TITANIUM SANDS LIMITED — AGM Information 2004

Oct 25, 2004

Precious Metals Australia Limited

NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY STATEMENT

Meeting to be held on 29 November 2004 at 10:00am at Level 2, 47 Colin Street, West Perth, Western Australia

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of shareholders of Precious Metals Australia Limited (Company) for the year to 30 June 2004 will be held at Level 2, 47 Colin Street, West Perth, Western Australia at 10:00 am (Western Standard Time) on 29 November 2004 to consider and, if thought fit, to pass the following resolutions referred to in this notice and explained in the accompanying Explanatory Statement.

ORDINARY BUSINESS

$\mathbf{L}$ Financial Reports

To receive and consider the financial reports for the year ended 30 June 2004 and the directors' and auditor's reports.

2. Election of Mr Michael Fry as a director of the Company

Resolution $1 - To consider, and if thought fit, pass the following resolution as an ordinary resolution:$

Mr Michael Fry, being a director of the Company who retires pursuant to Article 13.3 of the Company's Constitution, and being eligible, is re-elected as a director of the Company.

3. Election of Mr Roderick Smith as a director of the Company

Resolution $2 - To consider, and if thought fit, pass the following resolution as an ordinary resolution:$

Mr Roderick Smith, being a director of the Company appointed since the last general meeting, retires pursuant to Article 13.6 of the Company's Constitution and being eligible, is re-elected as a director of the Company.

SPECIAL BUSINESS

$\mathbf{4}$ . Resolution 3 - Adoption of new Constitution

To consider and, if thought fit, pass (with or without amendment) the following resolution as a special resolution:

"That, for the purposes of section 136 of the Corporations Act 2001 and for all other purposes, the regulations contained in the document tabled at the Meeting and signed by the Chairman for identification purposes be approved and adopted as the new Constitution of the Company (with effect immediately upon this resolution being passed) in substitution for, and to the exclusion of, the existing Constitution of the Company."

$\overline{\mathbf{5}}$ . Resolution 4 – Grant of options to Michael Fry

To consider and, if thought fit, to pass with or without amendment, the following resolution as an ordinary resolution:

"That, pursuant to and in accordance with Listing Rule 10.11 of the Listing Rules of Australian Stock Exchange Limited and section 208 of the Corporations Act, the Company approve and authorize the grant of issue of up to 500,000 options for no consideration at an exercise price of $$0.15$ , expiring three years from the date of grant, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting (including Annexure A to the Explanatory Memorandum) to Michael Fry or his nominees.'

Voting exclusion statement

In relation to Resolution 4, pursuant of the Official Listing Rules of the Australian Stock Exchange, the Company will disregard any votes cast on this resolution by Mr Michael Fry or his associates.

The Company however need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form: or
• it is east by the chairperson of the meeting as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.

Resolution 5 – Grant of options to Ian Macpherson 6.

"That, pursuant to and in accordance with Listing Rule 10.11 of the Listing Rules of Australian Stock Exchange Limited and section 208 of the Corporations Act, the Company approve and authorize the grant of issue of up to 500,000 options for no consideration, an exercise price of \$0.15, expiring three years from the date of grant, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting (including Annexure A to the Explanatory Memorandum) to Ian Macpherson or his nominees."

Voting exclusion statement

In relation to Resolution 5, pursuant of the Official Listing Rules of the Australian Stock Exchange, the Company will disregard any votes cast on this resolution by Mr Ian Macpherson or his associates.

The Company however need not disregard a vote if:

• it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form: or
• it is east by the chairperson of the meeting as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.

By Order of the Board

Ian Macpherson Company Secretary

Dated this 14 day of October, 2004

EXPLANATORY STATEMENT

1. GENERAL INFORMATION

This Explanatory Statement has been prepared to assist shareholders with their consideration of the Resolutions to be put to the Annual General Meeting to be held at 10:00am on 29 November 2004. This Explanatory Memorandum should be read with, and forms part of the accompanying Notice of Meeting.

APPOINTMENT OF DIRECTORS - RESOLUTIONS 1 & 2 $2^{\circ}$

Section 201G of the Corporations Act provides that a company may appoint a person as a director by resolution passed in general meeting.

Clause 13.2 of the Company's constitution provides that the Company shall at all times have at least three directors and that the number of directors shall not exceed nine. The Company currently has four (4) directors comprising the Earl of Warwick as Chairman, Mr Roderick Smith as Chief Executive Officer, Michael Fry and Ian Macpherson.

