ZAMBEZI RESOURCES LIMITED

(Incorporated in Bermuda under the Bermuda Companies Act 1981 with company number 35116) ARBN 124 462 826

PROSPECTUS

This Prospectus has been issued for the following purposes:

for the offer of 444,444,444 Shares at an issue price of 1.8 cents each to sophisticated investors to raise \$8 million; and
for the offer of 10,000,000 Options exercisable at 2.5 cents each expiring on 30 September 2013 to Azure Capital Limited or its nominees; and
for the offer of 10,000,000 Options exercisable at 3 cents each expiring on 30 September 2013 to Azure Capital Limited or its nominees.

The offers for the Shares and Options close at 5.00pm AWST on 14 September 2010.

IMPORTANT NOTICE

This document is important and requires your immediate attention. It should be read in its entirety. If you do not understand its contents or are in doubt as to the course you should follow, you should consult your stockbroker or professional adviser. An investment in the securities offered by this Prospectus should be considered speculative.

INDEX

Section 1	DETAILS OF THE OFFERS	3
Section 2	CAPITAL STRUCTURE AND EFFECT OF THE OFFERS	8
Section 3	BOARD AND MANAGEMENT	11
Section 4	RISK FACTORS	13
Section 5	MATERIAL CONTRACTS	21
Section 6	ADDITIONAL INFORMATION	25
Section 7	DEFINED TERMS	36
Section 8	DIRECTORS' RESPONSIBILITY STATEMENT AND CONSENT	38

9 September 2010
9 September 2010
13 September 2010
14 September 2010
15 September 2010

*These dates are indicative only. The Directors reserve the right to vary the key dates, without prior notice and subject to compliance with the Listing Rules.

IMPORTANT NOTICE

This Prospectus is dated 9 September 2010. A copy of this Prospectus was lodged with the ASIC on 9 September 2010. No responsibility for the contents of this Prospectus is taken by ASIC or the ASX. No securities will be issued or granted on the basis of this Prospectus later than 13 months after the date of this Prospectus. The Shares and Options issued pursuant to this Prospectus will be issued on the terms and conditions set out in this Prospectus.

The Company will apply for the Shares offered pursuant to this Prospectus to be listed on ASX. The Options offered pursuant to this Prospectus will not be listed on the ASX.

In preparing this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and that certain matters may reasonably be expected to be known to investors and professional advisers who investors may consult. No person is authorised to give any information or to make any representation in connection with the Offers described in this Prospectus. Any information or representation which is not contained in this Prospectus or disclosed by the Company pursuant to its continuous disclosure obligations may not be relied upon as having been authorised by the Company in connection with the issue of this Prospectus.

This Prospectus does not constitute an offer or invitation to acquire securities in any place in which, or to any person to whom, it would not be lawful to make such an offer or invitation. The securities offered under this Prospectus have not been, and will not be, registered under the applicable securities laws of Canada, Japan, the Republic of Ireland, the Republic of South Africa or the United States (each a "Restricted Territory") and they may not, subject to certain exceptions, be offered or sold directly or indirectly within a Restricted Territory or to, or for the account or benefit of any national, citizen or resident of, a Restricted Territory. The distribution of this Prospectus in jurisdictions other than Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws.

Throughout this Prospectus, for ease of reading, various words and phrases have been defined rather than used in full on each occasion and are set out in Section 7 of this Prospectus.

CORPORATE DIRECTORY

DIRECTORS

Brian James Rear Non Executive Chairman, Australia

Simon Durack Non Executive Director, Australia

David Vilensky Non Executive Director, Australia

Richard Procter Non Executive Director, Australia

CEO David Russell

SECRETARY Allison Forte

REGISTERED OFFICE

Canon's Court 22 Victoria Street Hamilton HM 12 BERMUDA

PRINCIPAL OFFICE

17 Ord Street West Perth WA 6005 AUSTRALIA Tel: 08 9216 9000 Fax: 08 9216 9090 Website: www.zambeziresources.com Email: [email protected]

AUSTRALIAN SOLICITORS

Blakiston & Crabb* 1202 Hay Street West Perth WA 6005 AUSTRALIA

AUDITORS

Deloitte Touche Tohmatsu Woodside Plaza Level 14 240 St Georges Terrace Perth WA 6000 AUSTRALIA

SHARE REGISTRY

Computershare Investor Services Pty Limited** Level 2, 45 St Georges Terrace Perth WA 6000 AUSTRALIA Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

LEAD MANAGER

Azure Capital Limited Level 34, Exchange Plaza 2 The Esplanade Perth WA 6000

ZAMBIAN SOLICITORS

Corpus Legal Practitioners** The Globe Building 2386 Longolongo Road Lusaka ZAMBIA

*See Section 6.7. **Provided for information purposes only.

Section 1 DETAILS OF THE OFFERS

1.1 Purpose of the Offer

On 12 August 2010, the Company announced an equity capital raising through a placement of 444,444,444 Shares to sophisticated investors ("Placement"), with Azure acting as the lead manager of the Placement.

The Company's securities have been continuously quoted since 13 March 2010 to the date of this Prospectus, after having previously been suspended from trading since 11 March 2009. The Placement will provide funding to the Company to further its current exploration projects and to repay existing loans. Refer to Section 1.3 below for further details of the use of funds from the Offers.

The Shares and Options which are offered pursuant to this Prospectus are being offered to sophisticated investors only and so disclosure is not strictly required under Part 6D.2 of the Corporations Act. However, this Prospectus will also facilitate secondary trading of the securities to be issued pursuant to this Prospectus.

1.2 Details of the Offers

By this Prospectus, the Company is offering:

(a) 444,444,444 Shares at an issue price of 1.8 cents each to raise \$8 million pursuant to the Placement ("Placement Offer"); and
(b) 10,000,000 Options exercisable at 2.5 cents each, expiring on 30 September 2013 and 10,000,000 Options exercisable at 3 cents each, expiring on 30 September 2013 for a nil issue price to Azure as consideration for services provided in connection with the Placement ("Option Offer"),

(together referred to as "the Offers").

1.3 Use of Funds

The funds raised from the Placement (which is fully subscribed) will be applied towards the following:

(a) finalising the due diligence over the Chingola Dumps Project, and upon successful completion of the due diligence and a formal decision to proceed with the Chingola Dumps Project, settling the agreement with Rephidim and conducting the bankable feasibility study;
(b) continuing exploration on the copper and uranium licences;
(c) repaying the loan facility with LinQ, further details of which are set out in item 4 of Section 5;
(d) funding the costs of this Prospectus; and
(e) working capital purposes.

The application of the \$8 million raised under the Placement Offer is summarised as follows:

Use of Funds	Amount (\$)
Finalising due diligence over Chingola Dumps Project	\$350,000
Settlement of agreement with Rephidim & conducting bankable feasibility study over the Chingola Dumps Project(a)	\$5,080,000

Exploration activities on the copper and uranium licences	\$750,000
(b) Repaying loan facility with LinQ (See item 4 of Section 5)	\$1,050,000
Expenses of this offers (See section 6.9)	\$535,000
Working capital purposes	\$235,000
TOTAL	\$8,000,000

(a) This will only occur should the due diligence investigation prove successful and a formal decision to proceed with the Chingola Dumps Project is agreed.
(b) LinQ is being repaid \$1,050,000 of the loan facility and is also participating in the Placement and has subscribed for 50,000,000 Shares (\$900,000) at 1.8 cents each. Following the Placement, LinQ's relevant interest in the Company will be diluted from 26.1% to 20.7%.

1.4 Opening and Closing Dates

The Offers will open for acceptances by sophisticated investors and Azure Capital Limited only at 9:00am AWST on 9 September 2010 and will close at 5:00pm AWST on 14 September 2010 or such later date as the Directors, in their absolute discretion and subject to compliance with the Listing Rules, may determine ("Offer Period").

1.5 Brokerage and Commission

The Company has agreed to pay Azure a completion fee of 6% of monies raised from the Placement Offer. This fee includes a 2% management fee and a 4% share placement fee, payable in cash upon successful completion.

In addition, the Company will issue, subject to shareholder approval, the Option Offer Options to Azure's nominee in consideration for lead manager services.

1.6 Applications

Only persons from whom Applications are specifically invited pursuant to this Prospectus are eligible to apply for the Shares and Options, being sophisticated investors and Azure respectively. The number of Shares and/or Options for which each person is entitled to apply is specified on the personalised Application Form.

