TITANIUM SANDS LIMITED — AGM Information 2005

Oct 23, 2005

PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

PRECIOUS METALS AUSTRALIA LIMITED

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

INCORPORATING

EXPLANATORY STATEMENT

AND

PROXY FORMS

Date of Meeting 25^th November 2005

Time of Meeting 10.00am

Place of Meeting Ord Group $2^nd$ Floor 47 Colin Street WEST PERTH WA 6005

PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Shareholders of Precious Metals Australia Limited ACN 009 131 533 ("PMA" or "Company") will be held at Ord Group, Level 2, 47 Colin Street, West Perth WA 6005 on Friday 25th November 2005 at 10.00am for the purpose of transacting the following business.

An Explanatory Memorandum containing information in relation to the following Resolutions and a Proxy Form accompanies this Notice.

AGENDA

ORDINARY BUSINESS

To receive and consider the Financial Statements of the Company for the year ended 30 June 2005 together with the director's report and the Auditors report thereon.

RESOLUTION 1: ELECTION OF THE EARL OF WARWICK

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

"That the Earl of Warwick who retires pursuant to clause 9.3 of the Company's Constitution and, being eligible, offers himself for re election, be re-elected a director of the Company".

Short Explanation:

The constitution of the company requires that one third (rounded to the nearest whole number) of the directors must retire at each AGM on a rotational basis, commencing with the director who has served the longest.

RESOLUTION 2: REMUNERATION REPORT

To adopt the Remuneration Report for the year ended 30 June 2005.

Short Explanation: The note on this resolution is advisory only and does not bind the directors of the company.

SPECIAL BUSINESS

RESOLUTION 3 - RATIFICATION OF PREVIOUS ISSUE OF SECURITIES

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

"That, for the purpose of Rule 7.4 of the Listing Rules of the Australian Stock Exchange Limited and for all other purposes, the Shareholders ratify and approve the issue of 5,939,588 fully paid ordinary shares in the Company at 8.5 cents per share which were issued on 27 April 2005 on the terms and conditions set out in the Explanatory Statement attached to and forming part of this Notice of Meeting."

Short Explanation: An equity issue can be ratified by shareholders in accordance with ASX Listing Rule 7.4. This allows the Company the flexibility to issue shares and options to subscribe for fully paid shares in the future up to the threshold of 15% of its total ordinary securities in any 12 month period. Please refer to the Explanatory Statement for details.

Voting Exclusion Statement: The Company will disregard any votes cast on this resolution by any person who may have participated in the issue and any of their associates. However, the Company 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 cast by a person chairing the Meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

RESOLUTION 4: APPROVAL TO ESTABLISH AN EXECUTIVE AND EMPLOYEE SHARE OPTION PLAN

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

"That, pursuant to and in accordance with Rule 7.2, Exception 9 of the Listing Rules of Australian Stock Exchange Limited, the Company adopt and implement an Employee Share Option Plan for employees and directors to be known as "PMA Executive and Employee Share Option Plan" and all issues of securities under that plan on and subject to the terms and conditions as set out in the plan, a summary of which forms Annexure A to the Explanatory Memorandum accompanying this Notice of Meeting."

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 4 by a director of the Company (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any person associated with those persons. However, the Company 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 cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Who may Vote

For the purposes of regulation 7.11.37 of the Corporations Regulations, the Company determines that members holding ordinary shares as at 10:00am on 23 November 2005 will be entitled to attend and vote at the Annual General Meeting.

Proxies

• 1. A Shareholder of the Company entitled to attend and vote is entitled to appoint not more that two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the Shareholder's voting rights. If the Shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a Shareholder of the Company.
• 1. To be valid, a proxy form must be received by the Company by 10:00am on 23 November 2005 ("Proxy Deadline"). Proxies may be submitted:
• a) By hand delivery to the Company's registered office at Level 1, 30 Richardson Street., West Perth Western Australia 6005;or
• b) By post addressed to Precious Metals Australia Limited, C/o Advanced Share Registry PO Box 1156 Nedlands Western Australia 6009; or
• c) By facsimile at $(08)$ 9389 7871

A proxy appointment must be signed by the Shareholder or the Shareholder's attorney. Where the appointment is signed by the appointer's attorney, a certified copy of the authority, or the authority itself, must be lodged with the Company in one of the above ways by the Proxy Deadline. If facsimile transmission is used, the authority must be certified.

BY ORDER OF THE BOARD

IAN MACPHERSON Company Secretary

Date: 21st October 2005

PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the purposes of the ASX Listing Rules and the Corporations Act. The purpose of this Explanatory Memorandum is to provide Shareholders with all the information known to the Company that is material to Shareholders in deciding whether or not to approve the placement, and the establishment of the executive and employee option scheme.

