PERSEUS MINING LIMITED — Capital/Financing Update 2004

Jul 29, 2004

PERSEUS MINING LIMITED ACN 106 808 986

PROSPECTUS

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For an Offer of 17,500,000 Shares at an issue price of 20 cents each and 8,750,000 free attaching Options to raise \$3,500,000

This document is important and requires your immediate attention. It should be read in its entirety. Due to the nature of the Company's activities, the Securities offered by this Prospectus should be considered speculative. Accordingly, you should consult your professional advisers in considering whether to subscribe for the Securities.

Offer: This Prospectus seeks to raise \$3,500,000 by offering for subscription 17,500,000 Shares at an issue price of 20 cents each, payable in full on application, and 8,750,000 free attaching Options.

Board of Directors

Reginald Norman Gillard Mark Andrew Calderwood Colin John Carson Alexander Becker Rhett Boudewyn Brans Neil Christian Fearis

Company Secretary Susmit Mohanlal Shah

Registered and Principal Office 30 Ledgar Road Balcatta, Western Australia, Australia 6021 Telephone: (61 8) 9240 6344 Facsimile: (61 8) 9240 2406 Website: www.perseusmining.com Email: info@perseusmining.com

Share Registry Advanced Share Registry Services Level 7, 200 Adelaide Terrace Perth, Western Australia, Australia 6000 Telephone: (61 8) 9221 7288 Facsimile: (61 8) 9221 7869

Non-executive Chairman Managing Director Executive Director Non-executive Director Non-executive Director Non-executive Director

Legal Advisers Cullen Babington Hughes 229 Stirling Highway Claremont, Western Australia, Australia 6010

Independent Consulting Geologist RSG Global Pty Ltd 1162 Hay Street West Perth, Western Australia, Australia 6005

Broker to the Issue Montagu Stockbrokers Ptv Ltd Level 2, 37 St George's Terrace Perth, Western Australia, Australia 6000 Telephone: (61 8) 9225 2800 Facsimile: (61 8) 9325 4311

Investigating Accountants and Auditors HLB Mann Judd 15 Rheola Street West Perth, Western Australia, Australia 6005

CONTENTS

OPRESSIS

	Letter from the Chairman
	Investment Highlights
	Investment Summary
	Details of the Offer
	Directors
5	Perseus and its Projects		12
6.	Investment Considerations and Risk Factors		20
	Independent Consulting Geologist's Report
8.	Solicitor's Report
9.	Independent Accountant's Report		95
10.	Additional Information		104
11	Directors' Consents		109
12.	Glossary		110

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IMPORTANT NOTES

This Prospectus is dated 14 July 2004 and was lodged with the ASIC on 14 July 2004. Neither the ASIC nor ASX takes any responsibility for the contents of this Prospectus. No Securities will be allotted or issued on the basis of this Prospectus later than 13 months after the date of the Prospectus.

Application will be made to ASX within 7 days after the date of issue of this Prospectus for admission of the Company to the Official List of the ASX and for Official Ouotation of the Securities the subject of this Prospectus.

No person has been authorised to provide information or to make any representation in connection with the Offer which is not contained in this Prospectus. Any such information or representation may not be relied upon as having been authorised by the Company.

This Prospectus does not constitute an offer in any place in which. or to any person to whom, it would not be lawful to make such an offer. The distribution of this Prospectus in iursidictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. Applications can only be made by completing the appropriate Application Form in full, in accordance with instructions contained on the reverse of the $f_{\Omega}$

Certain words and terms used in this Prospectus have defined meanings, which appear in Section 12.

Exposure Period

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. Potential investors should be aware that this examination may result in the identification of deficiencies in the Prospectus and, in that droumstance, any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations $\Delta$ ct

Applications for Securities under this Prospectus will not be accepted by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge Applications during the Exposure Period.

Web Site - Electronic Prospectus

A copy of this Prospetus can be downloaded from www.perseusmining.com, the Company's website. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access the Prospectus from within Australia.

The Corporations Act prohibits any person passing on to another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

How to use this Prospectus

This Prospectus provides information for investors who wish to invest in Perseus. It should be read in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of Perseus and the rights and liabilities attaching to the Securities. The Securities offered under this Prospectus should be considered speculative. The Company is at an early stage of its development, accordingly there are significant risks associated with investing in the Company. Potential investors should take these factors into account and consider whether this is an appropriate investment in view of their personal circumstances. If in doubt investors should seek advice from their professional advisor before deciding whether to invest. There is no quarantee that the Securities offered under this Prospectus will make a return on capital investment, that dividends will be paid on the Shares, or that there will be any increase in the value of the Securities in the future.

Investors who wish to subscribe for Securities should complete an Application Form included in this Prospectus. Shareholders in Afminex Limited (ACN 065 212 679) have priority rights to subscribe for Securities and they should use the specially marked application form included in this Prospectus. Further information on those priority rights is set out in Section 3.6.

Forward-Looking Statements

Certain statements in this Prospectus constitute forward-looking statements. Investors should note that those statements are inherently subject to uncertainties in that they may be affected by a variety of known and unknown risks, variables and other factors which could cause actual values or results, performance or achievements to differ materially from anticipated results, implied values, performance or achievements expressed, projected or implied in the statements. These risks, variables and factors indude, but are not limited to, the matters described in Section 6. Perseus gives no assurance that the anticipated results, performance or achievements expressed or implied in those forward-looking statements will be achieved.

Altered Vendian shale - Kyidoo Project

D Persetts

I FTTER FROM THE CHAIRMAN

Dear Investor

It is with great pleasure that I have the opportunity to introduce vou to Perseus Mining Limited ("Perseus").

Perseus has a number of prospects in West Africa and Central Asia with the potential to bost multi-million ounce nold deposits The Tengrela project in Côte d'Ivoire. Grumesa in Ghana and Savovardy and Kyldoo in the Kyrgyz Republic all have identified drill targets. These projects all lie within major gold belts which host world dass gold deposits and form the foundation of a highly attractive tenement package, justifying the substantial exploration programs proposed in this Prospectus.

The projects held by Perseus have been extensively explored over a number of years, resulting in the delineation of numerous targets that will be tested by Perseus and its joint venture partners. In most cases, Perseus owns the projects outright or .
has substantial majority equity, so gold discoveries can have a significant positive impact on shareholder value...

Papara prospect area - Tengrela Project

Afminex, which has co-ordinated the acquisition of the projects by Perseus, held the Tengrela and Grumesa tenements for over five years. Exploration undertaken in that time has identified significant gold resources at Grumesa and extensive targets at Tengrela. Infill resource drilling is planned for Grumesa commencing in late August and at Tengrela an exploration program consisting mainly of RAB drilling and pitting of significant anomalies is scheduled to commence at the beginning of the field season in early October. A four hole diamond drilling program to test two major structural targets has already commenced at Kyldoo and a more extensive drilling program is scheduled to commence shortly at Savoyardy.

The Grumesa project has the potential to provide a cash flow in the short to medium term and, after the planned infill resource drilling, the Company will be investigating the possibility of mining and toll treating the higher grade material at a nearby processing facility.

Your board of directors, management and staff of Perseus have extensive experience in West Africa and the Kyrgyz Republic, thus avoiding the time delays and associated costs normally encountered when establishing operations in a new jurisdiction.

Afminex shareholders have a priority right to subscribe for the Securities offered by this Prospectus in recognition of the fact that Afminex has provided the major assets and co-ordinated the float process.

I commend this investment to Afminex shareholders and other investors alike as a first dass exposure to gold projects with the potential to host major discoveries.

Yours sincerely

Reg Gillard Chairman

14 July 2004

1. INVESTMENT HIGHLIGHTS

Perseus has acquired interests in several significant gold projects located in West Africa and Central Asia. The key projects, Grumesa (Ghana), Tengrela (Côte d'Ivoire), and Savoyardy (Kyrgyz Republic) were selected using the following strict criteria:

• significant previous exploration induding geochemistry, geophysics, trenching or drilling;
• identified style of mineralisation consistent with "World Class" (over 100 tonnes) gold deposits occurring along strike or within the same aold belt:
• developed robust exploration model; and
• drill ready.

Other projects such as Kyldoo, Maly Naryn, Talas, Tolubay (all in the Kyrqyz Republic), which are all prospective in their own right, have been acquired at nominal cost to Perseus.

Tengrela, Grumesa and Savoyardy are considered to have relatively low exploration risk. Grumesa already has identified gold resources, which are located within trucking distance of an existing processing plant. Tengrela has nine significant gold in soil anomalies in a region where there is a high conversion rate of anomalies to gold deposits. Adit sampling on the Savoyardy project in Soviet times identified gold mineralisation averaging 6.5g/t over widths of up to 19m. Location of these projects in three different countries is considered a positive factor as it mitigates sovereign risk.

Perseus will not be affected by the "learning curve" often associated with offshore exploration and development. The Directors and senior management have substantial experience in exploration in West Africa and Central Asia.

In the case of Savovardy and Kyldoo, farming out the projects has reduced the funding risk and accelerated exploration. Drilling commenced at Kyldoo in late June and, at Savoyardy, a diamond drilling program is scheduled to commence shortly. Perseus is still able to retain significant equity and the right to contribute to funding once the exploration risk has been demonstrably reduced.

Perseus is well placed to acquire additional quality gold projects in West Africa and the emerging Central Asian region.

Persetr

Note: In this Prospectus, "Côte d'Ivoire" and "Ivory Coast" have been used interchangeably and both refer to the République de Côte d'Ivoire in West Africa.

OPerseus

PERSEUS GROUP STRUCTURE

2. INVESTMENT SUMMARY

This section is intended as an introduction and not as a summary of the Prospectus. It should be read in conjunction with the remainder of the Prospectus.

Perseir

2.1 Perseus's Objectives and Strategies

Perseus's objective is to maximise shareholder value through the discovery of significant gold deposits in West Africa and Central Asia.

Perseus believes it will enhance the probability of achieving its corporate objective by:

• a) focusing most of its exploration effort on:
• i) projects that have been subject to significant previous exploration, induding geochemistry, geophysics, trenching or drilling;
• ii) projects with an identified style of mineralisation consistent with "World Class" (over 100 tonnes) gold deposits occurring along strike or within the same gold belt; and
• iii) projects that have robust exploration models and are "drill ready";
• b) utilising advanced exploration models together with proven analytical and geophysical techniques to identify drill targets;
• $\zeta$ drill testing at least ten target zones within 12 months of listing;
• d) continuing to identify new gold opportunites for acquisition or joint venture based on the above selection criteria;
• motivating its exploration team by maintaining a flat management structure and establishing success based incentives such as an $e)$ employee share option scheme; and
• maintaining a high social awareness and applying high environmental and safety standards during all exploration and mining activities. $f$

2.2 Purpose of the Offer and Planned Expenditure

The purpose of the Offer is to raise funds to:

• explore the Company's mineral interests as described in this Prospectus; and
• meet the ongoing administration costs of the Company.

Pursuant to the Offer, Perseus is seeking to raise \$3.5 million. In addition, at 31 May 2004, it had net working capital of approximately \$400,000. It is proposed that these funds will be utilised as follows.

oration and evaluation	1.123.000	1,260,000
Administration and corporate cos	360,000	390,000
Issue costs	350,000		350.000
Tenement acquisition - Grumesa-Awisam	205,000
Plant and equipment	the contract of the contract of 147.000
	2,185,000	1.650.000	3,835,000

Actual expenditure incurred on the projects will depend on the results achieved. The Directors are satisfied that upon completion of the Offer, Perseus will have sufficient funds to meet its stated objectives.

If oversubscriptions are accepted (see Section 3.1) and the Company raises a total of \$5 million, the additional funds will be expended primarily on exploration programs; refer to Section 5.1 for further details.

2.3 Capital Structure

The capital structure of the Company at completion of the Offer will be as follows:

	No of	- No of	Percentage	Notes
	Shares	Options	of total Shares
Subscriber shares on registration of the Company				Vendor
Consideration issued for acquisition of
mineral assets and promoter shares	33,433,445		5722%
Seed capital	7500.000	3,750,000	12.83%	23
Director, consultant and employee options.		2,940,000	NΑ	1.3
Broker to the Issue Options		4,000,000	ΝA	13
Shares and Options being offered by this Prospectus	17,500,000	8,750,000	29.95%
Total assuming Offer is fully subscribed	58,433,450	19.440.000	100%
Oversubscriptions	7,500,000	3.750.000
Total issued Securities (including oversubscriptions)	65,933,450	23,190,000

Notes:

• 1. These Shares and Options will be subject to ASX escrow conditions for a period of two years.
• 1. 3,750,000 Shares and 1,875,000 Options will be subject to ASX escrow conditions for a period of between one and two years.
• 1. Options are exercisable at 20 cents each on or before 31 March 2009. Refer to details of Option terms in Section 10.2.

The Directors have resolved to issue, subject to shareholder approval, 2,000,000 Options in aggregate to the non-executive directors (refer to Section 10.6 for further details) and 800,000 Options to a former director after the Company's listing on ASX. These additional Options will be issued on the same terms and conditions as the 2,940,000 Options referred to in the above table.

3. DETAILS OF THE OFFER

3.1 The Offer

This Prospectus constitutes an offer by Perseus of 17,500,000 Shares and 8,750,000 free attaching Options at an issue price of 20 cents per Share payable in full on application to raise \$3.5 million. The Options will be issued on the basis of one Option for every two Shares subscribed for.

The Shares offered by this Prospectus will be issued as fully paid shares and, when issued, will rank equally in all respects with the existing Shares.

The Directors reserve the right to accept oversubscriptions for up to an additional \$1.5 million by issuing an additional 7,500,000 Shares and 3,750,000 free attaching Options.

3.2 Indicative Timetable

e en 1955 en 1957 (1956), la actual de la contrada de la contrada de la contrada de la contrada de la contrada La contrada de la contrada de la contrada de la contrada de la contrada de la contrada de la contrada de la co Prospectus lodged with ASIC	14 July 2004
Opening date	21 July 2004
Record date for determining Afminex Limited shareholders' priority rights	n maarana dahaan dahaan dahaan dahaan dahaan dahaan dahaan dahaan dahaan dahaan dahaan dahaa dahaa dahaa daha 21 July 2004
Closing Date for applications	16 August 2004
Expected dispatch of holding statements	24 August 2004
Expected date of commencement of trading of Securities on ASX	30 August 2004

These dates are indicative only. The Company reserves the right to extend the Closing Date without prior notice. The date the Securities will commence trading on ASX may vary with any change in the Closing Date.

3.3 Minimum Subscription

The minimum subscription to the Issue is \$3,500,000. If the minimum subscription is not reached within 4 months after the date of this Prospectus, the Directors will not allot any Securities and the Company will within 7 days thereafter repay all application monies received, without interest.

Subject to the minimum subscription being reached, the issue of Securities will proceed as soon as possible after the Closing Date and after ASX permission for Official Quotation of the Securities is received.

3.4 Applications and Payment for Securities

An Application constitutes an offer by you to subscribe for Securities on the terms and conditions of the Offer. An Application can only be made on an Application Form contained in this Prospectus. Applications must be for a minimum of 10,000 Shares and 5,000 attaching Options (representing a minimum investment of \$2,000) and thereafter in multiples of 5,000 Shares.

If you decide to apply for Securities, you must:

• (i) complete the enclosed Application Form. Afminex shareholders should complete the specially marked Application Form to take advantage of their priority right to apply for Securities; refer to Section 3.6;
• (ii) pay the application monies by cheque drawn on and payable at any Australian bank in Australian currency. Your cheque should be crossed "Not Negotiable" and be made payable to Perseus Mining Limited. Cash will not be accepted and receipts will not be issued: and
• (iii) lodge the completed Application form and your cheque by posting or delivering it to the Company in accordance with the instructions contained in the Application Form.

Until the issue of Securities to applicants all application monies will be held by the Company in trust in a bank account established solely for that purpose. Any interest that accrues on that account will be retained by the Company.

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3.5 Stock Exchange Listing

Within seven days from the date of this Prospectus, the Company will apply to ASX to be admitted to the Official List and for Official Quotation of:

• a) the Securities issued under this Prospectus: and
• $\mathbf{b}$ all existing Securities, other than Options issued to Directors and employees. As referred to elsewhere in the Prospectus, some of the existing Securities will be subject to ASX escrow provisions.

ASX takes no responsibility for the contents of the Prospectus. The fact that ASX may admit the Company to the Official List is not to be taken as an indication by ASX of the merits of the Company or the Securities offered under this Prospectus.

If permission is not granted for the Company to be admitted to the Official List before the end of three months after the date of the issue of the Prospectus, then all application monies received pursuant to this Prospectus will be refunded to applicants in full, without interest.

3.6 Afminex Limited Shareholders

Through a demerger process. Afminex transferred its significant gold projects to Perseus, in order to focus on its oil interests. This process will enable appropriate financial and management resources to be dedicated to the development of and value adding to these gold assets.

Afminex received 20,200,000 Shares as part consideration for these gold assets and it subscribed for a further 3,585,130 promoter Shares. All of these Shares will be subject to ASX's escrow provisions for a period of two years from the date of the Company's listing on ASX.

Afminex shareholders as at 21 July 2004 have a priority right to apply for Securities under this Prospectus. 10,000,000 Shares and 5,000,000 free attaching Options have been set aside as a priority pool for Afminex shareholders and will be allocated initially so as to give each applicant 10,000 Shares (with 5,000 free attaching Options) and thereafter on an equitable basis. If Applications from Afminex shareholders exceed 10,000,000 Shares in total, the Directors reserve the right to scale back Applications that have been made for more than 10,000 Shares and otherwise deal with the Applications in their absolute discretion.

Afminex shareholders should use the specially marked Application Form which accompanies this Prospectus.

3.7 Non-Resident Investors

This Prospectus does not constitute an Offer or invitation in any place in which, or to any person to whom, it would not be lawful to make such an Offer or extend such an invitation.

No action has been taken to register or qualify the Securities or the Offer or otherwise to permit a public offering of the Securities in any jurisdiction outside Australia.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons outside Australia who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities law.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of Securities pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

3.8 CHESS

The Company will be admitted to participate in the Clearing House Electronic Subregister System ("CHESS") in accordance with the Listing Rules and the SCH Business Rules. On admission to CHESS, the Company will operate an electronic issuer-sponsored subregister and an electronic CHESS subregister. The two subregisters together will make up the Company's principal register of securities.

The Company will not issue certificates to investors. Instead, investors who elect to hold their securities on the issuer-sponsored subregister will be provided with a holding statement (similar to a bank account statement) by the Company which sets out the number of securities allotted to each investor under this Prospectus. For investors who elect to hold their securities on the CHESS subregister, the Company will, on allotment, issue an advice to investors that sets out the number of securities allotted to the investor under this Prospectus and at the end of the month following the allotment, CHESS (acting on behalf of the Company) will provide investors with a holding statement that confirms the number of securities allotted.

A holding statement (whether issued by CHESS or the Company) will also provide details of an investor's Holder Identification Number (in the case of a holding on the CHESS subregister) or Shareholder Reference Number (in the case of a holding on the issuer sponsored subregister). Following distribution of these initial holding statements to all investors, a holding statement will only routinely be provided to an investor at the end of any subsequent month during which the investor's holding of securities changes.

3.9 Restricted Securities

Securities issued to Directors, promoters, vendors and seed capital investors prior to the Offer will be subject to the restricted securities provisions of the Listing Rules. Accordingly, a proportion of such Securities will be required to be held in escrow for a period of time, as determined by ASX. Indicative escrow periods are noted in Section 2.3.

3.10 Broker to the Issue

The Company has entered into an agreement with Montagu Stockbrokers Pty Ltd ("Montagu") for it to act as Broker to the Issue. Montagu will assist the Company in completing the Issue by procuring subscribers on a best endeavours basis. It will be paid a management fee of \$35,000. In addition, the Company will issue 4,000,000 Options to Montagu or its nominees and pay Montagu a 5% fee on applications upon which a broker stamp has been affixed as further remuneration for procuring Applications. The terms and conditions of the Options will be the same as the terms and conditions of the Options to be issued pursuant to this Prospectus except that the Options issued to Montagu or its nominees will be subject to ASX escrow conditions for two years.

3.11 Risk Factors

An investment in Perseus should be considered speculative given the nature of its existing assets and their stage of development. A discussion of the risk factors, which should be considered before investing in Perseus, is contained in Section 6. If you do not understand this Prospectus, you should consult your stockbroker, accountant or other professional adviser without delay.

3.12 Privacv

If you apply for Securities you will be asked to provide personal information to Perseus (and to Perseus's share registry) which collects, holds and uses that personal information in order to assess your application, service your needs as an investor, provide facilities and services that you may request and carry out appropriate administration.

By submitting an Application Form, each applicant agrees that the Company may use the information in the Application Form for the purposes set out in this privacy disclusore statement and may disclose it for those purposes to the share registry, the Company's agents, contractors and third party service providers (induding mailing houses), ASX, ASIC and other regulatory authorities.

4. DIRECTORS

Reginald Gillard (Non-executive Chairman) BA FCPA FAICD JP

After practising as an accountant for over 31 years, during which time he formed and developed a number of service related businesses, Reg Gillard now focuses on corporate management, corporate governance and the evaluation and acquisition of businesses. He is non-executive chairman of Afminex Ltd, Lafayette Mining Ltd, Moto Goldmines Ltd, and Aspen Group Ltd.

Mark Calderwood (Managing Director) AusiMM

Mark Calderwood is a member of the Australasian Institute of Mining and Metallurgy and has 20 years' experience in exploring for and mining gold. He is experienced in resource/reserve estimation and feasibility studies. He is managing Afminex's West African operations, having eight years experience and a network of contacts in that region. These West African operations induded the gold assets which have now been acquired by Perseus from Afminex. Mr Calderwood is also intimately familiar with the Grumesa and Tengrela projects. Upon completion of this Offer, Mr Calderwood will assist Afminex in the orderly disposal of its remaining African mineral assets but his focus will be on Perseus's West African and Central Asian gold interests.

Colin Carson (Executive Director) CPA FCIS FCIM

Colin Carson has been involved as a director and company secretary of a number of Australian public companies since the early 1980s and is an executive director of Afminex, responsible for the operations of that company, joint venture negotiations and corporate and legal matters. He is experienced with taxation and mining laws in Ghana, Côte d'Ivoire and the Kyrgyz Republic. Mr Carson will be a part-time executive director of Perseus.

Dr Alex Becker (Non-Executive Director) PhD (Geology)

Alexander Becker has a PhD in structural geology and tectonophysics. He has over 20 years' experience in mineral and petroleum exploration, tectonics, stratigraphy and regional geology in Central Asia, particularly the Kyrgyz Republic. Dr Becker spends a significant portion of his time in the Kyrqyz Republic. Dr Becker is a non-executive director of Afminex and will act as a consultant to Perseus.

Rhett Brans (Non-Executive Director) MIEAust CPEng

Mr Brans qualified as a civil engineer at what is now known as Monash University in 1974 and completed an advanced management program at the University of Melbourne in 1991.

Mr Brans has operated a consultancy providing project management services to the mining industry for the past 12 years. In this capacity, he has managed the development of gold and base metal projects. His experience extends across the full range from mining feasibility studies through to commissioning operations. Mr Brans has 30 years experience in the design and construction of mineral treatment facilities.

Neil Fearis (Non-Executive Director) LLB (Hons)

Neil Fearis has 27 years' experience as a commercial lawyer in the UK and Australia. For 13 years he was a partner in one of Australia's largest national law firms. In 1999 together with others he formed Fearis Salter Power Shervington, a niche firm specialising in the provision of corporate and commercial legal advice to listed public companies. Mr Fearis practices principally in the area of mergers and acquisitions, takeovers, public flotations, and other forms of capital raising.

He is a member of several professional bodies associated with commerce and the law, including the Law Council of Australia, the International Bar Association, the Securities Institute of Australia, and the Australian Institute of Company Directors. Mr Fearis was formerly WA Chairman of the Australian-British Chamber of Commerce and is currently Chairman of Kresta Holdings Limited and a non-executive director of Camarvon Petroleum Limited and Capital Growth Corp Limited.

5. PERSEUS AND ITS PROJECTS

5.1 Background - Project Selection

Perseus was incorporated in October 2003 to acquire, explore and develop several significant gold projects located in West Africa and Central Asia. The West African projects have been acquired from Afminex (which has tumed its focus to oil exploration), whilst the Central Asian (Krygyz Republic) properties have been assembled by Perseus with assistance from Afminex and its Kyrgyz minerals industry contacts.

Perseus has targeted regions which:

• have numerous "World Class" (over 100 tonnes) gold deposits;
• have significant existing gold production and growing reserve inventories;
• remain amongst the least explored by modern techingues; and
• include countries in which the Directors and Perseus staff have substantial experience, so Perseus will not be affected by the "learning curve" usually associated with offshore exploration and development.

The regions of focus are:

Ghana - The Ashanti gold belt in Ghana has for more than a decade been one of the world's most prolific in terms of gold discoveries and production growth. Recent successes by Newmont Mining Corporation, Golden Star Resources Ltd, St Jude Resources Ltd and Adamus Resources Ltd have shown that the new wave of discoveries is on prospects originally identified in the mid 1990s. In a short period, Newmont's assets in Ghana have become a major focus for that company with over 11 million ounces of reserves identified in two projects.

Morila - Tongon (Mali-Côte d'Ivoire) – New discoveries and mine developments in Mali have contributed to the rapid increase in that country's importance as a gold producer. The discoveries in Mali and northern Côte d'Ivoire are significant for the relative ease with which the deposits have been discovered, their large size, grade, and mine profitablifty. The discovery and early production successes at Morila sparked the current Malian gold exploration rush.

Tien Shan (Uzbekistan, Kyrgyz Republic, Northern China) - In terms of global gold endowment, the Tien Shan gold belt is considered second only to the Witwatersrand of South Africa. It contains many World Class deposits induding the world's largest open pittable gold deposit, the over 120 million ounce Muruntau gold mine (refer to the footnote below). Production from the Tien Shan gold belt has increased since the break up of the former Soviet Union in 1991 and is likely to continue its upward trend given the number of Western companies now exploring within this region.

The Company's key projects, Tengrela, Grumesa and Savoyardy, were selected using an additional strict set of criteria:

• significant previous exploration induding geochemistry, geophysics, drilling, adits or trenching;
• identified geological setting and style of mineralisation consistent with large gold deposits occurring along strike or within the same gold helt^.
• developed robust exploration model; and
• drill readv.

Perseus considers the fact that the three key projects are located in different countries as a positive factor because it mitigates sovereign risk. Other projects such as Kyldoo, Maly Naryn, Talas and Tolubay, are all prospective in their own right.

Two of the Kyrgyz projects, Kyldoo and Savoyardy, have been joint ventured to Canadian listed entity, Lalo Ventures Ltd ("Lalo"), which has the right to earn up to a 70% interest in each via a combination of significant exploration expenditure and share allotments to original vendors (not including Perseus). Lalo has substantial exploration targets and considers the joint venture projects to be highly prospective for significant gold discoveries.

In this Section, deposit sizes are referred to in terms of their total endowment, which includes recorded past production and remaining resources.

Perseus plans to undertake exploration on the projects not joint ventured to Lalo, as well as, in the future, contribute to expenditure on Kyldoo and Savoyardy. Exploration expenditure will be dominated by drilling.

		Minimum Subscription - \$3.5 million raising			Oversubscription - \$5 million raising
Proiec	Year 1 \$'000	Year -5'000-	Total 2 years \$'000	'Year 1 \$'000	Year: \$'000	Total 2 vears \$'000
Tengrela	585	689	1.274	626	1.250	1.876
Grumesa	413	410	823	468	648	1.116
Maly Naryn	50	77	122	-97	263	360.
Talas	46	43	89	86	GЯ	184
ľolubay	29	46	75	38	152	190
Total	1.123	1.260	2.383	1.315	2,411	3.726

Note - Actual expenditure will be subject to exploration results

5.2 Tenarela - Côte d'Ivoire (Perseus - 90% interest)

The Tengrela South and East permits ("Tengrela project") covering an area of approximately 885km² are located in Côte d'Ivoire on the border with Mali, 30km SSW from the Syama gold mine (6.5Moz) along the Syama shear. The project lies 150km SSE of the Morila gold mine (7Moz) and 65km WNW of Tongon deposit (2.8Moz). Perseus has a 90% interest in the Tengrela project, with 10% held by a local partner. At the mining stage, the Govemment of Côte d'Ivoire has a statutory right to a 10% interest and the arrangement with the local partner stipulates that the Government's 10% will be adjusted against Perseus's interest only, leaving Perseus with an 80% interest at that stage. Perseus is the joint venture manager and free carries the local partner with respect to expenditure. However, Perseus can recover expenditure incurred by it on behalf of the local partner out of surplus cash from production.

The Tengrela project is located within the Syama - Boundiali greenstone belt of the Middle Proterozoic Birimian Shield.

There has been extensive systematic exploration on the Tengrela project, including airborne geophysics and 21,000 geochemical samples taken over the original licence area of 1,900km². This exploration led to the delineation of a series of significant soil anomalies over a strike of 75km, mostly along the Syama shear, within the current Tengrela project area of 885km².

The nine main soil anomalies on the Tengrela permits are ranked as "regionally significant", being comparable to other significant soil anomalies in the district (Syama group, Tabakoroni-Finkolo, Tioro, Morila) and are regarded as high priority targets for follow-up exploration. The total area of these anomalies is over 40km² and will require selective or staged follow-up. Significantly, most coherent soil anomalies in the Morila-Tongon region tested to date have resulted in the discovery of insitu mineralisation, often of economic significance.

In anticipation of early success at Tengrela, the Company plans to spend over \$1.27 million in exploration over the next two years, mostly on drilling, with the objective of delineating significant gold resources.

Initial exploration will include pitting on a 200m by 40m pattern over the principal anomalies to ascertain the existence and style of saprolitic mineralisation. Concurrently, 10,000m (250 holes) of RAB drilling will be undertaken to test more significant mineralisation encountered during pitting. A budget of 3,000m of RC drilling has also been allowed for the first year, to test the more significant targets generated from pitting and RAB drilling.

References to "Moz" mean million ounces of gold

A further 6,000m of RAB drilling and 4,000m of RC drilling is budgeted for the second year to follow up the more significant targets identified in Year 1 and to commence resource definition drilling of mineralisation with economic potential. Limited diamond drilling (500m) is budgeted to assist in defining lithological and structural controls within any identified resource areas.

These exploration programs will be extended if the Company raises additional funds through the oversubscriptions offered under this Prospectus.

	Tengrela Project- Significant soil anomalies
Name	Size (sa km)	Type	Apparent Significance
Sissingue	99	Linear	Regionally significant
Kofre	2.8	Bulls eye	Regionally significant
Kanakono	45	Bulls eye x 2	Regionally significant
Podio NE	1.0	Bulls eve	Regionally significant
: Katara	1.0	Bulls eve	Regionally significant
Zinguinasso	$2.2\degree$	Linear $x \bar{3}$	Regionally significant
Papara	19.6	Patchy	Regionally significant
Zanikan	3.0	Bulls eve	Regionally significant
Logbog	1.8	Linear	Regionally significant
Gbeni North	1.3	Linear	Followup required
Gbeni South	0.1	Bulls eve	Followup required
Kakologo	3.2	Linear	Followup required
Mbasso	22	Linear	Followup required

5.3 Grumesa - Ghana (Perseus - 80% interest)

The Grumesa-Awisam project (39km²) in Ghana, which is held by Perseus in joint venture with Ashanti Goldfields Company Limited ("AGC"), is located within the highly prospective Ashanti gold belt of south west Ghana, some 30km south east of the over 66Moz Obuasi gold mine. The project is situated within the Tarkwaian Series sediments that unconformably overlie the marginally older Proterozoic Birimian System of the West African Shield

Perseus has an 80% interest in the project and has agreed to purchase AGC's 20% interest for US\$140,000, subject to completing its listing on ASX by no later than 31 August 2004 and obtaining regulatory approvals. The Ghana Government has a right to a 10% interest in the project vehicle at the mining stage.

Prior exploration includes over 19,000 of RC and diamond drilling, in addition to trenching, auger drilling, magnetics, RAB drilling and soil sampling.

The Grumesa-Awisam project includes inferred resources estimated to total 15.1Mt at 0.9g/t Au (450,000oz). Extensive low-grade mineralisation, believed to be of epigenetic affinity, is hosted by conglomerates comprising a steeply plunging antiform within the Tarkwaian Series.

A detailed review of the higher-grade southern portion of the deposit, previously drilled on sections spaced at 100m, has identified an area for infill resource drilling with the goal of delineating approximately 1Mt of open pit millfeed at an average grade of 2g/t Au, with a low strip ratio, that could be mined and toll treated at an operating cost of less than US\$250 per ounce of gold recovered. Delineation and development of such a deposit depends upon results from the infill drilling being at least comparable with previous results and the successful negotiation of a toll treatment agreement with AGC for use of its Sansu plant at Obuasi.

The mineral paragenesis behind this massive and intriguing mineralised system at Kayeya deposit on the Grumesa project has not yet been fully resolved, and the deposit may ultimately prove to represent the 'footprint' of a substantially larger mineralised body.

Exploration planned for the first year includes 3,000m of infill RC and limited diamond drilling, with the objective of defining and upgrading resources associated with and proximal to the higher grade portion of the Kayeya deposit. The Year 1 program also indudes additional metallurgical testwork and the completion of an environmental impact statement with a view to making an environmental permit application if warranted by exploration and prefeasibility results. It is proposed that pit optimisation studies, mine design, scheduling and financial modeling associated with a pre-feasibility study will be completed in Year 1.

The Year 2 program will involve deeper (100m to 300m) diamond drilling to assess the depth potential of specific targets and confirm the geological model as it evolves. Pre-feasibility studies on the higher-grade portion of the Kayeya deposit may progress to a full feasibility study in Year 2. If the spot gold price is over US\$375 per ounce, the feasibility of establishing a large heap leaching operation will be investigated.

Hole.	North	East	Dip	Azm	Hole Depth	Intersection	Width	Grade
	(m)	(m)			(m)	(m)	(m)	$(q/t \text{ Au})$
KRC003	89301	60191	-50	89.5	50.	$0 - 15$	15	0.7
						23-50(1)	27	2.0
KRC004	89300	60218	$-50$	90	60	$0 - 46$	46	2.2
KRC006	89306	60265	-50	270	70	24-57	33	3.0
KRC009	89300	60332	-50	270	60	15-60(1)	45	15
KRC064	89596	60379	$-50$	90	21	$8 - 21^{(1)}$	13	3.3
KRC078	89397	60141	-50	90	70	$3 - 70^{(1)}$	67	1.2
KRC087	89299	60315	-60	270		19-23		2.1
						36-58	22	15
KRC088	89398	60130	-50	89	90	$8 - 90^{(1)}$	82	$10^{1}$
KRC099	90000	60171	-60	90	50	24-50(1)	26	1.8
KRC112	90794	60183	-50	270	100	$-4-20$	16	3.0
						23-28	S	15
						34-40	6	16
						46-48	2	2.6
KRC113	90795	60239	-50	270	78	$5 - 76$	71	0.9
KRC122	89502	60094	-50	92	70	$1 - 70^{(1)}$	69	0.9
KRC125	89599	60171	-50	91	32	$0 - 32^{(1)}$	32	$12 \,$
					ind.	18-27	9	2.7
KRB126	90792	60091	-50	89	48	$2 - 27$	25	2.6
					inci.	18-26	-8	55
						36-48(1)	12	0.9

Note: (1) Ended in mineralization

5.4 Savoyardy - Kyrgyz Republic (Perseus 100% - farm-in partner earning up to 70%)

The Savovardy exploration license (124km²) is situated in the south of the Kyrgyz Republic on the border with China. The property has recently been joint ventured to Lalo Ventures Ltd ("Lalo"), which has the right to earn up to a 70% interest in the Savovardy project via a combination of exploration expenditures and share allotments to the original stakeholders in the project.

The Eastern zone of gold mineralisation is concentrated along the axis of a fault bound antiform extending for 12km. The source of gold is believed to be carbonaceous shale ("black shale"), which forms the core of the antiform. Gold was discovered during exploration for antimony, primarily in fracture zones, and significant potentially stratabound gold mineralisation was later located in adits which partially tested only about 500 metres of strike of the Eastern zone. The remaining 11.5 km of the zone has not been tested by drilling or adits.

The main adit intercepted two converging zones of mineralisation referred to as Zones 4 and 10, with high grade gold mineralisation developed along a strike of 180 metres and over widths of up to 19 metres.

