Prospectus Lodgement

ABN 95 112 425 788

12 March 2010

The Manager Company Announcements Office Australian Securities Exchange Ltd 4th Floor, 20 Bridge Street SYDNEY, NSW 2000

PROSPECTUS LODGEMENT

Please find attached a copy of the Prospectus lodged by the Company with ASIC today.

It is planned that a copy of this Prospectus will be sent to shareholders following the completion of the exposure period.

Yours faithfully,

Mathew Walker Chairman

For further information please contact: James Robinson, Company Secretary, Pilbara Minerals Limited, Tel: (08) 6460 4960

Address Suite 9, 1200 Hay Street, West Perth WA 6005 Postal PO Box 281, West Perth WA 6872 Telephone +61 8 6460 4960 Facsimile +61 8 9324 3045 Website www.pilbaraminerals.com.au

PILBARA MINERALS LIMITED ACN 112 425 788

PROSPECTUS

For an offer of up to 30,000,000 Shares at an issue price of 20 cents each to raise up to $6,000,000.

This Offer is conditional upon Shareholders approving the issue of the Shares offered by this Prospectus at a general meeting to be held on or about 19 April 2010. Please refer to Section 5.2 for further details.

This Prospectus is a compliance prospectus for the purposes of satisfying Chapters 1 and 2 of the ASX Listing Rules and to satisfy ASX requirements for re-listing following a change to the nature and scale of the Company’s activities.

Joint Sponsoring Brokers to the Offer:

Novus Capital Limited (AFSL 238168)

CK Locke & Partners Pty Ltd (AFSL 222440)

IMPORTANT INFORMATION

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay. The Shares offered by this Prospectus should be considered highly speculative.

CHANGE IN NATURE AND SCALE AND RECOMPLIANCE WITH CH APTERS 1 AND 2 OF THE ASX LISTING RULES

At the Company’s annual general meeting of the Company held on 14 December 2009, the Company obtained approval from its Shareholders to change the nature of its activities under ASX Listing Rule 11.1. As a result, the Company must comply with ASX requirements to re-list on the ASX, which include recomplying with Chapters 1 and 2 of the ASX Listing Rules. Inter alia, this Prospectus is issued to assist the Company to recomply with these requirements.

IMPORTANT NOTICE

This Prospectus is dated 12 March 2010 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

The expiry date of this Prospectus is at 5.00pm WST on that date which is 13 months after the date this Prospectus was lodged with the ASIC (Expiry Date ). No Shares may be issued on the basis of this Prospectus after the Expiry Date.

Application will be made to ASX within seven (7) days after the date of this Prospectus for Official Quotation of the Shares the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who 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 in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

No person is authorised to give information or to make any representation in connection with this Prospectus, which is not contained in the Prospectus. Any information or representation not so contained may not be relied on as having been authorised by the Company in connection with this Prospectus.

In making representations in this Prospectus regard has been had to the fact that the Company is a disclosing entity for the purposes of the Corporations Act and certain matters may reasonably be expected to be known to investors and professional advisers whom potential investors may consult.

It is important that investors read this Prospectus in its entirety and seek professional advice where necessary. The Shares the subject of this Prospectus should be considered highly speculative.

WEB SITE – ELECTRONIC PROSPECTUS

A copy of this Prospectus can be downloaded from the website of the Company at www.pilbaraminerals.com.au/ . Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the

complete and unaltered version of this Prospectus. Any person may obtain a hard copy of this Prospectus free of charge by contacting the Company.

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the Application Form it was not provided together with the electronic Prospectus and any relevant supplementary or replacement Prospectus.

EXPOSURE PERIOD

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should 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 with Section 724 of the Corporations Act.

Applications for Shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period.

RISK FACTORS

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisers before deciding whether to apply for Shares pursuant to this Prospectus. For further information in relation to the risk factors of the Company please refer to Section 12 of the Prospectus.

The risk factors set out in Section 12 of this Prospectus, and other general risks applicable to all investments in listed securities not specifically referred to, may affect the value of the Shares in the future. Accordingly, an investment in the Company should be considered highly speculative.

CO NT EN TS

1. CORPORATE DIRECTORY ...... 1 2. CHAIRMAN’S LETTER ...... 2 3. KEY RISK FACTORS ...... 3 4. INVESTMENT OVERVIEW ...... 7 5. DETAILS OF THE OFFER ...... 12 6. COMPANY OVERVIEW ...... 17 7. RISK FACTORS ...... 21 8. BOARD & MANAGEMENT ...... 29 9. INDEPENDENT GEOLOGIST’S REPORT ...... 32 10. INVESTIGATING ACCOUNTANT’S REPORT ...... 67 11. SOLICITOR’S REPORT ON AUSTRALIAN TENEMENTS ...... 86 12. REPORT ON INDONESIAN TENEMENTS ...... 103 13. ADDITIONAL INFORMATION ...... 109 14. DIRECTORS’ AUTHORISATION ...... 118 15. GLOSSARY ...... 119

1. CORPORATE DIRECTORY

Directors Registered Office

Mathew Walker (Non-executive Chairman) Suite 9 James Robinson (Non-executive Director) 1200 Hay Street Gavan Farley (Non-executive Director) WEST PERTH WA 6005

Company Secretary Telephone: + 61 8 6460 4960 Facsimile: +61 8 9324 3045 James Robinson

Joint Sponsoring Brokers to the Offer Solicitors

Novus Capital Limited Steinepreis Paganin Level 24 Level 4, The Read Buildings Royal Exchange Building 16 Milligan Street 56 Pitt Street Perth WA 6000 SYDNEY NSW 2000

CK Locke & Partners Pty Ltd Independent Geologist Lower Ground Floor 8 The Esplanade Zephyr Consulting Group Pty Ltd PERTH WA 6000 Level 2 79 Hay Street SUBIACO WA 6008

Investigating Accountant Indonesian Tenement Adviser

HLB Mann Judd CV Resource Management Level 4 Pertokoan Pasar Rumput 6 130 Stirling Street Manggarai PERTH WA 6000 Jakarta, Selatan 12910 Telephone: +61 8 9227 7500 Facsimile: +61 8 9227 7533

Auditor Corporate Advisers

HLB Mann Judd Empire Securities Group Pty Ltd Level 4 Level 5 130 Stirling Street 2 Bligh Street PERTH WA 6000 SYDNEY NSW 2000 Telephone: +61 8 9227 7500 Facsimile: +61 8 9227 7533

Share Registry*

Security Transfer Registrars Pty Ltd 770 Canning Highway APPLECROSS WA 6153

Telephone: (08) 9315 2333 Facsimile: (08) 9315 2233

* This entity is included for information purposes only. It has not been involved in the preparation of this Prospectus.

2. CHAIRMAN’S LETTER

Dear Investor

On behalf of the Directors of Pilbara Minerals Limited (Company ), I am delighted to invite you to subscribe for up to 30,000,000 Shares at an issue price of 20 cents each to raise up to $6,000,000.

The Company has recently acquired 6 granted exploration licences in the West Pilbara region of Western Australia and agreed to acquire a further 7 granted exploration licences in the same region, subject to the satisfaction of a number of conditions precedent. Further details of the material terms and conditions of the Tenement Sale Agreement relating to the 7 granted exploration licences are set out in Part II of the Solicitor’s Report on Australian Tenements contained in Section 11 of this Prospectus.

The West Pilbara Mineral Tenements in which the Company has or may acquire an interest comprise 13 granted exploration licences located south of the regional centre of Karratha in the West Pilbara region of Western Australia and form 4 project areas covering approximately 1,715 square kilometres. These project areas, known as the Mt Wohler, Pyramid, Maitland and Kylena projects, are considered to be prospective for base metals, platinum group elements and/or gold mineralisation.

The Company has also entered into an Option Agreement pursuant to which the Company was granted an exclusive option to acquire the issued capital of an Indonesian company to be established to hold, explore, develop and, if warranted, mine the Seluma Iron Sands Project. A summary of the material terms and conditions of the Option Agreement is set out in Section 13.3(b) of this Prospectus.

The Seluma Iron Sands Project is located approximately 75 kilometres south of Bengkulu adjacent to the small village of Pasar Talo on the south west coast of the Indonesian island of Sumatra. The project comprises a single KP located on the coastal plain proximal to a series of inactive volcanic centres which lie along the Great Sumatran Fault.

The Company intends to use the funds raised from the Offer towards exploration activities on the West Pilbara Mineral Tenements and its Seluma Iron Sands Project as well as working capital.

The Board looks forward to welcoming you as a Shareholder.

Yours sincerely

Mathew Walker Chairman

3. KEY RISK FACTORS

3.1 Re-Quotation of Shares on ASX

The Company is required to comply with Chapters 1 and 2 of the ASX Listing Rules due to the initial change of activities approved by Shareholders on 28 March 2008 and in order for the Company’s securities to be requoted on the Australian Securities Exchange. Compliance with Chapter 1 of the ASX Listing Rules requires, amongst other things, the Company to lodge a prospectus with the ASIC and this Prospectus has been prepared partly for the purpose of satisfying that requirement.