The Directors recommend that Shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

Certain capitalised terms in this Explanatory Memorandum are defined in the Glossary.

RESOLUTION 1 - RE-ELECTION OF THE EARL OF WARWICK AS A DIRECTOR

Section 201G of the Corporations Act provides that a company may appoint a person as a director by resolution passed in general meeting. Rule 9.3 of the Company's constitution stipulates that "if the Company has more than 3 directors, one third of the directors (rounded down to the nearest whole number) shall retire at each annual general meeting"

The constitution of the Company further provides that the directors to retire under rule 9.3 shall be "those who have held their office over the longest period of time since their last appointment"

The Earl of Warwick is the director who has served the longest period of time since reelection.

The Earl of Warwick has been a director of the Company since 1999 and Chairman since 2001. The Earl has a wide range of business experience in the resources and property industries and business investment.

In accordance with Rule 9.3 (b) of the Company's constitution, the Earl of Warwick is eligible for re-election, and so offers himself for re-election as a Director

RESOLUTION 2 - REMUNERATION REPORT

The Board is voluntarily submitting its Remuneration Report to shareholders for consideration and adoption by way of non-binding resolution.

The Remuneration Report is set out in and forms part of the Director's Report contained in the Annual Report to Shareholders. The Report:

• explains the Board's policy for determining the nature and amount of remuneration of executive directors and senior executives of the Company;
• explains the Board's remuneration policy; and
• sets out remuneration details for each Director. $\blacksquare$

A reasonable opportunity will be provided for discussion of the Remuneration Report at the meeting.

The Board unanimously recommends that shareholders vote in favour of adopting the Remuneration Report.

RESOLUTION 3 - RATIFICATION OF PREVIOUS ISSUE OF SECURITIES

Resolution 3 seeks approval under Listing Rule 7.4 to ratify the issue of 5,939,588 ordinary shares for the purposes of Listing Rule 7.1, which provides generally that a company may not issue shares or options to subscribe for shares equal to more than 15% of the company's issued share capital in any 12 month period without subsequently obtaining shareholder approval.

Although the issue of 5,939,588 Shares does not exceed this amount, seeking approval under the Listing Rules allows the Company to issue a further 15% of its issued capital in future without reference to the shares issued under this resolution.

The details of the issue are:

• 5,939,588 ordinary shares were issued on 27 April 2005.
• $\bullet$ The issue price was 8.5 cents per share;
• The shares issued have the same conditions as existing ordinary fully paid issued shares in the Company;
• The shares were issued to a small number of international sophisticated investors
• The purpose of the placement was to raise funds of approximately \$504,865 to $\bullet$ provide working capital.

RESOLUTION 4 - EXECUTIVE AND EMPLOYEE SHARE OPTION PLAN

Shareholders of the Company approved the adoption of the PMA Employee Option Plan on 23 November 1994 ("Existing Plan"). There are currently no options on issue which have been issued pursuant to the Existing Plan. The Existing Plan is not compliant with ASIC Class Order 03/184 which provides conditional relief from disclosure and licensing provisions of the Corporations Act for certain offers of securities made to employees under an employee share scheme. The Directors wish to be able to issue options to employees in the future pursuant to a compliant employee share option plan and are therefore proposing the adoption of the new PMA Executive and Employee Share Option Plan. The Directors have resolved to cancel the Existing Plan and adopt the new plan.

The Directors consider it desirable to have an option plan in place under which executives and employees may be offered the opportunity to subscribe for options to acquire shares in the Company in order to increase the range of potential incentives available to them and to strengthen links between the Company and its employees.

The proposed PMA Executive and Employee Share Option Plan allows the Company to issue up to a maximum of 5% of its issued capital as free options to Eligible Persons, which

includes employees of PMA and its controlled entities. It is also intended that the options will be issued to new employees who may be appointed to PMA in the future. A copy of the PMA Executive and Employee Share Option Plan is attached to this Explanatory Memorandum as Annexure A.

The proposed Resolution 4 would have the effect of giving power to the Directors to grant 5% of the issued capital of the Company from time to time. Based on the number of shares issued at the date of this notice, being 64,536,833 this will enable Directors to grant up to 3,226,842 options pursuant to the terms and conditions of the PMA Executive and Employee Share Option Plan, over unissued shares in the Company.

If options granted pursuant to the PMA Executive and Employee Share Option Plan are exercised, the effect would be to increase the Company's cash reserves and dilute the shareholding of existing shareholders.