Mr Fry is retiring by rotation in accordance with Article 13.3 of the Company's Constitution. Mr Smith, who was appointed since the last general meeting, now stands for election by members in accordance with Article 13.6.

As set out in the Company's Annual Report and, as most members are aware, Mr Smith was previously Chief Executive Officer of the Company.

Mr Smith's knowledge and detailed understanding of the vanadium industry and the Company's main undertaking, being a 15% net profit interest in the Windimurra Vanadium project, is well known and documented. He has rejoined the Board once again to provide executive management but more specifically to manage the process and action that the Company has commenced against former joint venture partner, Xstrata (Windimurra) Pty Ltd, following Xstrata's decision and announcement of their intent to permanently close the Windimurra operation..

ADOPTION OF NEW CONSTITUTION - RESOLUTION 3 $\mathbf{3}$ .

This resolution ensures that the Constitution is consistent with the requirements of the Listing Rules and recent amendments to the Corporations Act, and is put to shareholders for the purposes of section 136 of the Corporations Act (and for all other purposes).

A copy of the proposed Constitution will be sent to any Shareholder upon request and is available for inspection at the Company's registered office during normal business hours. The Constitution will also be available for inspection at the Meeting. Set out below is a summary of the material terms of the proposed Constitution. The summary is not exhaustive and does not constitute a definitive statement of all of the rights and obligations of Shareholders.

$3.1$ Transfer of Shares

The Company may participate (and presently does participate) in the electronic share registration and transfer system known as CHESS operated by ASX Settlement and Transfer Corporation Pty Ltd. The Company's participation in CHESS allows it to issue holding statements in lieu of share certificates. The Company will not charge any fee for registering a transfer of Shares. The Directors may refuse to register a transfer of Shares in the circumstances permitted by, or required under, the Corporations Act and the Listing Rules.

Alterations of Share Capital $3.2^{\circ}$

Shares may be converted or cancelled with shareholder approval and the Company's share capital may be reduced in accordance with the requirements of the Corporations Act and the Listing Rules.

$3.3$ Share Buy-Backs

Subject to the Corporations Act and the Listing Rules, the Company may buy back Shares on any terms and at any time determined by the Directors.

Preference Shares $3.4$

The Corporations Act requires that certain rights of preference shares either be set out in the constitution of the Company or be approved in general meeting by special resolution before preference shares are issued.

The proposed Constitution sets out a framework of rights for preference share issues from which the Board can determine to allot and issue preference shares without the need to obtain further shareholder approval every time an allotment of preference shares is proposed. The framework is contained in Schedule 1 of the Constitution and contains specific rights of a class of preference shares to the repayment of capital, participation in surplus assets and profits, voting rights and priority payment of capital and dividends.

At present, the Board has no intention of issuing preference shares but may do so in the future.

$3.5$ Liens

In the event that the Company issues partly paid shares and a call made on those shares is unpaid, the Company will have a lien over those shares which may be enforced by a sale of the shares.

3.6 Sale or Disposal of Unmarketable Parcels

The proposed Constitution permits the Company to procure the disposal of securities where a Shareholder holds less than a marketable parcel of securities within the meaning of the Listing Rules. To invoke this procedure, the Directors must first give notice to the relevant Shareholder that the Company intends to sell or dispose of his or her securities. The Shareholder may then elect not to have his or her securities sold by notifying the Company.

In addition, the Company also has the right to divest Shareholders of securities comprising less than a marketable parcel where that unmarketable parcel was created by a transfer on or after 1 September 1999 of a parcel of securities that was less than a marketable parcel at the time of the transfer. In these circumstances, the Company must give the relevant Shareholder a notice stating that the securities have been sold or disposed of and the proceeds of the sale or disposal (less any amounts due and unpaid in respect of the securities and the expenses of the sale or disposal) must be sent to the Shareholder after the sale. In addition, the Directors may resolve to remove or vary the rights of a Shareholder holding less than a marketable parcel to vote, or to receive dividends, in respect of some or all of the securities liable to be sold or disposed of, however, any dividends withheld in these circumstances must be paid to the relevant Shareholder following the sale or disposal (as the case may be).

At present, the Board has no intention of invoking this procedure but may do so in the future.

$3.7$ Variation of Class Rights

Class rights attaching to a particular class of Shares may be varied or cancelled by special resolution of the Company and with the consent in writing of Shareholders with at least 75% of the votes in that class or by special resolution passed at a meeting of the class of Shareholders holding Shares in that class.

