to Prospectus - Stratum Metals Limited

STRATUM METALS LIMITEDACN 147 867 301PROSPECTUSFor the offer of 20,000,000 fully paid ordinary sharesat an issue price of $0.20 each to raise $4,000,000.The Closing Date of this Offer is 14 October 2011.LEAD MANAGERACN 006 519 393 AFSL 245421Important InformationThis is an important document that you should read in its entirety. You should consider carefully the risk factorsin Section 4 in light of your personal circumstances and seek professional advice before you decide whether to invest.The Offer does not take into account your investment objectives, financial situation or particular needs.The Shares offered pursuant to this Prospectus should be considered speculative.

CORPORATE DIRECTORYDIRECTORSRichard Anthon Non-Executive ChairmanMartin Holland Managing DirectorMichael Addison Non-Executive DirectorKent Hunter Non-Executive DirectorINDEPENDENT GEOLOGISTG J MilesConsulting GeologistPO Box 396WEST PERTH WA 6872COMPANY SECRETARYElizabeth HuntEXPLORATION MANAGERTodd AxfordREGISTERED OFFICELevel 7, 151 Macquarie StreetSydney NSW 2000INVESTIGATING ACCOUNTANTSBentleysLevel 1, 12 Kings Park RoadWEST PERTH WA 6005LEAD MANAGERE.L. & C. Baillieu Stockbroking LtdLevel 26, 360 Collins StreetMELBOURNE VIC 3000CONTACT DETAILSWebsite: www.stratummetals.com.auEmail:info@stratummetals.com.auPh: +61 2 9276 1245Fax: +61 2 9276 1284IPO COMPLIANCE MANAGERSMining Corporate Pty LtdPO Box 1905SUBIACO WA 6904SOLICITORS REPORT ON TENEMENTSPrice SierakowskiLevel 24 St Martin’s Tower44 St Georges TerracePERTH WA 6000SHARE REGISTRY*Advanced Share Registry Services150 Stirling HighwayNEDLANDS WA 6009Ph: (08) 9389 8033Fax: (08) 9389 7871AUDITORSBentleysLevel 1, 12 Kings Park RoadWEST PERTH WA 6005* This party had no involvement in the preparationor issue of this Prospectus. Its name appears forinformation purposes only.

CHAIRMAN’S LETTERCHAIRMAN’S LETTERDear Investor,Stratum Metals Limited (“Stratum Metals” or the “Company”) was formed to utilise some of the latestinnovations in geosciences to target areas in Western Australia prospective for the discovery of goldand copper-gold ore bodies.Stratum Metals has entered into various agreements to acquire a tenement portfolio located in theprospective gold and copper mineralisation region of Yilgarn in Western Australia.These tenements cover a range of mineralising systems in known and emerging mineral provincesin Western Australia, where potential exists for new gold, copper and nickel discoveries.Stratum Metals proposes commencing comprehensive and intensive exploration of the targets identifiedin the search for new ore bodies. A detailed regional exploration programme is planned as shown inthe Independent Geologist Report in Section 6 of this Prospectus.Stratum Metals will initially focus on its prospective Gidgee Project located on the Greenstone Belt,East Murchison Mineral Field of Western Australia.The Gidgee Project is located close to existing civil and mining infrastructure with its southern leasesituated eight kilometres from a 600,000 tonne per annum process facility (not in operation), purchasedas part of the Gidgee Gold Project by Panoramic Resources Limited in February 2011.Additionally, Stratum Metals has entered into agreements to acquire tenure (subject to grant andsufficient exploration expenditure) in the Canning Basin, considered to be prospective for coal.Stratum Metals has an experienced board of directors and management team with a proven track recordin mining exploration, strategic transactions and technical, legal and financial management.Stratum Metals understands the discovery of a new ore body is the key driver to shareholder value.It is this goal that Stratum Metals will focus on with determination, energy, passion and enthusiasm.On behalf of the Stratum Metals board I am pleased to offer you the opportunity to become a fellowshareholder.P R O S P E C T U SYours sincerelyRick AnthonNon-Executive Chairman1

TABLE OF CONTENTS1. INVESTMENT OVERVIEW 31.1. Important Notice 41.2. Investment Highlights 41.3. Risks 51.4. Key Features of the Company’s Business Model 61.5. Key Financial Information 61.6. Information on Directors and Executives 81.7. Indicative Timetable 101.8. Pro-forma Capital Structure 101.9. Restricted Securities 102. DETAILS OF THE OFFER 112.1. Shares Offered for Subscription 112.2. Purpose of the Offer 112.3. How to Apply for Shares 122.4. Allotment of Shares 122.5. Minimum Subscription 122.6. Oversubscription 132.7. ASX Listing 132.8. Applicants outside Australia 132.9. Arrangements with Brokers 132.10. Underwriting 132.11. Commissions on Application Forms 132.12. CHESS 132.13. Risk Factors 142.14. Forecasts 142.15. Dividends 142.16. Privacy Disclosure 142.17. Enquiries 143. COMPANY AND PROJECT OVERVIEW 153.1. Background 153.2. Projects 173.3. Exploration Budget 194. RISK FACTORS 205. CORPORATE GOVERNANCE 256. INDEPENDENT GEOLOGIST’S REPORT 277. INVESTIGATING ACCOUNTANT’S REPORT 668. SOLICITOR’S REPORT ON MINING TENEMENTS 789. ADDITIONAL INFORMATION 88210. GLOSSARY 10311. CONSENT BY THE DIRECTORS 10412. APPLICATION FORM & INSTRUCTIONS 105

INVESTMENT OVERVIEWIMPORTANT NOTICEThis Prospectus is dated 9 September 2011.A copy of this Prospectus was lodged with the ASIC on 9 September 2011. Neither the ASIC nor the ASXtake any responsibility for the contents of this Prospectus.No person or entity is authorised to give any information or to make any representation in connection withthe Offer which is not contained in this Prospectus. Any information or representation not so containedmay not be relied on as having been authorised by the Company in connection with the Offer.No Shares will be issued on the basis of this Prospectus later than thirteen (13) months after the date ofthis Prospectus. Application will be made within seven (7) days after the date of this Prospectus forpermission for the Shares offered pursuant to this Prospectus to be listed for Quotation.The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and personswho come into possession of this Prospectus should seek advice and observe any such restrictions. Anyfailure to comply with such restrictions may constitute a violation of applicable securities laws. ThisProspectus does not constitute an offer in any place in which, or to any person to whom, it would not belawful to make an offer.Applicants should read this document in its entirety and, if in any doubt, consult with their professionaladvisors before deciding whether to apply for Shares. There are risks associated with an investment inStratum Metals and the Shares offered pursuant to this Prospectus must be regarded as a speculativeinvestment. The Shares offered pursuant to this Prospectus carry no guarantee with respect to return oncapital investment, payment of dividends or the future value of the Shares.Certain abbreviations and other defined terms are used throughout this Prospectus. Defined terms aregenerally identifiable by the use of an upper case first letter. Details of the definitions and abbreviationsused are set out in Section 10 of this Prospectus.All amounts are in Australian dollars unless otherwise specified.Exposure PeriodIn accordance with Chapter 6D of the Corporations Act, this Prospectus is subject to an Exposure Periodof 7 days from the date of lodgement of the Prospectus with the ASIC. This period may be extended by theASIC for a further period of 7 days. The purpose of this Exposure Period is to enable the Prospectus to beexamined by market participants prior to the raising of the funds, which examination may result in theidentification of deficiencies in this Prospectus. If this Prospectus is found to be deficient, Applicationsreceived during the Exposure Period will be dealt with in accordance with section 724 of the CorporationsAct. Applications received prior to the expiration of the Exposure Period will not be processed until afterthe Exposure Period. No preference will be conferred upon Applications received in the Exposure Period.P R O S P E C T U SElectronic ProspectusThis Prospectus will be issued in paper form and as an electronic Prospectus, which may be viewed onlineat www.stratummetals.com.au. The offer of Shares pursuant to this Prospectus is available to personsreceiving an electronic version of this Prospectus in Australia. The Corporations Act prohibits any personfrom passing onto another person the Application Form unless it is attached to or accompanied by thecomplete and unaltered version of this Prospectus. During the Offer Period, any person may obtain a hardcopy of this Prospectus by contacting the Company by e-mail at info@stratummetals.com.au3

SECTION 1: INVESTMENT OVERVIEW1.1 Important NoticeProspective investors should read this Prospectus in its entirety, including the Independent Geologist’sReport in Section 6, the Investigating Accountant’s Report in Section 7, and the Solicitor’s Report on MiningTenements in Section 8.Neither Stratum Metals Limited (“Stratum Metals” or the “Company”) nor any other person guaranteesthe performance of the Shares offered pursuant to this Prospectus, or the performance of Stratum Metalsor the return on any investment in the Company.The Shares offered pursuant to this Prospectus should be considered speculative.1.2 Investment HighlightsProjectsStratum Metals has entered into agreements to acquire a 100% interest in four metalsprojects in the Yilgarn Region of Western Australia (Yilgarn Projects):• the Gidgee Project in the East Murchison region,• the Pinyalling Project in the South Murchison region,• the Bannockburn Nickel Project in the Wildara area south-southeast of Leinster, and• the Laverton Project in the vicinity of the township of Laverton in the Eastern Goldfields ofWestern Australia.These Yilgarn Projects are focused on regions prospective for gold, copper and/or nickel mineralisation.Recent geophysical interpretation of the Yilgarn Projects has provided new insights and highlighted thepotential of the tenements that may have previously gone unrecognised.In addition to the Yilgarn Projects, Stratum Metals has entered into agreements with State Resources PtyLtd to acquire and earn an interest within the coal prospective Canning Basin, Western Australia.The Company has the right to acquire 100% of exploration licence applications E04/2124 and E04/2125(subject to grant of the exploration licence applications to State Resources).Stratum Metals has also entered into an option agreement to farm-in up to 80% of exploration licenceapplication E04/1993 (subject to grant of the exploration licence application to State Resources and toStratum Metals meeting minimum expenditure on the tenement).Following completion of tenement acquisitions, Stratum Metals’ tenement portfolio will consist of a 100%interest in six granted exploration licences, and subject to the grant of applications 100% interest in twofurther exploration licences and, subject to both grant and meeting expenditure commitments, up to an80% interest in a further third exploration licence.For further details on the Projects and on the agreements relating to the acquisition of the Projects,investors are directed to section 9.3 of this Prospectus.4Stratum Metals’ projects are generally located in close proximity to infrastructure. Their strategic locationclose to existing mining and civil infrastructure provides development advantages should any viablediscoveries be made.

INVESTMENT OVERVIEW1.3 RisksThere are risks associated with an investment in the Company which are discussed in Section 4 of thisProspectus. Some of the principal risks include:• There can be no assurance that exploration of the projects in which the Company has acquired or isacquiring an interest, or other exploration properties that may be acquired by the Company in thefuture, will result in the discovery of an economic resource. Even if an economic resource is discovered,there is no guarantee that the resource will be able to be commercially exploited by the Company.• There can be no guarantee that the exploration licence applications (E04/1993, E04/2124 andE04/2125), the subject of agreements with State Resources Pty Ltd, will be granted. Should theseexploration licence applications not be granted to State Resources Pty Ltd, the Company will acquireno interest in the Canning Basin Project. Further, the Company will not acquire an interest in E04/1993until it has incurred sufficient exploration expenditure in connection with the tenement.• Title to the tenements in which the Company has acquired or is acquiring an interest are subject tothe tenement holder complying with the terms and conditions of the tenements and other relevantlegislation. A summary of the terms and conditions attaching to the tenements is set out in theSolicitor’s Report on Mining Tenements in Section 8.• There are operational and resource estimate risks in respect of the projects in which the Companyhas or will acquire an interest such as a failure to locate or identify economic mineral deposits andoperational and technical challenges in the mining and processing of ore.• Investment risks include economic risks such as changes in commodity prices, interest rates andexchange rates.• There is a risk that the Company may be unable to obtain additional capital on satisfactory terms orat all.• On 2 July 2010, the Australian Federal Government announced the introduction of a new rent-basedtax on resources. This new resource tax arrangement is to be known as the Mineral Resource RentTax (the MRRT) and will apply from 1 July 2012. The proposed MRRT will apply to the mining of ironore and coal in Australia, will be levied at a rate of 30 percent and will apply to the value of resourcesextracted by resources entities. The extent to which the Company will be impacted by the MRRT iscurrently unknown and will depend on the outcome of the final legislative design.P R O S P E C T U S• Other risks include environmental and regulatory risks and reliance on key management personnel.The above list is not to be taken as an exhaustive list of the risks faced by the Company or by investorsin the Company.Prospective investors should carefully review the Risk Factors set out in Section 4 of this Prospectusand consult their professional adviser with any questions.5

INVESTMENT OVERVIEWUse of FundsFull Subscription($4M)$Pre-Offer cash and receivables 299,647Total to be raised under the Offer 4,000,000Total Funds Available 4,299,647Year 1 ExpenditureExploration Asset Acquisition Costs 135,000Exploration Expenditure (refer Section 3.3) 819,700Expenses of the Offer 400,500Administration Costs 595,800Total Expenditure 1,951,000Total funds available – end of Year 1 2,348,647Year 2 ExpenditureExploration Expenditure (refer Section 3.3) 1,473,800Administration Costs 715,467Total Expenditure 2,189,267Total funds available – end of Year 2 159,380Note:1. The above table is a statement of current intentions as of the date of lodgement of this Prospectuswith the ASIC. As with any budget, intervening events (including exploration success or failure) andnew circumstances have the potential to affect the ultimate way funds will be applied. The Boardreserves the right to alter the way funds are applied on this basis.2. Exploration expenditure will be reviewed on an on-going basis, depending upon the nature of resultsforthcoming from the respective work programmes.3. It is the Company’s intention to increase and accelerate its exploration and drilling programs toachieve results as soon as practicable. The Company may seek to raise additional funds within twoyears after listing on the ASX to the extent required to increase and accelerate the exploration anddrilling programs as determined by the Board.P R O S P E C T U S7

INVESTMENT OVERVIEWMr Kent HunterBBus, Chartered AccountantNon-Executive DirectorMr Hunter is a chartered accountant with over 16 years corporate and company secretarial experience.Mr Hunter has been involved in the listing of over 30 companies on the ASX in the past 9 years. He hasexperience in capital raisings, ASX compliance and regulatory requirements and is currently a director ofCazaly Resources Limited, Carbon Conscious Ltd, Western Manganese Ltd and is company secretary oftwo other ASX listed entities.Commencing with Hall Chadwick Chartered Accountants in 1990, Mr Hunter completed his professionalyear and became chartered in 1993. Mr Hunter joined Ord Partners Chartered Accountants in 1995 andbecame Corporate and Audit Manager for a range of listed and unlisted entities.Mr Hunter founded Mining Corporate in 2000 and established a business of identifying projects requiringa route to commercialisation including industrial, technology, mining and exploration companies.Mrs Elizabeth HuntBSc, MAcc, CSA(Cert)Company SecretaryMrs Hunt has eight years corporate and accounting experience and has been involved in the IPOmanagement, corporate advisory and company secretarial services, financial accounting and reportingand ASX and ASIC compliance management. Mrs Hunt has completed a Masters of Accounting at CurtinUniversity and the Chartered Secretaries of Australia Certificate in Governance and Risk Management.Mrs Hunt is currently also company secretary of Whinnen Resources Limited and Condor Blanco Mines Limited.Mr Todd AxfordBSc (Geology), Grad. Dip PMExploration ManagerMr Axford is a member of the Australian Institute of Mining and Metallurgy and Australian Institute ofGeoscientists. Mr Axford has a strong background as a geologist working in the field, complemented witha more recent focus on the corporate side of the resource industry. Mr Axford has 16 years combinedexperience in gold, iron ore and base metals, with management of programs from conception tocompletion, along with project feasibility and due diligence work.P R O S P E C T U SMr Axford was the Senior Mine Geologist at Mount Gibson Iron between 2004 and 2007. From 2007 to 2010Mr Axford was Exploration Manager for Australian Resources Ltd before establishing private consultingfirm Geko-Co Pty Ltd. Mr Axford, Principal of consulting company Geko-Co Pty Ltd, contracts toStratum Metals.9

INVESTMENT OVERVIEW1.7 Indicative TimetableLodgement of Prospectus with ASIC 9 September 2011Opening Date for Applications 19 September 2011Closing Date for Applications 14 October 2011Expected dispatch of holding statements 21 October 2011Expected date for listing on the ASX 28 October 2011These dates are indicative only and may vary. Stratum Metals reserves the right to close the Offer early,or extend the Closing Date without prior notice. Applicants are therefore encouraged to submitApplications as soon as possible after the Opening Date.1.8 Pro-forma Capital StructureThe pro-forma capital structure of Stratum Metals is summarised in the table below.Description Full Subscription %No. of SharesPromoter and Vendor Shares 16,100,003 39.1Pre-IPO Seed Shares 5,050,000 12.3IPO 20,000,000 48.6Total Issued Capital 41,150,003 100.0SharesA total of 41,150,003 Shares will be on issue in the Company at the successful completion of the Offer.Of these, an aggregate of 2,700,000 shares will be held by Vendors of exploration projects.OptionsAs at the date of this Prospectus, a total of 3,000,000 options exercisable at $0.25 per Share on or before7 June 2016 and 3,000,000 options exercisable at $0.35 per Share on or before 7 June 2016 have beenissued to Directors. Please refer to Section 9.4 for full details of Directors’ interest in Shares and Optionsand Section 9.1 for full terms and conditions of Options.1.9 Restricted Securities10Securities on issue as at the date of this Prospectus and securities issued to the Vendors may be subjectto the restricted securities provisions of the Listing Rules. Accordingly, a proportion of such securitiesmay be required to be held in escrow for up to 24 months and may not be transferred, assigned orotherwise disposed of during that period. These agreements will be entered into in accordance with theASX Listing Rules.In general, securities issued to promoters and related parties as escrowed for 24 months from the dateof ASX listing. A portion of securities issued to seed investors and vendors are generally escrowed for 12months from the date of the issue of the securities. The final number of escrowed securities will bedetermined by ASX.

SECTION 2: DETAILS OF THE OFFER2.1 Shares Offered for SubscriptionPursuant to this Prospectus, the Company offers for subscription 20,000,000 Shares at an issue price of$0.20 each to raise $4,000,000 (before expenses of the Offer).The Shares offered pursuant to this Prospectus will rank equally with the existing Shares on issue.The Company reserves the right to reject any Application or to allocate any Applicant fewer Shares thanthe number applied for.2.2 Purpose of the OfferThe purpose of the Offer is to provide Stratum Metals with the necessary funding to acquire and developthe Projects and identify other potential acquisition opportunities.It is intended to apply funds raised from the Offer as follows:Use of FundsFull Subscription($4M)$Pre-Offer cash and receivables 299,647Total to be raised under the Offer 4,000,000Total Funds Available 4,299,647Year 1 ExpenditureExploration Asset Acquisition Costs 135,000Exploration Expenditure (refer Section 3.3) 819,700Expenses of the Offer 400,500Administration Costs 595,800Total Expenditure 1,951,000Total funds available – end of Year 1 2,348,647Year 2 ExpenditureExploration Expenditure (refer Section 3.3) 1,473,800Administration Costs 715,467Total Expenditure 2,189,267P R O S P E C T U STotal funds available – end of Year 2 159,380Note:1. The above table is a statement of current intentions as of the date of lodgement of this Prospectuswith the ASIC. As with any budget, intervening events (including exploration success or failure) andnew circumstances have the potential to affect the ultimate way funds will be applied. The Boardreserves the right to alter the way funds are applied on this basis.2. Exploration expenditure will be reviewed on an on-going basis, depending upon the nature of resultsforthcoming from the respective work programmes.113. It is the Company’s intention to increase and accelerate its exploration and drilling programs toachieve results as soon as practicable. The Company may seek to raise additional funds within twoyears after listing on the ASX to the extent required to increase and accelerate the exploration anddrilling programs as determined by the Board.

DETAILS OF THE OFFER2.6 OversubscriptionsThe Company will not accept oversubscriptions.2.7 ASX ListingWithin 7 days after the date of this Prospectus, application will be made for the Shares offered pursuantto this Prospectus to be granted Quotation.If approval for Quotation is not granted within three (3) months after the date of this Prospectus, theCompany will not allot or issue any Shares, and will repay all Application Monies without interest as soonas practicable thereafter.The ASX takes no responsibility for the contents of this Prospectus. The fact that the ASX may admitStratum Metals to the Official List is not to be taken in any way as an indication of the merits of theCompany or the Shares offered pursuant to this Prospectus.2.8 Applicants Outside AustraliaThe distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and personswho come into possession of this Prospectus should seek advice on and observe any of these restrictions.Failure to comply with these restrictions may violate securities laws. Applicants who are resident incountries other than Australia should consult their professional advisers as to whether any governmentalor other consents are required or whether any other formalities need to be considered and followed.2.9 Arrangements with BrokersE.L. & C. Baillieu Stockbroking Ltd (AFSL 245421) has agreed to act as Lead Manager to the Offer.Please refer to Section 9.3.4 for further details and fees payable to E.L. & C. Baillieu Stockbroking Ltd.2.10 UnderwritingThe Offer is not underwritten.2.11 Commissions on Application FormsP R O S P E C T U SIn addition to the arrangement with the Lead Manager, the Company reserves the right to pay acommission of up to 6% (inclusive of goods and services tax) of amounts subscribed to any licensedsecurities dealer or Australian Financial Services Licensee in respect of valid applications lodged andaccepted by the Company and bearing the stamp of the licensed securities dealer or Australian FinancialServices licensee. Payments will be subject to the receipt of a proper tax invoice from the licensedsecurities dealer or Australian Financial Services licensee.2.12 CHESSStratum Metals will apply to participate in the Clearing House Electronic Subregister System (CHESS),operated by ASX Settlement (a wholly owned subsidiary of the ASX), in accordance with the Listing Rulesand ASTC Settlement Operating Rules. On admission to CHESS, the Company will operate an electronicissuer-sponsored sub-register and an electronic CHESS sub-register. The two sub-registers together willmake up the Company’s principal register of securities.13

SECTION 3: COMPANY AND PROJECT OVERVIEW3.1 BackgroundStratum Metals was incorporated on 15 December 2010 as an Australian based exploration company. TheCompany’s principal intent is to conduct exploration activities across a number of prospective gold, copper,nickel and coal resource projects in Western Australia.Stratum Metals’ strategy is to add value to its existing project portfolio through the strategic explorationand development of its assets. Stratum Metals has an experienced board of directors and managementteam with a proven track record in mining exploration, strategic transactions and technical, legal andfinancial management.Stratum Metals’ corporate objectives, include:• developing targeted exploration programs for each of the tenements the Company has acquired aninterest in, or will acquire an interest in;• continue to assess opportunities for further acquisition and development of future projects; and• create value for its shareholders3.2 Project InformationStratum Metals has recently entered into conditional agreements to acquire 100% of four projects in theYilgarn Region of Western Australia focusing on gold, copper and nickel mineralisation (Yilgarn Projects).Project Status of Titles Target MetalsGidgee Granted AuPinyalling Granted Au, Cu, NiSBannockburn Granted NiSLaverton Granted Ultramafic NiRecent geophysical interpretation of the Yilgarn Projects has provided new insights and highlighted thepotential of the tenements that may have previously gone unrecognized.In addition to the metal projects, Stratum Metals has entered into a conditional option agreement withState Resources to explore and earn an initial 60% interest and up to an 80% interest in exploration licenceapplication E04/1993 and a conditional tenement acquisition agreement to acquire 100% of explorationlicence applications E04/2124 and E04/2125 within the coal prospective Canning Basin.P R O S P E C T U SProject Status of Titles Target MetalsCanning Basin Application Thermal coalThe Projects’ strategic location, close to existing mining and civil infrastructure, provides developmentadvantages should any viable discoveries be made.Details of the projects are summarised in this section and a comprehensive background on each individualproject and previous work undertaken on the tenements and proposed exploration work is set out in theIndependent Geologist’s Report located in section 6 of this Prospectus.15

COMPANY AND PROJECT OVERVIEW16Figure 1 – Stratum Metals Limited Project Locations

