PAINCHEK LTD — Capital/Financing Update 2014

Aug 10, 2014

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11 August 2014

DIRECTORS

David Deloub Executive Chairman

Ian Prentice Non-Executive Director

Jason Eveleigh

Non-Executive Director Suzie Foreman Company Secretary

SHARE INFORMATION

ASX Code: MEH

Issued Capital: 33.1M Fully Paid Shares 7.0M Unlisted Options 2.0M Performance Rights

CONTACT INFORMATION

Registered Office: Level 2, 79 Hay St Subiaco, WA 6008 T: +61 89200 4436 F: +61 89200 4437 www.merahresources.com.au

ORESEARCH FINALISES ACQUISITION OF SOUTH AUSTRALIAN COPPER PROJECT

Highlights:

• Oresearch Limited (Oresearch) has entered into an Option/Joint Venture Agreement (Agreement) with Teck Australia Pty Ltd (Teck).

• The Agreement provides Oresearch the option to earn a 100% interest in the Coober Pedy Project. This arrangement is subject to a Back-in Right and Net Smelter Royalty reserved to Teck as detailed in this announcement.

• By acquiring Oresearch, Merah will acquire an interest in the rights of Oresearch to earn up to a 100% interest in the Coober Pedy Project.

• The Coober Pedy Project is currently 100% owned by Teck and comprises three exploration licenses totalling 900 km[2] , located at the north-western end of the highly endowed Proterozoic Olympic Iron Oxide Copper-Gold (IOCG) Province in the Gawler Craton, South Australia.

• Teck has defined a strong, discrete magnetic and gravity anomaly, the Cyclops prospect, which is an untested ‘walk-up’ IOCG drill target in close proximity to the Karari Shear Zone.

• The anomalies have been forward modeled and are consistent with a magnetite-rich body of approximately 800m x 250m, starting at a depth of about 150-200m.

• On completion of the acquisition of Oresearch, Merah intends to finalize an initial 1,200m drill program to test the anomaly.

• The Agreement to earn a 100% interest in the Coober Pedy Project will be in addition to the option to earn up to an 80% interest in the Fyre Lake, Canadian Yukon Property (previously announced on 18 July 2014).

Merah Resources Limited ACN: 146 035 127

On the 18[th] July 2014, Merah Resources Limited ( Merah or the Company ) (ASX: MEH) announced that it had entered into a binding terms sheet ( Oresearch Agreement ) with Oresearch Limited ( Oresearch ), an unlisted Australian domiciled company, and its shareholders, to acquire the legal and beneficial ownership of 100% of the issued capital of Oresearch.

With the signing of the Agreement between Oresearch and Teck, in addition to acquiring the exclusive right and option to earn up to an 80% interest in the Fyre Lake Property, upon settlement of the acquisition of Oresearch Merah will now also acquire an interest in the Coober Pedy Project.

Details of the Fyre Lake Property were previously provided in the Merah ASX announcement of 18[th] July 2014. Details of the Coober Pedy Option/Joint Venture Agreement are now provided below.

COOBER PEDY PROJECT

The Coober Pedy Project is 100% owned by Teck Australia Pty Ltd and comprises three exploration licenses, located at the north-western end of the highly endowed Proterozoic Olympic Iron Oxide Copper-Gold (IOCG) Province in the Gawler Craton, South Australia ( Coober Pedy Project or Project ).

Project Geology

The project area covers crustal-scale structures, the Karari Shear Zone and Horse Camp Fault, and has similar geology and high amplitude magnetic and gravity features to the adjoining Mt Woods Domain that hosts the Prominent Hill IOCG deposit.

Exploration History

Teck has defined a strong, discrete magnetic and gravity anomaly, the Cyclops prospect, which is an untested ‘walk-up’ IOCG drill target in close proximity to the Karari Shear Zone. The anomalies have been forward modelled and are consistent with a magnetite-rich body of approximately 800m x 250m, starting at a depth of about 150200m.

Elsewhere within the project tenure, residual magnetic/gravity anomalies require further modelling, prioritization, and drill testing where warranted.

Exploration Plan

Under the Agreement with Teck, Oresearch will complete an initial drilling program of at least 1,200m to test the geophysical anomalies defined at the Cyclops prospect, with subsequent exploration to be determined based on the results of this initial drilling program.

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PROJECT LOCATION MAP

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COMMERCIAL TERMS

Oresearch will earn up to a 100% interest (subject to a 2% Net Smelter Royalty retained by Teck) in the Coober Pedy tenements currently owned by Teck.

The Agreement is subject to the consent of the Minister for Minerals & Energy Resources of South Australia under section 83 of the South Australian Mining Act.