There is a risk that the Company may not be able to meet the requirements of ASX for re-quotation of its Shares on the ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all.

3.2 Extension and Conversion of KP – Seluma Iron Sands Project

KP KW.08 JNP (the KP the subject of the Seluma Iron Sands Project) was granted on 11 March 2008 and expires on 11 March 2010. The term of KP KW.08 JNP can be extended by its registered holder (ie. PT PRU) by making an application to the Indonesian Government on or before 26 March 2010. This process involves the submission of exploration and environmental reports, and the payment of certain fees, to the Indonesian Government. If renewed, KP KW.08 JNP will also need to subsequently be converted into a new form of mining right, known as a Mining Business Permit (Ijin Usaha Pertambangan) ( IUP ).

Upon renewal of KP KW.08 JNP and conversion into an IUP, such IUP will be valid for a further 10 years. Please refer to the Report on Indonesian Tenements set out in Section 12 of this Prospectus for further details.

The Company has been informed that PT PRU is currently in the process of preparing an application to extend the term of KP KW.08 JNP and convert it into an IUP. The Company is not aware of any reasons why such an application will not be granted by the Indonesian Government.

Whilst the Company is confident that its Indonesian partner, PT PRU, will provide all reasonable assistance to ensure that KP KW.08 JNP is extended and converted into an IUP, there can be no guarantee that this will occur. In addition, circumstances outside of the Company’s control may arise that prevent the KP from being converted into an IUP.

3.3 Government policy changes

Actions or policy changes by governments (particularly in Australia and Indonesia) in relation to access to lands and infrastructure, compliance with environmental regulations, taxation, royalties and subsidies may adversely affect the Company’s operations and financial performance.

The Company’s operations in Indonesia will be governed by a series of Indonesian laws, regulations and decrees. These laws, regulations and decrees may be amended from time to time, which may have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price for the Company. Breaches or non-compliance with these laws, regulations or decrees can result in penalties and other liabilities, which may also have a material adverse impact on the financial position, financial performance, cashflows, growth prospects and share price of the Company.

While the Company is reasonably familiar with the Indonesian regulatory regime and will undertake all reasonable due diligence in assessing and managing the risks associated with investing and operating in Indonesia (and other countries in which it may invest), the legal and political conditions of the country and any changes thereto are outside the control of the Company.

On 16 December 2008, the Parliament of the Republic of Indonesia passed a new mining law, the Mineral and Coal Mining Law ( new mining law ). This new mining law came into effect on 12 January 2009.

The new mining law abolishes the system of mining rights under Contracts of Work, Coal Contracts of Work and Kuasa Pertambanhan ( KP ), and introduces a new system of mining permits including Izin Uaaha Pertambangan ( IUP ).

While there are saving and transitional provisions, the new mining law makes no mention of the continuity of KPs. To assist between the old mining laws and the new mining laws, the Directorate-General of Minerals, Coal and Geothermal released a Circular on 30 January 2009 that, while not law, provides guidance and direction to relevant government officers, and includes a provision that KPs, including any upgrades issued under the old mining laws, are valid until their term expires and will be converted to IUPs by 12 January 2010. Until such time as the position of KPs is confirmed at law, the status of the tenement comprising the Seluma Iron Sands Project (which is a KP) is uncertain under the new mining law.

3.4 Transfer of Title Risks

The Company has recently acquired 6 granted exploration licences in the West Pilbara region of Western Australia from Pilbara Mining Pty Ltd. It has also agreed to acquire a further 7 granted exploration licences in the same region, subject to the satisfaction of a number of conditions precedent, from Seefingan Exploration Pty Ltd.

As noted in Section 3 of the Solicitor’s Report on Australian Tenements set out in Section 11 of this Prospectus, the Company is not recorded as being the registered holder of a legal interest with respect to the West Pilbara Mineral Tenements. While the Company has been provided with copies of signed tenement transfers for each of these Tenements, there can be no guarantee that the West Pilbara Mineral Tenements will be transferred in the Company’s name.

3.5 Exploration Success

The mineral tenements of the Company as described in this Prospectus are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings.

There can be no assurance that exploration of the Project, or any other tenements that may be acquired in the future, will result in the discovery of an

economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

The exploration costs of the Company described in the Independent Geologist’s Report are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company’s viability.

3.6 Expenditure Commitments

As demonstrated in the Tenement Schedule in Part 1 of the Solicitor’s Report on Australian Tenements set out in Section 11 of this Prospectus, the prescribed expenditure commitments for the previous expenditure year in respect of each of E47/1092-1097 were not met.

Any person may apply to the warden for the forfeiture of an exploration licence where there is, or has been, non-compliance with the prescribed expenditure conditions. However, a recommendation for forfeiture may not be made unless the warden is satisfied that the non-compliance is, in the circumstances of the case, of sufficient gravity to justify the forfeiture.

An application for forfeiture may be made during the expenditure year in relation to which the requirement is not complied with or within 8 months after the commencement of the following expenditure year.

We note that it has been more than 8 months since the commencement of the following expenditure year for each of E47/1092-1095. However, an application for forfeiture may be made by a third party on the grounds of non-compliance in respect of E47/1096 and E47/1097 on or before 5 May 2010 and 25 April 2010 respectively.

3.7 Country Risk

Indonesia’s export potential over the next 10 years will depend to some extent on the perceived risks attached to investment in the mining sector. The mining industry in Indonesia is facing a range of legal, governance and human capacity building challenges in the transition to regional autonomy. To the extent that these risk factors continue to affect the mining sector, they can be expected to have an adverse impact on mining exploration and exports in Indonesia.

Changes to the mining law or to the other government legislation and regulations in Indonesia, or to the division of regulatory powers between the Central Government in Jakarta and local and provisional bodies, may materially impact on the ability of the Company to operate in Indonesia and on the ultimate profitability of any potential projects to be developed in Indonesia. In the event that an economic resource is identified in the Seluma Iron Sands Project, there can be no assurance that all or any of the relevant approvals and permits necessary to conduct mining operations will be granted by the Indonesian government and other appropriate regulatory authorities.

The risk of terrorism, war or social upheaval activities in Indonesia, Australia, the Asia Pacific Region or other areas in which the Company operates, and the resulting impact upon the projects, is also a relevant risk factor.

4. INVESTMENT OVERVIEW

4.1 Important Notice

This Section is not intended to provide full information for investors intending to apply for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

4.2 Indicative Timetable

Lodgement of Prospectus with the ASIC 12 March 2010

Record Date for Priority Offer 5.00 pm WST on 22 March 2010

Opening Date 22 March 2010

Closing Date 5.00 pm WST on 16 April 2010

Despatch of Holding Statements 23 April 2010

Expected date for quotation on ASX 30 April 2010

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Date or close the Offer early without notice.

4.3 Objectives

The Company’s main objectives in undertaking the Offer include:

• assist the Company to meet the requirements of ASX and satisfy Chapters 1 and 2 of the ASX Listing Rules;

• raising sufficient funds to explore the West Pilbara Mineral Tenements and the Seluma Iron Sands Project (subject to the exercise of the exclusive option pursuant to the Option Agreement and the extension and conversion of the KP the subject of the Seluma Iron Sands Project. Please refer to the Report on Indonesian Tenements in Section 12 of this Prospectus for further details); and

• to provide funds for general working capital and costs of the Offer.

On completion of the Offer, the Board believes the Company will have sufficient working capital to achieve these objectives.

4.4 Change in Nature and Scale of Activities

As outlined in more detail in Section 6.2 of this Prospectus, the Company has entered into an agreement to acquire a 100% interest in the West Pilbara Mineral Tenements. Although recompliance with Chapters 1 and 2 of the ASX Listing Rules is not required for the change to activities arsing as a result of the acquisition of the West Pilbara Mineral Tenements, the Company is still required to comply with Chapters 1 and 2 of the ASX Listing Rules due to the initial change of activities approved by Shareholders on 28 March 2008 and in order for the Company’s securities to be requoted on the Australian Securities Exchange.

Shareholder approval was also obtained for the change in the nature of the Company’s activities at the Company’s annual general meeting held on 14 December 2009. Compliance with Chapter 1 of the ASX Listing Rules requires, amongst other things, the Company to lodge a prospectus with the ASIC and this Prospectus has been prepared for the purpose of satisfying that requirement.

ASX has further advised the Company that Shares in the Company will remain suspended from trading on ASX until the Company has satisfied all of its obligations under the ASX Listing Rules, including complying with Chapters 1 and 2 of the ASX Listing Rules.