Completed Application Forms must be accompanied by the application monies (if applicable) and lodged in person or by post with the Company at:

Computershare Investor Services Pty Limited Level 2, 45 St Georges Terrace Perth WA 6000 AUSTRALIA Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

Delivered to Or by post to

Computershare Investor Services Pty Limited GPO Box D182 Perth WA 6840 AUSTRALIA Telephone: (08) 9323 2000 Facsimile: (08) 9323 2033

not later than 5:00pm AWST on 14 September 2010 or such later date as the Directors advise in respect of the Offers.

Cheques should be in Australian currency, made payable to "Zambezi Resources Limited" and crossed "Not Negotiable".

1.7 Issue of Securities

The issue of Shares and Options under the Offers is subject to shareholder approval.

A completed and lodged Application Form constitutes a binding and irrevocable application for the number of Shares and/or Options specified in the relevant Application Form. The Application Form does not need to be signed to be a binding application.

If the Application Form is not completed correctly it may still be treated as a valid application. The Directors' decision whether to treat the application as valid and how to construe, amend and/or complete the Application Form is final.

1.8 ASX Listing

The Company will make application to ASX within 7 days following the date of this Prospectus for official quotation of the Shares offered pursuant to this Prospectus.

If approval is not granted by ASX within 3 months after the date of this Prospectus, the Company will not allot or issue any Shares and will repay all application monies (where applicable) as soon as practicable, without interest.

A decision by ASX to grant official quotation of the Shares is not to be taken in any way as an indication of ASX's view as to the merits of the Company, or the Shares now offered for subscription.

No application will be made to ASX for quotation of the Options offered pursuant to this Prospectus.

1.9 No Issue of Securities after 13 Months

No Shares or Options will be allotted or issued on the basis of this Prospectus later than 13 months after the date of this Prospectus.

1.10 Overseas Investors

This Prospectus does not constitute an offer in any place in which, or to any person to whom it would not be lawful to make such an offer.

Investors resident outside Australia should consult their professional advisers as to whether any governmental or other constraints are required, or other formalities need to be observed to enable them to accept the Offer.

1.11 Underwriting

The Offers have not been underwritten.

1.12 Minimum and Maximum Subscription

There is no minimum subscription for the Placement Offer. The maximum subscription for the Placement Offer is 444,444,444 Shares.

There is no minimum subscription for the Option Offer. The maximum subscription for the Option Offer is 20,000,000 Options.

1.13 Market Prices of Shares on ASX

The highest and lowest closing market sale prices of Shares on ASX during the 3 months immediately preceding the date of this Prospectus were \$0.038 on 17 August 2010 and \$0.015 on 27 June 2010 respectively. The latest available market sale price of Shares on ASX immediately before the date of issue of this Prospectus was \$0.027 on 8 September 2010.

1.14 Data Protection and Privacy

The Company collects information about each applicant from the Application Form for the purposes of processing the application and, if the application is successful, to administer the applicant's security holding in the Company.

By submitting an Application Form, each applicant agrees that the Company may use the information in the Application Form for the purposes set out in this privacy disclosure statement and may disclose it for those purposes to the share registry, the Company's related bodies corporate, agents, contractors and third party service providers (including mailing houses), the ASX, ASIC and other regulatory authorities.

If an applicant becomes a security holder of the Company, the Corporations Act requires the Company to include information about the security holder (name, address and details of the securities held) in its public register. This information must remain in the register even if that person ceases to be a security holder of the Company. Information contained in the Company's registers is also used to facilitate distribution payments and corporate communications (including the Company's financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Application Form, the Company may not be able to accept or process your application.

1.15 Electronic Prospectus

The Corporations Act prohibits any person from passing onto another person the Application Form unless it is attached to or accompanied by a completed and unaltered version of this Prospectus. The Application Forms included with this Prospectus contain a declaration that the investor has personally received the complete and unaltered Prospectus prior to completing the Application Form.

Pursuant to Class Order 00/044, the ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please phone the Company and the Company will send you, for free, either a hard copy or a further electronic copy of the Prospectus, or both.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

Section 2 CAPITAL STRUCTURE AND EFFECT OF THE OFFERS

2.1 Principal Effects

The principal effects of the Offers are:

(a) the Company's cash funds will increase by \$8,000,000 less expenses of the Offers, which are estimated to be approximately \$535,000;
(b) the Company will issue 444,444,444 Shares and the number of Shares on issue will increase from 778,512,460 to 1,222,956,904; and
(c) the Company will issue 20,000,000 Options.

2.2 Consolidated Balance Sheet and Capital Structure

Capital Structure of the Company

The pro-forma capital structure of the Company following the Offers (assuming full subscription) pursuant to this Prospectus is set out below:

Issued Capital	Number
Shares
Existing Shares on issue	778,512,460
Shares offered for subscription pursuant to this Prospectus under the Placement Offer	444,444,444
Total Shares on issue after completion of the Offers	1,222,956,904
Unquoted Options
Existing unquoted Options on issue	171,000,0002
Options offered for subscription pursuant to this Prospectus under the Option Offer	20,000,000
Total Number of Options on issue after completion of the Offers	191,000,000

1 Assuming no Options are converted into Shares during the Offer Period.

2 The terms of the existing Options are as follows:

Number	Exercise price	Expiry date
1,000,000	£0.20	31 August 2011
135,000,000	A\$0.01	30 November 2012
5,000,000	A\$0.02	5 May 2013
30,000,000	A\$0.02	31 May 2013

Unaudited Pro-Forma Consolidated Balance Sheet

The following is a pro-forma unaudited consolidated balance sheet of the Company as at 31 August 2010, adjusted to reflect:

i. Estimated cash outflows from 1 April to 31 August 2010;
ii. the Placement Offer to raise \$8,000,000;
iii. the Option Offer valuation; and
iv. costs of the Offers of \$535,000.

		31 March 2010	31 March 2010
		Audited	Unaudited Pro
		Balance Sheet	forma Balance
			Sheet
	Note	(AUD )	(AUD)
ASSETS
CURRENT ASSETS
Cash and cash equivalents	(a)	863,162	7,658,162
Trade and other receivables		5,050	5,050
Prepayments		11,501	11,501
TOTAL CURRENT ASSETS		879,713	7,674,713

NON-CURRENT ASSETS
Capitalised exploration expenditure		2,595,887	2,595,887
Investments		4,647	4,647
TOTAL NON-CURRENT ASSETS		2,600,534	2,600,534
TOTAL ASSETS		3,480,247	10,275,247

CURRENT LIABILITIES
Trade and other payables		247,583	247,583
Provisions		597	597
Borrowings		609,307	609,307
TOTAL CURRENT LIABILITIES		857,487	857,487

TOTAL LIABILITIES		857,487	857,487

NET ASSETS		2,622,760	9,417,760

EQUITY
Issued capital	(b)	3,942,271	11,130,271
Reserves	(c)	24,256,072	24,583,072

Accumulated losses TOTAL EQUITY	(d)	(25,575,583) 2,622,760	(26,295,583) 9,417,760

NOTES TO THE UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEET

The above unaudited pro-forma consolidated balance sheet is based on the audited financial statements at 31 March 2010 in AUD terms adjusted for:

(a) Cash and cash equivalents have been adjusted to reflect the amount raised under the Placement Offer less the Offers expenses. A reconciliation of cash is as follows:

Cash at Bank 31 March 2010	863,162
Estimated cash outflow 1 April - 31 August 2010	(720,000)
Funds raised from the exercise of Options in July and	50,000
August
Funds to be raised from the Placement Offer	8,000,000
Estimated costs of the Offers	(535,000)
Proforma Cash on Hand at 31 March 2010	7,658,162

(b) Issued capital has been adjusted to reflect the issue of 444,444,444 Shares at 1.8 cents each to raise \$8 million.

Issued capital has been adjusted to reflect the issue of 5,000,000 Shares at 1 cent each raising \$50,000 from the exercise of Options as per Appendix 3B's released by the Company during July and August.

The costs of the Offers, being \$535,000 and the Options issued under the Options Offer, have been accounted for in capital raising costs in accordance with Australian Accounting Standards.

(c) The Options to be issued under the Options Offer have been valued in accordance with Australian Equivalents to International Financial Reporting Standards. The fair value at grant date of the Option Offer Options has been determined using a Black-Scholes option pricing model that takes into account the exercise price, the term of the option, the impact of dilution, the non-tradeable nature of the option, the share price at grant date and expected price volatility of the underlying share, the expected dividend yield and the risk-free interest rate for the term of the option.