Oresearch is required to complete a minimum of $500,000 of exploration expenditure (including 1,200m of which 600m will be core drilling at 200m per hole) on the Coober Pedy Project by 31 July 2015 ( Initial Program ) .

Following completion of the Initial Program and delivery of the results and expenditure information to Teck, Oresearch can elect to either terminate the Agreement or proceed with a sole, exclusive and irrevocable right and option ( Option ) to earn a 100% interest in the Coober Pedy Project. Oresearch may exercise its Option by incurring a further $3,500,000 of exploration expenditure on the Project by 31 July 2018 and maintaining the minimum statutory expenditure on each tenement comprising the Project and maintaining those tenements in good standing.

Upon Oresearch incurring the further $3,500,000 of exploration expenditure on the Project, Oresearch shall deliver the results and expenditure information to Teck ( Option Expenditure Notice ). Oresearch will be deemed to have exercised the Option and earned a 100% interest in the Coober Pedy Project on the date that it delivers the Option Expenditure Notice to Teck.

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Teck’s right to conduct exploration on the relevant properties is subject to a number of agreements including, a Deed of Access, an ALMAC Area Indigenous Land Use Agreement (ILUA) and a Native Title Mining and Land Access Agreement for Exploration. As these agreements are not assignable, Oresearch will be required to make separate application for these permits/licences.

Exploration Licence 4891 and 4892 are within the Woomera Prohibited area and will be required to make application to the Australian Department of Defence for access and permission to undertake exploration activities in this area.

If a new ILUA is not executed by November 1 2014, the period for Oresearch to complete the Initial Program and all subsequent dates will be extended by the time period taken to execute the new ILUA.

If the new ILUA is not executed by August 1, 2015, either party may terminate the Agreement.

Teck will have the a right to earn back a 65% interest in the Coober Pedy Project at any time during the Option or prior to Oresearch incurring $7,500,000 in expenditures on the Project ( Back-in Right ). The Back-in Right will expire 60 days after Oresearch delivers a statement certifying that it has incurred $7,500,000 in expenditures on the Project to Teck. If Teck elects to exercise its Back-in Right, it can earn back a 65% interest in the Project by either:

• a) making a cash payment of $10,000,000 to Oresearch within 60 days of exercise of its Back-in Right or;

• b) sole funding the next $20,000,000 of expenditures on the Project within the period of time equivalent to the period of time from the date of the Agreement to the date of exercise of the Back-in Right.

Teck shall have exercised its Back-in Right on the earlier of the date that it has completed the above expenditure requirements and delivered notice thereof to Oresearch.

A joint venture between Teck and Oresearch ( Joint Venture ) will automatically be formed on the date Teck exercises its Back-in Right ( Participation Date ) with the parties’ initial Joint Venture interests being 65% Teck and 35% Oresearch . From the formation of the Joint Venture each party will be liable for its pro-rata share of costs and liabilities in accordance with its Joint Venture interest.

Teck also reserves a 2% Net Smelter Royalty ( NSR ) on the Project following Oresearch earning a 100% interest in the Coober Pedy Project. However, if the Back-in Right is exercised, the Teck’s right to the NSR will be extinguished.

ORESEARCH AGREEMENT

As set out in the Company’s ASX announcement on 18 July 2014, under the terms of the Oresearch Agreement, in the event that Oresearch enters into a binding agreement to acquire rights to a group of exploration licences located in South Australia on terms satisfactory to Merah in its sole discretion, Merah will issue to the Oresearch shareholders (or their nominees) pro rata to their existing proportion holding, that number of fully paid

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ordinary shares in the capital of Merah, when multiplied by the issue price of $0.03, will be equal to $66,666 ( Additional Consideration Shares ).

The entry into the Agreement by Oresearch satisfies the condition for the issue of the Additional Consideration Shares. Accordingly, Merah will issue the Additional Consideration Shares to the Oresearch shareholders on the settlement date of the Oresearch acquisition.

The Oresearch Agreement remains conditional on the satisfaction of a number of conditions precedent, including, but not limited to, Merah obtaining any necessary shareholder approvals.

Yours faithfully,

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David Deloub

Managing Director

About Merah Resources Limited

Merah was incorporated on 27[th] August 2010 for the purpose of identifying, evaluating and acquiring resource projects and assets in Australia and/or overseas that are considered by the Board to add potential shareholder value.

The Company intends to continue to identify, evaluate and if warranted, acquire additional resource projects and assets both in Australia and overseas.

These projects may be acquired by way of direct project acquisition, joint venture, farm-in or equity investment.

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