On 5^th October 2005 the Company announced its intention to issue 500,000 options each, to two key employees, Michael Drew (Chief Financial Officer) and Brett Foster (Windimurra Project Manager). These options are to be issued on the following basis;

Number	Issue Date	Exercise Price	Term
100,000	Completion of 3 months employment	\$1.30	5 years from issue
100,000	Completion of 6 months employment	\$1.40	5 years from issue
100,000	Completion of 9 months employment	\$1.75	5 years from issue
100,000	Completion of 12 months employment	\$2.00	5 years from issue
100,000	Completion of 15 months employment	\$2.25	5 years from issue

The above 1,000,000 options will be issued under the PMA Executive and Employee Share Option Plan, and not in addition to the number of options that can currently be issued under the Plan

To enable the Company to secure employees and directors who can assist the Company in achieving its objective to re develop the Windimurra Vanadium Mine, it is necessary to provide competitive remuneration and incentives to such personnel, particularly in a highly competitive labour market which the mining industry has been experiencing over the past few years.

The introduction of the Plan is designed to achieve this objective, by encouraging continued improvement in performance over time and by encouraging personnel to acquire and retain significant shareholdings in the company.

The Directors consider that the incentives to employees and consultants which are represented by the options are a cost effective and efficient incentive for the Company as opposed to alternative forms of incentive such as cash bonuses or increased remuneration.

The Directors do not consider that there are any opportunity costs to the Company or benefits foregone by the Company in granting the options under the PMA Executive and Employee Share Option Plan.

Prior shareholder approval will be required before any director or related party of the company can participate in the Plan.

Shareholder approval is sought for the purposes of Listing Rule 7.2 Exception 9(b) which provides that Listing Rule 7.1 does not apply to an issue of securities under an employee incentive scheme that has been approved by the holders of ordinary securities within 3 years of the date of issue.

In accordance with the requirements of Listing Rule 7.2 Exception 9(b), the following information is provided:

• (a) a full copy of the terms of the PMA Executive and Employee Share Option Plan is attached as Annexure A to the Notice of Meeting;
• (b) no securities have previously been issued under the plan;
• (c) a voting exclusion statement has been included for the purposes of Resolution 4.

GLOSSARY

"ASX" means Australian Stock Exchange Limited (ACN 008 624 691);

"Board" means the board of directors of the Company;

"Company" or "PMA" means Precious Metals Australia Limited ACN 009 131 533;

"Corporations Act" means the Corporations Act 2001 (Cth);

"Directors" means the directors of the Company;

"Explanatory Memorandum" means the explanatory memorandum accompanying the Notice:

"Notice" means the Notice of Meeting which accompany this Explanatory Memorandum;

"Shareholders" means holders of Shares in the Company; and

"Shares" means fully paid ordinary shares in the Company.

ANNEXURE A

PMA EXECUTIVE AND EMPLOYEE SHARE OPTION PLAN

PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

PRECIOUS METALS AUSTRALIA LIMITED

RULES OF EXECUTIVE AND EMPLOYEE SHARE OPTION PLAN

PRECIOUS METALS AUSTRALIA LIMITED ACN 009 131 533

RULES OF EXECUTIVE AND EMPLOYEE SHARE OPTION PLAN (adopted by the Board on 15 October 2005 subject to shareholder approval)

$\mathbf{1}$ . NAME OF PLAN

$1.1$ This Plan shall be called the PMA Executive and Employee Share Option Plan.

$2.$ ESTABLISHMENT AND TERMINATION OF THE PLAN

• The Board may establish and administer the Plan in accordance with the terms $2.1$ and conditions set out in these Rules and otherwise as it determines from time to time in its absolute discretion.
• $2.2$ The Board may terminate the Plan, or suspend its operation for any period it considers desirable, at any time that it considers appropriate.
• $2.3$ The Board may not issue any further Options after the Plan has been terminated. However, these Rules will continue to apply to Options on issue at the date of such termination until the last of those Options lapses or is exercised.

PURPOSE OF PLAN $\mathcal{R}$

• $3.1$ The purpose of this Plan is to:
• $(a)$ recognise the ongoing ability of the employees of the Company and their expected efforts and contribution in the long term to the performance and success of the Company;
• provide an incentive to the employees of the Company to remain in their $(b)$ employment in the long term;
• attract persons of experience and ability to employment with the $(c)$ Company and foster and promote loyalty between the Company and its employees; and
• provide employees of the Company with the opportunity to acquire $(d)$ Options, and ultimately Shares, in the Company, in accordance with these Rules.

