SKY METALS LIMITED — Capital/Financing Update 2004

Mar 7, 2004

CONVERTIBLE UNSECURED NOTE

THIS CONVERTIBLE NOTE is issued the	day of	2002.
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• $BY:$ PLANET GAS LIMITED (ABN 46 098 952 035) of Level 8, 261 George Street, Sydney, NSW, 2000 ('the Company')
• ROSIGNOL PTY LIMITED (ACN 078 287 457) of 45A Wyalong St, TO: Willoughby NSW, 2068 ('the Investor')

on the terms and conditions set out in the Schedule attached.

The amount advanced by the Investor to the Company and to which this Convertible Unsecured Note applies is $50,000 (FIFTY THOUSAND DOLLARS) and which represents 100,000 (ONE HUNDRED THOUSAND) Convertible Unsecured Notes having a principal amount of 50 cents each.

SIGNED by PLANET GAS LIMITED(ABN 46 098 952 035) in accordance withSection 127 of the Corporations Act	ì
Signature of Director	Signature of Director/Secretary
Print Name of Director	Print Name of Director/Secretary
Acknowledge and accepted by ROSIGNOLPTY LTD (ACN 078 287 457) in accordancewith Section 127 of the Corporations Act	€
Signature of Investor	Signature of Witness
Print Name of Investor	Print Name of Witness

SCHEDULE TO CONVERTIBLE UNSECURED NOTE

TERMS AND CONDITIONS OF CONVERTIBLE HNSECTIRED NOTE/S ISSUED BY PLANET GAS LIMITED (ABN 46 098 952 035) ("the Company")

ROSIGNOL PTY LIMITED (ACN 078 287 457) TO. ('the Investor')

The terms and conditions of issue of Convertible Unsecured Notes are as follows:

$\mathbf{1}$ . In these terms and conditions ('the conditions' or 'these conditions'), unless the contrary intention appears:

Act' means the Corporations Act 2001 (Cwlth) as amended and in force for the time being. and the expression "offeror", "on market offeror", "takeover offers" and "voting shares" shall have the same respective meanings as in the Act.

'Company' means Planet Gas Limited (ABN 46 098 952 035).

Convertible Unsecured Notes' means such of the Convertible Unsecured Notes created and issued by the Company to the Investor.

Conversion Date' means the date the Company is listed on the American Stock Exchange. NASDAQ, Canadian Stock Exchange, or any other internationally recognised stock exchange.

'Dollars' or '$' means the lawful currency of the Commonwealth of Australia.

'Investor' means Rosignol Pty Limited (ACN 078 287 457)

'Maturity Date' means the day before the anniversary of the date of the Notes or any earlier date upon which the Company is obliged to repay the principal moneys payable on the Notes.

'Notes' means Convertible Unsecured Notes.

'Noteholders' means the Investor or any transferee of a Note.

'Ordinary Shares' means ordinary shares in the Company which are tradeable on a stock exchange.

• $21$ Each of the Convertible Unsecured Notes shall:

  • $(a)$ pay a principal amount of fifty cents;
  • be convertible on the Conversion Date in the manner and circumstances provided by $(b)$ clause 3 and, subject to clause 5 of these conditions, into the number of Ordinary Shares having a value equivalent to $1.25 (ONE DOLLAR AND TWENTY FIVE CENTS):
  • $\left( c\right)$ be transferable provided the whole of the Convertible Unsecured Note is transferred to only one other Party or if to more than one, only as joint holders of the Note.

• $\overline{3}$ . Convertible Unsecured Notes shall be convertible into the number of Ordinary Shares determined in accordance with clause 2(b) of these conditions automatically and contemporaneously with the Company's shares becoming listed for trading on the Australian Stock Exchange, American Stock Exchange, NASDAQ, Canadian Stock Exchange, or any other internationally recognised stock exchange. For the purposes of this clause 3 receipt by the Company of a written approval by any such stock exchange to the Company's shares being listed will be deemed to be a listing on the relevant stock exchange:

• $\overline{4}$ . $(a)$ The Company shall allot the Ordinary Shares to which the Noteholder is entitled upon conversion of the Convertible Unsecured Notes immediately on the Conversion Date.

