REACH RESOURCES LIMITED — M&A Activity 2003

Sep 1, 2003

MEMORANDUM OF UNDERSTANDING-BLUEWAVE SEAFOOD LTD

ANNOUNCEMENT

3 SEPTEMBER 2003

The Board of Cervantes Seafood Limited (Company) wish to advise that the Company has executed a Memorandum of Understanding (MOU) under which the Company will review a merger proposal with Bluewave Seafood Limited (Bluewave) (Merger).

The conditions precedent of the MOU include, without limitation:

• a. Due Diligence by each party;
• b. Completion by the Company of the merger of the assets and business of INF Pty Ltd on the terms announced to ASX on 14 July 2003
• c. Bluewave providing satisfactory confirmation that it has secured agreements with a specified number of boats for the supply of lobster catch to the Company;
• d. Bluewave providing confirmation to the Company that it has proposals to dispose of properties surplus to its operational requirements;
• e. Bluewave procuring an agreement from its secured lenders for the restructure of its existing credit facilities to the satisfaction of the Company;
• f. All relevant consents and approvals required by third party financiers, the Corporations Act and the ASX Listing Rules being obtained by the Company and Bluewave.

Upon satisfaction or waiver of the conditions precedent, the parties agree to enter into negotiation for the proposed Merger.

Background to Bluewave

With a turnover in excess of A\$50 million, Bluewave is one of Australia's largest processors and global exporter of the world recognised Western Rock Lobster species (Panulirus Cygnus). For over 55 years, Bluewave has supplied its premium lobster brands to the major food service markets in Asia, USA and Europe where Bluewave has earned a sound reputation for quality and service.

Bluewave's processing capacity is up to 1,500mt of lobster per annum processed to exacting international quality standards.

AUTHORISED BY:

Chen Hao Managing Director Cervantes Seafood Limited