REDCASTLE RESOURCES LIMITED — Audit Report / Information 2011

May 5, 2011

Independent Expert's Report GRP Corporation Limited

FINANCIAL SERVICES GUIDE

Dated 1 January 2011

1. HLB Mann Judd Corporate (WA) Pty Ltd

HLB Mann Judd Corporate (WA) Pty Ltd ABN 69 008 878 555 ("HLB Mann Judd Corporate" or "we" or "us" or "ours" as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are require to issue to you, as a retail client, a Financial Services Guide ("FSG"). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as a financial services licensee.

This FSG includes information about:

• who we are and how we can be contacted;
• the services we are authorised to provide under our Australian Financial Services Licence, Licence No. 250903;
• remuneration that we and/or our staff and any associates receive in connection with the general financial product advice;
• any relevant associations or relationships we have; and
• our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

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

• securities;
• interests in managed investment schemes excluding investor directed portfolio services;
• superannuation; and
• debentures, stocks or bonds issued or proposed to be issued by a government

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

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

4. General financial product advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product and there is no statutory exemption relating to the matter, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

5. Benefits that we may receive

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

Except for the fees referred to above, neither HLB Mann Judd Corporate, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by us

HLB Mann Judd Corporate has no employees. All personnel who complete reports for HLB Mann Judd Corporate are partners of HLB Mann Judd (WA Partnership). None of those partners are eligible for bonuses directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

HLB Mann Judd Corporate is wholly owned by HLB Mann Judd (WA Partnership). Also, our directors are partners in HLB Mann Judd (WA Partnership). Ultimately the partners of HLB Mann Judd (WA Partnership) own and control HLB Mann Judd Corporate.

From time to time HLB Mann Judd Corporate or HLB Mann Judd (WA Partnership) may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1. Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. Complaints must be in writing, addressed to The Complaints Officer, HLB Mann Judd Corporate (WA) Pty Ltd, Level 4, 130 Stirling Street, Perth WA 6000.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 7 days and investigate the issues raised. As soon as practical, and not more than one month after receiving the written complaint, we will advise the complainant in writing of the determination.

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9.2 Referral to external disputes resolution scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited ("FOS"). FOS independently and impartially resolves disputes between consumers, including some small business, and participating financial services providers.

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

Financial Ombudsman Service Limited GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399

10. Contact details

You may contact us using the details at the foot of page 1 of this FSG.

1105 GRP015 REP LDI

5 May 2011

The Directors GRP Corporation Limited c/- Allegra Capital Pty Ltd Level 1, 173 Mounts Bay Road PERTH WA 6000

Dear Sirs

INDEPENDENT EXPERT'S REPORT

1. INTRODUCTION

On 4 March 2011 ("Announcement Date"), GRP Corporation Limited ("GRP" or the "Company") announced that it had signed a binding agreement with the shareholders of Cady Energy Pty Ltd ("Cady") ("Agreement") to acquire 100% of the issued shares in CADY for consideration represented by the issue by GRP to the Cady shareholders of 90,000,000 shares in GRP (on a post-Consolidation basis) and 11,250,000 Consideration Options (on a post-Consolidation basis) ("Proposed Transaction"). The key material terms of the Agreement, including the purchase price, are set out in Section 1.1 of this Report. Completion of the Proposed Transaction is subject to numerous conditions precedent, which are also set out in Section 1.1 of this Report.

2. PURPOSE OF THE REPORT

This Report is to be included in the Notice of Annual General Meeting and Explanatory Memorandum ("Notice of Meeting") for the meeting to be held on 7 June 2011 to consider various resolutions, including the resolutions giving effect to the Proposed Transaction, for the purpose of assisting shareholders in their consideration of those resolutions. This Report should not be used for any other purpose.

Shareholder approval for the proposed issue of the consideration shares and Consideration Options is required under item 7 of Section 611 of the Corporations Act 2001 ("Act"). Section 606 of the Act prohibits the acquisition of an interest in a public company with more than 50 members by a person if the transaction increases that person's interest from 20% or below to more than 20%. An exception to this general prohibition is set out in Section 611(7), whereby such an acquisition is allowed when approved by a majority of shareholders at a general meeting and where no votes are cast in respect of shares held by the acquirer or its associates.

HLB Mann Judd Corporate (WA) Pty Ltd AFSL 250903 Level 4, 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: hlb@hlbwa.com.au. Website: http://www.hlb.com.au

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

2. PURPOSE OF THE REPORT (CONTINUED)

We note that there are numerous resolutions to be put before the shareholders at the meeting to be held on or about 7 June 2011. Resolution 7 relates to the Proposed Transaction and is subject to the passing of Resolutions 5, 6 and 8-13. As such, all of these resolutions are considered to be interdependent. This Report addresses the impact of these resolutions but not the remaining resolutions as they are considered to be independent of Resolution 7, which is the subject of this Report.

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Currently, the shareholders of Cady ("Vendors") hold no shares in the issued capital of GRP. Should the Proposed Transaction be approved, the Vendors and their associates will have the ability to own up to 51.4% of the share capital of GRP, prior to any participation in the proposed capital raising or the exercise of any of the Consideration Options.

The Directors of GRP have requested that HLB Mann Judd Corporate (WA) Pty Ltd ("HLB") provide an independent expert's report ("Report") advising whether, in our opinion, the Proposed Transaction is fair and reasonable to the non-associated shareholders of GRP. "Non-associated shareholders" would be deemed to be all shareholders of GRP other than those who might obtain a benefit as a result of the Proposed Transaction.

Our Report has been prepared solely for the purpose of assisting the non-associated shareholders of GRP in considering the Proposed Transaction, details of which are included in the Explanatory Memorandum and summarised in Section 1 of this Report.

