VENARI MINERALS NL - Proxy Solicitation & Information Statement 2013

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18 October 2013

The Manager ASX Level 8, Exchange Plaza 2 The Esplanade PERTH WA 6000

Dear Sir

Notice of Extraordinary General Meeting & Explanatory Memorandum

Enclosed is the Notice of Extraordinary General Meeting which has been mailed to Shareholders today.

Yours faithfully

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Vince Fayad Company Secretary

a: level 9, 1 o’connell street p gpo box 5446 ph: +61 2 9237 6525 sydney nsw 2000 sydney nsw 2001 fx: +61 2 8346 6099 w: www.aro.com.au e [email protected] asx aro

Astro Resources NL ABN 96 00 7 090 904

Notice of Extraordinary General Meeting and Explanatory Memorandum

Date of Meeting: 20 NOVEMBER 2013 Time of Meeting: 11.00 AM (Sydney time) Place of Meeting: LEVEL 9, NO.1 O’CONNELL STREET SYDNEY NSW 2000

Chairman’s Letter

Dear Shareholder

I am pleased to invite you to attend an Extraordinary General Meeting (EGM ) of Astro Resources NL ABN 96 00 7 090 904 ( Company ) which will be held at the offices of Lawler Partners, Level 9 No.1 O’Connell Street Sydney, on 20 November 2013 at 11.00am (Sydney time).

Enclosed is a Notice of Extraordinary General Meeting ( Notice ), which sets out the items of business. The Explanatory Memorandum which accompanies and forms part of the Notice have been prepared to assist you in understanding the items of business and the nature and consequences of the approvals sought.

At the EGM we are seeking your support to enable the Company to issue convertible notes to various entities to facilitate 100% ownership of Governor Broome Sands Pty Ltd ( GBS ) (20%), raise $500,000 of in cash and a note for satisfaction of the acquisition of plant and equipment. The resolutions that are required to be dealt with by Shareholders in relation to the conversion of the notes into ordinary shares of the Company are as follows:

the first and second convertible notes are proposed to be issued to Reliance Natural Resource Fund Pty Ltd (RNRF ) and a current substantial shareholder of the Company, Mining Investments Limited (MIL ) respectively. MIL is an entity controlled and owned by Mr Elias (Leo) Khouri. These convertible notes are required to be issued under a share sale agreement for the acquisition of the 20% it does not own in GBS, resulting in GBS becoming a wholly owned subsidiary of the Company;
the third and fourth convertible notes proposed to be issued to MIL and Pure Steel Limited (PSL ) for lending in cash the Company $250,000 each or $500,000 in total. The funds from these notes are to be used for exploration expenditure, evaluation of new projects and for general working capital requirements. Any conversion of these convertible note enables the Company to preserve its future cash resources, by converting the debt into equity at the time of repayment; and
the fifth convertible note is proposed to be provided as consideration for the acquisition by the Company of diamond drilling equipment, at a price of $150,000. The approval of the conversion terms allows the Company to fulfil its obligations under the asset purchase agreement and at the same allow it to preserve its future cash resources, by converting the debt into equipment at the time of repayment.

The acquisition of the remaining 20% shareholding in GBS is an important milestone for your Company. This acquisition will allow the Company to acquire the GBS project for a fair value, which has been subsequently supported by the independent geological technical valuation report (refer to the Independent Expert’s Report). Additionally, completion of the acquisition will provide for the following benefits:

determine the strategic direction of the project;
reduce the administrative burden on the Company; and
removes a number of obligations that are currently imposed upon the Company under the GBS shareholders agreement most notably having to fund 100% of the project for an 80% shareholding. This obligation is considered to devalue the overall 80% interest in the GBS project.

The convertible notes in relation to cash injection of funds totalling $500,000 provides the Company with the opportunity of preserving its cash resources at the future later date for repayment.

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Notice of Extraordinary General Meeting

As a result of the proposed acquisition of the GBS shareholding, together with the funding provided by MIL, this results in MIL (and Mr Khouri) potentially having a voting interest of more than 20% in the Company, assuming that it was to exercise its right to convert the debt into equity. In these difficult times for junior mining exploration companies, such as Astro, the Directors believe that it is fortunate to have received such financial support from MIL and Mr Khouri and therefore believe that approval of the convertible notes to MIL is considered to be in the best interests of the Company.

The acquisition of the diamond drilling equipment is also considered to be an important next step in the development of the East Kimberly Diamond project and in particular, for creating value for all shareholders.

The Directors have appointed Grant Thornton to prepare and independent expert’s report in relation to the transactions involving MIL and Mr Khouri (i.e. the note relating to consideration payable for the acquisition of the 20% shareholding in GBS and the note for the cash funding). Grant Thornton have concluded for both transactions, that they are not fair, but reasonable. I would urge you to read the Independent Expert’s Report.

The Company values your vote and I look forward to seeking you at the EGM. If you are unable to attend, I encourage you to participate by completing and returning the enclosed proxy form.

Yours sincerely

Kris Knauer Chairman 15 October 2013

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Notice of Extraordinary General Meeting

Notice is given that an Extraordinary General Meeting of shareholders of Astro Resources NL ABN 96 00 7 090 904 ( Company ) will be held at the offices of Lawler Partners at Level 9, No.1 O’Connell Street Sydney, on [20 November 2013] at [11.00am] (Sydney time).

Terms used in this Notice of Meeting are defined in Section 8 of the accompanying Explanatory Memorandum.

The Explanatory Memorandum and the Proxy Form accompanying this Notice of Meeting are incorporated in and comprise part of this Notice of Meeting.

For the purposes of Resolutions 2 and 3 an Independent Expert’s Report prepared by Grant Thornton ( Independent Expert ) is enclosed with this Notice of Meeting in Annexure A. Shareholders are urged to read and consider the Independent Expert’s Report prior to making a decision as to how to vote on Resolutions 2 and 3.

A copy of this Notice and the Explanatory Memorandum which accompanies this Notice has been lodged with the Australian Securities & Investments Commission ( ASIC ) in accordance with Section 218 of the Corporations Act.

Agenda

The agenda for the meeting is as follows:

1. Opening of meeting

2. Resolution 1: Issue of convertible note to Reliance Natural Resource Fund Pty Ltd ABN 26 140 558 809 under a share sale agreement

3. Resolution 2: Issue of convertible note to Mining Investments Limited under a share sale agreement

4. Resolution 3: Issue of convertible note to Mining Investments Limited

5. Resolution 4: Issue of convertible note to Pure Steel Limited

6. Resolution 5: Issue of a convertible note to David Alexander Gibbs

7. Other business

8. Close of meeting

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Notice of Extraordinary General Meeting

Ordinary business

Resolution 1: Issue of a convertible note and conversion shares to Reliance Natural Resource Fund Pty Ltd under the Share Sale Agreement

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company:

“That, subject to Resolution 2 being approved, in accordance with Listing Rule 7.1, and for all other purposes, the Company be authorised to issue the RNRF Convertible Note (and RNRF Conversion Shares) to Reliance Natural Resource Fund Pty Ltd ABN 26 140 558 809 ( RNRF ) on the terms and conditions contained in this Notice of Meeting and attached Explanatory Memorandum.”

Voting Exclusion Statement

In accordance with Listing Rule 14.11, the Company will disregard any votes cast on this Resolution by:

(a) RNRF, MIL and Mr Elias Khouri; and
(b) any associate of RNRF, MIL or and Mr Elias Khouri .

However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions in the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Resolution 2: Issue of a convertible note and conversion shares to Mining Investments Limited under the Share Sale Agreement

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company:

“That, subject to Resolution 1 being approved:

(a) in accordance with Listing Rule 7.1 and for all other purposes the Company be authorised to issue the MIL Convertible Note A and MIL-A Conversion Shares (upon conversion of the MIL Convertible Note A) to Mining Investments Limited ( MIL ); and
(b) in accordance with section 611 (item 7) of the Corporations Act and for all other purposes MIL and Mr Elias Khouri (as the sole director and shareholder of MIL) be authorised, to acquie a Relevant Interest in Voting Shares where potentially, MIL’s and Mr Elias Khouri’s Voting Power in the Company would increase:
from 20% or below to more than 20%; or
from a starting point that is above 20% and below 90%,

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Notice of Extraordinary General Meeting

upon the terms and conditions described in the Explanatory Memorandum.”

Notes

For the purpose of section 611 of the Corporations Act, an Independent Expert’s Report prepared by Grant Thornton is enclosed with this Notice of Meeting in Annexure A. Grant Thornton has formed the view that the transaction proposed by this resolution is not fair but reasonable to the non-associated shareholders of the Company.

Voting Exclusion Statement

In accordance with Listing Rule 14.11, the Company will disregard any votes cast on this Resolution by:

(a) MIL and RNRF; and
(b) any associate of MIL or RNRF.

However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions in the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Resolution 3: Issue of a convertible note and conversion shares to Mining Investments Limited

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company:

“That:

(a) in accordance with Listing Rule 7.1 and for all other purposes the Company be authorised to issue the MIL Convertible Note B (and MIL-B Conversion Shares upon conversion of the MIL Convertible Note B) to Mining Investments Limited ( MIL ) and;
(b) in accordance with section 611 (item 7) of the Corporations Act and for all other purposes MIL and Mr Elias Khouri (as the sole director and shareholder of MIL) be authorised to acquire a Relevant Interest in Voting Shares where potentially, MIL’s and Mr Elias Khouri’s Voting Power in the Company would increase:
from 20% or below to more than 20%; or
from a starting point that is above 20% and below 90%,

upon the terms and conditions described in the Explanatory Memorandum.”

Notes

For the purpose of section 611 of the Corporations Act, an Independent Expert’s Report prepared by Grant Thornton is enclosed with this Notice of Meeting in Annexure A. Grant

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Notice of Extraordinary General Meeting

Thornton has formed the view that the transaction proposed by this resolution is not fair but reasonable to the non-associated shareholders of the Company.

Voting Exclusion Statement

In accordance with Listing Rule 14.11, the Company will disregard any votes cast on this Resolution by:

(a) MIL and Mr Elias Khouri; and
(b) any associate of MIL or Mr Khouri.

However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions in the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Resolution 4: Issue of a convertible note and conversion shares to Pure Steel Pty Ltd

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company:

“That in accordance with Listing Rule 7.1 and for all other purposes the Company be authorised to issue the PSL Convertible Note to Pure Steel Pty Ltd ACN 163 986 623 ( PSL ) and the Company be authorised to issue, to PSL, the PSL Conversion Shares upon conversion of the PSL Convertible Note, upon the terms and conditions described in the Explanatory Memorandum.”

Voting Exclusion Statement

In accordance with Listing Rule 14.11, the Company will disregard any votes cast on this Resolution by:

(a) PSL; and
(b) any associate of PSL.

However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions in the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

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Notice of Extraordinary General Meeting

Resolution 5: Issue of a convertible note and conversion shares to David Alexander Gibbs

To consider and, if thought fit, pass the following resolution, as an Ordinary Resolution of the Company:

“That in accordance with Listing Rule 7.1 and for all other purposes the Company be authorised to issue the P&E Convertible Note to David Alexander Gibbs ( Gibbs ) and the Company be authorised to issue, to Mr Gibbs, the P&E Conversion Shares upon conversion of the P&E Convertible Note,upon the terms and conditions described in the Explanatory Memorandum.”

Voting Exclusion Statement

In accordance with Listing Rule 14.11, the Company will disregard any votes cast on this Resolution by:

(a) David Alexander Gibbs; and
(b) any associate of David Alexander Gibbs.

However, the Company need not disregard a vote if:

(a) it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions in the proxy form; or
(b) it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Special business

Nil

General business

To consider any other business as may be lawfully put forward in accordance with the Constitution.

By order of the board

Vincent John Fayad Company Secretary 15 October 2013

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Notice of Extraordinary General Meeting

1. Introduction

The following information is provided to Shareholders of Astro Resources NL ABN 96 00 7 090 904 ( Company ) in connection with the business to be considered at an Extraordinary General Meeting of Shareholders to be held at the offices of Lawler Partners on Level 9 No.1 O’Connell Sydney 20 November 2013 commencing at 11.00am (Sydney time).

The Notice of Meeting, which is also enclosed, sets out details of proposals concerning the 5 Resolutions to be put to Shareholders.

The Directors recommend Shareholders read the accompanying Notice of Meeting and this Explanatory Memorandum in full before making any decision in relation to the Resolutions.

Unless otherwise defined, terms used in this Explanatory Memorandum are defined in Section 8.

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Explanatory Memorandum

ORDINARY BUSINESS

1. Resolution 1 and 2: Issue of convertible notes (and conversion shares) to Mining Investments Limited and Reliance Natural Resource Fund Pty Ltd under the Share Sale Agreement

1.1 Introduction: Share Sale Agreement Convertible Notes

The Company, RNRF and Governor Broome Sands Pty Ltd ABN 43 137 970 579 ( GBS ) entered into a share sale agreement dated 15 August 2013 ( Share Sale Agreement ) pursuant to which the Company will acquire a 20% shareholding interest in GBS ( GBS Shares ) from RNRF for $750,000 ( Purchase Price ).

The Company already holds the other 80% shareholding in GBS so that upon completion of the Share Sale Agreement GBS will be a wholly owned subsidiary of the Company.

The Share Sale Agreement is subject to Shareholder approval enabling the Company to pay the Purchase Price by issuing the following convertible notes in lieu of cash:

(a) $250,000 convertible note to RNRF ( RNRF Convertible Note ); and
(b) $500,000 convertible note to Mining Investments Limited ( MIL Convertible Note A ) which is being issued by the Company directly to MIL at the request of RNRF, and represents payment by RNRF to MILfor services that MIL has provided to RNRF in introducing this share sale transaction to RNRF (further details of which are contained in Section 1.3 below),

( Share Sale Convertible Notes ).

Accordingly, Resolution 1 seeks Shareholder approval for the Company to issue the RNRF Convertible Note (and the RNRF Conversion Shares upon conversion of the RNRF Convertible Note) to RNRF. Further details in relation to Resolution 1 are set out in section 2 below.

Resolution 2 seeks Shareholder authorisation to issue the MIL Convertible Note A (and MIL-A Conversion Shares upon conversion of the MIL Convertible Note A) to MIL. Further details in relation to Resolution 2 are set out in section 3 below.

1.2 Convertible Note Terms

A summary of the terms of the RNRF Convertible Note and MIL Convertible Note A are set out in Annexure B to this Explanatory Memorandum.

The key terms of the RNRF Convertible Note are as follows:

Maturity Date	14 months from completion of the Share Sale Agreement. If the note holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment obligation for a further 12 months, during which period all rights available under the note will remain available to the holder (Rollover Extension).
Interest Rate	12% per annum. 17% per annum duringthe Rollover Extension(if

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Explanatory Memorandum

	exercised).
Fees payable by the Company	An incentive fee equal to 5% of the conversion amount is payable on each occasion when a conversion notice is received by the Company. If the full Face Value of the note is converted into Shares, this would represent a total fee of $12,500. A payment of $8,500 is payable as a Rollover Consideration if the Company exercises the Rollover Extension.

The key terms of the MIL Convertible Note A are as follows:

Maturity Date	14 months from completion of the Share Sale Agreement. If the note holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment obligation for a further 12 months, during which period all rights available under the note will remain available to the holder (Rollover Extension).
Interest Rate	12% per annum. 17% per annum during the Rollover Extension (if exercised).
Fees payable by the Company	An incentive fee equal to 5% of the conversion amount is payable on each occasion when a conversion notice is received by the Company. If the full Face Value of the note is converted into Shares, this would represent a total fee of $25,000. A payment of $16,500 is payable as a Rollover Consideration if the Company exercises Rollover Extension.

The general terms of each of the RNRF Convertible Note and MIL Convertible Note A are analogous to those of the MIL Convertible Note B (the subject of Resolution 3), the PSL Convertible Note (the subject of Resolution 4) and the P&E Convertible Note (the subject of Resolution 5).

1.3 Arrangement between RNRF and MIL

As noted in Section 1.1, part of the consideration for the Purchase Price under the Share Sale Agreement is being directed by the Company to MIL, who is a substantial shareholder in the Company.

RNRF has disclosed to the Company that, in exchange for MIL introducing RNRF to the Company and RNRF proceeding to sell 100% of its shares in GBS to the Company across the initial acquisition of 80% in September 2011 and now the balance 20% under the Share Sale Agreement, RNRF has agreed to pay MIL an amount of $500,000 ( Fee ), as well as an entitlement to part of a royalty that

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Explanatory Memorandum

RNRF retains with respect to GBS’s Governor Broome mineral sands project. AS disclosed to the Company, RNRF and MIL have only recently agreed to terms with regards to the Fee and, subsequently, RNRF has directed and agreed with the Company under the Share Sale Agreement for the Company to issue the MIL Convertible Note A to MIL in part payment of the Purchase Price under the Share Sale Agreement, which MIL has agreed to accept in payment by RNRF of the Fee.

The Company notes that it is not a party to the agreement between RNRF and MIL or otherwise been engaged in the discussions between RNRF and MIL with regards to the Fee and that the issue of the MIL Convertible Note A is at the request of RNRF and not in return for any services provided by MIL to the Company.

2. Resolution 1: Issue of a convertible note (and conversion shares) to Reliance Natural Resource Fund Pty Ltd under the Share Sale Agreement

2.1 ASX Listing Rule 7.1 - Issues exceeding 15% of capital

Listing Rule 7.1 prohibits a listed company, except in certain cases, from issuing in any 12 month period new Equity Securities equivalent in number to more than 15% of the total number of ordinary securities on issue at the beginning of the twelve month period ( 15% Capacity ) without either the prior approval of a majority of disinterested shareholders, or the issue otherwise falls within one of the prescribed exceptions to Listing Rule 7.1 ( 15% Rule ).

Equity Securities issued with shareholder approval under ASX Listing Rule 7.1 do not count towards the 15% Capacity.

The RNRF Convertible Note and any Shares issued upon conversion of the Convertible Note would constitute ‘Equity Securities’ under the Listing Rules and require shareholder approval so that they do not count towards the Company’s 15% Capacity.

The RNRF Convertible Note is however a ‘Convertible Security’ and under ‘Exception 4’ in Listing Rule 7.2, an issue of Equity Securities on the conversion of Convertible Securities does not count towards the 15% Capacity provided that the Company complied with the Listing Rules when it issued the Convertible Securities (or issued the Convertible Securities before it was listed).

Therefore the Company is seeking Shareholder approval in accordance with Listing Rule 7.1 to issue the RNRF Convertible Note, so that the RNRF Convertible Note and any Equity Securities issued upon conversion of the RNRF Convertible Note ( RNRF Conversion Shares ) do not count towards the Company’s 15% Capacity.

RNRF is not a Related Party of the Company or a Substantial Holder in the Company, and MIL and RNRF are not Associates for the purposes of the Listing Rules or the Corporations Act.

For the purposes of ASX Listing Rule 7.3, the Company advises:

(a) 7.3.1: Maximum number of Securities to be issued

The maximum number of Equity Securities to be issued is, initially, 1 convertible note. The RNRF Convertible Note is convertible into the RNRF Conversion Shares, where the maximum number of RNRF Conversion Shares to be issued is a function of the Moneys Owing under the RNRF Convertible Note and the Issue Price.

The Issue Price is the lower of:

(1) $0.001; and
(2) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

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Explanatory Memorandum

The Moneys Owing will be the unconverted portion of the Face Value (which is $250,000) plus any capitalised interest (which is calculated daily at a rate or 12% per annum and payable quarterly).

It is not possible to accurately predict the number of RNRF Conversion Shares that may be issued as this will depend on the Moneys Owing (including the amount of interest that is capitalised) and the Issue Price which, will depend on a VWAP.

However, assuming conversion at the end of the full 14 month term, the lowest possible Issue Price (which would be $0.0008, that is 80% of the lowest possible trading price VWAP ($0.001)), and that not taking into account any interest that may be capitalised on a quarterly basis, the maximum number of Shares that would be issued would be 312,500,000 Shares.

The Company currently has on issue 3,488,062,324 Shares. Upon the issue and conversion of the RNRF Convertible Note the Company will have 3,800,562,324 Shares on issue meaning that the RNRF Conversion Shares would represent 8.22% of the diluted issued capital (assuming no Existing Options are exercised, none of the other convertible notes are converted and no additional Shares are issued).

RNRF currently holds 200,000,000 Shares in the Company. Upon the issue and conversion of the RNRF Convertible Note, RNRF will hold 512,500,000 Shares which would represent 13.48% of the diluted issued capital (assuming no Existing Options are exercised, none of the other convertible notes are converted and no additional Shares are issued).

Refer to Section 6 of this Explanatory Memorandum for an outline of the interest which will be held by RNRF in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

(b)

7.3.2: Date by which the Company will issue the Securities

The RNRF Convertible Note will be issued as soon as practicable and in any event within three months of the date of the Meeting. The RNRF Conversion Shares will be issued upon and subject to conversion being effected during the Term.

(c)

7.3.3: Issue price of Equity Securities

The Issue Price of the RNRF Convertible Note is effectively the Face Value, which is $250,000. A summary of the terms of the RNRF Convertible Note are set out in Annexure B.

The RNRF Conversion Shares will be issued at an issue price calculated according to the following formula:

The Issue Price per Share is the lower of:

(1) $0.001; and
(2) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

(d)

7.3.4: Allottees of Equity Securities

The RNRF Convertible Note (and any RNRF Conversion Shares) will be issued to Reliance Natural Resource Fund Pty Ltd ABN 26 140 558 809.

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Explanatory Memorandum

(e)

7.3.5: Terms of the Equity Securities

A summary of the terms of the RNRF Convertible Note is set out in Section 1.2 and Annexure B to this Explanatory Memorandum. The general terms of the RNRF Convertible Note are analogous to those of the MIL Convertible Note A (the subject of Resolution 2),the MIL Convertible Note B (the subject of Resolution 3), the PSL Convertible Note (the subject of Resolution 4) and the P&E Convertible Note (the subject of Resolution 5).

The RNRF Conversion Shares will rank pari passu with all of the other fully paid ordinary shares on issue in the Company.

(f) 7.3.6: Use of funds raised

No funds are being raised for the issue of the RNRF Convertible Note or the RNRF Conversion Shares, as the Equity Securities are being issued as consideration for the Company’s acquisition of the GBS Shares.

(g) 7.6.7: Dates of allotment

Not applicable.

(h) 7.6.8: Voting Exclusion Statement

A voting exclusion statement is included in the Notice of Meeting for Resolution 1.

2.2 Director Recommendation - Resolution 1

The Board recommends that Shareholders vote in favour of this Ordinary Resolution, as it enables the Share Sale Agreement to be completed and as a result of which the Governor Broome Sands Pty Ltd will become a wholly owned subsidiary of the Company. This provides the following advantages:

(a) the RNRF Convertible Note prevents the Company from having to raise a significant amount of cash both immediately and the time of repayment of the RNRF Convertible Note so as to fund the GBS Shares; and
(b) by completing the acquisition of the GBS Shares, the following advantages will apply to Astro:
(1) it allows the Company to acquire such interest for fair value, as supported by the independent valuation;
(2) it removes the financial obligation of having to fund 100% of the GBS project, for an 80% shareholding. The Directors believe that the free carried interest has a negative value to its 80% shareholding, as a willing buyer would discount the value given the fact that the obligations under the shareholders agreement between Astro and the Company require Astro to fund all costs. This discount is likely to be significant. Accordingly, completing the acquisition is considered to be essential;
(3) it should stream line the corporate and administrative costs of the Company;
(4) provides greater flexibility in dealing with the GBS project;
(5) allows the Company to raise money for the GBS project without the need to consider the minority shareholders of GBS specific interests; and
(6) removes a number of the obligations on the Company prescribed in the GBS shareholders’ agreement.

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Explanatory Memorandum

3. Resolution 2: Issue of a convertible note and conversion shares to Mining Investments Limited under the Share Sale Agreement

3.1 Shareholder Approval

Resolution 2 seeks Shareholder authorisation:

(a) under Listing Rule 7.1 to issue the MIL Convertible Note A to MIL; and
(b) under section 611 (Item 7) of the Corporations Act to issue the MIL-A Conversion Shares to MIL upon conversion of the MIL Convertible Note A.

MIL is a company that is wholly owned by Mr Elias (Leo) Khouri, who is the sole director of MIL. MIL’s activities, amongst other investments, include that of investing in ASX listed “junior mining companies” such as the Company. As the sole director and shareholder of MIL, Mr Khouri is an associate of MIL and is in a position to have practical control of, and influence over, the control and voting shares of MIL and the intentions of MIL.

Neither MIL nor Mr Khouri is a Related Party of the Company for the purposes of the Listing Rules or the Corporations Act.

3.2 Relevant Legislation

ASX Listing Rule 7.1 - Issues exceeding 15% of capital

Equity Securities issued with shareholder approval under ASX Listing Rule 7.1 do not count towards the 15% Capacity.

The MIL Convertible Note A would constitute ‘Equity Securities’ under the Listing Rules and require shareholder approval so that it does not count towards the Company’s 15% Capacity. Therefore the Company is seeking Shareholder approval in accordance with Listing Rule 7.1 to issue the MIL Convertible Note A, so that it does not count towards the Company’s 15% Capacity.

The MIL Convertible Note A is convertible into Shares (the MIL-A Conversion Shares). Shareholder approval is sought for the issue and acquisition of the MIL-A Conversion Shares pursuant to section 611(Item 7) of the Corporations Act (below).

For the purposes of ASX Listing Rule 7.3, the Company advises:

(a) 7.3.1: Maximum number of Securities to be issued

The maximum number of Equity Securities to be issued is, initially, 1 convertible note. The MIL Convertible Note A is convertible into the MIL-A Conversion Shares, where the maximum number of MIL-A Conversion Shares to be issued is a function of the Moneys Owing under the MIL Convertible Note A and the Issue Price.

For details with respect to the maximum number of MIL-A Conversion Shares which can be issued under the MIL Convertible Note A and what these Shares would represent of the diluted issued capital (assuming no Existing Options are exercised, none of the other convertible notes are converted and no additional Shares are issued) refer to the content under the heading “Section 611 (Item 7(b)(ii)): The maximum

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extent of the increase in that person’s Voting Power in the company that would result from the acquisition” in the following section.

Refer to Section 6 of this Explanatory Memorandum for an outline of the interest which will be held by MIL in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

(b) 7.3.2: Date by which the Company will issue the Securities

The Issue Price of the MIL Convertible Note A is effectively the Face Value, which is $500,000.

(d) 7.3.4: Allottees of Equity Securities

The MIL Convertible Note A will be issued to Mining Investments Limited (a Lebanese incorporated entity).

(e) 7.3.5: Terms of the Equity Securities

A summary of the terms of the MIL Convertible Note A is set out in Section 1.2 and Annexure B to this Explanatory Memorandum. The general terms of the MIL Convertible Note A are analogous to those of the RNRF Convertible Note A (the subject of Resolution 1), the MIL Convertible Note B (the subject of Resolution 3), the PSL Convertible Note (the subject of Resolution 4) and the P&E Convertible Note (the subject of Resolution 5).

(f) 7.3.6: Use of funds raised

No funds are being raised for the issue of the MIL Convertible Note A as it being issued as part consideration for the Company’s acquisition of the GBS Shares.

(g) 7.6.7: Dates of allotment

Not applicable.

(h) 7.6.8: Voting Exclusion Statement

A voting exclusion statement is included in the Notice of Meeting for Resolution 2.

Chapter 6, section 611 (Item 7) of the Corporations Act

Section 606 of the Corporations Act prohibits a person from acquiring a relevant interest in issued Voting Shares in a listed company if the acquisition would result in that person’s Voting Power in the company increasing:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%,

( Takeover Prohibition ).

However, there are certain specified exceptions to the Takeover Prohibition. In particular, under section 611 (Item 7) of the Corporations Act an acquisition will not contravene the Takeover

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Prohibition if shareholders approve the acquisition by passing a Resolution at a general meeting, where:

(a) no votes were cast in favour of the Resolution by the person proposing to make the acquisition or their associates; and
(a) shareholders were given all information known to the acquirer or the company that was material to the decision on how to vote,

( Takeover Exception ).

‘ASIC Regulatory Guide 74: Acquisitions Approved by Members’ ( ASIC RG 74 ) also specifies certain requirements where a Company seeks an acquisition to be exempt under section 611 (Item 7).

The acquisition of MIL Convertible Note A will not result in MIL acquiring a relevant interest in issued Voting Shares in the Company. However under section 606(6) a person is taken to acquire a relevant interest in Voting Shares in a company if Securities in which the person already had a Relevant Interest become Voting Shares in the company, and in that case the acquisition occurs when the securities become Voting Shares.

Therefore, the acquisition by MIL of any MIL-A Conversion Shares issued upon conversion of the MIL Convertible Note A will result in MIL acquiring a Relevant Interest in issued Voting Shares which may cause MIL’s relevant interest in the Voting Power in the Company to increase from a starting point that is:

(a) below 20% to more than 20%; or
(b) from a starting point that is above 20% and below 90% (e.g. where the MIL Convertible Note A is not converted in full at one time).

As the sole director and shareholder of MIL, Mr Khouri will also obtain a Relevant Interest in the Voting Power of the Company equal to that obtained by MIL.

Accordingly, Resolution 2 seeks approval for the issue of the MIL-A Conversion Shares to MIL upon conversion of the MIL Convertible Security A under section 611(Item 7).

In accordance with Listing Rule 7.2 (Exception 16), an issue of Securities approved for the purposes of section 611 (Item 7) does not require further approval under Listing Rule 7.1. Therefore any Shares issued upon conversion of the MIL Convertible Note A will not count towards the Company’s 15% Capacity under Listing Rule 7.1.

For the purposes of section 611 (Item 7(b)), the Company advises that:

(a) Section 611 (Item 7(b)(i)): The identity of the person proposing to make the acquisition and their associates

The identity of the person proposing to make the acquisition and their associates is Mining Investments Limited (a Lebanese incorporated entity).

As the sole director and shareholder of MIL, Mr Elias Khouri, is in a position to have practical control of, and influence over, the control and voting shares of MIL and the intentions of MIL. Mr Khouri will also acquire a direct Relevant Interest as a result of the issue of the MIL-A Conversion Shares to MIL.

The Company is not aware of any associates of MIL or Mr Khouri who hold securities in the Company.

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(b) Section 611 (Item 7(b)(ii)): The maximum extent of the increase in that person’s Voting Power in the company that would result from the acquisition

There are currently 3,488,062,324 Shares on issue in the Company. MIL currently holds 575,000,000 Shares, representing 16.48% of the issued capital. Mr Elias Khouri does not hold any securities in the Company, except through his ownership of MIL.

The MIL Convertible Note A is convertible into Shares (the MIL-A Conversion Shares), where the maximum number of MIL-A Conversion Shares to be issued is a function of the Moneys Owing under the MIL Convertible Note A, and the Issue Price.

The Issue Price is the lower of:

(1) $0.001; and
(2) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

The Moneys Owing will be the unconverted portion of the Face Value (which is $500,000) plus any capitalised interest (which is calculated daily at a rate or 12% per annum and payable quarterly).

It is difficult to accurately predict the number of MIL-A Conversion Shares that may be issued as this will depend on the Moneys Owing (including the amount of interest that is capitalised) and the Issue Price which, will depend on a VWAP.

The Company currently has on issue 3,488,062,324 Shares. Upon the issue and conversion of the MIL-A Convertible Note the Company will have 4,113,062,324 Shares on issue meaning that the MIL-A Conversion Shares would represent a maximum increase in the Voting Power in the Company of both MIL and Mr Khouri of 12.70% to 29.18% assuming no Existing Options are exercised and none of the other convertible notes (including the MIL Convertible Note B) are converted into shares and no additional shares are issued.

Refer to Section 6 of this Explanatory Memorandum for an outline of the Voting Power in the Company which will be held by MIL and Mr Khouri in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

MIL and Mr Khouri would have a maximum voting power of 29.18% as a result of the acquisition of the MIL-A Conversion Shares.

Refer to Section 6 of this Explanatory Memorandum for an outline of the Voting Power which will be held by MIL and Mr Khouri in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

(d) Section 611 (Item 7(b)(iv),(v)): The maximum extent of the increase in the Voting Power of each of that person’s associates that would result from the acquisition; and the voting power that each of that person’s associates would have as a result of the acquisition.

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The Company is not aware of any associates of MIL or Mr Khouri which hold securities in the Company.

In accordance with ASIC RG 74.25, the Company advises that:

(a) Reasons for the proposed acquisition

The proposed acquisition by MIL and Mr Khouri arises as a result of the issue of the MIL Convertible Note A (and MIL- A Conversion Shares) to partly satisfy the sale consideration payable to RNRF under the Share Sale Agreement.

(b) When the proposed acquisition is to occur

It is intended that the MIL Convertible Note A will be issued, subject to shareholder approval of resolution 1, 5 business days after shareholder approval of this resolution is received any in any event no later than 3 months of the date of such shareholder approval. The correlative issue and acquisition of the MIL-A Conversion Shares will take place upon conversion being effected within the Term.

(c) Material terms of the proposed acquisition:

Refer to section 2.2 and Annexure B regarding the terms of the MIL Convertible Note A.

The MIL-A Conversion Shares will rank equally with all other Shares on issue in the Company.

Apart from as already set out in the balance of this Explanatory Memorandum there are no other material terms.

(d) Details of any other relevant agreement between the acquirer and the Company that is conditional or depends on members’ approval of the proposed acquisition:

Completion of the Share Sale Agreement and the issue of the RNRF Convertible Note under the RNRF Convertible Note Deed are conditional upon and subject to Shareholders approving the issue and acquisition of the MIL Convertible Note A and MIL-A Conversion Shares, although neither MIL nor Mr Khouri is a party to those agreements.

There is no other relevant agreement entered into by the Company with either MIL or Mr Khouri that is conditional upon or depends upon Shareholder approval of this Resolution 2.

(e) Acquirer’s intentions regarding the future of the target entity if members approve the acquisition.

MIL and Mr Elias Khouri have advised the Board that they have no intention of:

(1) requesting the Company to change its strategic direction or operational priorities;
(2) seeking to change the Company’s current employment arrangements;
(3) seeking to acquire any of the Company’s assets or otherwise redeploy the assets of the Company; or
(4) using its increased voting power to attempt to secure additional Board positions or vary the current balance of nominee and independent directors.

