard to the relationships listed in Box 2.1 of the Corporate Governance Principles and Recommendations and the Company’s materiality thresholds.

Recommendation 2.2 - The chair should be an independent director

The non-independent chair of the Board is Mr Richard Homsany, who also provides legal services to the Company. The Company is of the view that the size and scale of its current operations do not warrant the appointment of an independent chairperson and that non-compliance with this Recommendation 2.2 will not be detrimental to the Company.

Recommendation 2.4 – The board should establish a Nomination Committee

There is no nomination committee separate to the full Board. The role of the nomination committee is undertaken by the full Board. The Board considers that, given the Board is comprised of four (4) Directors and given the current size and scope of the Company’s operations, no efficiencies or other benefits would be gained by establishing a separate nomination committee.

As the Company’s operations grow and evolve, the Board will reconsider the appropriateness of forming a separate nomination committee.

Principle 4: Safeguard Integrity in Financial Reporting

Recommendations 4.1 and 4.2 - The board should establish an Audit Committee and structure it in accordance with Recommendation 4.2

There is no audit committee separate to the full Board. The role of the audit committee is undertaken by the full Board. The Board considers that, given the Board is comprised of four (4) Directors and given the current size and scope of the Company’s operations, no efficiencies or other benefits would be gained by establishing a separate audit committee.

As the Company’s operations grow and evolve, the Board will reconsider the appropriateness of forming a separate audit committee.

Principle 8: Remunerate Fairly and Responsibly

Recommendations 8.1 and 8.2 – The board should establish a Remuneration Committee and structure it in accordance with Recommendation 8.2

There is no remuneration committee. The role of the remuneration committee is undertaken by the full Board. The Board considers that, given the Board is comprised of four (4) Directors and given the current size and scope of the Company’s operations, no efficiencies or other benefits would be gained by establishing a separate remuneration committee. No Directors participate in any deliberations regarding their own remuneration or related issues.

As the Company’s operations grow and evolve, the Board will reconsider the appropriateness of forming a separate remuneration committee.

Recommendation 8.3 – Companies should clearly distinguish the structure of non-executive directors’ remuneration from that of executive directors and senior executives

The Performance Rights Plan and Employee Share Option Plan, details of which are set out in Section 13.1(e) and Section 13.1(d) respectively, will be used by the Company as part of the remuneration planning for both executive and non-executive Directors and employees. The Corporate Governance Guidelines and Recommendations recommend that non-executive directors should not receive options or participate in schemes designed for the remuneration of executives. Although the use of the Performance Rights Plan and Employee Share Option Plan as part of the remuneration planning for non-executive Directors is not in accordance with Recommendation 8.3, the Company considers that it is appropriate for non-executive Directors to be granted Performance Rights and Options having regard to the Company’s current circumstances including its size and stage of operations.

9. INDEPENDENT GEOLOGIST’S REPORT

INDEPENDENT'TECHNICAL'REPORT'

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Malcolm'Castle'

Consulting!Geologist! P.O.!Box!473,!South!Perth,!WA!6951! Phone:!08!9474!9351! Mobile:!04!1234!7511! Email:[email protected]! ABN:!84!274!218!871!

1!February!2012!

The!Directors! Merah!Resources!Limited!

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Dear!Sirs,!
Re:!
INDEPENDENT'GEOLOGIST’S'REPORT'ON'MINERAL'
PROJECTS'in'WESTERN'AUSTRALIA'
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I!have!been!commissioned!by!Merah!Resources!Limited!(“Merah”!or!the!“Company”)!to!provide! an! independent! technical! report! (“Report”)! on! Mineral! Projects! in! Western! Australia! which! together!comprise!the!“Projects”.!!This!Report!is!to!be!included!in!a!Prospectus!to!be!lodged!by! the!Company!with!the!Australian!Securities!and!Investments!Commission!(“ASIC”).!!The!funds! raised! will! be! used! to! partly! finance! the! consideration! payable! to! acquire! the! Projects,! for! ongoing!exploration!and!evaluation!of!the!mineral!properties!of!the!Projects!and!working!capital! requirements!(“Funds!Raised”).!

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The'Projects'

The! Lawlers! Project! is! considered! to! be! prospective! for! gold! (+! base! metal)! mineralisation! associated!with!the!Lawlers!Anticline!within!the!Agnew!–!Wiluna!greenstone!belt!in!the!North! Eastern!Goldfields!of!Western!Australia.!!The!North!Eastern!Goldfields!is!host!to!a!wide!range!of! mineralisation!styles,!with!significant!deposits!including!the!Agnew!Gold!Mine,!the!Lawlers!Gold! Mine,!the!Leinster!Nickel!Mine,!Mt!Keith!Nickel!Mine!and!the!Jaguar!Copperb!Zinc!Mine!

The!Company!has!prepared!staged!exploration!programs,!specific!to!the!exploration!potential!of! each! of! the! projects,! which! are! consistent! with! its! budget! allocations.! ! It! is! considered! that!

sufficient!exploration!and!mining!activities!have!been!undertaken!by!earlier!explorers!to!justify! the! proposed! programs! and! expenditure.! ! On! that! basis,! I! consider! the! funds! raised! will! be! sufficient!to!carry!out!the!Company’s!objectives!stated!in!the!Prospectus.!

Details!in!respect!to!the!legal!status!and!tenure!of!the!tenements!comprising!the!projects!have! not!been!considered!in!this!Report!but!are!outlined!in!the!Exploration!and!Mining!Titles!Report! elsewhere!in!the!Prospectus.!

DECLARATIONS'

Relevant'codes'and'guidelines'

This!Report!has!been!prepared!as!a!technical!assessment!in!accordance!with!the!2005!edition!of! “Code! for! the! Technical! Assessment! and! Valuation! of! Mineral! and! Petroleum! Assets! and! Securities! for! Independent! Expert! Reports”! (the! “VALMIN! Code”),! which! is! binding! upon! Members!of!the!Australasian!Institute!of!Mining!and!Metallurgy!(“AusIMM”)!and!the!Australian! Institute!of!Geoscientists!(“AIG”),!as!well!as!the!rules!and!guidelines!issued!by!the!Australian! Securities! and! Investments! Commission! (“ASIC”)! and! ASX! Limited! (“ASX”)! which! pertain! to! Independent!Expert!Reports!(Regulatory!Guides!111!and!112).!

Where! and! if! mineral! resources! have! been! referred! to! in! this! Report,! the! classifications! are! consistent!with!the!”Australasian!Code!for!Reporting!of!Exploration!Results,!Mineral!Resources! and!Ore!Reserves”!(the!“JORC!Code”),!prepared!by!the!Joint!Ore!Reserves!Committee!of!the! AusIMM,!the!AIG!and!the!Minerals!Council!of!Australia,!effective!December!2004.!

Where!assay!values!for!rock!chip!samples!and!drill!intercepts!are!quoted!they!represent!the!best! results!from!a!series!of!lower!grade!values.!!They!should!not!be!taken!to!represent!the!average! grade!of!the!samples!unless!otherwise!stated.!!

Under!the!definition!provided!by!ASX!and!in!the!VALMIN!Code,!the!Projects!are!classified!as! ‘exploration!projects’,!which!are!inherently!speculative!in!nature.!!The!Projects!are!considered! to!be!sufficiently!prospective,!subject!to!varying!degrees!of!risk,!to!warrant!further!exploration! and!development!of!their!economic!potential,!consistent!with!the!exploration!and!development! programs!proposed!by!the!Company.!

Sources'of'Information'

The!statements!and!opinion!contained!in!this!Report!are!given!in!good!faith!and!this!Report!is! based! on! information! provided! by! the! tenement! holders,! technical! reports! prepared! by! consultants! and! previous! tenements! holders,! and! other! relevant! published! and! unpublished! data!for!the!projects.!!I!have!endeavoured,!by!making!all!reasonable!enquiries,!to!confirm!the! authenticity,!accuracy!and!completeness!of!the!technical!data!upon!which!this!Report!is!based.!! A!final!draft!of!this!Report!was!provided!to!the!Company!along!with!a!written!request!to!identify! any!material!errors!or!omissions!prior!to!lodgement.!

In!compiling!this!Report,!I!did!not!carry!out!a!site!visit!to!any!of!the!Project!areas.!!Based!on!my! professional!knowledge!and!experience!and!the!availability!of!extensive!databases!and!technical!

reports! made! available! by! various! Government! agencies,! I! considered! that! sufficient! current! information!was!available!to!allow!an!informed!appraisal!to!be!made!without!such!a!visit.!

This!Report!has!been!compiled!based!on!information!available!up!to!and!including!the!date!of! this!Report.!!Consent!has!been!given!for!the!distribution!of!this!Report!in!the!form!and!context! in!which!it!appears.!!I!have!no!reason!to!doubt!the!authenticity!or!substance!of!the!information! provided.!

This!Report!contains!statements!attributable!to!third!persons.!!These!statements!are!made!in,!or! based!on!statements!made!in!previous!geological!reports!that!are!publicly!available!from!either! Government!agencies!or!ASX.!!The!authors!of!these!previous!reports!have!not!consented!to!the! statements’!use!in!this!Report,!and!these!statements!are!included!in!accordance!with!ASIC!Class! Order! CO! 07/428! Consent! to! Quote:! Citing! trading! data! and! geological! reports! in! disclosure! documents!and!PDS.!

Qualifications'and'Experience'

The!person!responsible!for!the!preparation!of!this!Report!is:!

Malcolm!Castle,!B.Sc.!(Hons),!GCertAppFin!(Sec!Inst),!MAusIMM.!

Malcolm! Castle! has! over! 40! years’! experience! in! exploration! geology! and! property! evaluation,!working!for!major!companies!for!20!years!as!an!exploration!geologist.!!He! established! a! consulting! company! 20! years! ago! and! specialises! in! exploration! management,! technical! audit,! due! diligence! and! property! valuation! at! all! stages! of! development.!!He!has!wide!experience!in!a!number!of!commodities!including!gold,!base! metals,! iron! ore! and! mineral! sands.! ! He! has! been! responsible! for! project! discovery! through!to!feasibility!study!in!Australia,!Fiji,!Southern!Africa!and!Indonesia!and!technical! audits!in!many!countries.!

Mr!Castle!completed!studies!in!Applied!Geology!with!the!University!of!New!South!Wales! in!1965!and!has!been!awarded!a!B.Sc.!(Hons)!degree.!!He!has!completed!postgraduate! studies!with!the!Securities!Institute!of!Australia!in!2001!and!was!awarded!a!Graduate! Certificate!in!Applied!Finance!and!Investment!in!2004.!

Mr! Castle! is! a! Member! of! the! Australasian! Institute! of! Mining! and! Metallurgy! (“AusIMM”)! and! has! the! appropriate! relevant! qualifications,! experience,! competence! and!independence!to!be!considered!as!an!“Expert”!and!“Competent!Person”!under!the! Australian!VALMIN!and!JORC!Codes,!respectively.!

Independence'

I!am!not,!nor!do!I!intend!to!be,!a!director,!officer!or!other!direct!employee!of!the!Company!and! have!no!material!interest!in!the!projects!or!the!Company.!!The!relationship!with!the!Company!is! solely!one!of!professional!association!between!client!and!independent!consultant.!!The!review! work! and! this! Report! are! prepared! in! return! for! professional! fees! based! upon! agreed!

commercial!rates!and!the!payment!of!these!fees!is!in!no!way!contingent!on!the!results!of!this! Report.!

Yours!faithfully!

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Malcolm!Castle! B.Sc.(Hons),!MAusIMM,! GCertAppFin!(Sec!Inst)

REGIONAL'GEOLOGY'–'EASTERN'GOLDFIELDS'OF'WESTERN'AUSTRALIA'

The!Eastern!Goldfields!province!of!the!Archaean!Yilgarn!Craton!(the!Norseman!–!Wiluna!belt)!in! Western!Australia!is!host!to!globally!significant!gold!and!nickel!deposits,!including!Kalgoorlie’s! Golden!Mile!(gold),!Kambalda’s!St!Ives!camp!(gold),!Norseman!(gold),!Kambalda!(nickel)!and!Mt! Keith!(nickel).!!This!province!makes!up!the!eastern!third!of!the!Archaean!Yilgarn!Craton!and!is! bound!to!the!west!by!the!Ida!Fault!(in!the!Menzies!–!Coolgardie!area),!an!east!dipping!crustal! scale! structure.! ! The! older! Southern! Cross! province! is! located! to! the! west! of! the! Eastern! Goldfields!province.!

The!Norseman!–!Wiluna!belt!consists!of!late!Archaean!greenstones!and!granitoids!characterised! by! a! pronounced! north! –! northwest! trending! structural! grain,! defined! by! regional! foliation,! major! fold! axes,! elongate! granitoid! bodies! and! craton! scale! shear! zones.! Anticlines! are! commonly!cored!by!granitoids!and!synclines!by!greenstones.!!The!greenstones!comprise!igneous! rocks!ranging!from!ultramafic!to!felsic,!largely!as!komatiitic!and!basaltic!volcanic!rocks,!and!a! sedimentary!rock!component.!!Granitoids!are!predominantly!monzogranitic!to!granodioritic!in! composition.!

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Figure'1'–'Regional'Geology'North'Eastern'Goldfields'

The!Lawlers!Project!held!by!the!Company!is!located!to!the!south!south!west!of!Agnew!and!is! situated!in!the!southern!part!of!the!Agnew!–!Wiluna!greenstone!belt!within!the!Agnew!Domain.!! This!domain!is!dominated!by!the!north!plunging!Lawlers!Anticline,!which!has!a!core!of!granitoid! rocks!that!appear!to!intrude!the!supercrustal!lithologies.!!To!the!west!the!domain!is!in!faulted! contact! with! the! Waroonga! Shear! Zone.! ! The! greenstone! belt! consists! mainly! of! basalt! and! ultramafic!rocks!intruded!by!extensive!sills!of!gabbro!and!dolerite.!Conglomerate!and!feldspathic! sandstone!outcrop!on!the!western!side!of!the!belt.!

The! greenstone! belt! in! the! area! of! the! Project! on! the! western! side! of! the! Lawlers! Anticline! trends!north!to!north!east!and!is!broadly!parallel!to!the!regionally!significant!Waroonga!Shear.!! There!are!a!number!of!north!west!trending!shear!zones!in!the!area!which!dextrally!offset!the! greenstone!belt.!

Mineralisation!in!the!region!is!dominated!by!gold!and!nickel,!although!there!is!also!significant! base! metal! (Cu! –! Zn! –! Pb)! mineralisation! and! lesser! uranium! mineralisation.! Gold! was! first! discovered!in!the!Agnew!–!Lawlers!district!in!1895!with!production!taking!place!over!three!broad! periods!–!1895!to!1911,!mid!1930’s!to!late!1940’s!and!mid!1980’s!to!present.!!There!are!two! main!gold!operations!currently!active!in!the!vicinity!of!Merah’s!Lawlers!Project:!

Gold! Fields! Limited’s! Agnew! Gold! Mine! –! centred! on! the! Waroonga! underground! complex! and! satellite! open! pits,! such! as! Songvang,! within! mafic! or! ultramafic! rocks! along!the!western!limb!of!the!Lawlers!Anticline.!!Total!resources!as!at!30!June!2009!of! 221.2!Mt!at!5.1g/t!Au!and!reserves!of!2.9!Mt!at!7.8g/t!Au!(quoted!in!accordance!with! the!JORC!code!b!www.goldfields.co.za).!
Barrick! Gold! Corporation’s! Lawlers! Gold! Mine! –! located! north! and! east! of! Gold! Field! Limited’s! Agnew! Gold! Mine.! ! Total! reserves! as! at! 31! December! 2010! of! 352,000! oz! (quoted!in!accordance!with!NI!43b101!–!www.barrick.com).!

The! Lawlers! Project! is! considered! to! be! prospective! for! gold! (and! base! metal)! mineralisation! associated!with!the!Lawlers!Anticline!within!the!Agnew!–!Wiluna!greenstone!belt!in!the!North! Eastern!Goldfields!of!Western!Australia.!!The!North!Eastern!Goldfields!is!host!to!a!wide!range!of! mineralisation!styles,!with!significant!deposits!including:!

Agnew!Gold!Mine!
Lawlers!Gold!Mine!
Leinster!Nickel!Mine!
Mt!Keith!Nickel!Mine!
Jaguar!Copperb!Zinc!Mine!

The!Lawlers!Project!includes!a!granted!Exploration!Licence!at!Mt!Adamson!and!the!Company! may!earn!an!interest!in!two!granted!Prospecting!Licences!at!Bounty!and!McAuley!in!the!North! Eastern!Goldfields!of!Western!Australia.!

MT'ADAMSON'PROJECT'

The! Mt! Adamson! project! is! located! on! the! eastern! edge! of! the! western! limb! of! the! Lawlers! Anticline!extending!to!the!interpreted!fold!axis,!covering!the!interpreted!granite!–!greenstone! contact.!The!area!is!considered!prospective!for!gold!mineralisation,!in!both!shears!and!quartz! veins!within!greenstones!and!quartz!veins!within!granites,!and!base!metal!mineralisation.!

LOCATION!AND!TENURE!

The!Mt!Adamson!project!is!approximately!28!kilometres!south!of!Leinster,!12!kilometres!south! south!west!of!the!Lawlers!Gold!Mine!and!about!320!kilometres!north!of!Kalgoorlie.!!Access!is! south! via! the! Leinster! Road! past! the! Agnew! Hotel,! then! approximately! 12km! south! past! the! historic!Lawlers!townsite!then!via!the!Pinnacles!Station!road!to!the!project!area.!!Within!the! project!area!access!is!on!station!tracks!and!disused!roads!and!would!be!problematic!in!the!west! of! the! project! following! wet! weather! due! to! a! large! drainage! system! and! associated! watercourses.!!

The! project! consists! of! a! single! exploration! licence! (E36/675)! owned! by! Merah,! which! was! granted!on!12!March!2009,!and!covers!approximately!48!square!kilometres.!!!

GEOLOGICAL!SETTING!

Mt!Adamson!is!situated!in!the!southern!part!of!the!Agnew!–!Wiluna!greenstone!belt!and!ranges! from!interpreted!greenstones!of!the!western!limb!of!the!Lawlers!Anticline!in!the!west!and!north! through! to! porphyritic! tonalite! and! granitoids! which! have! intruded! the! core! of! the! Lawlers! Anticline.!Large!portions!of!the!project!are!covered!by!colluvium!and!alluvium!of!varying!depth,! particular!in!the!west!where!there!is!a!large!drainage!system!and!associated!watercourses.!!

The!north!–!south!trending!fold!axis!of!the!Lawlers!Anticline!is!interpreted!to!cross!the!eastern! third!of!the!Mt!Adamson!project.!!There!are!also!a!number!of!north!west!tending!structures!that! are!interpreted!to!cross!cut!the!western!limb!of!the!Lawlers!Anticline!and!penetrate!the!project! area.!!One!north!west!structure!located!in!the!north!of!the!project!area!offsets!interpreted!mafic! rocks!in!the!north!west!and!is!interpreted!to!intersect!the!fold!axis!of!the!Lawlers!Anticline!in!the! central! east.! ! Another! north! west! structure! is! interpreted! to! extend! from! the! Songvang! gold! deposit!in!the!western!limb!of!the!Lawlers!Anticline!and!penetrate!through!the!south!west!of! the!project!area.!!

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Figure'2'–'Local'Geology'and'Prospect'Locations'

PREVIOUS!EXPLORATION!

The!Mt!Adamson!project!has!been!subjected!to!limited!nickel!exploration!during!the!1970s!and! 1980s.!