COMPANY AND PROJECT OVERVIEWGIDGEE PROJECT• The Gidgee Project is located 640 kilometres northeast of Perth, within the Gum Creek Greenstone Belt,East Murchison Mineral Field of Western Australia, and consists of exploration licences E53/1440(Gidgee South) and E53/1494 (Gidgee North), covering 9 and 4 sub-blocks respectively.• The project is located close to existing civil and mining infrastructure. The southern lease is eightkilometres from Panoramic Resources Limited’s (ASX: PAN) Gidgee Gold Project which includes the600,000 tonnes per annum Gidgee Gold treatment plant (currently not in operation) and is 90 kilometresnorth-northeast of Sandstone.• Stratum Metals has entered into a Tenement Sale Agreement with Fraka Investments whereby theCompany may acquire 100% of this project.PINYALLING PROJECT• The Pinyalling Project includes two exploration licences (E59/1545 and E59/1618) located in the southernpart of the Achaean aged Murchison Province of Western Australia, 430 kilometres north of Perth.• New geophysical modelling at the Pinyalling Project indicates that the tenure covers an extension ofthe Baron Igneous Complex partly under alluvial cover which is prospective for nickel sulphide, copperand gold mineralisation.• The Company has entered into a Tenement Sale Agreement with Fraka Investments whereby theCompany may acquire 100% of E59/1545 and E59/1618.P R O S P E C T U S17Outcrop on E53/1440 Gidgee South

COMPANY AND PROJECT OVERVIEWBANNOCKBURN PROJECT• The Bannokburn Project comprises a single exploration licence, E37/1010, partially covering 8 subblocks.The project is located in one of the world’s most prolific nickel sulphide provinces on the majorPerseverance shear zone.• New geophysical modelling indicates the project is centred on a potentially unrecognised extension ofultramafic lithologies adjacent to the Sinclair Nickel Mine.• Stratum Metals has entered into a Tenement Sale Agreement with the licence holder Fraka Investmentswhereby the Company can acquire 100% of E37/1010.LAVERTON PROJECT• The Laverton Project comprises a single exploration licence, E38/2156 and is located 15 kilometresnorthwest of Laverton, approximately 800 kilometres northeast of Perth. The tenement is located onthe Laverton Downs Pastoral Lease.• The project is under-explored using modern techniques and may benefit from new geophysical dataacquisitions.• The Windarra region is prospective for ultramafic nickel.• Stratum Metals has a Tenement Acquisition Agreement with State Resources Pty Ltd to acquire E38/2156.CANNING BASIN• The Canning Basin is an emerging coal province in the Kimberley region of Western Australia.• The Canning Basin project covers prospective rocks in the Lightjack Formation which is known to hostcoal deposits currently being evaluated by Rey Resources Limited.• The Canning Basin is prospective for large scale coal deposits and is strategically located to takeadvantage of possible long term demand for thermal coal from both India and China.• The Company has entered into an Option Agreement with State Resources Pty Ltd to explore and earnan initial 60% interest and up to an 80% interest in exploration licence application E04/1993 and aTenement Acquisition Agreement with State Resources Pty Ltd to acquire a 100% interest in explorationlicence applications E04/2124 and E04/2125.18

COMPANY AND PROJECT OVERVIEW3.3 Exploration BudgetThe Company proposes to fund its intended activities as outlined in the tables below from the proceedsof the Offer. It should be noted that the budgets will be subject to modification on an ongoing basisdepending on the results obtained from exploration undertaken. This will involve an ongoing assessmentof the Company’s project interests and may lead to increased or decreased levels of expenditure on certaininterests, reflecting a change in emphasis. Subject to the above, the following expenditure is proposed:Full subscription ($4m)Expenditure Year 1 Year 2 TotalWages, salaries and contractors 183,000 290,000 473,000Geophysical survey 290,000 - 290,000Geochemistry 19,200 - 19,200RAB drilling 110,200 139,500 249,700RC drilling - 585,000 585,000Assays 33,900 196,500 230,400Field costs and consumables 33,400 97,800 131,200Resource estimation - 15,000 15,000Tenement administration 30,000 30,000 60,000Administration 120,000 120,000 240,000Total 819,700 1,473,800 2,293,500P R O S P E C T U S19

SECTION 4: RISK FACTORSProspective investors in the company should be aware that subscribing for Shares in the Companyinvolves a number of Risks. Stratum Metals is an exploration company and an investment in theCompany should be considered speculative.The business activities of the Company are subject to various risks that may impact on the futureperformance of the Company. Some of these risks can be mitigated by the use of safeguards andappropriate systems and controls, but some are outside the control of the Company and cannot bemitigated. There are a number of risk factors that investors should consider and seek independent adviceon, before deciding whether or not to invest in Shares.The principal risk factors include, but are not limited to, the following:Risks Specific to Stratum Metals4.1 Operating RisksThe operations of the Company may be affected by various factors, including failure to locate or identifymineral deposits; failure to achieve predicted grades in exploration and mining; operational and technicaldifficulties encountered in mining; difficulties in commissioning and operating plant and equipment;mechanical failure or plant breakdown; unanticipated metallurgical problems which may affect extractioncosts; adverse weather conditions; industrial and environmental accidents; industrial disputes; andunexpected shortages or increases in the costs of consumables, spare parts, plant and equipment.Having been incorporated on 15 December 2010 Stratum Metals does not have any extensive operatinghistory, although it should be noted that the Company’s Directors have between them significantoperational experience. No assurances can be given that Stratum Metals will achieve commercial viabilitythrough the successful exploration and/or mining of its tenement interests. Unless or until Stratum Metalsis able to realise value from its projects, it is likely to incur ongoing operating losses.4.2 Resource EstimatesThe Projects do not have any JORC Code identified resource. Even if a resource is identified, resourceestimates are expressions of judgment based on knowledge, experience and industry practice. Estimateswhich were valid when originally calculated may alter significantly when new information or techniquesbecome available. In addition, by their very nature, resource estimates are imprecise and depend to someextent on interpretations, which may prove to be inaccurate. As further information becomes availablethrough additional fieldwork and analysis, the estimates are likely to change. This may result in alterationsto development and mining plans which may, in turn, adversely affect the Company’s operations.4.3 Exploration Cost Estimate20The exploration costs of the Company described in the Project Review section of this Prospectus are basedon certain assumptions with respect to the method and timing of exploration. By their nature, theseestimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs maymaterially differ from these estimates and assumptions. Accordingly, no assurance can be given that thecost estimates and the underlying assumptions will be realised in practice, which may materially andadversely affect the Company’s viability.4.4 Title Risks and Native TitleInterests in tenements in Australia are governed by the respective State legislation and are evidenced bythe granting of licences or leases. Each licence or lease is for a specific term and carries with it annualexpenditure and reporting commitments, as well as other conditions requiring compliance. Consequently,the Company could lose title to or its interest in tenements if licence conditions are not met or if insufficientfunds are available to meet expenditure commitments. It is also possible that, in relation to tenements in

RISK FACTORSwhich the Company has an interest or will in the future acquire such an interest; there may be areas overwhich legitimate common law native title rights of Aboriginal Australians exist. If native title rights doexist, the ability of the Company to gain access to tenements (through obtaining consent of any relevantlandowner), or to progress from the exploration phase to the development and mining phases ofoperations may be adversely affected.There can be no guarantee that the exploration licence applications (E04/1993, E04/2124 and E04/2125),the subject of agreements with State Resources Pty Ltd, will be granted. Should these explorationlicence applications not be granted to State Resources Pty Ltd, the Company will acquire no interest inthe Canning Basin Project.Further, the Company will not acquire an interest in E04/1993 until it has incurred sufficient explorationexpenditure in connection with the tenement.4.5 Additional Requirements for CapitalThe Company’s capital requirements depend on numerous factors. Depending on the Company’s abilityto generate income from its operations, the Company may require further financing in addition to amountsraised pursuant to this Prospectus. Any additional equity financing will dilute shareholdings, and debtfinancing, if available, may involve restrictions on financing and operating activities. If the Company isunable to obtain additional financing as needed, it may be required to reduce the scope of its operationsand scale back its exploration programs as the case may be.4.6 Reliance on Key Management and PersonnelThe responsibility of overseeing the day-to-day operations and the strategic management of the Companydepends substantially on its senior management and its key personnel. There can be no assurance given thatthere will be no detrimental impact on the Company if one or more of these employees cease their employment.More generally, in the event that the Company progresses the development and commercialisation of anyof its assets toward production, it is likely to require a large number of personnel for these operations.There is currently a significant shortage of skilled workers in Australia’s mining industry, and a high levelof demand for skilled workers from existing operators. As such, there is a risk that the Company may notbe able to procure the required number of skilled workers for any of its future operations which couldhave an adverse impact on the Company.General RisksP R O S P E C T U S4.7 Economic RisksGeneral economic conditions, movements in interest and inflation rates, the prevailing global commodityprices and currency exchange rates may have an adverse effect on the Company’s exploration,development and production activities, as well as on its ability to fund those activities.As with any mining project, the economics are sensitive to metal and commodity prices, particularly forgold, copper, nickel and coal. Commodity prices fluctuate and are affected by many factors beyond thecontrol of the Company. Such factors include supply and demand fluctuations for oil and gas, technologicaladvances, forward selling activities and other macro-economic factors. These prices may fluctuate to alevel where the proposed mining operations are not profitable. Should the Company achieve successleading to mineral production, the revenue it will derive through the sale of commodities also exposespotential income of the Company to commodity price and exchange rate risks.21

RISK FACTORSFurther, share market conditions may affect the value of the Company’s quoted securities regardless ofthe Company’s operating performance. Share market conditions are affected by many factors such as:(a)(b)(c)(d)(e)(f)general economic outlook;interest rates and inflation rates;currency fluctuations;changes in investor sentiment;the demand for, and supply of, capital; andterrorism or other hostilities.4.8 Commercial RiskThe mining industry is competitive and there is no assurance that, even if commercial quantities arediscovered, a profitable market will exist for sales of such commodities. There can be no assurance thatthe quality of the commodity will be such that the properties in which the Company holds and interestcan be mined at a profit.4.9 Exploration RiskPotential investors should understand that precious and base metal exploration and development is ahigh-risk undertaking.There can be no assurance that exploration of acquired projects or any other exploration properties thatmay be acquired in the future will result in the discovery of an economic resource. Even if an apparentlyviable resource is identified, there is no guarantee that it can be economically exploited.The future exploration activities of the Company may be affected by a range of factors including geologicalconditions, limitations on activities due to seasonal weather patterns, unanticipated operational andtechnical difficulties, industrial and environmental accidents, native title process, changing governmentregulations and many other factors beyond the control of the Company.The success of the Company will also depend upon the Company having access to sufficient developmentcapital, being able to maintain title to the Projects and obtaining all required approvals for its activities.In the event that exploration programmes prove to be unsuccessful this could lead to a diminution in thevalue of the Projects, a reduction in the case reserves of the Company and possible relinquishment ofpart or all of the Projects.4.10 Environmental Impact ConstraintsThe Company's exploration programs will, in general, be subject to approval by governmental authorities.Development of any of the Company's properties will be dependent on the relevant project meetingenvironmental guidelines and, where required, being approved by governmental authorities.4.11 Environmental Risks22The operations and proposed activities of the Company are subject to State and Federal laws andregulations concerning the environment. As with most exploration projects and mining operations, theCompany’s activities are expected to have an impact on the environment, particularly if advancedexploration or field development proceeds. It is the Company’s intention to conduct its activities to thehighest standard of environmental obligation, including compliance with all environmental laws.

RISK FACTORSIn this regard, the Department of Minerals and Petroleum of Western Australia, from time to time, reviewsthe environmental bonds that are placed on permits. The Directors are not in a position to state whethera review is imminent or whether the outcome of such a review would be detrimental to the funding needsof the Company.4.12 Commodity Price Volatility and Exchange Rate RisksThe price for gold, copper, nickel and coal will depend on available markets at acceptable prices andtransmission and distribution costs. Any substantial decline in the price of gold, copper, nickel or coal oran increase in transmission or distribution costs could have a material adverse effect on the Company.Furthermore, international prices of various commodities are denominated in United States dollars,whereas the income and expenditure of the Company are and will be taken into account in Australiancurrency, exposing the Company to the fluctuations and volatility of the rate of exchange between theUnited States dollar and the Australian dollar as determined in international markets.4.13 Insurance RisksInsurance coverage of all risks associated with minerals exploration, development and production is not alwaysavailable and, where available, the cost can be high. The Company will have insurance in place consideredappropriate for the Company’s needs. The Company will not be insured against all possible losses, eitherbecause of the unavailability of cover or because the Directors believe the premiums are excessive relativeto the benefits that would accrue. The Directors believe that the insurance they have in place isappropriate. The Directors will continue to review the insurance cover in place to ensure that it is adequate.4.14 Competition RiskThe industry in which the Company will be involved is subject to domestic and global competition. Althoughthe Company will undertake all reasonable due diligence in its business decisions and operations, theCompany will have no influence or control over the activities or actions of its competitors, which activitiesor actions may, positively or negatively, affect the operating and financial performance of the Company’sprojects and business.4.15 Government and Legal RiskChanges in government, monetary policies, taxation and other laws can have a significant impact on theCompany’s assets, operations and ultimately the financial performance of the Company and its securities.P R O S P E C T U SOn 2 July 2010, the Australian Federal Government announced the introduction of a new rent-based taxon resources. This new resource tax arrangement is to be known as the Mineral Resource Rent Tax (theMRRT) and will apply from 1 July 2012.The proposed MRRT will apply to the mining of iron ore and coal in Australia, will be levied at a rate of 30percent and will apply to the value of resources extracted by resources entities.The Federal Government is proposing to conduct industry consultation on the implementation of the MRRTand issue draft legislation by June 2011 for public comment. It is expected that legislation will be introducedinto the Federal Parliament in the latter half of 2011. The extent to which the Company will be impacted bythe MRRT will depend on the outcome of the final legislative design.23

RISK FACTORS4.16 Access to infrastructureThere is currently limited capacity and high demand for rail and port services for the export of mineral productsin Australia. In the event that the Company progresses to production, there is no guarantee that suitable andaffordable rail and port capacity will be available, which could have a material adverse impact on the Company.In the event that the Company progresses the development and commercialisation of any of its assetstoward production, it will also require the use of both power and water infrastructure. Due to high demandfor power and water access, there is a risk that the Company may not be able to procure access to powerand water which could have a material adverse impact on the Company.4.17 Liquidity RiskThere is no guarantee that there will be an ongoing liquid market for Shares. Accordingly, there is a riskthat, should the market for Shares become illiquid, Shareholders will be unable to realise their investmentin the Company. Any Shares held in escow may affect the liquidity of Shares.Investment SpeculativeThe above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or byinvestors in the Company. The above factors, and others not specifically referred to above, may in the futurematerially affect the financial performance of the Company and the value of the Shares offered pursuant tothis Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee withrespect to the payment of dividends, returns of capital or the market value of those securities.Potential investors should consider that an investment in the Company is speculative and should consulttheir professional advisers before deciding whether to apply for Shares pursuant to this Prospectus.24

SECTION 5: CORPORATE GOVERNANCEThe Board of Stratum Metals comprises:Richard AnthonMartin HollandMichael AddisonKent HunterNon-Executive ChairmanManaging DirectorNon-Executive DirectorNon-Executive DirectorPlease refer to Section 1.6 for information on directors.The Board is responsible for the overall corporate governance of the Company and acknowledges, as aguiding principle, that it will at all times act ethically, honestly, and in accordance with the law, with aview to creating sustainable value for its shareholders.The Board endorses the Corporate Governance Principles and Recommendations (ASXRecommendations) as published by the ASX Corporate Governance Council and has adopted corporategovernance charters and policies reflecting those ASX Recommendations, to the extent appropriate havingregard to the size and circumstances of the Company.The following policies and procedures have been implemented and are available in full on the company’swebsite at www.stratummetals.com.au• Statement of Board and Management FunctionsThe Board of Directors has adopted a charter formalising the functions and responsibilities of theBoard. The Board is ultimately responsible for all matters relating to the running of the Company.• Code of conduct for directors and key executivesThe Board has adopted a Code of Conduct for Directors and Key Executives which addresses mattersrelevant to the Company’s legal and ethical obligation to its stakeholders. The policy outlines itsrequirements with respect to; the directors discharge of duties; relationships; compliance with lawsand ethics; conflicts of interest; confidentiality; use of company assets; competition; environment;health and safety; and the annual review of the code of conduct by the board.• Share Trading PolicyThe Share Trading Policy sets out the Company’s policy with regard to trading in Company securities.The policy applies to all directors, key management personnel and other employees of the Companyand their associates. The policy outlines: the requirements; general prohibition on insider trading;restrictions on trading; additional restrictions on short-term trading; permission to trade; exceptions;required notification of proposed trade in Company securities; and notification of trade in theCompany’s securities.P R O S P E C T U S• Audit Committee Charter;The Board has adopted an Audit Committee Charter outlining the composition of the committee; itsresponsibilities; authority; meeting requirements; reporting procedures; and oversight of the riskmanagement system.• Continuous Disclosure Policy;The Board has adopted a Disclosure Strategy to ensure that The Company complies with thedisclosure requirements of the ASX Listing Rules. The strategy highlights the requirements forimmediate notification; the procedure for disclosing the information; those responsible for disclosingthis information; and policy review details.25• Shareholder Communications StrategyThe Board of directors aims to ensure that shareholders are informed of all major developments.The Shareholder Communications Strategy adopted by the Board, outlines responsibilities for reportsissued to shareholders; ASX announcements; Annual General Meetings; maintenance of theCompany website; requests for information; and review of shareholder communications.

CORPORATE GOVERNANCE• Risk Management Policy;The Board has adopted the Risk Management Policy, which outlines the Board’s responsibility inidentifying risk, maintaining the integrity of financial reporting, recognising the role of the auditorand reviewing the risk management policy.• Remuneration Committee Charter;The Board has adopted a Remuneration Committee Charter outlining the composition of the committee;its responsibilities; meeting requirements; reporting procedures; and duties of the committee.• Diversity PolicyThe Company will develop, implement and monitor strategies, initiatives and programs to promotethe principle, including the achievement of gender diversity and review and report in same.• Process for performance evaluation of the Board, Board committees, individual directors and keyexecutives; and• Corporate Code of Conduct.The responsibilities of the Board include:• protection and enhancement of shareholder value;• formulation, review and approval of the objectives and strategic direction of the Company;• monitoring the financial performance of the Company by reviewing and approving budgets andmonitoring results;• approving all significant business transactions including acquisitions, divestments and capitalexpenditure;• ensuring that adequate internal control systems and procedures exist and that compliance with thesesystems and procedures is maintained;• the identification of significant business risks and ensuring that such risks are adequately managed;• the review of performance and remuneration of executive directors and key staff;• the establishment and maintenance of appropriate ethical standards; and• evaluating and, where appropriate, adopting with or without modification the ASX CorporateGovernance Council's Corporate Governance Principles and Recommendations.The Board recognises the need for the Company to operate with the highest standards of behaviourand accountability.26The Company has considered the ASX Corporate Governance Council's Corporate Governance Principlesand Recommendations to determine an appropriate system of control and accountability to best fit itsbusiness and operations commensurate with these guidelines.The Company seeks to follow these recommendations for listed companies where appropriate for its sizeand operations. In cases where the Company determines it would be inappropriate to follow the principlesbecause of its circumstances, the Company will provide reasons for not doing so in its Annual Report.The Board will consider on an ongoing basis its Corporate Governance procedures and whether they aresufficient given the Company’s nature of operations and size.

SECTION 6: INVESTIGATING GEOLOGIST’S REPORTG J MilesConsulting Geologist(ABN 19 091 305 119)PO Box 396 West Perth WA 6872Ph: 0424 016 674 threnody@smartchat.net.auThe Directors 24 August 2011Stratum Metals LimitedPO Box 1905Subiaco WA 6904Dear Sirs,INDEPENDENT GEOLOGISTS REPORTMr Miles has been commissioned by Stratum Metals Limited. (“Stratum” or “the Company”) to providean Independent Geologist’s Report on the projects contained in the following report located in WesternAustralia, and in which the Company has, or is earning, an interest. This report is to be included in aProspectus to be lodged with the Australian Securities and Investments Commission (“ASIC”) on orabout the 1st September 2011, offering for subscription 20,000,000 Ordinary Shares at an issue priceof $0.20 per Ordinary Share through a Prospectus, to raise a total of $4,000,000 (before costs associatedwith the issue). The funds raised will be used for the purpose of exploration and evaluation of theexisting mineral properties and identification of new projects.The Independent Geologists' Report set out in this Prospectus has been prepared in accordance withthe Australasian Code for Reporting on Exploration Results, Mineral Resources and OreReserves,("JORC Code") December 2004 edition, the Code and Guidelines for Assessment and Valuationof Mineral Assets and Mineral Securities for Independent Expert Reports (“Valmin Code”), andRegulatory Guides 111 and 112 relating to Independent Expert Reports by the Australian Securities andInvestments Commission (“ASIC”) and relevant requirements of the Listing Rules of the AustralianSecurities Exchange (“ASX”).Mr Miles is a professional geologist with more than fifteen years experience in the exploration,development, mining, and evaluation of mineral properties within Australia and abroad. Mr Miles is aMember of the Australian Institute of Geoscientists (AIG) and has the appropriate relevant qualifications,experience, competence and independence to be considered an “Expert” under definitions provided inthe Valmin Code and “Competent Person” as defined in the JORC Code. Mr Miles is an explorationconsultant who has provided services to a number of Australian mining and exploration companies.P R O S P E C T U SMr Miles has not been requested to provide an independent valuation, nor has he been asked tocomment on the fairness or reasonableness of any vendor or promoter considerations, and thereforehe has not offered any opinion on these matters.Mr Miles has based the review of the various mineral properties on information provided by theCompany, along with technical reports prepared by previous tenements holders, governmentexploration database systems of Western Australia, and other relevant published and unpublished data.A listing of the principal sources of information is included in the Independent Geologist’s Report.Assumptions have been made by Mr Miles that the tenements and associated agreements are current,in good standing and the tenements are lawfully accessible for exploration.27A final draft of the report was provided to the Company, along with a written request to identify anymaterial errors or omissions prior to lodgement.