The table below summarises the model inputs for the Option Offer Options:

Model Inputs	Option Offer Options	Option Offer Options
1. Options granted for no consideration:	10,000,000	10,000,000
2. Exercise price (cents):	2.50	3.00
3. Issue date:	15 Sept 2010	15 Sept 2010
4. Expiry date:	30 Sept 2013	30 Sept 2013
5. Underlying security spot price at grant date (cents):	3.00	3.00
6. Expected price volatility of Shares:	75%	75%
7. Expected dividend yield:	0%	0%
8. Risk-free interest rate	4.46%	4.46%
Black-Scholes Valuation per Option (cents)	1.70	1.57

(d) Accumulated losses has been adjusted for estimated cash outflows for general operating expenses for the period 1 April to 31 August 2010.
(e) The unaudited pro forma consolidated balance sheet has been prepared consistent with the Accounting Standards adopted by the Company in preparing the Audited Annual Financial Statements dated 31 March 2010.

Section 3 BOARD AND MANAGEMENT

Mr Brian Rear – AWASM, MSc (London), DIC; MBL (South Africa) (Non Executive Chairman, Appointed 10 May 2004)

Mr Rear has a distinguished career in mining spanning over 35 years of technical and managerial experience in Australia, New Guinea, United Kingdom, Europe, South Africa and Indonesia. He has worked for successful resource companies including CRA, Rio Tinto Consultants, Barrack Mines Limited, Anglovaal and Straits Resources Limited in gold, base metals, uranium, thermal coal and industrial minerals. Mr Rear is a graduate from the Western Australian School of Mines in metallurgy. He is a graduate of the Royal School of Mines London, holding a Diploma of Imperial Collage and an MSc (Lon) in mineral process design from the University of London. Brian also holds a Masters Degree in Business Leadership from the University of South Africa's School of Business Leadership.

Simon Durack – CA, B.Comm, Post GradDip Bus, FCIS (Non-Executive Director, Appointed 3 August 2009)

Mr Durack is an experienced Chartered Accountant, practising Company Secretary and Director, and brings to the Company over 30 years commercial experience gained working in Australia, South East Asia and Europe. Mr Durack has held many senior financial, secretarial and director positions with both large public and private entities in a diverse range of industries.

David Vilensky – BA, LLB (Non-Executive Director, Appointed 3 August 2009)

Mr Vilensky is a practising solicitor and managing partner of Perth law firm Bowen Buchbinder Vilensky. He has more than 25 years of experience in the field of corporate and business law and in commercial and corporate management. Mr Vilensky is also regarded as a specialist on trade practices law and has written a number of published articles on this subject. Mr Vilensky acts for a number of listed and public companies in the mining and resources sector and is on the board of Latin Resources Ltd, a company focusing on iron ore and gold projects in Peru which is in the process of listing on the ASX.

Richard Procter – BSc (Eng), MBA, CEng, MIMMM (Non-Executive Director, Appointed 14 September 2009)

Mr Procter is a mining engineer with over 30 years broad international experience encompassing roles in the corporate, operations, contracting, consulting and mine development areas. He has held senior industry positions that have demonstrated leadership and management of base and precious metal mining companies (both underground and open) and development of project assessment types including definitive/bankable feasibility studies and their conversion into mining operations. Mr. Procter has managed teams undertaking mining asset evaluations and valuations, including technical and operational audits (encompassing complete mining asset due diligence of large ongoing operations). Mr Procter provides technical and financial capability to the Company and represents several public and private companies at board level.

David Russell – BSC (with merit in Geology), BSC (Special) Honours Geology, MAusIMM, MGSSA, F Fin (Chief Executive Officer – Appointed 30 June 2010)

Mr Russell is a geologist and mining investment analyst with a wealth of experience in the resources sector gained over 30 years in Africa, Canada and Australia where he has held various senior management positions. He also has financial management experience from his involvement as a mining analyst and in the advisory area of the James Capel group, Investec Bank and JCI.

Section 4 RISK FACTORS

4.1 Introduction

The risk factors which should be taken into account in assessing the Company's activities and investment in the Company include, but are not necessarily limited to, those set out below. Prospective investors should carefully consider the following factors, among others, affecting the proposed activities of the Company prior to making an investment therein, as well as other matters set forth elsewhere in this document. The exploration and development of natural resources is a speculative activity that involves a high degree of financial risk. An investment in the Company may not be suitable for all recipients of this document.

The following summary, which is not exhaustive, represents some of the major risk factors which potential investors need to be aware of.

4.2 Risk Factors

(a) General Economic Risks

Share market conditions, particularly those affecting mining and exploration companies, may affect the ultimate value of the Company's Share price regardless of operating performance.

The price of copper and gold is influenced by physical and investment demand and supply. Fluctuations in the copper and gold prices may influence individual projects in which the Company has an interest.

The Company could be affected by unforeseen events outside its control including, inter alia, natural disasters, terrorist attacks and political unrest and/or government legislation or policy, particularly in connection with environmental issues which may interrupt or prevent exploration, mine development or production operations.

General economic conditions may affect interest rates and inflation rates. Movements in these rates will have an impact on the Company's cost of financing.

(b) Trading and Liquidity in the Company's Securities

An investment in the securities of the Company is highly speculative and subject to a high degree of risk and only those who can bear the risk of the entire loss of their investment should invest.

Each prospective investor should view his investment in securities of the Company as a long-term investment and should not consider such investment unless he is certain he will not have to liquidate his investment for an indefinite period of time.

Investors may realise less than their original investment, or sustain a total loss of their investment.

The Company will require additional financial resources to continue funding its future plans. Therefore the Company may need to raise additional funds through public or private financing. No assurance can be given that any such additional financing will be available or that, if available, it will be available on terms favourable to the Company or its shareholders.

Notwithstanding statutory subscription rights, if additional funds are raised through the issue of equity securities, the percentage ownership of then current shareholders of the Company may be reduced and such securities may have rights, preferences or privileges senior to those of the holders of the Company's Shares.

If adequate funds are not available to satisfy either short or long-term capital requirements, the Company may be required to limit its operations significantly.

There can be no assurance that the Company will be able to manage effectively the expansion of its operations or that the Company's current personnel, systems, procedures and controls will be adequate to support the Company's operations. Any failure of management to manage effectively the Company's growth and development could have a material adverse effect on the Company's business, financial condition and results of operations.

The Company's future results will depend in part on management's ability to manage growth, which will require, among other things, continued development of the Company's financial and management controls, and its ability to expand, manage and train its employee base. There is no certainty therefore that all or, indeed, any of the elements of the Company's current strategy will develop as anticipated and that the Company will be profitable.

The Company is highly dependent on the Directors. Whilst the Board has sought to and will continue to ensure that Directors and any key employees are appropriately incentivised, their services cannot be guaranteed. The continued involvement of key employees, consultants and Directors is not assured, and the loss of their services to the Company may have a material adverse effect on the performance of the Company.

(d) Exploration and Production Risks

Exploration and production involve a high degree of risk and may be hampered by mining, heritage, community and environmental legislation, industrial disputes, cost overruns, land claims and compensation, geological, geotechnical and seismic factors, weather conditions and other unforeseen events which are beyond the control of the Company.

The success of the Company also depends on the delineation of economically minable reserves, access to required development capital, movements in the price of copper and gold, securing and maintaining title to its exploration tenements and obtaining all consents and approvals necessary for the conduct of its exploration and mining activities.

The Company's success is also dependent upon it being able to adequately attract resources and competent joint venture partners to assist the Company in its exploration strategy and the development of any economically viable reserves.

Exploration may be unsuccessful, resulting in a reduction of the value of those tenements, diminution in the cash reserves of the Company and possible relinquishment of the exploration tenements.

Whether or not income will result from projects undergoing exploration, development and production programmes depends on successful establishment of mining operations. Factors including costs, actual mineralisation, consistency and reliability of ore grades, and mineral prices affect successful project development, as does the design and construction of efficient processing facilities, competent operation and management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced consultants.