3.8 Meetings of Shareholders

The Company may hold a general meeting of Shareholders in 2 or more places linked together by audio-visual communication devices or any other technology that gives the Shareholders as a whole in those places a reasonable opportunity to participate in the proceedings. Notices of meetings may be given to Shareholders in person, by post or by electronic means (ie, facsimile or email address) in accordance with the procedure prescribed by the Corporations Act from time to time.

If the Company is admitted to the Official List, the Company's auditor must attend the annual general meeting of the Company (AGM) at which the auditor's report for that financial year is considered, or be represented by a suitably qualified member of the audit team that conducted the audit and who is in a position to answer questions about the audit. Shareholders must be given a reasonable opportunity to ask the Company's auditor (or their representative) questions relevant to the conduct of the audit, the preparation and content of the auditor's report, the accounting policies adopted by the Company in relation to the preparation of the financial statements and the independence of the auditor in relation to the conduct of the audit. In addition, Shareholders may submit written questions to the auditor which are relevant to the content of the auditor's report to be considered at the AGM (or the conduct of the audit) within the time period and in the manner prescribed by the Corporations Act.

3.9 Proxies

A Shareholder who is entitled to attend and cast a vote at a meeting of Shareholders may appoint a proxy to attend and vote at the meeting on the Shareholder's behalf. The proposed Constitution contains provisions specifying the form and manner of lodgement of proxy instruments. An instrument appointing a proxy is valid and effective if it is signed, or otherwise authenticated in a manner prescribed by the Regulations, by the Shareholder making the appointment and the Company receives the appointment (and any authority under which the appointment was signed, or otherwise authenticated in a manner prescribed by the Regulations, or a certified copy of the authority) not less than 48 hours before the time scheduled for commencement of the relevant meeting of Shareholders (or any adjournment thereof).

3.10 Polls

The proposed Constitution provides that a poll on any resolution at a meeting of Shareholders (except a resolution relating to the election of a chairperson of that meeting or the adjournment of that meeting) may be demanded by at least 5 Shareholders present and entitled to vote on the resolution or Shareholders with at least 5% of the votes that may be cast on the resolution on a poll.

3.11 Appointment and Removal of Directors

Unless altered by the Company in general meeting, the minimum number of Directors is 3 and the maximum is 10. The existing Directors may appoint a new Director to fill a casual vacancy or as an addition to the Board. Any such Director must retire at the next general meeting of the Company (at which time he or she may be eligible for re-election as a Director). The Company, in general meeting, may also appoint a Director. No Director other than the Managing Director may hold office for longer than 3 years without submitting himself or herself for re-election.

For a person to be eligible for election as a Director (who is not retiring as a Director in accordance with the proposed Constitution), a nomination for the office of Director and the written consent of the proposed Director must be received by the Company at least 35 Business Days (in the case of a meeting called or requested to be called by Shareholders, 30 Business Days) before the date of a general meeting of Shareholders at which Directors may be elected.

3.12 Remuneration of Directors

Subject to the Corporations Act and the Listing Rules, the Company may pay to the Directors a maximum total amount of Directors' fees (excluding salaries and other employee benefits) determined by the Company in general meeting or, until so determined, as the Directors resolve. The Directors may also determine the manner in which the Directors' fees are divided between the Directors, and until so determined, the amount must be divided between the Directors equally.

In addition, the Company must pay all reasonable travelling, accommodation and other expenses properly incurred by the Directors in attending Board meetings. Shareholders' meetings and otherwise in connection with the business of the Company.

3.13 ASX Listing Rules

If the Company is admitted to the Official List, the Company will be bound by the Listing Rules regardless of any other provisions contained in the proposed Constitution.

4. GRANT OF OPTIONS TO DIRECTORS

Resolutions $4 & 5 - Grant Of Options To Directors$

Shareholder approval is being sought in Resolutions 4 and 5 to grant a total of 1,000,000 Options to Directors of the Company or their respective Nominees.

The grant of Options is designed to reward recipients for service provided at what the Board considers below industry rates, to encourage them to have a greater involvement in the achievement of the Company's objectives and to provide an incentive to strive to that end by participating in the growth and prosperity of the Company through share ownership. The options may not be exercised within a six month period.

Under the Company's current circumstances the Directors consider that the incentives to the parties noted above, represented by the issue of these options, are a cost effective and efficient reward incentive for the Company, as apposed to alternative forms of incentive, such as the payment of additional cash compensation to the Directors.