Asarco! Australia! Limited! explored! an! area! that! covered! the! majority! of! the! project! between! 1989!and!1991!as!part!of!its!large!regional!Miranda!Project,!which!extended!from!south!of!the! Mt! Adamson! project! area! to! Yakabindi! in! the! north.! ! Work! completed! consisted! of! aerial! photograph! and! aeromagnetic! interpretation,! ground! reconnaissance,! reconnaissance! lag! sampling!(306!samples!collected!on!a!400m!by!50m!grid)!and!infill!lag!sampling!(552!samples!on! a! 100m! by! 25m! gird! and! 59! samples! as! a! repeat! of! a! previously! sampled! line).! ! The! initial! reconnaissance! lag! sampling! defined! a! broad! gold! anomaly,! however! the! infill! and! repeat! sampling! failed! to! support! the! original! results! and! the! initial! results! were! determined! to! be! spurious.!

WMC!Resources!Limited!explored!the!northern!most!block!of!the!project!area!between!1996! and!2001!as!part!of!the!Agnew!Gold!Project!which!included!a!number!of!operating!gold!mines! and!extended!to!the!north!and!west!of!the!project!area.!!First!pass!soil!sampling!was!completed! across!the!block!on!200m!spaced!lines,!with!samples!every!100m!along!the!lines,!identifying! weak! gold! anomalism! on! a! single! line! in! the! north! west! of! the! area.! ! Results! from! the! soil! sampling!ranged!from!<1ppb!up!to!134ppb.!!No!further!work!was!undertaken!by!WMC.!

The!Agnew!Gold!Mining!Company!(Gold!Fields!Limited)!explored!an!area!that!covers!the!central! western! portion! of! the! Mt! Adamson! project! from! late! 2003! until! late! 2008! completing! lag! sampling!(the!iron!rich!surface!residual!material)!on!a!broadly!400m!by!100m!grid!and!follow!up! aircore!drilling.!!A!total!of!655!lag!samples!were!collected!and!were!assayed!for!Au,!Cu,!Ni,!Bi,! Mo,!Fe!and!As,!with!Au!results!ranging!from!<1!to!128ppb.!!Gold!Fields!completed!62!vertical! aircore!holes!for!1,082m!on!seven!traverses.!!Holes!were!drilled!every!25m!along!the!traverses! and!ranged!in!depth!from!1!to!49m.!!All!holes!were!sampled!on!2m!intervals!and!assayed!for! gold.!!Assay!results!ranged!from!<0.01!to!0.15ppm.!!!

United!Mining!Resources!Pty!Ltd!&!Rio!Resources!Pty!Ltd!were!granted!E36/675!on!12!March! 2009!and!completed!a!review!of!the!mineral!potential!of!the!project,!a!regional!MAGLAG!and! MAGSTREAM!geochemical!survey,!an!airborne!magnetic!/!radiometric!survey!and!a!geophysical! interpretation.!!The!geochemical!survey!consisted!of!147!MAGLAG!samples!(magnetic!portion!of! the!surface!residual!material),!collected!on!16!traverses!500m!apart!with!samples!every!500m! along! the! traverses,! and! 40! MAGSTREAM! samples! (magnetic! portion! of! stream! sediments).!! Samples!were!collected!in!the!north,!west!and!east!portions!of!the!project!and!were!assayed!for! a!suite!of!61!elements.!

The!airborne!magnetic!/!radiometric!survey!was!flown!on!north!–!south!flight!lines!on!200m!line! spacing.!!Consultant!Geophysicist!Graham!Elliott!completed!an!interpretation!of!the!data!from! this!survey!combined!with!government!aeromagnetic!data!that!was!on!400m!spaced!east!–!west! flight!lines.!!The!review!of!the!magnetic!data!identified!an!interpreted!mafic!sequence!beneath! cover!in!the!north!west!of!the!project!area,!a!west!north!west!trending!structure!with!dextral! movement!that!extends!from!the!western!limb!of!the!Lawlers!Anticline!through!the!northern! end!of!Target!1!defined!by!the!MAGLAG!survey!and!intersects!the!interpreted!axis!of!the!Lawler! Anticline!in!the!central!east!portion!of!the!project,!and!a!poorly!defined!north!west!trending! structure! extending! from! the! Songvang! gold! deposit! on! the! western! limb! of! the! Lawlers! Anticline!and!through!the!southern!end!of!Target!1!defined!by!the!MAGLAG!survey.!!

PROSPECTIVITY!

Mt!Adamson!is!at!a!relatively!early!stage!of!exploration!however!there!is!the!opportunity!for!the! identification! of! gold! mineralisation! within! both! concealed! mafics! adjacent! to! the! granite! –! greenstone! contact! and! associated! with! quartz! veins! within! the! granite,! with! a! series! of! interpreted!splay!structures!off!the!major!crustal!fracture!associated!with!western!limb!of!the! Lawlers!Anticline!cross!cutting!the!project!area.!!The!presence!of!numerous!major!structures!and! large!gold!deposits!in!the!in!the!vicinity!of!the!Mt!Adamson!project!highlights!the!prospectivity!

of!the!area.!!There!is!also!scope!for!the!identification!of!base!metal!mineralisation!within!the! project!area.!

The!geochemical!survey!identified!three!gold!(+base!metal)!prospective!zones:!

Target!1!b!located!along!the!north!western!edge!of!the!project!area!–!anomalous!Au,! Ag,! As,! Te,! Sb,! Zn! and! Ni! –! potentially! prospective! for! greenstone! hosted! gold! mineralisation,!
Target!2!–!located!in!the!northern!block!of!the!project!–!anomalous!Ag,!As,!Sb,!Cu,!Mo,! Pb,! W! and! Ba! with! high! background! Au! levels! –! potentially! prospective! for! felsites! related!base!metal!and!gold!mineralisation,!and!
Target!3!–!located!on!the!eastern!edge!of!the!project!–!anomalous!Ag,!Te,!Pb!and!Ba! with!high!background!Mo,!Sb!and!As!

Exploration!by!previous!operators!has!focused!on!surface!sampling!throughout!the!majority!of! the!project!area!and!limited!shallow!vertical!aircore!drilling!in!the!western!portion,!with!results! generally! being! inconclusive! due! to! the! depth! of! cover! in! the! west! associated! with! a! large! drainage!system.!!There!has!been!limited!exploration!in!the!southern!and!central!portions!of!the! project!area,!particularly!in!the!area!of!the!interpreted!axis!of!the!Lawlers!Anticline.!

EXPLORATION!PROGRAM!AND!BUDGET!

A!review!of!the!effectiveness!of!the!aircore!drilling!in!the!western!portion!of!the!project!area!is! required,!particularly!in!the!area!of!the!MAGSTREAM!/!MAGLAG!Target!1!and!the!intersection!of! the!interpreted!WNW!/!NW!structures!and!the!interpreted!mafic!sequence!beneath!cover.!!Grid! based!aircore!drilling!is!required!to!further!evaluate!the!Target!1!anomaly!whilst!targeted!follow! up!RC!drilling!is!required!to!test!the!structural!targets!beneath!cover.!

In!addition!the!MAGSTREAM!/!MAGLAG!Target!2!in!the!north!of!the!project!area!warrants!follow! up!assessment!and!possible!first!pass!grid!based!aircore!drilling!with!indications!of!potential!for! felsite!hosted!base!metal!mineralisation!in!addition!to!gold!mineralisation.!!!

The!intersection!of!the!WNW!/!NW!structures!with!the!interpreted!fold!axis!in!the!central!east! of!the!project!area!warrants!further!assessment,!even!though!surface!geochemistry!to!date!has! not!highlighted!any!significant!anomalism.!!An!assessment!of!the!regolith!in!this!area!may!assist! in!designing!follow!up!systematic!surface!sampling.!

Merah!proposes!to!complete!data!compilation,!assessment!and!interpretation!of!the!available! aeromagnetic!data,!geological!mapping!and!surface!sampling,!!

In! the! first! year! of! exploration! it! is! proposed! to! complete! the! compilation! of! previous! exploration! data! in! to! a! GIS! and! detailed! assessment! and! interpretation! of! the! available! aeromagnetic! data! to! assist! in! defining! the! extent! of! the! covered! mafic! sequence! and! the! location! of! the! WNW/NW! cross! cutting! structures.! ! It! is! also! proposed! to! conduct! detailed! geological!mapping!and!surface!sampling!in!the!area!of!the!interpreted!Lawlers!Anticline!fold! axis.!!Initial!aircore!drilling!is!proposed!to!test!targets!identified!from!these!stages!of!exploration.!

Exploration! in! the! second! year! may! consist! of! a! mix! of! aircore/RC! drilling! to! test! identified! targets!and!to!infill!and!test!the!extensions!of!known!zones!of!mineralisation.!!

$3.0millionCapitalRaising	Year1	Year2	TOTAL
Personnel: Fieldexpenses: Geophysics: Drilling: Assays:	$93,250 $33,000 $9,500 $140,250 $40,000	$101,000 $33,250 $0 $280,500 $32,500	$194,250 $66,250 $9,500 $420,750 $72,500
TOTAL	$316,000	$447,250	$763,250

In!the!event!that!the!Company!raises!the!minimum!subscription!it!will!modify!its!exploration! activities!such!that!the!quantum!of!follow!up!aircore!and!RC!drilling!is!reduced.!!This!reduction! would!have!the!effect!of!extending!the!evaluation!period!of!any!identified!mineralised!zones.!! Expenditures!would!remain!in!excess!of!statutory!expenditure!commitments.!!

$2.5millionMinimumSubscription	Year1	Year2	TOTAL
Personnel: Fieldexpenses: Geophysics: Drilling: Assays:	$36,827 $19,500 $5,750 $63,250 $21,750	$83,500 $31,750 $0 $239,250 $27,250	$120,037 $51,250 $5,750 $302,500 $49,000
TOTAL	$147,077	$381,750	$528,827

The!exploration!budget!will!be!subject!to!modification!on!an!ongoing!basis!depending!on!the! results!obtained!from!exploration!and!development!activities!as!they!progress.!It!is!also!noted! that!proposed!expenditure!is!sufficient!to!cover!the!minimum!expenditure!obligation!for!the!Mt! Adamson! tenement! as! specified! by! the! Department! of! Mines! and! Petroleum! of! Western! Australia.!

It!is!considered!that!the!Company!has!a!reasonable!proposed!exploration!budget!over!two!years! consistent! with! its! stated! objectives! and! that! this! program! is! warranted! and! justified! on! the! basis!of!the!historical!exploration!activity!and!demonstrated!potential!for!discovery!of!gold!and! base!metal!mineralisation.!

BOUNTY'AND'MCAULEY'PROJECTS'

LOCATION!AND!TENURE!

The! Bounty! and! McAuley! tenements! form! part! of! the! Lawlers! Project! and! are! located! approximately!5!kilometres!north!of!the!Mt!Adamson!tenement.!Access!is!via!existing!station! and!exploration!tracks.!!

The!Project!consists!of!two!granted!prospecting!licences!(P36/1730!and!P36/1742)!covering!an! area!of!19!hectares.!!The!tenements!were!granted!on!9!March!2011.!The!tenements!are!owned! by! Murchison! Resources! Limited.! ! Merah! has! an! option! to! enter! in! to! a! farmbin! agreement,! whereby!it!has!the!exclusive!right!to!earn!an!80%!interest!in!the!mineral!rights!within!the!project! area.!

GEOLOGICAL!SETTING!

As!with!Mt!Adamson,!the!Bounty!and!McAuley!Project!is!located!within!the!western!limb!of!the! Lawlers!Anticline!in!the!southern!portion!of!the!Agnew!–!Wiluna!greenstone!belt.!Large!portions! of! the! project! are! covered! by! thin! layers! of! colluvium! with! sub! crop! and! outcrop! of! mafic! volcanics! with! intrusions! of! metamorphosed! dolerite.! Gold! mineralisation! at! Bounty! and! McAuley! occurs! within! shear! hosted! quartz! veins! and/or! quartz! breccias,! with! historic! production! (1900! –! 1910)! indicating! the! occurrence! of! high! grade! narrow! vein! style! of! gold! deposits.!

PREVIOUS!EXPLORATION!

Previous! modern! systematic! exploration! over! the! Lawlers! Project! has! been! relatively! limited! other!than!in!the!areas!of!historic!high!grade!underground!workings!at!Bounty!and!McAuley,! and!the!previous!work!has!identified!a!number!of!targets!ranging!from!conceptual!opportunities! through!to!the!extensions!of!known!high!grade!mineralised!zones.!

Work! completed! since! the! 1970s! has! included! small! scale! underground! development! and! production! at! Bounty,! aerial! photograph! and! aeromagnetic! interpretation,! ground! reconnaissance,! geological! mapping,! surface! sampling! (lag,! soils,! rock! chip,! MAGLAG! and! MAGSTREAM)!aircore!/!RAB!drilling,!RC!drilling!(mainly!at!McAuley),!a!ground!magnetics!survey! and! a! airborne! magnetic/radiometric! survey.! ! The! main! target! of! this! work! was! Archaean! greenstone!hosted!gold!mineralisation.!!!

Exploration!of!the!Bounty!and!McAuley!Project!area,!other!than!the!historical!production!in!the! early!1900’s,!has!been!recorded!since!1983.!!Work!completed!included!small!scale!underground! development!and!production,!a!ground!magnetics!survey,!geological!mapping,!rock!chip!and!soil! sampling,!aircore!/!RAB!drilling!and!RC!drilling.!!The!small!scale!production!was!completed!on! the!Bounty!lease,!while!the!majority!of!the!drilling!activity!was!completed!on!the!McAuley!lease.!

Western! Mining! Corporation! Limited! explored! an! area! extending! north! from! the! Bounty! and! McAuley!Project!from!1983!to!1985!as!part!of!its!Emu!South!Project!in!joint!venture!with!Nord! Australex!Nominees!Pty!Ltd.!!The!project!area!covered!all!of!the!Bounty!prospecting!licence!and! the! northern! edge! of! the! McAuley! prospecting! licence.! ! Work! completed! consisted! of! the! establishment!of!a!regional!grid,!a!soil!sampling!program!on!200m!by!20m!grid!and!detailed! geological! mapping,! with! this! work! focused! to! the! west! and! north! of! the! project! area.! ! The! geological! mapping! extended! to! the! western! edge! of! the! Bounty! and! McAuley! Project! area.!! WMC!completed!RC!drilling!on!the!Deliverer!and!Redeemer!prospects!located!to!the!west!and! north!west!respectively!of!the!project!area.!

In!1988!a!review!of!the!Bounty!tenement!was!completed!by!GRD,!which!included!a!summary!of! the! historical! production! from! the! Bounty! Gold! Mine! and! an! assessment! of! the! existing! operations! of! a! mining! syndicate.! ! Goldfields! Resources! Development! Pty! Ltd! referred! to! a! historical!report!on!the!Bounty!Gold!Mine!that!indicated!production!of!1,544!troy!ounces!of!gold! from!1,340!tonnes!of!ore!between!1900!and!1906!when!ground!water!inflow!prevented!ongoing! development.!!The!mining!syndicate!had!dewatered!the!working,!extended!the!shaft,!completed! lateral!development!and!extracted!approximately!133!tonnes!of!ore,!63!tonnes!of!which!were! treated!for!the!production!of!1,290g!of!gold.!!The!report!describes!steeply!north!plunging!folded! and!cross!faulted!quartz!veins!within!a!“tensional”!opening!within!mafic!rocks!as!the!host!for!the! high!grade!gold!mineralisation.!

Hodges,!a!member!of!the!mining!syndicate!exploiting!the!Bounty!Gold!Mine,!summarised!the! activities!of!the!syndicate!from!its!inception!in!1987!through!to!early!1989.!!The!syndicate!had! dewatered! the! shaft! completed! underground! development! work! for! the! production! of! 160! tonnes!of!ore!for!3,302g!of!gold!produced.!!It!also!completed!six!RC!holes,!three!at!the!Bounty! Gold!Mine!(RCH!B,!RCH!C!and!RCH!D)!and!three!at!the!Bounty!South!Gold!Mine!(RCH!BSA,!RCH! BSB!and!RCH!BSC).!!Only!limited!intervals!from!this!drilling!were!assayed.!

HoleID	Depth	Interval	Width	AverageGrade
RCHB	45m	40–43m	3.0m	3.04g/t
RCHC	51m	42–44m	2.0m	42.9g/t
		45–50m	5.0m	0.24g/t
RCHD	51m	43–47m	4.0m	10.7g/t
RCHBSA	26m			NSA
RCHBSB	33m	24–26m	2.0m	5.45g/t
		32–33m	1.0m	0.2g/t
RCHBSC	31m	26–27m	1.0m	0.67g/t
		30–31m	1.0m	1.3g/t

Table'2'–'Bounty'RC'Drill'Results'Summary''

Asarco! Australia! Limited’s! Miranda! Project,! which! was! explored! between! 1984! and! 1991,! extended!northwards!from!the!southern!edge!of!the!Bounty!and!McAuley!Project,!although!the! project! area! was! excluded! from! the! Miranda! Project! area.! ! Work! completed! adjacent! to! the!

project! area! consisted! of! limited! geological! mapping! as! part! of! a! broader! regional! mapping! program.!

Forsayth! Mining! Services! explored! the! McAuley! tenement! between! 1989! and! 1990! in! joint! venture! with! the! tenement! holder! completing! gridding,! a! ground! magnetics! survey,! detailed! geological!mapping,!rock!chip!and!soil!sampling,!aircore!/!RAB!drilling!and!RC!drilling.!!The!rock! chip!sampling!was!focused!on!the!historic!McAuley!gold!workings!and!returned!assays!ranging! from!0.02!to!7.35g/t,!while!the!geochemical!sampling,!which!consisted!of!the!collection!of!80! samples,!defined!two!+10ppb!Au!in!soil!anomalies,!one!associated!with!the!historical!workings! and!the!other!associated!with!areas!of!quartz!outcrop!coincident!with!a!magnetic!high.!!

==> picture [272 x 344] intentionally omitted <==

Figure'3'–'McAuley'Tenement'Exploration'Summary'

Aircore! and! RAB! drilling! was! completed! to! test! the! geochemical! anomalies! identified,! with! 5! aircore!holes!for!15m!(no!data!reported!–!holes!failed)!and!19!RAB!holes!for!223m.!!RAB!samples! were! collected! in! 1m! intervals! and! composited! to! 4m! for! fire! assay! analysis,! with! intervals! reporting!+0.2g/t!rebsampled!at!1.0m!intervals.!!Better!results!were!1.0m!at!0.92g/t!from!7.0m! in!MARB2A,!2.0m!at!0.88g/t!from!1.0m!in!MARB10!and!1.0m!at!2.94g/t!from!10m!in!MARB10! (see!Appendix!1!for!drill!hole!details!and!full!assay!results).!

Forsayth! Mining! Services! drilled! 5! RC! holes! (MA21! to! 25! for! 235m)! in! 1989! and! 22! RC! holes! (MA26!to!48!(excl.!MA43)!for!659m!in!1990!to!evaluate!the!historical!McAuley!workings.!!Drill! hole!details!and!assay!data!for!the!RC!drill!holes!are!reported!in!Appendix!2.!!RC!drill!samples! were! collected! in! 1m! intervals! and! composited! to! 4m! for! fire! assay! analysis,! with! intervals! reporting!+0.2g/t!rebsampled!at!1.0m!intervals.!!The!RC!drilling!confirmed!the!presence!of!high! grade! gold! mineralisation! beneath! the! old! workings! in! zones! of! shearing,! quartz! veining! and! pyritization,!defining!two!mineralised!bodies;!one!with!a!north!east!trend!and!easterly!dip!at!60! –!70°!and!the!other!to!the!east!with!a!north!west!trend!and!steep!dip.!!The!better!weighted! average!results!based!on!downhole!intervals!from!this!drilling!are!shown!in!the!following!table.! Please! note,! where! assay! values! for! rock! chip! samples! and! drill! intercepts! are! quoted! they! represent! the! best! results! from! a! series! of! lower! grade! values.! They! should! not! be! taken! to! represent!the!average!grade!of!the!samples!unless!otherwise!stated.!