4.5 Risk Factors

Prospective investors in the Company should be aware that subscribing for Shares the subject of this Prospectus involves a number of risks. These risks are set out in Section 12 of this Prospectus and investors are urged to consider those risks carefully (and, if necessary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 12 of this Prospectus, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the Shares. Accordingly, an investment in the Company should be considered highly speculative.

4.6 Purpose of the Offer and Use of Proceeds

The purpose of the Offer is to position the Company to seek to achieve the objectives set out in Section 4.3 above.

The Company intends to apply funds raised from the Offer as follows:

Item Minimum Maximum Subscription ($) Subscription ($) $3,000,000 $6,000,000 West Pilbara Mineral Tenements 1 − Data acquisition and review 66,440 140,000 − Land Management 216,120 216,120 − Geological Mapping 32,350 74,500 − Surface Sampling and Prospecting 35,750 91,500 − Geophysics 365,000 705,000 − RAB Drilling 105,000 255,000 − RC Drilling 335,000 660,000 − Diamond Drilling 140,000 405,000 − Sampling/Assaying 204,340 452,880 Total 1,500,000 3,000,000 Seluma Iron Sands Project 2 − Data acquisition and review 11,250 22,500 − Geological Mapping 21,750 43,500 − Geophysics 75,000 150,000 − Air Core Drilling 207,000 414,000 − Assays 86,250 172,500 − Mining Studies 98,750 197,500

Total 500,000 1,000,000 Costs of extending the term of the KP 61,000 61,000 the subject of the Seluma Iron Sands Project and converting it to an IUP 3 Expenses of the Offer 4 345,000 530,000 Working capital 594,000 1,409,000 Total 3,000,000 6,000,000 Notes:

1 The West Pilbara Mineral Tenements comprise the Mt Wohler, Pyramid, Maitland and Kylena Projects. Please refer to the Independent Geologist’s Report in Section 9 of this Prospectus for further information.

2 Please refer to the Independent Geologist’s Report in Section 9 of this Prospectus for further information.

3 KP KW.08 JNP (the KP the subject of the Seluma Iron Sands Project) was granted on 11 March 2008 and expires on 11 March 2010. The term of KP KW.08 JNP can be extended by its registered holder (ie. PT PRU) by submitting an application to the Indonesian Government on or before 26 March 2010. The application process involves the submission of exploration and environmental reports, and the payment of certain fees, to the Indonesian Government. If renewed, KP KW.08 JNP will also subsequently be converted into a new form of mining right, known as a Mining Business Permit (Ijin Usaha Pertambangan) ( IUP ). Please refer to the Report on Indonesian Tenements in Section 12 of this Prospectus for further information and a breakdown of the costs involved. A summary of the risks involved is also set out in Section 7.3 of this Prospectus.

4 Please refer to Section 13.8 of this Prospectus for further details.

In the event that the Company does not receive the full subscription of $6,000,000, but receives more than the minimum subscription of $3,000,000, the funds raised pursuant to the Offer will be first applied towards the expenses of the Offer and then the above amounts will be scaled back pro rata.

As at the date of this Prospectus, it is the Company’s intention to exercise the option pursuant to the terms of the Option Agreement with respect to the Seluma Iron Sands Project. The registered holder of the KP the subject of the Seluma Iron Sands Project is also in the process of preparing an application to extend the term of the KP and convert it into an IUP. However, if new circumstances arise which cause the Company to elect not to exercise the option in accordance with the terms of the Option Agreement or the application to extend the term of the KP and convert it into an IUP is refused by the Indonesian Government (for whatever reason), then the Company will apply $500,000 (in the event that the minimum subscription is received) and $1,000,000 (in the event that the maximum subscription is received) towards working capital. Please also refer to Section 7.3 and the Report on Indonesian Tenements in Section 12 for further details.

The above tables are statements of current intentions as of the date of lodgement of this Prospectus with the ASIC. As with any budget, intervening events (including exploration success or failure) and new circumstances have the potential to affect the ultimate way funds will be applied. The Board reserves the right to alter the way funds are applied on this basis.

4.7 Capital Structure

The capital structure of the Company following completion of the Offer is summarised below 1:

Shares 2

Number

Shares currently on issue 37,175,000

Shares to be issued to Seefingan Exploration Pty Ltd 3 3,000,000

Shares to be issued pursuant to the Offer (including the 30,000,000 Priority Offer and the General Offer)

Shares to be issued to Empire Securities (or its nominee) 4 150,000

Total Shares on completion of the Offer 70,325,000

Options 5

Number

Options (listed) (ASX Code: FTNO) 1,001,000 (exercise price $1.00 / expiry date 18 September 2010)

Options (unlisted) 417,500 (exercise price $1.00 / expiry date 26 April 2010)

Options (unlisted) 110,000 (exercise price $1.00 / expiry date 7 June 2010)

Options (unlisted) 200,000 (exercise price $1.00 / expiry date 4 December 2010)

Options (unlisted) 150,000 (exercise price $1.00 / expiry date 21 August 2011)

Options (unlisted) 50,000 (exercise price $2.00 / expiry date 21 August 2011)

Options (unlisted) 350,000 (exercise price $1.00 / expiry date 28 May 2012)

Options (unlisted) 18,000,000 (exercise price 20 cents / expiry date 31 December 2012)

Options to be issued to Empire Securities (or its nominee) 10,000,000 (unlisted) 6 (exercise price 20 cents / expiry date 31 December 2012)

Options to be issued to CK Locke & Partners (or its nominee) 5,000,000

(unlisted) 7 (exercise price 20 cents / expiry date 31 December 2012)

Total Options 35,278,500

Notes:

1 Please also refer to the Investigating Accountant’s Report set out in Section 10 of this Prospectus for further details.

2 The rights attaching to the Shares are summarised in Section 13.1 of this Prospectus.

3 Please also refer to the summary of the Tenement Sale Agreement contained in Part II of the Solicitor’s Report on Australian Tenements set out in Section 11 of this Prospectus.

4 These Shares are to be issued to Empire Securities (or its nominee) in part consideration for its services as the Company’s corporate advisor in relation to the Offer. Please refer to Section 13.6 of this Prospectus for further details. The issue of these Shares is subject to the Company obtaining all necessary shareholder approvals.

5 Please also refer to Section 13.2 of this Prospectus.

6 These Options are to be issued to Empire Securities (or its nominee) in part consideration for its services as the Company’s corporate advisor in relation to the Offer. Please refer to Section 13.6 of this Prospectus for further details. The grant of these Options is subject to the Company obtaining all necessary shareholder approvals.

7 These Options are to be issued to CK Locke & Partners (or its nominee) in consideration for its services as joint sponsoring broker to the Offer. Please refer to Section 5.12 of this Prospectus for further details. The grant of these Options is subject to the Company obtaining all necessary shareholder approvals.

4.8 Restricted Securities

Subject to the Company recomplying with Chapters 1 and 2 of the ASX Listing Rules, certain Shares issued to vendors are likely to be classified by ASX as restricted securities and will be required to be held in escrow.

5. DETAILS OF THE OFFER

5.1 The Offer

Pursuant to the Offer, the Company invites applications for up to 30,000,000 Shares at an issue price of 20 cents each to raise up to $6,000,000.

The Offer consists of:

(a) a Priority Offer to Eligible Shareholders; and

(b) a General Offer to the public.

The Shares offered under this Prospectus will rank equally with the existing Shares on issue.

5.2 Conditional Offer

The Offer is conditional upon Shareholders approving the issue of the Shares offered under this Prospectus at a general meeting to be held on or about 19 April 2010.

In the event that Shareholders do not approve the issue of the Shares, the Company will refund all application monies as soon as is practicable.

The business of the General Meeting will consider, other than the Offer, the following resolutions:

(a) the issue of Shares and Options to Empire Securities Group Pty Limited;

(b) the issue of Options to CK Locke & Partners Pty Ltd; and

5.3 Recompliance with Chapters 1 and 2 of the ASX Listing Rules

At the annual general meeting held on 14 December 2009, the Company sought and obtained Shareholder approval for a change in nature of its activities. Although recompliance with Chapters 1 and 2 of the ASX Listing Rules is not required for the change to activities arsing as a result of the acquisition of the West Pilbara Mineral Tenements, the Company is still required to comply with Chapters 1 and 2 of the ASX Listing Rules due to the initial change of activities approved by Shareholders on 28 March 2008 and in order for the Company’s securities to be requoted on the Australian Securities Exchange.

In the event that the Company does not receive conditional approval for re- quotation on ASX, then it will not proceed with the Offer and will repay all application monies received.

5.4 Priority Offer and General Offer

Priority Offer

Of the 30,000,000 Shares being offered, 4,000,000 Shares (or 13.3% of all Shares being offered) are being offered as a pro-rata priority entitlement to Shareholders registered as at the Record Date.

