VERITY RESOURCES LIMITED — Proxy Solicitation & Information Statement 2008

May 29, 2008

ACN 122 995 073

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TO: COMPANY ANNOUNCEMENTS OFFICE AUSTRALIAN SECURITIES EXCHANGE

DATE:

30[th] May 2008

NOTICE OF GENERAL MEETING

Notice is given that General Meeting of the Company will be held at Suite 5.09, Level 5, Pacific Tower, 737 Burwood Road, Hawthorn Victoria 3122 on Wednesday 2[nd] July 2008 at 10.00 am.

A copy of the Notice being distributed to shareholders is attached.

Richard Baker Company Secretary

Botswana Metals Limited

REGISTERED OFFICE Suite 5.10, 737 Burwood Rd, Hawthorn, Australia Telephone +61 3 9813 5888 Facsimile +61 3 9813 2668

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ACN 122 995 073

NOTICE OF GENERAL MEETING

PROXY FORM

AND

EXPLANATORY MEMORANDUM

Date of Meeting

2 July 2008

Time of Meeting 10am AEST

Place of Meeting

Suite 5.09, Level 5 Pacific Tower 737 Burwood Road Hawthorn Victoria 3122

BOTSWANA METALS LIMITED

(ACN 122 995 073)

NOTICE IS HEREBY GIVEN THAT A GENERAL MEETING OF SHAREHOLDERS OF BOTSWANA METALS LIMITED (ACN 122 995 073) (“COMPANY”) WILL BE HELD AT SUITE 5.09, LEVEL 5, PACIFIC TOWER, 737 BURWOOD ROAD, HAWTHORN, MELBOURNE 3122 IN THE STATE OF VICTORIA ON WEDNESDAY 2 JULY 2008 AT 10AM (AEST).

An Explanatory Memorandum containing information in relation to the business to be transacted at the meeting accompanies this Notice of General Meeting.

AGENDA

Resolution 1:Grant of Options to Directors

To consider, and if thought fit, to pass the following special resolution:

That approval is given to grant :

• (a) Mr Patrick John Volpe (or his nominee)

• (i) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 10 cents per option expiring 30 June 2011;

• (ii) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 15 cents per option expiring 30 June 2011; and

• (iii) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 20 cents per option expiring 30 June 2011;

• (b) Dr Andrew James Tunks (or his nominee)

• (i) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 10 cents per option expiring 30 June 2011;

• (ii) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 15 cents per option expiring 30 June 2011; and

• (iii) 1,000,000 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 20 cents per option expiring 30 June 2011;

• (c) Mr Henry James Stacpoole (or his nominee) (i) 333,334 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 10 cents per option expiring 30 June 2011;

• (ii) 333,333 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 15 cents per option expiring 30 June 2011; and

• (iii) 333,333 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 20 cents per option expiring 30 June 2011;

• (d) Dr Paul Woolrich (or his nominee)

• (i) 333,334 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 10 cents per option expiring 30 June 2011;

• (ii) 333,333 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 15 cents per option expiring 30 June 2011; and

• (iii) 333,333 options to acquire ordinary fully paid shares in the capital of the Company at an exercise price of 20 cents per option expiring 30 June 2011;

on the basis that the terms and conditions of the Options shall be as set out in note 11 to this Notice of Meeting which terms and conditions are hereby incorporated in and form part of this resolution

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Resolution 2: Adoption of Employee Share Option Plan

To consider and if thought fit, to pass the following resolution as an ordinary resolution:

That the Company adopt an Employee Share Option Plan in the form tabled at the meeting and marked with the letter “A” and signed by the Chairman for the purposes of identification and that the directors of the Company be authorised to issue and allot securities pursuant to the terms of the said plan in accordance with the provisions of Exception 9 in Listing Rule 7.2 of the Listing Rules of ASX Limited.

Resolution 3: To fix Directors remuneration

To consider and if thought fit, to pass the following ordinary resolution:

That until and unless otherwise resolved by the Company in General Meeting the maximum level of Directors fees (disregarding salary and other benefits payable to executive directors by the terms of their engagement) be fixed at $200,000 (inclusive of superannuation and other entitlements) for the year ending 30 June 2008 and each subsequent year with such fees to be divided amongst them as determined by the directors and agreed between them, or in default of agreement, equally.

Members should read the attached Explanatory Memorandum carefully before deciding how to vote on each of the resolutions set out above. Without limiting the generality of the foregoing, full details of the related party benefits are set out in the accompanying Explanatory Memorandum.

By Order of the Board of BOTSWANA METALS LIMITED

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Richard Baker Company Secretary Dated: 27 May 2008

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NOTES

Voting and Instructions for Appointment of Proxy:

1. The Directors have determined that in accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cwth), the shares of Botswana Metals Limited that are quoted on the Australian Securities Exchange as at 10.00 pm on 27 June 2008, will be taken, for the purposes of the General Meeting, to be held by the persons who held them at that time. Accordingly, those persons so registered as the holders of shares at that time will be entitled to attend and, and those persons who are not disqualified from voting as required in accordance with Note 12 below, will be entitled to vote at the meeting.