We have prepared this Report having regard to the relevant Australian Securities and Investments Commission ("ASIC") releases. ASIC Regulatory Guide 74 "Acquisitions Agreed to by Shareholders" suggests that the obligation to supply shareholders with all information that is material to the decision on how to vote on the resolutions giving effect to the Proposed Transaction, can be satisfied by either:

• (a) undertaking a detailed examination of the Proposed Transaction, if the Directors consider that they have sufficient expertise; or
• (b) by commissioning an independent expert's report.

The Directors of GRP have commissioned this Report to satisfy this obligation.

We have also had regard to ASIC Regulatory Guide 111 "Content of Expert Reports" and ASIC Regulatory Guide 112 "Independence of Experts". Further details are provided in Section 2 of this Report.

3. SUMMARY AND OPINION

In order to assess whether the Proposed Transaction is fair and reasonable, we have:

• assessed whether the Proposed Transaction is fair by estimating the fair market value of GRP and an ordinary GRP share (value of consideration offered) prior to the Proposed Transaction and comparing this value to the estimated fair market value of GRP and an ordinary GRP share after the matters contemplated by the Proposed Transaction are completed, including the other conditions precedent contained in the Agreement; and
• assessed the reasonableness of the Proposed Transaction by considering other advantages and disadvantages of the Proposed Transaction to non-associated shareholders.

3.1 Fairness

Set out in the table below is a comparison of our assessment of the fair market value of GRP (value of consideration offered) before the Proposed Transaction with the estimated fair market value of GRP after the matters contemplated by the Proposed Transaction are completed, including the other conditions precedent contained in the Agreement.

The estimated fair market value of GRP prior to the Proposed Transaction is below the estimated fair market value of GRP after the matters contemplated by the Proposed Transaction are completed, including the other conditions precedent contained in the Agreement.

Accordingly, it is our opinion that the Proposed Transaction is fair.

Valuation of GRP

As set out in Section 5 of this Report, the fair market value of GRP before and after the Proposed Transaction has been determined using the net assets on a going concern method. We have also referred to the share trading history of GRP shares over the past 12 months.

3.2 Reasonableness

The Proposed Transaction is reasonable.

In accordance with ASIC Regulatory Guide 111, an offer is reasonable if it is fair. On this basis, in our opinion, the Proposed Transaction is reasonable. We have also identified the following factors in relation to the reasonableness of the Proposed Transaction.

3.2.1 Advantages of accepting the Proposed Transaction

• the potential increase in market capitalisation of the Company following completion of the Proposed Transaction and the associated capital raising may lead to increased coverage from investment analysts, access to improved equity capital market opportunities and increased liquidity, which are not currently present;
• if the Company does not proceed with the Proposed Transaction, its cash reserves will continue to be eroded by on-going administrative and corporate costs;
• since the current directors of the Company were appointed under a recapitalisation proposal approved by shareholders in 2010, they have been actively seeking opportunities to return the Company to operation and enhance shareholder value. The directors believe that the acquisition of Cady and Cady's assets is such an opportunity; and
• the Company's securities have been suspended from trading on ASX as ASX has formed the view that the Company's operations do not warrant the continued quotation of the securities. If Resolutions 5 to 13 are passed, the Company will seek to satisfy any conditions imposed by ASX to lift the suspension on the Shares from trading on ASX, although there is no guarantee this will occur.

3.2.2 Disadvantages of accepting the Proposed Transaction

• the Company will be changing the nature of its activities from a property development company to an oil and gas exploration and production company, which may not be consistent with the objectives of all shareholders;
• there are many risk factors associated with the change in nature of the Company's activities to an oil and gas exploration and production company, some of which are set out in the Notice of Meeting;
• current shareholders will have their interests in the Company diluted by the Proposed Transaction, capital raising and any further equity funding undertaken by the Company;
• there is no guarantee that exploration undertaken on the Project by the Company will result in the discovery of mineral resources; and
• proposed project timelines may not proceed as expected.

3.2.3 Other Considerations

An individual shareholder's decision in relation to the Proposed Transaction may be influenced by his or her particular circumstances. We have considered the Proposed Transaction for GRP Shareholders as a whole. We have not considered the effect of the Proposed Transaction on the particular circumstances of individual shareholders nor have we considered their individual objectives, financial situation or needs. Due to their particular circumstances, individual shareholders may place different emphasis on various aspects of the Proposed Transaction from the one adopted in this Report. Accordingly, individuals may reach different conclusions as to whether the Proposed Transaction is fair and reasonable.

In conclusion, as the Proposed Transaction is fair, it is also reasonable.

4. Conclusion

We are of the opinion that the Proposed Transaction is fair and reasonable to GRP's non-associated shareholders.

This opinion should be read in conjunction with our detailed report which sets out our scope and findings.

Yours faithfully HLB MANN JUDD CORPORATE (WA) PTY LTD Licensed Investment Advisor (AFSL Licence number 250903)