All Eligible Shareholders will be sent a copy of the Prospectus together with a copy of a Priority Offer Application Form.

Each Eligible Shareholder has an entitlement to a proportion of the Priority Offer with all other Eligible Shareholders pro rata to the number of Shares held on the Record Date.

However, where the number of Shares held by an Eligible Shareholder results in an Entitlement of less than 10,000 Shares, such investors are encouraged to apply for further Shares by completing the space provided on the Priority Offer Application Form to round up their application to a minimum parcel of 10,000 Shares.

Shares applied for in excess of an Entitlement will be considered as part of the General Offer.

The Priority Offer to Eligible Shareholders will only be available upon completion of a Priority Offer Application Form received by the Company on or before the Closing Date.

General Offer

The General Offer will be for a minimum of 15,000,000 Shares, with the balance of any Shares not issued to Eligible Shareholders under the Priority Offer also forming part of the allocation for the General Offer.

5.5 Applications

Applications for Shares under the Priority Offer must be made using the Priority Offer Application Form .

Applications under the Priority Offer will only be accepted if made in the same name as the registered Eligible Shareholder.

In addition, applications made for Shares in excess of an Entitlement in order to increase an application to a minimum parcel of 10,000 Shares may be made using the Priority Offer Application Form by completing the space provided on the Priority Offer Application Form.

Applications for Shares under the General Offer must be made using the General Offer Application Form attached to this Prospectus. Applications for Shares under the General Offer must be for a minimum of 10,000 Shares and thereafter in multiples of 1,000 Shares.

Payment for the Shares must be made in full at the issue price of 20 cents per Share. Completed Application Forms and accompanying cheques must be mailed to:

Pilbara Minerals Limited PO Box 281 West Perth Business Centre WEST PERTH WA 6872

Cheques should be made payable to “Pilbara Minerals Limited – Share Offer Account” and crossed “Not Negotiable”. Completed Application Forms must reach one of the above addresses by no later than the Closing Date.

The Company reserves the right to close the Offer early.

5.6 Allotment

The Directors will determine the allottees of all the Shares, except those issued under the Priority Offer, in their sole discretion. The Directors reserve the right to reject any application or to allocate any applicant fewer Shares than the number applied for, except in relation to Shares applied for under the Priority Offer.

Subject to the Company complying with Chapters 1 and 2 of the ASX Listing Rules, Shares issued pursuant to the Offer will be allotted as soon as practicable after the Closing Date. Where the number of Shares issued is less than the number applied for, or where no allotment is made, surplus application monies will be refunded without any interest to the Applicant as soon as practicable after the Closing Date.

Pending the allotment and issue of the Shares or payment of refunds pursuant to this Prospectus, all application monies will be held by the Company in trust for the Applicants in a separate bank account as required by the Corporations Act. The Company, however, will be entitled to retain all interest that accrues on the bank account and each Applicant waives the right to claim interest.

5.7 ASX Listing

The Shares are currently suspended and will remain in suspension until the Company has recompiled with Chapters 1 and 2 of the ASX Listing Rules.

Application for Official Quotation by ASX of the Shares offered pursuant to this Prospectus will be made within 7 days after the date of this Prospectus. If approval is not obtained from ASX before the expiration of 3 months after the date of issue of the Prospectus, (or such period as varied by the ASIC), the Company will not issue any Shares and will repay all application monies for the Shares within the time prescribed under the Corporations Act, without interest.

The fact that ASX may grant Official Quotation to the Shares is not to be taken in any way as an indication of the merits of the Company or the Shares now offered for subscription.

5.8 Applicants outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify the Shares or otherwise permit a public offering of the Shares the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment and issue of the Shares pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

5.9 Oversubscriptions

No oversubscriptions will be accepted by the Company.

5.10 Minimum Subscription

The minimum subscription to be raised pursuant to the Offer is $3,000,000.

If the minimum subscription has not been raised within four (4) months after the date of this Prospectus, all applications will be dealt with in accordance with the Corporations Act.

5.11 Not Underwritten

The Offer is not underwritten.

5.12 Joint Sponsoring Brokers to the Offer

The Company has entered into an agreement Novus Capital Limited (Novus Capital ) pursuant to which Novus Capital will act as joint sponsoring broker to the Offer in return for a fee of $30,000 (exclusive of GST).

The Company has also engaged CK Locke & Partners Pty Ltd ( CK Locke & Partners ) to act as joint sponsoring broker to the Offer and to provide corporate advisory services to the Company. In consideration for the services provided by CK Locke & Partners to the Company, the Company will pay a fee of $30,000 (exclusive of GST) and issue 5,000,000 unlisted options exercisable at $0.20 each on or before 31 December 2012 to CK Locke & Partners (or its nominee), subject to the receipt of all necessary shareholder approvals.

5.13 Commissions Payable

The Company reserves the right to pay a commission of 6% (exclusive of goods and services tax) of amounts subscribed to any licensed securities dealers or Australian financial services licensee (including Novus Capital and CK Locke & Partners) in respect of any valid applications lodged and accepted by the Company and bearing the stamp of the licensed securities dealer or Australian financial services licensee. Payments will be subject to the receipt of a proper tax invoice from the licensed securities dealer or Australian financial services licensee.

5.14 Proposed Non-Renounceable Entitlement Issue of Options

The Company proposes to undertake a non-renounceable entitlement issue of Options ( Loyalty Issue ) approximately 3 months after the Shares are requoted on ASX.

All Shareholders registered on the share register of the Company at a date to be announced by the Company to ASX will be entitled to participate in the Loyalty Issue. The terms of the Options to be issued will be determined by the Directors at the time.

A disclosure document for the Loyalty Issue will be issued when the securities are offered. Anyone who wishes to subscribe for Options pursuant to the Loyalty Issue will need to complete the application form that will accompany the Loyalty Issue disclosure document.

5.15 Dividends

Any future determination as to the payment of dividends by the Company will be at the discretion of the Directors and will depend on the availability of distributable earnings and operating results and financial condition of the

Company, future capital requirements and general business and other factors considered relevant by the Directors. No assurance in relation to the payment of dividends or franking credits attaching to dividends can be given by the Company.

5.16 Clearing House Electronic Sub-Register System (CHESS) and Issuer Sponsorship

The Company will not be issuing share or option certificates. The Company is a participant in CHESS, for those investors who have, or wish to have, a sponsoring stockbroker. Investors who do not wish to participate through CHESS will be issuer sponsored by the Company. Because the sub-registers are electronic, ownership of securities can be transferred without having to rely upon paper documentation.

Electronic registers mean that the Company will not be issuing certificates to investors. Instead, investors will be provided with separate statements (similar to a bank account statement) that set out the number of Shares allotted to them under this Prospectus. The notice will also advise holders of their Holder Identification Number or Security Holder Reference Number and explain, for future reference, the sale and purchase procedures under CHESS and issuer sponsorship.

Further monthly statements will be provided to holders if there have been any changes in their security holding in the Company during the preceding month.

5.17 Privacy Statement

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to assess your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The information may also be used from time to time and disclosed to persons inspecting the register, including bidders for your securities in the context of takeovers, regulatory bodies including the Australian Taxation Office, authorised securities brokers, print service providers, mail houses and the share registry.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the share registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for Shares, the Company may not be able to accept or process your application.

5.18 Queries

Any questions concerning the Offer should be directed to Mr James Robinson, on +61 8 6460 4960.

6. COMPANY OVERVIEW

6.1 Background

Pilbara Minerals Limited (formerly Fortuna Minerals Limited) was incorporated on 10 January 2005 and admitted to the Official List on 14 September 2007 as an online gambling business.

As a result of the online gambling business performing significantly below expectations, changes were made to the Company’s board of directors in December of 2007 and the new Board resolved to focus its activities solely within the mining sector.

The Company obtained Shareholder approval for a change to the nature of its activities at a general meeting held on 28 March 2008. At this time, ASX also required the Company to recomply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules.

To date, the Company has not yet satisfied these requirements and the Company’s securities remain suspended from trading on ASX. As a result, the Company was also required by ASX to obtain Shareholder approval for acquisition of the interest in the Seluma Iron Sands Project and the acquisition of the West Pilbara Mineral Tenements.

On 20 March 2009, Shareholder approval was obtained in relation to the Seluma Iron Sands Project. At the annual general meeting held on 14 December 2009, Shareholder approval was obtained for the acquisition of 6 granted exploration licences in the West Pilbara region of Western Australia. The Company subsequently entered into a Tenement Sale Agreement to acquire a further 7 granted exploration licences in the same area. A summary of the Tenement Sale Agreement is set out in Part II of the Solicitor’s Report on Australian Tenements contained in Section 11 of this Prospectus.

The 13 granted exploration licences in the West Pilbara region of Western Australia in which the Company has an interest are collectively referred to as the West Pilbara Mineral Tenements.

