XSTATE RESOURCES LIMITED — Capital/Financing Update 2010

Sep 28, 2010

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XState Resources Limited

Registered office 41 Stirling Highway Nedlands WA 6009 Tel: +61 8 9423 3200 Fax: +61 8 9389 8327

ABN 96 009 217 154

Postal address PO Box 985 Nedlands WA 6909 Website www.xstate.com.au

29 September 2010

ASX Limited

Electronic lodgement

Letter to Option Holders re Entitlements Issue

Dear Sirs

Attached is a copy of a letter despatched to option holders in relation to the Entitlements Issue announced on 29 September 2010.

The Company wishes to advise that the record date has changed to 11 October 2010 and the despatch date has changed to 13 October 2010.

The proposed timetable is as follows:

espatch date has changed to 13 October 2010. d The proposed timetable is as follows:
Lodgement of Prospectus with ASIC	29 September 2010
Lodgement of Prospectus and Appendix 3B with ASX	30 September 2010
Notice sent to Shareholders	1 October 2010
Ex Date	5 October 2010
Record Date for determining Entitlements	11 October 2010
Prospectus despatched to Shareholders	13 October 2010
Closing Date	27 October 2010
Notify ASX of under‐subscriptions	29 October 2010
Despatch date/Shares entered into Shareholders’ security holdings	5 November 2010
Trading of new Shares and new Options expected to commence on ASX	8 November 2010

*These dates are indicative only and determined based upon the current expectations of the Directors and may be changed at the discretion of the Directors.

For and on behalf of the Board.

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XState Resources Limited

ABN 96 009 217 154

Registered office Postal address 41 Stirling Highway PO Box 985 Nedlands WA 6009 Nedlands WA 6909 Tel: +61 8 9423 3200 Website Fax: +61 8 9389 8327 www.xstate.com.au

28 September 2010

Dear Option Holder,

NOTICE OF NON RENOUNCEABLE ENTITLEMENT ISSUE TO OPTION HOLDERS

We are writing to you in relation to your option holding in Xstate Resources Limited ( Company ).

The Company has announced to the ASX Limited ( ASX ) a non-renounceable entitlement issue on the basis of four (4) Shares for every five (5) Shares held by Shareholders at an issue price of 10 cents per Share ( Entitlement Issue ). One (1) 30 June 2013 listed option exercisable at 24 cents will be issued for every two (2) shares applied for, such option issued for no consideration.

Pursuant to the terms of the options that were issued to you, the Company is required to notify you of your right to participate in any pro rata issue of securities if you exercise your options prior to the record date for the pro rata issue.

Accordingly, take notice that in order to participate in the Entitlement Issue, you will need to exercise your options prior to the record date for the Entitlement Issue, being 11 October 2010.

The Company will lodge a prospectus in relation to the Entitlement Issue at the Australian Securities & Investments Commission and this document will be despatched to shareholders of the Company on 13 October 2010. The prospectus outlines the Entitlement Issue in detail.

Should you have any queries in relation to this matter, please do not hesitate to contact the Company on (+61 8) 9423 3200.

Yours faithfully

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David McArthur Company Secretary