TANAMI GOLD NL — AGM Information 2003

Oct 23, 2003

2003

NOTICE OF ANNUAL GENERAL MEETING

To be held on Thursday, 27 November 2003

and

EXPLANATORY MEMORANDUM TO ACCOMPANY NOTICE OF ANNUAL GENERAL MEETING

and

PROXY FORM

NOTICE OF ANNUAL GENERAL MEETING

The Annual General Meeting of Tanami Gold NL (the "Company") will be held on Thursday, 27 November 2003 at The Celtic Club, 48 Ord Street, West Perth, Western Australia, commencing at $11.00 a.m.$

Kennedi

General Business:

$\mathbf{1}$ . Financial Statements and Reports (no resolution required)

To receive and consider the financial statements for the Company and its controlled entity for the year ended 30 June 2003 and the reports of the Directors and Auditor thereon.

$2.$ Re-election of Director

To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That Mr G. E. Comb, who retires by rotation in accordance with the Company's

Constitution, be re-elected as a Director of the Company"

3. Approval of issue of shares

To consider, and if thought fit, to pass the following resolution as an ordinary resolution:

"That, for the purposes of Rule 7.1 of the Listing Rules of the Australian Stock Exchange Limited ("ASX") and all other purposes, the Company be authorised to issue and allot to such persons that the directors in their absolute discretion think fit, provided that the directors and any of their associates are excluded from such an issue, up to 25,000,000 fully paid ordinary shares in the capital of the Company at a minimum issue price equal to 80% of the average market price for the Company's ordinary shares over the last 5 days on which sales of those shares were recorded on the ASX before the day on which the issue is made."

Voting Exclusion

For the purposes of ASX Listing Rule 7.3, the Company will disregard any votes cast on this resolution by any person who may participate in the proposed issue and any person who might obtain a benefit, except a benefit solely in the capacity of a shareholder, if the resolution is passed, and any associates of those persons. However, the Company need not disregard a vote if:

• it is cast by that person (excluded from voting) as proxy, appointed in writing for a person $(a)$ who is entitled to vote, in accordance with the directions on the proxy form and is not cast on behalf of a person (excluded from voting) or their associates; or
• it is cast by a person chairing the Meeting as a proxy for a person who is entitled to vote, in $(b)$ accordance with a direction on the proxy form to vote as the proxy decides.

TANAMI GOLD NL ABN 51 000 617 176

$\overline{4}$ . Grant of Options to Mr Gary Comb, Chairman

To consider and, if thought fit, to pass the following resolution as an ordinary resolution:

"That, for all purposes, shareholders approve the issue to Mr Gary Comb (or his nominee) of 1,500,000 options to subscribe for fully paid ordinary shares in the Company exercisable at \$0.20 each and otherwise on the terms and conditions set out in the attached Explanatory Statement."

Voting Exclusion

For the purposes of ASX Listing Rule 10.13 and section 224 of the Corporations Act 2001, the Company will disregard any votes cast on this resolution by Mr Gary Comb and any of his associates. However, the Company need not disregard a vote if:

• $(a)$ it is cast by that person (excluded from voting) as proxy, appointed in writing for a person who is entitled to vote, in accordance with the directions on the proxy form and is not cast on behalf of a person (excluded from voting) or their associates; or
• it is cast by a person chairing the Meeting as a proxy for a person who is entitled to vote, in $(b)$ accordance with a direction on the proxy form to vote as the proxy decides.