OPERATION OF THE PLAN $\overline{4}$

• The Plan operates according to these Rules which bind the Company and each 4.1 Participant.
• 4.2 The number of Shares to be received on exercise of the Options the subject of an offer under the Plan when aggregated with:
• the number of Shares which would be issued were each outstanding offer $(a)$ or Option, being an offer made or Option acquired pursuant to the Plan or any other employee share scheme extended only to employees or Directors of the Company, exercised; and
• the number of Shares issued during the previous 5 years pursuant to the $(b)$ Plan or any other employee share scheme extended only to employees or Directors of the Company;

but disregarding any offer made, or Option acquired or Share issued by way of or as a result of:

• an offer under the Plan to a person situated at the time of receipt of the $(c)$ Offer outside Australia: or
• an offer under the Plan that did not need disclosure to investors because $(d)$ of section 708 of the Corporations Act; or
• an offer made under a disclosure document. $(e)$

must not exceed 5% of the total number of issued Shares as at the time of the offer under the Plan.

5. ELIGIBILITY

• $5.1$ Subject to these Rules, the Board may from time to time determine that any Eligible Person is entitled to participate in the Plan and the extent of that participation. Prior to making that determination, the Board must consider:
• the seniority of the relevant Eligible Person and the position the Eligible $(a)$ Person occupies within the Company;
• the length of service of the Eligible Person with the Company; $(b)$
• the record of employment of the Eligible Person with the Company; $(c)$
• $(d)$ the potential contribution of the Eligible Person to the growth of the Company;
• $(e)$ the extent (if any) of the existing participation of the Eligible Person (or any Permitted Nominee in relation to that Eligible Person) in the Plan; and
• any other matters which the Board considers relevant. $(f)$
• $5.2$ The Board may exercise its powers in relation to the participation of any Eligible Person on any number of occasions.

6. OFFER OF OPTIONS

• 6.1 Subject to these Rules and to the Listing Rules, the Company (acting through the Board) may offer Options to any Eligible Person at such times and on such terms as the Board considers appropriate. Each offer must state:
• the name and address of the Eligible Person to whom the offer is made; $(a)$
• $(b)$ that the Eligible Person to whom the offer is addressed may accept the whole or any lesser number of Options offered;
• the minimum number of Options and any multiple of such minimum or $(c)$ any other number which may be accepted;
• $(d)$ the period within which the offer may be accepted, and the period or periods during which the Options or any of them may be exercised and the Expiry Date;
• the method of calculation of the Exercise Price; and $(e)$
• any other matters which the Board may determine. $(f)$

ACCEPTING OFFERS $\overline{7}$ .

• $7.1$ Upon receipt of an offer of Options, an Eligible Person may, within the period specified in the offer:
• accept the whole or any lesser number of Options offered by giving to the $(a)$ Company an Application Form; or
• nominate a nominee in whose favour the Eligible Person wishes to $(b)$ renounce the offer by notice in writing to the Board. The Board may, in its absolute discretion, resolve not to allow such renunciation of an offer in favour of a nominee without giving any reason for such decision.

$7.2$ Upon:

• receipt of the Application Form referred to in paragraph 7.1(a); or $(a)$
• $(b)$ the Board resolving to allow a renunciation of an offer in favour of a nominee ("Permitted Nominee") and the Permitted Nominee accepting the whole or any lesser number of Options offered by giving the Company an Application Form.

then the Eligible Person or the Permitted Nominee, as the case may be, will be taken to have agreed to be bound by these Rules and will be granted Options subject to these Rules.

• 7.3 If Options are issued to a Permitted Nominee or an Eligible Person, the Eligible Person must, without limiting any provision in these Rules, ensure that the Permitted Nominee complies with these Rules.
• $7.4$ On the issue of Options following receipt by the Company of an Application Form, an Eligible Person or the Permitted Nominee, as the case may be, becomes a Participant.

8. NO CONSIDERATION

No consideration is payable by an Eligible Person for a grant of an Option, 8.1 unless the Board decides otherwise.

9. CERTIFICATES

• 9.1 The Company must give a Participant one or more Certificates stating:
• the number of Options issued to the Participant; $(a)$
• $(b)$ the Exercise Price of those Options; and
• $(c)$ the Issue Date of those Options.
• 9.2 The Certificates for the Options will be dispatched within 10 Business Days after the Issue Date.

10. QUOTATION

• The Company will not apply for Official Quotation of any Options. $10.1$
• 10.2 If shares of the same class as those allotted pursuant to the exercise of Options granted under the Plan are listed on the ASX, the Company must apply for Official Quotation of those Shares allotted pursuant to the exercise of Options within the time required by the Listing Rules after the date of allotment.

NOT TRANSFERABLE $11₁$

$11.1$ Subject to clause 14.5, Options are not transferable.

