TESORO GOLD LTD — M&A Activity 2013

Aug 18, 2013

CONTINUATION INVESTMENTS LIMITED

19 August 2013

Manager of Company Announcements ASX Limited Level 8 Exchange Plaza 2 The Esplanade PERTH WA 6000

By E-Lodgement

UNSOLICITED TAKEOVER OFFER

On 12[th] August 2013, DMX Corporation Limited ( DMX ) announced an unsolicited and conditional proportional takeover offer to acquire 2 out of every 3 shares held by each Continuation Investments Limited ( COT ) shareholder ( Takeover Offer ).

The offer price is either 7 cents cash per COT share ( Cash Alternative ) or 5.83 DMX shares per COT share ( Scrip Alternative ) ( Offer Price). The last closing price of COT’s shares prior to the date of this announcement was 7 cents on 14 August 2013. In the past 3 months prior to the date of this announcement, COT’s shares have traded as high as 7.5 cents, higher than the Cash Alternative offered by DMX for control of COT.

COT was made aware of the Takeover Offer minutes before the documentation was uploaded on the ASX electronic announcement platform.

The Board of COT immediately advised that it would review the Takeover Offer documentation and urged shareholders not to take any action in relation to the Takeover Offer.

In accordance with the Corporations Act, COT will release a Target Statement which responds to the Takeover Offer. The Board expects to release this within 15 days after COT receives notice from DMX that the Takeover Offer has been sent to COT shareholders.

Overall, the Takeover Offer, conveniently structured as a proportional bid, is an obvious and opportunistic attempt to acquire control of COT without paying the competitive price which would typically be paid for a control transaction of this nature.

The directors of COT confirm that they WILL REJECT the Takeover Offer. The Board of Directors control shareholdings representing approximately 17.5% of COT’s issued and voting share capital as at 12 August 2013.

______________ Continuation Investments Limited 945 Wellington Street WEST PERTH WA 6005 ABN 91 106 854 175 phone: (08) 9322 7600 fax: (08) 9322 7602 email: reception@grangeconsulting.com.au

CONTINUATION INVESTMENTS LIMITED

Prior to release of COT’s target’s statement, the COT Board continues to recommend to shareholders to TAKE NO ACTION in respect of their shareholding in COT and the Takeover Offer due to COT’s significant concerns with the terms of the offer.

COT’s concerns with the Takeover Offer

1. COT has serious concerns that the bidder’s statement issued by DMX in relation to the Takeover Offer is defective, contains potentially misleading statements and information and is deficient in certain respects. If left unresolved by DMX, COT will detail these concerns in its Target Statement.

2. The Takeover Offer is a proportional takeover offer only . Unless you hold less than a marketable parcel of COT shares, DMX is only offering to acquire two thirds of your shareholding in COT. This means that if the Takeover Offer is successful, you will remain a minority shareholder of COT, unless you sell the balance of your COT shareholding to a third party.

3. DMX currently has no operating business . DMX’s securities have been suspended from trading on the ASX for over 12 months. As a result, there is currently extremely poor liquidity in DMX’s securities, with the last recorded off-market transfer of DMX shares occurring in February 2013, approximately 6 months ago. Any COT shareholder who accepts the Takeover Offer and acquires DMX shares under the Scrip Alternative would share the current risk of extremely poor liquidity.

4. Although DMX has indicated its intention to seek reinstatement of its securities to trading on ASX, there is no guarantee that it will achieve reinstatement and the Takeover Offer is not conditional upon DMX’s reinstatement . Further, in order to achieve reinstatement of its securities to trading on ASX, it is highly likely that DMX will have to raise equity capital at 20 cents per DMX share. This exposes COT shareholders who choose to accept the Scrip Alternative to the risk that their DMX shareholding will be heavily consolidated.

5. The Takeover Offer has a number of conditions, including that a majority of COT’s directors are appointed by DMX and a very low minimum acceptance condition of 30%.

6. By setting a low minimum acceptance condition (30%) and seeking Board and therefore operational control, DMX is, in effect, seeking to acquire control of COT for considerably lower consideration than that which a bidder would typically be expected

______________ Continuation Investments Limited 945 Wellington Street WEST PERTH WA 6005 ABN 91 106 854 175 phone: (08) 9322 7600 fax: (08) 9322 7602 email: reception@grangeconsulting.com.au

CONTINUATION INVESTMENTS LIMITED

to pay in a public markets control transaction. Further, DMX has not offered COT shareholders any premium for control under the Takeover Offer.

1. The Cash Alternative represents more than a 20% discount to the net tangible asset ( NTA ) backing of a COT share as at 30[th] June 2013, as advised to ASX on 15[th] July 2013.

2. As mentioned above, DMX’s shares have been suspended from trading on the ASX for more than 12 months . The Takeover Offer documentation provides no explanation as to why DMX’s stock is suspended and no insight as to if or when its shares will be reinstated to trading again on the ASX.

