ZENITH MINERALS LIMITED — Proxy Solicitation & Information Statement 2014

Feb 13, 2014

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NOTICE OF GENERAL MEETING AND EXPLANATORY MEMORANDUM

Date of Meeting: Tuesday 18[th] March 2014 Time of Meeting: 11.00 am WST Place of Meeting: The Celtic Club (President’s Meeting Room) 48 Ord Street, WEST PERTH WA 6005

NOTICE IS HEREBY GIVEN that a General Meeting of Shareholders of Zenith Minerals Limited will be held at The Celtic Club (President’s Meeting Room), 48 Ord Street, West Perth, Western Australia, at 11.00 am WST on Tuesday 18[th] March 2014.

In respect of Resolution 3, the Independent Expert has determined that the transaction the subject of that r e solution is not fair but reasonable to the non-associated Shareholders of Zenith Minerals Limited. All Shareholders should refer to the Independent Expert’s Report included as Annexure C to this Notice of General Meeting.

AGENDA

1. RESOLUTION 1 – APPROVAL OF SECURITIES ISSUE FOR THE ACQUISITION OF S2M2 COAL PTY LTD

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

“That, subject to and conditional on the passing of Resolutions 2 and 3, for the purpose of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of 15,076,186 Shares to the parties, for the purpose and on the terms set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on Resolution 1 by any person who may participate in the proposed issue and any person who might obtain a benefit (except a benefit solely in the capacity of a holder of ordinary securities) if the Resolution is passed, and any person associated with those persons. However, the Company will not disregard any votes cast on Resolution 1 by such person if:

• (a) the person is acting as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• (b) the person is the Chairman of the Meeting acting 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.

2. RESOLUTION 2 – APPROVAL TO ISSUE SECURITIES TO RELATED PARTY (CREEKWOOD NOMINEES)

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

“That, subject to and conditional on the passing of Resolutions 1 and 3, for the purpose of Listing Rule 10.11, and for all other purposes, Shareholders approve the

issue of 1,693,814 Shares to Creekwood Nominees (or its nominee) as consideration for the acquisition of Creekwood Nominees’ shareholding in S2M2, for the purpose and on the terms set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on Resolution 2 by Creekwood Nominees and any of its associates. However, the Company will not disregard any votes cast on Resolution 2 by such person if:

• (a) the person is acting as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• (b) the person is the Chairman of the Meeting acting 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.

3. RESOLUTION 3 – APPROVAL TO ACQUIRE SHAREHOLDING IN S2M2 COAL PTY LTD FROM RELATED PARTY (CREEKWOOD NOMINEES)

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

“That, subject to and conditional on the passing of Resolutions 1 and 2, for the purpose of Listing Rule 10.1, and for all other purposes, Shareholders approve the acquisition of Creekwood Nominees’ shareholding in S2M2 in consideration of the issue of 1,693,814 Shares to Creekwood Nominees (or its nominee), for the purpose and on the terms set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on Resolution 3 by Creekwood Nominees and any of its associates. However, the Company will not disregard any votes cast on Resolution 3 by such person if:

• (a) the person is acting as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• (b) the person is the Chairman of the Meeting acting 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.

Independent Expert’s Report: Shareholders should carefully consider the report prepared by the Independent Expert for the purposes of Shareholder approval under Listing Rule 10.1. The Independent Expert’s Report comments on the fairness and reasonableness of the transaction the subject of Resolution 3, to the non-associated Shareholders in the Company. The Independent Expert has determined that the transaction is not fair but reasonable to the non-associated Shareholders in the Company.

4. RESOLUTION 4 – APPROVAL FOR ISSUE OF 1,000,000 OPTIONS TO MICHAEL CLIFFORD UPON HIS APPOINTMENT AS MANAGING DIRECTOR

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

“That, for the purposes of Listing Rule 10.14 of the ASX Listing Rules and for all other purposes, approval is given for the Company to issue 1,000,000 Options to Michael Clifford (or his nominee) pursuant to Zenith Minerals Limited’s Share Option Plan upon his appointment as managing director of the Company on the terms and conditions set out in the Explanatory Statement accompanying this Notice of Meeting.”

Voting Exclusion : The Company will disregard any votes cast on Resolution 4 by a Director (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any person associated with that Director. However, the Company will not disregard any votes cast on Resolution 3 by such person if:

• (a) the person is acting as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• (b) the person is the Chairman of the Meeting acting 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.

The Company will also disregard any votes cast on Resolution 4 by a member of the Key Management Personnel or their closely related parties, as proxy for another person, where the Proxy Form does not specify how the proxy is to vote, with the exception that votes cast by the Chairman as proxy appointed in writing, in accordance with a direction on the Proxy Form to vote as the proxy decides, will not be excluded.

Explanatory Statement

The Explanatory Statement accompanying this Notice of General Meeting is incorporated in and comprises part of this Notice of General Meeting.

Proxies

Please note that:

• (a) a member of the Company entitled to attend and vote at the General Meeting is entitled to appoint a proxy;

• (b) a proxy need not be a member of the Company; and

• (c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms.

Corporate Representative

Any corporate Shareholder who has appointed a person to act as its corporate representative at the meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company and/or registry in advance of the meeting or handed in at the meeting when registering as a corporate representative. An appointment of corporate representative form is enclosed if required.

Entitlement to attend and vote

For the purposes of voting at this General Meeting, a Shareholder’s voting entitlement will be taken to be the entitlement of the Shareholder shown on the register of Shareholders at 11.00 am WST on Friday 14[th] March2014.

BY ORDER OF THE BOARD

Alex Dermedgoglou

Company Secretary

14th February 2014

Explanatory Statement

This Explanatory Statement accompanying this Notice of General Meeting is incorporated in and comprises part of this Notice of General Meeting.

RESOLUTION 1 – APPROVAL OF SECURITIES ISSUE FOR THE ACQUISITION OF S2M2 COAL PTY LTD

Background

As announced to the ASX on 23 and 31 December 2013, the Company is proposing to acquire 100% of the issued shares in S2M2 Coal Pty Ltd ( S2M2 ), a private mineral exploration company ( Transaction ).

The Company intends to acquire all of the S2M2 fully paid ordinary shares on issue ( S2M2 Shares ) from S2M2 shareholders through a series of individual share sale and purchase agreement ( Share Sale Agreements ) which are inter-conditional.

Each of the Share Sale Agreements is subject to the fulfillment of certain conditions, including:

• (a) the Company receiving the required shareholder approval for the Transaction, being the approvals sought under Resolutions 1, 2 and 3;

• (b) the appointment of Michael Clifford (currently a director of S2M2) as managing director of the Company post Transaction, by way of a services agreement on customary terms; and

• (c) completion occurring under each of the other Share Sale Agreements, in order that the Company acquires 100% of all S2M2 Shares under the Transaction.

Consideration for S2M2 shares under the Share Sale Agreements is to be fully paid ordinary shares in the Company.

The consideration for the acquisition of all of the shares in S2M2 will be approximately 16.8 million fully paid ordinary shares in the Company (Consideration Shares ), representing approximately15.7% of the issued capital of the Company (on a fully diluted basis) as at the date of this Notice of Meeting. Each S2M2 shareholder is to receive that portion of the Consideration Shares based on their S2M2 percentage holding under the respective Share Sale Agreements.

Currently, S2M2 shareholders (and their associates) hold a relevant interest in approximately 17% of the issued capital of the Company and no individual S2M2 shareholder (including its associates) holds a relevant interest in more than 5% of the issued capital of the Company (in each case, on a fully diluted basis).

Post Transaction, S2M2 shareholders (and their associates) will hold a relevant interest in approximately 29.4% of the issued capital of the Company and no individual S2M2 shareholder (including its associates) will hold a relevant interest in more than 6% of the issued capital of the Company (in each case, on a fully diluted basis and assuming no further issues of securities by the Company).

The Company is seeking Shareholder approval under this Resolution 1 for the issue of 15,076,186 Consideration Shares to S2M2 shareholders.

The Company is proposing to issue a further 1,693,814 Consideration Shares under the Transaction to Creekwood Nominees, an existing shareholder of S2M2. Creekwood Nominees is an entity controlled by Director Stanley Macdonald, and therefore is considered to be a related party of the Company. Accordingly, separate Shareholder approval is being sought for the issue of Consideration Shares to Creekwood Nominees under Resolution 2 below.

The approvals sought under Resolutions 1, 2 and 3 are conditional on each other and neither resolution will be approved unless each of Resolutions 1, 2 and 3 are passed by Shareholders. As the Share Sale Agreements are inter-conditional and subject to the conditions noted above (including the receipt of shareholder approval under Resolutions 1, 2 and 3), if Resolutions 1, 2 and 3 are not passed by the Company’s shareholders then the Transaction will not proceed.

Information about S2M2

As noted above, S2M2’s main business activity is mineral exploration.

The directors and management of S2M2 are Stanley Macdonald, a current director of the Company, and Michael Clifford, who is to become managing director of the Company post Transaction.

S2M2’s assets comprise cash (currently, approximately $A660,000), an option agreement relating to a Turkish gold project, gold projects in Western Australia and rights to a coal project in Indonesia as set out below:

 Kavaklitepe Gold Project Turkey (right to earn up to 70%)

S2M2 has entered into an option agreement to earn up to a 70% interest in Canadian TSX listed Columbus Copper Corporation’s ( Columbus Copper ) wholly-owned Kavaklitepe Gold Project located in western Turkey.

Under the option agreement with Columbus Copper, S2M2 may earn an initial 51% interest in the Kavaklitepe Gold Project over three years by, among other things, making USD400,000 in cash payments of which USD250,000 was paid on 9 October 2013 and completing USD2,500,000 in cumulative exploration expenditures on the Kavaklitepe Gold Project. If S2M2 earns the initial 51% interest in the Kavaklitepe Gold Project, it may elect to earn a further 19%, for a total of 70%, by paying Columbus Copper an additional USD500,000 and by completing a bankable feasibility study within a four year period. The option agreement contains other terms and conditions that are standard for an option/joint venture contract of this nature.

 Mt Minnie Gold Project – Western Australia (100%)

The Mt Minnie project consists of two exploration licence applications (E09/2063 – Mt Minnie North and E09/2064- Ram West) and is situated within the Gascoyne Mineral Field of Western Australia approximately 240km northeast of Carnarvon. The Mt Minnie North – Ram West tenements cover a portion of terrain composed predominantly of mid-Proterozoic granite assigned to the Minnie Creek batholith interpreted as highly prospective for gold mineralisation commonly referred to as reduced intrusive related gold deposits, that have a trace element metal association including: bismuth, molybdenum and tungsten.

The project has 7 existing gold prospects requiring follow-up that to date have only been the subject of cursory reconnaissance exploration activity. S2M2 is planning a program of detailed mapping and sampling to define the extents of the gold mineralisation.

 Sungai Roi Coal Project - Indonesia (right to earn 90%)

The Sungai Roi Coal concession in East Barito, Kalimantan, Indonesia, is a coal exploration project which is close to existing infrastructure including haul roads and barge loading facilities that have the potential to reduce the upfront capital costs and time frame for development of the project. S2M2 has the right to earn 90% equity in the company owning the Sungai Roi coal concession by funding the evaluation of the project.

In October 2013, S2M2 received a non-binding offer from an Indonesian entity to purchase its Sungai Roi coal rights. Consideration for 100% equity in the company holding the Sungai Roi Project is USD500,000 in staged payments and a USD1 royalty per tonne of coal mined. The purchaser is to be responsible for all forestry permits, delineation of resources and all costs associated with furthering the Sungai Roi coal project upon signing any purchase agreement. Due diligence and legal documentation of the sale and purchase agreement is currently in progress.

For further information on S2M2 and its projects, please refer to the ASX announcements released on 23 and 31 December 2014.

Listing Rule 7.1

Listing Rule 7.1 provides that, unless an exemption applies, a company must not, without prior approval of shareholders, issue or agree to issue Equity Securities if the Equity Securities will in themselves or when aggregated with the ordinary securities issued by the company during the previous 12 months, exceed 15% of the number of ordinary securities on issue at the commencement of that 12 month period.

The issue of the Consideration Shares pursuant to Resolution 1 will exceed the 15% limit and therefore requires the approval of Shareholders.

The securities proposed to be issued, for which approval is sought under Resolution 1, comprise 15.7% of the Company’s fully diluted issued capital (based on the number of Shares and Options on issue as at the date of this Notice of General Meeting).

In compliance with the information requirements of Listing Rule 7.3, Shareholders are advised of the following information:

(a) Maximum number of securities to be issued

The Company intends to issue a total of 15,076,186 Consideration Shares pursuant to the approval sought under Resolution 1.

(b) Date of issue

The Consideration Shares will be issued no later than 3 months after the date of Shareholder approval pursuant to this Resolution 1 or such later date as approved by ASX.

(c) Issue price

The Consideration Shares are being issued as consideration for the acquisition of S2M2, being the Transaction, as detailed above.

(d) Persons to whom the securities are to be issued

The persons to whom the Consideration Shares are to be issued under Resolution 1 will be the shareholders of S2M2 (other than Creekwood Nominees).

None of the persons issued Consideration Shares under Resolution 1 are related parties of the Company.

(e) Terms of the securities

The Consideration Shares will be fully paid ordinary shares in the capital of the Company on the same terms and conditions as the Company’s existing Shares and rank equally in all respects with the existing Shares. A summary of the material terms of the Shares is set out in Annexure A.

The Company will apply to ASX for official quotation of the Shares.

(f) Intended use of the funds raised

The purpose of the issue is to provide consideration for the acquisition of S2M2, being the Transaction, as detailed above.

There will be no funds raised from the issue of the Consideration Shares.

(g) Voting exclusion statement

A voting exclusion statement for Resolution 1 is included in the Notice of General Meeting preceding this Explanatory Statement.

Board Recommendation

The Board believes that the proposed issue and the Transaction is beneficial for the Company and recommends Shareholders vote in favour of the Resolution. It will allow the Company to retain the flexibility to issue further Equity Securities representing up to 15% of the Company’s share capital during the next 12 months.

RESOLUTIONS 2 AND 3 – APPROVAL TO ISSUE SECURITIES TO RELATED PARTY (CREEKWOOD NOMINEES) AND APPROVAL TO ACQUIRE SHAREHOLDING IN S2M2 COAL PTY LTD FROM RELATED PARTY (CREEKWOOD NOMINEES)

Creekwood Nominees is a related party of the Company as Mr Stanley Macdonald, a director of the Company, controls Creekwood Nominees. Creekwood Nominees currently holds 25,000,000 S2M2 Shares ( Macdonald Stake ) which represents approximately 10.1% of the issued capital of S2M2.

The Company proposes to issue 1,693,814 Consideration Shares as consideration for the Macdonald Stake ( Macdonald Consideration Shares ) under the Transaction.

The issue of the Macdonald Consideration Shares will be equal to approximately 1.5% of the Company’s post Transaction fully-diluted share capital assuming no further issues of securities by the Company.

Additionally, the relevant interests in the Company of Mr Stanley Macdonald and his associates (including Creekwood Nominees) will increase from approximately 2.4% (currently held) to 3.6% of the Company’s post Transaction fully diluted share capital assuming no further issues of securities by the Company.

As Creekwood Nominees is a related party of the Company, the issue of the Macdonald Consideration Shares to Creekwood Nominees as consideration for the Macdonald Stake will be subject to Listing Rule 10.11 approval. Accordingly, the Company seeks approval under Resolution 2 for the purposes of Listing Rule 10.11.

The ASX has also advised the Company that Listing Rule 10.1 will apply to the acquisition of the Macdonald Stake by the Company. Accordingly, the Company also seeks approval under Resolution 3 for the purposes of Listing Rule 10.1.

As noted above, the approvals sought under Resolutions 1, 2 and 3 are conditional on each other and neither resolution will be approved unless each of Resolutions 1, 2 and 3 are passed by Shareholders. As the Share Sale Agreements are inter-conditional and subject to the conditions noted above (including the receipt of shareholder approval under Resolutions 1, 2 and 3), if Resolutions 1, 2 and 3 are not passed by the Company’s shareholders then the Transaction will not proceed.

Listing Rule 10.11

Listing Rule 10.11 provides that, unless a specified exception applies, a Company must not issue or agree to issue securities to a related party without the approval of ordinary shareholders. A “related party”, for the purposes of the Listing Rules, has the meaning given to it in the Corporations Act.

As noted above, Creekwood Nominees is a related party of the Company. As such, Shareholder approval is sought under Listing Rule 10.11 as Resolution 2 proposes the issue of securities to Creekwood Nominees.

As Shareholder approval is being sought under ASX Listing Rule 10.11, approval is not also required under Listing Rule 7.1 and the Macdonald Consideration Shares will not be included in the calculation of the Company’s 15% annual placement capacity under Listing Rule 7.1 if Resolution 2 is passed.

Approval is not being sought under Chapter 2E of the Corporations Act in this Resolution 2 as the issue of the Macdonald Consideration Shares by the Company to Creekwood Nominees (or its nominee) is being made on an arm’s length basis in accordance with section 210 of the Corporations Act.

In compliance with the information requirements of Listing Rule 10.13, Shareholders are advised of the following information:

(a) Name of person to receive securities

The person receiving the Macdonald Consideration Shares is Creekwood Nominees (or its nominee).

(b) Maximum number of securities to be issued

The maximum number of S2M2 Shares to be issued to Creekwood Nominees (or its nominee) under Resolution 2 is 1,693,814 (being the Macdonald Consideration Shares).

(c) Date of issue

The Macdonald Consideration Shares will be issued no later than 1 month after the date of the General Meeting.

(d) Issue price

The Macdonald Consideration Shares are being issued as consideration for the acquisition of the Macdonald Stake, being part of the overall Transaction, as detailed above.

(e) Terms of issue

The Macdonald Consideration Shares will be fully paid ordinary shares in the capital of the Company on the same terms and conditions as the Company’s existing Shares and rank

equally in all respects with the existing Shares. A summary of the material terms of the Shares is set out in Annexure A.

The Company will apply to ASX for official quotation of the Macdonald Consideration Shares.

The Macdonald Consideration Shares will be escrowed for a period of 12 months from the date of issue.

(f) Purpose of issue and intended use of the funds raised (if any)

The purpose of the issue is to provide consideration for the acquisition of the Macdonald Stake, being part of the Transaction, as detailed above.

There will be no funds raised from the issue of the Macdonald Consideration Shares.