HoleID	Depth	Interval	Width	AverageGrade
MA21	25m	9–10m	1.0m	3.52g/t
MA22	69m	6–24m	18.0m	1.96g/t
MA23	51m	18–23m	5.0m	7.54g/t
MA24	45m	14–20m	6.0m	1.77g/t
MA28	31m	11–21m	10.0m	3.47g/t
	incl.	13–14m	1.0m	14.4g/t
	and	17–18m	1.0m	5.82g/t
MA29	35m	4–7m	3.0m	8.03g/t
		25–26m	1.0m	3.60g/t
MA30	40m	8–11m	3.0m	7.69g/t
	incl	9–10m	1.0m	20.8g/t
MA31	35m	14–17m	3.0m	2.66g/t
MA33	35m	27–30m	3.0m	1.57g/t
MA34	45m	9–13m	4.0m	4.56g/t
	incl	11–12m	1.0m	12.0g/t
MA39	40m	28–30m	2.0m	3.34g/t
MA40	25m	12–18m	6.0m	3.43g/t
MA41	20m	6–8m	2.0m	4.56g/t
MA44	35m	22–24m	2.0m	2.06g/t

Table'3'–McAuley'Forsayth'RC'Drilling'–'Significant'Intersections''

PROSPECTIVITY!

The! Bounty! and! McAuley! Project! is! considered! prospective! for! gold! mineralisation,! with! historical! production! from! modest! sized! high! grade! underground! workings! and! previous! exploration!identifying!high!grade!extensions!to!the!previously!mined!deposits!and!the!potential! for!definition!of!new!zones!of!mineralisation.!

The! identified! mineralised! zones! remain! poorly! tested! at! depth,! with! the! majority! of! drilling! shallower!than!50m!below!surface!and!the!historical!workings!(early!1900s)!limited!at!depth!due! to!ground!water!inflow.!!The!geology!of!the!western!limb!of!the!Lawlers!Anticline!supports!the! development!of!gold!mineralisation,!ranging!from!modest!sized!high!grade!deposits!through!to! large!lower!grade!deposits.!!!

The! Project! is! at! a! relatively! early! stage! of! exploration,! and! gold! mineralisation! has! been! identified!and!exploited!on!both!of!the!project!tenements,!with!only!limited!systematic!modern! exploration!completed!to!date.!!!

EXPLORATION!PROGRAM!AND!BUDGET!

In! the! first! year! of! exploration! it! is! proposed! to! complete! the! compilation! of! previous! exploration!data!in!to!a!GIS,!modeling!and!interpretation!of!the!available!drilling!data!to!assist!in! defining!drill!targets!and!the!completion!of!an!initial!program!of!RC!drilling!to!infill!and!test!the! extensions!of!the!known!zones!of!mineralisation.!!!

Exploration!in!the!second!year!may!consist!of!infill!and!extensional!RC!and!diamond!drilling!with! the!aim!of!enabling!the!estimation!of!an!initial!resource.!!Initial!drill!testing!of!secondary!targets! in!the!project!area!may!also!be!completed!in!the!second!year.!

$3.0millionCapitalRaising	Year1	Year2	TOTAL
Personnel: Fieldexpenses: Drilling: Assays:	$92,500 $27,500 $201,000 $20,500	$122,000 $35,500 $392,500 $29,500	$214,500 $63,000 $593,500 $50,000
TOTAL	$341,500	$579,500	$921,000

$2.5millionminimum Subscription	Year1	Year2	TOTAL
Personnel: Fieldexpenses: Drilling: Assays:	$28,000 $14,500 $104,500 $10,500	$105,000 $34,250 $352,000 $22,500	$133,000 $48,750 $456,500 $33,000
TOTAL	$157,500	$513,750	$671,250

The!exploration!budget!will!be!subject!to!modification!on!an!ongoing!basis!depending!on!the! results!obtained!from!exploration!and!development!activities!as!they!progress.!It!is!also!noted! that! proposed! expenditure! is! sufficient! to! cover! the! minimum! expenditure! obligation!for! the! Bounty! and! McAuley! tenements! as! specified! by! the! Department! of! Mines! and! Petroleum! of! Western!Australia.!

It!is!considered!that!the!Company!has!a!reasonable!proposed!exploration!budget!over!two!years! consistent! with! its! stated! objectives! and! that! this! program! is! warranted! and! justified! on! the! basis! of! the! historical! exploration! activity! and! demonstrated! potential! for! discovery! of! gold! mineralisation.!

REFERENCES'

Barrick!Gold!Corporation!website,!Global!Operations,!Australia!Pacific!Region,!Yilgarn!South!–!! www.barrick.com/GlobalOperations/AustraliaPacific/YilgarnSouth

Brooke,!W.J.L.,!1984!–!“Annual!Report!on!Emu!South!Project!for!the!Period!2!November!1983!to! 1!November!1984”.!!Western!Mining!Corporation!Limited,!Exploration!Division,!December!1984.! Brooke,!W.J.L.,!1985!–!“Annual!Report!on!Emu!South!Project!for!the!Period!2!November!1984!to! 1!November!1985”.!!Western!Mining!Corporation!Limited,!Exploration!Division,!December!1985.! Carrello,!F.E.,!1990!–!“Miranda!Project,!W.A.,!Mt.!Adamson!Block,!1989!Annual!Report!to!Mines! Department,!Exploration!Licence!36/124,!January!1990”.!!Asarco!Australia!Ltd.!

Eddison,!F.,!2008!–!“Lawlers!Project,!P36/1525,!East!Murchison!Mineral!Field,!Annual!Report,!3! February!2007!to!2!February!2008,!May!2008”.!!Heron!Resources!Limited.!

Eddison,!F.,!2010!–!“Lawlers!Project,!P36/1525,!East!Murchison!Mineral!Field,!Annual!and!Final! Report,!3!February!2009!to!2!February!2010,!March!2010”.!!Heron!Resources!Limited.!

Elliott,!G.,!2010!–!“Assessment,!Interpretation!and!Analysis,!Mount!Margaret!Project!(E36/675),! Western!Australia,!December!2010”.!!Internal!Report,!Rio!Resources!Pty!Ltd!and!United!Mining! Resources!Pty!Ltd.!

Gold!Fields!Limited,!Agnew!Gold!Mine,!Technical!Short!Form!Report!as!at!30!June!2009!

Gold! Fields! Limited,! Agnew! Gold! Mining! Company! Pty! Ltd,! 2007! –! “Partial! Surrender! Report,! Exploration!Lease!E36/490,!Reporting!Period!9!October!2003!to!8!October!2006”.!!January!2007.!

Gold! Fields! Limited,! Agnew! Gold! Mining! Company! Pty! Ltd,! 2008! –! “Partial! Surrender! Report,! Exploration! Lease! E36/490,! Brazil! Prospect,! Reporting! Period! 9! October! 2003! to! 8! October! 2007”.!!January!2008.!

Gold! Fields! Limited,! Agnew! Gold! Mining! Company! Pty! Ltd,! 2008! –! “Final! Surrender! Report,! Exploration!Lease!E36/490,!Reporting!Period!9!October!2003!to!7!October!2008”.!!December! 2008.!

Goldfields!Resource!Development!Pty!Ltd,!1988!–!“Report!on!the!Bounty!Mine,!P36/598,!East! Murchison!Goldfield,!November!1988”!

Green,!B.,!1992!–!“Miranda!Project,!Western!Australia,!Mt.!Adamson!Block,!Surrender!Report!to! Department!of!Mines,!Exploration!Licence!36/124,!March!1992”.!!Asarco!Australia!Ltd.!!

Hodges,!M.K.,!1989!–!“Report!on!PL!36/598!East!Murchison!Goldfield,!Bounty!&!Bounty!South! Mines,!January!1989”.!

Mueller,!D.H.A.,!1987!–!“Miranda!Project,!W.A.,!McAuley!Block,!1986!Annual!Report!to!Mines! Department,!Prospecting!Licences!36/192!–!197,!276,!February!1987”.!!Asarco!Australia!Ltd.!!

Nguyen,!P.,!2001!–!“Relinquishment!Report!for!Exploration!Licence!EL36/304,!May!2001”.!!WMC! Resources!Ltd,!Agnew!Gold!Operation.!

O’Brien.!P.M.,!1990!–!“McAuley!(GML!36/1483)!Progress!Report!to!31!December!1989,!January! 1990”.!!Forsayth!Mining!Services.!

O’Brien.! P.M.,! 1990! –! “McAuley! (GML! 36/1483)! Progress! Report! to! 31! December! 1990,! December!1990”.!!Forsayth!Mining!Services.!

Painter,!M.G.M.,!Groenewald,!P.B.!and!McCabe,!M.,!2003!–!“East!Yilgarn!Geoscience!Database,! 1:100!000!Geology!of!the!Leonora!–!Laverton!Region,!Eastern!Goldfields!Granite!–!Greenstone! Terrane!–!An!Explanatory!Note”.!!Geological!Survey!of!Western!Australia!–!Report!84.!

Rugless,!C.,!2010!–!“Lawlers!Project!(E36/675)!–!Preliminary!MAGLAG!and!MAGSTREAM!Results,! 25[th] !July!2010”.!!Internal!Report,!Rio!Resources!Pty!Ltd!and!United!Mining!Resources!Pty!Ltd.!

Stewart,!A.J.,!2004!–!“Explanatory!Notes!on!the!Leonora!1:250,000!Geological!Sheet,!Western! Australia!(Second!Edition)”.!Geological!Survey!of!Western!Australia.!

GLOSSARYOFTECHNICALTERMS	GLOSSARYOFTECHNICALTERMS
aeolian	Formedordepositedbywind.
aerialphotography	Photographsoftheearthssurfacetakenfromanaircraft.
aeromagnetic	A survey undertaken by helicopter or fixedbwing aircraft for the
	purpose of recording magnetic characteristics of rocks by measuring
	deviationsoftheearthsmagneticfield.
airbornegeophysicaldata	Datapertainingtothephysicalpropertiesoftheearthscrustatornear
	surfaceandcollectedfromanaircraft.
aircore	Drillingmethodemployingadrillbitthatyieldssamplematerialwhich
	isdeliveredtothesurfaceinsidetherodstringbycompressedair.
alluvial	Pertainingtosilt,sandandgravelmaterial,transportedanddeposited
	byariver.
alluvium	Claysilt,sand,gravel,orotherrockmaterialstransportedbyflowing
	wateranddepositedincomparativelyrecentgeologictimeassorted
	orsemibsortedsedimentsinriverbeds,estuaries,andfloodplains,on
	lakes,shoresandinfansatthebaseofmountainslopesandestuaries.
alteration	The change in the mineral composition of a rock, commonly due to
	hydrothermalactivity.
amphibolitefacies	Anassemblageofmineralsformedatmoderatetohightemperatures
	(450Cto700C)duringregionalmetamorphism.
andesite	Anintermediatevolcanicrockcomposedofandesineandoneormore
	maficminerals.
anomalies	Anareawhereexplorationhasrevealedresultshigherthanthelocal
	backgroundlevel.
anticline	Afoldintherocksinwhichstratadipinoppositedirectionsawayfrom
	thecentralaxis.
antiformal	Ananticlineblikestructure.
Archaean	The oldest rocks of the Precambrian era, older than about 2,500
	millionyears.
assayed	Thetestingandquantificationmetalsofinterestwithinasample.
Au	Chemicalsymbolforgold.
augersampling	Adrillsamplingmethodusinganaugertopenetrateupperhorizons
	andobtainasamplefromlowerinthehole.
axialplane	Theplanethatintersectsthecrestortroughofafold,aboutwhichthe
	limbsaremoreorlesssymmetricallyarranged.
basalts	A volcanic rock of low silica (<55%) and high iron and magnesium
	composition,composedprimarilyofplagioclaseandpyroxene.
polymetallics	Anonbpreciousmetal,usuallyreferringtocopper,leadandzinc.
bedrock	Anysolidrockunderlyingunconsolidatedmaterial.
BIF	A rock consisting essentially of iron oxides and cherty silica, and
	possessingamarkedbandedappearance.
BLEGsampling	Bulk leach extractable gold analysis; an analytical method for
	accuratelydetermininglowlevelsofgold.
brittle	Rockdeformationcharacterisedbybrittlefracturingandbrecciation.
Cainozoic	An era of geological time spanning the period from 65 million years
	agotothepresent.
carbonate	Rock of sedimentary or hydrothermal origin, composed primarily of
	calcium, magnesium or iron and CO3. Essential component of
	limestonesandmarbles.
chert	Finegrainedsedimentaryrockcomposedofcryptocrystallinesilica.
chlorite	Agreencolouredhydratedaluminiumbironbmagnesiumsilicatemineral
	(mica)commoninmetamorphicrocks.
clastic	Pertainingtoarockmadeupoffragmentsorpebbles(clasts).

clays! A!finebgrained,!natural,!earthy!material!composed!primarily!of!hydrous! aluminium!silicates.! colluvium! A!loose,!heterogeneous!and!incoherent!mass!of!soil!material!deposited! by!slope!processes.! conduits! The! main! pathways! that! facilitate! the! movement! of! hydrothermal! fluids.! conglomerate! A!rock!type!composed!predominantly!of!rounded!pebbles,!cobbles!or! boulders!deposited!by!the!action!of!water.! copper! A! reddish! metallic! element,! used! as! an! electrical! conductor! an! the! basis!of!brass!and!bronze.! dacite! An! extrusive! rock! composed! mainly! of! plagioclase,! quartz! and! pyroxene!or!hornblende!or!both.! depletion! The! lack! of! gold! in! the! nearbsurface! environment! due! to! leaching! processes!during!weathering.! diamond!drill!hole! Mineral!exploration!hole!completed!using!a!diamond!set!or!diamond! impregnated!bit!for!retrieving!a!cylindrical!core!of!rock.! dilational! Open! space! within! a! rock! mass! commonly! produced! in! response! to! folding!or!faulting.! dolerite! A!medium!grained!mafic!intrusive!rock!composed!mostly!of!pyroxenes! and!sodiumbcalcium!feldspar.! DoIR! Department!of!Industry!and!Resources,!WA.! ductile! Deformation!of!rocks!or!rock!structures!involving!stretching!or!bending! in!a!plastic!manner!without!breaking.! dykes! A!tabular!body!of!intrusive!igneous!rock,!crosscutting!the!host!strata!at! a!high!angle.! enbechelon! Repeating!parallel,!but!offset,!occurrences!of!lenticular!bodies!such!as! ore!veins.! erosional! The!group!of!physical!and!chemical!processes!by!which!earth!or!rock! material!is!loosened!or!dissolved!and!removed!from!any!part!of!the! earths!surface.! fault!zone! A!wide!zone!of!structural!dislocation!and!faulting.! feldspar! A!group!of!rock!forming!minerals.! felsic! An! adjective! indicating! that! a! rock! contains! abundant! feldspar! and! silica.! folding! A!term!applied!to!the!bending!of!strata!or!a!planar!feature!about!an! axis.! foliated! Banded! rocks,! usually! due! to! crystal! differentiation! as! a! result! of! metamorphic!processes.! followbup! A!term!used!to!describe!more!detailed!exploration!work!over!targets! generated!by!regional!exploration.! g/t! Grams! per! tonne,! a! standard! volumetric! unit! for! demonstrating! the! concentration!of!precious!metals!in!a!rock.! gabbro! A!fine!to!coarse!grained,!dark!coloured,!igneous!rock!composed!mainly! of!calcic!plagioclase,!clinopyroxene!and!sometimes!olivine.! geochemical! Pertains!to!the!concentration!of!an!element.! geophysical! Pertains!to!the!physical!properties!of!a!rock!mass.! GIS!database! A!system!devised!to!present!partial!data!in!a!series!of!compatible!and! interactive!layers.! gneissic! Coarse!grained!metamorphic!rocks!characterised!by!mineral!banding! of!the!light!and!dark!coloured!constituent!minerals.! granite! A!coarsebgrained!igneous!rock!containing!mainly!quartz!and!feldspar! minerals!and!subordinate!micas.! granoblastic! A! term! describing! the! texture! of! a! metamorphic! rock! in! which! the! crystals!are!of!equal!size.!

granodiorite! A! coarse! grained! igneous! rock! composed! of! quartz,! feldspar! and! hornblende!and/or!biotite.! greenschist! A! metamorphosed! basic! igneous! rock! which! owes! its! colour! and! schistosity!to!abundant!chlorite.! greenstone!belt! A! broad! term! used! to! describe! an! elongate! belt! of! rocks! that! have! undergone!regional!metamorphism!to!greenschist!facies.! greywackes! A!sandstone!like!rock,!with!grains!derived!from!a!dominantly!volcanic! origin.! GSWA! Geological!Survey!of!Western!Australia.! gypsum! Mineral!of!hydrated,!or!waterbcontaining,!calcium!sulphate.! halite! Impure!salt!deposit!formed!by!evaporation.! hangingwall! The!mass!of!rock!above!a!fault,!vein!or!zone!of!mineralization.! hematite! Iron!oxide!mineral,!Fe2O3.! hinge!zone! A!zone!along!a!fold!where!the!curvature!is!at!a!maximum.! hydrothermal!fluids! Pertaining!to!hot!aqueous!solutions,!usually!of!magmatic!origin,!which! may!transport!metals!and!minerals!in!solution.! igneous! Rocks!that!have!solidified!from!a!magma.! infill! Refers!to!sampling!or!drilling!undertaken!between!prebexisting!sample! points.! insitu! In!the!natural!or!original!position.! interflow! Refers!to!the!occurrence!of!other!rock!types!between!individual!lava! flows!within!a!stratigraphic!sequence.! intermediate! A!rock!unit!which!contains!a!mix!of!felsic!and!mafic!minerals.! intrusions! A!body!of!igneous!rock!which!has!forced!itself!into!prebexisting!rocks.! intrusive!contact! The!zone!around!the!margins!of!an!intrusive!rock.! ironstone! A!rock!formed!by!cemented!iron!oxides.! isoclinal! A!series!of!folds!that!dip!in!the!same!direction!at!the!same!angle.! joint!venture! A!business!agreement!between!two!or!more!commercial!entities.! komatiitic! Magnesiumbrich!mafic!to!ultramafic!extrusive!rock.! laterite! A!cemented!residuum!of!weathering,!generally!leached!in!silica!with!a! high!alumina!and/or!iron!content.! lead! A!metallic!element,!the!heaviest!and!softest!of!the!common!metals.! lineament! A! significant! linear! feature! of! the! earth’s! crust,! usually! equating! a! major!fault!or!shear!structure.! lithological!contacts! The!contacts!between!different!rock!types.! lithotypes! Rock!types.! magnetite! A! mineral! comprising! iron! and! oxygen! which! commonly! exhibits! magnetic!properties.! metamorphic! A! rock! that! has! been! altered! by! physical! and! chemical! processes! involving!heat,!pressure!and!derived!fluids.! metasedimentary! A!rock!formed!by!metamorphism!of!sedimentary!rocks.! monzogranite! A! granular! plutonic! rock! containing! approximately! equal! amounts! of! orthoclase! and! plagioclase! feldspar,! but! usually! with! a! low! quartz! content.! Moz! Millions!of!ounces.! Mt! Million!Tonnes.! mylonite! A!hard!compact!rock!with!a!streaky!or!banded!structure!produced!by! extreme!granulation!of!the!original!rock!mass!in!a!fault!or!thrust!zone.! nickel! Silverybwhite!metal!used!in!alloys.! nickel!laterite! Nickel!ore!hosted!within!the!laterite!profile,!usually!derived!from!the! weathering!of!olivinebrich!ultramafic!rocks.! open!pit! A!mine!working!or!excavation!open!to!the!surface.! Orthoimage! A!geographically!located!composite!plan!using!aerial!photography!as!a! base.! outcrops! Surface!expression!of!underlying!rocks.!