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Separately to the Share Sale Agreement, MIL has agreed to provide the Company with a convertible loan facility of $250,000 ( MIL Facility ). Under the MIL Facility, MIL will loan funds of $250,000 to the Company ( MIL Loan ) and subject to and upon receiving Shareholder approval, the Company will issue a convertible note to MIL ( MIL Convertible Note B ) enabling MIL to convert the Loan into Shares ( MIL-B Conversion Shares ) at any time during the term.

Resolution 3 seeks Shareholder authorisation to issue the MIL Convertible Note B (and MIL-B Conversion Shares upon conversion of the MIL Convertible Note B) to MIL separate to the issue and conversion of the MIL Convertible Note B.

(f) Intention of the acquirer to significantly change the financial or dividend distribution policies of the entity:

MIL and Mr Khouri have advised the Board that they have no intention of seeking to change the financial or dividend distribution policies of the Company.

(g) The interests that any director has in the acquisition or any relevant agreement disclosed above

None of the Directors of the Company have any interest in the acquisition of the MIL-A Conversion Shares or any agreement referred to above.

(h) Intended directors if members approve the acquisition:

No additional directors will be appointed as a result of the issue of the MIL-A Conversion Shares.

3.3 Independent Expert’s Report

For shareholder approval sought under item 7 of Section 611 of the Corporations Act, ASIC RG 74 also requires that Shareholders be provided with an Independent Expert’s Report one of the purposes of which is to consider whether the issue of the MIL-A Conversion Shares is fair and reasonable to the Shareholders who are not associated with MIL and Mr Khouri.

The Company has engaged Grant Thornton to provide the Independent Expert’s Report.

Shareholders are urged to read and consider the Independent Expert’s Report which is enclosed with the Notice of Meeting prior to making a decision as to how to vote on Resolution 2.

The Independent Expert’s Report concludes that the issue of the MIL-A Conversion Shares to MIL is not fair but reasonable to the non associated Shareholders.

Fairness

In forming an opinion in relation to the fairness of the issue of the MIL-A Conversion Shares (together with the MIL-B Conversion Shares under resolution 3), Grant Thornton has concluded that when taking into account the combined effect of the MIL-A Conversion Shares and the MIL-B Conversion Shares, MIL would achieve control of the Company and, as a result, the non-associated shareholders (as a collective group) of the Company would end up with a value on a minority basis which is less than a value on a control basis, assuming that the issue of both MIL-A Conversion Shares and MIL-B Conversion Shares were approved.

Based on Grant Thornton’s preferred value, the value of one Astro Share on a control basis prior to the MIL-A Conversion Shares and the MIL-B Conversion Shares is $0.0998 and this compares to the value of one Astro Share on a minority basis of $.0.0828 , assuming that the issue of both the MIL-A Conversion Shares and the MIL-B Conversion Shares were approved. Accordingly, the nonassociated shareholders would be worse off by the amount of $0.017 , representing a decrease of 17.1% .

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Reasonableness

In forming the opinion that the issue of the MIL-A Conversion Shares (together with the MIL-B Conversion Shares) was reasonable, Grant Thornton have noted the following:

Advantages

(a) it will allow the Company to continue as a going concern, particularly given the Company’s limited cash resources;
(b) it will allow 100% ownership of GBS and for the Company to have control over future exploration and development of the project, as well as any future sale of the project, without seeking the consensus and agreement of RNRF;
(c) it will simplify the ownership structure;
(d) the potential for a future strategic relationship with MIL, including as an additional financier of the Company, going forward; and
(e) the potential dilution from alternate transactions may be greater.

Disadvantages

(a) there is not premium for control being paid by MIL;
(b) the proposed issues are dilutive, resulting in MIL owning up to 34.18% of the shares in the Company;
(c) MIL will have an ability to significantly influence the affairs of the Company;
(d) the Company, as sole owner, will be solely responsible for future funding requirements, requiring significant investment to proceed from development to production stage;
(e) it will increase complexity of the Company’s capital structure; and
(f) it will increase Astro’s gearing level from 0% to 26%.

The above content is a summary only of the assessment by Grant Thornton. For further details of the assessment made by Grant Thornton in determining the fairness and reasonableness of the issue of the MIL-A Conversion Shares (together with the MIL-B Conversion Shares under resolution 3) please refer to the Independent Expert’s Report in Annexure A.

3.4 Directors’ Recommendation – Resolution 2

Each of the Directors recommend that non-associated Shareholders vote in favour of this Resolution as it facilitates for the advantages set out in 3.3 above and having regard for the considerations noted in the Independent Expert’s Report prepared by Grant Thornton. Additionally, the Directors consider that given MIL’s method of investment, involving investment in “junior ASX listed mining companies” this will assist the Company in the future with financing of its operations.

4. Resolution 3: Issue of a convertible note and conversion shares to Mining Investments Limited

4.1 Introduction: MIL Convertible Note

Separately to the Share Sale Agreement, MIL has agreed to provide the Company with a convertible loan facility of $250,000 ( MIL Facility ). Under the Facility, MIL will loan unsecured funds of $250,000

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to the Company ( MIL Loan ) and subject to and upon receiving Shareholder approval, the Loan will automatically convert into a convertible note issued to MIL ( MIL Convertible Note B ) enabling MIL to convert the Loan into Shares ( MIL-B Conversion Shares ) at any time during the Term.

Further details about MIL and its activities are set out in Section 3.1 above

4.2 Shareholder Approval

Resolution 3 seeks Shareholder authorisation:

(a) under Listing Rule 7.1 to issue the MIL Convertible Note B to MIL; and
(b) under section 611 (Item 7) of the Corporations Act to issue the MIL-B Conversion Shares to MIL upon conversion of the MIL Convertible Note B.

MIL is not a Related Party of the Company for the purposes of the Listing Rules or the Corporations Act.

4.3 Convertible Note Terms

A summary of the terms of the MIL Convertible Note B are set out in Annexure B to this Explanatory Memorandum.

The key terms of the MIL Convertible Note B are as follows:

Maturity Date	If shareholder approval is obtained - 14 months from entry into the deed. If the note holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment obligation for a further 12 months, during which period all rights available under the note will remain available to the holder (Rollover Extension). If shareholder approval is not obtained – 26 months from entry into the deed (without a right to a Rollover Extension).
Interest Rate	12% per annum if shareholder approval is obtained. 17% per annum if shareholder approval is not obtained. 17% per annum during the Rollover Extension (if exercised).
Fees payable by the Company	An establishment fee of $5,000 (1.0% of Face Value). If shareholder approval is obtained: • an incentive fee of 5% of the conversion amount is payable when a conversion notice is issued. If the full Face Value of the note is converted into Shares,this

Maturity Date

If shareholder approval is obtained - 14 months
from entry into the deed.
If the note holder elects for any money owing on
the Maturity Date to be repaid in cash, the
Company can elect to extend this repayment
obligation for a further 12 months, during which
period all rights available under the note will
remain
available
to
the
holder
(Rollover
Extension).
If shareholder approval is not obtained – 26
months from entry into the deed (without a right to
a Rollover Extension).

Interest Rate

12% per annum
if shareholder approval is
obtained.
17% per annum if shareholder approval is not
obtained.
17% per annum during the Rollover Extension (if
exercised).

Fees payable by the Company

An establishment fee of $5,000 (1.0% of Face
Value).
If shareholder approval is obtained:
•
an incentive fee of 5% of the conversion
amount is payable when a conversion
notice is issued. If the full Face Value of
the note is converted into Shares,this

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would represent a total fee of $12,500;

• an amount of $12,500 is payable as Rollover Consideration if the Rollover Extension is exercised.

If shareholder approval is not obtained a $12,500 Unsecured Debt Fee is payable.

It is noted that pending the passing of Resolution 3, the cash advance made by MIL to the Company under the MIL Convertible Note B constitutes an unsecured debt of the Company to MIL. In the event that Resolution 3 is passed, the value of the unsecured debt will be used to subscribe for the issue of the convertible note contained in MIL Convertible Note B. If Resolution 3 is not passed, then the unsecured debt will continue to be an unsecured debt of the Company to be repaid in accordance with the agreed terms.

The general terms of each of the Convertible Note A are analogous to the RNRF Convertible Note (Resolution 1), the MIL Convertible Note A (the subject of Resolution 2), the PSL Convertible Note (the subject of Resolution 4) and the P&E Convertible Note (the subject of Resolution 5).

4.4 Relevant Legislation

ASX Listing Rule 7.1 - Issues exceeding 15% of capital

Equity Securities issued with shareholder approval under ASX Listing Rule 7.1 do not count towards the 15% Capacity.

The MIL Convertible Note B would constitute ‘Equity Securities’ under the Listing Rules and require shareholder approval so that it does not count towards the Company’s 15% Capacity. Therefore the Company is seeking Shareholders’ approval in accordance with Listing Rule 7.1 to issue the MIL Convertible Note B, so that it does not count towards the Company’s 15% Capacity.

The MIL Convertible Note B is convertible into Shares (the MIL-B Conversion Shares). Shareholder approval is sought for the issue and acquisition of the MIL-B Conversion Shares pursuant to section 611(Item 7) of the Corporations Act (below).

For the purposes of ASX Listing Rule 7.3, the Company advises:

(a) 7.3.1: Maximum number of Securities to be issued

The maximum number of Equity Securities to be issued is, initially, 1 convertible note. The MIL Convertible Note B is convertible into the MIL-B Conversion Shares, where the maximum number of MIL-B Conversion Shares to be issued is a function of the Moneys Owing under the MIL Convertible Note B and the Issue Price.

For details with respect to the maximum number of MIL-B Conversion Shares which can be issued under the MIL Convertible Note B and what these Shares would represent of the diluted issued capital (assuming no Existing Options are exercised, none of the other convertible notes are converted and no additional Shares are issued) refer to the content under the heading “Section 611 (Item 7(b)(ii)): The maximum extent of the increase in that person’s Voting Power in the company that would result from the acquisition” in the following section.

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(b)

7.3.2: Date by which the Company will issue the Securities

It is intended that the MIL Convertible Note B will be issued, subject to shareholder approval of resolution 1, 5 business days after shareholder approval of this resolution is received any in any event no later than 3 months after the date of such shareholder approval.

(c)

7.3.3: Issue price of Equity Securities

The issue price of the MIL Convertible Note B is effectively the Face Value, which is $250,000.

(d)

7.3.4: Allottees of Equity Securities

The MIL Convertible Note B will be issued to Mining Investments Limited (a Lebanese incorporated entity). MIL is owned by Mr Elias Khouri who is the sole director of MIL. MIL’s business activities include, amongst other activities, investing in “junior mining explorers” on the ASX, such as the Company.

(e)

7.3.5: Terms of the Equity Securities

A summary of the terms of the MIL Convertible Note B is set out in Section 4.3 and Annexure B to this Explanatory Memorandum. The general terms of the MIL Convertible Note B are analogous to those of the RNRF Convertible Note A (the subject of Resolution 1) and MIL Convertible Note A (the subject of Resolution 2), the PSL Convertible Note (the subject of Resolution 4) and the P&E Convertible Note (the subject of Resolution 5).

(f)

7.3.6: Use of funds raised

The Loan funds advanced will be used for meeting the Company’s exploration expenditure, evaluation of new projects and for general working capital requirements. The current proposed allocation of the funds, subject to change at the discretion of the Board, is as follows:

Use	Amount
May-July 2014 bulk sample exploration program (announced 30 Sept 2013)	$125,000
Due diligence on new projects	$25,000
Working capital	$100,000
Total	$250,000

(g) 7.6.7: Dates of allotment

Not applicable.

(h) 7.6.8: Voting Exclusion Statement

A voting exclusion statement is included in the Notice of Meeting for Resolution 3.

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Explanatory Memorandum

Chapter 6, section 611 (Item 7) of the Corporations Act

Section 606 of the Corporations Act prohibits a person from acquiring a Relevant Interest in issued Voting Shares in a listed company if the acquisition would result in that person’s Voting Power in the company increasing:

(a) from 20% or below to more than 20%; or
(b) from a starting point that is above 20% and below 90%,

( Takeover Prohibition ).

However, there are certain specified exceptions to the Takeover Prohibition. In particular, under section 611 (Item 7) of the Corporations Act an acquisition will not contravene the Takeover Prohibition if shareholders approve the acquisition by passing a Resolution at a general meeting, where:

(a) no votes were cast in favour of the Resolution by the person proposing to make the acquisition or their associates; and
(b) shareholders were given all information known to the acquirer or the company that was material to the decision on how to vote,

( Takeover Exception ).

ASIC Regulatory Guide 74: Acquisitions Approved by Members ( ASIC RG 74 ) also specifies certain requirements where a Company seeks an acquisition to be exempt under section 611 (Item 7).

The acquisition of MIL Convertible Note B will not result in MIL acquiring a Relevant Interest in issued Voting Shares in the Company. However under section 606(6) a person is taken to acquire a Relevant Interest in Voting Shares in a company if Securities in which the person already had a Relevant Interest become Voting Shares in the company, and in that case the acquisition occurs when the Securities become Voting Shares.

Therefore, the acquisition by MIL of any MIL-B Conversion Shares issued upon conversion of the MIL Convertible Note B will result in MIL acquiring a Relevant Interest in issued Voting Shares which may cause MIL’s relevant interest in the Voting Power in the Company to increase:

(a) from below 20% to more than 20%; or
(b) from a starting point that is above 20% and below 90% (e.g. where the MIL Convertible Note B is not converted in full at one time).

As the sole director and shareholder of MIL, Mr Elias Khouri will also obtain a Relevant Interest in the Voting Power of the Company equal to that obtained by MIL.

Accordingly, Resolution 3 seeks approval for the issue of the MIL-B Conversion Shares to MIL upon conversion of the MIL Convertible Security B under section 611(Item 7).

In accordance with Listing Rule 7.2 (Exception 16), an issue of Securities approved for the purposes of section 611 (Item 7) does not require further approval under Listing Rule 7.1. Therefore any Shares issued upon conversion of the MIL Convertible Note B will not count towards the Company’s 15% Capacity under Listing Rule 7.1.

For the purposes of section 611 (Item 7(b)), to the extent not already addressed in relation to Resolution 2, the Company advises that:

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Explanatory Memorandum

(a) Section 611 (Item 7(b)(i)): The identity of the person proposing to make the acquisition and their associates

The identity of the person proposing to make the acquisition and their associates is Mining Investments Limited (a Lebanese incorporated entity).

The Company is not aware of any associates of MIL or Mr Khouri who hold securities in the Company.

(b) Section 611 (Item 7(b)(ii)): The maximum extent of the increase in that person’s Voting Power in the company that would result from the acquisition

There are currently 3,488,062,324 Shares on issue in the Company. MIL currently holds 575,000,000 Shares, representing 16.48% of the issued capital. Mr Khouri does not hold any securities in the Company except through his ownership of MIL.

The MIL Convertible Note B is convertible into Shares (the MIL-B Conversion Shares), where the maximum number of MIL-B Conversion Shares to be issued is a function of the Moneys Owing under the MIL Convertible Note B, and the Issue Price.

The Issue Price is the lower of:

(1) $0.001; and
(2) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

The Moneys Owing will be the unconverted portion of the Face Value (which is $250,000) plus any capitalised interest (which is calculated daily at a rate or 12% per annum and payable quarterly).

It is not possible to accurately predict the number of MIL-B Conversion Shares that may be issued as this will depend on the Moneys Owing (including the amount of interest that is capitalised) and the Issue Price which, will depend on a VWAP.

The Company currently has on issue 3,488,062,324 Shares. Upon the issue and conversion of the MIL-B Convertible Note the Company will have 3,800,562,324 Shares on issue meaning that the MIL-B Conversion Shares would represent a maximum increase in Voting Power in the Company of both MIL and Mr Elias Khouri of 6.87% to 23.35%, assuming no Existing Options are exercised and none of the other convertible notes (including the MIL Convertible Note A) are converted into shares.

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(c) Section 611 (Item 7(b)(iii)): The voting power that the person would have as a result of the acquisition.

Assuming the MIL Convertible Note A is issued but not converted and otherwise assuming no additional shares are issued MIL and Mr Khouri would have a maximum voting power of 23.35% as a result of the acquisition.

The table below shows the maximum number of Shares that could be issued to MIL, including in the circumstance that the MIL Convertible Security A is also issued and is converted (but assuming that no other Shares are issued (including those arising from the RNRF Convertible Note and the P&E Convertible Note), and no Existing Options are exercised). The calculations below assume the lowest possible Issue Price of $0.0008 and all interest is paid in cash until the end of the Term.

Table 2: MIL proposed shareholding post Convertible Note A and Convertible Note B

	Current holding	Conversion of MIL Convertible Note A (only)	Conversion of MIL Convertible Note B (only)	Conversion of MIL Convertible Note A and B
Maximum number of Shares that would be issued	n.a	625,000,000	312,500,000	937,500,000
Maximum number of Shares that would be held based on conversion formula	575,000,000	1,200,000,000	887,500,000	1,512,500,000
Total Shares on issue	3,488,062,324	4,113,062,324	3,800,562,324	4,425,562,324
Maximum Voting Power of MIL and Mr Elias Khouri	16.48%	29.18%	23.35%	34.18%

Refer to Section 6 of this Explanatory Memorandum for an outline of the Voting Power which will be held by MIL and RNRF in the event that all convertible notes to be issued under this Notice are issued and converted into Shares. On that basis (and based upon the assumptions contained in that Section 6), the Voting Power which would be held by MIL and Mr Elias Khouri if all conversion shares are issued would be 28.88% , an increase of 12.4% from its current Voting Power.

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Explanatory Memorandum

(d) Section 611 (Item 7(b)(iv),(v)): The maximum extent of the increase in the Voting Power of each of that person’s associates that would result from the acquisition; and the voting power that each of that person’s associates would have as a result of the acquisition.

The Company is not aware of any associates of MIL or Mr Khouri who hold securities in the Company.

In accordance with ASIC RG 74.25, the Company advises that:

(a) Reasons for the proposed acquisition

The proposed acquisition by MIL and Mr Khouri arises as a result of the issue of the MIL Convertible Note B (and MIL-B Conversion Shares) which is being issued to MIL in consideration for MIL providing the Company with the MIL Loan.

(b) When the proposed acquisition is to occur

Under the MIL Convertible Note Deed B the MIL Loan will convert into the MIL Convertible Note B issued to MIL, on the business day following shareholder approval of this resolution. In any event the MIL Convertible Note B will be issued no later than 3 months after the date of such shareholder approval. The correlative issue and acquisition of the MIL-B Conversion Shares will take place upon conversion being effected within the Term.

(c) Material terms of the proposed acquisition:

Refer to section 4.3 and Annexure B regarding the terms of the MIL Convertible Note B.

The MIL-B Conversion Shares will rank equally with all other Shares on issue in the Company.

Apart from as already set out in the balance of this Explanatory Memorandum there are no other material terms.

(d) Details of any other relevant agreement between the acquirer and the Company that is conditional or depends on members’ approval of the proposed acquisition:

There is no other relevant agreement between the Company and either MIL or Mr Khouri that is conditional upon or depends upon Shareholder approval of this Resolution 3.

(e) Acquirer’s intentions regarding the future of the target entity if members approve the acquisition.

Refer to section 3.2 above under the heading “Chapter 6, section 611 (Item 7) of the Corporations Act”.

(f) Intention of the acquirer to significantly change the financial or dividend distribution policies of the entity:

Refer to section 3.2 above under the heading “Chapter 6, section 611 (Item 7) of the Corporations Act”.

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(g) The interests that any director has in the acquisition or any relevant agreement disclosed above

None of the Directors of the Company have any interest in the acquisition of the MIL-B Conversion Shares or any agreement referred to above.

(h) Intended directors if members approve the acquisition:

No additional directors will be appointed as a result of the issue of the MIL-B Conversion Shares.

4.5 Independent Experts Report

For shareholder approval sought under item 7 of Section 611 of the Corporations Act, ASIC RG 74 also requires that Shareholders be provided with an Independent Experts Report one of the purposes of which is to consider whether the issue of the MIL-B Conversion Shares is fair and reasonable to the Shareholders who are not associated with MIL and Mr Khouri.

The Company has engaged Grant Thornton to provide the Independent Expert’s Report.

Shareholders are urged to read and consider the Independent Expert’s Report which is enclosed with the Notice of Meeting prior to making a decision as to how to vote on Resolution 3.

The Independent Expert’s Report concludes that the issue of the MIL-B Conversion Shares to MIL is not fair but reasonable to the non associated Shareholders.

Fairness

The matters considered by Grant Thornton in forming their opinion in relation to the fairness of the issue of the MIL-B Conversion Shares (together with the MIL-A Conversion Shares under resolution 2) are set out in section 3.3 above.

Reasonableness

The factors which Grant Thornton considered in forming the opinion that the issue of the MIL-B Conversion Shares (together with the MIL-A Conversion Shares) was reasonable are set out in section 3.3 above above.

The above content is a summary only of the assessment made by Grant Thornton. For further details of the assessment made by Grant Thornton in determining the fairness and reasonableness of the issue of the MIL-A Conversion Shares (together with the MIL-B Conversion Shares under resolution 3) please refer to the Independent Expert’s Report in Annexure A.

4.6 Directors’ Recommendation

Each of the Directors recommend that non-associated Shareholders vote in favour of this Resolution. The reasons for this are:

(a) consistent with the comments made in section 3.2 above, it provides the Company with a major shareholder who is willing to support the Company particularly in times when most junior exploration companies are struggling to raise cash;
(b) it affords the Company of the opportunity of preserving its cash at the future date for repayment of the MIL Convertible Note B; and
(c) having regard for the advantages and disadvantages of the issue of the MIL-B Conversion Shares (together with the MIL-A Conversion Shares under Resoluton 2) noted in the Independent Expert’s Report prepared by Grant Thornton as summarised in Section 3.3 above.

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Explanatory Memorandum

Prior to entering into the MIL Convertible Note B (as well as the PSL Convertible Note referred to in Resolution 4), the Directors pursued alternative forms of capital raisings with other parties. No formal offers were received from these parties, but the view of the Directors was that any such proposals would be more dilutive than the terms proposed under the MIL Convertible Note B. It is the Directors view from discussions with third parties that the terms discussed were a reflection of the Company’s low cash position and that restoring the Company’s financial strength is necessary to ensure that future capital raisings could be offered on less dilutive terms.

The Directors have also considered:

(a) alternative forms of raising capital from all shareholders of the Company, such as a rights issue or share purchase plan - however, given the lack of liquidity in the Company’s shares on trading on the ASX, the Directors have formed the view that there is likely to be a “lack of appetite” for subscribing to such capital raisings, and the costs associated with attempting those issues is considered to be prohibitive;
(b) the urgent need for funds given the Company’s low cash position; and
(c) MIL’s investment philosophy, which is a philosophy of supporting junior exploration companies, such as the Company, in the areas of operational issues, the seeking out of acquisition opportunities and providing financial support.

The Directors are of the view that the MIL Convertible Note B (and the potential increase in the Relevant Interest of both MIL and Mr Khouri) is considered to be in the best interests of the nonassociated Shareholders.

5. Resolutions 4 and 5: Issue of convertible note and conversion shares to each of PSL and David Alexander Gibbs

5.1 Introduction

PSL has agreed to provide the Company with a convertible loan facility of $250,000 ( PSL Facility ). Under the Facility, PSL will loan unsecured funds of $250,000 to the Company ( PSL Loan ) and subject to and upon receiving Shareholder approval, the Loan will automatically convert into a convertible note issued to PSL (PSL Convertible Note ) enabling PSL to convert the PSL Loan into Shares ( PSL Conversion Shares ) at any time during the Term.

The Company and David Alexander Gibbs ( Gibbs ) entered into an agreement for sale of equipment dated 25 September 2013 ( P&E Purchase Agreement ) pursuant to which the Company will acquire drilling equipment from Gibbs for $150,000 ( P&E Consideration ).

The P&E Purchase Agreement is subject to Shareholder approval enabling the Company to pay the P&E Consideration by issuing a $150,000 convertible note to Gibbs ( P&E Convertible Note ) in lieu of cash, which note will be capable of conversion into Shares ( P&E Conversion Shares ) at any time during the Term.

5.2 Shareholder Approval

Resolution 4 seeks Shareholder authorisation under Listing Rule 7.1 to issue the PSL Convertible Note to PSL and to issue the PSL Conversion Shares to PSL upon conversion of the PSL Convertible Note.

PSL is not a Related Party of the Company for the purposes of the Listing Rules or the Corporations Act.

Resolution 5 seeks Shareholder authorisation under Listing Rule 7.1 to issue the P&F Convertible Note to Gibbs and to issue the P&E Conversion Shares to Gibbs upon conversion of the P&E Convertible Note.

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Explanatory Memorandum

Gibbs is not a Related Party of the Company for the purposes of the Listing Rules or the Corporations Act.

5.3 Convertible Note Terms

A summary of the terms of the PSL Convertible Note and P&E Convertible Note are set out in Annexure B to this Explanatory Memorandum.

The key terms of the PSL Convertible Note are as follows:

Maturity Date	If shareholder approval is obtained - 14 months from entry into the deed. If the note holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment obligation for a further 12 months, during which period all rights available under the note will remain available to the holder (Rollover Extension). If shareholder approval is not obtained – 26 months from entry into the deed (without a right to a Rollover Extension).
Interest Rate	12% per annum if shareholder approval is obtained. 17% per annum if shareholder approval is not obtained 17% per annum during the Rollover Extension (if exercised).
Fees payable by the Company under each note	If shareholder approval is obtained: • an incentive fee of 5% of the conversion amount is payable when a conversion notice is issued. If the full Face Value of the note is converted into Shares, this would represent a total fee of $12,500; • an amount of $12,500 is payable as Rollover Consideration if the Rollover Extension is exercised. If shareholder approval is not obtained a $12,500 Unsecured Debt Fee is payable.

Maturity Date

Interest Rate

12% per annum if shareholder approval is
obtained.
17% per annum if shareholder approval is not
obtained
17% per annum during the Rollover Extension (if
exercised).

Fees payable by the Company under each note

If shareholder approval is obtained:
•
an incentive fee of 5% of the conversion
amount is payable when a conversion
notice is issued. If the full Face Value of
the note is converted into Shares, this
would represent a total fee of $12,500;
•
an amount of $12,500 is payable as
Rollover Consideration if the Rollover
Extension is exercised.
If shareholder approval is not obtained a $12,500
Unsecured Debt Fee is payable.

It is noted that pending the passing of Resolution 4, the cash advance made by PSL to the Company under the PSL Convertible Note constitutes an unsecured debt of the Company to PSL. In the event that Resolution 4 is passed, the value of the unsecured debt will be used to subscribe for the issue of the convertible note contained in PSL Convertible Note. If Resolution 4 is not passed, then the unsecured debt will continue to be an unsecured debt of the Company to be repaid in accordance with the agreed terms.

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Explanatory Memorandum

The key terms of the P&E Convertible Note A are as follows:

Maturity Date	14 months from completion of the P&E Purchase Agreement. If the note holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment obligation for a further 12 months, during which period all rights available under the note will remain available to the holder (Rollover Extension).
Interest Rate	12% per annum.
Fees payable by the Company under each note	An amount of $5,000 is payable as Rollover Consideration if the Rollover Extension is exercised.

The general terms of the PSL Convertible Note and P&E Convertible Note are analogous to those of the RNRF Convertible Note (the subject of Resolution 1), the MIL Convertible Note A (the subject of Resolution 2) and the MIL Convertible Note B (the subject of Resolution 3).

5.4 ASX Listing Rule 7.1 - Issues exceeding 15% of capital

Equity Securities issued with shareholder approval under ASX Listing Rule 7.1 do not count towards the 15% Capacity.

The PSL Convertible Note and P&E Convertible Note and any Shares issued upon conversion of the PSL Convertible Note and P&E Convertible Note would constitute ‘Equity Securities’ under the Listing Rules and require shareholder approval so that they do not count towards the Company’s 15% Capacity.

The PSL Convertible Note and P&E Convertible Note are however each a ‘Convertible Security’ and under ‘Exception 4’ in Listing Rule 7.2, an issue of Equity Securities on the conversion of Convertible Securities does not count towards the 15% Capacity provided that the Company complied with the Listing Rules when it issued the Convertible Securities (or issued the Convertible Securities before it was listed).

Therefore the Company is seeking Shareholder approval in accordance with Listing Rule 7.1 to issue the PSL Convertible Note and P&E Convertible Note, so that the PSL Convertible Note and P&E Convertible Note and the PSL Conversion Shares or P&E Conversion Shares do not count towards the Company’s 15% Capacity.

Resolution 4: PSL Convertible Note

For the purposes of ASX Listing Rule 7.3, the Company advises:

(a) 7.3.1: Maximum number of Securities to be issued

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Explanatory Memorandum

The maximum number of Equity Securities to be issued is, initially, 1 convertible note (PSL Convertible Note). The PSL Convertible Note is convertible into Shares (the PSL Conversion Shares), where the maximum number of PSL Conversion Shares to be issued is a function of the Moneys Owing under the PSL Convertible Note, and the Issue Price.

The Issue Price is the lower of:

(a) $0.001; and
(b) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

The Moneys Owing will be the unconverted portion of the Face Value (which is $250,000) plus any capitalised interest (which is calculated daily at a rate or 12% per annum and payable quarterly).

It is difficult to accurately predict the number of PSL Conversion Shares that may be issued as this will depend on the Moneys Owing (including the amount of interest that is capitalised) and the Issue Price which, will depend on a VWAP.

The Company currently has on issue 3,488,062,324 Shares . Upon the issue and conversion of the PSL Convertible Note the Company will have 3,800,562,324 Shares on issue meaning that the PSL Conversion Shares would represent 8.22% of the diluted issued capital (assuming no Existing Options are exercised or no conversion of any other convertible notes and no additional Shares are issued).

PSL does not hold any other Shares in the Company. Refer to Section 6 of this Explanatory Memorandum for an outline of the interest which will be held by PSL in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

(b) 7.3.2: Date by which the Company will issue the Securities

The PSL Convertible Note will be issued as soon as practicable and in any event within three months of the date of the Meeting. The PSL Conversion Shares will be issued upon and subject to conversion being effected during the Term.

(c) 7.3.3: Issue price of Equity Securities

The Issue Price of the PSL Convertible Note is effectively the Face Value, which is $250,000. A summary of the terms of the PSL Convertible Note are set out in Annexure B.

The PSL Conversion Shares will be issued at an issue price calculated according to the following formula:

The Issue Price per Share is the lower of:

(1) $0.001; and
(2) A price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

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Explanatory Memorandum

(d) 7.3.4: Allottees of Equity Securities

The PSL Convertible Note (and any PSL Conversion Shares) will be issued to PSL.

(e) 7.3.5: Terms of the Equity Securities

A summary of the terms of the PSL Convertible Note is set out in Section 5.3 and Annexure B to this Explanatory Memorandum. The general terms of the PSL Convertible Note are analogous to those of the RNRF Convertible Note (the subject of Resolution 1), the MIL Convertible Note A (the subject of Resolution 2), the MIL Convertible Note B (the subject of Resolution 3), and the P&E Convertible Note (the subject of Resolution 5) .

The PSL Conversion Shares will rank pari passu with all of the other fully paid ordinary shares on issue in the Company.

(f) 7.3.6: Use of funds raised

$250,000 will be raised for the issue of the PSL Convertible Note which will be used to for exploration expenditure, evaluation of new projects and for general working capital requirements.

(g) 7.6.7: Dates of allotment

Not applicable.

(h) 7.6.8: Voting Exclusion Statement

A voting exclusion statement is included in the Notice of Meeting for Resolution 4.

5.5 Director Recommendation - Resolution 4

The Board recommends that Shareholders vote in favour of this Ordinary Resolution for the following reasons:

(c) it affords the Company of the opportunity of preserving its cash at the future date for repayment of the PSL Convertible Note; and
(d) it potentially allows the Company to improve its financial position, by reclassifying a liability into equity.

Resolution 5: P&E Convertible Note

For the purposes of ASX Listing Rule 7.3, the Company advises:

(a) 7.3.1: Maximum number of Securities to be issued

The maximum number of Equity Securities to be issued is, initially, 1 convertible note ( P&E Convertible Note). The P&E Convertible Note is convertible into Shares (the P&E Conversion Shares), where the maximum number of P&E Conversion Shares to be issued is a function of the Moneys Owing under the P&E Convertible Note, and the Issue Price.

The Issue Price is the lower of:

(1) $0.001; and

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Explanatory Memorandum

(2) a price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

The Moneys Owing will be the unconverted portion of the Face Value (which is $150,000) plus any capitalised interest (which is calculated daily at a rate or 12% per annum and payable quarterly).

It is difficult to accurately predict the number of P&E Conversion Shares that may be issued as this will depend on the Moneys Owing (including the amount of interest that is capitalised) and the Issue Price which, will depend on a VWAP.

The Company currently has on issue 3,488,062,324 Shares. Upon the issue and conversion of the P&E Convertible Note the Company will have 3,675,562,324 Shares on issue meaning that the P&E Conversion Shares would represent 5.10% of the diluted issued capital (assuming no Existing Options are exercised or no conversion of any other convertible notes and no additional Shares are issued).

Gibbs does not hold any other Shares in the Company. Refer to Section 6 of this Explanatory Memorandum for an outline of the interest which will be held by Gibbs in the event that all convertible notes to be issued under this Notice are issued and converted into Shares.

(b)

7.3.2: Date by which the Company will issue the Securities

The P&E Convertible Note will be issued as soon as practicable and in any event within three months of the date of the Meeting. The P&E Conversion Shares will be issued upon and subject to conversion being effected during the Term.

(c)

7.3.3: Issue price of Equity Securities

The Issue Price of the P&E Convertible Note is effectively the Face Value, which is $150,000. A summary of the terms of the P&E Convertible Note are set out in Annexure B.

The P&E Conversion Shares will be issued at an issue price calculated according to the following formula:

The Issue Price per Share is the lower of:

(1) $0.001; and
(2) A price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.

(d)

7.3.4: Allottees of Equity Securities

The P&E Convertible Note (and any P&E Conversion Shares) will be issued to Gibbs.

(e)

7.3.5: Terms of the Equity Securities

A summary of the terms of the P&E Convertible Note is set out in Section 5.3 and Annexure B to this Explanatory Memorandum. The general terms of the P&E Convertible Note are analogous to those of the RNRF Convertible Note (the subject of Resolution 1), the MIL Convertible Note A (the subject of Resolution 2), the MIL

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Explanatory Memorandum

Convertible Note B (the subject of Resolution 3), and the PSL Convertible Note (the subject of Resolution 4).