(g) Voting exclusion statement

A voting exclusion statement for Resolution 2 is included in the Notice of General Meeting preceding this Explanatory Statement.

Listing Rule 10.1

Listing Rule 10 deals with transactions between an entity (or any of its subsidiaries) and persons in a position to influence the entity.

Listing Rule 10 provides that an entity (or any of its subsidiaries) must not acquire a “substantial asset” from, or dispose of a substantial asset to, any of the following persons without the approval of the entity’s security holders:

• (a) a related party;

• (b) a subsidiary;

• (c) a “substantial holder”, if the person and the person’s associates have a relevant interest, or had a relevant interest at any time in the 6 months before the transaction, in at least 10% of the total votes attached to the voting securities;

• (d) an associate of a person referred to in (a) to (c) above; or

• (e) a person whose relationship to the entity is such that, in ASX’s opinion, the transaction should be approved by security holders.

As noted above, Creekwood Nominees is a related party of the Company as Mr Stanley Macdonald, a director of the Company, controls Creekwood Nominees.

Under Listing Rule 10.2, an asset is “substantial” if its value, or the value of the consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the Company as set out in the latest accounts given to ASX under the Listing Rules.

As noted above, the ASX has advised the Company that Listing Rule 10.1 will apply to the acquisition of the Macdonald Stake by the Company from Creekwood Nominees.

Accordingly, the Company also seeks approval under Resolution 3 for the purposes of Listing Rule 10.1.

Independent Expert’s Report

The Independent Expert has been asked to prepare a report on whether the acquisition of the Macdonald Stake by the Company is fair and reasonable to the non-associated Shareholders of the Company.

The Independent Expert has concluded that the acquisition of the Macdonald Stake by the Company is not fair but reasonable to non-associated Shareholders.

The Independent Expert’s Report is contained in Annexure C. Shareholders are urged to consider the Independent Expert’s Report in detail and if in doubt seek advice from their professional advisers prior to voting.

A voting exclusion statement for Resolution 3 is included in the Notice of General Meeting preceding this Explanatory Statement.

Board Recommendation

The Board, other than Stanley Macdonald who has a material personal interest in Resolutions 2 and 3, recommends that Shareholders approve Resolutions 2 and 3.

RESOLUTION 4 – APPROVAL FOR ISSUE OF 1,000,000 OPTIONS TO MICHAEL CLIFFORD UPON HIS APPOINTMENT AS MANAGING DIRECTOR

Background

As set out in the Explanatory Statement for Resolution 1, the Company is proposing to acquire 100% of the issued shares in S2M2 through a series of Share Sale Agreements which are inter-conditional and subject to certain conditions, including the appointment of Michael Clifford as managing director of the Company post Transaction.

Michael Clifford has entered into a services agreement with the Company on customary terms to be appointed as managing director of the Company, subject to the Transaction proceeding. As part of these appointment terms, Michael Clifford (or his nominee) is to be issued 1,000,000 Options under the Company’s Employee Share Option Plan ( ESOP ).

Resolution 4 seeks Shareholder approval to grant and issue 1,000,000 Options to Mr Michael Clifford (or his nominee) under the ESOP on the terms and conditions set out in the Annexure B to this Explanatory Statement and on the basis that the Transaction proceeds and he becomes managing director post Transaction. As noted above, for the Transaction to proceed, Resolutions 1, 2 and 3 must be passed by Shareholders. If Resolutions 1, 2 and 3 are not passed and the Transaction does not proceed, or Michael Clifford does not take up his appointment post Transaction, then the ESOP Options the subject of Resolution 4 will not be issued.

The ESOP Options are to be issued to Michael Clifford (or his nominee) under the ESOP and will be exercisable at a price that is 45% greater than the volume weighted average price ( VWAP ) of the Shares on ASX for the 20 trading days prior to the date of issue of the ESOP Options.

The ESOP Options will expire 45 months after date of issue with 100% to vest immediately once shareholder approval to grant and issue the options is received.

The grant of the ESOP Options is designed to incentivise the recipients and align the Board and senior staff in the setting and achievement of the Company’s objectives, by participating in the future growth and prosperity of the Company through share ownership.

The grant of the ESOP Options to Michael Clifford, upon his appointment as managing director, is to provide an incentive for future services he will provide to the Company.

The Directors have determined the exercise price based on the price of the Company’s Shares in the period prior to issue of the ESOP Options to Michael Clifford. The directors consider that an exercise price 45% above the VWAP of the Company’s Shares on ASX for the 20 trading days prior to issuing the ESOP Options to Michael Clifford, is appropriate.

The ASX Listing Rules set out a number of regulatory requirements which must be satisfied. These are summarised below.

Listing Rules 10.11 and 10.14

ASX Listing Rule 10.11 provides a general restriction against issuing securities (including an option) to a related party of the company without shareholder approval. As Michael Clifford will be a Director of the Company at the time of issue of the ESOP Options, shareholder approval under the Listing Rules is required.

ASX Listing Rule 10.14 provides that a company must not issue equity securities (including options to acquire shares) to a director of the company under an employee incentive scheme unless the issue has been approved by shareholders by ordinary resolution. If approval is given by shareholders under Listing Rule 10.14, separate approval is not required under Listing Rules 10.11 or 7.1. Shareholders should note that the issue of ESOP Options to Michael Clifford (or his nominee) will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

Approval is not being sought under Chapter 2E of the Corporations Act in this Resolution 4 as the issue of the ESOP Options to Michael Clifford (or his nominee) as part remuneration for his proposed appointment as managing director is considered by the Board to constitute “reasonable remuneration” within the meaning of section 211 of the Corporations Act.

ASX Listing Rule 10.15 requires the following information to be provided for an approval under ASX Listing Rule 10.14:

• (a) the ESOP Options will be issued to Michael Clifford (or his nominee);

• (b) if Resolution 4 is passed by Shareholders, the maximum number of ESOP Options to be issued to the related party, Michael Clifford (or his nominee), is 1,000,000;

• (c) the ESOP Options will be issued for no consideration, accordingly no funds will be raised from the grant of the ESOP Options and any funds raised from the exercise of the ESOP Options will be used for general working capital purposes;

• (d) no ESOP Options were issued to a related party of the Company or persons referred to in Listing Rule 10.14 since the Company adopted its ESOP;

• (e) Eligible participants under the ESOP are full-time or part-time employees or directors of the Company or an Associated Body Corporate who are invited by the Board to participate in the ESOP;

• (f) the ESOP Options will be issued not later than 12 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules);

• (g) no loan is being provided by the Company to Mr Michael Clifford for the acquisition of the ESOP Options; and

• (h) the ESOP Options will be issued to Michael Clifford on the terms and conditions set out in Annexure B.

Board Recommendation

All Directors recommend that Shareholders vote in favour of Resolution 4.

GLOSSARY

In this Explanatory Statement, the following terms have the following unless the context otherwise requires.

Annexure

Annexure an annexure to this Notice of General Meeting. ASIC Australian Securities and Investments Commission. ASX ASX Limited. Board board of Directors. Chairman chairman of the General Meeting. Company or Zenith Zenith Minerals Limited ACN 119 397 138. Company Secretary the company secretary of the Company. Constitution constitution of the Company. Corporations Act Corporations Act 2001 (Cth). Creekwood Nominees Creekwood Nominees Pty Ltd ACN 073 878 654 ATF The Challenger Trust Director director of the Company. Equity Securities has the meaning given to that term in the Listing Rules. Explanatory Statement the explanatory statement that accompanies this Notice of General Meeting. Key Management Personnel has the meaning given to that term in section 9 of the Corporations A ct. Listing Rules listing rules of the ASX. Meeting or General Meeting the general meeting convened by this Notice of General Meeting.

Notice or Notice of General Meeting or

this notice of General Meeting.

Notice of Meeting Proxy Form

the proxy form enclosed with this Notice of General Meeting.

Share

fully paid ordinary share in the capital of the Company. holder of a Share in the Company. S2M2 Coal Pty Ltd ACN 149 819 214 Australian Western Standard Time.

Shareholder S2M2

WST

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Instructions for Completing ‘Appointment of Proxy’ Form

1. A member entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote on their behalf.

Where more than one proxy is appointed, each proxy must be appointed to represent a specific proportion of the member's voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes.

1. A proxy need not be a member of the Company.

2. In the case of joint holders, signatures are required by the first named and one other joint holder.

3. Corporate shareholders should comply with the execution requirements as set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:

   • two Directors of the Company;

   • a Director and a Company Secretary of the Company; or

   • for a proprietary company that has a sole Director who is also the sole Company Secretary, that Director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Law, a document must appear to have been executed in accordance with Section 129(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 confirm 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 Company must state that next to his or her signature.

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

2. Where a Proxy Form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.

3. Pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) the Board has determined that, for the purpose of voting at the meeting , Shares in the Company will be taken to be held by the persons who are registered holders at 11.00 am WST on Friday 14[th] March 2014. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting.

4. To be effective, this proxy (and the Power of Attorney, if any, under which it is signed or a notarially certified copy thereof) must be lodged at the office of the Company, 3rd Floor, 33 Ord Street, West Perth, Western Australia, 6005, or posted to PO Box 1426 , West Perth, WA 6872 or sent by facsimile to (08) 9321 0070 or by email to info@zenithminerals.com.au, not less than forty eight (48) business hours before the time for holding the General Meeting.

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CORPORATE REPRESENTATIVE FORM

Shareholder Details

This is to certify that by a resolution of the Directors of:

………………………………………………………………………….…….….………... (Company),

Insert name of shareholder company

the Company has appointed:

……………………..……………………………………………………………………….……….…, Insert name of corporate representative

in accordance with the provisions of section 250D of the Corporations Act 2001, to act as the body corporate representative of that company at the general meeting of the members of Zenith Minerals Limited to be held on 18[th] March 2014 and at any adjournments of that meeting/all meetings of the members of Zenith Minerals Limited.

DATED ………………………………………………………. 2014

Please sign here Executed by the Company ) in accordance with its constituent documents )

.....................................................….………….….….. .......................................................….…………………….... Signed by authorised representative Signed by authorised representative ........................................................…………...….. .......................................................….………………….…... Name of authorised representative (print) Name of authorised representative (print) .....................................................…………….…..….. .......................................................….………………..…….. Position of authorised representative (print) Position of authorised representative (print)

Instructions for Completion

• Insert name of appointor Company and the name or position of the appointee (e.g. “John Smith” or “each director of the Company”).

• Execute the Certificate following the procedure required by your Constitution or other constituent documents.

• Print the name and position (e.g. director) of each company officer who signs this Certificate on behalf of the company.

• Insert the date of execution where indicated.

• Send or deliver the Certificate to the registered office of the Company at 3rd Floor, 33 Ord Street, West Perth, Western Australia, 6005 or PO Box 1426 , West Perth, WA 6872 or send by facsimile to (08) 9321 0070 or by email to info@zenithminerals.com.au, before the meeting, or hand it in at the registration desk on the day of the meeting”.

ANNEXURE A

TERMS OF THE MACDONALD CONSIDERATION SHARES THE SUBJECT OF RESOLUTION 2

The following is a summary of the rights and liabilities attaching to the Macdonald Consideration Shares to be issued as consideration for the Macdonald Stake, and the subject of the Shareholder approval sought under Resolution 2.

The Macdonald Consideration Shares to be issued pursuant to approval sought under Resolution 2 are ordinary Shares and will as from their issue rank equally in all respects with all existing Shares.

• (a) Voting Rights

Subject to the Constitution of the Company and any rights or restrictions at the time being attached to a class of shares, at a general meeting of the Company every Shareholder present in person, or by proxy, attorney or representative has one vote on a show of hands, and upon a poll, one vote for each Share held by the Shareholder and for each partly paid share held, a fraction of one vote equal to the proportion which the amount paid up bears to the amounts paid or payable on that share. In the case of an equality of votes, the chairperson has a casting vote.

(b) Dividends

Subject to the Corporations Act, the ASX Listing Rules and any rights or restrictions attached to a class of shares, the Company may pay dividends as the Directors resolve, but only out of profits of the Company. The Directors may determine the method and time for payment of the dividend.

(c) Winding up

If the Company is wound up whether voluntarily or otherwise, the liquidator may, with the sanction of a special resolution, divide amongst Shareholders in specie of kind, the whole or any part of the assets of the Company.

(d) Transfer of Shares

Generally, shares are freely transferable, subject to satisfying the requirements of the ASX Listing Rules, ASX Settlement Operating Rules and the Corporations Act. The Directors may decline to register any transfer of Shares but only where permitted to do so by the Corporations Act, the ASX Listing Rules, ASX Settlement Operating Rules or under the Company’s Constitution.

(e) Further Increases in Capital

Subject to the Corporations Act, the ASX Listing Rules, the ASX Settlement Operating Rules and any rights attached to a class of shares, the Company (under the control of the Directors) may issue shares and grant options over shares, on any terms, at any time and for any consideration, as the Directors resolve.

(f) Variation of Rights

Subject to the Corporations Act, the ASX Listing Rules, the ASX Settlement Operating Rules and the terms of issue of shares in a particular class, the Company may vary or cancel rights attached to shares in that class by either special resolution passed at a general meeting of the holders of the shares in that class, or with the written consent of the holders of at least 75% of the votes in that class.

(g) Meetings and Notices

Each Shareholder will be entitled to receive notice of, and to attend and vote at, general meetings of the Company and to receive notices, accounts and other documents required to be furnished to Shareholders under the Company’s Constitution, the Corporations Act and the ASX Listing Rules.

ANNEXURE B

TERMS AND CONDITIONS OF OPTIONS UNDER THE COMPANY’S EMPLOYEE SHARE OPTION PLAN

The Company’s Share Option Plan was established prior to the Company’s listing on ASX and a summary of the terms and conditions of the Share Option Plan were set out in the Prospectus. The terms and conditions of the options to be issued (if approved), are as follows:

1. Each option shall entitle the Option holder, when exercised, to one ordinary share.

2. The unlisted options ( Options ) are exercisable wholly or in part at any time prior to 5.00 pm (WST) on the date which is 45 months after the issue date of the Options ( Expiry Date ). Options not exercised by that date shall lapse.

3. Each Option may be exercised by notice in writing to the Company, together with the payment for the number of Shares in respect of which the Options are exercised, at any time before the Expiry Date. Any notice of exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt.

4. The Option exercise price is 45% premium to the Volume Weighted Average Price (VWAP) for the 20 trading days preceding the issue.

5. An Option does not confer the right to a change in exercise price or a change in the number of the underlying Shares over which the Option can be exercised.

6. Shares issued upon exercise of the Options will be issued following receipt of all the relevant documents and payments and will rank equally in all respect with the then issued Shares.

7. The Company will apply for quotation on ASX of the Shares issued upon exercise of the Options.

8. There are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate in new issues of securities offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 12 Business Days before record date (books closing date). This will give Option holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.

9. In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, the number of Options or the exercise price of the Options, or both, shall be reconstructed in accordance with the Listing Rules.

10. An Option held by a Participant will immediately lapse upon the first to occur of:

11. (a) its Expiry Date;

12. (b) the making by the Board of a determination that:

    • (i) the Participant has acted fraudulently, dishonestly or in breach of the Participant's obligations to the Company or an Associated Body Corporate; and

    • (ii) the Option is on that account to be forfeited;

13. (c) subject to clause 11 of this Schedule, the Participant ceasing to be employed by the Company or an Associated Body Corporate for any reason (or, in the case of an Option held by a nominee, the employment of the nominating Participant is terminated) except where the Participant ceases to be employed as a direct result of the disposal or sale of the Company or Associated Body Corporate (in which case, for the avoidance of doubt, such Options shall not lapse by virtue of that event alone);

14. (d) the day which is 30 days following any person or corporation having a relevant interest in not less than 90% of the Shares; or

15. (e) the day which is 10 days following the Company issuing a notice of meeting convening a meeting of shareholders in order to enter into a scheme of arrangement (pursuant to the provisions of the Corporations Act) which, if implemented would result in a person or corporation having a relevant interest in not less than 90% of the Shares.

16. 11 For the purposes of clause 10 of this Schedule, a Participant shall be deemed to have ceased to be employed by the Company or an Associated Body Corporate:

17. (a) on the day which is six months after the day the Participant ceases to be employed by the Company or an Associated Body Corporate by virtue of:

18. (i) the Participant's death; or

19. (ii) the Participant being retrenched or made redundant by the Company or an Associated Body Corporate (other than as a direct result of the disposal or sale of the Company or Associated Body Corporate); and

20. (b) on the later of 21 days following the Participant ceasing to be employed by the Company or an Associated Body Corporate or such later date that the Board determines in its absolute discretion where the Participant ceases to be employed by virtue of:

21. (i) the Participant retiring; or

22. (ii) the Participant's permanent illness or permanent physical or mental incapacity (as certified by a medical practitioner who is approved in writing by the Board).

ANNEXURE C

INDEPENDENT EXPERT’S REPORT

PO Box 1908 West Perth WA 6872 Australia

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

29 January 2014

ABN: 42 128 908 289 AFS Licence No: 448697 www.stantons.com.au

The Directors Zenith Minerals Limited Level 1, 33 Ord Street WEST PERTH WA 6005

The Independent Expert has concluded that the transaction related to the issue of 1,693,814 consideration shares to Creekwood the subject of Resolution 2 outlined in this Notice of General Meeting is not fair but reasonable to Shareholders of the Company (not associated with Creekwood) as at the date of this report.

Dear Sirs

• Re: ZENITH MINERALS LIMITED (ABN 961 119 397 938) ON THE PROPOSAL TO ACQUIRE MINERAL ASSETS BY ACQUIRING 100% OF THE ISSUED CAPITAL OF S2M2 COAL PTY LTD AND ISSUING CONSIDERATION SHARES TO A RELATED PARTY. SHAREHOLDERS MEETING PURSUANT TO AUSTRALIAN SECURITIES EXCHANGE (“ASX”) LISTING RULE 10.1

1. Introduction

• 1.1 We have been requested by the Directors of Zenith Minerals Limited (“Zenith” or “the Company”) to prepare an Independent Expert’s Report to determine the fairness and reasonableness of the proposal as noted in Resolution 2 to the Notice of Meeting of Zenith Shareholders (“Notice”) and as more fully described in the Explanatory Statement (“ES”) attached to the Notice. Resolutions 1 to 2 relate to the proposals whereby Zenith will acquire from a related party and unrelated parties (Resolution 2 refers to the related party and Resolution 1 relates to the unrelated parties) and issue 16,770,000 shares (“Consideration Shares”) in consideration for the acquisition of 100% of the issued share capital of S2M2 Coal Pty Ltd (“S2M2”).