2. A Member entitled to attend and vote at a Meeting is entitled to appoint not more than two proxies to attend and vote on his behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the Member’s voting rights.

3. If the Member does not specify the proportion of votes the proxy may exercise, then each proxy will be taken to exercise one half of the votes held and subject to the proxy with fractional entitlements to votes being disregarded.

4. A proxy duly appointed need not be a Member. In the case of joint holders all must sign.

5. A form of proxy accompanies this Notice and, to be effective, the form and any document necessary to show the validity of the form of proxy must be lodged at the registered office of the Company not less than 48 hours before the time appointed for the Meeting. Any proxy lodged after that time will be treated as invalid.

6. Directors and Officers of all Corporate Members should note that unless the Corporate Member either:

7. (a) completes and lodges with the Company a valid appointment of proxy in accordance with the instructions in these notes; or

8. (b) completes and either lodges with the Company prior to the meeting a form of appointment of or certificate of appointment of a personal representative in accordance with the provisions of Section 250D of the Corporations Law or causes such personal representative to attend the meeting with such form of appointment or certificate; or

9. (c) has appointed an attorney.

and such proxy, personal representative or attorney attends the relevant meeting, then such corporate member will be unable to exercise any votes at the relevant meeting.

1. Proxies and corporate appointment of representative forms may be returned to the Company in either of the following ways:

2. (a) in person or by post to Computershare Investor Services Pty Limited GPO Box 242

   • Melbourne Victoria 3001

3. (b) or by facsimile to 07 3237 2152.

4. Corporate Members should comply with the execution requirements set out in these notes or otherwise comply with the provisions of Section 127 of the Act. Section 127 of the Act provides that a company may execute a document without using its common seal if the document is signed by:

5. 2 directors of the company; or

6. a director and a company secretary of the company; or

7. for a proprietary company that has a sole director who is also the sole company secretary – that director.

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

Where a person signs the proxy and does not specify that the person signing is signing as a sole director and sole company secretary then the person signing the proxy will be deemed to have warranted to the Company that the Corporate Member is a company that has dispensed with the requirement to appointed a secretary as permitted by section 204A of the Act.

1. Completion of a proxy form will not prevent individual Members from attending the meetings in person if they wish. Where a Member completes and lodges a valid proxy form and attends the meeting in person then the proxy’s authority to speak and vote for that Member is suspended while the Member is present at the meeting.

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1. Where a proxy form or form of appointment of or certificate of appointment of a personal representative is lodged and is executed under power of attorney the power of attorney must be lodged in like manner as a proxy.

2. The terms and conditions of the Options as referred to in Resolution 1 are as follows:

3. (a) Each option entitles the holder to subscribe for 1 ordinary share in Botswana Metals Limited (ACN 122 995 073) (“the Company”). upon the payment of

   • (i) $0.10 (10 cents) for those options proposed to be granted with an exercise price of 10 cents;

   • (ii) $0.15 (15 cents) for those options proposed to be granted with an exercise price of 15 cents; and

4. (iii) $0.20 (20 cents) for those options proposed to be granted with an exercise price of 20 cents.

5. (b) The options will lapse at 5.00pm (AEST) on 30 June 2011 (“Expiry Date”).

6. (c) The optionholder must be in the employ of the Company or a subsidiary of the Company at the time of exercise thereof unless his services have been terminated following any takeover of the Company.

7. (d) The options are not transferable.

8. (e) There are no participating rights or entitlements inherent in these options and holders of the options will not be entitled to participate in new issues of capital that may be offered to shareholders during the currency of the option.

9. (f) In the event of any re-organisation (including reconstruction, consolidation, subdivision, reduction or return of capital) of the issued capital of the Company, the options will be re-organised as required by the Listing Rules, but in all other respects the terms of exercise will remain unchanged.

10. (g) The options shall be exercisable at any time during the period ending on or before the Expiry Date (“Exercise Period”) by the delivery to the registered office of the Company of a notice in writing (“Notice”) stating the intention of the optionholder accompanied by an Option Certificate or Holding Statement and a cheque made payable to the Company for the subscription monies for the shares to be issued on exercise of the options the subject of the Notice. The Notice and cheque must be received by the Company during the Exercise Period. An exercise of only some options shall not affect the rights of the optionholder to the balance of the options held by him.

11. (h) The Company shall allot the resultant shares and deliver a statement of shareholdings with a Holders’ Identification Number within 5 business days of exercise of the options.

12. (i) The shares allotted shall rank, from the date of allotment, equally with the existing ordinary shares of the Company in all respects.