Related Party Transactions Generally

Chapter 2 E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:

• The giving of the financial benefit falls within one of the nominated exceptions to the provision; or $1.$
• $2.$ Prior shareholder approval is obtained to the giving of the financial benefit.

Current Holdings

	Direct holdings		Indirect holdings
Director	Shares	Options	Shares	Options
Michael Fry	100,000
Ian Macpherson

Information Requirements

For the purposes of Chapter 2E, each of the Directors are considered to be related parties of the Company.

Resolutions 4 and 5 provide for the grant of Options to the Directors of the Company which is a financial benefit which requires shareholder approval.

For the purposes of Chapter 2E of the Corporations Act the following information is provided.

The related party to whom the proposed resolution would permit the financial benefit to be given:

Subject to shareholder approval the following maximum number of Options will be granted to the following related parties or their respective nominees:

Name of Related Party	Number of Options
Michael Fry	500,000
Ian Macpherson	500,000
Total	1,000,000

Each of the 1,000,000 Options to be granted to the Directors will have an exercise price of 15 cents being 100% above the weighted average closing share price on the ASX over the 5 trading days preceding the date of the Notice of Meeting.

Each of the Directors are related parties of the Company.

The Nature of the financial benefit

The proposed financial benefit to be given is the grant of Options for no consideration to the Directors as noted above. The terms and conditions of the Options to be granted to the Directors are set out in Annexure A to this Explanatory Memorandum.

Directors Recommendations

Notwithstanding that the proposed grant of options to Non-executive directors is not strictly in accordance with the recommended Corporate Governance Guidelines, more particularly recommendation 9.3, both the Chairman, Earl of Warwick and Roderick Smith recommend that shareholders vote in favour of Resolutions 4 and 5. It is their view that the issue of options is a cost effective reward for effort. The Company does not have a large surplus of cash and, accordingly, is managing the cash reserves carefully. In addition the proposed grant of options recognises the fact that non-executives are more directly involved in the day to day decision making processes as a result of the scale of the company's operations and reduced personnel numbers.

The quantum of options has been determined based on the assessment of underlying value being \$10,000 for each of Messrs Fry and Macpherson, which in the view of the non-participating Directors aligns the total remuneration for the non-executive Directors with the market. Messrs Fry and Macpherson decline to make a recommendation about Resolutions 4 and 5 as they have a material personal interest in the outcome of the respective resolutions as they relate to the proposed issue of Options to them individually.

Other information that is reasonable required by members to make a decision and that is known to the Company or any of its Directors.

The proposed ordinary Resolutions 4 and 5 would have the effect of giving power to the Directors to grant up to 1,000,000 Options on the terms and conditions as set out in Annexure A to this Explanatory Memorandum and as otherwise mentioned above. The Company presently has 32,997,713 issued shares, 12,896,334 listed options.

If any Options granted, as proposed above, are exercised (exercisable at 15 cents) the effect would be to dilute the share holding of existing shareholders by 3% on an undiluted basis (2% on a diluted basis). The market price of the Company's shares during the period of the options will normally determine whether or not option holders exercise the options. At the time any options are exercised and shares are issued pursuant to the exercise of the options, the Company's ordinary shares may be trading at a price which is higher than the exercise price of the options.

The Director's base salaries per annum (including superannuation) and the total financial benefit to be received by them in this current period as a result of the grant of Options the subject of Resolutions 4 and 5 are as follows:

Director	Description	$(S)$ p.a	Options (\$)	Total Financial Benefit (\$)
Michael Fry	Non Exec. fees	15,000	10,000	25,000
Ian Macpherson	Non Exec. fees	15.000	10,000	25.000

Trading history

Over the last eight months since requotation of its securities on the ASX the Company's shares have traded between 5 cents per share (lowest) and 27.5 cents per share (highest) on limited volume. The latest trading price available at the time of preparing this notice of meeting was 7.8 cents per share.

Valuation of Options

The Company's advisers have valued the Options to be granted to the Directors using the Black-Scholes Option Pricing Model ("BSModel"), which is the most widely used and recognized model for pricing options. The acceptance of this model is due to its derivation being grounded in economic theory. The value of an option calculated by the BSModel is a function of a number of variables, their assessment of the value of the Options has been prepared using the following assumptions:

Variable	Input
Share Price	9 cents
Exercise price of Directors' Options	15 cents
Risk Free Interest Rate	5.25 $%$
Volatility	50.00%
$\sqrt{\text{Time (years)}}$ to expiry	3 years

For the purposes of this valuation the Company's advisers have assumed 30 November 2004 as the issue date of the Options. For the share price, the advisers have assumed 9 cents, as this represents the most recent average price of the Company's shares and is considered by the advisers to be a fair value for the shares. The advisers have also assumed a volatility level of 50% given the industry in which the Company operates its financial position and the volatility of listed shares of other companies comparable to Precious Metals Australia. Based on the assumptions and advice from the Company's advisers, it is considered that the estimated value of Options to be issued to the Directors is 2 cents each, or \$10,000 in total.