• 1.2 Zenith will issue a total of 16,770,000 shares (“Consideration Shares”) to the S2M2 shareholders’ that represents approximately 14.933% of the expanded issued capital of Zenith post the Acquisition. S2M2 owns 100% of the shares in six subsidiaries but one (Black Dragon Energy Pte Ltd) is in the process of being deregistered. The S2M2 Group comprises of:

S2M2 COAL PTY LTD KALICOAL BLACK DRAGON MAMUCOAL S2M2 EASTERN PTY LTD ENERGY (AUS) PTY LTD COAL PTY LTD PTY LTD GLOBAL BLACK DRAGON PHOENIX ENERGY PTE LTD POWER PTE LTD (BEING DEREGISTERED)

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Liability limited by a scheme approved under Professional Standards Legislation

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S2M2 owns or is earning an interest in various mineral projects in Turkey, Indonesia and Australia (the Mineral Assets). As part of a series of Share Sale Agreements, Mr Michael Clifford (“Clifford”) is to be appointed as the Managing Director of Zenith following completion of the Acquisition. Clifford will, subject to shareholder approval, be issued 1,000,000 share options in Zenith, exercisable at 45% above the 20 day volume weighted average share price of Zenith shares.

The acquisition of all of the shares in S2M2 is for the purpose of this report known as the Acquisition. The Notice and ES refers to the proposed acquisition of S2M2 and the issue of shares to the S2M2 shareholders.

• 1.3 In terms of Share Purchase Agreements (Short Form and Long Form) (“SPA’s”) entered into by Zenith and the S2M2 shareholders in December 2013 it is proposed that Zenith will acquire 100% of the shares in S2M2, an unlisted private company (incorporated in WA on 11 March 2011) and as at 31 December 2013 has 247,518,333 shares on issue and approximately 10 shareholders. These include a 25,000,000 shareholding under the control of Stan Macdonald (“Macdonald”) who also has a beneficial interest in 2,297,100 shares in Zenith via his control of Creekwood Nominees Pty Ltd (“Creekwood”). Macdonald is a director of Zenith as well as a shareholder in (via Creekwood) and director of S2M2 and for the purposes of this report Macdonald and Creekwood are known as the Related Party. The ASX considers that ASX Listing Rule 10.1 applies to the acquisition of the Related Party’s shareholding in S2M2 pursuant to the Acquisition. The total number of Consideration Shares to be issued to the Related Party will be 1,693,814. Resolution 2, on which we are opining on refers to the proposed issue of 1,693,814 Consideration Shares to Creekwood.

Further details on the Mining Assets owned or to be owned by S2M2 are referred to in the 12 January 2014 report titled “Independent Technical Valuation of Zenith Minerals Limited and S2M2 Coal Pty Ltd” (“Minerals Valuation Report”) of Al Maynard and Associates Pty Ltd (“Maynard”) as referred to in paragraph 1.13 below and attached as Appendix B to this report.

• 1.4 Immediately prior to the issue of the Consideration Shares, there will be 95,531,274 Zenith shares on issue. By acquiring all of the shares in S2M2, the S2M2 shareholders collectively will increase their shareholding interest in Zenith from approximately 16.95% (pre the Acquisition as eight S2M2 shareholders already controls 16,196,059 shares in Zenith) to approximately 29.36% of Zenith that assumes there will be on issue 112,301,274 shares. The existing Zenith shareholders’ interest post the Acquisition and issue of the Consideration Shares will be reduced to approximately 85.07% (approximately 70.64% excluding the interests of the S2M2 shareholders who are already shareholders in Zenith). The Related Party shareholding will increase from approximately 2.40% to approximately 3.55% post the Acquisition.

• 1.5 There are three resolutions being put to the shareholders. Resolution 1 relates to the proposal to issue 15,076,186 Consideration Shares to various shareholders of S2M2 other than Creekwood as part of the acquisition to acquire all of the shares in S2M2; Resolution 2 relates to the proposal to issue 1,693,814 Consideration Shares to Creekwood as part of the acquisition to acquire all of the shares in S2M2 and Resolution 3 relates to the proposal to allot and issue 1,000,000 share options to Michael Clifford, the proposed new Managing Director of the Company. In effect Resolutions 1 and 2 relate to the approval for the Company to allot and issue a total of 16,770,000 Consideration Shares to acquire 100% of the issued capital of S2M2. We are not reporting on the merits or otherwise of Resolutions 1 and 3 but note that for us to report on the proposal to acquire S2M2 from a Related Party (as noted in Resolution 2) we are in effect required to report on the fairness and reasonableness of the proposal under Resolution 1 as well (to issue 15,076,186 Consideration Shares to non related parties).

• 1.6 Listing Rule 10.1 of the ASX Listing Rules provides that shareholder approval is required before a listed company may acquire or dispose of a substantial asset to a related party or substantial shareholder where the substantial shareholder and the substantial shareholder’s associates have a relevant interest (or had a relevant interest at any time in the 6 months

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before the relevant transaction) in at least 10% of the total votes attached to the voting securities. An asset is substantial for the purposes of ASX Listing Rule 10.1 if its value or the value of the consideration for it is, or in ASX’s opinion is, 5% or more of the equity interests of the company as set out in the latest accounts given to ASX under the Listing Rules.

• 1.7 For the purposes of ASX Listing Rule 10.1, Macdonald is a director of Zenith and also a shareholder (and director) of S2M2. As noted above it is proposed that Zenith will acquire all of the share capital of S2M2 from the S2M2 shareholders for the consideration of 16,770,000 Consideration Shares. Macdonald controls 25,000,000 shares in S2M2 and thus his interests (via Creekwood) will be issued 1,693,814 Consideration Shares in Zenith to take his/Creekwood’s combined shareholding interests in Zenith to 3,990,915 shares representing approximately 3.553% of the expanded issued capital of Zenith post the Acquisition. As noted above, the ASX considers that ASX Listing Rule 10.1 applies to the acquisition of the Related Party’s shareholding in S2M2 under the Acquisition. Zenith therefore requires shareholder approval under ASX Listing Rule 10.1 to acquire the Related Party’s shareholding in S2M2 through the issue of a total of 1,693,814 Consideration Shares to the Related Party under the Acquisition. Resolutions 1 and 2 are in effect requesting approval to acquire S2M2 (the substantial asset) from non related parties (issue of 15,076,186 Consideration Shares) and the Related Party (issue 1,693,814 Consideration Shares to Creekwood).

• 1.8 A notice prepared in relation to a meeting of shareholders convened for the purposes of ASX Listing Rule 10.1 must be accompanied by an Independent Expert's Report stating whether the proposal to acquire the S2M2 shareholding from a Related Party (notwithstanding that not all shareholders of S2M2 are related parties to Zenith) is fair and reasonable to those shareholders not associated with the Related Party. To assist shareholders in making a decision the directors have requested that Stantons International Securities prepare an Independent Expert's Report, which must state whether, in the opinion of the Independent Expert, the proposal to acquire the S2M2 shareholding from the Related Party is fair and reasonable to the non-associated shareholders of Zenith (not associated with the Related Party). For us to conclude on such fairness and reasonableness, we have had to consider the fairness and reasonableness of the total Acquisition (and the issue of 16,700,000 Consideration Shares) as a whole.

• 1.9 Apart from this introduction, this report considers the following:

• Summary of opinion

• Implications of the proposals

• Corporate history and nature of business of Zenith and S2M2

• Future direction of Zenith

• Basis of valuation of Zenith shares

• Value of consideration

• Basis of valuation of S2M2

• Conclusion as to fairness

• Reasonableness of the offer

• Conclusion as to reasonableness

• Sources of information

• Appendix A and our Financial Services Guide and the Minerals Valuation Report on the S2M2 Mining Assets and the Zenith mineral assets attached as Appendix B to this report

• 1.10 In determining the fairness and reasonableness of the acquisition of 100% of the shares of S2M2, who via itself and various subsidiaries owns the Mining Assets, we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness).

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• 1.11 The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target” and irrespective of whether the consideration is scrip or cash. An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Although in this case the proposed acquisition of S2M2 is not a takeover offer (of Zenith), we have considered the general principals noted above to determine our opinions on fairness and reasonableness.

• 1.12 In our opinion, the proposal as outlined in paragraph 1.1 and 1.2 and Resolution 2 may, on balance, taking into account the factors referred to in 9 below and elsewhere in this report, be considered to be not fair but reasonable to the shareholders of Zenith (not associated with the Related Party) as at the date of this report.

• 1.13 The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the 12 January 2014 Minerals Valuation Report on the mineral assets owned by the Zenith Group and the Mining Assets of S2M2 Group prepared by Maynard a copy of which is attached as Appendix B to this report.

It is noted that the volumes of trades in Zenith shares on ASX is extremely low (with some trading days having nil sales) but the last sale price was 11.5 cents on 15 January 2014 (10.0 cents to 15.0 cents pre the announcement of the S2M2 Acquisition). Using the limited trading share prices, the proposed Acquisition would be fair. However, our preferred methodology to value the shares in Zenith is to use the adjusted net asset backing methodology as noted elsewhere in this report.

1. Implications of the Proposals

2. 2.1 As at 28 January 2014, there were 95,531,274 ordinary fully paid shares on issue in Zenith. The top 40 shareholders list as at 13 January 2014 discloses the following:

Shareholder HSBC Custody Nominees Australia Ltd Giralia Resources Ltd (owned by Atlas Iron Ltd) Granich Nada (spouse of Michael Joyce) Yandal Investments Pty Ltd Miquilini Suzi Queli	No. of fully paid shares % of issued fully paid shares 12,868,590 13.47 10,259,066 10.74 5,005,491 5.24 3,262,417 3.42 2,791,260 2.92
	34,186,824 35.79

The top 20 shareholders as per the top 40 shareholders list at 13 January 2014 owned approximately 56.18% of the ordinary issued capital of the Company. The interests of Macdonald have a beneficial interest in 2,297,100 shares in Zenith and the S2M2 shareholders (including the Related Party) own a collective 16,196,059 shareholding (16.95% in Zenith prior to the Acquisition).

• 2.2 If the Acquisition is completed, the collective shareholding of the S2M2 shareholders would approximate 29.36% (includes the 2,297,100 existing shareholding interest of the Related Party in Zenith). The movement in the issued capital of the Company will be:

Shares on issue at 28 January 2014 Issue of Consideration Shares to the S2M2 Shareholders Shares on Issue post the Acquisition Exercise of the Existing Options Exercise of the Managing Director Options Potential shares on issue		Number 95,531,274 16,770,000 112,301,274 100,000 1,000,000 113,401,274

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• 2.3 The current Board of Directors is expected to change in the near future as a result of the Acquisition. The Board is currently Julian David Goldsworthy, Rodney Michael Joyce and Stanley Macdonald (all non-executive directors). Mr Michael Clifford will become the new Managing Director of Zenith on completion of the Acquisition.

• 2.4 S2M2 (and its subsidiaries) will become legally wholly owned subsidiaries of Zenith. S2M2 owns 100% of the issued capital of six subsidiaries, one of which is on the process of being deregistered (refer paragraph 1.2 above).

• 2.5 In the event that the Consideration Shares are issued to the S2M2 shareholders, the S2M2 shareholders would own approximately 29.36% of the expanded issued capital of Zenith (includes the 2,297,100 shares beneficially held by the Related Party as at 31 December 2013). The Related Party would have a beneficial interest in approximately 3.55% of the expanded issued capital of Zenith.

• 2.6 We have been advised that the Company does not propose to undertake a capital raising after Completion as the combined cash funds may approximate $1,456,000. However, following an initial exploration programme on the Mining Assets a new capital raising may be undertaken in late 2014 or some time in 2015. In the event that a capital raising is completed, the shareholding interests of the S2M2 Shareholders in Zenith may reduce.

• Corporate History and Nature of Businesses

Zenith

• 3.1 Principal Activities and Significant Assets

Zenith is an ASX listed mineral exploration and evaluation company having achieved an ASX listing in May 2007. The primary mineral commodity comprises manganese and iron. Its more significant assets are as follows:

• Mount Alexander Iron Ore Project – an iron ore project in Western Australia. The Company has announced a 535 million tonnes inferred magnetite resource at 30% Fe (iron). It is planned to undertake further drilling activities in the near future to test new identifiable targets and increase the magnetite resources. An independent Scoping Study of May 2011 indicated capex costs of between $743 million and $1,866 million. In October 2013, the Company completed the acquisition of new key tenement (E08/1987) at Mount Alexander North at a cost of $50,000 cash plus the issue of 500,000 shares in Zenith. The Company announced “that the Mount Alexander Project has now entered a phase of reduced exploration spend, and the focus has moved to engagement with potential development partners/buyers as we seek to develop or monetise this asset, the Company should be active in identifying a pipeline of new opportunities to which we can add value for the benefit of shareholders”.

• Earaheedy Manganese Project – a manganese project in Western Australia but also prospective for zinc and lead. It is planned to undertake further drilling activities in the near future to test identifiable targets and increase inferred resources. The Company has announced a 1.6 million tonnes inferred manganese resource at a 5% cut off grade and 1.2 million tonnes at a 10% cut off grade.

• Cash at bank at 31 December 2013 of approximately $851,000 which is reducing at the rate of approximately $85,000 per month.

• 3.2 The Company also has an interest in the Cardinals copper/zinc/lead prospect but limited exploration activity has been conducted on this prospect in 2013 and is currently under review.

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S2M2

• 3.3 Extract from information on S2M2 as provided by Zenith

• 3.3.1 “S2M2 Coal Pty Ltd is a private unlisted Australian company with Australian and international shareholders. The company was established to explore for acquire and develop coal projects in Indonesia, and subsequently broadened its aims to actively pursuing high quality mineral exploration and development opportunities in low risk jurisdictions. In addition to entering into the Agreement (17 September 2013) with Columbus Copper on the Kavaklitepe Gold Project in western Turkey (refer below), the company holds mineral licences prospective for gold in Western Australia. The company is in the process of divesting its Indonesian coal assets”.

• 3.3.2 About Mick Clifford the main driver of S2M2 “Michael Clifford is a geologist (BSc (Hons) 1987, MSc) with over 25 years experience in the exploration industry. Mick held senior technical and business development roles and explored for most major metal commodities during a successful career with Billiton Australia, Acacia Resources and AngloGold Ashanti (Regional Exploration Manager Australia). Mick was Managing Director of ASX listed PacMag Metals Ltd from 2005 until its takeover in 2010, when he co-founded private explorer S2M2 Coal Pty Ltd. He is experienced in international exploration, exploring for gold, copper and coal in Indonesia and has had exposure to mining and exploration in the USA, Brazil, PNG and Mongolia”.

3.3.3 S2M2 Coal Assets

3.3.3.1 Kavaklitepe Gold Project Turkey (Earning up to 70%)

“S2M2 Coal has an exclusive option to earn up to a 70% interest in Canadian TSX listed Columbus Copper’s wholly-owned Kavaklitepe Gold Project located in western Turkey.

Columbus Copper reported the discovery of gold mineralization at Kavaklitepe in a news release dated January 17, 2013. The original discovery was made by following up a stream sediment anomaly with 5.2 grams per tonne (“gpt”) gold returned from a rock chip composite in a stream bed outcrop. A small trench in an adjacent road cut was opened up perpendicular to the observed mineralization strike and returned a weighted average grade of 2.67 gpt gold over 21 metres of exposure. About 1.4 kilometres northwest from the discovery outcrop follow up on a soil sample anomaly, peaking at 6.05 gpt gold, led to identification of a brecciated zone striking 50NE with low-sulphidation epithermal gold signature. Four rock samples collected there returned 28.2 gpt, 21.7 gpt, 6.7 gpt and 3.66 gpt gold respectively (see Columbus news release of March 1, 2013). Further rock sampling along a road bank in this zone confirmed the presence of high-grade gold mineralization returning 54.0 metres of continuous rock chips with an average grade of 3.33 gpt gold, including 21.5 metres grading 7.2 gpt gold.

Columbus Copper also collected a total of 2,127 soil samples on the project in 50 metre x 50 metre and 100 metre x 100 metre grids covering an area of approximately 11 square kilometres, of which 176 samples returned gold grades higher than 50 ppb, 112 - higher than 100 ppb and 40 - higher than 250 ppb with 9 of these samples containing more than 1000 ppb (1 gpt) gold. The soil sampling outlined a potentially mineralized zone measuring 850 metres by 250 metres and continuing for another 800 metres to the southwest and possibly displaced by a northwest southeast trending fault at its southern margin. There are strong, coincident arsenic and antimony anomalies.

Under the Agreement with Columbus, S2M2 may earn an initial 51% interest in the Property over three years by, among other things, making US$400,000 in cash payments of which US$250,000 was paid on October 9, 2013 and completing US$2,500,000 in cumulative exploration expenditures on the Property. If S2M2 earns the initial 51% interest in the Property, it may elect to earn a further 19%, for 70% total, by paying Columbus Copper an additional US$500,000 and by completing a bankable feasibility study within a four year period. The Agreement contains other terms and conditions that are standard for an option/joint venture contract.

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S2M2 Coal is planning a program of geophysical surveys (induced polarisation and ground magnetics) to endeavour to see through the thin soil cover and leaf litter etc, along with detailed geological mapping of the scarce outcrop on the licence prior to trenching and drill testing”.

For additional technical information on the Kavaklitepe Gold Project, please refer to the Columbus Copper News release dated June 11, 2013 (not attached to this report) and the S2M2 Valuation Report by Maynard.

3.3.3.4 Mt Minnie Gold Project – Western Australia (100%)

“The Mt Minnie project consisting of two exploration licence applications (E09/2063 – Mt Minnie North and E09/2064- Ram West) is situated within the Gascoyne Mineral Field of Western Australia approximately 240 km northeast of Carnarvon. The Mt Minnie North – Ram West tenements cover a portion of terrain composed predominantly of mid-Proterozoic granite assigned to the Minnie Creek batholith interpreted as highly prospective for gold mineralisation commonly referred to as reduced intrusive related gold deposits, that have a trace element metal association including: bismuth, molybdenum and tungsten. The project has 7 existing gold prospects requiring follow-up that to date have only been the subject of cursory reconnaissance exploration activity.