13. In accordance with the provisions of Chapter 2E of the Corporations Act 2001 and of Listing Rule 10, the Company advises that it will disregard any votes cast on Resolution 1 on the Notice of Meeting by any of the Directors of the Company and or any of their associates within the meaning of the Corporations Act 2001. However, the Company will not disregard a vote if:

14. (a) it is cast by any such person or any of its associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

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

16. Resolution 3 proposes to fix Directors Fees at an aggregate maximum amount of $200,000 for the year ended 30 June 2008 and subsequent years (disregarding salary and other benefits payable to executive directors by the terms of their engagement). The level of Directors Fees was not previously fixed.

17. Chairman’s voting intentions:

All members appointing proxies should note that the Chairman intends to exercise proxies in his favour, and which do not direct the proxy holder how to vote, in favour of all resolutions. If you do not wish to direct your proxy how to vote please place a mark in the box.

By marking this box, you acknowledge that the Chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolutions and your votes will not be counted in calculating the required majority is a poll is called on any of the resolutions.

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ACN 122 995 073

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EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the information of shareholders of BOTSWANA METALS LIMITED (“BML” or “the Company”) in connection with the business to be transacted at the General Meeting of shareholders of BML to be held at Suite 5.09, Level 5, Pacific Tower, 737 Burwood Road, Hawthorn Victoria 3122 on 2 July 2008 at 10am AEST.

It forms part of the accompanying Notice of Meeting convening the General Meeting and contains an explanation of, and information about, the following matters to be considered at the meeting.

These matters are the grant of options to Directors on the terms set out in the Notice of Meeting and this Explanatory Memorandum, the adoption of an Employee Share Option Plan, and the setting of the maximum Directors Fees payable by the Company.

The Directors recommend shareholders read the accompanying Notice of General Meeting (“Notice”) and this Explanatory Memorandum in full before making any decision in relation to the resolutions.

RESOLUTION 1: GRANT OF OPTIONS TO DIRECTORS

Resolution 1 on the Notice of Meeting provides for the grant of options to directors. This resolution, if passed, will approve the grant to Directors of a total of 8,000,000 options to subscribe for up to 8,000,000 ordinary fully paid shares on the terms set out herein. The options proposed to be issued to directors will be free from restriction.

All options to be granted to Directors will, if approved for grant, be granted to Directors by no later than 2 August 2008, being not more than one (1) month from the date of the meeting.

The grant of options is proposed as additional remuneration to reward to the Directors for their efforts and as an incentive to the Directors to continue those efforts with the aim of significantly enhancing the future value of the Company for the overall benefit of members.

Option Valuation

A valuation of the options shows that, on a binomial model, the options have different values depending upon the exercise price and based on the following assumptions set out in the attached option valuation report by DMR Corporate Pty Ltd (“DMR”). The assumptions are:

• (a) a share price of $0.06 (6 cents);

• (b) differing exercise prices as per the table below;

• (c) the options being granted on 16 July 2008 and expiring on 30 June 2011 (1,079 days);

• (d) an interest rate of 6.22% (equal to the risk free rate of Treasury Bond yields with maturities approximating the expiry date of the options);

• (e) a volatility factor of 73% calculated by reference to a comparable group of 38 companies.

Members should understand that the price of the Shares in the Company have changed and will continue to change from the price as at the date when the Board passed the resolution to seek approval for grant of the options ($0.051 on the 14 March 2008) and that, by the time of the meeting to consider and if thought fit, approve the grant of the options, the market value of the shares and thus the value of the options (using a binomial method of valuation) will inevitably differ from that value shown here. Using the parameters and assumptions set out above, the value of the options is set out in the tables on the following page.

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Option Exercise Price (Cents)	Resultant Option Value (Cents)
10	1.51
15	1.22
20	0.99

The total value of options to be issued to directors is as follows:

Director	Options Exercisable at 10 cents $	Options Exercisable at 15 cents $	Options Exercisable at 20 cents $	Total amount of Benefit $
P. Volpe	15,086	12,156	9,926	37,168
A. Tunks	15,086	12,156	9,926	37,168
H. Stacpoole	5,029	4,052	3,309	12,390
P. Woolrich	5,029	4,052	3,309	12,390
Total	40,230	32,416	26,470	99,116

Terms of Options

The proposed terms of grant of options to Mr Patrick John Volpe, Dr Andrew James Tunks, Mr Henry James Stacpoole and Dr Paul Woolrich pursuant to Resolution 1 are set out in Note 11 to the Notice of Meeting.

Recent Share trading History

In considering the terms of Resolution 1 members should note the recent trading history of shares in the Company detailed in the report from DMR. They should also note that the latest recorded sale price for the shares, before the date of this notice was 9.5 cents and should, before voting in relation to the resolutions, have regard to the then price for shares in the capital of the Company.