INDEPENDENT GEOLOGIST’S REPORTThe assessment of the Company’s projects is initially based upon technical, tenement and costinformation provided by the Company and this information has been accepted by Mr Miles as being trueand accurate and that the Company has not retained any material information relevant to the reportingassessment of the mineral property. None of the information provided by Stratum has been specifiedas being confidential and not to be disclosed in this report.The mineral properties, in which the Company has, or is earning, an interest, are considered to be an“Exploration Project” which are speculative in nature but require additional exploration to enhance theeconomic potential. Mr Miles considers that the Company’s projects have been acquired on the basisof sound technical merit. The mineral properties are considered to be sufficiently prospective, subjectto varying degrees of exploration risk, warranting further exploration and assessment of their economicpotential, consistent with the Company’s proposed programmes.The Company intends to raise $4,000,000 and at least half the liquid assets held, or funds proposed tobe raised by the Company, are understood to be committed to acquisition, exploration, developmentand administration of the mineral properties, satisfying the requirements of ASX Listing Rules 1.3.2(b)and 1.3.3(b).Mr Miles is satisfied that if $4,000,000 is raised the Company will have sufficient working capital tocarry out its stated objectives, satisfying the requirements of ASX Listing Rule 1.3.3(a).The Company has provided exploration work programmes and budgets covering the initial two years ofexploration totalling approximately $2.3 million, of which the Company plans to spend approximately$819,700 in the first year of assessment. Where proposed exploration strategies have been stated, theproposed programmes are considered to be broadly consistent with the potential of the variousprojects. The corresponding budgets are generally adequate to cover the anticipated costs of theprogrammes. The programmes may be altered in view of results gained which could revise theemphasis of current priorities.Mr Miles considers that the relevant areas have sufficient technical merit, to justify the proposedprogrammes and associated expenditure, satisfying the requirements of ASX Listing Rule 1.3.3(a).The Independent Geologist’s Report has been prepared on information available up to and includingthe 16th July 2011. Mr Miles has sufficient experience which is relevant to the styles of mineralisationand types of deposit under consideration and to the activity which they are each undertaking to qualifyas a Competent Person as defined in the JORC Code. Mr Miles has provided consent for the inclusionof the Independent Geologist’s Report in the Company Prospectus, in the form and context in which thereport and those statements appear, and has not withdrawn that consent before lodgement of theProspectus with the ASIC.Mr Miles does not have, or previously had, any material interest in Stratum Metals Limited, or themineral properties in which the Company has an interest. The relationship with Stratum is solely oneof professional association between client and independent consultant. The report is prepared in returnfor professional fees based upon normal commercial rates and the payment of these fees is in no waycontingent on the results of the report.28Yours faithfully,G J MilesBSc, Grad Dip (Geol)MAIG

INDEPENDENT GEOLOGIST’S REPORT1 Executive Summary 302 Gidgee Project 322.1 Location and access 322.2 Tenure 322.3 Geology and Mineralisation 342.4 Previous Exploration 352.5 Proposed Exploration Programme and Budget 373 Pinyalling Project 383.1 Location and access 383.2 Tenure 383.3 Geology and Mineralisation 393.4 Previous Exploration 393.5 Proposed Exploration Programme and Budget 424 Bannockburn Project 444.1 Location and access 444.2 Tenure 444.3 Geology and Mineralisation 434.4 Previous Exploration 494.5 Proposed Exploration Programme and Budget 495 Laverton Project 505.1 Location and access 505.2 Tenure 505.3 Geology and Mineralisation 515.4 Previous Exploration 535.5 Proposed Exploration Programme and Budget 546 Canning Basin Coal Project 566.1 Location and access 566.2 Tenure 566.3 Geology and Mineralisation 576.4 Previous Exploration 596.5 Proposed Exploration Programme 59P R O S P E C T U S7 Principle Sources of Information 608 Glossary of Technical Terms and Abbreviations 6229

INDEPENDENT GEOLOGIST’S REPORT1 EXECUTIVE SUMMARYStratum Metals Limited (Stratum or the “Company”) has reached agreement to acquire fourProjects in the Yilgarn Region and one in the Canning Basin of Western Australia. These projectsinclude the Gidgee Project in the East Murchison region of the State, the Pinyalling Project in theSouth Murchison region, the Bannockburn Nickel Project in the Wildara area south-southeast ofLeinster and the Laverton Project in the vicinity of the township of Laverton in the Eastern Goldfields(Figure 1). The Canning Basin Coal Project will be added to the portfolio subject to the tenementsbeing granted and agreed exploration expenditure. Recent geophysical interpretation of the Projectshas provided new insights and highlighted the potential of the tenements that may have goneunrecognized previously.The tenement portfolio consists of six granted Exploration Licenses and three Exploration LicenceApplications, covering over 550km 2 .These projects are focused on regions prospective for gold, copper, nickel and coal mineralisation.Their strategic location next to existing mining and civil infrastructure provides developmentadvantages should any discoveries be made.The Gidgee Project is in an established mining region with a long exploration and productionhistory, with gold originally discovered there in 1926. The southern lease of the Project is onlyeight kilometres from the 600,000tpa Gidgee Gold treatment plant (currently not in operation) and90 km north-northeast of Sandstone. Previous exploration at the Project has identified broadanomalous gold zones at the German Well Prospect providing an immediate focus for Stratum’sexploration plans.New geophysical modelling at the Pinyalling Project indicates that the tenure covers an extensionof the Baron Igneous Complex partly under alluvial cover which is prospective for nickel sulphide,copper and gold mineralisation. The Project is in the southern part of the Murchison Province only430km north of Perth.The Bannockburn Nickel Project is located in one of the world's most prolific nickel sulphideprovinces on the major Perseverance shear zone, which hosts the major nickel deposits ofPerseverance, Rocky's Reward, Mount Keith, Yakabindie (BHP Billiton), and Honeymoon Well(Norilsk) as well as the large Cosmos (Xstrata) camp and the nearby discoveries of Waterloo(Norilsk) and Sinclair (Xstrata). New geophysical modelling indicates the project is centred on apotentially unrecognised extension of ultramafic lithologies adjacent to the Sinclair Nickel Mine.The Laverton Project is strategically located in a nickel and gold producing region, located lessthan 5km from the historic Windarra Nickel Mine and a similar distance from the Lancefield GoldMine. The Project is under-explored using modern techniques and will benefit from newgeophysical data acquisitions.The Canning Basin Coal Project comprises three tenement applications in an emerging coal provincein the Kimberley region of Western Australia. The tenements cover prospective rocks in the LightjackFormation which is known to host coal deposits currently being evaluated by Rey Resources Limited.30Stratum has proposed an aggressive exploration programme and will commence immediately uponsuccessful ASX listing and completion of necessary permitting.Budgets detailed in this report total an estimated $2.3 million, which is considered adequate tocover the costs of the proposed exploration programmes of the Company and the minimumexpenditure requirements of the Western Australian Department of Mines and Petroleum.

INDEPENDENT GEOLOGIST’S REPORTP R O S P E C T U S31Figure 1 – Stratum Metals Limited Project Locations

INDEPENDENT GEOLOGIST’S REPORT2 GIDGEE PROJECT2.1 Location and accessThe Gidgee Project area is located 640 kilometres northeast of Perth, within the Gum CreekGreenstone Belt, East Murchison Mineral Field of Western Australia, and consists of twoexploration licenses.The project is located close to existing civil and mining infrastructure, with the southern lease onlyeight kilometres from the 600,000tpa Gidgee Gold treatment plant (currently not in operation)(Figure 2) and 90 km north-northeast of Sandstone.2.2 TenureThe Gidgee Project comprises two granted Exploration Licences, E53/1440 (Gidgee South) andE53/1494 (Gidgee North), covering 9 and 4 sub-blocks respectively. Stratum has entered into aTenement Sale Agreement with the licence holder Fraka Investments Pty Ltd whereby the Companycan acquire 100% of the Gidgee Project.Table 1. Gidgee Project Tenure SummaryTenement ID Area Expenditure Grant Date Expiry Date Annual Rent(sub-blks) CommitmentE53/1440 9 $20,000 6 Aug 2009 5 Aug 2014 $1090E53/1494 4 $15,000 29 Mar 2010 28 Mar 2015 $48432

INDEPENDENT GEOLOGIST’S REPORTP R O S P E C T U S33Figure 2. Location of Gidgee Project

INDEPENDENT GEOLOGIST’S REPORT2.3 Geology and MineralisationThe Gum Creek Greenstone Belt of Archaean volcanic and sedimentary rocks lies in the YilgarnCraton of Western Australia, approximately 600 kilometres north east of Perth, and immediatelynorth of Sandstone. The belt forms a lensoid, broadly sinusoidal structure about 110 kilometreslong (north-south) and 24 kilometres wide (east-west). It is surrounded by intrusive granitoidswhich contain rafts of the greenstones, and which have contact metamorphosed the basalts andbanded iron formations at the belt margins.The greenstone sequence is relatively simple, with three broadly continuous major geological unitsoccupying a large north-south synclinorium.The lowest unit consists of a sequence of interbedded banded iron formation and mafic andultramafic volcanics overlain by ferruginous shales, shales and thin cherts. This unit is betterpreserved in the eastern and northern parts of the belt, where it is about 2000m in width. Thisis a fold-thickened width, and the true thickness of the unit is not known. On the western margin ofthe belt it has been partly intruded out by granites, and remains as thinner, discontinuous remnants.The central unit consists of a sequence of basalts and felsic volcanics, contemporaneous dolerites,and lesser ultramafic volcanics and interflow sediments. The felsics contain quartz-sericiteschists, quartz-biotite schists, and rhyolitic to andesitic fragmental volcanics, and contain sulphidicblack shales. The volume of felsics is much greater on the eastern and northern parts of the belt.The unit has been intruded by differentiated gabbroic sills which range in composition fromultrabasic through pyroxenite to gabbro. The largest volume of gabbroic rock occurs in the centraleasternpart of the belt, and the sills thin to the north and south. The western part of the beltcontains only rare, thin gabbroic units. They appear to have been structurally less affected thanthe surrounding basalts, and are thought to be slightly younger than the rest of the sequence.The uppermost unit consists of shales, black shales, siltstones and minor cherts, with rareconglomerates and dolostones. It seldom outcrops, and has not been explored to the same extentas the lower units, so details of its lithologies and structure are not as well known. In thenortheastern part of the belt the lower portion of the sedimentary sequence is facies-interfingeredwith the felsic volcanics of the upper part of the central unit.Later granites are intruded along north-south zones for the length of the belt. They are generallyunfoliated medium grained monzonitic bodies, and probably have a range of intrusion ages. Theyare not affected by the ductile deformation, but have been variously affected by later faulting.Intense silicification and epidotisation has occurred adjacent to all the internal granites. Two smallstocks, one 5 kms SSW of Gidgee and the other 30 kms NNW of Gidgee, display very distinctmagnetic signatures, and these may represent volcanic plugs rather than granitoids.The northern third of the belt is intruded by numerous WNW – ENE Proterozoic dolerite dykes.These do not crop out, but are clearly identified on the aeromagnetics.Several early phases of tight to isoclinal folding have affected the banded iron formations of thelowest unit, and at least the latest of these has affected the upper units. Most axes have now beenrefolded into N-S parallelism.34The whole sequence has been refolded about tight NNE axes, and this has produced two mainsynclines containing the upper sedimentary unit separated by a narrow anticline of the central unitbasalts. This anticline contains the gold mineralisation at Gidgee, Heron, Reliance and Manakado.The western syncline appears to be doubly plunging, suggesting later open folding about E-W axes.Faulting is complex throughout the Gum Creek Belt, and it is probable that the margins of the beltand many of the contacts between lithological units are fault controlled. The most prominent faulting

INDEPENDENT GEOLOGIST’S REPORToccurs as regional-scale, NNW ductile shear zones, which appear to control the gross distribution ofgold mineralization in the region. These have a sinistral displacement interpreted from magnetics,but are seen to have a considerable reverse movement in places (eg: Kingfisher pit). At least 5 of thesehave been interpreted, including the Bolger Well, Gidgee, Victory Well, Tokay and Wilsons Shear Zones.Sinistral NE to NNE faulting is common throughout the belt, and empirically the main mineralisedareas (eg: Gidgee, Wyooda-Thangoo) are in zones where this faulting is more intense. This directionis important in localising higher grade pods in the underground mineralisation at Swan Bitter, andmay partly control mineralisation in the Manakado pit.Dextral and sinistral NW faulting is also common in the region, and this may have an impact on thedistribution of mineralisation in the Gidgee mine area. Metamorphic grade in the supracrustal rocksis generally greenschist facies, with slightly higher grades (containing garnet-stauroliteassemblages) in the northern areas. The margins of the belt have been contact-metamorphosed toamphibolite facies by the intrusion of the surrounding granites, with mafic amphibolites, garnetmuscoviteand quartz-biotite assemblages being recorded.Historically the Gidgee region has produced around 1.5M ounces of gold from open pit and undergroundoperations almost continuous between 1987 and 2005. In the area, approximately 20 open pits havebeen previously mined, as well as underground mining beneath two of the open pits (Swan Bitter andKingfisher). Most of the gold is free-milling, except for the Wilsons Deposit which is refractory.Minor historical mining has occurred at Gidgee North, however no production records are available.2.4 Previous ExplorationThe Project area has undergone several phases of previous exploration. Numerous geochemicalanomalies exist throughout the project; some of these have been followed up by several phases ofdrilling. However, due to the deeply weathered terrain, much of the historical drilling has not beenan effective or exhaustive test for gold mineralisation.The best modern exploration that covered the Gidgee North area was completed by GoldfieldsExploration in the mid-1990’s. It was part of their Youno Downs Project, where they completedgeological mapping, geochemical sampling, RAB and RC drilling. Two hundred RAB holes for11,744m and 22 RC holes for 2,318m were completed at the Virgo and German Well Prospects.Numerous anomalous results were returned, but the interpreted size of the potential deposit did notmeet Goldfields’ target requirements.P R O S P E C T U SDrilling prior to Goldfields work was predominantly less than 20 metres in maximum depth. TheGoldfields reconnaissance and geochemical RAB drilling typically did not test to bedrock (which isoften greater than 100 metres below surface), the commonly accepted best practice of today. Muchof the past drilling in this project has tested the leached and depleted upper saprolite of the weatheringprofile. Stratum has acquired an extensive drilling database but is yet to validate the data.At Gidgee South, historical exploration by Goldfields and Gateway Mining was gold focused; howeverthey identified base metal (Cu, Zn) anomalism on or adjacent to the Tokay Shear, in addition to goldmineralisation. This shear appears to be intruded by a dolerite sill, which separates volcanoclasticsto the west and ultramafics to the east. The Tokay Shear is interpreted to pass through E53/1440(Figure 3), but Gateway only conducted reconnaissance geochemical sampling (57 samples) on thetenement with no anomalous results.35Exploration by Legend Mining Ltd to the south in the Bungarra Complex has shown the potentialfor these rocks to host copper, nickel and platinum group metal mineralisation within intrusivemafic/ultramafic complexes. This model is applicable to E53/1440 and the contact defined by theTokay Shear provides an initial focus for exploration.

INDEPENDENT GEOLOGIST’S REPORT36Figure 3 – Gidgee Project – Aeromagnetics (Laplacian greyscale)

INDEPENDENT GEOLOGIST’S REPORT2.5 Proposed Exploration Programme and BudgetExploration of the gold and base metal potential at the project is at a relatively early stage,requiring extensive mapping and reconnaissance style work to determine the resource potentialof the Project. However, the extensive historical work at the German Well Prospect has identifiedthis area as having extensive low-grade gold mineralisation and provides an immediate focus forexploration. Further drilling is required to test the bedrock potential and high-grade mineralisationpotential of the area.The Gidgee South tenement requires extensive early stage exploration to confirm the base metalmineralisation model proposed for the project.Stratum has proposed an exploration programme and budget for the first two years of explorationat the Gidgee Project upon listing on the ASX. The work involves compiling the previous data intoa consolidated database, acquisition of geophysical data sets, followed by geological mapping,RAB drilling programmes, followed by RC drilling to support a maiden inferred resource estimateif successful. A budget of $817,100 is proposed by Stratum which is considered to be valid andconsistent with the size of the Gidgee Project and will exceed the minimum statutory expenditurerequirements of the tenements.The planned exploration programmes are as follows:Year 1• Comprehensive open file and published report search. Collection and capture of all relevantinformation into a project database.• Acquisition of geophysical datasets.• Geological mapping and reconnaissance sampling.• Complete initial reconnaissance-style RAB drilling (Approx. 3,000m).Year 2• Review of initial drilling programme and targeting.• Infill RAB drilling (Approx 3,000m)• Broad-spaced RC drilling (Approx 4,000m)• Complete Inferred Resource EstimateTable 2. Proposed exploration expenditure for the Gidgee ProjectFull subscription ($4m)Expenditure Year 1 Year 2 TotalP R O S P E C T U SWages / salaries / contractors $58,000 $95,000 $153,000Geophysical Survey $75,000 - $75,000RAB Drilling $47,200 $47,200 $94,400RC Drilling - $260,000 $260,000Assays $13,400 $81,400 $94,800Field costs/consumables $8,800 $32,100 $40,900Resource Estimation - $15,000 $15,000Tenement Administration $12,000 $12,000 $24,000Administration $30,000 $30,000 $60,000Totals $244,400 $572,700 $817,10037

INDEPENDENT GEOLOGIST’S REPORT3 PINYALLING PROJECT3.1 Location and accessThe Pinyalling Project includes two Exploration Licences located in the southern part of theAchaean aged Murchison Province of Western Australia only 30 kilometres from the township ofPaynes Find and approximately 430 kilometres north of Perth (Figure 4). The Exploration Licencescontain targets for nickel sulphide, copper, platinum/ palladium (PGE’s) and gold mineralisation.3.2 TenureThe Project comprises two Exploration Licences, E59/1545 and E59/1618, covering 13 and 10 subblocksrespectively. Stratum has entered into a Tenement Sale Agreement with the licence holder,Fraka Investments Pty Ltd whereby the Company can acquire 100% of the Pinyalling Project,excluding the right to explore and mine for iron ore rights.Table 3. Pinyalling Project Tenure SummaryProject Tenement Area Expenditure Grant Expiry Annual(sub- Commitment Date Date Rentblocks)Pinyalling E 59/1545 13 $20,000 17 May 2010 16 May 2015 $1574Pinyalling E 59/1618 10 $20,000 8 Aug 2011 7 Aug 2016 $121138Figure 4 – Pinyalling Project Location

INDEPENDENT GEOLOGIST’S REPORT3.3 Geology and MineralisationThe project lies over the eastern portion of the Yalgoo–Singleton Greenstone Belt, the southernmostgreenstone belt within the Murchison Province, characterised by broad amplitude, open folddomains. These domains are separated by narrower zones of high strain deformation, with tightisoclinal folding and multiple shear zones. The belt is considered a supracrustal sequenceconsisting of layered sediments, volcaniclastic sediments and mafic to ultramafic volcanic sills.The leases have been targeted to cover the interpreted margin of the Baron Igneous Complex (BIC)(Figure 5) where there is anomalism in minerals that indicate the possibility of existing nickelcopper-PGEmineralisation within a differentiated mafic-ultramafic intrusive. The Project area issometimes referred to as the Baron area.Regionally, the rocks belong to the Murchison Supergroup, which is composed of a lower LukeCreek Group and upper Mt Farmer Group. Within the project, the general setting of the rocks isnot well understood, but most lithologies are believed to belong to the Luke Creek Group. Thisgroup consists of four formations, two of which, the Gabanintha and Windaning appear fromstructural and lithostratigraphic evidence to be locally represented.By correlation with the regional greenstone stratigraphy, the Project sequence is inferred to youngfrom north to south. The basal mafic sequence comprises tholeiitic basalt and gabbro, with someunits displaying differentiated horizons containing peridotite and minor clinopyroxenite. Occasionalchert and jaspilitic BIF horizons indicate much of the sequence is extrusive. Conformably overlyingthe mafic sequence is by a package of felsic schist and volcanogenic rocks, with lesser intercalatedultramafic horizons and minor BIF. The geology of the sequence is not well defined due to the poorexposure and strong weathering. Parts of the tenements are covered by an alluvial sequence ofunknown thickness.Ultramafic talc-carbonate schist intercalated within the felsic package is of uncertain origin, butmay represent komatiite flow sequences as spinifex textures have been observed. The rock groupoverlying the BIF -felsic sequence to the south is not exposed, but from drill data appears to bedominated by mafic volcanics with subsidiary felsic intercalations. Much of the sequence is affectedby north-northeast trending splays, duplexes and imbricate structures related to the Fields FindFault. A late stage west to northwest fracture system also truncates the area in part and ispreferentially intruded by Proterozoic dolerite dykes.3.4 Previous ExplorationThe Baron area has a history of gold mining, including the Pinyalling Mining Centre where 958ounces of gold was produced from 1902 to 1939. Historical drilling of the Baron RothschildProspect (excised from Stratum’s project area) defined an inferred gold resource of 825,962 tonnesat 2.43 g/t gold for 64,590 ounces (Royal Resources 2010 Annual Report). The gold mineralisationis associated with pyrite and pyrrhotite within BIF.P R O S P E C T U SThundelarra Exploration Ltd (2003) reported PGE mineralisation within the Baron Igneous Complex(on the northern boundary of the Stratum leases) with a geological setting similar to mineralisedreef horizons in other layered complexes such as at Munni Munni.Nickel copper sulphide mineralisation of this region remains relatively unexplored for by modernmethods (although Esso located base metal gossans during work in the 1970s). Work byThundelarra Exploration was possibly the first to identify the potential for nickel copper sulphidesand this style of mineralisation.39The target horizon is the basal contact of the mafic/ultramafic units which is predominantly coveredby recent transported material and not historically well explored. Regionally, this intrusivecomplex is best represented in the gravity image (Figure 5).

INDEPENDENT GEOLOGIST’S REPORTFigure 5 – Pinyalling Project - Aeromagnetic Image (TMI ENE Sun Angle)PGE’s can be a good indicator of such styles of mineralisation (but not an essential component).The BIC and related intrusions contain historically identified PGE mineralisation. Mapping byCotton (Thundelarra, 2003) has identified the general geological setting of the mineralisation thatoccurs adjacent to a marker pyroxenite with an upper pyroxenite – gabbro contact hosting theorthomagmatic mineralisation.Project scale mapping (Figure 6) suggests these mafic/ultramafic rocks are in contact withsediments and granite (the dominant unit to the south). Much of this contact, particularly in thesouthern portions of the tenement is covered by recent alluvium. This style of mineralisation alsoopens up the possibility of mineralised feeder dykes in the basement, as remobilisation of massivesulphide mineralisation into the country rocks.40

INDEPENDENT GEOLOGIST’S REPORTFigure 6 – Pinyalling Project – Geological Mapping by Cotton 2002 (after Thundelarra Exploration, 2003)Figure 7 shows results of geochemical work by Thundelarra (2003). Nickel, copper and PGE allsuggest a priority target should be in the northern part of E59/1545 (although this is the only areawhere geochemical sampling is possible). The low chromium is also a good indicator of layeredintrusive ultramafic rocks, compared to the komatiitic style.P R O S P E C T U S41

INDEPENDENT GEOLOGIST’S REPORTFigure 7. Geochemical results from the northern portion of E59/1545.3.5 Proposed Exploration Programme and BudgetWhile gold is an important exploration focus for Stratum, the target deposit model for this area isthe concentration of nickel sulphides at the base of differentiated extrusive or intrusive maficultramaficrocks.Exploration needs to focus firstly on defining the basal contact of the mafic/ultramafic intrusive of theBIC. This may be difficult if numerous small intrusive events occur. Indeed, past mapping suggeststhat the mafic/ultramafic intrusive rocks form a complex pattern with the existing country rocks.42While it appears that the contact between the intrusive and the country rocks is consistent withthe northern boundary of tenement E59/1545, scouring at these surfaces, mineralised feeder dykesand remobilisation of sulphides into the country rocks are very real exploration targets.The Southern Target on E59/1545 is also obscured by recent alluvial sediments requiringreconnaissance drilling as a first-pass test of the bedrock geochemistry.