The Company remains required to recomply with Chapters 1 and 2 of the ASX Listing Rules.

The Company intends to use the funds raised from the Offer towards exploration activities on both the West Pilbara Mineral Tenements and, subject to exercise of the option pursuant to the Option Agreement, the Seluma Iron Sands Project. Each of these projects is discussed in more detail below.

6.2 West Pilbara Mineral Tenements

The West Pilbara Mineral Tenements in which the Company has an interest comprise 13 granted exploration licences located south of the regional centre of Karratha in the West Pilbara region of Western Australia and form 4 project areas covering approximately 1,715 square kilometres. These project areas, known as the Mt Wohler, Pyramid, Maitland and Kylena projects, are considered to be prospective for base metals, platinum group elements and/or gold mineralisation associated with concealed greenstone sequences or layered mafic-ultramafic intrusions.

Access to the West Pilbara Mineral Tenements is either east from Karratha on the Great Northern Highway, then south on the Roebourne-Wittenoom road or south-east from Karratha on the Hamersley Iron Railway road then along station tracks.

Regional Geology

The West Pilbara region of Western Australia makes up the western portion of the Archaean Pilbara Craton and broadly consists of an Archaean granite- greenstone sequence in the north that is unconformably overlain to the south by the Fortescue Group.

The project areas are broadly aligned along the unconformity between the Archaean granite – greenstone sequence and the younger Fortescue Group sediments and mafic volcanics.

The granite – greenstone sequence in the West Pilbara is characterised by the presence of a series of large layered mafic – ultramafic intrusions. The region is host to mineralisation ranging from platinum group elements to Ni-Cu. The granite – greenstone sequence also hosts significant VMS deposits including Cu- Zn-Ag, Cu-Zn and Cu-(Zn)-(Pb). The Fortescue Group is the lowest group in the Mount Bruce Supergroup of the Precambrian Hamersley Basin and is a generally unmetamorphosed and largely undeformed sequence. No significant mineral occurrences have been recorded with the Fortescue Group rocks in the area of the West Pilbara Mineral Tenements.

Project Geology

The Mt Wohler and Pyramid projects are located in areas of the Fortescue Group rocks just south of the unconformity contact with the Archaean granite – greenstone sequence. The Maitland project is predominantly located within the Archaean granite – greenstone sequence, with the unconformity contact occurring in the southern portion of this tenement. The Kylena project is an elongate north south trending tenement that predominantly covers Fortescue Group rocks and extends south from adjacent to the unconformity contact.

Previous exploration

Previous exploration over the West Pilbara Mineral Tenements has been reasonably limited.

A regional aeromagnetic survey completed by the former Bureau of Mineral Resources, Geology and Geophysics (BMR ) in the mid 1980’s has identified a number of magnetic highs beneath Fortescue Group rocks in the portion of the West Pilbara where the West Pilbara Mineral Tenements are located. While past exploration has generally focused on these anomalies, there has been no drilling or modern geophysics completed on any of these targets.

Potential targets

The magnetic highs identified by the BMR survey have been interpreted as having potential to represent concealed greenstone sequences of layered mafic – ultramafic intrusions in the Archaean basement rocks.

The depth of the Fortescue Group cover rocks overlying the magnetic highs is unknown in the Mt Wohler, Pyramid, Maitland and Kylena projects. However, previous modelling has indicated that the cover could range from 500 to 2,000 metres in the Mt Wohler project area. Economic development on any potential

discoveries may be impacted by the depth of overburden, with modern geophysics and/or stratigraphic drilling required to test the targets and assess the depth of cover.

6.3 Seluma Iron Sands Project

On or about 4 February 2009, the Company entered into an Option Agreement with PT Seluma Mining Indonesia ( PT Seluma ) and PT Pringgodani Rizki Utama ( PT PRU ) pursuant to which PT Seluma and PT PRU granted to the Company an exclusive option to acquire a 100% interest in the issued capital of a company to be registered under the laws of Indonesia which will be established to hold, explore, develop and, if warranted, mine on KP number KW.08 JNP ( Seluma Iron Sands Project ) (and any replacement or successor tenements) (Option Agreement ).

A summary of the Option Agreement is set out in Section 13.3(b) of this Prospectus.

The Seluma Iron Sands Project is located approximately 75 kilometres south of the city of Bengkulu, Bengkulu Province, Sumatra. The project is centred on the village of Pasor Talo on the south west coast of Sumatra and includes about 6.2 kilometres of beach frontage.

The terrain is largely flat coastal plain with minor sand dune ridges. The Talo River bisects the project area and there are a number of associated tributaries and swampy areas. The area behind the beach front has mixed use between lightly wooded with forest re-growth and cultivated land ranging from palm oil plantations to subsistence farming.

The project comprises a single KP located on the coastal plain proximal to a series of inactive volcanic centres which lie along the Great Sumatran Fault. It covers an area of approximately 2,000 hectares, with 1,130 hectares located on shore and the balance located off the coast.

Local Geology

The terrestrial portion of the project extends from 1– 2 kilometres inland from the beach front and consists of a coastal plain dominated by beach sands and sand dune ridges. The profile broadly consists of fine to medium grained beach sands interbedded with sandy gravel layers, representing varying depositional environments. Basement sediments have been intersected at depths of greater than10 metres.

Iron sand mineralisation occurs as layers of varying width and concentration throughout the beach sand and sandy gravel profile, with layers of higher concentrations of iron sands typically being 0.3 – 1.0 metre in width.

Previous Exploration

There has been limited modern exploration completed over the Seluma Iron Sands Project area with no record of exploration activity prior to 2007.

The Company commenced a 71 hole aircore drilling program to systematically evaluate the potential of the project in late July of 2009. However, due to unforeseen land access issues, the program was limited to 5 holes which formed part of a section across the prospective stratigraphy in the south east of the project area along strike from previous hand auger drilling that had returned only minor to low levels of iron sands mineralisation. The holes completed were

mostly located in swampy country between two sand dune systems and did not extend to the coast. As such, the program did not test the coastal dune system or the current beach.

The land access issues resulted in a failure of the program to test the more prospective areas within the project area and therefore to systematically evaluate the potential of the project.

Proposed Exploration

The Seluma Iron Sands Project remains prospective for iron sands mineralisation and it is the Company’s intention to resume exploration activities upon securing land access agreements on the more prospective areas within the KP area.

General Status of Seluma Iron Sands Project

As it stands, the Company is satisfied with its geological technical due diligence on the Seluma Iron Sands Project. However, ongoing legal due diligence is required in order to ensure that:

(a) the Company’s rights in relation to each project are more adequately secured to reflect the new mining laws of Indonesia; and

(b) the Company has the correct Indonesian legal structures in place to ensure compliance with existing and future Indonesian mining laws.

While the Company is not expecting any issues in relation to the above, additional Indonesian specific legal and tax advice is still being sought.

In the event it is determined that any changes are required to the existing agreements or structures currently in place (after final legal and tax advice is obtained), the Company is confident that its Indonesian partners will assist and facilitate whatever is needed to ensure the Company’s rights are preserved.

The Company would also like to reiterate that operating in Indonesia is not without other risks. For this reason, investors and Shareholders should carefully read the risks set out in Section 7 of the Prospectus.

7. RISK FACTORS

7.1 Introduction

An investment in the Company is not risk free and prospective new investors should consider the risk factors described below, together with information contained elsewhere in this Prospectus, before deciding whether to apply for Shares.

The following is not intended to be an exhaustive list of the risk factors to which the Company is exposed.

Risks Specific to the Company

7.2 Re-Quotation of Shares on ASX

There is a risk that the Company may not be able to meet the requirements of the ASX for re-quotation of its Shares on the ASX. Should this occur, the Shares will not be able to be traded on the ASX until such time as those requirements can be met, if at all.

7.3 Extension and Conversion of KP – Seluma Iron Sands Project

7.4 Transfer of Title Risks

7.5 Government policy changes

On 16 December 2008, the Parliament of the Republic of Indonesia passed a new mining law, the Mineral and Coal Mining Law ( New Mining Law ). This New Mining Law came into effect on 12 January 2009.

The New Mining Law abolishes the system of mining rights under Contracts of Work, Coal Contracts of Work and Kuasa Pertambanhan ( KP ), and introduces a new system of mining permits including Izin Uaaha Pertambangan ( IUP ).

While there are saving and transitional provisions, the New Mining Law makes no mention of the continuity of KPs. To assist between the old mining laws and the New Mining Laws, the Directorate-General of Minerals, Coal and Geothermal released a Circular on 30 January 2009 that, while not law, provides guidance and direction to relevant government officers, and includes a provision that KPs, including any upgrades issued under the old mining laws, are valid until their term expires and will be converted to IUPs by 12 January 2010. Until such time as the position of KPs is confirmed at law, the status of the tenement comprising the Seluma Iron Sands Project (which is a KP) is uncertain under the New Mining Law.