Related Party Requirements of Chapter 2E of the Corporations Act 2001

While the directors consider that the benefit to each Director is reasonable as additional remuneration and falls within the exception to the related party provisions of the Corporations Act by virtue of the provisions of Section 211 of the Corporations Act such that members’ approval is not required under the provisions of Chapter 2E , the Directors nevertheless consider that to assist members to consider how to vote on each of the resolutions, that they be provided with the information under Chapter 2E which would have been required by Section 219 of the Act if the directors had not formed the view that the benefits were reasonable.

1. Each of the Directors of the Company has an interest in the outcome of the resolution proposed to be passed for the purpose of approving the grant of options to that director.

2. The nature of the financial benefits which may be obtained by the related parties are that the related parties will be granted the options which have been valued as set out in the report from DMR and which values are summarised above.

However, it is important for Members to recognise that for the value in the related party benefit constituted by the grant of the Options to be realisable by the optionholder, that the optionholder must exercise the options as the options are not transferable.

The restrictions on transfer effectively mean that the optionholder cannot merely trade the options to receive any inherent value therein. The value inherent in the options cannot be converted into money or money’s worth in the hands of the grantees of the options unless they exercise the options and to do that they must pay the Company the Exercise Price of the options exercised.

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No assurance can be given as to the future performance of the Company or as to future share prices and therefore, because of the restriction on transfer it is not possible to quantify what the ultimate benefit to the employees will be on exercise, if exercised. That amount may well exceed the theoretical value placed on the options by DMR or be less than that amount.

To the extent that the share price might decrease, rather than increase, the value inherent in the options, and which can only be realised on exercise, will also decrease. There are many instances where employee options which are granted are not exercised because of adverse changes in the share price which means it is not economic to exercise the option.

As stated, on exercise the value created in the optionholder will not necessarily equate to the DMR valuation. It will be a reflection of the difference between the share price at the date of exercise and the exercise price and, although that may be significantly greater than the DMR valuation, that value will not chrystalise to be of benefit to the optionholder until and unless the options are exercised: because they cannot be transferred as a way of enabling the optionholder to receive any value inherent therein from time to time.

Voting Restrictions

Botswana Metals Limited will disregard any votes cast on the resolution by Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or any related party of Botswana Metals Limited or any associate of Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or such related party. However, Botswana Metals Limited will not disregard a vote if:

• (a) it is cast by any such person or any of its associates as proxy for a person who is entitled to vote, in accordance with the directions on 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 a direction on the proxy form to vote as the proxy decides.

Members should be aware that the acquisition by any person of options does not change voting power. That voting power will only change in accordance with changes in the relevant interests in shareholdings of any member or of those of his associates.

Director’s recommendations

The Corporations Act requires in Section 219, inter alia, that in relation to each director of the company it must be set out herein:

• (a) if the director wanted to make a recommendation to members about the proposed resolution—the recommendation and his or her reasons for it; or

• (b) if not—why not; or

• (c) if the director was not available to consider the proposed resolution—why not.

Accordingly the following information is provided.

Generally, in relation to the grant of options to Directors, it was set out in the Company’s Replacement Prospectus (under which it sought, and was granted, listing on the ASX) that options had been granted to the directors as follows:

• Options exercisable at 20 cents to be issued on ASX listing day, expiring 30 June 2011 and to be escrowed for 12 months;

• Options exercisable at 50 cents upon the market holding a share price of 50 cents or better for 30 days, expiring 30 June 2011 and to be escrowed for 12 months; and

• Options exercisable at $1 not before 2 years service and upon market holding a share price of $1 or better for more than 30 days and expiring 30 June 2011.

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Notwithstanding that, and following discussions with ASX at the time of application for listing, each director to whom options had been granted surrendered their options on the basis that, subsequent to listing, new proposals for the grant of options would be put to members for their approval. This is that proposal.

The proposal put to be put to the members for approval has altered with regard to the terms of the options contained in the Replacement Prospectus, which were surrendered by the Directors. The changes in the terms of the options reflect the differing market environment than the environment that existed at the date of the Replacement Prospectus, being 26 October 2007. This is reflected in the fact that the DMR Report (attached) assumes the share price to be $0.06 when valuing the options.

Insofar as Resolution 1 relating to the issue of Options to each of the Directors is concerned, each of the directors of the Company abstains from making any recommendation because he is interested in the outcome of the resolution.

However, the directors believe that the members should consider the following matters when deciding how to vote on the resolution:

In relation to Mr Volpe and grant of Options to him:

• (a) each of the Directors apart from Mr Volpe considers that the grant of the options to Mr Volpe is fair and reasonable having regard to Mr Volpe’s the responsibilities and role in the Company. Mr Volpe has been and will continue to be primarily responsible for all financial and capital raising initiatives and it was primarily through his initiatives that the existing operations of the Company were able to be demerged from the control of A-cap with the Company being able to raise capital and separately list on the ASX.

• (b) The control and management of the company is primarily vested in Mr Volpe from a corporate and financial aspect as opposed to operational point of view: where it is under the overall management and control of Dr Tunks.