Risk factors relating to the Chingola Dumps Project include possible extreme variability in grade as a result of a nugget effect whereby a high grade sample may skew average values. This will require careful geostatistical analysis in order to address the possible variability in grade and determine accurate grade and tonnage estimates to JORC standards. The dumps are heterogenous comprising previously mined material ranging in size from fines to large boulders. Accurate determination of specific gravity may be difficult and hence converting the volume of dumps as surveyed to tonnes may be problematic. Due to the heterogenous nature of dumps comprising both stockpile and overburden material it may be necessary to crush material and blend to achieve a more uniform run of mine feed. The diverse nature of the dumps material will require metallurgical testwork to test characteristics for heap leaching.

(e) Joint Venture Risk

The Directors are unable to predict the risk of financial failure, non compliance with obligations or default by a participant in any joint venture to which the Company is, or may become, a party.

The Company is party to two joint venture agreements, with Glencore International AG of Switzerland, and with Lithic Metals.

(f) Environmental Risk

The Company's Zambezi tenement, which contains the Chakwenga gold prospect, the Kangaluwi-Chisawa copper project and part of the Cheowa-Neningombwe prospect, falls within the Lower Zambezi National Park. The Zambian government allows exploration in both National Parks and Game Management Areas. The progression from a Prospecting Licence to a Mining Licence requires the provision of an Environmental Management Plan ("EMP") and an Environmental Impact Statement ("EIS"). It is expected that the granting of a Mining Licence within the National Park will require a more rigorous environmental assessment process prior to a mine permit being granted. The Directors accordingly consider prospects contained within the National Parks to have an inherently higher environmental risk than the remaining tenements.

Exploration and production activities have become subject to increasing environmental responsibility and liability. The Company will seek to operate in accordance with the highest standards of environmental practice, however, the potential for liability is an ever present risk.

Environmental legislation may change in a manner that may require stricter standards and a heightened degree of responsibility for companies and their directors and employees. There may also be unforeseen environmental liabilities resulting from exploration and mining activities and these problems and liabilities may be costly to remedy.

The Company, as a participant in mining activities, may become subject to liability from hazards that cannot be insured against or against which it may elect not to be insured because of high premium costs or other reasons. The Company may incur liabilities to third parties (in excess of any insurance cover) arising from pollution or other damage or injury.

The Company is currently mitigating against this aspect of risk by undertaking stakeholder negotiations which includes liaison with non government donor organisations and related government organisations.

(g) Country Risk

Zambezi's assets are located in Zambia, which introduces both sovereign and Zambian domestic economic risk issues to investors investing in the Company's Shares. Investors in Zambezi should however be aware of the specific country risk issues associated with Zambia.

HIV/AIDS is prevalent in eastern and southern Africa. As a Zambian operating company, Zambezi will be exposed to the risks associated with operating in such an environment.

(h) Enforcement of Judgments

As the Company is a Bermuda exempted company, the rights of shareholders will be governed by Bermuda law and the Company's Memorandum of Association and Bye-laws. The rights of shareholders under Bermuda law may differ from the rights of shareholders of companies incorporated in other jurisdictions. All of the Company's assets are located outside of Australia. As a result, it may be difficult for investors to effect service of process in Australia or to enforce in Australia judgments obtained in Australian courts against the Company or those persons who may be liable under Australian law. The current position with regard to enforcement of judgments in Bermuda is set out below but this may be subject to change.

A final and conclusive judgment of a foreign court against the Company, under which a sum of money is payable (not being a sum of money payable in respect of taxes or other charges of a like nature, in respect of a fine or other penalty, or in respect of multiple damages as defined in The Protection of Trading Interests Act 1981) may be enforceable in Bermuda if the foreign court is situated in a country to which The Judgments (Reciprocal Enforcement) Act 1958 (the "1958 Act") applies. The procedure provided for in the 1958 Act must be followed if the 1958 Act applies. The 1958 Act applies to Australia. Under the 1958 Act, a judgment obtained in the superior courts of a territory to which it applies would be enforced by the Supreme Court of Bermuda without re-examination of the merits of the case provided that:

(a) the judgment is final and conclusive, notwithstanding that an appeal may be pending against it or it may still be subject to an appeal in such country;
(b) the judgment has not been given on appeal from a court which is not a superior court; and
(c) the judgment is duly registered in the Supreme Court of Bermuda in circumstances in which its registration is not liable thereafter to be set aside.

Under Section 3(4) of the 1958 Act, the registration of such a court's judgment in the Supreme Court of Bermuda involves the conversion of the judgment debt into Bermuda dollars as of the date of the foreign court's judgment, but the BMA has indicated that its present policy is to give the consents necessary for any Bermuda dollar award made by the Supreme Court of Bermuda as aforesaid to be recovered in external currency.

Where the 1958 Act does not apply, a final and conclusive judgment of a competent foreign court under which a sum of money is payable (not being a sum payable in respect of taxes or other charges of a like nature, in respect of a fine or other penalty, or in respect of multiple damages as defined in The Project of Trading Interests Act 1981 may be the subject of enforcement proceedings in the Supreme Court of Bermuda under the common law doctrine of obligation by action on the debt evidenced by the judgment of such competent foreign court. A final opinion as to the availability of this remedy should be sought when the facts surrounding the foreign court's judgment are known, but, on general principles, we would expect such proceedings to be successful provided that:

(a) the court which gave the judgment was competent to hear the action in accordance with private international law principles as applied in Bermuda; and
(b) the judgment is not contrary to public policy in Bermuda, has not been obtained by fraud or in proceedings contrary to natural justice and is not based on an error in Bermudan law.

Enforcement of such a judgment against assets in Bermuda may involve the

conversion of the judgment debt into Bermuda dollars, but the BMA has indicated that its present policy is to give the consents necessary to enable recovery in the currency of the obligation.

No stamp duty or similar or other tax or duty is payable in Bermuda on the enforcement of a foreign judgment. Court fees will be payable in connection with proceedings for enforcement.

(i) BMA Approval

The consent of the BMA is required for all issues of shares to persons who are non-residents of Bermuda for exchange control purposes. The BMA's consent is also required for subsequent transfers of issued shares of the Company. Pursuant to the Notice of the Public issued by the BMA on 1 June 2005 (the "General Permission"), general permission has been given for the issue and subsequent transfer of any securities of a company where any of its "Equity Securities" are listed on an "Appointed Stock Exchange", which includes ASX, where "Equity Security" means a share which entitles the holder to vote for or appoint one or more directors or a security which by its terms is convertible into a share which entitles the holder to vote for or appoint one or more directors. Approvals or permissions given by the BMA do not constitute a guarantee by the BMA as to the Company's performance or credit worthiness. Accordingly, in giving such consent or permissions, the BMA shall not be liable for the financial soundness, performance or default of the Company's business or for the correctness of any opinions or statements expressed in this document.

(j) Legislative Changes

Changes in government regulations and policies in Zambia, Bermuda or elsewhere may adversely affect the financial or other performance of the Company.

(k) Retention of Key Business Relationships

The Group relies significantly on strategic relationships with other entities and also on good relationships with regulatory and governmental departments. The Group also relies upon third parties to provide essential contracting services. There can be no assurance that its existing relationships will continue to be maintained or that new ones will be successfully formed and the Group could be adversely affected by changes to such relationships or difficulties in forming new ones. Any circumstance, which causes the early termination or non-renewal of one or more of these key business alliances or contracts, could adversely impact the Group, its business, operating results and prospects.

Various aspects of the Company's future performance and profitability are dependent on the outcome of future negotiations with third parties. The Group's interests may in future be held in a joint venture and, in some cases, a joint venture partner may be the manager of the joint venture. In these situations the joint venture decision may not accord with the Group's stated plan. Currently the Company has in place contracts with drillers, transport groups and laboratories to facilitate and maintain a level of operations with regard to planned exploration.

(l) Licences

While the Directors have no reason to believe that the existence and extent of any of the Group's properties are in doubt, title to mining properties is subject to potential litigation by third parties claiming an interest in them. The Directors have identified thirty Small Scale Mining Leases ("SML") and one Large Small Scale Mining Leases ("LSML") within the Zambezi tenement portfolio. The total area of the identified SMLs is less than 1% of the total tenement area held by Zambezi, and no SMLs have been identified within Zambezi's major project areas at Cheowa and Kangaluwi. The Directors maintain a policy of continuing to review and monitor Small Scale Mining Licences and their effect on day to day operations.

The failure to comply with all applicable laws and regulations, including failures to pay taxes, meet minimum expenditure requirements, or carry out and report assessment work, may invalidate title to portions of the properties where the mineral rights are not held by the Group.

The Group might not be able to retain its licence interests when they come up for renewal.