$12₁$ EXERCISE OF OPTIONS

• Subject to these Rules and the terms of the Options, Options may be exercised at $12.1$ any time during the period commencing on the Issue Date and ending on the Expiry Date.
• $12.2$ Notwithstanding paragraph 12.1, all Options may be exercised:
• during a Bid Period; or $(a)$
• $(b)$ at any time after a Change of Control Event has occurred; or
• $(c)$ on an application under section 411 of the Corporations Act, if a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.
• Options may only be exercised by the Participant giving notice in writing to the $12.3$ Board delivered to the registered office of the Company. The notice must specify the number of Options being exercised and the Exercise Price for the Options specified in the notice and must be accompanied by:
• $(a)$ the Certificate for those Options, for cancellation by the Company; and
• $(b)$ a cheque payable to the Company (or another form of payment acceptable to the Board) in the amount of the product of the number of Options then being exercised by the Participant and the Exercise Price.

The notice is only effective (and only becomes effective) when the Company has received value for the full amount referred to in paragraph (b).

• $12.4$ Subject to paragraph 14.1, within 10 Business Days after the notice referred to in clause 12.3 becoming effective, the Board must:
• allot and issue the number of Shares to be issued in respect of the Options $(a)$ being exercised;
• $(b)$ cancel the Certificate for the Options being exercised; and
• if applicable, issue a new Certificate for any remaining Options covered $(c)$ by the Certificate accompanying the notice.
• The Board may, at its discretion, by notice to the Participant reduce, waive or 12.5 vary (provided such variation is not adverse to the Participant) the Exercise Conditions attaching to Options in whole or in part at any time and in any particular case.

SHARES ALLOTTED ON EXERCISE OF OPTIONS 13.

• All Shares allotted upon exercise of the Options rank pari passu in all respects 13.1 with Shares previously issued and, in particular, entitle the holders of Shares to participate fully in:
• dividends declared by the Company after the date of allotment; and $(a)$
• $(b)$ all issues of securities made or offered pro rata to holders of Shares.

LAPSE OF OPTIONS 14.

• Options not validly exercised on or before the Expiry Date will automatically 14.1 lapse.
• 14.2 Unless otherwise determined by the Board, if any Options are granted subject to Exercise Conditions and, prior to satisfaction of the Exercise Conditions (such that the Options are not exercisable), an Eligible Person ceases to be an Eligible Person then:
• $(a)$ if the Eligible Person ceases to be an Eligible Person for any reason other than a Specified Reason, any such Options held by such Eligible Person, or if appropriate, his or her Permitted Nominee, will automatically lapse; and
• $(b)$ if the Eligible Person ceases to be an Eligible Person for a Specified Reason, such Eligible Person, or if appropriate, his or her Permitted Nominee, may exercise any such Options held by him or her within:
  • 3 months of the date of (as the case may be) Retirement, $(i)$ Redundancy, death or Total and Permanent Disablement; or
  • such longer period as the Board determines, $(ii)$

subject to the Board, in its absolute discretion, reducing, waiving or varying the Exercise Conditions applying to those Options in accordance with clause 12.5 so that those Options may be exercised. Options the subject of clause 14.2(b) not exercised within 3 months or the longer period determined by the Board, will automatically lapse.

• 14.3 Unless otherwise determined by the Board, if an Eligible Person ceases to be an Eligible Person at any time after an Option is or has become exercisable, then:
• $(a)$ if the Eligible Person ceases to be an Eligible Person for any reason other than a Specified Reason, such Eligible Person, or if appropriate, his or her Permitted Nominee, may exercise any such Options held by him or her within:
  • 1 month of ceasing to be an Eligible Person; or $(i)$
  • such longer period as the Board determines, $(ii)$

and any Options the subject of this clause not exercised within 1 month or the longer period determined by the Board, will automatically lapse; and

• if an Eligible Person ceases to be an Eligible Person for a Specified Reason, $(b)$ such Eligible Person, or if appropriate, his or her Permitted Nominee is entitled to exercise any such Option at any time prior to its Expiry Date.
• 14.4 A certificate signed by the company secretary of the Company stating that a person ceased for any reason to be an Eligible Person shall (in the absence of manifest error) be conclusive for the purposes of the Plan, both as to such occurrence and the reason for such occurrence and the date of such occurrence.
• 14.5 Subject to clause 14.2, if at any time prior to the Expiry Date of any Options a Holder dies, the deceased Holder's Legal Personal Representative may:

• elect to be registered as the new Holder of the deceased Holder's Options; $(a)$

• $(b)$ whether or not he or she becomes so registered, exercise those Options in accordance with and subject to these Rules as if he were the Holder of them: and

• if the deceased Holder had already given the Company a notice of $(c)$ exercise of his or her Options, pay the Exercise Price in respect of those Options.