The P&E Conversion Shares will rank pari passu with all of the other fully paid ordinary shares on issue in the Company.

(f)

7.3.6: Use of funds raised

No funds are being raised for the issue of the P&E Convertible Note, as the Equity Securities are being issued as consideration under the P&E Purchase Agreement for the acquisition of plant and equipment to be used for diamond drilling.

7.6.7: Dates of allotment

Not applicable.

7.6.8: Voting Exclusion Statement

A voting exclusion statement is included in the Notice of Meeting for Resolution 5.

5.6 Director Recommendation - Resolution 5

The Board recommends that Shareholders vote in favour of this Ordinary Resolution, as it enables the P&E Purchase Agreement to be completed and, as a result of which, the Company can acquire plant and equipment to be used for diamond drilling whilst preserving the cash balance of the Company.

6. Summary of overall changes to share interests

In the event that:

(a) each of Resolutions 1, 2, 3, 4 and 5 are approved; and
(b) all of the RNRF Conversion Shares, MIL-A Conversion Shares, MIL-B Conversion Shares, PSL Conversion Shares and P&E Conversion Shares are issued,

and assuming that:

(c) all conversion shares are issued at the lowest possible Issue Price of $0.0008 and that all interest is paid in cash until the end of the Term; and
(d) no existing options are exercised and no additional Shares are issued,

then the number of Shares on issue by the Company will be 5,238,062,324 and the interests held in the Company by the recipients of the conversion shares will be as follows:

Note Holder	Current Share Holding	Conversion Shares issued	New Share Holding	% interest
RNRF	200,000,000	312,500,000	512,500,000	9.78%
MIL (including Mr Elias Khouri)	575,000,000	937,500,000	1,512,500,000	28.88%
PSL	Nil	312,500,000	312,500,000	5.97%
Gibbs	Nil	187,500,000	187,500,000	3.60%

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Explanatory Memorandum

7. Voting entitlement

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 at 7.00pm (Sydney Time) on Monday 18 November 2013.

Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

8. Interpretation

The following terms used in the Notice of Meeting and the Explanatory Memorandum are defined as follows:

15% Capacity has the meaning given to that term in section 2.1.

AGM means annual general meeting.

ASIC means the Australian Securities & Investments Commission.

Associated Entity has the meaning given to that term in the Corporations Act.

ASX means the ASX Limited.

Board means the board of Directors of the Company from time to time.

Business Day means a day on which all banks are open for business generally in Sydney.

Chair means the person chairing the Meeting.

Company means Astro Resources NL ABN 96 0 07 090 904.

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

Corporations Act means the Corporations Act 2001 (Cth);

Directors mean the directors of the Company from time to time.

Equity Securities has the meaning given to that term in the Listing Rules.

Explanatory Memorandum means the explanatory statement accompanying this Notice.

GBS means Governor Broome Pty Limited ACN 137 970 579 of Level 9 No.1 O’Connell Street Sydney.

Independent Expert means Grant Thornton Corporate Finance Pty Limited AFSL: 247140 of Level 17, 383 Kent Street, Sydney NSW 2000.

Independent Expert means the report by the Independent Expert attached as Annexure A.

Listing Rules means the official listing rules of the ASX as amended from time to time.

Market Price has the meaning given to that term in the Listing Rules.

Meeting means the Extraordinary General Meeting to be held on 20 November 2013 convened by the accompanying Notice of Meeting.

Astro_Draft Notice of Meeting (HG 15 10 13 clean final)

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Explanatory Memorandum

MIL means Mining Investments Limited (a company incorporated in Lebanon).

MIL Convertible Note A means the Convertible Note means the convertible note issued by the Company to MIL pursuant to the Share Sale Agreement in accordance with the Convertible Note Deed between the Company and MIL dated 15 August 2013 and described therein as the Note.

MIL Convertible Note B means the Convertible Note means the convertible note issued by the Company to MIL in accordance with the Convertible Note Deed between the Company and MIL dated 15 August 2012 and described therein as the Note.

MIL-A Conversion Shares means the Shares issued to MIL upon conversion of part or all of the MIL Convertible Note A.

MIL-B Conversion Shares means the Shares issued to MIL upon conversion of part or all of the MIL Convertible Note B.

Mineral Sands means the mineral sands project owned in Western Australia by GBS.

Notice of Meeting or Notice means the notice of meeting giving notice to shareholders of the Meeting, accompanying this Explanatory Memorandum.

Ordinary Resolution means a resolution passed by more than 50% of the votes at a general meeting of shareholders.

P&E Convertible Note means the Convertible Note means the convertible note issued by the Company to David Alexander Gibbs in accordance with the Convertible Note Deed between the Company and David Alexander Gibbs dated 25 September 2013 and described therein as the Note.

P&E Conversion Shares means the Shares issued to David Alexander Gibbs upon conversion of part or all of the P&E Convertible Note.

P&E Purchase Agreement means the agreement between the Company and David Alexander Gibbs dated 25 September 2013 pursuant to which the Company will acquire drilling equipment.

PSL means Pure Steel Limited (a company incorporated in Nevis under company registration number: C1800).

PSL Convertible Note means the Convertible Note means the convertible note issued by the Company to PSL in accordance with the Convertible Note Deed between the Company and PSL dated 15 August 2013 and described therein as the Note.

PSL Conversion Shares means the Shares issued to PSL upon conversion of part or all of the PSL Convertible Note.

Related Party has the meaning in section 228 of the Corporations Act.

Relevant Interest has the meaning given to that term in the Corporations Act.

Resolutions means the resolutions set out in the Notice of Meeting.

RNRF means Reliance Natural Resource Fund Pty Ltd ABN 26 140 558 809.

RNRF Convertible Note means the convertible note issued by the Company to RNRF pursuant to the Share Sale Agreement in accordance with the Convertible Note Deed between the Company and RNRF dated 15 August 2013 and described therein as the Note.

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Explanatory Memorandum

RNRF Conversion Shares means any Shares issued upon conversion of part or all of the RNRF Convertible Note.

Securities has the meaning in section 92(1) of the Corporations Act.

Shares means fully paid ordinary shares in the Company from time to time.

Share Sale Agreement means the Agreement for Sale of Shares between the Company, RNRF and Governor Broome Sands Pty Ltd ABN 43 137 970 579 dated 15 August 2013.

Shareholder means a shareholder of the Company.

Special Resolution means a resolution:

(a) of which notice has been given as set out in paragraph 249L(1)(c) of the Corporations Act; and
(b) that has been passed by at least 75% of the votes cast by members entitled to vote on the resolution.

Subsidiaries has the meaning given to that term in the Corporations Act.

Term means the term of the relevant convertible note as specified in Appendix B.

Trading Day has the meaning given to that term in the Listing Rules.

Voting Power has the meaning given to that term in the Corporations Act.

Voting Shares has the meaning given to that term in the Corporations Act.

Any inquiries in relation to the Resolutions or the Explanatory Memorandum should be directed to Vincent John Fayad (Company Secretary):

Level 9 1 O’Connell Street Sydney NSW 2000 + 61 28 346 6099

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Annexure

ANNEXURE“A” Independent Expert’s Report

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Astro Resources NL

Independent Expert’s Report and Financial Services Guide

24 September 2013

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The Directors Astro Resources NL Level 9 1 O’Connell Street Sydney NSW 2000

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24 September 2013

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Dear Sirs

Independent Expert’s Report and Financial Services Guide

Introduction

Astro Resources NL (“Astro” or the “Company”) is an Australian public company listed on the Australian Securities Exchange (“ASX”). The Company is currently focused on developing its 80% flagship Governor Broome mineral sands projects (“the GBS Project”). The GBS Project[1] covers an area of approximately 140 square kilometres (“sq km”) and is located southwest of Nannup, on the Scott Coastal Plain in Western Australia and is prospective for heavy minerals. GBS Project is owned through a special purpose company, Governor Broome Sands Pty Limited[2] (“GBS”). Reliance Natural Resource Fund Pty Ltd (“RNRF”) holds the remaining 20% interest in GBS.

As at 17 September 2013 Astro had a market capitalisation of approximately A$3.5 million.

Proposed Issuances

In August 2013, Astro announced that it had entered into a Share Sale Agreement (“SSA”) with RNRF to acquire the remaining 20% equity interest in GBS that it does not already own (“the Proposed Acquisition”). As consideration for the Proposed Acquisition, Astro will issue:

A convertible note of A$250,000 to RNRF (“RNRF CN”) convertible into a maximum of 312.5 million ordinary shares in Astro (“ARO Shares”) representing 8.22%[3] of the diluted issued capital of Astro after the Proposed Acquisition. RNRF currently holds approximately 5.7% interest in Astro.

1 The GBS Project was originally acquired as a part of the larger Scott Coastal Plains mineral sands project which comprised twelve exploration tenements including the three tenements belonging to the GBS Project. In FY13, GBS relinquished all other nine tenements not a part of the GBS Project.

2 Previously known as Governor Well Minerals Pty Ltd.

3 Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to section 1.2 for further details on convertible note terms.

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As advised by RNRF, a convertible note of A$500,000 to MIL (“MIL CN A”) convertible into a maximum of 625.0 million ARO Shares representing 15.20%[11] of the diluted issued capital of Astro. MIL currently holds approximately 16.48% interest in Astro. The issue of MIL CN A will be in full satisfaction of current fees owing by RNRF to MIL. For further details refer to Section 1.2.

In addition and separate to the Proposed Acquisition, MIL has agreed to provide a convertible loan facility (“the Loan”) of A$250,000 to Astro for exploration and evaluation of new projects. Subject to and upon receiving approval from shareholders of Astro not associated with MIL (“NonAssociated Shareholders”), the Loan will convert[4] into one convertible note issued to MIL with terms analogous to MIL CN A (“MIL CN B”) (together with the issue of RNRF CN and MIL CN A referred to as the “Proposed Issuances”). The MIL CN B will be convertible into a maximum of 312.5 million ARO Shares representing 8.22%[11] of the diluted issued capital of Astro.

We note the issue of MIL CN B is not interdependent with the Proposed Acquisition, and that the issue and conversion of either MIL CN B or MIL CN A will potentially result in MIL’s interest in Astro exceeding 20%.

If the Proposed Issuances are completed and upon conversion of the MIL CN A and B, MIL may potentially own up to 34.18% interest in Astro as shown in the table below[5] :

`Scenarios`	`No CNs converted` `Conversion of MIL` `CN B` `Conversion of MIL` `CN A` `Conversion of` `RNRF CN and` `MIL CN A` `Conversion of` `RNRF CN and` `MIL CN A & B` `Conversion of MIL` `CN A & B`
`Existing number of outstanding shares` `Existing number of shares held by MIL` `Shares on conversion of RNRF Convertible Notes` `Shares on conversion of MIL Convertible Notes A` `Shares on conversion of MIL Convertible Notes B` Total number of ARO Shares	Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `-` `-` `-` `312,500,000` `312,500,000` `-` `-` `625,000,000` `625,000,000` `625,000,000` `625,000,000` `-` `312,500,000` `-` `-` `312,500,000` `312,500,000`
	3,488,062,324 3,800,562,324 4,113,062,324 4,425,562,324 4,738,062,324 4,425,562,324
MIL interest	16.48% 23.35% 29.18% 27.12% 31.92% 34.18%

Source: NOM, Management and GTCF calculations

The Directors of ARO unanimously recommend that Non-Associated Shareholders vote in favour of the Proposed Issuances. Each Director of Astro intends to vote in favour of the Proposed Issuances.

Purpose of the report

Upon conversion and exercise of either the MIL CN A or MIL CN B, MIL’s voting power in Astro may increase from below 20% to over 20%.

The Directors of Astro have engaged Grant Thornton Corporate Finance to prepare an independent expert’s report stating whether, in its opinion; the issue of MIL CN A and MIL CN B

4 We note that is the Proposed Issuances are not approved, the Loan will remain as unsecured loan to Astro.

5 The calculation does not incorporate convertible notes to be issued to Pure Steel Limited and David Alexander Gibbs. Refer Section 1.5 for further details.

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as set out in Resolution 2 and 3 (the Proposed Issuances) are fair and reasonable to the NonAssociated Shareholders[6] for the purposes of Item 7 of Section 611 of the Corporations Act.

In forming our opinion on the proposed issue of convertible notes to MIL, we have analysed Resolutions 1, 2 and 3 of the Notice of Meeting collectively given both convertible notes are to be issued to MIL on analogous terms.

For the purpose of this report, an independent technical specialist, Continental Resource Management Pty Ltd (“Continental” or “CRM”), was engaged to conduct an independent geological and technical assessment and value the mineral assets held by Astro. The Continental Report is attached as Appendix C of this report.

Summary of opinion

Grant Thornton Corporate Finance has concluded that the Proposed Issuances are not fair but reasonable to the Non-Associated Shareholders.

We have formed this view primarily because we are of the opinion that the advantages of the Proposed Issuances outweigh the disadvantages.

Fairness Assessment

In forming our opinion in relation to the fairness of the Proposed Issuances to the Non-Associated Shareholders, Grant Thornton Corporate Finance has compared the value per ARO Share before the Proposed Issuances (on a control basis) to the assessed value per ARO Share after the Proposed Issuances (on a minority basis).

The following table and graph summarises our assessment:

`Fairness assessment`	`Section`	`Low`	`High`	`Preferred`
	`Reference`	`(cents)`	`(cents)`	`(cents)`
`Fair market value per ARO Share before the Proposed Transactions (control basis)`	`6.1`	`0.0834`	`0.1162`	`0.0998`
`Fair market value per ARO Share after the Proposed Transactions (minority basis)`	`7.1`	`0.0650`	`0.1023`	`0.0828`
`Increase/ (decrease) in value by ARO Share (cents)`		`(0.0184)`	`(0.0139)`	`(0.0170)`
`Increase/ (decrease) in value by ARO Share (%)`		`(22.1%)`	`(11.9%)`	`(17.1%)`
Source: GTCF calculations

Our assessed value range of the ARO Shares after the Proposed Issuances on a minority basis is lower than our assessed valuation range of ARO Shares before the Proposed Issuances on a controlling basis. Accordingly, we conclude that the Proposed Issuances are not fair to the NonAssociated Shareholders.

Reasonableness Assessment

Regulatory Guide 111 “Content of expert reports” (“RG 111”) establishes that an offer is reasonable if it is fair. It might also be reasonable if, despite being not fair, there are sufficient

6 The Non-Associated Shareholders are the shareholders of Astro not associated with MIL.

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reasons for the security holders to accept the offer/transaction. In assessing the reasonableness of the Proposed Issuances, we have considered the following likely advantages, disadvantages and other factors associated with the Proposed Issuances.

Advantages

Ability to continue as a going concern

ARO announced in August 2013 that it has entered into two convertible notes for a sum of $250,000 each (including MIL CN B) and the proceeds from these convertible notes have been drawn by the Company. The terms of conversion are subject to shareholder approval and if the shareholder approval in relation to MIL CN B and the other convertible note is not obtained, the amount owing will remain as an unsecured loan to the Company.

Given the limited cash resources of the Company, if the Proposed Issuances are not approved the Company may be required to undertake other fund raising transactions which may be more dilutive than the Proposed Issuances. In addition, the ability of the Company to continue as a going concern may be adversely affected.

100% control of GBS Project

Astro will increase its ownership of GBS to 100% and accordingly, it will have full control over the advancement and development of the GBS Project. All future exploration and development activities can be undertaken without first seeking the consensus and agreement from RNRF. Consequently, any potential uncertainties with regards to third party approval will be removed and in turn enhance operational efficiency and stability.

Given that Astro currently has an obligation to fund 100% of the GBS Project with only a 80% shareholding interest until a decision to mine is taken, completion of Proposed Issuances will remove this additional funding commitments for the GBS Project.

Simpler corporate structure

The implementation of the Proposed Issuances will result in a simpler corporate and ownership structure that will facilitate potential off-take, debt and equity financing for the GBS Project.

Strategic alliance with MIL

The Company’s Board has been advised that MIL has currently no intention of changing the strategic operations or the employment arrangement of the Company. MIL has further advised that it is not currently seeking to appoint additional directors to the Company’s Board or change the composition of the Board.

We also note that Astro may be required to source additional funding to further develop its mineral projects. While this is not known at this stage and may not eventuate, MIL may further assist with future capital raisings or provide Astro with access to channels for sourcing of capital that may otherwise not be available to the Company.

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As a result of additional investment in the Company, MIL will be also further incentivised to work towards the future success of Astro.

Avoidance of payment of deferred consideration

In September 2011, Astro acquired 80% interest in GBS from RNRF (“the Initial Acquisition”) for a total consideration of A$3.2 million consisting of cash and ordinary shares in Astro (“ARO Shares”). The consideration included a deferred consideration contingent on the achievement of certain development milestones (“Deferred Consideration”) in relation to the GBS Project (for further details refer to Section 4.2.1).

Whilst we have assessed the market value of deferred consideration at $nil as at the date of our report, ARO will not be required to make any of these potential payments if the Proposed Issuances are completed.

Potential sale of the GBS Project

Astro may be in a relatively better position to maximise the proceeds from the sale of the GBS Project if it decides to do so in the future by virtue of a 100% ownership interest.

Alternative transactions

If the Proposed Issuances are not approved by the Non-Associated Shareholders, the Company may seek alternative funding such as a private placement or a rights issue to fulfil its strategy and potentially repaying the Proposed Issuances. The potential dilution of alternative transactions may be greater for the Non-Associated Shareholders as compared with the Proposed Issuances. Rights issues and private placements for companies in the growth phase of their business cycle and with limited cash resources are generally completed at a discount to the prevailing market price and difficult to obtain.

Disadvantages

Premium for control

We note that MIL is not paying a premium to Astro for potentially acquiring interest in excess of 20%. Whilst MIL will remain the largest shareholder of Astro holding in excess of 20% of the fully diluted capital (up to a maximum interest of 34.18%) on completion of Proposed Issuances, MIL will not obtain a full control over Astro (i.e. more than 50% of the issued capital). In our opinion, it is not commercially realistic to expect that MIL will pay a full premium for Proposed Issuances.

Dilution from the shares issued to MIL upon conversion of convertible notes

MIL’s shareholding in Astro has the potential to increase up to 34.18%[7] if it decides to convert the convertible notes to be issued under the Proposed Issuances. As a result, the shareholding of the Non-Associated Shareholders will be diluted.

7 Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options in Astro or other convertible notes not issued to MIL are exercised. Refer to section 1.2 for further details on convertible note terms.

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Increased influence over the Company

Whilst MIL will not acquire a full controlling interest in Astro as a result of the Proposed Issuances, MIL will have the ability to significantly increase its influence over the affairs of the company as the single largest shareholder of Astro after the implementation of the Proposed Issuances. MIL may also have the capacity to block any potential takeover bid of Astro. MIL will consider its own interests in such situations and potentially such considerations will be different to other Astro Shareholders.

Sole funding responsibility

As a result of owning 100% of GBS, Astro will be solely responsible for funding the exploration, development and production activities of the GBS Project even after the decision to mine has been passed. The advancement of the GBS Project from a development to a production stage will require significant investment.

Complex capital structure

If the Proposed Issuances are approved, the complexity of the capital structure of Astro will further increase as a result of the issue of $1.0 million of new convertible notes potentially convertible into 1,250 million ordinary shares.

Companies with complex and highly dilutive capital structures tend to trade at a discount to their peers.

Gearing level

If the Proposed Issuances are approved and the RNRF CN, MIL CN A and B are not converted into ordinary shares, the gearing level of the Company will increase considerably from 0% to approximately 23.6% based on the pro-forma balance sheet as at 30 June 2013 prepared by the Company.

Companies with significant debt levels tend to be more adversely impacted by volatile markets, material changes in the regulatory environment and competitions. Furthermore, they are more exposed to the systematic risk of the general economy.

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Other factors

Astro Shareholders’ position if the Proposed Issuances are not approved

If the Proposed Issuances are not approved, it would be the current Directors’ intention to continue operating the Company in line with its objectives. Astro Shareholders who retain their shares will continue to share in any benefits and risks in relation to Astro’s ongoing business. However, the directors may need to undertake an alternative transaction/ fund raising or the ability of the Company to continue as a going concern may be in jeopardy.

Overall conclusion

After considering the abovementioned quantitative and qualitative factors, Grant Thornton Corporate Finance has concluded that Proposed Issuances are not fair but reasonable to the Non-Associated Shareholders.

Other matters

Grant Thornton Corporate Finance has prepared a Financial Services Guide in accordance with the Corporations Act. The Financial Services Guide is set out in the following section.

The decision of whether or not to approve the Proposed Issuances is a matter for each Astro Shareholder to decide based on their own views of value of Astro and expectations about future market conditions, Astro’s performance, risk profile, and investment strategy. If Astro Shareholders are in doubt about the action they should take in relation to the Proposed Issuances, they should seek their own professional advice.

Yours faithfully

GRANT THORNTON CORPORATE FINANCE PTY LTD

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ANDREA DE CIAN Partner

Phillip Rundle Partner

24 September 2013

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Financial Services Guide

1 Grant Thornton Corporate Finance Pty Ltd

Grant Thornton Corporate Finance Pty Ltd (“Grant Thornton Corporate Finance”) carries on a business, and has a registered office, at Level 17, 383 Kent Street, Sydney NSW 2000. Grant Thornton Corporate Finance holds Australian Financial Services Licence No 247140 authorising it to provide financial product advice in relation to securities and superannuation funds to wholesale and retail clients.

Grant Thornton Corporate Finance has been engaged by Astro to provide general financial product advice in the form of an independent expert’s report in relation to the issue of convertible notes to existing substantial shareholder, MIL as a part of the acquisition of the remaining 20% equity interest in GBS, and a separate loan facility agreement (the Proposed Issuances). This report is included in the Company’s Notice of Meeting and Explanatory Memorandum.

2 Financial Services Guide

This Financial Services Guide (“FSG”) has been prepared in accordance with the Corporations Act, 2001 and provides important information to help retail clients make a decision as to their use of general financial product advice in a report, the services we offer, information about us, our dispute resolution process and how we are remunerated.

3 General financial product advice

In our report we provide general financial product advice. The advice in a report does not take into account your personal objectives, financial situation or needs.

Grant Thornton Corporate Finance does not accept instructions from retail clients. Grant Thornton Corporate Finance provides no financial services directly to retail clients and receives no remuneration from retail clients for financial services. Grant Thornton Corporate Finance does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice directly to retail investors.

4 Remuneration

When providing the Report, Grant Thornton Corporate Finance’s client is the Company. Grant Thornton Corporate Finance receives its remuneration from the Company. In respect of the Report, Grant Thornton Corporate Finance will receive from Astro a fee of approximately A$25,000 plus GST, which is based on commercial rate for the preparation of the report. Our directors and employees providing financial services receive an annual salary, a performance bonus or profit share depending on their level of seniority. The above fee quote excludes any fee payable to the independent technical specialist. The costs associated with the independent technical specialist will be paid separately by the Company.

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In addition to any fee that may be payable to Grant Thornton Corporate Finance, the Company agrees to reimburse reasonable out-of-pocket expenses incurred in connection with Grant Thornton Corporate Finance’s activities under this engagement.

Except for the fees referred to above, no related body corporate of Grant Thornton Corporate Finance, or any of the directors or employees of Grant Thornton Corporate Finance or any of those related bodies or any associate receives any other remuneration or other benefit attributable to the preparation of and provision of this report.

5 Independence

Grant Thornton Corporate Finance is required to be independent of Astro in order to provide this report. The guidelines for independence in the preparation of an independent expert’s report are set out in Regulatory Guide 112 Independence of expert issued by the Australian Securities and Investments Commission (“ASIC”). The following information in relation to the independence of Grant Thornton Corporate Finance is stated below.

“Grant Thornton Corporate Finance and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with Astro (and associated entities) that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation the Proposed Issuances.

Grant Thornton Corporate Finance has no involvement with, or interest in the outcome of the transactions, other than the preparation of this report.

Grant Thornton Corporate Finance will receive a fee based on commercial rates for the preparation of this report. This fee is not contingent on the outcome of the transactions. Grant Thornton Corporate Finance’s out of pocket expenses in relation to the preparation of the report will be reimbursed. Grant Thornton Corporate Finance will receive no other benefit for the preparation of this report.

Grant Thornton Corporate Finance considers itself to be independent in terms of Regulatory Guide 112 “Independence of expert” issued by the ASIC.”

6 Complaints process

Grant Thornton Corporate Finance has an internal complaint handling mechanism and is a member of the Financial Industry Complaints Services Complaints Handling Tribunal, No F-3986. All complaints must be in writing and addressed to the Chief Executive Officer at Grant Thornton Corporate Finance. We will endeavour to resolve all complaints within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with, the complaint can be referred to the Financial Ombudsman Service who can be contacted at:

PO Box 579 – Collins Street West Melbourne, VIC 8007 Telephone: 1800 335 405

Grant Thornton Corporate Finance is only responsible for this report and FSG. Complaints or questions about the General Meeting should not be directed to Grant Thornton Corporate Finance.

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Grant Thornton Corporate Finance will not respond in any way that might involve any provision of financial product advice to any retail investor.

Compensation arrangements

Grant Thornton Corporate Finance has professional indemnity insurance cover under its professional indemnity insurance policy. This policy meets the compensation arrangement requirements of section 912B of the Corporations Act, 2001.

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Page

1	Outline of the Proposed Acquisition and Proposed Issuances	12
2	Purpose and scope of the report	18
3	Profile of the industry	21
4	Profile of Astro	27
5	Valuation methodologies	38
6	Valuation assessment of Astro before the Proposed Issuances	40
7	Valuation assessment of Astro after the Proposed Issuances	45
8	Sources of information, disclaimer and consents	48
Appendix A–Valuation methodologies		51
Appendix B–Glossary		53
Appendix C–Continental Report		56

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1 Outline of the Proposed Acquisition and Proposed Issuances

1.1 Overview of parties involved

Astro Resources NL (“Astro” or the “Company”)

Astro is an Australian public company listed on the Australian Securities Exchange (“ASX”). The Company is currently focused on developing its 80% flagship Governor Broome mineral sands project (“GBS Project”). GBS Project is owned through a special purpose company, Governor Broome Sands Pty Limited[8] (“GBS”).

The GBS Project[9] covers an area of approximately 140 square kilometres (“sq km”). It is located southwest of Nannup, on the Scott Coastal Plain in Western Australia and is prospective for heavy minerals.

Reliance Natural Resource Fund Pty Ltd (“RNRF”)

RNRF is an Australian private investment company that owns the remaining 20% interest in GBS.

RNRF currently holds 200 million ARO Shares representing approximately 5.7% equity interest in ARO.

Mining Investments Ltd (“MIL”)

MIL is a major shareholder of Astro, holding approximately 16.48% interest in Astro.

The sale of the 80% interest held by RNRF to ARO was facilitated for RNRF by MIL and accordingly, there is a success fee currently outstanding owed by RNRF to MIL consisting of:

Cash payment to be satisfied by way of transferring the convertible note consideration to MIL of A$0.50 million (“Fee Owing”).
50% of the Royalty Right[10] in relation to the GBS Project.

8 Previously known as Governor Well Minerals Pty Ltd.

9 The GBS Project was originally acquired as a part of the larger Scott Coastal Plains Mineral Sands Project which was comprised of twelve exploration tenements including the three tenements belonging to the GBS Project. In FY13, GBS relinquished all other nine tenements not a part of the GBS Project.

10 As a part of the Initial Acquisition, RNRF retained a 1.5% net royalty on any minerals produced from the GBS Project (the Royalty Right).

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1.2 Proposed Acquisition and Proposed Issuances

Astro, GBS and RNRF entered into a Share Sale Agreement (“SSA”) in August 2013 pursuant to which Astro will acquire the remaining 20% equity interest in GBS from RNRF (“Proposed Acquisition”) for a consideration of A$750,000 (“Consideration”).

The Consideration will be satisfied by Astro via the issue of the following convertible notes in lieu of cash:

A convertible note of A$250,000 to RNRF (“RNRF CN”) convertible into a maximum of 312.5 million ARO Shares representing 8.22%[11] of the issued capital of Astro on a fully diluted basis.
A convertible note of A$500,000 convertible into a maximum of 625.0 million ARO Shares representing 15.20%[11] of the issued capital of Astro on a fully diluted basis. As instructed by RNRF, ARO will issue this convertible note directly to MIL (“MIL CN A”) in full and final satisfaction of the Fee Owing payable by RNRF to MIL. MIL CN A is conditional on the issue of RNRF CN and vice versa.

The Proposed Acquisition and the issue of the MIL CN A are regulated by resolutions 1 and 2 in the notice of meeting and they are interdependent between each other.

In addition and separate to the above, MIL has agreed to provide a convertible loan facility (“Loan”) of A$250,000 to Astro for working capital purposes.

Subject to and upon receiving approval from shareholders of Astro not associated with MIL (“Non-Associated Shareholders”), the Loan will convert into one convertible note issued to MIL (“MIL CN B”) (together with the issue of RNRF CN and MIL CN A referred to as the “Proposed Issuances”). The MIL CN B will be convertible into a maximum of 312.5 million ARO Shares representing 8.22%[11] of the issued capital of Astro on a fully diluted basis.

We note that the Proposed Acquisition and the issue of the MIL CN A are not interdependent with the issue of MIL CN B.

For key terms of the convertible notes to be issued under the Proposed Issuances please refer to Section 1.3.

11 Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to Section 1.3 for further details on convertible note terms.

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If the Proposed Issuances are completed and upon conversion of the MIL CN A and B, MIL may potentially own up to 34.18% interest in Astro as shown in the table below[12] :

`Scenarios`	`No CNs converted` `Conversion of MIL` `CN B` `Conversion of MIL` `CN A` `Conversion of` `RNRF CN and` `MIL CN A` `Conversion of` `RNRF CN and` `MIL CN A & B` `Conversion of MIL` `CN A & B`
`Existing number of outstanding shares` `Existing number of shares held by MIL` `Shares on conversion of RNRF Convertible Notes` `Shares on conversion of MIL Convertible Notes A` `Shares on conversion of MIL Convertible Notes B` Total number of ARO Shares	Case 1 Case 2 Case 3 Case 4 Case 5 Case 6 `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `3,488,062,324` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `575,000,000` `-` `-` `-` `312,500,000` `312,500,000` `-` `-` `625,000,000` `625,000,000` `625,000,000` `625,000,000` `-` `312,500,000` `-` `-` `312,500,000` `312,500,000`
	3,488,062,324 3,800,562,324 4,113,062,324 4,425,562,324 4,738,062,324 4,425,562,324
MIL interest	16.48% 23.35% 29.18% 27.12% 31.92% 34.18%

Source: NOM, Management and GTCF calculations

Completion of the Proposed Issuances is conditional on all the relevant resolutions being passed by Non-Associated Shareholders in relation to the Proposed Issuances.

The graph below provides an illustration of the effect to Astro before and after the Proposed Issuances in relation to GBS, RNRF and MIL.

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----- Start of picture text -----

Before the Proposed Issuances After the Proposed Issuances (fully diluted basis¹)
Deferred $0.5 million in
RNRF MIL RNRF MIL
consideration fees owing
5.70% 16.48% 10.82% 31.92%
Astro Astro
80.00% 100.00%
GBS GBS
20.00%
----- End of picture text -----

Note (1): Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to Appendix C for further details on convertible note terms.

12 The calculation does not incorporate convertible notes to be issued to Pure Steel Limited and David Alexander Gibbs. Refer Section 1.5 for further details.

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1.3 Convertible note terms

`Convertible note terms`
	`Reliance Natural Resources Fund`
`Convertible note issuee`	`Pty Ltd`	`Mining Investments Limited`	`Mining Investments Limited`
`Convertible note`	`RNRF CN`	`MIL CN A`	`MIL CN B`
			`Exploration on new projects and`
`Approved purpose`	`Proposed Acquisition`	`Proposed Acquisition`	`general working captial`
			`requirements`
`Principal amount`	`$250,000`	`$500,000`	`$250,000`
`Conversion period`	`Any time prior to maturity date`
	`At the lower of:`
`Conversion price`	`(i) $0.001`
	`(ii) 80% of the 30 day VWAP of ARO Shares prior to conversion notice`
`Conversion formula`	`Number of conversion shares = conversion amount / conversion price`
`Conversion incentive`	`5% of the conversion amount`
`Maturity date`	`14 months from commencement date`
	`On the maturity date, the issuee can elect that any monies owing shall be`		`repaid in:`
`Repayment election`	`(i) ARO Shares at the conversion price; or` `(ii) Cash; or`
	`(iii) Combination of ARO Shares and cash.`
`Interest rate`	`12% pa (accruing daily and payable quarterly)`
`Facility establishment fee`	`NA`	`NA`	`1% of face value`
`Rollover period`	`12 months`
`Rollover consideration fee`	`$8,500`	`$16,500`	`$12,500`
`Rollover interest rate`	`17% pa`
`Maximum no. of conversion shares¹`	`312,500,000`	`625,000,000`	`312,500,000`

Source: NOM and Management

Note (1): Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised.

1.4 Effects of the Proposed Issuances

If the Proposed Issuances are approved by the Non-Associated Shareholders:

GBS will become a wholly-owned subsidiary of Astro.
Astro will own 100% of the GBS Project, be entitled to receive all the future cash flows[13] , and will be required to procure 100% of the funding to develop the GBS Project[14] .

13 With exception to a 1.5% net royalty on any minerals produced from the GBS Project.

14 We note that under the current arrangement, ARO is required to fund 100% of the GBS Project expenditure until a decision to mine has been passed.

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Termination of the GBS shareholders agreement entered into as a result of the Initial Acquisition.
RNRF will no longer be entitled to receive the Deferred Consideration[15] from Astro consisting of:
A$0.1 million cash and 150 million ARO Shares at the conversion of exploration tenement E70/2372 to a mining lease (“Deferred Consideration Part One”).
A$0.25 million cash and 100 million ARO Shares when Astro makes the formal decision to mine any minerals from the GBS Project (“Deferred Consideration Part Two”).

We note that as at 30 June 2013, Astro has recognised nil value on the balance sheet in relation to the Deferred Consideration. For further details refer to Section 4.3.2.