Listing Rule 10.11

Listing Rule 10.11 provides that a Company may not issue securities to a related party unless it has the approval of holders of ordinary securities. Approval given under Listing Rule 10.11 does not require approval to be given under Listing Rule 7.1.

Additional Information

For the purposes of Listing Rule 10.13, the following information is provided to shareholders:

• The Options will be granted to each of the Directors, as noted above;
• The maximum number of Options to be issued is 1,000,000;
• The Options will be granted on a date which will be no later than one month after the date of this Annual General Meeting;
• The Options will be granted for no consideration;
• No funds will be raised by the grant of the options; and
• The terms and conditions of the options are set out in Annexure A to this Explanatory Memorandum. The options may not be exercised within the first six months of their term, unless a takeover bid is made for the Company or a scheme or arrangement is put to the shareholders or unless otherwise approved by shareholders.

5. GLOSSARY

In this Explanatory Statement, unless the context otherwise requires:

ASX means Australian Stock Exchange Limited (ABN 98 008 624 691).

Board means the board of Directors as constituted from time to time.

Business Day has the meaning given by Chapter 19 of the Listing Rules.

Company means Precious Metals Australia Limited (ACN 009 131 533).

Constitution means the constitution of the Company as amended from time to time.

Corporations Act means the Corporations Act 2001.

Directors means the directors of the Company from time to time and Director means any one of them.

Listing Rules means the listing rules of ASX and any other rules of ASX which are applicable while the Company is admitted to the Official List, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

Meeting means the meeting convened by the Notice of Annual General Meeting which this Explanatory Statement accompanies and forms part of.

Official List means the official list of entities that ASX has admitted and not removed.

Official Quotation means official quotation of the Company's securities on ASX.

Option means a free option to acquire a Share, the terms of which are set out in Section 4 of the Explanatory Statement.

Regulations means the Corporations Regulations 2001.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

ANNEXURE A

TERMS AND CONDITIONS OF OPTIONS

• $\mathbf{1}$ . Each Option entitles the registered Option holder to subscribe for and be allotted one ordinary Share in the capital of the Company, credited as fully paid, at an exercise price of \$0.15 per share ("Exercise Price") on or before 3 years from the date of grant of the Options ("Expiry Date").
• $\overline{2}$ . The Options will be issued for no consideration.
• $\mathcal{E}$ The Options will not be quoted on the ASX.
• $\overline{4}$ . The Options are not transferable.
• $5.$ The Company must, as soon as it is reasonably practicable to do so, allot shares on exercise of the Options in accordance with the Listing Rules ("Listing Rules") of the Australian Stock Exchange Limited ("ASX") and register the Option holder or his nominee as a shareholder in the register of members in respect of the Shares so allotted. No Option may be exercised if to do so would contravene the Corporations Act or the Listing Rules.
• 1. The Company must apply to the ASX for official quotation of the Shares issued on any exercise of an Option.
• $7.$ Shares issued on the exercise of Options will rank pari passu with all existing ordinary Shares in the capital of the Company from the date of issue and will be entitled to each dividend for which the books closing date for determining entitlements falls after the date of issue.
• 1. An option is exercisable by the registered Option holder lodging the notice of exercise of Option in the form set out below together with, subject to the Option terms, the Exercise Price for each Share to be issued on exercise and the relevant Option certificate, at any office of the Company's share registrar. The exercise of some Options only does not affect the registered Option holder's right to exercise other Options at a later time. Remittances must be made payable to the Company and cheques should be crossed "not negotiable".
• $\overline{9}$ . $(a)$ Subject to paragraphs (b) and (c) below. Options may be exercised at any time in the period after 6 months from the date of grant of the Options and prior to 5:00pm on the Expiry Date. An Option not exercised by 5.00pm on the Expiry Date lapses. There is no obligation to exercise the Options.
• $(b)$ Options may be exercised within 6 months from the date of grant of the Options if a takeover bid (as defined in the Corporations Act) is made for the Company's securities, if a resolution to approve a scheme of arrangement in relation to the Company is put to the Shareholders, or if the exercise of Options is otherwise approved by the Board.
• In the event a Director in respect of whom the Options were granted (whether or not that $(c)$ Director is the holder of the Options) dies, retires or is removed from the Board for any reason more than 3 months prior to the Expiry Date, and the holder of the Options or his or her legal personal representative (as the case may be) does not exercise all the Options within 3 months of the date of death, resignation or removal of that Director, the Options granted in respect of that Director that have not been exercised at the end of that 3 months period shall be forfeited.