PARTICIPATION RIGHTS, BONUS ISSUES, RIGHTS ISSUES, 15. REORGANISATIONS OF CAPITAL AND WINDING UP

• 15.1 New Issues
• Participants are not entitled to participate in any new issue of securities to $(a)$ existing holders of Shares in the Company unless:
  • they have become entitled to exercise their Options under the Plan; $(i)$ and
  • $(ii)$ they do so before the record date for the determination of entitlements to the new issue of securities and participate as a result of being holders of Shares.
• The Company must give Participants, in accordance with the Listing $(b)$ Rules, notice of any new issue of securities before the record date for determining entitlements to the new issue.
• 15.2 Bonus Issues

If there is a bonus share issue ("Bonus Issue") to the holders of Shares, 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 the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank pari passu in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares.

15.3 Pro Rata Issues

If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise of any Options, the Exercise Price of an Option will be adjusted in the manner provided for in the Listing Rules.

15.4 Reorganisation of Capital

If, prior to the expiry of any Options, there is a reorganisation of the issued capital of the Company, then the rights of a Participant (including the number of Options to which each Participant is entitled and the Exercise Price) is changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

15.5 Winding Up

If, prior to the expiry of any Options, a resolution for a members' voluntary winding up of the Company is proposed (other than the purpose of a reconstruction or amalgamation) the Board may, in its absolute discretion, give written notice to Participants of the proposed resolution. Subject to the Exercise

Conditions, the Participants may, during the period referred to in the notice, exercise their Options.

15.6 Fractions of Shares

For the purpose of this clause 15, if Options are exercised simultaneously, then the Participant may aggregate the number of Shares or fractions of Shares for which the Participant is entitled to subscribe. Fractions in the aggregate number only will be disregarded in determining the total entitlement of a Participant.

15.7 Calculations and Adjustments

Any calculations or adjustments which are required to be made under this clause 15 will be made by the Board and, in the absence of manifest error, are final and conclusive and binding on the Company and the Participant.

15.8 Notice of Change

The Company must within a reasonable period give to each Participant notice of any change under clause 15 to the Exercise Price of any Options held by the Participant or to the number of Shares which the Participant is entitled to subscribe for on exercise of an Option.

EXERCISE PRICE OF OPTIONS 16.

$16.1$ The method of calculation of the Exercise Price of each Option will be determined by the Board with regard to the Market Value of the Shares when it resolves to offer the Option.

17. AMENDMENTS TO THE RULES

17.1 Board May Alter Rules

The Board may subject to the Listing Rules alter, delete or add to these Rules at any time (save for the provisions of clause 4).

Consent of Participants 17.2

If any amendment to be made under clause 17.1 would adversely affect the rights of Participants in respect of any Options then held by them, the Board must obtain the consent of Participants who between them hold not less than 75% of the total number of those Options held by all those Participants before making the amendment.

17.3 Eligible Persons Outside Australia

The Board may make any additions, variations or modifications to the Rules, in relation to the implementation of the Plan and the specific application of the Rules to Eligible Persons residing outside Australia.

POWERS OF THE BOARD 18.

• The Plan shall be administered by the Board who shall have the power to: 18.1
• determine appropriate procedures and make regulations for the $(a)$ administration of the Plan which are consistent with these Rules;

• $(b)$ resolve conclusively all questions of fact or interpretation arising in connection with the Plan:

• $(c)$ terminate or suspend the operation of the Plan at any time, provided that the termination or suspension does not adversely affect or prejudice the rights of Participants holding Options at that time;

• $(d)$ delegate those functions and powers it considers appropriate, for the efficient administration of the Plan, to any one or more persons whom the Board reasonably believes to be capable of performing those functions and exercising those powers, for such period and on such conditions as the Board may determine;
• take and rely upon independent professional or expert advice in or in $(e)$ relation to the exercise of any of their powers or discretions under these Rules:
• administer the Plan in accordance with these Rules as and to the extent $(f)$ provided in these Rules; and
• make regulations for the operation of the Plan consistent with these Rules. $(g)$

19. NOTICES

19.1 Notices may be given by the Company to any Holder either personally or by sending by post to his or her address as noted in the Company's records or to the address (if any) within the Commonwealth of Australia supplied by him to the Company for the giving of notices. Notices for any overseas Holders shall be forwarded and posted by air. Where a notice is sent by post the notice shall be deemed to be served on the day after posting. The signature of any notice may be given by any Director or secretary of the Company. A notice of exercise given under clause 12.3 shall not be deemed to be served on the Company until actually received.

NO COMPENSATION OR DAMAGES 20.