palaeochannels! An!ancient!preserved!stream!or!river.! pegmatite! A!very!coarse!grained!intrusive!igneous!rock!which!commonly!occurs!in! dykeblike! bodies! containing! lithiumbboronbfluorinebrare! earth! bearing! minerals.! pisolitic! Describes!the!prevalence!of!rounded!manganese,!iron!or!aluminabrich! chemical! concretions,! frequently! comprising! the! upper! portions! of! a! laterite!profile.! playa!lake! Broad!shallow!lakes!that!quickly!fill!with!water!and!quickly!evaporate,! characteristic!of!deserts.! polymictic! Referring! to! coarse! sedimentary! rocks,! typically! conglomerate,! containing!clasts!of!many!different!rock!types.! porphyries! Felsic! intrusive! or! subbvolcanic! rock! with! larger! crystals! set! in! a! fine! groundmass.! ppb! Parts!per!billion;!a!measure!of!low!level!concentration.! Proterozoic! An!era!of!geological!time!spanning!the!period!from!2,500!million!years! to!570!million!years!before!present.! pyroxenite! A! coarse! grained! igneous! intrusive! rock! dominated! by! the! mineral! pyroxene.! quartz!reefs! Old!mining!term!used!to!describe!large!quartz!veins.! quartzofeldspathic! Compositional!term!relating!to!rocks!containing!abundant!quartz!and! feldspar,!commonly!applied!to!metamorphic!and!sedimentary!rocks.! quartzose! Quartzbrich,!usually!relating!to!clastic!sedimentary!rocks.! RAB!drilling! A!relatively!inexpensive!and!less!accurate!drilling!technique!involving! the!collection!of!sample!returned!by!compressed!air!from!outside!the! drill!rods.! rafts! A!relatively!large!block!of!foreign!rock!incorporated!into!an!intrusive! magma.! RC!drilling! A!drilling!method!in!which!the!fragmented!sample!is!brought!to!the! surface!inside!the!drill!rods,!thereby!reducing!contamination.! regolith! The! layer! of! unconsolidated! material! which! overlies! or! covers! insitu! basement!rock.! residual! Soil! and! regolith! which! has! not! been! transported! from! its! point! or! origin.! resources! Insitu!mineral!occurrence!from!which!valuable!or!useful!minerals!may! be!recovered.! rhyolite! Finebgrained!felsic!igneous!rock!containing!high!proportion!of!silica!and! felspar.! rock!chip!sampling! The!collection!of!rock!specimens!for!mineral!analysis.! saline! Salty! saprock! Zone!of!weathered!rock!preserved!within!the!weathered!profile.! saprolite! Disintegrated,!inbsitu!rock,!partially!decomposed!by!the!chemical!and! physical!processes!of!oxidation!and!weathering.! satellite!imagery! The! images! produced! by! photography! of! the! earth’s! surface! from! satellites.! schist! A!crystalline!metamorphic!rock!having!a!foliated!or!parallel!structure! due!to!the!recrystallisation!of!the!constituent!minerals.! scree! The!rubble!composed!of!rocks!that!have!formed!down!the!slope!of!a! hill!or!mountain!by!physical!erosion.! sedimentary! A!term!describing!a!rock!formed!from!sediment.! sericite! A! white! or! pale! apple! green! potassium! mica,! very! common! as! an! alteration!product!in!metamorphic!and!hydrothermally!altered!rocks.! shale! A!fine!grained,!laminated!sedimentary!rock!formed!from!clay,!mud!and! silt.! sheared! A! zone! in! which! rocks! have! been! deformed! primarily! in! a! ductile! manner!in!response!to!applied!stress.!

sheet!wash! Referring!to!sediment,!usually!sand!size,!deposited!over!broad!areas! characterised! by! sheet! flood! during! storm! or! rain! events.! Superficial! deposit! formed! by! low! temperature! chemical! processes! associated! with! ground! waters,! and! composed! of! fine! grained,! waterbbearing! minerals!of!silica.! silcrete! Superficial! deposit! formed! by! low! temperature! chemical! processes! associated!with!ground!waters,!and!composed!of!fine!grained,!waterb bearing!minerals!of!silica.! silica! Dioxide!of!silicon,!SiO2,!usually!found!as!the!various!forms!of!quartz.! sills! Sheets! of! igneous! rock! which! is! flat! lying! or! has! intruded! parallel! to! stratigraphy.! silts! Finebgrained!sediments,!with!a!grain!size!between!those!of!sand!and! clay.! soil!sampling! The!collection!of!soil!specimens!for!mineral!analysis.! stocks! A!small!intrusive!mass!of!igneous!rock,!usually!possessing!a!circular!or! elliptical!shape!in!plan!view.! strata! Sedimentary!rock!layers.! stratigraphic! Composition,!sequence!and!correlation!of!stratified!rocks.! stream!sediment!sampling! The! collection! of! samples! of! stream! sediment! with! the! intention! of! analysing!them!for!trace!elements.!

strike! Horizontal!direction!or!trend!of!a!geological!structure.! subcrop! Poorly!exposed!bedrock.! sulphide! A! general! term! to! cover! minerals! containing! sulphur! and! commonly! associated!with!mineralization.! supergene! Process! of! mineral! enrichment! produced! by! the! chemical! remobilisation!of!metals!in!an!oxidised!or!transitional!environment.! syenite! An!intrusive!igneous!rock!composed!essentially!of!alkali!feldspar!and! little!or!no!quartz!and!ferromagnesian!minerals.! syncline! A!fold!in!rocks!in!which!the!strata!dip!inward!from!both!sides!towards! the!axis.! talc! A! hydrous! magnesium! silicate,! usually! formed! due! to! weathering! of! magnesium!silicate!rocks.! tectonic! Pertaining! to! the! forces! involved! in! or! the! resulting! structures! of! movement!in!the!earth’s!crust.! tholeiitic! A!descriptive!term!for!a!basalt!with!little!or!no!olivine.! thrust!fault! A! reverse! fault! or! shear! that! has! a! low! angle! inclination! to! the! horizontal.! tremolite! A! grey! or! white! metamorphic! mica! of! the! amphibole! group,! usually! occurring!as!bladed!crystals!or!fibrous!aggregates.! ultramafic! Igneous! rocks! consisting! essentially! of! ferromagnesian! minerals! with! trace!quartz!and!feldspar.! veins! A!thin!infill!of!a!fissure!or!crack,!commonly!bearing!quartz.! volcaniclastics! Pertaining!to!clastic!rock!containing!volcanic!material.! volcanics! Formed!or!derived!from!a!volcano.!

zinc!

A! lustrous,! blueishbwhite! metallic! element! used! in! many! alloys! including!brass!and!bronze.!

10. INVESTIGATING ACCOUNTANT’S REPORT

==> picture [131 x 54] intentionally omitted <==

2 February 2012

The Board of Directors Merah Resources Limited Level 2, 79 Hay Street SUBIACO WA 6008

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT

INTRODUCTION

This Investigating Accountant’s Report (“Report”) has been prepared for inclusion in a prospectus to be dated on or about 2 February 2012 (the “Prospectus”) for the issue by Merah Resources Limited (the “Company”) of 15,000,000 ordinary shares at an issue price of 20 cents each to raise up to a total of $3,000,000 before the expenses of the issue (the ‘Offer’). The minimum subscription under the Prospectus is $2,500,000.

This Report has been included in the Prospectus to assist potential investors and their financial advisers to make an assessment of the financial position of Merah Resources Limited.

STRUCTURE OF REPORT

This Report has been divided into the following sections:

Background information;
Scope of Report;
Financial information;
Subsequent events;
Statements; and
Declaration.

1. BACKGROUND INFORMATION

The Company was registered in Australia on 27 August 2010 and HLB Mann Judd was appointed as the Company’s auditor on 26 October 2010. The current directors of the Company are Mr Richard Homsany, Mr David Deloub, Mr Ian Prentice and Ms Suzie Foreman. Ms Suzie Foreman also acts as the Company Secretary.

The Company has an interest in the Mt Adamson, Bounty and McAuley projects which are prospective for gold and base metals as detailed in Section 6.2 of the Prospectus.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 WA. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers

Investigating Accountant’s Report

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As at the date of this Report, the Company has on issue 12,250,001 fully paid ordinary shares, 7,000,000 options exercisable at 20 cents expiring on 31 August 2015 and 3,000,000 performance rights on the terms and conditions set out in Section 13.1(c) of the Prospectus. The following table summarises share capital movements since registration.

*Date* 27 August 2010 Issued on registration 4 May 2011 Seed capital Shares on issue as at 30 June 2011 25 August 2011 Vendor issue for acquisition of E36/675 tenement 24 October 2011 Seed capital Shares on issue at 31 December 2011 Shares on issue at the date of this Report	*Number* *issued* *Issue* *price* 1 $1 10,000,000 $0.02 10,000,001 500,000 $0.02 1,750,000 $0.02 12,250,001 12,250,001	$ 1 200,000
		200,001 10,000 35,000
		245,001
		245,001

The intended use of funds raised by the issue of shares under the Prospectus is detailed in Section 4.7 of the Prospectus.

2. SCOPE OF REPORT

You have requested HLB Mann Judd (“HLB”) to prepare this Report presenting the following information:

a) the historical financial information of the Company, comprising the historical Statement of Financial Position as at 31 December 2011 and the historical Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period from 1 July 2011 to 31 December 2011 as set out in Appendix 1 to this Report; and
b) the proforma financial information of the Company, comprising the proforma Statement of Financial Position as at 31 December 2011 and the proforma Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then ended. This information is presented under the following two scenarios:
$2.5 million capital raising (minimum subscription); and
$3.0 million capital raising (full subscription).

The Directors have prepared and are responsible for the historical and proforma financial information. We disclaim any responsibility for any reliance on this Report or on the financial information to which it relates for any purposes other than that for which it was prepared. This Report should be read in conjunction with the full Prospectus.

We performed a review of the historical financial information and the proforma financial information of the Company as at 31 December 2011 in order to ensure consistency in the application of applicable Accounting Standards and other mandatory professional reporting requirements. Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements.

Investigating Accountant’s Report

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Our review of the historical financial information and the proforma financial information of the Company was carried out in accordance with Australian Auditing Standard ASRE 2410 “Review of an Interim Financial Report performed by the Independent Auditor of the Entity” and included such enquiries and procedures as we considered necessary for the purposes of this Report.

The review procedures undertaken by HLB in our role as Investigating Accountants were substantially less in scope than that of an audit examination conducted in accordance with generally accepted auditing standards. Our review was limited primarily to an examination of the historical financial information and the proforma financial information, analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical financial information and proforma financial information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

a) support by another person, corporation or an unrelated entity has not been assumed;
b) the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and
c) the going concern basis of accounting has been adopted.

3. FINANCIAL INFORMATION

Set out in Appendix 1 (attached) are:

a) The Statement of Financial Position of the Company as at 31 December 2011, and the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then ended; and
b) The proforma Statement of Financial Position of the Company as at 31 December 2011 and proforma Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the period then ended as they would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 31 December 2011:
i) the payment of an option fee for the Murchison option, farm-in and joint venture agreement (the ‘Murchison Agreement’) via the issue of 150,000 ordinary shares at 20 cents each as detailed in section 12.3 of the Prospectus;
ii) the issue by the Company pursuant to the Prospectus of a maximum of 15,000,000 ordinary shares at an issue price of 20 cents each, raising $3,000,000 (full subscription), together with a comparison on the basis of the minimum subscription noted below;
iii) the write off to the issued capital account of the costs of the Offer being an estimated $304,671 (less costs already incurred as at 31 December 2011 of $29,036), as detailed below based on achieving the full subscription:

Investigating Accountant’s Report

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ASIC fees ASX fees Brokers’ fees Advisers’ fees Printing Miscellaneous	Minimum subscription $ Full subscription $ 2,137 2,137 30,209 31,812 150,000 180,000 60,000 60,000 16,000 16,000 14,722 14,722
	273,068 304,671

This information is presented under the following two scenarios:

  - $2.5 million capital raising (minimum subscription); and

  - $3.0 million capital raising (full subscription); and

iv) transfer from prepaid share issue costs to issued capital of $29,036 of prepaid initial public offering expenses; and
c) Notes to the historical financial information and proforma financial information.

4. SUBSEQUENT EVENTS

In our opinion, there have been no material items, transactions or events subsequent to 31 December 2011 not otherwise disclosed in the Prospectus that have come to our attention during the course of our review that would require comment in, or adjustment to, the content of this Report or which would cause such information included in this Report to be misleading.

5. STATEMENTS

Based on our review, which was an audit, we have not become aware of any matter that causes us to believe that:

a) the historical financial information of Merah Resources Limited as at 31 December 2011, as set out in Appendix 1 of this Report, does not present fairly the financial position of the Company as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia and its performance as represented by its results of its operations, its cash flows and its changes in equity for the period from 1 July 2011 until 31 December 2011;
b) the proforma financial information of Merah Resources Limited as at 31 December 2011 as set out in Appendix 1 of this Report, does not present fairly the financial position of the Company as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia and its performance as represented by its results of its operations, its cash flows and its changes in equity for the period then ended, as if the transactions referred to in Section 3(b) of this Report had occurred during that period.

Investigating Accountant’s Report

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6. DECLARATION

a) HLB will be paid its usual professional fees based on time involvement, for the preparation of this Report and review of the financial information, at our normal professional rates (expected to be $7,500 exclusive of GST);
b) Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report;
c) Neither HLB, nor any of its employees or associated persons has any interest in Merah Resources Limited or in the promotion of the Company. HLB Mann Judd is the appointed auditor of the Company;
d) Unless specifically referred to in this Report, or elsewhere in the Prospectus, HLB was not involved in the preparation of any other part of the Prospectus and did not cause the issue of any other part of the Prospectus. Accordingly, HLB makes no representations or warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus; and
e) HLB has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears. The inclusion of this Report should not be taken as an endorsement of the Company or a recommendation by HLB of any participation in the Company by an intending subscriber.

Yours faithfully

HLB MANN JUDD

M R W OHM Partner

Investigating Accountant’s Report

-6-

- APPENDIX 1 –

MERAH RESOURCES LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2011

CURRENT ASSETS Cash and cash equivalents Other assets TOTAL CURRENT ASSETS NON CURRENT ASSETS Exploration and evaluation expenditure TOTAL NON-CURRENT ASSETS TOTAL ASSETS CURRENT LIABILITIES Trade and other payables TOTAL CURRENT LIABILITIES TOTAL LIABILITIES NET ASSETS EQUITY Issued capital Reserves Accumulated losses TOTAL EQUITY	*Notes*	*Reviewed* *Historical* *Reviewed* *Proforma* *Reviewed* *Proforma* *$2.5 million* *capital* *raising* *$3.0 million* *capital* *raising* $ $ $
	2 3 4 5 6	133,410 2,360,342 2,828,739 32,190 3,154 3,154
		165,600 2,363,496 2,831,893
		37,052 67,052 67,052
		37,052 67,052 67,052
		202,652 2,430,548 2,898,945
		106,776 77,740 77,740
		106,776 77,740 77,740
		106,776 77,740 77,740
		95,876 2,352,808 2,821,205
		245,001 2,501,933 2,970,330 6,278 6,278 6,278 (155,403) (155,403) (155,403)
		95,876 2,352,808 2,821,205

This statement should be read in conjunction with the accompanying notes.

Investigating Accountant’s Report

-7- MERAH RESOURCES LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

		*Reviewed*	*Reviewed*
		*Proforma*	*Proforma*
		*$2.5*	*$3.0*
		*million*	*million*
	*Reviewed*	*capital*	*capital*
	*Historical*	*raising*	*raising*
	$	$
Income from ordinary activities	1,565	1,565	1,565
Other expenses	(116,091)	(116,901)	(116,901)
(Loss) from ordinary activities before income tax	(114,526)	(114,526)	(114,526)
Income tax expense	-	-	-
(Loss) from ordinary activities after income tax	(114,526)	(114,526)	(114,526)
Other comprehensive income	-	-	-
Total comprehensive (loss) for the period	(114,526)	(114,526)	(114,526)
MERAH RESOURCES LIMITED
STATEMENT OF CASH FLOWS
FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

		*Reviewed*	*Reviewed*
		*Proforma*	*Proforma*
		*$2.5*	*$3.0*
		*million*	*million*
	*Reviewed*	*capital*	*capital*
	*Historical*	*raising*	*raising*
	$	$	$
Cash Flows From Operating Activities
Payments to suppliers and employees	(74,516)	(74,516)	(74,516)
Interest received	1,565	1,565	1,565
Net Cash Used In Operating Activities	(72,951)	(72,951)	(72,951)
Cash Flows From Investing Activities
Exploration and evaluation expenditure	(11,432)	(11,432)	(11,432)
Net Cash Used In Investing Activities	(11,432)	(11,432)	(11,432)
Cash Flows From Financing Activities
Proceeds from issue of shares and options	35,050	2,535,050	3,035,050
Issue costs paid	-	(273,068)	(304,671)
Net Cash Provided By Financing Activities	35,050	2,261,982	2,730,379
Net increase in Cash Held	(49,333)	2,177,599	2,645,996
Cash at the beginning of the financial period	182,743	182,743	182,743
Cash At The End Of The Financial Period	133,410	2,360,342	2,828,739

These statements should be read in conjunction with the accompanying notes.

Investigating Accountant’s Report

-8-

MERAH RESOURCES LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

Balance at 1 July 2011 Proceeds from issue of options Issue of 1,750,000 shares for seed capital at 2 cents each Issue of 500,000 ordinary shares at 2 cents each for acquisition of tenement E36/675 Performance Rights Issued Comprehensive loss for the period As at 31 December 2011 $2.5 million capital raising Proforma adjustments: Issue of 150,000 shares at 20 cents each under Murchison Agreement Issue of 12,500,000 shares at 20 cents each pursuant to the Prospectus Share issue expenses Transfer of prepaid share issue expenses to share capital $2.5 million capital raising Proforma total $3.0 million capital raising Proforma adjustments: Increased number of shares issued pursuant to Prospectus Increased share issue expenses $3.0 million capital raising Proforma total	*Issued* *Capital* *Accumulated* *Losses* *Reserves* *Total* $ $ $ $ 200,001 (40,877) 5,117 164,241 - - 50 50 35,000 - - 35,000 10,000 - - 10,000 - - 1,111 1,111 - (114,526) - (114,526)
	245,001 (155,403) 6,278 95,876 30,000 - - 30,000 2,500,000 - - 2,500,000 (244,032) - - (244,032) (29,036) - - (29,036)
	2,501,933 (155,403) 6,278 2,352,808 500,000 - - 500,000 (31,603) - - (31,603)
	2,970,330 (155,403) 6,278 2,821,205

This statement should be read in conjunction with the accompanying notes

Investigating Accountant’s Report

-9-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies which have been adopted in the preparation of the historical and proforma financial information reported under Australian Equivalents to International Financial Reporting Standards (“AIFRS”) are shown below.