• $10.$ No exercise of an Option represented by an option certificate may be registered until that certificate is surrendered to the Company or the Option holder provides the Company with a statutory declaration, in a form satisfactory to the Company, to the effect that the certificate has been lost or destroyed and indemnifies the Company against any loss or damage if the original certificate is found. If the Option holder exercises less than all Options represented by a certificate then the Company will cancel the certificate and issue a new certificate for the balance.

• $11.$ There are no participating rights or entitlements inherent in the Options and holders will not be entitled to participate in new issues of capital offered or made to shareholders 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 10 business days after the issue is announced. This will give Option holders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

• $12.$ There will be no change to the Exercise Price of an option in the event of the Company making a pro rata issue of Shares or other securities to shareholders (other than a bonus issue).
• $13.$ If there is a bonus issue ("Bonus Issue") to shareholders, 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 record date for the Bonus Issue ("Bonus Shares"). The Bonus Shares must be paid up by the Company out of profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank equally in all respects with the other Shares on issue as at the date of issue of the Bonus Shares.
• $14.$ The rights of an Option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation. The Company must give notice to the Option holder of any adjustment to the number of Shares which the Option holder is entitled to subscribe for or be issued on exercise of the Option or the exercise price per Share in accordance with the Listing Rules.

PROXY FORM

APPOINTMENT OF PROXY PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

ANNUAL GENERAL MEETING

$I/We.$

being a Member of Precious Metals Australia Limited entitled to attend and vote at the Annual General Meeting, hereby

Appoint

(Name of proxy)

or failing the person so name or, if no person is named, the Chairman of the Meeting or the Chairman's nominee, to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the Annual General Meeting to be held at Level 2, 47 Colin Street, West Perth, Western Australia on 29 November 2004 at 10:00am (WST) and at any adjournment thereof. If no directions are given, the Chairman will vote in favour of all of the resolutions.

Voting on Business of the Annual General Meeting

	FOR	AGAINST	ABSTAIN
Resolution 1 - Appointment of Michael J Fry as director
Resolution 2 – Election of Roderick Smith as director
Resolution $3 -$ Adoption of new Constitution
Resolution 4 – Grant of Options to Mr Michael Fry
Resolution 5 – Grant of Options to Mr Ian Macpherson
0R
If you do not wish to direct your proxy how to vote, please place a mark in this box

By marking this box, you acknowledge that the Chairman may exercise your proxy. The Chairman will vote in favour of all of the resolutions if no directions are given.

If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item on a show of hands or on a poll and that your shares are not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is

Signed this

day of

2004

Bv: Individuals and joint holders

Companies (affix common seal if appropriate)

Instructions for Completing Appointment of "Proxy Form"

• $\mathbf{I}$ In accordance with Section 249L of the Corporations Act, a shareholder of the Company who is entitled to attend and cast two or more votes at an annual general meeting of shareholders is entitled to appoint two proxies. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.
• A duly appointed proxy need not be a member of the Company. In the case of joint holders, all $2¹$ must sign.
• $\overline{3}$ . Corporate shareholders should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common sel if the document is signed by:
• two directors of the company;
• a director and a company secretary of the company; or
• for a proprietary company that has a sole director who is also the sole company secretary $$ that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section $127(1)$ or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section $127(1)$ or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the Company must state that next to his or her signature.

• Completion of a Proxy Form will not prevent individual shareholders from attending the Annual $\overline{4}$ . General Meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the Meeting in person, then the proxy's authority to speak and vote for that shareholder is suspended while the shareholder is present at the Meeting.
• $5.$ Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.
• 1. In accordance with Section 250BA of the Corporations Act the Company specifies the following for the purposes of receipt of proxy appointments:

Registered Office:	2nd floor
	47 Colin Street
	West Perth WA 6005
Fax Number:	+61 8 9321 3523

To be valid, a proxy form (and any authority under which the proxy form is signed or a certified copy of the authority) must be received by the Company not less than 48 hours before the time scheduled for commencement of the Meeting.