7.6 Expenditure Commitments

7.7 Exploration Success

There can be no assurance that exploration of the Project, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

7.8 Operating Risks

The operations of the Company may be affected by various factors, including failure to locate or identify mineral deposits, failure to achieve predicted grades in exploration and mining, operational and technical difficulties encountered in mining, difficulties in commissioning and operating plant and equipment, mechanical failure or plant breakdown, unanticipated metallurgical problems which may affect extraction costs, adverse weather conditions, industrial and environmental accidents, industrial disputes and unexpected shortages or increases in the costs of consumables, spare parts, plant and equipment.

No assurances can be given that the Company will achieve commercial viability through the successful exploration and/or mining of its tenement interests. Until the Company is able to realise value from its projects, it is likely to incur ongoing operating losses.

7.9 Resource Estimates

Resource estimates are expressions of judgement based on knowledge, experience and industry practice. Estimates which were valid when originally calculated may alter significantly when new information or techniques become available. In addition, by their very nature, resource estimates are imprecise and depend to some extent on interpretations, which may prove to be inaccurate. As further information becomes available through additional fieldwork and analysis, the estimates are likely to change. This may result in alterations to development and mining plans which may, in turn, adversely affect the Company’s operations.

7.10 Commodity Price Volatility and Exchange Rate Risks

If the Company achieves success leading to mineral production, the revenue it will derive through the sale of commodities exposes the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of the Company. Such factors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic factors.

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 Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets.

7.11 Environmental Risks

The operations and proposed activities of the Company on the West Pilbara Minerals Tenements are subject to State and Federal Australian environmental laws and regulations, while its operations and proposed activities on the Seluma Iron Sands Project in Indonesia are subject to Indonesian laws and regulation concerning the environment. As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws.

In this regard, the Department of Mines and Petroleum in Western Australia will from time to time review the environmental bonds that are placed on the West Pilbara Minerals Tenements. The Directors are not in a position to state whether a review is imminent or whether the outcome of such a review would be detrimental to the funding needs of the Company.

The Company may also become liable for environmental damage caused by previous owners of any tenements the Company acquires. As a result, substantial liabilities to third parties or governmental entities may be incurred, the payment of which could reduce or eliminate funds available for acquisitions, exploration and development or cause the Company to suffer losses.

7.12 Title Risks

The mining tenements in which the Company has or may acquire an interest are subject to the applicable local laws and regulations. There is no guarantee that

any tenement applications or conversions in which the Company has a current or potential interest will be granted.

Interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure 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 insufficient funds are available to meet expenditure commitments.

Permits (or applications) in Indonesia in which the Company has an interest are (or, if granted/extended, will be) subject to the relevant conditions applying in Indonesia. Failure to comply with these conditions may render the permits liable to forfeiture.

All of the projects in which the Company has an interest will be subject to application for permit renewals from time to time. Renewal of the term of each permit is subject to applicable legislation. If a permit is not renewed for any reason, the Company may suffer significant damage through loss of the opportunity to develop and discover any mineral resources on that permit.

The Company is reliant to a certain extent on the cooperation and compliance of parties to the agreements to which it is a party.

7.13 Native Title – West Pilbara Minerals Tenements

It is also possible that, in relation to tenements which the Company has an interest in or will in the future acquire such an interest, there may be areas over which legitimate common law native title rights of Aboriginal Australians exist. If native title rights do exist, the ability of the Company to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations may be adversely affected.

There may be areas or objects of Aboriginal heritage located on the West Pilbara Mineral Tenements. Any interference with these sites or objects must be in strict conformity with the provisions of the relevant legislation. In addition, it may also be necessary for the Company to enter into separate arrangements with the traditional owners of the sites. This could be costly for the Company and potentially cause delays in its proposed exploration activities.

Further to this, it is possible that an Indigenous Land Use Agreement ( ILUA ) may be registered against one or more of the tenements in which the Company has an interest. The terms and conditions of any such ILUA may be unfavourable for, or restrictive against, the Company.

The Directors will closely monitor the potential effect of native title claims involving tenements in which the Company has or may have an interest.

7.14 Land Owner Risk

The Company may be required to pay compensation to land owners, local authorities, traditional land users and others who may have an interest in the area covered by an Indonesian mining tenement. The Company’s ability to resolve compensation issues and compensation costs involved will have an impact on the future success and financial performance of the Company’s mining operations. If the Company is unable to resolve such compensation

claims on economic terms, this could have a material adverse effect on the business, results or operations and financial condition of the Company.

7.15 Country Risk

7.16 Legal Risk

The introduction of new legislation or amendments to existing legislation by governments, developments in existing common law, or the respective interpretation of the legal requirements in any of the legal jurisdictions which govern the Company’s operations or contractual obligations, could impact adversely on the assets, operations and, ultimately, the financial performance of the Company and the value of its Shares. In addition, there is a commercial risk that legal action may be taken against the Company in relation to commercial matters.

7.17 Additional Requirements for Capital

The Company’s capital requirements depend on numerous factors. Depending on the Company’s ability to generate income from its operations, the Company may require further financing in addition to amounts raised under the capital raising. Any additional equity financing will dilute shareholdings, and debt financing, if available, may involve restrictions on financing and operating activities. If the Company is unable to obtain additional financing as needed, it may be required to reduce the scope of its operations and scale back its exploration programmes as the case may be.

7.18 Contractual Risks

The Company has entered into the Tenement Sale Agreement as summarised in Part II of the Solicitor’s Report on Australian Tenements contained in Section 11 of this Prospectus and the Option Agreement as summarised in Section 13.3(b) of this Prospectus. The ability of the Company to achieve its objectives will depend on the performance by Pilbara Mining Pty Ltd of its obligations under the Tenement Sale Agreement and PT Seluma Mining Indonesia and PT Pringgodani Rizki Utama under the Option Agreement. If Pilbara Mining Pty Ltd, PT Seluma

Mining Indonesia and PT Pringgodani Rizki Utama (as the case may be) defaults in the performance of its obligations it may be necessary for the Company to approach a court to seek a legal remedy. Legal action can be costly and there can be no guarantee that a legal remedy will be ultimately granted on the appropriate terms.

General Risks

7.19 Economic Risks

General economic conditions, movements in interest and inflation rates 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.

7.20 Market Conditions

Share market conditions may affect the value of the Company’s quoted securities regardless of the Company’s operating performance. Share market conditions are affected by many factors such as:

(a) general economic outlook;

(b) interest rates and inflation rates;

(d) changes in investor sentiment toward particular market sectors;

(e) the demand for, and supply of, capital; and

(f) terrorism or other hostilities.

The market price of securities can fall as well as rise and may be subject to varied and unpredictable influences on the market for equities in general and resource exploration stocks in particular. Neither the Company nor the Directors warrant the future performance of the Company or any return on an investment in the Company.

7.21 Reliance on Key Personnel

The responsibility of overseeing the day-to-day operations and the strategic management of the Company depends substantially on its senior management and its key personnel. There can be no assurance given that there will be no detrimental impact on the Company if one or more of these employees cease their employment.

7.22 Investment Speculative

The above list of risk factors ought not to be taken as exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus. Therefore, the Shares to be issued pursuant to this Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

8. BOARD & MANAGEMENT

8.1 Directors

Mathew Walker Non-executive Chairman

Mr Walker has extensive experience in the provision of corporate advice and in public company management. Specialising in the mining sector, Mr Walker has served as executive Chairman or Managing Director for public companies with mining interests in North America, South America, Africa, Australia, and Central Asia. Currently he serves as Managing Director of Augustus Minerals Limited and Non-executive director of BrainZ Instruments Limited. He is a director of boutique investment banking and corporate advisory firm Alto Capital, and is a member of the Australian Institute of Company Directors. He holds a Bachelor of Business from the University of Technology, Sydney.

James Robinson Non-executive Director

Mr Robinson joined the Company following 10 years with one of Western Australia’s leading stockbroking firms. He holds a Bachelor of Economics from the University of Western Australia and is currently completing a Graduate Diploma of Applied Corporate Governance from Chartered Securities Australia.

Mr Robinson currently serves as Company Secretary of Augustus Minerals Limited and BrainZ Instruments Limited. He is also a director of Cicero Corporate Services Pty Ltd.

Gavan Farley Dipl. Bus., MBA, MAICD Non-executive Director

Gavan Farley has over 35 years in international business experience, ranging from the hospitality industry in Europe, Africa and the Caribbean, to more than 20 years managing a high technology engineering solutions company in the United Kingdom, Germany and the United States of America. Mr Farley is currently a consultant of Empire Securities Group Pty Limited, a boutique corporate advisory firm based in Sydney that specialises in raising capital for companies in the resources and technology sectors.