(a) Basis of preparation

The financial statements have been prepared in accordance with the measurement requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia using the accrual basis of accounting, including the historical cost convention.

Compliance with IFRS

The financial information complies with the measurement requirements of Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial information, comprising the financial statements and notes thereto, comply with measurement requirements but not all of the disclosure requirements of International Financial Reporting Standards.

Historical cost convention

These financial statements have been prepared under the historical cost convention, and do not take into account changing money values or, except where stated, current valuations of non-current assets. Cost is based upon the fair value of the consideration given in exchange for assets.

Critical accounting judgements and key sources of estimation uncertainty

The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

(b) Revenue Recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised:

Investigating Accountant’s Report

-10-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD OF 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

Interest income

Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(c) Cash and cash equivalents

Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(d) Income tax

The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the notional income tax rate for each jurisdiction adjusted by changes in deferred tax assets and liabilities attributable to temporary differences between the tax bases of assets and liabilities and their carrying amounts in the financial statements, and to unused tax losses.

Deferred tax assets and liabilities are recognised for temporary differences at the tax rates expected to apply when the assets are recovered or liabilities are settled, based on those tax rates which are enacted or substantively enacted for each jurisdiction. The relevant tax rates are applied to the cumulative amounts of deductible and taxable temporary differences to measure the deferred tax asset or liability. An exception is made for certain temporary differences arising from the initial recognition of an asset or a liability. No deferred tax asset or liability is recognised in relation to these temporary differences if they arose in a transaction, other than a business combination, that at the time of the transaction did not affect either accounting profit or taxable profit or loss.

Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to utilise those temporary differences and losses.

Deferred tax liabilities and assets are not recognised for temporary differences between the carrying amount and tax bases of investments in controlled entities where the parent entity is able to control the timing of the reversal of the temporary differences and it is probable that the differences will not reverse in the foreseeable future.

(e) Other taxes

Revenues, expenses and assets are recognised net of the amount of GST except when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included.

Investigating Accountant’s Report

- 11-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(e) Other taxes (continued)

The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority.

(f) Impairment of assets

The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cashgenerating unit to which it belongs. When the carrying amount of an asset or cashgenerating unit exceeds its recoverable amount, the asset or cash-generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at a revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

Investigating Accountant’s Report

-12-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(g) Property, plant and equipment

Items of plant and equipment are carried at historical cost less accumulated depreciation, and recoverable amount.

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the Statement of Comprehensive Income.

Depreciation

Items of plant and equipment are depreciated over their estimated useful lives. The straight line method of depreciation is used and assets are depreciated from the date of acquisition.

(h) Trade and other payables

Trade payables and other payables are carried at amortised cost and represent liabilities for goods and services provided to the Company prior to the end of the financial period that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

(i) Provisions

Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.

When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate asset but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement.

If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability.

When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

Investigating Accountant’s Report

-13-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(j) Employee leave benefits

Wages, salaries, annual leave and sick leave

Liabilities for wages and salaries, including non-monetary benefits, annual leave and accumulating sick leave expected to be settled within 12 months of the balance date are recognised in other payables in respect of employees’ services up to the balance date. They are measured at the amounts expected to be paid when the liabilities are settled. Liabilities for non-accumulating sick leave are recognised when the leave is taken and are measured at the rates paid or payable.

(k) Share-based payment transactions

The Company provides benefits to employees (including senior executives) of the Company in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Merah Resources Limited (market conditions) if applicable.

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Company’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The Statement of Comprehensive Income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately.

Investigating Accountant’s Report

-14-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(k) Share-based payment transactions (continued)

However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

The cost of cash-settled transactions is measured initially at fair value at the grant date using the Black-Scholes formula taking into account the terms and conditions upon which the instruments were granted. This fair value is expensed over the period until vesting with recognition of a corresponding liability. The liability is re-measured to fair value at each reporting date up to and including the settlement date with changes in fair value recognised in profit or loss.

(l) Issued Capital

Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

(m) Exploration and evaluation expenditure

Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied:

(i) the rights to tenure of the area of interest are current; and
(ii) at least one of the following conditions is also met:
(a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or
(b) exploration and evaluation activities in the area of interest have not at the balance date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Investigating Accountant’s Report

-15-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)

(m) Exploration and evaluation expenditure (continued)

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development.

(n) Proforma transactions

The proforma Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows have been derived from the historical financial information as at 31 December 2011 adjusted to give effect to the following actual or proposed significant events and transactions by the Company subsequent to 31 December 2011:

i) the payment of an option fee for the Murchison option, farm-in and joint venture agreement (the ‘Murchison Agreement’) via the issue of 150,000 ordinary shares at 20 cents each as detailed in section 12.3 of the Prospectus;
ii) the issue by the Company pursuant to the Prospectus of a maximum of 15,000,000 ordinary shares at an issue price of 20 cents each, raising $3,000,000 (full subscription), together with a comparison on the basis of the minimum subscription noted below;
iii) the write off to the issued capital account of the costs of the Offer being an estimated $304,671 (less costs already incurred as at 31 December 2011 of $29,036), as detailed below based upon achieving the full subscription:

Investigating Accountant’s Report

-16-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

	Minimum	Full
	subscription	subscription
	$	$
ASIC fees	2,137	2,137
ASX fees	30,209	31,812
Brokers’ fees	150,000	180,000
Advisers’ fees	60,000	60,000
Printing	16,000	16,000
Miscellaneous	14,722	14,722
	273,068	304,671

This information is presented under the following two scenarios:

$2.5 million capital raising (minimum subscription); and
$3.0 million capital raising (full subscription); and
iv) the transfer from prepaid share issue costs to issued capital of $29,036 of prepaid initial public offering expenses.

2. CASH AND CASH EQUIVALENTS
Balance as at 31 December 2011
Issue of ordinary shares at 20 cents each
pursuant to Prospectus
Payment of share issue costs
Balance at end of period
3. OTHER ASSETS
Balance as at 31 December 2011
Transfer to share issue costs
Balance at end of period
4. EXPLORATION AND EVALUATION
EXPENDITURE
Balance as at 31 December 2011
Issue of 150,000 ordinary shares at 20 cents
each pursuant to Murchison Agreement
Balance at end of period

Reviewed
Historical
Proforma
$2.5
million
capital
raising
Proforma
$3.0
million
capital
raising
$
$
$
133,410
133,410
133,410
-
2,500,000
3,000,000
-
(273,068)
(304,671)
133,410
2,360,342
2,828,739
32,190
32,190
32,190
-
(29,036)
(29,036)
32,910
3,154
3,154
37,052
37,052
37,052
-
30,000 30,000
37,052
67,052
67,052

Investigating Accountant’s Report

-17-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

			*Proforma*	*Proforma*
			*$2.5*	*$3.0*
			*million*	*million*
		*Reviewed*	*capital*	*capital*
		*Historical*	*raising*	*raising*
		$	$	$
5.	TRADE AND OTHER PAYABLES
	Balance as at 31 December 2011	106,776	106,776	106,776
	Settlement of accrued share issue costs	-	(29,036)	(29,036)
	Balance at end of period	106,776	77,740	77,740
6.	ISSUED CAPITAL
		*Number of shares*		$
	*Reviewed Historical*
	Balance as at 31 December 2011		12,250,001	245,001
	*Reviewed Proforma*
	Balance at 31 December 2011 prior to proforma
	adjustments		12,250,001	245,001
	Issue of 150,000 ordinary shares at 20 cents each
	under Murchison Agreement		150,000	30,000
	Issue of 12,500,000 ordinary shares at 20 cents each
	pursuant to Prospectus		12,500,000	2,500,000
	Transfer of prepaid share issue expenses		-	(29,036)
	Remaining costs of the offer		-	(244,032)
	Proforma total - $2.5 million capital raising		24,900,001	2,501,933
	Increased number of shares issued pursuant to
	Prospectus		2,500,000	500,000
	Increased share issue expenses		-	(31,603)
	Proforma total - $3.0 million capital raising		27,400,001	2,970,330

Investigating Accountant’s Report

-18-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

7. OPTIONS

At 31 December 2011, the Company had 7,000,000 options over unissued shares as follows:

	Number
Type	under option	Grant date	Date of expiry	Exercise price
Unlisted options	7,000,000	14 September 2010	31 August 2015	$0.20

The weighted average fair value of the options granted is $0.0007.

8. CONTINGENCIES AND COMMITMENTS

Details of planned expenditure commitments are outlined in the Prospectus and include the following.

Service and related agreements with Directors are outlined in Section 12.1 of the Prospectus.

Under the Murchison Agreement summarised in Section 12.3 of the Prospectus, the Company has an option to farm-in to an 80% interest in two granted prospecting licences which may be exercised upon the Company’s admission to the official list of the ASX on a conditional basis. The Company paid the registered holder of those tenements, Murchison Resources Pty Ltd (‘Murchison’), consideration of $11,000 upon entering into the Murchison Agreement and, upon exercising its option under the Murchison Agreement (the ‘Exercise Date’), the Company will issue 150,000 fully paid ordinary shares at 20 cents per share to Murchison and/or its nominee.

The key terms of the Murchison Agreement are as follows:

i) Within 12 months of the Exercise Date, the Company must spend $50,000 on reverse circulation drilling (‘Year One’);
ii) The Company cannot withdraw from the Murchison Agreement until it has incurred the $50,000 or paid the unspent portion of that expenditure to Murchison;
iii) Within 30 days of the conclusion of Year One, the Company may elect to withdraw or continue;
iv) If continuing, the Company must issue and allot 500,000 fully paid ordinary shares to Murchison;
v) After electing to continue, the Company must sole fund $250,000 of exploration exclusive of minimum expenditure from the end of Year One until 24 months from the Exercise Date (‘Initial Farm-in Period);
vi) The Company may withdraw during the Initial Farm-in Period by not paying the above sole funding in which case it will not earn any interest in the tenements which are the subject of the Murchison Agreement;
vii) Within 30 days of the conclusion of the Initial Farm-in Period, the Company may elect to continue to earn an interest by sole funding expenditure in connection with the tenements until a decision to mine based on a bankable feasibility study is made within 48 months from the Exercise Date;

Investigating Accountant’s Report

-19-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

8. CONTINGENCIES AND COMMITMENTS (continued)

viii) Upon a decision to mine based on a bankable feasibility study, an 80% interest will be deemed to have been earned by the Company; and

ix) Upon an 80% interest being obtained, an unincorporated joint venture between Murchison and the Company will be formed with a 20:80 respective interest.
The Directors are not aware of any potential contingencies.

9. RELATED PARTY TRANSACTIONS

Details of Directors’ interests in the Company’s issued capital and transactions with the Company are included in Sections 4.16 and 4.17 of the Prospectus. Related party agreements are detailed in Section 4.17 of the Prospectus.

10. PERFORMANCE RIGHTS

Following shareholder approval on 29[th] November 2011, the Board has implemented a Performance Rights Plan (‘PRP’) to provide incentives to Directors, executives and employees of the Company. Under the PRP the Board has also resolved to issue the following performance rights to the Managing Director, Mr David Deloub as detailed in Section 4.16 of the Prospectus:

Tranche	Number	ExpiryDate	Hurdle
A	1,000,000	31 Oct 2013	The Company achieves a market capitalisation of
			equal to or greater than A$10 million based on a
			VWAP1over 30 consecutive trading days.
B	1,000,000	31 Oct 2015	The Company achieves a market capitalisation of
			equal to or greater than A$20 million based on a
			VWAP1over 30 consecutive trading days.
C	1,000,000	31 Oct 2016	The Company achieves a market capitalisation of
			equal to or greater than A$40 million based on a
			VWAP1over 30 consecutive trading days.

1 Volume Weighted Average Price

In addition, the Managing Director must remain in the service of the Company until the date that is three (3) months from the completion of each of the exercise conditions set out above in order for the corresponding right to be exercised.

Tranches A and B have a fair value per right of 0.74 cents and Tranche C has a fair value per right of 0.56 cents. The total fair value of $20,400 will be allocated across the relevant vesting periods.

Investigating Accountant’s Report

-20-

MERAH RESOURCES LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR THE PERIOD FROM 1 JULY 2011 TO 31 DECEMBER 2011

10. PERFORMANCE RIGHTS (continued)

The fair value of the performance rights was estimated using the market value at that date and an adjustment to reflect the Company’s assessment of the probability of the relevant market conditions being met. The length of the expected vesting period is consistent with the assumptions used below in determining the fair value of the rights granted.

Details	Tranche A	Tranche B	Tranche C
Number	1,000,000	1,000,000	1,000,000
Share price	0.02	0.02	0.02
Probability	0.37	0.37	0.28
Value	$ 7,400.00	$ 7,400.00	$ 5,600.00
Vesting Period	2 years	4 years	5 years
Grant Date	29/11/2011	29/11/2011	29/11/2011

11. SOLICITORS’ REPORT ON TENEMENTS

2 February 2012

The Directors Merah Resources Limited 79 Hay Street SUBIACO WA 6008

Cardinals Corporate Pty cardinals Ltd as trustee for the lawyers(and(consultants( Cardinals Corporate Trust trading as Tel: +61 8 9213 3000 Cardinals Lawyers and Fax: +61 8 9481 7479 Consultants ABN 57 245 735 267 Suite 3, Ground Floor 57 Havelock Street West Perth WA 6005 PO Box 1957 West Perth WA 6872

Dear Sirs and Madam

Solicitors' Report on Tenements – Merah Resources Limited ACN 146 035 127

This report ( Report ) is prepared for inclusion in a prospectus ( Prospectus ) to be dated on or about 2 February 2012 by Merah Resources Limited ACN 146 035 127 ( Company ) for an offer to the public by the Company of up to 15,000,000 fully paid ordinary shares in the capital of the Company ( Shares ) at an issue price of AUD$0.20 per Share to raise up to AUD$3,000,000 with a minimum subscription to the offer of 12,500,000 Shares at an issue price of AUD$0.20 per Share to raise $2,500,000.

This Report is on the mining tenement interests to which the Company is entitled or has acquired. It has been prepared at the request of the directors of the Company ( Directors ).

1. TENEMENT INTERESTS

As at the date of this Report the Company has entered into an acquisition agreement with United Mining Resources Pty Ltd and Rio Resources Pty Ltd and an option, farm in and joint venture agreement with Murchison Resources Pty Ltd ( Agreements ). The Agreements are summarised in section 12 of the Prospectus.

Under the Agreements the Company has:

(a) acquired the whole of the interest of United Mining Resources Pty Ltd and Rio Resources Pty Ltd in a granted exploration licence, E36/675, applied for and granted under the Mining Act 1978 (WA) ( Mining Act ) ( United Tenement ); and
(b) acquired an option for the right to farm in to and earn an interest of 80% in, two granted prospecting licences, P36/1730 and P36/1742, applied for and granted under the Mining Act and which are owned by Murchison Resources Pty Ltd ( Murchison Tenements ).

The Company's interests in the Murchison Tenements are contractual in nature and depend on the enforceability of the relevant agreement and on the parties fulfilling its terms.

Details of the United Tenement and the Murchison Tenements ( Tenements ) are set out in the Schedule of Tenements at the end of this Report ( Schedule ). The Schedule forms an essential part of this Report.

2. SEARCHES

Title Searches

For the purposes of this Report the following searches and enquiries in respect of the Tenements we have made and considered searches of the Register maintained by the Department of Mines

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and Petroleum Perth, Western Australia ( DMP ) dated 1 February 2012 ( DMP Searches ) and cross checked those against searches of the register maintained by the National Native Title Tribunal ( NNTT ) dated 1 February 2012 ( NNTT Search ).

Aboriginal Heritage Searches

We have conducted searches of the online register of Aboriginal heritage sites maintained by the Department of Indigenous Affairs in Western Australia ( DIA ) to search for any registered Aboriginal sites either on the register of Aboriginal sites maintained under the Aboriginal Heritage Act 1972 (WA) ( Aboriginal Heritage Act ) on 1 February 2012 ( DIA Searches ).

3. OPINION

As a result of our searches and enquiries detailed above, but subject to the assumptions and qualifications set out in this Report, we are of the opinion that, as at the date of the relevant searches:

(a) This Report provides an accurate statement of the status of the Tenements and the Company’s interest in the Tenements.
(b) Unless otherwise specified in this Report, the Tenements are validly granted and in good standing.
(c) This Report provides an accurate statement as to third party interests, including encumbrances, in relation to the Tenements as apparent from our searches and information provided to us.

4. AGREEMENT REVIEW

General

We have examined the Agreements provided to us by the Company that relate to the Tenements. Summaries of the Agreements are set out in section 12 of the Prospectus. These are the only agreements of which we are aware that relate to the Company's interest in the Tenements.

5. MINING TENEMENTS UNDER THE MINING ACT

Tenements Generally

Tenements granted under the Mining Act are subject to various conditions. Those conditions may be statutory conditions and relate to rent, minimum expenditure or reporting requirements. As the Tenements the subject of this Report are prospecting licences and exploration licences under the Mining Act, the summary below is limited to those grants in particular. The endorsements, conditions, current encumbrances, native title claims, registered sites and material contracts applicable to the Tenements are mentioned in the notes to the Schedule.

Holders of exploration or prospecting licences are obliged to pay an annual rent and to meet annual expenditure requirements. Failure to meet such requirements may mean that the exploration or prospecting licence is vulnerable to an order for forfeiture. The rent and expenditure obligations for the Tenements are summarised in the Schedule.

Conditions are imposed on the grant of mining tenements pursuant to the Mining Act and may be imposed also under the Native Title Act. These include conditions relating to the environment and include a standard schedule of general exclusions and conditions established pursuant to

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the Mining Act. Endorsements and conditions affecting the Tenements are also summarised in the Schedule.

Exploration Licences under the Mining Act

The grant of an exploration licence under the Mining Act lies with the Minister following recommendation by the Mining Registrar or the Mining Warden. The holder of an exploration licence is authorised to carry out exploratory operations of a kind described in the exploration licence with respect to its area. Generally, an exploration licence confers title to explore for all minerals except iron.

While an exploration licence will remain in force for five (5) years from the date of grant, the Minister may extend the term of an exploration licence granted after 10 February 2006 by a further period of five (5) years followed by a further period or periods of two (2) years where the Minister is satisfied that prescribed grounds for extension exist. Prescribed grounds for the extension of an exploration licence include where the Minister believes that government, legal, climatic or heritage issued have caused difficulties or delays in carrying out work on the licence, or where the land has been unworkable for a significant part of any year of the term of the exploration licence, or where the Minister considers that work carried out justifies further exploration on the licence. At the end of the initial five year period, the holder of an exploration licence must relinquish 40% of the area of the exploration licence however the Minister may defer this requirement if satisfied that a prescribed ground for deferral exists (which would be similar to the grounds for extension).

The holder of an exploration licence granted after 10 February 2006 may apply for retention status in respect of the licence. The application will be considered by the Minister, who may approve it where there is an identified mineral resource within the licence area but it is impractical to mine the resource for prescribed reasons. If retention status is granted, the minimum expenditure requirements on that licence are reduced in the year of grant and cease in future years. The Minister may impose a program of works or require the holder to apply for a mining lease.

The Mining Act provides that during the first year of grant of an exploration licence, no legal or equitable interest in or affecting an exploration licence, may be transferred or dealt with whether directly or indirectly, without the consent in writing of the Minister. After that first year there is no restriction on such dealings.