(m) Indigenous and Native Title Issues

The Zambian Mines Act deals with native title under which there are restrictions with respect to local activities. Certain parts of the Company's prospecting areas are actively farmed and may fall within this definition of local activities.

(n) Currency Risk

Any future income from mineral sales may be subject to exchange rate fluctuations and become subject to exchange control or similar restrictions. The Company expects to report its financial results in pound sterling although part of its business may be conducted in other currencies. As a result, it will be subject to foreign currency exchange risk due to exchange rate movements which will affect the Company's transaction costs and the translation of its results.

(o) Company Tax Status

The Company is registered and domiciled in Bermuda. While the Directors do not expect the Company will be taxed in Australia or the UK or elsewhere as a public company, this may not be the case.

(p) No Takeover Protection

As the Company is registered in Bermuda, Chapter 6 of the Corporations Act does not apply to the Company. As a result, any takeover offer for the Company or consolidation of control in the Company will not be regulated by Chapter 6 of the Corporations Act or any other takeover regime.

(q) Forward Looking Statements

This document contains forward looking statements, including, without limitation, statements containing the words "believe", "anticipated", "expected" and similar expressions. Such forward looking statements involve unknown risk, uncertainties and other factors which may cause the actual results, financial condition, performance or achievement of the Company, or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward looking statements. Factors that might cause such a difference include, but are not limited to, those set out in this Section 4. Given these uncertainties, investors are cautioned not to place any undue reliance on such forward looking statements. To the extent lawfully permitted, the Company disclaims any obligations to update any such forward looking statements in this Prospectus to reflect future events or developments.

4.3 Speculative Nature of Investment

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the securities offered under this Prospectus.

Therefore, the securities to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends or return of capital and the securities carry no guarantee with respect to the market value of such securities.

Investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for securities under the Offers.

Section 5 MATERIAL CONTRACTS

1. Lead Manager Mandate - Azure Capital Limited

1. On 6 August 2010 the Company engaged Azure Capital Limited ("Azure") to act as lead manager for the Placement ("Mandate").
1. Azure has been engaged to place 444,444,444 Shares at an issue price of 1.8 cents per Share to raise \$8,000,000.
1. (Completion Fee): The Company will pay Azure a Completion Fee including a 2% management fee and 4% Placement fee plus GST payable in cash upon successful completion of the Placement.
1. (Option Issue): Upon completion of the Placement, the Company will issue to Azure (or its nominees), 10,000,000 Options exercisable at 2.5 cents each expiring on 30 September 2013 and 10,000,000 Options exercisable at 3 cents each expiring on 30 September 2013.
1. (Termination): The Company may terminate the Mandate if Azure defaults in the performance of any of its material obligations. The Company must give notice of the default in writing and allow Azure 14 days to remedy the default.
1. (Indemnity): The Company has agreed to indemnify Azure against any loss, liability and all costs and expenses actually payable (including to its legal representatives whether under a costs agreement or not) which Azure may incur as a result of:
(a) any threatened or actual court action or inquiry by any regulatory authority or any other person in respect of the Placement;
(b) Azure's activities in connection with the provision of any information or services of the Company, unless those costs, losses, claims, damages, liabilities or action arise through Azure's:
- (i) negligence;
- (ii) fraud; or
- (iii) wilful default of the Mandate.

2. Memorandum of Understanding – Chingola Dumps Project

Rephidim Mining Supplies and Technical Services Ltd

1. On 19 March 2010, the Company executed a Memorandum of Understanding ("MOU") with Rephidim Mining Supplies and Technical Services Ltd ("Rephidim").
1. The MOU covers Mineralised Dump Project (OB18) (covered by mining licence SML340 under the Mines and Minerals Development Act (No. 7 of 2008) and mineralised dumps SP11 and OB7 both located in Zambia ("Project"). The Project rock dumps comprise stockpiles of mineralised copper oxide material and also oxide overburden from earlier open pit mining by Nchanga Consolidated Copper Mines.
1. A non-refundable deposit of USD\$150,000 has been paid by the Company to Rephidim in accordance with the terms of the MOU.
1. (Stage 1 Payment): At the completion of a due diligence period (which at the time of signing the MOU was not expected to exceed 6 months), the sum of USD\$500,000 comprising 50% cash and 50% in equivalent Shares (which Shares are calculated on the average daily volume weighted price of the Shares for the period of 10 business days prior to the payment date), is payable within 30 days by the Company to Rephidim.
1. (Management Fee): Once the Company has informed Rephidim that the due diligence was successful it will make payment to Rephidim of a management fee of USD\$20,000 per month, for services to be provided by Rephidim during the feasibility study ("Bankable Feasibility Study" or "BFS"). The management fee is payable until the end of the BFS stage or twelve months, whichever is the earlier.
1. (Stage 2 Payment): If at the completion of the BFS the Project is considered by the Company to be commercially viable in accordance with its investment criteria, then it will make payment to Rephidim of the sum of USD\$4,000,000, comprising 50% cash and 50% in equivalent Shares (which Shares are calculated in the same manner as Stage 1 Payment Shares). The payment will be made within 3 months of completion of the BFS, which time is extendable by a further 3 months in the event it is required by the Company.
1. The Company will make payment to Rephidim of a royalty of USD\$0.30 per tonne of ore processed for copper metal. The payment is due each month of production and will commence with the commissioning of the Project and once the practical completion tests undertaken by an independent technical expert have been concluded. The royalty payment may (in the discretion of Rephidim) be paid in Shares, which Shares are calculated in the same manner as the Stage 1 Payment Shares.
1. All payments under the MOU are unsecured, free of interest and fully subordinated to any other loans.
1. (Termination): The Company shall at any time be able to terminate its interest in the Project without penalty and without further obligation to Rephidim.
1. (First Right of Refusal): Under the MOU, Rephidim also grants the Company a 90 day first right of refusal on all and each additional dumps that Rephidim shall in the future have interest in and/or which Rephidim has mandates to sell on behalf of third parties.

3. CEO Consultancy Agreement

Warner Holdings Pty Ltd / David Russell

1. On 29 June 2010, the Company engaged Warner Holdings Pty Ltd ("Consultant") to provide consultancy services to the Company ("Consultancy Agreement").
1. Under the Consultancy Agreement, the Consultant has agreed to provide the services of David Alexander Russell. Mr Russell will hold the position of Chief Executive Officer of the Company.
1. Except as agreed between the Company and the Consultant, Mr Russell may not act as a director or hold another office with other companies except for companies which at the date of the Consultancy Agreement, he is a director of or holds other office.
1. The Company will pay the Consultant \$100,000 plus GST for the six month period beginning 24 June 2010 ("Consultancy Fee"). The Company has agreed to provide Mr Russell with business class travel and a reasonable level of travel insurance for world travel outside Australia. The Company has also agreed to pay or reimburse Mr Russell for all expenses properly and reasonably incurred by Mr Russell whilst travelling on behalf of the Company.
1. The Consultancy Agreement is for an initial term of six months commencing on 24 June 2010. This term may be extended by mutual agreement of the parties on such terms and conditions as the parties may agree.
1. The Consultancy Agreement and the rights and benefits of the Consultant and Mr Russell are not assignable or transferable without the written consent of the Company.

4. LinQ Loan Facility Agreement

1. On 31 March 2010 the Company executed a loan facility agreement with Perpetual Corporate Trust Limited in its capacity as Custodian of the LinQ Resources Fund and as agent for LinQ Limited in its capacity as responsible entity of the LinQ Resources Fund and LinQ Capital Limited in its capacity as responsible entity of the LinQ Resources Fund ("Lender") ("Loan Facility Agreement").
1. Under the Loan Facility Agreement, the Lender has agreed to provide a funding facility of AUD \$1,000,000 to the Company ("Facility") for working capital purposes only.
1. (Repayment): The Facility must be repaid in full, on or before the last business day of the 15th calendar month after the funding is provided to the Company. As set out in the Loan Facility Agreement the funding was provided on 25 March 2010 and the repayment date of the facility will be 30 June 2011. As set out in Section 1.3, part of the proceeds of the Placement Offer will be used to repay the Facility.
1. (Interest): Interest is payable on the portion of the Facility as drawn down until repayment of the Facility in full. Interest is accrued daily at a rate of 10% per annum.
1. (Indemnity): The Company has agreed to indemnify the Lender against any loss which the Lender pays, suffers, incurs or is liable for in respect of any of the following:
(a) any funding portion required by a funding notice not being made for any reason on its due date;
(b) the occurrence of any event of default or the exercise of its powers in respect of any occurrence of default;
(c) the Lender acting in reliance on any facsimile or email instructions from a transaction party (or anyone purporting to be from or on behalf of a transaction party); or
(d) the non exercise, attempted exercise, exercise or delay in the exercise of any power.