Resources were estimated by the Soviets in 1974 under the Russian resource dassification system, however these cannot currently be classified or reported under the Australasian Code for Reporting of Mineral Resources and Ore Reserves ("JORC Code").

	Significant gold mineralisation from adit sampling, Zones 4 and 10 Zone #4	$\sim$ Zone #10 in segundak pada sebagai dan bagi dalam ke		Convergent Zone
:Width (m)	Au (a/t)	Width (m)	Au $(q/t)$	Width (m)	Au $(q/t)$
	13.5				29.5
6.0			69		279
		19 A			クミュ
	10.R	iΔñ		-----
	20.		12 ち		12 C
	68			FRf

The Karagatty, Karagatty II, Tata, Pogranichnoe and Lesnoe prospects are trench gold anomalies along structural strike from Savoyardy and are of similar tenor at surface. These prospects, which occur along faults within the sandstone unit, have the potential to host significant gold mineralisation within the more prospective underlying carbonaceous shale. They have not been tested at depth, and are priority targets for Laio's proposed diamond drilling program.

A series of more diffuse anomalies [induding a substantial inverse polarisation (IP) target) developed along the north western contact of the Devonian sandstone inlier have received substantially less exploration attention. Perseus considers that this thrust contact is equally prospective for gold mineralisation. This is supported by documented exploration across the Chinese border, where mineralisation along the contact has been traced for 3,200m and includes one 750m long zone averaging 1.98g/t Au over an average width of about 30m.

The Savoyardy project is owned by Perseus's wholly owned subsidiary, JSC Savoyardy. Lalo must spend a minimum of US\$250,000 on exploring Savoyardy by 31 October 2004 and can earn a 70% interest in the Savoyardy project by incurring cumulative expenditure of US\$1 million by 31 December 2004, US\$3 million by 31 December 2005 and US\$6 million by 31 December 2006. Lalo is also required to issue shares to the value of US\$1.5 million to parties previously associated with the project to acquire the 70% interest. If Lalo successfully earns a 70% interest in the Savoyardy project, Lalo and Perseus thereafter will fund further expenditure in proportion to their respective interests or dilute their interests in accordance with an agreed formula.

5.5 Kyldoo - Kyrayz Republic (Perseus earning up to 80%)

The Kyldoo exploration licence covering 149km² is located in central Kyrgyz Republic. Perseus has the right to earn up to an 80% equity in the project. It can achieve an initial 50% interest by completing a four-hole diamond drilling program costing approximately US\$80,000 by July 2004. Perseus may then elect to increase its equity to 80% by spending a further US\$400,000 by 30 September 2005, including US\$75,000 by 30 November 2004. Lalo may acquire up to a 70% interest in the project by farming into Perseus's joint venture rights, in which case Perseus would retain an interest of between 10% and 30% after Lalo has spent US\$3,480,000, depending upon the level of contributions by JSC Kentor, the original joint venture partner. If JSC Kentor elects to convert its equity to a royalty of between 1.5% and 2.5% on gold produced (depending on the gold price), Perseus acquires JSC Kentor's equity in exchange for delivering the royalty. Lalo is required to spend a minimum of US\$80,000 on the project by 15 July 2004 and can eam a 70% interest in the Kyldoo project by incurring cumulative expenditure of US\$480,000 by 31 December 2004, US\$1,480,000 by 31 December 2005 and US\$3,480,000 by 31 December 2006. Lalo is also required to issue shares to the value of US\$1.5 million to Afminex and its partners in the project to acquire the 70% interest.

After extensive mapping and surface sampling a geological model, based on the Kumtor deposit (17Moz) further to the east within the Kyrgyz Republic, has been developed for exploration. Key elements that contribute to the prospectivity of the Kyldoo Project indude the occurrence of folded carbonaceous shale horizons of likely Upper Proterozoic age situated within the cores of anticlinal domes. The age and geological setting of Kumtor and Kyldoo are essentially identical, both being hosted by the distinctive Middle Tien Shan carbonaceous shale horizon.

The anticlinal and domal structures at Kyldoo can be traced intermittently along strike for at least 20km within the Vendian stratigraphy. Detailed prospecting has outlined anomalous gold mineralisation over an open 2km strike length within the Tropinny and Medovy Antidines.

Several factors that indicate good potential for the development of economic gold mineralisation have been noted in the Tropinny area. The carbonaceous shale horizon has been preserved, immediately beneath the Upper Tillite unit exposed along the anticlinal axis. The tillite exhibits fracturing proximal to the fold axis, which along with the associated alteration, increases in intensity towards the hinge zone. Fracturing and alteration within the tillite is up to 130m wide, associated with an increase in the development of pyrite and arsenopyrite.

The initial exploration program, consisting of four diamond holes into target zones associated with both the Tropinny and Medovy Antidines as part of the initial joint venture commitment, commenced in June. The holes, ranging in depth from 50m to 150m, are considered sufficient to test the geological model.

Diamond drill core - Kyldoo Project

Mineralised diamond core - Kyldoo Project

5.6 Maly Naryn - Kyrgyz Republic (Perseus 100%)

The 383km² Maly Naryn licence is located in the Jetim range in the central eastern portion of the Kyrgyz Republic, 30km NE of the city of Naryn and 130km west of the Kumtor gold mine.

The Maly Naryn project is located within an under-explored belt of highly prospective Vendian carbonaceous shales of the Middle Tien Shan domain. The distribution of extensive placer gold and auriferous rock chip samples strongly suggests that primary gold mineralisation is derived from carbonaceous shales within the eastem portion of the project area and have been remobilized during large scale alteration associated with the Permo-Carboniferous intrusives.

Perseus proposes to initially focus on areas where previous rock chip sampling returned significant results and areas that have been mined on a small scale and have never been sampled.

The Directors believe there is potential for the delineation of mineralisation of economic significance within the first year of exploration at Mały Naryn.

		Maly Naryn Project - Significant Soviet Rock Chip and Channel Sample Results
Sample Number	Width (m)	Rock Description	Au . ppm	Ag. ppm	Cu. %
3136	0.6	sandstone (pyrite, arsenopyrite)	42.0	16	< 0.01
3148	10	siltstone (pyrite, arsenopyrite)	64	5.2	< 0.01
3154	10	quartz (pyrite)	4.0	14	< 0.01
3150	0.8	vein quartz (arsenopyrite)	71.0	70	< 0.01
3151a	0.6	sandstone (pyrite, arsenopyrite)	2.8	2.6	< 0.01
6409-1-5	4.0	alteration breccia (sulphide)	0.8	2.1	< 0.01
3151a	10	limestone (iron oxide)	2.8	2.6	< 0.01
6408-2	chip.	gossan	2.9	14	< 0.01
6408-1	chip.	aossan	2.8	1.1	< 0.01
220-223	4.0	skam limestone (pyrite, chalcopyrite, molybdenite)	0.8	2.0	0.23
261-264	4.0	skam limestone (pyrite chalcopyrite, arsenopyrite)	0.9	5.2	0.47
N128	3.0	limestone (pyrite, chalcopyrite)	2.8	12.0	1.76
1465-1	10	skam in sandstone (pyrite, chalcopyrite)	$2.2\,$	6.8	1.45
1466-1	1.0	skam in sandstone (pyrite, chalcopyrite)	10.4	42.4	5.40
1477-3	0.4	quartz (iron oxide)	76	6.2	< 0.01

5.7 Talas Project (Perseus 100%)

The 2,270km² Talas project is located approximately 250km west of Bishkek on the northern slopes of the Talas Range.

The geology of the Talas project area is dominated by mid to upper Proterozoic rocks of the Northern Tien Shan fold belt.

Past regional exploration and artisanal mining activity identified stream sediment gold anomalies over a strike length of 30km. Limited followup of the anomalies resulted in the discovery of extensive low grade insitu gold mineralisation within quartz veins and associated with metasomatic alteration within large regional thrusts. The gold is variously associated with copper, minor tungsten, arsenic, zinc, molybdenum and antimony. Further east, gold mineralisation is associated with quartz-carbonate veining containing lead and silver. Reported gold grades within channel sampling typically ranged from 0.04 to 0.5g/t, with peaks up to 12g/t Au.

The 30km zone of gold occurrences within the Talas project has not been subjected to focused exploration. Perseus plans to concentrate exploration for gold in areas of greater metasomatic alteration and favourable structural settings.

5.8 Tolubay (Perseus 100%)

The 46.4km² Tolubay project is situated in the foothills of Alay range in Chauway valley, 110km from Osh city in central western Kyrgyz Republic. A significant quantity of mercury was previously mined in the area up to 1991.

Limited sampling for gold resulted in the discovery of strataform gold mineralisation within carbonaceous shale between limestone and jasperoid. The thickness of the strataform mineralisation is up to 40m comprising soft carbon-rich day shale with abundant arsenic mineralization and anthraxolite. Gold grades appear to increase from east to west and at depth. In one area underground sampling in the late 1990s returned 39m @ 0.7g/t Au at level 1366m RL, 28m @ 1.0g/t Au at level 1330m RL and diamond drill hole PDC-1-98 intercepted 20m @ 1.9g/t Au at about 1300m RL. Adit sampling returned anomalous intercepts including 26m @ 4.45g/t Au.

Perseus will undertake exploration over the prospective horizon, which extends for 4.5km, to locate areas of elevated gold mineralisation.

6. INVESTMENT CONSIDERATIONS AND RISK FACTORS

6.1 Investment Considerations

Investors wishing to subscribe for the Securities offered by this Prospectus should read the Prospectus in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of the Company and the rights attaching to the Securities offered by this Prospectus.

This Section is not intended to be an exhaustive list of the considerations to be taken into account by an investor or of the risk factors to which the Company is exposed. Some of these risks can be mitigated by the use of safeguards and appropriate systems and actions, but many are outside the control of the Company and cannot be mitigated.

There are numerous risks associated with investing in any form of business and with investing in the share market in particular. All investors should consult their professional advisers if they are in doubt as to any aspect of this Prospectus or any matters relating to an investment in the Company.

6.2 General Risk Factors

The Securities offered by this Prospectus are speculative because of the nature of the business and assets of the Company. They carry no quarantee with respect to return of capital, payment of dividends or the price at which they will trade on the ASX.

There is also a range of specific risks associated with Perseus's business and its involvement in the exploration and mining industry. These risk factors are largely beyond the control of Perseus and its directors because of the nature of the Company's proposed business.

Perseus is a mineral exploration company and an investment in it carries with it risks normally associated with investment in a business of this type.

Future viability and profitability of Perseus will be dependent on a number of factors, induding but not limited to the specific risks referred to below.

6.3 Mining and Exploration Risks

The primary business of Perseus is exploration for, and commercial development of mineral ore bodies, which is subject to the significant risks inherent in these activities. Its operations are still in the exploratory phase. The current and future operations of the Company may be affected by a range of factors, including:

• start-up risks
• $\cdot$ geological conditions
• limitations on activities due to seasonal weather patterns
• alterations to joint venture programs and budgets
• unanticipated operational and technical difficulties encountered in trenching, drilling and production activities
• mechanical failure of operating plant and equipment
• adverse weather conditions, industrial and environmental accidents, industrial disputes and other force majeure events
• unavailability of drilling equipment
• unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment and labour $\ddot{\phantom{0}}$
• prevention of access by reason of political unrest, outbreak of hostilities, inability to obtain consents or approvals
• contracting risks from third parties providing essential services.

No assurance can be given that exploration will be successful.

The ultimate success and financial viability of the Company depends on the discovery and delineation of economically recoverable ore reserves, design and construction of efficient mining and processing facilities, and competent operational and managerial performance. There is no assurance that exploration and development of the mineral interests described in this Prospectus (which are all at an exploration stage), or any other projects that may be acquired by the Company in the future, will result in the discovery of an economic deposit. Even if an apparently viable deposit is identified, there is no quarantee that it can be profitably exploited.

It is also dependent on the Company's ability to obtain necessary titles and governmental and other regulatory approvals.

Potential investors should be aware that the resource targets discussed in this Prospectus are expressions of judgment based on knowledge, experience and industry practice. Targets that were valid at the time they were discussed may be upgraded or downgraded as additional exploration and development activities are undertaken and new information becomes available.

6.4 Changes in Government Policy

Adverse changes in the government policies or legislation of the governments of Côte d'Ivoire, Ghana and the Krygyz Republic affecting taxation, profit repatriation, royalties, mining and exploration activities may affect the operations of the Company.

6.5 Reliance on Key Personnel

In formulating its exploration and mining programs, the Company relies to a significant extent upon the experience and expertise of key personnel. Although the key personnel have a considerable amount of experience and have previously been successful in their pursuits, there is no guarantee or assurance that they will be successful in pursuing the objectives described in this Prospectus.

6.6 Metal Market Conditions

The Company's ability to benefit from any future mining operations will depend on market factors, some of which may be beyond its control. The world market for gold and other minerals is subject to many variables and may fluctuate markedly.

6.7 General Economic Conditions

Factors such as inflation, currency fluctuations, interest rates, supply and demand, industrial disruption, government policy and legislation, have an impact on operating costs, commodity prices, the parameters in which the Company may operate and stock market prices. Factors that may be beyond the control of the Company include:

• general economic conditions in Australia and the countries in which the Company operates and, in particular, inflation rates, interest rates, exchange rates, commodity supply and demand factors;
• financial failure or default by a participant in any of the joint ventures or other contractual relationship to which the Company is, or may become, a party:
• insolvency or other managerial failure by any of the contractors used by the Company in its activities; and
• industrial and landholder disputes.

These as well as other conditions can affect the Company's future possible revenues and price of its securities.

6.8 Environmental Risks

The Company's projects are subject to various laws and regulations regarding environmental matters and the discharge of hazardous waste and materials. The Company may be required to comply from time to time with environmental management issues that arise from factors beyond its control.

6.9 Tenement Title Risks

Mineral licences are granted subject to various conditions including, but not limited to, expenditure conditions. Failure to comply with these conditions may expose the licences to forfeiture.

All of the licences in which the Company has an interest will be subject to application for renewal from time to time. The renewal of the term of each licence is subject to the applicable legislation in that jurisdiction. If a licence is not renewed for any reason, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that licence. However, the Directors are not aware of any reason why renewal of the term of any licences will not be granted.

Investors should refer to the Solicitor's Report in Section 8 for a report on the tenements in general and legal title in particular.

6.10 Capital Requirement Risk

Investors should be aware that the Company will have no substantive income in the foreseeable future and must continue to fund its exploration programs through equity capital. The continued viability of the Company is therefore dependent upon:

• the success of this Issue:
• the success of the Company's efforts to attract other participants, who will undertake or share all or part of the exploration expenditure; and
• the successful raising of funds in the future.

6.11 Share Market Risk

Applicants should be aware that there are risks associated with any stock market investment. It is important to recognise that share prices and dividends may fall as well as rise, and the price of the Securities may trade below or above the issue price. Share prices for exploration companies are generally subject to wide fluctuations, which may be unrelated to the operating performance of the relevant company. Such fluctuations may adversely affect the market price of the Securities.

6.12 Limited Operational History

While the Company's management has significant experience and has previously carried out or been exposed to exploration and production activities while employed by other companies, the Company was not incorporated until late 2003. Accordingly the Company has limited historical, financial or operating history. The Company's ability to achieve its objectives depends on the ability of the Directors and staff to implement current plans and to respond to any unforeseen circumstances that require changes to those plans.

6.13 Sovereign Risk

Whilst the Directors believe that the Company's sovereign risk is mitigated as a result of conducting operations in different jurisdictions, it should be noted that certain areas in which the Company plans to operate have been the subject of recent civil unrest, for example. Côte d'Ivoire (Tengrela project) has been the subject of civil unrest. Civil and political unrest and an outbreak of hostilities remains a major risk in northern Côte d'Ivoire that could affect the Company's access to its project area and subsequent exploration and development. As at the date of this Prospectus, United Natons forces have been deployed to maintain peace in Côte d'Ivoire with the consent of the government and rebel forces. Both Côte d'Ivoire and the Krygyz Republic have been and remain the subject of official travel warnings issued by the Australian government.

IMPORTANT DISCLAIMER AND RECOMMENDATION

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of Perseus and the value of the Securities offered under this Prospectus.

Therefore, the Securities to be issued pursuant to this Prospectus carry no quarantee with respect to the payment of dividends, returns of capital or their market value.

Potential investors should consider that an investment in Perseus is speculative and should consult their professional advisers before deciding whether to apply for Securities.

7. INDEPENDENT CONSULTING GEOLOGIST'S REPORT

23rd June 2004

The Directors Perseus Mining Limited 30 Ledgar Road BALCATTA WA 6021

Head Office 1167 Hau Street West Perth WA 6005 PO Box 1571 West Perth 6872

Telephone +61 8 9324 8800 Facsimile +61 8 9342 8877

Email: infolaustralia@rsqglobat.com Web: http://www.sgglobal.com

Dear Sirs.

RSG Global Pty Ltd ("RSG Global") has been commissioned by Perseus Mining Limited ("Perseus") to provide an Independent Consulting Geologist's Report on mineral exploration properties located in the Kyrgyz Republic of central Asia and the countries of Ghana and Ivory Coast in West Africa in which Perseus has, or is earning, an interest. This report is to be induded in a Prospectus to be lodged with the Australian Securities and Investments Commission ("ASIC") on or about 8 July 2004, offering for subscription 17500,000 Shares at an issue price of 20c per Share and 8,750,000 free attaching Options (the "Prospectus"), to raise a total of \$3,500,000 (before costs associated with the issue). There will be provision to accept oversubscriptions of up to 7,500,000 Shares to raise an additional \$1,500,000. The funds raised will be used for the purpose of exploration and evaluation of the mineral properties.

RSG Global has not been requested to provide an Independent Valuation, nor have we been asked to comment on the faimess or reasonableness of any vendor or promoter considerations, and we have therefore not offered any opinion on these matters.

RSG Global has based its review of the Perseus properties on information provided by Perseus, along with technical reports by Government agencies and previous tenement holders, and other relevant published and unpublished data. Perseus has prepared compilation reports summarising previous exploration activities and these reports are listed with other principal sources of information in the bibliography. A site visit was undertaken to the Grumesa-Awisam property in Ghana by Richard Yeates in February, 1999, while Dean Wadsworth visited all the Kyrgyz properties, with the exception of the less material Maly Naryn and Tolubay Projects, in September 2003. A site visit to the Tengrela Property in Ivory Coast could not be completed due to access difficulties during the monsoon season. Regardless, RSG Global has made all reasonable enquires to ensure the authenticity and completeness of the technical data on which it has relied, and a final draft of the report was also provided to Perseus, along with a written request to identify any material errors or omissions prior to lodgement. Where appropriate, and in accordance with ASIC Practice Note 55 and Update 183, consent has been obtained to quote data and opinions expressed in unpublished reports prepared by other professionals on the properties concerned.

The Perseus properties are understood to comprise seven granted exploration tenements covering an aggregate area of approximately 3,886 square kilometres. The legal status associated with the tenure of the Perseus properties is the subject of a separate Solicitor's Report, which appears in Section 8 of this Prospectus, and these matters have not been independently verified by RSG Global. The present status of tenements listed in this report is based on information provided by Perseus, and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation.

The Independent Consulting Geologist's Report has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports ("The Valmin Code"), which is binding upon Members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the rules and quidelines issued by such bodies as the ASIC and Australian Stock Exchange (ASX), which pertain to Independent Expert Reports.

RSG Global Pty Ltd (ACN 101 090 135) as trustee for RSG Global Partnership (ABN 79 256 402 893)

ACCRA	JOHANNESBURG	LIMA
Email: info.ghana@rsglobal.com	Email: info.southafrica@rsglobal.com	Email: info.peru@rsglobal.com

The mineral properties, in which Perseus has or is earning an interest, are considered to be "Exploration Projects" which are inherently speculative in nature. Regardless, RSG Global considers that the projects have been acquired on the basis of sound technical merit. The properties are also considered to be sufficiently prospective, subject to varying degrees of exploration risk, to warrant further exploration and assessment of their economic potential, consistent with the proposed programs.

Exploration and evaluation programs summarised in the report amount to a total expenditure of approximately \$2.3M, of which Perseus plans to spend approximately \$1.09M in the first year of assessment. Perseus intends to raise \$3.5M, and at least half the liquid assets held, or funds proposed to be raised by Perseus, are understood to be committed to acquisition, exploration, development and administration of the mineral properties, satisfying the requirements of ASX Listing Rules 1.3.2(b) and 1.3.3(b). RSG Global also understands that Perseus has sufficient working capital to carry out its stated objectives, satisfying the requirements of ASX Listing Rule 1.3.3(a). Perseus has prepared staged exploration and evaluation programs, specific to the potential of the projects, which are consistent with the budget allocations. RSG Global considers that the relevant areas have sufficient technical merit to justify the proposed programs and associated expenditure satisfying the requirements of ASX Listing Rule 1.3.3(a). The proposed exploration budget induding committed farm-in partner expenditure, also exceeds the anticipated minimum annual statutory expenditure commitment on the various project tenements.

The Independent Consulting Geologist's Report has been prepared on information available up to and including May 2004. RSG Global has provided consent for the inclusion of the Independent Consulting Geologist's Report in Section 7 of the Prospectus, and to the inclusion of statements made by RSG Global in Section 10 of the Prospectus, in the form and context in which the report and those statements appear, and has not withdrawn that consent before lodgement of the Prospectus with the ASIC.

RSG Global is a mining industry consulting firm, which has been providing services and advice to the international mineral industry and financial institutions since 1987. This report has been compiled by Richard Yeates and Dean Wadsworth, both of whom are professional geologists with 22 years and 18 years respective experience in the exploration and evaluation of mineral properties internationally. Richard Yeates is a Principal of RSG Global, and a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG). Dean Wadsworth is a Senior Consulting Geologist with RSG Global. The primary author has the appropriate relevant qualifications, experience, competence and independence to be considered as an "Expert" under the definitions provided in the Valmin Code.

Neither RSG Global, nor the authors of this report, have or have previously had, any material interest in Perseus or the mineral properties in which Perseus has an interest. Our relationship with Perseus is solely one of professional association between client and independent consultant. This report is 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 RSG Global Pty Ltd

Richard Yeates Principal

TABLE OF CONTENTS

	Summary		28
1	Introduction		29
2	Ivory Coast Property		30
2.1	Background Information on Ivory Coast		30
	2.1.1	Demographics and Geographic Setting	30
	2.1.2	Political and Financial Status	30
	2.1.3	Mining Industry	30
	2.1.4	Mining Tenure	31
22	Tengrela Project		32
	2.2.1	Location, Access and Physiography	32
	2.2.2	Tenure	33
	2.2.3	Geology	33
	2.2.4	Exploration History	34
	2.2.5	Exploration Potential	36
	2.2.6	Exploration Strategy and Expenditure	36
3.	Ghana Property		37
3.1	Background Information on Ghana		37
	3.1.1	Demographics and Geographic Setting	37
	3.1.2	Political and Financial Status	37
	3.1.3	Mining Industry	37
	3.1.4	Mining Tenure	38
3.2	Grumesa-Awisam Project		39
	3.2.1	Location, Access and Physiography	39
	3.2.2	Tenure	39
	3.2.3	Geology	40
	3.2.4	Exploration History	41
	3.2.5	Mineral Resources	42
	3.2.6	Exploration Potential	42
	3.2.7	Exploration Strategy and Expenditure	43
	Kyrgyz Republic Properties		44
41	Background Information on the Kyrgyz Republic		44
	4.1.1	Demographics and Geographic Setting	44
	4.1.2	Political and Financial Status	44
	4.1.3	Mining Industry	44
	4.1.4	Mining Tenure	44
	4.1.5	Regional Geological Setting	45
4.2	Savoyardy Project		46
	4.2.1	Location, Access and Physiography	46
	4.2.2	Tenure	46
	4.2.3	Geology	46
	4.2.4	Exploration History	48
	4.2.5	Mineral Resources	49
	4.2.6	Exploration Potential	49
	4.2.7	Exploration Strategy and Expenditure	50

	4.5.6	Exploration Strategy and Expenditure	63
	4.5.5	Exploration Potential	63
	4.5.4	Exploration History	63
	4.5.3	Geology	61
	4.5.2	Tenure	60
	4.5.1	Location, Access and Physiography	60
4.5	Talas Project		60
	4.4.6	Exploration Strategy and Expenditure	60
	4.4.5	Exploration Potential	59
	4.4.4	Exploration History	59
	4.4.3	Geology	56
	4.4.2	Tenure	56
	4.4.1	Location, Access and Physiography	56
44	Maly Naryn Project		56
	4.3.7	Exploration Strategy and Expenditure	56
	4.3.6	Exploration and Resource Potential	55
	4.3.5	Mineral Resources	54
	4.3.4	Exploration and Mining History	52
	4.3.3	Geology	51
	4.3.2	Tenure	50
	4.3.1	Location, Access and Physiography	50
4.3	Kyldoo Project

Principal Sources of Information $\bf 6$

69

LIST OF TABLES

Table 1 - Tengrela Project : Logbog Prospect - Summary of Significant Axmin RAB Drilling Results	35
Table 2 - Tengrela Project : Proposed Year 1 & 2 Exploration Expenditure	36
Table 3 -- Grumesa-Awisam Project : Kayeya Deposit -- Inferred Resource Estimate	42
Table 4 - Grumesa-Awisam Project : Proposed Year 1 & 2 Exploration Expenditure	43
Table 5 -- Savoyardy Project : Savoyardy Prospect -- Soviet Resource Estimates	49
Table 6 - Kyldoo Project : Trench Sampling Results	54
Table 7 - Maly Naryn Project : Soviet Rock Chip Sample Results	59
Table 8 - Maly Naryn Project : Proposed Year 1 & Year 2 Exploration Expenditure	60
Table 9 - Talas Project : Proposed Year 1 & Year 2 Exploration Expenditure	64

LIST OF FIGURES

Figure 1 - West Africa Tenement Location Plan
Figure 2 - Tengrela Project, Regional Geology	33
Figure 3 - Grumesa-Awisam Project, Regional Geology	39
Figure 4 - Perseus Tenement Locations and Tectonic Terrain Boundaries within the Kyrgyz Republic	45
Figure 5 - Savoyardy Project, Geology and Exploration Summary
Figure 6 - Kyldoo Project, Geology and Exploration Summary
Figure 7 - Kyldoo Project, Geology of the Tropinny and Medovy Prospect Areas
Figure 8 - Kyldoo Project, Tropinny Anticline, IP line 3, Chargeability and Resistivity	55
Figure 9 - Maly Naryn Project Geology
Figure 10 - Maly Naryn Project, Geology and Geochemistry	58
Figure 11 - Talas Project, Geology

SUMMARY

Perseus Mining Limited (Perseus) has an interest in four gold exploration properties and is earning an interest in another property located in the Kyrgyz Republic of central Asia, and has an interest in one property each in the countries of Ghana and Ivory Coast in West Africa, which collectively represent mineral tenure aggregating to 3,886km².

The Tengrela Project is situated within Ivory Coast immediately adjacent to the Mali border, and comprises Upper Birimian meta-volcanics and sediments. The property straddles the southern extension of the Syama Shear Zone, which hosts the 6.5 Moz Syama gold deposit in Mali 20km to the north east. The project incorporates nine regionally significant soil geochemical anomalies, which readily justify further assessment, of which seven occur within a 60km long and "km wide corridor interpreted to represent the southern extension of the Syama Shear Zone.

The Grumesa-Awisam Project in Ghana is located within the highly prospective Ashanti gold belt of southwest Ghana. The project is situated within the Tarkwaian Series sediments that unconformably overlie the marginally older Proterozoic Birimian System of the West African Shield. Gold mineralisation within the Birimian is largely associated with major shear zones conforming to the regional fabric. In addition, detrital gold deposits of major economic importance are hosted within the lower conglomeratic units of the Tarkwaian Series, however isolated examples of significant epigenetic mineralisation have also been recognised within Tarkwaian lithologies.

The Grumesa-Awisam Project includes inferred resources estimated to total 9.1Mt at 1.0g/t Au (450,000oz) situated within an intriguing geological setting. Extensive low-grade mineralisation, believed to be of epigenetic affinity, is hosted by conglomerates comprising a southerly plunging antiform within the Tarkwaian Series. Perseus plans to target the higher grade gold mineralisation in the southern portion of the inferred resource with the aim of delineating 0.9 to 1.1 million tonnes of open pitable reserve at an average gold grade of 1.9g/t Au with a low strip ratio that can be mined and toll treated at an operating cost of less than US \$250 per ounce of gold recovered.

The mineral paragenesis behind this massive and intriguing mineralised system has not vet been fully resolved, and the deposit may ultimately prove to represent the 'footprint' of a substantially larger low-grade mineralised body.

Four of the five properties in the Kyrgyz Republic are held by Perseus's subsidiaries, JSC Z-Explorer (Z-Explorer) and JSC Savoyardy, and one is held in joint venture with local entity JSC Kentor (Kentor). The Kyldoo and Savoyardy Projects have been joint ventured to Canadian listed entity, Lalo Ventures Limited, which has the right to earn up to a 70% interest in each via a combination of exploration expenditure and share allotments.

The Kyrgyz projects are all located within the highly prospective Tien Shan fold and thrust belt of central Asia. This province includes the giant Muruntau and Kumtor gold deposits within Uzbekistan and the Kyrgyz Republic respectively, and in terms of global gold endowment, is considered second only to the Witwatersrand of South Africa.

The Kyldoo, Savoyardy and Maly Naryn properties lie within the Middle and Southern Tien Shan domains, incorporating a folded and thrusted sequence of late Proterozoic to Palaeozoic shallow marine to continental sedimentary rocks, which have been intruded by Permo-Carboniferous granitoids. Exploration by government agencies during the 1970's and 1980's, and subsequent work by junior companies, has identified gold mineralisation on each project, the majority associated with litho-structural settings, in most cases directly comparable with those at the giant Muruntau or Kumtor deposits. Gold mineralisation and geochemical anomalies are dominantly associated with deformed and altered carbonaceous shales within the axes of antidines and along thrust contacts. The relatively immature Tolubay Project also occurs within the Southern Tien Shan whereas the Talas Project lies within the less-prospective Northern Tien Shan domain.

The Kyldoo and Savoyardy Projects include gold resources estimated by Soviet agencies under the Soviet classification system, however the validity of these in relation to the JORC Code has not been independently established by RSG Global. Notwithstanding this, the mineralisation is consistent with established gold models within the Tien Shan, and provides Perseus's joint venture partner, Lalo Ventures Limited, with an immediate focus for early exploration. In addition to identified mineralisation, limited previous exploration within all properties has generated a significant number of prospects, targets and anomalies, the majority of which have not been followed up to any real extent.

Perseus has provided comprehensive two-year exploration programs and budgets for each project that are consistent with the considerable exploration potential of the properties. The proposed expenditure is adequate to meet the cost of the anticipated programs and, along with proposed joint venture partner contributions, exceed the minimum statutory expenditure requirements on the project tenements in each case.

INTRODUCTION $\mathbf{1}$ .

RSG Global Pty Ltd (RSG Global) has been commissioned by Perseus Mining Limited (Perseus) to provide an Independent Geologist's Report for inclusion in a Prospectus to facilitate the listing of Perseus on the Australian Stock Exchange. Perseus has, or is earning, an interest in seven extensive gold exploration properties variously located in the Kyrgyz Republic of central Asia, and the countries of Ghana and Ivory Coast in West Africa.

RSG Global has based its review of the Perseus properties on information provided by Perseus, along with technical reports by Government agencies and previous tenement holders, and other relevant published and unpublished data. Perseus has prepared compilation reports summarising previous exploration activities and these reports are listed with other principal sources of information in the bibliography.

A site visit was undertaken to the Grumesa-Awisam property in Ghana by the primary author in February 1999, while the co-author visited the Kyldoo, Savoyardy and Talas properties in the Kyrgyz Republic in September 2003. A site visit to the Tengrela Property in Ivory Coast could not be completed due to access difficulties during the monsoon season. Notwithstanding this, RSG Global has made all reasonable enquires to ensure the authenticity and completeness of the technical data on which it has relied, and a final draft of the report was also provided to Perseus, along with a written request to identify any material errors or omissions prior to lodgement.

Where appropriate, and in accordance with ASIC Practice Note 55 and Update 183, consent has been obtained to quote data and opinions expressed in unpublished reports prepared by other professionals on the properties concerned.

The Independent Consulting Geologist's Report has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports ("The Valmin Code"), which is binding upon Members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the rules and quidelines issued by such bodies as the ASIC and Australian Stock Exchange (ASX), which pertain to Independent Expert Reports.

The legal status associated with the tenure of the Perseus properties is the subject of a separate Solicitor's Report, which appears in Section 8 of this Prospectus, and these matters have not been independently verified by RSG Global. The present status of tenements listed in this report is based on information provided by Perseus, and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation.

RSG Global is a mining industry consulting firm, which has been providing services and advice to the international mineral industry and financial institutions since 1987. This report has been compiled by Richard Yeates and Dean Wadsworth, both of whom are professional geologists with 22 years and 18 years respective experience in the exploration and evaluation of mineral properties internationally.

Richard Yeates is a Principal of RSG Global, and a Member of the Australasian Institute of Mining and Metallurgy (AusIMM) and the Australian Institute of Geoscientists (AIG). Dean Wadsworth is a Senior Consulting Geologist with RSG Global. The primary author has the appropriate relevant qualifications, experience, competence and independence to be considered as an "Expert" under the definitions provided in the Valmin Code.

Neither RSG Global, nor the authors of this report, have or have had previously, any material interest in Perseus or the mineral properties in which Perseus has an interest. Our relationship with Perseus is solely one of professional association between client and independent consultant. This report is 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.

IVORY COAST PROPERTY $\overline{2}$ .

$2.1$ BACKGROUND INFORMATION ON IVORY COAST

2.1.1 Demographics and Geographic Setting

Ivory Coast (Côte d'Ivoire) is an independent republic with a population of 17 million. It is one of the larger countries in West Africa with an area of over 320,000km². Ivory Coast is bordered by Mali and Burkina Faso to the north, Ghana to the east and Guinea and Liberia to the west

The population comprises various ethnic groups, which include Akan (42%), Gur (18%), Northern Mandes (17%), Krous (11%) and Southern Mandes (10%). Non-Africans, dominated by those of French and Lebanese extraction, number approximately 150,000.

Ivory Coast has a tropical climate along its coast and is semi-arid to the north. Three distinct seasons prevail: warm and dry (November to March), hot and dry (March to May), hot and wet (June to October). The terrane is largely flat to undulating with mountains in the northwest.

While French is the official language, 60 native dialects are discernable, with Dioula the most widely spoken.

2.1.2 Political and Financial Status

Diversification of agriculture for export, and encouragement of foreign investment have made lvory Coast the most prosperous of the tropical African states, attracting a substantial workforce from neighbouring countries, representing approximately 20% of the population. Ivory Coast has maintained close ties to France since independence in 1960, and is the only sub-Saharan country never to have experienced a communist backed regime.

Ivory Coast is among the world's largest producers and exporters of coffee, cocoa beans, and palm oil, consequently the economy is highly sensitive to fluctuations in both international prices for these products and dimatic conditions. Despite attempts by the government to diversify the economy, it is still largely dependent on agriculture and related activities, which engage approximately 68% of the population. Following several years of slow growth, the Ivorian economy began to improve in 1994, due to the devaluation of the CFA franc, improved prices for cocoa and coffee, growth in non-traditional primary exports such as pineapples and rubber, limited trade and banking liberalisation, offshore oil and gas discoveries, and generous external financing and debt rescheduling by multilateral lenders and France. The 50% devaluation of Franc Zone currencies on 12 January 1994 created a onetime jump in the inflation rate to 26% in 1994, but the rate fell sharply in 1996-99. Moreover, government adherence to donormandated reforms led to a jump in growth to 5% annually in 1996-99. Growth was negative in 2000-02 because of the difficulty of meeting the conditions of international donors, continued low prices of key exports and the civil unrest.

On 25th December 1999, a military coup overthrew the democratically elected government, in response to increasing corruption. Junta leader Robert Guei held elections in late 2000, but excluded prominent opposition leader Alassane Ouattara and declared himself the winner. Popular protest forced Guei to step aside and brought runner-up Laurent Gbagbo into power. Gbagbo's opponents launched a failed coup attempt in September 2002. Rebel forces claimed the northern half of the country and in January 2003 were granted ministerial positions in a unity government. Tension remains high between Gbagbo and rebel leaders, but French, West African and United Nations troops are in Ivory Coast to maintain peace and help implement the peace accords.