L DI GIALLONARDO Authorised Representative

1.	DETAILS OF THE PROPOSED TRANSACTION 7
	1.1SUMMARY 7
	1.2DETAILS OF CADY 8
	1.3RESOLUTIONS GIVING EFFECT TO THE PROPOSED TRANSACTION 8
2.	SCOPE OF THE REPORT 8
	2.1PURPOSE OF THE REPORT 8
	2.2BASIS OF EVALUATION 9
	2.3LIMITATIONS AND RELIANCE ON INFORMATION 10
3.	PROFILE OF GRP 11
	3.1COMPANY HISTORY 11
	3.2ASSETS 11
	3.3LEGAL STRUCTURE 11
	3.4DIRECTORS 12
	3.5CAPITAL STRUCTURE AND SHAREHOLDERS 12
	3.6SHARE PRICE PERFORMANCE 13
	3.7FINANCIAL PERFORMANCE 13
	3.8FINANCIAL POSITION 143.9TAX LOSSES 14
4	PROFILE OF CADY 14
	4.1HISTORY OF CADY 14
	4.2CURRENT ACTIVITIES 14
	4.3DIRECTORS 144.4CAPITAL STRUCTURE AND SHAREHOLDERS 15
	4.5FINANCIAL POSITION 15
5	VALUATION OF GRP BEFORE THE PROPOSED TRANSACTION 15
	5.1VALUATION SUMMARY 15
	5.2VALUATION METHODOLOGY 16
	5.3VALUATION 17
	5.4CROSS-CHECK WITH QUOTED MARKET PRICE BASIS 18
	5.5COMMENTARY ON PREMIUM FOR CONTROL 18
	5.6CONCLUSION ON THE FAIR MARKET VALUE OF GRP BEFORE THE PROPOSED TRANSACTION 19
6	VALUATION OF GRP AFTER THE PROPOSED TRANSACTION 19
	6.1VALUATION 20
	6.2CONCLUSION ON THE FAIR MARKET VALUE OF GRP AFTER THE PROPOSED TRANSACTION 21
7	EVALUATION AND CONCLUSION 21
	7.1FAIRNESS 21
	7.2REASONABLENESS 22
	7.3CONCLUSION 23
8	APPENDICES 24
	APPENDIX 1 – GLOSSARY OF TERMS 24
	APPENDIX 2 - SOURCES OF INFORMATION 25
	APPENDIX 3 - QUALIFICATIONS, DECLARATIONS AND CONSENTS 26
	APPENDIX 4 – INDEPENDENT VALUATION REPORT OF THE HANGING WOMAN PROJECT BY MR ROBERT
	A KING, PE DATED 10 APRIL 2011 27

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GRP CORPORATION LIMITED

INDEPENDENT EXPERT'S REPORT

1. DETAILS OF THE PROPOSED TRANSACTION

1.1 Summary

On 4 March 2011 ("Announcement Date"), GRP Corporation Limited ("GRP" or the "Company") announced that it had signed a binding agreement with the shareholders of Cady Energy Pty Ltd ("Cady") ("Agreement") to acquire 100% of the issued shares in CADY for consideration represented by the issue by GRP to the Cady shareholders of 90,000,000 shares in GRP (on a post-Consolidation basis) and 11,250,000 Consideration Options (on a post-Consolidation basis) ("Proposed Transaction"). The key material terms of the Agreement, including the purchase price, are set out in Section 1.1 of this Report. Completion of the Proposed Transaction is subject to numerous conditions precedent, which are also set out in Section 1.1 of this Report.

The consideration for the Proposed Transaction comprises the following:

• (a) the issue by GRP of 90,000,000 fully paid ordinary shares in GRP (on a post-Consolidation basis); and
• (b) the issue by GRP of 11,250,000 options to acquire shares in GRP exercisable at 20 cents on or before 30 June 2014 (on a post-Consolidation basis).

The Proposed Transaction is subject to various conditions precedent, being:

• (a) due diligence by GRP on Cady and the Project to be completed to the satisfaction of GRP;
• (b) GRP shareholders approving in general meeting the Proposed Transaction, the consolidation of the existing issued capital of GRP on a 20:1 basis, and the ability by GRP to issue up to 75 million shares on a post-Consolidation basis to raise up to $15 million, pursuant to ASX Listing Rules 7.1, 10.1, 10.11 and 11.1; and Sections 208, 254H and 611 of the Corporations Act 2001 ("Act");
• (c) all other regulatory and GRP and Cady shareholder approvals in accordance with the Act, the Listing Rules and GRP's constitution;
• (e) Cady not issuing any further shares or rights to shares in the capital of Cady unless mutually agreed in writing between GRP and Cady;
• (f) the appointment of at least two directors of Cady's choice and the resignation of two existing directors of GRP.

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1.2 Details of Cady

The Company is proposing to acquire 100% of the issues shares in Cady, which is an Australian company based in Perth, Western Australia. Cady is focused on the commercial development of its 100% owned coal bed methane project known as the Hanging Woman Project located in the Powder Region Basis, Wyoming USA ("Project").

Cady purchased the Project from Kennedy Oil in June 2010. The Project is 13,393 acres in area and was originally acquired and drilled by Kennedy Oil, which is an established private coal bed methane producing company based in Gillette, Wyoming.

1.3 Resolutions giving effect to the Proposed Transaction

Our Report is required as detailed in Section 2.1 below only in relation to the Proposed Transaction, which is the acquisition by GRP of 100% of the issued capital of Cady (Resolution 7). However, as this resolution is subject to the passing of other resolutions being considered at the Annual General Meeting, we have assessed the Proposed Transaction taking into account all of these interdependent resolutions.

The resolutions which are interdependent are:

Resolution 5	Consolidation of the issued capital of GRP on the basis of 20 sharesbeing consolidated into one share.
Resolution 6	The change in the nature of the Company's activities from a propertydevelopment company to an oil and gas exploration and productionscompany, pursuant to Listing Rule 11.1.
Resolution 7	The acquisition of 100% of the issued shares in Cady on the terms setout in the Agreement.
Resolution 8	Approving and authorising the directors of GRP to allot and issue upto 75,000,000 shares in GRP (on a post-Consolidation basis) at an issueprice of 20 cents each.
Resolution 9	The election of Mr Murray Durham to the board of GRP.
Resolution 10	The election of Mr Saxon Palmer to the board of GRP.
Resolution 11	The election of Mr John (Gus) Simpson to the board of GRP.
Resolution 12	Change in the Company's name to Cady Energy Limited.
Resolution 13	Adoption of a new Constitution.

Resolutions 1-4 deal with various statutory requirements and are not subject to the passing of any of the above resolutions.

2. SCOPE OF THE REPORT

2.1 Purpose of the Report

This Report is to be included in the Notice of Annual General Meeting and Explanatory Memorandum ("Notice of Meeting") for the meeting to be held on 7 June 2011 to consider various resolutions, including the resolutions giving effect to the Proposed Transaction, for the purpose of assisting shareholders in their consideration of those resolutions.