Section 6 ADDITIONAL INFORMATION

6.1 Legal Framework of this Prospectus

The Company is a "disclosing entity" under the Corporations Act and is subject to the regime of continuous disclosure and periodic reporting requirements. Specifically, the Company is subject to the Listing Rules which require continuous disclosure to the market of any information possessed by the Company which a reasonable person would expect to have a material effect on the price or value of its securities.

6.2 Applicability of Corporations Act

As a "disclosing entity", the Company has issued this Prospectus in accordance with section 713 of the Corporations Act applicable to prospectuses for an offer of securities which are securities that were quoted securities at all times in the 3 months before the issue of this Prospectus.

Having taken such precautions and having made such enquiries as are reasonable, the Company believes that it has complied with the provisions of the Listing Rules as in force from time to time which apply to disclosing entities, and which require the Company to notify ASIC of information available to the stock market conducted by ASX, throughout the 12 months before the issue of this Prospectus.

The ASX maintains files containing publicly disclosed information about all listed companies. The Company's file is available for inspection at ASX in Perth during normal working hours. In addition, copies of documents lodged by, or in relation to, the Company with ASIC may be obtained from, or inspected at, any regional office of ASIC.

The Shares underlying the Options to be issued under this Prospectus, and the Shares, are in respect of a class of shares that were continuously quoted securities at all times in the 12 months before the issue of this Prospectus.

6.3 Information Available to Shareholders

The Company will provide a copy of each of the following documents, free of charge, to any investor who so requests during the application period under this Prospectus:

(a) the Annual Report for the Company for the period ending 31 March 2010; and
(b) the following documents used to notify ASX of information relating to the Company during the period after lodgement of the Annual Report of the Company for the period ending 31 March 2010 and before the issue of this Prospectus:

Date	Headline
31/8/2010	Monthly Cashflow Report
25/08/10	Appendix 3B
20/08/2010	Ceasing to be a substantial holder
20/08/2010	Notice of Special General Meeting
12/08/2010	Share Placement

Date	Headline
9/08/2010	Trading Halt
30/07/2010	Change in substantial holding
29/07/2010	Quarterly Activities and Cashflow Report
22/07/2010	Appendix 3B
15/07/2010	Completion of Drilling Programme at Chingola, Zambia
30/06/2010	Appointment of Chief Executive Officer

6.4 Rights Attaching to Option Offer Options

6.4.1 Terms and Conditions of 10,000,000 Options with exercise price of 2.5 cents and expiry date of 30 September 2013

(a) Each Option, when exercised, entitles the holder to subscribe for and be allotted one Share in the capital of the Company upon the payment of 2.5 cents per Share ("Exercise Price").
(b) The Options can be exercised in whole or in part, and if exercised in part multiples of 50,000 must be exercised on each occasion. The exercise of only some Options shall not affect the rights of the Option holder to the balance of the Options held.
(c) Options are exercisable by lodging at the office of the Company an exercise notice accompanied by payment of the purchase price for the Options (being the Exercise Price multiplied by the number of Options the subject of the exercise notice). Shares allotted and issued pursuant to the exercise of Options will be allotted and issued by the Company within 10 Business Days after receipt by the Company of a properly executed Exercise Notice together with payment of the purchase price.
(d) Each Option is transferable.
(e) Each Option will expire at 5.00 pm Perth time on 30 September 2013.
(f) The Option holder cannot participate in any new issue of securities of the Company to shareholders without exercising the Options in which case the Option holder will be afforded a period of at least 9 Business Days (as defined in the Listing Rules) prior to and inclusive of the record date to determine entitlements to the issue to exercise the relevant Options.
(g) The Options do not confer on the holder any rights to participate in dividends during the currency of the Options.
(h) In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules, but in all other respects the terms of exercise will remain unchanged.
(i) Subject to the Listing Rules, the number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received

by the Option holder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue.

(j) The Options will not be listed for official quotation on the ASX.
(k) Subject to paragraph (h) above, the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised if the Company completes a bonus or entitlements issue.
(l) The Shares allotted upon the exercise of the Options shall rank, from the date of allotment, equally with the existing ordinary Shares in all respects.

6.4.2 Terms and conditions of 10,000,000 Options with exercise price of 3 cents and expiry date of 30 September 2013

(a) Each Option, when exercised, entitles the holder to subscribe for and be allotted one Share in the capital of the Company upon the payment of 3 cents per Share ("Exercise Price").
(b) The Options can be exercised in whole or in part, and if exercised in part multiples of 50,000 must be exercised on each occasion. The exercise of only some Options shall not affect the rights of the Option holder to the balance of the Options held.
(c) Options are exercisable by lodging at the office of the Company an exercise notice accompanied by payment of the purchase price for the Options (being the Exercise Price multiplied by the number of Options the subject of the exercise notice). Shares allotted and issued pursuant to the exercise of Options will be allotted and issued by the Company within 10 Business Days after receipt by the Company of a properly executed Exercise Notice together with payment of the purchase price.
(d) Each Option is transferable.
(e) Each Option will expire at 5.00 pm Perth time on 30 September 2013.
(f) The Option holder cannot participate in any new issue of securities of the Company to shareholders without exercising the Options in which case the Option holder will be afforded a period of at least 9 Business Days (as defined in the Listing Rules) prior to and inclusive of the record date to determine entitlements to the issue to exercise the relevant Options.
(g) The Options do not confer on the holder any rights to participate in dividends during the currency of the Options.
(h) In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules, but in all other respects the terms of exercise will remain unchanged.
(i) Subject to the Listing Rules, the number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to the exercise of the Options so that, upon exercise of the Options the number of Shares received by the Option holder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issue.
(j) The Options will not be listed for official quotation on the ASX.
(k) Subject to paragraph (h) above the Options do not confer on the holder any right to a change in the exercise price of the Options or a change to the number of underlying securities over which the Options can be exercised.
(l) The Shares allotted upon the exercise of the Options shall rank, from the date of allotment, equally with the existing ordinary Shares in all respects.

6.5 Rights Attaching to Shares

The 444,444,444 Shares and the Shares to be issued pursuant to the exercise of the Option Offer Options will rank equally in all respects with existing Shares.

The rights attached to Shares are governed by the Memorandum, Bye-Laws, applicable Bermuda statutes regarding companies including the Bermuda Companies Act and, in certain circumstances, will be regulated by the Corporations Act, the Listing Rules, the ASTC Settlement Rules, ACH Clearing Rules and the general law.

The following is a summary of the principal rights which attach to the Shares:

(a) Voting

Subject to any rights or restrictions attaching to any class of Shares, at any general meeting of the Company, each shareholder entitled to vote may vote in person or by proxy, attorney or (if it is a company) by representative each of whom shall be entitled to speak and to one vote on a show of hands and each shareholder present in person or by proxy, attorney or (if it is a company) by representative shall be entitled on a poll to one vote for each fully paid Share held. A poll may be demanded by the chairman of the meeting, by at least three shareholders present in person or represented by proxy, by any one or more shareholders present in person or by proxy who are together entitled to not less than 10% of the total voting rights of all shareholders having the right to vote at such meetings, or by one or more shareholders present in person or represented by proxy who together hold Shares conferring the right to vote at such meeting, being Shares on which an aggregate sum has been paid up equal to not less than 10% of the total sum paid up on all such Shares conferring such right.

No shareholder shall, unless the board of Directors otherwise determines, be entitled to vote at any general meeting unless all calls or other sums presently payable by them in respect of Shares of the Company have been paid. On a poll a shareholder or proxy or representative, if entitled to more than one vote, need not use all their votes or cast all their votes they use in the same way.

In the case of any equality of votes at a general meeting, whether on a show of hands or on a poll, the chairman of such meeting shall not be entitled to a second or casting vote and the resolution shall fail.