• (c) It should be that the grant of options to Mr Volpe and each other director is a “one-off” event and it should be noted that the terms of the options proposed to be granted are have exercise prices in excess of the market price of the Shares on issue and that 1/3rd thereof are exercisable at 10 cents, 1/3rd are exercisable at 15 cents and the remaining 1/3rd are exercisable at 20 cents with the result that, apart from the comparatively modest value inherent in the options (in Mr Volpe’s case an amount of approximately $37,168) the only significant benefit which Mr Volpe will receive therefrom is if the underlying value of shares in the capital of the Company increases significantly.

In relation to Dr Tunks and grant of Options to him:

• (a) Each of the directors of the Company other than Dr Tunks considers that the grant of the options to Dr Tunks is fair and reasonable having regard to Dr Tunks’ responsibilities and role in the Company. Dr Tunks has been and will continue to be primarily responsible for all day to day operations in relation to the Company’s exploration activities in Botswana and is responsible for identification of additional prospective areas and acquisition of tenements over such areas.

• (b) Again the terms of the options proposed to be granted should be noted and, likewise for Dr Tunks and all directors, apart from the comparatively modest value inherent in the options (again in Dr Tunks’ case an amount of approximately $37,168) the only significant benefit which Dr Tunks will receive therefrom is if the underlying value of shares in the capital of the Company increases significantly.

• (c) Each of the directors other than Dr Tunks recommends to members that they vote in favour of the resolution for the reasons stated above: but in like manner as in relation to Mr Volpe, say that each member must form his own opinion in relation to the resolution and vote as he or she considers appropriate having regard to the information contained in this explanatory memorandum and the level of benefits already received by Dr Tunks from the Company and its subsidiaries as disclosed herein.

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In relation to Mr Stacpoole and grant of Options to him:

• (a) each of the directors of the Company other than Mr Stacpoole, who abstains from making any recommendation because he is interested in the outcome, considers that the grant of the options to Mr Stacpoole is fair and reasonable having regard to his responsibilities and role in the Company. Mr Stacpoole is a non-executive director of the Company but brings extensive mining experience to the Board and that experience and involvement and advice is, in the opinion of the other directors, a valuable asset. That Mr Stacpoole is a non-executive director is reflected in the number of options proposed to be granted to him being a total of 1,000,000 options with a significantly lesser value as assessed by DMR. This is considered appropriate by the other directors and reflects his lesser role in the Company.

• (b) Again the terms of the options proposed to be granted should be noted and, likewise for all directors, apart from the comparatively modest value inherent in the options (in Mr Stacpoole’s case an amount of approximately $12,390) the only significant benefit which Mr Stacpoole will receive therefrom is if the underlying value of shares in the capital of the Company increases significantly.

• (c) Again, each of the directors other than Mr Stacpoole recommends to members that they vote in favour of the resolution for the reasons stated above: but likewise say that each member must form his own opinion in relation to the resolution and vote as he or she considers appropriate having regard to the information contained in this explanatory memorandum and the level of benefits already received by Mr Stacpoole from the Company and its subsidiaries as disclosed herein.

In relation to Dr Woolrich and grant of Options to him:

• (a) each of the directors of the Company other than Dr Woolrich, who abstains from making any recommendation because he is interested in the outcome, considers that the grant of the options to Dr Woolrich is fair and reasonable having regard to his responsibilities and role in the Company. Dr Woolrich is a non-executive director of the Company but brings extensive mining experience relating to operations in Africa to the Board. Dr Woolrich has extensive contacts and knowledge of mining and exploration within Africa generally and that, allied with his extensive and wide-ranging experience is, again in the opinion of the other directors, a valuable asset. Again, that Dr Woolrich is a non-executive director is reflected in the number of options proposed to be granted to him being an total of 1,000,000 options with a significantly lesser value as assessed by DMR and is considered appropriate by the other directors and reflects his lesser role in the Company.

• (b) Again the terms of the options proposed to be granted should be noted and, likewise for all directors, apart from the comparatively modest value inherent in the options (again in Dr Woolrich’s case an amount of approximately $12,390) the only significant benefit which Dr Woolrich will receive therefrom is if the underlying value of shares in the capital of the Company increases significantly.

• (c) Again, each of the directors other than Dr Woolrich recommends to members that they vote in favour of the resolution for the reasons stated above: but likewise say that each member must form his own opinion in relation to the resolution and vote as he or she considers appropriate having regard to the information contained in this explanatory memorandum and the level of benefits already received by Dr Woolrich from the Company and its subsidiaries as disclosed herein.

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Directors Remuneration

For the information of Members, the following information is provided in relation to director’s remuneration. The Directors are remunerated on an annual basis and details thereof for the 10 month period ended 30 April 2008 are as set out in the table below (including superannuation contributions). The Directors received no remuneration for the period 19 January 2007 to 30 June 2007.