Prospecting Licences under the Mining Act

The holder of a prospecting licence is authorised to enter upon land to prospect for minerals, using such vehicles, machinery and equipment as may be reasonably necessary or expedient. The holder of prospecting licence extract or remove not more than 500 tonnes of earth, soil, rocks, stone, fluid or mineral-bearing substances over the term of the licence. The holder of a prospecting licence is entitled, during the term of that licence, apply for and, subject to the Mining Act, have granted one or more mining leases over any part of the land the subject of the prospecting licence.

While a prospecting licence will remain in force for four (4) years from the date of grant, the Minister may extend the term of a prospecting licence granted after 10 February 2006 by a further period of four (4) years if he is satisfied that a prescribed ground exists. Prescribed grounds for the extension of a prospecting licence include where the Minister believes that government, legal, climatic or heritage issued have caused difficulties or delays in carrying out

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work on the licence, or where the land has been unworkable for a significant part of any year of the term of the prospecting licence, or where the Minister considers that work carried out justifies further prospecting on the licence. Once the term of the prospecting licence has been renewed for a period of four years, it can be extended for a further period or periods of four years if the licence has retention status.

The holder of a prospecting licence granted after 10 February 2006 may apply for retention status in respect of the licence. The application will be considered by the Minister, who may approve it where there is an identified mineral resource within the licence area but it is impractical to mine the resource for prescribed reasons. If retention status is granted, the holder will not be required to comply with the prescribed expenditure obligations in respect of that prospecting licence.

6. INFORMATION IN RELATION TO NATIVE TITLE

Native Title Generally

In June 1992 the High Court of Australia held in Mabo v Queensland (No 2) that the common law of Australia recognised that Aboriginal and Torres Strait Islander people are entitled to rights called "native title" in relation to their traditional lands and waters.

In general terms, these native title rights to land and water will be recognised where the claimants can establish that they have maintained a continuous connection with the land in accordance with traditional laws and customs since British settlement in 1788 and where the native title rights have not been lawfully extinguished.

The High Court held that native title could be extinguished by the valid exercise of governmental powers provided there was a clear and plain intention to do so. For such extinguishment to be lawful it must adhere to the obligations imposed by the Racial Discrimination Act 1975 (Cth) which came into operation on 31 October 1975.

On 1 January 1994 the Native Title Act 1993 (Cth) ( Native Title Act ) enacted by the Commonwealth parliament came into operation. The Native Title Act was substantially amended in 1998.

By way of summary, the Native Title Act:

(a) provides for recognition and protection of native title;
(b) establishes the mechanism by which claims are filed and dealt with and determined in the Federal Court of Australia;
(c) establishes the position of a Native Title Registrar with responsibility to consider whether claims filed pass the requirements of the so-called registration test, maintain registers of native title claims, proven native title and Indigenous Land Use Agreements, and provide mediation services to parties to native title claims; and
(d) establishes the NNTT with responsibility to assist the Native Title Registrar and provide services and support to parties to native title claims.

Native Title Claims

Lodging a Claim

The Native Title Act provides for procedures where a claimant may lodge an application for a determination of native title with the Federal Court. These procedures require the Federal Court

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to refer a native title claim to the Native Title Registrar who must apply the registration test as set out in the Native Title Act.

Registration Test

If the Native Title Registrar considers a claim satisfies the registration test, the claim is entered on the Register of Native Title Claims maintained by the NNTT. If a claim fails to meet the registration test it may still be entered on the Register at a later date if additional information is provided by the native title claimants which satisfies the registration test. Both registered and unregistered native title claims proceed through the mediation and determination process in the Federal Court. However claimants on unregistered claims do not usually have rights of notification or rights to negotiate under the Native Title Act in relation to activities such as the grant of mining tenements on the land the subject of their unregistered claim.

The Future Act Regime under the Native Title Act

The Native Title Act provides procedures for the benefit of native title claimants that are collectively known as the future act regime. After registration of their native title claim, registered native title claimants will be entitled to the "right to negotiate" with respect to certain "acts" that may affect native title. The grant of a mining tenement in Western Australia is an act that may "affect" native title.

In Western Australia the State can give notice that it intends to proceed with the grant of a under the so–called “expedited procedure” or under the so-called “right to negotiate” procedures operated by DMP.

The Expedited Procedure

(a) Generally in relation to exploration licences the State issues a notice including a statement that the tenement should be granted under the expedited procedure. This means the tenement will be granted without negotiations with any native title claimants. Registered native title claimants may lodge an objection to this with the NNTT within 4 months of the notice issuing.
(b) If no objection is lodged, the NNTT does not become involved. It is then a matter for the State to proceed to grant the tenement under Mining Act procedures through the DMP and the relevant Minister.
(c) If one or more objections are lodged the matter is then dealt with by the NNTT. The parties may negotiate, agree that the expedited procedure may apply and consent to a determination that the expedited procedure does apply. If there is a consent determination that the expedited procedure does apply, the State then proceeds to grant under the Mining Act.
(d) If the parties do not reach such an agreement, the matter must be heard and determined by the NNTT. The NNTT may decide that the expedited procedure does apply, in which case the tenements may proceed to grant under the requirements of the Mining Act. Alternatively the NNTT may determine that the expedited procedure does not apply in which case the process for grant of the tenement must comply with the right to negotiate provisions of the NTA administered by DMP. The expedited procedure will not apply if the grant of the exploration licence or prospecting licence is likely to interfere with the claimants' community or social activities on the land,

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areas or sites of significance or involve major disturbance to any area of land or waters.

The Right to Negotiate

(a) The “right to negotiate" provisions of the NTA require the parties, that is the State of Western Australia, the company to whom tenements may be granted and the registered native title parties to negotiate in “good faith” and for a period of not less than 6 months following the publication of the State’s notice that it intended to grant the tenement.
(b) If no agreement is reached in that time the matter may be referred to the NNTT for determination as to whether, under the NTA, the tenement may be granted. If it determines that the tenement may be granted, the NNTT may impose conditions on the grant additional to those imposed under the Mining Act.

Proving a Claim

Irrespective of whether a native title claim is registered or unregistered, the native title claimants must prove in the Federal Court that their claimed native title rights exist, in order to have their claimed native title rights formally recognised. Native title claims may be resolved through a full trial, or may be the subject of a consent determination following a successful mediation process.

We have not undertaken any investigations to determine the content of the rights claimed in any native title claim intersecting the Tenements, whether any of the claims might succeed or whether any further native title claims may be made over the relevant area.

However, if a native title claim is successfully proved, the then current holder of any mining tenement may be liable for compensation for any effect of the grant of that tenement on the native title proved to have existed. As yet, there has not been any determination of a compensation claim of this kind in Australia and very few such claims have been commenced. We are not able to predict what compensation, if any, would be payable by the tenement holder in the event that a compensation claim brought in relation to a mining tenement were successful.

Native Title Claims intersecting the Tenements

As result of the NNTT Searches it appears that the external boundaries of one native title claim intersect the Tenements. Details of this claim are set out in the Schedule.

Validity of Tenements in relation to Native Title

Except as set out below, we have not undertaken any independent investigation as to whether the Tenements were validly granted in relation to native title considerations.

(a) Tenements granted before 1 January 1994

Tenements granted before 1 January 1994 are either valid as at the date of grant or have been validated by the Native Title Act and validating legislation contemplated by the NTA and enacted by the State of Western Australia.

According to the DMP Searches conducted, no Tenements were granted during this period.

(b) Tenements granted between 1 January 1994 and 23 December 1996

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Tenements granted between 1 January 1994 and 23 December 1996 are either valid as at the date of grant or invalid due to non-compliance with the provisions of the Native Title Act. If certain criteria are met, the Native Title Act and State legislation will have validated those invalid acts.

According to the DMP Searches conducted, no Tenements were granted during this period.

Mining tenements granted since 23 December 1996 which affect native title rights and interests will be valid provided that the future act procedures set out above were followed by the relevant parties. We have not been instructed to analyse whether or not the relevant NTA procedures were followed in relation to each Tenement, but are not aware of any reason why they would be regarded as not being validly granted.

According to the DMP Searches conducted, all of the Tenements were granted after 23 December 1996.

We note that any tenements sought in the future in relation to the Tenements (for example conversions from the current Tenements to another type of tenure) will be required to comply with the future act regime.

7. ABORIGINAL HERITAGE

Compliance with the Aboriginal Heritage Act is a standard condition imposed on mining tenements in Western Australia. Accordingly, the Aboriginal Heritage Act applies to the Tenements. It is an offence under the Aboriginal Heritage Act for a person to damage or in any way alter an Aboriginal site or any object on or under an Aboriginal site. The Minister of Indigenous Affairs’ consent is required pursuant to section 18 of the Aboriginal Heritage Act in the event that any use of land is likely to result in the excavation, destruction, concealment of, or alteration or damage to, an Aboriginal site or object.

A register of Aboriginal Sites is kept by the DIA under the Aboriginal Heritage Act. However, sites and objects of significance to Aboriginal persons are protected by the Aboriginal Heritage Act whether or not those sites are registered under the Aboriginal Heritage Act. There is no requirement for a site to be registered and only a small percentage of Aboriginal sites in Western Australia are registered. Accordingly it is highly probable that there may be other, unregistered, Aboriginal sites within the area of the Tenements.

According to the DIA Searches, 18 registered Aboriginal heritage sites are located within the boundaries of the Tenements. The Company will need to ensure that any interference with the sites is done in strict conformity with the Aboriginal Heritage Act. Details of the registered sites are provided in the Schedule.

The Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) ( Commonwealth Heritage Act ) also applies to and protects significant Aboriginal areas and objects. Such protection is afforded by means of temporary or permanent declarations issued by the Commonwealth Minister with responsibility for Indigenous Affairs, which have the potential to delay or halt exploration activities. It is an offence to contravene a declaration made pursuant to the Commonwealth Heritage Act.

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The Company should ensure that any interference with Aboriginal sites that exist on the Tenements is avoided where possible. Accordingly it would be prudent for the Company to carry out heritage surveys (as is standard industry practice) to determine if any Aboriginal sites or objects exist within the area of the Tenements. It may also be necessary for the Company to enter into separate agreements with the traditional owners of the land that is the subject of the Tenements.

8. COMPLIANCE

The Company’s interests or rights in regards to the Tenements are subject to the holder’s continued compliance with the terms and conditions of the grant under the Mining Act (and any regulations made under the Mining Act), together with any conditions specific to each Tenement. The searches that we have conducted in connection with this Report do not disclose any failure to comply with the conditions in respect of the Tenements.

The Company has only an equitable interest, and does not have a registered interest, in the Murchison Tenements pursuant to its agreement with Murchison Resources Pty Ltd referred to in section 1 of this Report and summarised in section 12 of the Prospectus. As a result the Company’s rights in regards to the Murchison Tenements, which are currently registered in the name of Murchison Resources Pty Ltd, are subject to Murchison Resources Pty Ltd complying with its contractual obligations under that agreement. Furthermore, if the Company does not meet its obligations under the agreement with Murchison Resources Pty Ltd, including its expenditure obligations, it will not be entitled to earn any interest in the Murchison Tenements.

9. ASSUMPTIONS AND QUALIFICATIONS

This Report, including the Schedule, is based on, and subject to, the following assumptions and qualifications set out below and as otherwise specified elsewhere in this Report:

(a) we have relied upon information provided by third parties, including various government departments, in response to searches made, or caused to be made, by us and have relied upon that information, including the results of searches, being accurate, complete and up to date as at the date of its receipt by us;
(b) we have assumed that the responses to any questions which we have put to the Directors, officers, employees, advisers and agents of the Company have been true and accurate in all respects and have not contained any material omissions;
(c) references in the Schedule are taken from details shown on the searches we have obtained from the DMP, DIA and the NNTT. We have not undertaken independent surveys of the land the subject of the Tenements. Consequently we cannot verify the accuracy of the areas of the Tenements, the areas of the relevant native title claims or the location of any identified Aboriginal heritage site;
(d) our review of the DMP Searches and the NNTT Search indicates that no indigenous land use agreement has been registered in relation to any of the areas covered by the Tenements. Further the Company has not provided us with any information as to whether there exist any agreements with registered or unregistered native title claimants allowing access to the land covered by the Tenements. We have therefore assumed that no such land access agreements exist;
(e) where Ministerial consent is required in relation to the transfer of any tenements, we express no opinion as to whether such consent will be granted, or the consequences of

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consent being refused, although we are not aware of any matter which would cause consent to be refused;

(f) in relation to any statement relating to whether the Tenements are in good standing, such statement is only based on the information contained in the relevant search on the instruments of title for the Tenements;
(g) if any of the Tenements are subject to a plaint for forfeiture, we express no opinion on the possible outcome of that plaint action;
(h) we have assumed that the registered holder of the Murchison Tenements has valid legal title to those tenements;
(i) we have examined the Agreements. Unless specifically noted, the Agreements are the only material contracts in relation to the Tenements of which we are aware;
(j) we have assumed that the Agreements were within the capacity and powers of, and were validly authorised, stamped or lodged for stamping (where necessary), executed, delivered by and are legally binding on and enforceable against the parties to them and comprise the entire agreement of the parties to each of them with respect to their respective subject matters;
(k) we have assumed that the stamp duty markings, seals and signatures on the Agreements are authentic;
(l) we have assumed that the parties to each of the Agreements are complying with and will continue to comply with and fulfil the terms of the Agreements;
(m) we have assumed the completeness and the conformity to original documents or all copies reviewed;
(n) where compliance with the terms and conditions of any Tenement and the provisions of the Mining Act including requirements necessary to maintain the Tenement in good standing, or a possible claim in relation to the Tenement by third parties is not disclosed on the face of the searches referred to above, we express no opinion as to such compliance or claim;
(o) the Mining Act generally provides that certain dealings in relation to tenements are of no force prior to such dealing being approved and registered by the relevant authority. Notwithstanding that the parties to a registered dealing may have performed all of their obligations so that the relevant agreement has come to an end, it is not the practice to withdraw the agreement from the register. Accordingly, in many cases there are numerous dealings registered against tenements, many of which may be purely historical;
(p) native title may exist in the areas covered by the Tenements. In relation to native title, whilst we have conducted searches to ascertain what native title claims, if any, have been lodged in the Federal Court and intersect the areas of the Tenements, we have not conducted any historical or anthropological investigations regarding the likely existence or non-existence of native title rights and interests in respect of those areas. Further since the NTA contains no sunset provisions preventing the future lodging of additional native title claims over the area of the Tenement, we give no assurances as to whether the current claims will remain on foot in the Federal Court of Australia or whether new and additional claims may be lodged over the same area;

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(q) Aboriginal heritage sites or objects as defined in the Aboriginal Heritage Act or under the Commonwealth Heritage Act may exist in the areas covered by the Tenements and yet not appear on the Register of Aboriginal Sites maintained by the DIA or be the subject of declaration under the Commonwealth Heritage Act. We have not conducted independent archaeological or ethnographic surveys to ascertain the existence or likely existence of any such Aboriginal heritage sites or objects within the area of the Tenements;
(r) we have not conducted enquiries as to the current or historical land tenure underlying the areas of land the subject of the Tenements. In this regard, we are unable to express an opinion on the likelihood of native title rights and interests having been extinguished by previous land grants affecting part or all of the land the subject of the Tenements; and
(s) we have not conducted searches of the Database of Contaminated Sites maintained by the Department of Environment and Conservation.

10. CONSENT AND DISCLOSURE OF INTEREST

This Report has been prepared, and is given, solely for the benefit of the Company and the Directors in connection with the issue of the Prospectus and is not to be relied on or disclosed to any other person or used for any other purpose or quoted or referred to in any public documents or filed with any government body or other person without our prior written consent. Cardinals Lawyers and Consultants will be paid its normal and usual professional fees for the preparation of this Report. Except in respect of its professional fees, that its principal is the chairman of the board of Directors, and as otherwise disclosed in the Prospectus, Cardinals Lawyers and Consultants has no interest in the promotion of the Company.

Yours sincerely

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Cardinals

Lawyers and Consultants

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4 All disturbances to the surface of the land made as a result of exploration, including costeans, drill pads, grid lines and access tracks, being backfilled and rehabilitated to the satisfaction of the Environmental Officer, Department of Mines and Petroleum (DMP). Backfilling and rehabilitation being required no later than 6 months after excavation unless otherwise approved in writing by the Environmental Officer, DMP.
5 All waste materials, rubbish, plastic sample bags, abandoned equipment and temporary buildings being removed from the mining tenement prior to or at the termination of exploration program.
6 Unless the written approval of the Environmental Officer, DMP is first obtained, the use of drilling rigs, scrapers, graders, bulldozers, backhoes or other mechanised equipment for surface disturbance or the excavation of costeans is prohibited. Following approval, all topsoil being removed ahead of mining operations and separately stockpiled for replacement after backfilling and/ or completion of operations.
7 The Licensee notifying the holder of any underlying pastoral or grazing lease by telephone or in person, or by registered post if contact cannot be made, prior to undertaking airborne geophysical surveys or ay ground disturbing activities utilising equipment such as scrapers, graders, bulldozers, backhoes, drilling rigs; water carting equipment or other mechanised equipment.
8 The Licensee or transferee, as the case may be, shall within thirty (30) days of receiving written notification of:-
the grant of the License; or
registration of a transfer introducing a new License; advise, by registered post, the holder of any underlying pastoral or grazing lease details of the grant or transfer.
9 The prior written consent of the Minister responsible for the Mining Act 1978 being obtained before commencing any prospecting activities on Water Act 57 Reserve 13956.
10 The prior written consent of the Minister responsible for the Mining Act 1978 being obtained before commencing any exploration activities on Trigonometrical Station Site Reserve 37036.
11 No interference with Geodetic Survey Station NMF 136 and mining within 15 metres thereof being confined to below a depth of 15 metres from the natural surface.
12 Consent to conduct exploration activities upon Peak Hill Stock Route Reserve 9699 granted subject to no exploration activities being carried out on Peak Hill Stock Route Reserve 9699 which restrict the use of the reserve.

Aboriginal Heritage Sites

13 The register of Aboriginal sites shows a site named “Walawurru Hill Site Complex” (Site 28449) is present within the boundary of this Tenement. The site is described on the register as “Ceremonial, Mythological, Man-Made Structure, Quarry, Artefacts/Scatter”. The status of the site is that it is on the permanent register. Access to the site is closed and restricted to males only.

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14 The register of Aboriginal sites shows a site named “Nhrc_wh_03” (Site 28451) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that it is on the permanent register. Access to the site is closed and restricted to males only.
15 The register of Aboriginal sites shows a site named “Nhrc_wh_04” (Site 28452) is present within the boundary of this Tenement. The site is described on the register as “Mythological, Man-Made Structure”. The status of the site is that it is on the permanent register. Access to the site is closed.
16 The register of Aboriginal sites shows a site named “Lawlers 3” (Site 1497) is present within the boundary of this Tenement. The site is described on the register as “Mythological, Quarry, Artefacts/Scatter”. The status of the site is that it is on the permanent register. Access to the site is closed and restricted to males only.
17 The register of Aboriginal sites shows a site named “Nhrc_wh_02” (Site 28453) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that it is on the permanent register. Access to the site is closed and restricted to males only.
18 The register of Aboriginal sites shows a site named “Nhrc_wh_01” (Site 28454) is present within the boundary of this Tenement. The site is described on the register as “Ceremonial, Mythological, Man-Made Structure”. The status of the site is that it is on the permanent register. Access to the site is closed and restricted to males only.
19 The register of Aboriginal sites shows a site named “Milya” (Site 19964) is present within the boundary of this Tenement. The site is described on the register as “Ceremonial, Artefacts/Scatter, Historical”. The status of the site is that information has been lodged and is awaiting assessment. Access to the site is closed.
20 The register of Aboriginal sites shows a site named “Pn16” (Site 24461) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
21 The register of Aboriginal sites shows a site named “Pn17” (Site 24462) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
22 The register of Aboriginal sites shows a site named “Pn18” (Site 24463) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
23 The register of Aboriginal sites shows a site named “Pn19” (Site 24464) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
24 The register of Aboriginal sites shows a site named “Pn20” (Site 24465) is present within the boundary of this Tenement. The site is described on the register as “Ceremonial,

13!