NOTES:

• A member entitled to attend and vote is entitled to appoint not more than two proxies to attend 1. and vote on behalf of the member. A proxy need not be a member of the Company, but must be a natural person (not a corporation). A proxy may also be appointed by reference to an office held by the proxy (eg "the Company Secretary").
• $\overline{2}$ Where more than one proxy is appointed, each proxy may be appointed to represent a specified proportion of the member's voting rights. If no such proportion is specified, each proxy may exercise half of the member's votes.
• 1. A proxy form is enclosed. A separate form must be used for each proxy. An additional form can be obtained by writing to the Company at 42 Churchill Avenue, Subiaco, Western Australia or by fax to (61.8) 9381 2747. Alternatively, you may photocopy the enclosed form.
• $\overline{4}$ . A duly completed proxy form and (where applicable) any power of attorney or a certified copy of the power of attorney must be received by the Company at its registered office or the address or fax number set out below, not less than 48 hours before the time for commencement of the meeting. Please send by post to PO Box 1604, Subjaco, Western Australia 6904 or by fax to (61 8) 9381 2747.
• 1. The Company will accept proxy appointments by a corporate member executed in accordance with either section $127(1)$ (not under seal) or section $127(2)$ (under seal) of the Corporations Act 2001.

• The time nominated by the Board for the purpose of determining the voting entitlements at the 6. meeting is 5:00pm Perth time on 25 November 2003.

• The Explanatory Memorandum attached to this Notice forms part of this Notice.

BY ORDER OF THE BOARD

K Hogg Company Secretary 22 October 2003

TANAMI GOLD NL ABN 51 000 617 176

FARI FAN ALLORA (SEBAGINA EN 1

INTRODUCTION $\mathbf{1}$ .

This Explanatory Statement has been prepared for the information of shareholders in Tanami Gold NL ("Company" or "Tanami Gold") in connection with the Annual General Meeting to be held on 27 November 2003 at 11:00 a.m WST.

The Company seeks approval for the placement of up to 25,000,000 Shares to raise additional working capital. It also seeks approval for the grant of Options to Mr Comb (or his nominee), the Chairman of the Company.

$\overline{2}$ RESOLUTION 3 - APPROVAL OF ISSUE OF SHARES

Subject to certain exceptions, ASX Listing Rule 7.1 prohibits a company from issuing securities without shareholder approval in any 12 month period where the number of securities issued would exceed 15% of the number of fully paid ordinary securities in the company 12 months prior to the proposed issue.

The issue contemplated by Resolution 3 will cause this limit to be exceeded, and accordingly shareholders' approval is being sought under that Rule.

Funds raised will be used for working capital including the funding of exploration programs to be undertaken on both 100% owned projects and joint venture projects located in the Tanami-Arunta Province estimated at approximately \$1.5 million for 2004 and funding of acquisition opportunities as and when they arise.

Listing rule 7.3 sets out the information required to be disclosed to shareholders when seeking this approval. The information set out below is intended to satisfy this requirement:

• The maximum number of securities to be issued is 25,000,000 Shares. $(a)$
• $(b)$ The Shares will be issued no later than 3 months after the date of the meeting. Allotment will occur progressively.
• The Shares will be issued at a minimum issue price equal to 80% of the average market $(c)$ price for Shares over the last 5 days on which sales of those Shares were recorded on the ASX before the day on which the issue is made.
• $(d)$ The Shares will be issued and allotted to such persons that the Directors in their absolute discretion think fit, provided that the Directors and any of their associates are excluded from the issue.
• The Shares will rank equally in all respects with the existing Shares. $(e)$
• $(f)$ The funds raised will be used for working capital, including exploration expenditure and possible asset acquisition costs.

Directors' Recommendation

The Board believes that refreshing the Company's ability to issue shares within the 15% limit is in the best interests of the Company, thereby maintaining its flexibility to make placements of securities without seeking Shareholder approval if the need or opportunity arises. Accordingly, the Board recommends Shareholders vote in favour of the Resolution.

RESOLUTION 4 - APPROVAL OF GRANT OF OPTIONS TO MR GARY COMB 3.

Resolution 4 relates to the proposed issue of Options to Mr Gary Comb (or his nominee).

The grant of Options to Mr Comb (or his nominee) is designed to acknowledge and reward the services and contributions to be made by him to the Company in his changing role in an executive capacity, with the Company now focussing on both exploration and on the acquisition of gold projects leading to production status. Mr Comb's participation and responsibility in the acquisition and development of such projects will increase and, importantly, his expertise in this area provides the Company with strong operational experience.