If only MIL CN A is approved, MIL will hold A$500,000 in MIL CN A convertible into a maximum of 625.0 million ARO Shares representing 15.22%[16] of the diluted issued capital of Astro. Upon full conversion of the MIL CN A, MIL’s interest in Astro will increase up to approximately 29.18%[17] on a fully diluted basis.
If only MIL CN B is approved, MIL will hold A$250,000 MIL CN B convertible into a maximum of 312.5 million ARO Shares representing 8.22%[16] of the diluted issued capital of Astro. Upon full conversion of the MIL CN B, MIL’s interest in Astro will increase to approximately 23.35%[17] on a diluted basis.
If both MIL CN A and B under Proposed Issuances are completed, MIL will hold A$750,000 in MIL CN A and B, convertible into a maximum of 937.5 million ARO Shares representing 21.18%[16] of the issued capital of Astro. Upon full conversion of the MIL CN A and B, MIL’s interest in Astro will increase up to approximately 34.18%[17] on a fully diluted basis.

1.5 Other Transactions

We note that in addition to the Proposed Issuances, Astro is also seeking shareholder approval for the issuance of two other convertible notes not related the Proposed Issuances as summarised below:

Issue of convertible note to Pure Steel Limited as consideration for A$250,000 loan. The funds will be used for exploration expenditure, evaluation of new projects and general working purposes.
Issue of convertible note to David Alexander Gibbs as consideration for A$150,000 loan. The funds will be used for the acquisition of diamond drilling equipment.

15 For further details on the Deferred Consideration refer to Section 4.2.1.

16Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to Section 1.3 for further details on convertible note terms.

17 Assuming no other convertible notes issued to any other party are converted.

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For further details refer to Resolutions 4 and 5 of the Notice of Meeting (“NOM”). Grant Thornton Corporate Finance has not been engaged to form an opinion in relation to the convertible notes to be issued to Pure Steel Limited and David Alexander Gibbs.

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2 Purpose and scope of the report

2.1 Purpose

Section 606 of the Corporations Act prohibits the acquisition of a relevant interest in the issued voting shares of a company if the acquisition results in the person’s voting power in the company increasing from either below 20% to more than 20%, or from a starting point between 20% and 90%, without making an offer to all shareholders of the company.

Item 7 of Section 611 of the Corporations Act allows the shareholders not associated with the acquiring company (“Non-Associated Shareholders”) to waive this prohibition by passing a resolution at a general meeting. Regulatory Guide 74 “Acquisitions agreed to by shareholders” (“RG 74”) and Regulatory Guide 111 “Content of expert reports” (“RG 111”) issued by ASIC set out the view of ASIC on the operation of Item 7 of Section 611 of the Corporations Act.

RG 74 requires that shareholders approving a resolution pursuant to Section 623 of the Corporations Act (the predecessor to Item 7 of Section 611 of the Corporations Act) be provided with a comprehensive analysis of the proposal, including whether or not the proposal is fair and reasonable to the Non-Associated Shareholders. The Directors may satisfy their obligations to provide such an analysis by either:

Commissioning an independent expert’s report; or
Undertaking a detailed examination of the proposal themselves and preparing a report for the non-associated shareholders.

If the Proposed Issuances are completed, MIL may increase its current shareholding interest in the Company from 16.48% up to:

29.18% on a fully diluted basis if MIL CN A is issued and converted.[ 18]
23.35% on a fully diluted basis if MIL CN B issued and converted.[18]
34.18% on a fully diluted basis if both MIL CN A and MIL CN B are issued and converted.[18]

Accordingly, the Directors of Astro have engaged Grant Thornton Corporate Finance to prepare an independent expert’s report stating whether, in its opinion, the Proposed Issuances are fair and reasonable to the Non-Associated Shareholders for the purposes of Item 7 of Section 611 of the Corporations Act.

2.2 Basis of assessment

In preparing our report, Grant Thornton Corporate Finance has had regard to the Regulatory Guides issued by ASIC, particularly RG 111, which states that an issue of shares requiring approval under Item 7 of Section 611 of the Corporations Act should be analysed as if it were a takeover bid.

18 Assumes conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to Section 1.3 for further details on convertible note terms.

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Accordingly, we have assessed the Proposed Issuances with reference to Section 640 of the Corporations Act.

RG 111 states that:

An offer is considered fair if the value of the offer price or consideration is equal to or greater than the value of the securities that are the subject of the offer. The comparison should be made assuming 100% ownership of the target company irrespective of whether the consideration offered is scrip or cash and without consideration of the percentage holding of the offeror or its associates in the target company.
An offer is considered reasonable if it is fair. If the offer is not fair it may still be reasonable after considering other significant factors which justify the acceptance of the offer in the absence of a higher bid. ASIC has identified the following factors which an expert might consider when determining whether an offer is reasonable:
The offeror’s before existing entitlement, if any, in the shares of the target company.
Other significant shareholding blocks in the target company.
The liquidity of the market in the target company’s securities.
Taxation losses, cash flow or other benefits through achieving 100% ownership of the target company.
Any special value of the target company to the offeror, such as particular technology and the potential to write off outstanding loans from the target company.
The likely market price if the offer is unsuccessful.
The value to an alternative offeror and likelihood of an alternative offer being made.

Grant Thornton Corporate Finance has determined whether the Proposed Issuances are fair to the Non-Associated Shareholders by comparing the fair market value of ARO Shares before the Proposed Issuances on a 100% control basis with the fair market value of ARO Shares after the Proposed Issuances on a minority basis.

In considering whether the Proposed Issuances are reasonable to the Non-Associated Shareholders, we have considered a number of factors, including:

Whether the Proposed Issuances are fair.
The implications to Astro and the Non-Associated Shareholders if the Proposed Issuances are not approved.
Other likely advantages and disadvantages associated with the Proposed Issuances as required by RG111.

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Other costs and risks associated with the Proposed Issuances that could potentially affect the Non-Associated Shareholders of Astro.

For the purpose of this report, an independent technical specialist, Continental Resource Management Pty Ltd (“Continental”) was engaged to conduct an independent geological and technical assessment and a valuation of the GBS Project and other tenements held by Astro.

Continental’s report (the “Continental Report”) is included as Appendix C to this report.

2.3 Independence

Prior to accepting this engagement, Grant Thornton Corporate Finance considered its independence with respect to the Proposed Issuances with reference to the ASIC Regulatory Guide 112 “Independence of Expert’s Reports” (“RG 112”).

Grant Thornton Corporate Finance has no involvement with, or interest in, the outcome of the approval of the Proposed Issuances other than that of an independent expert. Grant Thornton Corporate Finance is entitled to receive a fee based on commercial rates and including reimbursement of out-of-pocket expenses for the preparation of this report.

Except for these fees, Grant Thornton Corporate Finance will not be entitled to any other pecuniary or other benefit, whether direct or indirect, in connection with the issuing of this report. The payment of this fee is in no way contingent upon the success or failure of the Proposed Issuances.

2.4 Consent and other matters

Our report is to be read in conjunction with the Notice of Meeting and Explanatory Memorandum dated on or around September 2013 in which this report is included, and is prepared for the exclusive purpose of assisting the Non-Associated Shareholders in their consideration of the Proposed Issuances. This report should not be used for any other purpose.

Grant Thornton Corporate Finance consents to the issue of this report in its form and context and consents to its inclusion in the Notice of Meeting and Explanatory Memorandum.

This report constitutes general financial product advice only and in undertaking our assessment, we have considered the likely impact of the Proposed Issuances to Astro Shareholders as a whole. We have not considered the potential impact of the Proposed Issuances on individual Astro Shareholders. Individual shareholders have different financial circumstances and it is neither practicable nor possible to consider the implications of the Proposed Issuances on individual shareholders.

The decision of whether or not to approve the Proposed Issuances is a matter for each Astro Shareholder based on their own views of value of Astro and expectations about future market conditions, Astro’s performance, risk profile and investment strategy. If Astro Shareholders are in doubt about the action they should take in relation to the Proposed Issuances, they should seek their own professional advice.

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3 Profile of the industry

Astro is a mineral resource company primarily engaged in the exploration of mineral sands in the Nannup region of southern Western Australia.

3.1 Overview

The mineral sand mining and exploration industry in Australia (“the Industry”) is primarily engaged in the exploration of two types of heavy minerals:

Titanium minerals – include mainly ilmenite and rutile. Titanium minerals are generally the most prevalent form of heavy minerals contained in mineral sands and are used mainly for the production of titanium dioxide concentrates. Titanium dioxide is a white powder commonly utilised as a pigment with a wide range of applications in paints and coatings, plastics, paper, rubber, textiles, inks, cosmetics, food and UV protection. Rutile contains approximately 95% titanium dioxide and ilmenite contains on average 54% titanium dioxide in its mineral form. As a result, the price of ilmenite is substantially lower than the price of rutile, and ilmenite is often used to produce synthetic rutile.
Zircon – is mainly sold to producers of ceramics which includes sanitary ware and tiles used in housing construction. Zircon is also a key input for the manufacturing of refractory bricks which are built to withstand high temperatures and used in lining furnaces, kilns and fireplaces. Zircon is also used to manufacture various chemicals.

The product segmentation for the Industry in 2012 by total revenue is illustrated below:

Product segmentation 2012

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----- Start of picture text -----

Ilmenite
Other¹
18%
21%
Zircon
23%
Rutile
38%
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Source: IbisWorld

Note (1): ‘Other’ products mainly consist of Leucoxene, another titanium mineral (c. 87% titanium dioxide) which is essentially another variant of ilmenite containing less iron.

3.2 Key drivers affecting mineral sands exploration

The key drivers affecting mineral sands exploration include:

Demand for heavy minerals – the demand for mineral sands exploration is derived from investment demand and the demand for related end products such as tiles, paints, paper, plastics and refractory bricks. Most of these end products are discretionary and tend to see increased

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demand when the global economy is growing; therefore growth in the world gross domestic product (“GDP”) is a key driver of demand for heavy minerals.

Prices of heavy minerals – low prices for heavy minerals tend to have a negative impact on the level of mineral sands exploration activities and vice versa.
Exchange rates – a large portion of mineral sands are exported and are usually traded in US$ dollars, therefore relative exchange rates are an important factor affecting the level of global heavy minerals trading and demand.
Political and regulatory factors – mineral sands exploration activities are considered high risk undertakings as there is a considerable amount of risk and uncertainty surrounding the commercial viability of such projects. Consequently, tenements located in countries with welldefined regulatory processes and a stable political environment may be more attractive to mineral sand explorers and producers as they are less risky than unregulated and politically unstable countries.
Funding requirements – given the inherent riskiness of the Industry, the availability and cost of capital to fund such projects can significantly impact on the level of mineral sands exploration activities being undertaken.

3.3 Demand and supply

The majority of the heavy minerals produced in Australia are exported and accounted for approximately 62% of Industry revenue in 2012.[19] The major overseas purchasers of rutile and ilmenite are titanium dioxide pigment manufacturers, and the major overseas purchasers of zircon are manufactures of ceramic products and refractory bricks for use in metal smelting kilns. Domestically, the majority of heavy minerals are used for the production of synthetic rutile (from ilmenite) and titanium dioxide pigment which are then mostly exported.

Australia is a key global producer of heavy minerals. In 2012, Australia accounted for approximately 15% of ilmenite, 58% of rutile and 43 % of zircon produced globally.[20] The table below sets out the historical production volumes of zircon, ilmenite and rutile for the Industry:

19 Mineral Sand Mining in Australia, IbisWolrd, May 2013

20 Mineral Commodity Summaries 2013 , US Geological Survey, January 2013

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Historical production volumes

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2,500
2,000
Zircon production
1,500 Rutile production
Illmenite production
1,000
500
0
2005 2006 2007 2008 2009 2010 2011 2012
Source: US Geological Survey (“USGS”)
Production (000's tonnes)
----- End of picture text -----

The historical production of ilmenite, rutile and zircon has decreased by a compounded average annual growth rate (“CAGR”) of 2.5% from 2007 to 2012. Production decreased most significantly from 2007 to 2009 as a result of decreased global economic activity caused by the global financial crisis (“GFC”). Production growth has since increased slightly with recovery of the global economy. However, despite increases in the price of heavy minerals, production decreased again in 2012 in response to weaker forecast demand as a result of poor economic conditions, oversupply and destocking by customers.

Mineral sands in Australia are produced predominately by the following three companies:

Market share by revenue in 2012

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Other
0.01%
Tronox Western Australia Pty
Ltd
Iluka Resources Ltd 38%
42%
Cristal Australia Pty Ltd
20%
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Source: IbisWorld

We note the following about the above key Industry participants[21] :

Iluka Resources Ltd (“Iluka”) – is one of the major producers of mineral sands in the world with an estimated A$1.1 billion in FY13 revenue. The company principally produces zircon, titanium dioxide products of rutile and synthetic rutile, and ilmenite. The company has both mining and processing operations in South Australia, Western Australia, Victoria and the United States (“US”). In the year to date to 30 June 2013, Iluka produced approximately 118,500 tonnes of zircon, 60,600 tonnes of rutile and 59,000 tonnes of synthetic rutile.

21 Mineral Sand Mining in Australia, IbisWolrd, May 2013

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Tronox Western Australia Pty Ltd (“Tronox”) – Tronox is a subsidiary of global titanium dioxide pigment manufacturer, Tronox Limited[22] and had estimated revenue of A$395.8 million in FY13. Tronox was formed in 2012 and is primarily engaged in the operation of the Tiwest mineral sands project which consists of a mine and processing facilities in Western Australia. In FY13, Tronox produced approximately 64,000 tonnes of zircon, 38,000 tonnes of rutile and 452,000 tonnes of ilmenite.
Cristal Australia Pty Ltd (“Cristal”) – Cristal is a subsidiary of the National Titanium Dioxide Co. Limited of Saudi Arabia and had an estimated revenue of A$212.5 million in FY13. Cristal manufactures titanium dioxide, titanium chemical, and specialty titanium products with operations in Western Australia and Eastern Australia.

3.4 Price analysis

The historical and forecast prices for ilmenite, rutile and zircon are set out below:

Historical and forecast ilmenite prices (US$/tonne)

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----- Start of picture text -----

US$
350
300
250
200
150
100
50
0
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F
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Source: USGS and Consensus Economics Inc.

Historical and forecast rutile prices (US$/tonne)

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----- Start of picture text -----

US$
2,500
2,000
1,500
1,000
500
0
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F
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Source: USGS and Consensus Economics Inc.

22 Tronox Limited is one of the worl d’s largest integrated manufactures of mineral sands and titanium dioxide pigments.

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Historical and forecast zircon prices (US$/tonne)

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----- Start of picture text -----

US$
3,000
2,500
2,000
1,500
1,000
500
0
2007 2008 2009 2010 2011 2012 2013F 2014F 2015F 2016F 2017F
----- End of picture text -----

Source: USGS and Consensus Economics Inc.

Mineral sands have historically been sold through long term contracts marked by relative price stability and modest price growth. However, from 2008 to 2010, the significant economic slowdown caused by the global financial crisis (“GFC”) and European sovereign debt crisis caused the price for heavy minerals to decline by a CAGR of approximately 4.8% over the period.

At the end of 2010, Iluka was the first major heavy mineral producer to shift from long term contracts to shorter term contracts. Shorter term contracts negotiated quarterly or half yearly have enabled producers to raise prices to cover increased costs and achieve more sustainable profit margins to attract investors. From 2010 to 2012 the prices of ilmenite, rutile and zircon increased by a CAGR of approximately 100%, 104% and 70% respectively.

The prices of ilmenite, rutile and zircon are forecast to decrease significantly in 2013 by 19%, 29% and 43% respectively. The decline is primarily due to weaker demand as a result of poor economic conditions, oversupply and destocking by customers in 2013. From 2014 to 2017, the prices for ilmenite and rutile are expected to decline slightly due to reduced demand growth as a result of improving efficiency of titanium dioxide manufacturing plants requiring less raw materials, and relatively stronger increases in production. However, the price for zircon is expected to increase slightly in line with the expected recovery of the global economy due to growth in demand from the metal smelting and construction industries in Asia.

3.5 Outlook Industry Performance

The performance of the Industry is expected to remain dependent on the level of demand and prices. In the short to medium term, the CAGR of revenue for the Industry is forecast to be 4.5% over the next five years. The expected annual growth rate for the Industry is relatively higher than the forecast short to medium term average world GDP growth rate of 3.9%[23] over the next five years driven by the following:

Increased demand and export of heavy minerals reflecting continual economic recovery from the GFC and the European sovereign debt crisis. The bulk of production output is expected to be absorbed by exports, especially to Asia.

23 World Economic Outlook , International Monetary Fund, April 2013

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Mineral sands output is expected to increase materially over the next five years from the increased capacity utilisation and expansion of existing mineral sands projects. In 2018, Australia is forecast to produce approximately 91.5% more ilmenite, 1.3% more rutile and 13.1% more zircon than in 2012. However, the increase in production is expected to constrain price growth.

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4 Profile of Astro

4.1 Company overview

Astro is an ASX listed minerals exploration company mainly engaged in developing its flagship Governor Broome Mineral Sands Projects (the GBS Project). The GBS Project covers an area of approximately 140 square kilometres (“sq km”) and is located southwest of Nannup, on the Scott Coastal Plain in Western Australia. Astro currently holds 80% interest in the GBS Project through ownership of 80% of the shareholding in GBS (formerly known as Governor Well Minerals Pty Ltd). In addition, the Company has various diamond and drilling interests that are generally known as ‘East Kimberley Diamonds’.

4.2 Asset overview

The maps below illustrate the locations of Astro’s projects.

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Source: Astros’s Annual report, 30 June 2012.

The table below provides a summary of the tenements currently held by the Company:

Summary of tenements

`Project`	`Area` `Inferred` `(km` `2)` `(JORC)¹ (Mt)` `Tenement` `Grant Date` `Expiry Date` `Holder or Applicant` `Astro` `ownership`
`GBS Project` `GBS Project` `GBS Project`	`E70/2372` `9/01/2002` `8/01/2014` `56` `E70/2464` `6/09/2006` `5/09/2013` `48` `E70/3681` `20/06/2011` `19/06/2016` `36` `185.7` `Governor Broome Sands` `Pty Ltd` `80%`
`HM Sands GBS Project` `HM Sands GBS Project` `HM Sands GBS Project` `HM Sands GBS Project` `HM Sands GBS Project`	`E70/4418` `16/10/2012` `15/10/2017` `13` `P70/1583` `13/07/2010` `12/07/2014` `0` `P70/1584` `13/07/2010` `12/07/2014` `0.2` `P70/1639` `Application` `NA` `1` `P70/1640` `Application` `NA` `2` `NA` `HM Sands Pty Ltd` `100%`
`Lower Smoke Creek Project` `Carr Boyd Range Project` `Argyle Dykes Project` `Argyle Dykes Project` `Argyle Dykes Project`	`E80/4210` `3/08/2011` `2/08/2016` `87.5` `E80/4316` `22/02/2012` `21/02/2017` `56` `P80/1615` `1/02/2008` `31/01/2016` `1.5` `P80/1616` `1/02/2008` `31/01/2016` `1.5` `P80/1617` `1/02/2008` `31/01/2016` `1.8` `NA` `100%` `East Kimberly Diamond` `Corporation Pty Ltd`
`MacPhee Creek Diamond and Uranium Project`	`MacPhee Resources Pty` `Ltd` `100%` `E80/3243` `25/07/2005` `Application for extension` `110.5` `NA`

Source: Continental Report

Note (1): Joint Ore Reserves Committee is a standard used for the public disclosure of information relating to mineral properties in Australasia.

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4.2.1 GBS Project

General overview

Astro currently owns a 80% equity interest in GBS, which holds 100% interest in the GBS Project[24] . The GBS Project is located in the South Perth Basin which is considered a heavy mineral province, containing numerous heavy mineral deposits stretching from Port Gregory, north of Geraldton, to Jangardup, near the south coast of Western Australia.

The GBS Project comprises of three prospective deposits; the Governor Broome North, South and East deposits. Since the acquisition of GBS in September 2011, Astro has undertaken significant exploration work and increased the total JORC[25] defined resources to a tonnage of 185.7 million tonnes (“Mt”) at a grade of 4.36% heavy minerals (“HM”) (JORC inferred) with a mineral assemblage dominated by high-quality, commercial grade, sulphate ilmenite. Set out in the chart below is the GBS Project’s mineral assemblage.

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Oversize
7.6%
Slimes
14.8%
Garnet & other
31%
HM
4.4%
Ilmenite
Zircon 59%
5%
Sands High grade titanium
73.2% minerals
2% Leucoxene
3%
----- End of picture text -----

Source: Quarterly report – 30 June 2013and Continental Report

In July 2012, Astro completed extraction of 1 tonne of material from the GBS Project and produced 20 kilogram (“kg”) of product samples which were distributed to potential buyers and off-take/ development partners for independent analysis. Responses from sample recipients have provided further confirmation that the sulphate ilmenite dominating the GBS Project’s mineral assemblage is potentially commercial grade and suitable for sulphate plant processing into titanium dioxide pigments commonly employed in Asian markets.

In January 2013, Astro announced that it had identified a significant new exploration target within the GBS Project’s South deposit with a potential tonnage in the range of 90 to 130 Mt at a grade of 4% to 6% HM.

24 The GBS Project was originally acquired as a part of the larger Scott Coastal Plains Mineral Sands Project which was comprised of twelve exploration tenements including the three tenements belonging to the GBS Project. In FY13, GBS relinquished all other nine tenements not a part of the GBS Project.

25 Joint Ore Reserves Committee is a standard used for the public disclosure of information relating to mineral properties in Australasia.

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Acquisition of the GBS Project

In September 2011, Astro entered into a Shareholders Agreement (“Initial SHA”) for the acquisition of 80% interest in GBS from Reliance Natural Resources Fund Pty Ltd (“RNRF”) (“Initial Acquisition”) for a total consideration of A$3.2 million consisting of:

A$0.5 million cash and 80 million fully paid ordinary shares in Astro (“ARO Shares”) at completion of acquisition (paid).
A$0.5 million cash in 6 months from completion or pursuant to the cumulative raising of A$2 million by Astro. In March 2012, Astro completed the payment of A$500,000 to RNRF (paid).
120 million ARO Shares to be issued subject to shareholder approval. Astro obtained shareholder approval in November 2011 and the ARO Shares were subsequently issued (paid).
A$0.1 million cash and 150 million ARO Shares at the conversion of exploration tenement E70/2372 to a mining lease (“Deferred Consideration Part One”).
A$0.25 million cash and 100 million ARO Shares when Astro makes the decision to mine any minerals from the GBS Project (“Deferred Consideration Part Two”).

As a result of the Initial Acquisition, Astro took control of the board and management of GBS and obtained the first right of refusal on RNRF’s remaining 20% minority interest in GBS. We note that RNRF also retained a 1.5% net royalty on any minerals produced from the GBS Project (“the Royalty Right”) and appointed Non-Executive Director, Graham Libbesson[26] to the Board of Astro.

HM Sands GBS Project

In 2012, Astro successfully applied for additional tenements bordering the tenements held by GBS through wholly owned subsidiary, HM Sands Pty Ltd (“HM Sands”), to form the HM Sands GBS Project which is considered a part of the GBS Project but 100% owned by Astro. In particular, we note that HM Sand’s P70/1583 tenement is within the GBS Project’s East deposit.

4.2.2 Other Projects

Astro also has a number of other exploration assets throughout Western Australia including the following:

East Kimberly Diamond Projects

Carr Boyd Range/Lower Smoke Creek are two projects which surround Venus Metals Ltd’s JORC inferred 5 million carat diamond resource in the Kimberley region of Western Australia. Both projects’ exploration licenses were granted in FY12 with a five year term.
Argyle Dykes Project consists of three contiguous exploration licenses also located in the Kimberley region. A drilling program has been designed to coincide with work at the MacPhee

26 We note that Mr. Libbesson is not a director of RNRF.

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Creek Diamond and Uranium Project to confirm the presence and consistency of diamond bearing material at depth. In FY12, the project was granted a four year extension of term to continue exploration.

Furthermore, we note that during the March 2013 quarter, the Company has advanced negotiations to acquire a Heavy Mineral Separation plant (“HMS Plant”) located adjacent to Astro’s alluvial diamond leases. This acquisition has now been completed. The HMS Plant will be acquired for the purpose of sorting diamonds from gravel in diamond exploration programmes. As consideration for the HMS Plant, Astro is intending to issue A$150,000 in convertible notes subject to ARO Shareholder approval. For further details refer to Section 1.4.

MacPhee Creek Diamond and Uranium Project

MacPhee Creek Diamond and Uranium Project is owned by Astro’s wholly owned subsidiary, MacPhee Resources Pty Ltd (“McPhee”). The project consists of one exploration license located in the East Kimberly region of Western Australia, approximately 130 km south of Kununurra. Work on the MacPhee Creek Diamond and Uranium Project has yielded indications of geological structures suitable for further assessment of both uranium and diamond prospectivity.
Astro has proposed a work program to test a number of target areas before undertaking a proposed drilling program. However, the program is still waiting submission for approval by the Department of Mines and Petroleum subsequent to on-going negotiations with the Kimberley Land Council regarding heritage protection concerns. We also note that the exploration license expired on 24[th] July 2013 and that an application has been made for an extension of term for a further year.

Refer to the Continental Report in Appendix C for further detail on Astro’s exploration projects.

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4.3 Financial information

4.3.1 Financial Performance

The consolidated statements of comprehensive income of Astro for the financial year ended 30 June 2011 (“FY11”), 30 June 2012 (“FY12”) and 30 June 2013 (“FY13”) are set out in the table below:

`Astro`	`FY2011`	`FY2012`	`FY2013`
	`Audited`	`Audited`	`Audited`
`Consolidated Statements of Comprehensive Income`	`A$'000`	`A$'000`	`A$'000`
Revenue
`Sundry income`	`52`	`5`	`52`
Total revenue	52	5	52
Expenses
`Exploration expenditure written off`	`(198)`	`(982)`	`(245)`
`Other expenses`	`(935)`	`(1,356)`	`(858)`
EBITDA	(1,081)	(2,334)	(1,052)
`Depreciation expense`	`(11)`	`(5)`	`(6)`
EBIT	(1,091)	(2,338)	(1,058)
`Interest received`	`116`	`42`	`25`
Loss from continuing operations before income tax	(975)	(2,296)	(1,033)
`Income tax expense`	`-`	`-`	`230`
Loss from continuing operations after income tax	(975)	(2,296)	(803)
Source: Audited Finanical Reports, Management and GTCF calculations

We note the following in relation to the statements of comprehensive income set out above:

In FY12, NDMJV was fully impaired resulting in capitalised exploration expenditure being written off by approximately A$982,000. We note that capitalised exploration expenditure is reviewed for impairment at each reporting date and is written off to the extent that the capitalised costs are not expected to be recoverable through successful development or sale of the tenements.
In FY13, Astro fully dissolved the NDMJV and relinquished a number of tenements that were no longer required which resulted in an impairment expense of approximately A$0.6 million. This was partially offset by approximately A$0.4 million in relation to the removal of the Deferred Consideration liability given the expectation that the obligation will terminate if the Proposed Issuances are successful. Refer to section 4.2.1 for more details on the Deferred Consideration.
Other expenses consist of mainly administrative expenses, directors’ consultant fees[27] and consultants’ fees. Other expenses has decreased by approximately A$498,000 mainly due to Company restructuring, successful implementation of cost reduction schemes, and reduced exploration activities.

27 Includes termination fees of $90,000.

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4.3.2 Financial Position

The statements of financial position of Astro as at 30 June 2012 and 30 June 2013 are set out in the table below:

`Astro`	`30 Jun 2012`	`30 Jun 2013`
	`Audited`	`Audited`
`Consolidated Statements of Financial Position`	`A$'000`	`A$'000`
Current assets
`Cash and cash equivalents`	`1,586`	`348`
`Trade and other receivables`	`69`	`35`
`Inventories`	`4`	`4`
`Other current assets`	`26`	`23`
Total current assets	1,685	410
Non-current assets
`Other receivables (bonds)`	`78`	`-`
`Available-for-sale investments`	`4`	`4`
`Exploration expenditure`	`3,807`	`3,681`
`Plant and equipment`	`41`	`-`
Total non-current assets	3,930	3,684
Total assets	5,615	4,094
Current liabilities
`Trade and otherpayables`	`692`	`156`
Total current liabilities	692	156
Non-current liabilities
`Other creditors`	`200`	`20`
Total non-current liabilities	200	20
Total liabilities	892	176
Net assets	4,722	3,918
Equity
`Issued capital`	`9,177`	`9,177`
`Reserves`	`1,596`	`1,595`
`Accumulated losses`	`(6,124)`	`(6,927)`
`Parent Interest`	`4,649`	`3,845`
`Non-controlling interest`	`73`	`73`
Total equity	4,722	3,918
Source: Audited Finanical Reports, Management and GTCF calculations

We note the following in relation to the statements of financial position:

Cash and cash equivalents decreased by approximately A$1.2 million to A$348,000 in FY13 mainly as a result of exploration and administration expenditure incurred during the year.
Trade and other receivables of A$35,000 as at 30 June 2013 consist of GST refundable and a bond refund on leased property.
Capitalised exploration expenditure of A$3.7 million are predominately in relation to the GBS Project. We note that in FY13, approximately A$0.6 million in capitalised exploration expenditure was impaired due to the dissolution of the NDM JV and the relinquishment of a number of tenements. This was partially offset by approximately A$0.4 million in reduction of provisions for impairment.

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Trade and other payables decreased by A$0.5 million in FY13 mainly as a result of the removal of approximately A$175,000 in Deferred Consideration Part One[28] . Given the uncertainty associated with Astro achieving the milestone required for payment of the Deferred Consideration Part One and the expectation that the obligation will terminate if the Proposed Issuances are successful, the Company has assigned nil value to the Deferred Consideration Part One.

We note that the Deferred Consideration Part Two was recognised off-balance sheet as a contingent liability in FY12 given its relatively higher level of uncertainty in comparison to the Deferred Consideration Part One.

Other non-current creditors of A$20,000 relates to the contingent consideration for the acquisition of MacPhee which involves the issuance of 20 million shares as set out below:
10 million shares to be issued on commencement of drilling on E80/3243.
10 million shares to be issued on achieving an inferred JORC resource of 5 million pounds.
Issued capital increased from approximately A$5.8 million in FY11 to A$9.2 million in FY12 mostly due to the following:
Issue of 200 million ARO Shares at A$0.0032 per share for the acquisition of GBS in September 2011. For further details refer to Section 4.2.1.
Capital raising of approximately A$3.1 million in May 2012 for the advancement of mineral sands exploration in the form of the following:
- Rights issue of approximately 1,308 million ARO Shares at A$0.002 per share with a 1 for 4 attaching option at an exercise price of A$0.005, expiring on 30 June 2014.
- Placement of 250 million ARO Shares at A$0.002 per share with a 1 for 4 attaching option at an exercise price of A$0.005, expiring on 30 June 2014 to professional investors.
- Issue of 350 million options at an exercise price of A$0.005, expiring on 30 June 2014 as payment for underwriting services. For further details on the options refer to Section 4.4.2.

Contingent liabilities

As at 30 June 2013, Astro had the following contingent liabilities/ commitments not recognised on the balance sheet:

Minimum exploration work and expenditures on its current tenements of approximately A$1.8 million (A$0.4 million current and A$1.4 million non-current) which may be required should

28 As discussed in Section 4.2.1, the Deferred Consideration Part One is comprised on 150 million ARO Shares at a price of A$0.004 per share and A$100,000 in cash. The Deferred Consideration Part One is payable to RNRF contingent on the conversion of an exploration license to a mining license.

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Astro wish to preserve interests in its current tenements. We understand the actual minimum expenditure requirements may be different due to expenditure exemption approvals and relinquishment of parts of tenements.

4.4 Capital Structure

As at 15 August 2013, ARO has the following securities on issue:

3,488,062,324 fully paid listed ordinary shares (“ARO Shares”);
739,505,210 listed options maturing 30 June 2014 (“the Options”).