3. DMX’s Preliminary Final Report lodged with ASX on 9[th] August 2013 for the 12 months ended 30 June 2013 shows a NTA backing per ordinary DMX share of 0.95 cents. DMX has priced its shares under the Takeover Offer and proposed DMX capital raising at 1.2 cents per DMX share, a 26% premium to its NTA as at 30 June 2013.

4. DMX has provided no evidence that it is capable of completing a capital raising at 1.2 cents per DMX share. The successful completion of that capital raising appears a critical condition for the reinstatement of DMX securities on ASX.

5. COT has approximately $22 million of carry-forward tax losses which may be available to it. Assuming a tax rate of 30%, such losses are worth approximately $0.33 per COT share to the extent that they can be fully utilised against future earnings. The Takeover Offer ascribes zero value to these tax losses.

6. Unlike DMX which is suspended, COT’s securities are freely tradable on ASX. The Takeover Offer ascribes zero value to the Company’s ongoing status as a trading, ASXlisted company.

7. DMX does not wish to pursue a 100% takeover of COT as it sees value in COT’s ‘listed investment entity’ status under the ASX listing rules, which would be lost if DMX obtained control of 100% of COT. However, DMX has not outlined any plans, experience or capacity and expertise to raise any additional capital for COT in order to execute its investment strategy.

8. DMX claims that, if it is successful in achieving operational control of COT, it intends to run the business of COT along similar lines to DMX’s business. DMX has no operating business and has remained suspended from trading for over 12 months, yet is

______________ Continuation Investments Limited 945 Wellington Street WEST PERTH WA 6005 ABN 91 106 854 175 phone: (08) 9322 7600 fax: (08) 9322 7602 email: reception@grangeconsulting.com.au

CONTINUATION INVESTMENTS LIMITED

proposing to use the same management team responsible for DMX’s current state of affairs to manage COT in the future.

1. DMX’s statements of intentions for COT and its investment strategy are vague, conditional, and unsubstantiated .

2. The Scrip Alternative of the Takeover Offer does not extend to overseas shareholders and the Takeover Offer does not extend to COT option holders and is therefore prejudicial to both security holders’ interests.

Recent Background and Activities

The current COT Board has a strong mix of mining, finance and commercial skills and is diligently applying those skills to broaden the investments of COT.

Mr Jeremy King and Mr Andrew Worland were appointed to the COT Board in March 2012. Mr David Church was appointed in April 2013.

COT initiated a share split and a rights issue to create additional liquidity in the Company’s stock, allowing shareholders a greater opportunity to commercialise their investment in COT and provide additional working capital to the Company. This process, which successfully raised the full rights issue amount of $701,131, was completed in August 2012.

The directors of COT have clearly and regularly described to investors their ongoing review of the core business activities of COT, which may lead to a change of focus in the nature of investments undertaken by COT. In the meantime, the directors have successfully managed COT to ensure it continues to operate efficiently and is able to meet its listed investment company obligations under the ASX listing rules.

Over the past 12 months, in parallel with restructuring and improving COT’s capital structure, the Board has assessed a significant number of natural resource investment opportunities in the USA, Canada, Brazil, West Africa, South Africa, Asia and Australia in energy minerals, precious and base metals and bulk commodities. Each of these opportunities has been identified on the basis of scale, prospectivity and ability to deliver sustained share price appreciation for COT. In addition, through its extensive financing and mining network, COT has also reviewed the potential to provide financing for development stage mining properties. It continues to actively assess this opportunity which would be consistent with its status as a listed investment company.

However, overall, the Board of COT has taken a cautious approach to new investments given continued heightened market volatility both domestically and abroad, a strategy which in the Board’s view has been justified as values across most asset classes have generally deteriorated.

______________ Continuation Investments Limited 945 Wellington Street WEST PERTH WA 6005 ABN 91 106 854 175 phone: (08) 9322 7600 fax: (08) 9322 7602 email: reception@grangeconsulting.com.au

CONTINUATION INVESTMENTS LIMITED

While COT has assessed a large number of opportunities and prospects, it has managed to do so at minimal due diligence cost, due to the extensive network of contacts within the professional investment and mining community that the Board brings to bear. The directors of COT continue to operate the Company on as little cash expenditure as is prudently possible. Mr King has not drawn director fees since November 2012. Mr Church has not drawn director fees since his appointment to the Board in April 2013. Mr Worland held a full time executive position with COT between 1 January 2013 and 30 April 2013 in an effort to fast track the Company’s investment efforts. Mr Worland voluntarily terminated his own services agreement effective 30 April 2013 to ensure tight cost control within COT and has not drawn a salary or received director fees since.

In short, COT enjoys a healthy balance sheet, a low cost structure and a Board with the local and international credentials to create significant shareholder value going forward at a time when the Company continues to be exposed to a number of potentially exciting investment opportunities.

The Board looks forward to continuing to work to deliver significant value to its shareholders.

For and on Behalf of the Board

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Jeremy King Director

______________ Continuation Investments Limited 945 Wellington Street WEST PERTH WA 6005 ABN 91 106 854 175 phone: (08) 9322 7600 fax: (08) 9322 7602 email: reception@grangeconsulting.com.au