The Options to be granted are in addition to Mr Comb's fees and remuneration package payable by the Company. It is proposed that Mr Comb be granted 1,500,000 Options at an exercise price of \$0.20 each. In the 3-month period before the date of the Notice to which this Explanatory Statement is attached, the highest price of Shares was \$0.20 on 8 September 2003 and the lowest price was \$0.115 on 7 August 2003. The closing price on the date of the Notice was \$0.16.

Importantly, the terms and conditions of exercising the Options are incentive-based in that the right to exercise each of the three tranches of 500,000 Options each requires the Share price to increase to \$0.20, \$0.30 and \$0.45 respectively. All unexercised Options expire 5 years from the date of the grant. If Mr Comb ceases to be a Director, he may exercise any remaining Options within 6 months of cessation.

The Options will be issued to Mr Comb (or his nominee) as soon as practicable after the date of this meeting and in any event within 1 month.

Listing Rules Approval

Shareholder approval is sought under Listing Rule 10.11 which provides that a company must not issue securities (including options) to a related party of the company, such as a director, without the company obtaining shareholder approval.

Corporations Act Approval

Chapter 2E of the Corporations Act regulates the provision of financial benefits to related parties by a public company. The granting of the Options as contemplated by Resolution 4 may constitute the provision of a financial benefit to a related party. Section 208 of the Corporations Act prohibits a company from giving a financial benefit to a related party without prior shareholder approval.

A "related party" for the purposes of the Corporations Act is widely defined. It includes a director of a public company and specified members of the director's family. It also includes an entity over which a director maintains control.

A "financial benefit" for the purposes of the Corporations Act is also defined widely. It includes a public company paying money to another entity. It also includes the public company granting an option over its securities. In determining whether or not a financial benefit is being given, it is necessary to look to the economic and commercial substance and the effect of the transaction (rather than just the legal form) and any consideration which has been given to be disregarded, even if it is full or adequate.

The granting of Options to Mr Comb (or his nominee) as contemplated by Resolution 4 may constitute the giving of a financial benefit to a related party of the Company and accordingly shareholder approval is also sought for this purpose.

The following information is provided to shareholders to enable them to assess the merits of the resolution:

• $(a)$ the Options will be granted to Mr Comb, a Director, or his nominee;
• $\left( b\right)$ the proposed financial benefit to be given to Mr Comb is 1,500,000 Options on the terms and conditions set out in Annexure A: and
• $(c)$ the Options shall be granted to Mr Comb (or his nominee) in recognition of the services and contribution of Mr Comb to the Company both previously and in the future.

For the financial year ending 30 June 2003 Mr Comb received \$22,600 in annual director's fees and \$18,150 for the provision of technical consultancy services to the Company. For the period beginning 1 July 2003 and ending 21 October 2003 Mr Comb received \$9537.50 in director's fees.

Mr Comb currently has a relevant interest in 1,067,599 fully paid ordinary shares in the Company. If the Options proposed to be granted to Mr Comb (or his nominee) under Resolution 4 are exercised, the Company's issued shares would increase by 1,500,000 and his percentage ownership of issued shares on a fully diluted basis would increase to approximately 0.87%.

The Options shall be granted without any conditions on exercise, other than those set out in the terms and conditions in Annexure A.

It is a requirement of ASIC that a dollar value be placed on the Options to be issued. ASIC has indicated the Black-Scholes option price calculation method is acceptable. This method is designed to value listed securities that are freely tradeable and hence it is not entirely appropriate or reliable in this instance. Nevertheless, a range of values for the Options has been estimated using the Black-Scholes method.