Mr Farley also serves as a non-executive director of Indochine Resources Ltd, a gold and base metals exploration company with assets in Cambodia and Laos and has been acting as company secretary for Pilbara Mining Pty Ltd, the vendor of the 6 granted exploration licences in the West Pilbara region of Western Australia recently acquired by the Company.

Mr Farley obtained his business qualifications with a Business Studies Diploma from Footscray Institute of Technology (now Victoria University) and an MBA- Finance from the University of Birmingham. Apart from his time in Australia, he has spent over 15 years in the United Kingdom, 11 years in the United States of America and a further 5 years in Africa and the Caribbean.

8.2 Management and Consultants

The Company is aware of the need to have sufficient management to properly supervise the exploration and (if successful) for the development of the Project.

As the Company’s projects become more involved, the Board will continually monitor and the management roles in the Company and look to appoint additional management and/or consultants when and where appropriate to ensure proper management of the Company’s projects.

8.3 Corporate Governance

The Company’s main corporate governance policies and practices are outlined below:

The Board of Directors

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against those objectives. The goals of the corporate governance processes are to:

(a) maintain and increase Shareholder value;

(b) ensure a prudential and ethical basis for the Company’s conduct and activities; and

Consistent with these goals, the Board assumes the following responsibilities:

(a) developing initiatives for profit and asset growth;

(b) reviewing the corporate, commercial and financial performance of the Company on a regular basis;

(d) identifying business risks and implementing actions to manage those risks and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully-informed basis.

Composition of the Board

Election of Board members is substantially the province of the Shareholders in general meeting. However, subject thereto, the Company is committed to the following principles:

(a) the Board is to comprise Directors with a blend of skills, experience and attributes appropriate for the Company and its business; and

(b) the principal criterion for the appointment of new Directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been committed to by the Board.

Independent professional advice

Subject to the Chairman’s approval (not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

Remuneration arrangements

The remuneration of an Executive Director will be decided by the Board, without the affected Executive Director participating in that decision-making process.

The total maximum remuneration of Non-Executive Directors is the subject of a Shareholder resolution in accordance with the Company’s Constitution, the Corporations Act and the ASX Listing Rules, as applicable. The determination of Non-Executive Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Non-executive Director. The current limit, which may only be varied by Shareholders in general meeting, is an aggregate amount of $250,000 per annum.

The Board may award additional remuneration to Non-executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

External audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

Audit committee

The Company will not have a separate constituted audit committee.

Identification and management of risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

Ethical standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

9. INDEPENDENT GEOLOGIST’S REPORT

32 25 February 2010

The Directors Pilbara Minerals Limited Suite 9, 1200 Hay Street West Perth WA 6005

Dear Sirs,

INDEPENDENT GEOLOGIST’S REPORT ON THE

MINERAL PROPERTIES of PILBARA MINERALS LIMITED

Zephyr Consulting Group Pty Ltd (“Zephyr”) has been commissioned by Pilbara Minerals Limited (ABN 95 112 425 788) (“Pilbara”) to provide an independent technical report on the company’s projects in the Pilbara region of Western Australia and Sumatra in Indonesia. This report is to be included in a Prospectus to be lodged by Pilbara with the Australian Securities and Investments Commission (“ASIC”), offering for subscription a maximum of 30 million Shares at an issue price of $0.20 per Share (“the Prospectus”), to raise up to a maximum of $6.0 million (before costs associated with the issue).

This is not an independent evaluation report, and as such, serves only to comment on the geological setting and proposed exploration programs on the properties. Zephyr has not been asked to comment on the potential economic value or financial considerations pertaining to the value of Shares or assets held by Pilbara in relation to these properties.

Pilbara is acquiring a group of granted tenements in the West Pilbara region of Western Australia and has an option to acquire a single project in Bengkulu Province, Sumatra, Indonesia. The project areas in the West Pilbara; Mt Wohler, Pyramid, Maitland and Kylena, are considered to be prospective for base metals, PGE and/or gold mineralisation associated with concealed greenstone sequences or layered mafic – ultramafic intrusions. The Seluma Iron Sands Project, in Bengkulu Province, Sumatra, is a single lease considered to be prospective for iron rich heavy mineral sands within beach sands and sand dunes.

Details in respect to the legal status and tenure of the tenements comprising the Projects have not been considered in this report.

DECLARATIONS

Relevant codes and guidelines

This report has been prepared in accordance with the rules and guidelines issued by such bodies as the ASIC and ASX Limited (“ASX”), which pertain to Independent Expert Reports. Where mineral resources have been referred to in this Report, the classifications are consistent with the Australasian Code for Reporting of Mineral Resources and Ore Reserves (“JORC Code”), prepared by the Joint Ore Reserves

! ! Page !1! Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia, effective December 2004. The report complies with section 716(2) of the Corporations Act 2001 where consent is required if unpublished statements have been attributed to third parties.

Under the definition provided by the ASX and in the JORC Code, these properties are classified as ‘exploration projects’, which are inherently speculative in nature. The properties are considered to be sufficiently prospective, subject to varying degrees of risk, to warrant further exploration and development of their economic potential, consistent with the programs proposed by Pilbara.

Sources of Information

The statements and opinion contained in this report are given in good faith and this review is based on information provided by the title holders, along with technical reports by consultants, previous tenements holders and other relevant published and unpublished data for the area. Zephyr has endeavoured, by making all reasonable enquiries, to confirm the authenticity, accuracy and completeness of the technical data upon which this report is based. A final draft of this report was provided to Pilbara, along with a written request to identify any material errors or omissions prior to lodgement.

The independent technical report has been compiled based on information available up to and including the date of this report. Consent has been given for the distribution of this report in the form and context in which it appears. Zephyr has no reason to doubt the authenticity or substance of the information provided.

Independence

Zephyr, its employees and associates are not, nor intend to be directors, officers or other direct employees of Pilbara and have no material interest in the Projects or Pilbara. The relationship with Pilbara is solely one of professional association between client and independent consultant. The review work and this report are prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this Report.

Yours faithfully

Zephyr Consulting Group Pty Ltd Level 2, 79 Hay Street Subiaco WA 6008 Phone: 61 8 9200 4474 Fax: 61 8 9200 4475

! ! Page !2! Author: Ian Prentice, B.Sc., GradDipAppFin (Sec Inst), MAusIMM, Director of Zephyr

Ian Prentice has over 20 years experience in exploration and mining geology and property evaluation, working for exploration and mining companies and in the stock broking industry. He has wide ranging exploration and operating experience in a number of commodities including gold and base metals. He currently consults to the mining industry specialising in project review, due diligence and exploration management. He has been involved in exploration through to feasibility study in Western Australia, Northern Territory, Queensland, New Zealand and Indonesia.

Mr Prentice completed studies in Geology at the University of Western Australia in 1986 and completed postgraduate studies with the Securities Institute of Australia and has been awarded a Graduate Certificate in Applied Finance and Investment.

Mr Prentice is a Member of the Australasian Institute of Mining and Metallurgy (“AusIMM”) and has the appropriate relevant qualifications, experience, competence and independence to be considered as an “Expert” and “Competent Person” under the Australian Valmin and JORC Codes respectively.

! ! Page !3! Table of Contents

1. ! SUMMARY ...... 6 !

2. ! WEST PILBARA REGION OF WESTERN AUSTRALIA ...... 7 !

3. ! MT WOHLER PROJECT ...... 8 !

3.1. ! EXPLORATION POTENTIAL ...... 8 !

3.2. ! LOCATION AND TENURE ...... 8 !

3.3. ! LOCAL GEOLOGY ...... 9 !

3.4. ! PREVIOUS EXPLORATION ...... 10 !

3.5. ! EXPLORATION PROGRAM AND BUDGET ...... 10 !

4. ! PYRAMID PROJECT ...... 11 !

4.1. ! EXPLORATION POTENTIAL ...... 11 !

4.2. ! LOCATION AND TENURE ...... 12 !

4.3. ! LOCAL GEOLOGY ...... 12 !

4.4. ! PREVIOUS EXPLORATION ...... 13 !

4.5. ! EXPLORATION PROGRAM AND BUDGET ...... 15 !

5. ! MAITLAND PROJECT ...... 15 !

5.1. ! EXPLORATION POTENTIAL ...... 15 !

5.2. ! LOCATION AND TENURE ...... 16 !

5.3. ! LOCAL GEOLOGY ...... 17 !

5.4. ! PREVIOUS EXPLORATION ...... 17 !

5.5. ! EXPLORATION PROGRAM AND BUDGET ...... 18 !

6. ! KYLENA PROJECT ...... 19 !

6.1. ! EXPLORATION POTENTIAL ...... 19 !

6.2. ! LOCATION AND TENURE ...... 19 !

6.3. ! LOCAL GEOLOGY ...... 20 !

6.4. ! PREVIOUS EXPLORATION ...... 21 !