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Mythological, Artefacts/Scatter, Grinding patches/grooves”. The status of the site is that information has been lodged and is awaiting assessment. Access to the site is closed and restricted to females only.

25 The register of Aboriginal sites shows a site named “Pn34” (Site 24468) is present within the boundary of this Tenement. The site is described on the register as “Mythological, Man-Made structure”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
26 The register of Aboriginal sites shows a site named “Pn35” (Site 24469) is present within the boundary of this Tenement. The site is described on the register as “Grinding patches/grooves”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
27 The register of Aboriginal sites shows a site named “Pn36” (Site 24470) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
28 The register of Aboriginal sites shows a site named “Cn84” (Site 24560) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that information has been lodged and is awaiting assessment. The site affords open access.
29 The register of Aboriginal sites shows a site named “Lawlers Creek” (Site 20666) is present within the boundary of this Tenement. The site is described on the register as “Mythological”. The status of the site is that it is on the permanent register. The site affords open access.

Native Title

30 This tenement is intersected by the Wutha application for determination of native title (WAD6064/98) (WC99/010). The Wutha native title claim is a registered claim currently in mediation. This application has been dismissed to the extent that it relates to any land or waters that are the subject of proceeding WAD 6005 of 1998 (Harrington Smith & Ors v State of Western Australia & Ors).

Agreements

31 A summary of the agreement between the Company and Murchison Resources Pty Ltd is set out in section 12 of the Prospectus.
32 A summary of the agreement between the Company, United Mining Resources Pty Ltd and Rio Resources Pty Ltd is set out in section 12 of the Prospectus.

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12. MATERIAL CONTRACTS

The full terms of contracts to which the Company is a party that may be material in terms of the Offer or the operations of the Company or that otherwise are or may be relevant to a potential investor in the Company are not set out in this Prospectus. Summaries of these contracts are set out in Sections 4.2, 4.3 and 4.17 and in this Section 12. If you wish to gain full knowledge of the contents of these contracts you can inspect them at the Company’s registered office during normal business hours.

12.1 Agreements with Directors and Related Parties

Details of the material terms of the agreements between the Company and the Directors or other related parties of the Company are set out in Section 4.17.

12.2 Sale Agreement – Mt Adamson Project

The Company has entered into an agreement dated 20 May 2011 with United Mining Resources Pty Ltd ACN 122 921 153 and Rio Resources Pty Ltd ACN 139 939 021 (together the Vendors ) under which the Company acquired a 100% legal and beneficial interest in the Mt Adamson Project ( Sale Agreement ).

The Sale Agreement was conditional upon the satisfaction of a number of conditions precedent, which have now been satisfied. Settlement of the transactions contemplated under the Sale Agreement has been completed and the tenement comprising the Mt Adamson Project is now registered solely in the Company’s name.

The consideration paid by the Company for the Mt Adamson Project consisted of a cash payment of $15,000 plus GST and the issue and allotment of 500,000 Shares to the Vendors and/or their nominee(s). The Vendors acknowledged under the Sale Agreement that the 500,000 Shares may be classified as restricted securities by the ASX and agreed to enter into restriction agreements in the form required by the ASX in respect of those Shares.

Warranties and indemnities ordinarily found in agreements of this type were provided by the Vendors and the Company under the Sale Agreement, including warranties by the Vendors that the tenement comprising the Mt Adamson Project was in good standing and that there are no royalties payable in respect of it, other than those imposed by statute.

The Sale Agreement also contains additional provisions which are considered usual in an agreement of this type.

12.3 Murchison Agreement – Bounty and McAuley Projects

The Company has entered into an agreement dated 12 September 2011 with Murchison Resources Pty Ltd ACN 009 175 491 ( Murchison ) in respect of the Bounty Project and the McAuley Project ( Murchison Agreement ).

Under the Murchison Agreement, Murchison granted the Company an option to earn an interest in, and to enter into a joint venture in respect of, the Bounty and McAuley Projects ( Option ), in return for the payment by the Company of an option fee of $11,000 on execution of the Murchison Agreement. The Company intends to exercise the Option upon its admission to the official list of the ASX on a conditional basis, which under the Murchison Agreement is required to occur within six months from the date of that agreement or by such later date as the parties may agree in writing, which the parties extended until 30 April 2012. If the Company elects to exercise the Option it must do so by providing notice in writing to Murchison and by issuing to Murchison and/or its nominee(s) 150,000 Shares. In the event that the Company fails to list on the ASX within six months of the date of the Murchison Agreement or by such later date as the parties may agree in writing, or elects not to exercise the Option, the Murchison Agreement will be terminated and will have no further force or effect.

If the Company elects to exercise the Option, it will be required to incur a minimum of $50,000 on reverse circulation drilling (including assaying and associated costs) on the Bounty and McAuley Projects

( Minimum Expenditure ) within 12 months from the date on which the Company exercises the Option ( Year One ). After exercising the Option the Company may not withdraw from the Murchison Agreement without first incurring the Minimum Expenditure or paying to Murchison the balance of the unspent Minimum Expenditure.

During Year One Murchison will be responsible for all exploration activities on the Bounty and McAuley Projects, with the Company being entitled to have a representative present during any drilling conducted in that period and to promptly receive copies of all data generated by such drilling.

Subject to it having incurred the Minimum Expenditure, the Company may within 30 days of the end of Year One provide notice in writing to Murchison that it wishes to continue to earn an interest in the Bounty and McAuley Projects by sole funding $250,000 of expenditure (excluding the Minimum Expenditure) on the Bounty and McAuley Projects ( Further Expenditure ) in the 24 months from the Exercise Date ( First Farm In Period ), and by issuing and allotting 500,000 Shares to Murchison and/or its nominee(s) within five business days of electing to continue to earn an interest in the Bounty and McAuley Projects. If the Company fails to incur the Further Expenditure on the Bounty and McAuley Projects within the First Farm In Period, it will be deemed to have withdrawn from the Murchison Agreement and will not have earned any interest in the Bounty and McAuley Projects.

Subject to it having incurred the Further Expenditure within the First Farm In Period, the Company may elect by notice in writing to Murchison, within 30 days after the end of the First Farm In Period, to continue to earn an interest in the Bounty and McAuley Projects by sole funding expenditure on the Bounty and McAuley Projects until such time as the Company decides to proceed with the development of a commercially feasible operation directed at the winning and treatment of ore to produce a saleable mineral product based upon a bankable feasibility study ( Decision to Mine ), which must be within 48 months from the Exercise Date ( Second Farm In Period ). If the Company fails to notify Murchison in writing that it has made a Decision to Mine within the Second Farm In Period it will be deemed to have withdrawn from the Murchison Agreement and will not have earned any interest in the Bounty and McAuley Projects.

The Company will have the sole and exclusive right to enter and explore for minerals on the Bounty and McAuley Projects and to determine the allocation of expenditure on the Bounty and McAuley Projects during the First Farm In Period and the Second Farm In Period. The Company will be responsible for, amongst other things, the payment of all rates, rents and similar charges and the compliance with applicable laws in connection with the Bounty and McAuley Projects during Year One, the First Farm In Period and the Second Farm In Period and will be required to provide quarterly reports to Murchison in respect of its activities thereon.

Upon providing Murchison with notice that it has made a Decision to Mine and a copy of the bankable feasibility study on which that decision based, the Company will have earned an 80% interest in the Bounty and McAuley Projects and a joint venture will be formed between the Company and Murchison in respect of the Bounty and McAuley Projects, in which the Company will have a participating interest of 80% and Murchison will have a participating interest of 20% ( Joint Venture ). The Company will be the initial manager of the Joint Venture.

Murchison may, within 90 days after receiving notice from the Company that the Company has earned an 80% interest in the Bounty and McAuley Projects, elect to contribute a 20% share of all ongoing costs to retain its interest in the Joint Venture, or to not contribute its 20% share in which case its interests in the Joint Venture will be diluted, or to offer to sell its 20% interest in accordance with the Murchison Agreement. In the event that either party’s participating interest in the Joint Venture becomes less than 5% their participating interest will be converted to a 1% gross production royalty and that party will have no participating interest in the Joint Venture and no ownership interest in either the Bounty Project or the McAuley Project.

Each of the Company and Murchison is entitled to a first right of refusal in the event that the other party wishes to transfer all or part of its interest in the Joint Venture.

The Murchison Agreement contains clauses ordinarily found in joint venture agreements regarding the management of the Joint Venture including formation of an operating committee, cash calls, force majeure

and dilution. Neither party may assign, transfer or otherwise dispose of their interests in the Bounty and McAuley Projects or under the Murchison Agreement without the prior written consent of the other party, which will not be unreasonably withheld where the assignment, transfer or disposition is to a party that is reasonably capable of fulfilling the obligations of the transferor or assignor under the Murchison Agreement and where a deed in favour of the continuing party has been entered into under which the transferee or assignee agrees to be bound by the provisions of the Murchison Agreement.

The Murchison Agreement also contains additional provisions which are considered usual in an agreement of this type.

13. ADDITIONAL INFORMATION

13.1 Rights attaching to Securities (a) Shares

The Shares offered for subscription under this Prospectus are new Shares that will rank equally with the issued Shares. The rights attaching to Shares are set out in the Constitution and in certain circumstances are regulated by the Corporations Act, the Listing Rules, the ASX Settlement Operating Rules and general law. The rights, privileges and restrictions attaching to Shares are summarised below. This is not exhaustive nor is it a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement you should obtain independent legal advice. A copy of the Constitution is available for inspection at the Company’s registered office during normal business hours.

(i) General meetings and Notice of Meetings

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

Shareholders may requisition meetings in accordance with section 249D of the Corporations Act and the Constitution.

(ii) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of Shares, at general meetings of Shareholders or classes of Shareholders:

(A) each Shareholder entitled to vote may vote in person or by proxy, attorney or representative;
(B) on a show of hands, every person present who is a shareholder or a proxy, attorney or representative of a Shareholder has one vote; and
(C) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he or she is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited). Amounts paid in advance of a call will be ignored when calculating the proportion.

(iii) Dividend rights

Subject to the rights of persons (if any) entitled to Shares with special rights to a dividend the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may authorise the payment or crediting by the Company to the Shareholders of such a dividend. The Directors may authorise the payment or crediting by the Company to the Shareholders of such interim dividends as appear to the Directors to be justified by the profits of the Company, subject to the Corporations Act. Subject to the rights of persons (if any) entitled to Shares with special rights as to dividend all dividends are to be declared and paid according to the amounts paid or credited as paid on the Shares in respect of which the dividend is paid. Interest may not be paid by the

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Company in respect of any dividend, whether final or interim. The Directors may deduct from any dividend payable to a Shareholder all sums of money (if any) presently payable by that Shareholder to the Company on account of calls or otherwise in relation to Shares.

(iv) Winding-up

If the Company is wound up the liquidator may, with the sanction of a special resolution of the Company, divide among the Shareholders in kind the whole or any part of the property of the Company, and may for that purpose set such value as he or she considers fair on any property to be so divided and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the sanction of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other Securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to Shareholders, Shares classified by the ASX as restricted securities (as that term is defined in the Listing Rules) at the time of the commencement of the winding up shall rank in priority after all other Shares.

(v) Transfer of Shares

Generally Shares are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the Listing Rules.

Directors may refuse to register any transfer of Shares, other than a market transfer, where permitted or required by the Listing Rules or the ASTC Settlement Rules (superseded by the ASX Settlement Operating Rules) or where the transfer would breach the Listing Rules. Where the Directors exercise their right to refuse a transfer, they must give written notice in accordance with Listing Rules to the transferee and lodging broker (if any). Failure to give notice will not invalidate the decision of the Directors. The Company must not refuse to register or give effect to or delay or in any way interfere with the registration of a market transfer where to do so would be contrary to the Listing Rules or any of the ASX Settlement Operating Rules.

(vi) Variation of rights

Pursuant to section 246B of the Corporations Act the Company may, with the sanction of a special resolution passed at a meeting of Shareholders, vary or abrogate the rights attaching to Shares.

If at any time the Share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class), whether or not the Company is being wound up, may be varied or abrogated with the consent in writing of the holders of three quarters of the issued Shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the Shares of that class, subject to sections 246B to 246E of the Corporations Act.

(vii) Shareholder Liability

As the Shares under the Prospectus are fully paid ordinary shares, they are not subject to any calls for money by the Directors and will therefore not become liable to forfeiture.

(viii) Future Increases in Capital

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The allotment and issue of any Shares is under the control of the Directors. Subject to restrictions on the allotment of Shares to Directors or their associates, the ASX Listing Rules, the Constitution and the Corporations Act, the Directors may allot or otherwise dispose of Shares on such terms and condition as they see fit.

(ix) Alteration to the Constitution

In accordance with the Corporations Act, the Constitution can only be amended by a special resolution passed by at least three quarters of Shareholders present and voting at the general meeting. At least 28 days’ written notice specifying the intention to propose the resolution as a special resolution must be given to Shareholders.

(x) ASX Listing Rules

If the Company is admitted to the official list of the ASX, notwithstanding anything in the Constitution, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Constitution prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Constitution to contain a provision or not to contain a provision the Constitution is deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the Constitution is or becomes inconsistent with the Listing Rules, the Constitution is deemed not to contain that provision to the extent of the inconsistency.

(b) Terms and Conditions of Options

The terms and conditions of the Options on issue at the date of this Prospectus are as follows:

(i) each Option entitles the holder to one (1) Share;
(ii) the Options are exercisable at any time on or prior to 5:00pm (WST) on 31 August 2015 ( Expiry Date ) by completing an option exercise form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the Share Registry. Options not exercised on or before the expiry date will automatically lapse on the Expiry Date;
(iii)
the Option exercise price is $0.20 per Option;
(iv) the Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.
(v) an Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:
(A) a written notice of exercise of Options specifying the number of Options being exercised; and
(B) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

( Exercise Notice );

(vi) an Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds;

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(vii) within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice;
(viii) an Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised;
(ix) subject to the Corporations Act, the Listing Rules and the Constitution, the Options are freely transferable;
(x) all Shares issued upon exercise of the Options will rank equally in all respects with the Company’s then issued Shares. The Company will not apply for Quotation of the Options unless otherwise determined by the Directors of the Company in their sole discretion. However, the Company will apply to ASX to have the Shares granted Quotation pursuant to the exercise of the Options on ASX within 10 Business Days after the date of allotment of those Shares;
(xi) there are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of their Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 6 Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue; and
(xii) in the event of a reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company, all rights of the Option holder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction.

(c) Terms and Conditions of Performance Rights

The Managing Director, Mr David Deloub, has been issued 3,000,000 Performance Rights at the date of this Prospectus being 1,000,000 of each of Performance Rights A, Performance Rights B and Performance Rights C under and subject to the terms and conditions of the Performance Rights Plan, the principal terms of which are summarised in Section 13.1(e). Shareholder approval of the issue of the Performance Rights to Mr Deloub was granted at the annual general meeting of the Company held on 29 November 2011. The Performance Rights entitle the holder to Shares on the following terms and conditions:

(i) Subject to the satisfaction of the exercise conditions set out in paragraph (ii) below, each Performance Right entitles the holder to subscribe for one Share.
(ii) The Performance Rights shall become exercisable and convert to Shares as follows:
(A) on the achievement of a market capitalisation equal to or greater than:

• in the case of Performance Rights A, $10 million based on a volume weighted average price on or before 31 October 2013; and

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in the case of Performance Rights B, $20 million based on a volume weighted average price on or before 31 October 2015; and
in the case of Performance Rights C, $40 million based on a volume weighted average price on or before 31 October 2016,

each for a period of no less than 30 consecutive trading days (“trading days” is defined in the Listing Rules); and

(B) where the holder has completed a continuous period of service as an employee of the Company from the date of issue of the Performance Rights until the date that is three (3) months from the date on which the relevant condition referred to in Section 13.1(c)(ii)(A) above is satisfied,

prior to the Expiry Date (as defined below) (Sections 13.1(c)(ii)(A) and 13.1(c)(ii)(B) together the Exercise Conditions , and each an Exercise Condition ).

(iii) The Performance Rights expire as follows:
(A) Performance Rights A expire at 5.00 pm (WST) on 31 October 2013;
(B) Performance Rights B expire at 5:00pm (WST) on 31 October 2015; and
(C) Performance Rights C expire at 5:00pm (WST) on 31 October 2016,

(each an Expiry Date ). Any Performance Right not exercised before the corresponding Expiry Date shall automatically lapse on the Expiry Date and the holder shall have no entitlement to Shares pursuant to those Performance Rights.

(iv) The Performance Rights were issued for nil cash consideration and no consideration will be payable upon the exercise of the Performance Rights on the satisfaction of the Exercise Conditions.
(v) The Company will not apply for Quotation of the Performance Rights on the ASX. However, the Company will apply for Quotation of all Shares allotted pursuant to the exercise of Performance Rights on the ASX within 10 Business Days after the date of allotment of those Shares.
(vi) All Shares issued and allotted upon the exercise of Performance Rights will upon allotment rank equally in all respects with other Shares.
(vii) The unexercised Performance Rights will become exercisable upon the happening of any of the following events:
(A) if a takeover bid is made, the takeover bid is declared unconditional and the bidder has acquired a relevant interest in more than 50% of the Company’s shares; or
(B) on the date of despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members or any class thereof pursuant to section 411 of the Corporations Act seeking approval for a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of

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the Company or its amalgamation with any other company or companies; or

(C) on the date upon which a person or a group of associated persons becomes entitled, subsequent to the date of grant of the Performance Rights, to sufficient Shares to give it or them the ability, in general meeting, to replace all or allow a majority of the Board in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

(viii) In addition to Sections 13.1(c)(i) to 13.1(c)(vii) above, the terms and conditions set out in the Performance Rights Plan apply to the Performance Rights. Further details of the Performance Rights Plan are set out in Section 13.1(c).

(d) Employee Incentive Option Scheme

The Company has adopted an Employee Inventive Option Scheme ( Scheme ) to allow eligible participants to be granted options ( Employee Options ) to acquire Shares, the principal terms of which are summarised below.

(i) Eligibility and Grant of Employee Options

The Board may offer Employee Options to any full or part time employee or Directors of any company in the Group. Employee Options may be offered by the Board, acting in its absolute discretion, at any time (unless to do so would contravene the Corporations Act, the Listing Rules or any other applicable law).

(ii) Consideration

Each Employee Option issued under the Scheme will be issued for no consideration.

(iii) Exercise Price

The exercise price for Employee Options offered under the Scheme will be determined by the Board in its absolute discretion.

(iv) Exercise Conditions and Restrictions

No Employee Option may be offered, granted or exercised and no Share may be issued under the Scheme if to do so would contravene the Corporations Act, the Listing Rules or any other applicable law. The Employee Options may be subject to such conditions on exercise as may be fixed by the Directors including, without limitation, length of service by eligible participant, contributions and potential contributions by the eligible participant and any other matters considered by the Board to be relevant. Any restrictions imposed by the Directors must be set out in the offer for the Employee Option.