(b) Dividends

The Directors may declare and pay a dividend or make a distribution out of contributed surplus to shareholders according to their rights and interests, including such interim dividends as appear to the Directors to be justified by the position of the Company in accordance with the requirements of the Bermuda Companies Act. The Directors, in their discretion, may determine that any dividend may be paid according to the amounts paid as a proportion of the total amount paid and payable on the Shares in respect of which the dividend or distribution is paid or apportioned and paid pro rata according to the amounts paid up on the Shares during any portion(s) of the period in respect of which the dividend or distribution is paid. Payment or satisfaction of any dividend or distribution out of contributed surplus may be made in cash or by paying up in full Shares to be issued to shareholders or by the distribution of specific assets.

Contributed surplus is a North American concept recognised under the generally accepted accounting principles of the Canadian Institute of Chartered Accountants, whose accounting principles are applied in Bermuda. Contributed surplus includes proceeds from donated Shares, credits resulting from the redemption or conversion of Shares at less than the amount of the nominal capital or par value, the excess value of Shares acquired over those issued in a Share exchange should the board of Directors elect to treat it as such and donations of cash or other assets to the Company.

Generally, Shares are freely transferable, subject to formal regulatory requirements and to such other requirements as may be applicable and to the registration of the transfer not resulting in a contravention of or failure to observe the applicable provisions of the Bermuda Companies Act.

BMA consent is required for all new issues of Shares in a Bermuda exempted company including all issues to persons who are non-resident of Bermuda for exchange control purposes. The BMA's consent is also required for subsequent transactions in issued Shares between persons regarded as non-resident of Bermuda for exchange control purposes, if a special general consent has not been granted or the transactions are not covered by the General Permission.

The BMA's consent granted pursuant to the General Permission covers the Shares underlying the Option Offer Options to be issued pursuant to this Prospectus and the free transferability of these Shares to and between any persons without the prior approval of the BMA so long as these Shares are listed on an "Appointed Stock Exchange", which includes the ASX.

(d) Meetings, Reports and Notice

Notice of every general meeting shall be given in any manner permitted by the Bye-Laws to all shareholders other than under the provisions of the Bye-Laws or the terms of issue of the Shares they hold, are not entitled to receive such notice from the Company and every Director and to any resident representative who or which has delivered a written notice upon the Company's registered office requiring that such notice be sent to them or it.

Subject to any rights or restrictions attaching to any class of Shares, shareholders are entitled to receive all notices, auditors' reports and accounts and other documents required to be furnished to shareholders under the Bermuda Companies Act.

(e) Winding Up

Subject to the terms of issue of Shares, if the Company is wound up, the liquidator may, with the sanction of a resolution of the shareholders and any other sanction required by the Bermuda companies law, divide amongst the shareholders in specie or in kind the whole or any part of the assets of the Company (whether they shall consist of property of the same kind or not) and may for such purposes set such value as he or she deems fair upon any property to be divided as aforesaid and may determine how such division shall be carried out as between the shareholders or different classes of shareholders. The liquidator may, with the like sanction, vest the whole or any part of such assets in trustees upon such trust for the benefit of the contributories as the liquidator, with the like sanction, shall think fit, but so that no shareholder shall be compelled to accept any Shares or other assets upon which there is any liability.

(f) Increases in Share Capital and Issue

The Company may, if authorised by a general meeting of its shareholders, increase its Share capital. The Company may, by the resolution increasing the capital, direct that the new Shares or any of them shall be offered in the first instance either at par or at a premium, subject to the provisions of the Bermuda Companies Act, to all the holders for the time being of Shares of any class or classes in proportion to the number of such Shares held by them respectively or make any other provision as to the issue of the new Shares.

Shares are subject to all the provisions of the Bye-Laws with reference to lien, the payment of calls, forfeiture, transfer, transmission and otherwise.

(g) Variation of Rights Attaching to Shares

All or any of the special rights for the time being attached to any issued class of shares may be altered or abrogated with the consent in writing of the holders of not less than 75% of the issued shares of that class or with the sanction of a resolution passed at a separate general meeting of the holders of such shares voting in person or by proxy.

(h) Alteration of Capital

The Company may by resolution of the shareholders alter its capital by reducing or increasing its capital, consolidating and dividing any or all of its capital, cancelling shares which have not been taken or agreed to be taken by any person, issuing shares entitling the shareholder to either no voting right or a restricted voting right, or converting all or any of its fully paid ordinary shares, the nominal amount of which is expressed in a particular currency, into fully paid ordinary shares of a nominal amount of a different currency.

(i) Directors

The Company must have not less than 2 and no more than 6 Directors (a number in excess of 6 Directors is permitted by resolution of the shareholders). Subject to the Bermuda Companies Act and the Bye-Laws, the Directors shall be elected or appointed by shareholders and shall serve for such terms as the Company by resolution may determine, or in the absence of such determination, until the termination of the next annual general meeting following their appointment.

(j) Preference Shares

The Bye-Laws provide for the Company to issue Preference Shares. Subject to the Bermuda Companies Act, the Company's Memorandum and any confirmation or consent required by law or the Bye-Laws, the Company may from time to time by resolution in general meeting convert any preference shares into redeemable Preference Shares.

The Company does not currently have any Preference Shares on issue.

(k) ASX Listing Rules

Whilst the Company is admitted to the Official List of ASX, then despite anything in the Bye-Laws of the Company, if the Listing Rules prohibit an act being done, the act must not be done. Nothing in the Bye-Laws prevents an act being done that the Listing Rules require to be done. If the Listing Rules require an act to be done or not to be done, authority is given for that act to be done or not to be done (as the case may be). If the Listing Rules require the Bye-Laws to contain a provision or not to contain a provision the Bye-Laws are deemed to contain that provision or not to contain that provision (as the case may be). If a provision of the Bye-Laws is or becomes inconsistent with the Listing Rules, the Bye-Laws are deemed not to contain that provision to the extent of the inconsistency.

6.6 Interests of Directors

Directors' Holdings

The Directors are not subscribing for Shares under the Placement Offer. The relevant interest of each of the Directors in Shares and Options at the date of this Prospectus and immediately after the issue of Shares and Options under the Offers are as follows:

	Number of Shares
Directors	Held at date of Prospectus	Issued under the Offers	Held after the Offers
Brian Rear	276,2281	-	276,2281
Simon Durack	-	-	-
David Vilensky	-	-	-
Richard Proctor	-	-	-

Notes:

These Shares are held by SRH Resources Pty Ltd as trustee for the SRH Provident Fund. Mr Rear and his wife are the sole directors of the SRH Resources Pty Ltd.

	Number of Options
Directors	Held at date of Prospectus	Issued under the Offers	Held after the Offers
Brian Rear	500,0002	-	500,0002
Simon Durack	-	-	-
David Vilensky	-	-	-
Richard Proctor	-	-	-

500,000 unquoted Options exercisable at £0.20 expiring 31 August 2011.

Remuneration of Directors

The Bye-Laws provide that the non-executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum sum per annum from time to time determined by the Company in general meeting (which is currently AUD\$250,000).

A Director may be paid fees or other amounts as the Directors determine where a Director performs special duties or otherwise performs services outside the scope of the ordinary duties of a Director. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

Over the last two years, the total aggregate of the remuneration paid to and benefits in kind granted to the Directors by the Company was as follows:

Director	Fees/Salary/Bonus (AUD\$)	Other Remuneration (AUD\$)	Total Remuneration (AUD\$)
Brian Rear	128,793	23,872	152,665
Julian Ford1	340,894	-	340,894
Geoffrey Johnson2	140,880	-	140,880
Jeremy Wrathall3	19,112	23,872	42,984
Simon Durack	32,253	-	32,253
David Vilensky	32,098	-	32,098

Notes:

Mr Ford ceased to be a Director on 31 October 2009.
Mr Johnson ceased to be a Director on 3 August 2009.
Mr Wrathall ceased to be a Director on 17 October 2009.

The amounts paid to Directors are disclosed in AUD and an exchange rate of GBP to AUD of 1.74248 was used to convert the GBP amounts into the disclosure currency above.

Except as disclosed in this Prospectus, no Director (whether individually or in consequence of a Director's association with any company or firm or in any material contract entered into by the Company) has now, or has had, in the 2 year period ending on the date of this Prospectus, any interest in:

the formation or promotion of the Company; or
property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offers; or
the Offers.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or agreed to be paid to any Director or to any company or firm with which a Director is associated to induce him to become, or to qualify as, a Director, or otherwise for services rendered by him or his company or firm with which the Director is associated in connection with the formation or promotion of the Company or the Offers.