In determining these values, the following assumptions have been made:

• The Share price at issue date will be between 16 and 20 cents. $(a)$
• $(b)$ The Options to be exercisable at \$0.20.
• $(c)$ The Options are expected to mature within 5 years of their date of issue, assumed at 27 November 2008.
• Price volatility of the Shares is approximately 0.69282. $(d)$
• The average current risk-free interest rate is 5.365%. $(e)$
• The first tranche of Options can only be exercised upon the attainment of a volume weighted $(f)$ average share price on the ASX of \$0.20 or more for 5 consecutive trading days. Given the nature of the industry, it is impossible to predict exploratory success. With this in mind, the Directors have set the probability of the Share price reaching \$0.20 at 75%.
• The second tranche of Options can only be exercised upon the attainment of a volume weighted $(g)$ average share price on the ASX of \$0.30 or more for 5 consecutive trading days. Given the nature of the industry, it is impossible to predict exploratory success. With this in mind, the Directors have set the probability of the Share price reaching \$0.30 at 50%.
• The third tranche of Options can only be exercised upon the attainment of a volume weighted $(h)$ average share price on the ASX of \$0.45 or more for 5 consecutive trading days. Given the nature of the industry, it is impossible to predict exploratory success. With this in mind, the Directors have set the probability of the Share price reaching \$0.45 at 25%.
• $(i)$ The Option values have been discounted by 25% reflecting their unlisted status and limited secondary market.

On this basis an exercise price of \$0.20 each results in a value range of:

• for the first tranche: \$0.051 to \$0.070 per Option; $(a)$
• $(b)$ for the second tranche: \$0.034 to \$0.046 per Option; and
• $(c)$ for the third tranche: \$0.017 to \$0.023 per Option.

Directors' Recommendation

The Directors (other than Mr Comb) do not have an interest in the Resolution. They believe that the issue of these Options to Mr Comb will be beneficial to the Company and recommend that shareholders vote in favour of Resolution 4.

TANAMI GOLD NL
ABN 51 000 617 176

4. GLOSSARY

ASIC	Australian Securities and Investments Commission.
ASX	Australian Stock Exchange.
Board	board of Directors.
Company	Tanami Gold NL (ABN 51 000 617 176)
Constitution	constitution of the Company.
Corporations Act	Corporations Act 2001 (Cth).
Director	director of the Company.
Listing Rules	ASX Listing Rules.
Option	option to acquire a Share.
Share	fully paid ordinary share in the capital of the Company.
Shareholder	holder of a Share.

TANAMI GOLD NL ABN 51 000 617 176

Annexure A

Terms and Conditions of Options to Mr Comb (Resolution 4)

• $\mathbf{1}$ In consideration of the continued services of the Optionholder, the Company hereby grants to the Optionholder 1,500,000 options to each subscribe for one ordinary fully paid share in the capital of the Company ("Share") subject to these terms and conditions ("Option"). The Options may only be exercised in three tranches of 500,000 Options each upon the attainment of a volume weighted average share price on ASX of equal or greater than \$0.20, \$0.30 and \$0.45 respectively for 5 consecutive trading days.
• $\overline{2}$ A certificate will be issued for the Options.
• 3 The Options shall expire on the earliest of the relevant dates set out below ("Expiry Date"):
• (a) 6 months from the date on which the Optionholder's appointment with the Company is terminated, for any reason;
• (b) 18 months (or such later date as the Company's Board determines in its sole discretion) after a person or corporation:
  • makes a takeover bid (as defined in the Corporations Act) to acquire any Share and the takeover bid extends to Shares issued and allotted after the date of the takeover bid; and
  • (ii) becomes entitled to proceed to compulsory acquisition of the Shares pursuant to section 661 of the Corporations Act. In such event, the Company shall notify (in writing) the Optionholder of the Expiry Date as soon as possible after the Company becomes aware that the person or corporation has become entitled to proceed to compulsory acquisition;
• (c) 18 months (or such later date as the Company's Board determines in its sole discretion) after the Company convenes a meeting of shareholders in order to enter into a scheme of arrangement (pursuant to the provisions of the Corporations Act) which, if implemented would result in a person or corporation becoming entitled to not less than 90% of the Shares. In such an event, the Company shall notify (in writing) the Optionholder of the Expiry Date as soon as practicable after the Company convenes the aforementioned meeting; and
• (d) 5 years from the date of grant of the Options.
• $\overline{4}$ Each Option shall carry the right in favour of the Optionholder to subscribe for one Share.
• $\overline{5}$ Shares allotted to Optionholders on exercise of Options shall be issued at an exercise price of \$0.20 cents per Share ("Exercise Price").
• The Exercise Price of Shares the subject of the Options shall be payable in full on exercise of the 6 Options.
• $\overline{7}$ Subject to clause 1, Options shall be exercisable at any time up to and including the Expiry Date by the delivery to the registered office of the Company of a notice in writing stating the intention of the Optionholder to:
• $(a)$ exercise all or a specified number of Options; and
• pay the Exercise Price by way of subscription monies in full for the exercise of each Option. $(b)$