(v) Participation in Rights Issues and Bonus Issues

If the Company makes a pro rata issue of Securities (except a bonus issue) to the holders of Shares (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) the Employee Option exercise price shall be reduced according to the formula specified in the Listing Rules.

In the event of a bonus issue of Shares being made pro rata to Shareholders, (other than an issue in lieu of dividends), the number of Shares issued on exercise of each Employee Option will include the number of bonus Shares that would have been issued if the

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Employee Option had been exercised prior to the record date for the bonus issue. No adjustment will be made to the exercise price per Share of the Employee Option.

(vi) Term of Employee Options

The Employee Options granted under the Scheme expire following the lapsing date (being the date which is 2 years after the date of grant or such other date as determined by the Board), or where there has been a failure to meet any exercise conditions. If the relevant person ceases to be an employee of the Group or a Director prior to satisfaction of the exercise conditions, the Employee Options granted under the Scheme will lapse immediately, except where the relevant person ceases to be an employee of the Company or a Director due to that person’s death, permanent disability, retirement or redundancy (each a Ceasing Event ) or otherwise in the Board’s discretion. In the event of a Ceasing Event in respect of the relevant person, that person or their legal personal representative may exercise those Employee Options which have become exercisable, which have not already been exercised and have not lapsed by the first to occur of the relevant lapsing date or six months after the Ceasing Event.

(vii) Reorganisation

The terms upon which Employee Options will be granted will not prevent the Employee Options being reorganised as required by the Listing Rules on the reorganisation of the capital of the Company.

(e) Performance Rights Plan

The Company has adopted a Performance Rights Plan ( PRP ) approved by Shareholders on 29 November 2011 which allows the Directors and employees of the Group to be granted Performance Rights to acquire Shares.

The objective of the PRP is to provide the Company with a remuneration mechanism, through the issue of securities in the capital of the Company, to motivate and reward the performance of the Directors and employees of any company in the Group in achieving specified performance milestones within a specified period. The Board will ensure that the performance milestones attached to the securities issued pursuant to the PRP are aligned with the successful growth of the Company’s business activities. The principal terms of the PRP are summarised below:

(i) Subject to any necessary approvals from Shareholders or as required by law or by the Listing Rules, the Board may, from time to time, at its absolute discretion and only where any Director and full time or part time employee of the Group, who is determined by the Board to be eligible to participate in the PRP ( Eligible Participants ), grant Performance Rights to Eligible Participants with effect from the date determined by the Board, upon the terms set out in the PRP and upon such additional terms and exercise conditions as the Board determines.
(ii) Each Performance Right will be exercisable as an entitlement to one Share provided that certain performance milestones are met. If the performance milestones are not met, the Performance Rights will lapse and the Eligible Participant will have no entitlement Shares.
(iii) Subject to the Company being listed on the ASX, the Company will, within 7 days of the date of the Shares being issued, make application to the ASX for Quotation of the Shares.
(iv) Shares resulting from the exercise of the Performance Rights shall, from the date of issue, rank equally with all other Shares on issue.

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(v) Performance Rights shall not be quoted on the ASX.
(vi) Performance Rights shall not be transferred or assigned by an Eligible Participant except with the prior written consent of the Board.
(vii) Subject to any right an Eligible Participant may have as a holder of Shares, holders of Performance Rights may only participate in new issues of securities to holders of Shares if the vesting requirements have been satisfied and the relevant Shares have been issued prior to the record date for determining entitlements to the issue. The Company shall give notice to holders of Performance Rights (as required under the Listing Rules) of any new issues of securities prior to the record date for determining entitlements to the issue.
(viii) If Shares are issued pro rata to Shareholders generally by way of bonus issue (other than an issue in lieu of dividends or by way of dividend reinvestment) involving capitalisation of reserves or distributable profits, the number of Shares over which each Performance Right is exercisable may be increased by the number of Shares which the participant would have received if the Performance Right had been exercised before the record date for the bonus issue.
(ix) In the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of an Eligible Participant are to be changed in a manner consistent with the Corporations Act and the Listing Rules at the time of the reorganisation.
(x) The holder of Performance Rights does not have any entitlement to vote at a general meeting of Shareholders.
(xi) If during the life of a Performance Right or while any Restricted Shares (as that term is defined in the PRP) are held by a Participant:
(A) a court orders a meeting to be held in relation to a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;
(B) any person becomes bound or entitled to acquire shares in the Company under:
- section 414 of the Corporations Act; or
- Chapter 6A of the Corporations Act;
(C) the Company merges with another company;
(D) the Board concludes that there has been a change in control of the Company;
(E) a selective capital reduction is announced in respect of the Company which would result in a person who previously had voting power of less than 50% in the Company obtaining voting power of more than 50%;
(F) in any other case, a person obtains voting power in the Company which the Board (which for the avoidance of doubt will comprise those directors immediately prior to the person acquiring that voting power) determines, acting in good faith and in accordance with their

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fiduciary duties, is sufficient to control the composition of the Board;

(G) the Company passes a resolution for voluntary winding up; or
(H) an order is made for the compulsory winding up of the Company,
the Board may, in its absolute discretion, resolve that:
(I) any outstanding Performance Rights will be exercisable; or
(J) any restrictions on trading imposed under the PRP cease at a time and in a manner determined by the Board.
(xii) Where the relevant person in respect of an Eligible Participant ceases to be an employee of a member of the Group or a Director due to that person’s death, permanent disability, retirement or redundancy (each a Ceasing Event ) the Board may determine that the Eligible Participant or their legal personal representative may exercise those Performance Rights which have become exercisable, which have not already been exercised and have not lapsed by the first to occur of the relevant lapsing date or six months after the Ceasing Event.
(xiii) Where, in respect of an Eligible Participant, the relevant person ceases to be an employee of a member of the Group or a Director, for any reason, prior to the date on which Performance Rights become exercisable the Board may, in its absolute discretion, determine that some or all of the Performance Rights held by that Eligible Participant do not lapse and may be exercised by the Eligible Participant, if otherwise permitted under the Rules, within such additional time as is determined by the Board following the Ceasing Event. Performance Rights which have not been exercised by the end of that period lapse immediately and all rights in respect of these Performance Rights will thereupon be lost.

13.2 Interests of Directors

Other than as set out in this Prospectus, no Director or proposed Director holds, or has held within the two years preceding lodgement of this Prospectus with the ASIC, any interest in:

the formation or promotion of the Company; or
any property acquired or proposed to be acquired by the Company in connection with:
its formation or promotion; or
the Offer; and
the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to a Director or a proposed Director:

as an inducement to become, or to qualify as, a Director; or
for services provided in connection with:
the formation or promotion of the Company; or
the Offer.

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13.3 Interests of Experts and Advisers

Other than as set out below or elsewhere in this Prospectus, no:

person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus; or
promoter of the Company,

holds, or has held within the two (2) years preceding lodgement of this Prospectus with ASIC, any interest in:

the formation or promotion of the Company; or
any property acquired or proposed to be acquired by the Company in connection with:

o its formation or promotion; or

o the Offer; and

the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of these persons for services provided in connection with:

the formation or promotion of the Company; or
the Offer.

Malcolm Castle has acted as the Independent Geologist and has prepared an Independent Geologist’s Report which has been included in Section 9. The Company estimates it will pay Mr Castle approximately $10,000 plus GST for these services. During the 24 months preceding lodgement of this Prospectus with ASIC, Mr Castle has not received any other fees from the Company.

HLB Mann Judd has acted as auditor and Investigating Accountant and has prepared an Investigating Accountant’s Report which has been included in Section 10. The Company estimates it will pay HLB Mann Judd approximately $7,000 plus GST for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with ASIC, HLB Mann Judd has received other fees of $5,000 plus GST from the Company for audit services.

Cardinals Lawyers and Consultants has acted as the solicitors to the Company in relation to the Offer, has been involved in due diligence enquiries on legal matters and has prepared the Solicitors’ Report on Tenements in Section 11. The Company estimates it will pay Cardinals Lawyers and Consultants approximately $28,000 plus GST and disbursements for these services. Subsequently, fees will be charged in accordance with normal charge out rates.

Athena Corporate Pty Ltd has acted as compliance manager in relation to the Offer and has been involved in the due diligence enquiries and preparation of this Prospectus. The Company estimates it will pay Athena Corporate Pty Ltd approximately $15,000 plus GST for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with ASIC, Athena Corporate Pty Ltd has received other fees of approximately $20,000 plus GST from the Company for accounting and Company secretarial services.

Security Transfer Registrars Pty Ltd has been appointed as the Company’s Share registry and will be paid for these services on normal commercial terms.

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13.4 Consents

Each of the parties referred to in this Section:

(a) does not make the Offer;
(b) has not authorised or caused the issue of this Prospectus;
(c) does not make, or purport to make, any statement in this Prospectus other than those referred to in this Section; and
(d) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any statement included in or omitted from this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section 13.4.

Malcolm Castle has given his written consent to being named as the Independent Geologist to the Company in this Prospectus and to the inclusion of the Independent Geologist’s Report in Section 9 in the form and context in which the report is included. Malcolm Castle has not withdrawn his consent prior to the lodgement of this Prospectus with ASIC.

HLB Mann Judd has given its written consent to being named as Auditor and Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 10 in the form and context in which the report is included. HLB Mann Judd has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

Cardinals Lawyers and Consultants has given its written consent to being named as solicitors to the Company in this Prospectus and to the inclusion of the Solicitors’ Report on Tenements in Section 11 in the form and context in which the report is included. Cardinals Lawyers and Consultants has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Security Transfer Registrars Pty Ltd has given its written consent to being named the Share registry of the Company in this Prospectus and has not withdrawn its consent prior to lodgement of this Prospectus with ASIC.

13.5 Expenses of the Offer

The total expenses of the Offer are estimated to be approximately between $273,068 and $304,671 at a minimum and full subscription and are expected to be applied towards the items set out in the table below:

Item of Expenditure	Amount ($)	Amount ($)
	Minimum Subscription	Full Subscription
	$2.5m	$3.0m
ASIC fees	2,137	2,137
ASX fees	30,209	31,812
Brokers’ commissions*	150,000	180,000
Investigating Accountant’s Report, Legal Expenses, Independent Geologist’s Report	60,000	60,000
Printing	16,000	16,000
Miscellaneous	14,722	14,722
TOTAL	273,068	304,671

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Broker commissions will only be paid on applications made through a licensed securities dealer or Australian financial services licensee and accepted by the Company (refer to Section 5.10 for further information). The amount calculated is based on 100% of applications being made in this manner. For those applications made directly to or accepted by the Company no broker commissions will be payable and the expenses of the Offer will be reduced and additional funds will be put towards new project evaluation.

13.6 Continuous Disclosure Obligations

Following the admission of the Company to the official list of the ASX, the Company will be a “disclosing entity” (as defined in section 111AC of the Corporations Act) and, as such, will be subject to regular reporting and disclosure obligations. Specifically, like all ASX listed companies, the Company will be required to continuously disclose to the market any information it has which a reasonable person would expect to have a material effect on the price or the value of the Securities.

Price sensitive information will be publicly released through the ASX before it is disclosed to Shareholders and market participants. Distribution of other information to Shareholders and market participants will also be managed through disclosure to the ASX. In addition, the Company will post this information on its website after the ASX confirms an announcement has been made, with the aim of making the information readily accessible to the widest audience.

13.7 Litigation

As at the date of this Prospectus, the Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

13.8 Financial Forecasts and Cashflow Projections

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and consider that they do not have a reasonable basis to forecast future earnings for the Company. Given the speculative nature of mineral exploration and the early stage of the Company’s projects there are significant uncertainties associated with the future revenue earning potential of the Company and the timing and sustainability of the cash flow. On the basis of these inherent uncertainties, the Directors believe that reliable forecasts cannot be prepared and accordingly have not included forecasts in this Prospectus.

13.9 Privacy Statement

If you complete an Application Form you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, and, if your application is successful, to service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

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

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the Share Registry whose contact details are set out in the Corporate Directory in Section 1.

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

You should note that if you do not provide the information required on the Application Form the Company may not be able to accept or process your application.

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13.10 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will apply to participate in the Clearing House Electronic Sub-register System ( CHESS ). CHESS is operated by ASX Settlement Pty Ltd, a wholly owned subsidiary of the ASX, in accordance with the Listing Rules and the ASX Settlement Operating Rules. On admission to CHESS, the Company will operate an electronic issuer-sponsored sub-register and an electronic CHESS sub-register. The two sub-registers together will make up the Company’s principal register of Securities.

Under CHESS the Company will not issue Share certificates to investors. Instead holders of Securities will receive a statement of their holdings in the Company. If an investor is broker sponsored, ASX Settlement Pty Ltd will send a CHESS statement. This statement will also advise investors of either their Holder Identification Number (HIN) in the case of a holding on the CHESS sub-register or a Security Holder Reference Number (SRN) in the case of a holding on the issuer sponsored sub-register.

A statement will be routinely sent to Security holders at the end of any calendar month during which their holding changes. A Security holder may request a statement at any other time however a charge may be incurred for additional statements.

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14. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings, unless the context requires otherwise:

$ means an Australian dollar.

Application Form means the application form attached to and forming part of this Prospectus.

ASIC means the Australian Securities & Investments Commission.

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

ASX Settlement Operating Rules means the operating rules of the settlement facility operated by ASX Settlement Pty Ltd (ACN 008 504 532), as amended from time to time.

Board means the board of Directors.

Bounty Project means prospecting licence 36/1730, applied for and granted under the Mining Act, details of which are set out in the Independent Geologist’s Report in Section 9 and the Solicitors’ Report on Tenements in Section 11.

Business Day means a day other than a Saturday or a Sunday when trading banks are ordinarily open for business in Perth, Western Australia.

Chairman means the chairman of the Board.

Closing Date means the closing date of the Offer as set out in the indicative timetable in the Investment Overview in Section 4.5 (subject to the Company reserving the right to extend the Closing Date or close the Offer early).

Company or Merah means Merah Resources Limited (ACN 146 035 127).

Constitution means the constitution of the Company.

Corporate Governance Principles and Recommendations means the Corporate Governance Principles and Recommendations (Second Edition) as published by the ASX Corporate Governance Council.

Corporations Act means the Corporations Act 2001 (Cth) and any regulations promulgated under it.

Directors means the directors of the Company from time to time.

Employee Share Option Plan means the Merah employee share option plan adopted by the Company, a summary of which is contained in Section 13.1(d).

Full Subscription is defined in Section 5.5.

Group means the Company and its related bodies corporate (as that term is defined in the Corporations Act) (if any).

JORC Code means the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (2004) prepared by the Joint Ore Reserves Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and Minerals Council of Australia.

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Listing Date means the date upon which the Company is admitted to the official list of the ASX.

Listing Rules means the Listing Rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the official list of the ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

Managing Director means the managing director of the Company.

McAuley Project means prospecting licence 36/1742, applied for and granted under the Mining Act, details of which are set out in the Independent Geologist’s Report in Section 9 and the Solicitors’ Report on Tenements in Section 11.

Minimum Subscription is defined in Section 5.6.

Mining Act means the Mining Act 1978 (WA) and any regulations made under it, each as amended from time to time.

Mt Adamson Project means exploration licence 36/675, applied for and granted under the Mining Act, details of which are set out in the Independent Geologist’s Report in Section 9 and the Solicitors’ Report on Tenements in Section 11.

Murchison Agreement means the option, farm in and joint venture agreement dated 12 September 2011 between the Company and Murchison Resources Pty Ltd in respect of the Bounty Project and the McAuley Project, a summary of which is contained in Section 12.3.

Offer means the invitation to apply for Shares under this Prospectus.

Option means an option to acquire a Share on the terms and conditions set out in Section 13.1(b).

Performance Right means a performance right issued pursuant to the Performance Rights Plan and includes Performance Rights A, Performance Rights B and Performance Rights B, the terms of which are set out in Section 13.1(c).

Performance Rights Plan or PRP means the Merah performance rights plan, a summary of which

is contained in Section 13.1(e).

Projects or the Lawlers Project means the Mt Adamson Project, the Bounty Project and the McAuley Project collectively, and Project means any one of them as the context requires.

Prospectus means this prospectus dated 2 February 2012.

Quotation means official quotation by the ASX in accordance with the Listing Rules.

Sale Agreement means the tenement sale agreement dated 20 May 2011 between the Company, United Mining Resources Pty Ltd and Rio Resources Pty Ltd in respect of the Mt Adamson Project, a summary of which is contained in Section 12.2.

Section means a section of this Prospectus.

Securities means Shares, Options and Performance Rights, or any one of them, as the context requires.

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

Share Registry means Security Transfer Registrars Pty Ltd ACN 008 894 488.

Shareholder means a holder of a Share.

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Tenements means the tenements comprising the Bounty Project, the McAuley Project and the Mt Adamson Project, details of which are set out in the Solicitors’ Report on Tenements in Section 11, or any one of them, as the context requires.

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

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15. DIRECTORS’ STATEMENT AND AUTHORISATION

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

Each Director has consented to the lodgement of this Prospectus with ASIC in accordance with section 720 of the Corporations Act and has not withdrawn that consent.

Dated the second day of February 2012.

==> picture [226 x 96] intentionally omitted <==

_______ David Deloub Managing Director For and on behalf of Merah Resources Limited

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AI assistant

PAINCHEK LTD — Capital/Financing Update 2012

65534_rns_2012-02-13_e40bd46a-1b70-4731-b8b9-e253128bb521.pdf

MERAH RESOURCES LTD ACN 146 035 127

PROSPECTUS

IMPORTANT INFORMATION

TABLE OF CONTENTS

1.

2.

3.

4.

5.

6.

7.

1. CORPORATE DIRECTORY

Directors

Solicitors

Company Secretary

Auditor

Registered Office

Investigating Accountant

Contact Details

Independent Geologist

Proposed ASX Code

Share Registry*

2. IMPORTANT NOTICE

2.1 Applicants Outside Australia

2.2 Electronic Prospectus

2.3 Website

2.4 Exposure Period

2.6 Definitions

2.7 Forward Looking Statements

3. CHAIRMAN’S LETTER

4. INVESTMENT OVERVIEW

Merah is an exploration company and you should consider that an investment in the Company is speculative.

4.1

The Company

4.2

Business Model

4.3 Key Investment Highlights

4.4 Key Risks

Option to Acquire the Bounty and McAuley Projects

Contractual and Joint Venture Risk

Exploration Risks

Access Risk - Native Title and Aboriginal Heritage

Reliance on Key Personnel

Limited Operating History

Additional Requirements for Capital

Exploration Costs

Title Risk

Additional Projects and Acquisitions

Liquidity Risk

4.5 The Offer

Indicative timetable

4.6 Purpose of the Offer

4.7 Use of Funds

4.8 Pro Forma Capital Structure

4.9

Substantial Shareholders

4.10 Restricted Securities

4.11 Financial Information

4.12 Taxation

4.13

Dividend Policy

4.14 Directors and Key Personnel

Mr Richard Homsany

Non-Executive Chairman

David Deloub

Managing Director

Mr Ian Prentice

Non-Executive Director

B.SC (Geol) Grad. Dip. FINSIA, M.AusIMM

Ms Suzie Foreman

Non-Executive Director

B.Bus (Hons), CA

4.15 Corporate Governance

4.16 Disclosure of Directors’ Interests

Options

Performance Rights

4.17 Agreements with Directors or other Related Parties

PAINCHEK LTD Capital/Financing Update 2012