Mt Minnie North (E09/2063) - Rock chip sampling (by Catalyst Metals who were exploring predominantly for molybdenum) at the Woods Prospect identified a zone of sub-cropping gossanous material returning very positive gold results including: 21.5 g/t Au, 0.49 g/t Au, 0.3 g/t Au, 0.15 g/t Au and 1.09 g/t Au. In addition rock chip sampling by the Equatorial Mining-Merrit Mining JV in 1997 returned up to 6.64g/t Au from the Osborne Well/Neptune Prospect area, located approximately 12 km to the south east of Woods. Mineralisation at all prospects is associated with quartz veining and sheared-altered granite.

Ram West (E09/2064) - Reconnaissance prospecting by Catalyst Metals in 2009 (who focused on the molybdenum and copper potential of the region) defined 5 gold prospects over an area 10km x 5km that have not been followed up after their initial discovery: Ram West – gold to 0.85 g/t Au with associated bismuth (0.14%), tungsten and molybdenum, Fenceline – gold up to 64.2 g/t Au, Roadside - gold up to 0.3 g/t Au with associated tungsten and molybdenum, Michelles Copper – gold up to 0.6 g/t Au with associated bismuth (0.2%), molybdenum (278 ppm), tungsten (0.12%) and copper (3.6%), Clay pan – gold up to 0.28 g/t Au.

S2M2 Coal is planning a program of detailed mapping and sampling to define the extents of the gold mineralisation”.

3.3.3.5 Sungai Roi Coal Project - Indonesia (Right to earn 90%)

“The Sungai Roi Coal concession in East Barito, Kalimantan, Indonesia contains an Exploration Target estimated in accordance with Section 17 and Section 38 of the JORC Guidelines 2012 of approximately 1 to 1.2 million tonnes of high-grade (6800 - 6900 kcal/kg GAR) thermal coal. The potential quantity and grade of the Exploration Target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

The Exploration Target was estimated based on detailed mapping and sampling of 14 shallow dipping coal seams exposures over a strike length of 3km within a width of 800m and a 40m vertical range based on topographic contours. Cumulative coal seam thickness is up to 1.87m. Drilling to test the validity of the Exploration Target is recommended subject to receipt of necessary permits and approvals.

S2M2 Coal has the exclusive right to conduct due diligence on the Sungai Roi coal concession, to acquire a 90% interest in the company owning the Sungai Roi coal concession. The multiple flat lying coal seams of the concession crop out over 3km of

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strike within an area of gently undulating topography. The project is close to existing infrastructure including haul roads and barge loading facilities that have the potential to reduce the upfront capital costs and time frame for development of the project.

In October 2013, S2M2 Coal received a conditional offer from an Indonesian entity to purchase S2M2 Coal Rights in respect of the Sungai Roi Project for consideration of USD 500,000 in staged payments and a USD1.00 royalty per tonne of coal mined. The purchaser will be responsible for all forestry permits, delineation of resources and all costs associated with furthering the Sungai Roi coal project upon signing any purchase agreement. Due diligence and legal documentation of the sale and purchase agreement is in progress”.

3.3.3.6 Cash and other assets

“At 30 June 2013 S2M2 Coal Pty Ltd had cash deposits of $1,044,036, which have been depleted since by the option payment of US$250,000 on October 9, 2013 to Columbus Copper. S2M2 Coal’s Cash balance at mid October was approximately $660,000”. It is estimated that the cash position of S2M2 at the date Zenith acquires all of the shares in S2M2 will approximate $600,000.

• 3.4 We refer to the 12 January 2014 Maynard Valuation Report by Maynard on S2M2’s Mining Assets and the ES for more detailed information on S2M2 and its assets.

• 3.5 A summary unaudited consolidated balance sheet (consolidated statement of financial position) of the S2M2 Group as at 30 November 2013 as adjusted for the further estimated administration, exploration and corporate costs from 1 December 2013 to 28 February 2014 of approximately $70,000 less sale proceeds from the sale of plant of $25,000 is noted elsewhere in this report.

4.

Future Directions of Zenith

• 4.1 We have been advised by the directors and management of Zenith that:

• There are no proposals currently contemplated either whereby Zenith will acquire any further properties or assets from S2M2’s shareholders (however Zenith will issue ordinary shares to the S2M2 shareholders as outlined above in relation to the Acquisition) or where Zenith will transfer any of its property or assets to S2M2’s shareholders;

• The composition of the Board will not change in the short term as noted above;

• The Company may raise further capital in 2014 or 2015 depending upon exploration results on the Mining Assets that is planned to occur in 2014;

• No dividend policy has been set; and

• The Company will endeavour to enhance the value of its interests in the Mining Assets to be acquired via the Acquisition.

5.

Basis of Valuation of Zenith Shares

• 5.1 Shares

• 5.1.1 In considering the proposal to acquire all of the shares in S2M2, we have sought to determine if the consideration payable by Zenith to the S2M2 shareholders is fair and reasonable to the existing non-associated shareholders of Zenith.

• 5.1.2 The offer would be fair to the existing non-associated shareholders if the value of the ordinary shares in S2M2 being acquired by Zenith is greater than the implicit value of the Consideration Shares (ordinary shares) in Zenith being offered as consideration. Accordingly, we have sought to determine a theoretical value that could reasonably be placed on S2M2 shares for the purposes of this report.

• 5.1.3 The valuation methodologies we have considered in determining a theoretical value of an Zenith share (and also a S2M2 share) are:

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• Capitalised maintainable earnings/discounted cash flow;

• Takeover bid - the price at which an alternative acquirer might be willing to offer;

• Adjusted net asset backing and windup value; and

• The market price of Zenith shares (and S2M2 shares).

• 5.2 Capitalised maintainable earnings and discounted cash flows.

• 5.2.1 Due to Zenith’s current operations, a lack of a reliable long term profit history arising from business undertakings and the lack of a reliable future cash flow from current business activities, we have considered these methods of valuation not to be relevant for the purpose of this report. Zenith made a loss of approximately $1,005,000 for the year ended 30 June 2013 and as at that date had unaudited losses of approximately $5,827,000.

5.3 Takeover Bid

• 5.3.1 It is possible that a potential bidder for Zenith could purchase all or part of the existing shares, however no certainty can be attached to this occurrence. To our knowledge, there are no current bids in the market place and the directors of Zenith have formed the view that there are unlikely to be any takeover bids made for Zenith in the immediate future. However, if the agreement to acquire S2M2 is completed, the S2M2 Shareholders (including the Related Party) collectively will control approximately 29.36% of the expanded ordinary issued capital of Zenith. However, no S2M2 shareholder individually will own more than 5.73% of the expanded issued capital of Zenith post the Acquisition.

• 5.4 Adjusted Net Asset Backing

• 5.4.1 We set out below a reviewed balance sheet (statement of financial position) of Zenith (Balance Sheet “A”) as at 30 November 2013, adjusted for estimated exploration and administration and other costs of $100,000 and depreciation of $6,000 for the period 1 December 2013 to 28 February 2014.

• 5.4.2 In addition, we disclose a pro-forma consolidated Balance Sheet “B” assuming the following:

• The acquisition of all of the shares in S2M2 by way of an issue of 16,770,000 Consideration Shares at a deemed issue price of 13.5 cents per share for a total consideration of $2,263,950; and

• Allowing for indirect costs of the Acquisition and Notice preparation of approximately $75,000;

In addition, we disclose the unaudited consolidated statement of financial position of the S2M2 Group as at 30 November 2013 adjusted for the sale of plant of $25,000 and for corporate, administration and exploration costs estimated at $70,000 and depreciation of $3,000 for the period 1 December 2013 to 28 February 2014 of which $50,000 is capitalised as exploration costs.

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	Unaudited Adjusted 30 November 2013 Zenith $000 “A” Unaudited Pro-forma 30 November 2013 Zenith (including consolidation of S2M2) $000 “B” Unaudited Adjusted Consolidated S2M2 30 November 2013 $000
Current Assets Cash assets Trade and other receivables Total Current Assets Non Current Assets Bonds Property, plant and equipment Capitalised exploration costs (refer below in paragraph 5.4.3) Total Non Current Assets Total Assets Current Liabilities Trade and other payables Employee benefits Total Current Liabilities Total Liabilities Net Assets Equity Issued Capital Reserves Accumulated Losses Total Equity	930 1,456 601 20 50 30
	950 1,506 631
	43 43 - 62 79 17 4,991 6,614 854
	5,096 6,736 871
	6,046 8,242 1,502
	217 224 7 17 17 -
	234 241 7
	234 241 7
	5,812 8,001 1,495
	12,015 14,279 3,003 207 207 - (6,410) (6,485) (1,508)
	5,812 8,001 1,495

The net asset (book value) backing per fully paid (pre acquisition of S2M2) ordinary Zenith share as at 30 November 2013 based on the unaudited adjusted balance sheet (Balance Sheet “A”) and 95,531,274 ordinary shares on issue is approximately 6.08 cents (refer paragraph 5.4.5 below).

• 5.4.3 In determining the net tangible asset value on a going concern basis it is necessary to adjust the book values of the mineral assets of the Zenith Group to reflect the technical (market) fair value of those assets. We have therefore instructed Maynard to undertake a valuation of the existing mineral assets of Zenith. In January 2014 Maynard prepared the Minerals Valuation Report in which they have valued Zenith’s mineral assets on a preferred, low and high value. In addition, in assessing the fair value of S2M2, we also commissioned Maynard to prepare a valuation of the S2M2 Mining Assets as detailed elsewhere in this report. We have used and relied on the Minerals Valuation Report and have satisfied ourselves that:

• Maynard is a suitably qualified consulting firm and has relevant experience in assessing the merits of mineral projects and preparing mining asset valuations (also the principal author of the report, Brian Varndell is suitably qualified and experienced);

• • Maynard is independent from Zenith and S2M2; and • Maynard has to the best of our knowledge employed sound and recognised methodologies in the preparation of the valuation report on the Zenith mineral assets and S2M2’S Mining Assets.

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5.4.4. Maynard has ascribed a range of market values for Zeniths mineral assets as follows:

Mount Alexander Iron Project Earaheedy Manganese Project Cardinals Mineral assets of Zenith Rounded by Maynard to:		Low $M000’s 27.10 4.97 0.10	Preferred $M000’s High $M000’s 55.30 84.6 6.63 8.29 0.15 0.20
		32.17	62.08 93.09 62.00 93.00
		32.00	62.00 93.00

• 5.4.5 Using the fair values of Zenith’s mineral assets as ascribed in the Zenith Valuation Report and based on the assumptions provided to us of the other assets and liabilities of Zenith as at 30 November 2013 (as adjusted) as per Balance Sheet B above, the net fair value of Zenith is expected to lie in the range as follows:

Paragraph Mineral assets 5.4.4 Property, plant and equipment Other current assets Other current liabilities Total Number of shares on issue Net asset value per share (cents)	Low $000’s 32,000 62 993 (234) 32,821 95,531,274 34.35	Preferred $000’s 62,000 62 993 (234) 62,821 95,531,274 65.75	High $000’s 93,000 62 993 (234)
			93,821
			95,531,274 98.20

• 5.4.6 Based on the preferred values, the adjusted net book values at 30 November 2013 (“Balance Sheet B”) equates to a value per share of approximately 65.75 cents (ignoring the value, if any, of non-booked tax benefits).

• 5.4.7 The pro-forma statement of financial position discloses capitalised costs of $6,614,000 made up of the capitalised costs of $4,991,000 from Zenith, the $854,000 capitalised costs in S2M2 with the balance represented by the excess of the cost of the acquisition of S2M2 by Zenith ($769,000) over the net book assets of S2M2 being acquired ($1,495,000) and this has been deemed an additional fair value to Mining Assets of the S2M2 Group and thus disclosed as capitalised exploration costs.

Based on the unaudited pro-forma consolidated net asset book values, this equates to a value per fully paid ordinary share post the issue of 16,770,000 Consideration Shares (112,301,274 ordinary shares on issue) of approximately 7.12 cents per share (ignoring the value, if any, of non-booked tax benefits. If we used the preferred net fair value of S2M2 of $5,484,000 (refer paragraph 8.7 below), the pro-forma consolidated net assets would approximate $10,452,000 and the adjusted net asset backing per share would approximate 9.30 cents.

• 5.4.4 We note that the market has been informed of all of the current projects, joint ventures and farm in/farm out arrangements entered into between Zenith and other parties. We also note it is not the present intention of the Directors of Zenith to liquidate the Company and therefore any theoretical value based upon wind up value or even net book value (as adjusted), is just that, theoretical. The shareholders, existing and future, must acquire shares in Zenith based on the market perceptions of what the market considers a Zenith share to be worth. The market has either generally valued the vast majority of junior/mid size mineral exploration and development companies at significant discounts or premiums

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to appraised technical values and this has been the case for a number of years although we also note that there is an orderly market for Zenith shares and the market is kept fully informed of the activities of the Company. The market has ascribed a current value as noted below.

• 5.4.5 The market has either generally valued the vast majority of mineral exploration (and oil and gas) companies at significant discounts or premiums to appraised technical values and this has been the case for a number of years although we also note that there is an orderly market for Zenith shares and the market is kept fully informed of the activities of the Company. However, it is noted that from Zenith’s point of view as the legal parent company, the value ascribed to the 16,770,000 Consideration Shares to be issued to the S2M2 Shareholders would be accounted for at the market value of an Zenith share at date of issue (notwithstanding the low volume of shares traded in Zenith). The actual share price at the date of acquisition of S2M2 cannot be determined at this point of time.

For accounting purposes under Australian Equivalents to International Financial Reporting Standards (“IFRS”), the consideration for the issue of Zenith shares to acquire the shares in S2M2 from the S2M2 Shareholders will be booked at the fair value of the shares in S2M2 or at the share price of an Zenith share at the date of Acquisition and not any perceived technical value.

• 5.5 Market Price of Zenith Fully Paid Ordinary Shares

• 5.5.1 Share prices in Zenith as recorded on the ASX since 1 July 2013 up to and including 23 December 2103 (the day of the announcement of the proposed Acquisition) and subsequent to the announcement of the Acquisition to 27 January 2014 have been as follows:

	High	Low	Closing Price	Volume
	Cents	Cents	Cents	000’s
July 2013	8.5	5.0	5.0	1,502
August 2013	16.0	5.5	16.0	509
September 2013	21.0	15.0	19.0	592
October 2013	19.0	13.5	13.5	343
November 2013	16.5	13.5	13.5	160
December 2013 (to
23rd)	15.0	10.0	10.0	178
24 December 2013 to
27January2014	13.5	10.0	11.0	1,698

As can be seen from the trading volume on ASX, there was very little trading of the Zenith shares before the announcement of the Acquisition and thus we consider that there is not a Deep Market in trading of Zenith shares on ASX. Deep Market is normally (but not always) considered when at least 1% of a company’s shares are traded on ASX on a monthly basis. The S2M2 acquisition was announced to the market on 23 December 2013. There were many trading days since where there were no trades of Zenith shares on ASX. Subsequent to the announcement of the Acquisition, the shares in Zenith traded on ASX had been between 10.0 cents and 12.0 cents with a last sale on 27 January 2014 of 11.0 cents (only 1,698,000 shares traded from 24 December 2013 to 27 January 2014 of which 1,451,592 were traded between on four trading days between 2 January 2014 and 7 January 2014).

• 5.5.2 The future value of a Zenith share will depend upon, inter alia:

• the future prospects of its mineral assets and the Mining Assets being obtained via the Acquisition;

• the state of the iron, base metal, coal and manganese markets (and prices) in Australia and overseas;

• the state of Australian and overseas stock markets;

• the strength and performance of the Board and management and/or who makes up the Board and management;

• foreign exchange rates;

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• general economic conditions;

• the liquidity of shares in Zenith; and

• possible ventures and acquisitions entered into by Zenith.

6.0 Preferred Valuation Method for Valuing a Zenith Share

• 6.1.1 In assessing the fair value of Zenith and a Zenith share pre the Acquisition, we have selected the net assets at fair market values on a going concern methodology as the preferred methodology as:

• Zenith does not generate revenues or profits and per the audited accounts has incurred significant losses in the financial years ended 30 June 2013 and 2012. Therefore the capitalisation of future maintainable earnings is not appropriate;

• Zenith although has potential future net cash inflows, the Company still needs to raise significant cash funds to enter into the development and commercialisation mode and therefore the Discounted Cash Flow methodology is not considered appropriate (but refer comments in paragraph 5.4.3 above); and

• Although the shares of Zenith are listed there is not a Deep Market of share trading in Zenith but we have now used share price as a secondary market valuation methodology.

• 6.1.2 As stated at paragraph 5.4.5 we have assessed the value of Zenith prior to the Acquisition on a net asset basis as adjusted and on a going concern basis as being approximately 65.75 cents.

• 6.1.3 We note that, the net asset value may not necessarily reflect fair values in the current economic circumstances of the Company. If funds can be raised and development of the Mount Alexander and Earaheedy Projects proceed to development or are sold far in excess of book values, then arguably the fair value of a Zenith share may be in excess of the current fair book value and current market values.

• 6.1.4 It is noted that using ASX share prices (as a secondary valuation methodology) the fair market value of a Zenith share to a shareholder pre the proposed Acquisition lies in the range of 13.5 cents and 15.0 cents( albeit on low trading volumes). Subsequent to the announcement of the Acquisition, the shares have traded in the range of 10.0 cents to 12.0 cents (to 27 January 2014).

The Acquisition is currently not dependent on any capital raising in the short term but depending on exploration results, further capital raisings may be required in late 2014 or early 2015. We have considered the pre-announcement ASX share price of a Zenith share that falls mainly in the range of 10.0 cents to 15.0 cents and the net adjusted book value of a Zenith share that approximates 65.75 cents. As stated, the ASX share prices do not necessarily reflect fair values in the current economic circumstances of the Company but as the shares are freely tradable then the pre-announcement share prices could also be taken into account in determining the fairness of the Acquisition. The Directors of Zenith will need to consider the accounting standards in determining the final price attributable to the Consideration Shares to be issued to acquire S2M2.

1. Value of Consideration

2. 7.1 Based on the technical valuation as noted above (not share prices) the consideration range would be:

16,770,000 Consideration Shares Assumed fair share price (not ASX share prices)	Low $5,760,495 34.35 cents	Preferred $11,026,275 65.75 cents	High $16,468,140
			98.20 cents

We have excluded the indirect costs such as legal and other fees.