The notice must be accompanied by the Option certificate and a cheque made payable to the Company for the subscription monies for the Shares. An exercise of only some Options shall not affect the rights of the Optionholder to the balance of the Options held by them.

8 The Company shall allot the resultant Shares and deliver the share certificates or uncertificated holding statement within 5 business days of the exercise of the Options.

TANAMI GOLD NL ABN 51 000 617 176

• 9 Options shall not be listed for Official Quotation on Australian Stock Exchange Limited ("ASX").
• $10$ The Options shall not be transferable.
• 11 Shares allotted pursuant to an exercise of Options shall rank from the date of allotment, equally with existing Shares in all respects.
• 12 The Company shall, in accordance with the Listing Rates of ASX, make application to have Shares allotted pursuant to an exercise of Options listed for Official Quotation on ASX.
• 13 In the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the Optionholder shall be reconstructed in accordance with the Listing Rules of ASX.
• 14 Subject to clause 13, the Optionholder shall have no right to a change in the exercise price of an Option or a change to the number of Shares over which an Option can be exercised.
• 15 There are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new issues of securities offered to Shareholders of the Company during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 9 business days after the issue is announced so as to give holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.
• If, from time to time, before the expiry of the Options the Company makes a pro rata issue of Shares to 16 the holders of ordinary Shares for no consideration ("bonus issue"), the number of Shares over which an Option is exercisable will be increased by the number of Shares which the holder would have received if the Option had been exercised before the date for calculating entitlements to the bonus issue.

(Name of member or members)

$\alpha f$

(Address of member or members)

(the 'Member'), a member of TANAMI GOLD NL (ABN 51 000 617 176), appoints

(Name of Proxy)
Ωf
(Address of Proxy)

TANAMI GOLD NL ABN 51 000 617 176 PROXY FORM

or, failing that person, the Chairman of the meeting as the Member's proxy to vote for the Member and on the Member's behalf at the General Meeting of the Company to be held on Thursday, 27 November 2003 at The Celtic Club, 48 Ord Street, West Perth, Western Australia, commencing at 11.00 am and at any adjournment of that meeting.

The proxy is directed to vote in the following manner:		FOR	AGAINST	ABSTAIN
Resolution
2.	Re-election of Director - G. E. Comb
3.	Approval of issue of shares
4.	Approval of grant of options to Mr G. E. Comb

Shareholders should note the voting restrictions set out in the notes attached to the Notice of Meeting. A mark should be placed in the appropriate box if the Member wishes to direct the proxy to vote in a specified way in relation to the above resolutions. If no direction is given, the proxy may vote or not as the proxy sees fit. The Chairman intends to vote for each resolution in the case of undirected proxies.

$\Box$

If you do not wish to direct your proxy how to vote, please place a mark in the box. By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

This form must be signed by the Member or by an attorney of the Member (in the case of a body corporate, the proxy form must be executed in accordance with section 127 of the Corporations Act 2001. In the case of a Sole Director/Secretary company, please indicate "Sole Director".).

Signature of Member	Signature of Member
SIGNED for and on behalf of
by its duly appointed attorney in the presence of:
Witness	Attorney
Name (printed):	Name (printed):
	Date of Power of Attorney:
THE COMMON SEAL of
was affixed in the presence of, and the sealing is attested to by
Director	Secretary
Name (printed):	Name (printed):