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Shareholder approval for the proposed issue of the consideration shares and Consideration Options is required under item 7 of Section 611 of the Corporations Act 2001 ("Act"). Section 606 of the Act prohibits the acquisition of an interest in a public company with more than 50 members by a person if the transaction increases that person's interest from 20% or below to more than 20%. An exception to this general prohibition is set out in Section 611(7), whereby such an acquisition is allowed when approved by a majority of shareholders at a general meeting and where no votes are cast in respect of shares held by the acquirer or its associates.

The Directors of GRP have requested that HLB Mann Judd Corporate (WA) Pty Ltd ("HLB") provide an independent expert's report ("Report") advising whether, in our opinion, the Proposed Transaction is fair and reasonable to the non-associated shareholders of GRP. "Non-associated shareholders" would be deemed to be all shareholders of GRP other than those who might obtain a benefit as a result of the Proposed Transaction.

This Report has been prepared to assist shareholders in their decision whether to vote for or against the resolution giving effect to the Proposed Transaction.

2.2 Basis of Evaluation

We have prepared this report having regard to the relevant Australian Securities and Investments Commission ("ASIC") releases. ASIC Regulatory Guide 74 "Acquisitions Agreed to by Shareholders" suggests that the obligation to supply shareholders with all information that is material to the decision on how to vote on the resolutions, can be satisfied by either:

• (a) undertaking a detailed examination of the Proposed Transaction, if the Directors consider that they have sufficient expertise; or
• (b) by commissioning an independent expert's report.

The Directors of GRP have commissioned this Report to satisfy this obligation.

We have also had regard to ASIC Regulatory Guide 111 "Content of Expert Reports" and ASIC Regulatory Guide 112 "Independence of Experts". Further details are provided below.

2.2.1 Fairness

In determining the fairness and reasonableness of the Proposed Transaction, we have had regard to ASIC Regulatory Guide 111, which states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness).

The concept of fairness is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in this offer. In relation to our assessment of the Proposed Transaction, we have assessed whether the Proposed Transaction is fair by estimating the fair market value of GRP (value of consideration offered) prior to the Proposed Transaction and comparing this value to the estimated fair market value of GRP after the matters contemplated by the Proposed Transaction are completed, including the effects of the other interdependent resolutions.

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The shares have been valued at fair market value, which we have defined as the amount at which the shares would be expected to change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither of whom is under any compulsion to buy or sell. Special purchasers may be willing to pay higher prices to gain control, to reduce or eliminate competition, to ensure a source of material supply or sales, or to achieve cost savings or other synergies arising on business combinations, which could only be enjoyed by the special purchaser. Our assessment of the value of GRP has not been premised on the existence of a special purchaser.

2.2.2 Reasonableness

ASIC Regulatory Guide 111 states that an offer is reasonable if it is fair. An offer may also be reasonable, if despite it not being fair, there are significant factors which in the expert's opinion shareholders should consider in accepting the offer.

2.2.3 Individual circumstances

We have evaluated the Proposed Transaction for GRP shareholders as a whole. We have not considered the effect of the Proposed Transaction on the particular circumstances of individual shareholders. Due to their particular circumstances, individual shareholders may place a different emphasis on various aspects of the Proposed Transaction from the ones adopted in this Report. Accordingly, individual shareholders may reach different conclusions to ours on whether the Proposed Transaction is fair and reasonable. If in doubt, shareholders should consult an independent adviser.

2.3 Limitations and Reliance on Information

HLB's opinion is based on economic, sharemarket, business trading and other conditions and expectations prevailing at the date of this Report. These conditions can change significantly over relatively short periods of time. If these conditions did change materially the valuations and opinions could be different in these changed circumstances.

This report is also based upon financial information and other information provided by GRP and its consultants. HLB has considered and relied upon this information. HLB has no reason to believe that any material facts have been withheld. The information provided to HLB has been evaluated through analysis, enquiry and review for the purposes of forming an opinion as to whether the Proposed Transaction is fair and reasonable. However, in preparing reports such as this, time is limited and HLB does not warrant that its enquiries have identified or verified all of the matters that an audit, extensive examination or "due diligence" investigation might disclose. In any event, an opinion as to fairness and reasonableness is more in the nature of an overall review rather than a detailed audit or investigation.

An important part of the information used in forming an opinion of the kind expressed in this Report is comprised of the opinions and judgment of management. This type of information was also evaluated through analysis, enquiry and review to the extent practical. However, such information is often not capable of external verification or valuation.

Preparation of this Report does not imply that HLB has audited in any way the management accounts or other records of GRP or Cady. It is understood that the accounting information that was provided was prepared in accordance with generally -11-

accepted accounting principles and in a manner consistent with the method of accounting in previous years except as otherwise noted.

The information provided to HLB included historical financial information of GRP and Cady. GRP is responsible for this information. HLB has used and relied on this information for the purpose of analysis. HLB has assumed that this information was prepared appropriately and accurately based on the information available to management at the time and within the practical constraints and limitations of such information. HLB has assumed that this information does not reflect any material bias, either positive or negative. HLB has no reason to believe otherwise.

3. PROFILE OF GRP

3.1 Company History

GRP has previously disclosed its concern in relation to the slowdown of property development activities and the flow on effect on demand for subordinated debt facilities. This slowdown significantly impacted the performance of the Company and on 9 May 2008, the Company's securities were suspended from official quotation on the ASX after attempts by the directors of GRP to recapitalise the Company failed.

The Company's securities remain suspended. The Company was placed into voluntary administration on 13 May 2010 by appointing Mr Murray Godfrey of RMG Partners Business Solutions as administrator under Section 436A of the Act and remained in administration until 4 November 2010, when shareholders removed the remaining directors, and elected new directors and a company secretary, approved a change of the Company's name to GRP Corporation Limited and executed a deed of arrangement and creditors trust. The ASX has indicated that before the securities of the Company can be reinstated to official quotation, the Company must comply with the admission requirements of Chapters 1 and 2 of the Listing Rules, which prescribe the conditions for official quotation.

3.2 Assets

The Company has negligible assets.