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• 7.2 It is noted that at the time of negotiation of the Acquisition, the Zenith directors considered that the fair market value of a Zenith share may have been around the 13.5 cents to 15.0 cents range.

If we used the 13.5 cent to 15.0 cent ASX share price prior to and since the Acquisition as noted above, the amounts attributable to the Consideration Shares would lie in the range of $2,263,950 to $2,515,500. Based on the last sale price on 24 January 2014, the deemed accounting consideration may approximate $1,844,700 (11.0 cents per share).

8. Basis of Valuation of S2M2 (and interests in the Mining Assets)

• 8.1 The usual approach to the valuation of an asset is to seek to determine what an informed, willing but not anxious buyer would pay to an informed, willing but not anxious seller in an open market.

• 8.2 S2M2 is an unlisted private company and therefore valuing the shares on a takeover basis and on a market based approach are not relevant. There are no indications that other parties wished to acquire all of the shares in S2M2 other than Zenith. The shareholders in S2M2 do not have an active market to trade their shares.

• 8.3 The unaudited adjusted consolidated balance sheet of S2M2 at 30 November 2013 is disclosed under paragraph 5.4.2 above. This consolidated balance sheet shows the S2M2 Group net assets carried at a book value of $1,495,000 with the exploration and evaluation expenditure carried at a book value of $854,000.

• 8.4 Completion of the Acquisition is conditional on all necessary due diligence being undertaken on the ownership interests of S2M2, S2M2’s shareholding and interests and ownership of the Mining Assets. We advise that we have not undertaken any further steps to ascertain ownership of S2M2, S2M2’s subsidiaries and their assets and liabilities and the Mining Assets.

• 8.5 We, in conjunction with the Company commissioned Maynard (Author of the Mining Valuation Report was Al Maynard) to prepare a valuation report of the Mineral Assets owned by S2M2. The Mining Valuation Report of 12 January 2014 should be read in its entirety and a full copy of the S2M2 Valuation Report is attached as Appendix B to our report. The Mining Valuation Report ascribes a range of values to the S2M2 Mineral Assets and for the purposes of our report we have used the low, high and mid range valuations referred to in the Mining Valuation Report.

• 8.6 Maynard has provided a range of market values of the S2M2 Mining Assets (not all yet registered in the name of S2M2 or its subsidiaries and some include options to acquire interests in mining projects) as follows:

Kavalklitepe Gold Project Minnie Creek Gold Project Indonesian Coal Project Mining Assets	Low $ 3,750,000 100,000 50,000 3,900,000	Preferred $ 4,550,000 150,000 100,000 4,800,000	High $ 5,360,000 200,000 150,000
			5,710,000

Maynard has rounded the high figure to $5,700,000.

• 8.7 Taking into account the 30 November 2013 adjusted S2M2 Group other assets and liabilities, the net fair value of the S2M2 Group may have a preferred fair value of $5,484,000 (low $4,584,000 and high $6,384,000). However, it is noted that the Mining Assets have prospectivity and the ultimate value may rise in the event of commercial success.

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• 8.8 It is noted that the S2M2 Group has estimated net cash reserves of approximately $594,000 but has large commitments under the Agreement with Columbus Copper to earn an initial 51% interest in the Kavalklitepe Gold Project by paying Columbus Copper a further US$150,000 and spending US$2,500,000 over three years (and may earn a further 19% to take its interest to 70% by spending an additional US$500,000 and by completing a bankable feasibility study within a four year period. If the acquisition of the S2M2 Group by Zenith is achieved, Zenith will need to meet the liabilities of the S2M2 Group.

• 8.9 Zenith does not have large cash reserves and will eventually need to undertake a capital raising after the Acquisition is completed. As discussed above, the Company may raise new capital in late 2014 or early 2015. The amount required has not been set as it will inter-alia depend on exploration success on the Mining Assets to be acquired and whether funds are received from any farm-outs or sales of the existing mineral assets of Zenith.

• Conclusion as to Fairness

• 9.1 The proposal to acquire the shares in S2M2 that has as its only significant assets, the shares in several subsidiaries that has the option over the Kavalklitepe Gold Project in Turkey and the interest in the Indonesian Coal Project (sold subject to due diligence and other matters for US$500,000 plus a royalty) and the Minnie Creek Project for the consideration noted in paragraph 7.1, is believed to be fair to Zenith’s non-associated shareholders if the value of the consideration offered is equal to or less than the value of the shares in S2M2 being acquired.

• 9.2 Due to the nature of the business of the S2M2 Group, valuations are dependent upon the value placed on the Mining Assets. The valuation of Mining Assets and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.

• 9.3 The actual consideration to the S2M2 Shareholders is 16,770,000 Consideration Shares and based on the pre announcement (of the Acquisition) technical fair price of around 65.75 cents per share, the consideration is $11,026,275 (see paragraph 7.1 above).

• Based on pre announcement share prices as traded on ASX (with limited volumes) the deemed consideration may fall in the range of $2,263,950 to $2,515,500 but based on the closing share price of a Zenith share as at 24 January 2014 (11.0 cents), the deemed consideration may approximate $1,844,700.

• 9.4 The Related Party share of the total value attributable to S2M2 based on our preferred methodology is considered to be approximately $554,000 based on the Related Party’s 10.1% shareholding interest in S2M2. The Related Party’s shareholding interest in the expanded Zenith after completion of the Acquisition will initially approximate 3.55% (3,990,914 shares) (before the exercise of any share options and any other share issues).

• 9.5 The ranges of values attributable to 100% of S2M2 and comparison with the consideration payable at technical fair value (along with a range of considerations using share prices of an Zenith share as traded on ASX in limited volumes) are as follows:

Technical Values

Technical Values
Fair value of S2M2 Fair value of Zenith (Technical) (refer paragraph 7.1 above) Excess of cost over fair value of S2M2	Low $ 4,584,000 5,760,495 1,176,495	Preferred $ 5,484,000 11,026,275 5,542,275		High $ 6,384,000 16,468,140
				10,084,140

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Share Price Values (for Zenith) Fair value of S2M2 Fair value of Zenith (ASX values) Excess (deficiency) of cost over fair value of S2M2	Low $ 4,584,000 1,677,000 2,907,000	Preferred $ 5,484,000 2,263,950 3,220,050	High $ 6,384,000 2,515,500 3,868,500

• 9.6 As noted above, the preferred net fair value of the S2M2 Group may approximate $5,484,000 using the fair values attributed to the Mining Assets by Maynard. The pre acquisition technical value of a Zenith share (not the pre announcement share price) may approximate 65.75 cents (and the pre announcement market share price was around 10.0 cents to 15.0 cents (but on extremely low trading volumes).

• 9.7 Based on a 65.75 cent technical value attributable to the Consideration Shares, the Acquisition price is substantially higher than the perceived fair value attributable to the shares in S2M2 (that is mainly based on a subjective independent valuation of the Mining Assets) and on such a basis the Acquisition is not fair.

• 9.8 In our opinion, taking into account the factors noted in this report, and assuming that Zenith will raise further capital in late 2014 or early 2015 to assist in funding exploration on the S2M2 Mining Assets, the proposal as outlined in paragraphs 1.1 and 1.2 and Resolution 2 may on balance be considered to be not fair at the date of this report. By implication, the proposals pursuant to Resolutions 1 to 2 are not fair at the date of this report.

The valuation of mining block interests and the valuation of future profitability and cash flows are extremely subjective as they involve assumptions regarding future events that are not capable of independent substantiation .

It is noted that the volumes of trades in Zenith shares on ASX is extremely low (with some trading days having nil sales) but the last sale price was 11.0 cents on 27 January 2014 (10.0 cents to 15.0 cents pre the announcement of the S2M2 Acquisition). Using the limited trading share prices, the proposed Acquisition would be fair. However, our preferred methodology to value the shares in Zenith is to use the adjusted net asset backing methodology as noted elsewhere in this report.

10.

Reasonableness of the S2M2 Acquisition

• 10.1 We set out below some of the advantages and disadvantages and other factors pertaining to the proposed Acquisition that we considered in arriving at our conclusion on the reasonableness of the Acquisition and in particular the proposal pursuant to Resolution 2.

Advantages

• 10.2 The Company to some extent has exhausted its ability to add value to its existing mineral assets (refer paragraph 3.1 above), (albeit some longer term potential) to a revitalised mineral exploration company with some prospectivity, particularly on the Kavalklitepe Gold Project in Turkey. The Acquisition if successful could lead to potential mineral operations in Turkey or the ability for Zenith to on-sell or farm-out the Mining Assets to another mineral focused company at a profit.

• 10.3 The Company may be better placed to raise further funds by way of share equity as a result of acquiring the Mining Assets (via acquiring all of the shares in S2M2).

• 10.4 There is an incentive to Zenith and S2M2, to successfully exploit the Mining Assets as the S2M2 Shareholders (including the Related Party) will have shareholding interests in Zenith that collectively will total approximately 29.36% of the expanded issued capital of Zenith post the Acquisition. The S2M2 Valuation Report notes the prospectivity pertaining to the Mining Assets.

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• 10.5 Zenith currently has two mineral prospects of note, being the Mount Alexander Iron Project and the Earaheedy Manganese Project. Should these projects prove not to be commercially viable (they are very encouraging but may require a larger player in the mining industry to add value), diversification into the mineral sector in Turkey (Kavalklitepe Gold Project) by acquiring 100% of S2M2 may reduce the risk (but at the same time Zenith is taking on significant exploration commitments). Refer sections 3.3.3.1 and 8.8 above.

• 10.6 Existing shareholders may be given the opportunity to sell their shares in excess of the share prices existing prior to the Acquisition announcement. However, those shareholders who consider the risk of mineral exploration in Turkey to be too high may wish to sell their shareholdings in Zenith.

• 10.7 The net book assets of Zenith are estimated at $5,812,000 whilst post the Acquisition, the net book assets of the Zenith Group that will include the S2M2 Group is estimated to be an initial $8,001,000. The value attributable to the existing shareholders (excluding the Related Party) approximates $7,192,000 compared with a current shareholding interest of approximately $5,812,000.

Disadvantages

• 10.8 Currently, the S2M2 shareholders collectively have a beneficial interest in 16,196,059 shares in the Company (held by the Related Party and other S2M2 shareholders) and if Resolutions 1 to 2 are passed, the S2M2 shareholders will increase their collective shareholding interest in Zenith to approximately 29.36% (before the exercise of any share options and any other share issues). The Related Party is receiving consideration as noted in paragraph 9.4 above. The existing shareholders (excluding the Related Party and other S2M2 shareholders who are also shareholders in Zenith) will be diluted from owning a current approximate 83.04% shareholding interest in Zenith and its underlying assets to a smaller shareholding of approximately 70.64% post the Acquisition.

• 10.9 The exploration commitments, planned expenditures and expenditure obligations pursuant to the Mining Assets are quite high. Should commercial minerals (mainly gold) be proven, to proceed to development may require significant additional capital which would dilute the current shareholders even further. The number of shares that may be issued to raise additional capital is not yet known.

• 10.10 In general terms, investments in Turkish mineral exploration companies may be considered medium to high risk however for those shareholders who consider that the proposed Acquisition from the S2M2 Shareholders is a risk worth taking, then the proposed Acquisition under Resolutions 1 and 2 may be reasonable. The country of Turkey is subject to various political, economic and other uncertainties, including, among other things, expropriation, nationalization, renegotiation or nullification of existing concessions, licenses, permits, approvals and contracts, taxation policies, foreign exchange and repatriation restrictions, changing political conditions, international monetary fluctuations, currency controls and foreign governmental regulations that favour or require the awarding of contracts to local contractors or require foreign contractors to employ citizens of, or purchase supplies from, a particular jurisdiction. In addition, in the event of a dispute arising from foreign operations, S2M2’s subsidiary with the option to acquire up to a 70% interest in the Kavalklitepe Gold Project may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Australia. Failure to comply strictly with applicable laws, regulations and local practices relating to mineral right applications and tenure, could result in loss, reduction or expropriation of entitlements.

• 10.11 The Mining Assets may not turn out to be commercially viable and thus losses may be incurred. Significant future funding will be required by the Company to support its payment obligations under the Agreement entered into by the S2M2 Group to acquire an option to acquire an initial 51% interest in the Kavalklitepe Gold Project. There can be no assurance that such funding will be available on satisfactory terms or at all. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional

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financing as needed, it may be required to reduce the scope of its operations in Turkey and scale back the planned Turkish exploration programs as the case may be, which may adversely affect the business and financial condition of the expanded Zenith Group and its performance. Where S2M2 fails to comply with the terms of these agreements, particularly as they relate to the ongoing payment obligations, S2M2’s Turkish interests in, and ability to carry out exploration on, the subject tenements (part of the Mining Assets) may be lost.

• 10.12 The S2M2 Group has net cash reserves of $594,000. If the acquisition of the S2M2 Group by Zenith is achieved, Zenith will need to meet the liabilities (current and future) of the S2M2 Group that may be material in nature. New capital may need to be raised in late 2014 or early 2015. If exploration results are encouraging and to meet farm-in payments and exploration commitments pertaining to the Mining Assets, large capital raisings post 2014 will be required.

Other Factors

• 10.13 It is noted that for accounting purposes in the books of Zenith, the Consideration Shares will be booked at the market value of the ordinary shares in Zenith at the date the Consideration Shares are issued to the S2M2 shareholders. Zenith as the legal parent entity will account for the value of the Consideration Shares at the ASX market value (not the technical value) of the ordinary shares in Zenith that may be considered to be in the range of 10.0 cents and 15.0 cents per share. Thus, as the legal potential owner of the shares in S2M2, Zenith may record an investment in S2M2 of approximately $1,677,000 to $2,515,000. The ultimate fair value of an investment in S2M2 is at this stage unknown and write downs in the investment may be required at a later stage (particularly if commercial success is not forthcoming).

• 10.14 The number of fully paid ordinary shares on issue initially rises by 16,770,000 to 112,301,274 (before exercise of any share options and before any shares issued under future capital raisings). This represents an approximate 17.55% increase in the ordinary shares of the Company based on the number of shares on issue at the time of the announcement of the Acquisition on 23 December 2013.

• 10.15 The Acquisition is considered not fair based on the methodology adopted by us being the adjusted net asset backing methodology. It is noted that we have not considered the share price as traded on ASX as the most appropriate methodology to use to ascribe a technical value to a Zenith share due to the limited number and volumes of trades as recorded via the ASX. However, if we used the share prices over recent months (to 14 January 2014), then the proposed issue of 16,770,000 Consideration Shares would be fair.

• Conclusion as to Reasonableness

• 11.1 After taking into account the factors referred to in 10 above and elsewhere in this report, we are of the opinion that the advantages to the existing shareholders outweigh the disadvantages and thus the proposed Acquisition as noted in paragraphs 1.1 and 1.2 and Resolution 2 in the Notice may be considered, on balance, to be reasonable to the existing non-associated shareholders of Zenith at the date of his report. By implication, the proposals pursuant to Resolutions 1 to 2 are also reasonable at the date of this report

12. Sources of Information

• 12.1 In making our assessment as to whether the proposed Acquisition as noted in paragraphs 1.1 and 1.2 is fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company, S2M2, S2M2’s subsidiaries and the Mining Assets that is relevant to the current circumstances. In addition, we have held discussions with the management of Zenith about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Zenith.

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• 12.2 Information we have received includes, but is not limited to:

• a) Notice of Zenith and ES of January 2014;

• b) Discussions with management of Zenith;

• c) Details of historical market trading of Zenith ordinary fully paid shares recorded by ASX for the period 1 January 2013 to 27 January 2014 (last sale was on 24 January 2014);

• d) Shareholding details of Zenith as supplied by the Company’s share registry as at 29 November 2013;

• e) Audited balance sheet of Zenith as at 30 June 2013 and unaudited balance sheet as at 30 November 2013;

• f) Announcements made by Zenith to the ASX from 1 January 2011 to 27 January 2014;

• g) The SPA’s between Zenith and S2M2 Shareholders executed in December 2013 for the proposed acquisition of all of the shares in S2M2;

• h) The 12 January 2014 Mining Valuation Report by Maynard on the Mining Assets of S2M2 and the mineral interests of Zenith;

• i) The estimated annual minimum Mining expenditure commitments on the Mining Assets;

• j) Un-audited balance sheet of the S2M2 Group as at 30 November 2013;

• k) Cash flow forecasts of Zenith to June 2014;

• l) Cash flow forecasts for S2M2 to June 2104; and

• m) Permission correspondence from Maynard allowing us to use, refer to and rely on the Mining Valuation Report.

• . 12.3 Our report includes Appendix A and Appendix B (the Mining Valuation Report) and our Financial Services Guide attached to this report.

Yours faithfully

STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren - FCA Director

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APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities dated 29 January 2014, relating to the acquisition of S2M2 as outlined in paragraphs 1.1 and 1.2 of the report and Resolution 2 in the Notice of Meeting to Shareholders and the Explanatory Statement proposed to be distributed to the Zenith shareholders in February 2014.

At the date of this report, Stantons International Securities does not have any interest in the outcome of the proposals. There are no relationships with Zenith and S2M2 other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. There are no existing relationships between Stantons International Securities and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $20,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities nor John P Van Dieren and Martin Michalik have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities does not hold any securities in Zenith and S2M2. There are no pecuniary or other interests of Stantons International Securities that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities and Mr J Van Dieren and M Michalik have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities is the holder of an Australian Financial Services Licence (no 448697) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities. Stantons International Securities has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Messrs Mr John P Van Dieren, (FCA) and Martin Michalik (ACA), the persons responsible for the preparation of this report, have extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Zenith in order to assist them to assess the merits of the proposed Acquisition as outlined in Resolutions 1 and 2 of the Notice and the Explanatory Statement to which this report relates. This report has been prepared for the benefit of Zenith’s shareholders and does not provide a general expression of Stantons International Securities opinion as to the longer term value of Zenith and the S2M2 Group and their assets. Stantons International Securities does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of Zenith and the S2M2 Group. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities to the form and context in which it appears.

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DUE CARE AND DILEGENCE

This report has been prepared by Stantons International Securities with due care and diligence. The report is to assist shareholders in determining the fairness and reasonableness of the proposals set out in Resolution 2 to the Notice and each individual shareholder may make up their own opinion as to whether to vote for or against Resolution 2.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities may rely on information provided by Zenith and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Zenith has agreed:

• (a) To make no claim by it or its officers against Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Zenith may suffer as a result of reasonable reliance by Stantons International Securities on the information provided by Zenith; and

• (b) To indemnify Stantons International Securities (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Zenith or any of its officers providing Stantons International Securities any false or misleading information or in the failure of Zenith or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities.