6.7 Interests of Named Persons

Except as disclosed in this Prospectus, no expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, nor any firm in which any of those persons is or was a partner nor any company in which any of those persons is or was associated with, has now, or has had, in the 2 year period ending on the date of this Prospectus, any interest in:

the formation or promotion of the Company;
property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offers; or
the Offers.

Except as disclosed in this Prospectus, no amounts of any kind (whether in cash, Shares, Options or otherwise) have been paid or agreed to be paid to any expert, promoter or any other person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of the Prospectus, or to any firm in which any of those persons is or was a partner or to any company in which any of those persons is or was associated with, for services rendered by that person in connection with the formation or promotion of the Company or the Offers.

Bowen Buchbinder Vilensky, a company of which Mr David Vilensky is a director, have acted as Australian solicitors to the Company in relation to this Prospectus. In respect of their work on this Prospectus, the Company will pay approximately \$17,500 for these professional services. Bowen Buchbinder Vilensky have provided other professional services to the Company during the last two years amounting to approximately \$35,595.

Blakiston & Crabb have acted as Australian solicitors to the Company in relation to this Prospectus (but were not a member of the Due Diligence Committee with respect to the Prospectus). In respect of their work on this Prospectus, the Company will pay approximately \$10,000 for these professional services. Blakiston & Crabb have provided other professional services to the Company during the last two years amounting to approximately \$163,444.

The amounts disclosed above are exclusive of any amount of goods and services tax payable by the Company in respect of those amounts.

6.8 Expenses of the Offers

The approximate expenses of the Offers are as follows:

Advisors fees (legal, corporate, etc)	\$38,000
Brokerage	\$480,000
ASX listing fees	\$15,350
Other	\$1,650
Total	\$535,000

These expenses are payable by the Company.

6.9 Consents

Each of the parties referred to in this Section 6.9:

(a) does not make, or purport to make, any statement in this Prospectus or on which a statement made in the Prospectus is based, other than as specified in this Section 6.9; and
(b) to the maximum extent permitted by law, expressly disclaims and takes no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section 6.9.

Deloitte Touche Tohmatsu has given its written consent to being named as the Company's auditor in this Prospectus and the auditor of the Company's balance sheet for the year ended 31 March 2010 as set out in Section 2.2 of this Prospectus and has not withdrawn its consent prior to the lodgement of this Prospectus with ASIC.

Blakiston & Crabb has consented to being named in this Prospectus as the solicitors to the Offers (which were not a member of the Due Diligence Committee with respect to the Prospectus) and has not withdrawn such consent prior to the lodgement of this Prospectus with the ASIC.

Bowen Buchbinder Vilensky has consented to being named in this Prospectus as the solicitors to the Offers and has not withdrawn such consent prior to the lodgement of this Prospectus with the ASIC.

Azure Capital Limited has consented to being named in this Prospectus as the lead manager of the Offers and has not withdrawn such consent prior to the lodgement of this Prospectus with the ASIC.

Section 7 DEFINED TERMS

"\$" or "AUD\$" means Australian dollars;

"£" means pounds sterling;

"ACH" means the Australian Clearing House Pty Limited ACN 001 314 503;

"ACH Clearing Rules" means the operating rules of ACH;

"Application Form" means the application form to apply for the Shares pursuant to this Prospectus;

"ASIC" means the Australian Securities and Investments Commission;

"ASTC" means ASX Settlement and Transfer Corporation Pty Ltd ACN 008 504 532;

"ASTC Settlement Rules" means the operating rules of ASTC;

"ASX" means ASX Limited and, where the context permits, the Australian Securities Exchange operated by ASX Limited;

"AWST" means Australian Western Standard Time;

"Azure" means Azure Capital Limited ACN 107 416 106;

"Bermuda Companies Act" means the Companies Act 1981 of Bermuda;

"BMA" means the Bermuda Monetary Authority;

"Board" means the board of Directors;

"Business Day" means every day other than a Saturday, Sunday, New Year's Day, Good Friday, Easter Monday, Christmas Day, Boxing Day and any other day that ASX declares is not a business day;

"Bye-Laws" means the Bye-Laws of the Company, as amended from time to time;

"Company" or "Zambezi" means Zambezi Resources Limited ARBN 124 462 826;

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

"Directors" means the directors of the Company;

"Group" means Zambezi Resources Limited and its beneficially owned subsidiary companies being Mwembeshi Resources Limited, Mwembeshi Resources (Bermuda) Limited, Africa Austral Mineracao Limitada, Southern African Resources Limited, Cape Resources Limited, Chalimbana Resources Limited, Cheowa Resources Limited and Zambezi Resources (Australia) Pty Ltd;

"LinQ" means LinQ Capital Limited ACN 098 197 258 as responsible entity for the LinQ Resources Fund;

"Listing Rules" means the Listing Rules of ASX;

"Offers" has the meaning in Section 1.2 of this Prospectus;

"Offer Period" has the meaning in Section 1.4 of this Prospectus;

"Option" means an option to acquire one Share;

"Option Offer" has the meaning in Section 1.2 of this Prospectus;

"Option Offer Options" means Options offered under the Option Offer;

"Placement Offer" has the meaning in Section 1.2 of this Prospectus;

"Prospectus" means this prospectus;

"Rephidim" means Rephidim Mining Supplies and Technical Services Ltd;

"Section" means a section of this Prospectus; and

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

AI assistant

TREK METALS LIMITED — Capital/Financing Update 2010

65923_rns_2010-09-08_7c7659e1-0ea9-47c4-962a-60f13d23eaa4.pdf

ZAMBEZI RESOURCES LIMITED

PROSPECTUS

The offers for the Shares and Options close at 5.00pm AWST on 14 September 2010.

IMPORTANT NOTICE

INDEX

IMPORTANT NOTICE

CORPORATE DIRECTORY

DIRECTORS

REGISTERED OFFICE

PRINCIPAL OFFICE

AUSTRALIAN SOLICITORS

AUDITORS

SHARE REGISTRY

LEAD MANAGER

ZAMBIAN SOLICITORS

Section 1 DETAILS OF THE OFFERS

1.1 Purpose of the Offer

1.2 Details of the Offers

1.3 Use of Funds

1.4 Opening and Closing Dates

1.5 Brokerage and Commission

1.6 Applications

Delivered to Or by post to

1.7 Issue of Securities

1.8 ASX Listing

1.9 No Issue of Securities after 13 Months

1.10 Overseas Investors

1.11 Underwriting

1.12 Minimum and Maximum Subscription

1.13 Market Prices of Shares on ASX

1.14 Data Protection and Privacy

1.15 Electronic Prospectus

Section 2 CAPITAL STRUCTURE AND EFFECT OF THE OFFERS

2.1 Principal Effects

2.2 Consolidated Balance Sheet and Capital Structure

Capital Structure of the Company

Unaudited Pro-Forma Consolidated Balance Sheet

NOTES TO THE UNAUDITED PRO-FORMA CONSOLIDATED BALANCE SHEET

Section 3 BOARD AND MANAGEMENT

David Vilensky – BA, LLB (Non-Executive Director, Appointed 3 August 2009)

Richard Procter – BSc (Eng), MBA, CEng, MIMMM (Non-Executive Director, Appointed 14 September 2009)

Section 4 RISK FACTORS

4.1 Introduction

4.2 Risk Factors

(d) Exploration and Production Risks

4.3 Speculative Nature of Investment

Section 5 MATERIAL CONTRACTS

1. Lead Manager Mandate - Azure Capital Limited

2. Memorandum of Understanding – Chingola Dumps Project

Rephidim Mining Supplies and Technical Services Ltd

3. CEO Consultancy Agreement

Warner Holdings Pty Ltd / David Russell

4. LinQ Loan Facility Agreement

Section 6 ADDITIONAL INFORMATION

6.1 Legal Framework of this Prospectus

6.2 Applicability of Corporations Act

6.3 Information Available to Shareholders

6.4 Rights Attaching to Option Offer Options

6.4.1 Terms and Conditions of 10,000,000 Options with exercise price of 2.5 cents and expiry date of 30 September 2013

6.4.2 Terms and conditions of 10,000,000 Options with exercise price of 3 cents and expiry date of 30 September 2013

6.5 Rights Attaching to Shares

(h) Alteration of Capital

(i) Directors

6.6 Interests of Directors

Directors' Holdings

Remuneration of Directors

6.7 Interests of Named Persons

6.8 Expenses of the Offers

6.9 Consents

Section 7 DEFINED TERMS

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TREK METALS LIMITED Capital/Financing Update 2010