INDEPENDENT GEOLOGIST’S REPORTStratum has proposed an exploration programme and budget for the first two years of explorationat the Pinyalling Project upon listing on the ASX. The work involves compiling the previous datainto a consolidated database, followed by geological mapping, acquiring geophysical surveys, andRAB and RC drilling programmes. A budget of $657,300 is proposed by Stratum which is consideredto be valid and consistent with the size of the Pinyalling Project and will exceed the minimumstatutory expenditure requirements of the tenements.The planned exploration programmes are as follows:Year 1• Comprehensive open file and published report search. Collection and capture of all relevantinformation into a project database.• Acquisition of geophysical datasets.• Geological mapping and reconnaissance sampling.• Complete initial reconnaissance-style RAB drilling (Approx. 2,000m).Year 2• Review of initial drilling programme and targeting.• Infill RAB drilling (Approx 3,000m)• Broad-spaced RC drilling (Approx 3,000m)Table 4. Proposed exploration expenditure for the Pinyalling ProjectFull subscription ($4m)Expenditure Year 1 Year 2 TotalWages / salaries / contractors $60,000 $80,000 $140,000RAB Drilling $31,500 $45,000 $76,500RC Drilling - $195,000 $195,000Geophysical survey $60,000 - $60,000Assays $9,500 $68,200 $77,700Field costs/consumables $5,800 $26,300 $32,100Tenement Administration $8,000 $8,000 $16,000Administration $30,000 $30,000 $60,000Totals $204,800 $452,500 $657,300P R O S P E C T U S43

INDEPENDENT GEOLOGIST’S REPORT4 BANNOCKBURN PROJECT4.1 Location and accessThe Bannockburn Nickel Project is located in one of the world's most prolific nickel sulphideprovinces on the major Perseverance shear zone, which hosts the major nickel deposits ofPerseverance, Rocky's Reward, Mount Keith, Yakabindie (BHP Billiton), and Honeymoon Well(Norilsk) as well as the large Cosmos (Xstrata) camp and the nearby discoveries of Waterloo(Norilsk) and Sinclair (Xstrata). The Bannockburn Project is immediately adjacent to theBannockburn Gold Mine, now on care and maintenance. Access to the tenement can be gained viathe Old Agnew Road and then mine access roads (Figure 8).The Bannockburn Project is strategically located towards the northern end of the Kambalda-MtKeith nickel corridor and is close to major highways, power and nickel processing plants.4.2 TenureThe Project comprises a single Exploration Licence, E37/1010, partially covering 8 sub-blocks.Stratum has entered into a Tenement Sale Agreement with the licence holder, Fraka InvestmentsPty Ltd whereby the Company can acquire 100% of the Bannockburn Project.The Goldfields Gas Pipeline runs through the tenement with conditions limiting explorationactivities in the vicinity of the pipeline.Table 5. Bannockburn Project Tenure SummaryTenement ID Area Expenditure Grant Date Expiry Date Annual Rent(sub-blks) CommitmentE 37/1010 8 $20,000 14 April 2010 13 April 2015 $96944

INDEPENDENT GEOLOGIST’S REPORTFigure 8 – Bannockburn Project Location4.3 Geology and MineralisationP R O S P E C T U SThe Project lies within the western limit of the supracrustal rock of the Eastern Goldfields Provincewithin the central part of the Norseman-Wiluna greenstone belt. This is an attenuated beltcharacterised by major wrench faults which are traceable over hundreds of kilometres with atleast two phases of complex folding and common steep dips. Peak metamorphism is at lowergreenschist grade.The area is bounded to the west by the Wildara Shear and to the east by the Clifford-Minnieritchiefault which is the local equivalent of the Mt George Shear. The western margin of the greenstonepackage is defined by the Bannockburn shear which is an east dipping structure whichtruncates the shallow stratigraphy to the east. Granite/gneiss lies between the Wildara andBannockburn shears.45

INDEPENDENT GEOLOGIST’S REPORTThe ultramafics within the Mt Clifford-Marriott area display greater similarities to the WalterWilliams Formation rather than those of the Leinster-Mt Keith succession. Typically thesesequences are composed of basal basalt, komatiitic flows, and an upper basalt and terminated bya package of felsic lavas, volcaniclastic sediments with minor shale and chert horizons. Theultramafics are considered prospective to host both disseminated and massive nickel sulphides.The area is well endowed with gold and base metal mineralisation. Large gold deposits includeEmu Redeemer, Lawlers (northeast of the project), Tarmoola and Sons of Gwalia, Thunderbox(immediately east) and Bannockburn. The region is usually recognized as a prolific nickel sulphideprovince which hosts the major nickel deposits of Perseverance, Rocky's Reward, Mount Keith,Yakabindie (BHP Billiton), and Honeymoon Well (Norilsk) as well as the large Cosmos (Xstrata)camp and the nearby discoveries of Waterloo (Norilsk) and Sinclair (Xstrata) which have progressedto production (Figure 9).VMS mineralisation occurs at Teutonic Bore and Jaguar (4km south of Teutonic Bore and northeastof Bannockburn). At Jaguar the mineralisation is hosted within a package of mafic andhydrothermally altered felsic volcanics similar to Golden Grove in the Murchison.Recent geophysical interpretation by Stratum indicates the project potentially lies withinprospective ultramafic lithologies of the north-south trending Sinclair Ultramafic Belt, locatedapproximately 6 kilometres south along strike from Xstrata's Sinclair Nickel Deposit (approximately45Kt Ni metal). Recent geophysical image interpretation (Figure 10) supports this trend beingcovered by E37/1010. This lease appears to cover the very prospective basal contact of themafic/ultramafic package, and is sandwiched between large land holdings held by nickel sulphideminers Xstrata and Norilsk Nickel.46

INDEPENDENT GEOLOGIST’S REPORTP R O S P E C T U SFigure 9 – Geophysical image of Bannockburn region showing setting of major nickel deposits.47

INDEPENDENT GEOLOGIST’S REPORT48Figure 10. Aeromagnetic image showing interpreted basal contact of ultramafic host lithologies.

INDEPENDENT GEOLOGIST’S REPORT4.4 Previous ExplorationHistorically this area has been held by gold focused exploration and mining companies with verylittle nickel sulphide exploration being completed. Despite the proximity of the Bannockburn GoldMine, only cursory exploration work appears to have been completed over the project, however avast amount of work has been completed in the region with numerous discoveries that demonstratethe prospectivity of the project area.4.5 Proposed Exploration Programme and BudgetDespite the gold potential of this area, the exploration focus for this lease will prioritise nickelsulphides. Stratum believes the ultramafic trend to be the previously un-recognised and unexploredeastern basal unit of this prospective mafic suite extending from the Sinclair Nickel Mineto the north.The Goldfields Gas Pipeline does complicate exploration of this project and limits the use of somegeophysical methods that are useful in exploring for such nickel deposits. However, explorationof this project is not impossible.Stratum has proposed an exploration programme and budget for the first two years of explorationat the Bannockburn Project upon listing on the ASX. The work involves compiling the previous datainto a consolidated database, followed by geological mapping, acquiring geophysical surveys, RABand RC drilling programmes. A budget of $ 467,800 is proposed by Stratum which is considered tobe valid and consistent with the size of the Bannockburn Project and will exceed the minimumstatutory expenditure requirements of the tenements.The planned exploration programmes are as follows:Year 1• Comprehensive open file and published report search. Collection and capture of all relevantinformation into a project database.• Ground geophysical data collection.• Complete initial reconnaissance-style RAB drilling (Approx. 2,000m).Year 2• Review of initial drilling programme and targeting.• Broad-spaced RC drilling targeting Geophysical and/or RAB targets (Approx 2,000m)Table 6. Proposed exploration expenditure for the Bannockburn ProjectP R O S P E C T U SFull subscription ($4m)Expenditure Year 1 Year 2 TotalWages / salaries / contractors $40,000 $55,000 $95,000RAB Drilling $31,500 - $31,500RC Drilling - $130,000 $130,000Geophysical survey $75,000 - $75,000Assays $11,000 $32,000 $43,000Field costs/consumables $5,800 $17,500 $23,300Tenement Administration $5,000 $5,000 $10,000Administration $30,000 $30,000 $60,000Totals $198,300 $269,500 $467,80049

INDEPENDENT GEOLOGIST’S REPORT5 LAVERTON PROJECT5.1 Location and accessThe project area is located 15 northwest of Laverton, approximately 800 kilometres north east ofPerth (Figure 11). The tenement is located on the Laverton Downs Pastoral Lease. Access is viathe main Leonora-Laverton bitumen road to Laverton and then by gravel station roads to theLaverton Project.Figure 11. Location of the Laverton Project.5.2 TenureThe area is covered by one granted Exploration licences E38/2156. The Exploration Licence covers acombined area of 13 subblocks. Stratum has entered into a Tenement Acquisition Agreement with thelicense holder, State Resources Pty Ltd, whereby the Company can acquire 100% of the Laverton Project.50

INDEPENDENT GEOLOGIST’S REPORTTable 7. Laverton Project Tenure SummaryTenement ID Area Expenditure Grant Date Expiry Date Annual Rent(sub-blks) CommitmentE 37/2156 13 $20,000 19 April 2010 18 April 2015 $1,5745.3 Geology and MineralisationThe Laverton Project area is divided into four broadly defined north-south lithostructural corridorsbounded by major strike shear zones. The eastern corridor consists predominantly of stronglydeformed metasediments and andesitic volcanoclastics, and includes slate, greywacke, andesiteand chert. This domain is bounded to the west by the Childe Harold fault, one of the bounding faultsto the Laverton Tectonic Zone, which hosts the Granny Smith deposits.To the west a complex assemblage of mafic and ultramafic volcanic and intrusive rocks, withinterlayered iron formation and black shale. Most of the banded iron formation and mafic hostedgold deposits of the Laverton area are hosted by these lithologies.Corridor 3 is a relatively narrow, fault bounded zone occupied almost entirely by deformedsediments, including conglomerates, forming the characteristic hanging wall assemblage of theLancefield mine stratigraphy. Little or no gold mineralisation is known within these rocks.Corridor 4 comprises strongly deformed ultramafics, mafic volcanic and intercalated BIF andsediments, and include the Lancefield, Gladiator and Gladiator South gold deposits. Felsic volcanicoccur within the sequence at Gladiator South and Gladiator North. The sequence includes gabbroicintrusions conformable to stratigraphy and abundant generally transgressive felsic dykes. In thefootwall to the immediate mine stratigraphy at Lancefield, the structurally thickened ultramaficfootwall is interpreted to have been domed by several discrete plugs of granitoid. The Lancefieldgold deposit is located in a series of stacked interflow sediments within a predominantly maficpart of Corridor 4 assemblage.Structurally, the area comprises a moderately-eastward dipping and eastward facing suite ofgreenstones in a transition zone between the linear, strike fault controlled Laverton GreenstoneBelt and the more open structure of the Margaret Anticline to the southwest. The sequence isprised apart from the north by a blunt wedge of granitoid, the Windarra Batholith, against whichthe greenstones are strongly compressed, sheared and interlayered with granite phases. Thrustlikelayer parallel movement has taken place along ultramafic horizons, including the batholithnear Lancefield. A major upright southeast-trending fault from Beasley Creek to near Gladiatoroffsets the succession in a sinistral sense at least 1.5km. In the northwestern corner of the area,this structure meets another curvilinear sinistral fault which is projected to link the northwestBeasley Creek prospect and the Gladiator South deposit.P R O S P E C T U SThe project area covers part of a large composite granite pluton occupying the core of the MargaretAnticline, a south plunging regional scale fold structure bounded on either side by the CeliaLineament and Laverton Tectonic Zone respectively (Figure 12). In and around the project area,the granites contain a number of dismembered remnants of the mineralised WindarraBIF/ultramafic sequence. The discontinuous zone of greenstone remnants trending north westfrom Woodline Well may represent part of a contact zone between different intrusions.51

INDEPENDENT GEOLOGIST’S REPORTFigure 12. Geology of the Laverton ProjectThe Laverton dyke suite is clearly visible on the aeromagnetics, trending east west although noexposures are known. A north northwest trending gravity lineament passes through the Korong-Gum Well area. Faults showing a similar orientation can also be interpreted from aeromagneticdata. North westerly trending shear zones have also been interpreted from the magnetics.Outcrop within the tenements is generally poor. Subcropping ultramafics together with minor BIFand gabbro is locally present north west of Woodline Well. This package disappears under sandcover immediately north of the Woodline nickel sulphide occurrence. Subcropping weatheredgranitoid gneiss is exposed along the eastern boundary of the project area adjacent to a northsouthtrending saline drainage system.52

INDEPENDENT GEOLOGIST’S REPORT5.4 Previous ExplorationIn 1970 Union Miniere Development and Mining Corporation Ltd carried out 1:12,000 mapping ofthe area, as part of reconnaissance copper and nickel exploration program. In 1972-73 Uraniumand Nickel Exploration NL and Kennecott Exploration Australia Pty Ltd carried out mapping andpercussion drilling for copper, nickel and zinc.Ashton Gold WA Ltd – Hill Minerals NL JV explored for gold using aeromagnetic and groundmagnetic surveys to define chert horizons prospective for Lancefield style mineralisation. Areasof interest were tested with RAB and RC drilling. Spotty gold mineralisation was reported, but afull list of results cannot be found.In the period 1969-1974, Carpentaria Exploration explored for nickel sulphides in the WoodlineWell area. A small sub-economic nickel sulphide resource was established, consisting ofdisseminated sulphides within a peridotite host rock. This resource is currently held within anexcised area within E38/2156. Although moderate grades of Ni were established by this work, theoverall resource grade was low, and the nickel bearing ultramafic was lost at depth. Recent drillingby Perilya Mines Ltd in July 2004 intersected sulphide bearing ultramafics in three of the holes.During 1988-89, Western Mining Corporation explored for gold in greenstone zenoliths within thegranite batholith. 2180 lag samples were collected on a 400x100m grid. Samples were alsoanalysed for Ni, Cu, Bi, and As. Three anomalies in excess of 20ppb gold were outlined. Follow upsampling infilled the pattern to 100x40m. Results were disappointing, and WMC concluded thatthe original values were the result of laboratory error.Anvil Mining NL purchased multiclient aeromagnetic data and carried out 1:25,000 outcropmapping. Four rock chip samples were collected from two costeans, a drill hole and rock wastefrom Eleven Mile Well and analysed for Cu, As, Ag, Pb and Au (ppm) by AAS. Twenty two minus 80#soil samples were collected from sites along the WMC grid and analysed for Au (ppb), Cu and As(ppm). All samples failed to report gold values above the 1ppb detection limit.In 1996, Voyager Gold NL carried out hydrogeochemistry over E38/2156. This method is a techniquewhere treated ground water samples are tested for very low levels of soluble metals typicallyassociated with mineralised systems. Ground water is known to be effective in taking a wide rangeof chalcophile elements into solution, and, because of the nature of flow within the aquifer,dispersing the resulting anomaly pattern over a large area. The ability, using Neutron ActivationAnalysis, to reliably analyse gold content of ground waters to 1ppt has helped produce a costeffective exploration tool over regolith dominated area.P R O S P E C T U SThese hydrogeochemical samples were collected from four accessible bores and submitted toCSIRO. Gold values were universally low, with a peak value of 2.6ppt from Gum Well. Arsenic valueswere also low, however there was distinct anomalism in a base metal suite including Ni, Cu, Pb,Zn, Sb, Cd, Co, and Mo. They concluded that this anomalism may reflect known nickel sulphidemineralisation at Woodline, or the presence of as yet undiscovered resources.53

INDEPENDENT GEOLOGIST’S REPORT5.5 Proposed Exploration Programme and BudgetDespite an extensive history of exploration in the region, the Laverton Project will benefit fromrecent technological advances in exploration. Open file aeromagnetic data will be obtained andmerged with a new aeromagnetic survey to improve drill targeting of nickel hosting ultramaficsand potential gold bearing structures. In parallel, a regolith landform map will be produced todetermine the viability of surficial geochemical exploration. Interpretation of the detailedaeromagnetic data, combined with potential geochemical results will be used to site RAB/Air Coredrill holes followed by RC and Diamond Drilling.Stratum has proposed an exploration programme and budget for the first two years of explorationat the Laverton Project upon listing on the ASX. A budget of $351,300 is proposed by Stratum whichis considered to be valid and consistent with the size of the Laverton Project and will exceed theminimum statutory expenditure requirements of the tenements.The planned exploration programmes are as follows:Year 1• Comprehensive open file and published report search. Collection and capture of all relevantinformation into a project database.• New aeromagnetic geophysical data collection.• Geological mapping• Complete initial reconnaissance-style geochemistry sampling.Year 2• Interpretation of aeromagnetic and geochemical data and targeting.• Broad-spaced RAB drilling targeting Geophysical and/or geochemical targets (Approx 3,000m)Table 9. Proposed exploration expenditure for the Laverton ProjectFull subscription ($4m)Expenditure Year 1 Year 2 TotalWages / salaries / contractors $25,000 $60,000 $85,000RAB Drilling - $47,300 $47,300Geochemistry $19,200 - $19,200Geophysical survey $80,000 - $80,000Assays - $14,900 $14,900Field costs/consumables $13,000 $21,900 $34,900Tenement administration $5,000 $5,000 $10,000Administration $30,000 $30,000 $60,000Totals $172,200 $179,100 $351,30054

INDEPENDENT GEOLOGIST’S REPORT6 CANNING BASIN COAL PROJECT6.1 Location and accessThe Canning Basin Coal Project is located approximately 150 kilometres southwest of Derby in theKimberley Region of Western Australia. Access to the tenements is gained initially via the GreatNorthern Highway, then south on the Noonkanbah-Calwynyardah Road and then via station tracksof Blina and Kalyeeda Pastoral Stations (Figure 13).The Canning Basin Project is located less than 20 kilometres from Rey Resources Limited’s DuchessParadise Project and situated within the same coal-bearing host rocks. The granting of the tenementswill provide Stratum with exposure to an emerging coal province with very little exploration.6.2 TenureThe Project is covered by three Exploration Licence Applications, E04/1993, E04/2124 andE04/2125, covering a combined 465km 2 . The Company has entered into an Option Agreement withthe licence holder, State Resources Pty Ltd, whereby the Company can explore and earn an initial60% interest in E04/1993, with the option to earn an additional 20% interest, such that theCompany’s total interest will be 80%. The Company has also entered into a Tenement AcquisitionAgreement with State Resources Pty Ltd to acquire a 100% interest in E04/2124 and E04/2125.Table 10. Canning Basin Coal Project Tenure SummaryTenement ID Area Expenditure Application Expiry Date Annual Rent(sub-blks) Commitment DateE 04/1993 89 N/A 17 Nov 2009 N/A N/AE 04/2124 50 N/A 5 May 2011 N/A N/AE 04/2125 4 N/A 5 May 2011 N/A N/AP R O S P E C T U S55

INDEPENDENT GEOLOGIST’S REPORT56Figure 13. Location and tenements of the Canning Basin Coal Project.

INDEPENDENT GEOLOGIST’S REPORT6.3 Geology and MineralisationThe Canning Basin Coal Project lies within the Canning Basin, the largest onshore sedimentarybasin in Western Australia, with the majority of the area being within the Fitzroy Trough. The FitzroyTrough is a north-west trending depocentre along the northern edge of the Canning Basin.The Canning Basin is an emerging coal province in the northwest of Western Australia where thereis outcrop mapped by the Geological Survey of Western Australia (“GSWA”) of the prospective coalbearing Lightjack Formation. The Lightjack Formation hosts Rey Resources Limited’s DuchessParadise Project which is currently undergoing feasibility studies located within the western endof the Fitzroy Graben. The Fitzroy Graben lies within the northern portion of the Canning Basinand is a deep trough of sedimentary rocks over 100km wide and up to 15km in depth.Coal has been reported from drill holes in several Permian units but significant coal seams onlyoccur in the Lightjack Formation, the lowermost unit of the Late Permian Liveringa Group. Thecoal measures of the Lightjack Formation are up to 40m thick and occur about 50m above thecontact with the underlying Noonkanbah Formation. The sequence contains two main seams,separated by up to 25m. The thickest recorded intersection of an upper seam is 4m at Liveringawhile for the lower seam is 10m in the McLarty Syncline.The prospectivity of Stratum’s Canning Basin Coal Project lies in its location in the southern portionof the Graben, covering known outcrops of the Lightjack Formation (Figure 14).P R O S P E C T U S57

INDEPENDENT GEOLOGIST’S REPORT58Figure 14. Geology of the Canning Basin Coal Project, highlighting the host Lightjack Formation.

INDEPENDENT GEOLOGIST’S REPORT6.4 Previous ExplorationThe most recent exploration of the Project was conducted by Rio Tinto Exploration Pty Ltd (RTE)who explored their very large Canning Coal Project. Part of this project overlaps onto Stratum’scurrent project area. RTE conducted extensive open file data review which highlighted previousdrilling intercepts of coal deposits within the Permian Lightjack Formation. Air photo mapping andhydro-geological reviews were also completed.RTE also drilled 27 RC and Diamond holes across their project. It has not been determined howmany of these holes fall into Stratum’s applications. Four holes intersected modest thicknessesof sub-bituminous coal. RTE withdrew after the project was considered insufficient to host a largeenough resource and the coal quality not likely to meet marketable export criteria at the time.A number of petroleum wells have been drilled in the vicinity of the tenement applications. A singlewell was drilled by Arc Energy in 2007 within the current boundary of E04/2125. No review of thedrill logs has been conducted at this time.6.5 Proposed Exploration ProgrammeProgrammes and budgets for the Canning Basin Coal Project are subject to the successful grantingof the tenements. There is no information at the current time to suggest when the tenements mayor may not be granted and as such, no budgets have been developed.However, should all the tenements be granted, it is anticipated that initial programmes will consistof a thorough review of previous exploration, particularly to identify the locations of the previousdrill holes completed by RTE. Field mapping of the Lightjack Formation would be completedconcurrently, followed by reconnaissance RC drilling, subject to regulatory heritage andenvironmental approvals.P R O S P E C T U S59

INDEPENDENT GEOLOGIST’S REPORT7 PRINCIPLE SOURCES OF INFORMATIONAttwell, S., 2003Attwell, S., 2004Combined Annual Report for the Baron Project (C59/2000). ThundelarraExploration Ltd. Unpublished Report to WA Department of Industry and Resources.Combined Annual Report for the Baron Project (C59/2000). ThundelarraExploration Ltd. Unpublished Report to WA Department of Industry and Resources.Breakaway Resources Limited ASX Announcement: Gold Business UpdateBannockburn Resource Upgrade, 15th February 2004.Carlson, R., 1994Carlson, R., 1995Coles, R., 2002Coles, R., 2003Dower, B., 1995Fleming, M., 1996Annual Report Youno Downs (Northern Group). Pancontinental Gold (Operations)Pty Ltd. Unpublished Report to the WA Mines Department.Annual Report Youno Downs (Northern Group). Goldfields Exploration Pty Ltd.Unpublished Report to the Department of Minerals and Energy WA.Combined Annual Report for the Gidgee Project, Gum Creek Greenstone Belt(C6/2002). Abelle Limited. Unpublished Report to the Department of Minerals andEnergy, WA.Combined Annual Report for the Gidgee Project, Gum Creek Greenstone Belt(C6/2002). Abelle Limited. Unpublished Report to the Department of Minerals andEnergy, WA.Annual report for the Pinyalling Project. Goldfields Exploration Division Pty Ltd.Unpublished report to the WA Department of Minerals and Energy.Annual report for the Pinyalling Project. Goldfields Exploration Pty Ltd.Unpublished report to the WA Department of Minerals and Energy.Gryphon Minerals Ltd 2004, Quarterly Report June 2004Guy, J., 2002Johnson G.I., 1997Kelly, M. C., 2004Millar, A. S., 2004Annual Technical Report for the Bannockburn Project (C489/1996). BreakawayResources Ltd. Unpublished report to the WA Department of Minerals and Energy.EL38/625 – Spinifex Well, Annual Technical Report 1997. Metex Resources NL. WADepartment of Mines & EnergyAnnual Exploration Report on The Bannockburn Nickel/Base Metal Joint Venture(C489/1996). Jubilee Mines NL. Unpublished report to the WA Department ofMinerals and Energy.Combined Annual and Final Report, Canning Coal Project, C95/2003. Rio TintoExploration Pty Ltd. Unpublished report to the Department of Industry and Resources.60Panoramic Resources ASX announcement: Gidgee Gold Project Acquisition, 31st January 2011.Pelligrini, A., 2000Combined Annual Report for the Gidgee West Project. Gateway Mining NL.Unpublished report to the WA Department of Minerals and Energy.Pelligrini, A., 2002Surrender Report E53/591. Gateway Mining NL. Unpublished report to theDepartment of Minerals and Energy.