A draft of this report was presented to Zenith directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities) Dated 29 January 2014

1. Stantons International Securities Pty Ltd ABN 42 128 908 289 and Financial Services Licence 448697 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide (“FSG”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

• who we are and how we can be contacted;

• the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 448697;

• remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;

• any relevant associations or relationships we have; and

• our complaints handling procedures and how you may access them.

3.

Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

• Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by our employees

SIS has no employees and Stantons International Audit and Consulting Pty Ltd charges a fee to SIS. All Stantons International Audit and Consulting Pty Ltd employees receive a salary. Stantons International Audit and Consulting Pty Ltd employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

SIS is ultimately a wholly subsidiary of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd trades as Stantons International that provides audit, corporate services, internal audit, probity, management consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

• 9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

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Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

1. Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email jvdieren@stantons.com.au

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APPENDIX B

INDEPENDENT VALUATION OF THE MINING ASSETS HELD BY THE S2M2 GROUP AND THE MINERAL INTEREST DATED 12 JANUARY 2014 BY MAYNARD – THE MINING VALUATION REPORT

25

AL MAYNARD & ASSOCIATES Pty Ltd Consulting Geologists

www.geological.com.augeological.com.aulogical.com.auogical.com.auical.com.aucal.com.aul.com.aucom.aum.auau

www.geological.com.augeological.com.aulogical.com.auogical.com.auical.com.aucal.com.aul.com.aucom.aum.auau ABN 75 120 492 435 9/280 Hay Street, Tel: (+618) 9388 1000 Mob: 04 0304 9449 SUBIACO, WA, 6008 Fax: (+618) 9388 1768 al@geological.com.au Australia Australian & International Exploration & Evaluation of Mineral Properties

INDEPENDENT TECHNICAL VALUATION OF

Zenith Minerals Limited

AND S2M2 Coal Pty Ltd

PREPARED FOR

Stantons International Securities

Authors: Brian J. Varndell BSc(SpecHonsGeol), FAusIMM Allen J. Maynard BAppSc(Geol), MAIG, MAusIMM Company; Al Maynard & Associates Pty Ltd Date: 12[th] January, 2014 Revised: 12[th] February, 2014

S2M2 Zenith Valuation

TABLE OF CONTENTS

1.0 INTRODUCTION .................................................................................................................... 1
1.1 Scope and Limitations .................................................................................................................................................................. 1
1.2 Statement of Competence ............................................................................................................................................................ 2
2.0 VALUATION OF THE MINERAL ASSETS – METHODS AND GUIDES ............................... 2
2.1 General Valuation Methods ........................................................................................................................................................ 3
2.2 Discounted Cash Flow/Net Present Value ................................................................................................................................. 3
2.3 Joint Venture Terms .................................................................................................................................................................... 3
2.4 Similar Transactions .................................................................................................................................................................... 3
2.5 Multiple of Exploration Expenditure ......................................................................................................................................... 4
2.6 Ratings System of Prospectivity (Kilburn) ................................................................................................................................ 4
2.7 Empirical Methods (Yardstick – Real Estate) ........................................................................................................................... 4
2.8 General Comments ....................................................................................................................................................................... 4
2.9 Environmental implications ........................................................................................................................................................... 5
2.10 Native Title Claims ........................................................................................................................................................................ 5
2.11 Commodities-Metal prices ............................................................................................................................................................ 5
2.12 Resource/Reserve Summary ........................................................................................................................................................ 5
2.13 Previous Valuations ....................................................................................................................................................................... 5
2.14 Encumbrances/Royalty ............................................................................................................................................................... 5
3.0 BACKGROUND INFORMATION ........................................................................................... 5
3.1 Purpose .............................................................................................................................................................................................. 5
3.2 Specific Valuation Methods ............................................................................................................................................................. 5
4.0 ZENITH PROJECTS .............................................................................................................. 5
4.1 Tenure ................................................................................................................................................................................................ 6
4.2 Mt Alexander Project ....................................................................................................................................................................... 7
4.2.1 Introduction ................................................................................................................................................................................ 7
4.2.2 Location and Access .................................................................................................................................................................. 7
4.2.3 Local Geology ............................................................................................................................................................................ 7
4.2.4 Resource Estimate ...................................................................................................................................................................... 8
4.3 Earaheedy Project ...................................................................................................................................................................... 10
4.3.1 Introduction .............................................................................................................................................................................. 10
4.3.2 Location and Access ................................................................................................................................................................. 10
4.3.3 Regional Geology ..................................................................................................................................................................... 10
4.3.4 Manganese Exploration ............................................................................................................................................................ 10
4.3.5 Resource Estimate .................................................................................................................................................................... 11
4.3.6 Zinc-Lead-Copper Exploration ............................................................................................................................................... 13

Zenith- S2M2- Valuation

Contents 1

S2M2 Zenith Valuation

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||||
|---|---|---|
|4.4 Cardinals Project ............................................................................................................................................................................ 13|
|5.0 S2M2 PROJECTS ..................................................................................................................... 13|
|5.1 Kavaklitepe Project ........................................................................................................................................................................ 13|
|5.1.1 Location and Infrastructure ...................................................................................................................................................... 14|
|5.1.2 Tenure and Permitting .............................................................................................................................................................. 14|
|5.1.3 Regional Geology ..................................................................................................................................................................... 14|
|5.1.4 Local Geology and Mineralisation ........................................................................................................................................... 15|
|5.2 Mt Minnie Project .......................................................................................................................................................................... 17|
|5.2.1 Regional Geology ..................................................................................................................................................................... 18|
|5.2.2 Local Geology .......................................................................................................................................................................... 18|
|5.3 Sungai Roi Project .......................................................................................................................................................................... 19|
|6.0|VALUATION OF ZENITH & S2M2 PROJECTS|.................................................................. 20|
|6.1 Empirical Method ......................................................................................................................................................................... 20|
|6.2 Valuation Conclusions ................................................................................................................................................................. 21|
|7.0 REFERENCES .......................................................................................................................... 21|
|List of Figures|
|Figure 1: Zenith Projects Location Map. ............................................................................................ 6|
|Figure 2: Mt Alexander Project Location............................................................................................ 7|
|Figure 3: Mt Alexander TMI-RTP Magnetic Image with Resource Outline. ....................................... 8|
|Figure 4: Mt Alexander – Typical Cross Section. .............................................................................. 9|
|Figure 5: Mt Alexander Exploration Targets Location. ...................................................................... 9|
|Figure 6 : Earaheedy Project Tenure and Regional Geology. ......................................................... 10|
|Figure 7: Cross Section through the Lockeridge Prospect Manganiferous Carbonate Unit. ........... 11|
|Figure 8: Red Lake Prospect Drillhole Locations. ............................................................................ 12|
|Figure 9: Red Lake Cross Section. .................................................................................................. 13|
|Figure 10: Kavaklitepe Project Location in Turkey. ......................................................................... 14|
|Figure 11: Kavaklitepe Tenement on Local Geology. ...................................................................... 15|
|Figure 12: Kavaklitepe Soil Geochemistry Image. ........................................................................... 16|
|Figure 13: Mt Minnie Tenements on Regional Geology. ................................................................. 17|
|Figure 14: Sungai Roi Tenement Location. ..................................................................................... 19|
|List of Tables|
|Table 1: Zenith Tenement Details ..................................................................................................... 6|
|Table 2: Mt Alexander Resource Estimates. ..................................................................................... 8|
|Table 3: Mt Alexander Exploration Targets. ...................................................................................... 9|
|Table 4: Red Lake – Earaheedy Manganese Resource Estimate. ................................................. 12|
|Table 5: Mt Minnie Tenement Details. ............................................................................................. 17|
|Table 6: Range of Values for the Zenith Projects. ........................................................................... 20|
|Table 7: Range of Values for the S2M2 Projects............................................................................. 21|
|Table 8: Summary Range of Values for the Zenith and S2M2 Projects. ........................................ 21|

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Zenith- S2M2- Valuation

Contents 2

S2M2 Zenith Valuation

The Directors, 12[th] January, 2014 Stantons International Securities, Level 2, 1 Walker Avenue, West Perth, Western Australia, 6005 Email: jvandieren@stantons.com.au

Dear Sirs,

Valuation Report for Zenith Minerals Limited and S2M2 Coal Pty Ltd

1.0 INTRODUCTION

This report has been prepared by Al Maynard & Associates (‘AM&A’) at the request of Stantons International Audit and Consulting (trading as Stantons International Securities) (“SIS”) to provide an independent appraisal of the current value of Zenith Minerals Limited (“Zenith”) and S2M2 Coal Pty Ltd (“S2M2”). For this report Zenith owns 100% of its portfolio while S2M2 variously has rights from 70 to 100% of its projects.

1.1 Scope and Limitations

This independent valuation and its accompanying geological report have been prepared at the request of Mr John Van Dieren of SIS to provide the writer’s opinion of the current value of the properties described in this accompanying geological report.

This valuation has been prepared in accordance with the requirements of the Valmin code (1997) and updated version (2005) as adopted by the Australian Institute of Geoscientists (‘AIG’) and the Australasian Institute of Mining and Metallurgy (‘AusIMM’).

This valuation is valid as of 12[th] January, 2014, which is the date of the final review of the valuation report. This valuation can be expected to change over time having regard to political, economic, market and legal factors. The valuation can also vary due to the success or otherwise of any mineral exploration that is conducted either on the properties concerned or by other explorers on prospects in the near environs. The valuation could also be affected by the consideration of other exploration data, not in the public domain, affecting the properties which have not been made available to the author.

In order to form an opinion as to the value of any property, it is necessary to make assumptions as to certain future events, which might include economic and political factors and the likely exploration success. The writer has taken all reasonable care in formulating these assumptions to ensure that they are appropriate to the case. These assumptions are based on the writer’s technical training and experience in the mining industry. The opinions expressed represent the writer’s fair professional opinion at the time of this report. These opinions are not however, forecasts as it is never possible to predict accurately the many variable factors that need to be considered in forming an opinion as to the value of any mineral property.

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

The values obtained are estimates of the amount of money, or cash equivalent, which would be likely to change hands between a willing buyer and a willing seller in an arm’s length transaction, wherein each party had acted knowledgeably, prudently and without compulsion. This is the required basis for the estimation to be in accordance with the provisions of the Valmin Code (2005).

.

Zenith- S2M2- Valuation

Page 1

S2M2 Zenith Valuation

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. When relevant, AM&A uses the appropriate methods to enable a balanced analysis. Values are presented as a range and the preferred value is identified.

The readers should therefore form their own opinion as to the reasonableness of the assumptions made and the consequent likelihood of the values being achieved.

The information presented in this report is based on technical reports provided by Zenith & S2M2 supplemented by our own inquiries. At the request of AM&A copies of relevant technical reports and agreements were made available.

Zenith will be invoiced and expected to pay a fee for the preparation of this report. This fee comprises a normal, commercial daily rate plus expenses. Payment is not contingent of the results of this report or the success of any subsequent public fundraising. Except for these fees, neither the writer nor his family nor associates have any interest neither in the properties reported upon nor in Zenith & S2M2. Zenith & S2M2 have confirmed that all technical data known to the public domain is available to the writers. Zenith & S2M2 also confirm that no other independent professional valuation affecting the mineral properties, the subject of this report, have been commissioned within the last two years.

The valuation presented in this document is restricted to a statement of the fair value of the tenement package. The Valmin Code (2005) defines fair value as “The estimated amount of money, or the cash equivalent of some other consideration, for which, in the opinion of the Expert reached in accordance with the provisions of the Valmin Code, the mineral asset or security shall change hands on the Valuation date between a willing buyer and a willing seller in an arms length transaction, wherein each party had acted knowledgeably, prudently and without compulsion”.

It should be noted that in all cases, the fair valuation of the mineral properties presented is analogous with the concept of “valuation in use” commonly applied to other commercial valuations. This concept holds that the properties have a particular value only in the context of the usual business of the company as a going concern. This value will invariably be significantly higher than the disposal value, where, there is not a willing seller. Disposal values for mineral assets may be a small fraction of going concern values.

In accordance with the Valmin Code (2005), we have prepared the “Range of Values” as shown in Table 8, Section 6.2. Field visits were not made to the projects as the author is familiar with the West Australian and Indonesian terranes discussed. It is considered that sufficient geotechnical data has been provided from the reports covering the exploration of the areas to enable an understanding of the geology.

1.2 Statement of Competence

This report has been prepared by Brian J. Varndell BSc(SpecHonsGeol), FAusIMM, a geologist with over 40 years in the industry and 35 years in mineral asset valuation and Allen J. Maynard BAppSc(Geol), MAIG, MAusIMM (35 years). The writers hold the appropriate qualifications, experience and independence to qualify as an independent “Experts” under the definitions of the Valmin Code (2005).

2.0 VALUATION OF THE MINERAL ASSETS – METHODS AND GUIDES

Without proven ore reserves it is difficult to place a singular dollar value on any mining tenement. However, with due regard to the guidelines for assessment and valuation of mineral assets and mineral securities as adopted by the AusIMM Mineral Valuation Committee on 17 February 1995 –

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the Valmin Code (updated 1997 & 2005) – we have derived the estimates listed below using the appropriate method for the current technical value of the mineral exploration properties as described.

The following ASIC publications have also been duly referred to and considered in relation to the valuation procedure: ‘Regulatory Guidelines’ 111 & 112.

The subjective nature of the valuation task is kept as objective as possible by the application of the guideline criteria of a “fair value”. This is a value that an informed, willing, but not anxious, arms’ length purchaser will pay for a mining (or other) property in a transaction devoid of “forced sale” circumstances.

2.1 General Valuation Methods

The original Valmin Code and updated versions identified various methods of valuing mineral assets, including:-

• Discounted cash flow,

• Joint Venture and farm-in terms for arms’ length transactions,

• Precedents from similar asset sales/valuations,

• Multiples of exploration expenditure,

• Ratings systems related to perceived prospectivity,

• Real estate value and,

• Rule of thumb or yardstick approach.

2.2 Discounted Cash Flow/Net Present Value

This method provides an indication of the value of a property with identified reserves. It utilises an economic model based upon known resources, capital and operating costs, commodity prices and a discount for risk estimated to be inherent in the project. The discount is very subjective and varying factors are applied to the resources. Alternatively a value can be assigned on a royalty basis commensurate with the in situ contained metal value.

Net present value (‘NPV’) is determined from discounted cash flow (‘DCF’) analysis 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. The NPV method relies on reasonable estimates of capital requirements, mining and processing costs.

2.3 Joint Venture Terms

The terms of a proposed joint venture agreement may be used to provide a market value based upon the amount an incoming partner is prepared to spend to earn an interest in part or all of the property. This pre-supposes some form of subjectivity on the part of the incoming party when grass roots properties are involved.

2.4 Similar Transactions

When commercial transactions concerning properties in similar circumstances have recently occurred, the market value precedent may be applied in part or in full to the property under consideration.

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2.5 Multiple of Exploration Expenditure

The multiple of exploration expenditure method (‘MEE’) is used whereby a subjective factor (also called the prospectivity enhancement multiplier or ‘PEM’) is based on previous expenditure on a tenement with or without future committed exploration expenditure and is used to establish a base value from which the effectiveness of exploration can be assessed. Where exploration has produced documented positive results a MEE multiplier can be selected that takes into account the valuer's judgment of the prospectivity of the tenement and the value of the database. MEEs can typically range from 0.0 to 3.0 applied to previous exploration expenditure to derive a dollar value.

2.6 Ratings System of Prospectivity (Kilburn)

The most readily accepted method of this type is the modified Kilburn Geological Engineering/Geoscience Method and is a rating method based on the basic acquisition cost (‘BAC’) of the tenement that applies incremental, fractional or integer ratings to a BAC cost with respect to various prospectivity factors to derive a value. 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 that may be applied is the current state of the market.

2.7 Empirical Methods (Yardstick – Real Estate)

The market value determinations may be made according to the independent expert’s knowledge of the particular property. This can include a discount applied to values arrived at by considering conceptual target models for the area. The market value may also be rated in terms of a dollar value per unit area or dollar value per unit of resource in the ground. This includes the range of values that can be estimated for an exploration property based on current market prices for equivalent properties, existing or previous joint venture and sale agreements, the geological potential of the properties, regarding possible potential resources, and the probability of present value being derived from individual recognised areas of mineralisation. This method is termed a “Yardstick” or a “Real Estate” approach. Both methods are inherently subjective according to technical considerations and the informed opinion of the valuer.

2.8 General Comments

The aims of the various methods are to provide an independent opinion of a “fair value” for the property under consideration and to provide as much detail as possible of the manner in which the value is reached. It is necessarily subjective according to the degree of risk perceived by the property valuer in addition to all other commercial considerations. Efforts to construct a transparent valuation using sophisticated financial models are still hindered by the nature of the original assumptions where a known resource exists and are not applicable to properties without an identified resource.

The values derived for this report have been concluded after taking into account:-

• The cost and accuracy of the existing technical data and its relevance to the prospect;

• Using the exploration data and potential as a measure of worth;

• The general geological environment of the property under consideration is taken into account to determine the exploration potential;

• Current market values for properties in similar or analogous locations;

• Commodity prices used: iron ore currently US$130 per tonne (62% Fe index), manganese US$350/t (Kitco) and gold US$1220/oz.

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2.9 Environmental implications

Information to date indicates that the project areas do not contain unique faunal habitats or fauna or flora species regarded as being rare, threatened or endangered.

2.10 Native Title Claims

Some tenements may be subject of Native Title Claims and will be dealt with through the normal administrative process. AM&A is not aware of any sacred sites or areas of significance within the tenements.

2.11 Commodities-Metal prices

Where appropriate current metal prices are used sourced from the usual metal market publications.

2.12 Resource/Reserve Summary

There are JORC Code compliant resources identified at the Mt Alexander and the Earaheedy projects.

2.13 Previous Valuations

No previous valuation reports have been commissioned for the projects within the last two years.

2.14 Encumbrances/Royalty

According to information provided there are no encumbrances attached to any of the licences however there are statutory State royalties due on all production. For the S2M2 Sungai Roi project a US$1 per tonne payable to S2M2 may pertain should the 100% purchase be completed.