3.3 Legal Structure

The GRP Corporation structure up to 14 September 2009 was as follows:

Group Entity	Place ofIncorporation
Parent Entity:
GRP Corporation Limited	Australia
Controlled Entities:
The Company has 16 wholly-owned controlled
entities, as listed in Note 15 to the Company's
30 June 2010 Annual Report.

These controlled entities are inactive.

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3.4 Directors

The Company's current directors are:

Mark Rowbottam Miguel Laborde Steve Nicols

3.5 Capital Structure and Shareholders

At the date of this Report, GRP had the following securities on issue:

Shares:	Number
Balance per 31 December 2010 reviewed financial statementsIssue of 4,000,000 ordinary shares subsequent to 31 December	197,213,444
2010	4,000,000
Balance at the date of this Report	201,213,444
Options:	Number
There are no options on issue at the date of this Report	NIL

Top 20 shareholders

The top 20 shareholders at the date of this Report are set out below:

	Number of	% of
Shareholder	Shares	total
		shares
		on issue
Prosperity Cap Pty Ltd	33,333,334	16.9
Sinbad Pty Ltd	33,333,334	16.9
Miguel Rodolfo Laborde	33,333,333	16.9
Shan Pei Inv Ltd	29,327,944	14.9
Glacier Pty Ltd	8,000,000	4.1
Confadent Ltd	6,000,000	3.0
Howlett Retirement Pty Ltd	5,000,000	2.5
Steve John Woodland	3,500,000	1.8
Yanmar Soil Pty Ltd	3,500,000	1.8
Brendan Egan	3,000,000	1.5
Glyn Povey	2,500,000	1.3
Jomark Super Pty Ltd	2,000,000	1.0
Southern Amity Inc	2,000,000	1.0
Kenneth Ray Jeffery	2,000,000	1.0
Brian Williams	2,000,000	1.0
Faye Longmuir	2,000,000	1.0
Vikki Cookson	2,000,000	1.0
Craig Thomas Brunt	2,000,000	1.0
Skyworth Inv Ltd	1,700,000	0.9
Anthony Rowbottam	1,500,000	0.8
Remaining shareholders	23,185,499	9.7
Total	201,213,444	100

3.6 Share Price Performance

The Company's securities were suspended from official quotation on the ASX on 9 May 2008. At that date, the last trade in the Company's ordinary shares was at 2.2 cents.

As there has been no indicator of the market value of GRP's ordinary shares (as represented by quoted share prices) for some time, we have not considered quoted share prices as part of our assessment.

3.7 Financial Performance

The reviewed consolidated financial results for the half-year ended 31 December 2010 are set out below:

	ConsolidatedReviewedHalf-Year to31 Dec 2010
Revenue:
Gain on debt forgiveness (i)	1,116,640
Interest received	627
Total revenue	1,117,267
Professional fees paid to administrator (ii)	(195,030)
Professional fees paid to related party (iii)	(56,364)
Listing fees	(16,485)
Other expenses	(25,681)
Profit before income tax	823,707
Income tax expense	-
Profit after income tax	823,707

• (i) On 4 November 2010, the Company executed a deed of arrangement and creditors trust with its creditors, extinguished all liabilities and removed itself from Administration. As a result, the Company's liabilities were reduced by $1,116,640 which is recorded as a gain on debt forgiveness.
• (ii) Professional fees of $195,030 were paid to the Administrator, RMG Partners Business Solutions in relation to the Company's Administration.
• (iii)Professional fees of $56,364 were paid to Nicols and Brien in relation to preparing and transitioning the Company from Administration.

3.8 Financial Position

The audited consolidated statement of financial position as at 30 June 2010 and the reviewed consolidated statement of financial position as at 31 December 2010 are set out below:

	Consolidated
	Audited	Reviewed
	30 June 2010	31 Dec 2010
Current Assets
Cash assets	1,126	84,008
Receivables	-	7,778
Total Current Assets	1,126	91,786
Non Current Assets	-	-
Total Non Current Assets	-	-
Total Assets	1,126	91,786
Current Liabilities
Payables	1,147,766	48,699
Total Current Liabilities	1,147,766	48,699
Total Liabilities	1,147,766	48,699
Net Assets/(Liabilities)	(1,146,640)	43,087
Equity
Issued capital	7,375,015	7,741,035
Accumulated losses	(8,521,655)	(7,697,948)
Total Equity	(1,146,640)	43,087

3.9 Tax Losses

The 30 June 2010 financial report discloses that there are no tax losses available to be carried forward. As such, we have not ascribed a value to any tax losses that may have arisen.

4 PROFILE OF CADY

4.1 History of Cady

Cady was registered on 13 October 2009 and is based in Perth, Western Australia.

4.2 Current Activities

Cady is focused on the commercial development of its 100% owned coal bed methane project (known as the Hanging Woman Project) located in the Powder River Basin in Wyoming, USA. Cady purchased the Project in June 2010 from Kennedy Oil, an established private coal bed methane producing company based in Gilette, Wyoming.

4.3 Directors

The current directors of Cady are as follows:

Saxon Palmer John (Gus) Simpson -15-

4.4 Capital Structure and Shareholders

The shareholding of Cady at the date of this Report is set out in the Notice of Meeting, and comprises 90,000,000 ordinary shares.

4.5 Financial Position

The unaudited statement of financial position of Cady at 31 December 2010 is set out below:

	Unaudited31 Dec 2010
Current Assets
Cash assets	306,305
Total Current Assets	306,305
Non Current Assets
Deferred exploration expenditure	766,268
Total Non Current Assets	766,268
Total Assets	1,072,573
Current Liabilities
Payables	24,204
Total Current Liabilities	24,204
Total Liabilities	24,204
Net Assets/(Liabilities)	1,048,369
Equity
Issued capital	1,200,511
Accumulated losses	(152,142)
Total Equity	1,048,369

We have commissioned an independent valuation report of the Hanging Woman Project owned by Cady, from Mr Robert A King, PE dated 10 April 2011. This report is included in Appendix 4 of this Report and concludes that the value of the Project's probable (P2) reserves is as follows:

	$US
Low case value	37,840,000
High case value	60,544,000
Preferred case value	47,930,000

In our valuation in Section 6.1 of this Report, we have used the preferred case value of $US47,930,000 and have assumed an exchange rate of $US1 = $A1, resulting in a value of $A47,930,000.