2.1.3 Mining Industry

Underfain almost entirely by Archaean and early Proterozoic rocks, the Ivory Coast has considerable mineral potential, with important occurrences of gold, diamonds, iron, nickel, cobalt, manganese and bauxite having been identified. As is the case through much of West Africa, gold has represented a high exploration priority in the Ivory Coast, particularly following the introduction of a new, more favourable mining investment code in 1995. The low gold price between 1997 and 2002, has however, considerably reduced investment in the gold sector, exacerbated by instability resulting from the recent political unrest.

2.1.4 Mining Tenure

Ivory Coast	Mineral Exploration And Mining Rights
Mining Act
State Ownership of Minerals
Negotiated Agreement	Not speated

Minina Title / Licence Types

1.11111111111111111111111111111111111
Reconnaissance Tenements	Reconnaissance authorisation
Exploration Tenements	Exploration Permit
Mining Tenements	Quarry exploitation authorisation
Retention Tenements	N/A
Special Purpose Tenements	Exploitation of mine and quarry residue and waste dumps
Small Scale Mining Tenements	Exploitation authorisation
Artisinal Tenements	Authorisation for Artisanal Mining

Prospecting Tenement

Name	Exploration Permit
Purpose	Exclusive right to explore for minerals
Maximum Area	1000km 2
Duration	3 vears
Renewals	$2 \times 2$ years
Area Reduction.	50% at renewal
Procedure	By application
	Minister for Mines

Prospecting Tenement

Name	Reconnaissance authorisation
Purpose	Non-exclusive reconnaissance right to explore for all minerals
Maximum Area	5000km 2
Duration	vear
Renewals	vear
Area Reduction
	, application
	Minister for Mines

Mining Tenement

Name	Mining Permit
Purpose	Exclusive right to explore, mine, process, transport and export minerals
Maximum Area	Not specified
Duration	20 years
Renewals	Life of mine
Area Reduction	N/A
Procedure	Recommendation by Minister for Mines
	Granted by decree of the Council of Ministers.

$2.2₂$ TENGRELA PROJECT

2.2.1 Location, Access and Physiography

The contiguous Tengrela East and Tengrela South Projects are located in the Tengrela region of northern Ivory Coast, adjacent to the Mali border and approximately 700km north of the capital, Abidian (Figure 1). Korhogo, the principal regional centre, is located 150km to the southeast. Principal access is gained via sealed road to Boundali and thereafter by all-weather formed gravel road to Tengrela.

Figure 1 - West Africa Tenement Location Plan

The Tengrela permit areas are situated in an area of low to moderate relief, lying to the west of the Bagoe River. Land use is dominated by cash cropping and subsistence cultivation, interspersed with savanna woodfand.

2.2.2 Tenure

The Tengrela East and South Projects consist of contiguous Research Permits, RP145 and RP146 respectively, covering an aggregate area of 884.7km². Perseus has an 80% interest in the permit areas via the company's wholly owned subsidiary, Occidental Gold (Ivory Coast) SARL (Occidental), with a local joint venture partner holding 10% and the remaining 10% reflecting the Ivory Coast Government equity applicable at the mining stage.

2.2.3 Geology

The permit areas cover a strongly deformed Birimian greenstone belt intruded by granitoid bodies (Figure 2). Interpretation of both aeromagnetic and radiometric data indicates the permits indude an extensive sequence of north trending Birimian volcanidastics, intruded by both large (Kanakono Pluton) and small uranium-rich felsic intrusives.

Figure 2 - Tengrela Project, Regional Geology

A major structural feature considered to control mineralisation at Resolute Mining's Syama gold mine (SMoz in resources), situated 20km northeast of the Tengrela East Project in Mali, is interpreted from regional airborne magnetic data to extend into the Tengrela permits. In the western and southwestern portions, volcano-sedimentary units to the east and a volcanic package to the west are separated by a prominent north-northeast trending shear zone. The most significant structures occur in the southwest portion of the Tengrela South Permit, where fieldwork has identified abundant intense shearing and silicification.

Ancient artisinal workings at the Zanikan Prospect cover a 12km by 4km area, proximal to a large contact metamorphic aureole localised around the (possibly dilational) southeastern margin of the Kanakono pluton. Lag sampling has outlined a 20km long north-northeast trending corridor of anomalous gold values (>15ppb) incorporating the Zanikan and Gbeni Prospects. Higher tenor lag sample values (>100ppb Au) up to 22.4g/t, coincide directly with BLEG and soil samples that cover the northern part of Zanikan. Pitting at Zanikan (213 pits) at 10m intervals commonly encountered brittle fracturing, pyrite pseudomorphs and occasional gossanous veinlets within saprolitic material. Four pits returned grades >0.4g/t Au in saprolite, including 0.7g/t in ZAP-22, 0.9g/t in ZAP-103, 0.5q/t in ZAP-145 and 2.9q/t in ZAP-191. Significantly, 3 of these pits occur on adjacent lines, suggesting a north-south mineralised trend, consistent with the regional stratigraphic and tectonic fabric.

2.2.4 Exploration History

Having negotiated a joint venture agreement with Occidental in June 1998, Randgold commenced a program to assess both Tengrela Permits involving:-

Interpretation of high-resolution airborne geophysical data.

• Regolith mapping over both permits.
• An orientation geochemical study to determine the most effective geochemical sampling techniques.
• Systematic soil sampling and pitting of the Zanikan gold workings.
• Detailed soil sampling of the Gbeni gold workings.

LAG sampling (1.841 sites) at a density of 1.1 samples per km² was undertaken over both permits outside the regional soil grids. Significant lag gold anomalies (Figure 2) were identified in the following locations:-

• Podio E $(14km^2 \text{ up to } 2,400 \text{ pb})$
• Zinguinasso S (10.8km² up to 208 ppb)
• (2.8km² up to 1,670 ppb) Zinguinasso SE
• (10km² up to 920 ppb) Zinguinasso NE
• $(4.7km²$ up to 240 ppb) Zinguinasso E
• Ouomon E $(4.4 \text{km}^2 \text{ up to } 370 \text{ ppb})$
• Ouomon SE $(1.5km²$ up to 300 ppb)
• $(21.7km²$ up to 450 ppb) Gbeni S
• Gbeni E $(1.7 \text{km}^2 \text{ up to } 4.600 \text{ ppb})$
• $(20.8km²$ up to $780$ ppb) Gbeni
• Zanikan (12.6km² up to 22,400 ppb)
• Kanakono (16.7km² up to 4,090 ppb)
• (16.4km² up to 1,000 ppb) Kanakono N
• $(36km²$ up to $4,090$ ppb) Papara
• $(4.8 \text{km}^2 \text{ up to } 1.430 \text{ pb})$ Dounaso

These coarse fraction anomalies appear to dosely coincide with regional structural trends, confirmed by broader targets generated in finer fraction sampling. The aggregate area of anomalous results approximate $180 \text{km}^2$ .

Regional sampling on a 500 by 100m pattern was completed over a 288km² area covering the structurally complex western portion of the Tengrela South permit. This soil sampling defined a single discrete anomaly (the Logbog anomaly) from 200m to 400m wide and extending for 3.5km, incorporating values from 20 to 200 ppb gold, however no further exploration was completed and Randgold withdrew from the joint venture having spent US\$500,000.

Under a joint venture agreement with Occidental, Axmin Limited completed further exploration on the Logbog anomaly between March and July 2000. This program included infill soil sampling (1,114 samples) and regolith mapping, which was successful in confirming the relatively strong soil response generated by Randgold, over a 4.3km by 0.3km area termed the Logbog Grid. RAB drilling, consisting of 61 holes (2,182m) on 5 traverses, encountered significant intercepts on several of the lines. More significant results are summarised in Table 1 below.

		Table 1 - Tengrela South Project
					Logbog Prospect - Summary of Significant Axmin RAB Drilling Results
Hole	North	East	Grid	Dec.	Depth	Interval	Width	Grade
			Azimuth		(m)	(m)	(m)	$(g/t \text{ Au})$
TRB-7	51000	15720	90	-60	33	$5 - 10$		0.7
TRB-8	51000	15680	90	-60	29	$0 - 29*$	29	0.5
TRB-14	51400	15830	90	-60	33	20-25		4.4
TRB-15	51400	15810	90	-60	37	30-35		0.7
TRB-18	51400	15750	90	-60	37	$15 - 30$	15.	0.4
TRB-40	53500	15970	90	-60	41	15-35	20.	0.7
TRB-42	53500	15930	90	-60	42	$5 - 25$	20	0.4
TRB-43	53500	15908	90.	-60	45	$5 - 25$	20.	04
$TRB-44$	53500	15890	90	-60	35	20-30	10	2.5

Mineralised zones range from 10m to 50m in width, hosted by sheared, metamorphosed mafic rocks, volcanoclastics and granitoids. Despite the broad nature of RAB drilling, the scattered distribution of more significant intercepts implies a measure of inconsistency in individual mineralised zones. Despite the results, Axmin completed no further work on the Logbog Prospect, nor did they follow up encouraging results generated by Randgold at Zanikan or lag sample anomalies. Axmin withdrew from the joint venture having spent US\$78,000 during the period.

Occidental recommenced exploration in its own right in April 2002 with a program of soil sampling and pitting designed to refine the extensive lag anomalies defined by Randgold along the southern extensions of the Syama tectono-stratigraphic corridor. In addition to mapping and limited rock chip sampling, initial soil sampling was undertaken at 50m intervals along 800m to 1,600m spaced lines. The samples were screened to a nominal -2mm, with four consecutive 50m sub-samples (200m) composited for analysis. In all, 974 composites were collected, representing 3.894 individual sample sites from 8 separate targets. The composite samples were submitted to SGS laboratories in Ghana for 2kg bottle roll gold analysis and AAS arsenic analysis following an aqua regia digest.

Following encouraging initial results from a number of areas, 624 of the 50m sub-sample residues were analysed for gold individually, and infill soil sampling was variously completed on an 800m by 50m, 400m by 50m or 200m by 50m grid spacing in 5 separate areas for gold analysis.

At the Papara and Kanakono anomalies, where the regolith prevented effective soil sampling, 39 and 13 pits were respectively excavated on a 200m by 50m pattern to a depth of approximately 3m prior to sampling. The resulting samples were assayed by SGS in Ghana by fire assay.

Prior to commencement of the 2002 program, 16 potentially significant lag anomalies and 2 soil anomalies had been defined. By completion of the program in July 2002, 13 of the lag anomalies had been tested and 3 remained untested. Of the 13 tested anomalies, 10 were confirmed and refined by soil sampling, while 3 were rejected as being of little significance. Seven anomalies were considered to be of major regional significance and a further 3 targets require additional assessment before their significance can be accurately determined. The majority of more significant targets are associated with elevated arsenic values. Weakly to moderately anomalous gold and arsenic values were also identified from pitting at the Papara and Kanakono Prospects.

2.2.5 Exploration Potential

The Tengrela permits straddle the southern extension of the Syama Shear Zone. The Syama deposit, with a known gold endowment of approximately 6.5Moz, lies within Mali approximately 40km along strike to the north from Tengrela. More recently Canadian company Etruscan Resources Inc has identified significant mineralisation associated with the Syama Shear in drilling at the Tabakoroni Prospect within the Finkolo Permit. The prospect which lies immediately north of the Tengrela permits across the Bagoe River in Mali. was originally identified by BHP when operating the Syama mine.

The 9 principal soil anomalies within the Tengrela Permits are regarded as regionally significant and represent a high priority for further exploration. Seven of these 9 targets occur within a 60km long and 7km wide corridor interpreted to represent the southern extension of the Syama Shear Zone, which is locally mimicked by the Bagoe River separating Ivory Coast and Mali. Approximately 45% of this prospective corridor is veneered by transported regolith or duricrust and cannot be effectively tested via conventional soil sampling. While this provides a considerable challenge for exploration, the persistent application of systematic programs, supported by a reasonable budget, is readily justified.

2.2.6 Exploration Strategy and Expenditure

Perseus has provided a comprehensive two year programme and budget for the Tengrela East and South Project. The Year 1 program incorporates pitting (1,000 pits) on a 200m by 40m pattern over the principal anomalies to ascertain the existence and style of saprolitic mineralisation, followed by 10,000m (250 holes) RAB drilling. The budget also provides for 3,000m of initial RC drilling to test the more significant targets generated by the current and planned soil geochemistry, pitting and RAB drilling.

A further 1,000 pits, 6,000m of RAB drilling and 4,000m of RC drilling is budgeted for the Year 2 program. This will be respectively applied to follow up the more significant targets identified in Year 1 and commence resource definition drilling of the higher priority mineralisation. Limited diamond drilling (approximately 500m) will be applied to assist in defining lithological and structural controls within any identified resource areas. The associated budgets are summarised in Table 2 below.

RANGER

Activity		Year 1		Year 2		Total
		А\$		A\$		AS
Assaying		82,900		70,600		153,500
Soil Sampling		2,200				2,200
Pitting		30,900		30,900		61,800
RAB Drilling		154,400		92,600		247,000
RC Drilling		135,900		181,200		317,100
Diamond Drilling				70,600		70,600
Vehides/Fuel		10,300		15,400		25,700
Field Supplies/Accommodation/Other		17,600		26,500		44,100
Staff/Contractors		94500		142,500		237.000
Tenements Rates and Rents		4,400				4,400
Administration		51,500		58,800		110,300
Total	А\$	584,600	Α\$	689,100	A\$	1,273,700

Table 2 - Tengrela East & South Project
Proposed Year 1 and 2 Exploration Expenditure

RSG Global considers that the proposed exploration programs and budgets are consistent with the project's exploration potential, and the budgets are adequate to cover the costs of the proposed programs and meet minimum statutory expenditure requirements.

GHANA PROPERTY $\mathbf{R}$

$3.1$ BACKGROUND INFORMATION ON GHANA

3.1.1 Demographics and Geographic Setting

Ghana is situated in West Africa, immediately north of the equator and on the Greenwich meridian. Ghana is bordered to the north and northwest by Burkina Faso, to the east by Togo, to the south by the Atlantic Ocean, and to the west by Côte d'Ivoire (Ivory Coast). Formerly a British colony known as the Gold Coast, Ghana was in 1957 the first nation in sub-Saharan Africa to achieve independence.

Ghana has a total area of 238,537km² (92,100 square miles). Its capital city is Accra, while other major cities include Kumasi, Tema, Tamale and Sekondi-Takoradi. Ghana has a tropical dimate and a population of approximately 19 million (1999 estimate).

English is the official language of Ghana and is universally used in schools, but in 1962 the government selected nine Ghanaian languages, in addition to English and French, for use in educational institutions. Traditional religions are adhered to by more than one-fifth of the population while Christianity has been adopted by approximately three-fifths, and Muslim beliefs by about 16% of the population.

Natural Resources include gold, timber, diamonds, bauxite and manganese, while agricultural products include cocoa, rubber, coconuts, coffee, pineapples, cashews, pepper and other food crops. Ghana's industries are dominated by mining, timber processing, light manufacturing, fishing, aluminium production and tourism.

3.1.2 Political and Financial Status

Following cessation of colonial rule in 1957. Ghana has seen four republics with intermittent military rule. The first republic extended from March 1957 to February 1966, under the first president Dr. Kwame Nkrumah. The second republic extended from June 1979 to September 1981, under President Dr. Hilla Limann, while the third, under President Fit Lt. Jerry Rawlings, was elected for the maximum 2 terms from June 1993 until December 2000. In a relatively peaceful process in December 2000, the Ghanaian people elected the New Patriotic Party (NPP) under Mr John Kuffuor into government for a 4 year term.

Ghana's GDP relies heavily on gold, cocoa, rubber and timber, amounting to USD\$7.8 billion in 1999, however the decline in the gold price, along with a collapse in the cocoa price (48% lower than late 1998 levels) has had a substantial negative impact on the country's balance of trade, with a budget deficit amounting to some USD\$6.0 billion. Maior trading partners include the U.K. Germany, U.S.A. and Nigeria.

3.1.3 Mining Industry

Gold represents Ghana's major export commodity, representing approximately 50% of GDP. Ghana is the world's 10th and Africa's 2nd largest producer of gold, with current production estimated at 2.4Moz per annum. Investment in the gold mining and exploration sector has, however, diminished dramatically since 1997-98, due to the marked decline in the gold price. Whilst production levels have been maintained during this period, difficulty raising venture capital has resulted in a substantial decline in the level of exploration.

3.1.4 Mining Tenure

Ghana			MINERAL EXPLORATION AND MINING RIGHTS
Mining Act			1986 (as amended)
State Ownership of Minerals			Yes
Negotiated Agreement			No
Mining Title / Licence Types
Reconnaissance Tenements		f	Reconnaissance Licence
Exploration Tenements			Prospecting Licence
Mining Tenements			Mining Lease
Restricted Mining Lease
Retention Tenements			No
Special Purpose Tenements
Small Scale Mining Tenements		t	Yes
Reconnaissance Tenement
Name			Reconnaissance Licence
Purpose	(Note 1)		Entitles the holder to search for specific minerals by surface
prospecting
Maximum Area			Area extent is negotiable
Duration			1 year
Renewals			Yes 1 year (multiple) if in the public interest
Area Reduction		t	No.
Procedure			By application
Granted by		÷	Ministry of Lands and Natural Resources
Prospecting Tenement
Name			Prospecting Licence
Purpose			Confers the exclusive right to search for specific minerals
			and to determine their extent and economic value
Maximum Area	(Note 2)		$150$ km 2
Duration			$3$ years
Renewals			Multiple 2 year extensions
Area Reduction			Yes
Procedure			By application
Granted by			Minister of Lands and Natural Resources
Mining Tenement
Name			Mining Lease
Purpose			Exclusive rights to extract specified minerals
Maximum Area	(Note 3)	÷	$50$ km 2
Duration			30 years
Renewals			Yes
Area Reduction			No
Procedure	(Note 4)		By application
Granted by		t	Minister of Lands and Natural Resources
Mining Tenement
Name			Restricted Mining Lease
Purpose			Exclusive rights to extract building and industrial minerals for
Maximum Area			local consumption
Duration
Renewals
Procedure			By application
Granted by			Ministry of Lands and Natural Resources

Notes: 1) A Reconnaissance Licence confers on the holder the right to search for specified minerals by geochemical, geophysical and geological means. It does not permit drilling, excavation, or other physical activities on the land, except where such activity is specifically permitted by the Licence.

2) The maximum area of the Prospecting Licence of 150km² can be exceeded at the discretion of the Government.

• 3) The maximum area of a Mining Lease is 50km² or, where a holder acquires more than one lease, an aggregate of 150km². These limits can be extended at the discretion of Government if it is in the public interest to do so.
• 4) A Mining Lease is granted, an application to the Secretary for Lands and Natural Resources, on terms and conditions determined by the Secretary. Thus, within the parameters set by the Law, there is room for negotiation between the investor and the Government to work out a package suited to the specific project. Among important matters which are negotiated are deferment of royalty payments; work programs; and retention allowances. The Minerals Commission conducts all necessary technical reviews before an application, with recommendations, is submitted to the Secretary. The Minerals and Mining Law insists upon the recruitment and training of Ghanaians for all levels of work, and local sourcing, to the maximum possible extent. The Minerals Commission reviews all the reports which lease holders are required to submit, and monitors activities in the field.

GRUMFSA-AWISAM PROJECT ミラ

3.2.1 Location, Access and Physiography

The Grumesa-Awisam Prospecting Licence straddles the boundary of the Ashanti and Central Regions of southern Ghana and is located on the eastern flank of the prospective Ashanti Belt. The concession is comprised of two blocks with a combined area of 38.7km², with the Grumesa portion of the project lying between the Nkrabia Forest Reserve and the Ofin River, while the smaller Awisam block lies 4km south of the Ofin River (Figure 3).

Figure 3 - Grumesa-Awisam Project, Regional Geology

The Grumesa block is easily accessed via a secondary unsealed road that runs southeast from Obuasi, while the Awisam block may be reached on similar style secondary roads from Dunkwa. Both blocks generally lack significant internal vehicular access.

Relief in the Grumesa-Awisam area is largely gently undulating, becoming even more subdued in the vidnity of the Ofin River system. More resistant hills and ranges, generally striking northeast-southwest, occur in the northeastern portion of the northern concession block. The southeasterly draining Fume River, a tributary of the Ofin River, dominates the local drainage system. Areas of lower relief are generally vegetated by open secondary forest and agricultural land, while remnant tropical forest is more prevalent in areas of higher relief. The Kayeya Prospect is situated within gently undulating terrain of generally lower relief, with cocoa farms representing the principal land use.

3.2.2 Tenure

The Grumesa-Awisam Project comprises a single Prospecting Licence (PL2-30), separated into two discrete blocks, covering an aggregate area of 38.7km². The concession is registered in the name of Ashanti Goldfields Company Limited (AGC).

Leo Shield Exploration Ghana Limited (Leo Shield) entered into a joint venture agreement with AGC on the 30th of January 1997, whereby Leo Shield could earn a 72% equity in the project by funding and managing the exploration activities. Leo Shield

subsequently completed its joint venture commitments, and has sold its rights under the agreement to wholly-owned Perseus subsidiary, Sun Gold Limited (Sun). Sun has subsequently also agreed to purchase the remaining 18% non-government equity from AGC for US\$140,000, subject to the successful listing of Perseus on the ASX by 31 August 2004.

3.2.3 Geology

Regional Setting

The principal gold producing areas of southwestern Ghana, are associated with the coeval lower Proterozoic Systems of the Birimian (2.17-2.18 billion years) meta-yolcanic (arc) and metasedimentary (basin) rocks, along with the younger, unconformably overlying Tarkwaian epidastic system, developed within and along the margins of the Kumasi Basin. Erosion of the volcanic arcs during arc/basin development produced the argillites, turbidite units and tuffs of the Kumasi Basin.

The gold deposits of West Africa largely lie within the Proterozoic domain of the Man Shield, the southemmost subdivision of the West African (or Guinean) Craton. Lithologies comprising the shield, overlie the largely unknown Archaean Liberian Craton. The West African Shield represents approximately 45% of the exposed geology of Ghana, being largely restricted to the northern, western and southwestern portions of the country. The shield area is confined to the southeast by a Proterozoic mobile zone and the central-eastern portion is largely veneered by late Proterozoic to early Palaeozoic sediments of the Volta Basin.

The Precambrian Birimian System of West Africa can be broadly subdivided into phyllites, tuffs and greywackes of the Lower Birimian, and various basaltic to andesitic lavas and volcanoclastics of the Upper Birimian. These subdivisions are largely believed to be coeval and have been deformed and regionally metamorphosed to grades ranging from lower greenschist to lower amphibolite facies.

The Birimian System has been intruded by two distinctive granitoid types. The larger basin-type granitoids (and gneisses) are muscovite and/or biotite-rich, and distinctly foliated and deformed, providing a pre-tectonic appearance. The smaller belt-type (arc related) granitoids on the other hand, are hornblende-rich, lack the characteristic foliation of the former, and are generally interpreted to be syn or post-tectonic. Despite their appearance, the belt-type granitoids are dated as being 60-90 million years older than the larger basin-type granitoids, however these dates are frequently inconsistent with field observations.

The vounger Proterozoic Tarkwaian sediments, thought to unconformably overlie the Birimian System, consist of a thick series of arenaceous, and to a lesser extent argillaceous sediments, believed to be derived from erosion of the Birimian. Economically important conglomerates and quartzites, termed the Banket Group, comprise the basal portion of the series. The Tarkwaian Series is largely confined to elongate north northeast trending basins, believed to represent intra-gatonic rifts. The margins of these basins commonly coincide with major (frequently mineralised) structures representing the contact between Upper and Lower Birimian sequences. It is conceivable that reactivation of the major structures during a period of crustal extension, may have been responsible for rifting, and subsequent preservation of the Tarkwaian Series.

The Birimian belt-basin development was followed at around 2.1 billion years by the Eburnean tectono-thermal event, a single-stage progressive SE-NW compressional and regional metamorphic episode, expressed by foliation and shear development oriented between 025^° - 050^°. Metamorphic grade is now generally lower greenschist facies with higher grade facies developed locally proximal to intrusive bodies.

Tight isoclinal folding (foliation regionally oriented NNE-SSW) is regionally well developed in the argillaceous facies. Multiple episodes of strike-slip and over-thrust faulting from the northwest (and perhaps the southeast in part) are more apparent in the arc-related Birimian volcanics and Tarkwaian Series.

The spatial distribution of gold mineralisation in West Africa is dosely governed by north to northeast trending belts of metavolcanic rocks, ranging from 15 to 40km in width, comprising the Upper Birimian. Almost without exception, the major gold deposits lie at or dose to the margins of the belts in dose proximity to the strongly deformed contacts between the Upper and Lower Birimian sequences.

Gold mineralisation in Ghana (largely applicable to the majority of the Birimian of West Africa) is found in three principal settings. The most significant of these deposits are closely related to major structures at the Upper and Lower Birimian contact. Deposits are of numerous styles, including quartz reefs hosted within, frequently carbonaceous, phyllites and greywackes associated with major semiconformable shear structures and subsidiary oblique faults. Lower grade mineralisation may also be present as disseminations or associated with sheeted quartz veining within tuffs, greywackes and basic dykes situated in close proximity to major structures.

The second and increasingly significant style of gold mineralisation is that associated with sheeted vein swarms and stockwork zones within granitoids. These deposits are typically lower grade than reef style mineralisation and appear to be confined to the smaller belt-type or Dixcove Suite granitoids and their regional equivalents.

Banket deposits represent the third significant style of mineralisation, hosted by quartz pebble conglomerate towards the base of the Tarkwaian Series. The gold is thought to be of detrital origin, derived from erosion of the Birimian Series upon which the Banket Group lie. Epigenetic sheeted or stockwork quartz veining is, however, also present within lower portions of the Tarkwaian Series.

Project Geology

The Grumesa-Awisam Project is located within a sequence of lower Proterozoic Birimian meta-volcanics (arc) and metasedimentary (basin) rocks, which are unconformably overlain by epidastic sediments of the Tarkwaian Series.

The Kayeya gold prospect, which covers an area of some $3km^2$ , is the only portion of the concession in which detailed mapping has been undertaken. Ground magnetics, combined with data obtained from mapping, trenching and drilling, indicate that the Kaveva Prospect is situated within a suspected steeply plunging antiform with the axial plane trending $\sim 045^\circ$ magnetic. The southern portion of the antiform is recumbent, with both limbs dipping in a westerly direction, while in the northern portion the axial plane appears to be subvertical. The core of the antiform is occupied by conglomerates with a high magnetic susceptibility, which plunge below surface several hundred metres south of the concession boundary. Perseus suggest that the repetition of this distinguishable magnetic unit along a north-south direction represents structural duplication by sub-horizontal thrusts striking approximately 080°. Other major structural features strike ~045° and 025-030°.

The principal host is a broad (500m wide) matrix supported, largely polymictic, cross-bedded conglomerate. The arenaceous clasts include identical material to the matrix sandstone, containing occasional magnetite within cross beds. This suggests that the conglomerate is derived from erosion of the Tarkwaian Series itself, and the unit is informally referred to as the Kayeya Conglomerate. The presence of coarse reworked Tarkwaian epidastics adjacent to a major N-S fault is suggestive of significant later movement in this portion of the Ashanti Belt.

Examination of diamond core demonstrates multiple cycles of cobble conglomerate (metre to decimetre in thickness), with interbeds of silty to coarse impure quartzose arenite (also decimetre to centimetre in thickness). The clasts are well rounded and poorly sorted, consisting predominately of arenite, along with subordinate quartz and siliceous material. Attenuation due to deformation and lithification, has imparted a profound rodding within the less durable lithotype clasts.

Quartz veining is parallel to the dominant 045° fabric, although the dip is oblique to the lithological/structural grain, ranging from subhorizontal to 40° NW in core, and from 55° NW through to 55° SE in trenches. The strike of joint and deavage planes are again largely parallel to the dominant fabric, although dips range from 55°NW through to 15°SE.

Ground magnetic traverses across the entire prospect area have revealed the presence of at least two and possibly three thin discrete strike-persistent, relatively non-magnetic units within the epidastic succession. Correlation of these units with trench mapping and drilling, suggest they coincide with intervals of biotite schist of likely argillaceous origin.

The Kayeya Conglomerate appears to be mineralised $(≥ 0.3q/t Au)$ over an area of about 2.3km², the southern portion of which is referred to as the Kayeya Prospect. Although not conclusive, gold mineralisation is interpreted to be epigenetic in origin. Gold mineralisation can be interpreted as structurally controlled by a combination of vertical to steeply east dipping features, and a set of shallowly north dipping structures. The sub-vertical features appear to strike between 020° and 030°, with mineralisation occurring as a set of parallel lenses connected by sheet-like mineralised zones dipping to the north at between 0°and 30°. The sub-vertical bodies range from 5m to 40m wide and can be traced in excess of 700m along strike. The sub-horizontal lenses range from 10m to 30m in width, extend from 80m to 250m across strike and have a northerly plunge. The latter style has been traced for 200m to the north and remains open beneath shallow drilling in that direction.

Visible gold in diamond core recovered from the Kayeya Prospect generally occurs on the margins of guartz stringers or in biotite-rich micro-fractures suggestive of an epigenetic origin, however the correlation between gold and guartz veining is otherwise poor. Mineralogical work on thin and polished sections of the drill core provides stronger evidence that the mineralisation is hydrothermal in origin. This evidence includes the irregular shape of gold partides, the presence of gold-silver telluride (petzite) and selenide (clausthalite), and an association of fine gold with minor chalcopyrite, however the lack of obvious hydrothermal alteration and the poor correlation between mineralisation and quartz veining remain somewhat problematic.

3.2.4 Exploration History

No previous mining is evident within the Grumesa-Awisam Project aside from artisanal mining of the alluvial deposits draining the Kayeya Prospect. International Gold Resources, which became a subsidiary of Ashanti, completed regional stream sediment geochemistry in 1996. Despite incomplete survey control, this work was reasonably successful in delineating what came to be known as the Kayeya Anomaly within the Grumesa Block. Infill stream sediment geochemistry completed by Leo Shield in May 1997 identified three anomalies located in the western (Grumesa), central (Kayeya) and eastern areas (gneiss terrain). Reconnaissance gold soil sampling, and subsequent RAB drilling, were followed by infill soil sampling in September 1997, employing bottle roll analyses, which proved successful in providing more cohesive anomalies. Various RC, aircore and limited (oriented) diamond drilling programs were completed between late 1998 and early 1999. Limited mobile metal ion (MMI) geochemistry, petrographic and mineralogical studies, and ground magnetometer surveys were also employed to aid definition and assessment of the anomalies at various times.

The Kayeva Prospect has been the focus of drilling and trenching programs since December 1997. To date 560 RC holes (18,751m), 32 rotary air blast (RAB) holes (924m) and 5 diamond core holes (488m) have been completed, along with 6.045m of trenching. Exploration and resource definition drilling at the Kayeya Prospect has essentially been focused on delineation of shallow oxide mineralisation

The project was put on care and maintenance in 1999 due to a falling gold price and the company's focus elsewhere.

Exploration was reactivated in 2002, with Leo Shield completing 1,470 augur holes over a selected portion of the Kayeya gold occurrence. Holes were completed to a maximum depth of 4.4m on a 40m by 80m pattern over approximately 25% of the mineralised area. The results generally confirmed the extent of mineralisation known from previous drilling.

The mineral resource estimate was updated in September 2002 and preliminary economic studies were commenced to evaluate the higher-grade southern portion of the deposit.

3.2.5 Mineral Resources

In September 2002, Leo Shield estimated resources associated with the Kayeya Prospect utilising Surpac software, and employing the inverse distance squared estimation method. The procedure resulted in estimation of an Inferred Resource of 9.1Mt at 1.0q/t Au using a lower cutoff grade of 0.8g/t. Even though in excess of 580 holes (20.000m) have been drilled at Kaveya, the resource has appropriately been classified as Inferred, as most of the holes are on lines spaced 200m apart. The Perseus resources are summarised in Table 3 below.

Table 3 - Grumesa-Awisam Project - Kayeya Deposit
Inferred Resource Estimate - (Leo Shield - September 2002)
1.0g/t Au Cutoff Grade			0.8g/t Au Cutoff Grade			0.6g/t Au Cutoff Grade
Ore Type.	Tonnes .		Grade Ounces	Tonnes	∽Grade –	Ounces	Tonnes		Grade Ounces
		(g/t Au).			(a/t Au)			(g/t Au)
Oxide	1,700,000	13	70.000	3,200,000	11	110,000	5,400,000	10	170,000
Sulphide / Transition	1.200.000	13	50,000	2,900,000	1.0	90,000	5,300,000	0.9	150.000
Primary	1.100.000	12	40,000	3.000.000	1.0	100,000	4,400,000	0.9	130.000
Total	4.000.000	13	160.000	9.100.000	1.0	310,000	15,100,000	0.9	450,000

There are only 17 holes (3%) drilled to below 60m vertical depth and only 29% of holes are deeper than 30m vertical depth at Kaveva, providing considerable opportunity to identify additional resources at relatively shallow depth.

Perseus intends to target the higher grade gold mineralisation in the southern portion of the inferred resource with the aim of delineating approximately 1 million tonnes of open pit mill feed at an average grade of 2g/t Au, with a low strip ratio, that could be mined and toll treated at an operating cost of less than US\$250/oz of gold recovered. Delineation of such a deposit depends upon results from the infill drilling being at least comparable with previous results and the successful negotiation of a toll treatment agreement with AGC.

3.2.6 Exploration Potential

The prospect is an extensive gold occurrence, possibly representing a "foot print" to a more substantial deposit still, that has only been defined by relatively wide-spaced drilling (200m traverse interval) to an average depth of only 26m. The opportunity to define additional oxide resources is limited by the relatively shallow base of oxidation, however once a better understanding of the precise nature of (and controls on) mineralisation is achieved, there is considerable opportunity for a major primary discovery.

Despite the extensive nature of the Kayeya mineralisation and the high fluid flows required to create such an extensive mineralised system, the gold appears to be relatively homogeneously distributed. Providing that the epigenetic nature of the mineralisation can be confirmed with confidence, it is considered highly likely that gold concentration will be associated with structural elements active at the time of mineralisation, and that identifying these elements should represent a priority for further exploration.

The remaining potential of the project area appears to be somewhat limited. Minor gold anomalies have been defined towards the eastern and western margins of the project, however these are considered unlikely to prove significant.

3.2.7 Exploration Strategy and Expenditure

Perseus has provided a comprehensive two year program and budget for the Grumesa-Awisam Project. The program commences with 3,000m of RC and limited diamond drilling in Year 1, with the objective of defining and upgrading resources associated with the smaller high-grade portion of the Kayeya deposit and to highlight possible extensions of the mineralisation. The Year 1 program will also involve additional metallurgical testwork on the primary ore types along with the completion of an environmental impact statement, leading to an environmental permit application. It is proposed that all pit optimisation studies, mine design, scheduling and financial modelling associated with a pre-feasibility study will be completed by Perseus in Year 1.

The Year 2 program will involve deeper (100m to 130m) diamond drilling to assess the depth potential of specific targets and confirm the geological model as it evolves. Pre-feasibility studies on the high-grade portion of the Kayeya deposit will progress to a full feasibility study in Year 2. The associated budgets are summarised in Table 4 below.

Table 4 - Grumesa-Awisam Project
Proposed Year 1 and 2 Exploration Expenditure
Activity		Year 1 A\$		Year 2 A\$		Total Α\$
Assaying		19,200		20,400		39,600
Geology/Petrology		2,900		2900		5,800
RC Drilling		121,800		10,1500		223,300
Diamond Drilling		21,200		70,600		91,800
Vehicle Costs		5,100		7,700		12,800
Field Supplies/Accommodation/Other		8.800		13.200		22,000
Staff/Contractors		85,700		90.400		176,100
Feasibility Preliminary (incl. metallurgical testwork)		36,800				36,800
Feasibility Detailed (Incl. EIS, final documentation)		73,500		66,200		139,700
Administration		37500		37300		74.800
Total	A\$	412,500	A\$	410,200	A\$	822,700

KYRGYZ REPUBLIC PROPERTIES 4.

BACKGROUND INFORMATION ON THE KYRGYZ REPUBLIC $4.1$

4.1.1 Demographics and Geographic Setting

The Kyrgyz Republic is a land-locked independent republic situated in Central Asia, bordering Kazakhstan in the north, China in the east, Tajikistan in the south and Uzbekistan in the west. The capital city is Bishkek and other important cities indude Osh, Dialal-Abad and Naryn.

The Kyrgyz Republic has a total area of approximately 198,500km². The climate is dry continental to polar in the high Tien Shan, subtropical in the south-west Fergana Valley region and temperate in the northem foothill zone. The mountainous peaks, and associated valleys and extensive river systems of the Tien Shan encompass the entire nation. The population of the Kyrgyz Republic is approximately 4.9 million.