3.0 BACKGROUND INFORMATION

3.1 Purpose

This independent valuation has been provided by way of a detailed study of information provided by Zenith & S2M2 for the purpose of estimating a current cash value of their exploration portfolios.

3.2 Specific Valuation Methods

There are several methods available for the valuation of a mineral prospect ranging from the most favoured DCF analysis of identified Reserves/Resources to the more subjective rule-of-thumb assessment when no Reserves have yet been calculated but Resources exist. These are discussed in Section 2.0.

4.0 ZENITH PROJECTS

The Zenith Projects are located in the north west of Western Australia. The flagship project is at Mt Alexander where substantial banded iron formation (“BIF”) hosted magnetite iron deposit has been identified. Zenith has significant holdings of exploration ground at Earaheedy where manganese has been identified as primary mineralisation comprising stratiform manganese carbonate in stratigraphy above the Frere Formation. The Zenith priority target is high grade (>40% Mn) as manganese oxide formed by weathering or supergene upgrade of the primary carbonate. The Earaheedy Basin is also considered prospective for lead-zinc mineralisation. Zenith also holds the Cardinals Project located in the East Pilbara that covers volcanic rocks of the Sulphur Springs Group which hosts the nearby Panorama-Sulphur Springs volcanic hosted massive sulphide style ("VMS") base metals deposits.

The current Zenith focus is to identify resources within the Mt Alexander project area of iron mineralisation as magnetite deposits suitable for upgrade via milling and concentration and subsequent sale as magnetite concentrate. The early production of manganese Direct Shipping Ore (“DSO”) from Earaheedy is also a short term goal.

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4.1 Tenure

Most tenements are granted and are managed by Zenith which has 100% iron rights at Mt Alexander and Earaheedy.

Lease	Project	Status	Area	Applied	Grant Date	Expiry Date	Commit $	Rent $
E08/1410	Mt Alexander	Granted	9 Blocks	11/08/2003	21/03/2006	20/03/2015	70000.00	4196
E08/1972	Mt Alexander	Granted	58 Blocks	4/03/2009	21/04/2010	20/04/2015	87000.00	10524
E08/1987	Mt Alexander	Granted	28 Blocks	7/04/2009	23/02/2010	22/02/2015	42000.00	5183
E08/2046	Mt Alexander	Granted	11 Blocks	19/08/2009	21/01/2011	20/01/2016	20000.00	1284
L08/119	Mt Alexander	Granted	47833.7Ha	21/03/2013	7/08/2013	6/08/2034	0.00	23917
E38/2895	Lake Carnegie	Application	34 Blocks	12/11/2013	N/A		0.00	0
E38/2896	Lake Carnegie	Application	49 Blocks	12/11/2013	N/A		0.00	0
E38/2897	Lake Carnegie	Application	25 Blocks	12/11/2013	N/A		0.00	0
E45/3449	Cardinals	Granted	33 Blocks	30/06/2009	15/11/2010	14/11/2015	49500.00	6108
E69/1771	Earaheedy	Granted	18 Blocks	4/09/2001	10/06/2008	9/06/2015	30000.00	4432
E69/1907	Earaheedy	Granted	35 Blocks	18/11/2003	10/10/2006	9/10/2015	105000.00	16643
E69/2657	Earaheedy	Granted	40 Blocks	20/07/2009	20/05/2010	19/05/2015	60000.00	7258
E69/2733	Earaheedy	Granted	69 Blocks	30/11/2009	28/03/2011	27/03/2016	69000.00	8052
E69/2734	Earaheedy	Granted	2 Blocks	30/11/2009	23/11/2010	22/11/2015	20000.00	370
E69/2735	Earaheedy	Granted	25 Blocks	30/11/2009	23/11/2010	22/11/2015	37500.00	4628
E69/2736	Earaheedy	Granted	1 Blocks	30/11/2009	28/03/2011	27/03/2016	10000.00	281
E69/2737	Earaheedy	Granted	1 Blocks	30/11/2009	28/03/2011	27/03/2016	10000.00	281

Table 1: Zenith Tenement Details

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Figure 1: Zenith Projects Location Map.

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4.2 Mt Alexander Project

4.2.1 Introduction

Zenith announced an updated Inferred magnetite resource of 535Mt at 30% Fe at Mt Alexander in May 2013 and an independent Scoping Study in May, 2011 indicated capital expenditure costs of A$1,698M to construct a production and export facility. In October 2013 an adjoining tenement E08/1987 was acquired at Mt Alexander North for $50,000 cash plus 0.5M shares in Zenith. The Project has now entered a phase of reduced exploration spend, and the focus has moved to engagement with potential development partners to develop or monetise the project.

4.2.2 Location and Access

The Mt Alexander Project is located only 120km from the port of Onslow and 260km SW of Karratha. It is well located with respect to existing infrastructure (Fig 2). The Project, comprising four granted Exploration Licences (“EL”) owned 100% by Zenith Minerals Limited, is positioned ~10km west of the North West Coastal Highway and the Dampier Bunbury gas pipeline is ~35km west.

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Figure 2: Mt Alexander Project Location.

4.2.3 Local Geology

The magnetite resource estimate, centred on the Mt Alexander prospect, encompasses magnetitebearing BIF units that trend parallel to each other over several kilometres of strike extent (Fig 3). The BIF units dip steeply to the northwest with drilling and geophysical modelling indicating a depth extent of more than 400m (Fig 4). The BIF units, up to 200m in true thickness, are hosted within a Proterozoic sedimentary package that has been subjected to ductile deformation during regional metamorphism and subsequently overprinted by small to medium scale ductile to brittle fault and fold structures. Weathering of the BIF horizons has a consistent 20-30m vertical depth extent.

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Figure 3: Mt Alexander TMI-RTP Magnetic Image with Resource Outline.

4.2.4 Resource Estimate

The resource estimate undertaken by CSA Global in compliance with the JORC 2012 Code and released to ASX on 24 May 2013 currently stands at 535Mt at 30% Fe with details in Table 2.

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Table 2: Mt Alexander Resource Estimates.

Substantial additional potential exists for increased tonnage with only ~50% of target BIF drill tested to date. The Company has released (24 May 2013) an additional Exploration Target of 570 to 680 million tonnes @ 25 to 35% Fe ( excluding the Inferred Resource), in accordance with Section 17 and Section 38 of the JORC Guidelines 2012. The potential quantity and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource. The Exploration Target has been estimated on the basis of outcrop mapping (by Zenith and by Jigsaw Geoscience, assays from outcrop rock chip samples taken by Zenith, drilling by Zenith (12 RC holes within the Exploration Target) at nominal 300m centres , magnetic susceptibility measurements and total iron and DTR analyses from drill samples, 2.5D profile and 3D inversion modelling of detailed ground (~100-200m line spacing) and airborne magnetic (~50m line spacing) survey data by Core Geophysics. A volume for the magnetite mineralisation was calculated to - 100mRL and a bulk density range of 3.1g/cc to 3.7g/cc (consistent with a grade of 25-35wt% iron as magnetite) was applied to the volume derived from the modelling. The updated resource model wireframe was utilised for the Mt Alexander prospect area where appropriate.

Further drilling to test the validity of the Exploration Target is planned within the next 2 years subject to receipt of the necessary permits and approvals,and the availability of funding.

The Exploration Target (*See Note below) comprises 570-680Mt at 25-35% Fe exclusive of the Inferred Resource estimate. Details of the Exploration Targets are presented in Table 3.

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Deposit	Mtfrom	Mt to	Grade %Fe
MtAlexander	340	400	25-35
MtAlexander West	130	160	25-35
Goodeman	100	120	25-35
Total	570	680	25-35

Table 3: Mt Alexander Exploration Targets.

(*Note) It should be noted that the potential quantity and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

There is a significant exploration target at Mt Alexander that remains to be drill tested and it is thus considered that there is potential to increase the resource base through further drilling.

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Figure 4: Mt Alexander – Typical Cross Section.

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Figure 5: Mt Alexander Exploration Targets Location.

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4.3 Earaheedy Project

4.3.1 Introduction

The Earaheedy Project is currently being explored primarily for manganese but is also prospective for zinc and lead. Additional drilling is planned to test identifiable targets and increase inferred resources. Zenith announced a 1.6Mt Inferred manganese resource at a 5% cut off grade and 1.2Mt at a 10% cut off grade at the Red Lake deposit in April 2013.

4.3.2 Location and Access

The Earaheedy Project is located ~120km north of Wiluna, at the southern margin of the Proterozoic Earaheedy Basin. The tenements are 100% owned by Zenith and cover a series of manganese and zinc-lead-silver prospects (Fig 6).

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Figure 6 : Earaheedy Project Tenure and Regional Geology.

4.3.3 Regional Geology

The Palaeo-proterozoic Earaheedy Basin in Western Australia lies at the southern end of the Capricorn Orogen. The Earaheedy Group, the sole lithostratigraphic unit comprising the basin fill, is a 5km thick succession of shallow-marine siliciclastic and carbonate sedimentary rocks. It consists from oldest to youngest of the Yelma, Frere, Windidda, Chiall, Wongawol, Kulele and Mulgarra formations.

4.3.4 Manganese Exploration

In 2010 Zenith identified the Earaheedy Basin north of Wiluna in WA as a potential new manganese province with similarities to the giant Kalahari manganese field in South Africa. Zenith established a strong land position with tenements covering ~75 strike km of prospective stratigraphy. Primary mineralisation comprises stratiform manganese carbonate and is associated with iron formations in adjacent stratigraphy (Fig 6). The priority target is high grade (>40% Mn) manganese oxide formed by weathering or supergene upgrade of the primary carbonate.

In late 2010 Zenith completed drilling for manganese in the western Earaheedy Basin at the Lockeridge Prospect which intersected a shallow dipping bed of manganese mineralisation averaging 10m thickness and extending from surface to 1.2km down dip along a strike of 1.6km (Fig 7). The deposit is not laterally constrained by drilling. Highlight Lockeridge drill intersections include:

 ZTRC014 with 12m at 11.1% Mn from 28m

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• ZTRC017 with 3m at 18.0% Mn from 37m

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Figure 7: Cross Section through the Lockeridge Prospect Manganiferous Carbonate Unit.

In late 2011 Zenith completed RC drilling at the Black and Blue prospect which returned thick manganese oxide intersections such as in ZBRC006.

• ZBRC006 with 31m at 7.9% Mn from surface including 2m at 17.1% Mn, 1m at 22% Mn and 3m at 14.3 %Mn

In 2012 Zenith reported the first DSO grade manganese drill intersections recorded in the Earaheedy Basin at the Red Lake prospect. This was followed by subsequent resource definition drilling. Highlight manganese oxide intersections include:

• ZRLRC013a with 3m at 41% Mn within 5m at 34.8% Mn from 22m

• ZRLRC024 with 1m at 40.2% Mn within 4m at 26.7% Mn from 3m

Preliminary dry screen beneficiation testwork returned positive results on lower grade (sub-DSO) manganese mineralised samples from Red Lake RC drillholes with the combined coarser +1.6mm fraction of all eleven test samples averaging 38.1% Mn from an original head grade of 26.9% Mn. This indicates a potential for very simple and low cost beneficiation to produce a significant grade improvement.

4.3.5 Resource Estimate

A resource estimate was completed by CSA Global for the Red Lake prospect. The tonnage/grade estimates are presented in Table 4 at both a 5% and a 10% Mn cut-off grade.

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Table 4: Red Lake – Earaheedy Manganese Resource Estimate.

This information was prepared and first disclosed in an ASX release dated 9[th] April, 2013 under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported.

The resource estimate includes drilling completed in late 2012 and encompasses a fault-bounded manganese oxide horizon (Figs 8 & 9) located almost immediately above iron formations of the Frere Formation. The manganese horizon displays a sub-horizontal orientation with a 4.0m true thickness situated under shallow cover with a lateral extent of some 400m x 300m.

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Figure 8: Red Lake Prospect Drillhole Locations.

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Figure 9: Red Lake Cross Section.

4.3.6 Zinc-Lead-Copper Exploration

The Earaheedy project also includes a 30km long zone of carbonate-hosted zinc and lead mineralisation in the Yelma Formation at the base of the Earaheedy Basin stratigraphy. Broadly spaced drilling by RGC Exploration from 1992-96 defined several prospects containing drill intersections of oxidised and primary Zn-Pb mineralisation, including;

Navajoh with 7.3m at 6.1% Zn and 0.77% Pb including 3.3m at 11.2% Zn Magazine with 5m at 5.6% Zn and minor Pb including 2m at 8.2% Zn and 2.8% Pb Chinook with 6m at 3.63% Pb with minor Zn.

A review of the zinc-lead-silver (and copper-gold) potential of the Zenith tenure in the Earaheedy Basin has been completed and historical data is being compiled from a variety of sources and reinterpreted on the basis of new geophysical and geological datasets that have become available since the last significant completed work by RGC in the 1990s. The aim is to define a number of base metal targets for drill testing.

4.4 Cardinals Project

The Cardinals Project is located in the East Pilbara and covers volcanic rocks of the Sulphur Springs Group, the host of the nearby Panorama-Sulphur Springs VMS base metals deposits (not owned by Zenith). Zenith retains 100% interest in tenement E45/3449 (“Cleland Rocks”). There was no field activity during 2013 and the tenement is currently under review.

5.0 S2M2 PROJECTS

S2M2 owns three projects. At the Kavaklitepe Project in western Turkey S2M2 can earn 70% of the project, at Mt Minnie it owns 100% of two Exploration Licence applications (“ELA”) and at the Sungai Roi Project in the E. Barito Province of Kalimantan, Indonesia S2M2 can acquire 100% of the project.

5.1 Kavaklitepe Project

S2M2 Coal has an exclusive option to earn up to a 70% interest in Canadian TSX listed Columbus Copper (“Columbus”) 100% owned Kavaklitepe Gold Project located in Turkey (Fig 10). Under the Agreement S2M2 may earn an initial 51% interest over three years by making $0.4M in cash payments of which $0.25M was paid on October 9, 2013 and completing $2.5M in cumulative exploration expenditures on the Property. If S2M2 earns the initial 51% interest it may elect to earn a further 19% by paying Columbus an additional $0.5M and by completing a bankable feasibility

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study within a four year period. The Agreement contains other terms and conditions that are standard for an option/joint venture contract and include plans to conduct a program of geophysical surveys, including IP and ground magnetics to endeavour to see through the thin soil cover, along with detailed geological mapping of the scarce outcrop on the licence prior to trenching and drill testing.

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Figure 10: Kavaklitepe Project Location in Turkey.

5.1.1 Location and Infrastructure

The project is located in the Western Anatolia region of Turkey, approximately 120km SSE of Istanbul and 300km WNW of Ankara (Fig 10). The area is very well serviced by new and or wellmaintained major multilane highways, power, water and service industries. A new high speed rail linking Istanbul Ankara is under construction that lies adjacent to the project area. Nearby ports include Guzelyali (Bursa), Yalova and Izmir.

5.1.2 Tenure and Permitting

EL2007/9861 covers 11.6km[2] and is currently being transferred for conversion to an Operational Licence (Fig 11). The majority of the licence covers forest with minor agricultural farmland and an agricultural dam at the margins. Mining is permitted in forestry lands, subject to obtaining the required operation licences. Compensation for forest lands is stipulated within the Mining laws and includes an additional 30% of the government royalty to be paid to the State. The royalty for gold is currently 2% and an additional 30% will take this up to 2.6% of gold.

The project is largely covered by mature birch, oak and pine forest with minor areas of cultivation at an elevation of ~1,000masl. The topography is moderate with rolling hills and valleys ranging up to 100m. There is only minor to sparse outcrop within the project area, mostly being masked by thin soil cover <1m. Areas mapped and sampled to date have mostly been from float or exposed through recent forestry track cuttings or manually through the thin soil cover. Exposures observed in the field display a thin stripped weathering profile with limited potential for significant oxide mineralisation. This indicates that trenching will be an effective tool to test anomalies prior to any drill program.

5.1.3 Regional Geology

The geology and metallogeny of Turkey is dominated by the highly endowed Tethyan Belt that extends from the western Mediterranean via the Alps to SE Europe, through Turkey, Iran and into

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China. It is host to some world class gold- copper deposits such as Rossi Montana with 48Moz Au, Sar Cheshmeh with 11Moz Au and 7Mt Cu and Reko Dik with 23Moz Au and 24Mt Cu.

The Tethyan Belt is the result of collision, subduction and rifting associated with island and continental arc formation during the U.Cretaceous to Cenozoic periods. A wide spectrum of ore deposits resulted from these complex tectonic events. Gold and gold- copper deposits in Turkey formed mainly as a result of the convergence of the African, Arabian and Indian plates, and their collision with Eurasia in the area of the former Tethyan oceans.

There are currently three main regions in which gold exploration is focused within Turkey. The majority of activity is in the NW for porphyry deposits including Kisladag with 17Moz Au and epithermal mineralisation as at Ovacık with 6Moz Au, Agi Dagi with 6.5Moz Au and Efemcukuru with 2.5Moz Au; in the NE with Copler of 10Moz Au; and to a lesser extent in the central region including Himmetdede with <1Moz Au. The Kavaklitepe Project is positioned near the margin of the Pontides and Anatolides regions in NW Turkey. These regions are host to the majority of known epithermal gold and porphyry copper gold deposits and occurrences within Turkey.

5.1.4 Local Geology and Mineralisation

The project area lies immediately north of a fertile cluster of Cu-Au-Mo porphyry and related skarn systems. Palaeozoic to Mesozoic schists and marble are the main geological units within the project area (Fig 11). A set of dominantly strike-slip and cross faults have been interpreted to form extensional strain anomalies, pre mineral shear zones and folds in the area. Some faults are also parallel to the Eskishehir Fault that is a regionally important, brittle fault system striking WNW over a length of 80km that probably penetrates to deep crustal level, and also controls the mineralisation in the two nearby porphyry copper-gold deposits of Muratdere and Gurculer along its strike.

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Figure 11: Kavaklitepe Tenement on Local Geology.

The Kavaklitepe gold mineralisation is a grassroots discovery. Gold anomalism was originally identified from regional stream sediment sampling by Rio Tinto in 2003, peaking at 726ppb Au. Follow up 200m x 200m soil sampling returned three anomalous samples with a peak value of 455ppb Au however no mineralisation was identified that could be responsible for the anomaly so no additional work was undertaken until Columbus revisited the area in 2012.