5 VALUATION OF GRP BEFORE THE PROPOSED TRANSACTION

5.1 Valuation Summary

HLB has estimated the fair market value of GRP prior to the Proposed Transaction to be $67,087, as set out in section 5.3 of this Report.

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For the purpose of our opinion, fair market value is defined as the amount at which the shares would change hands between a knowledgeable willing buyer and a knowledgeable willing seller, neither being under a compulsion to buy or sell. We have not considered special value in this assessment.

In determining this amount, we estimated the fair market value of GRP after considering the various methods, which are discussed in further detail below.

5.2 Valuation Methodology

Methodologies commonly used for valuing assets and businesses are as follows:

5.2.1 Capitalisation of future maintainable earnings ("FME")

This method places a value on a business by estimating the likely FME, capitalised at an appropriate rate which reflects business outlook, business risk, investor expectations, future growth prospects and other entity specific factors. This approach relies on the availability and analysis of comparable market data.

The FME approach is the most commonly applied valuation technique and is particularly applicable to profitable businesses with relatively steady growth histories and forecasts, regular capital expenditure requirements and non-finite lives.

The FME used in the valuation can be based on net profit after tax or alternatives to this such as earnings before interest and tax ("EBIT") or earnings before interest, tax, depreciation and amortisation ("EBITDA"). The capitalisation rate or "earnings multiple" is adjusted to reflect which base is being used for FME.

5.2.2 Discounted future cash flows ("DCF")

The DCF methodology is based on the generally accepted theory that the value of an asset or business depends on its future net cash flows, discounted to their present value at an appropriate discount rate (often called the weighted average cost of capital). This discount rate represents an opportunity cost of capital reflecting the expected rate of return which investors can obtain from investments having equivalent risks.

A terminal value for the asset or business is calculated at the end of the future cash flow period and this is also discounted to its present value using the appropriate discount rate.

DCF valuations are particularly applicable to businesses with limited lives, experiencing growth, that are in a start up phase, or experience irregular cash flows.

5.2.3 Net asset value

Asset based methods estimate the market value of an entity's securities based on the realisable value of its identifiable net assets. Asset based methods include:

• Orderly realisation of assets method
• Liquidation of assets method
• Net assets on a going concern method

The orderly realisation of assets method estimates fair market value by determining the amount that would be distributed to entity holders, after payment of all liabilities including realisation costs and taxation charges that arise, assuming the entity is wound up in an orderly manner.

The liquidation method is similar to the orderly realisation of assets method except the liquidation method assumes the assets are sold in a shorter time frame. Since wind up or liquidation of the entity may not be contemplated, these methods in their strictest form may not be appropriate. The net assets on a going concern method estimates the market values of the net assets of an entity but does not take into account any realisation costs.

The net assets on a going concern method is usually appropriate where the majority of assets consist of cash, passive investments or projects with a limited life. All assets and liabilities of the entity are valued at market value under this alternative and this combined market value forms the basis for the entity's valuation.

Often the FME and DCF methodologies are used in valuing assets forming part of the overall net assets on a going concern basis. This is particularly so for exploration and mining companies where investments are in finite life producing assets or prospective exploration areas.

These asset based methods ignore the possibility that the entity's value could exceed the realisable value of its assets as they do not recognise the value of intangible assets such as management, intellectual property and goodwill. Asset based methods are appropriate when entities are not profitable, a significant proportion of the entity's assets are liquid or for asset holding companies.

5.2.4 Quoted Market Price Basis

Another alternative valuation approach that can be used in conjunction with (or as a replacement for) any of the above methods is the quoted market price of listed securities. Where there is a ready market for securities such as the ASX, through which shares are traded, recent prices at which shares are bought and sold can be taken as the market value per share. Such market value includes all factors and influences that impact upon the ASX. The use of ASX pricing is more relevant where a security displays regular high volume trading, creating a "deep" market in that security.

5.2.5 Methodology Adopted

We consider that the most appropriate method for the valuation of GRP is the net assets on a going concern method.

5.3 Valuation

We set out below the reviewed 31 December 2010 consolidated statement of financial position of GRP and the "proforma market value" consolidated statement of financial position of GRP at that date. The proforma market value consolidated statement of financial position is based on the reviewed 31 December 2010 consolidated statement of financial position adjusted for the following item:

(a) Subsequent to 31 December 2010, GRP issued a further 4,000,000 ordinary shares at 0.6 cents per share to raise $24,000.

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	Consolidated
	Reviewed31 Dec 2010	ProformaMarket value31 Dec 2010
Current Assets
Cash assets	84,008	108,008
Receivables	7,778	7,778
Total Current Assets	91,786	115,786
Non Current Assets	-	-
Total Non Current Assets	-	-
Total Assets	91,786	115,786
Current Liabilities
Payables	48,699	48,699
Total Current Liabilities	48,699	48,699
Total Liabilities	48,699	48,699
Net Liabilities	43,087	67,087
No. of shares on issue		201,213,444
Net asset backing per share		$0.0003

5.4 Cross-check with Quoted Market Price Basis

In Section 3.6 of this Report, we have noted the following:

• (a) The Company's securities were suspended from official quotation on the ASX on 9 May 2008 and have not traded since that date.
• (b) At 9 May 2008, the last trade in the Company's shares was at 2.2 cents.

As a result of the above, we have not considered quoted share prices as part of our assessment.

5.5 Commentary on Premium for Control

The share market can be expected to provide an objective assessment of the fair market value of a listed entity, where the market is well informed and liquid. Market prices incorporate the influence of all publicly known information relevant to the value of an entity's securities.