The official languages of the Kyrgyz Republic are Kyrgyz and Russian. In terms of religion, 75% of the country is Muslim, and 20% are Russian Orthodox. Over 97% of the population is literate.

4.1.2 Political and Financial Status

The Kyrayz Republic was annexed by Russia in 1864 and achieved independence from the Soviet Union on 31 August 1991. The Kyrayz Republic's economy and industrial output declined sharply when the Soviet Union broke up in 1991, but by mid-1995 production began to recover and exports began to increase. The Kyrgyz Republic has been fairly progressive in carrying out market reforms, such as an improved requlatory system and land reform. The Kyrqyz Republic was the first CIS country to be accepted into the World Trade Organization.

The Kyrayz Republic has a predominantly agricultural economy. Cotton, tobacco, wool, and meat are the main agricultural products. although only tobacco and cotton are exported in any quantity. Industrial exports indude gold, mercury, uranium, and natural gas and electricity.

Based on 2002 estimates, the Kyrgyz Republic has a GDP (Purchasing Power Parity) of US\$13.5 billion and a GDP per capita of US\$2,800.

The Kyrgyz Republic implemented a stabilisation program that lowered inflation from 88% in 1994 to 15% in 1997. Inflation was then lowered to an estimated 7% in 2001 and to 2.1% in 2002. The government has continued to privatise many industries. Growth was held down to 2.1% in 1998 largely because of the spill over from Russia's economic difficulties, but moved ahead to 3.6% in 1999, 5% in 2000, and 5% again in 2001. The drop in output at the Kumtor gold mine sparked a 0.5% decline in GDP in 2002. Poverty indicators are no better in 2002 than in 1996. On the positive side, the government and the international financial institutions have embarked on a comprehensive medium-term poverty reduction and economic growth strategy. Further restructuring of domestic industry and success in attracting foreign investment are keys to future growth.

Although the Kyrgyz Republic remains one of the poorest countries of the former Soviet Union, it has become one of the most progressive in carrying out market reforms.

4.1.3 Mining Industry

The Kyrgyz Republic's mineral industry involves both the mining and processing of mineral products. The country is a significant producer of tin, tungsten and gold, and is the largest producer of antimony and molybdenum in the former Soviet Union. The Kyrgyz Republic is not a major ferrous metal producer. All of the mining and beneficiation enterprises are controlled by the state-owned Kyrgyzaltyn.

Currently nearly all of the Kyrgyz Republic's foreign investment in the mining industry has been focused on the gold sector, which has shown the most growth and potential. The Kyrgyz Republic's economy has benefited greatly from gold production, being the former Soviet Union's third largest gold producer. The country's immediate economic prospects are substantially linked to the future of its gold industry.

In recent years, the economy has benefited greatly from gold production from the large Kumtor deposit, a joint venture with Canada's Cameco Gold Inc. Several other major gold deposits are under development with the participation of foreign investors.

4.1.4

Mining Tenure

Mining Tenure is governed by the "Law of the Kyrgyz Republic on Subsoil". This law is used to administer the relationship between government and private entities when conducting mineral resource exploration and mining in the "subsoil" as defined by the Law. Essentially there are two levels (from four related types) of tenure for mineral exploration related activities in the Kyrqyz Republic-

Licence to Conduct Geological Subsoil Study (Article 10) - this licence gives the holder the exclusive right to conduct geological research within the boundaries of the licence area for a period of two years, with extensions up to 10 years. The maximum size of the licence area and the minimum annual statutory investment is determined by the Government of the Kyrgyz Republic. Should a deposit be discovered, the licencee shall have an exclusive right to obtain a licence without holding a tender.

Licence to Develop Mineral Deposits (Article 11) - grants the licencee the exclusive right within the boundaries of the mining allotment to mine, process, sell and export all recovered minerals for a period of 20 years with subsequent extensions depending on the depletion of mineral stocks.

4.1.5 Regional Geological Setting

The geology of the Kyrgyz region is dominated by a complex sequence of rocks that comprise the Tien Shan thrust-fold belt. The Tien Shan form an arc of east – west trending mountains that belong, in part, to the larger Urals-Mongolian fold belt. The fold belts of the Tien Shan were formed during a period of complex intra-plate rifting that started in the late Proterozoic, culminating in two major collisions and over-thrusting events in the mid to late Palaeozoic. The Tien Shan is subdivided into two main tectonic blocks defineated by a major fault, the east - west trending Nikolaev Lineament. The Northern Tien Shan lie to the north of the fault and are composed of folded late Proterozoic to early Permian sedimentary rocks. To the south the stratigraphy is of late Proterozoic to early Devonian age, subdivided into the Middle and Southern Tian Shan, reflecting different depositional environments.

The Tien Shan Mobile belt is host to some of the world's largest gold deposits (Figure 4). Muruntau in Uzbekistan is considered the largest, with a total resource estimated at 170Moz of gold, hosted within carbonaceous shales of the Southern Tien Shan. The Kumtor mine in the eastern Kyrgyz Republic has a resource of up to 17Moz, occurring within carbonaceous shales of the Middle Tien Shan sequence. The Tien Shan mobile belt is considered by many to contain the second largest endowment of gold behind the Witwatersrand in South Africa.

Figure 4 - Perseus Tenement Locations and Tectonic Terrain Boundaries within the Kyrgyz Republic

The rocks of the Northern Tien Shan fold belt were formed throughout a period of intercontinental rifting that started during the Baikalian (upper Proterozoic) and continuing through to the Caledonian Orogeny (Cambrian to early Devonian). A collision event took place during the late Carboniferous to early Permian, which accreted island arcs of the Northern Tien Shan onto the northern margin of the Middle Tien Shan - Tarim continental block

The Middle Tien Shan, which extends for approximately 500km through the Kyrgyzian Mountains, occupies an intermediate position between the Northern and the Southern Tien Shan thrust-fold domains and shares a similar stratigraphic history with the Southern Tien Shan belt.

Sedimentary rocks of the Middle Tien Shan were deposited in the late Precambrian and Palaeozoic eras on a continent or in a marine environment under sub-platform conditions. In the Middle Tien Shan two phases of magmatic activity are recorded, respectively corresponding to collision events that occurred with the Southern Tien Shan during the mid Palaeozoic and in the Northern Tien Shan during the upper Palaeozoic. The entire sequence was subsequently deformed during the Variscan Orogeny.

At the end of the Palaeozoic era, the Middle Tien Shan was over-thrust onto the Northern Tien Shan and, in turn, over-thrust by the Southern Tien Shan. Due to thrusting, the width of the Middle Tien Shan varies significantly, reaching a maximum width of 80km in the west and disappearing at the eastern extremity of Kyrghyzian Tien Shan, where the Southern Tien Shan is over-thrust directly onto the Northern Tien Shan. Further to the east in China, the Middle Tien Shan again appears in a tectonic window between the Northern and Southern Tien Shan.

The basement of the Southern Tien Shan is inferred to be of upper Proterozoic to lower Palaeozoic age, comprised of metamorphosed siltstones, mudstone and sandstones. Deformation during the Caledonian Orogeny has produced tightly folded structures, which are unconformably overlain by un-metamorphosed carbonate dominated sequences of Devonian to Carboniferous age. Collision of the Proterozoic Tarim Basin to the south during the Carboniferous resulted in the Southern Tien Shan belt being over-thrust onto rocks of the Middle Tien Shan block.

The complexity of the Proterozoic-Palaeozoic successions is in contrast to the Mesozoic-Cenozoic sedimentary rocks that infill basins between the mountain chains forming significant cover sequences.

The Talas-Fergana strike-slip fault is a major transverse structure with 240km of right-lateral displacement, documented by an offset in the boundary between the Middle and Southern Tien Shan. Movement along the fault is postulated to have occurred in the late Palaeozoic, with further strike-slip movement probably continuing into the Mesozoic period.

SAVOYARDY PROJECT $4.2$

4.2.1 Location, Access and Physiography

The Savoyardy Project is located approximately 145km to the southeast of the city of Osh and approximately 300km south of Bishkek. The project is situated within the Osh Province in the southern Kyrgyz Republic, adjacent to the border with China. Road access is available to the centre of the project area from Osh city, with approximately 50% of the road paved and the remainder gravel.

The project area covers the valley of the Savoyardy River at elevations between 2.500m and 3.700m above sea level. The physiography consists of steep rugged slopes and narrow to moderate width valleys below a summer snow-line at approximately 4,000m elevation. The vegetation is dominated by sparse alpine grassland and scrub with minor conifer stands.

4.2.2 Tenure

The Savoyardy Project comprises a single Exploration Licence (Au-87-04) covering 124km², with the Chinese border forming the southwestern boundary of the licence. The tenement is registered in the name of JSC Savoyardy, a wholly-owned subsidiary of Perseus, which currently holds a 100% interest.

Canadian listed company, Lalo Ventures Limited (Lalo), has negotiated the right to earn up to 70% interest in JSC Savoyardy via staged exploration expenditure and share allocations. To earn an initial 51% interest in JSC Savoyardy, Lalo must incur exploration expenditure of US\$3M and issue Afminex and other parties associated with the project prior to Perseus's involvement US\$1M in Lalo shares by 31 December 2005. Upon Lalo incurring exploration expenditure of a further US\$3M and issuing an additional US\$0.5M in shares, it shall be entitled to a 70% equity in the project via a shareholding in JSC Savovardy and Perseus will have a 30% equity. A management fee of up to 12% of all expenditure is payable to the project manager, which is to be appointed by Lalo.

4.2.3 Geology

The Savoyardy Project is situated within a northeast trending belt of sedimentary rocks, which form part of the Southern Tien Shan thrust/fold complex. The project is dominated by a sequence of carbonaceous shales, which are reported to contain up to 15% carbon and are intercalated with lenses of sandstone and limestone (Figure 5). Soviet geologists inferred this unit to be of Silurian age, however Perseus reasonably considers that the likely age is upper Proterozoic (Vendian), as the geochemical signature and

deformation is similar to units of comparable age elsewhere within the Southern Tien Shan fold belt. The shales have been overthrust to the northwest by an undifferentiated sequence of glacigene sediments of similar age.

The carbonaceous shales are interrupted by a thrust inlier of shallow marine Devonian sandstones before the shales are again exposed to the southeast. These are in turn in thrust contact with a sequence of lower Carboniferous to lower Permian sandstones and siltstones, commonly including thick interbedded limestone and dolomite layers, occupying the southeastern margin of the project. A sub-horizontal succession of undifferentiated Mesozoic sediments unconformably overlying the Palaeozoic sequence, impinge on the northern portion of the tenement.

Apart from small dykes exposed at Savoyardy, no intrusive or volcanic rocks have been recognised within the project area.

Figure 5 - Savoyardy Project, Geology and Exploration Summary

The structure is dominated by tight isodinal folding of the basement sequence, which occurred during the Variscan Orogeny, representing the earliest deformation event within the project area. Folding has generated two main anticlines with an axial trend towards the northeast, extending the length of the property. The younger Palaeozoic succession is characterised by more subdued folding and extensive thrusting. Northeast trending and northwest dipping thrust faults, including the Irkesh, Komur, and Savoyardy Thrusts, constrain the major lithological units. The entire stratigraphy and earlier thrust faults have been offset by later north-trending oblique faults, which appear to have a temporal and spatial relationship to the mineralising event and are suspected to represent the primary conduits for mineralising hydrothermal fluids.

Gold mineralisation occurs where north trending faults intersect fracture zones developed along the anticlinal hinge zones within the basement carbonaceous shales, and also along the thrust contact between the shales and overlying sandstones. In the former case, the mineralisation tends to be confined to the carbonaceous shales, extending along the adiacent antidinal axes. The latter style of mineralisation is particularly evident within Zones 3 and 5 and the extensions to Zone 4 and 10 at the Savoyardy Prospect, where mineralisation is more discrete or pod-like in nature, probably in response to localised dilation associated with differential thrust movement along the contact between the brittle sandstone unit and the more ductile carbonaceous shale.

Alteration associated with mineralisation is dominated by a quartz-carbonate-sulphide assemblage. The nature of sulphide mineralisation has been studied in detail, identifying specific associations between gold and pyrite-arsenopyrite or alternatively sphalerite-tennantite-tetrahedrite mineralisation. The gold is reported to be finely dispersed and free within sulphides dominated by pyrite. Little gold appears to be directly associated with antimony (dominantly occurring as stibnite), a relationship potentially explained by metallogenic zonation, reflecting a change in pressure and temperature regime during the mineralising event.

Four main mineral associations have been recognised:-

• Quartz-berthierite-stibnite veins located in the upper Palaeozoic formations.
• Quartz-carbonate-jamesonite veins hosted mainly within the Devonian sandstones.
• Quartz-gold-pyrite-arsenopyrite veins located mainly at the contact between Devonian sandstones and the carbonaceous shales.
• Quartz-gold-pyrite-arsenopyrite fracture fill dominantly as stratabound zones within the carbonaceous shale unit, where arsenopyrite is characteristically disseminated as fine needles, similar to other carbonaceous shale hosted gold deposits in Kazakhstan and Uzbekistan.

4.2.4 Exploration History

The Savovardy area was first mapped during a program of regional prospecting carried out by the Soviet regime between 1971 and 1973. Geological mapping was undertaken at a scale of 1:50,000, concentrated along the regional northeast trending Savoyardy Fault Zone, and the entire project area was incorporated in a broader program of stream sediment and soil geochemistry.

Significant gold anomalies were outlined in two broadly parallel northeast trending horizons extending over a strike length of 15km to the Chinese border, and a further 10km into China itself. More discrete anomalies were generated along the thrust contact between the carbonaceous shales and older glacigene sediments to the north, however these anomalies occur largely along valley floors and are mainly obscured by alluvial cover. A series of more diffuse anomalies, induding the Savoyardy, Karagatty, Karagatty II, Tata1, Pogranichnoe and Lesnoe Prospects, straddle the contact between the carbonaceous shales and the Permo-Carboniferous sandstones.

It is understood that an induced polarisation (IP) survey was initially undertaken over the Sayoyardy-Pogranichnoe area. An anomaly was identified over a strike length of 5km along the thrust contact between the carbonaceous shales and Devonian sandstones to the southwest of the Savovardy Prospect. An IP survey was also carried out over the rest of the Savovardy area during 2001-2002 by the State South Kyrgyz Geological Survey; however the full details of this work are not presently available in the State archive.

During the 1970's the Soviet regime was intent on developing mineral resources of strategic and industrial importance. The discovery of antimony mineralisation at the Savoyardy Prospect between 1974 and 1977 initiated detailed mapping (1:5,000 scale) and sampling. Although gold was identified to be indirectly associated with antimony at Savoyardy, the principal focus was to develop and mine the antimony mineralisation. Between 1977 and 1980 a trenching program was followed by underground exploration, induding the development of an adit and several crosscuts.

The Soviets are understood to have completed metallurgical testwork biased toward the recovery of gold by means of flotation followed by cyanidation. The 65kg-sample of pyrite-arsenopyrite ore with a gold grade of 30.8g/t was tested in the State Laboratory. A flotation concentrate was obtained from ore milled to 0.002mm to 0.07mm and analysed and the concentrate was then treated by cyanidation, the result of this was an overall gold recovery of 95.87%.

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More recently Perseus has completed limited re-mapping and re-sampling of the mineralization zones (230 channel samples) at the Savovardy Prospect, and commenced compilation and translation of the Soviet data. Two new mineralised zones have been identified at the Savoyardy Prospect and one in the Lesnoe-Pogranichnoe area, approximately 2km south of the Savoyardy Prospect. A 150m wide gold anomaly with grades up to 1.2g/t has been confirmed at the Lesnoe-Pogranichnoe Prospect, apparently related to a 90m thick unit of altered carbonaceous shales in the core of an anticline.

4.2.5 Mineral Resources

Gold mineralisation was initially defined via sampling of surface trenches and underground exposures at the Savoyardy Prospect. The main adit intercepted two converging zones of mineralisation referred to as Zones 4 and 10, developed over widths up to 19m (Table 5). The density of sampling was considered by Russian workers to be sufficient to categorise the gold mineralisation into a low confidence resource category in accordance with the Soviet classification system, however this estimate is not considered JORC compliant.

Between 1984 and 1985, Russian specialists reviewed the potential for carbonaceous shale associated gold mineralisation in the southern portion of the Kyrgyz Republic. They considered that the mineralised potential at the Savoyardy Prospect was considerably greater than that indicated in their original resource statement, and elected to quantify additional low confidence mineralisation. RSG Global has not had the opportunity to independently verify and appropriately classify the Soviet resource estimates.

Preliminary metallurgical test work commissioned by Perseus in January 2004 indicates that the gold is likely to not be amenable to heap leaching.

College

Zone #4			Zone #10 .	Convergent Zone
Width (m)	57. L Au $(g/t)$	Width (m)	Au $(g/t)$	Width (m)	Au $(g/t)$
$-2.2$	85				29.5
25	13.5		69		279
25					23.3
	22.6		3.8		16.7
	9.4	58
	12.4	2.6	18.3		16.6
	19.8		$\overline{\phantom{a}}$ 13 ዓ		82
	. 10.9
	. 29.7
	6.8

Den
Sterfongen
Sterfongen Table 5 - Savoyardy Project a bayan a Significant Gold Mineralisation from Adit sampling, Zones 4 and 10

4.2.6 Exploration Potential

Substantial exploration and underground development was undertaken by Soviet agencies at the Savovardy Prospect. While much of this work was focused on antimony, gold mineralisation was quantified on the basis of surface trenching and underground face sampling. The geological model developed did not consider the full strike extent of the mineralisation and underground exploration to the north of Zones 4 and 10 may well reveal considerable extensions to the currently identified mineralised zones.

There appears to be reasonable continuity of gold mineralisation between the underground development and surface exposures, however the gold mineralisation decreases in width and grade at the surface, indicating sufficient variability with the underground mineralisation, and therefore the continuity should be confirmed by drilling. Similarly, the width of mineralised zones encountered in underground development is considerably greater than that exposed in surface trenching. This suggests that there is a high likelihood the mineralisation will persist with depth, possibly extending to the lower limit of carbonaceous shale, providing an additional opportunity to expand the resource base in the Savoyardy area.

Full translation of the metallurgical reports and more specific metallurgical testing directed towards gold mineralisation will be important in determining the metallurgical characteristics of the ore. The potential for preg-robbing via activated carbon species within the carbonaceous shale host, and the potential metallurgical complexities associated with arsenopyrite and stibnite sulphide species within the ore, may adversely affect gold recoveries.

The Karagatty, Karagatty II, Tata1, Pogranichnoe and Lesnoe Prospects are gold-antimony anomalies along structural strike from Savovardy and of similar tenor. These prospects dominantly occur along faults within the sandstone unit, and further exploration is readily justified to establish the presence of gold mineralisation within the more prospective underlying carbonaceous shale.

The series of more diffuse anomalies (including the substantial IP target) developed along the northwestern contact of the Devonian sandstone inlier have received substantially less exploration attention. RSG Global considers that this thrust contact is equally prospective for gold mineralisation. This is supported by documented exploration across the Chinese border, where mineralisation along this contact has been traced for 3.200m, and includes one 750m long zone averaging 1.98g/t Au over an average width of about 30m.

The significance of the more discrete anomalies generated along the thrust contact between the carbonaceous shales and older glacigene sediments to the north is largely unknown, however RSG Global considers that further assessment of these targets is also readily justified.

The Savovady Project incorporates a significant succession of carbonaceous shales with a demonstrated propensity to host gold mineralisation within the Middle and Southern Tien Shan geological domains. RSG Global considers that the Savovardy Prospect, along with other less mature targets and anomalies within the project area, represent a significant opportunity to define a considerable gold resource. In terms of geological setting, these targets are potentially consistent with other deposits within the Southern Tien Shan domain, including the giant Muruntau Mine in Uzbekistan.

The potential for open pit mining at the Savovardy and other prospects along the same northeast trend is somewhat limited by the rugged terrain, possibly necessitating underground mining. Notwithstanding this, gold anomalies also occur within areas of lower topographic relief in the northwestern portion of the project.

4.2.7 Exploration Strategy and Expenditure

Perseus has not provided a budget for Savoyardy as the Year 1 expenditure will be met by Lalo, where Lalo must spend an initial US\$250,000 on exploration before 31 July 2004. If Lalo elects to maintain its farm in arrangement, it must spend a further US\$750,000 in exploration expenditure by 31 December 2004, a further US\$2,000,000 by 31 December 2005 and a final expenditure commitment of US\$3,000,000 by 31 December 2006.

4.3 KYLDOO PROJECT

4.3.1 Location, Access and Physiography

The Kyldoo Licence area is situated in the central region of the Kyrgyz Republic, located approximately 205km to the southwest of the capital of Bishkek. The concession is comprised of a single block situated at an elevation of 2,000m to 2,500m within the Tien Shan mountain belt, and is situated on the mildly sloping flanks of the Fergana Range.

The Kyldoo Project lies 4km west of the Makmal gold mine, which provides good access to the area via bitumen roads and well maintained unsealed roads. Vehicular access to the project is sound, with some minor upgrading of access roads necessary to reach some portions of the project area. The town of Kazarman, located 25km north of Kyldoo, provides support for the area, induding the nearby Makmal mine and processing plant.

Topographic relief in the Kyldoo Project area is relatively gentle to moderate, with deeply incised valleys. The drainage is dominated by north-flowing, snow and glacier fed streams that contain water all year round. The vegetation is mainly comprised of sparse grasslands supporting small concentrations of cattle and goats. In the viginity of the project area the hills are covered in patches of thorny scrub.

4.3.2 Tenure

The Kyldoo Project comprises a single Exploration Licence (Au-63-04) covering an area of 149km². The concession is registered in the name of JSC Kyldoo. Perseus has the right to earn up to 80% equity in the project, achieving an initial 50% interest by completing a four-hole diamond drilling program costing approximately US\$80,000 by 31 July 2004. Perseus may then elect to increase its equity to 80% by spending a further US\$400,000 by 30 November 2005.

Canadian listed company, Lalo Ventures Limited (Lalo), has negotiated the right to earn up to 70% interest in JSC Kyldoo via staged exploration expenditure and share allocations to Afminex and its partners. To earn an initial 51% interest in the Kyldoo Project, Lalo must incur exploration expenditure of US\$0.48M and issue Afminex and its partners US\$0.5M in Lalo shares by 31 December 2004 and incur further expenditure of US\$1M by 31 December 2005. Lalo may then earn a further 19% (aggregate of 70%) interest in JSC Kyldoo by issuing a further US\$1M in Lalo shares to Afminex and its partners and committing additional exploration expenditure of US\$2M by 31 December 2006.

In addition, Lalo will pay Afminex and its partners a royalty of US\$1/oz for any gold produced from the Kyldoo Project. A management fee of up to 15% of all expenditure is payable to the project manager, to be appointed by Lalo.

4.3.3 Geology

The Kyldoo Project incorporates rocks of the Middle Tien Shan thrust-fold belt, adjacent to the Talas-Fergana Fault. In the vicinity of the project area a major flexure in this structure is interpreted to have developed in response to clockwise rotation. This deformation has also produced intense jointing and faulting, mapped with a normal sense of movement, indicating dilation of the rotated block due to trans-tension.

The permit area covers moderately deformed rocks of sedimentary origin ranging in age from upper Proterozoic (Vendian) to Carboniferous (Figure 6). The sequence observed at Kyldoo is typical of the Middle Tien Shan belt and is comprised of a conformable sequence dominated by the Lower and Upper Tillite Members, between which lies the economically significant Carbonate Member. The Lower Tillite Member comprises boulder dasts within a grey shaley siltstone matrix. The Carbonate Member consists of carbonaceous shale intercalated with marl and limestone with a thickness of up to 100m. The Upper Tillite Member is comprised of a lower Black Tillite unit with boulder-sized clasts in a matrix of black carbonaceous shale, and an upper Grey Tillite unit.

Figure 6 - Kyldoo Project, Geology and Exploration Summary

The lower Cambrian to lower Ordovician Shartor Formation semi-conformably overlies the Vendian rocks and comprises silicified dolomite, marl and chert. This sequence is in turn overlain by middle to upper Ordovician siltstone and polymictic sandstone of the Ichkebash Formation. The overlying Devonian Tulkubash Formation contains a basal conglomerate that grades into an upper quartz arenite member. The eastern part of the project area is dominated by thickly bedded to massive limestone and dolomite deposited during the lower Carboniferous.

The western section of the project area is dominated by allochthonous blocks of the Southern Tien Shan belt, which have over-thrust the Middle Tien Shan succession. Along the thrust contact the Southern Tien Shan succession is dominated by Silurian to lower Devonian talc-chlorite schists and tectonic breccias, overlain by marble and dolostone with intercalated volcanic units.

The sedimentary rocks of the Middle Tien Shan have been moderately folded, forming a sub-parallel series of anticlines and syndines, which are slightly recumbent towards the east. The Vendian succession is over-thrust and variously truncated by the Silurian to Devonian succession to the west, and separated from Ordovician sediments to the east by a persistent steeply dipping fault. The entire sequence and structures have been offset by a penetrative series of late west to northwest trending oblique normal faults.

The more prospective Vendian stratigraphy is exposed as a series of parallel synclines and anticlines in two areas within the northern portion of the project, referred to as the Tropinny and Medovy areas respectively. The former is dominated by the Tropinny Anticline, which is exposed over an 800m length and a width of 300m. Secondary undulations along the fold axis have created at least three discrete domal structures, beneath which the prospective carbonaceous shales are interpreted to lie at shallow depth below the Upper Tillite unit. The Medovy area, located 800m south of Tropinny (Figure 7), comprises a window of well-exposed carbonaceous shale and intercalated limestone duplicated by thrusting, which has been folding into the Medovy Anticline and a complimentary syndine.

Intrusive rocks of dominantly intermediate composition (diorite to monzonite) occur throughout the Kyldoo region. These intrusions are thought to have been emplaced during late Carboniferous to Permian times and are reported to outcrop sporadically along the Vendian stratigraphy.

The Makmal mine, located 4km to the east of Kyldoo Project, has a reported gold endowment of 5.6Moz and production of 3.5Moz. Here skarn-style gold mineralisation is developed within carbonates intruded by Permian stocks, presumably equivalent to those developed within the Vendian stratigraphy at Kyldoo.

Within the Kyldoo Project itself, gold mineralisation has been identified in at least three localities, one of which is associated with Devonian sandstones to the north, while the other occurrences lie within Vendian rocks of the Tropinny and Medovy areas respectively. Trench sampling across the axis of the Tropinny Anticline identified gold mineralisation up to 4.3g/t. Au over 2m, associated with fractures within the Upper Tillite.

Intense structurally controlled metasomatic alteration is continuously developed along the gest of the Tropinny Anticline over a width up to several hundred metres, decreasing in intensity away from the hinge zone. The alteration assemblage is characteristic of low temperature fluids and includes siderite, ankerite, sericite, albite, kaolinite, barite, and pseudomorphs of iron oxides after pyrite. Dykes intruded along the axis have been altered to kaolin, whilst elsewhere they remain unaltered.

4.3.4 Exploration and Mining History

The Kyldoo Project area has been extensively studied and prospected by both the Soviet and Kyrgyz Governments since the 1930's. The most intensive period of exploration was undertaken during the 1970's and 1980's under the Soviet regime. The area has been mapped at a scale of 1:50,000 and stream sediment sampling was carried out at a density of 15 to 24 samples/km². A heavy mineral pan concentrate survey was also completed at a density of 4 samples/km². Anomalies generated via stream sediment geochemistry were followed up with soil sampling.

Figure 7 - Kyldoo Project, Geology of the Tropinny and Medovy Prospect Areas

Within the Kyldoo Project the Soviet exploration outlined gold anomalies extending along the northeastern flank of the Tropinny Antidine, which was subsequently trenched and sampled. Two of the higher priority zones identified from trenching at Medovy and Kansky were drilled and qualified by Soviet exploration teams.

Kentor completed exploration over the Kyldoo Project during 1998 and 1999, involving the re-sampling of Soviet trenches and the excavation of additional trenches in higher priority areas. These trenches were mapped and sampled in detail, with both lithological and structural information recorded. The trench channel sample results are included in Table 6 below. Sample results from Tropinny indicate strong zoning of anomalous arsenic, antimony and molybdenum associated with alteration along the hinge zone of the anticline.

TABLE 6 - KYLDOO PROJECT
Trench Sampling Results

	Trench Sampling Results
Costean.	Sample No.	Interval	Width	Аu.	Location
Station			(m)	(m)	ppm
T-13/98	36-43	$0 - 8$	8	3.00	Kansky
T-15/98	49-52	14 - 5.4	4	6.44	Kansky
T-17/98	59-60	4 - 6		5.18	Kansky
T-19/98	72-75	$8 - 11$	s	0.96	Kansky
T-54/98	79-82	$8 - 12$	4	6.35	Medow
R-2/98	102	2 - 2,5	0.5	3.01	Medow
R-1/98	106 - 110	1-6	5	183	Medow
T-30/98	113-114	56-58	2	4.30	Tropinny
R-3/98	119-120	$2 - 4$	2	3.17	Tropinny
R-4/98	124-125	2-4	2	3.12	Tropinny
DC12	472	79-80		0.94	Tropinny
DC12	9010	129,8-chip	NΑ	2.01	Medovy
DC11	AB6	$75 - 76$		159	Tropinny
DC11	AB7	79-80.5	15	1.04	Tropinny

During 1999 Kentor initiated a geophysical study over the northern segment of the Tropinny Antidine, collecting data from a dipoledipole induced polarisation (IP) survey. Eight east-west trending profiles were completed totalling 5,000m, with the aim of locating areas of high chargeability, reflecting zones of strong sulphide development. The results identified an IP anomaly consistent with the axis of the anticline, with chargeability values of 10% comparing favourably to values of 7% recorded at the Kumtor mine (Figure 8). The high chargeability values are considered to be due to strongly disseminated sulphides. Graphite is not considered to be the cause of the anomaly as the carbon species within the shale horizons are reportedly dominated by poorly conductive coal mineral species.

4.3.5 Mineral Resources

Two of the higher priority zones of gold mineralisation identified via initial trenching at Medovy and Kansky were drilled by Soviet exploration teams, however the drilling data has not been identified and independently assessed by RSG Global.

Russian workers considered the density of drillhole data enough to consider assigning a low confidence resource classification to the Medovy-Kansky area in accordance with the Soviet dassification system, however this estimate is not considered JORC compliant and has therefore not been reported.

Figure 8 - Kyldoo Project, Tropinny Anticline, IP line 3, Chargeability (top) and Resistivity (Bottom)

4.3.6 Exploration and Resource Potential

Perseus has proposed a model for exploration similar to that evident at Kumtor, where the age and geological setting are essentially identical. Moderate to strong deformation at Kumtor has resulted in the development of fracture zones along the axes of anticlines and fault zones. Mineralisation is concentrated within zones of strong fracturing in the carbonaceous shale units and along the contact with the overlying tillites and sandstones, associated with extensive alteration and sulphide development.

Key elements that contribute to the prospectivity of the Kyldoo Project indude the occurrence of folded carbonaceous shale horizons of likely upper Proterozoic age situated within the cores of anticlinal domes. The carbonaceous shale unit is a distinctive Middle Tien Shan horizon that is host to the significant Kumtor deposit (17Moz) further to the east within the Kyrgyz Republic. In the Kyfdoo context the proposed model is considered to be valid, providing a sound framework for future gold exploration.

The antidinal and domal structures at Kyldoo can be traced intermittently along strike for at least 20km within the Vendian stratigraphy. Detailed prospecting has outlined anomalous gold mineralisation over a 2km strike length within the Tropinny and Medovy Antidines. This potential may well extend to the south, however the structure appears to have been extensively disrupted by post mineralisation faulting.

Several factors that indicate good potential for the development of economic gold mineralisation have been noted in Tropinny area. The carbonaceous shale horizon appears to have been largely preserved, occurring immediately beneath the Upper Tillite unit exposed along the anticlinal axis. Domal settings developed along the axis of the Tropinny Anticline are interpreted to represent excellent traps for migrating mineralised metasomatic fluids. The maximum stratigraphic thickness of the tillite is 90m, although the depth to carbonaceous shale is likely to be considerably less due to folding and erosion. The tillite exhibits fracturing proximal to the fold axis, which along with the associated alteration, increases in intensity towards the hinge zone. Fracturing and alteration within the tillite is up to 130m wide, associated with an increase in the development of pyrite and arsenopyrite. Post-mineralisation fault displacement appears to limit the strike continuity of the fold systems, however, potentially restricting the extent of mineralisation.

The overfying Silurian to lower Devonian limestone unit of the Southern Tien Shan Fold Belt has in places been leached and replaced by silica. Kentor geologists proposed that the silicified limestone would effectively create an impervious layer above the folded Middle Tlen Shan rocks. This could possibly restrict the flow of hydrothermal fluids, increasing the effect of rock-fluid chemical interactions, an important factor in the deposition of gold mineralisation. Sampling of the limestone indicates that it does not contain anomalous gold, however the possibility of skarn mineralisation associated with the intrusive rocks, similar in setting to the nearby Makmal Mine, should also be considered a valid target for exploration.

The nearby Makmal Mine demonstrates the gold endowment of the Kyldoo area and RSG Global considers that there is reasonable potential to locate significant mineralisation within the Kyldoo Project.

4.3.7 Exploration Strategy and Expenditure

Perseus has not provided a budget for Kyldoo as the Year 1 expenditure will be met by Lalo, where Lalo must spend US\$80,000 on or before 15 July 2004. If Lafo elects to maintain its farm-in arrangement, it must fund a further US\$400,000 in exploration expenditure by 31 December 2004 and a further US\$1,000,000 by 31 December 2005.

44 MALY NARYN PROJECT

4.4.1 Location, Access and Physiography

The Maly Naryn Project is situated approximately 190km to the southeast of Bishkek, within the mountainous centre of the Kyrgyz Republic along the Jetim Range. The city of Naryn lies approximately 30km to the southeast of the project, and the Kumtor gold mine is located 130km to the east. Access to the Maly Naryn property is via the Naryn to Lake Issyk-Kul road, which is partially sealed and designed for heavy traffic.

The physiography is dominated by rugged mountainous terrain, ranging in elevation from 2,400m to over 4,000m, dissected by deep river valleys. Slopes in the deeper valleys are very steep, decreasing in grade above 3,000m with abundant deposits of glacial moraine and talus. Above 3,800m the slopes become more subdued, with some valleys incorporating active glaciers.

4.4.2 Tenure

The Maly Naryn Project comprises a single Exploration Licence (Au-161-03) forming a rectangular block covering an area of 383km². The tenement is registered in the name of JSC Z-Explorer, a wholly owned subsidiary of Perseus, which holds a 100% interest.

4.4.3 Geology

The Maly Naryn Project incorporates rocks of the Middle Tien Shan fold belt, where upper Proterozoic and Palaeozoic successions are exposed as a system of imbricate thrust sheets. The Vendian-aged rocks are the oldest present within the project area and are reported to have a maximum thickness of 1,000m, exaggerated by crustal repetition and thrust duplexing (Figure 9). The Vendian rocks consist of an Upper and Lower Tillite unit separated by a succession of carbonaceous shales, siltstones and sandstones with inter-bedded carbonate rocks.

The Vendian basement is conformably overlain by a succession of Cambrian shallow marine sediments comprising shale, limestone and chert, which is in turn overlain by an Ordovician sandstone unit. Devonian conglomerate and sandstone semi-conformably overlie the Ordovician rocks. The absence of lower Devonian sequences in the Maly Naryn area is suggested to reflect a period of uplift and denudation.

The stratigraphy has been intruded by granite, granodiorite and diorite of Permo-Carboniferous age, and significant contact metamorphisim is evident within the carbonaceous shales and limestone adjacent to the intrusives. Previous workers have noted that rocks within this zone are extensively metasomatised for up to 7km from the contact, implying that the flanks of intrusions are relatively shallow dipping and their carapaces are largely preserved.

There appears to be a strong correlation between the Permo-Carboniferous intrusives and gold mineralisation, suggesting that the mineralising fluids had a strong magmatic component (Figure 10). Skarn development within carbonate sequences is in places associated with gold mineralisation of up to 10.4g/t Au recorded from rock chip sampling. Discrete patches and lenses of sulphide (to 20%), in places up to tens of metres wide and several hundred metres in length, are developed within the contact aureole. The sulphide assemblage is characteristically comprised of pyrite, arsenopyrite, pyrrhotite and minor chalcopyrite, however the sulphide concentration does not directly correlate with gold mineralisation.