  • $(b)$ The Company will within 14 days after the Conversion Date cause its share registry to send to the Noteholder a statement confirming the number of Ordinary Shares issued on conversion of the Convertible Unsecured Notes.
  • Ordinary Shares allotted upon conversion of Convertible Unsecured Notes $\left( c\right)$ $(i)$ shall rank from the day after the Conversion Date in relation to the Convertible Unsecured Notes so converted for any dividends or distributions declared, made or paid by the Company on its Ordinary Shares on or after that day, subject to apportionment in accordance with the provisions of the Constitution of the Company in respect of any portion of the period in respect of which those dividends or distributions are declared, paid or made that has expired prior to that day, and at all times subject to the Listing Rules of the relevant stock exchange on which the Ordinary Shares of the Company are traded, or for which permission to trade has been approved.
    • $(ii)$ Subject to paragraph (i) of this sub-clause, Ordinary Shares allotted upon conversion of Convertible Unsecured Notes shall rank in all respects pari passu and form one class with the Ordinary Shares on issue at the Conversion Date.

• $(a)$ If before conversion of the Convertible Unsecured Notes and before the Maturity Date:

  • $(i)$ the Company becomes aware:
    • $(aa)$ than an offeror or on-market offeror has become entitled (within the meaning of the Act) to more than 50% of the voting shares in the capital of the Company, and
    • $(bb)$ that in the case of takeover offers made subject to a condition, any takeover offers which have not been accepted and any contracts resulting from acceptance of takeover offers have become unconditional or the condition has been waived or fulfilled.

the Company shall (unless the offeror or on-market offeror has offered to acquire Convertible Unsecured Notes on terms that, in the opinion of the directors of the Company, are fair and reasonable) within 14 days of so becoming aware, give notice in writing to the Noteholder of the fact; or

the Company proposes to enter into a scheme of arrangement between the $(ii)$ Company and its members or any class of them, the Company shall give to the Noteholder notice in writing of such proposal; or

$\overline{5}$ .

• $(iii)$ an effective resolution is passed for a member's voluntary winding up of the Company, the directors shall give to the Noteholder notice in writing of the passing of that resolution.
• $(b)$ Where notice is given pursuant to paragraph (aa) or (bb) of sub-clause (i) of this clause, the Noteholder may, within 30 days from the date of the receipt of such notice, by notice in writing given to the Company at its registered office require the Company to immediately repay the principal of all Convertible Unsecured Notes held by the Investor.
• $6.$ The Company will not, prior to the Maturity Date or, the Conversion Date, which ever the earlier, create a charge or security over the Company's assets without the prior written consent of the Noteholder, which will not be unreasonably withheld if it is to be done in the ordinary course of the Company's business.
• $\overline{7}$ . During the period commencing from the date of issue of the Convertible Unsecured Notes and ending on the Maturity Date any reorganisation of the capital of the Company will comply with the Listing Rules of any stock exchange of which it is intended to seeking listing of its shares and the Act.
• 1. In the event that the Company fails to gain listing of its ordinary shares on a qualifying stock exchange by the Maturity Date of the Convertible Unsecured Notes, a simple majority, by dollar value, of the Noteholders may give the Company notice that the note will not be extended and that repayment of the principal amount is due. In such an event the Company agrees it will place the Powder River Basin Project on the open market for sale and it undertakes to use its best endeavours to sell the project expeditiously for the best achievable price. The net proceeds from such a sale will be used to discharge the liability of the amount of the Note principal. No contract for sale, which would result in less than one hundred cents in the dollar of the Note principal amount being available for repayment, will be entered into without the written permission of the Noteholders. Alternatively, the Noteholders may offer to extend the term of the Note, and such an offer will be in writing and lodged with the Company not less than one month prior to the original Maturity Date of the Notes.
• $91$ All Convertible Unsecured Notes repaid or converted by the Company shall be cancelled and shall not be re-issued.
• 1. For the purposes of the terms and conditions of issue of Convertible Unsecured Notes a Note certificate should be issued and shall be deemed to have been issued on the terms and conditions set forth herein and shall contain no conditions inconsistent therewith.
• 1. This Note is governed by the laws of the State of New South Wales and the parties submit to the exclusive jurisdiction of the courts of New South Wales.
• $12.$ This Note is a bearer note.
• 1. Any stamp duty payable on this Note or on the conversion of the Note into Ordinary Shares will be paid by the Company.

Terms and Conditions agreed to by the Parties:

Dated: $\ldots$ , $\ldots$ , $\ldots$ , $\ldots$ , $\ldots$ , $\ldots$ , $\ldots$

SIGNED by PLANET GAS LIMITED(ABN 46 098 952 035) in accordance withSection 127 Corporations Act
Signature of Director	Signature of Director/Secretary
Print Name of Director	Print Name of Director/Secretary
SIGNED by ROSIGNOL PTY LIMITED )(ACN 078 457 587) in accordance withSection 127 Corporations Act
Signature of Investor	Signature of Witness
Print Name of Investor	Print Name of Witness