INDEPENDENT GEOLOGIST’S REPORTPelligrini, A., 2003Pelligrini, A., 2003Surrender Report E53/697. Gateway Mining NL. Unpublished report to theDepartment of Minerals and Energy.Surrender Report E57/365. Gateway Mining NL. Unpublished report to theDepartment of Minerals and Energy.Poseidon Nickel Limited 2011. Investor Presentation February 2011.Rey Resources Limited website: www.reyresources.comRichards, M., 1991Richards, M., 1992Rohde, C., 1997Mt Townsend Project Annual Report. Pancontinental Mining & Noranda Pty LtdJoint Venture. Unpublished Report to the WA Mines Department.Mt Townsend Project Annual Report. Pancontinental Mining & Noranda Pty LtdJoint Venture. Unpublished Report to the WA Mines Department.Mineral Prospectivity Mapping Study Leonora/Sir Samuel Area for Australian GoldFields NL by Lyle A Burgess and F. M. Rankin. Supplementary Report to theMiranda, Cottees & Bannockburn Projects. Consolidated Gold Mines Ltd.Unpublished Report to WA Deparment of Minerals and Energy.Rohde, C., 1999Combined Annual Report for the Bannockburn Project (C531/1994). ConsolidatedGold Mines Ltd. Unpublished Report to WA Deparment of Minerals and Energy.Royal Resources Limited 2010 Annual Report. Available from website: www.royalresources.com.auThompson, D., 2007 Partial Surrender Report E53/957 (Gidgee Project). Apex Minerals NL.Unpublished Report to Department of Industry and Resources.Verran, T., 1996Final Report Youno Downs (Northern Group). Goldfields Exploration Pty Ltd.Unpublished Report to the Department of Minerals and Energy WA.P R O S P E C T U S61

INDEPENDENT GEOLOGIST’S REPORT8 GLOSSARY OF TECHNICAL TERMS AND ABBREVIATIONSAeromagneticsAlteration haloAmphiboliteAnomalousAnomalyArchaeanAssayAuAuriferousBasaltCalcreteAirborne measurement of the earth's magnetic field for the purpose of recordingmagnetic characteristics of rocks.Zone of chemical alteration surrounding mineralisation. May be used as a‘pathfinder’ to the primary mineralisation.A metamorphic rock composed mainly of amphibole, a family of minerals inwhich the silica molecules are bound together in parallel chains.Having statistically significantly higher or lower values than the norm.A portion of an area surveyed that is different in appearance from the areasurveyed in general or containing higher or lower values than considered normal.The oldest rocks of the Earth's crust – older than 2,400 million years.An examination of a sample to determine by measurement certain of itsingredients.Chemical symbol for gold.Containing gold.A fine-grained, dark igneous rock, generally extrusive, composed of half feldsparand half mafic materials.A surficial form of carbonate, usually formed during weathering processes.Carbonate Rock of sedimentary or hydrothermal origin, composed primarily of CO 362ChloriteClasticCuDeformationDepositionDisseminatedDoleriteDykeExplorationFaultA dark replacement mineral related to mica.Sediments derived from erosion of pre-existing rocks.Chemical symbol for copperProcess by which rocks are folded or faulted.The precipitation of mineral matter from solution.Mineral grains scattered throughout host rock.A medium-grained mafic intrusive rock composed mainly of pyroxene andplagioclase; crystalline basalt.A tabular igneous intrusion cutting across the bedding or other planar structuresin the country rocks.Projecting, sampling, mapping, drilling and other work involved in the searchfor mineralisation.A fracture in rock along which there has been relative displacement of the twosides either vertically or horizontally; this may provide a channel for the passageof mineral-bearing solutions.

INDEPENDENT GEOLOGIST’S REPORTFelsicFerruginousGabbroGeochemical anomalyGeochemical surveysGeophysical surveyGradeDescriptive of light-coloured, fine-grained igneous rock containing an abundanceof mineral feldspar (generally potassium-rich) and quartz but with a very lowcontent of mafic minerals.Pertaining to or containing iron; red-coloured rocks in which the iron contenthas been oxidised.Coarse-grained, dark igneous rock of similar composition to basic volcanics.A concentration of one or more elements in rock, soil, water or vegetation thatdiffers significantly from the normal concentration.The application of methods and techniques of geochemistry, such as soil androck sampling, in the search for minerals.The exploration of an area in which physical properties (for example, resistivity,conductivity, magnetic properties) unique to the rocks in the area arequantitatively measured by one or more geophysical methods.Quantity or gold or other metal per unit weight of host rock or sample.GraniteGranitoidGreenstoneGridGround magneticsHost rockIgneousLateriteCoarse-grained igneous crystalline rock with a high silica content.Pertaining to or composed of granite.Term for any fine-grained mafic igneous rock.Systematic array of points or lines along which field observations are made.Ground based measurement of the earth's magnetic field for the purpose ofrecording magnetic characteristics of rocks.Rock containing mineralisation.Formed by solidification from the molten state.Iron-rich residual surface rock capping formed by weathering in tropicalconditions.P R O S P E C T U SMaficMagneticMagnetiteMetamorphicMetabasaltMineralisationReferring to igneous rocks composed dominantly of iron and magnesiumminerals.anomaly magnetic values above or below the norm for a particular rock.A mineral; magnetic oxide of iron.Alteration and re-crystallisation or rocks because of heating or application ofpressure or both.Partly metamorphosed basalt rocks.The concentration of metals and their chemical compounds within a body of rock.63

INDEPENDENT GEOLOGIST’S REPORT64MonzograniteNiNickelOutcropOxidisedPercussion drillingProjectProspectPyritePyroxenePyrrhotiteQuartzRAB drillingRC drillingRegolithSamplingSchistSedimentShearSilicifiedSillStratigraphicStratigraphyThe name of a subdivision of granite rocks.Chemical symbol for nickelSilvery-white metal used in alloys.An exposure of bedrock at the surface, projecting through the overlying soil cover.Near-surface decomposition by exposure to the atmosphere and groundwater.A method of drilling which utilises a hammering action under rotation topenetrate rock while the cuttings are forced to the surface by compressed airreturning outside the drill rods.An area including a group of tenements that constitute a logical working unit.Any mine workings not yet valued; an area to be examined geophysically forminerals, and an area confirmed by geophysical and geological studies to thedegree that it can now be tested.Magnetic iron sulphide mineral.A dark silicate mineral common in mafic rocks.Magnetic iron sulphide mineral.A very common mineral composed of silica.Rotary air blast drilling, a technique whereby the cuttings are returned to thesurface outside the drill stem by compressed air and are thus liable tocontamination from the wall rocks.Reverse circulation drilling, a technique in which the cuttings are recoveredthrough the drill rods, thereby minimising sample losses and contamination.Weathered portion of the land surface down to bedrock.Taking small pieces of rock at intervals along exposed mineralisation for assay(to determine the mineral content).Type of fine-grained metamorphic rock with a laminated fabric similar to slate.Formed by the deposition of solid fragmental or chemical material thatoriginates from the weathering of rocks.A fracture in rock that is similar to a fault; zone in which rocks have beendeformed by lateral movement along innumerable parallel planes.Referring to rocks in which a significant proportion of the original constituentminerals have been replaced by silica.Intrusive igneous rock horizontally or sub-horizontally emplaced.Pertaining to the composition, sequence and correlation of stratified rocks.The study of stratified rocks, especially their age, correlation and character.

INDEPENDENT GEOLOGIST’S REPORTStructureSub-bituminous CoalSulphidesTenementUltramaficVeinVolcanicThe sum total of the structural features of an area.A type of coal whose properties range from those of lignite to those of bituminouscoal and are used primarily as fuel for steam-electric power generationMinerals comprising a chemical combination of sulphur and metals.Area of land defined by a government authority over which an applicant mayconduct exploration or mining activity. Aka ‘Mineral Property’. eg Mining Leaseor Prospecting Licence.Referring to an igneous rock composed essentially of dark-coloured iron andmagnesium minerals.A narrow, dyke-like intrusion of mineral traversing a rock mass of differentmaterial.Class of igneous rocks that have flowed out or have been ejected at or near theEarth’s surface, as from a volcano.VTEMWeatheringCHEMICAL SYMBOLSVersatile Time-Domain Electromagnetic survey, used to detect conductivesubstances at shallow depths in the Earth's crustThe set of all processes that decay and break up bedrock by physical fracturingor chemical decomposition.Ag Silver As ArsenicAu Gold Cu CopperFe Iron Mg MagnesiumMn Manganese Mo MolybdenumNb Niobium Ni NickelPb Lead Sn TinTi Titanium W TungstenZnZincP R O S P E C T U SABBREVIATIONScm centimetre g gramg/t gram per tonne g.m gram metres (grade x width)ha hectare km kilometrekg kilogram m metrekm 2 square kilometre m 3 cubic metrem 2 square metre M millionmm millimetre oz troy ounce, equivalent to 31.10348g.t tonne # mesh size65UNITS OF CONCENTRATIONppbppmparts per billionparts per million

SECTION 7: INVESTIGATING ACCOUNTANT’S REPORT2 September 2011The DirectorsStratum Metals LimitedC/- Mining Corporate Pty LtdPO Box 1905SUBIACO WA 6904Dear SirsInvestigating Accountant’s Report – Stratum Metals LimitedIntroductionThis report has been prepared at the request of the Directors of Stratum Metals Limited (“Stratum” or“the Company”), for inclusion in a prospectus to be lodged with the Australian Securities and InvestmentCommission (“ASIC”) on or around 2 September 2011 (“Prospectus”), relating to the proposed issue of20,000,000 ordinary shares at an issue price of $0.20 each to raise a total of $4,000,000.The offer is not underwritten and the minimum subscription level is $4,000,000.Basis of PreparationThe report has been prepared to provide investors with information on historical results and thefinancial position of Stratum, and to provide investors with a pro forma Statement of Financial Positionand pro forma Statement of Comprehensive Income of Stratum as at 30 June 2011 adjusted to includefunds raised by the Prospectus and the completion of exploration interest acquisitions and othertransactions as referred to in Note 2 of Appendix 2.This Report does not address the rights attaching to the Shares to be issued in accordance with theProspectus, the risks associated with the investment, nor form the basis of an Expert’s opinion withrespect to a valuation of the Company or a valuation of the Share issue price of $0.20 per share tothe public.Bentleys has not been requested to consider the prospects for Stratum nor the merits and a riskassociated with becoming a shareholder and accordingly, has not done so, nor purports to doso. Bentleys accordingly takes no responsibility for those matters or for any matter or omissionin the Prospectus, other than responsibility for this report. Risk factors are set out in Section 4 ofthe Prospectus.Background66Stratum Metals Limited is an Australian company incorporated on 15 December 2010 with the primarypurpose of acquiring an interest in, exploring and subject to positive exploration results, developingresource based projects. For further details of the Company refer to the Company and Project Overviewin Section 3 of this Prospectus.The Company has entered into a Tenement Sale Agreement with Fraka Investments Pty Ltd pursuantto which the Company has acquired 100% legal and beneficial ownership of exploration licensesE37/1010, E53/1440, E53/1494, E59/1545 and E59/1618 located at or near the Yilgarn Region ofWestern Australia.

INVESTIGATING ACCOUNTANT’S REPORTThe Company has also entered into a Tenement Acquisition Agreement with State Resources Pty Ltdfor the option to acquire a 100% legal and beneficial ownership in exploration license E38/2156. Theproject area lays 15km northwest of Laverton. The Company has entered into an option agreementwith State Resources Pty Ltd for the option to explore and earn up to an 80% interest in explorationlicence application E04/1993 within the coal prospective Canning Basin. The Company also has enteredinto an Tenement Acquisition Agreement with State Resources Ltd to acquire a 100% interest inexploration license applications E04/2124 and E04/2125, also in the Canning Basin Region.Since incorporation, the only other activities undertaken by the Company have been the preparation forthe proposed ASX listing of Stratum. Refer to Section 9.3 of the Prospectus for further details of thenature of these agreements.Scope of ReportBentleys has been requested to:(a)report whether anything has come to our attention which would cause us to believe that thehistorical financial information disclosed in the appendices to this report is not fairly presented inaccordance with the recognition and measurement requirements (but not the disclosurerequirements) of Australian Accounting Standards and other mandatory professional reportingrequirements in Australia, and the accounting policies adopted by Stratum, and(b)report whether anything has come to our attention which would cause us to believe that the proforma financial information disclosed in the appendices to this report is not presented fairly inaccordance with the basis of preparation and assumptions set out therein and with the recognitionand measurement requirements (but not the disclosure requirements) of Australian AccountingStandards and other mandatory professional reporting requirements in Australia, and theaccounting policies adopted by Stratum.Stratum has prepared, and is responsible for, the historical and pro forma financial information includedin the appendices to this report.Scope of ReviewBentleys has audited the financial statements of Stratum as at 30 June 2011 and provided an auditopinion on those financial documents. We have conducted our review of the audited historical financialinformation and pro forma financial information in accordance with Australian Auditing Standard ASRE2405 “Review of Historical Financial Information Other Than a Financial Report”. We made suchenquiries and performed such procedures as we, in our professional judgement, considered reasonablein the circumstances, including:P R O S P E C T U S(i)(ii)(iii)(iv)(v)enquiry of directors, management and others;analytical procedures on the historical information;a review of work papers, accounting records and other documents;a review of assumptions used to compile the pro forma financial information; andcomparison of consistency in application of the recognition and measurement requirements (butnot the disclosure requirements) of Australian Accounting Standards and other mandatoryprofessional reporting requirements in Australia, and the accounting policies adopted by Stratum.67The review procedures were substantially less in scope than an audit examination conducted inaccordance with Australian Auditing Standards.Having regard to the nature of the review, which provides less assurance than an audit and to the natureof the historical and pro forma financial information, this report does not express an audit opinion onthe historical and pro forma financial information included in the appendices to this report.

INVESTIGATING ACCOUNTANT’S REPORTAppendix 1 – Historical and Pro-Forma Financial InformationSTATEMENT OF COMPREHENSIVE INCOMENote Reviewed ReviewedActualPro formaFor the Period For the Period30 June 2011 30 June 2011$ $Income 100 100Directors fees (100,025) (100,025)Employees entitlement expenses (4,646) (4,646)Entertainment (5,217) (5,217)Incorporation costs (662) (662)Rent (9,073) (9,073)Stamp duty (10,735) (10,735)Travel and accommodation (31,282) (31,282)Administration Expenses (46,235) (46,235)Other expenses (269) (269)Loss before income tax (208,044) (208,044)Income tax expense - -Loss after income tax (208,044) (208,044)Other comprehensive income - -Total comprehensive Loss for the period (208,044) (208,044)P R O S P E C T U S69

INVESTIGATING ACCOUNTANT’S REPORTSTATEMENT OF FINANCIAL POSITIONNote Reviewed ReviewedActualPro formaFor the Period For the Period30 June 2011 30 June 2011$ $CURRENT ASSETSCash and cash equivalents 3 299,647 3,899,147Other assets 6,837 6,837TOTAL CURRENT ASSETS 306,484 3,905,984NON CURRENT ASSETSExploration expenditure 4 382,922 382,922TOTAL NON CURRENT ASSETS 382,922 382,922TOTAL ASSETS 689,406 4,288,906CURRENT LIABILITIESTrade and other payables 5 428,092 428,092TOTAL CURRENT LIABILITIES 428,092 428,092TOTAL LIABILITIES 428,092 428,092NET ASSETS 261,314 3,860,814EQUITYIssued capital 6 469,358 4,068,858Accumulated losses 7 (208,044) (208,044)TOTAL EQUITY 261,314 3,860,81470

INVESTIGATING ACCOUNTANT’S REPORTAppendix 2 – Notes to and Forming Part of the Financial Statements1. Summary of significant accounting policies(a)Basis of AccountingThe financial statements have been prepared in accordance with the measurement and recognition(but not the disclosure) requirements of Australian Accounting Standards, Australian AccountingInterpretations and the Corporations Act 2001.The financial statements have been prepared on an accruals basis, are based on historical costand except where stated do not take into account changing money values or current valuations ofnon-current assets. Cost is based on the fair values of the consideration given in exchange forassets.The preparation of the Statement of Comprehensive Income and Statement of Financial Positionrequires the use of certain critical accounting estimates and assumptions. It also requiresmanagement to exercise its judgement in the process of applying the Company’s accountingpolicies. The areas involving a higher degree of judgement or complexity, or areas whereassumptions and estimates are significant to the Statement of Comprehensive Income andStatement of Financial Position are disclosed where appropriate.(b)The financial information has been prepared on the basis of a going concern which contemplatescontinuity of normal business activities and the realisation of assets and settlement of liabilitiesin the ordinary course of business.The Statement of Comprehensive Income for the period ended 30 June 2011 and the Statement ofFinancial Position as at 30 June 2011 are in accordance with the Company’s reviewed financialposition at that date. The pro forma Statement of Comprehensive Income for the period ended 30June 2011 and the pro forma Statement of Financial Position as at 30 June 2011 represents thereviewed financial result and position and adjusted for the transactions discussed in Note 2 to thisreport. The Statement of Comprehensive Income and Statement of Financial Position should beread in conjunction with the notes set out in this report.Cash and Cash EquivalentsCash and cash equivalents includes cash on hand, deposits held at call with financial institutions,other short-term, highly liquid investments with original maturities of three months or less thatare readily convertible to known amounts of cash and which are subject to an insignificant risk ofchanges in value, and bank overdrafts. Bank overdrafts are shown within borrowings in currentliabilities on the Statement of Financial Position.P R O S P E C T U S(c)Revenue and Other IncomeRevenue is measured at the fair value of the consideration received or receivable after taking intoaccount any trade discounts and volume rebates allowed. Any consideration deferred is treatedas the provision of finance and is discounted at a rate of interest that is generally accepted in themarket for similar arrangements. The difference between the amount initially recognised and theamount ultimately received is interest revenue.Interest revenue is recognised using the effective interest rate method, which, for floating ratefinancial assets, is the rate inherent in the instrument. Dividend revenue is recognised when theright to receive a dividend has been established.All revenue is stated net of the amount of goods and services tax (GST).71

INVESTIGATING ACCOUNTANT’S REPORT(d)Income TaxThe income tax expense for the period comprises current income tax expense and deferredtax expense.72(e)Current income tax expense charged to the profit or loss is the tax payable on taxable income calculatedusing applicable income tax rates enacted, or substantially enacted, as at reporting date. Current taxliabilities are measured at the amounts expected to be paid to the relevant taxation authority.Deferred income tax expense reflects movements in deferred tax asset and deferred tax liabilitybalances during the period as well unused tax losses.Current and deferred income tax expense is charged directly to equity instead of the Statement ofComprehensive Income when the tax relates to items that are credited directly to equity.Deferred tax assets and liabilities are ascertained based on temporary differences arising betweenthe tax bases of assets and liabilities and their carrying amounts in the financial statements. Deferredtax assets also result where amounts have been fully expensed but future tax deductions are available.No deferred income tax will be recognised from the initial recognition of an asset or liability, excludinga business combination, where there is no effect on accounting or taxable profit or loss.Deferred tax assets and liabilities are calculated at the tax rates that are expected to apply to theperiod when the asset is realised or the liability is settled, based on tax rates enacted orsubstantively enacted at reporting date. Their measurement also reflects the manner in whichmanagement expects to recover or settle the carrying amount of the related asset or liability.Deferred tax assets relating to temporary differences and unused tax losses are recognised onlyto the extent that it is probable that future taxable profit will be available against which the benefitsof the deferred tax asset can be utilised.Where temporary differences exist in relation to investments in subsidiaries, branches, associatesand joint ventures, deferred tax assets and liabilities are not recognised where the timing of thereversal of the temporary difference can be controlled and it is not probable that the reversal willoccur in the foreseeable future.Current tax assets and liabilities are offset where a legally enforceable right of set-off exists andit is intended that net settlement or simultaneous realisation and settlement of the respectiveasset and liability will occur. Deferred tax assets and liabilities are offset where a legallyenforceable right of set-off exists, the deferred tax assets and liabilities relate to income taxeslevied by the same taxation authority on either the same taxable entity or different taxable entitieswhere it is intended that net settlement or simultaneous realisation and settlement of therespective asset and liability will occur in future periods in which significant amounts of deferredtax assets or liabilities are expected to be recovered or settled.Impairment of AssetsAt each reporting date, the Company reviews the carrying values of its tangible and intangible assetsto determine whether there is any indication that those assets have been impaired. If such anindication exists, the recoverable amount of the asset, being the higher of the asset’s fair value lesscosts to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’scarrying value over its recoverable amount is expensed to the Statement of Comprehensive Income.Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.Where it is not possible to estimate the recoverable amount of an individual asset, the Companyestimates the recoverable amount of the cash-generating unit to which the asset belongs.

INVESTIGATING ACCOUNTANT’S REPORT(f)Exploration and Evaluation ExpenditureExploration, evaluation and development expenditure incurred is accumulated in respect of eachidentifiable area of interest. These costs are only carried forward to the extent that they areexpected to be recouped through the successful development of the area or where activities in thearea have not yet reached a stage that permits reasonable assessment of the existence ofeconomically recoverable reserves.Accumulated costs in relation to an abandoned area are written off in full against profit in theperiod in which the decision to abandon the area is made.When production commences, the accumulated costs for the relevant area of interestare amortised over the life of the area according to the rate of depletion of the economicallyrecoverable reserves.A regular review is undertaken of each area of interest to determine the appropriateness ofcontinuing to carry forward costs in relation to that area of interest.(g)Costs of site restoration are provided over the life of the facility from when exploration commencesand are included in the costs of that stage. Site restoration costs include the dismantling andremoval of mining plant, equipment and building structures, waste removal, and rehabilitation ofthe site in accordance with clauses of the mining permits. Such costs have been determined usingestimates of future costs, current legal requirements and technology on an undiscounted basis.Any changes in the estimates for the costs are accounted for on a prospective basis. In determiningthe costs of site restoration, there is uncertainty regarding the nature and extent of the restorationdue to community expectations and future legislation. Accordingly the costs have been determinedon the basis that the restoration will be completed within one year of abandoning the site.Investments & Financial InstrumentsRecognition and de-recognitionRegular purchases and sales of financial assets are recognised on trade-date being the date onwhich the Company commits to purchase or sell the asset. Financial assets are derecognised whenthe rights to receive cash flows from the financial assets have expired or have been transferredand the Company has transferred substantially all the risks and rewards of ownership.P R O S P E C T U SWhen securities classified as available-for-sale are sold, the accumulated fair value adjustmentsrecognised in equity are included in the Statement of Comprehensive Income as gains and lossesfrom investment securities.Classification and Subsequent Measurement(i)Financial assets at fair value through profit or lossFinancial assets are classified at fair value through profit or loss when they are held for tradingfor the purpose of short term profit taking, where they are derivatives not held for hedgingpurposes, or designated as such to avoid an accounting mismatch or to enable performanceevaluation where a Company of financial assets is managed by key management personnel ona fair value basis in accordance with a documented risk management or investment strategy.Realised and unrealised gains and losses arising from changes in fair value are included inprofit or loss in the period in which they arise.73

INVESTIGATING ACCOUNTANT’S REPORT(ii) Loans and receivablesLoans and receivables are non-derivative financial assets with fixed or determinable paymentsthat are not quoted in an active market and are subsequently measured at amortised costusing the effective interest rate method.(iii) Held-to-maturity investmentsHeld-to-maturity investments are non-derivative financial assets that have fixed maturitiesand fixed or determinable payments, and it is the Company’s intention to hold theseinvestments to maturity. They are subsequently measured at amortised cost using the effectiveinterest rate method.(iv) Available-for-sale financial assetsAvailable-for-sale financial assets are non-derivative financial assets that are eitherdesignated as such or that are not classified in any of the other categories. They compriseinvestments in the equity of other entities where there is neither a fixed maturity nor fixed ordeterminable payments.(v) Financial liabilitiesNon-derivative financial liabilities (excluding financial guarantees) are subsequently measuredat amortised cost using the effective interest rate method.Fair ValueFair value is determined based on current bid prices for all quoted investments. Valuationtechniques are applied to determine the fair value for all unlisted securities, including recentarm’s length transactions, reference to similar instruments and option pricing models.ImpairmentAt each reporting date, the Company assesses whether there is objective evidence that a financialinstrument has been impaired. In the case of available-for-sale financial instruments, aprolonged decline in the value of the instrument is considered to determine whether impairmenthas arisen. Impairment losses are recognised in the Statement of Comprehensive Income.(h)(i)Trade CreditorsThese amounts represent liabilities for goods and services provided to the Company prior to theend of the financial year and which are unpaid. The amounts are unsecured and are usually paidwithin 30 days of recognition.Issued CapitalOrdinary shares are classified as equity.Costs directly attributable to the issue of new shares or options are shown in equity as a deduction,net of tax, from the proceeds.74