Recent sediments, consisting of mainly moraine debris, infill valleys and veneer the upper slopes, particularly in the southern and northwestern extremities of the project area.

4.4.4 Exploration History

The Maly Naryn River has been the centre of placer gold mining activity since the 1930's, with nuggets of up to 16oz having been reported. Anecdotal evidence suggests that artisanal miners identified the source of the placer gold and mined the auriferous black shale to a limited extent.

During the 1960's, exploration by Soviet agencies reportedly discovered significant primary gold mineralisation within carbonaceous shales directly underlying the placer deposits. The sampling results, provided in Table 7 below, remarkably do not appear to have been followed up by the Soviets.

In 1999, Kentor geologists were made aware of the Soviet sampling results and, in following up the report, found no evidence of placer gold mining activity upstream from the outcropping carbonaceous shale, confirming this unit as the likely primary source for the placer gold deposits. Kentor collected and analysed 17 rock chip samples, all of which returned anomalous gold values to a maximum of 6.4g/t Au. No further exploration has been completed within the Maly Naryn Project since this time.

Table 7 - Maly Naryn Project

Soviet Rock Chip and Channel Sample Results

Sample.	Width	Rock Description	Au	Ag	Cu -
Number	(m)		ppm	ppm	%
3136	0.6	sandstone (pyrite, arsenopyrite)	42.0	16	$<$ 0.01
3148	10	siltstone (pyrite, arsenopyrite)	64	5.2	< 0.01
3154	10	quartz (pyrite)	4.0	14	< 0.01
-3150	0.8	vein quartz (arsenopyrite)	71.0	70	$<$ 0.01
3151a	0.6	sandstone (pyrite, arsenopyrite)	2.8	26	< 0.01
6409-1-5	4.0	alteration breccia (sulphide)	0.8	2.1	< 0.01
.3151a	10	limestone (iron oxide)	2.8	2.6	< 0.01
6408-2	chip.	aossan	2.9	14	< 0.01
$-6408 - 1$	chip	aossan	2.8	1.1	< 0.01
220-223	4.0	skarn limestone (pyrite, chalcopyrite, molybdenite)	0.8	2.0	0.23
261-264	4.0	skarn limestone (pyrite chalcopyrite, arsenopyrite)	0.9	5.2	0.47
N128	3.0	limestone (pyrite, chalcopyrite)	2.8	12.0	1.76
1465-1	10	skarn in sandstone (pyrite, chalcopyrite)	2.2	6.8	1.45
1466-1	10 °	skarn in sandstone (pyrite, chalcopyrite)	10.4	42.4	5.40
1477-3	0.4	quartz (iron oxide)	76	6.2	$0.01$

4.4.5 Exploration Potential

The Maly Naryn Project is considered to represent an immature exploration opportunity within a significantly under-explored belt of highly prospective Vendian carbonaceous shales of the Middle Tien Shan domain. The distribution of extensive placer gold mining activity strongly suggests that primary gold mineralisation is derived from carbonaceous shales within the eastern portion of the project area. There is sufficient evidence to suggest that the extensive Soviet exploration program during the 1970's and 1980's overlooked the primary gold potential of the area due to the extensive placer mining activity.

The presence of considerable thicknesses of Vendian carbonaceous shales, duplicated by thrust faulting, represents a favourable lithostructural setting for gold mineralisation within the Middle Tien Shan, consistent with the Kumtor model. RSG Global considers that a systematic exploration program is readily justified within the Maly Naryn Project.

The presence of Permo-Carboniferous intrusives and extensive associated alteration suggests that gold mineralisation may be contemporaneous with this event. The age relationship and paragenesis are similar to other gold deposits within the Tien Shan fold belt, including the Kumtor and Muruntau deposits. There is also some evidence for the development of gold and base metal mineralisation associated with skams proximal to the Permo-Carboniferous intrusives, providing a valid alternative model for exploration.

Insufficient exploration has been completed elsewhere within the Maly Naryn Project to determine the potential at this stage. It is evident from the geological mapping, however, that prospective carbonaceous shales Iving adiacent to Permo-Carboniferous intrusives are also present within the western portion of the project.

4.4.6 Exploration Strategy and Expenditure

Perseus has provided a full two-year budget and work program for the Maly Naryn Project. It is proposed to initially complete a comprehensive program of mapping and geochemical sampling over areas of exposed prospective stratigraphy, with the objective of defining gold anomalies for further assessment. It is envisaged that a total of 1,200 rock chip samples will be collected and analysed for gold and other elements as part of the initial phase.

It is evident that a sound understanding of the structural evolution of the project area is presently lacking. The compilation of a meaningful litho-structural framework is considered an essential precursor to significantly advancing the exploration model and strategy, and this aspect should be considered a priority.

The results from the Year 1 program will ultimately dictate the target priorities for assessment during Year 2, however Perseus has made provision for up to 1,000m of trenching on selected anomalies.

RSG Global considers that the proposed exploration program is broadly consistent with the potential of the Maly Naryn Project, and that the proposed expenditure (Table 8 below) is adequate to meet the anticipated costs of the program and satisfy statutory expenditure requirements.

Proposed Year 1 and 2 Exploration Expenditure
Activity		Year 1		Year 2		Total
		А\$		AS.		A\$
Trenching				9,300		9,300
Assaying		12,700		6,400		19,100
Earth works				8.800		8,800
Rock Chip Sampling		2,200				2,200
Transport Costs		3,500		5,300	Ֆ	8,800
Field Supplies/Accommodation/Other		5,300		7100		12,400
Staff/Contractors		18,800		24,900		43,700
Tenements Rates and Rents		2,200		2.200		4,400
Administration		5.400		7700		13,100
Total	AS.	50,100	A\$	71,700	A\$	121,800

4.5 TALAS PROJECT

4.5.1 Location, Access and Physiography

The Talas Project is located approximately 252km to the west of Bishkek on the northern slopes of the Talas Range. The settlements of Toktogul and Talas are located to the southeast and northeast of the tenement respectively. Access to the area is via the Toktogul to Talas road that connects a series of settlements within the licence area, and from the west via the north-south Kara to Buura Valley road.

The northern slopes of the Talas Range represent a gently tilted peneplained surface that dips to the north and has undergone rapid erosion. This has resulted in the formation of steep rocky valleys and gorges with a relief ranging from 3,500m to 4,000m along the upper ridges, grading down to 2,000m to 2,500m elevations along the valley floors.

4.5.2 Tenure

The Talas tenement comprises a single Exploration Licence (Au-188-03) forming a rectangular block covering an area of 2,270km². The tenement is registered in the name of JSC Z-Explorer, a wholly-owned subsidiary of Perseus.

4.5.3 Geology

The geology of the Talas project area is dominated by mid to upper Proterozoic rocks of the Northern Tien Shan fold belt, which is comprised of two main tectonic sheets. The southern Uzunakhmat Sheet is composed exclusively of mid to upper Proterozoic sedimentary rocks that have been metamorphosed to green-schist facies, whereas the northern Karagoin Sheet is characterised by unmetamorphosed rocks of both mid to upper Proterozoic and lower Palaeozoic ages.

The rocks of the Uzunakhmat Sheet are composed of the Bakair, Karabura and Uzuankhmat Formations (Figure 11). The underlying Bakair Formation occurs along the southwest margin of the project area, following a northwest trend, and is comprised of marble, carbonaceous shale and intercalated sandy limestone with a phyllitic texture. These rocks are inferred to be middle Riphean (mid Proterozoic) age, forming the local basement. The Karabura Formation occurs as a series of thrust-bounded imbricate sheets and can be sub-divided into the Lower Member, which is comprised of sandy limestone and sandstone and the Upper Member made up of intercalations of limestone and sandstone. The Karabura Formation is also inferred to be of middle Riphean age. The younger Uzuankhmat Formation is of middle to upper Riphean age and is comprised of well-bedded sandstones.

The rocks from the Karagoin Sheet occur along a general northwest trend, following the northern boundary of the tenement area. The Uzunakhmat Sheet was over-thrust onto the Karagoin Sheet by a series of southwest vergent imbricate thrust slices.

Figure 11 - Talas Project, Geology

lgneous rocks outcrop in the northern part of the Karagoin Sheet where a large pluton of leucogranite, known as the Kumushtak Intrusion, is identified. The contacts are steeply dipping on the western side of the intrusion and are mainly shallow dipping on the southern and eastern sides. Aeromagnetic data indicate that the granitoid has a shallow dip to the south, where it can be traced under the Uzunakhmat Sheet for approximately 20km. The intrusion has an associated contact metamorphic halo represented by magnesium skarns and homfels, which are more prominent on its southern margins. Gold, silver, uranium and arsenic occurrences, induding the Kumushtak silver deposit and the Uchimachek arsenic deposit, have been recorded along the southern margin of the intrusion.

faneous rocks within the Uzunakmat Sheet are sparsely distributed, and are represented by metamorphosed diorite dykes of likely Riphean age, located mainly within the southern exposures of Uzunakmat rocks. Palaeocene dykes of alkaline basalt, commonly recognised throughout the Northern Tien Shan, also intrude the Uzunakmat Sheet.

Two main deformation events are recognised in the Talas Project area, the first event is represented by a phase of thrusting and folding during the Baikalian Orogeny (700Ma), which affected both major tectonic blocks. Structural studies have revealed that the styles of deformation within the two sheets during the Baikalian Orogeny were markedly different. Deformation within the Uzunakhmat Sheet was predominately ductile in nature, with the development of north vergent folds with sub-horizontal axes trending to the east-southeast.

Intense pressure solution shadows associated with clastic grains in the metamorphosed Uzunakhmat Sheet rocks indicate deformation occurring within a high strain regime. Thrust faulting during this time is associated with the development of thick zones (tens of metres) of phyllonite and mylonite.

Folds within the Karagoin Sheet are also north vergent, with sub-horizontal axes trending towards the east-southeast, however the styles of deformation are more characteristic of a brittle regime. Cleavage within the rocks is more typically sub-vertical to anastomosing, commonly forming convergent fans around fold cores. Thrust faults are less frequent, and are represented by zones of tectonic breccia up to a few metres thick with the occasional development of gouge zones.

The second major deformation event occurred during the Caledonian Orogeny, when rocks of the Uzunakhmat Sheet were thrust over lower Palaeozoic rocks of the Karagoin Sheet. Decollement style structures are recognised in the lowermost lithologies of the Bakair Formation, which exhibit pronounced bedding parallel schistocity and asymmetric folds with "floating hinges". These structures overlie middle Ordovician aged sediments in the under-plate Karagoin Sheet, providing evidence for thin-skinned thrust-fold tectonics. The northwest thrust faults generated during the Baikalian deformation where reactivated during the Caledonian event, with the development of thick zones of breccia and gouge that overprint the phyllonite and mylonite. The thrust propagation is inferred to be from south to the north, with the development of brittle deformation along the thrust front. Evidence for this is seen in the Yellow and Blue Thrusts, occurring along the northern part of the Uzunakhmat Sheet, which derive their names from the colour of the breccia and gouge developed within.

Metasomatic alteration overprints structures active during the Caledonian thrust event, particularly evident along the Hugh's and Uidiailau Faults. The alteration is expressed as post-tectonic sericite (and possibly albite), characteristically including euhedral pyrite in concentrations of up to 10%. Metasomatic afteration is also evident within folded rocks along the axes of anticlines and along thrust duplexes. The linear nature of the folds and thrust faults means that alteration can be traced over many kilometres using aerial photography and satellite imagery.

Gold mineralisation is associated with metasomatic alteration within the thrust faults in the Uzunakhmat Sheet, in particular along the Hugh's and Uidjailau Faults, from where the majority of stream sediment gold anomalies appear to be sourced. The anomalies occur over strike lengths of 20km and 30km along the Hugh's and Uidiailau Faults respectively. The gold is variously associated with copper, minor tungsten, arsenic, zinc, molybdenum and antimony.

Quartz veins have been recognised throughout the project area within rocks of the Uzunakhmat Sheet, generally located along the hangingwall of thrust faults and at the contact between limestone and phyllite in the Karabura Formation and sandstone of the Uzunakhmat Formation. The veins range in thickness from 5cm to 1m and comprise milky quartz, along with siderite, pyrite and copper sulphides. Sampling of the vein material has returned gold values up to 12g/t. To the east of the gold mineralisation, quartzcarbonate veins containing silver-bearing galena are more common, invariably associated with thrust faults and evidence of smallscale artisinal mining activity.

Anomalous gold values (>0.1g/t) are also reported from the metasomatically altered laminae of intercalated limestone and phyllite comprising the Upper Karabura Formation.

4.5.4 Exploration History

Small-scale mining of placer gold has been reported from within the project area since the 1930's, concentrated on the northern slopes of the Talas Range and in the Uzunakhmat Valley. However, it wasn't until the 1950's and 1960's that prospecting was carried out to identify the primary source of the placer gold. The initial work centred around the Kumushtak Intrusion, due to the Soviet concept at that time that all major gold deposits are associated with magmatic activity. The source of the gold was not discovered. however small deposits of uranium, lead, zinc and silver were identified.

During the 1980's, systematic stream sediment sampling was undertaken by Soviet geologists along the central and western portions of the Talas Range. Gold was found to be associated with thrust faults within the Uzunakhmat Sheet, and the anomalies were scrutinised in more detail. Clastic sediments of the Uzunakhmat Formation were targeted as the likely source of mineralisation, particularly where adjacent to breccia and mylonite zones associated with thrusting.

The exploration model was further refined to reflect palaeo-placers as the initial source of gold mineralisation, which then underwent a process of redistribution due to dynamic metamorphism. As an outcome of this model the thrust faults were assessed via reconnaissance rock chip sampling, and ultimately trenched and channel sampled over 3m to 5m intervals, reducing to 1m intervals across zones of intense iron staining, mylonite development and quartz veining.

Four main prospects, Taskain, Koybulak, Taldysai and Postunbulak, were identified and subjected to detailed sampling. The Taskain site was the most intensely sampled of the four, with anomalous gold values (0.05g/t to 0.1g/t) sporadically distributed over a strike length of approximately 5km and a width of 500m, however no significant mineralisation was defined. The Koybulak, Taldysai and Postunbulak sites were sampled in less detail, however the results revealed more discrete zones of anomalous gold mineralisation. All rock chip samples collected during this phase of exploration were assayed for gold using spectral emission, a technique that can generate a high level of variability in gold determinations.

A study carried out by Gutierras-Alonso and Alex Becker on behalf of Apex Silver Mines, concentrated on refining the exploration model for the Talas Project. A detailed analysis of the area revealed a strong association between structures and gold mineralisation, highlighting antidinal cores and thrust duplexes as favourable targets.

More recently the Talas area has been held under Prospecting Licences by JSC Kumushtak, a joint venture between Apex Silver Mines and the North Kyrgyz Geological Expedition. South of the project area, along the southern slopes of the Talas Range, Prospecting Licences have been variously held by joint ventures between Newmont Gold and Kyrgyzaltyn in the first instance, and Kentor Gold NL and the Geophysical Expedition in the other case.

4.5.5 Exploration Potential

Regional exploration at the Talas Project has highlighted four prospect areas with anomalous low-grade gold mineralisation. However, it is evident that detailed mapping and sampling to determine the extent of the mineralisation has not been carried out. Perseus have refined an exploration model based on the localisation of gold bearing metasomatic fluids along structurally controlled conduits, which could provide opportunity to define significant targets. RSG Global considers this to represent a valid exploration model given the extent of metasomatic alteration along the Hugh's and Uidjailau Faults, and the significant size of the gold anomalies at Taskain, Koybulak, Taldysai and Postunbulak.

Insufficient exploration has been completed elsewhere within the Talas Project to determine the potential at this stage. It is evident from the geological mapping, however, that further work along the contact zone between the Upper Karabura Formation and Uzunakhmat Formation, along with detailed assessment along the Hugh's and Uidjailau Faults, may provide Perseus with further targets for exploration.

4.5.6 Exploration Strategy and Expenditure

Perseus has provided a full two-year budget and work program for the Talas Project. During the first year Perseus will carry out a program of geological mapping and channel sampling over known auriferous zones and over previously untested areas with the aim of delineating significant in-situ gold mineralisation. It is anticipated that a total of 600 four-metre channel samples will be taken during the course of the year.

During the second year a detailed follow up of the gold anomalies outlined during the first year will be carried out to further delineate mineralised targets. However, no drilling is proposed for the second year.

RSG Global considers that the proposed exploration program is broadly consistent with the potential of the Talas Project, and that the proposed expenditure (Table 9 below) is adequate to meet the anticipated costs of the program and satisfy statutory expenditure requirements.

Proposed Year 1 and 2 Exploration Expenditure
Activity		Year 1		Year 2	Total
		A\$		AS		A\$
Trenching		4,600		9,300		13,900
Assaying		13,300		6.400		19,700
Rock chip sampling		1,800				1,800
Transport Costs		2,300		2,600		4,900
Field Supplies/Accommodation/Other		3.500		3,500		7,000
Staff/Contractors		13,200		14,500		27700
Tenements Rates and Rents		2,200		2,200		4,400
Administration		4.900		4,600		9.500
Total	A\$	45,800	AS	43,100	A\$	88,900

GLOSSARY OF TECHNICAL TERMS 5.

aeromagnetic survey	A survey undertaken by helicopter or fixed-wing aircraft for the purpose of recording magnetic characteristics of rocks by measuring deviations of the earths magnetic field.
aircore drilling	Drilling method applied in soft, unconsolidated ground, which yields a high quality sample delivered to the surface inside the rod string by compressed air.
albite	A sodium rich feldspar - a common silicate mineral within granites and an alteration mineral.
alkaline	An igneous rock in which the feldspar is dominantly sodic and/or potassic and is used for rocks which contain essential feldspathoid.
alluvial	Silt, sand and gravel material, transported and deposited by a river.
alteration	Change in mineralogical composition of rock, commonly brought about by reactions to hydrothermal solutions.
amphibolite facies	An assemblage of minerals formed at moderate to high temperatures during regional metamorphism.
andesite	A mafic volcanic rock composed essentially of andesine and one or more mafic minerals.
anomaly	An area where exploration has revealed results higher than the local background level.
antiform	An antidine-like structure.
arenaceous	Of a sediment or sedimentary rock consisting wholly or in part of sand-sized fragments, or having a sandy texture or appearance.
argillaceous	Applied to rocks composed of day minerals, or having a notable proportion of day in their composition.
arsenopyrite	An iron, arsenic sulphide, FeAsS.
auger sampling	A drill sampling method using a flyte.
axial plane	The plane that intersects the crest or trough of a fold, about which the limbs are more or less symmetrically arranged.
basait	An extrusive rock composed primarily of calcic plagiodase, pyroxene, with or without olivine.
batholith	A large, domed, intrusive igneous body.
biotite	A dark brown to green, magnesium-iron mica commonly found in igneous and metamorphic rocks.
bottle roll analysis	An analytical technique in which a sample of pulverised rock is mixed with water and excess cyanide in a sealed container and is then agitated in order to replicate typical conditions within a cyanide based processing facility. Commonly used to enhance sample reproducibility in particulate gold ores.
carbonaceous	Containing carbon, commonly as graphite.
chalcopyrite	A copper iron sulphide, CuFeS 2
chert	Fine grained sedimentary rock composed of cryptocrystalline silica.
chlorite	A green coloured hydrated aluminium-iron-magnesium silicate mineral (mica) common in metamorphic rocks.
dast	A fragment of rock or pebble surrounded by matrix in a breccia or conglomerate.
dausthalite	Lead selenide, PbSe.
colluvial	Weathered material transported largely by gravity and usually proximal to the source area.
conglomerate	A rock type composed predominantly of rounded pebbles, cobbles or boulders deposited by the action of water.
contact metamorphism	Alteration of a rock resulting from the thermal effect of a nearby igneous intrusion.
craton	Large, and usually ancient, stable mass of the earth's crust.
cross-bedded	Having minor beds or laminae lying oblique to the main beds of stratified rock. Commonly developed in sandstones deposited by the action of wind or water.
decollement	The plane of dislocation caused by an upper series of rocks folding and in the process, sliding over a lower series of rocks.
detrital gold	Accumulated particles of gold derived from pre-existing mineralised rocks by the process of weathering or erosion.
diamond drilling	Method of obtaining a cylindrical core of rock by drilling with a diamond set or diamond impregnated bit.
diorite	The coarse-grained plutonic equivalent of an andesite.

dolerite	A medium grained mafic intrusive igneous rock composed mostly of pyroxenes and sodium-calcium feldspar.
dyke	A tabular body of intrusive igneous rock, crosscutting the host strata at an oblique angle.
epiclastic	Consisting of the consolidated detritus of pre-existent non-volcanic rocks.
epigenetic	Mineralisation deposited later than the enveloping rocks.
fabric	The spatial and geometrical configuration of all those components that make up a deformed rock.
fault	A fracture or fracture zone, along which displacement of opposing sides has occurred.
feasibility study	A study undertaken to determine the economic viability of a mineral deposit.
ferromagnesian	Minerals containing iron and magnesium, usually in the form of amphibole, pyroxene, biotite and olivine.
foliation	The banding or lamination of metamorphic rocks as distinguished from stratification in sedimentary rocks.
gabbro	A coarse grained intrusive rock, which is low in silica and has relatively high levels or iron and magnesium minerals.
gneiss	A coarse grained, banded, high-grade metamorphic rock, often of granitic appearance.
granitoid	A field term for a coarse grained felsic igneous rock, resembling granite.
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.
greywackes	Sandstone like rock, with grains derived from a dominantly volcanic origin.
hornblende	A rock forming amphibole group mineral, which forms part of the mafic component of igneous rocks.
hydrothermal	Pertaining to hot aqueous solutions, usually of magmatic origin, which may transport metals and minerals in solution.
hypabyssal rocks	Igneous rocks that have crystalised at relatively shallow depth, resulting in rapid cooling and consequent finer grain size.
Indicated Mineral Resource	In-situ mineral resource calculated with a moderate confidence level to which economic parameters have not been applied.
Inferred Mineral Resource	In-situ mineral resource calculated with a low confidence level to which economic parameters cannot be applied.
inverse distance (ID)	A grade estimation technique in which the influence of assays is determined by the inverse of the square of the distance away from the point being estimated.
isodinal fold	A tight fold whose limbs are sub-parallel.
lag sampling	Sampling of coarser or heavier residual material, which accumulates by deflation on the ground surface.
LandSat imagery	Photographs of the earth's surface collected by satellite and commonly processed to enhance particular features.
limb	The margin side or edge of a fold structure.
magnetic survey	Determination of the deviation in the earths magnetic field in response to the inherent magnetism of different rock types.
matrix	The fine-grained material cementing dasts within a conglomerate.
Measured Mineral Resource	In-situ mineral resource calculated with a high confidence level but to which economic parameters have not been applied.
metallurgy	The science of separating metals from their ores and preparing them for use via concentration, smelting and refining.
metamorphic	A rock that has been altered by physical and chemical processes involving heat, pressure and derived fluids.
metavolcanic	Rocks derived from volcanic activity and subsequently metamorphosed.
mineralogy	The study of minerals and mineral assemblages.
mobile metal ion (MMI)	A soil sampling and analytical technique whereby the concentration of loosely attached metal ions are leached with weak reagents prior to recording.
mobile zone	An elongate belt in the earth's crust within which major deformation, igneous activity and metamorphism has occurred, usually consistent with terrain collision.

muscovite	A metamorphic rock, which has a foliated texture and contains prominent bands of the platy mineral, muscovite.
mylonite	A fine-grained rock produced by prolonged, intense shearing and dislocation.
nugget effect	Poorly reproducible gold values due to the erratic distribution of course particulate gold.
Palaeozoic	An era of geological time from about 570 to 225 million years ago.
petrography	The science of the description and systematic classification of rocks and minerals with the aid of a microscope.
petzite	A telluride of silver and gold, (Ag,Au) 2 TE.
phyllites	Metasedimentary rocks displaying a platy deavage.
phyllonite	A mylonite in which recrystallisation or growth of new minerals has taken place.
pit optimisation	Mathematical, computer-based technique for determining the pit profile which returns the maximum value for a given set of economic and physical parameters.
plagiodase	An isomorphous series of feldspar minerals, (Na,Ca)Si 3 O 8 , common in igneous rocks.
plunge	The attitude of a line in a plane, which is used to define the orientation of fold hinges, mineralised zones and other structures.
polymictic	Term referring to a conglomerate containing clasts of a wide variety of rock types.
ppb	Parts per billion; a measure of low-level concentration.
ppm	Parts per million; quantitative equivalent of g/t.
Probable Ore Reserve	A 'Probable Ore Reserve' is the economically mineable portion of an Indicated, and in some circumstances Measured. Mineral Resource.
Proterozoic	An era of geological time spanning the period from 2,500 million years to 570 million years before present.
Proved Ore Reserve	A 'Proved Ore Reserve' is the economically mineable part of a Measured Mineral Resource.
pyrite	An iron sulphide mineral, FeS2.
pyroclastics	Detrital volcanic material that has been explosively ejected from a volcanic vent.
pyrrhotite	An iron sulphide mineral, FeS.
quartz porphyry	A medium grained igneous rock of granitic composition occurring normally as minor intrusions, and carrying prominent phenocrysts of quartz.
quartzite	A sandstone that has been metamorphosed or indurated by the recrystallisation of silica grains.
Rotary Air Blast (RAB) drilling	A type of open-hole air blast drilling (Rotary Air Blast).
radiometrics survey	A geophysical survey measuring the relative abundance of various radioactive elements.
Reverse Circulation (RC) drilling	(Reverse Circulation) A drilling method in which the fragmented sample is brought to the surface inside the drill rods, thereby reducing contamination.
rift	A linear depression or basin caused the subsidence of a central block of ground between two semi- parallel fault surfaces.
rock chip sampling	The collection of selective or representative samples of rock fragments within a limited area.
rodding	An extreme form of preferred mineral alignment produced in response to metamorphism and deformation, imparting a rod-like appearance in a rock exposure.
roof pendant	Remnant block of country rock incorporated in the upper portions of a batholith.
saprolite	Disintegrated somewhat decomposed rock that lies in its original place.
schist	A crystalline metamorphic rock having a foliated or parallel structure due to the recrystalisation of the constituent minerals.
sericite	A mica mineral, very common as an alteration product in metamorphic and hydrothermally altered rocks.
shield	Craton or portion of a craton.
silicification	Replacement by, or introduction of, appreciable quantities of silicon dioxide minerals.
stock	A small intrusive mass of igneous rock, usually possessing a circular or elliptical shape in plan view.
stockwork	A network of irregularly arranged quartz veinlets produced during pervasive brittle fracture.
strike slip fault	A fault in which the net slip is practically in the direction of the fault strike.
stringer	A small discontinuous or irregular veinlet.

stripping ratio	The ratio of the volume of waste material removed to the volume of ore removed, used in connection with open pit mining.
tension gash	Zones of dilation, often filled with quartz, that occurs as a result of extensional tectonics.
tholeiitic	A term applied to basic or ultramafic rocks composed predominantly of magnesium rich feldspar and pyroxene minerals.
thrust	A low angle (shallowly inclined) fault or shear.
tonalite	A coarse grained granitic rock composed of guartz, sodium-calcium feldspar and a high proportion iron rich minerals.
trenching	The excavating of a trench for the purpose of collecting samples or geological information.
tuff	A rock formed of compacted volcanic fragments, generally smaller than 4 millimetres in diameter.
turbidite	Turbidity current deposit, usually equivalent to a greywacke.
ultrabasic (ultramafic)	Igneous rocks consisting essentially of ferromagnesian minerals with trace quartz and feldspar, containing less than 45% silica and a high MgO content.
unconformably	Having the relation of uniformity to the underlying rocks; not succeeding the underlying strata in immediate order of age and in parallel position.
VLF survey	(Very Low Frequency) A type of geophysical survey used to identify subsurface conductive areas.
volcanoclastic	Pertaining to clastic rock containing volcanic material.

6. PRINCIPAL SOURCES OF INFORMATION

General References

AustMM.	1998	Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (The Valmin Code). Issued April 1998. The Australasian Institute of Mining and Metallurgy.
Ivory Coast Property
Afminex Limited	1998	Tengrela Joint Venture, Cote d'Ivoire, Review of Exploration, August 2002. Internal company report.
Occidental Gold (Ivory Coast) sarl	1998	Tengrela (Summary Document) Tengrela East and Tengrela South Concessions.
Occidental Gold (Ivory Coast) sarl	2002	Tengrela Project, Property Review and Work Report, July 2002, Internal company report.
Randgold Resources Limited	1999	Tengrela JV, Exploration Progress Report, March 1999.
Randgold Resources Limited	1998	Tengrela Joint Venture, Cote d'Ivoire. Joint Venture Meeting 21st October 1998, Abidjan.
Randgold Resources Limited	1999	Tengrela Joint Venture, Cote d'Ivoire. Joint Venture Meeting (9th June 1999) Abidjan.
Samax Services Limited	2000	Tengrela South Joint Venture, Cote d'Ivoire. Exploration Program, March to July 2000. Randy Ruff, Barbara Stefanini, July, 2000; Consultants for Samax Services Ltd.
Ghana Property
AMMTEC Limited	1998	Metallurgical evaluation of three gold bearing samples from Ghana for Leo Shield Exploration NL.
Leo Shield Exploration Ghana Ltd.	1997	IGR Exploration (Ghana) Limited. Ashanti Reconnaissance Licence RL 2/30. Progress Report for the Period up to 31st December 1997.
Leo Shield Exploration Ghana Ltd.	1998	Ashanti Goldfields Company Limited. Grumesa Joint Venture. Grumesa-Awisam Prospecting Licence RL 2/30. Progress Report for the quarter ended 30th September 1998.
Leo Shield Exploration Ghana Ltd.	1998	IGR Exploration (Ghana) Limited. Grumesa Joint Venture. Ashanti Reconnaissance Areas Reconnaissance Licence RL 2/30. Progress Report for the Period to the 30th June 1998.
Leo Shield Exploration Ghana Ltd.	1998	Ashanti Goldfields Company Ltd. Grumesa Joint Venture. Grumesa-Awisam Prospecting Licence & Ashanti Reconnaissance Licence RL 2/30. Progress Report for October 1998.
Leo Shield Exploration Ghana Ltd.	1998	IGR Exploration (Ghana) Limited. Grumesa Joint Venture. Ashanti Reconnaissance Areas Reconnaissance Licence RL 2/30. Progress Report for the Period to the 31st March 1998.
Leo Shield Exploration Ghana Ltd.	2000	Ashanti Goldfields Company Ltd. Grumesa Joint Venture. Grumesa-Awisam Prospecting Licence & Ashanti Reconnaissance Licence RL 2/30 Terminal Report 30th June 2000.
Leo Shield Exploration Ghana Ltd.	2002	Ashanti Goldfields Company Ltd. Grumesa Joint Venture. Grumesa-Awisam Prospecting Licence RL 2/30 Update Report 22nd October 2002.

Kyrgyz Republic Properties

Afminex Limited	2003	Kyldoo Exploration Licence, internal company report June 2003.
Afminex Limited	2003	Savoyardy Exploration Licence, Internal company report.
Afminex Limited	2003	Talas Exploration Licence, Internal company report.
Afminex Limited	2003	Maly Naryn Exploration Licence, Internal company report.
Becker, A	2000	Kentor Gold NL, Technical Report 17, Kyldoo January 2000.
Brookfield M. E.	2000	Geological development and Phanerozoic curstal accretion
		in the western segment of the southern Tien Shan
		(Kyrgyzstan, Uzbekistan and Tajikistan). Tectonophysics 328
		$(2000)$ 1-14.
Bullen, M. E., Burbank, D. W. and Garver, J. I.	2003	Building the northern Tien Shan : Intergrated thermal,
		structural, and Topographic Constraints. The Journal of
		Geology, Mar 2003; 111, 2.
Majestic Gold Corporation	2003	Sawayaerdun Gold Project.
		http://www.majesticgold.net/China.htm
Solomovich, L. I., Trifonov, B. A.	2002	Postcollisional granites in the South Tien Shan Vaiscan
		Collisional Belt, Kyrgyzstan. Journal of Asian Earth Science
		21 (2002) 7-21.
Wood Dickerson, P	2003	Intra-plate mountain building in response to continent -
		continent collision - the Ancestral Rocky Mountains (North
		America) and inferences drawn from the Tien Shan (Central
		Asia). Tectono-physics 365 (2003) 129-142.

8. SOLICITOR'S REPORT

Cullen Babington Hughes Lawyers

Rick Cullen Ed Babington Michael Hughes John Byrne Notary Public Incorporating the practice of John W Byrne 229 Stirling Highway PO Box 907, Claremont WA 6914

Our reference: EB: 00051 12 July 2004

The Directors Perseus Mining Limited 30 Ledgar Road Bakatta WA 6021

Dear Sirs

Solicitors Report

This Report has been prepared for inclusion in a prospectus (Prospectus) to be issued by Perseus Mining Limited (Company) dated on or about 12 July 2004 offering for subscription 17500,000 fully paid ordinary shares at an issue price of 20 cents per share and 8,750,000 attaching free options (Offer) to raise \$3,500,000 before the costs of the Offer.

Perseus operates through subsidiary companies as follows:

• a) Sun Gold Resources Ltd (Sun Gold) a company incorporated in the Republic of Ghana. Sun Gold is wholly owned by Perseus;
• Occidental Gold (Ivory Coast) SARL (OGIC) a company incorporated in the République de Côte d'Ivoire. OGIC is wholly owned by b) Occidental Gold Pty Ltd (Occidental) an Australian company. Occidental is wholly owned by Perseus;
• CJSC Z-Explorer (Z Explorer) a "dosed joint stock company" incorporated in the Kyrgyz Republic Z Explorer is wholly owned by Perseus; c) and
• CJSC Savoyardy (Savoyardy) a "dosed joint stock company" incorporated in the Kyrgyz Republic Savoyardy is wholly owned by Perseus. ď)

1. CONTENT

This Report relates to:

• 1) mining tenements, leases and licences issued to the Company or its subsidiaries (Tenements) in:
• a) the Republic of Ghana;
• b) the République de Côte d'Ivoire; and
• c) the Kyrgyz Republic,

under the various laws and legislation applying in those countries; and

• 2) contractual interests in mining tenements, leases and licences in:
• a) the Republic of Ghana;
• b) the Kyrgyz Republic; and
• c) the République de Côte d'Ivoire,

under the various laws and legislation applying in those countries (Tenement Interests), the Tenements and Tenement Interests being collectively referred to in this report as Mining Properties, as set out in the Tenement Schedule at Schedule 1 to this Report (Tenement Schedule)

Cullen Babington Hughes Pty Ltd (ACN 094 864 212) PO BOX 907, Claremont WA 6910

3) A brief summary of the laws applying to the Mining Properties in the jurisdictions in which they are located.

The Schedules form part of this Report.

2. TITLE SEARCHES

We have caused to be conducted searches of the registers and records maintained:

• a) in Ghana by the Minerals Commission under the Minerals and Mining Law 1986 (the Ghana Law). The searches were conducted on or about 19 March 2004 and 28 June 2004;
• b) in the République de Côte d'Ivoire under Law 95-533 and its associated decrees and ordinances (the Ivory Coast Law). The searches were conducted in March 2004 and on or about 2 July 2004; and
• c) in the Kyrgyz Republic by the Agency for Geology and Mineral Resources under the Law of the Kyrgyz Republic "On Subsoil", No. 42 of 1997 (the Kyrayz Law). The searches were conducted on or about 22 April 2004 and 1 July 2004.

in relation to the Mining Properties.

As a result of those searches, and subject to the statements set out in this Report, we are satisfied that the information and particulars induded in this Report in relation to the Tenements and the Tenement Interests, including the Tenement Schedule and the Material Contracts, are an accurate statement of the status of the Tenements and the Tenement Interests at the date the searches were conducted.

Our searches reveal that as at the date of this Report:

• a) the Company or one of its subsidiaries is the registered holder of the Tenements or has a Tenement Interest as set out in Part 1 of the Tenement Schedule; and
• b) the named parties are the registered holder of the Tenements or the Tenement Interests as set out in Part 2 of the Tenement Schedule.

3. MATERIAL CONTRACTS

We have reviewed the material contracts provided to us to which the Company (or one of its subsidiaries) is a party and/or which relate to the rights and obligations of the Company in respect of:

• a) mining tenements and a joint venture in respect of mining tenements in the Republic of Ghana;
• b) mining tenements and joint ventures in respect of mining tenements in the République de Côte d'Ivoire; and
• c) mining tenements and joint ventures in respect of mining tenements in the Kyrgyz Republic.