• $20.1$ The rights and obligations of any Holder under the terms of his or her employment with the Company are not affected by his or her participation in the Plan.
• 20.2 These Rules do not form part of, and will not be incorporated into, any contract of engagement or employment between a Holder and the Company.
• 20.3 No Holder has any rights to compensation or damages as a result of the termination of his or her employment, so far as those rights arise or may arise from the Holder ceasing to have rights under the Plan as a result of the termination.
• 20.4 Participants do not, as Participants, have any right to attend or vote at general meetings of holders of Shares.

GOVERNING LAW 21.

• 21.1 The Plan and any Options issued under it are governed by the laws of Western Australia and the Commonwealth of Australia.
• 21.2 Each Participant irrevocably and unconditionally submits to the non-exclusive jurisdiction of the courts of Western Australia, the Commonwealth of Australia and courts entitled to hear appeals from those courts.

22. ADVICE

$22.1$ Eligible Persons should obtain their own independent advice at their own expense on the financial, taxation and other consequences to them of or relating to participation in the Plan.

23. DEFINITIONS AND INTERPRETATION

In these Rules, unless the context otherwise requires, the following words and 23.1 expressions shall have the following meanings:

"Application Form" means a duly completed and executed application for the issue of Options made by an Eligible Person or Permitted Nominee in respect of an Offer, in the form approved by the Board from time to time;

"ASX" means Australian Stock Exchange Limited;

"Bid Period", in relation to a takeover bid in respect of shares in the Company, means the period referred to in the definition of that expression in section 9 of the Corporations Law provided that where a takeover bid is publicly announced prior to the service of a bidder's statement on the Company in relation to that takeover bid, the Bid Period shall be deemed to have commenced at the time of that announcement;

"Board" means the directors acting as the board of directors of the Company or a committee appointed by such board of directors;

"Business Day" means Monday to Friday inclusive, except New Years Day, Good Friday, Easter Monday, Christmas Day, Boxing Day and any other day that ASX declares is not a business day;

"Certificate" means the certificate issued in accordance with clause 9 by the Company to a Holder in respect of an Option;

"Change of Control Event" means a shareholder, or a group of associated shareholders, becoming entitled to sufficient shares in the Company to give it or them the ability, and that ability is successfully exercised, in general meeting, to replace all or a majority of the Board;

"Company" means Precious Metals Australia Limited ACN 009 131 533;

"Corporations Act" means Corporations Act 2001 (Cth);

"Director" means a director of the Company from time to time but does not include a person who is only a director by virtue of being an alternate director;

"Eligible Person" means at any time a person who then is a Director or an employee (whether full-time or part-time) of the Company or of an associated body corporate of the Company;

"Exercise Condition" means the performance, vesting or other conditions (if any) determined by the Board and specified in an Offer which are, subject to these Rules, required to be satisfied, reached or met before an Option can be exercised;

"Exercise Price" means, in respect of an Option, the subscription price per Share, determined in accordance with clause 16, payable by a Holder on exercise of the Option;

"Expiry Date" means, in relation to an Option, the date determined by the Board prior to the offer of the relevant Options, subject to any restriction in the Corporations Act from time to time but in any event no longer than 5 years from the Issue Date;

"Holder" means, in relation to an Option, the person (whether an Eligible Person or a Permitted Nominee) entered in the Company's register of options as the holder of that Option;

"Issue Date" means, in relation to an Option, the date on which the Company grants that Option;

"Legal Personal Representative" means the executor of the will or an administrator of the estate of a deceased person, the trustee of the estate of a person under a legal disability or a person who holds an enduring power of attorney granted by another person;

"Listing Rules" means the Official Listing Rules of ASX as they apply to the Company from time to time:

"Market Value" means, if the Company is admitted to the official list of ASX:

• the weighted average closing sale price of the Shares recorded on the stock $(a)$ market of ASX over the five trading days immediately preceding the day on which the Board resolves to offer an Option; or
• $(b)$ in circumstances where there has been no trading in the Shares during the five trading days immediately preceding the day on which the Board resolves to offer an Option, the last sale price recorded on the stock market of ASX;

"Offer" means an invitation to an Eligible Person made by the Company under clause 6.1 to apply for an issue of Options;

"Official Quotation" has the meaning ascribed to it in the Listing Rules;

"Option" means an option issued under the Plan to subscribe for a Share;

"Participant" means a person who holds Options issued under the Plan and includes, if a Participant dies or becomes subject to a legal disability, the Legal Personal Representative of the Participant;

"Permitted Nominee" has the meaning given to it by clause 7.2;

"Plan" means the PMA Executive and Employee Share Option Plan established in accordance with these Rules:

"Redundancy" means, in relation to an Eligible Person, a determination by the Board that the Company's need to employ a person for the particular kind of work carried out by that Eligible Person has ceased (but, for the avoidance of any doubt, does not include the dismissal of an Eligible Person for personal or disciplinary reasons or where the Eligible Person leaves the employ of the Company of his or her own accord);