4.4.1 Astro Shares

The top ten shareholders of Astro as at 15 August 2013 are set out below:

Top 10 Shareholders

`Top 10 Shareholders as at 15 August 2013`	`No. of shares` `Interest` `(%)`
`Mining Investments Ltd` `Reliance Natural Resources Fund Pty Ltd` `Soaraway Development Pty Ltd` `Dentost Pty Ltd` `JP Morgan Nominees Australia Ltd` `Mr David Wayne Austin & Mrs Christina Yit Ling Austin` `Synergy Holdings Pty Ltd` `Mr Lin Cheng` `Newmont Mining Finance Pty Ltd` `South Banc Group Pty Ltd`	`575,000,000` `16.48%` `200,000,000` `5.73%` `207,422,609` `5.95%` `70,000,000` `2.01%` `68,556,811` `1.97%` `55,250,000` `1.58%` `50,000,000` `1.43%` `48,000,000` `1.38%` `44,047,608` `1.26%` `42,358,665` `1.21%`
Total Top Ten Shareholders	1,360,635,693 39.01%
`Other Shareholders`	`2,127,426,631` `60.99%`
Total Shareholders	3,488,062,324 100.00%
Source: Management

The daily movements in Astro’s share price and volumes for the period from August 2012 to September 2013 is set out below:

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----- Start of picture text -----

Share price (A$) Volume
0.0030 100,000,000
90,000,000
0.0025
80,000,000
70,000,000
0.0020
60,000,000
0.0015 50,000,000
40,000,000
0.0010
30,000,000
20,000,000
0.0005
10,000,000
- -
Aug 12 Sep 12 Oct 12 Nov 12 Dec 12 Jan 13 Feb 13 Mar 13 Apr 13 May 13 Jun 13 Jul 13 Aug 13 Sep 13
----- End of picture text -----

Source: Capital IQ

We note the following with regards to the share price history shown above:

`Date`	`Comments`
`5 July 2012`	`ARO announced the completion of the initial drilling program at the GBS Project. Share price closed at A$0.002.`
`24 July 2012`	ARO obtained product samples of Heavy Mineral Concentrate (“HMC”) fr`om the Governor Broome deposits and` `delivered these samples to potential and identified product buyers, confirming the Governor deposit as an` `acceptablequality feed-stock resource. Shareprice closed at A$0.002.`
`31 July 2012`	`ARO announced the commencement of mineral processing at GBS Project and the completion of the drilling` `programs. Share price closed at A$0.002.`
`13 August 2012`	`ARO announced that approximately 15kg of ilmenite product samples from GBS Project have been prepared for` `international distribution and commercial evaluation. Share price closed at A$0.002.`
`5 September 2012`	`ARO advised that the 200 million fully paid ordinary shares which were issued pursuant to the acquisition of the` `GBS Project and placed under voluntary escrow for a 12 month period will be released on 19 September 2012.` `Share price closed at A$0.002.`
`6 September 2012`	`ARO announced recent extensional drilling has confirmed additional mineralisation at GBS Project. Share price` `closed at A$0.002.`
`8 October 2012`	`ARO announced positive results from the mineral assemblage and bulk samples test-work completed from` `samples taken from GBS Project, confirming high quality sulphate grade ilmenite suitable for targeted Asian` `markets and HMC. Shareprice closed at A$0.002.`
`31 October 2012`	`ARO announced the application for three new tenements covering circa 27km2 at the Governor Broome East` `deposit area. These new tenements have the potential to extend mineralisation to the south of the existing` `project boundary. Share price closed at A$0.001.`
`6 December 2012`	`ARO announced an increase in the Governor Broome resource to 185.7Mt @ 4.35% HM representing an` `additional 29% of the existing Governor Broome East resource. Share price closed at A$0.001.`
`10 January 2013`	`ARO announced the identification of a new exploration target of between 90Mt and 130Mt at a grade between` `4% and 6% HM at GBS Project. Share price closed at A$0.001.`
`30 July 2013`	`ARO issued its June 2013 quarterly report and announced that it is in advanced stages of acquiring the` `remaining 20% interest in GBS and dissolution of the NDM JV. Share price closed at A$0.001.`
`30 July 2013`	`ARO announced in its June 2013 quarterly report that the Company is in advanced negotiations to acquire HMS` `plant aimed to undertake a target sampling programme for alluvial diamonds in East Kimberley tenements. Share` `price closed at A$0.001.`
`15 August 2013`	`ARO announced that it had entered into an agreement to acquire the remaining 20% interest in GBS that is does` `not already own for a consideration of A$0.75 million to financed by convertible notes. In addition, ARO had` `entered into two convertible note facilities to raise A$0.5 million to fund new exploration. Share price closed at` `A$0.001.`

Source: ASX Announcements

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Set out below is the share price performance of Astro since August 2012:

`Astro Resources NL`	`Average` `High` `Low` `Close` `weekly volume` `$` `$` `$` `000'` `Share Price`
Month ended
`Aug 2012` `30` `31/08/2012` `Sep 2012` `29` `30/09/2012` `Oct 2012` `30` `31/10/2012` `Nov 2012` `29` `30/11/2012` `Dec 2012` `30` `31/12/2012` `Jan 2013` `30` `31/01/2013` `Feb 2013` `27` `28/02/2013` `Mar 2013` `30` `31/03/2013` `Apr 2013` `29` `30/04/2013` `May 2013` `30` `31/05/2013` `Jun 2013` `29` `30/06/2013` `Jul 2013` `30` `31/07/2013` `Aug 2013` `30` `31/08/2013`	`0.0020` `0.0010` `0.0020` `4,650` `0.0020` `0.0010` `0.0010` `8,294` `0.0020` `0.0010` `0.0020` `4,005` `0.0020` `0.0010` `0.0010` `43,021` `0.0020` `0.0010` `0.0010` `16,965` `0.0020` `0.0010` `0.0010` `14,178` `0.0010` `0.0010` `0.0010` `3,758` `0.0010` `0.0010` `0.0010` `3,423` `0.0010` `0.0010` `0.0010` `114` `0.0010` `0.0010` `0.0010` `1,302` `0.0000` `0.0000` `0.0010` `-` `0.0010` `0.0010` `0.0010` `543` `0.0010` `0.0010` `0.0010` `3,435`
Week ended `17 May 2013` `24 May 2013` `31 May 2013` `7 Jun 2013` `14 Jun 2013` `21 Jun 2013` `28 Jun 2013` `5 Jul 2013` `12 Jul 2013` `19 Jul 2013` `26 Jul 2013` `2 Aug 2013` `9 Aug 2013` `16 Aug 2013` `23 Aug 2013` `30 Aug 2013`	`0.0010` `0.0010` `0.0010` `488` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0010` `0.0010` `0.0010` `500` `0.0010` `0.0010` `0.0010` `2,000` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0000` `0.0000` `0.0010` `-` `0.0010` `0.0010` `0.0010` `5,490` `0.0010` `0.0010` `0.0010` `5,625` `0.0010` `0.0010` `0.0010` `4,000`

Source: Capital IQ and calculations

We note that 0.1 cent is the minimum price a share can trade on the ASX. Accordingly, Astro Shares have been trading at the minimum level since November 2012.

4.4.2 Options

In FY12, Astro issued 739,505,210 Options at an exercise price of A$0.005 with a maturity date of 30 June 2014. If the Options are exercised, the option holder will be entitled to one fully paid share in the Company for each Option.

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We note MIL holds 139,882,221 Options which represents 18.92% of the exiting listed Options. If the Options are exercised, MIL’s interest in Astro will increase from 16.33% to approximately 19.55% of the enlarged issued share capital of Astro[29] .

29 Assumes no other existing options or convertible notes in Astro are exercised.

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5 Valuation methodologies

5.1 Introduction

In forming our opinion on the proposed issue of convertible notes to MIL as set out in Resolutions 2 and 3 of the Notice of Meeting (the Proposed Issuances), we have analysed Resolutions 2 and 3 collectively. This is because both convertible notes are issued to MIL on analogous terms and the conversion of either of the convertible notes will result in MIL potentially increasing its interest in Astro in excess of 20%.

As part of assessing whether or not the Proposed Issuances are fair to Non-Associated Shareholders, Grant Thornton Corporate Finance has compared:

Fair market value of ARO Shares before the Proposed Issuances on a control basis.
Fair market value of ARO Shares after the Proposed Issuances on a minority basis.

In each case, Grant Thornton Corporate Finance has assessed values using the concept of fair market value. Fair market value is commonly defined as:

“the price that would be negotiated in an open and unrestricted market between a knowledgeable, willing but not anxious buyer and a knowledgeable, willing by not anxious seller acting at arm’s length.”

Fair market value excludes any special value. Special value is the value that may accrue to a particular purchaser. In a competitive bidding situation, potential purchasers may be prepared to pay part, or all, of the special value that they expect to realise from the acquisition to the seller.

5.2 Valuation methodologies

RG 111 outlines the appropriate methodologies that a valuer should generally consider when valuing assets or securities for the purposes of, amongst other things, share buy-backs, selective capital reductions, schemes of arrangement, takeovers and prospectuses. These include:

Discounted cash flow (“DCF”) method and the estimated realisable value of any surplus assets;
Application of earnings multiples to the estimated future maintainable earnings or cash flows of the entity, added to the estimated realisable value of any surplus assets;
Amount available for distribution to security holders on an orderly realisation of assets;
Quoted price for listed securities, when there is a liquid and active market; and
Any recent genuine offers received by the target for any business units or assets as a basis for valuation of those business units or assets.

Further details on these methodologies are set out in Appendix A to this report. Each of these methodologies is appropriate in certain circumstances.

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RG111 does not prescribe the above methodologies as the method(s) that an expert should use in preparing their report. The decision as to which methodology to use lies with the expert based on the expert’s skill and judgement and after considering the unique circumstances of the entity or asset being valued. In general, an expert would have regard to valuation theory, the accepted and most common market practice in valuing the entity or asset in question and the availability of relevant information.

5.3 Selected valuation methods

Grant Thornton Corporate Finance has selected the market value of net assets as the primary method to assess Astro’s equity value. The market value of net assets is based on the sum-of-parts of Astro’s assets and liabilities as set out in Astro’s audited balance sheet as at 30 June 2013. In assessing the fair market value of Astro, Grant Thornton Corporate Finance has aggregated:

The market value of its mineral assets.
The value of other assets and liabilities owned by Astro.
Deducted costs associated with the Proposed Issuances.

RG111 requires the fairness assessment to be made assuming 100% ownership of the target company and irrespective of whether the consideration offered is script or cash and without consideration of the percentage holding of the offeror or its associates in the target company. The valuation of exploration assets for independent expert’s report purposes are typically carried out in conjunction with an independent technical specialists with expertise in the relevant minerals in accordance with RG112 and generally accepted market practice.

Prior to reaching our valuation conclusions, we have considered the reasonableness of our valuation by comparing our results to the quoted share price of Astro and the price paid for the GBS Project as part of the Initial Acquisition in 2011.

5.3.1 Independent technical specialist

For the purposes of this report, Grant Thornton Corporate Finance has engaged Continental to prepare a valuation of the exploration and predevelopment assets of Astro which was completed in accordance with the VALMIN Code[30] .

A copy of Continental Report is included as Appendix C to this report.

30 The VALMIN Code is binding on members of the Australasian Institute of Mining and Metallurgy when preparing public independent expert reports required by the Corporations Act concerning mineral and petroleum assets and securities. The purpose of the VALMIN Code is to provide a set of fundamental principles and supporting recommendations regarding good professional practice to assist those involved in the preparation of independent expert reports that are public and required for the assessment and/or valuation of mineral and petroleum assets and securities so that the resulting reports will be reliable, thorough, understandable and include all the material information required by investors and their advisers when making investment decisions.

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6 Valuation assessment of Astro before the Proposed Issuances

6.1 Valuation summary

As outlined in section 5.3, Grant Thornton Corporate Finance has adopted the market value of net assets methodology to assess the equity value of Astro before the Proposed Issuances.

Set out below is a summary of our valuation assessment of Astro before the Proposed Issuances on a control basis:

`Valuation summary` `Section` `Pre Proposed Transactions` `Reference`	`Low` `High` `Preferred` `A$'000` `A$'000` `A$'000`
`Fair value of Astro's interest in GBS` `6.1.1` `Fair value of other exploration assets` `6.1.2` `Adjusted other assets and liabilities as at 30 June 2013` `6.1.3` `Less: Value of options` `6.1.4` `Less: Costs of the Proposed Transactions` `6.1.5` `Add: Tax losses` `6.1.6` Equity value of Astro (control basis) `Number of ARO shares on issue` `4.4.1` Equity value per ARO Share (cents)	`2,289` `3,208` `2,749` `450` `673` `562` `258` `258` `258` `(26)` `(26)` `(26)` `(60)` `(60)` `(60)` `-` `-` `-`
	2,910 4,053 3,482 `3,488,062,324` `3,488,062,324` `3,488,062,324`
	0.0834 0.1162 0.0998

6.1.1 Fair value of Astro’s interest in GBS

For the purpose of our valuation of Astro’s interest in the GBS Project, we have assessed the fair market value of Astro’s 80% interest in GBS, which owns the GBS Project.

As discussed in section 5.3, Continental has assessed the fair market value of Astro’s mineral assets including the GBS Project. Continental has assessed the market value of Astro’s 80% interest in the GBS Project between A$2.9 million and A$4.0 million, with a preferred value of A$3.4 million.

`GBS`	`Low` `High` `Preferred` `A$'000` `A$'000` `A$'000`
`Value of the GBS Project (80% ownership basis)` `Other assets and liabilities¹` Value of Astro's interest in GBS `Minority discount` Value of Astro's interest in GBS	`2,861` `4,010` `3,436` `-` `-` `-`
	2,861 4,010 3,436 `20%` `20%` `20%`
	2,289 3,208 2,749

Source: Continental Report and GTCF calculations Note (1): Astro's interest in GBS's other assets and liabilities are already included in Astro's consolidated financial accounts

In our assessment of Astro’s 80% interest in the GBS Project, we have applied a discount of 20% to take into account that Astro does not own 100% of the GBS Project but it has an obligation to fund 100% of the GBS Project until a decision to mine is taken. Our decision also takes into account the following:

As long as RNRF holds more at least 7.5% interest in GBS, it is entitled to appoint one out of three directors to the board of GBS.

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As long as RNRF holds at least 7.5% interest in GBS, unanimous shareholders’ approval/resolution is required for a number of items including:
Issue of any securities.
Director remunerations.
Dividend distributions.
Partnerships or mergers.
Stock exchange listing/ divestures/ liquidations.

Accordingly, it is our opinion that a discount for holding less than 100% of the GBS Project is applicable in assessing Astro’s 80% interest in GBS.

6.1.2 Fair value of other exploration assets

Continental has also assessed the fair market value of Astro’s other exploration assets (We note Astro holds 100% interest in all other exploration assets). The assessed value of other exploration assets is summarised in the table below:

`Valuation of other exploration assets`	`Low` `High` `Preferred` `A$'000` `A$'000` `A$'000`
`HM Sands GBS Project` `Lower Smoke Creek Project` `Carr Boyd Range Project` `Argyle Dykes Project` `MacPhee Creek Diamond and Uranium Project` Total value of exploration assets	`65` `95` `80` `68` `102` `85` `8` `12` `10` `51` `77` `64` `258` `387` `323`
	450 673 562

Source: Continental Report and Management

6.1.3 Adjusted other assets and liabilities

For the purpose of this report, we have assessed the fair market value of other assets and liabilities of Astro based on the audited balance sheet as at 30 June 2013. Our adjusted assessment of Astro’s other assets and liabilities are set out below:

`Adjusted other assets and liabilities as at 30 June 2013`	`Note`	`A$000`
`Cash and other equivalents`		`348`
`Trade and other receivables`		`35`
`Inventories`		`4`
`Other current assets`		`23`
`Available-for-sale investments`	`Note 1`	`4`
`Trade and other payables`		`(156)`
`Other creditors`	`Note 2`	`-`
Total other assets and liabilities		258

Source: Management and GTCF calculations

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Note 1

Available-for-sale investments consist of 600,000 shares in Lucapa Diamond Company Ltd valued at A$0.006 per share based on the trading price as at 14 August 2013 (one day prior to the announcement of the Proposed Issuances).

Note 2

We have excluded other creditors of A$20,000 consisting of the deferred consideration of 20 million ARO Shares for the acquisition of MacPhee Resources contingent on certain drilling and development milestones. For further details refer to Section 4.3.2. We have not included these liabilities in our valuation given the MacPhee Creek Diamond and Uranium Project has been assessed to be at the exploration stage by Continental.

Note 3

As discussed in Section 4.3.2, Astro has contingent liabilities consisting of minimum exploration work and expenditures of approximately A$1.8 million. We have not included these liabilities in our valuation given the significant uncertainty inherent in exploration activities, and that Continental has assessed the market value of these assets based on the current level of exploration.

6.1.4 Options

Astro currently has 739,505,186 Options on issue as set out in Section 4.3.2. The value of the Options has been determined using the Binomial Model, and with regard to the following key assumptions:

Expiry date of 30 June 2014.
Underlying share price of A$0.001.
Risk free rate of 2.39%, being the yield on 2 year Australian Commonwealth Government Bond.
Assessed volatility over the life of the Options of 100%.

Based on the above, we have assessed the value of Options to be approximately A$26,000.

6.1.5 Issuance costs

For the purpose of the valuation, Grant Thornton Corporate Finance has taken into consideration costs associated with the Proposed Issuances payable by Astro. Management of Astro has advised that the estimated issuance costs to be incurred by Astro are approximately A$94,000 irrespective of whether the Proposed Issuances are completed or otherwise. As at 30 June 2013, approximately A$34,000 has already been paid/ recognised in trade payables by Astro. Accordingly, Grant Thornton Corporate Finance has incorporated issuance costs of A$60,000 into the assessment of the fair value of ARO Shares.

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6.1.6 Taxation losses

Astro has approximately A$12.4 million in accumulated net tax losses which could potentially be used to offset against future taxable income. However, the amount has not been recognised as an asset for financial reporting purposes as it does not satisfy the recognition criteria under the relevant accounting standards.

Given the early stage nature of Astro’s assets, it is not possible to predict whether or not Astro will be able to generate any material earnings in the future and as a result be able to utilise the tax losses. Accordingly, we have not ascribed a value to Astro’s unutilised tax losses.

6.2 Valuation cross check

6.2.1 Quoted security price

Prior to reaching our valuation conclusion, we have considered the quoted security price of Astro Shares. In accordance with the requirements of RG111, we have considered the listed securities’ depth, liquidity, and whether or not the market value is likely to represent the value of Astro.

The following table summarises the monthly trading volume of Astro Shares since March 2012:

	`Volume`	`Monthly`	`Total value of`
	`traded`	`VWAP`	`shares traded`	`Volume traded as`
`Month end`	`('000)`	`($)`	`($'000)`	`% of total shares`
`Mar 2012`	`67,487`	`0.0021`	`143`	`3.1%`
`Apr 2012`	`81,077`	`0.0023`	`190`	`3.7%`
`May 2012`	`163,581`	`0.0020`	`326`	`7.5%`
`Jun 2012`	`69,503`	`0.0011`	`75`	`2.0%`
`Jul 2012`	`8,768`	`0.0014`	`13`	`0.3%`
`Aug 2012`	`21,388`	`0.0012`	`26`	`0.6%`
`Sep 2012`	`33,175`	`0.0011`	`37`	`1.0%`
`Oct 2012`	`18,423`	`0.0017`	`31`	`0.5%`
`Nov 2012`	`189,293`	`0.0010`	`194`	`5.4%`
`Dec 2012`	`71,251`	`0.0010`	`74`	`2.0%`
`Jan 2013`	`62,381`	`0.0011`	`69`	`1.8%`
`Feb 2013`	`15,034`	`0.0010`	`15`	`0.4%`
`Mar 2013`	`14,376`	`0.0010`	`14`	`0.4%`
`Apr 2013`	`500`	`0.0010`	`1`	`0.0%`
`May 2013`	`5,988`	`0.0010`	`6`	`0.2%`
`Jun 2013`	`-`	`na`	`na`	`0.0%`
`Jul 2013`	`2,500`	`0.0010`	`3`	`0.1%`
`Aug 2013`	`15,115`	`0.0010`	`15`	`0.4%`

Source: Capital IQ

Based on the above table, we note the following:

There has been historically very low level of trading in Astro Shares.

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The monthly volume traded as a percentage of total outstanding shares ranged between nil and 7.50% with an average of 1.64%. Trading in Astro Shares has been almost non-existent since December 2012.
Astro Shares have been volatile in the past months with the minimum and maximum monthly VWAP price varying between 0.10 cents and 0.23 cents between March 2012 and August 2013. Since December 2012, Astro Shares have been trading at 0.1 cents, the minimum share trading price on the ASX.

Based on the above, we note that the liquidity of UCL shares is extremely low and accordingly, the trading share price of UCL may not be reflective of market value. As a result, we have not relied on the quoted security price of UCL for our cross-check.

6.2.2 Initial acquisition cross check

We note that the GBS Project accounts for majority of the equity value of Astro. Accordingly, we have tested the reasonableness assessment of the GBS Project assessed by CRM with the initial 80% interest acquisition of GBS.

In September 2011, Astro acquired 80% of GBS from RNRF for a total Consideration of approximately A$3.2 million. We note the following in relation to the Initial Acquisition:

The Initial Acquisition was undertaken approximately 24 months ago. Since then, Astro has further advanced the GBS Project including increasing the inferred JORC of the GBS Project by approximately 31 million tonnes and confirming the mineral assemblage of the identified resources.
RNRF was not a related party at the time of the Initial Acquisition and it was completed at arms’ length.
The Consideration may have incorporated a degree of premium for control given the Initial Acquisition was for 80% interest in GBS, entitled Astro to appoint and remove three out of four directors and the chairperson of GBS, and managerial and operational control of the GBS Project.

Based on the above factors, we are of the opinion that the Initial Acquisition Consideration of $3.2 million is not inconsistent with the valuation of GBS Project in the range of $2.9 million to $4.0 million assessed by CRM.

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7 Valuation assessment of Astro after the Proposed Issuances

7.1 Valuation summary

As discussed in Section 1.2, we note that if either Resolutions 2 or 3 of the NOM are successfully passed, MIL will be issued MIL CN A or MIL CN B. If MIL then converts either MIL CN A or MIL CN B, it can potentially increase its interest in Astro from 16.48% to a level in excess of 20%, thereby triggering the requirements to prepare an independent experts report under item 7 of Section 611 of the Corporations Act.

For the purpose of this report we have undertaken the post Proposed Issuances analysis based on the assumption that both Resolutions 2 and 3 are successfully passed and that MIL fully coverts both convertible notes (fully diluted basis).

Set out below is a summary of our valuation assessment of Astro after the Proposed Issuances on a minority basis:

`Valuation summary` `Section` `Pre Proposed Transactions` `Reference`	`Low` `High` `Preferred` `A$'000` `A$'000` `A$'000`
`Fair value of Astro's interest in GBS` `7.1.1` `Fair value of exploration assets` `6.1.2` `Other assets and liabilities` `7.1.2` `Less: Value of options` `6.1.4` `Less: Costs of the Proposed Transactions` `6.1.5` `Add: Tax losses` `6.1.6` Equity value of Astro (control basis) `Number of ARO shares on issue` `7.1.4` Equity value per ARO Share (cents) `Minority discount` `7.1.5` Value of ARO Share on minority discount (cents)	`3,578` `5,014` `4,297` `450` `673` `562` `458` `458` `458` `(26)` `(26)` `(26)` `(60)` `(60)` `(60)` `-` `-` `-`
	4,400 6,059 5,230 `4,738,062,324` `4,738,062,324` `4,738,062,324`
	0.09286 0.12788 0.11038
	`30.0%` `20.0%` `25.0%`
	0.06500 0.10230 0.08279

Source: Continental Report, Management and GTCF calculations

7.1.1 Fair value of other exploration assets

After the Proposed Issuances, Astro will own 100% of GBS. The following table summarises the value of Astro’s interest in GBS after the Proposed Issuances:

`GBS`	`Low` `High` `Preferred` `A$'000` `A$'000` `A$'000`
`Value of the GBS Project (100% ownership basis)` `Other assets and liabilities¹` Value of Astro's interest in GBS	`3,576` `5,013` `4,295` `2` `2` `2`
	3,578 5,014 4,297

Source: Continental Report and GTCF calculations

Note (1): Consist of the other assets and liabilities not already included in Astro's FY2013 consolidated finanical accounts

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7.1.2 Adjusted other assets and liabilities

For the purpose of this report, we have assessed the fair market value of the other assets and liabilities of Astro based on the audited balance sheet as at 30 June 2013. Our adjusted assessment of Astro’s other assets and liabilities are set out below:

`Adjusted other assets and liabilities` `Reference` `A$000`	`Adjusted other assets and liabilities` `Reference` `A$000`
`Cash and other equivalents` `Note 1` `548` `Trade and other receivables` `35` `Inventories` `4` `Other current assets` `23` `Available-for-sale investments` `Section 6.1.3` `4` `Trade and other payables` `(156)` `Other creditors` `Section 6.1.3` `-` Total other assets and liabilities 458
Source: Management and GTCF calculations

Note 1

Cash and cash equivalents of A$348,000 as at 30 June 2013 has been adjusted to include:

Addition of A$250,000 in cash from the proposed issue of the MIL CN B.
Deduction of A$50,000 in cash as conversion incentive payment[31] to MIL and RNRF for the conversion of RNRF CN, and MIL CN A and B.

7.1.3 Number of Astro Shares

As discussed in Section 7.1, we have assessed the fair value of ARO Shares after the Proposed Issuances on a fully diluted basis assuming that RNRF CN, MIL CN A and MIL CN B will be fully converted into ARO Shares. However, we have assumed that the existing 739,505,186 Options in Astro will not be exercised given that the exercise price of A$0.005 is significantly above the current share price of A$0.001.

The following table sets out the number of ARO Shares on issue after the Proposed Issuances on a fully diluted basis:

`Number of shares on a fully diluted basis`
`Existing number of outstanding shares` `Shares on conversion of RNRF Convertible Notes` `Note 1` `Shares on conversion of MIL Convertible Notes A` `Note 1` `Shares on conversion of MIL Convertible Notes B` `Note 1` Total number of ARO Shares on a fully diluted basis	`3,488,062,324` `312,500,000` `625,000,000` `312,500,000`
	4,738,062,324

Source: NOM, Management and GTCF calculations

31 Based on the terms of respective convertible note facilities, the conversion incentive payment is calculated as 5% of the total conversion amount (A$250,000 for RNRF CN, A$500,000 for MIL CN A and A$250,000 for MIL CN B).

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Note 1

We note that RNRF CN, and MIL CN A and MIL CN B can be converted into ARO Shares any time before maturity at a price per share that is the lower of:

A$0.001.
80% of the 30 day VWAP of ARO Shares prior to the date of conversion notice.

Given that Astro Shares have traded at VWAP of A$0.001 for 9 months prior to the announcement of the Proposed Issuances in August 2013, we have assumed conversion at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. For further details on convertible notes refer to Appendix C.

7.1.4 Minority discount

As the Proposed Issuances are considered control transactions in accordance with RG 111, we have compared our assessment of Astro on a control basis before the Proposed Issuances with our assessment of Astro on a minority basis following the implementation of the Proposed Issuances.

In our assessment of the minority discount, we have considered the following:

If the Proposed Issuances are implemented, Non-associated Shareholder’s collective interest in Astro will be diluted to 65.82%[32] .
If the Proposed Issuances are completed, MIL will remain the largest shareholder of Astro holding in excess of 20% of the fully diluted capital but will not have effective control over the Company.
MIL has advised the Board that is has no intention of using its increased voting power to attempt to secure additional Board positions or vary the current balance of nominee and independent directors.

Based on the discussions set out above we have applied a minority discount in the range of 20% to 30% to our assessed value of Astro after the Proposed Issuances.

32Assumes conversion of both MIL Convertible Note A and B at A$0.0008 (80% of lowest possible VWAP of A$0.001) and no existing options or other convertible notes in Astro are exercised. Refer to Section 1.3 for further details on convertible note terms.

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8 Sources of information, disclaimer and consents

8.1 Sources of information

In preparing this report Grant Thornton Corporate Finance has used various sources of information, including:

ASX announcement regarding the Proposed Issuances
Annual reports of Astro for FY11 and FY12
Interim report of Astro for half year ended on 31 December 2012
Governor Well Minerals Pty Ltd Shareholder’s Agreement, September 2011
Agreement for Sale of Shares, August 2013
Convertible Note Deeds
Governor Broome Sands Pty Ltd Fee Arrangements, July 2013
Astro website
Releases and announcements by Astro on ASX
Discussions with Astro Management
U.S. Department of the Interior U.S. Geological Survey, Mineral Commodity Summaries 2009-2013
Energy & Metals Consensus Forecast June 2013
Capital IQ
IBISWorld, Mineral Sand Mining in Australia, May 2013
Western Australian Mineral and Petroleum, Statistics Digest 2011-12
Various broker reports
Independent Technical Report, Continental
Other publicly available information

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8.2 Qualifications and independence

Grant Thornton Corporate Finance Pty Ltd holds Australian Financial Service Licence number 247140 under the Corporations Act and its authorised representatives are qualified to provide this report.

Grant Thornton Corporate Finance provides a full range of corporate finance services and has advised on numerous takeovers, corporate valuations, acquisitions, and restructures. Prior to accepting this engagement, Grant Thornton Corporate Finance considered its independence with respect to Astro and all other parties involved in the Proposed Issuances with reference to the ASIC Regulatory Guide 112 “Independence of expert” and APES 110 “Code of Ethics for Professional Accountants” issued by the Accounting Professional and Ethical Standard Board. We have concluded that there are no conflicts of interest with respect to Astro, its shareholders and all other parties involved in the Proposed Issuances.

Grant Thornton Corporate Finance and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with Astro or its associated entities that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Proposed Issuances.

Grant Thornton Corporate Finance has no involvement with, or interest in the outcome of the Proposed Issuances, other than the preparation of this report.

Grant Thornton Corporate Finance will receive a fee based on commercial rates for the preparation of this report. This fee is not contingent on the outcome of the Proposed Issuances. Grant Thornton Corporate Finance’s out of pocket expenses in relation to the preparation of the report will be reimbursed. Grant Thornton Corporate Finance will receive no other benefit for the preparation of this report.

8.3 Limitations and reliance on information

This report and opinion is based on economic, market and other conditions prevailing at the date of this report. Such conditions can change significantly over relatively short periods of time.

Grant Thornton Corporate Finance has prepared this report on the basis of financial and other information provided by Astro and publicly available information. Grant Thornton Corporate Finance has considered and relied upon this information. Grant Thornton Corporate Finance has no reason to believe that any information supplied was false or that any material information has been withheld. Grant Thornton Corporate Finance has evaluated the information provided by Astro and other experts through inquiry, analysis and review, and nothing has come to our attention to indicate the information provided was materially misstated or would not afford reasonable grounds upon which to base our report. Nothing in this report should be taken to imply that Grant Thornton Corporate Finance has audited any information supplied to us, or has in any way carried out an audit on the books of accounts or other records of Astro.

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This report has been prepared to assist the Independent Directors of Astro in advising NonAssociated Shareholders in relation to the Proposed Issuances. This report should not be used for any other purpose. In particular, it is not intended that this report should be used for any purpose other than as an expression of Grant Thornton Corporate Finance’s opinion as to whether the Proposed Issuances is fair and reasonable to the Non-Associated Shareholders.

Astro has indemnified Grant Thornton Corporate Finance, its affiliated companies and their respective officers and employees, who may be involved in or in any way associated with the performance of services contemplated by our engagement letter, against any and all losses, claims, damages and liabilities arising out of or related to the performance of those services whether by reason of their negligence or otherwise, excepting gross negligence and wilful misconduct, and which arise from reliance on information provided by Astro, which Astro knew or should have known to be false and/or reliance on information, which was material information Astro had in its possession and which Astro knew or should have known to be material and which Astro did not provide to Grant Thornton Corporate Finance. Astro will reimburse any indemnified party for all expenses (including without limitation, legal expenses) on a full indemnity basis as they are incurred.

8.4 Consents

Grant Thornton Corporate Finance consents to the issuing of this report in the form and context in which it is included in the Notice of Meeting and Explanatory Memorandum to be sent to Astro Shareholders. Neither the whole nor part of this report nor any reference thereto may be included in or with or attached to any other document, resolution, letter or statement without the prior written consent of Grant Thornton Corporate Finance as to the form and content in which it appears.

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Appendix A – Valuation methodologies

Capitalisation o f f uture m aintainable e arnings

The capitalisation of future maintainable earnings multiplied by appropriate earnings multiple is a suitable valuation method for businesses that are expected to trade profitably into the foreseeable future. Maintainable earnings are the assessed sustainable profits that can be derived by a company’s business and excludes any abnormal or “one off” profits or losses.

This approach involves a review of the multiples at which shares in listed companies in the same industry sector trade on the share market. These multiples give an indication of the price payable by portfolio investors for the acquisition of a parcel shareholding in the company.

Discounted f uture c ash f lows

An analysis of the net present value of forecast cash flows or DCF is a valuation technique based on the premise that the value of the business is the present value of its future cash flows. This technique is particularly suited to a business with a finite life. In applying this method, the expected level of future cash flows are discounted by an appropriate discount rate based on the weighted average cost of capital. The cost of equity capital, being a component of the WACC, is estimated using the Capital Asset Pricing Model.

Predicting future cash flows is a complex exercise requiring assumptions as to the future direction of the company, growth rates, operating and capital expenditure and numerous other factors. An application of this method generally requires cash flow forecasts for a minimum of five years.

Orderly r ealisation o f a ssets

The amount that would be distributed to shareholders on an orderly realisation of assets is based on the assumption that a company is liquidated with the funds realised from the sale of its assets, after payment of all liabilities, including realisation costs and taxation charges that arise, being distributed to shareholders.

Market v alue o f q uoted s ecurities

Market value is the price per issued share as quoted on the ASX or other recognised securities exchange. The share market price would, prima facie, constitute the market value of the shares of a publicly traded company, although such market price usually reflects the price paid for a minority holding or small parcel of shares, and does not reflect the market value offering control to the acquirer.

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Comparable m arket t ransactions

The comparable transactions method is the value of similar assets established through comparative transactions to which is added the realisable value of surplus assets. The comparable transactions method uses similar or comparative transactions to establish a value for the current transaction.

Comparable transactions methodology involves applying multiples extracted from the market transaction price of similar assets to the equivalent assets and earnings of the company.

The risk attached to this valuation methodology is that in many cases, the relevant transactions contain features that are unique to that transaction and it is often difficult to establish sufficient detail of all the material factors that contributed to the transaction price.

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Appendix B – Glossary

$’000s	Thousands of dollars
A$	Australian dollar
ARO	Astro Resources NL
ARO Shares	3,488,062,324 fully paid listed ordinary shares
ASIC	Australian Securities and Investments Commission
Astro or the Company	Astro Resources NL
Astro Shareholders	The shareholders of Astro
ASX	Australian Securities Exchange
CAGR	Compounded Annual Growth Rate
Cash Payment	Cash payment of $500,000
Continental	Continental Resource Management Pty Ltd
Corporations Act	Corporations Act 2001
Cristal	Cristal Australia Pty Ltd
DCF	Discounted cash flow
Deferred Consideration	Deferred consideration contingent on certain development milestones
Deferred Consideration Part One	A$0.1 million cash and 150 million ARO Shares
Deferred Consideration Part Two	A$0.25 million cash and 100 million ARO Shares
FSG	Financial Services Guide
FYXX	Financial year ended 20XX
GBS	Governor Broome Sands Pty Limited
GBS Project	Governor Broome Mineral Sands Project
GDP	Gross domestic product
GFC	Global Financial Crisis
Grant Thornton Corporate Finance	Grant Thornton Corporate Finance Pty Limited
HM	Heavy minerals
HMC	Heavy Mineral Concentrate
HM Sands	HM Sands Pty Ltd

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HMS Plant	Heavy Mineral Separation plant
HY20XX	Half financial year ended 20XX
Iluka	Iluka Resources Ltd
Industry	The mineral sand mining and exploration industry in Australia
Initial Acquisition	In September 2011, Astro acquired 80% interest in GBS from RNRF
Kg	Kilogram
McPhee	MacPhee Resources Pty Ltd
MIL	Mining Investments Ltd
MIL CN A	A convertible note of A$500,000 to MIL
MIL CN B	The convertible loan facility of A$250,000 will convert into one convertible note issued to MIL
Mt	Million tonnes
NDM	North Doolgunna Metal Pty Ltd
NDM JV	North Doolgunna Joint Venture
Non-Associated Shareholders	Shareholders of Astro not associated with MIL
Options	739,505,210 listed options maturing 30 June 2014
oz	Ounces
Proposed Acquisition	Astro entered into a Share Sale Agreement with RNRF to acquire the remaining 20% equity interest in GBS
Proposed Issuances	Issue of RNRF CN and MIL CN A under the Proposed Acquisition and issue of MIL CN B
RG 111	Regulatory Guide 111 “Content of expert reports”
RG 112	Regulatory Guide 112 “Independence of Expert’s Reports”
RG 74	Regulatory Guide 74 “Acquisitions agreed to by shareholders”
RNRF	Reliance Natural Resource Fund Pty Ltd
RNRF CN	A convertible note of A$250,000 to RNRF
Royalty Right	1.5% net royalty on any minerals produced from the GBS Project
Sq km	Square kilometres
SSA	Share Sale Agreement
t	Tonnes

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The Loan MIL has agreed to provide a convertible loan facility to Astro Tronox Tronox Western Australia Pty Ltd US United States US$ United States dollar

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Appendix C – Continental Report

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VALUATION REPORT ON THE MINERAL ASSETS OF ASTRO RESOURCES NL

REPORT NUMBER WA13/06

Author J. J G. Doepel

Signature:

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Distribution: Astro Resources NL 1 Grant Thornton Continental Resource Management Pty Ltd 1

Date: 20[th] August 2013

Continental Resource Management Pty Ltd; Rpt WA13/06

CONTINENTAL RESOURCE MANAGEMENT PTY LTD

ACN 009 366 929 Phone +61 8 9478 3987 Email [email protected]

10 Hehir Street PO Box 307 Belmont WA 6984 Australia

20[th] August 2013

Andrea De Cian Corporate Finance Grant Thornton Australia Level 17 / 383 Kent Street Sydney, NSW 2000

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Dear Sir,

INDEPENDENT EXPERT’S REPORT

This report was prepared by Continental Resource Management Pty Ltd (‘CRM’), an independent geological consultancy established in 1989. CRM prepared the report at the request of Grant Thornton Australia to provide an independent valuation of Astro Resources NL’s (‘Astro’s’) Mineral Assets, which are comprised of the mineral tenements (‘the Tenements’) of the following projects (‘the Projects’):

Governor Broome;
East Kimberley Diamonds; and
MacPhee Creek.