We have also reviewed certain agreements entered into by the Company in relation to other matters. Agreements in respect of the Mining Properties are the Material Contracts and are set out in Schedule 2.

We are satisfied as a result of our review of the Material Contracts that, except as set out in this Report or the Schedules, none of the Mining Properties is subject to any unusual conditions of a material nature.

Other contracts relevant to the Company are set out in Section 10 of the Prospectus. We express no opinion in relation to the information presented in Section 10.

4. SCOPE OF INVESTIGATION

4.1 In the Republic of Ghana

For the purposes of this Report, our enquiries have been limited to:

• a) engaging lawyers in the Republic of Ghana to:
• i) review publicly available records;
• ii) advise on mining law and other related legislation in the Republic of Ghana; and
• b) reviewing copies of the Material Contracts relating to the Republic of Ghana.

4.2 In the République de Côte d'Ivoire

For the purposes of this Report, our enquiries have been limited to:

• a) engaging lawyers in the République de Côte d'Ivoire to:
• i) review publicly available records;
• ii) advise on mining law and other related legislation in the République de Côte d'Ivoire; and
• b) reviewing copies of the Material Contracts relating to the République de Côte d'Ivoire.

4.3 In the Kyrgyz Republic

For the purposes of this Report, our enquiries have been limited to:

• a) engaging lawyers in the Kyrgyz Republic to:
• i) review publicly available records;
• ii) advise on mining law in the Kyrgyz Republic; and
• b) reviewing copies of the Material Contracts relating to the Kyrgyz Republic

5. SCOPE OF OPINION

This Report:

• a) relates only to the laws in force at the date of this Report which relate to the daiming, grant, operation and tenure of the Mining Properties or interests in other mining properties of:
• i) the Republic of Ghana;
• ii) the République de Côte d'Ivoire; and
• iii) the Kyrgyz Republic; and
• b) is strictly limited to the matters it deals with and does not extend, by implication or otherwise, to any other matter.

6. ASSUMPTIONS

For the purpose of giving this Report, we have assumed:

• a) that the information provided to us by the Company is correct and up to date as at 12 July 2004;
• b) that the information provided to us by the lawyers we engaged is correct and up to date as at 3 July 2004;
• that where a document has been submitted to us translated into English, that the translation is correct; d.
• d) the authenticity of all signatures, seals and dates, and of any stamp duty endorsement or marking;
• that any unstamped documents have been or will be stamped if required; $\Theta$
• the completeness, and conformity to originals, of all copies of documents submitted to us: $f$
• that each of the Material Contracts provided to us is within the capacity and powers of, and has been validly authorised, sealed, g) executed and delivered by and is binding on, all of the parties to it; that it continues in full force and effect; and that all conditions, covenants and obligations contained in it have been complied with or otherwise discharged or will be duly complied with, discharged or satisfied where the contract is executory;
• h) that all of the Mining Properties have been validly granted and (where applicable) renewed by the relevant Minister or government authority. The good standing of the Mining Properties and the holders' interests in the Mining Properties are both subject to the holders continuing to comply with the terms and conditions of the Mining Properties under the provisions of:
• i) the Ghana Law:
• ii) the Ivory Coast Law; and
• iii) the Kyrgyz Law.

As set out at Schedule 3, the system of application, grant and tenure of mining interests in each of the Republic of Ghana, the République de Côte d'Ivoire and in the Kyrgyz Republic is different in both substance and detail from the system which applies in Australia. This report does not purport to set out all aspects of those laws as they apply to the Mining Properties in those jurisdictions and does not purport to be an exhaustive review of all laws that may apply to the Company in those jurisdictions.

• that the relevant Minister or other government authority exercising powers under the Ghana Law, the Kyrgyz Law or the Ivory Coast -i} Law has been validly appointed and has acted within the scope of their respective powers, authorities and discretions in respect of the Mining Properties and in registering, authorising, approving or granting any permission or consent in relation to any dealing or proposed dealing affecting the Mining Properties; and
• $\mathbf{j}$ the accuracy and completeness of any instructions and information we have received from the Company and any of its directors, officers, employees, agents or representatives.

The making of the above assumptions indicates that we have assumed that each matter the subject of those assumptions is true. correct and complete in every particular. That we have made an assumption in this Report does not imply that we have made any enquiry to verify that assumption. No assumption specified is limited by reference to any other assumption.

7. QUALIFICATIONS

This Report is subject to the following qualifications:

• a) we have only made the enquiries described in section 4 above;
• b) the nature and enforcement of obligations under a Material Contract may be affected by the discretion of courts to grant or withhold relief by way of injunction, specific performance or other equitable remedy, by statute of limitation, by estoppel and similar principles, by laws concerning insolvency, bankruptcy, liquidation, receivership, administration or reorganisation, and by other laws affecting creditors' rights generally. These vary from country to country;
• c) any documents which are required to be stamped but have not been duly stamped may not be admissible in evidence in any relevant enforcement proceedings;
• d) all areas are approximate:
• e) to the extent that any opinion or conclusion is based on our review of a Material Contract, that opinion or condusion is subject to any subsequent amendment, variation or termination of the Material Contract of which we have not, as at the date of this Report, been advised:
• there may be equitable or other interests in existence affecting the Mining Properties which for various reasons are not discoverable $f$ by search or enquiry but which may be enforceable against a holder of any interest in the Mining Properties;
• q) we do not express any opinion as to, and made no investigation of, the laws of any jurisdiction applying to the right of the Company or its subsidiaries to carry on business in any jurisdiction;
• h) we do not express any opinion as to, and have made no investigation of, the laws of any jurisdiction other than Western Australia and the Commonwealth of Australia other than as set out at sections 2, 3 and 4 above; and
• further approvals may be required before activities can be carried out in relation to a particular Mining Property. We express no opinion as $\mathbf{i}$ to whether the Company's activities are likely to require such approvals or, if they do, whether the approvals will be forthcoming.

8. RESPONSIBILITY STATEMENT AND CONSENT

Except for this Report (including the Schedules) Cullen Babington Hughes Pty Ltd has not been involved in the preparation of any part of the Prospectus.

In accordance with section 716 of the Corporations Act, Cullen Babington Hughes Pty Ltd has given and has not, before the lodgement of the Prospectus with the Australian Securities and Investments Commission, withdrawn its consent to the indusion of this Report in the Prospectus in the form and context in which it is included.

Yours faithfully

Ed Baint

Edmund Babinoton Cullen Babington Hughes ebabington@cbhlegal.com.au

SCHEDULE 1 - TENEMENT SCHEDULE AND TENEMENT INTERESTS

Part 1 - Interests held by the Company or its subsidiaries

GHANA

GITAIVA
Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
-NIL

IVORY COAST

Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
Exploration Permit No 145 - Tengrela E ast	OGIC.	90%	See Note 2	2.2,2.3,2.4	1,2,3

KYRGYZ REPUBLIC

Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
Au-171-02 - Tolubay	Z Explorer	100%	10 December 2004	NΑ	1,4
Au-188-03 - Talas	Z Explorer	100%	12 September 2004	NΑ	1,4
Au-161-03 - Maly Naryn	Z Explorer	100%	31 December 2005	NΑ	1,4
Au-87-04 - Savoyardy	Savoyardy	100%	10 December 2004	3.1,3.2	1.4

Part 2 - Contractual interests of the Company or its subsidiaries

GHANA

Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
Prospecting Licence 2/30 - Grumesa	Ashanti Goldfields Company Limited .	80%	8 July 2006	1.1.1.2.1.5	1,5,6,7

IVORY COAST

Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
Exploration Licence No 146- Tengrela South	SOMICI.	90%	See Note 2	2.2.2.3	1,2,3

KYRGYZ REPUBLIC

Tenement	Registered	Current	Expiry Date	Reference to	Notes
Number	Holder	Beneficial		Schedule 2
And Type		Interest		(Material Contracts) Paragraph
No Au-63-04	Kyldoo	ΝiΙ	1 April 2005.	3.3,3.4,3.5,3.6,3.7	1,4
Kyldoo

Notes:

• 1 The beneficial interest of Perseus or its respective subsidiary is the current interest before allowance for statutory government entitlements at the mining stage, joint venture earn-in or farm-out rights, or the right of Perseus or its respective subsidiary to purchase tenement interests
• 2 The expiry dates of the Tengrela South and Tengrela East permits have been extended pursuant to force majeure provisions due to recent civil unrest in the République de Côte d'Ivoire. By letters dated 28 June 2004 OGIC and SOMICI requested that the permits be reinstated for a one vear period, but no final determination of the renewal period has been made at the date of this report.
• 3 The Government of the République de Côte d'Ivoire is entitled to a 10% free carried interest in any company owning a mining tenement and a 3% royalty on production. The 10% free carried interest will come from the interest of OGIC, leaving it with an 80% beneficial interest.
• 4 The Government of the Kyrgyz Republic is entitled to a royalty on the sale of minerals of 5%.
• The Government of the Republic of Ghana is entitled to a royalty on the sale of minerals. This is set by the Minister but must be within $\tilde{\mathbf{5}}$ the range of 3% to 12% calculated in accordance with the mining regulations and dependent upon projected profitability.
• 6 The Government of the Republic of Ghana is entitled to a free 10% interest in any company owning a mining tenement. Perseus's current 80% beneficial interest would reduce proportionally to 72% after taking into account that interest. In addition the Government may negotiate the purchase of up to a further 20% interest upon terms to be agreed with the holder of mining tenement where any mineral is discovered in commercial quantities.
• $\overline{7}$ Perseus has entered into a contract to acquire Ashanti Goldfields Company Ltd's minority interest in Grumesa-Awisam on terms and conditions outlined in paragraph 1.5 of Schedule 2 of this report.

SCHEDULE 2 - MATERIAL CONTRACTS

1 AGREEMENTS RELATING TO THE REPUBLIC OF GHANA

1.1 Grumesa Joint Venture - Heads of Agreement

Made between Leo Shield Exploration Ghana Limited (Leo) and IGR Exploration Ghana Limited (IGR) dated 30 January 1997.

a) Nature of Agreement

The agreement relates to the farm out by IGR of an 80% interest in the Grumesa Reconnaissance Licence 2/30, Leo earned an 80% interest by the expenditure of US\$200,000 on exploration of the tenement.

The agreement was amended by:

• i) an agreement dated 18 December 1997 made between Leo and IGR;
• ii) an undated Deed of Covenant made in July 1998 between Leo and Ashanti Goldfields Company Limited (Ashanti) (a Ghanaian company) whereby the parties recorded and agreed that Ashanti had acquired the interest of IGR in the Grumesa Joint Venture and the tenement and that Ashanti is bound by the terms of the Grumesa Joint Venture; and
• iii) the deed of assignment transferring Leo's interest to Sun Gold referred to at paragraph 1.2 below.
• b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing execution of the Agreement, management of the project, withdrawal from the project, defaults and calculation of expenditure, force majeure and the execution of a complete formal agreement.

The parties have not entered into a complete formal agreement. The Heads of Agreement is stated to be binding on the parties until such time as that later agreement is entered into.

The agreement contains a provision requiring the parties to establish a new joint venture company (Newco) after Leo has earned its 80% interest if the parties chose to do so. We are instructed that to date that has not occurred by agreement between the Parties.

After Leo earned its 80% interest IGR had the right to convert its 20% interest to a 5% net profits interest. We are instructed that to date neither Ashanti nor IGR has elected to receive the 5% net profits interest.

The agreement contains a provision allowing Ashanti (provided that Ashanti has maintained its 20% interest) to increase its holding in Newco if a bankable feasibility study has been completed in respect of an identified deposit at the tenement. Ashanti may:

• i) maintain its interest at the 20% level:
• increase its interest in Newco to 70% by paying Sun Gold US\$27.50 per ounce of total recoverable gold as determined in the ii) feasibility study; or
• iii) offer to increase its interest in Newco to 100% by paying Leo US\$44 per ounce of total recoverable gold as determined in the feasibility study. Whether that offer is accepted by Sun Gold is at the discretion of Sun Gold.

The agreement contains provisions requiring the issue of shares to the Government of Ghana subject to the parties maintaining their respective pro rata interests. The possible interest of the Government of Ghana is set out paragraph 1.4(c)(ii) in Schedule 3 of this report.

The agreement does not contain provisions requiring the approval of the other party to the transfer of an interest in the agreement. The Company has nevertheless sought and obtained the approval of Ashanti to the transfer from Leo to Sun Gold.

c) Status

We are instructed that Reconnaissance Licence 2/30 has been replaced by Prospecting Licence 2/30.

The interest earned by Leo and assigned to Sun Gold has not been registered in the name of Leo or Sun Gold. Under the Ghana Law only one party is recorded as the holder of a mining tenement. Sun Gold will not have a legal right to the tenement unless the tenement is transferred to Sun Gold. Such a transfer would require the approval of the government.

The procedure set out in the agreement requires Sun Gold to be a shareholder in Newco and the tenement will be transferred to Newco. We can give no indication when or if that will occur or whether government approval would be received.

This agreement is the subject of the Grumesa Joint Venture - Deed of Assignment referred to in paragraph 1.2 below.

On 9 July 2004 the Minister for Mines renewed the tenement to 8 July 2006 in the name of AngloGold Ashanti Limited (Anglo). The application for renewal of the tenement was made by Ashanti. Ashanti is a wholly owned subsidiary of Anglo. The renewal of the tenement in the name of Anglo appears to be a derical error.

1.2 Grumesa Joint Venture - Deed of Assignment

Made between Leo, Afminex Limited (Afminex), the Company and Sun Gold dated 2 March 2004.

Leo is a subsidiary company of Afminex. Sun Gold is a subsidiary company of the Company.

a) Nature of Agreement

The agreement relates to the assignment by Leo of its interest in the Grumesa Joint Venture Heads of Agreement (details of which are set out in paragraph 1.1 above) to Sun Gold.

The purchase price for the transfer was US\$250,000 satisfied by the issue of 3,200,000 ordinary shares in the capital of the Company and the grant of a royalty to Leo.

b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing execution of the agreement, completion of the sale, warranties and representations with respect to the assets being sold, assumption of obligations under the Grumesa Heads of Agreement and guarantees by each of Afminex and the Company of the performance of their respective subsidiaries.

The agreement provides for the grant to Afminex of a royalty of 0.5% of the value of all minerals recovered from the tenements the subject of the Grumesa Joint Venture less transport and refinery costs.

Status c).

The agreement was executed on 2 March 2004 and settlement has occurred.

1.3 Sun Gold Share Sale Agreement

Made between Afminex and the Company dated 2 March 2004.

a) Nature of Agreement

The agreement relates to the sale by Afminex of all of the issued shares in Sun Gold to the Company for a purchase price of \$1.00.

b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing completion of the sale, registration of the shares, and warranties and representations with respect to the assets being sold.

The shares in Sun Gold sold to the Company are partly paid shares. This means that if Sun Gold is placed into liquidation the unpaid portion of those shares may be recovered from the holder of those shares.

The agreement is subject to:

• Afminex receiving any required approvals for the sale of the shares from its members in general meeting on or before 30 June i) 2004 (if any such approval is required);
• ii) no call being made in respect of the shares;
• iii) no encumbrance being created over the shares; and
• iv) Sun Gold not owing any debt to Afminex or Leo.

At the date of issue of this report the Company has instructed us that:

• i) under paragraph (i) above no such approval is required and will not be sought; and
• ii) the conditions have otherwise been satisfied.

The agreement was subject to Afminex procuring the transfer by Leo of Leo's interest in the Grumesa Joint Venture to Sun Gold within 90 days of the date of the agreement. This condition is the subject of the agreement referred to in paragraph 1.2 above.

Status c)

The agreement was executed on 2 March 2004 and settlement under the agreement took take place on 5 March 2004.

1.4 Grumesa Assumption

Deed of Covenant made between Ashanti and Sun Gold and dated 22 January 2004.

a) Nature of Agreement

The agreement records that Sun Gold acquired the interest of Leo in the Grumesa Joint Venture and that Sun Gold is bound by the terms of the Grumesa Joint Venture referred to in paragraph 1.1 above.

b) Material Terms

The agreement records that:

• i) Sun Gold has acquired Leo's interest in the Grumesa Joint Venture; and
• ii) Sun Gold agrees to the terms of, and to be bound by, the Grumesa Joint Venture Agreement as amended.
• c) Status

The agreement was executed on 22 January 2004.

1.5 Grumesa Sale

Letter agreement made between Ashanti, Perseus and Sun Gold dated 1 June 2004.

a) Nature of Agreement

The agreement records that Ashanti will sell to Sun Gold the 20% interest of Ashanti in the Grumesa Joint Venture for a consideration of US\$140.000, subject to the Company obtaining a listing on the Australian Stock Exchange by 31 August 2004 and obtaining regulatory approvals for the transfer of the Grumesa-Awisam prospecting licence to Sun Gold.

b) Status

The agreement is conditional on listing of the Company and obtaining regulatory approvals for the transfer of the Grumesa-Awisam prospecting licence to Sun Gold. The necessary formal documents are to be compiled by the Company. We can express no opinion as to when transfer of the tenement concerned may be effected.

2 AGREEMENTS RELATING TO THE RÉPUBLIQUE DE CÔTE D'IVOIRE

2.1 OGIC Deed of assignment of debt

Made between the Company and Afminex dated 2 March 2004.

a) Nature of Agreement

The agreement relates to the assignment by Afminex to the Company of debt owed by OGIC to Afminex recorded in the books of Afminex and denominated in US dollars, being an amount of not less than US\$1,903,335.90.

At the date of the agreement OGIC was a subsidiary of Occidental Gold Pty Ltd (Occidental) and Occidental was a subsidiary of Afminex

The consideration for the assignment of the debt is the issue by the Company of 16,000,000 ordinary fully paid shares in the capital of the Company to Afminex.

b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing execution of the agreement, completion of the assignment, and warranties and representations with respect to the performance of the agreement.

Status $\triangle$

The agreement was executed on 2 March 2004.

2.2 Occidental Share Sale Agreement

Made between Afminex, the Company, Occidental and OGIC dated 2 March 2004.

a) Nature of Agreement

The agreement relates to the sale by Afminex of all of the shares in Occidental to the Company for a purchase price of \$1.00 (plus GST) and the grant of a royalty to Afminex.

b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing execution of the agreement, completion of the sale, warranties and representations with respect to the shares being sold, warranties and representations with respect to the assets of Occidental and OGIC, assumption of obligations under the Tengrela joint venture agreement, and guarantees by each of Afminex and the Company of the performance of their respective subsidiaries.

The agreement provides for the grant to Afminex of a royalty of 0.5% of the value of all minerals recovered from the tenements the subject of the Tengrela Joint Venture, less refining and smelting costs.

The agreement is subject to:

• Afminex receiving any required approvals to the sale of the shares from its members in general meeting on or before 30 June i) $2fMA$
• ii) no encumbrance being created over the mining tenement owned by OGIC; and
• iii) neither of Occidental or OGIC owing any debt to Afminex.

At the date of issue of this report the Company has instructed us that:

• i) under paragraph (i) above no such approval is required and will not be sought; and
• ii) the conditions have otherwise been satisfied.
• Status c)

The agreement was executed on 2 March 2004 and settlement under the agreement has occurred.

2.3 Tengrela Joint Venture Agreement

Made between OGIC and Societe Minière De Côte D'Ivoire (SOMICI), a company incorporated in the République de Côte d'Ivoire, and dated 29 September 1997.

a) Nature of Agreement

The agreement creates a joint venture between OGIC and SOMICI in respect of the Tengrela region under which the parties will each acquire and retain interests in mining tenements as follows:

• i) SOMICI 10%; and
• ii) OGIC 90%.

subject to the rights of the government to take an interest.

SOMICI owns the Tengrela South Permit 146. OGIC owns the Tengrela East Permit 145. We are instructed that the parties have treated these permits as the subject matter of the agreement.

b) Material Terms

The agreement is brief and provides that:

• i) OGIC is to meet all exploration expenses until the completion of a mining feasibility study;
• ii) SOMICI is to obtain the Tengrela South Permit;
• ii) the parties are to incorporate a new company to hold the tenement interests within three months of the grant of the Tengrela South Permit. To date that has not occurred;
• iv) OGIC is to manage the exploration activities of the joint venture;
• v) OGIC may withdraw from the agreement at any time;
• vi) OGIC may sell or assign its interest in the agreement and the joint venture;
• vii) each party will grant the other a right of first refusal over the shares in the new company referred to in paragraph (b)(iii) above;
• viii) OGIC is to provide quarterly technical and financial reports;
• ix) disputes are to be mediated; and
• x) a full formal agreement is to be prepared. We are instructed by the Company that to date this has not occurred.

After completion of a mining feasibility study the following is to apply:

• ïŁ ownership is adjusted to acknowledge the ownership interests of the government of the République de Côte d'Ivoire. Reference to these interests is made at paragraph 2.4(b)(ii) of Schedule 3 to this report;
• ii) OGIC is to carry the government's non-contributing interest;
• iii) OGIC is to fund any development, provided that OGIC may recover those costs (plus interest on costs after completion of a feasibility study) on a priority basis from mine profits. OGIC may obtain external project finance to develop the mining project.

The agreement sets out the basis on which the project entity is to apply its net profit after tax and the deduction of expenses until OGIC has recovered its costs in full. After satisfying all other legal obligations and commitments (including scheduled external loan repayments), if there are surplus funds, 2% of after-tax profits shall be distributed to SOMICI and the balance to OGIC until OGIC is reimbursed in full its prior expenditure plus interest. The parties receive distributions in accordance with their respective ioint venture interests (80% OGIC, 10% SOMICI) after OGIC has been repaid in full.

$\epsilon$ Status

The agreement deals with interests in the tenements as set out in Schedule 1. One of those tenements is registered in the name of SOMICI.

The interest of OGIC in Tengrela South Permit 146 has not been registered in the name of OGIC. It is our understanding that only one person may be registered at any one time as the holder of a Research permit in the République de Côte d'Ivoire.

Exploration permits Nos. 145 and 146 expired on 24 February 2003. The Company has provided us with a letter to OGIC from the Minister of Mines and Energy in the Ivory Coast acknowledging political instability in the country and stating that under the Mining Code the period of inactivity on the permit due to the political instability will be taken into account when OGIC is to complete its works program.

Lawyers in the Ivory Coast have stated to us that:

• i) the effect of the letter issued by the Minister is to extend the term of the exploration licences; and
• ii) the exploration licences are consequently valid.

By letter dated 28 June 2004 OGIC requested that the permits be re-instated for a one year period from 1 October 2004. No final determination of the renewal period has been made at the date of this report. We can express no opinion as to when or if the extension will be granted.

2.4 Transfer and Royalty Agreement

Made between OGIC, Leo Resources SARL (Leo IC) and Le Groupment des Hommes D'Affaires Ivoriens (Ivorian Partners) in June 2002. Leo IC was previously owned by OGIC.

a) Nature of Agreement

The agreement relates to the resolution of certain matters between the parties by the:

• i) grant of a royalty to Leo IC by OGIC; and
• ii) transfer of the shares in Leo IC to the Ivorian Partners.
• b) Material Terms

The agreement contains standard provisions for a document of this nature including:

• i) provisions governing completion of the transfer and registration of the shares;
• ii) release of each party from pre-existing claims;
• iii) calculation and payment of the royalty. The royalty is US\$0.80 per ounce of refined gold produced from the Tengrela East Research Permit 145, payable monthly; and
• iv) transfer or sale of the royalty.
• c) Status

Transfer of the shares in Leo IC to the Ivorian Partners has not occurred as at the date of this Report. We are instructed by the Company that the transfers are being processed but can make no comment on when or if that may occur.

3 AGREEMENTS RELATING TO THE KYRGYZ REPUBLIC

3.1 Savovardy Joint Venture Agreement

Made between Lalo Ventures Limited (Lalo Ventures), the Company and Z Explorer and dated 10 November 2003.

a) Nature of Agreement

Under the agreement the Company grants to Lalo Ventures an option to earn equity in Sayoyardy by undertaking exploration of the Savoyardy Prospecting Licence as follows:

• i) Lalo Ventures must incur minimum expenditure of US\$250,000 by 31 October 2004; and
• ii) at the option of Lalo Ventures and subject to compliance with the previous expenditure requirements, the expenditure of a further US\$750,000 by 31 December 2004 to maintain the option; and
• ii) at the option of Lalo Ventures and subject to compliance with the previous expenditure requirements, the expenditure of a further US\$2,000,000 by 31 December 2005 to earn a 51% interest in Savoyardy; and
• iv) at the option of Lalo Ventures and subject to compliance with the previous expenditure requirements, the expenditure of a further US\$3,000,000 by 31 December 2006 to earn a 70% interest in Savovardy.

The agreement also provided for the transfer by Z Explorer of its interest in the Savoyardy Prospecting Licence to Savoyardy. This requirement has been satisfied.

b) Material Terms

The agreement contains standard provisions for a document of this nature, including provisions governing execution of the agreement, completion of the sale, issue of shares in Savoyardy, appointment of directors to Savoyardy, management and budgets of the joint venture, appointment of a technical committee for the joint venture, withdrawal, default, arbitration and termination.

If Lalo Ventures has earned an interest in Savoyardy and chooses subsequently to withdraw, Lalo Ventures is to return any shareholding in Savoyardy to the Company.

The agreement is subject to the incorporation of Savoyardy and the transfer of the Prospecting Licence currently held by Z Explorer to Savoyardy within three months of the date of the agreement.

At the date of issue of this Report the conditions have been satisfied.

c) Status

The Prospecting Licence was transferred to Savoyardy on 23 April 2004. As at the date of this Report the Company is the sole shareholder in Savoyardy.

3.2 Savoyardy Royalty Agreement

Made between Lalo Ventures, the Company, Afminex and the following parties (referred to as the Kyrgyz Partners): Tatiana Dmitrieva, Waldemar Muellar, Pauline Mueller, Alexander Becker, Yaroslav Bandurak and Sergie Shestaev, and dated 11 November 2003.

a) Nature of Agreement

The agreement relates to the resolution of certain matters between the parties by the:

• i) issue of shares in Lalo Ventures to Afminex and the Kyrgyz Partners; and
• ii) grant of a royalty payable by Lalo Ventures or by the Company on gold produced from the Savoyardy Prospecting Licence.
• b) Material Terms

The agreement contains provisions including:

• i) provisions governing calculation of the number and value of the shares in Lalo Ventures to be issued;
• ii) issue and registration of the shares;
• iii) release of each party from pre-existing claims; and
• iv) calculation and payment of one of two royalties.

The first royalty is US\$1.00 per ounce of gold produced from the area covered by the Savoyardy Prospecting Licence as at the date of the agreement, payable monthly. The royalty is payable by Lalo Ventures to Afminex and the Kyrgyz Partners.

If Lalo Ventures withdraws from the Savoyardy Joint Venture (referred to at paragraph 3.1 above), then the Company is required to pay a Net Smelter Royalty on gold produced from the area covered by the Savoyardy Prospecting Licence to Afminex and the Kyrgyz Partners.

The royalty payable by the Company is 0.5% of actual gold refined from the area of the Savoyardy Prospecting Licence.

v) transfer or sale of the applicable royalty.

$d$ Status

Issue of the shares to the Kyrgyz Partners and Afminex under this agreement is subject to Lalo Ventures' continued participation in the Savoyardy Joint Venture (referred to at paragraph 3.1 above).

3.3 Pchanskava Joint Venture Agreement

Made between Afminex, CJSC Kentor (a dosed joint stock company incorporated in the Kyrgyz Republic) (Kentor) and Kentor Gold NL (ACN 082 658 080) (KGNL) and dated 11 November 2003.

a) Nature of Agreement

Kentor owned the Pchanskaya Prospecting Licence. Kentor owns all of the shares in CJSC Kyldoo (a closed joint stock company incorporated in the Kyrgyz Republic) (Kyldoo). The agreement creates a joint venture between Afminex and Kentor in respect of the Pchanskaya Prospecting Licence under which:

• i) the Pchanskaya Prospecting Licence was transferred to Kyldoo from Kentor; and
• ii) Afminex may earn an interest in Kyldoo.
• b) Material Terms

The agreement contains provisions governing execution of the agreement, completion of the sale, and warranties and representations with respect to the assets being sold.

Afminex is able to earn a 50% interest in Kyldoo by the completion of an exploration program requiring at least 550 metres of diamond drilling in four separate drill holes.

Afminex has the option to increase its equity in Kyldoo by sole funding the next US\$400,000 in exploration expenditure by 30 September 2005, with a minimum of US\$75,000 to be spent by 30 November 2004, to earn a further 30% interest in Kyldoo.

Kentor can elect to convert its equity in Kyldoo to a royalty on gold produced, being 1.5% if the average gold price is below US\$350 in a month. 2% if the average gold price in the month is between US\$350 and US\$400, and 2.5% if the average gold price is over US\$400.

The agreement is a heads of agreement and may be replaced with a more formal complete agreement. Until such time as that later agreement is entered into, it is the intention of the parties that they are bound by the Heads of Agreement.

Ò. Status

Afminex's rights and obligations under the agreement have been assigned to the Company under the Assignment and Assumption Agreement referred to in paragraph 3.4 below.

We are instructed by the Company that at the date of this Report no interest has been earned by Afminex or the Company under the Pchanskaya Joint Venture Agreement and that no shares in Kyldoo have been issued to either of the Company or Afminex.

We note that the obligation of Afminex under this agreement has been farmed out to Lalo Ventures under the terms of the Kyldoo Option Agreement referred to in paragraph 3.5 below.

3.4 Assignment and Assumption Agreement - Kyldoo Acquisition

Made between Afminex and the Company and dated 20 May 2004.

a) Nature of Agreement

Afminex acquired the right to earn up to an 80% interest in Kyldoo under the terms of the Pchanskaya Joint Venture Agreement referred to at paragraph 3.3 above.

The agreement records the sale by Afminex of the interest of Afminex in the Pchanskaya Joint Venture Agreement to the Company.

b) Material Terms

The Company agrees to acquire the interest of Afminex under the Pchanskaya Joint Venture Agreement. The consideration payable by the Company is the issue to Afminex of 1,000,000 ordinary fully paid shares in the Company.

The agreement contains provisions governing execution of the agreement, completion of the assignment, assumption of the obligations of Afminex by the Company, and a release and an indemnity with respect to the assets being assigned to the Company.

The Company also grants a royalty to Afminex. The royalty payable by the Company is 0.5% of the value of all minerals produced from the area the subject of the Pchanskaya Joint Venture Agreement. "Value" for this purpose means the price received on sale less transport, smelting and sale costs.

This royalty is not payable at any time Lalo Ventures is paying the royalty under the Kyldoo Option Agreement referred to in paragraph 3.5 below

c) Status

We are instructed by the Company that at the date of this Report no interest has been earned by Afminex or the Company under the Pchanskaya Joint Venture Agreement and that no shares in Kyldoo have been issued to either of the Company or Afminex.

3.5 Kyldoo Option Agreement

Made between Afminex and Lalo Ventures dated 11 November 2003 and amended by the Amendment Agreement referred to at paragraph 3.7 below.

a) Nature of Agreement

Afminex acquired the right to earn up to an 80% interest in Kyldoo under the terms of the Pchanskaya Joint Venture Agreement referred to at paragraph 3.3 above.

The agreement grants to Lalo Ventures the right to acquire from Afminex an equity interest in Kyldoo.

b) Material Terms

The agreement contains provisions governing execution of the agreement, completion of the sale, and warranties and representations with respect to the assets being sold.

Lalo Ventures is to:

• i) spend a minimum of US\$80,000 on exploration by 15 July 2004; and
• ii) at the election of Lalo Ventures:
• A) expend a further US\$400,000 on exploration expenditure before 31 December 2004; and
• B) issue to Afminex shares in the capital of Lalo Ventures to the value of US\$500,000 or 750,000 shares, whichever is the greater to retain the right to acquire an equity interest in Kyldoo;
• iii) at the election of Lalo Ventures, to expend a further US\$1,000,000 on exploration expenditure before 31 December 2005 to earn a 51% equity interest in the capital of Kyldoo:
• iv) at the election of Lalo Ventures:
• A) to expend a further US\$2,000,000 on exploration expenditure before 31 December 2006; and
• B) to issue to Afminex US\$1,000,000 worth of Lalo Ventures shares based on the average trading price of the shares in the 20 days prior to issue,

to earn a 70% equity interest in the capital of Kyldoo.

Lalo Ventures is also required to pay to Afminex a royalty of US\$1.00 per ounce of gold produced from the area of the Pchanskaya Joint Venture at the date of the agreement.

c) Status

The obligations imposed on Afminex under the agreement have been assigned to the Company under the Assignment and Assumption Agreement referred to in paragraph 3.6 below. The interest in the Mining Properties the subject of the Pchanskaya Joint Venture earned by the Company will not be registered in the name of the Company but is reflected in the shares to be issued in Kyldoo to the Company.

Afminex has assigned 26.7% of each of its right to receive shares in Lalo Ventures and the royalty referred to in paragraph (b) above to a third party. This has no effect on the Company.

3.6 Assignment and Assumption Agreement - Kyldoo Farm out

Made between Afminex, the Company and Lalo Ventures and dated 21 May 2004.

a) Nature of Agreement

Lalo Ventures acquired the right to earn up to a 70% interest in Kyldoo under the terms of the Kyldoo Option Agreement referred to at paragraph 3.5 above.

The agreement assigns to the Company the interest of Afminex in the Kyldoo Option Agreement other than the right to receive any shares or royalty as set out at paragraph 3.5(b) above.

b) Material Terms

The Company agrees to take over the obligations of Afminex under the Kyldoo Option Agreement and Lalo Ventures consents to the transfer of the interest to the Company.

The agreement contains provisions governing execution of the agreement, completion of the assignment and a release and indemnity with respect to the assets being assigned to the Company.

The agreement specifically excludes from the assets transferred to the Company the royalty payable to Afminex and the right to receive Lalo Ventures shares under the Kyldoo Option Agreement referred to at paragraph 3.5(b) above.

ð Status

We are instructed by the Company that at the date of this Report no interest has been earned by Afminex, the Company or Lalo Ventures under the Pchanskaya Joint Venture Agreement.

3.7 Amending Agreement

Made between Afminex, the Company, Kentor, KGNL and Lalo Ventures and dated 3 April 2004.

a) Nature of Agreement

The agreement evidences:

• the waiver of certain rights of pre-emption in respect of the assignment by Afminex of interests under the Pchanskaya Joint ïŁ. Venture Agreement;
• ii) the amendment of certain dauses of the Pchanskaya Joint Venture Agreement and the Kyldoo Option Agreement; and
• iii) the consent of the other parties to the assignment by Afminex of interests under the Pchanskaya Joint Venture Agreement.
• b) Material Terms

The agreement records an amendment to the Pchanskaya Joint Venture Agreement to incorporate dauses dealing with:

• i) the transfer of the Kyldoo mining tenement to Kyldoo;
• ii) the effect of any failure to effect such a transfer;
• iii) rehabilitation.

The agreement records an amendment to the Kyldoo Option Agreement:

• iv) to deal with equity allocations, rights and obligations if Kentor does not contribute to expenditure after US\$400,000 has been spent on the project pursuant to the Pchanskaya Joint Venture Agreement. We note that Lalo Ventures is not a party to that agreement and the obligations under that agreement lie with Afminex and, by assignment, with the Company, and
• if Kentor elects not to contribute or fails to contribute to expenditure, then Kentor's interest in the Pchanskaya Joint Venture V) Agreement is diluted in accordance with the dilution formula and:
• A) prior to Lalo Ventures earning a 70% interest in Kyldoo, the Company's equity increases accordingly;
• B) after Lalo Ventures has earned a 70% interest in Kyldoo, the Company may elect to contribute Kentor's share of expenditure to acquire equity in accordance with the dilution formula; and
• C) if Kentor's interest is converted to a royalty as described in paragraph 3.3(b) above. Kentor's equity reverts to the Company and the Company is responsible for paying the royalty to Kentor; and
• vi) to set the deemed and actual expenditure levels of the parties.

The agreement also contains approvals by the other relevant parties to:

• i) the farm out by Afminex under the Kyldoo Option Agreement referred to at paragraph 3.5 above; and
• ii) the transfer by Afminex to the Company under the Assignment and Assumption referred to at paragraph 3.4 above,

and agreement by Lalo Ventures and the Company to be bound by the terms of the Pchanskaya Joint Venture Agreement.