DIRECTORS REMUNERATION: 1 JULY 2007 TO 30 APRIL 2008
Name of Director	Base Salary or Director’s Fees $	Super- annuation $	Non Cash Benefits $
P Volpe	178,100	16,029	-
A Tunks	129,000	11,610	-
H Stacpoole	41,667	3,750	-
P Woolrich	13,889	-	-

Additional Information

The Directors are not aware of any other information that:

• (a) is reasonably required by members in order to decide whether or not it is in the Company’s interests to pass each of the proposed resolution; and,

• (b) is known to the Company or to any of its director;

that has not previously been disclosed either direct to members or generally to the market in accordance with the Company’s continuing disclosure obligations under the Listing Rules of ASX.

RESOLUTION 2: ADOPTION OF EXECUTIVE AND EMPLOYEE OPTION PLAN

Resolution 2 on the Notice of Meeting provides for the adoption of an Employee Share Option Plan (ESOP). The Company proposes this be adopted to assist in the attraction, retention and motivation of employees and directors of the Company and its subsidiaries.

A copy of the proposed ESOP will be tabled at the Meeting.

The provisions of Exception 9 in Listing Rule 7.2 provide that where the holders of ordinary shares have approved the issue of securities under an employee incentive scheme (effectively by approving the establishment thereof) and the Notice of Meeting includes a summary of the terms of the scheme, the number of securities issued under the scheme since the date of the last approval and voting exclusion statement then, the allotment of securities to employees under an employee incentive scheme will be an exception to the prohibition on issue of shares contained in Listing Rule 7.1.

A summary of the terms of the ESOP and a summary of the terms of the options are each set out below.

The ESOP applies to employees and directors of the Group comprised by the Company and all of its subsidiaries or related bodies corporate from time to time.

Under the ESOP the Board may issue invitations to employees and directors to accept offers of options under the ESOP.

The aggregate number of options which may be on issue shall not at any time exceed or be capable of exceeding 10% of the total number of shares on issue in the capital of the Company calculated on the basis that all shares and other securities convertible into shares had been converted. This includes options, convertible notes and any other securities convertible into shares. "Shares" for the purpose of the ESOP means fully paid ordinary shares in the capital of the Company.

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Invitations offered to employees and directors must be accepted within 28 days or such other period as the Board may determine and upon receipt of a duly signed acceptance in the appropriate time frame, the Company will issue the accepting party a certificate for the options granted provided that, if within that time frame, the employee or director ceases to be employed by the Group, no obligation to grant the options exists.

Unless otherwise determined by the Board, the options are to be granted free of cost.

The options can be granted on such terms and conditions as to restrictions on exercise, performance contingencies, hurdles and targets as the Board considers reasonable in the interests of the Company and its subsidiaries as a whole.

The exercise price of the options will be set by the Board at the time of grant of the options. While no restriction on the requisite exercise price exists, ordinarily this would be not less than the market value of a fully paid ordinary share in the capital of the Company on the issue date of the option or that other value which is that value determined by the Board having regard to various matters relevant to the Company.

Any optionholder granted options subject to restriction may, as a term of the grant thereof, be required to enter into a restriction agreement with the Company and, in addition, if required by the provisions of the Listing Rules or ASX generally, each optionholder shall likewise enter into a restriction agreement in such form and for such period as required by ASX pursuant to the provisions of the Listing Rules.

The terms of options are subject to provisions requiring that, in the event of any reorganisation, the options shall be reconstructed in like manner as required under the Listing Rules.

Options that are not exercised during the exercise period applicable to them automatically lapse.

Subject to the overriding discretion of the Board, where an optionholder ceases to be employed by the Group or, in the case of an optionholder who is a director, that optionholder ceases to be a director of any member of the Group then all options which have not vested lapse, the optionholder has 30 days to elect to exercise options which have vested but not been exercised and if those options are not exercised in that 30 day period, they lapse automatically at the end of that period.

A qualification to the above is that on the death of an optionholder the executor of the optionholder's estate or the nominated beneficiaries of that estate have a period of 12 months to exercise options which have vested but not been exercised in lieu of the 30 days referred to.

The plan provides that, in the case of bonus issues of shares to shareholders, the number of shares over which the Option is exercisable will increase to the number of shares that the holder of the Option would have received if the Option had been exercised before the record date for the bonus issue.

The plan further provides that, in the event that either;

• (a) a bona fide takeover bid pursuant to the Corporations Act 2001 is made for more than 50% of the issued share capital of the Company; or

• (b) the Company makes an announcement that it proposes to merge with another company by means of a Scheme of Arrangement to be effected pursuant to the Corporations Act 2001; or

• (c) the Company proposes to effect a merger with any other company by any other lawful means;

all the terms and conditions of the Option Plan shall be deemed to be modified so as to remove all restrictions on exercise thereof so as to permit such options to be immediately exercisable by the holders thereof.