Share prices from share market trading do not reflect the market value for control of a company as they are for portfolio holdings. Traditionally, the premiums required to obtain control of companies range between 15% and 25% of the portfolio holding values.

The following table sets out the capital structure of the post-Consolidation shares both before and after the completion of the Proposed Transaction:

Shareholder	ShareholdingPostAcquisition(postConsolidationbasis)	%Holding	Shareholding PostAcquisition (postConsolidationbasis)	%Holding
Cady	-	0%	90,000,000	51.4%
Capital raising	-	0%	75,000,000	42.8%
Existing holders	10,060,672	100.0%	10,060,672	5.8%
Total	10,060,672	100.0%	175,060,672	100.0%

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It could be argued that the current Cady shareholders could control the Company if they acted in concert with each other subsequent to the Proposed Transaction. As a result, a premium for control could be factored into our assessment of whether the Proposed Transaction is fair and reasonable. However, due to the matters discussed in our assessment in Section 7 of this Report, we do not believe that any adjustment for premium for control would alter our conclusions.

5.6 Conclusion on the Fair Market Value of GRP Before the Proposed Transaction

The value derived from the net assets on a going concern method is considered to be the best estimate of the fair market value of GRP, being $67,087. We have not considered GRP's recent trading performance for the reasons stated in Section 5.4 above.

6 VALUATION OF GRP AFTER THE PROPOSED TRANSACTION

We have addressed in Section 5.2 of this Report valuation methods commonly utilised in valuing businesses. As noted previously, our assessment of the Proposed Transaction in its entirety is required due to the resolutions giving rise to the Proposed Transaction being interdependent. This includes consideration of the numerous conditions precedent set out in Section 1.1 of this Report. As a result, we have assessed the fair market value of GRP after taking into account numerous proforma adjustments contemplated by resolutions 5, 6 and 8 to 12 and as listed in section 6.1 below.

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6.1 Valuation

	Consolidated
	Market value31 Dec 2010 (persection 5.3)	ProformaMarket value31 Dec 2010
Current Assets
CashReceivables	108,0087,778	15,414,3137,778
	115,786	15,422,091
Non-Current Assets
Deferred exploration expenditure	-	47,930,000
	-	47,930,000
Total Assets	115,786	63,352,091
Current Liabilities
Payables	48,699	72,903
	48,699	72,903
Total Liabilities	48,699	72,903
Net Assets	67,087	63,279,188
No. of shares on issue (Proforma)Net asset backing per share		175,060,672$0.36

Proforma Adjustments

The proforma adjustments incorporated in the above "proforma market value " column result from the numerous conditions precedent set out in Section 1.1 of this Report, and comprise the following:

• (a) The acquisition of 100% of the shares in Cady for consideration of 90,000,000 fully paid ordinary shares (post-Consolidation) and 11,250,000 options (post-Consolidation) to acquire shares in GRP exercisable at 20 cents on or before 30 June 2014. We have valued these options using a Black & Scholes options pricing model, with the inputs being: current share price of 20 cents; exercise price of 20 cents; expiry date of 30 June 2014; interest rate of 5.1%; and volatility of 100%.
• (b) The issue of 75,000,000 fully paid ordinary shares (post-Consolidation) at 20 cents each to raise $15,000,000.
• (c) The consolidation of the Company's shares at a ratio 0f 20:1.
• (d) The acquisition of Cady and the subsequent consolidation of Cady as a whollyowned subsidiary. This has involved a fair value assessment of the net assets of Cady based on Cady's unaudited management accounts for the period ended 31 December 2010, together with an adjustment for the fair value of the Hanging Woman Project as noted in Section 4.5 of this Report.

The following potential proforma adjustments have not been incorporated into the proforma balances above:

• (a) The acquisition of CADY and the resulting recognition of a value for Exploration and Tenement Acquisition Expenditure recorded in the consolidated statement of financial position could lead to a potential deferred tax liability being required to be recorded on consolidation. This would lead to a grossing up of the purchase price allocated to Exploration and Tenement Acquisition Expenditure. As such, this will have no effect on the Company's net assets and will not affect our conclusion as to the fairness or reasonableness of the Proposed Transaction.
• (b) If it is deemed that the current Cady shareholders will control GRP subsequent to the Proposed Transaction, then the acquisition could be deemed to be a Reverse Acquisition in which case Cady would become the accounting parent and GRP would become the accounting subsidiary. This would lead to adjustments to the proforma consolidated statement of financial position above, however for the purposes of this Report, this would not alter our conclusion as to the fairness and reasonableness as noted in Section 7 below, as any adjustments would be to reflect requirements of accounting standards and not concepts of values for the purposes of this Report.

Reconciliation of Shares on Issue

(Post-Consolidation)	Number ofshares
Number of shares on issue at 31 December 2010	197,213,444
Issue of shares post-31 December 2010	4,000,000
	201,213,444
Consolidation of shares (assumed at 20:1)	10,060,672
Issue of shares to acquire Cady	90,000,000
Capital raising	75,000,000
	175,060,672

6.2 Conclusion on the fair market value of GRP after the Proposed Transaction

In our opinion, the fair market value of GRP after taking into account the proforma adjustments noted above is $63,279,188.

7 EVALUATION AND CONCLUSION

7.1 Fairness

ASIC Regulatory Guide 111 defines an offer as being fair if the value of the offer price is equal to or greater than the value of the securities being the subject of the offer. However, in the context of the Proposed Transaction, we have considered the Proposed Transaction as being fair if the fair market value of GRP (value of consideration offered) prior to the Proposed Transaction is less than the estimated fair market value of GRP after the matters contemplated by the Proposed Transaction are completed, including the other conditions precedent contained in the Agreement. Set out in the table below is a comparison of our assessment of the fair market value of GRP before and after the Proposed Transaction.

	$
Estimated fair market value of GRP before the Proposed
Transaction (Section 5.3)	67,087
Estimated fair market value of GRP after the Proposed Transaction
(Section 6.1)	63,279,188

Accordingly, it is our opinion that the Proposed Transaction is fair.