"Retirement" means, in relation to an Eligible Person, retirement by that Eligible Person from the Company at age 60 or over or such earlier age as considered appropriate by the Board;

"Rules" means these rules, as amended from time to time:

"Series" means, in relation to Options, Options with a common Issue Date;

"Shares" means fully paid ordinary shares in the capital of the Company;

"Specified Reason" means Retirement, Total and Permanent Disablement, Redundancy or death;

"Tax" means any tax, levy, impost, GST, deduction, charge, rate, contribution, duty or withholding which is assessed (or deemed to be assessed), levied, imposed or made by any government or any governmental, semi-governmental or judicial entity or authority together with any interest, penalty, fine, charge, fee or other amount assessed (or deemed to be assessed), levied, imposed or made on or in respect of any or all of the foregoing; and

"Total and Permanent Disablement" means, in relation to an Eligible Person, that the Eligible Person has, in the opinion of the Board and with effect on a date determined by the Board, after considering such medical and other evidence as it sees fit, become incapacitated to such an extent as to render the Eligible Person unlikely ever to engage in any occupation for which he is reasonably qualified by education, training or experience.

23.2 In these Rules, unless a contrary intention appears:

• where an expression is defined, another part of speech or grammatical form $(a)$ of that expression has a corresponding meaning;
• $(b)$ the singular includes the plural and vice versa;
• $(c)$ a reference to a gender includes all genders; and
• $(d)$ an expression defined in, or given a meaning for the purposes of, the Corporations Act has the same meaning where used in these Rules.

PRECIOUS METALS AUSTRALIA LIMITED ABN 65 009 131 533

PROXY FORM

The Secretary	Precious Metals Australia Limited Level 1, 30 Richardson Street West Perth WA 6005
I/We

being a shareholder/(s) of Precious Metals Australia Limited (Company) hereby appoint as proxy to vote in accordance with the following directions (or if no directions have been given, as the proxy or Chairman sees fit) at the Annual General Meeting to be held at Precious Metals Australia Limited 2nd Floor, 47 Colin Street, West Perth, Western Australia on 25th November 2005 at 10.00am (WST) (and at any adjournment thereof) (Meeting).

		OR		the Chairman
Name of person you are appointing (if not the Chairman)
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 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. The Chairman intends to vote in favour of the resolation if no directions are given.
Resolution		For	Against	Abstain**
Election of the Earl of Warwick as a Director 1.
2. Adoption of the Remuneration Report
Ratification of Previous Issue of Securities 3.
Approval of the PMA Executive and Employee Share Option Plan 4.
**If you mark the abstain box for a particular item, you are directing your proxy not to vote on that item.
Appointing a Second Proxy (if applicable) Contact Telephone % or
The number of Shares	The percentage of your voting		Namber	Area Code	Telephone Number
applicable to this proxy form	rights
Signature(s) Shareholder 1	Shareholder 2			Shareholder 3
Sign here
Director	Director/Secretary		Sole Director and Secretary
	Proxies may be lodged either by facsimile on (08) 9389 7871, or by mail to PO Box 1156, Nedlands WA 6909 or delivery to the registered office of the Company at Level 1, 30 Richardson Street, West Perth WA 6005.
	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.
Company Seal (if required)	For further instructions on voting, please refer to the rear of this form.

PRECIOUS METALS AUSTRALIA LIMITED ABN 65 009 131 533

INSTRUCTIONS ON VOTING

$\mathbf{1}$ . How to Vote

Shareholders may vote by attending the Meeting in person, by proxy or authorised representative.

$2.$ Voting in Person

To vote in person, attend the Meeting on the date and at the time and place specified in this Notice of General Meeting.

$\overline{3}$ . Voting by Proxy

Shareholders are entitled to appoint up to 2 individuals to act as proxies to attend the Meeting and vote on their behalf. Where more than one proxy is appointed each proxy may be appointed to represent a specific proportion of the shareholder's voting rights. If the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes.

The proxy form must be signed by the shareholder or his/her attorney duly authorised in writing or, if the shareholder is a corporation, in a manner permitted by the Corporations Act 2001. In the case of Shares jointly held by 2 or more persons, all joint holders must sign the proxy form.

Completion of a proxy form will not prevent individual shareholders from attending the 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.

The proxy may, but need not, be a shareholder of the Company.

$\ddot{4}$ . Voting Entitlements

For the purposes of determining voting entitlements at the Meeting, Shares will be taken to be held by the persons who are registered as holding the Shares 48 hours before the time scheduled for commencement of the Meeting. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.