Prospectus - Kingsrose Mining

expenditure will be borne by the parties in accordance with their participating 50% interests.
The product entitlement of the joint venture parties is each of the Company and Reed Resources Ltd will be
entitled to 50% of the product from shallow ore being gold ore produced within the Tenement Area up to and
including a depth of 243 metres. The product entitlement in respect of deep ore, being gold ore produced
within the Tenement Area from a depth exceeding 243 metres, is the Company will be 60% entitled to the
product whilst Reed Resources Ltd will be 40% entitled to the product.
The agreement provides for a gold production milestone of at least 25,000 ounces of gold ore by 31 May
2009. If the gold production milestone is not satisfied, Reed Resources Ltd may terminate the agreement by
notice in writing to the Company with the consequence that the participating interest of the Company in the
joint venture will be deemed to be zero. Additionally, if the gold production milestone is not satisfied, the
Company becomes insolvent or withdraws from the joint venture, then Reed Resources Ltd may purchase
various office and mining equipment owned by the Company at the then written down value. If the gold
production milestone is satisfied, Reed Resources Ltd is obliged to transfer 50% of its registered interest in the
joint venture tenements to the Company.
Surface resources amenable to open pit mining are excluded areas from the joint venture and are reserved for
the benefit of Reed Resources Ltd. Reed Resources Ltd cannot commence open pit operation on any part of
the Tenement Area where the Company reasonably expects that open pit operations would detrimentally affect
current or future underground mining activities.
The Company has a first right of refusal to form a joint venture with Reed Resources Ltd in respect of all gold
and silver mineralisation occurring upon the Comet Vale Tenements on terms similar to the joint venture
however the Company will earn no right to a registered holding in the Comet Vale Tenements. The Comet
Vale Tenements constitute mining leases M 29/85, M 29/185, M 29/186, M 29/270, M 29/35, M 29/197, M
29/198, M 29/199, M 29/200, M 29/201, M 29/232, M 29/233, M 29/235, exploration licences E 29/614, E
29/603 and E 29/670 and prospecting licence P 29/1764.
The joint venture will be conducted on a day to day basis by the Company as the operator subject to
instructions of the management committee. Each party at the management committee level is entitled to
votes equalling its participating share in the joint venture. While there are two parties to the joint venture, all
management committee decisions must be unanimous.
No party may assign its rights or obligations under the agreement without the written consent of the other
party.
The agreement otherwise features clauses common in mining joint venture agreements including withdrawal,
default, pre-emptive right, force majeure and dispute resolution clauses. The agreement is governed by the
laws of Western Australia.
3. MTAB Pty Ltd Royalty Deed
By a royalty deed dated 14 May 2002 as amended, Reed Resources Ltd (together with the Company from the
date of acquiring its interest in the joint venture) is liable to pay MTAB Pty Ltd a royalty upon production.
The total royalty payable to MTAB Pty Ltd for gold produced from the joint venture tenements is 2% of the
gross proceeds received from the sale of any gold. The royalty payable from the sale of any minerals other
than gold produced from the joint venture tenements is 2% of the net smelter return received from the sale of
the product at the point of sale less selling costs, the costs of mining, milling, leaching, smelting, refining and
any other processing costs, the cost of assaying and sampling such products and taxes imposed in connection
with producing or selling the product.
Upon completion of the sale transaction under the Asset Sale Agreement, the joint venture parties will be Reed
Resources Ltd and the Company which will each have a 50% participating interest and they will each be liable
to pay the royalties in accordance with their participating interest.
The royalty deed is governed by the laws of Western Australia.
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