The valuation is only for the purpose of providing independent expert opinion on the value of Astro’s Mineral Assets to Grant Thornton Australia. Except where otherwise noted, dollar values given refer to Australian dollars.

CRM’s assessment of the Projects is based upon technical information provided by Astro. Reference has been made to other sources of information, published and unpublished, where it has been considered necessary. CRM has endeavoured, by making reasonable enquiries, to confirm the authenticity and completeness of the technical data used in the preparation of this report and to ensure that CRM had access to all relevant technical and other information.

The author has visited the Governor Broome Project Tenements during exploration drilling of its tenements. He has not visited the East Kimberley Diamonds Tenements or the MacPhee Creek Tenement, as he is of the opinion that no significant information would be gained by field visits to them.

The statements contained in this report are given in good faith and are derived from information believed to be reliable and accurate. That information has been supplemented by our own investigations. We have relied upon that information and have no reason to believe that any material facts have been withheld from us; our report has taken into account all the relevant information supplied to us. We do not imply that we have carried out any type of audit on the technical, accounting or other records of Astro, or that

Continental Resource Management Pty Ltd; Rpt WA13/06

our assessment has revealed all of the matters that an audit or more extensive examination might disclose at the date of this report. We also do not imply that we have confirmed the legal status of the Tenements or Astro’s rights to the Tenements, or that there are no encumbrances or other reasons that may adversely affect or hinder such rights or the ability of Astro to exploit the Tenements.

In particular, CRM does not have expertise in the possible process routes for beneficiation of the Governor Broome Deposit Heavy Mineral mineralisation. Nor has CRM investigated or verified economic parameters for the processes. For these matters, CRM has relied upon information, both published and unpublished, provided to it by Astro. The report is written to conform to the AusIMM's Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (Valmin Code) as revised 2005.

Yours faithfully John Doepel Continental Resource Management Pty Ltd

20[th] August 2013

Continental Resource Management Pty Ltd; Rpt WA13/06

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----- Start of picture text -----

|||
|---|---|
|EXECUTIVE SUMMARY|7|
|INTRODUCTION|8|
|VALUATIONS OF MINERAL ASSETS|10|
|GOVERNOR BROOME MINERAL SANDS PROJECT|12|
|Introduction|12|
|Access and Infrastructure|13|
|Tenements|13|
|Geological Setting|13|
|Previous Exploration|14|
|Current Exploration|15|
|Project Geology|16|
|Mineralisation|17|
|Resources|18|
|Exploration Target|19|
|Metallurgical Testwork|19|
|Flora Survey|21|
|Mineral Sand Prices|21|
|GOVERNOR BROOME PROJECT VALUATION|22|
|Applicable Valuation Method|22|
|Tenement Expenditures|22|
|Prospectivity Enhancement Multipliers|22|
|E70/2372 and E70/2464|22|
|E70/3681|23|
|E70/4418|23|
|P70/1583|23|
|P70/1584|23|
|P70/1639 and 1640|24|
|Valuation Summary|24|
|EAST KIMBERLEY DIAMONDS PROJECTS|25|
|Introduction|25|
|Location and Access|25|
|Tenements|25|
|Geological Setting|27|
|Lower Smoke Creek Project Geology|27|
|Lower Smoke Creek Project Previous Exploration|28|
|Lower Smoke Creek Project Current Exploration|29|
|Lower Smoke Creek Project Conclusions|30|
|Carr Boyd Project|31|
|Argyle Dykes Project|31|
|CRA Exploration|31|
|Moonstone Exploration|32|
|Astro Exploration|32|
|EAST KIMBERLEY DIAMONDS PROJECTS VALUATION|34|

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Continental Resource Management Pty Ltd; Rpt WA13/06

Applicable Valuation Method	34
Tenement Expenditures	34
Prospectivity Enhancement Multipliers	34
E80/4120	34
E80/4316	34
P80/1615 - 1617	34
Valuation Summary	35
MACPHEE CREEK URANIUM AND DIAMOND PROJECT	36
Introduction	36
Location and Access	36
Tenement	36
Geological Setting and Project Geology	36
Uranium Mineralisation	37
Diamond Occurrences	38
Exploration	38
1979-1983	38
1986-1989	38
Current Exploration	38
MACPHEE CREEK PROJECT VALUATION	42
Applicable Valuation Method	42
Tenement Expenditures	42
Prospectivity Enhancement Multipliers	42
Valuation Summary	42
CONCLUSION	43
BIBLIOGRAPHY	44
DECLARATIONS	45
GLOSSARY OF GEOLOGICAL AND TECHNICAL TERMS	46
Tables
Table 1 Astro’s Mineral Tenements – Summary of values	7
Table 2 Governor Broome Project – Tenement summary	13
Table 3 2006 QEMSCAN of Heavy Mineral Assemblage	17
Table 4 2012 Governor Broome Heavy Mineral Assemblages	17
Table 5 Governor Broome Deposit – Inferred Resources by area	19
Table 6 2012 Metallurgical Testwork Products	20
Table 7 Governor Broome Project - Tenement expenditures	22
Table 8 Governor Broome Project – Ascribed tenement values	24
Table 9 East Kimberley Diamonds Projects – Tenement summary	25
Table 10 Summary of Aster Imagery Interpretations	30
Table 11 East Kimberley Diamonds - Tenement expenditures	34
Table 12 East Kimberley Diamonds Projects – Ascribed tenement values	35
Table 13 Astro Tenements – Summary of values	43
Figures
Figure 1 Astro’s Project locations	9
Figure 2 Project location map	12

Continental Resource Management Pty Ltd; Rpt WA13/06

Figure	3 Scott Coastal Plain – Geological map	14
Figure	4 Project drill-holes and Mineral Resource outlines	15
Figure	5. Governor Broome Deposit – Cross-section 6,209,640mN	16
Figure	6 Governor Broome Heavy Mineral Assemblage	18
Figure	7 2005 Governor Broome HM Concentrate Mineralogy	20
Figure	8 East Kimberley Diamonds and MacPhee Projects - Tenement locations	26
Figure	9 Solid geological map of Lower Smoke Creek and Carr Boyd Projects (after	Hassan,
	2000)	27
Figure	10 Argyle Dykes Project - Geological map	33
Figure	11 MacPhee Creek Project – Geological map (after Hassan, 2000)	37
Figure	12 Durham Fault Zone - Uranium anomalies and targets (from Jenke, 2010)	39
Figure	13 MacPhee Creek Project – Areas of high uranium in granite (from Jenke, 2010)	40
Figure	14 MacPhee Creek Project - Diamond targets and structures (from Jenke, 2010)	41

Continental Resource Management Pty Ltd; Rpt WA13/06

EXECUTIVE SUMMARY

Continental Resource Management Pty Ltd (‘CRM’) was commissioned by Grant Thornton Australia to provide an independent valuation of Astro Resources NL’s (‘Astro’s’) Mineral Assets, which are comprised of the mineral tenements (‘the Tenements’) of the following projects (‘the Projects’):

Governor Broome;
East Kimberley Diamonds; and
McPhee Creek.

CRM’s ascribed values of Astro’s interests in its Tenements are listed and totaled in Table 1.

Table 1 Astro’s Mineral Tenements – Summary of values

Project	Tenement	Preferred Value (A$M)	Low Value (A$M)	High Value (A$M)
Governor Broome(GBS1)	E70/2372	2.429	2.024	2.833
	E70/2464	0.931	0.776	1.086
	E70/3681	0.076	0.061	0.091
Sub-totals		3.436	2.861	4.010
Governor Broome(HMS2)	E70/4418	0.020	0.016	0.024
	P70/1583	0.025	0.021	0.029
	P70/1584	0.035	0.028	0.042
	P70/1639	Nil	Nil	Nil
	P70/1640	Nil	Nil	Nil
Sub-totals		0.080	0.065	0.095
East KimberleyDiamonds	E80/4210	0.085	0.068	0.102
	E80/4316	0.010	0.008	0.012
	P80/1615	0.021	0.017	0.025
	P80/1616	0.021	0.017	0.026
	P80/1617	0.022	0.017	0.026
Sub-totals		0.159	0.127	0.191
MacPhee Creek3	E80/3243	0.323	0.258	0.387
Totals	Totals	3.998	3.311	4.683

Note 1: GBS: Held by Governor Broome Sands Pty Ltd Note 2: HMS: Held by HM Sands Pty Ltd

Note 3: Valuation dependent upon tenement remaining in good standing

CRM estimates the value of Astro’s Mineral Projects to be within the range of $3.311M to $4.683M with a preferred value of $3.998M as of the 20[th] August 2013.

Continental Resource Management Pty Ltd; Rpt WA13/06

INTRODUCTION

Governor Broome (Astro 80%);
East Kimberley Diamonds (Astro 100%);
MacPhee Creek (Astro 100%).

The locations of these projects are shown on Figure 1.

Astro’s major and most significant project is its Governor Broome Mineral Sands Project situated in the South-West of WA.

Except where otherwise noted, dollar values given refer to Australian dollars.

Continental Resource Management Pty Ltd; Rpt WA13/06

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Figure 1 Astro’s Project locations

Continental Resource Management Pty Ltd; Rpt WA13/06

VALUATIONS OF MINERAL ASSETS

The valuation of mineral properties is exceptionally subjective. If an economic resource is subsequently identified then any prior valuation will be dramatically low relative to any later valuations, or alternatively if exploration is unsuccessful in defining an economic resource it is likely to decrease the value of the properties.

There are a number of generally accepted procedures for establishing the value of mineral properties with the method employed depending upon the circumstances of the property. Where relevant, it is standard practice to use more than one method to enable a balanced analysis, in which values are presented as a range and a preferred value is identified.

The following methods of valuing mineral exploration properties are commonly employed:

Comparable Transactions: The range of values which can be estimated for an exploration property which are based on recent market prices for comparable properties. The prices are based on existing or previous joint venture and sale agreements. To be comparable the geological potential of the properties or the type of contained resources must be similar.

In-situ Metal Value: Discounted in situ contained metal methods provide an indication of the value of a property with identified resources. The discount is very subjective but it is common to use 5% of Measured Resources, 2% of Indicated Resources, and 0.5% of Inferred Resources. Alternatively a value can be assigned on a royalty basis commensurate with the in-situ contained metal.

Kilburn Method: This is a rating method based on the basic acquisition cost (BAC) of the tenement with multiplier factors. Under the Kilburn Method the valuer is required to systematically assess four key technical factors which enhance, downgrade, or have no impact on the value of the property. The factors are then applied serially to the BAC of each tenement in order to derive a value for the property. The factors used are: off-property attributes, on-property attributes, anomalies, and geology. A fifth factor to be applied is the state of the market.

Prospectivity Enhancement Multiplier (PEM): Past expenditure on a tenement and/or future committed exploration expenditure can establish a base value from which the effectiveness of exploration can be assessed. Where exploration has produced documented results a PEM can be derived which takes into account the valuer's judgement of the prospectivity of the tenement and the value of the database. PEMs normally range between 0 and 5, with values >3 only being applied in the case of extremely encouraging exploration results. CRM considers this method applicable to Astro’s tenements.

Net present value (‘NPV’): NPV determined from discounted cash flow (‘DCF’) analysis is appropriate where reasonable mining and processing parameters can be applied to an identified Ore Reserve. It is a process that allows perceived capital costs, operating costs, royalties, taxes and project financing requirements to be analysed in conjunction with a discount rate to reflect the perceived technical and financial risks and the depleting value of the mineral asset over time.

Continental Resource Management Pty Ltd; Rpt WA13/06

The NPV method relies on reasonable estimates of capital requirements, mining, and processing costs.

Commitment: In some cases it is applicable to base a valuation on the cost of retaining a mineral tenement. These costs comprise the annual rent and the statutory expenditure commitment.

Continental Resource Management Pty Ltd; Rpt WA13/06

GOVERNOR BROOME MINERAL SANDS PROJECT

Introduction

The Governor Broome Mineral Sands Project is comprised of a contiguous group of tenements that are being explored as a single entity by Astro. The projects are located on the Scott Coastal Plain in the South West of WA, approximately 260km south of Perth. The port of Bunbury is about 115km to the north by Sues Rd and the Bussell Hwy.

A number of heavy mineral (‘HM’) deposits have been located within the near-surface sediments of the coastal plain. Astro’s primary prospect within the area is Governor Broome, within which an Inferred Resource of 185.7 Mt @ 4.35% HM has been estimated, with a further Exploration Target estimated to contain between 90Mt and 130Mt at a grade of between 4% and 6% HM.

The Scott Coastal Plain was explored by a number of mineral sands producers during the 1980s and 1990s. That exploration led to the delineation of HM resources by the BHP Minerals Ltd group (‘BHP’), both at Beenup and within Metal Sands’ Rover Range Prospect, and by Cable Sands (WA) Pty Ltd (now Bemax Resources NL (‘Bemax’)) at Jangardup. BHP mined the Beenup deposit from 1996 to 1999 and Jangardup was mined from 1994 to 2003.

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Figure 2 Project location map

Continental Resource Management Pty Ltd; Rpt WA13/06

Access and Infrastructure

The tenements cover a combination of cleared farmland, predominantly grazed by both dairy and beef cattle, forestry plantations, and bushland. A small portion of the project area is within State Forest (see Figure 2). The general topography is flat and access within the farmland and plantations is straightforward. Access within bushland is restricted to roads and four-wheeldrive tracks. There are access agreements with landholders within E70/2372 and E70/2464, including the entire area of the Governor Broome Deposit.

Infrastructure within the area was provided previously for BHP’s Beenup and Bemax’s Jangardup Mines. Both utilised a local workforce. Only 8km of road would need to be upgraded to connect the Governor Broome Deposit with the Brockman Highway and the high-quality, sealed Sues Road, which meets the Vasse Highway near Busselton. A high-tension power line passes only 5km from the deposit and underground water is present in large quantities within the area.

Tenements

The project tenements shown on Figure 2 and are listed in Table 2.

The three most significant tenements, E70/2372, 2464, and 3681, are held by Governor Broome Sands Pty Ltd (‘GBS’), which is owned 80% by Astro and 20% by Reliance National Resource Fund Pty Ltd. The remaining tenements are held or applied for by HM Sands Pty Ltd (‘HM Sands’), which is a 100% owned subsidiary of Astro.

– Table 2 Governor Broome Project Tenement summary

Tenement	Grant Date	Expiry Date	Holder or Applicant	Annual Commitment	Annual Rent	Area (km2)
E70/2372	��	��	GBS	��	��	56
E70/2464	��	��	GBS	��	��	48
E70/3681	��	��	GBS	��	��	36
E70/4418	��	��	HM Sands	��	��	13
��	��	��	HM Sands	��	��	0.0
��	��	��	HM Sands	��	��	0.2
��	��		HM Sands	NA	NA	1
��	��		HM Sands	NA	NA	2
Totals				$170,834	$22,814	156

Native Title has been extinguished over all private land within the project area, and the Governor Broome Deposit is upon private land.

Geological Setting

The project area is located on the Scott Coastal Plain at the southern end of the Perth Basin within a graben formed between the Leeuwin Complex to the west and the Yilgarn Craton to the east. The Scott Coastal Plain is bounded to the west and east by the Dunsborough Fault and the Darling Fault respectively (see Figure 3). Its northern limit is the erosional Barlee Scarp, the base of which follows the 40-metre contour, and to its south is the Southern Ocean.

Continental Resource Management Pty Ltd; Rpt WA13/06

The Scott Coastal Plain contains a series of fossil dune and shoreline systems created during times of changing sea levels in the Pleistocene Period. These systems are generally aligned subparallel to the present coast. The majority of the heavy mineral (‘HM’) deposits of the Perth Basin are located along similar shorelines, with high-grade deposits often associated with embayments, within which currents concentrated the heavy minerals. On the Scott Coastal Plain, the Warren Shoreline (see Figure 3) contains a number of HM deposits, including Astros’ Governor Broome Deposit and Bemax’s Scott River, Four Acres, Jangardup and Jangardup South Deposits. The Governor Broome deposit is located in a north trending embayment in the paleo-shoreline (see Figure 3).

The near-surface stratigraphy is dominated by the Quaternary Warren Sands, which unconformably overlie finer sediments of the Cretaceous Warnbro Group, which in turn is unconformable on Jurassic and Triassic sediments. HM deposits located to date on the Scott Coastal Plain occur within both the Warren Sands and Warnbro Group sediments. Typically the mineralisation is concentrated at the base of the Warren Sands, within reworked Warnbro Group sediments just above the unconformity, and within the upper few metres of the Warnbro Group. The Warren Sands are a sandy facies of the Guildford Formation, which is of the order of 10 metres thick across the plain, and the Warnbro Group has a typical thickness of 100 metres in the area.

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Figure 3 Scott Coastal Plain – Geological map

Previous Exploration

A JV between Golden Plateau NL (manager) and Kingsgate Consolidated NL carried out exploration for HM sands in the Scott River area during the period 1987-1991. In all, 181 aircore holes were drilled. HM mineralisation was encountered in two areas, one of which is now within Astro’s Governor Broome Deposit.

Westralian Sands Ltd (‘WSL’) explored the area from 1996 to 1998. It drilled 60 aircore holes, for a total of 2251m in the two areas of mineralisation located by the earlier JV. Low-grade

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mineralisation was intersected in both the Warren Sands and the underlying Warnbro Group. WSL and RGC Ltd (‘RGC’) merged during 1998 to form Iluka Resources Ltd (‘Iluka’), which continued the exploration from 1998 to 2000. Iluka assessed the mineralogy of the mineralisation within bulk samples composited from the HM concentrates of WSL’s drill samples. The HM suite averaged 63% ilmenite, 4.4% zircon, and 2.9% total leucoxene and rutile. Ilmenite from the Warren Sands unit averaged 50.5% titanium dioxide (‘TiO2’) and was assessed as representing a good quality product, but that from the Warnbro Group bulk samples was of significantly lower quality.

From 2005 to March 2007, Metals Sands Australia Ltd (‘Metal Sands’) explored the Governor Broome area with six campaigns of aircore drilling, drilling 1321 holes for a total of 17,364m.

Current Exploration

Astro commenced aircore drilling at Governor Broome in May 2012 with the aims of testing for repetition of mineralisation to the east of historical drilling and extensional and infill drilling of the Governor Broome East Deposit. A total of 513 holes were drilled for 9122m. A selected 2772 1m samples were submitted to Diamantina Laboratories for determination of the heavy mineral content. Samples not assayed are in storage pending review of data. Figure 4 shows the Metal Sands and Astro drill-holes.

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Figure 4 Project drill-holes and Mineral Resource outlines

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Project Geology

The Warren Sands vary in thickness from 5m to 15m within the drilled portion of the prospect area, and the unit, in general, thins to the north. In the vicinity of the Governor Broome Deposit the Warren Sand’s lower contact is deeper to the south and east of an interpreted paleo-shoreline (Figures 3 and 5). Close to the surface, the unit is a medium- to coarse-grained, sub-rounded, well- to poorly-sorted unconsolidated quartz sand. Generally, it fines downwards towards the contact with the Warnbro Group, where grain size can vary from fine sand to silt. Clay layers are not common, but are occasionally encountered in the upper levels. A cemented ferruginous layer is common within the top 3m.

The Warnbro Group sediments are of two main facies in the area: clayey sands and organic clays. The clayey sands contain medium- to coarse-grained, angular to sub-angular, unconsolidated quartz and minor feldspar grains. The clay content, which is variable, tends to increase downward. Generally, it contains between 1% and 8% of valuable HM. Common accessory minerals are garnet, pyrite, and fine coal fragments.

Dark grey to black organic clays and coal are often present at the top of the Warnbro Group. The coal is lignitic and occurs in bands that may be more than 1m thick. Thin (5-10cm) sandy layers are present. Common accessory minerals are garnet and pyrite.

The unconformable contact between the Warren Sands and the Warnbro Group is generally obvious in drill cuttings. Cementation and laterite development are common. Other indications are an abundance of well-rounded quartz pebbles and marine shell fossils. Sands are generally coarse to very coarse and poorly sorted. Reworking of the older sediments has occurred above the unconformity, accompanied by a concentration of HM, which have presumably been sourced from the Warnbro Group sediments.

An east-west cross-section through the Governor Broome Deposit is shown as Figure 5. On this section, the location of thicker mineralisation adjacent to and east of the interpreted paleo-shore line is apparent.

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Figure 5. Governor Broome Deposit – Cross-section 6,209,640mN

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Mineralisation

During 2006 Metal Sands submitted eight composite HM samples from the Governor Broome Deposit to SGS Lakefield Oretest (‘SGS’) for analysis by QEMSCAN technology, a method that uses electron microscopy to scan and identify the individual grains in samples. Each sample comprised 30 drill-sample HM concentrates. In all, 8300 grains were identified. The ranges of the HM proportions of the eight samples are given in Table 3. Ilmenite recovered during the pilot testwork had an average TiO2 content of 52%.

Table 3 2006 QEMSCAN of Heavy Mineral Assemblage

Mineral	From (%)	To (%)	Mean (%)
Ilmenite	55.1	74.3	63.5
Rutile	1.3	11.2	4.1
Zircon	3.2	6.2	4.3
Garnet	13.8	26.5	18.9
Iron sulphides	1.9	4.8	3.1
Other	2.7	14.1	6.1
Totals			100.0

During 2012 Allied Mineral Laboratories Pty Ltd (‘AML’) carried out further characterisation of the heavy mineral assemblage of the Governor Broome Deposit. A total of 24 composite samples were prepared from retained sinks from the 2005-2007 Metal Sands drilling programmes. The composites were selected from both the Warren Sands and Warnbro Sands in each of the Governor Broome North, South, and East areas. The results are summarised in Table 4 and shown graphically in Figure 6.

Table 4 2012 Governor Broome Heavy Mineral Assemblages

Area	Unit	Ilmenite (%)	Secondary Ilmenite (%)	Leucoxene (%)	Hi-Ti (%)	Zircon (%)
North	Warren	48.2	10.0	6.6	2.3	5.8
	Warnbro	51.1	4.2	2.0	1.2	3.9
South	Warren	47.8	3.4	2.0	0.8	2.7
	Warnbro	47.8	2.8	2.0	1.5	5.2
East	Warren	54.5	10.7	5.7	2.7	7.3
	Warnbro	54.5	2.6	1.4	0.9	4.2
Averages*		52.6	6.2	3.5	1.7	5.3

*: Averages weighted by tonnes of individual resources

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Figure 6 Governor Broome Heavy Mineral Assemblage

The various Ti species were assumed to have TiO2 contents of the order of:

Ilmenite: 53%;
Secondary Ilmenite: 63%;
Leucoxene: 85%; and
Hi-Ti: 90%.

Resources

At a lower block-cut of 2% HM and an upper block-cut of 30% slimes, the Governor Broome Inferred Resource is 186Mt @ 4.4% HM, 7.6% Oversize, and 15% Slimes . Resources for different portions of the deposit were estimated at different times by GRD Minproc Pty Ltd (‘GRD Minproc’), Geostat Services Pty Ltd (‘Geostat’), and CRM. The resources for the individual areas are set out in Table 5. The locations of the three areas of the deposit are shown on Figure 4.

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Table 5 Governor Broome Deposit – Inferred Resources by area Above 2% HM lower block-cut and below 30% slimes upper block-cut

Area	Resource Author	Tonnage (Mt)	Grade (HM%)	Oversize (%)	Slimes (%)
South	GRD Minproc	25.1	4.72	9.3	15.9
North	Geostat	24.2	5.38	9.0	11.2
East	Geostat & CRM	136.4	4.12	7.0	15.3
Totals		185.7	4.36	7.6	14.8

Exploration Target

In December 2012 CRM estimated an Exploration Target of 90 to 130Mt @ between 4% and 6% HM, 10% to 16% Oversize, and 9% to 15% Slimes for two areas within E70/2372. The larger area is between the Southern Extension of the Governor Broome East Mineralisation and the Governor Broome South Resource. The smaller area covers a gap in the drilling of the Governor Broome East Deposit. Heavy mineral speciation work indicates that the target mineralisation is likely to contain between 40% and 60% valuable heavy minerals (VHM).

The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration will result in the determination of a Mineral Resource.

The target was estimated using ID2 methodology and is reported in accordance with the 2004 JORC Code. CRM estimated the target within wireframes that were limited by a minimum 2% HM and a maximum of 30% Slimes. The estimation of the main area was based upon drill results from the southern end of the Governor Broome South Deposit, from a line of 22 holes drilled by Astro through the centre of the area, and from drill results from a line of 25 holes drilled across the northwest end of the southern extension of the Governor Broome East Deposit. The estimation of the smaller target area was based upon the two lines of 80m spaced drill-holes immediately to the northwest and southeast of the area.

The location of the exploration target is shown on Figure 4.

Metallurgical Testwork

During 2005, Metal Sands supplied a composite sample comprising approximately 400 drill intercepts to Doral Mineral Sands Pty Ltd for pilot testing. The test results indicated that it is feasible to extract most of the valuable HM from the deposit. The ilmenite and zircon were found to have median grain sizes of about 165µ and 120µ respectively. Figure 7 shows the mineralogy of the recovered concentrates.

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----- Start of picture text -----

Governor Broome Concentrates
Pyrite
3.1% Others
Zircon 1.7%
6.2%
Garnet
14.7%
Titanium
minerals
74.2%
----- End of picture text -----

Figure 7 2005 Governor Broome HM Concentrate Mineralogy

During 2012 close spaced drilling was carried out in the central part of the Governor Broome North Deposit to collect a bulk sample of the mineralisation. The resulting sample had a dry mass of 970kg and was sent to Allied Mineral Laboratories (AML) for development of testwork flowsheets for the recovery of ilmenite and zircon heavy mineral concentrates and for the production of product samples for marketing purposes.

The sample was treated on a spirals and wet tables to simulate a wet concentrator. The resulting heavy mineral fraction was treated through a simulated dry mill to produce an ilmenite product suitable for small scale evaluation by potential customers. The dry plant results are summarised in Table 6:

Table 6 2012 Metallurgical Testwork Products

Product	Wt% of dry mill feed	TiO2 (%)	Fe as Fe2O3 (%)	FeO (%)	SiO2 (%)	Al2O3 (%)	Cr2O3 (%)	ZrO2 (%)	U (ppm)	Th (ppm)
Ilmenite	73.4	51.2	49.2	33	0.30	0.17	0.03	0.02	<10	<10
Hi-Ti post flotation	2.3	63.0	24.1		3.0	1.7
Zircon rich stream	6.4	0.6	0.2		53.0	1.3		43.4	126	301

The electrostatic separation was very effective, with only 0.4% of the TiO2 going into the nonconductor fraction and 12% of the ZrO2 reporting to the conductor side.

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The ilmenite was found to be a high quality, high FeO product that should be very reactive in the sulphate pigment process, with Cr, U, and Th well within specifications for sulphate ilmenite.

The Hi-Ti product had significant sulphur present, in the form of iron sulphide. Flotation is an effective and proven method of removing sulphur from rutile and leucoxene products and a flotation sighter test rejected a significant amount of pyrite, but still left a non-mag Hi-Ti product with sulphur levels that would not be acceptable. Further work is required on this aspect of the plant flowsheet.

Flora Survey

Metal Sands commissioned a preliminary flora survey over the Governor Broome Deposit. The survey was completed in late 2006.

Mineral Sand Prices

Current mineral sand prices are reported to be in the following US$ ranges:

Ilmenite: 250-350;
Leucoxene (91% TiO2): 1450-1550; and
Zircon: 1250-1550.

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GOVERNOR BROOME PROJECT VALUATION

Applicable Valuation Method

CRM considers that the Prospectivity Enhancement Multiplier (‘PEM’) is applicable to the valuation of Astro’s projects, all of which have documented expenditures.

Tenement Expenditures

The expenditures reported to the Mines Department of Western Australia for the various Governor Broome Project tenements are summarised in Table 7.

Table 7 Governor Broome Project - Tenement expenditures


Tenement	Holder	Expenditure	Grant Date	Area (km2)
E70/2372	GBS	$1,619,023	9/01/2002	56
E70/2464	GBS	$620,797	6/09/2006	48
E70/3681	GBS	$111,425	20/06/2011	36
E70/4418	HM Sands	$20,000*	16/10/2012	13
P70/1583	HM Sands	$16,537	13/07/2010	0.0
P70/1584	HM Sands	$70,762	13/07/2010	0.2
P70/1639	HM Sands	NA	Application	1
P70/1640	HM Sands	NA	Application	2
Totals		$2,458,544		156

Expenditure requirement – not yet reported

Prospectivity Enhancement Multipliers

E70/2372 and E70/2464

The Governor Broome Deposit is situated within E70/2372 and E70/2464, with the larger proportion being within the former. The exploration within these tenements has been successful, with Inferred Mineral Resources and an Exploration Target being established. In addition, initial metallurgical testwork has achieved acceptable HM products, with preliminary flowsheets being developed. As such a positive PEM should be applied to the expenditure.

A PEM in the range of 1.5 to 3 appears to be appropriate, however a number of modifying factors should be considered. These include resource classification, grade, mineralogy, current product prices, and current market conditions. Consideration of all of these factors indicate that an appropriate PEM should be at the lower end of the possible range, despite the fact that the tonnage of in-situ mineralisation is large.

The resources are all in the Inferred Category and therefore more work will be required before Mineral Reserves and Feasibility Studies can be estimated or carried out; the average grade of the deposit (4.4% HM, of which about 69% is of valuable heavy minerals) is low compared to the grade of many developed HM deposits in WA; current product prices are, in general, low compared to past prices (the zircon price was approximately 80% higher a year ago, although the

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ilmenite price is now higher); and market conditions for the sale and development of mining assets are extremely poor. All of these factors are negative and CRM is thus of the opinion that an appropriate PEM for the expenditure on the tenements is at the lower end of the range: viz between 1.25 and 1.75 with a preferred value of 1.5.

CRM thus ascribes values for these tenements as follows:

E70/2372: $1,619,023 x 1.5 = $2.429M (within range of $2.024M to $2.833M);
E70/2464: $620,797 x 1.5 = $0.931M (within range of $0.776M to $1.086M).

E70/3681

Exploration within or adjacent to E70/3681 has been substantially confined to the drilling of lines of holes along Fouracres and Don Roads (Figure 4). No significant mineralisation was encountered. The exploration has thus downgraded the Prospectivity of the northern portion of the tenement. No significant exploration has been conducted within the southern portion of the tenement. CRM considers that a PEM of 0.5 (within a range of +/- 20%) should be applied to the expenditure that has been incurred to date, which is $111,425). However CRM recommends that the minimum required expenditure ($20,000) be outlaid in the current year to exploring the southern section of the tenement and allocates a PEM of 1 (within a range of 0.8 to 1.2) to this expenditure.

CRM thus ascribes the value of this tenement as follows:

E70/3681: ($111,425 x 0.5) + $20,000 = $76,000 (within range of $61,000 to $91,000).

E70/4418

No significant exploration has been carried out to date during the initial year of grant of E70/4418. However it can be assumed that the minimum required expenditure ($20,000) be outlaid in the current year to exploring the southern section of the tenement and allocates a PEM of 1 (within a range of 0.8 to 1.2) to this expenditure. CRM thus ascribes a preferred value of $20,000 within the range of $16,000 to $24,000 to the tenement.

P70/1583

P70/1583 has a reported expenditure of $16,537. It is within the Governor Broome East Deposit and it is thus reasonable to assign a PEM of between 1.25 and 1.75, with a preferred value of 1.5, to the expenditure. CRM thus ascribes values for the tenement as follows:

E70/1583: $16,537 x 1.5 = $25,000 (within range of $21,000 to $29,000).

P70/1584

P70/1584 has a reported expenditure of $70,762. Exploration within P70/15841 has been substantially confined to the drilling of a lines of holes along Don Road (Figure 4). No significant mineralisation was encountered. The exploration has thus downgraded the Prospectivity of the tenement. CRM considers that a PEM of 0.5 (within a range of +/- 20%) should be applied to the expenditure and thus ascribes values for the tenement as follows:

E70/1584: $70,762 x 0.5 = $35,000 (within range of $28,000 to $42,000).

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P70/1639 and 1640

As P70/1639 and 1640 are applications that have not yet been granted, they have at this time no value. Should they be granted in the near future then they could be assumed to have initial values of their annual expenditure requirements and rents plus their application fees. These total $4867 and $8504 respectively.

Valuation Summary

The ascribed values of the various tenements within the Governor Broome Project are summarised in Table 8.