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Columbus reported the discovery of gold mineralisation in January, 2013 as follow up to the peak Rio Tinto stream sediment anomaly that identified the discovery stream bed outcrop which returned a rock chip composite assay of 5.2g/t Au. A small trench in an adjacent road cut was opened perpendicular to the observed strike and returned 2.67g/t Au over 21m. About 1.4km NW of the discovery outcrop follow up to a soil sample anomaly that peaks at 6.05g/t Au identified a brecciated zone striking 50NE with a low-sulphide epithermal gold signature. Four breccia rock samples returned 28.2, 21.7, 6.7 and 3.66g/t Au. Additional sampling along a road cutting in this zone confirmed gold mineralisation returning 54m at 3.33g/t Au, including 21.5m at 7.2g/t Au.

Columbus collected 2,127 soil samples at the project in 50x50m and 100x100m grids and locally 25x25m over approximately 11km2. Best results included 176 above 50ppb Au, 112 were >100ppb Au, 40 were >250ppb and 9 were >1000 ppb Au (Fig 12). This sampling outlined a primary potential mineralised zone measuring 850x250m and continuing for another 800m to the SW where it is possibly displaced by a NW-SE trending fault at its southern margin. There are strong, coincident arsenic and antimony anomalies. More recent ongoing sampling also defined lower tenor anomalies or extensions throughout the licence area.

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Figure 12: Kavaklitepe Soil Geochemistry Image.

Initial interpretation suggests the anomalism could be related to low-sulphide epithermal gold mineralisation style that is frequently noted within the region and commonly as a distal association to porphyry copper-gold systems. The mapped geology includes basement lithologies of strongly foliated mica schists, likely after shales and fine grained quartzose sediments, with lesser marbles. The fabric is broadly trending in a NE/SW orientation. Minor carbonaceous shales have been locally mapped.

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Mineralisation observed in the high grade zones comprises sporadic cm-scale quartz veining and fine silica veinlets associated with brecciation. Alteration directly associated with mineralisation is dominantly sericitic which also persisted distally into the broader anomalous zones and could potentially be used as a vector to mineralisation.

S2M2 collected 12 rock chip samples during a field review for assay validation and thin section ‐ analysis. A re sample of a road bank returned 11m at 3.33 g/t Au, confirming the presence of gold mineralisation although sample intervals and grades were not directly comparable to the original Columbus Copper results.

5.2 Mt Minnie Project

The Mt Minnie project comprises two exploration licence applications (E09/2063 – Mt Minnie North and E09/2064- Ram West) situated within the Gascoyne Mineral Field of Western Australia approximately 240km NE of Carnarvon (Table%). The Mt Minnie North – Ram West tenements cover a portion of terrain composed predominantly of mid-Proterozoic granite assigned to the Minnie Creek batholith interpreted as highly prospective for gold mineralisation and commonly referred to as reduced intrusive related gold deposits, that have a trace element metal association including: bismuth, molybdenum and tungsten (Fig 13). The project has seven existing gold prospects that have only been subjected to cursory reconnaissance exploration and require followup.

Number	Holder	Application Date	Area	Rent
	S2M2
E09/2063	Eastern Coal	6/06/2013	41 blocks	$4784
	PtyLtd
	S2M2
E09/2064	Eastern Coal	6/06/2013	38 blocks	$4434
	PtyLtd

Table 5: Mt Minnie Tenement Details.

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Figure 13: Mt Minnie Tenements on Regional Geology.

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5.2.1 Regional Geology

The project area is situated within the central core and along the northern margins of the Minnie Creek batholith, an intrusive complex with an exposed length of more than 170km and 30–50km width. It is composed of 1.83–1.78Ga granites of the Moorarie Supersuite, the majority of which consists of monzogranite and granodiorite, with some tonalite and minor quartz diorite in the project area. Small gabbro intrusions are present, particularly SW of Osbourne Well, and many of the granites contain fine-grained mafic inclusions. The presence of mafic rocks distinguishes the batholith from other granites of the Moorarie Supersuite in the northern and southern parts of the Gascoyne Complex.

In the project area the majority of granites in the batholith are massive, but rocks throughout are commonly strongly foliated. Occasionally belts and xenoliths of medium-grade, mainly siliciclastic, meta-sedimentary rocks of the Morrissey Metamorphics outcrop. Protoliths to the metasedimentary rocks of the Morrissey Metamorphics were probably deposited after about 1.84Ga before being intrusion by granites of the Moorarie Supersuite. Rafts of folded meta-sedimentary schist with two metamorphic fabrics are included within undeformed granites of the Minnie Creek batholith, indicating that the meta-sedimentary rocks were first deformed during the Capricorn Orogeny.

The crenulated muscovite–quartz–chlorite–magnetite schists exposed in the project area are typical of much of the Morrissey Metamorphics throughout the central Gascoyne Complex. Often the contact between the schists and the granite are marked by intense tourmaline alteration.

5.2.2 Local Geology

Prospect scale geology comprises generally recessive tonalite - granodiorite felsic intrusive suites and strongly deformed meta-sedimentary sequences assigned respectively to the Moorarie Supersuite and Morrissey/Pooranoo Metamorphics. The area is pervasively intruded by multiple dolerite dykes assigned to the younger Mundine Well Dolerite suite.

A thin locally extensive cover of undifferentiated colluvium and calcrete deposits overlies basement sequences. Regolith weathering profiles are moderately developed with local evidence of peneplain to indurated crusts with calcareous laterite profiles present. Calcrete deposits are considered to have formed during the Tertiary epoch and relate to palaeo-drainages and/or fault structures.

The major structural features are usually only seen along creek systems where the preferentially eroding fault and shear structures are barely exposed. Unfortunately these zones are the most likely to contain significant mineralisation, the net effect being the most prospective zones are preferentially covered.

At Mt Minnie North on E09/2063 rock chip sampling primarily for molybdenum by Catalyst Metals at the Woods Prospect identified a zone of sub-cropping gossanous material returning positive gold results ranging from 0.15g/t Au to 21.5g/t Au. Equatorial Mining-Merrit Mining JV rock chip sampling in 1997 returned from 0.1g/t Au to 6.6g/t Au from the Osborne Well/Neptune Prospect area, located approximately 12km to the SE of Woods. Mineralisation at all prospects is associated with quartz veining and sheared-altered granite.

Reconnaissance prospecting by Catalyst Metals at Ram West on E09/2064 in 2009 defined five gold prospects over an area 10km x 5km that have not been followed up. Gold from 0.1g/t Au to 0.85g/t Au with associated bismuth from 0.05% to 0.14% and minor tungsten and molybdenum were identified at Ram. Other encouraging anomalous results were returned from the Fenceline, Roadside, Michelles and Clay Pan Prospect zones.

S2M2 Coal is planning a program of detailed mapping and sampling to define the extents of the gold mineralisation.

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5.3 Sungai Roi Project

The Sungai Roi Coal IUP 08/HAR/III/2008 concession issued on 2 September 2009 for 5 years covers 703.5ha in East Barito, Kalimantan, Indonesia contains an Exploration Target of 1.0-1.2Mt of 6800-6900kcal/kg GAR thermal coal. NOTE: The potential quantity and grade of this Exploration Target is conceptual in nature. There has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the determination of a Mineral Resource.

The Exploration Target was estimated by S2M2 Coal based on detailed mapping and sampling of 14 shallow dipping coal seams exposures over a strike length of 3km within a width of 800m and a 40m vertical range based on topographic contours. Cumulative coal seam thickness is up to 1.87m. Drilling to test the validity of the Exploration Target is recommended subject to receipt of necessary permits and approvals. , the timeframe for which cannot be estimated with certainty.

The generally flat lying coal crops out over 4km of strike within an area of gently undulating topography (Fig 14). The project is close to existing infrastructure including haul roads and barge loading facilities that have the potential to reduce the upfront capital costs and time frame for development of the project. S2M2 Coal has the right to earn 90% equity in that company owning the Sungai Roi coal concession by sole funding the evaluation of the project.

In October, 2013, S2M2 Coal received a non-binding offer from an Indonesian entity to purchase its Sungai Roi coal rights. Consideration for 100% equity in the company holding the Sungai Roi Project is US$0.5M in staged payments and a US$1.00 royalty per tonne of coal mined. The purchaser will be responsible for all forestry permits, delineation of resources and all costs associated with furthering the Sungai Roi coal project upon signing any purchase agreement. Due diligence and legal documentation of the sale and purchase agreement is in progress.

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Figure 14: Sungai Roi Tenement Location.

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6.0 VALUATION OF ZENITH & S2M2 PROJECTS

To arrive at a fair market value several aspects need to be considered. As no Ore Reserves are available, the Discounted Cash Flow method is not applicable. The Kilburn method is considered to provide a range of values that is so wide that it is not realistic.

The writers consider that the Empirical or Yard stick method is most applicable. There are several comparable transactions that the writers are aware of relating to these geological settings and tenement holdings.

6.1 Empirical Method

Using the Empirical method it is considered appropriate to apply discounting factors to the insitu resource values. Where no resources are available notional values have been ascribed to those projects with little data and limited positive rock chip results since no definitive mineralised deposits have yet been identified.

At the Zenith Mt Alexander Project the insitu BIF mineralisation for the Inferred Resource of 535Mt was calculated by applying an iron ore price ranging between $0.04-$0.12/t in order to arrive at Low, Preferred and High values.

This price ranges election is guided by some recent transactions with BIF and layered intrusive magnetite deposits, with limited to unlikely DSO component, have been completed with values between $0.04-$0.12/t for the resource (eg Forge Group transaction with Atlas Iron Limited’s Balla Balla project at $0.09/t and Cliffs/ Atlas Yerecoin project at $0.10/t or the Sichuan Taifeng Group / Ferrowest Ltd Yalgoo project at $0.10/t). In order to derive Low, Preferred and High values for the Target mineralisation lower prices from $0.01-0.03/t were applied to reflect the uncertainty of the estimate in the range of tonnages.

For the Earaheedy manganese deposit Inferred resource discount factors between 98.75-99.25% are considered to reflect the current uncertainty to future mining(due to distance from port facilities were applied to the insitu metal value using the tonnage and grade estimates and the Australian price equivalent in order to derive Low, Preferred and High values. For the grassroots Cardinals project notional values were applied.

The results of this determination are presented in Table 6.

MEE method comparisons using reasonable inflation factors of approximately 2 produce comparable values for the Cardinals and Earaheedy projects but are vastly different for Mt Alexander where the substantial resources have been identified by the exploration effort. Since the Mt Alexander project is the major contributor to the total valuation result the MEE method results were not considered applicable for averaging purposes.

	Low Range **A$M **	High Range **A$M **	Preferred **A$M **
Project
Mt Alexander	27.10	84.60	55.30
Earaheedy	4.97	8.29	6.63
Cardinals	0.10	0.2	0.15
TOTAL	32.17	93.09	62.08
Rounded	32	93	62

Table 6: Range of Values for the Zenith Projects.

Thus, it is determined that a preferred value of A$62 million from within the range of A$32 million to A$93 million is ascribed to the Zenith projects using the Empirical method.

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For the S2M2 Kavaklitepe project discount factors between 99.80-99.86% reflecting the uncertainty of the estimates were applied to the total insitu exploration target gold value in order to derive Low, Preferred and High values which were then reduced to reflect the 70% earn in capacity. For the grassroots Mt Minnie and Sungai Roi projects notional values were applied assuming the 100% holding. The results of this exercise are presented in Table 7. No MEE comparisons were undertaken.

	Low Range **A$M **	High Range **A$M **	Preferred **A$M **
Project
Kavaklitepe	3.75	5.36	4.55
MtMinnie	0.10	0.20	0.15
Sungai Roi	0.05	0.15	0.10
TOTAL	3.90	5.71	4.80
**Rounded $M **	3.9	5.7	4.8

Table 7: Range of Values for the S2M2 Projects.

Thus, it is determined that a preferred value of A$4.8 million from within the range of A$3.9 million to A$5.7 million is ascribed to the three S2M2 projects using the Empirical method.

6.2 Valuation Conclusions

A summary of the appraised values for the two companies is shown in the Table 8.

	Low Range **A$M **	High Range **A$M **	Preferred **A$M **
Project
Zenith	32.0	93.0	62.0
S2M2	3.9	5.7	4.8

Table 8: Summary Range of Values for the Zenith and S2M2 Projects.

Thus, it is the writers’ opinion that the current value of 100% of the Zenith Projects is ascribed at A$62M from within the range of A$32M to A$93M and the S2M2 current value is ascribed at A$4.8M from within the range of A$3.9M to A$5.7M.

Yours faithfully,

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Allen J. Maynard BAppSc(Geol), MAIG, MAusIMM.

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Brian J. Varndell BSc(SpecHonsGeol) FAusIMM

7.0 REFERENCES

AusIMM, (2004), “Australasian Code for Reporting of Mineral Resources and Ore Reserves (JORC Code), prepared by the Joint Ore Reserves Committee (JORC) of the AusIMM, the Australian Institute of Geoscientists (AIG) and the Minerals Council of Australia (MCA), effective December 2004 and updated 2012.

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AusIMM. (2005), "Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (the VALMIN Code)" 2005 Edition.

AusIMM, (1998), "Valmin 94 Conference - Mineral Valuation Methodologies"

ClM, (2003) - "Standards and Guidelines for Valuation of Mineral Properties. Final Version, February 2003" Special Committee of the Canadian Institute of Mining, Metallurgy and Petroleum on Valuation of Mineral Properties (CIMVAL).

Inflation Calculator: http://www.rba.gov.au/calculator/calc.go

KILBURN, LC, 1990, "Valuation of Mineral Properties which do not contain Exploitable Reserves" CIM Bulletin, August 1990.

Zenith References

Zenith website including ASX announcements Zenith database via email.

S2M2 References

Columbus Copper – TSX announcements. Kavaklitepe Due Diligence Report – August 2013. S2M2 database via Dropbox.

Competent Persons Statements

The information in this report which relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Allen Maynard, who is a Member of the Australian Institute of Geosciences (“AIG”), a Corporate Member of the Australasian Institute of Mining & Metallurgy (“AusIMM”) and independent consultant to the Company. Mr Maynard is the Director and principal geologist of Al Maynard & Associates Pty Ltd and has over 35 years of exploration and mining experience in a variety of mineral deposit styles. Mr Maynard has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves”.(JORC Code). Mr Maynard consents to inclusion in the report of the matters based on this information in the form and context in which it appears.

Competent Persons Statements

The information in this report which relates to Exploration Targets, Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by Mr Brian Varndell, who is a Fellow of the Australasian Institute of Mining and Metallurgy and independent consultant to the Company. Mr Varndell is an associate of Al Maynard & Associate Pty Ltd and has over 35 years of exploration and mining experience in a variety of mineral deposit styles including iron ore mineralisation. Mr Varndell has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the “Australasian Code for reporting of Exploration Results, Exploration Targets, Mineral Resources and Ore Reserves”.(JORC Code). Mr Varndell consents to inclusion in the report of the matters based on this information in the form and context in which it appears.

The information this Report that relates to in-situ Mineral Resources and Exploration Targets at Zenith Minerals Limited's Mount Alexander project is extracted from the 24 May 2013 ASX release entitled ‘Mount Alexander Resource Upgrade’ which is available to view on the Zenith Minerals website (www.zenithminerals.com.au) . The Competent Persons have been advised by the Company that it is not aware of any new information or data that materially affects the information included in the 24 May 2013 market announcement, and that all material assumptions and technical parameters underpinning the Mineral Resource and Exploration Target estimates in the 24 May 2013 market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

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The information in this Report that relates to in-situ Mineral Resources at Zenith Minerals Limited ’s Red Lake project is extracted from the 9 April 2013 ASX release entitled "Maiden Manganese Resource Estimate for Earaheedy Project" which is available to view on the Zenith Minerals website (www.zenithminerals.com.au) . The Mineral Resource estimate was prepared and first disclosed under the JORC Code 2004, and is based on information compiled by Grant Louw an employee of CSA Global. Grant Louw takes overall responsibility for the Mineral Resource estimate. He is a Member of the Australian Institute of Geoscientists and has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration, and to the activity he is undertaking, to qualify as a Competent Person in terms of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code 2004 and 2012 Editions). Mr Louw consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

This information was prepared and first disclosed to ASX on 9 April 2012 under the JORC Code 2004. It has not been updated since to comply with the JORC Code 2012 on the basis that the information has not materially changed since it was last reported. The Company has advised that it is not aware of any new information or data that materially affects the information included in the 9 April 2013 market announcement, and that all material assumptions and technical parameters underpinning the Mineral Resource estimate in the 9 April 2013 market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

The information in this report that relates to Zenith Minerals Limited and S2M2 Coal Pty Ltd Exploration Results is extracted from Zenith's 31 December 2013 ASX release entitled "Amended release Acquisition nets Zenith Turkish gold project"which is available to view on the Zenith Minerals website (www.zenithminerals.com.au) . The Competent Persons have been advised by the Company that it is not aware of any new information or data that materially affects the information included in the 31 December 2013 market announcement, and that all material assumptions and technical parameters in the 31 December 2013 market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the Competent Person’s findings are presented have not been materially modified from the original market announcement.

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PROXY FORM APPOINTMENT OF PROXY

GENERAL MEETING

I/We

being a member of Zenith Minerals Limited entitled to attend and vote at the Meeting, hereby

appoint

(Name of proxy)

or failing the person so named or, if no person is named, the Chairman of the Meeting or the Chairman’s Nominee, to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the General Meeting of Zenith Minerals Limited to be held The Celtic Club (President’s Meeting Room), 48 Ord Street, West Perth, Western Australia on Tuesday 18[th] March 2014 commencing at 11.00 am (WST) and at any adjournment of that meeting.

meeting.
Voting directions to	your proxy – please mark to indicate your directions
		For Against		Abstain*
Resolution 1.	Approval of securities issue for acquisition of S2M2Coal Pty Ltd
Resolution 2.	Approval to issue securities to related party (Creekwood
	Nominees)
Resolution 3.	Approval to acquire shareholding in S2M2 Coal Pty Ltd from
	related party (Creekwood Nominees)
Resolution4	Approval for issue of 1,000,000 Options to Michael Clifford upon his appointment as managing director

*If you mark the Abstain box for a particular Resolution, you are directing your proxy not to vote on that item on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

Dated this day of 2014

Signatures:

Individual or Shareholder 1 Shareholder 2 Shareholder 3 Sole Director and Sole Company Secretary Director Director/Company Secretary