7.2 Reasonableness

In accordance with ASIC Regulatory Guide 111, an offer is reasonable if it is fair. On this basis, in our opinion, the Proposed Transaction is reasonable. We have also identified the following factors in relation to the reasonableness of the Proposed Transaction.

7.2.1 Advantages of accepting the Proposed Transaction

• the potential increase in market capitalisation of the Company following completion of the Proposed Transaction and the associated capital raising may lead to increased coverage from investment analysts, access to improved equity capital market opportunities and increased liquidity, which are not currently present;
• if the Company does not proceed with the Proposed Transaction, its cash reserves will continue to be eroded by on-going administrative and corporate costs;
• since the current directors of the Company were appointed under a recapitalisation proposal approved by shareholders in 2010, they have been actively seeking opportunities to return the Company to operation and enhance shareholder value. The directors believe that the acquisition of Cady and Cady's assets is such an opportunity; and
• the Company's securities have been suspended from trading on ASX as ASX has formed the view that the Company's operations do not warrant the continued quotation of the securities. If Resolutions 5 to 13 are passed, the Company will seek to satisfy any conditions imposed by ASX to lift the suspension on the Shares from trading on ASX, although there is no guarantee this will occur.

7.2.2 Disadvantages of accepting the Proposed Transaction

• the Company will be changing the nature of its activities from a property development company to an oil and gas exploration and production company, which may not be consistent with the objectives of all shareholders;

• there are many risk factors associated with the change in nature of the Company's activities to an oil and gas exploration and production company, some of which are set out in the Notice of Meeting;

• current shareholders will have their interests in the Company diluted by the Proposed Transaction, capital raising and any further equity funding undertaken by the Company;

• -23-

• there is no guarantee that exploration undertaken on the Project by the Company will result in the discovery of mineral resources; and

• proposed project timelines may not proceed as expected.

7.2.3 Other Considerations

An individual shareholder's decision in relation to the Proposed Transaction may be influenced by his or her particular circumstances. We have considered the Proposed Transaction for GRP shareholders as a whole. We have not considered the effect of the Proposed Transaction on the particular circumstances of individual shareholders nor have we considered their individual objectives, financial situation or needs. Due to their particular circumstances, individual shareholders may place different emphasis on various aspects of the Proposed Transaction from the one adopted in this Report. Accordingly, individuals may reach different conclusions as to whether the Proposed Transaction is fair and reasonable.

In conclusion, as the Proposed Transaction is fair, it is also reasonable.

7.3 Conclusion

We are of the opinion that the Proposed Transaction is fair and reasonable.

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8 APPENDICES

Appendix 1 – Glossary of Terms

TERM	DEFINITION
Cady	Cady Energy Pty Ltd
ASIC	Australian Securities and Investments Commission
ASX	Australian Securities Exchange Limited
Consideration Options	11,250,000 options (post-Consolidation) in the Company
	exercisable at 20 cents
Directors	Directors of GRP
FME	Capitalisation of future maintainable earnings
HLB	HLB Mann Judd Corporate (WA) Pty Ltd
GRP or the Company	GRP Corporation Limited
Notice of Meeting	The Notice of Annual General Meeting and Explanatory
	Memorandum for the meeting to be held on 7 June 2011
NTA	Net tangible assets
Proposed Transaction	The entering into of the binding agreement with the
	shareholders of Cady Energy Pty Ltd to acquire 100% of
	Cady
Shareholders	Existing shareholders in GRP

Appendix 2 - Sources of Information

In preparing this report we have had access to the following principal sources of information:

• GRP's Annual report for the year ended 30 June 2010;
• GRP's reviewed half-year report for the period ended 31 December 2010;
• Discussions with directors, management and consultants of GRP;
• Publicly available information;
• ASX Announcements and media releases concerning the Proposed Transaction;
• Workpapers and calculations setting out proforma consolidated financial information; and
• Correspondence with the directors of GRP.

Appendix 3 - Qualifications, Declarations and Consents

HLB, which is a wholly owned entity of HLB Mann Judd Chartered Accountants, is a Licensed Investment Adviser and holder of an Australian Financial Services Licence under the Act and its authorised representatives are qualified to provide this Report. The authorised representatives of HLB responsible for this Report have not provided financial advice to GRP.

Prior to accepting this engagement, HLB considered its independence with respect to GRP with reference to ASIC Regulatory Guide 112. In HLB's opinion, it is independent of GRP and Cady.

This Report has been prepared specifically for the shareholders of GRP. It is not intended that this Report be used for any other purpose other than to accompany the Notice of Meeting to be sent to the GRP shareholders. In particular, it is not intended that this Report should be used for any purpose other than as an expression of the opinion as to whether or not the Proposed Transaction is fair and reasonable to the non-associated shareholders of GRP. HLB disclaims any assumption of responsibility for any reliance on this Report to any person other than those for whom it was intended, or for any purpose other than that for which it was prepared.

The statements and opinions given in this Report are given in good faith and in the belief that such statements and opinions are not false or misleading. In the preparation of this Report, HLB has relied on and considered information believed, after due inquiry, to be reliable and accurate. HLB has no reason to believe that any information supplied to it was false or that any material information has been withheld.

HLB has evaluated the information provided to it by GRP and other parties, through inquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially misstated or would not provide a reasonable basis for this Report. HLB has not, nor does it imply that it has, audited or in any way verified any of the information provided to it.

In accordance with the Act, HLB provides the following information and disclosures:

• HLB will be paid its usual professional fees (estimated to be $15,000 plus GST) based on time involvement at normal professional rates, for the preparation of this Report.
• Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report.
• HLB, nor any of its directors or associates, have any interest in GRP or Cady.
• Neither HLB nor HLB Mann Judd has had any relationship with GRP or Cady or any associate of GRP or Cady.

Appendix 4 – Independent Valuation Report of the Hanging Woman Project by Mr Robert A King, PE dated 10 April 2011