Table 8 Governor Broome Project– Ascribed tenement values	Table 8 Governor Broome Project– Ascribed tenement values	Table 8 Governor Broome Project– Ascribed tenement values	Table 8 Governor Broome Project– Ascribed tenement values	Table 8 Governor Broome Project– Ascribed tenement values
Holder	Tenement	Preferred Value (A$M)	Low Value (A$M)	High Value (A$M)
GBS	E70/2372	2.429	2.024	2.833
GBS	E70/2464	0.931	0.776	1.086
GBS	E70/3681	0.076	0.061	0.091
Sub-totals		3.436	2.861	4.010
HM Sands	E70/4418	0.020	0.016	0.024
HM Sands	P70/1583	0.025	0.021	0.029
HM Sands	P70/1584	0.035	0.028	0.042
HM Sands	P70/1639	Nil	Nil	Nil
HM Sands	P70/1640	Nil	Nil	Nil
Sub-totals		0.080	0.065	0.095
	Totals	3.516	2.926	4.105

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EAST KIMBERLEY DIAMONDS PROJECTS

Introduction

The East Kimberley Diamonds diamond projects comprises three projects: the Lower Smoke Creek, the Carr Boyd Range, and the Argyle Dykes Projects. Respectively, they are situated 20km downstream from the Argyle AK1 diamondiferous lamproite pipe, 30km northeast of the pipe, and 7km south-southwest of it. All three are prospective for diamond bearing lamproites and the Lower Smoke Creek Project, in particular, is prospective for alluvial diamonds.

Location and Access

The projects are situated to the southwest of Lake Argyle in the East Kimberley Region of WA. Access to the properties from the main regional centre Kununurra is via the sealed Great Northern Highway and then initially via the unsealed Lissadell Road that leads to the Argyle Diamond Mine and which joins the Great Northern Highway some 160km south by road from Kununurra.

The Argyle Dykes Project straddles the Lissadell Road and access within that project is straightforward. Access to the other projects is more difficult via station tracks. The areas to the north of Smoke Creek are, in general, unreachable by road during the summer wet season.

Tenements

The tenements to all three projects are held by East Kimberley Diamond Corporation Pty Ltd, a wholly owned subsidiary of Astro. The tenement details are summarised in Table 9. Their locations are shown on Figure 89.

	Table 9 East Kimberley Diamonds Projects –	Table 9 East Kimberley Diamonds Projects –	Table 9 East Kimberley Diamonds Projects –	Tenement summary	Tenement summary
Tenement	Project	Grant Date	Expiry Date	Annual Commitment	Annual Rent	Area (km2)
E80/4120	LowerSmokeCreek	3/08/2011	2/08/2016	$39,000	$4,641	87.5
E80/4316	Carr Boyd Range	22/02/2012	21/02/2017	$20,000	$2,023	56.0
P80/1615	Argyle Dykes	1/02/2008	31/01/2016	$5,960	$343	1.5
P80/1616	Argyle Dykes	1/02/2008	31/01/2016	$6,000	$338	1.5
P80/1617	Argyle Dykes	1/02/2008	31/01/2016	$7,200	$405	1.8
Totals				$78,160.00	$7,750	148.3

The Projects are subject to the determined Native Title Claim (WC 1994/002).

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Figure 8 East Kimberley Diamonds and MacPhee Projects - Tenement locations

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Geological Setting

The projects lie within the north-northeast trending Paleoproterozoic Halls Creek Orogen (also known as the Halls Creek Mobile Zone). Basement lithology in the project areas comprises metasediments, and intusive granitoids. These are overlain by Mesoproterozoic, Neoproterozoic, Cambrian, and Devonian sediments and by Cambrian basaltic volcanics (Figure 9). Deformation of the sedimentary sequences has been mainly confined to broad folding and to faulting.

AK1, the olivine lamproite diatreme that hosts the diamonds at Argyle, intruded the Paleo- and Meso-proterozoic formations at about 1200Ma. Alluvial diamonds have been recovered in the Lower Smoke Creek Project area from Cainozoic valley fill sediments. The stones are interpreted to have been derived from erosion of the AK1 system.

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Figure 9 Solid geological map of Lower Smoke Creek and Carr Boyd Projects (after Hassan, 2000)

Lower Smoke Creek Project Geology

Beneath the surficial deposits, the majority of the Lower Smoke Creek project geology is comprised of Neoproterozoic to Devonian sediments and volcanics (Figure 9). The central portion of the area contains diamond bearing alluvial valley fill of the Smoke Creek drainage system, although the majority of this prospective fill is excluded from the Astro tenure.

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The alluvial diamonds in the valley fill are down drainage system from the AK1 pipe, which is interpreted to be their source. The valley contains a system of river terraces, which are, in order from oldest to youngest age:

“A Terrace”; duricrusted (ferruginised) channel and floodplain gravels, 2m thick, which have solidified to form inverted topography about 8m above the current flood plain;
“B Terrace”; iron oxide coated quartzite clasts in ferruginous matrix occur about 4m above the current flood plain of Smoke Creek;
“C Terrace”; modern flood plain gravels of Smoke Creek, up to 4m thick, which contain the bulk of alluvial diamonds recovered to date. The coarse gravels are largely derived from erosion of a boulder conglomerate (Galloping Creek Formation) and provided an effective trap for alluvial diamonds; and
“D Terrace”; current river channel gravels and sandy bank material containing only rare commercial diamonds.

Lower Smoke Creek Project Previous Exploration

The tenement area has been the subject of exploration for diamonds since the discovery of diamonds at AK1. Argyle Diamond Mines Pty. Limited (‘ADM’) had outlined a resource of alluvial diamonds along Smoke Creek and commenced mining at the mine-site end of the resource in the 1980s. The lower end of the creek must have been sub-economic at the time and has since been sold to third parties. The ADM mining leases were restricted to the current channel and 600m either side.

The area outside of the main creek drainage has received less attention. In 1981/82 Gem Exploration recovered 28 small diamonds from 250t of gravel. From 1983-87 Afro-West carried out bulk testing, concentrating on Billy Goat and Flying Fox Creeks, in the west of the area. Astro Mining NL first became involved in 2000 in a joint venture (‘JV’) with Conquest Mining Limited (‘Conquest’) over several of the Conquest tenements in the area. In 2001 it withdrew from most of the tenements to concentrate on the Lower Smoke Creek area.

In 2000/2001 the following work was carried out on an area similar to the current tenement, focusing mainly on the discovery of primary lamproite bodies:

Literature studies;
High resolution airborne magnetics, radiometrics, and DTM;
Landsat imagery and airphoto interpretation;
Field inspection of anomalies;
Stream sampling and loaming for lamproite indicator minerals;
Soil and rock geochemistry for lamproites; and
Pitting and trenching.

Most of the anomalies arising from this work were found to be not related to a primary kimberlitic (lamproite) source. However an outcrop of perched iron-stained gravel was encountered on the north side of Smoke Creek that is similar in appearance to the ferruginised terraces associated with Smoke Creek upstream and within Limestone Creek.

After Astro withdrew from the JV in 2002, Conquest subsequently carried out further exploration comprising:

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Reconnaissance loam sampling;
Systematic soil sampling over 10km x 3km interpreted structural corridor;
Ground gravity over soil geochemistry anomalies;
Aircore drilling of soil/gravity anomalies and outstanding magnetic anomaly from Astro JV work; no kimberlitic rocks were found; four sites remain outstanding; and
Bulk sampling of paleochannels on north side of Lower Smoke Creek; 11 pits for 960t processed through DMS plant for 222 diamonds totalling 12.86cts at average of 1.34CPHT compared to 1.46CPHT from earlier Afro West pitting ( CPHT=carats per
).
hundred tonnes

In 2004 Conquest applied for mining leases over the EL and commissioned a flora and fauna study but appeared to relinquish its interest in the area in 2005.

Lower Smoke Creek Project Current Exploration

Upon grant of the Tenement, EKD commissioned Churchlands Consulting Pty Ltd (‘CC’) to carry out a thorough review of all past exploration in the tenement area. CC concluded that:

Test pitting of alluvial material to date demonstrated sub-economic grades of diamonds; however there are areas closer to the source at AK1 with significant potential that remain to be tested, particularly in the area of confluence of Smoke Creek with Flying Fox Creek where previous test pitting failed to reach the level of diamondiferous gravels;
Aircore drilling of soil geochemistry anomalies neglected four sites with significant geochemical results; and
Grid based soil geochemistry over an interpreted structural corridor that includes AK1 needs to be extended;

CC also acquired and examined the ASTER satellite imagery for the area to assist with mapping of paleochannels or areas of potential kimberlite occurrence. A brief summary of findings is given in Table 10.

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Table 10 Summary of Aster Imagery Interpretations	Table 10 Summary of Aster Imagery Interpretations	Table 10 Summary of Aster Imagery Interpretations
Spectra	Target	Observations
FeOH Group Content	Maps jarosite, gibbsite, etc	Very low in current channels; Weakly traces Billy Goat Creek; Possible paleochannel between Smoke and BillyGoat Creeks
AlOH Composition	Differentiates Al rich from Al poor clays	Traces paleochannels at NE (downstream) end close to Lake Argyle
Ferric Oxide Composition	Differentiates hematite and goethite and in combination with AlOH Composition, picks outpaleochannel deposits	Weak paleochannels at SW end of the Tenement associated with Smoke Creek
Ferric Oxide Content	Maps hematite / goethite	Strong trace of paleochannels at upper reaches: unfortunately masked by vegetation near drainages.
Ferrous Iron Index	Iron/silica or Iron/carbonate association; Maps fresh rock: esp. mafics	Little or no outcrop north of Smoke Creek compared to south of creek
Ferrous Fe Content in MgOHCO3	Differentiates low Fe mafics from high Fe mafics	No fresh rock to north of Smoke Creek; SW end rich in Fe – mafic/ultramafic; Less mafic to east; Possible circular mafic feature in southwest worthyof follow up.
Green Vegetation	Used to check why another Spectra might be obscured	Maps the current drainages brilliantly. Traces some possible shallow paleochannels due to water flow
Kaolin Group Index	Maps alteration or stratigraphy bydifferent clayspecies	Supports possible circular feature in southwest.
Opaques Index	Maps Magnetite, maghemite or Mn	Beautifully traces Smoke and Billy Goat Creeks but not much else west and north of Smoke Creek

CC developed a detailed exploration program and carried out two field visits to check a number of the potential targets and for site familiarisation.

Lower Smoke Creek Project Conclusions

CC made the following conclusions with regard to the Prospectivity of the Lower Smoke Creek Project:

The area has undergone significant exploration for alluvial and primary diamonds over many years, but to date economic or sub-economic concentrations are restricted to the proximity of Smoke Creek, currently held by third parties. Notwithstanding this, a number of target areas still remain untested;

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Aero-magnetics has been shown to be of limited use for primary lamproites and more widespread use of soil geochemistry is warranted, after detailed structural analysis to identify priority areas;
Several areas of potential alluvial deposits remain untested due to the depth of excavation required, however specialised high volume drilling rigs are now established in Australia which can drill holes of more than 1m diameter.

Carr Boyd Project

The Carr Boyd project area contains three main groups of rocks, which are in the main separated by northeast or north trending faults (Figure 9):

The eastern portion contains Devonian sediments of the Ord Basin Cockatoo Group that are beneath an alluvium plain sloping to the southeast towards Smoke Creek and the waters of the Argyle Dam;
The northern portion contains Mesoproterozoic sediments of the Carr Boyd Group that outcrop as the Carr Boyd Ranges. About 28km to the south-southwest this group is intruded by the AK1 lamproite;
The western portion contains Paleoproterozoic basement rocks of the Lamboo Complex.

In order to identify geophysical anomalies with the potential for buried kimberlite/lamproite pipes, previous exploration included a detailed aeromagnetic and radiometric survey in the region. This survey identified 13 aeromagnetic anomalies with signatures resembling intrusions along the southern boundary of the present tenement. Loam sampling was undertaken to confirm surface concentration of the diamond indicator minerals and minerals originating from the underlying bedrock formation. The presence of alluvial cover in most areas rendered most of the results relatively meaningless, however one aeromagnetic anomaly, not subject to alluvial cover, returned significant indicator mineral results (Anon, 2013).

No significant recent exploration is known to have been carried within the tenement area. A detailed reassessment using ��

Argyle Dykes Project

The Argyle Dykes Project covers a set of narrow diamond-bearing lamproite dykes that are situated 7km to the south-southwest of the AK1 pipe. The dykes have been variously interpreted as occupying tensional en-echelon fractures within a granitic basement and as being separate fault separated segments of a single dyke (Muggeridge, 1993). Their locations are shown on Figure 10, a geological map of the area.

The lamproite dykes have been previously explored as the Lissadell Road Dykes by CRA Exploration Pty Ltd (‘CRA’) and Moonstone Mines N.L. (‘Moonstone’).

CRA Exploration

CRA discovered the dykes in 1980 as a result of bulk drainage sampling (Temperly, 1986). Its exploration comprised bulk drainage sampling; bulk sampling of dykes; loam, gravel, and rock

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chip sampling; ground magnetics; ground very low frequency EM; and the drilling of two diamond drill-holes.

The dykes were reported to be mostly less than 10m in length, but range up to 60m long. They are normally less than 1m wide with a maximum width of 3m. They are composed of altered micaceous olivine lamproite that is silicified and highly weathered near surface. Seven dykes were mapped within an east-northeast striking zone. The individual dykes have a southeasterly trend and have dips of between 45[o] to the southwest and vertical.

Bulk sampling of narrow “stringer dykes” mixed with granitic “waste” produced 6.41cts of small diamonds from 42m[3] of material. CRA failed to discover other dykes in the area and relinquished its tenements.

Moonstone Exploration

Moonstone carried out exploration during 1992 and 1993 over the project area (Muggeridge). To date work carried out by Moonstone has included ground reconnaissance, stream sampling, loam sampling, ground magnetic surveys, geochemical surveys, indicator mineral studies, petrographic analysis, microdiamond tests, and bulk sampling. The work located two new lamproite occurrences.

The bulk sampling programme to test the known lamproite occurrences, using a rotary

diamond pan plant, was conducted during the period August to October 1992. A total of 924t of lamproite was processed through the plant. The highest grade achieved for an

individual bulk sample was 24CPHT (based on estimated lamproite treated). A total of 511 diamonds w e r e recovered for 54.2cts.

Astro Exploration

Astro has designed a drill programme to explore for extensions to the known dykes, based on Moonstone’s interpretation of their potential positions beneath cover (Figure 11).

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Figure 10 Argyle Dykes Project - Geological map

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EAST KIMBERLEY DIAMONDS PROJECTS VALUATION

Applicable Valuation Method

CRM considers that the Prospectivity Enhancement Multiplier (‘PEM’) is applicable to the valuation of Astro’s projects, all of which have documented expenditures.

Tenement Expenditures

The expenditures reported to the Mines Department of Western Australia for the various East Kimberley Diamonds Projects are summarised in Table 11.

Table 11 East Kimberley Diamonds - Tenement expenditures	Table 11 East Kimberley Diamonds - Tenement expenditures	Table 11 East Kimberley Diamonds - Tenement expenditures	Table 11 East Kimberley Diamonds - Tenement expenditures	Table 11 East Kimberley Diamonds - Tenement expenditures
Tenement	Project	Expenditure	Grant Date	Area (km2)
E80/4120	Lower Smoke Creek	$84,826	3/08/2011	87.5
E80/4316	Carr Boyd Range	$20,637	22/02/2012	56.0
P80/1615	Argyle Dykes	$41,356	1/02/2008	1.5
P80/1616	Argyle Dykes	$42,767	1/02/2008	1.5
P80/1617	Argyle Dykes	$43,499	1/02/2008	1.8
Totals		$233,085		148.3

Prospectivity Enhancement Multipliers

E80/4120

Expenditure to date by Astro on E80/4120 has identified a number of targets worthy of follow up exploration. As such, the expenditure has been effective but the lack of on ground testwork with positive results precludes the allocation of a PEM greater than 1. CRM therefore assigns a PEM of 1 within a +/- 20% range to the expenditure and ascribes a value to the tenement of $85,000 within the range of $68,000 to $102,000.

E80/4316

Expenditure to date by Astro on E80/4316 has been restricted to a desktop review of the potential of the tenement, without the identification of specific targets. As such the expenditure can not be considered to have enhanced the prospectivity of the tenement and CRM has assigned a PEM of 0.5 within a +/- 20% range to the expenditure and ascribes a value to the tenement of $10,000 within the range of $8,000 to $12,000.

P80/1615 - 1617

Expenditure to date by Astro on the Argyle Dykes tenements has been restricted to a desktop review of the potential of the tenement, without the identification of specific targets, although a drill programme has been planned to test the general location of the known dykes. As such the expenditure can not be considered to have enhanced the prospectivity of the tenement and CRM has assigned a PEM of 0.5 within a +/- 20% range to the expenditures and ascribes values to the tenements as follows:

P80/1615: $21,000 within the range of $17,000 to $25,000;
P80/1616: $21,000 within the range of $17,000 to $26,000; and

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P80/1617: $22,000 within the range of $17,000 to $26,000.

Valuation Summary

The ascribed values of the various tenements within the East Kimberley Diamonds Project are summarised in Table 12.

Table 12 East Kimberley Diamonds Projects – Ascribed tenement values	Table 12 East Kimberley Diamonds Projects – Ascribed tenement values	Table 12 East Kimberley Diamonds Projects – Ascribed tenement values	Table 12 East Kimberley Diamonds Projects – Ascribed tenement values	Table 12 East Kimberley Diamonds Projects – Ascribed tenement values
Tenement	Project	Preferred Value (A$M)	Low Value (A$M)	High Value (A$M)
E80/4120	Lower Smoke Creek	0.085	0.068	0.102
E80/4316	Carr Boyd Range	0.010	0.008	0.012
P80/1615	Argyle Dykes	0.021	0.017	0.025
P80/1616	Argyle Dykes	0.021	0.017	0.026
P80/1617	Argyle Dykes	0.022	0.017	0.026
Totals		0.159	0.127	0.191

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MACPHEE CREEK URANIUM AND DIAMOND PROJECT

Introduction

The MacPhee Creek Uranium and Diamond Project is comprised of a single tenement, E80/3243, situated in the East Kimberley of WA (Figure 9). It has dimensions of approximately 24km north-south and up to 7km east-west.

Location and Access

The licence area is 90km south-southwest of Kununurra. Road access to the area is via the sealed Great Northern Highway which skirts the western length of the tenement, along the central part of MacPhee Valley. Access from the regional centre of Kununurra is by 46km of the sealed Victoria Highway and thence 77km of the Great Northern Highway. Road access to the regional port of Wyndham and to the regional centre of Halls Creek is via the Great Northern Highway for 127km northerly and 234km southerly, respectively. The Doon Doon Roadhouse is located on the Highway 5km north of the EL.

A few pastoral station roads and tracks provide fair weather vehicular access to limited parts of the EL. In the central part of the EL, off-road access is slow and/or difficult by 4WD vehicle or quad bike. The marginal ranges are in places rugged, with current vehicular access not practical.

The tenement is centred over the upper part of the valley of MacPhee Creek. The valley has a low to undulating topography. The valley floor is a series of outwash sediments and minor outcropping granite with remnant overlying sandstone occurring as low rises. During the wet season the streams form significant water ways.

At the northern end of the tenement is the 200m plus high line of the Dunham Hills. The easternmost portion of the tenement contains the western edge of the 200m high north-south striking Ragged Range.

Tenement

The Exploration Licence (E80/3243) is registered in the name of MacPhee Resources Pty Ltd (‘MacPhee’), which is a wholly owned subsidiary of Astro. It was granted on 25[th] July 2005 and was due to expire on 24[th] July 2013. An application has been made for an extension of term of a further year. The licence has an area of 110.5km[2] , an annual exploration commitment of $105,000, and an annual rent of $16,317.

The tenement is within the area of a Native Title Claim (WC2010/013).

Geological Setting and Project Geology

As for the East Kimberly Diamonds Projects, E 80/3243 is within the north-northeast trending Paleoproterozoic Halls Creek Orogen.

Intrusive granitoids are the basement lithology throughout the project area, but two other groups are present in the northeast corner of the tenement, where Antrim Plateau Volcanics and Carr Boyd Group sediments overlay and are in fault contact with granite (Figure 11).

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Figure 11 MacPhee Creek Project – Geological map (after Hassan, 2000)

Uranium Mineralisation

Occurrences of secondary uranium mineralisation are present along the Dunham Fault Zone (‘DFZ’) (Figure 11). The granite and the DFZ are intruded by dolerites and within the DFZ both Carr Boyd Group sandstone and granite have been brecciated, silicified, and haematised.

Rio Tinto Finance and Exploration Limited (‘Rio Tinto’) dug a number of costeans within the DFZ during exploration of radiometric anomalies in 1955 (Rattigan and Clark). At Dunham River A (see Figure 12) a costean exposed meta-autunite and phosphuranylite in a 2cm wide vein adjacent to similar sized quartz veins cutting a dolerite dyke. A grab sample gave a radiometric

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assay of 0.85% eU3O8. At Dunham River B costeans exposed scattered occurrences of torbernite in narrow gossanous quartz veins which cut sheared, silicified, and haematised granite. An analysis of a grab sample returned 0.46% eU3O8.

Two other recorded occurrences of uranium mineralisation (Dunham River C and D) are shown on Figure 11. They are present as secondary uranium mineral coatings within joints in granite.

Diamond Occurrences

Five diamond occurrences are also shown on Figure 11. They are reported locations of diamonds obtained from bulk samples during exploration.

Exploration

1979-1983

The southern section of the tenement was explored for diamonds between 1979 and 1983 by mans of aerial photo interpretation, an airborne EM INPUT survey, an aeromagnetic survey, and by loam and gravel sampling.

The aerial photographic interpretation identified a single circular feature, the EM survey identified a north-northeasterly trending anomaly in the southeast of the current tenement, and the aeromagnetic survey identified 17 anomalies. Follow up sampling was carried out, but no further work.

1986-1989

Exploration between 1986 and 1989 included a second INPUT survey, which again identified anomalies in the southeast of the tenement, geochemical soil sampling, and bulk drainage sampling. Five of the eight bulk samples, which ranged from 30t to 47t in size, contained diamonds, at grades between 0.47 and 1.54CPHT. No diamonds were discovered in two followup larger samples.

Current Exploration

MacPhee commissioned an aero-magnetic and radiometric survey of the MacPhee Creek Project area which was completed and reported on by Southern Geoscience during 2010. The work identified radiometric responses which represent known uranium mineralisation and additional targets (Jenke, 2010). Figure 12 shows radiometric targets identified in the vicinity of the DFZ and Figure 13 areas of high radioactivity within the Crooked Creek Granite.

The work also identified a number of discrete magnetic responses, which are of interest for their diamond potential (Figure 13).

The Southern Geoscience report was analyzed and reported on by Vince Roberts and Associates and a helicopter survey, under the guidance of Vince Roberts and Associates, was undertaken to ‘ground truth’ identified anomalies. Based on this survey, recommendations were added for drill site locations which were later examined in the field by Consultant Geologist, John Jordan for accessibility, in company with a senior representative of Orbit Drilling. A Program of Works

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was submitted to the Mines Dept of WA, but delays by the Kimberley Land Council in relation to sensitive zones has stalled all exploration .

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Figure 12 Durham Fault Zone - Uranium anomalies and targets (from Jenke, 2010)

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Figure 13 MacPhee Creek Project – Areas of high uranium in granite (from Jenke, 2010)

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Figure 14 MacPhee Creek Project - Diamond targets and structures (from Jenke, 2010)

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MACPHEE CREEK PROJECT VALUATION

Applicable Valuation Method

CRM considers that the Prospectivity Enhancement Multiplier (‘PEM’) is applicable to the valuation of Astro’s projects, all of which have documented expenditures.

Tenement Expenditures

The expenditures reported to the Mines Department of Western Australia for E80/4243 total $645,406. This total is greater than the combined eight-year expenditure commitments of $573,417, however on two occasions (2007 and 2012) expenditure failed to meet requirements and applications for exemption were refused. Further, expenditure for the year ended 24[th] July 2013 also failed to meet the commitment and an application for exemption is pending and there is no guarantee that the applied for extension of term will be successful.

Prospectivity Enhancement Multipliers

The exploration carried out for uranium has not, in the opinion of CRM, delineated any significant targets that were previously unknown, but has delineated some targets for diamond exploration. As such, CRM is of the opinion that a PEM of 0.5 is appropriate to assign to the tenement expenditure, with a range of +/- 20%. This calculation values the tenement at $323,000 within the range $258,000 to $387,000.

However, as there is no guarantee that the extension of term will be granted it is possible that the tenement title will be extinguished and therefore have no value.

Valuation Summary

CRM ascribes to E80/3243 a preferred value of $323,000 within the range of $258,000 to $387,000, this valuation being contingent upon the title to the tenement remaining in good standing.

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CONCLUSION

The ascribed values of Astros’s projects are listed and totaled in Table 13.

Table 13 Astro Tenements – Summary of values

Project	Tenement	Preferred Value (A$M)	Low Value (A$M)	High Value (A$M)
Governor Broome(GBS1)	E70/2372	2.429	2.024	2.833
	E70/2464	0.931	0.776	1.086
	E70/3681	0.076	0.061	0.091
Sub-totals		3.436	2.861	4.010
Governor Broome(HMS2)	E70/4418	0.020	0.016	0.024
	P70/1583	0.025	0.021	0.029
	P70/1584	0.035	0.028	0.042
	P70/1639	Nil	Nil	Nil
	P70/1640	Nil	Nil	Nil
Sub-totals		0.080	0.065	0.095
East KimberleyDiamonds	E80/4210	0.085	0.068	0.102
	E80/4316	0.010	0.008	0.012
	P80/1615	0.021	0.017	0.025
	P80/1616	0.021	0.017	0.026
	P80/1617	0.022	0.017	0.026
Sub-totals		0.159	0.127	0.191
MacPhee Creek3	E80/3243	0.323	0.258	0.387
	Totals	3.998	3.311	4.683

Note 1: GBS: Held by Governor Broome Sands Pty Ltd Note 2: HMS: Held by HM Sands Pty Ltd

Note 3: Valuation dependent upon tenement remaining in good standing

CRM estimates the value of Astro’s Mineral Projects to be within the range of $3.311M to $4.683M with a preferred value of $3.998M as of the 20[th] August 2013.

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BIBLIOGRAPHY

Anon, 2013, Carr Boyd Range Project, Annual Mineral Exploration Report 2013 E80/4316,
unpub. rpt to Mines Dept WA by East Kimberley Diamond Corporation Pty Ltd, April 2013.
Jenke, G., 2010, Review of airborne magnetic and radiometric survey data at Macphee Creek, unpub. rpt to Astro Resources NL by Southern
E80/3243, Lissadell area, WA., Geoscience Consultants, Sept 2010.
Jordan, J., 2011, , unpub. rpt for Astro Resources NL by Field Inspection; Lissadell and Macphee
Churchlands Consulting Pty Ltd.
Jordon, J., 2012, Lower Smoke Creek Project (“LSC”) Exploration Licence 80/4120 Annual , unpub. rpt to Mines Dept WA for East
Technical Report 3[rd] Aug 2011 to 2[nd] Aug 2012 Kimberley Diamond Corporation Pty Ltd, Sept 2012.
Hassan, L.Y., 2000, , Mineral Occurrences and Exploration Potential of the East Kimberley
Western Australia Geological Survey Report 74, 83p.
MacLeod, M., 2011, Annual Mineral Exploration Report MacPhee Creek Project E80/3243 , unpub. rpt to Mines Dept WA by MacPhee Resources Pty Ltd,
25/07/2010 to 24/07/2011 August 2011.
MacLeod, M., 2012, Annual Mineral Exploration Report CGR No:178/2009 P80/1615 - 1617 , unpub. rpt to Mines Dept WA by East Kimberley Diamond
1/02/2011 to 31/01/2012 Corporation Pty Ltd, March 2012.
Muggeridge, M.T., 1993, , unpub. rpt to Mines Argyle Dykes Project EL 80/977 Final Report
Dept WA by Moonstone Mines N.L., Jan 1993, A35767.
Rattigan, J.H. and Clark, A.B., 1955, Report on Uranium Prospects and Prospecting in the East unpub. rpt to Mines Dept WA by Rio Tinto
Kimberley District, Western Australia, Finance and Exploration Ltd, June 1955, A2029.
Roberts, V.T., 2010, Field inspection and assessment of anomalous radiometric responses from
detailed aero survey (of 2009 - 2010) MacPhee Creek Project (EL 80/3243) East , unpub. rpt for Astro Resources NL by Vince
Kimberley Mineral Field Western Australia Roberts & Associates Pty Ltd.
Temperly, J., 1986, Final Report on Mineral Claims 80/10372-10375 Argyle, Lissadell, Western
, unpub. rpt to Mines Dept WA by CRA Exploration Pty Ltd, Oct 1986,
Australia A19271.

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DECLARATIONS

This report has been prepared by J.J.G. Doepel. Mr Doepel, a Principal Geologist with Continental Resource Management Pty Ltd (‘CRM’), has more than 30 years’ experience as a geologist in the mineral industry and more than five years’ relevant experience in the estimation, assessment and evaluation of the type of mineral deposits being sought by the Company. Mr Doepel holds a Bachelor of Science with Honours and a Graduate Diploma in Forensic Science from the University of Western Australia; and a Diploma of Teaching from the Western Australian Institute of Technology. He is a Member of the Geological Society of Australia and of the Australasian Institute of Mining and Metallurgy. He has been involved in exploration for a wide variety of metals and industrial minerals, including iron ore.

CRM was established in 1989 and since that time has provided geological consulting services to the exploration industry in Australia, Asia, Europe, Africa and North America. It has provided services in relation to the estimation, assessment and evaluation of a wide range of both metallic and non-metallic deposits. It has advised upon, designed and performed exploration programmes, carried out valuations, due diligence studies and mine life studies, and produced independent reports on mining and exploration properties.

No member or employee of CRM is, or is intended to be, a director, officer or other direct employee of the Company. No member or employee of CRM has, or has had, any share holding, or the right (whether enforceable or not) to subscribe for securities, or the right (whether legally enforceable or not) to nominate persons to subscribe for securities in the Company. CRM has previously provided geological services to the Company but there is no agreement or understanding between CRM and the Company as to CRM performing further work for the Company. Fees for the preparation of this report are being charged at a commercial rate, the payment of which are not contingent upon the conclusions of the report.

Where Mineral Resources and Ore Reserves are referred to, the terminology is consistent, unless specifically stated to the contrary, with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves as per the Joint Committee of the Australasian Institute of Mining and Metallurgy, Australian Institute of Geoscientists and the Australian Mining Industry Council and dated December 2004. The report is written to conform to the AusIMM's Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (Valmin Code) as revised 2005.

The statements and opinions contained in this report are given in good faith and in the belief that they are not false or misleading. The conclusions are based on the reference date of the 20th August 2013 and could alter over time depending on exploration and metallurgical testwork results, metal prices, and other relevant market factors.

Yours faithfully

John Doepel Continental Resource Management Pty Ltd 20[th] August 2013

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GLOSSARY OF GEOLOGICAL AND TECHNICAL TERMS

Aerial photography	The taking of airphotos for surveying or other purposes.
Aeromagnetic	A method of geophysical exploration in which an aircraft carries
	instruments that record the magnetic signatures of the rocks
	beneath its flight path.
Aeromagnetic survey	A geophysical survey method conducted from an aircraft that
	measures the magnetic intensities of the rock units below.
Aeromagnetics	Measurement of the earth's magnetic field from a surveying
	aircraft, or the purpose of recording the magnetic characteristics of
	rocks.
Airborne survey	A survey conducted by aircraft involving geophysical methods
	(radiometric, magnetic, gravity etc) and also imagery.
Aircore (AC) drilling	A drilling method suitable for unconsolidated material that returns
	a sample free of contamination from the overlying material.
Al	The chemical symbol for aluminium.
Alluvial	Pertaining to or composed of alluvium, or deposited by a stream of
	running water.
Alluvial cover	Surficial river and stream sediments.
Alluvial diamonds	Diamonds deposited in river and stream sediments.
Alluvial fan	A cone-shaped deposit of alluvium made by a stream where it runs
	out onto a lower valley or plain.
Alluvial valley fill	A deposit of alluvium within a valley.
Alluvium	Detrital sediment deposited by water, especially by rivers or
	streams. Relatively recent.
Alteration or Weathering	Change in mineralogical composition of a rock, commonly
	brought around by reactions with hydrothermal solutions.

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Altered ilmenite	Ilmenite that has been weathered; with its titanium content
	upgraded in the process.
Anomaly	An area highlighted by a geochemical or geophysical survey as
	possessing greater than background metal values or physical
	characteristics.
Argillaceous	Containing clay.
Assay	Analysis to determine the quantity of one or more elemental
	components.
Autunite	A yellow, radioactive, tetragonal mineral.
Barrier sediment	Sediment deposited as an emergent offshore bar parallel to the
	coast.
Basalt	An extrusive igneous rock; dark coloured, fine-grained, composed
	mainly of feldspar and pyroxene.
Basaltic volcanics	Extrusive igneous rocks similar in composition and appearance to
	basalts.
Basement	The oldest group of rocks in an area; usually metamorphic rocks
	found unconformable below younger strata.
Basin	A general term for an originally depressed area that has been filled
	with sedimentary rocks.
Bedrock	Solid rock underlying surficial deposits.
Boulder conglomerate	A Conglomerate primarily composed of boulder-sized clasts
	within a fine-grained matrix. See conglomerate.
Breccia	A coarse-grained rock composed of angular rock fragments
	cemented by a finer-grained matrix.
Brecciated	Broken into angular fragments, which are later cemented to form a
	new rock.

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Bulk sampling	Taking a large number of samples from one spot or location.
Cainozoic/Cenozoic	An era of geological time beginning approximately 70 million
	years ago.
Cambrian	The period of geological time between about 490 and 545 million
	years ago.
Carbonaceous	Containing organic material.
Carbonate	A mineral compound containing the radical CO3anion; especially
	calcium carbonate (calcite).
Cassiterite	Tin oxide, the common and most important mineral of tin.
Chromite	The principal ore mineral of chromium.
Clay	A rock or mineral fragment or a detrital particle of any
	composition with a diameter <4 microns.
Clast	A individual fragment of a rock, which was derived from the
	breakup of a larger rock.
Coarse-grained	Grain size within a crystalline rock generally with a diameter
	>5mm.
Coastal plain	A low, generally broad but sometimes narrow plain that margins
	the shore of a large body of water.
Collar	The open end of a drill hole.
Colluvium	Relatively recent, surficial, sheet-form deposits emplaced by sheet
	wash or gravity.
Complex	Group of igneous and/or metamorphic rocks.
Composite sample	A technique that combines a number of discrete samples collected
	from a body of material into a single homogenised sample for the
	purpose of analysis.