Finally, in the event of any proposed reconstruction or reorganisation or distribution of the issued capital of the Company the terms and conditions of the options shall be deemed to be modified so as to remove all restrictions on exercise thereof so as to permit such options to be immediately exercisable by the holders thereof.

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The removal of restrictions on exercise referred to above shall not affect any escrow restrictions on sale or transfer and where any options are subject to escrow under ASX Listing Rules, those rules will continue to apply to the shares issued on exercise which shall, as required under ASX Listing Rules, remain subject to escrow restrictions for the remainder of the term during which the options would have been so restricted.

Voting Restrictions

Botswana Metals Limited will disregard any votes cast on the resolution by Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or any related party of Botswana Metals Limited or any associate of Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or such related party. However, Botswana Metals Limited will not disregard a vote if:

• (d) it is cast by any such person or any of its associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

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

Members should be aware that the acquisition by any person of options does not change voting power. That voting power will only change in accordance with changes in the relevant interests in shareholdings of any member or of those of his associates.

RESOLUTION 3: DIRECTORS REMUNERATION

Resolution 3 is comparatively straight forward. The resolution fixes a maximum which may be paid by way of remuneration to Directors (disregarding salary and other benefits payable to executive directors by the terms of their engagement). This is required under the ASX Listing Rules and has not previously been set.

The amount of $200,000 is a maximum amount and at present only Mr Stacpoole and Dr Woolrich receive directors fees with each of Mr Volpe and Dr Tunks being remunerated on a salaried basis.

Voting Restrictions

Botswana Metals Limited will disregard any votes cast on the resolution by Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or any related party of Botswana Metals Limited or any associate of Mr Volpe, Dr Tunks, Mr Stacpoole and Dr Woolrich or such related party. However, Botswana Metals Limited will not disregard a vote if:

• (f) it is cast by any such person or any of its associates as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or

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

Members should be aware that the acquisition by any person of options does not change voting power. That voting power will only change in accordance with changes in the relevant interests in shareholdings of any member or of those of his associates.

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D M R CORPORATE

DMR ____ ________

D M R Corporate Pty Ltd A.C.N. 063 564 045 470 Collins Street Melbourne Telephone (03) 9629 4277 Victoria 3000 Facsimile (03) 9629 4598 Australia Email derek@dmrcorporate.com.au

27 March 2008

The Directors Botswana Metals Limited Suite 5.10, Level 5 737 Burwood Road Hawthorn VIC 3122

Dear Sirs,

Valuation of Options

1. Introduction

We have been requested by Mr. Richard Baker, Company Secretary of Botswana Metals Limited (“Botswana” or “the Company”), to advise Botswana in respect of the fair value of the following options which are proposed to be issued to the Botswana directors:

Director	Options exercisable	Options exercisable	Options exercisable
	at 10 cents	at 15 cents	at 20 cents
Patrick Volpe	1,000,000	1,000,000	1,000,000
Andrew Tunks	1,000,000	1,000,000	1,000,000
Harry Stacpoole	333,334	333,333	333,333
Paul Woolrich	333,334	333,333	333,333
	___	___	___
Total	2,666,668	2,666,666	2,666,666

• The options vest on the date of issue.

• The options are not transferable.

• The options are granted for no monetary consideration.

• The options have been valued as at the proposed issue date of 30 April 2008.

2. Valuation Methodology

• 2.1 Options are generally valued using one of a number of option pricing models. The Black-Scholes-Merton option pricing model assumes that the options will be exercised on the day immediately prior to their expiry date. This assumption is realistic if there are no dividends being paid during the life of the options or if the terms of the options do not allow for the possibility of an early exercise. The Black-Scholes-Merton model gives the maximum value to outstanding options and we do not consider this model to be applicable to the valuation of the above options.

DMR

• 2.2 We have reviewed the terms of the options that are proposed to be issued to the Botswana Directors and based on this review we have concluded that there is a reasonable probability that the options will be exercised before their expiry date. Our principal reason for this view is the lack of transferability of the options and their illiquidity. Our view is supported by empirical evidence that employee and director options are often exercised well before their expiry date. For this reason we have valued the options using a binomial model, which has been tailored specifically for use in valuing employee options.

• 2.3 It should be noted that pursuant to accounting standard AASB2 Share-based Payment, options issued to employees (and directors) must be valued at the date they are issued and expensed over the life of the options. This valuation cannot be prepared prior to the date of issue as one of the key variables in the model is the share price at the date of issue. We have used a binomial model and the current share price as at 20 March 2008 to ascertain an approximate value of the options being issued however the options may need to be revalued after the date of issue to determine the value to be expensed in the accounts.

• 2.4 The model used determines the value of an option as a function of the following variables:

• 1) the current share price of the underlying shares

• 2) exercise price of the option

• 3) volatility of the share price

• 4) vesting conditions

• 5) time to maturity – expiry date

• 6) risk free rate of interest

• 7) expected dividend yield

• 8) an exercise price multiple

3. Assumptions

The assumptions that we have selected in applying the binomial model to the option valuation are set out below.

