ST BARBARA LIMITED — M&A Activity 2004

Aug 30, 2004

STRATA MINING CORPORATION LIMITED ACN 008 021 118

SUITE 4/10 CANNING HIGHWAY SOUTH PERTH WA 6151

PO BOX 980 Postal: SOUTH PERTH WA 6151

Phone: (08) 9367 8295 (08) 9367 7654 Fax:

31 August 2004

The Company Announcements Office Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000

Dear Sir

Offer to acquire all shares and options in Elara Mining Limited

Strata Mining Corporation Limited ("Strata") is pleased to announce it has made an offer to acquire all the shares and options in Elara Mining Limited ("Elara"), a company with significant earn in rights in the Murchison Mineral Field in Western Australia. The offer reflects a change in the way in which Strata will conduct its business in that it will increase emphasis on direct investment in and management of projects.

The principal assets of Elara are:

The Polelle Joint Venture - Norrie Pluton (Meekatharra) $(a)$

Elara has the right to earn into a group of semicontiguous mining tenements and applications for mining tenements (the Polelle Joint Venture) located in the Murchison Mineral Field of Western Australia. Total area is approximately 130 km2 and consists of six Mining Leases, 11 applications for Mining Leases, two Exploration Licences, and two Prospecting Licences.

Elara can earn an initial 51% interest through the expenditure of $3.0 million on exploration by November 2005. After completing its initial $3.0 million expenditure. Elara may elect to earn an additional 14% interest in the tenements (for a total of 65%) through the expenditure of an additional $2.0 million.

To date, Elara has spent approximately $1 million on the first stage earn-in.

Potential

The Polelle Joint Venture contains an advanced stage mineral resource of approximately 65,000 oz at the Mulla Mulla project (see St Barbara Mines Limited annual report for the year ending 30 June 2003 at page 14), which will have a potential short lead time to production. Open pit mining operations immediately adjoining the joint venture area have historically produced approximately 538,000 ounces of gold. Importantly, the land that is the subject of the joint venture is located near infrastructure, and is within a short haulage distance to a treatment facility. Mulla Mulla and other sources of mineralisation within the Joint Venture area could provide significant tonnages of open-pittable oxide feed.

$(b)$ The Reedy's Joint Venture - (Meekatharra)

Elara has the right to farm-in into a group of contiguous mining tenements and applications for mining tenements (the Reedys Joint Venture) located in the Murchison Mineral Field of Western Australia. Total area is approximately 190km2 and consists of 25 Mining Leases, two Exploration Licences, one application for an Exploration License and two Prospecting Licences.

Elara can earn an initial 51% interest through the expenditure of $3.25 million on exploration by November 2005. After completing its initial $3.0 million expenditure, Elara may elect to earn an additional 14% interest in the tenements (for a total of 65%) through the expenditure of an additional $2.0 million.

To date. Elara has spent approximately $0.25 million on the first stage earn-in.

Potential

The Reedy's Joint Venture area includes areas of past production, from which in excess of 650,000 ounces of gold have been won. Mining operations ceased in or about 1996.

The high grade lodes at Reedys have been incompletely tested for extensions at depth, and potential exists for the upgrading of existing resources (St Barbara Mines Limited, in its 2003 annual report (see page 14), quoted measured, indicated and inferred resources of a total of 263,800 ounces calculated in accordance with the JORC Code), and delineation of new underground resources. Numerous advanced-stage exploration (brownfields) targets have been generated through the efforts of previous explorers.

In summary, the acquisition of Elara presents Strata with the opportunity to acquire several areas of significant and anomalous gold mineralisation that have been identified within the Polelle and Reedy's Joint Venture area - specifically:

• $(a)$ An oxide mineral resource has been delineated through RC and diamond drilling at the Mulla Mulla project, located near the Bluebird plant.
• $(b)$ Aircore reconnaissance drilling has discovered two zones of anomalous to significant gold mineralisation beneath surface cover at the Kanji and Miniritchie prospects.

Conditions of the offer

Strata's offer to acquire the shares and options in Elara is subject to a number of conditions, importantly, a minimum of 80% acceptance by Elara members, satisfactory due diligence and approval by Strata shareholders to the issue of Strata shares and options which will be required for the purpose of the transaction.

Subject to satisfaction of the conditions attaching to the offer Strata has offered the equivalent of 3.75 existing Strata shares for each Elara share (ie a total potential offering of the equivalent of approximately 110 million existing Strata shares, there being approximately 29 million Elara shares on issue) and 1 for 2 option to subscribe for a share in Strata with a strike price of the equivalent of 6 cents, and a term of 3 years for each Elara option (ie a total of approximately 12.5 million Strata options, there being approximately 25 million Elara options on issue). Completion of the proposed transactions is to occur 10 business days after satisfaction of the last condition precedent.

As referred to above. Strata shareholders will be asked to approve the issue of shares and options for the purposes of the above transaction. The proposed issue of shares is to be undertaken at 3.2cps (being a premium of more than 100% to the prevailing market price).

The fact that this transaction is proposed to be undertaken at a premium to the prevailing market price reflects the underlying value of the advanced mineral portfolio and investments that Strata has more recently established, including Strata's recently announced transaction to acquire a 50% interest in the Tennant Creek gold project.

Tennant Creek project - Juno & Nobles Nob Mines

Subject to the terms and conditions described in the company's announcement dated 1 June 2004 Strata is acquiring a 50% interest in 48 granted mining tenements at Tennant Creek, Northern Territory which were formerly the assets of Normandy Mining Limited. A recent independent review concluded the Juno deposit currently has a JORC compliant resource of 532,195 ounces of gold1 and that a total of seventeen (17) target areas within the portfolio have the potential to substantially increase the resource base. The Tennant Creek gold project and associated licences are believed by the directors to represent an advanced opportunity for fast tracking gold production. Currently identified indicated resources, together with remnants from the old mine plan and other areas of strong mineralisation at deeper levels within the mine, together with supergene copper and gold blankets at or near the water table will provide the bulk of the early mineable material.

Based on a preliminary scoping study of the Juno Deposit, the preliminary economics reflect an initial 3-4 year mine life (based on existing resources), annualised production of approximately 60,000 oz p.a. at a cash cost of approximately US$200/oz and an initial capital investment of US$10 million.

Other assets

In addition to the above assets. Strata currently also has investments in the following companies:

an 8% interest in Defiance Mining Corporation (TSX) which owns the $(a)$ Tasiast Gold Project (2.1m ozs) in Mauritania.

<sup>1 Information in this report relating to mineral resources conforms to the reporting requirements of the Australasian Code for Reporting of Identified Mineral Resources and Ore Resources (The JORC Code). It is based on information compiled and reported by Mr Phil Jones. B.App.Sc (Geol.), MAIG, MausIMM who is a Competent Person as defined by the Code.

• $(b)$ a 4.5% shareholding in St Barbara Mines.
• a 2.7% interest in St Istvan Gold plc, which owns the Lahoca Gold $(c)$ Project in Hungary which currently has a JORC compliant resource of $1.8m$ nz

Other business

Reflecting Strata's move to become a direct participant and owner/operator of resource projects the Board of Strata will be reorganised which will see nominees of Elara Mining join the Board of Strata, including the appointment of Mr Ian Murie, an Elara nominee, as chairman subject to the transaction being approved by Strata shareholders.

Strata looks forward to a successfully completing these proposed acquisitions.

| Yours faithfully

men Janith

Mark Smith Company Secretary