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Conductor	A conductive rock unit.
Conglomerate	A clastic sedimentary rock containing rounded to subangular
	granules, pebbles, cobbles, and/or boulders set in a finer grained
	matrix.
Contact	The boundary between two different types or ages of rock (i.e.
	Between different formations or intrusions and adjacent rock).
Core	The product of diamond drilling; a cylindrical sample of rock
	representative of the geology (Lithology and structural
	characteristics) beneath the surface at the location the hole is
	drilled.
Core sample	A portion of the drill core collected for analysis.
Costean	An elongate pit used to explore for near surface mineralisation.
Costeaning	Excavation of costeans.
Cover	The sedimentary accumulation over the crystalline basement.
Craton	A large block of the earth’s crust that has been stable and
	undeformed, except perhaps by faulting, for a long period of time.
Cretaceous	The final period of the Mesozoic Era; from about 135 to 65
	million years ago.
Cross-section	A diagram depicting the geometry of materials underground as
	they would appear on an imaginary vertical slice through the
	Earth.
cts	Carats
Cut-off grade	The lowest grade of mineralised material that qualifies as ore in a
	given economic deposit.
Deposit	In economic terms, this refers to a well defined mass of rock
	containing mineralisation.

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Devonian	The period of geological time between about 355 and 410 million
	years ago.
DFZ	Dunham fault zone
Diagenetic	Refers to a mineral formed within a sediment after deposition by
	chemical processes.
Diamond drilling	Rotary drilling method of obtaining cylindrical core of rock by
	drilling with a diamond-set or diamond-impregnated bit.
Diamondiferous	Descriptive term for rocks or sediments containing diamonds.
Diatreme	A volcanic vent piercing sedimentary strata, usually the result of
	an explosive eruption
Dip	The angle that a rock unit or structure makes with the horizontal.
Dolerite	A dark coloured fine to medium-grained intrusive igneous rock.
Drainage	Generally refers to a system of interconnecting streams through
	which water and runoff from higher elevations is channelled and
	expelled from an area.
Drill (hole) collar	Pipe used at the opening of a drill hole to concentrate weight and
	add rigidity to the hole entrance for ease of drilling.
Drill testing	Initial drilling of an area to establish mineralised zone boundaries
	and depth of extension.
Drilling	The act of producing a circular hole into the ground with a drill for
	purposes such as exploration, blasting, valuation, or obtaining
	water.
DTM	Digital Terrain Model.
Dunal	Related to a sand dune.
Duricrust	A general term for a hard crust on the surface, or as a layer within
	upper sediments; formed by the accumulation and concentration of
	soluble minerals by oxidation.

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Duricrusted	An iron-rich duricrust formed within a channel (topographic lows
(ferruginised) channel	usually formed by erosional watercourses).
Dyke	A tabular igneous intrusion that usually crosscuts geological
	stratification.
EL	Exploration Licence- Tenements for which the government has
	authorised exploration under predetermined conditions.
ELA	Exploration Licence Application- Tenements for which an
	application for an EL has been put forth but not yet granted.
Electron microscopy	Determining and identifying the structure of substances by using
	an electron microscope (an electron-optical instrument used to
	enlarge images of minute objects).
Electrostatic separation	Used to separate different kinds of minerals.
Elevation	The vertical distance from sea level to a point or object on the
	earth's surface.
EM	Electro-magnetic; a geophysical exploration method.
En echelon	Said of geologic features that are in an overlapping or staggered
	arrangement, e.g., faults, fractures etc.
Erosion	Process of breaking down land by weathering down surface
	materials by the action of streams, waves, wind, and geochemical
	degradation.
Exploration	Projecting, sampling, mapping, drilling and other work involved in
	the search for mineralisation or water.
Exploration drilling	Drilling to find economic mineral deposits or water, and to define
	mineralisation zones and depths of extension.
Exploration target	The focus of a particular drilling program or component there of
	(i.e. Inferred mineralised zone based on favourable geology or
	historic findings).

Continental Resource Management Pty Ltd; Rpt WA13/06

Extensional drilling	Drilling to define any further extension of the mineralisation.
Extrusive	A volcanic rock that has been expelled onto the Earth’s surface.
Facies (metamorphic)	A grade of metamorphism characterised by the development of a
	particular mineral.
Facies (sedimentary)	An assemblage of all lithologies present within a sedimentary
	rock.
Fault	A fracture in rock along which there has been relative
	displacement of the two sides either vertically or horizontally.
Fault	A fracture in rock along which there has been relative
	displacement of the two sides.
Fault breccias	A breccia formed as a result of faulting.
Fe	The chemical symbol for iron.
Feasibility study	An extensive technical and financial study to assess the
	commercial viability of a project.
Feldspar	A silicate mineral; formed in igneous and metamorphic rocks;
	light-coloured.
Ferrous	Descriptive term for minerals containing iron.
Ferruginous	Containing the element iron.
Ferruginous	Containing the element iron.
Fine-grained	A textural term for crystalline rock with crystals <1mm in
	diameter and sedimentary rock consisting of fine grains and clasts
	<1/16mm in diameter.
Floodplain	The surface or strip of relatively smooth land adjacent to a river
	channel.

Continental Resource Management Pty Ltd; Rpt WA13/06

Floodplain gravels	Gravel-sized sediment deposited by river water that has spread out
	over a flood plain.
Flotation	A metallurgical technique for the separation of (especially)
	sulphide minerals from finely ground rock.
Fluvial	Descriptive of a sediment deposited within or by a river or stream.
Fluviatile	Produced by the action of a river.
Fold	A bend in strata or any planar structure.
Fold axis	A geometric feature of particular types of folds but is generally a
	line of fixed orientation parallel to every orientation of the folded
	surface.
Formation	A rock unit; often sedimentary; may be given a formal name;
	capable of its distribution being mapped either at or below the
	surface of the Earth.
Fossil dune	A dune formed in the past.
g/cc	Grams per cubic centimetre.
g/t	Grams per tonne.
Garnet	An alumino-silicate metamorphic mineral.
Geochemistry	The study of the abundance of elements in rocks and soil by
	chemical methods.
Geophysics	The study and measurement of the physical properties of rocks and
	geological formations.
Geostatistical	Refers to the estimation of a mineral resource by means of
	statistical analysis of the distribution of analytical values within
	the mineralised body using a software package.

Continental Resource Management Pty Ltd; Rpt WA13/06

Geotechnical	Refers to the science that includes the physical properties and
	responses of rocks and rock formations to strains and stresses,
	especially in mine situations.
Gibbsite	A white or tinted Aluminium mineral formed by weathering of Al-
	rich igneous rocks.
Gneiss	High-grade metamorphic rock composed of alternating bands
	respectively rich in light- and dark-coloured minerals.
Goethite	A yellow-orange or light brown, hydrated iron oxide.
Gossanous	A descriptive term for rocks with similar characteristics to a
	gossan (a rock formed from the weathering of a sulphide-bearing
	rock; characterised by hydrated iron oxides).
Grab sample	A single sample collected at a particular time and place that is
	representative of the composition of the rock at this location and
	time.
Graben	An elongate relatively depressed block of rocks that is bounded by
	faults on its long sides.
Grade	Expression of relative quality (e.g. High grade) or of numerical
	quality (e.g. 3.0g/t Au).
Grade (of deposit)	Expression of relative quality of mineralisation (e.g. High-grade)
	or of numerical quality (e.g. 1.2% nickel).
Grade (of	Degree of change from the original rock; high-grade metamorphic
metamorphism)	rocks have been subjected to greater temperatures and/or pressures
	than have low-grade metamorphic rocks.
Granite	Light coloured, coarse-grained, intrusive igneous rock; formed at
	depth; comprises large sections of the Earth’s continental crust.
Granitic	Descriptive term used for igneous rocks with a Holocrystalline
	texture and anhedral constituents of a similar grainsize.
Granitoid	A field term for a coarse grained felsic rock resembling granite.

Continental Resource Management Pty Ltd; Rpt WA13/06

Graticular block	An area 1 minute of latitude north-south and 1 minute of longitude
	east-west.
Gradiometer	An instrument used to measure the gradient of a physical quantity.
	I.e. Gravity.
Gravity survey	A geophysical exploration method based on the detection of
	buried rock bodies of different density to those surrounding them.
Ground magnetic survey	A magnetic geophysical exploration survey carried out on the
	ground.
Ground magnetics	A geophysical exploration method based on the detection of
	buried rock bodies of different magnetic properties to those
	surrounding them.
Group	A major rock stratigraphic unit comprised of two or more
	associated formations.
ha	Hectare.
Haematite	An oxide of iron; red in colour.
Heavy mineral (HM)	A mineral with a high specific gravity; often valuable.
Hematite	An oxide of iron; red in colour.
Hematitic	Descriptive term for rocks or sediments containing hematite.
HM/s	Heavy mineral/s.
Hydrology	The science of ground-water.
Igneous	Refers to rocks formed by solidification from the molten state.
Ilmenite	A titanium-iron oxide mineral (FeTiO3).
Indicated resource	That part of a mineral resource for which tonnage, densities,
	shape, physical characteristics, grade, and mineralogy can be
	estimated with a reasonable level of confidence.

Continental Resource Management Pty Ltd; Rpt WA13/06

Indicator minerals	Minerals usually associated with a particular mineral deposit that
	suggest the presence of economic mineralisation.
Induration	The process whereby an unconsolidated sediment or soil becomes
	hardened to form a rock.
Inferred resource	That part of a mineral resource for which tonnage, grade, and
	mineralogy can be estimated with a low level of confidence.
Infill drilling	Drilling between existing holes to better understand the local
	geology and mineralisation.
In-situ	Located at the origin or in its original position.
In-situ mineralisation	Mineralisation located at its source and origin of its formation.
Intrusion	A body of igneous rock that invades older rocks.
Intrusive	See intrusion.
Inverted topography	Formed by the erosion of soft rock surrounding harder rock, such
	as a duricrust within a valley or channel, creating a topographic
	high; remnant of the previous topography of the channel or valley
	at the time the duricrust was formed.
Iron ore	Iron-rich rock containing chemical compounds from which
	metallic iron can be economically extracted.
Iron oxide	A complex formed by the oxidation of iron minerals.
Jarosite	A hydrous iron sulphate mineral.
Joint	A surface of actual or potential fracture or parting in a rock.
JORC code	Joint Ore Reserves Committee; A compliance standard for
	professional reporting of ore reserves and resources; The
	Australasian Code for reporting of Exploration Results, Mineral
	resources, and Ore Reserves.
Jurassic	The middle period of the Mesozoic Era, between about 140 and
	205 million years ago.

Continental Resource Management Pty Ltd; Rpt WA13/06

JV	Joint venture.
Kaolin	White clay mineral.
Kimberlite	A dark igneous rock containing abundant phenocrysts of olivine;
	the magma formed in the Earth’s upper mantle; the rock may
	contain diamonds; commonly occurs as intrusive pipelike bodies.
Kimberlitic source	Sourced from kimberlite rocks (see kimberlite).
Lamproite	A group of dark-coloured, potassium-rich rocks sourced from the
	earth’s upper mantle. Common host rock for diamonds.
Landsat	A unmanned satellite designed to provide multi-spectral imagery
	of the earth’s surface.
Laterite	A strongly leached metal-oxide rich crust formed at the surface
	after significant weathering.
Lateritised	A rock that has been subjected to alteration such that it has
	become laterite
Leucoxene	A titanium oxide-rich heavy mineral formed by the alteration of
	ilmenite.
Lignitic	Containing lignite (which is a brown-black low-grade coal).
Limestone	A sedimentary rock composed chiefly of the mineral calcium
	carbonate.
Lithification	The process by which unconsolidated sediment is converted to a
	coherent solid rock.
Lithology	The characteristics of a rock; especially mineral content, structure,
	grainsize, and classification.
Loam	Soil containing sand, silt and clay in roughly equal parts.
Loaming	A method of geochemical prospecting in which samples of
	surficial material are tested for traces of economic minerals.

Continental Resource Management Pty Ltd; Rpt WA13/06

Lower block-cut	The grade below which ore blocks are not included in a resource.
Lower-cut	The grade below which mineralised material is not included in a
	resource estimation.
m	Metre.
Ma	Million years ago.
Mafic	Descriptive of rocks composed dominantly of magnesium and iron
	forming silicates.
Mafics	Generally dark coloured, iron and magnesium rock forming
	minerals.
Maghemite	A magnetic iron oxide mineral.
Magnetics	Referring to a magnetic geophysical exploration survey, or to the
	magnetic properties of the rock units so surveyed.
Magnetite	A magnetic iron oxide mineral; Fe3O4.
Mature sediment	Sediment that is well-sorted and composed of stable minerals.
Measured resource	The part of a resource for which tonnage, densities, shape,
	physical characteristics, grade, and mineralogy can be estimated
	with a high level of confidence.
Mesoproterozoic	The middle of the three Proterozoic eras; between about 1,600 and
	1,000 million years ago.
Mesozoic	The era of geological time between about 65 and 250 million years
	ago.
Meta-autunite	A metamorphosed autunite (see autunite).
Metallogenic map	A map showing the distribution of particular assemblages or
	provinces of mineral deposits and their relationship to geological
	features.

Continental Resource Management Pty Ltd; Rpt WA13/06

Metallurgy	The science of the extraction or processing of metals.
Metamorphic	Descriptive of rock that has been altered by physical and chemical
	processes involving heat, pressure and/or fluids.
Metamorphism	The mineralogical, structural and chemical changes induced within
	solid rocks through the actions of heat or pressure, or the
	introduction of new chemicals.
Metasediment	A metamorphosed sediment.
Mica	A platy mineral.
Micaceous	Descriptive term for a rock containing mica.
Mineral reserves	That portion of a mineral resource which can be mined and
	processed at a profit. The economically mineable part of a
	Measured or Indicated Mineral Resource demonstrated by at least
	a Preliminary Feasibility Study.
Mineral resource	A concentration or occurrence of material of intrinsic economic
	interest in the earth’s crust in such a form, quality and quantity
	that there are reasonable prospects for eventual economic
	extraction (JORC code 2004).
Mineralisation	The concentration of metals and their minerals within a body of
	rock.
Mineralogy	The science of the study of minerals.
ML	Mining lease.
Modal analysis	Analysis of the mineral composition of a sample.
Molybdenite	The sulphide mineral of molybdenum (mos2).
Mt	Million tonnes.
Mt	Million tonnes.
Mt/a	Million tonnes per annum.

Continental Resource Management Pty Ltd; Rpt WA13/06

Native title claim An agreement involving Indigenous land access made under the Native Title Act 1993 (NTA). Neoproterozoic The youngest of the three Proterozoic eras; between about 580 and 1,000 million years ago. O The chemical symbol for oxygen (non metal). Olivine An olive coloured magnesium-iron silicate mineral; formed in ultrabasic igneous rocks. Ordovician The period of geological time between about 435 and 490 million years ago. Orogen A region subjected to deformation and uplift to form areas of high elevation (i.e. Mountain ranges). Orogenic Relating to a regional scale earth deforming and metamorphosing event. Outcrop An exposure of bedrock at the surface. Outwash sediments Sediments formed from soil material washed down a hill-side by rain water. Overburden Waste material above mineralisation. Oversize Descriptive of material coarser than sand that is removed from the sand prior to the separation of the heavy minerals in the plant. Palaeo A prefix common in geological terminology, meaning ancient, of past times, and sometimes suggesting an early or primitive nature. Palaeo-channel A buried stream channel containing stream sediments. Paleoproterozoic The oldest of the three Proterozoic eras; between about 2,500 and 1,600 million years ago. Paleo-shoreline An ancient shoreline.

Continental Resource Management Pty Ltd; Rpt WA13/06

Petrography	The systematic description of rocks using the naked eye or a
	microscope, hence petrographic work.
Petrographic analysis	An analysis of the properties of a rock such as structure,
	composition and origin.
Phosphuranylite	A golden yellow secondary mineral that exhibits phosphorescence
	(a type of light emission) upon exposure to radium.
Pipe	A roughly cylindrical-shaped body of rock; normally steeply
	plunging; often originally a volcanic conduit for magma or fluidss
Pitting	The action of excavating a area to create a localised depression in
	the landscape.
Placer mining	The mining of heavy metals or minerals that have been deposited
	within unconsolidated sediments.
Pleistocene	That portion of geological time between about 10,000 and 1.8
	million years ago.
Porphyry	Igneous rock containing conspicuous phenocrysts (large crystals)
	in a fine-grained groundmass; usually intrusive.
Precambrian	That portion of geological time older than about 545 million years
	ago.
Prefeasibility study	A prefeasibility study of a project is a precursor to a feasibility
	study. Its purpose is to examine the size, cost and value of the
	main components of the project in sufficient detail to ensure there
	is a solid basis for proceeding to the more costly and rigorous
	feasibility study.
Project	An area including a group of tenements that constitute a logical
	working unit.
Prospect	Any mine workings not yet valued; and area to be examined
	geophysically for minerals, and an area confirmed by geophysical
	and geological studies to the degree that it can now be tested.
Proterozoic	The eon of geological time between about 545 and 2,500 millions
	years ago.

Continental Resource Management Pty Ltd; Rpt WA13/06

Pyrite	A mineral composed of iron sulphide (fes2); ‘fools’ gold’.
Quartz	A mineral composed of silicon and oxygen; forms as hard,
	colourless crystals; a common component of sand.
Quartzite	A granular metamorphic rock composed predominantly of quartz.
Quaternary	The period of geological time from about 2 million years ago to
	the present.
Radiometric	A geophysical exploration method based on the detection of rock
	bodies of different radioactive properties to those surrounding
	them.
Reconnaissance	A general examination or survey of a region with reference to its
	main features, usually as a preliminary to a more detailed survey.
Reserve	An ‘Ore Reserve’ is the economically mineable part of a Measured
	and/or Indicated Resource. It includes diluting materials and
	allowances for losses, which may occur when the material is
	mined. Appropriate assessments and studies have been carried out.
Reserves	Proven: measured mineral resources, where technical economic
	studies show that extraction is justifiable at the time of the
	determination and under specific economic conditions. Probable:
	measured and / or indicated mineral resources which are not yet
	proven, but where technical economic studies show that extraction
	is justifiable at the time of the determination and under specific
	economic conditions.
Resource	In-situ mineral occurrence for which there are reasonable
	prospects for eventual economic extraction. The location, quality,
	quantity, grade, geological characteristics, and continuity are
	known, estimated, or interpreted from specific geological evidence
	and knowledge. A ‘Mineral Resource’ is a concentration or
	occurrence of material of intrinsic economic interest in or on the
	Earth's crust in such form, quality and quantity that there are
	reasonable prospects for eventual economic extraction.
River terrace	A level surface flanking a river within a valley. Usually a remnant
	of an old flood plain.

Continental Resource Management Pty Ltd; Rpt WA13/06

Rock chip sampling	The collection of rock chips from drilling for analysis.
Rutile	A mineral containing titanium dioxide (TiO2).
Sandstone	A sedimentary rock composed primarily of sand-sized grains.
Scarp	An escarpment, cliff or steep slope along the margin of a plateau.
Scheelite	The principal ore mineral of tungsten (CaWO3).
Scoping study	A preliminary study of a project that outlines the approximate size,
	cost and value of the main components of the project.
Sediment	Rocks formed by the deposition of solids from water.
Sedimentary sequence	A series of genetically related sedimentary units.
Shear/sheared	A set of fractures in rock that both distort (shear out) the rock and
	displace the rocks on its sides, as would a fault.
Silica	The compound SiO2. The component of the mineral quartz.
Silicified	Pertaining to the introduction of or replacement by silica.
Silt	Very fine detrital particles having a diameter in the range of 4-62
	microns with an upper size limit only just distinguishable by the
	human eye.
Siltstone	A fine-grained sedimentary rock formed by the lithification of
	layers of silt.
SiO2	The chemical compound silicon dioxide, which comprises the
	mineral quartz.
Skarn	A metamorphic rock formed by the addition of elements to a
	carbonate rock by contact metamorphism from an igneous
	intrusion.
Slimes	The clay fraction of a sediment.

Continental Resource Management Pty Ltd; Rpt WA13/06

Soil sampling	Systematic collection of soil samples at a series of different
	locations in order to study the distribution of soil geochemical
	values.
Stratigraphy	The branch of geology to do with the formation, composition,
	sequence and correlation of stratified rocks.
Stream sampling	The collection and analysis of the unconsolidated sediment at the
	base of a dry or flowing watercourse.
Stringers	Mineral veinlet or filament, usually one of a number, occurring in
	a discontinuous sub parallel pattern in host rock
Stringer dyke	A dyke which has a shattered appearance.
Structural analysis	The analysis of geological structure; including folds, faults, shears,
	cleavage, and joints. Structures range from regional scale to
	microscopic.
Structural corridor	An area defined by a zone of structural deformation.
Structure	The general disposition, orientation, arrangement or relative
	positions of rock masses. Common structures include Folds, faults,
	or shears that result from phases of deformation.
Suite	A group of minerals or rocks that are present in the one location
	and were collected or formed at about the same time.
Sulphate	A mineral compound characterised by the radical SO4.
Sulphate pigment process	Uses sulphuric acid to extract titanium from ilmenite, rutile and
	titanium slag.
Sulphide	A mineral compound characterised by the linkage with a metal.
t	Tonne.
Tensional en-echelon	En echelon (see en echelon) style fractures formed perpendicular
fractures	to the direction of the greatest tension.

Continental Resource Management Pty Ltd; Rpt WA13/06

Tertiary	The period of geological time between about 2 and 65 million
	years ago.
TiO2	Titanium dioxide.
Tonnage	Tonnes of ore calculated by breaking down the resource into
	smaller blocks. Based on area, thickness of ore, and bulk density.
Topography	The physical features of a region.
Torbernite	Aradioactive, hydrated green copper uranyl phosphate mineral.
Transgression	Gradual spread of a sea resulting from the lowering of the land or
	a rise in sea level.
Trenching	The action of excavating an elongate pit used to explore for near
	surface mineralisation.
Triassic	The initial period of the Mesozoic Era, between about 205 and 252
	million years ago.
U	Chemical symbol for Uranium; a radioactive element.
Ultramafic	Descriptive of igneous rock containing virtually no quartz or
	feldspar and composed essentially of ferromagnesian silicates,
	mainly olivine and pyroxene.
Unconformity	A time break between two sets of sedimentary rocks.
Upper block-cut	The grade above which ore blocks are not included in a resource.
Upper-cut	The grade of assays to which higher values are reduced, in order
	that a few high-grade samples do not over influence the estimated
	grade of the deposit.
Vein	A thin sheet-like intrusion into a fissure or crack, commonly
	bearing quartz.
Volcanic	Descriptive of rocks originating from volcanic activity.

Continental Resource Management Pty Ltd; Rpt WA13/06

Wireframe	A three-dimensional model of a geological unit or body of
	mineralisation.
Workings	Minor scrapings, pits, or shafts dug by prospectors or small scale
	miners; mostly historical.
Zircon	The chief ore mineral of zirconium; zirconium silicate; a heavy
	mineral.

Continental Resource Management Pty Ltd; Rpt WA13/06

Annexure

ANNEXURE “B” Summary of the Convertible Note Terms

Face Value of the relevant note	RNRF Convertible Note:$250,000. MIL Convertible Note A:$500,000. MIL Convertible Note B:$250,000. PSL Convertible Note: $250,000. P&E Convertible Note: $150,000.
Issue Price	The lower of: (a) $0.001; and (b) A price equal to 80% of the 30 Trading Day VWAP of the Shares prior to the Conversion Notice.
Maturity Date or Term	RNRF Convertible Note and MIL Convertible Note A: 14 months from completion of the share sale transaction, subject to the Rollover Extension MIL Convertible Note B and PSL Convertible Note:If shareholder approval is obtained - 14 months from entry into the deed, subject to Rollover Extension; If shareholder approval is not obtained – 26 months from entry into the deed. P&E Convertible Note:14 months from completion of the P&E Purchase Agreement, subject to the Rollover Extension.
Conversion Formula	N = CA/IP Where: N = the number of Conversion Shares to be issued; CA = the Conversion Amount; and IP = the Issue Price
Interest Rate	P&E Convertible Note: 12% per annum RNRF Convertible Note and MIL Convertible Note A:12% per annum increasing to 17% per annum during the Rollover Extension. MIL Convertible Note B and PSL Convertible Note:12% per annum increasing to 17% per annum during the Rollover Extension or if shareholder approval is not obtained.
Facility Establishment Fee	MIL Convertible Note B: 1.0% of Face Value ($5000) RNRF Convertible Note, MIL Convertible Note A, PSL Convertible Note and P&E Convertible Note:Nil
Incentive fee	RNRF Convertible Note, MIL Convertible Note A, MIL Convertible Note B and PSL Convertible Note:when a conversion notice is issued, the Company is require to pay the note holder an incentive fee equal to 5% of the conversion amount in immediately available funds. P&E Convertible Note:Nil
Other Fees	RNRF Convertible Note:A Rollover Consideration of $8,500 is payable if the Rollover Extension is exercised by the Company. MIL Convertible Note A:A Rollover Consideration of $16,500 is payable if the Rollover Extension is exercised by the Company. MIL Convertible Note B:A $12,500 Unsecured Debt Fee is payable if shareholder approval is not obtained. A Rollover Consideration of $12,500 is payable if shareholder approval is obtained and the Rollover Extension is exercised by the Company. PSL Convertible Note:A $12,500 Unsecured Debt Fee is payable if shareholder approval is not obtained. A Rollover Consideration of$12,500

Page 37

Annexure

	is payable if shareholder approval is obtained and the Rollover Extension is exercised by the Company. P&E Convertible Note:A Rollover Consideration of $5,000 is payable if shareholder approval is obtained and the Rollover Extension is exercised by the Company.
Repayment Election	On the Maturity Date the holder can elect that any monies owing shall be repaid by the Company: (a) issuing Shares at the Conversion Price to the value of the monies owing; or (b) repay the outstanding amount in cash; or (c) a combination of the above.
Rollover Extension	If the holder elects for any money owing on the Maturity Date to be repaid in cash, the Company can elect to extend this repayment for a further 12 months, during which period all rights available under the note will remain available to the holder. Additional fees will be payable and the interest rate may increase for the extended period as described in this summary.
Prepayment Option	The Company is entitled to repay the monies owing early at any time during the term.
Interest payment	Interest will accrue daily at the Interest Rate and will be payable quarterly. The Company can elect that any interest (or a portion thereof) due and payable be satisfied adding it to the Moneys Owing, which may be converted into Shares during the Term.
Financial covenants	The Company must observe standard covenants for a facility of this nature.
Security	Nil
Conditions Precedent	RNRF Convertible Note, MIL Convertible Note A, MIL Convertible Note B, PSL Convertible Note and P&E Convertible Note:Issue of the notes is subject to shareholder approval. [NOTE:With theMIL Convertible Note B and PSL Convertible Note, the cash advance is made prior to shareholder approval being obtained but will remain an unsecured loan pending shareholder approval being obtained and the note being issued. If shareholder approval is not obtained, this advance will remain an unsecured loan to the Company.] In addition, theRNRF Convertible Note and MIL Convertible Note Aare subject to completion of the Share Sale Agreement, and the P&E Convertible Note is subject to completion of the P&E Purchase Agreement.

Page 38

LODGE YOUR VOTE

ABN 96 007 090 904

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
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www.linkmarketservices.com.au

ONLINE

By mail:  Astro Resources NL C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia

 [By fax:][ +61 2 9287 0309]



All enquiries to: Telephone: +61 1300 554 454

SECURITYHOLDER PROXY FORM APPOINT A PROXY if you are NOT appointing the Chairman of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered securityholder) you are appointing as your proxy and at any adjournment or postponement of the meeting. X VOTING DIRECTIONS For Against Abstain * For Resolution 4 Issue of convertible note to Pure Steel Limited Resolution 5 Issue of a convertible note to David Alexander Gibbs

I/We being a member(s) of Astro Resources NL and entitled to attend and vote hereby appoint:

STEP 1

the Chairman OR if you are NOT appointing the Chairman of the Meeting as your of the Meeting proxy, please write the name of the person or body corporate (excluding (mark box) the registered securityholder) you are appointing as your proxy or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and to vote for me/us on my/our behalf at the Extraordinary General Meeting of the Company to be held at 11:00am (Sydney time) on Wednesday, 20 November 2013, at Level 9, No.1 O’Connell Street, Sydney, NSW and at any adjournment or postponement of the meeting. The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. Please read the voting instructions overleaf before marking any boxes with an X

STEP 2 VOTING DIRECTIONS For Against Abstain *

For Against Abstain * Resolution 4 Issue of convertible note to Pure Steel Limited

Resolution 1 Issue of convertible note to Reliance Natural Resource Fund Pty Ltd

Resolution 2 Issue of convertible note to Mining Investments Limited under a share sale agreement

Resolution 3 Issue of convertible note to Mining Investments Limited

 * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3 SIGNATURE OF SECURITYHOLDERS – THIS MUST BE COMPLETED

Securityholder 1 (Individual)

Joint Securityholder 2 (Individual)

Joint Securityholder 3 (Individual) Director

Sole Director and Sole Company Secretary Director/Company Secretary (Delete one) Director This form should be signed by the securityholder. If a joint holding, either securityholder may sign. If signed by the securityholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

ARO PRX301

HOW TO COMPLETE THIS PROXY FORM

Your Name and Address

To appoint a second proxy you must:

(a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded; and

This is your name and address as it appears on the Company’s security register. If this information is incorrect, please make the correction on the form. Securityholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your securities using this form.

(b) return both forms together.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in Step 1. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a securityholder of the Company. A proxy may be an individual or a body corporate.

Signing Instructions

You must sign this form as follows in the spaces provided:

Individual: where the holding is in one name, the holder must sign.

Joint Holding: where the holding is in more than one name, either securityholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Votes on Items of Business – Proxy Appointment

you return it. Companies: Corporations Act 2001 in the appropriate place. Corporate Representatives security registry.

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001 ) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the Company’s security registry or you may copy this form and return them both together.

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the Company’s security registry.

Lodgement of a Proxy Form

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 11:00am (Sydney time) on Monday, 18 November 2013, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy Forms may be lodged using the reply paid envelope or:

www.linkmarketservices.com.au

 ONLINE

Login to the Link website using the holding details as shown on the proxy form. Select ‘Voting’ and follow the prompts to lodge your vote. To use the online lodgement facility, securityholders will need their “Holder Identifier” (Securityholder Reference Number (SRN) or Holder Identification Number (HIN) as shown on the front of the proxy form).

 by mail:

Astro Resources NL C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



by fax:

+61 2 9287 0309



by hand:

delivering it to Link Market Services Limited, 1A Homebush Bay Drive, Rhodes NSW 2138.

If you would like to attend and vote at the Extraordinary General Meeting, please bring this form with you. This will assist in registering your attendance.

AI assistant

VENARI MINERALS NL — Proxy Solicitation & Information Statement 2013

66012_rns_2013-10-17_6d55ed5e-ab84-4e22-b410-380a995128d3.pdf

18 October 2013

Notice of Extraordinary General Meeting and Explanatory Memorandum

Dear Shareholder

Notice of Extraordinary General Meeting

Notice of Extraordinary General Meeting

Agenda

Ordinary business

Resolution 1: Issue of a convertible note and conversion shares to Reliance Natural Resource Fund Pty Ltd under the Share Sale Agreement

Voting Exclusion Statement

Resolution 2: Issue of a convertible note and conversion shares to Mining Investments Limited under the Share Sale Agreement

Notes

Voting Exclusion Statement

Resolution 3: Issue of a convertible note and conversion shares to Mining Investments Limited

Notes

Voting Exclusion Statement

Resolution 4: Issue of a convertible note and conversion shares to Pure Steel Pty Ltd

Voting Exclusion Statement

Resolution 5: Issue of a convertible note and conversion shares to David Alexander Gibbs

Voting Exclusion Statement

Special business

General business

1. Introduction

ORDINARY BUSINESS

1.1 Introduction: Share Sale Agreement Convertible Notes

( Share Sale Convertible Notes ).

1.2 Convertible Note Terms

1.3 Arrangement between RNRF and MIL

Explanatory Memorandum

2. Resolution 1: Issue of a convertible note (and conversion shares) to Reliance Natural Resource Fund Pty Ltd under the Share Sale Agreement

2.1 ASX Listing Rule 7.1 - Issues exceeding 15% of capital

(a) 7.3.1: Maximum number of Securities to be issued

(b)

7.3.2: Date by which the Company will issue the Securities

(c)

7.3.3: Issue price of Equity Securities

(d)

7.3.4: Allottees of Equity Securities

(e)

7.3.5: Terms of the Equity Securities

(f) 7.3.6: Use of funds raised

2.2 Director Recommendation - Resolution 1

3. Resolution 2: Issue of a convertible note and conversion shares to Mining Investments Limited under the Share Sale Agreement

3.1 Shareholder Approval

3.2 Relevant Legislation

ASX Listing Rule 7.1 - Issues exceeding 15% of capital

(a) 7.3.1: Maximum number of Securities to be issued

Explanatory Memorandum

(b) 7.3.2: Date by which the Company will issue the Securities

(d) 7.3.4: Allottees of Equity Securities

(e) 7.3.5: Terms of the Equity Securities

(f) 7.3.6: Use of funds raised

(g) 7.6.7: Dates of allotment

Chapter 6, section 611 (Item 7) of the Corporations Act

( Takeover Prohibition ).

Explanatory Memorandum

( Takeover Exception ).

(a) Section 611 (Item 7(b)(i)): The identity of the person proposing to make the acquisition and their associates

(a) Reasons for the proposed acquisition

(b) When the proposed acquisition is to occur

(c) Material terms of the proposed acquisition:

(e) Acquirer’s intentions regarding the future of the target entity if members approve the acquisition.

(f) Intention of the acquirer to significantly change the financial or dividend distribution policies of the entity:

(g) The interests that any director has in the acquisition or any relevant agreement disclosed above

(h) Intended directors if members approve the acquisition:

3.3 Independent Expert’s Report

Fairness

Reasonableness

Advantages

Disadvantages

3.4 Directors’ Recommendation – Resolution 2

4. Resolution 3: Issue of a convertible note and conversion shares to Mining Investments Limited

4.1 Introduction: MIL Convertible Note

Explanatory Memorandum

4.2 Shareholder Approval

4.3 Convertible Note Terms

4.4 Relevant Legislation

ASX Listing Rule 7.1 - Issues exceeding 15% of capital

VENARI MINERALS NL Proxy Solicitation & Information Statement 2013