## Directors’ Report 

## LIKELY DEVELOPMENTS 

Likely developments in the operations of the consolidated entity include NuStar Mining Corporation Limited developing the Paulsens Project and the Company evaluating and conducting limited exploration at Meekatharra. Otherwise likely developments are described in the following section, Events Subsequent to 30 June 2004 in this report. 

## EVENTS SUBSEQUENT TO 30 JUNE 2004 

Since 30 June 2004 the following has occurred: 

• On 15 July 2004, the Company announced the conversion by Ocean Resources Capital Holdings plc of the face value of its convertible note of $4.4 million into 55,000,000 ordinary shares at $0.08. 

• On 19 July 2004, the Company announced the resignation of Kevin Dundo as a Director with effect from 18 July 2004. 

• On 20 July 2004, a General Meeting of the shareholders of the Company was held and the following resolutions were carried: 

• Mr Eduard Eshuys was elected as a Director; 

• Mr Colin Wise was elected as a Director; and 

• Mr Stephen Miller was removed as a Director. 

• On 20 July 2004, the Company issued 42,050,000 fully paid ordinary shares at $0.04 per share to raise $1,682,000 for working capital. 

• On 20 July 2004, the Company issued 17,480,547 fully paid ordinary shares to Ocean Resources Capital Holdings Limited at $0.046 per share in satisfaction of interest of $804,105. 

• On 23 July 2004, the Company issued 26,591,453 fully paid ordinary shares to Resource Capital Fund II L.P. at $0.046 per share to raise $1,223,207 for working capital. 

• On 23 July 2004, the Company announced that Mr Eduard Eshuys was appointed as Managing Director and Mr Colin Wise was appointed as Non-Executive Chairman. The new Board appointed Deloitte to conduct a review of the Company, including the terms of employment of the former Executive Chairman. 

• On 12 August 2004, the Company announced that following the completion of the initial review by Deloitte, agreement was reached with the former Executive Chairman, Mr Stephen Miller, for his employment to end with effect from 4 August 2004. This resulted in a termination payment of $257,543 inclusive of all statutory entitlements (less applicable taxes). Mr Miller then resigned from the Boards of all wholly owned subsidiaries of the Company and from the Boards of NuStar and its subsidiary. 

• On 24 August 2004, NuStar announced that a detailed mining plan had established a Mining Reserve of 1,202,000 tonnes at 10.66g/t - containing 412,100 ounces of gold. 

• On 20 September 2004, NuStar announced that an agreement was reached in principle to acquire a royalty 

over the Paulsens Gold Project and an interest in the Wyloo Joint Venture – both held by the Company. 

• On 20 September 2004, the new Board announced that it had completed a review of the fi  nancial position and operations of the Company and had decided to divest a substantial part of the Company’s shareholding in NuStar with the following four separate but interrelated transactions: 

(a) an initial sale of 100 million NuStar shares to third parties at not less than $0.04 per share within seven business days; 

(b) the sale of the Paulsens 5% royalty owned by the Company to NuStar for not less than $5.1 million and the sale of the Company’s interest in the Pelican Joint Venture (adjacent to Paulsens) to NuStar; 

(c) the grant of an option to Claymore Capital Pty Limited (as arranger of these transactions) to purchase 100 million NuStar shares at $0.05 per share at any time up to three months after the initial sale; and 

(d) a Share Swap of NuStar shares for Company shares on the basis of 1.25 NuStar shares for each Company share. The Company intends to offer a maximum of 240 million NuStar shares and to cancel the Company shares received through the Share Swap by way of a capital reduction. Should more shareholders wish to accept the Share Swap than the number of NuStar shares available, then shareholder acceptances will be scaled back on a pro rata basis. 

The transactions described in (b) and (d) are subject to shareholder approval and the completion of an independent expert’s report. Shareholders will be asked to approve these transactions at the company’s AGM to be held in late November 2004 subject to all necessary statutory procedures being completed within this time. 

As a consequence of the above transactions, the Company will: 

• immediately retire an existing secured debt of $3.5 million; 

• have cash of approximately $8 million after payments to creditors and other liabilities; 

• retain approximately 102 million NuStar shares or just over 10% of the issued capital; and 

• have reduced the issued capital of the Company from 715 million shares to 523 million shares, should the maximum of 240 million NuStar shares be swapped. 

In addition to the above transactions, the Company has: 

• commenced a comprehensive review and data compilation of the Paddy’s Flat tenements (100% owned) in the Meekatharra region; 

• reviewed the Aurogenic and Elara joint ventures which require the joint venture partners to spend approximately $6.5 million during the coming twelve months; and 

• entered into negotiations with a third party for the use of the Blue Bird plant at Meekatharra which will at least cover the care and maintenance costs, while the operations are suspended. 

