SUREFIRE RESOURCES NL — Capital/Financing Update 2005

Jul 17, 2005

GENESIS BION 5th Floor, 52 Phillip St, SYDNEY 2000

Telephone 61-2-9252 7380 Facsimile 61-2-9252 8466

COMPANY ANNOUNCEMENTS OFFICE TO: COMPANY: AUSTRALIAN STOCK EXCHANGE LIMITED DR ROBERT GILMOUR FROM: 18^th July 2005 DATE: No. PAGES: 5 (INCLUDING THIS COVER PAGE)

GENESIS SIGNS AGREEMENT SURROUNDING EXCITING FERTILITY TECHNOLOGY

Further to recent announcements Genesis is pleased to provide the market with details upon which GBL has been granted an option to purchase 100% of the issued capital of a New Zealand based biotech company involved in the development of fertility testing devices for use in both human healthcare and veterinary markets.

• $\triangleright$ GBL has agreed the terms upon which it may purchase the issued capital of Manawatu Biotech Investments Limited ("MBIL") a privately owned New Zealand based biotech company:
• $\triangleright$ The terms of the transaction are the provision by GBL to MBIL of a Loan Facility of up to AUD\$250,000 along with GBL having the right to purchase within a twelve month period the entire issued capital of MBIL for a consideration of AUD\$450,000 comprising a cash component of \$200,000 and \$250,000 in GBL equity;
• $\triangleright$ MBIL's focus is the development of commercial products based on its proprietary science concerning the measurement of the urinary glucuronides E1G and PDG which are metabolites of oestrogen and progesterone, respectively, found in the urine of female humans and various other mammals;
• $\triangleright$ MBIL's proprietary science has been developed over the past 25 years and has involved during that period collaborations with Massey University, University of Melbourne and the World Health Organisation;

• GBL has been working with MBIL in the further development of its proprietary science as well as working with two US-based companies specializing in lateral flow technology. The ultimate objective is to combine technologies in order to produce a medical device which in the first instance can be used to define the fertile period within the human menstrual cycle;

• $\triangleright$ GBL believes the structure of the transaction provides the Company with significant flexibility to work with MBIL and the US based technology partners to progress the development of the proposed product. Further, the structure assists in mitigating the overall product development risk to GBL by the incorporation of "go forward"/"stop" milestone points along the proposed 12 to 18 month development timeline.

1. Background to MBIL

The History

MBIL is a New Zealand Company based in Palmerston North, on the Massey University campus.

Associate Professor Len Blackwell (MBIL Chief Scientist) formerly of Massey University has spent the last 25 years researching urinary excretion rates of the human ovarian hormone metabolites, E1G and PdG, and their relationship to fertility levels during the menstrual cycle.

Recent Focus

More recently the company has focused on the development of commercial products based on its proprietary science surrounding the measurement of the urinary glucuronides E1G and PdG which are metabolites of oestrogen and progesterone found in the urine of human (as well as other mammalian) females.

Assay Design

The company has developed non-invasive assays that measure the levels of these compounds in urine and are designed for use with a proprietary algorithm for determination of the fertile period in the human menstrual cycle.

At the present time, the determination of a female's fertile period using lateral flow strip technology is based on qualitative measurements so the quantitative nature of the new technology represents a potential significant advance.

Test Strip Development

These assays will be part of a test strip which when placed in urine can give a quantitative indication of whether or not a woman is in the fertile part of her menstrual cycle. These test strips are based on a new platform technology whereby magnetic particles are bound to an analyte which is then quantified using a proprietary magnetic reader. The reader is capable of producing a quantitative output with far greater accuracy than existing urine strip technology.

The company's goal is to develop a medical device which leverages the quantitative nature of the strip and reader technologies to gain a competitive advantage in both the human healthcare and veterinary markets.

In humans, the technology could potentially be applied in several areas of infertility management including:

• Monitoring of the menstrual cycle
• Accurate determination of the fertile period
• Monitoring the response to gonadotropin treatment $\bullet$

Ultimately, the technology may prove sufficiently accurate to allow its use as a "natural contraceptive". The company believes, when completed, the test may be more accurate than any other product currently on the market. The uncertainty lies in whether its reliability will be sufficient to enable it to meet the FDA requirements for sale in the United States as a "natural contraceptive".

Potential for multiple veterinary applications

The first veterinary application planned for development will be to monitor oestrus in dairy cows. The period of oestrus in cows is relatively short and a device which identifies that period with a high degree of reliability could potentially offer significant time and cost savings to the farmer. This technology offers the possibility of a very effective breeding management product.

Potential Path to Market

To achieve its aim of having a commercial product to sell based on the application of the technologies summarised above, the Company has devised a path to market briefly outlined below:

Phase 1 - Intellectual Property Platform

The Company has implemented a clear and robust IP strategy and is currently in the process of prosecuting its patents across the Patent Co-operation Treaty ('PCT") territories.

Phase 2 - Complete Biochemical Assay Development

The assay feasibility studies are being completed. The development of a near marketready product for use in humans will occur over the next 3 to 6 months and will involve cooperation between MBIL and two US-based companies specializing in reader and lateral flow strip development. The wider objective is to produce a registrable market-ready medical device.

The veterinary applications and, specifically, the bovine application is projected to be a further 12 months out in its development. Further market research is required to determine the exact end specification of the product and its potential value proposition for farmers. Its commercial development will occur immediately upon successful completion of the human product.

Phase 3 - Test Strip development

The company has entered into a Memorandum of Understanding and expects to follow up with both a product development and licensing agreement with MagnaBioSciences (MBS). MBS is a US-based company with a proprietary Magnetic Assay Reader (MAR) technology capable of measuring a wide range of biochemical assays based on paramagnetic particle technology ("PMP").

The PMP technology has been commercialised for similar "body fluid" assays, and may be regarded as a proven technology.

Phase 4 - Product pre-market testing and specification refinement

Complete pre-market testing and refinement is expected to be completed within 3 to 6 months post the completion of Phase 3 (noting that certain aspects may be commenced within Phase 3).

Fig 1: Path to Market Flow Diagram including approximated development costs

Risk Analysis

The major risks lie in successfully completing the biochemical assay development required for the diagnostic test strips and formulating an algorithm to determine the fertility status from hormonal excretion rates. The risk associated with the development of the PMP strip and reader is considered to be minimal as the process is considered to be "proven". However, the affordability of the device by its target market remains a risk.

Ongoing Strategy

This transaction illustrates the Company's stated strategy of identifying and purchasing potentially sound scientific assets, adding significant value to them through IP and commercial management, and to aim to ultimately produce a commercial product which can be potentially sold or licensed within a 12-18 month timeframe.

Genesis will continue to keep the market updated with respect to each phase of the product development outlined above.

2. Capital Raising and CEO Search Process

Capital Raising

As part of its overall strategic review the Board is in the process of considering the current and forecast cash position of the Company, particularly in relation to providing the necessary funding for the following activities:

• Continuing development in relation to CellGen; $\ddot{\Omega}$
• The MBIL transaction; $(ii)$
• $(iii)$ Appointment of a new CEO;
• Appointment of Strategic Advisory Committee Members; $(iv)$
• Other commercial opportunities and general working capital. $(v)$

The Board is in the process of considering the size and form of an appropriate capital raising and expects to be in a position to announce to the market shortly the details of this proposed capital raising.

CEO Search Process

The Company is continuing the CEO search process and is pleased with the progress to date, particularly in terms of the caliber of those potential candidates applying for the position. The Company would hope the process to be completed within a six week period and will keep the market informed upon a final decision being reached.

Please feel free to contact the Company should you have any queries in relation to this announcement.