3.1 The Share Price of the Underlying Shares

Botswana is a limited liability company incorporated in Australia and its securities are listed on the Australian Securities Exchange (“ASX”).

The volume weighted average share price (based on closing daily prices) for the 30-day period ended 20 March 2008 was $0.060 on a volume of 4,488,017 shares.

Based on the above share price, we consider that $0.060 represents the current market value of Botswana shares as at 20 March 2008.

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DMR

3.2 The Exercise Price of the Options

The exercise prices of the options are set out in Section 1 above.

3.3 The Volatility of the Share Price

The volatility of the share price is a measure of uncertainty about the returns provided by the shares. Generally it is possible to predict future volatility of a stock by reference to its historical volatility.

A share with a greater volatility has a greater time value component of the total option value.

The historic volatility information for Australian listed companies can be sourced from the Australian Graduate School of Management – Centre for Research in Finance Risk (“CRIF”) Measurement Service statistics. After examining the volatility experienced by shares in a comparable group of 38 companies we have concluded that a share price volatility of 73% is appropriate when valuing Botswana options.

3.4 Time to Maturity and Vesting Conditions

The options expire on 30 June 2011 and there are no vesting conditions.

3.5 Risk Free Interest Rate

In valuing the options, we have used a risk free rate of 6.22%. This rate is based on Treasury Bond yields with maturities approximating the expiry date of the options.

3.6 Dividends

Botswana does not have a track record of paying regular half yearly or annual dividends so we have assumed that no dividends will be paid.

3.7 Exercise Price Multiple

As stated in Section 2.2, employee options are often exercised prior to their expiry date. Botswana does not have a history that we could use to predict the likely exercise date.

In the absence of a specific history for Botswana we have assumed that the directors will exercise the options if the market price of Botswana shares reaches a multiple of 1.5 times the exercise price.

4. Valuation

4.1 Based on the assumptions set out in Section 3 above we have calculated the value of the options as at 30 April 2008 to be:

Director	Options exercisable at 10 cents	Valuation
		$
Patrick Volpe	1,000,000	15,086
Andrew Tunks	1,000,000	15,086
Harry Stacpoole	333,334	5,029
Paul Woolrich	333,334	5,029
	___	______
Total	2,666,668	40,230

3

DMR

Director	Options exercisable at 15 cents	Valuation
		$
Patrick Volpe	1,000,000	12,156
Andrew Tunks	1,000,000	12,156
Harry Stacpoole	333,333	4,052
Paul Woolrich	333,333	4,052
	___	______
	2,666,666	32,416
	Options exercisable at 20 cents
Patrick Volpe	1,000,000	9,926
Andrew Tunks	1,000,000	9,926
Harry Stacpoole	333,333	3,309
Paul Woolrich	333,333	3,309
	___	______
	2,666,666	26,470
Grand Total		$99,116

4.2 By way of a cross check we have calculated the value of the options by excluding the assumption set out in Section 3.7 above and assuming that they would be exercised at their expiry date. This calculation reveals the maximum value of the options using the Black-Scholes Option valuation method. The result is:

Director	Options exercisable at 10 cents	Valuation
		$
Patrick Volpe	1,000,000	24,172
Andrew Tunks	1,000,000	24,172
Harry Stacpoole	333,334	8,057
Paul Woolrich	333,334	8,057
	___	______
Total	2,666,668	64,458
	Options exercisable at 15 cents
Patrick Volpe	1,000,000	18,185
Andrew Tunks	1,000,000	18,185
Harry Stacpoole	333,333	6,062
Paul Woolrich	333,333	6,062
	___	______
	2,666,666	48,494
	Options exercisable at 20 cents
Patrick Volpe	1,000,000	14,339
Andrew Tunks	1,000,000	14,339
Harry Stacpoole	333,333	4,780
Paul Woolrich	333,333	4,780
	___	______
	2,666,666	38,238
Grand Total		$151,190

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DMR

• 4.3 Having considered all of the factors outlined in this report, including the above cross check, we have concluded that the options should be valued using the values set out in the table in Section 4.1 above.

• 4.4 The option valuations in Section 4.1 above estimate the following total benefits to each of the directors:

Director	Options exercisable	Options exercisable	Options exercisable	Total Benefit
	at 10 cents	at 15 cents	at 20 cents	$
Patrick Volpe	15,086	12,156	9,926	37,168
Andrew Tunks	15,086	12,156	9,926	37,168
Harry Stacpoole	5,029	4,052	3,309	12,390
Paul Woolrich	5,029	4,052	3,309	12,390
	______	______	______	______
Total	40,230	32,416	26,470	99,116

Yours faithfully

DMR Corporate Pty Ltd

==> picture [99 x 15] intentionally omitted <==

==> picture [99 x 15] intentionally omitted <==

Derek Ryan Director and Authorised Representative

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