INVESTIGATING ACCOUNTANT’S REPORT(j)Employee Benefits(i) Wages and salaries, annual leave and sick leaveLiabilities for wages and salaries, including non-monetary benefits, annual leave andaccumulating sick leave expected to be settled within 12 months of the reporting date arerecognised in other payables in respect of employees’ services up to the reporting date andare measured at the amounts expected to be paid when the liabilities are settled.(ii) Long service leaveThe liability for long service leave is recognised in the provision for employee benefits andmeasured as the present value of expected future payments to be made in respect of servicesprovided by employees up to the reporting date using the projected unit credit method.Consideration is given to expected future wage and salary levels, experience of employeedepartures and periods of service. Expected future payments are discounted using marketyields at the reporting date on national government bonds with terms to maturity and currencythat match, as closely as possible, the estimated future cash outflows.(k)ProvisionsProvisions for legal claims, service warranties and make good obligations are recognised whenthe Company has a present legal or constructive obligation as a result of past events, it is probablethat an outflow of resources will be required to settle the obligation and the amount has beenreliably estimated. Provisions are not recognised for future operating losses.(l)Where there are a number of similar obligations, the likelihood that an outflow will be required insettlement is determined by considering the class of obligations as a whole. A provision isrecognised even if the likelihood of an outflow with respect to any one item included in the sameclass of obligations may be small.Provisions are measured at the present value of management’s best estimate of the expenditurerequired to settle the present obligation at the reporting date. The discount rate used to determinethe present value reflects current market assessments of the time value of money and the risksspecific to the liability. The increase in the provision due to the passage of time is recognised asinterest expense.Goods and Services Tax (GST)Revenues, expenses and assets are recognised net of the amount of GST except:• Where the GST incurred on the purchase of goods and services is not recoverable from thetaxation authority, in which case the GST is recognised as part of the cost of acquisition of theasset or as part of the expense item as applicable; and• Receivables and payables in the statement of financial position are shown inclusive of GST.P R O S P E C T U S2. Actual and Proposed Transactions to Arrive at the Pro-Forma Financial InformationThe pro-forma financial information has been included for illustrative purposes to reflectthe position of Stratum on the assumption that the following transactions had occurred as at30 June 2011:(a) The issue of 20,000,000 ordinary shares at $0.20 each pursuant to the Prospectus to raise agross $4,000,000;(b) The payment of expenses of the public issue totalling an estimated $400,500 excluding GSTand expensed against equity;(c) The issue of 900,000 ordinary shares at $0.20 each to Fraka Investments Pty Limited (“Fraka”in accordance with the tenement sale agreement).75

INVESTIGATING ACCOUNTANT’S REPORTNote Reviewed ReviewedActualPro formaFor the Period For the Period30 June 2011 30 June 2011$ $3. Cash and cash equivalentsCash at Bank 299,647 299,647Issue of 20,000,000 ordinary sharespursuant to the Prospectus 2(a) - 4,000,000Costs of public issue 2(b) - (400,500)299,647 3,899,1474. Exploration expenditureExploration expenditure at cost 382,922 382,922382,922 382,9225. Trade and other payablesTrade and other payables 428,092 428,092428,092 428,0926. Issued capitalBalance 30 June 2011 469,358 469,358Issue of 20,000,000 ordinary sharespursuant to the Prospectus 2(a) - 4,000,000Costs of public issue 2(b) - (400,500)469,358 4,068,858a. Ordinary Shares No. No.Opening balance 20,250,003 20,250,003Issue of 20,000,000 ordinary sharespursuant to the Prospectus 2(a) - 20,000,000Issue of 900,000 ordinary shares to Fraka 2(c) - 900,00026,150,003 41,150,0037. Accumulated lossesAccumulated losses (208,044) (208,044)(208,044) (208,044)76

INVESTIGATING ACCOUNTANT’S REPORT8. Related PartiesRefer to Section 9 of the prospectus for details of related party transactions and shareholdings.9. Commitments(a) ExplorationThe Company will have minimum obligations pursuant to the terms and conditions of theexploration licences in the forthcoming year of $115,000 for exploration commitments. Thesefigures do not include the Canning Basin exploration licence applications. These obligationsare capable of being varied from time to time, in order to maintain current rights of tenure tomining tenements.(b) Native TitleThe Company’s mining tenements may be subject to native title applications in the future. Atthis stage it is not possible to quantify the impact (if any) that native title may have on theoperations of the Company.10. Contingent Assets and LiabilitiesAt the date of the report no material commitments or contingent liabilities exist that we are awareof, other than those disclosed in this Prospectus.11. Subsequent EventsAt the date of this report there have been no material events subsequent to balance date that weare aware of, other than those disclosed in this Prospectus.P R O S P E C T U S77

SECTION 8: SOLICITOR’S REPORT ON MINING TENEMENTS1 September 2011The DirectorsStratum Metals LimitedLevel 7, 151 Macquarie StreetSYDNEY NSW 2000Dear SirsSolicitors’ Report on Mining TenementsStratum Metals Limited (ACN 147 867 301) (“Company”)This report has been prepared for inclusion in the prospectus to be issued by the Company on or about6 September 2011 (“Prospectus”). The offer under the Prospectus comprises the issue of 20,000,000fully paid Shares at a price of $0.20 each to raise $4,000,000.We have been requested to report on the mining tenement interests to which the Company is entitledto or has acquired rights (“the Tenements”). Details of these mining tenement interests are listed inthe attached Schedule of Tenements (“the Schedule”) which, together with the notes to the Schedule(“the Notes”) forms part of this report.The Company has entered into various option and sale agreements with respect to the Tenements.These agreements are summarised in the Material Contracts Section of the Prospectus at Section 9.3(“the Agreements”).All of the Tenements are located in Western Australia and are identified in the Schedule.1. SearchesWe conducted searches of the Tenements in the registers maintained by the Western AustralianDepartment of Mines and Petroleum (“DMP”) and have also undertaken native title quick appraisalsearches of DMP’s electronic register and cross checked those against the National Native TitleTribunal's (“NNTT”) electronic register as at the following dates:(a) EL 59/1618 on 17 August 2011;(b) EL 37/1010, EL 38/2156, EL 53/1494, EL 59/1545, ELA 04/1993, ELA 04/2124 and ELA 04/2125on 23 August 2011; and(c) EL 53/1440 on 1 September 2011.78As a result of those searches and our perusal of the Agreements, we consider this report provides anaccurate statement, as at the date of the respective searches, as to the status of the Tenements andthe interests of the Company in those Tenements. We have assumed the information in the registersmaintained by DMP and NNTT is accurate. The references in the Schedule to the areas of the Tenementsare taken from details shown on DMP’s and NNTT's electronic registers. No survey was conducted toverify the accuracy of Tenement areas.

SOLICITOR’S REPORT ON MINING TENEMENTSWe have further assumed that the various parties’ seals and signatures on all the Agreements areauthentic, and that the Agreements are and were within the capacity and powers of those who executedthem. We assume that all of the Agreements were validly authorised, executed and delivered by andare binding on the parties to them and comprise the entire agreements of the parties to each of themconcerning their respective subject matters.2. General Information About Mining Tenements2.1 Western Australia(a) Mining Lease (“ML”)A ML gives the holder the exclusive right to find, extract and dispose of any minerals on theland the subject of that ML. The maximum area over which a ML may be granted must notexceed 10 square kilometres. A ML remains in force for a period of 21 years from the date ofgrant, the holder has an option to renew for another 21 years on expiry and further renewalsare possible under the Mining Act 1978 (WA) (“Mining Act”). The holder of a ML must obtainministerial consent in order to assign, sublet or part with possession of the ML.The Company does not hold an interest in any ML’s.(b) Mining Lease Application (“MLA”)A MLA does not constitute a lease while the application is pending grant, however the applicanthas a statutory entitlement to certain rights. A grant may take a considerable amount of timedue to the Minister having to comply with the law relating to native title. This process isoutlined in section 4 and 5 of this report.The Company does not hold an interest in any MLA’s.(c) Exploration Licence (“EL”)An EL remains in force for 5 years from the date of grant with the possibility of renewal by theMinister in certain circumstances. An EL must not be granted in respect of an area which isgreater than 70 blocks, unless otherwise designated by the Minister. The holder of an EL isrequired to expend certain amounts upon exploration activities during the term with failure todo this leading to possible forfeiture of the licence.P R O S P E C T U SThe holder of an EL has, subject to the Mining Act, the right to apply for and to have granted aML over the land the subject of the EL. The holder of an EL must not transfer or assign an ELwithin the first 12 months of its grant, unless(i)(ii)the transfer or assignment of an EL receives prior approval from the Minister; orany agreement to transfer or assign an EL expressly provides that the agreement isconditional upon the Minister’s approval and consent.The Company has acquired an interest in the following EL’s:79EL 37/1010, EL 59/1618, EL 53/1440, EL 53/1494, EL 59/1545 and EL 38/2156.The agreements relating to the EL’s listed above are conditional upon the Minister’s approvaland consent. The above are set out in the Schedule and the Agreements.

SOLICITOR’S REPORT ON MINING TENEMENTS(d) Exploration Licence Application (“ELA”)If an ELA is successful the Minister will grant an EL to the applicant. An ELA gives the applicantno title to land or any exclusive rights relating to the land the subject of the application. Forthere to be a valid grant the procedures outlined in section 4 and 5 below must have beenfollowed. Once an EL has been granted it cannot be transferred during the first year of theterm of the license, unless:(i)(ii)the transfer or assignment of an EL receives prior approval from the Minister; orany agreement to transfer or assign an EL expressly provides that the agreement isconditional upon the Minister’s approval and consent.The Company has acquired an interest in the following ELA’s:ELA 04/2124, ELA 04/2125 and ELA 04/1993.The agreements relating to the ELA’s listed above are conditional upon the Minister’s approvaland consent. The above are set out in the Schedule and the Agreements.(e) Prospecting Licence (“PL”)A PL remains in force for 4 years and can be extended for a further 4 years. Pursuant to theMining Act the holder of a PL has a right to apply for and have granted a mining lease over anyof the land the subject of the PL, subject to the Mining Act and the conditions of the licence.The holder must make an application for conversion prior to the expiry of the PL.The Company does not hold an interest in any PL’s.(f)Prospecting License Application (“PLA”)If a PLA is successful then the Minster will grant a PL to the applicant. A PLA gives theapplicant no title to land or any exclusive rights relating to the land the subject of theapplication. For there to be a valid grant the native title procedures outlined in section 4 and5 below must have been followed.The Company does not hold an interest in any PLA’s.3. Aboriginal SitesThe Tenements are subject to the provisions of the Aboriginal and Torres Strait Islander HeritageProtection Act (1984) (Cth) (the “Commonwealth Heritage Act”). This Act contains provisionsdesigned to preserve and protect from injury or desecration areas and objects which are of particularsignificance to Aboriginal people in accordance with Aboriginal tradition. An area or object is foundto be desecrated if it is used or treated in a manner inconsistent with aboriginal tradition.80The Aboriginal Heritage Act 1972 Western Australia (“WA Heritage Act”) applies to all of the Tenementslocated in Western Australia and makes it an offence, inter alia, to alter or damage an Aboriginal siteor object on or under an Aboriginal site. An Aboriginal site is defined to include any sacred, ritual orceremonial site which is of importance and special significance to persons of Aboriginal descent.There is no requirement or need for an Aboriginal site to be registered in any public manner or,indeed, to be in any way acknowledged as an Aboriginal site for it to qualify as an Aboriginal site forthe purposes of the WA Heritage Act.The Company must ensure that any interference with such sites is in strict conformity with theprovisions of the Commonwealth Heritage Act and the WA Heritage Act.

SOLICITOR’S REPORT ON MINING TENEMENTS4. Native Title LegislationJudicial recognition of native title at common law occurred in Mabo -v- Queensland (No 2) (Mabo),a decision of the High Court of Australia on 3 June 1992. Generally native title rights to land willbe recognised where:(a) the claimants can establish that they have maintained a continuous connection with the landin accordance with their traditional laws and customs since British settlement in 1788; and(b) the native title rights have not been lawfully extinguished.The High Court held in Mabo that native title rights can be lawfully extinguished by certaingovernment legislation and executive actions which are not inconsistent with native title. In orderfor extinguishment to be lawful the extinguishment must comply with the obligations imposed bythe Racial Discrimination Act 1975 (Cth).After Mabo, considerable uncertainties existed about the validity of proprietary rights in Australia,including mining tenements. To address those uncertainties the Commonwealth Parliamentresponded by passing the Commonwealth Native Title Act 1993 (Cth) (“NTA”). The NTA commencedon January 1994 and was substantially amended in 1998 in response to the decision of the HighCourt in Wik v Queensland. The Wik case recognised that the granting of a pastoral lease did notnecessarily extinguish all native title rights, some of which could co-exist with the rights under apastoral lease. In summary the NTA:(a) provides for recognition and protection of native title;(b) sets up mechanisms for determining claims for native title such as the “right to negotiate”which allows native title claimants to be consulted in relation to certain mining and otherdevelopments;(c) make valid certain “past acts” which would otherwise be invalidated because of native title;(d) establish ways in which “future acts” (eg the granting of mining tenement applications andconverting exploration licences and prospecting licences to mining leases) affecting native titlemay proceed and how native title rights are protected, including rights to compensation; and(e) provides a process by which claims for native title and compensation can be determined.P R O S P E C T U SThe Western Australian Parliament passed its own legislation, the Land (Title and TraditionalUsage) Act 1993 (“WA Act”) prior to the Commonwealth Act. On 16 March 1995 the High Courtfound that the WA Act was invalid, which means that Western Australia must comply with theCommonwealth Act.The High Court decision of Ward v Western Australia and South Australia (2002) HCA 28 (8 August2002) established that where tenure such as a pastoral lease is granted, native title is extinguishedto the extent that it is inconsistent with the rights conferred by the pastoral lease.5. Native Title Claims81Persons claiming to hold native title may lodge an application for determination of native title withthe Federal Court. Once a native title claim has been lodged, the Court will refer the applicationto the Native Title Registrar. The Native Title Registrar must determine whether the claim meetscertain conditions concerning the merits of the claim, and certain procedural and otherrequirements set out by the NTA.

SOLICITOR’S REPORT ON MINING TENEMENTSIf the Native Title Registrar is satisfied the lodged claim meets the registration requirements setout in the Commonwealth Act ("Registration Test”) it will be entered on the Register of Native TitleClaims maintained by the National Native Title Tribunal (“Register”). Claimants of registeredclaims are afforded certain procedural rights under the Commonwealth Act including the “rightto negotiate”.Claims which fail to meet the Registration Test are recorded on the Tribunal’s Schedule ofApplications Received. Such claims may be entered on the Register at a later date if additionalinformation is provided by the claimant that satisfies the Registration Test.Existing pastoral leases on land the subject of the Tenements extinguish the right of native titleclaimants to control the land, restrict access to the land and require permission for acts to be done.Where the Tenements relate to land which is currently the subject of a determined native titleclaim, the determination may provide that, in respect of the determination area there is no nativetitle right or interest in minerals as defined by the Mining Act.The Company’s Tenements are affected by various native title claims as described in the Scheduleand the Notes.We have not undertaken the considerable historical, anthropological and ethnographic work thatwould be required to determine the likelihood that the native title determination may bechallenged, or the possibility of any further claims being made in the future.6. Validity of the Tenements(a) Tenements granted since 23 December 1996Mining Tenements granted since 23 December 1996 which affect native title rights andinterests will be valid provided that the future act procedures set out in (b) below were followedby the relevant parties. We have not been instructed to analyse whether or not the relevantNTA procedures were followed in relation to each Tenement, but are not aware of any reasonwhy they would be regarded as not being validly granted.All of the granted Tenements were granted after 23 December 1996.(b) Future Tenement GrantsThe valid grant of any mining tenement which may affect native title requires full compliancewith the provisions of the NTA in addition to compliance with the usual procedures under therelevant State or Territory mining legislation. The primary procedure prescribed under theNTA is the “right to negotiate” process.82The right to negotiate process involves the publishing or advertising of a notice of the proposedgrant of a tenement followed by a 6 month period of negotiation between the State or TerritoryGovernment, the tenement applicant and the relevant registered native title claimant. Ifagreement is not reached to enable the grant to occur, the matter may be referred to arbitrationbefore the National Native Title Tribunal (“NNTT”), which has a further 6 months to reach adecision. The decision of the NNTT may be reviewed by the relevant Federal Minister.The right to negotiate process is not required to be followed in respect of a proposed futureact in instances where the expedited procedure applies. Under the NTA, a future act is an actattracting the expedited procedure if:

SOLICITOR’S REPORT ON MINING TENEMENTS(i) the act is not likely to interfere directly with the carrying on of the community or socialactivities of the persons who are the holders of native title in relation to the land; and(ii) the act is not likely to interfere with areas or sites of particular significance, in accordancewith their traditions, to the persons who are holders of the native title in relation to theland; and(iii) the act is not likely to involve major disturbance to any land or waters concerned or createrights whose exercise is likely to involve major disturbance to any land.When the proposed future act is considered to be one that attracts the expedited procedure,persons have until 3 months after the notification date to take steps to become a native titleparty in relation to the relevant act (for example the proposed granting of an explorationlicence). The future act may be done unless, within four months after the notification day, anative title party lodges an objection with the NNTT against the inclusion of a statement thatthe proposed future act is an act attracting the expedited procedure.If there are no objections lodged within the four month period, the act may be done. If one ormore native title parties object to the statement, the NNTT must determine whether the act isan act attracting the expedited procedure. If the NNTT determines that it is, the Territory maydo the future act (i.e. grant an exploration licence).Further, the right to negotiate process does not have to be pursued in cases where anindigenous land use agreement (“ILUA”) is negotiated with the relevant Aboriginal people andregistered with the NNTT. In such cases, the procedures prescribed by the ILUA must befollowed to obtain the valid grant of the tenement. These procedures will vary depending onthe terms of the ILUA.7. Renewals and Extensions of TenementsAs with the granting of mining tenements, renewals and extensions of mining tenements grantedprior to 1 January 1994, to the extent the renewals were invalid due to native title, have beenvalidated by legislation.Renewals of mining tenements granted between 1 January 1994 and 23 December 1996 have beensimilarly validated provided certain statutory criteria have been met.P R O S P E C T U SRenewals made after 23 December 1996 of tenements validly granted before that date will not besubject to the right to negotiate process provided:(a) the area to which the earlier right is made is not extended;(b) the term of the new right is not longer than the term of the earlier right; and(c) the rights to be created are not greater than the rights conferred by the earlier grant.There is doubt as to whether the right to negotiate process applies to second and subsequentrenewals but this matter is yet to be determined by the Courts.83Other than as stated above, renewals of mining tenements are subject to the same right tonegotiate process as is described in 6 (b) above.

SOLICITOR’S REPORT ON MINING TENEMENTS8. ComplianceThe Company’s interest in or rights in relation to the granted Tenements are subject to the holdercontinuing to comply with the respective terms and conditions of the granted Tenements underthe provisions of the Mining Act of Western Australia and regulations made pursuant to thatlegislation, together with the conditions specifically applicable to any granted mining tenement.The searches that we have carried out in relation to the Tenements do not reveal any failure tocomply with the conditions in respect of each of the granted mining tenements.9. QualificationsWhile the status of the Tenements is dealt with in detail in the Schedule and the Notes to theSchedule we point out by way of summary, that:(a) we have assumed that all searches conducted on our behalf by the departments are completeand accurate as at the time the searches were conducted;(b) we have assumed that all information or advice, whether oral or written provided to us by theCompany, its officers, employees, agents or representatives is accurate and complete;(c) in relation to each tenement application we express no opinion as to whether such tenementapplication will ultimately be granted, (including whether relevant Ministerial consent will beobtained) nor the conditions to which such tenement application may be granted or may notbe granted subject to; and(d) in relation to the native title determination outlined in this report we do not express an opinionon the merits of such determination.10. ConsentThis report is given solely for the benefit of the Company and the directors of the Company inconnection with the issue of the Prospectus and is not to be relied on or disclosed to any otherperson or used for any other purpose or quoted or referred to in any public document or filed withany government body or other person without our prior consent.Yours faithfullyPRICE SIERAKOWSKI84

SOLICITOR’S REPORT ON MINING TENEMENTSSCHEDULE OF MINING TENEMENTSTo be read in conjunction with the abbreviations and notes at the end of the Schedule.Status Tenement Project Registered Shares State Application Grant Date Expiry Area Expenditure Next Encum- NotesNo. and Name Holder or Held Date Date commitments Annual brancesType Applicant per Annum Rent (see notes)Live EL 37/1010 Bannockburn Fraka 100 WA 17/04/2009 14/04/2010 13/04/2015 8 BL $20,000.00 $908.00 See note 6 7Live EL 53/1440 Gidgee South Fraka 100 WA 04/11/2008 06/08/2009 05/08/2014 9 BL $20,000.00 $1,588.50 Nil 7Live EL 53/1494 Gidgee North Fraka 100 WA 31/07/2009 29/03/2010 28/03/2015 4 BL $15,000.00 $454.00 Nil 7Live EL 59/1545 Pinyalling Fraka 100 WA 05/09/2008 17/05/2010 16/05/2015 13 BL $20,000.00 $1,475.50 Nil 1, 2, 7Live EL 59/1618 Pinyalling Fraka 100 WA 17/08/2009 08/08/2011 07/08/2016 10 BL $20,000.00 $1,135.00 Nil 1, 2, 7Live EL 38/2156 Laverton State 100 WA 22/04/2008 19/04/2010 18/04/2015 13 BL $20,000.00 $1,475.50 N/A 8Pending ELA 04/1993 Canning Basin State 100 WA 17/11/2009 N/A N/A 89 BL N/A N/A N/A 3, 5, 9Pending ELA 04/2124 Canning Basin State 100 WA 05/05/2011 N/A N/A 50 BL N/A N/A N/A 3, 4, 5, 10Pending ELA 04/2125 Canning Basin State 100 WA 05/05/2011 N/A N/A 4 BL N/A N/A N/A 10Definitions:Fraka: Fraka Investments Pty LtdState: State Resources Pty LtdP R O S P E C T U S85

SOLICITOR’S REPORT ON MINING TENEMENTSNotes1. Application Name: Badimia PeopleTribunal Number:WC96/98Federal Court Number:WAD6123/98Date Registered: 4 October 1996Claim Status:RegisteredCurrent Status:ActiveNotification Status:CompleteIn Mediation:NoTenements Affected: EL 59/1545 and EL 59/16182. Application Name: Widi MobTribunal Number:WC97/72Federal Court Number:WAD6193/98Application Date: 26 August 1997Claim Status:Not accepted for registrationCurrent Status:Not accepted for registrationNotification Status:CompleteIn Mediation:NoTenements Affected: EL 59/1545 and EL 59/16183. Application Name: Nyikina and MangalaTribunal Number:WC99/025Federal Court Number:WAD6099/98Application Date: 21 September 1999Claim Status:RegisteredCurrent Status:ActiveNotification Status:CompleteIn Mediation:YesTenements Affected: ELA 04/1993 and ELA 04/21244. Application Name: NoonkanbahTribunal Number:WC98/009Federal Court Number:WAD6229/98Application Date: 3 March 1998Claim Status: Determined 27 April 2007Current Status:Finalised – Full Approved DeterminationNotification Status:CompleteTenements Affected: ELA 04/2124865. ILUA Name: SDWK Nyikina and MangalaILUA Type:Area AgreementTribunal Number:WI2005/01Status:RegisteredRegistration Date: 19 November 2008Tenements Affected: ELA 04/1993 and ELA 04/2124

SOLICITOR’S REPORT ON MINING TENEMENTS6. Gas Pipeline Easement:Tenement EL37/1010 is subject to a Gas Pipeline and easement which is owned and operated byAPA Group (an Australia wide owner and operator of high pressure gas pipelines). Mining activitynear the gas pipelines poses significant risk to the safety of people and property in the vicinity. Aspart of the conditions on this tenement, written consent from the APA Group is required before thefollowing are undertaken:• Conducting any works within 25m of the pipeline alignment;• Crossing the pipeline with vehicles/machinery with a group axle load greater than 6 tonnes (evenif the crossing is marked for heavy vehicles);• Blasting within 150m of the gas pipeline;• Causing any vibration greater than 20mm/s directly over the gas pipeline and its easement; and• Installation of high voltage power lines crossing the pipeline or parallel to the pipeline within 50m.7. Tenement Sale Agreement: Gidgee, Bannockburn and Pinyalling ProjectsThe Company has entered into a Tenement Sale Agreement with Fraka Investments Pty Ltd topurchase the tenements identified as EL37/2010, EL53/1440, EL53/1494, EL59/1545 andEL59/1618. Refer to the Material Contracts Section of the Prospectus at paragraph 9.3.1.1 for thematerial terms of this agreement.8. Tenement Acquisition Agreement: Laverton ProjectThe Company has entered into a Tenement Acquisition Agreement with State Resources Pty Ltdto purchase the tenement identified as EL38/2156. Refer to the Material Contracts Section of theProspectus at paragraph 9.3.1.2 for the material terms of this agreement.9. Option Agreement: Canning Basin ProjectThe Company has entered into an Option Agreement with State Resources Pty Ltd to earn an initial60% interest in tenement identified as ELA04/1993, and, subject to the terms and conditionscontained in the agreement, the option to earn an additional 20% interest (i.e., up to 80%). Referto the Material Contracts Section of the Prospectus at paragraph 9.3.2.1 for the material terms ofthis agreement.10. Tenement Acquisition Agreement and Power of Attorney: Canning Basin ProjectP R O S P E C T U SThe Company has entered into an Tenement Acquisition Agreement with State Resources Pty Ltdto purchase the tenements identified as ELA04/2124 and ELA04/2125. State Resources Pty Ltdhas also granted the Company a limited power of attorney in respect of these tenements. Referto the Material Contracts Section of the Prospectus at paragraphs 9.3.2.2 and 9.3.2.3 respectivelyfor the material terms of these agreements.87

SECTION 9: ADDITIONAL INFORMATION9.1 Rights Attaching to Securities9.1.1 Ordinary SharesThe rights, privileges and restrictions attaching to Shares can be summarised as follows:(a)General MeetingsShareholders are entitled to be present in person, or by proxy, attorney or representative to attendand vote at general meetings of the Company.Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act2001 and the Constitution of the Company.(b)Voting RightsSubject to any rights or restrictions for the time being attached to any class or classes of shares,at general meetings of shareholders or classes of shareholders:(i) each shareholder entitled to vote may vote in person or by proxy, attorney or representative;(ii) on a show of hands, every person present who is a shareholder or a proxy, attorney orrepresentative of a shareholder has one vote; and(iii) on a poll, every person present who is a shareholder or a proxy, attorney or representative ofa shareholder shall, in respect of each fully paid share held by him, or in respect of which heis appointed a proxy, attorney or representative, have one vote for the share, but in respect ofpartly paid shares shall have such number of votes as bears the same proportion to the totalof such shares registered in the shareholder’s name as the amount paid (not credited) bearsto the total amounts paid and payable (excluding amounts credited).(c)Dividend RightsSubject to the rights of persons (if any) entitled to shares with special rights to dividend theDirectors may declare a final dividend out of profits in accordance with the Corporations Act andmay authorise the payment or crediting by the Company to the shareholders of such a dividend.The Directors may authorise the payment or crediting by the Company to the shareholders of suchinterim dividends as appear to the Directors to be justified by the profits of the Company. Subjectto the rights of persons (if any) entitled to shares with special rights as to dividend all dividendsare to be declared and paid according to the amounts paid or credited as paid on the shares inrespect of which the dividend is paid. Interest may not be paid by the Company in respect of anydividend, whether final or interim.(d)Winding-Up88If the Company is wound up, the liquidator may, with the authority of a special resolution of theCompany, divide among the shareholders in kind the whole or any part of the property of the Company,and may for that purpose set such value as he considers fair upon any property to be so divided, andmay determine how the division is to be carried out as between the shareholders or different classesof shareholders. The liquidator may, with the authority of a special resolution of the Company, vestthe whole or any part of any such property in trustees upon such trusts for the benefit of thecontributories as the liquidator thinks fit, but so that no shareholder is compelled to accept any sharesor other securities in respect of which there is any liability. Where an order is made for the winding upof the Company or it is resolved by special resolution to wind up the Company, then on a distribution ofassets to members, any shares classified as restricted securities at the time of the commencement ofthe winding up shall rank in priority after all other shares.