SCHEDULE 3 - APPLICABLE LAW

1 REPUBLIC OF GHANA

1.1 Applicable legislation

The following apply to mining activities in the Republic of Ghana:

• a) The Minerals and Mining Law, 1986 (Mining Law); )and
• b) The Environmental Protection Agency Act, 1994 (EP Act) and the Environmental Assessment Regulations 1999

1.2 Summary of the Mining Law

• a) all minerals are the property of the State;
• b) no person is authorized to sell, export or otherwise dispose of a mineral resource without a mining title or licence under the provisions of the Mining Law;
• c) the State has a pre-emptive right to all minerals raised, won or obtained in Ghana subject to the obligation to pay the market price for those minerals; and
• d) the Mining Law is administered by the Minerals Commission.

1.3 Summary of the Types of Relevant Mining Titles

Licence Type	:Reconnaissance Licence	Prospecting Mining Lease Licence
	Regional exploration	Search for minerals Extraction of minerals
	not induding drilling	and evaluation
	No limitation on size	450 sq km but excludes [1000111111150 sq km per lease up to
	but excludes already.	maximum of 150 sq km already granted areas
	granted areas	per company
	12 months renewable	30 years (renewable) 2 years renewable with
		reduction of area to not less than half

1.4 Types of Mining Titles

• a) Reconnaissance
• i) Terms and Conditions governing grant

The Minister for Mines issues Reconnaissance Licences to persons who have submitted an application conforming to the requirements of the Mining Law.

ii) Rights attached to Reconnaissance Licence

The Reconnaissance Licence confers on its holder, within the boundaries of its perimeter, the right to explore for mineral substances but not by drilling, excavation or other sub-surface techniques.

iii) Term

12 months, with one renewal of 12 months.

• b) Prospecting Licence
• i) Terms and Conditions governing grant

The Minister for Mines issues Prospecting Licences to persons who have submitted an application conforming to the requirements of the Mining Law.

ii) Rights attached to Prospecting Licences

The Prospecting Licence confers on its holder, within the boundaries of its perimeter, the exclusive right to explore for mineral substances by surface and sub-surface methods. The holder of a Prospecting Licence is required to:

• advise the government of any discovery
• comply with its proposed works program
• repair or make good any damage caused by its activities
• keep records and report to the government
• employ and train citizens of Ghana.

The rights granted by a Prospecting Licence are subject to certain restrictions imposed by native title and land owner rights. The holder of a Prospecting Licence must not hinder or prevent members of the local population from exercising customary rights and privileges in or over a licensed area.

The Prospecting Licence holder may make arrangements with members of the local population for the limitation or waiver of such rights and privileges with such arrangements to include the payment of compensation where necessary. The government may provide assistance in the making of such arrangements.

Under a Prospecting Licence, the government also reserves the right to grant licences to third parties for prospecting or to enter into agreements for the production of minerals other than gold and base metals in the licensed area, provided that such activity does not unreasonably interfere with the rights granted to the licence holder.

iii) Term

Three years, with a renewal period of 2 years.

iv) Renewal

If the holder of a Prospecting Licence satisfies its obligations and complies with the mining regulations during the term of the licence, a renewal may be granted.

Renewal of a Prospecting Licence may be refused by decision of the Minister for Mines if the holder of a Prospecting Licence fails to satisfy its commitments relating to the work program or if the proposed program for the extended period is inadequate.

At each renewal of a Prospecting Licence at least 50% of the area held must be relinguished.

v) Transfer and assignment

There is no provision in the Mining Law to transfer or assign the licence to another person.

c) Mining Lease

i) Terms and conditions governing grant

The Minister for Mines issues Mining Leases to:

• the holder of a Prospecting Licence who furnishes evidence of the existence of a mineral deposit within the area of its Prospecting Licence; and
• other persons who furnish evidence of the existence of a mineral deposit.

Applications for a Mining Lease must be made within 90 days of the notification of a discovery or such other period as the Minister allows.

ii) State Interest

The State shall receive a 10% free-carried interest in the mining venture. The State may increase that interest to a 30% interest subject to agreement as to the terms of the acquisition with the holder of the Mining Lease. In the absence of agreement, the matter is to be arbitrated.

Mineral royalties are payable by a mining company based on the sales of minerals and the profitability of the company's mining operations at rates of between 3 and 12%.

iii) Term

The term of a Mining Lease shall not exceed 30 years. A renewal of up to 30 years may be granted.

iv) Mining - performance of works

The holder of a Mining Lease is required to:

• submit a program of works
• take into account environmental factors
• comply with its proposed works program and, specifically, must commence mining works within the time frame set out in the works program
• repair or make good any damage caused by its activities
• keep records and report to the government
• notify the government of commencement of commercial production and of any discoveries
• employ and train citizens of Ghana
• notify the government of a proposed suspension of production.
• v) Transfer and assignment

There is no provision in the Mining Law to transfer or assign a Mining Lease to another person.

The Mining Law also contains provisions prohibiting changes in ownership of those parties that hold Mining Leases without the prior approval of the Secretary.

1.5 Environmental Issues

Under the EP Act no person may commence any mining or quarrying undertaking unless an environmental permit has been issued by the Environmental Protection Agency (Agency) in respect of the undertaking.

Where the Agency approves an application at the initial assessment, it registers the undertaking and issues an environmental permit to that effect.

It is the responsibility of the applicant to:

• give notice of the proposed undertaking to the Ministry, the Minerals Commission and the relevant metropolitan, municipal or District Assembly
• advertise a scoping report in at least one national newspaper and a local newspaper and make copies of the scoping report available for inspection by the public.

The general public, relevant public agencies, municipal and district assemblies and local communities may make comments on any matter on which notices are issued under the above.

Where an environmental permit is granted to an applicant, it is valid for a period of 18 months effective from the date of issue of the permit.

Where an undertaking in respect of which a preliminary environmental report or an environmental impact statement is approved commences operations, the person responsible shall within 24 months obtain an environmental certificate from the Agency.

1.6 Exploration in Forest Reserves

The Ministry of Lands and Forestry in March 1996 placed a ban on mineral operations in forest reserves.

The prohibition was later relaxed to allow those companies which had reached an advanced stage in their exploration in a Forest Reserve to complete their exploration program.

2 RÉPUBLIQUE DE CÔTE D'IVOIRE

2.1 Applicable legislation

The following apply to mining activities in Côte d'Ivoire:

• a) Law no. 95-553 of 1995 (the Mining Code):
• b) Decree no. 96-634 of 1996 determining its implementation procedures; and
• Ò. Ordinance no. 96-600 of 1996 establishing the fixed rights, the surface fees, the proportional taxes relating to activities governed by the Mining Code, and constituting procedures relating to environmental rehabilitation reserve funds.

2.2 Summary of the Mining Code

• a) All minerals and all mineral waters are the property of the State.
• b) No person, whether a national or a foreigner, is authorized to undertake or conduct an activity governed by the Mining Code on private or public lands without having received, prior to undertaking the activity, a mining title or licence according to the provisions of the Mining Code.
• c) No person is authorized to hold a mining title if it is not registered with the trade registrar of the Republic of Côte d'Ivoire.
• d) The Mining Code is administered by the Ministry of Mining and Petroleum Resources.

2.3 Summary of the Types of Mining Titles

	Survey Authorisation	Permit
Purpose	Non-exclusive right	Exclusive right to explore	Exclusive right to
	to prospect	for minerals	extract minerals
	Negotiable, related to programme	Naries, but 50% reduction Network Depends on deposit for renewal
	12 months (renewable)	3 years, renewable for 2 years twice. After 7	20 years initially, with various additional terms.

2.4 Types of Relevant Mining Titles

a) Exploration Permit;

i) Terms and Conditions governing grant

The Council of Ministers issues decrees granting Exploration Permits to persons who have submitted an application conforming to the requirements of the Mining Code.

ii) Rights attached to Exploration Permit

The Exploration Permit confers on its holder, within the boundaries of its perimeter, surface and depth, the exclusive right to explore for mineral substances as well as the free disposal of the products extracted during exploration.

iii) Term

The total number of years in the exploration phase must not exceed a term of 7 years consisting of three distinct terms:

• An initial term of three years starting as of the date of grant; and $\ddot{\phantom{0}}$
• Two successive additional terms of 2 years each.
• iv) Renewal

If the holder of an Exploration Permit satisfies its obligations and complies with the mining regulations during the term of the permit, renewals are by law automatically granted.

Renewal of an Exploration Permit may be refused by a decision of the minister in charge of mines if the holder of an Exploration Permit fails to satisfy its commitments relating to:

• The general work program; or
• Minimum financial effort (Article 20 of decree no 96-634)

At each renewal of the Exploration Permit, at least 50% of the area held must be relinquished.

See also paragraph 2.4(b)(iv) below.

v) Transfer and assignment

Holders of an Exploration Permit or mining permit are authorized to transfer or assign the permit to other mining operators.

Subject to the prior approval of the minister in charge of mines and in compliance with the conditions provided by mining requlations, mining titles are transferable and assignable.

Provided that a holder or potential transferee has satisfied its obligations under the Mining Code, has submitted an application for a title in conformity with mining regulations, and meets the requirements of mining regulations, by right of law the minister's approval cannot be refused.

• b) Mining Permit
• i) Terms and conditions governing grant

The Council of Ministers issues decrees granting Mining Permits to holders of Exploration Permits who have furnished evidence of the existence of a mineral deposit within an Exploration Permit.

Application for a Mining Permit must be made to the Minister for Mines 60 days prior to the expiration of the validity of the term of the relevant Exploration Permit.

ii) State Interest

The République de Côte d'Ivoire has a 10% free-carried interest in any mining venture throughout the entire life of the mine.

iii) Term

The initial term of a Mining Permit shall not exceed 20 years, but application can be made to renew the permit at the expiry of that period.

iv) Mining - performance of works

The holder of a Mining Permit must commence mining works on the deposit within two years from the date the permit is granted.

The holder of a Mining Permit may postpone mining works during a period of 5 years, on the grounds of temporary bad commercial conditions or a sudden drop in market prices of the relevant mineral.

The authority issuing an Exploration Permit or Mining Permit may also revoke such permit, without any right to indemnity or compensation, pursuant to the service of a notice requiring the operator to remedy a default within 60 days.

Such revocations are limited to matters involving:

• Worker's safety and health
• Failure to comply with instructions of the mining engineer
• Unauthorized transfer or assignment
• Failure to pay duties and taxes
• Failure to maintain and restore the site during exploration and mining works.

2.5 Environmental protection

Holders of Mining Permits must establish a reserve fund for the rehabilitation and restoration of the site at the end of mining.

The sums deposited annually into this account, according to a schedule determined by the mining administration, are deductible from industrial and commercial profits.

The functioning of this account is defined by order of the minister in charge of finances (i.e. Art. 16 of Ordinance no 96-600 of 9 August 1996 constituting procedures relating to the reserve fund for environmental rehabilitation).

The Mining Code requires periodic monitoring of mining sites to verify the health and wellbeing of neighbouring populations:

• monitoring is performed by the mining permit holder, at its expense, within the framework of its environment management program, as approved by the mining administration;
• monitoring is also performed by the mining administration, and, if required, by an international agency experienced in this area designated by the mining administration, at the expense of the administration.

In cases of pollution exceeding normal tolerances, the costs related to inspections, future verifications and consequential fines are borne by the holder of the permit or licence.

2.6 Relations with landowners

• a) The occupancy of land required for prospecting or mining activities involving mineral substances confers on the landowner or legitimate occupant a right to compensation.
• b) Simple passage through such land is not eligible for compensation provided no damage results from such passage.
• c) Compensation is to be negotiated between the parties or, if an agreement is not reached, compensation shall be determined via mining administration arbitration.
• d) Compensation to the landowner or the legitimate occupant is calculated according to the formula established under no. 96-634 of 1996, as set out below.

Compensation to the landowner or the legitimate occupant is equal to:

i) Occupancy not exceeding a period of five years whereby land may be re-used in the future:

$$
D = \frac{R \times (1+i)^n}{i (1+i)^n} \cdot \frac{R + \langle P \times S \rangle}{i (1+i)}
$$

ii) Occupancy exceeding a period of five years or whereby land is no longer appropriate for crop production:

$D = (10 \times R) + (P \times S)$

where:

• D compensation in francs CFA:
• R annual revenue of the parcel;
• n number of years of occupancy;
• average annual interest applied by the national saving funds of the State of Côte d'Ivoire;
• P average acquisition price or usufruct per hectare;
• $\mathsf{S}$ surface area in hectares.

Compensation is due once only and applies exclusively to zones that have become inappropriate for use for other activities because of the mining activity.

3 KYRGYZ REPUBLIC

3.1 Applicable legislation

The following apply to mining activities in the Kyrgyz Republic:

• a) The Law of the Kyrgyz Republic "On Subsoil" dated 2 July 1997, as amended (the "Law on Subsoil");
• b) Regulation on Subsoil Use Licensing dated 14 June 2000:
• c) Regulation on the Conduct of Inspections by the State Inspection on Subsoil Use dated 14 June 2000;
• d) The Law of the Kyrgyz Republic "On Agreements on sharing of production resulting from development of mineral resources" dated 10 April 2002 (the "Production Sharing Agreements Law")

3.2 Summary of the Law

a) The Law on Subsoil governs relationships between the government and individuals, legal entities and other states. It also provides for the granting, renewal and termination of mineral concessions, state regulations while using subsoil, and payment of royalties and taxes

The subsoil of the Kyrgyz Republic may be in state, communal, private and other ownership. Minor deposits of generally found minerals appearing on the original ground of landowners may be in communal, private and other ownership.

The Government of the Kyrgyz Republic has a priority right to buy all or a part of the precious metal and precious stones produced in the Kyrgyz Republic.

The right to use of the subsoil which is in state ownership is granted by licences.

b) The Production Sharing Agreements Law establishes rules for the administration of production-sharing agreements relating to domestic and foreign investment in prospecting and development of mineral deposits located in the Kyrgyz Republic.

It also governs relationships arising in the course of conduding, executing and terminating production-sharing agreements and specifies the legal framework for such agreements.

In accordance with the Production Sharing Agreements Law, a proportion of the products produced is owned by the Kyrgyz Republic

We are instructed by lawyers in the Kyrgyz Republic that in practice such production-sharing agreements are not used.

c) The Law on Subsoil is administered by the State Agency on Geology and Mineral Resources (Geology Agency).

3.3 Summary of the Types of Relevant Mining Titles

Licence type	Exploration Licence	gisteria erabile, elimining sest "telesisteming", ("MMMMMMMMM") ("etelesist" ("mme" eliminiminiminiminiminimini Mining Licence
: Purpose	Exdusive right to explore for minerals	Exclusive right to extraction of minerals
Area	Dependent on application	Depends on deposit
- Period	2 years renewable for up to 10 years	Up to 20 years initially with possibility of extension $\sim$ $\sim$ $\sim$

3.4 Types of Mining Titles

• a) Exploration Licence
• i) Terms and Conditions governing grant

The Geology Agency grants subsoil use rights on the application of an individual or other legal person. The grant may be as a result of a tender process or direct negotiation.

Foreign investors are quaranteed the right to repatriate all or part of their capital and profits in the form of foreign currency, and to export product recovered from processing raw minerals, including gold.

ii) Rights attached to Exploration Licence

An exploration licence gives its holder the exclusive right to conduct research within the licensed area. The licensee must relinquish the prospected part of the licensable area within the period established in the licence agreement.

The licensable area for prospecting certain types of minerals may also be subject to licences issued to other licensees to prospect for

other types of minerals.

The Government of the Kyrgyz Republic establishes the maximum size of the licence area and the minimum amount of exploration expenditure per unit of licence area.

If a mineral deposit is discovered, the licensee has an exclusive right to obtain a mining licence.

iii) Term

An exploration licence is granted for a period of two years, with extensions for up to 10 years, provided that the conditions of the licence are met

iv) Transfer and assignment

The licensee may assign the rights provided by licence to other persons with the consent of the Geology Agency, provided that the conditions of the licence are met.

b) Mining Licence

i) Rights attached to Mining Licence

A licence to develop mineral deposits grants the licensee the exclusive right, within the boundaries of the licence, to conduct geological studies, deposit preparation and stripping, minerals recovery and processing, refining to sell and export recovered minerals, and raw minerals processing.

A licensee may recover common minerals and use underground waters within the boundaries of the licensed area provided the required licences are obtained.

The holder of the licence is required to:

• lodge reports with the Government
• maintain safe working practices
• rehabilitate workings
• provide financial quarantees if required
• monitor the status and movement of accompanying minerals
• preserve explored mining workings and boreholes
• make timely and accurate payments for the use of subsoil.
• ii) Term

Not longer than 20 years initially, with any extension dependent on depletion of the mineral deposit.

iii) Transfer and assignment

The licensee may assign the rights provided by licence to another person with the consent of the Geology Agency, provided that the conditions of the licence are met.

3.5 Relations with landowners

The Law on Subsoil regulates relationships between subsoil users and holders of land use rights. Subsoil users:

• must make agreements with holders of land rights to use their land;
• may make agreements with holders of land use rights to use other natural resources necessary for the mining operation; and
• may have to allow passage over the licence to holders of the adjacent mining tenement or land.

3.6 Other Applicable Laws

a) Land Code of the Kyrgyz Republic dated 2 June 1999

The Land Code regulates land relationships in the Kyrgyz Republic, and the grant, registration procedure and termination of rights to land. The Land Code also promotes the rational use and protection of land.

b) Law of the Kyrgyz Republic "On Environment Protection" dated 16 June 1999

A licensee must:

• maintain approved technology
• ensure the reliable and effective operation of deaning units, plants and control devices, disinfection and utilization of wastes; and
• implement environmentally safe technologies and production, protection and rational usage of natural resources.
• c) Law of the Kyrgyz Republic "On Specially Protected Natural Areas" dated 28 May 1994

Specially protected natural areas are areas for which a special regime of protection and usage is established. A specially protected natural area may have the status of state reserve (including biosphere), national park, state sanctuary, state natural monument, botanical garden, dendrological park, zoological park, natural territory for health-improving purposes. Any economic and other activity which conflicts with the purpose of a reserve or disturbs the natural development of the setting is prohibited.

d) Law of the Kyrgyz Republic "On Atmospheric Air Protection" dated 12 June 1999

The Law of the Kyrgyz Republic "On Atmospheric Air Protection" regulates air use and protection. For example, excessive emission of air pollutants is prohibited.

Mining activities must be carried out with appropriate measures for protection of the atmosphere.

$\alpha$ Resolution of the Government of the Kyrgyz Republic "On Payments for the Development and Reproduction of the Mineral Base, Financing the Exploration Works and the Mining Industry of the Kyrgyz Republic" dated 11 May 1993.

All enterprises undertaking mining operations must make royalty payments to the Government in accordance with approved rates. The rate for precious metals, induding gold, is 5% of the product value.

9. INDEPENDENT ACCOUNTANT'S REPORT

HILB Mann Judd

Chartered Accountants

9 July 2004

The Directors Perseus Minina Limited 30 Ledgar Road BALCATTA WA 6021

Dear Sirs

INDEPENDENT ACCOUNTANT'S REPORT

Introduction

This independent accountant's report ("Report") has been prepared at the request of the directors for inclusion in a Prospectus to be dated on or about 12 July 2004 ("Prospectus"). Through the Prospectus, Perseus Mining Limited ("Perseus" or "the Company") intends to offer 17,500,000 ordinary shares at an issue price of 20 cents per share and 8,750,000 free attaching options to raise \$3,500,000 ("the Offer"). The directors also reserve the right to accept oversubscriptions of up to 7,500,000 ordinary shares and 3,750,000 free attaching options, raising an additional \$1,500,000.

This Report has been induded in the Prospectus to assist potential investors and their financial advisers in making an assessment of the financial position of the Company.

The primary purpose of the Offer is to:

• a) raise funds to explore the Company's mineral interests as described in the Prospectus; and
• b) to enable the Company to seek admission to the official list of Australian Stock Exchange Limited ("ASX").

Structure of Report

This Report has been divided into the following sections:

• 1 Background Information;
• 2 Scope of Report;
• Historical and proforma financial information; 3
• $\varDelta$ Subsequent events;
• $\mathbb S$ Statements; and
• Declaration. 6

HLB Mann Judd (WA Partnership)
15 Rheola Street West Perth 6005, PO Box 263 West Perth 6872 Western Australia, DX 238 (Perth) Telephone +61 (08) 9481 0977, Fax +61 (08) 9481 3686 Email: hlb@mjwa.com.au Website: http://www.hlb.com.au

Partners: lan H Bargden, Terry M Blenkinsop, Lisa Christodulou, Wayne M Clark, Lucio Di Gaillonardo, Colin D Emmett, Peter M Forbes, Trever G Holdy, Norman Neill, Peter J Speachlay
HLB ManN Judd (WA Partnership) is a membe

1. BACKGROUND INFORMATION

The Company was registered in Australia on 24 October 2003 as a wholly owned subsidiary of Afminex Limited ("Afminex").

Perseus was registered to acquire, explore and develop several significant gold projects located in West Africa and Central Asia. The West African projects have been acquired from Afminex, whilst the Central Asian (Kyrgyz Republic) properties have been assembled by Perseus with assistance from Afminex and its Kyrgyz mineral industry contacts.

We were appointed as auditors of the Company on 19 November 2003.

We understand that the funds raised by the issue of shares under the Prospectus will be applied as follows:

• i) to fund exploration and evaluation of the Company's mineral interests;
• ii) to fund the administrative and corporate costs of the Company;
• iii) to fund further acquisition of mineral interests:
• iv) to fund the acquisition of plant and equipment; and
• v) to meet the costs of this issue, including, legal and accounting fees, expert's and adviser's fees and costs of printing, publication and distribution of the Prospectus.

2. SCOPE OF REPORT

You have requested HLB to prepare this Report presenting the following information:

• a) the historical financial information, comprising the unaudited consolidated statement of financial position as at 31 May 2004: and
• b) the proforma financial information comprising the proforma consolidated statement of financial position as at 31 May 2004.

We have conducted a review of the historical financial information and the proforma financial information in accordance with Australian Auditing Standard AUS 902 "Review of Financial Reports" and conducted such enguiries and procedures, which we considered necessary for the purposes of this Report. We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances including:

• A review of workpapers, accounting records and other documents.
• A review of the assumptions and adjustments used to compile the pro-forma statement of financial position.
• A comparison of consistency in application of the recognition and measurement principles in accounting standards and other mandatory professional reporting requirements in Australia and the accounting policies adopted by the Company as disclosed in Appendix 1 of this report.
• Enquiry of directors, management and others.

The review procedures undertaken by HLB in our role as Independent 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, 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 or proforma financial information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

• i) support by another person, corporation or an unrelated entity has not been assumed;
• ii) 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
• iii) the going concern basis of accounting has been adopted.

3. HISTORICAL AND PROFORMA FINANCIAL INFORMATION

Set out in Appendix 1 of this Report is:

i) the unaudited consolidated statement of financial position as at 31 May 2004;

• ii) the proforma consolidated statement of financial position as at 31 May 2004 as it would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 31 May 2004 ("proforma adjustments"):
• a) the proposed issue by the Company pursuant to this Prospectus of 17,500,000 ordinary fully paid shares at 20 cents each and 8,750,000 free attaching options to raise \$3,500,000;
• b) the payment and write off to the contributed equity account of other Prospectus costs, not already paid or previously provided, of approximately \$350,000;
• c) the acquisition of the remaining 20% interest in the Grumesa Joint Venture for approximately \$205,000;
• d) the acquisition of plant and equipment for approximately \$147,000;
• e) the issue of 4,000,000 options exercisable at 20 cents on or before 31 March 2009, in satisfaction of capital raising fee; and
• f) the issue of 2,940,000 options exercisable at 20 cents on or before 31 March 2009 to executives and employees.
• iii) extracts of the Notes to the Financial Statements in i) and ii) above.

4. SUBSEQUENT EVENTS

To the best of our knowledge and belief, and based on the work we have performed as described in the scope paragraphs above, there have been no material transactions or events subsequent to 31 May 2004, other than those included in our report, which would require comment on, or adjustment to, the financial information referred to in our report or that would cause such information included in this report to be misleading.

5. STATEMENTS

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that:

• the proforma consolidated financial position as at 31 May 2004, as set out in Appendix 1 of this Report, does not present fairly i). the financial position of the Perseus Mining Limited as at 31 May 2004, as if the transactions referred to in Section 3 of this Report had occurred as at that date; and
• ii) the historical financial information does not present fairly the unaudited consolidated statement of financial position of Perseus Mining Limited as at 31 May 2004,

in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements in Australia and accounting policies adopted by the Company as disclosed in Appendix 1 of this Report.

6. DECLARATION

HLB does not have any pecuniary interests that could reasonably be regarded as being capable of affecting its ability to give an unbiased opinion in relation to this Report. HLB is the ongoing auditor and will receive a professional fee for the preparation of this Report.

The Partners of HLB Mann Judd do not hold nor have any interest in any ordinary shares of the Company.

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.

HLB has consented to the indusion of this Report in the Prospectus in the form and context in which it appears. The indusion 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

Normalgheill

N G NEILL Partner

APPENDIX 1

Consolidated Statements of Financial Position
	Notes	Historical 31 May 2004	Pro Forma 31 May 2004
CURRENT ASSETS
Cash assets		457,735	-3,255,735
Receivables		10,755	10,755
Total current assets		468,490	3,266,490
NON-CURRENT ASSETS
Exploration and evaluation expenditure		2,020,685	2,225,685
Property, plant and equipment		11,714	158,714
Total non-current assets		2,032,399	2,384,399
Total assets		2,500,889	5,650,889
CURRENT LIABILITIES
Payables		37892	37892
Total current liabilities		37,892	37,892
Total liabilities		37,892	37,892
NET ASSETS		2,462,997	5,612,997
EQUITY. Contributed equity		2,712,487	5,862,487
Loss for the period since registration		(249, 490)	(249, 490)
TOTAL EQUITY		2,462,997	5,612,997

NOTES TO AND FORMING PART OF THE FINANCIAL STATEMENTS

NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies which have been adopted in the preparation of the historical consolidated statement of financial position and the pro forma consolidated statement of financial position are set out below:

Basis of Accounting

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

The financial statements have been prepared on a going concern basis of accounting.

Principles of Consolidation

The consolidated financial statements are those of the consolidated entity, comprising the Company, and all entities, which the Company controlled from time to time during the period from registration and at balance date.

All inter-company balances and transactions between entities in the consolidated entity, including any unrealised profits or losses, have been eliminated on consolidation.

Where controlled entities have entered or left the consolidated entity during the period, their operating results have been induded from the date control was obtained or until the date control ceased.

The financial reports of controlled entities are prepared for the same reporting year as the Company, using consistent accounting policies.

Foreign Currency

Transactions in foreign currencies of entities within the consolidated entity are converted to local currency at the rate of exchange ruling at the date of the transaction. At balance date amounts payable and receivable in foreign currencies are translated to Australian currency at rates of exchange current at that date. Resulting exchange differences are recognised in determining the result for the period.

As the foreign controlled entities are dependent on the parent entity, their monetary assets and liabilities are translated into Australian currency at rates of exchange at balance date. Non-monetary assets are translated at historical rates at the time of the transaction and revenues and expenses are translated at the average of rates ruling during the period. Resulting exchange differences are brought to account in determining the profit or loss for the period.

Taxes

Income taxes

Tax-effect accounting is applied using the liability method whereby income tax is regarded as an expense and is calculated on the accounting profit after allowing for permanent differences. To the extent timing differences occur between the time items are recognised in the financial statements and when items are taken into account in determining taxable income, the net related taxation benefit or liability, calculated at current rates, is disclosed as a future income tax benefit or a provision for deferred income tax. The net future income tax benefit relating to tax losses and timing differences is not carried forward as an asset unless the benefit is virtually certain of being realised.

Receivables

Trade receivables and other receivables are recorded at amounts due less provision for doubtful debts. An estimate for doubtful debts is made when collection of the full amount is no longer probable. Bad debts are written-off as incurred.

Acquisition of Assets

The cost method of accounting is used for all acquisitions of assets regardless of whether shares or other assets are acquired. Cost is determined as the fair value of the assets given up at the date of acquisition plus costs incidental to the acquisition.

Recoverable Amount of Non-Current Assets Valued on Cost Basis

The recoverable amount of an asset is the net amount expected to be recovered through the net cash inflows arising from its continued use and subsequent disposal.

The carrying amounts of non-current assets valued on the cost basis, other than mineral interest acquisition, exploration and development expenditure carried forward, are reviewed annually to determine whether they are in excess of their recoverable amount at balance date. If the carrying amount of a non-current asset exceeds its recoverable amount, the asset is written down to the lower amount. The write-down is expensed in the period in which it occurs.

In assessing recoverable amount of non-current assets, the relevant cash flows have not been discounted to their present value except where specifically stated.

Property, Plant and Equipment

Property, plant and equipment are induded at cost and, except for freehold land, are depreciated over their estimated useful lives commencing from the time the asset is held ready for use. Depreciation is provided using the straight line method for all property, plant and equipment. Estimated useful lives of between three and ten years have been used in the calculation of depreciation for plant and equipment.

Mineral Interest Acquisition, Exploration and Development Expenditure

Mineral interest acquisition, exploration and development expenditure is accumulated separately for each area of interest. Such expenditure comprises acquisition costs, direct exploration and development costs and an appropriate portion of related overhead expenditure, but does not indude general overheads or administrative expenditure not having a specific nexus with a particular area of interest.

Revenue received from the sale or disposal of product, materials or services during the exploration and evaluation phase of operations is offset against expenditure in respect of the area of interest or mineral resource concerned.

Exploration and evaluation costs are carried forward where right of tenure of the area of interest is current and they are expected to be recouped through sale or successful development and exploitation of the area of interest, or, where exploration and evaluation activities in the area of interest have not yet reached a stage that permits reasonable assessment of the existence of economically recoverable reserves.

Exploration and development expenditure, which does not satisfy the above criteria, is written off.

Joint Ventures

Joint venture interests are incorporated in the financial statements by induding the consolidated entity's proportion of joint venture assets and liabilities under the appropriate headings.

Where part of a joint venture is farmed out and in consideration the farminee undertakes to carry out further expenditure in the joint venture area of interest, expenditure incurred prior to farmout is carried forward without adjustment unless the terms of the farmout indicate that the expenditure carried forward is excessive based on the diluted interest retained. Provision is then made to reduce expenditure carried forward to a recoverable amount. Any cash received in consideration for farming out part of a joint venture interest is treated as a reduction in the carrying value of the related mineral property.

Pavables

Trade payables and other accounts payable are recognised when the consolidated entity becomes obliged to make future payments resulting from the purchase of goods and services. Amounts are unsecured and are usually paid within 30 days of recognition.

Provisions

Provisions are recognised when there is a legal, equitable or constructive obligation to make a future sacrifice of economic benefits as a result of a past event, it is probable that a future sacrifice of economic benefits will be required, and a reliable estimate can be made of the amount of the obligation.

Employee Entitlements

Provision is made for the Company's liability for wages and salaries, annual leave and long service leave arising from services rendered by employees to the reporting date. Liabilities so arising and expected to be settled within twelve months of the reporting date are measured at their nominal amounts based on remuneration rates, which are expected to be paid when the liability is settled.

Contributions are made by the consolidated entity to superannuation funds as stipulated by statutory requirements and are charged as expenses when incurred.

The value of options issued to employees, as remuneration is not recognised as an expense. Other than the costs incurred in administering any employee option scheme, which are expensed as incurred, the scheme does not result in any expense to the consolidated entity.

Contributed Equity

Issued capital is recognised at the fair value of the consideration received by the Company.

Transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

Pro Forma Transactions

The pro forma consolidated statement of financial position has been derived from the historical consolidated statement of financial position as at 31 May 2004 as adjusted to give effect to the following significant transactions that have occurred or are proposed to occur after 31 May 2004:

• the proposed issue by the Company pursuant to this prospectus of 17500.000 ordinary fully paid shares at 20 cents each and 8.750.000 free attaching options to raise \$3.500.000;
• ΗÌ. the payment and write off to the contributed equity account of other Prospectus costs, not already paid or previously provided, of approximately \$350,000;
• iii) the acquisition of the remaining 20% interest in the Grumesa Joint Venture for approximately \$205,000;
• iv) the acquisition of plant and equipment for approximately \$147,000;
• v) the issue of 4,000,000 options exercisable at 20 cents each on or before 31 March 2009, in satisfaction of capital raising fee; and
• vi) the issue of 2,940,000 options exercisable at 20 cents on or before 31 March 2009 to executives and employees.

The pro forma consolidated statement of financial position has been prepared on the basis that the Offer will be fully subscribed and that no oversubscriptions will be accepted.

NOTE 2 - INTERNATIONAL FINANCIAL REPORTING STANDARDS

The Financial Reporting Council has announced that Australia will adopt International Financial Reporting Standards ("IFRS") as the reporting and accounting framework from 1 January 2005.

The first year that IFRS will apply to Perseus, is the year ending 30 June 2006.

All financial information disclosed in this Prospectus has been prepared in accordance with generally accepted accounting principles in Australia (Australian GAAP).

The differences between Australian GAAP and IFRS identified by management to date as potentially having an impact on the financial position and financial performance of Perseus are summarised below. The summary should not be taken as an exhaustive list of all the differences between Australian GAAP and IFRS.

Perseus has not precisely quantified the effects of IFRS, however, management believes the key potential implications of the conversion are:

• Share based payments: the Company will be required to determine the fair value of future options or other equity based compensation issued to employees and recognise this as an expense in the statement of financial performance.
• Income taxes: the Company will be required to use a balance sheet approach, rather than an income statement approach. This method focuses on the tax-effects of transactions or other events that affect amounts recognised in the Statement of Financial Position.
• Exploration expenditure: currently an accounting standard has yet to be issued which deals with the treatment of exploration and evaluation expenditure under IFRS.

	Historical Consolidated 31 May 2004	Pro Forma Consolidated 31 May 2004
NOTE 3 - CASH ASSETS
Cash at bank and on hand	457.735	3,255,735
Reconciliation of movement in cash:
Opening balance		457.735
Shares issued pursuant to the Prospectus		3,500,000
Offer costs		(350,000)
Acquisition of the remaining interest in the Grumesa Joint Venture		(205,000)
Acquisition of plant and equipment		(147000)
Closing Balance	457,735	3,255,735

		Historical Consolidated 31 May 2004	Pro Forma Consolidated 31 May 2004
	NOTE 4 - EXPLORATION AND EVALUATION EXPENDITURE - AT COST
Deferred exploration costs.		2,020,685	.2,020,685
	Acquisition of the remaining interest in the Grumesa Joint Venture		205,000
Closing Balance		2,020,685	2,225,685
	The ultimate recoupment of exploration costs related to the mineral prospecting licences is dependent upon the consolidated entity successfully developing and commercially exploiting or disposing of the mineral prospecting licences.
NOTE 5 - CONTRIBUTED EQUITY
	i) issued and paid up ordinary share capital
Issued and paid up capital		2,712,487	2,712,487
Shares issued pursuant to the Prospectus			3,500,000
Offer costs			(350,000)
Closing Balance		2,712,487	5,862,487
Date	Movements in number of ordinary shares since registration: Details	Number
28 October 2003	Subscriber shares
23 January 2004	Promoter shares	13,233,445	13,233
5 March 2004	Seed capital	7,100,000	710,000
5 March 2004	Shares issued to Afminex for assignment of debt	16,000,000	1,600,000
5 March 2004	Shares issued to Afminex for acquisition of its interest in the Grumesa Joint Venture	3,200,000	320,000
31 March 2004	Seed capital	300,000	30,000
31 March 2004	Shares issued to Afminex for the acquisition of its interest in the Kyldoo Joint Venture.	1,000,000	100,000
12 April 2004	Seed capital	100,000	10,000
	Share issue costs		(70, 747)
	Balance as at 31 May 2004	40,933,450	2,712,487
	Shares to be issued pursuant to the Prospectus	17,500,000	3,500,000
	Share issue costs		(350,000)
	Balance per report	58,433,450	5,862,487

	Historical Consolidated	Pro Forma Consolidated
	31 May 2004	31 May 2004
NOTE 5 - CONTRIBUTED EQUITY (CONTINUED)
(ii) Share Options	Number	Numhe
Unissued ordinary shares under option:
Exercise Period Exercise Price.
On or before 31 March 2009 20 cents	3.750,000	3,750,000
Options issued pursuant to this Prospectus.		8.750.000
Options issued to executives and employees		2,940,000
Options issued in satisfaction of capital raising fee		4,000,000
	3.750.000	19,440,000

NOTE 6 - CONTINGENCIES AND COMMITMENTS

Details of commitments are outlined in both the Solicitor's Report (Section 8) and Consulting Geologist's Report (Section 7). The directors are not aware of any other contingencies.