ADDITIONAL INFORMATION(e)Transfer of SharesGenerally, shares in the Company are freely transferable, subject to formal requirements, theregistration of the transfer not resulting in a contravention of or failure to observe the provisionsof a law of Australia and the transfer not being in breach of the Corporations Act.(f)Variation of RightsPursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a specialresolution passed at a meeting of shareholders vary or abrogate the rights attaching to shares.If at any time the share capital is divided into different classes of shares, the rights attached toany class (unless otherwise provided by the terms of issue of the shares of that class), whether ornot the Company is being wound up may be varied or abrogated with the consent in writing of theholders of three-quarters of the issued shares of that class, or if authorised by a special resolutionpassed at a separate meeting of the holders of the shares of that class9.1.2 Options exercisable at $0.25 on or before 7 June 2016 (“$0.25 Options”)A summary of the terms and conditions of the $0.25 Options on issue as at the date of thisProspectus is as follows:1. Each Option entitles the holder to acquire one fully paid ordinary share in the Company.2. The Options may be exercised at any time until 7 June 2016. Each Option may be exercised byforwarding to the Company at its principal office the exercise notice, duly completed together withpayment of the sum of twenty five cents ($0.25) per Option exercised. Any Options not exercisedby 7.00pm EST on 7 June 2016 will lapse.3. The Options may be transferred by an instrument (duly stamped where necessary) in the formcommonly used for transfer of Options at any time until 7 June 2016. This right is subject to anyrestrictions on the transfer of an Option that may be imposed by the ASX in circumstances wherethe Company is listed on the ASX.4. Option holders shall be permitted to participate in new issues of securities on the prior exerciseof options in which case the Option holders shall be afforded the period of at least nine (9) businessdays prior to and inclusive of the record date (to determine entitlements to the issue) to exercisethe Option.P R O S P E C T U S5. Shares issued on the exercise of Options will be issued not more than fourteen (14) days afterreceipt of a properly executed exercise notice and application moneys. Shares allotted pursuantto the exercise of an Option will rank equally with the then issued ordinary shares of the Companyin all respects. If the Company is listed on the ASX it will, pursuant to the exercise of an Option,apply to the ASX for Quotation of the Shares issued as a result of the exercise, in accordance withthe Corporations Act and the Listing Rules.6. In the event of any reconstruction (including consolidation, sub-division, reduction or return) ofthe issued capital of the Company, all rights of the option holder will be changed to the extentnecessary to comply with the Listing Rules applying to the reconstruction of capital at the time ofthe reconstruction.897. If there is a bonus issue to shareholders, the number of shares over which the Option is exercisablemay be increased by the number of shares which the holder of the Option would have received ifthe Option had been exercised before the record date for the bonus issue.

ADDITIONAL INFORMATION8. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlyingsecurities in the Company, the exercise price of the Options may be reduced in accordance withListing Rule 6.22.9.1.3 Options exercisable at $0.35 on or before 7 June 2016 (“$0.35 Options”)A summary of the terms and conditions of the $0.35 Options on issue as at the date of this prospectusis as follows:1. Each Option entitles the holder to acquire one fully paid ordinary share in the Company.2. The Options may be exercised at any time until 7 June 2016. Each Option may be exercised byforwarding to the Company at its principal office the exercise notice, duly completed together withpayment of the sum of thirty five cents ($0.35) per Option exercised. Any Options not exercised by7.00pm EST on 7 June 2016 will lapse.3. The Options may be transferred by an instrument (duly stamped where necessary) in the formcommonly used for transfer of Options at any time until 7 June 2016. This right is subject to anyrestrictions on the transfer of an Option that may be imposed by the ASX in circumstances wherethe Company is listed on the ASX.4. Option holders shall be permitted to participate in new issues of securities on the prior exerciseof options in which case the Option holders shall be afforded the period of at least nine (9) businessdays prior to and inclusive of the record date (to determine entitlements to the issue) to exercisethe Option.5. Shares issued on the exercise of Options will be issued not more than fourteen (14) days afterreceipt of a properly executed exercise notice and application moneys. Shares allotted pursuantto the exercise of an Option will rank equally with the then issued ordinary shares of the Companyin all respects. If the Company is listed on the ASX it will, pursuant to the exercise of an Option,apply to the ASX for Quotation of the Shares issued as a result of the exercise, in accordance withthe Corporations Act and the Listing Rules.6. In the event of any reconstruction (including consolidation, sub-division, reduction or return) ofthe issued capital of the Company, all rights of the option holder will be changed to the extentnecessary to comply with the Listing Rules applying to the reconstruction of capital at the time ofthe reconstruction.7. If there is a bonus issue to shareholders, the number of shares over which the Option is exercisablemay be increased by the number of shares which the holder of the Option would have received ifthe Option had been exercised before the record date for the bonus issue.908. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlyingsecurities in the Company, the exercise price of the Options may be reduced in accordance withListing Rule 6.22..9.2 Employee incentive schemeAs an incentive to employees of Stratum Metals, the Company has adopted a scheme called the StratumMetals Employee Incentive Scheme (Scheme). At the date of this Prospectus, no options have beengranted pursuant to this Scheme.The purpose of the Scheme is to give employees, directors, executive officers and consultants of theCompany an opportunity, in the form of options, to subscribe for ordinary shares in the Company. The

ADDITIONAL INFORMATIONDirectors consider the Scheme will enable the Company to retain and attract skilled and experiencedemployees, board members and executive officers and provide them with the motivation to make theCompany more successful.Brief Overview of the SchemeA summary of the Terms and Conditions of the Scheme is set out below:Participants in the SchemeThe Board may offer free options to persons (“Eligible Persons”) who are:• Full-time or part-time employees; or• DirectorsUpon receipt of such an Offer, the Eligible Person may nominate an associate acceptable to the Boardto be issued with the options.Terms of OptionsThere is no issue price for the options. The exercise price for the options will be:• 125% of the market value of the Company’s shares on the date on which the options are issued;• $0.20; or• any greater price determined by the Board,whichever is the greatest.Shares issued on exercise of options will rank equally with other ordinary shares of the Company.Options may not be transferred without the approval of the Board. Quotation of options on the ASX willnot be sought. However, in the event that the Company is listed on the ASX, it will apply to the ASX forofficial quotation of shares issued on the exercise of options.P R O S P E C T U SRestrictions on Issues and Exercise of OptionsThe Board may not offer options under the Scheme if the total number of shares which would be issuedwere each option accepted, together with the number of shares in the same class or options to acquiresuch shares issued pursuant to all employee or executive share schemes during the previous five years,exceeds 5% of the total number of issued shares in that class as at the date of the offer.Options may only be issued or exercised within the limitations imposed by the Corporations Law andthe ASX Listing Rules.91

ADDITIONAL INFORMATIONExercise of OptionsOptions may be exercised at any time between 2 and 5 years after the date of grant of the options.If an Eligible Person leaves the employment of the group:i. 2 years or more after options are issued; orii. because of retirement at or after 55 years of age, disablement, retrenchment, death or any othercircumstances approved by the Board,the options may be exercised within 30 days (or 3 months in the case of death), or any longer periodpermitted by the Board. If not exercised in that time, the options lapse.If an Eligible Person leaves the employment of the group earlier than 2 years after options are issuedand (ii) above does not apply, the options lapse.If an Eligible Person acts fraudulently, dishonestly or in breach of obligations to the Company or anysubsidiary then, at the Board’s discretion, options issued to that person will lapse.Unexercised options will automatically lapse five years after they are issued.Participation in Future IssuesThe holders of options will only participate in new issues, including bonus issues, if they have exercisedthe options at that time and provided such exercise is permitted by the terms of the option.If there is a bonus issue to shareholders, the number of shares over which the option is exercisablemay be increased by the number of shares which the holder of the option would have received if theoption had been exercised before the record date for the bonus issue.In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlyingsecurities in the Company, the exercise price of the options may be reduced in accordance with ListingRule 6.22.Capital ReconstructionIn the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issuedcapital of the Company, all rights of the option holder will be changed to the extent necessary to complywith the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction.9.3 SUMMARY OF MATERIAL CONTRACTSSet out below is a summary of the contracts to which the Company is a party that may be material orotherwise may be relevant to a potential investor in the Company.92The whole of the provisions of the agreements below are not repeated in this Prospectus and anyintending Applicant who wishes to gain a full knowledge of the content of the agreements should inspectthe same at the registered office of the Company.

ADDITIONAL INFORMATION9.3.1 Yilgarn Projects9.3.1.1 Tenement Sale Agreement: Gidgee, Bannockburn and Pinyalling ProjectsThe Company entered into a Tenement Sale Agreement (“Agreement”) dated 15 February 2011 topurchase exploration licences E37/1010, E53/1440, E53/1494, E59/1545 and E59/1618 from FrakaInvestments Pty Ltd (“Fraka”).Fraka reserves the right to explore and mine iron ore on the Pinyalling Project (exploration licencesE59/1545 and E59/1618). The Company agrees to ensure E59/1545 and E59/1618 are authorised foriron ore under the Mining Act 1978 (WA).The consideration payable is:(a)(b)(c)$10,000 payable to Fraka upon execution of the Agreement;$110,000 payable to Fraka upon completion of the Fraka Agreement; and900,000 fully paid ordinary shares in the Company at an issue price of $0.20 each transferableupon completion of the Fraka Agreement.Completion of the Fraka Agreement is conditional upon and subject to the Company being grantedapproval to be listed on the Official List of the ASX on or before 30 November 2011 and alsothe grant of all necessary consents and approvals pursuant to the Mining Act 1978 (WA) and otherrelevant legislation.The Agreement also contains additional provisions which are considered standard in an agreement ofthis type.9.3.1.2 Tenement Acquisition Agreement: Laverton ProjectThe Company entered into a Tenement Acquisition Agreement (“Agreement”) dated 9 May 2011 toacquire the exploration licence E38/2156 from State Resources Pty Ltd.The consideration payable is:(a)$5,000 payable within 5 days of execution of the Agreement;P R O S P E C T U S(b)(c)(d)1,000,000 fully paid ordinary shares in the Company at a deemed issue price of $0.0001 each;$20,000 payable upon satisfaction of the conditions below; and200,000 shares to be issued at a deemed issue price of $0.10 each transferable upon satisfactionof the conditions below.The Agreement is conditional upon and subject to the grant of all necessary consents and approvalspursuant to the Mining Act 1978 (WA) and other relevant legislation.The parties agree that if the necessary approvals above are not obtained by 1 April 2012, or such otherdate as may be agreed in writing by the parties, the Agreement shall be at an end.93The Agreement also contains additional provisions, including warranties, which are considered standardin an agreement of this type.

ADDITIONAL INFORMATION9.3.2 Canning Basin Projects9.3.2.1 Option AgreementThe Company entered into an Option Agreement (“Agreement”) with State Resources Pty Ltd dated 19May 2011 for the option to explore and earn a 60% interest (“First Option”) in exploration licenceapplication E04/1993. Subsequent to the terms and conditions described below, the Agreement alsoallows for the Company to earn an additional 20% interest, such that the Company’s total interest inE04/1993 will be 80% (“Second Option”). State Resources Pty Ltd is currently the sole registeredapplicant of the area encompassed by E04/1993. The Agreement is to be formalised by way of Farm-inand Joint Venture Agreements within 6 months of the date on which the below conditions are satisfied.The Agreement is conditional upon and subject to the following:(a)the grant of E04/1993 to State Resources Pty Ltd;(b) consent obtained by the Company from the traditional landowners to access and explore E04/1993by way of an exploration deed; and(c)the grant of all necessary consents and approvals pursuant to the Mining Act 1978 (WA) and otherrelevant legislation.Subject to the Company demonstrating to State Resources Pty Ltd that it has made a reasonable effortto gain access to E04/1993, if the above conditions are not satisfied within 12 months from thecommencement of the Agreement, the Company may elect to extend the period for satisfaction of theabove conditions by a further 12 months.The initial consideration payable is as follows:(a) $5,000 payable to State Resources Pty Ltd within 10 business days of the execution of theAgreement; and(b)$20,000 payable to State Resources upon the grant of E04/1993.The Agreement provides that State Resources Pty Ltd will grant the First Option (60%) upon theCompany spending a minimum expenditure of $250,000 (excluding tenement maintenance expenditure)within the 2 year period commencing on the date of the satisfaction of the conditions listed above (“FirstOption Period”).The Agreement also provides that State Resources Pty Ltd will grant the Second Option (20%) providedthat the Company:(a)(b)pay a further consideration payment of $50,000 prior to the expiration of the First Option Period;andspend a minimum expenditure of $750,000 (excluding tenement maintenance expenditure) withinthe 2 year period commencing on the expiration of the First Option Period.94The Agreement also contains additional provisions, including warranties, liabilities and indemnitieswhich are considered standard in an agreement of this type.

ADDITIONAL INFORMATION9.3.2.2 Tenement Acquisition AgreementThe Company entered into a Tenement Acquisition Agreement (“Agreement”) with State Resources PtyLtd dated 15 July 2011 to acquire exploration licence applications E04/2124 and E04/2125 (“CanningBasin ELAs”). State Resources Pty Ltd is currently the sole registered applicant of the areaencompassed by the Canning Basin ELAs.The Agreement is conditional upon and subject to the following:(a)(b)the grant of the Canning Basin ELAs to State Resources Pty Ltd; andthe grant of all necessary consents and approvals pursuant to the Mining Act 1978 (WA) and otherrelevant legislation.Additionally, in the event that the Minister for Mines and Petroleum grants one of the Canning BasinELAs, but does not grant the other exploration licence application, the Company must purchase thegranted exploration licence application in accordance with the terms of the Agreement.The consideration payable to State Resources Pty Ltd under the Agreement is reimbursement by theCompany of all expenses directly incurred by State Resources Pty Ltd in relation to the Canning Basin ELAs.The Agreement also contains additional provisions, including warranties, liabilities and indemnities whichare considered standard in an agreement of this type.9.3.2.3 Limited Power of Attorney: Canning Basin ELAsThe Company entered into a Limited Power of Attorney (“Power of Attorney”) with State Resources PtyLtd dated 2 August 2011. The Power of Attorney appoints the Company as the attorney of State ResourcesPty Ltd for the purpose of enabling the Company to progress the applications for exploration licenceapplications E04/2124 and E04/2125 (“Canning Basin ELAs”). State Resources Pty Ltd is currently thesole registered applicant of the area encompassed by the Canning Basin ELAs.In respect of the Canning Basin ELAs, the Power of Attorney authorises the Company to do all or any ofthe following:(a)represent State Resources Pty Ltd in any correspondence or meetings with the Western AustralianDepartment of Mines and Petroleum (“Department”) or the holders of native title of the land thesubject of the Canning Basin ELAs (“Native Title Holders”), including obtaining documents andinformation, and providing any undertaking or entering into any agreements required by theDepartment or Native Title Holders; andP R O S P E C T U S(b)do all things necessary to:(i) progress the applications for the Canning Basin ELAs;(ii) secure their grant as tenements in accordance with the Mining Act 1978 (WA) (“the Act”); and(iii) maintain the Canning Basin ELAs in accordance with the requirements of the Act.Additionally, the Power of Attorney provides that all costs and expenses incurred by the Company,including liabilities arising in relation to the Canning Basin ELAs and any exercise of power by theCompany, shall be payable in full by the Company. State Resources Pty Ltd has no liability in respectof the Canning Basin ELAs.95The Power of Attorney also contains additional provisions which are considered standard in anagreement of this type.

ADDITIONAL INFORMATION9.3.3 Service Agreements with Directors9.3.3.1 Executive Services Agreement: Holland International Pty Limited and Martin HollandThe Company entered into an executive services agreement with Holland International Pty Limited andMartin Holland dated 27 June 2011 (“Holland Agreement”), pursuant to which Martin Holland willperform the role of Managing Director of the Company.The Holland Agreement is for an initial term of employment for 3 years commencing on the date thatthe Company lists on the ASX with the option to extend for a further 3 years. The Company cannotterminate the Holland Agreement within the first 3 years without reason.Mr Holland’s specific duties as Managing Director under the Holland Agreement (in addition to thegeneral fiduciary duties associated with being a director) are to:(a)(b)(c)manage the business of the Company, including, without limitation, implementing strategic andtactical plans, managing operational functions to achieve the Company’s goals and outcomes andensuring the proper implementation of the Company’s policies, procedures and systems;advise the Board in relation to all relevant issues affecting the Company and its performance,including, without limitation, relevant corporate governance issues; andformulate strategies to promote and improve the financial performance of the Company anddevelop new opportunities and expanding the Company’s current activities and market share.Mr Holland’s remuneration under the Agreement comprises of a salary of $180,000 per year inclusiveof statutory superannuation.The Holland Agreement also contains additional provisions which are considered standard in anagreement of this type.9.3.3.2 Non-executive Director Agreement – Richard AnthonRichard Anthon is engaged as a non-executive director of the Company pursuant to a Letter ofAppointment executed on 19 June 2011 (“Anthon Agreement”).Mr Anthon’s duties (in addition to the general fiduciary duties associated with being a director) underthe Anthon Agreement are to:(a)(b)attend board meetings and undertake additional enquiries in relation to the Company’s financialand operational performance; andperform services as required by the Company with skill, proper purpose, due diligence and care.Mr Anthon’s remuneration comprises of a salary of $60,000 per annum inclusive of statutorysuperannuation payable to Nambia Pty Ltd.96The Anthon Agreement also contains additional provisions which are considered standard in anagreement of this type.

ADDITIONAL INFORMATION9.3.3.3 Non-executive Director Agreement – Michael AddisonMichael Addison is engaged as a non-executive director of the Company pursuant to a Letter ofAppointment dated 31 May 2011 (“Addison Agreement”).Mr Addison’s duties (in addition to the general fiduciary duties associated with being a director) underthe Addison Agreement are to:(a)(b)attend board meetings and undertake additional enquiries in relation to the Company’s financialand operational performance; andperform services as required by the Company with skill, proper purpose, due diligence and care.Mr Addison’s remuneration comprises of a salary of $45,000 per annum inclusive of statutorysuperannuation.The Addison Agreement also contains additional provisions which are considered standard in anagreement of this type.9.3.3.4 Non-executive Director Agreement – Kent HunterKent Hunter is engaged as a non-executive director of the Company pursuant to a Letter of Appointmentdated 31 May 2011 (“Hunter Agreement”).Mr Hunter’s duties (in addition to the general fiduciary duties associated with being a director) underthe Hunter Agreement are to:(a)(b)attend board meetings and undertake additional enquiries in relation to the Company’s financialand operational performance; andperform services as required by the Company with skill, proper purpose, due diligence and care.Mr Hunter’s remuneration comprises of a salary of $45,000 per annum inclusive of statutorysuperannuation.The Hunter Agreement also contains additional provisions which are considered standard in anagreement of this type.P R O S P E C T U S9.3.4 Mandate Letter: E.L & C. Baillieu Stockbroking LtdPursuant to a mandate letter (“Mandate”) dated 2 August 2011 the Company has engaged E.L & C.Baillieu Stockbroking Pty Ltd (“Baillieu”) as Lead Manager. Baillieu will assist the Company by seekingto obtain subscriptions.The fees payable to Baillieu under the Mandate comprise of:a) a management fee of $85,000; andb) a selling fee of $150 per investor introduced to the Company by Baillieu or 3% of the amount raisedthrough investors introduced by Baillieu, whichever is the greater, on subscriptions of a minimumof $2,000 and a maximum of $10,000.97Additionally, the Company must reimburse Baillieu for all reasonable out-of-pocket expenses.