NOTE 7 - RELATED PARTY TRANSACTIONS

Details of related party transactions and directors interests are set out in Section 10 of the Prospectus.

10 ADDITIONAL INFORMATION

10.1 Rights Attaching To Shares

The Shares offered pursuant to this Prospectus are fully paid ordinary shares in the capital of the Company and these constitute the only class of shares on issue in the Company at the date of this Prospectus. The rights attaching to Shares are set out in the Company's Constitution (a copy of which can be inspected at the Company's registered office during normal business hours) and are, in certain circumstances, regulated by the Corporations Act, the Listing Rules and general law. The following is a summary of the principal rights attaching to Shares:

Voting Rights

At a general meeting every shareholder present in person or by proxy, attorney or representative will have on a show of hands one vote and, on a poll, one vote for each Share held.

General Meetings

Each shareholder is entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive all notices, financial reports and other documents required to be furnished to shareholders under the Constitution or the Corporations Act and Listing Rules.

Dividend Rights

Any dividend as declared shall be payable on all Shares in proportion to the amount of capital for the time being paid up or credited as paid up in respect of such Shares.

Rights on Winding-up

On a winding-up of the Company all monies and property that are to be legally distributed among holders of Shares will be distributed in proportion to the amounts paid up (or which at the commencement of the winding-up ought to have been paid up) on those Shares compared with the total paid-up capital of the Company.

Transfer of Shares

Subject to the Constitution, the Corporations Act and the SCH Business Rules, and subject to any restrictions applicable to Shares which have been designated by the ASX as "restricted securities", Shares are freely transferable.

10.2 Terms and Conditions of Options

The 3,750,000 Options issued to seed capital investors, the 2,940,000 Options issued to directors, consultants and employees ("Employee Options"), the Options to be issued to the Broker to the Issue (refer to Section 3.10) and the 8.750,000 Options to be issued pursuant to this Prospectus all have identical terms and conditions, except for the transferability and cancellation of Employee Options as set out in paragraphs 3 and 10 below. The Options entitle the holder to subscribe for Shares on the following terms:

• Each Option entitles the holder to subscribe for and be allotted one ordinary Share. The exercise price is 20 cents per Option. $\mathbf{1}$
• $\overline{2}$ Options expire at 5.00p.m. on 31 March 2009 (the "Expiry Date"). Options are exercisable by notice in writing to the Company accompanied by payment of the exercise price.
• Options, excluding Employee Options, are transferable and application will be made to the ASX for Official Quotation of the Options. 3
• Shares will be allotted and issued pursuant to the exercise of Options not more than 10 business days after receipt of a properly 4 executed notice of exercise and payment of the exercise price.
• $\Gamma_{!!q}$ Shares issued upon exercise of Options will rank pari passu in all respects with existing Shares. The Company will apply for Official Quotation by ASX of all Shares issued upon the exercise of Options within 3 business days after the date of allotment of those Shares.
• There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of 6 capital offered or made to the shareholders during the currency of the Options. However, the Company will send a notice to each optionholder at least 9 business days before the record date for any proposed issue of capital. This will give optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.
• There are no rights to a change in the exercise price, or in the number of Shares over which Options can be exercised, in the event of a 7 bonus issue by the Company prior to the exercise of any Options.
• $\mathcal{B}$ In the event of any reorganisation of the issued capital of the Company on or prior to the Expiry Date, the rights of an option holder will be changed to the extent necessary to comply with the applicable Listing Rules at the time of the reorganisation.
• The Company will, at least 20 business days before the Expiry Date, send notices to the optionholders stating the name of the q optionholder, the number of Options held, the number of Shares to be issued on exercise of the Options, the exercise price, the due date for payment of the exercise price, and the consequences of non-payment.
• 10 In the case of Employee Options, where the holder of the Options is not employed by or providing consulting services to or holding office in the Company or its subsidiaries as at 30 June 2005, then those Options will be cancelled.

ASX escrow provisions will apply to half of the Options issued to seed capital investors, and to all of the Employee Options and Options issued to the Broker to the Issue.

10.3 Corporate Governance

The Board's primary role is the protection and enhancement of long-term shareholder value. Good corporate governance is essential to this process. The Board is responsible for the overall corporate governance of the Company including its strategic direction, establishing and achieving objectives, monitoring and assessing risk and optimising performance. The following is a summary of Perseus's corporate governance policy.

Composition of the Board

The composition of the Board is determined in accordance with the following principles and quidelines:

• The Board should comprise at least 3 Directors and should maintain a majority of non-executive directors;
• The Board should comprise Directors with an appropriate range of qualifications and expertise;
• The Board shall meet at least quarterly; and
• The selection of the Board members shall always be for the purpose of their ability to add value to Perseus.

The Company's Constitution provides that one third of the Directors, excluding the Managing Director, shall retire by rotation annually. Retiring Directors are eligible for re-election at the annual general meeting. The Directors are not required to hold any qualifying shares.

Review of Board Performance

The Board will meet once a year to review its own performance. The Chairman will review the performance of the Managing Director annually. Evaluations are based on specific criteria, including whether strategic and operational objectives are being met.

Committees of the Board

At the date of this Prospectus, the Company does not have any formally constituted committees of the Board. The Directors consider that the Company is not of a size nor are its affairs of such complexity as to justify the formation of special committees. However, the Directors propose to establish an audit committee after the Company's listing on ASX.

Internal Control Framework

The Board has instigated an internal control framework that enables:

• appropriate control over expenditure;
• a regular reporting process, which facilitates Board review of all significant issues; and
• the reporting of price sensitive information to the ASX in accordance with continuous disclosure requirements.

Compensation Arrangements

The maximum aggregate amount payable to non-executive directors as Directors' fees has been set at \$200,000. The Constitution provides that this amount can only change pursuant to a resolution at a general meeting of the Company.

The Board reviews the remuneration packages and policies applicable to Directors and senior staff on an annual basis. Remuneration levels are competitively set to attract the most qualified and experienced Directors and personnel. Details of the Directors' remuneration terms are disclosed in Section 10.6.

Independent Professional Advice

Each Director has the right, in appropriate circumstances, to seek independent professional advice at the Company's expense for which the prior approval of the Chairman is required and will not be unreasonably withheld.

Risk Management

The Board monitors and receives advice on areas of operational and financial risk, and considers strategies for appropriate risk management arrangements. The Directors recognise that mineral exploration is inherently risky (refer Section 6).

Ethical Standards

The Board adknowledges the need for continued maintenance of the highest standard of corporate governance practice and ethical conduct by all Directors and employees of Perseus. The Directors propose to develop a code of conduct for ethical and responsible decision-making by themselves and management.

10.4 Dealings in Securities of Perseus

Due to the potential impact on the price of Perseus's securities of the release of exploration activity reports and financial information reports at the end of each calendar quarter, Directors, senior management and certain employees of Perseus with access to sensitive financial information who trade near the end of a calendar quarter incur the risk of being party to a future lawsuit based on an allegation that they are trading on inside information. In order to provide a measure of protection, Perseus will institute periods ("Black-Out Periods") during which Directors, employees and consultants of Perseus and entities over which those persons have control are not permitted to buy, sell or otherwise trade in securities of Perseus.

10.5 Subscription Agreement

The Company has entered into a subscription agreement dated 13 July 2004 with RAB Special Situations LP ("RAB"), a UK investment entity. Under the terms of the subscription agreement, RAB will subscribe for at least 7,500,000 Shares and 3,750,000 free attaching Options for an amount of \$1.5 million.

RAB has an existing holding of 4,000,000 Shares and 2,000,000 Options. Following its subscription for 7,500,000 Shares and assuming that the Company issues 17,500,000 Shares under this Prospectus (ie the minimum subscription), RAB will be entitled to approximately 19.68% of the then issued Shares.

The subscription agreement with RAB contains the following key items:

• (a) unless waived or extended by RAB, the subscription agreement comes to an end if the Company has not raised the minimum subscription of \$3.5 million by 30 September 2004.
• (b) Perseus undertakes unconditionally and irrevocably to indemnify and hold RAB harmless against all losses, damages, expenses and liabilities that RAB may incur as a result of a breach of the subscription agreement, warranties (given by Perseus) and/or the Corporations Act by Perseus for a period of two years from the date of the subscription agreement.
• (c) Perseus will not issue Shares at an issue price of less than twenty cents per share within 12 months after the issue of Securities offered by this Prospectus, except pursuant to a pro-rata issue to all shareholders.
• (d) RAB can terminate the subscription agreement before the issue of the Securities offered by this Prospectus, if RAB acting reasonably concludes that:
• (i) any statement contained in the Prospectus has become or been discovered to be untrue, incorrect or misleading in any respect which RAB considers to be material in the context of its subscription to the Securities; or
• (ii) matters have arisen or have been discovered which would, if the Prospectus were to be issued at that time, constitute in the opinion of RAB a material omission from the Prospectus; or
• (iii) there has been a breach by Perseus of the subscription agreement, warranties given by Perseus or the Corporations Act, which RAB considers to be material in the context of its subscription for the Securities; or
• (iv) a "Specified Event" has occurred. "Specified Event" means an event occurring or matter arising on or after the date of the subscription agreement and before admission to the Official List, which, if it had occurred or arisen before the date of the subscription agreement, would have rendered any of the warranties (given by Perseus) untrue, inaccurate or misleading in any material respect.
• (e) a number of warranties have been given by Perseus. These are of the usual nature and include warranties with respect to power and capacity to enter into the subscription agreement, accuracy and completeness of documents provided to RAB, share capital structure, Prospectus compliance with the Corporations Act, inclusion of all material information in the Prospectus, accuracy of accounting information provided by the Company and referred to in the independent accountant's report, reporting of any material breaches of environmental regulations, disclosure in the Prospectus of all related party transactions, authority to carry on business in all applicable jurisdictions, litigation, and the Company's solvency.

10.6 Directors' and Experts' Interests

• (a) Other than as set out in this Section 10.6 or elsewhere in this Prospectus, no:
• (i) Director;
• (ii) 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;
• (iii) promoter of the Company; or
• (iv) broker or underwriter to the Issue,

holds, or has held within two years before the date of this Prospectus, any interest in the Issue or in the formation or promotion of, or in any property acquired or proposed to be acquired by, the Company in connection with its formation or promotion or the Issue.

• (b) Set out below are the amounts that anyone has paid or agreed to pay and the nature and value of any benefit anyone has given or agreed to give:
• (i) to a Director to induce him to become, or to qualify him as, a director of the Company; or
• (ii) for services provided in connection with the formation or promotion of the Company or the Issue by any Director, any 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, any promoter of the Company, or any stockbroker or underwriter to the Issue:
• The Company has acquired its interests in the West African projects (Grumesa in Ghana and Tengrela in Côte d'Ivoire) and the Kyldoo project in the Kyrgyz Republic from Afminex. Afminex has also been instrumental in making introductions to the other projects in the Kyrgyz Republic. The consideration paid to Afminex for these projects is 20,200,000 Shares. Consideration payable to Afminex also includes a royalty payable on production of minerals. Detailed terms and conditions under which the Company has acquired the mineral interests from Afminex are provided in Section 8. Afminex also subscribed for an additional 3,585,130 Shares at an issue price of 0.1 cents each. Messrs Gillard, Carson, and Becker are directors of Afminex and Mr Calderwoood has been a director of Afminex until recently and remains a director of its Ghanaian subsidiaries

In June 2004, the Company entered into an agreement to acquire certain items of plant and equipment (mainly motor vehides) from Afminex for use on the West African properties. The total purchase price for these items of plant is US\$103,319, which is payable to Afminex upon the listing of the Company on the ASX. If the Company does not list on ASX by 30 September 2004, the agreement to acquire the plant and equipment will lapse.

The Company shares certain staff and office resources in Ghana with Afminex and will continue to do so for the foreseeable future, until such time as Afminex divests its other African mineral assets. The apportionment of costs is determined on the basis of usage of resources by the two companies.

• At the time the Company acquired its interest in the Kyldoo project from Afminex, Mr Becker was a shareholder in Kentor Gold NL. Kentor Gold NL is the parent company of JSC Kyldoo, which is the licence holder as well as the company in which Perseus can earn an equity interest (refer to Section 5.5). Mr Becker disposed of his shareholding in Kentor Gold NL prior to the date of this Prospectus.
• The following persons subscribed for a total of 9,648,315 Shares at an issue price of 0.1 cents each:

1,395,254 Shares to Mr Alexander Becker, issued prior to his appointment as a Director;

1,316,278 Shares to Mr Waldemar Mueller, a former director of the Company;

1.138.580 Shares to Ms Pauline Mueller:

2,244,253 Shares to Ms Tatiana Dmitrieva; and

1,184,650 Shares to each of Messrs Alexander Novak, Yaroslav Bandurak and Sergei Shestaev.

• The non-executive Directors are entitled to receive directors' fees as determined by the Company in general meeting. Currently, the non-executive Directors together are entitled to maximum aggregate fees of \$200,000 per annum. It has been agreed that the non-executive chairman shall receive a fee of \$40,000 per annum and the other non-executive directors (of whom there are three at present) shall receive a fee of \$30,000 each per annum from 1 June 2004 but subject to the Company being listed on the ASX. Non-executive Directors may also be remunerated for additional specialised services performed at the request of the Board. Reasonable expenses incurred by all Directors on Company business are reimbursable.
• Mr Calderwood has entered into an agreement with the Company to be employed as the Managing Director of the Company. A salary of \$5,500 per month is payable for the period from January 2004 to the listing of the Company on ASX. Following the listing of the Company on the ASX, Mr Calderwood will be paid an annual salary of \$175,000 per annum. Other components of his remuneration package include reasonable accommodation costs outside Australia, the equivalent of three return economy airfares per annum to Australia, and medical evacuation and insurance cover. Mr Calderwood's duties and responsibilities are those customarily expected of a Managing Director and from time to time delegated by the Board. Either party can terminate the agreement by giving six months written notice.
• Mr Carson has entered into an agreement with the Company to be employed as an executive director. Upon listing of the Company on the ASX Mr Carson will be paid an annual salary of \$70,000, induding superannuation, on the basis that he dedicates 90 hours per month for 11 months per annum to the affairs of Perseus, and provided that a pro rata adjustment will be made if he dedicates a greater or lesser amount of time to Perseus.

• A total of 2,940,000 Options have been issued to directors, consultants and employees of the Company on the terms and conditions referred to in Section 10.2. Included in these Options were 2.4 million Options to the managing director Mr Calderwood.

• HLB Mann Judd has acted as Independent Accountant to the Issue and will be paid a fee of approximately \$7,500 for the provision of the Independent Accountant's Report contained in Section 9. There are no other fees paid or payable to HLB Mann Judd for services rendered since registration of the Company.

• Fees paid or payable to RSG Global Pty Ltd ("RSG") for the provision of the Independent Consulting Geologist's Report contained in Section 7 are approximately \$50,000. There are no other fees paid or payable to RSG for services rendered since registration of the Company.
• Cullen Babington Hughes and its antecedent firm, Babingtons Lawyers, will be paid a fee of approximately \$29,000 for the provision of the Solicitor's Report contained in Section 8 and for advice in relation to the Offer and this Prospectus. Professional fees paid or payable to the date of this Prospectus for other services rendered by that firm and its antecedent firm, Babingtons Lawyers, since registration of the Company are approximately \$8,900.
• Corporate Consultants Pty Limited, an entity in which Mr R N Gillard is a director and a shareholder, provides administration, accounting and company secretarial services to the Company and has assisted with the preparation of this prospectus. Fees paid or payable from the date of the Company's registration in October 2003 to the date of this Prospectus are approximately \$45,500.
• (c) At the date of this Prospectus, the Directors have an interest in the securities of the Company as follows:

	The Country Country Country Shares
Service The company
– Mr .arson
- Mr. Becker contract of	$\cdots$
Mr Brans and the artists ALC	the control the contract of the contract of .	the first product of the product of the con-
Mr Fearis

Refer Section 10.2 for details of the option terms and conditions. As referred to in Section 2.3, following the listing of the Securities on ASX, the Directors will seek shareholder approval for the issue of 2,000,000 Options to non-executive directors. It is proposed that these will be issued as follows:

Mr Gillard - 400,000 Options, Mr Becker - 800,000 Options, Mr Brans - 400,000 Options and Mr Fearis - 400,000 Options.

As shareholders in Afminex, Mark Calderwood and entities associated with Messrs Gillard, Calderwood and Carson will be eligible to participate in this Issue on a priority basis along with all other Afminex shareholders. Although they have not yet finalised their participation rates, the Company understands that they intend to participate in the Offer.

10.7 Consents and Liability of Persons Named in this Prospectus

Each of the parties referred to in this Section:

• a) does not make, or purport to make, any statement in this Prospectus, or on which a statement made in this Prospectus is based other than as specified in this section; and
• to the maximum extent permitted by the law, expressly disdaims liability, and takes no responsibility, for any part of this Prospectus other $h$ than a reference to its name and a statement induded in the Prospectus with the consent of that party as specified in this section.

For the purposes of section 716 of the Corporations Act, the following parties have given their written consents to the issue of this Prospectus with statements made by them, or statements said in this Prospectus to be based on statements made by them, induded in the form and context in which they are included and have not withdrawn those consents before the lodgement of this Prospectus with the ASIC:

HLB Mann Judd - Independent Accountant's Report in Section 9.

RSG Global Pty Ltd - Independent Consulting Geologist's Report in Section 7.

Cullen Babington Hughes - Solicitors Report and Summary of Material Contracts in Section 8.

In addition, Advanced Share Registry Services has consented to be named as share registrar, HLB Mann Judd has consented to be named as auditor and Montagu Stockbrokers Pty Ltd has consented to be named as Broker to the Issue.

These parties have not been involved in the preparation of any other part of this Prospectus.

10.8 Expenses of the Issue

The total expenses of the Issue are estimated to be as follows:

Fees to Broker to the Issue
Independent Accountant.
Independent Consulting Geologis
Legal Fees
Accounting and secretarial fee
Printing and postage.
usting, lodgement and other fees	35,000

A total of approximately \$70,000 has been paid towards the above issue costs prior to the issue of this Prospectus.

10.9 Forecasts

Perseus is an exploration company and for this reason there are significant uncertainties associated with forecasting future revenue and earnings. On this basis, the Directors believe that reliable forecasts cannot be prepared and accordingly have not induded forecasts in this Prospectus.

10.10 Litigation

As at the date of this Prospectus, Perseus is not engaged in any litigation and, so far as the Directors are aware, no litigation involving Perseus is threatened.

11. DIRECTORS' CONSENTS

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

Dated 14 July 2004

Libr

Signed for and on behalf of Perseus Mining Limited

by M A Calderwood

Managing Director

12. GLOSSARY OF DEFINED TERMS

In this Prospectus the following terms and abbreviations have the following meanings, unless otherwise stated or unless the context otherwise requires:
"Afminex" means Afminex Limited (ACN 065 212 679).
"Application" means an application for the Securities offered by this Prospectus and made on an Application Form.
"Application Form" means the application forms endosed with and forming part of this Prospectus for use by investors.
"ASIC" means Australian Securities and Investments Commission.
"ASX" means Australian Stock Exchange Limited (ABN 98 008 624 691).
"Board" means the board of directors of the Company from time to time.
"Business day" has the meaning ascribed to it in the Listing Rules.
"Closing Date" means 16 August 2004 (subject to the right of the Directors to extend this date without notice).
"Company" or "Perseus" means Perseus Mining Limited (ACN 106 808 986).
"Constitution" means the Constitution of the Company.
"Corporations Act" means the Corporations Act 2001 (Commonwealth).
"Directors" means the directors of the Company at the date of issue of this Prospectus.
"Exposure Period" means in accordance with Section 727(3) of the Corporations Act, the period of 7 days (which may be extended by ASIC to up to 14 days) following lodgement of the Prospectus with ASIC during which the Company must not process Applications.
"Issue" means the issue of Securities under this Prospectus.
"Listing Rules" means the Official Listing Rules of ASX.
"Broker to the Issue" means Montagu Stockbrokers Pty Ltd (ABN 46 009 368 432), holder of an Australian Financial Services Licence, number 238033, of Level 2, 37 St George's Terrace, Perth, Western Australia 6000.
"Offer" means the offer of 17,500,000 Shares at 20 cents each and 8,750,000 free attaching Options under this Prospectus.
"Official List" means the official list of ASX.
"Official Quotation" means quotation on the Official List of ASX.
"Option" means an option to subscribe for a Share.
"Prospectus" means this prospectus, dated 14 July 2004.
"SCH Business Rules" means the Securities Clearing House Business Rules and any other rules of ASX Settlement and Transfer Corporation Pty Limited which apply while the Company is an issuer of CHESS-approved securities, each as amended or replaced from time to time.
"Shares" means fully paid ordinary shares in the capital of the Company.
"Security" means either a Share or Option and "Securities" means more than one Share and/or Option.
"WST" means Western Standard Time.
References in this Prospectus to Sections are to Sections of this Prospectus.

References in this Prospectus to \$ are to the currency of Australia unless stated otherwise.

GENERAL APPLICATION FORM

		(For use by the general public; use the different form included with this Prospectus if you are a shareholder in Afminex Limited)	Pin your cheque here
	PERSEUS MINING LIMITED
	ACN 106 808 986
		REGISTERED OFFICE: 30 Ledgar Road, Balcatta, Western Australia, 6021 SHARE REGISTRY: Advanced Share Registry Services, Level 7, 200 Adelaide Terrace, Perth, WA, 6000
		To meet the requirements of the Corporations Act this form must not be handed on unless accompanied by the Prospectus.
	PLEASE USE BLOCK LETTERS
	A I/We apply for		20 cents per Share	Shares (with 1:2 free attaching Options) and lodge in full application monies of	A\$
					All cheques or bank drafts must be drawn on an Australian bank in Australian dollars, made payable to "Perseus Mining Limited".
		B Complete Full Name Details
	Title	Given Name(s)		Surname (or Company Name and A.B.N.)
	Applicant (1)
	Joint Applicant (2)
	Number and Street	Complete Address Details
	Suburb or City		State	Postcode	Country
D	Telephone Details
	Home (	⟩	Work (	3	Contact Name
E.		CHESS Details (if applicable)
	PID		HIN
F	Cheque Details
	Drawer		Bank	Branch (BSB)	Amount of cheque \$
	number applied for.	be bound by the Constitution of Perseus Mining Limited and I/We further agree to take any number of Shares equal to or less than the			I/We declare that this application is completed according to the declarations/appropriate statements on the reverse of this form and agree to

I/We acknowledge (if I/we have not received a paper Prospectus) that:

• before applying for Shares, I/We have personally received the electronic Prospectus, or a print out of it, attached to the Application Form; $\bullet$
• the Corporations Act prohibits any person from passing on to another person the Application form unless it is attached to a complete and unaltered electronic Prospectus; and
• The Company will send me/us a paper Prospectus and the Application Form free of charge if I/We so request prior to the Closing Date. $\bullet$

Lodge your application form as soon as possible.

NOTE: RETURN OF THIS APPLICATION FORM WITH YOUR CHEQUE OR BANK DRAFT FOR THE APPLICATION MONIES WILL CONSTITUTE YOUR OFFER TO SUBSCRIBE FOR SHARES IN THE COMPANY. NO SIGNATURE IS REQUIRED. YOU SHOULD READ THE PROSPECTUS BEFORE COMPLETING THIS APPLICATION FORM.

PLEASE COMPLETE FRONT

How to Apply for Shares

Please complete all relevant sections of the Application Form using BLOCK LETTERS. If you have any questions on how to complete this Application Form please telephone the Company Secretary, Mr Susmit Shah, on (61-8) 9240-6344.

Please post or deliver the completed Application Form together with your cheque to the address listed below:

By Post:	Advanced Share Registry Services	In Person: I	Advanced Share Registry Services
	PO Box 6283		Level 7, 200 Adelaide Terrace
	Fast Perth I		Perth
	Western Australia 6892		Western Australia 6000

Completed Application Forms and cheques must be received by no later than 5.00 pm (WST) on 16 August 2004.

The Application Form does not need to be signed.

A1 Insert the NUMBER OF SHARES you wish to apply for in Box A. A ready reckoner of amounts payable for different numbers of Shares applied for is as follows:

Number of Shares	$m$ ount	Number of Shares	. 79
Contractor	the same shows a share and a same to \$2.000 .	$\mathcal{F}(\mathcal{F})$ . The total state of the state $\mathcal{F}$ າດດດ $\sim$
	The company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company \$4.000 the second complete state of the second complete state of the		ം എന്ന പ
	ነባ በበቡ	manar

• A2 Insert the amount of your APPLICATION MONIES in Box A. The amount must be equal to the number of Shares applied for (as in Box A) multiplied by 20 cents per Share.
• Write your FULL NAME in Box B. If your application form is not completed correctly, or if the accompanying payment is for the wrong B amount, it may still be treated as valid. Any decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final. You will not however, be treated as having offered to subscribe for more Shares than is indicated by the amount of the accompanying cheque for the application monies referred to in Box A.
• Enter your POSTAL ADDRESS for all correspondence in Box C. All communications to you from the Company's share registry $\epsilon$ (shareholding statements, annual/interim reports, correspondence, etc) will be mailed to the person(s) and address as shown in Box C.
• Enter details of contact person and telephone number to assist if any enquiries need to be made by the Company or the share registry in Ð Box D
• The Company participates in the CHESS System. If you are a participant in the CHESS System insert your HIN ("Holder Identification $\mathsf{E}% {\mathsf{M}}^{\mathsf{H}}(\mathsf{M})\simeq\mathsf{E}{\mathsf{M}}^{\mathsf{H}}(\mathsf{M})$ Number") and/or PID ("Participant Identifier").
• F1 Complete cheque details as required in Box F.
• F2 Insert TOTAL AMOUNT OF YOUR CHEQUE(s) OR BANK DRAFTS in Box F. Cheques or bank drafts must be drawn on an Australian bank in Australian currency and made payable to "PERSEUS MINING LIMITED" and crossed "NOT NEGOTIABLE". Do not send cash. No receipts will be issued.
• G Privacy

Please refer to Section 3.12 for details about collection, holding and use of your personal information. If you do not provide the information required on this form, we may not be able to accept or process your application.

GENERAL APPLICATION FORM

		(For use by the general public; use the different form included with this Prospectus if you are a shareholder in Afminex Limited)	Pin your cheque here
	PERSEUS MINING LIMITED
	ACN 106 808 986
		REGISTERED OFFICE: 30 Ledgar Road, Balcatta, Western Australia, 6021 SHARE REGISTRY: Advanced Share Registry Services, Level 7, 200 Adelaide Terrace, Perth, WA, 6000
		To meet the requirements of the Corporations Act this form must not be handed on unless accompanied by the Prospectus.
	PLEASE USE BLOCK LETTERS
	A I/We apply for		20 cents per Share		Shares (with 1:2 free attaching Options) and lodge in full application monies of	A\$
						All cheques or bank drafts must be drawn on an Australian bank in Australian dollars, made payable to "Perseus Mining Limited".
		B Complete Full Name Details
	Title	Given Name(s)				Surname (or Company Name and A.B.N.)
	Applicant (1)
	Joint Applicant (2)
	Number and Street	Complete Address Details
	Suburb or City		State		Postcode	Country
D	Telephone Details
	Home (	⟩	Work (	3		Contact Name
E.		CHESS Details (if applicable)
	PID		HIN
F	Cheque Details
	Drawer		Bank		Branch (BSB)	Amount of cheque \$
	number applied for.	be bound by the Constitution of Perseus Mining Limited and I/We further agree to take any number of Shares equal to or less than the				I/We declare that this application is completed according to the declarations/appropriate statements on the reverse of this form and agree to

I/We acknowledge (if I/we have not received a paper Prospectus) that:

• before applying for Shares, I/We have personally received the electronic Prospectus, or a print out of it, attached to the Application Form; $\bullet$
• the Corporations Act prohibits any person from passing on to another person the Application Form unless it is attached to a complete and unaltered electronic Prospectus; and
• The Company will send me/us a paper Prospectus and the Application Form free of charge if I/We so request prior to the Closing Date. $\bullet$

Lodge your application form as soon as possible.

NOTE: RETURN OF THIS APPLICATION FORM WITH YOUR CHEQUE OR BANK DRAFT FOR THE APPLICATION MONIES WILL CONSTITUTE YOUR OFFER TO SUBSCRIBE FOR SHARES IN THE COMPANY. NO SIGNATURE IS REQUIRED. YOU SHOULD READ THE PROSPECTUS BEFORE COMPLETING THIS APPLICATION FORM.

PLEASE COMPLETE FRONT

How to Apply for Shares

Please complete all relevant sections of the Application Form using BLOCK LETTERS. If you have any questions on how to complete this Application Form please telephone the Company Secretary, Mr Susmit Shah, on (61-8) 9240-6344.

Please post or deliver the completed Application Form together with your cheque to the address listed below:

By Post:	Advanced Share Registry Services	In Person: I	Advanced Share Registry Services
	PO Box 6283		Level 7, 200 Adelaide Terrace
	Fast Perth I		Perth
	Western Australia 6892		Western Australia 6000

Completed Application Forms and cheques must be received by no later than 5.00 pm (WST) on 16 August 2004.

The Application Form does not need to be signed.

A1 Insert the NUMBER OF SHARES you wish to apply for in Box A. A ready reckoner of amounts payable for different numbers of Shares applied for is as follows:

Number of Shares	$m$ ount	Number of Shares	. 79
Contractor	the same shows a share and a same to \$2.000 .	$\mathcal{F}(\mathcal{F})$ . The total state of the state $\mathcal{F}$ າດດດ $\sim$
	The company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company \$4.000 the second complete state of the second complete state of the		ം എന്ന പ
	ነባ በበቡ	manar

• A2 Insert the amount of your APPLICATION MONIES in Box A. The amount must be equal to the number of Shares applied for (as in Box A) multiplied by 20 cents per Share.
• Write your FULL NAME in Box B. If your application form is not completed correctly, or if the accompanying payment is for the wrong B amount, it may still be treated as valid. Any decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final. You will not however, be treated as having offered to subscribe for more Shares than is indicated by the amount of the accompanying cheque for the application monies referred to in Box A.
• Enter your POSTAL ADDRESS for all correspondence in Box C. All communications to you from the Company's share registry $\epsilon$ (shareholding statements, annual/interim reports, correspondence, etc) will be mailed to the person(s) and address as shown in Box C.
• Enter details of contact person and telephone number to assist if any enquiries need to be made by the Company or the share registry in Ð Box D
• The Company participates in the CHESS System. If you are a participant in the CHESS System insert your HIN ("Holder Identification $\mathsf{E}% {\mathsf{M}}^{\mathsf{H}}(\mathsf{M})\simeq\mathsf{E}{\mathsf{M}}^{\mathsf{H}}(\mathsf{M})$ Number") and/or PID ("Participant Identifier").
• F1 Complete cheque details as required in Box F.
• F2 Insert TOTAL AMOUNT OF YOUR CHEQUE(s) OR BANK DRAFTS in Box F. Cheques or bank drafts must be drawn on an Australian bank in Australian currency and made payable to "PERSEUS MINING LIMITED" and crossed "NOT NEGOTIABLE". Do not send cash. No receipts will be issued.
• G Privacy

Please refer to Section 3.12 for details about collection, holding and use of your personal information. If you do not provide the information required on this form, we may not be able to accept or process your application.

APPLICATION FORM FOR AFMINEX LIMITED SHAREHOLDERS ONLY

			Pin your cheque here
PERSEUS MINING LIMITED
ACN 106 808 986
REGISTERED OFFICE: 30 Ledgar Road, Balcatta, Western Australia, 6021 SHARE REGISTRY: Advanced Share Registry Services, Level 7, 200 Adelaide Terrace, Perth, WA, 6000
To meet the requirements of the Corporations Act this form must not be handed on unless accompanied by the Prospectus.
PLEASE USE BLOCK LETTERS
A I/We apply for	20 cents per Share	Shares (with 1:2 free attaching Options) and lodge in full application monies of	A\$
All cheques or bank drafts must be drawn on an Australian bank in Australian dollars, made payable to "Perseus Mining Limited".
Complete Full Name Details
Title Given Name(s)		Surname (or Company Name and A.B.N.)
Applicant (1)
Joint Applicant (2)
Complete Address Details
Number and Street
Suburb or City	State	Postcode	Country
Telephone Details
Home ( €	Work (	€	Contact Name
CHESS Details (if applicable)
PID	HIN
Cheque Details
Drawer	Bank	Branch (BSB)	Amount of cheque \$
G Details of shareholding in Afminex Limited (please indicate details of your holding in Afminex Ltd)
Name and address under which shares in Afminex Ltd are registered
Number of shares held
I/We declare that this application is completed according to the declarations/appropriate statements on the reverse of this form and agree to be bound by the Constitution of Perseus Mining Limited and I/We further agree to take any number of Shares equal to or less than the

In completing this Application Form, I/We acknowledge (if I/we have not received a paper Prospectus) that:

• before applying for Shares, I/We have personally received the electronic Prospectus, or a print out of it, attached to the Application Form;
• the Corporations Act prohibits any person from passing on to another person the Application form unless it is attached to a complete and unaltered electronic Prospectus; and
• The Company will send me/us a paper Prospectus and the Application Form free of charge if I/We so request prior to the Closing Date. $\bullet$

Lodge your application form as soon as possible.

NOTE: RETURN OF THIS APPLICATION FORM WITH YOUR CHEQUE OR BANK DRAFT FOR THE APPLICATION MONIES WILL CONSTITUTE YOUR OFFER TO SUBSCRIBE FOR SHARES IN THE COMPANY. NO SIGNATURE IS REQUIRED. YOU SHOULD READ THE PROSPECTUS BEFORE COMPLETING THIS APPLICATION FORM.

PLEASE COMPLETE FRONT

How to Apply for Shares

Please complete all relevant sections of the Application Form using BLOCK LETTERS. If you have any questions on how to complete this Application Form please telephone the Company Secretary. Mr Susmit Shah, on (61-8) 9240-6344.

Please post or deliver the completed Application Form together with your cheque to the address listed below:

By Post:	Advanced Share Registry Services	In Person: I	Advanced Share Registry Services
	PO Box 6283		Level 7, 200 Adelaide Terrace
	Fast Perth		Perth
	Western Australia 6892		Western Australia 6000

Completed Application Forms and cheques must be received by no later than 5.00 pm (WST) on 16 August 2004.

The Application Form does not need to be signed.

A1 Insert the NUMBER OF SHARES you wish to apply for in Box A. A ready reckoner of amounts payable for different numbers of Shares applied for is as follows:

Number of Shares	$m$ ount	Number of Shares	. 79
Contractor	the same shows a share and a same to \$2.000 .	$\mathcal{F}(\mathcal{F})$ . The total state of the state $\mathcal{F}$ າດດດ $\sim$
	The company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company of the company \$4.000 the second complete state of the second complete state of the		ം എന്ന പ
	ነባ በበቡ	manar

• A2 Insert the amount of your APPLICATION MONIES in Box A. The amount must be equal to the number of Shares applied for (as in Box A) multiplied by 20 cents per Share.
• Write your FULL NAME in Box B. If your application form is not completed correctly, or if the accompanying payment is for the wrong B amount, it may still be treated as valid. Any decision as to whether to treat your application as valid, and how to construe, amend or complete it, shall be final. You will not however, be treated as having offered to subscribe for more Shares than is indicated by the amount of the accompanying cheque for the application monies referred to in Box A.
• Enter your POSTAL ADDRESS for all correspondence in Box C. All communications to you from the Company's share registry $\epsilon$ (shareholding statements, annual/interim reports, correspondence, etc) will be mailed to the person(s) and address as shown in Box C.
• Enter details of contact person and telephone number to assist if any enquiries need to be made by the Company or the share registry in Ð Box D
• The Company participates in the CHESS System. If you are a participant in the CHESS System insert your HIN ("Holder Identification E Number") and/or PID ("Participant Identifier").
• F1 Complete cheque details as required in Box F.
• F2 Insert TOTAL AMOUNT OF YOUR CHEQUE(s) OR BANK DRAFTS in Box F. Cheques or bank drafts must be drawn on an Australian bank in Australian currency and made payable to "PERSEUS MINING LIMITED" and crossed "NOT NEGOTIABLE". Do not send cash. No receipts will be issued.
• G This application form is soley for use by shareholders of Afminex Limited, who wish to subscribe for shares in PerseusMining Ltd. Please indicate the name and address under which your shares in Afminex Limited are registered, and also indicate the number of shares held in Afminex Limited.
• H Privacy

Please refer to Section 3.12 for details about collection, holding and use of your personal information. If you do not provide the information required on this form, we may not be able to accept or process your application.