ADDITIONAL INFORMATION9.4 Interests of Directors of the CompanyExcept as disclosed in this Prospectus, no director holds, or during the last two years has held anyinterest in:(a)(b)(c)the formation or promotion of Stratum Metals;property acquired or proposed to be acquired by Stratum Metals in connection with its formationor promotion of the Offer; orthe Offer,and no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to bepaid to any Director to induce him to become or to qualify as a Director or otherwise for servicesrendered by him in connection with the formation or promotion of the Company or the offer of Sharesunder this Prospectus.Directors’ ShareholdingsThe Directors are not required under the Constitution to hold any shares.At the date of this Prospectus the relevant interests of each of the Directors in the Shares of theCompany is as follows:Director No. of Shares No. $0.25 Options No. $0.35 OptionsRichard Anthon 450,000 750,000 750,000Martin Holland 3,150,001 750,000 750,000Michael Addison 300,000 750,000 750,000Kent Hunter 1,000,001 750,000 750,000Notes:Nothing in this Prospectus will be taken to preclude Directors, officers or employees of Stratum Metalsfrom applying for Shares pursuant to this Prospectus.Directors’ RemunerationThe Constitution provides that the remuneration of non-executive Directors will be not more than theaggregate fixed sum determined by a general meeting. The aggregate remuneration for non-executiveDirectors has been set at an amount not to exceed $250,000 per annum.The remuneration of executive Directors will be fixed by the Directors and may be paid by way of fixedsalary or consultancy fee.98

ADDITIONAL INFORMATIONThe annual remuneration (inclusive of superannuation) payable to each of the Directors as the date ofthis Prospectus is as follows:DirectorAnnual RemunerationRichard Anthon $60,000Martin Holland $180,000Michael Addison $45,000Kent Hunter $45,000Mining Corporate, a Company in which Mr Hunter has a beneficial interest and is a Director, will receiveprofessional fees of approximately $40,000 plus GST for corporate advisory work undertaken in connectionwith this Prospectus. Mining Corporate will also receive fees based on normal commercial terms after listingon the ASX for company secretarial and corporate consulting services provided to the Company payable athourly rates. Stratum Metals’ Company Secretary, Mrs Elizabeth Hunt, is an employee of Mining Corporate.Deeds of Indemnity and AccessThe Company has entered into deeds of indemnity, insurance and access with each of its appointedDirectors. Under those deeds, the Company has agreed to indemnify each Director to the extentpermissible by the Corporations Act against any liability arising as a result of that Director acting inthe capacity as an officer of the Company.9.5 Interests of Persons NamedOther than as set out below or elsewhere in this Prospectus, no person named in this Prospectus asperforming a function in a professional, advisory or other capacity in connection with the preparationor distribution of this Prospectus has, or has had within the two years before lodgement of thisProspectus with the ASIC, any interest in:(a)(b)(c)the formation or promotion of Stratum Metals;property acquired or proposed to be acquired by Stratum Metals in connection with its formationor promotion of the Offer; orthe Offer,P R O S P E C T U Sand no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be givento any of those persons for services rendered by them in connection with the formation or promotion of theCompany or the offer of Shares pursuant to this Prospectus.Mr Greg Miles has acted as the Independent Geologist and has prepared an Independent Geologist’s Reportwhich has been included in Section 6 of this Prospectus. The Company estimates that it will pay Greg Milesapproximately $19,000 plus GST for the provision of these services. During the 24 months precedinglodgement of this Prospectus with the ASIC, Mr Greg Miles has not received any other fees from the Company.Bentleys Audit & Corporate (WA) Pty Ltd has acted as auditor and Investigating Accountant and has preparedan Investigating Accountant’s Report which has been included in Section 7 of this Prospectus. The Companyestimates that it will pay Bentleys approximately $8,000 plus GST for the provision of these services.Subsequent fees will be charged in accordance with normal charge out rates. During the 24 months precedinglodgement of this Prospectus with the ASIC, Bentleys has not received any other fees from the Company.99Price Sierakowski has prepared a Solicitor’s Report on Tenements which has been included in Section 8 ofthis Prospectus. The Company estimates that it will pay Price Sierakowski approximately $25,000 plus GST

ADDITIONAL INFORMATIONfor the Solicitors Report on Tenements and for other services. Subsequent fees will be charged in accordancewith normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC,Price Sierakowski has not received any other fees from the Company.Mining Corporate has acted as IPO Compliance Manager in relation to the Offer and this Prospectus. TheCompany estimates that it will pay Mining Corporate approximately $40,000 plus GST for the provision ofthese services. During the 24 months preceding lodgement of this Prospectus with the ASIC, MiningCorporate Pty Ltd has received a progress payment of $10,000 plus GST in relation to the IPO managementfee from the Company.E.L & C. Baillieu Stockbroking Pty Ltd has been engaged as Lead Manager to the Offer. During the 24 monthspreceding lodgement of this Prospectus with the ASIC, Baillieu has not received any other fees from theCompany. Any services provided by Baillieu in addition to those set out in Section 9.3.4 will be paid for onnormal commercial terms.Advanced Share Registry Services has been appointed as Stratum Metals’ share registry and will be paid forthese services on normal commercial terms.9.6 ConsentsThe following persons have each consented to being named in the Prospectus and to the inclusion ofthe following statements and statements identified in this Prospectus as being based on statementsmade by those persons, in the form and context in which they are included, and have not withdrawnthat consent before lodgement of this Prospectus with the ASIC:• Mr Greg Miles – Independent Geologist’s Report;• Bentleys – Investigating Accountant’s Report; and• Price Sierakowski – Solicitor’s Report on Mining Tenements.To the maximum extent permitted by law, each of the persons referred to above expressly disclaimsand takes no responsibility for any part of this Prospectus other than the statements referred to aboveand the statements identified in this Prospectus as being based on statements made by those persons.The following persons have consented to being named in this Prospectus but have not made anystatements that are included in this Prospectus or statements identified in this Prospectus as beingbased on any statements made by those persons, and have not withdrawn their consent beforelodgement of this Prospectus with ASIC:• Price Sierakowski for the Solicitor’s Report on Tenements;• Bentleys as auditors of Stratum Metals;• Advanced Share Registry Services as Share Registrar;100• Mining Corporate as IPO Compliance Managers to Stratum Metals; and• E.L. & C. Baillieu as Lead Manager to the Offer.To the maximum extent permitted by law, each of the persons referred to above expressly disclaimsand takes no responsibility for any part of this Prospectus other than the references to their name.

ADDITIONAL INFORMATION9.7 Top 20 ShareholdersAs at the date of this Prosectus the top 20 shareholders as:HolderShares1 Holland International Pty Limited 3,100,0002 Ross Maxwell Daisley & Marietta Louise Daisley 3,000,0003 Mr David Fraser 3,000,0004 State Resources Pty Ltd 1,200,0005 Kouta Bay Pty Ltd 1,000,0006 Jonca Investments Pty Ltd 800,0007 Orca Trading GMBH 550,0008 HSBC Custodian Nominees Australia 500,0009 Cotsbuoy Pty Limited 500,00010 Mcneil Nominess Pty Limited 500,00011 Nambia Pty Limited 450,00012 Strategic Development Partners (Aust) Pty Ltd 450,00013 Mr John Daniel Moore 400,00014 Katie Anne McMahon 300,00015 Mr John Mottram + Mrs Barbara Mottram 300,00016 Metal Bank Limited 250,00017 Mike Pelly 250,00018 Mr Matthew James Norman 250,00019 Peter Osward Buttery & Dr. Tanya Karen Buttery 250,00020 Julius Garofali 230,0009.8 Expenses of the OfferThe total expenses of the Offer are estimated to be $400,500 and are expected to be applied towardsthe items set out in the table below:Item of Expenditure $ASIC & ASX Fees 29,739Broker Commission and management fee 235,000Compliance Manager Fee 40,000Investigating Accountant Report 8,000Legal 25,000Independent Geologist Report 19,000Printing and typesetting 20,000Miscellaneous 23,761TOTAL 400,500P R O S P E C T U S101

ADDITIONAL INFORMATION9.9 TaxationThe acquisition and disposal of Shares in Stratum Metals will have tax consequences, which will differdepending on the individual financial affairs of each investor. All potential investors in Stratum Metals areurged to obtain independent financial advice about the consequences of acquiring Shares from a taxationviewpoint and generally.To the maximum extent permitted by law, Stratum Metals, its officers and each of their respective advisorsaccept no liability or responsibility with respect to the taxation consequences of subscribing for Sharespursuant to this Prospectus.9.10 Exposure PeriodThis Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is toenable this Prospectus to be examined by market participants prior to the raising of funds. Potential investorsshould be aware that this examination may result in the identification of deficiencies in the Prospectus and,in those circumstances, any Application that has been received may need to be dealt with in accordance withSection 724 of the Corporations Act 2001. Applications for Shares pursuant to this Prospectus will not beaccepted by the Company until after the expiry of the Exposure Period. No preference will be conferred onpersons who lodge Applications prior to the expiry of the Exposure Period.9.11 LitigationOther than as disclosed elsewhere in this Prospectus, the Company is not involved in any material litigationor arbitration proceedings, nor, so far as the Directors are aware, are any such proceedings pending orthreatened against the Company.9.12 Electronic ProspectusPursuant to Class Order 00/044 the ASIC has exempted compliance with certain provisions of the CorporationsAct 2001 to allow distribution of an electronic prospectus and electronic application form on the basis of apaper prospectus lodged with ASIC, and the publication of notices referring to an electronic prospectus orelectronic application form, subject to compliance with certain conditions.If you have received this Prospectus as an electronic Prospectus, please ensure that you have received theentire Prospectus accompanied by the Application Form. If you have not, please email the Company atinfo@stratummetals.com.au and the Company will send you, for free, either a hard copy or a further electroniccopy of the Prospectus or both. Alternatively, you may obtain a copy of the Prospectus from the Company’swebsite at: www.stratummetals.com.auThe Company reserves the right not to accept an Application Form from a person if it has reason to believethat when that person was given access to the electronic Application Form, it was not provided together withthe electronic Prospectus and any relevant supplementary or replacement prospectus or any of thosedocuments were incomplete or altered.102

SECTION 10: GLOSSARYApplicant means a person who submits an Application.Application means a valid application to subscribe for Shares.Application Form means the application form attached to and forming part of this Prospectus.Application Monies means monies received by Stratum Metals from Applicants.ASIC means the Australian Securities and Investments Commission.ASX means ASX Limited (ACN 008 624 691) or the Australian Securities Exchange, as the contextrequires.ASX Settlement means ASX Settlement Pty Ltd (ACN 008 504 532).Auditors means Bentleys.Board means the board of Directors unless the context indicates otherwise.Business Day means a day other than a Saturday or Sunday on which banks are open for business inPerth, Western Australia.CHESS means ASX Clearing House Electronic Subregistry System.Closing Date means the date on which the Offer closes, being 14 October 2011.Company or Stratum Metals means Stratum Metals Limited (ACN 147 867 301).Corporations Act means the Corporations Act 2001 of Australia.Directors means the directors of the Company from time to time.Dollars or $ means Australian dollars unless otherwise stated.EST means Eastern Standard Time, Sydney, New South Wales.Exposure Period means the period of seven (7) days after the date of lodgement of this Prospectus,which period may be extended by the ASIC by not more than seven (7) days pursuant to Section 727(3)of the Corporations Act 2001.Fraka Investments means Fraka Investments Pty Ltd.Glossary means this glossary.Investigating Accountant means Bentleys.Investigating Accountant’s Report means the report contained in Section 7 of this Prospectus.Independent Geologist means Greg Miles.Independent Geologist’s Report means the report contained in Section 6 of this Prospectus.JORC Code means the Australasian Code for Reporting on Exploration Results, Mineral Resources andOre Reserves, 2004 Edition.Lead Manager means E.L. & C. Baillieu Stockbroking Ltd (AFSL 245421).Listing Rules means the official Listing Rules of the ASX.Mining Corporate means Mining Corporate Pty Ltd.Offer means the offer of 20,000,000 Shares at $0.20 pursuant to this Prospectus.Offer Period means the period commencing on the Opening Date and ending on the Closing Date.Official List means the Official List of the ASX.Opening Date means the date on which the Offer opens.Option means an option to acquire one Share.Projects means the mineral exploration projects in which the Company has acquired or will acquire aninterest, as detailed in this Prospectus including the Independent Geologist’s Report and the Solicitor’sReport on Tenements.Prospectus means this prospectus dated 9 September 2011 for the issue of 20,000,000 Shares, includingany electronic or online version.Quotation means quotation of the Shares on the ASX.Share means a fully paid ordinary share in the capital of Stratum Metals.Shareholder means a holder of Shares.Share Registrar means Advanced Share Registry Services Pty Ltd.Solicitor’s Report on Mining Tenements means the report contained in Section 8 of this Prospectus.State Resources means State Resources Pty Ltd.Stratum Metals or Company means Stratum Metals Limited (ACN 147 867 301).Vendors means the vendors of the Projects to the Company, as detailed in Section 9.3.WST means Western Standard Time, Perth, Western Australia.Yilgarn Projects means the mineral exploration projects situated in the Yilgarn region of WesternAustralia, in which the Company has acquired or will acquire an interest, as detailed in this Prospectusincluding the Independent Geologist’s Report and the Solicitor’s Report on Tenements.P R O S P E C T U S103

SECTION 11: CONSENT BY THE DIRECTORSThe Directors state that they have made all reasonable enquiries and on that basis have reasonablegrounds to believe that any statements made by the Directors in this Prospectus are not misleadingor deceptive and that in respect to any other statements made in this Prospectus by persons otherthan Directors, the Directors have made reasonable enquiries and on that basis have reasonablegrounds to believe that persons making the statement or statements were competent to make suchstatements, those persons have given their consent to the statements being included in thisProspectus in the form and context in which they are included and have not withdrawn that consentbefore lodgement of this Prospectus with the ASIC, or to the Directors’ knowledge, before any issueof Shares pursuant to this Prospectus.Each of the Directors of Stratum Metals Limited has consented to the lodgement of this Prospectus inaccordance with Section 720 of the Corporations Act 2001 and has not withdrawn that consent.Dated the 9 September 2011.___________________________________Signed for and on behalf ofSTRATUM METALS LIMITEDByMr Martin HollandManaging Director104

APPLICATION FORMACN 147 867 301Before completing this Application Form, you should read the Prospectus dated9 September 2011 and the instructions overleaf. No Shares will be issued pursuant tothe Prospectus later than 13 months after the date of the Prospectus.Broker/Dealer StampShare Registrar Use OnlyPlease Read all instructions on the reverse of this formAI/We apply forA$Shares in Stratum Metals Limited at an issue price of $0.20 cents per Shareor such lesser number of Shares which may be allocated to me/us by the Directors..BI/We lodge full Application Monies ofCFull name (Title, given name(s) and surname or company nameJoint applicant 2 Joint applicant 3 DPostal Address (PLEASE PRINT)Street Number Street NameCity/Suburb/Town State PostcodeE Contact name Home telephone number Work telephone numberF CHESS HIN (where applicable) Email addressG Tax file number or exemption Applicant #2 Applicant #3CHEQUE DetailsPlease enter details of the cheque(s) that accompany this applicationHCheque DetailsDrawer Bank BSB Amount of cheque| | |Drawer Bank BSB Amount of cheque| | |Cheques should be marked ‘Not Negotiable’ and make payable “Stratum Metals Limited – Share Account”Declaration and Statements:By lodging this Application Form:I/We declare that all details and statements made by me/us are complete and accurate;I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;I/We acknowledge that the Company will send me/us a paper copy of the Prospectus free of charge if I/we request so during the currency of the Prospectus;I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; andI/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in Stratum Metalsand that no notice of acceptance of the application will be provided.TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT 2001, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO ORACCOMPANIED BY THE PROSPECTUS DATED 9 SEPTEMBER 2011.

HOW TO COMPLETE THE APPLICATION FORMA) Enter the NUMBER OF SHARES you wish to apply for. Theapplication must be for a minimum of 10,000 Shares andthereafter in multiples of 1,000 Shares.B) Enter the TOTAL AMOUNT of application money payable. Tocalculate the amount, multiply the number of Sharesapplied for by $0.20.C) Enter the FULL NAME(S) of all legal entities that are to berecorded as the registered holder(s). Use correct forms ofregistrable name (see below). Applications using the wrongform of name may be rejected.D) Enter the POSTAL ADDRESS for all communications fromthe Company. Only one address can be recorded.E) Enter a CONTACT NAME and TELEPHONE NUMBER(S) of aperson the share registry can speak to regarding anyqueries they may have on the Application.F) The Company will become an Issuer Sponsored participantin the Australian Stock Exchange CHESS System. Thisenables a holder to receive a statement of theirshareholdings from the Company’s Share Registrar. If youare already a Broker Sponsored participant in this system,enter your Holder Identification Number (HIN). Otherwise,leave this box blank and your Shares will automatically beissued sponsored on allotment.G) Enter the TAX FILE NUMBER(S) of the Applicant(s).Collection of Tax File Numbers is authorised by taxationlaws. Quotation of Tax File Number(s) is not compulsory andwill not affect the Application.H) Enter the details of cheque(s) accompanying the ApplicationForm in payment of application monies.DECLARATION AND STATEMENTSBefore completing the Application Form the Applicant(s) should read the Prospectus dated 9 September 2011. The Applicant(s) agree(s),upon and subject to the terms of the Prospectus, to take any number of Shares equal to or less than the number of Shares indicated onthe Application Form that may be allotted to the Applicants pursuant to the Prospectus and declare(s) that all details of statementsmade are complete and accurate.No notice of acceptance of the Application will be provided by the Company prior to the allotment of Shares. Applicants agree to bebound upon acceptance by the Company of the Application.If your Application Form is not completed correctly, it may still be treated as valid. The Company’s decision as to whether to treat yourApplication as valid, and how to construe, amend or complete it, shall be final.There is no requirement to sign the Application Form.PAYMENTApplications for Shares must be accompanied by the application money of $0.20 per Share (in Australian currency). Cheques shouldbe made payable to “Stratum Metals Limited – Share Account” and crossed ‘Not Negotiable’.LODGING OF APPLICATIONSCompleted Application Forms and accompanying application monies must be:Posted to: OR Delivered to:Stratum Metals LimitedStratum Metals LimitedC/- Advanced Share Registry ServicesC/- Advanced Share Registry ServicesPO Box 1156150 Stirling HighwayNEDLANDS WA 6909 NEDLANDS WA 6009Applications must be received by no later than 5.00pm WST on the Closing Date, currently 14 October 2011 unless varied bythe Company).CORRECT FORM OF REGISTRABLE TITLENote that only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or otherlegal entities acceptable to Stratum . At least one full given name and the surname is required for each natural person. The name ofthe beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as describedin the example of the correct forms of registrable names below:TYPE OF INVESTOR CORRECT FORM OF REGISTRABLE TITLE INCORRECT FORM OF REGISTRABLE TITLEIndividual Lisa Marie Smith L M SmithUse given names, not initialsCompany XYZ Pty Ltd XYZ P/LUse Company title, not abbreviationsXYZ CoTrusts Hayley Jones Hayley Jones Family TrustUse trustee(s) personal name(s),Do not use the name of the trustDeceased Estates Richard Jones Estate of late Richard JonesUse executor(s) personal name(s)Partnerships Thomas Jones and Michael Jones Thomas Jones and SonUse partners’ personal names,do not use the name of the partnershipClubs/Incorporated Bodies/Business Names David Jones AAA Cricket AssociationUse office bearer(s) personal name(s), Do not use the names of the clubs etc.Superannuation Funds Lisa Smith Pty Ltd Lisa Smith Pty LtdUse of name of trustee of fund, do not Superannuation Funduse the name of the fund.

APPLICATION FORMACN 147 867 301Before completing this Application Form, you should read the Prospectus dated9 September 2011 and the instructions overleaf. No Shares will be issued pursuant tothe Prospectus later than 13 months after the date of the Prospectus.Broker/Dealer StampShare Registrar Use OnlyPlease Read all instructions on the reverse of this formAI/We apply forA$Shares in Stratum Metals Limited at an issue price of $0.20 cents per Shareor such lesser number of Shares which may be allocated to me/us by the Directors..BI/We lodge full Application Monies ofCFull name (Title, given name(s) and surname or company nameJoint applicant 2 Joint applicant 3 DPostal Address (PLEASE PRINT)Street Number Street NameCity/Suburb/Town State PostcodeE Contact name Home telephone number Work telephone numberF CHESS HIN (where applicable) Email addressG Tax file number or exemption Applicant #2 Applicant #3CHEQUE DetailsPlease enter details of the cheque(s) that accompany this applicationHCheque DetailsDrawer Bank BSB Amount of cheque| | |Drawer Bank BSB Amount of cheque| | |Cheques should be marked ‘Not Negotiable’ and make payable “Stratum Metals Limited – Share Account”Declaration and Statements:By lodging this Application Form:I/We declare that all details and statements made by me/us are complete and accurate;I/We agree to be bound by the terms and conditions set out in the Prospectus and by the Constitution of the Company;I/We acknowledge that the Company will send me/us a paper copy of the Prospectus free of charge if I/we request so during the currency of the Prospectus;I/We authorise the Company to complete and execute any documentation necessary to effect the issue of Shares to me/us; andI/We acknowledge that returning the Application Form with the application monies will constitute my/our offer to subscribe for Shares in Stratum Metalsand that no notice of acceptance of the application will be provided.TO MEET THE REQUIREMENTS OF THE CORPORATIONS ACT 2001, THIS FORM MUST NOT BE HANDED TO ANY PERSON UNLESS IT IS ATTACHED TO ORACCOMPANIED BY THE PROSPECTUS DATED 9 SEPTEMBER 2011.

HOW TO COMPLETE THE APPLICATION FORMA) Enter the NUMBER OF SHARES you wish to apply for. Theapplication must be for a minimum of 10,000 Shares andthereafter in multiples of 1,000 Shares.B) Enter the TOTAL AMOUNT of application money payable. Tocalculate the amount, multiply the number of Sharesapplied for by $0.20.C) Enter the FULL NAME(S) of all legal entities that are to berecorded as the registered holder(s). Use correct forms ofregistrable name (see below). Applications using the wrongform of name may be rejected.D) Enter the POSTAL ADDRESS for all communications fromthe Company. Only one address can be recorded.E) Enter a CONTACT NAME and TELEPHONE NUMBER(S) of aperson the share registry can speak to regarding anyqueries they may have on the Application.F) The Company will become an Issuer Sponsored participantin the Australian Stock Exchange CHESS System. Thisenables a holder to receive a statement of theirshareholdings from the Company’s Share Registrar. If youare already a Broker Sponsored participant in this system,enter your Holder Identification Number (HIN). Otherwise,leave this box blank and your Shares will automatically beissued sponsored on allotment.G) Enter the TAX FILE NUMBER(S) of the Applicant(s).Collection of Tax File Numbers is authorised by taxationlaws. Quotation of Tax File Number(s) is not compulsory andwill not affect the Application.H) Enter the details of cheque(s) accompanying the ApplicationForm in payment of application monies.DECLARATION AND STATEMENTSBefore completing the Application Form the Applicant(s) should read the Prospectus dated 9 September 2011. The Applicant(s) agree(s),upon and subject to the terms of the Prospectus, to take any number of Shares equal to or less than the number of Shares indicated onthe Application Form that may be allotted to the Applicants pursuant to the Prospectus and declare(s) that all details of statementsmade are complete and accurate.No notice of acceptance of the Application will be provided by the Company prior to the allotment of Shares. Applicants agree to bebound upon acceptance by the Company of the Application.If your Application Form is not completed correctly, it may still be treated as valid. The Company’s decision as to whether to treat yourApplication as valid, and how to construe, amend or complete it, shall be final.There is no requirement to sign the Application Form.PAYMENTApplications for Shares must be accompanied by the application money of $0.20 per Share (in Australian currency). Cheques shouldbe made payable to “Stratum Metals Limited – Share Account” and crossed ‘Not Negotiable’.LODGING OF APPLICATIONSCompleted Application Forms and accompanying application monies must be:Posted to: OR Delivered to:Stratum Metals LimitedStratum Metals LimitedC/- Advanced Share Registry ServicesC/- Advanced Share Registry ServicesPO Box 1156150 Stirling HighwayNEDLANDS WA 6909 NEDLANDS WA 6009Applications must be received by no later than 5.00pm WST on the Closing Date, currently 14 October 2011 unless varied bythe Company).CORRECT FORM OF REGISTRABLE TITLENote that only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or otherlegal entities acceptable to Stratum . At least one full given name and the surname is required for each natural person. The name ofthe beneficiary or any other non-registrable name may be included by way of an account designation if completed exactly as describedin the example of the correct forms of registrable names below:TYPE OF INVESTOR CORRECT FORM OF REGISTRABLE TITLE INCORRECT FORM OF REGISTRABLE TITLEIndividual Lisa Marie Smith L M SmithUse given names, not initialsCompany XYZ Pty Ltd XYZ P/LUse Company title, not abbreviationsXYZ CoTrusts Hayley Jones Hayley Jones Family TrustUse trustee(s) personal name(s),Do not use the name of the trustDeceased Estates Richard Jones Estate of late Richard JonesUse executor(s) personal name(s)Partnerships Thomas Jones and Michael Jones Thomas Jones and SonUse partners’ personal names,do not use the name of the partnershipClubs/Incorporated Bodies/Business Names David Jones AAA Cricket AssociationUse office bearer(s) personal name(s), Do not use the names of the clubs etc.Superannuation Funds Lisa Smith Pty Ltd Lisa Smith Pty LtdUse of name of trustee of fund, do not Superannuation Funduse the name of the fund.

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