6.5. ! EXPLORATION PROGRAM AND BUDGET ...... 22 !

7. ! BENGKULU PROVINCE, SUMATRA, INDONESIA ...... 23 !

! ! Page !4! 8. ! SELUMA IRON SANDS PROJECT, SUMATRA ...... 24 !

8.1. ! EXPLORATION POTENTIAL ...... 24 !

8.2. ! LOCATION AND TENURE ...... 24 !

8.3. ! LOCAL GEOLOGY ...... 25 !

8.4. ! PREVIOUS EXPLORATION ...... 25 !

8.5. ! EXPLORATION PROGRAM AND BUDGET ...... 28 !

9. ! EXPLORATION BUDGET ...... 29 !

10. ! REFERENCES ...... 30 !

11. ! GLOSSARY OF TECHNICAL TERMS ...... 32 !

! !

! ! Page !5! 1. SUMMARY

Pilbara has or may acquire an interest in four project areas in the West Pilbara region of Western Australia and an exclusive option to acquire a single project in Bengkulu Province, Sumatra, Indonesia. This report reviews all five project areas.

The project areas in the West Pilbara, referred to as Mt Wohler, Pyramid, Maitland and Kylena, are considered to be prospective for base metals, PGE and/or gold mineralisation associated with concealed greenstone sequences or layered mafic – ultramafic intrusions. The West Pilbara region is host to a wide range of mineralisation styles, with significant deposits including: Radio Hill – a layered mafic – ultramafic intrusion hosted Ni-Cu-(PGE) deposit Mount Sholl – a series of layered mafic – ultramafic intrusion hosted Ni-Cu deposits Elizabeth Hill – a Ag-(Pb)-(Ni) deposit Whundo – a VMS Cu-Zn-Ag deposit Munni Munni - a layered mafic – ultramafic intrusion hosted PGE-Ni-Cu deposit Whim Creek – a VMS Cu-(Zn)-(Pb) deposit Balla Balla – layered mafic – ultramafic intrusion hosted V-Ti deposits

Previous exploration over Pilbara’s West Pilbara project areas has been reasonably limited. A regional aeromagnetic survey completed by the Bureau of Mineral Resources, Geology and Geophysics (“BMR”) in the mid 1980’s identified a number of magnetic highs beneath Fortescue Group rocks in this portion of the West Pilbara which have formed the basis of the majority of subsequent exploration activity. The magnetic highs have been interpreted as having potential to represent concealed greenstone sequences or layered mafic - ultramafic intrusions in the Archaean basement rocks. There has been no drilling or modern geophysics completed on any of these targets.

The project in Bengkulu Province, Sumatra, referred to as the Seluma Iron Sands Project, consists of a single lease considered to be prospective for iron rich heavy mineral sands within beach sands and sand dunes. Exploration by the project vendors, PT Pringgondani Rizki Utama (“PT PRU”), and Pilbara has involved three separate shallow sampling programs and a two limited drilling programs, with the majority of this activity focused within the central portion of the lease. Results from this work have confirmed the presence of potentially economic concentrations of Iron Sands within the lease, with assay results ranging from 4.8 to 22.5% Fe.

! ! Page !6! 2. WEST PILBARA REGION OF WESTERN AUSTRALIA

The West Pilbara region of Western Australia is host to a wide variety of mineral deposits, including Radio Hill (Ni-Cu-(PGE)), Munni Munni (PGE-Ni-Cu), Whim Creek (Cu-(Zn)-(Pb)), Cape Lambert (Magnetite) and Balla Balla (V-Ti). This region makes up the western portion of the Archaean Pilbara Craton and broadly consists of an Archaean granite – greenstone sequence in the north that is unconformably overlain to the south by the Fortescue Group.

The granite – greenstone sequence in the West Pilbara is characterised by the presence of a series of layered mafic – ultramafic intrusions which are commonly mineralised. Mineralisation ranges from PGE dominant at Munni Munni to Ni – Cu dominant at Radio Hill and Mt Sholl. The region is also host to a series of VMS deposits, including Whundo (Cu-Zn-Ag), Yannery Hill (Cu-Zn) and Whim Creek (Cu-(Zn)-(Pb)).

The Pilbara project areas are generally aligned along the unconformity between the Archaean granite – greenstone sequence and the younger Fortescue Group sediments and mafic volcanics. The Fortescue Group is the lowest group in the Mount Bruce Supergroup of the Precambrian Hamersley Basin and is a generally unmetamorphosed and largely undeformed sequence. The Fortescue Group is known to host gold mineralisation, uranium occurrences, base metal mineralisation and fluorite, however there are no known mineralisation occurrences within Fortescue Group rocks in the area of the Pilbara project areas.

Figure 1 – West Pilbara Regional Geology and Project Locations

! ! Page !7! Mt Wohler and Pyramid are located in areas of Fortescue Group rocks just south of the unconformity contact with the Archaean granite – greenstone sequence. Maitland is predominantly located within the Archaean granite – greenstone sequence, with the unconformity contact occurring in the southern portion of this tenement. Kylena is an elongate north south trending tenement that predominantly covers Fortescue Group rocks and extends south from adjacent to the unconformity contact.

The depth of the Fortescue Group cover rocks is unknown in the Mt Wohler, Pyramid, Maitland and Kylena areas; although previous modeling has indicated that the cover could range from 500 – 2,000m in the Mt Wohler area.

3. MT WOHLER PROJECT

3.1. EXPLORATION POTENTIAL

The primary exploration target within the Mt Wohler project area is a magnetic target defined from the BMR regional aeromagnetic data that has been interpreted to represent a concealed layered mafic – ultramafic intrusion – the Mt Wohler magnetic anomaly. Work by previous explorers has confirmed the location and tenor of the anomaly, however no surface expression of the anomaly has been identified within the exposed Fortescue Group rocks. Modeling of the 1985 BMR regional aeromagnetic survey data has provided depths estimates in the range of 500 – 2,000m and indicated that the shallower source was around 500 – 1,000m.

This project is at a relatively early stage of exploration with systematic modern exploration, including a detailed low level airborne magnetic survey, required to assist in further defining the anomaly and providing a better understanding of the depth of the target prior to drill testing. The target for this exploration would be a PGE-Ni-Cu mineralised layered mafic – ultramafic intrusion, similar in style to the Munni Munni or Radio Hill deposits. Given the estimated depth to the target a large medium to high grade deposit would be required to support economic development.

3.2. LOCATION AND TENURE

The Mt Wohler project is located about 120 kilometres south east of the regional centre of Karratha and about 50 kilometres south south west of Whim Creek. The north east corner of the Millstream – Chichester National Park forms the southern boundary of the project. Access is east from Karratha on the Great Northern Highway, then south on the Roebourne – Wittenoom road to the Bookarginner Outcamp, then east on station tracks to the project area.

The project consists of a three granted exploration licences (E47/1092, E47/1811 and E47/1816) covering an area of 78 sub blocks. E47/1092 was granted on 13 June 2007 and expires on 12 June 2012, E47/1811 and E47/1816 were granted on 2 July 2009 and expire on 1 July 2014. Annual expenditure commitment is $92,000 and tenement rental is $12,681.

! ! Page !8! Figure 2 – Mt Wohler Project Summary Map

3.3. LOCAL GEOLOGY

Mt Wohler is on the northern edge of the Mount Bruce Supergroup of the Precambrian Hamersley Basin and covers rocks of the Fortescue Group just south of the unconformity contact with the Archaean granite – greenstone sequence.

The geology from south to north consists of broadly flat lying units of the Fortescue Group: the Tumbiana Formation – mafic to intermediate volcaniclastic sandstone, argillite, basaltic flows and breccia, chert, stromatolitic limestone and dolerite, and calcareous sandstone, overlying the Kylena Formation – basaltic flows, andesite, dacite and rhyolite, overlying the Lyle Creek Member of the Hardey Formation – massive felsic to intermediate volcaniclastic sandstone and conglomerate, and

the Cooya Pooya Dolerite – a fine to medium grained dolerite.

! ! Page !9! The central and north western portion of the tenement is covered by colluvium associated with the Coorbeelie River system.

There are no recorded mineral occurrences within the project area, however the Top Camp gold prospect of the Croydon Mining area is located within Archaean sediments to the north of E47/1811. Previous exploration and mining activities at Top Camp have identified and exploited modest tonnages of high grade alluvial gold mineralisation.

Regional aeromagnetic data over the Mt Wohler project has identified an elongate west north west trending magnetic high (“the Mt Wohler anomaly”) in the central southern portion of the tenement beneath rocks of the Tumbiana and Kylena Formations. This magnetic high has been previously interpreted to represent a potential layered mafic – ultramafic intrusion covered by rocks of the Fortescue Group.

3.4. PREVIOUS EXPLORATION

Exploration of the Mt Wohler project area prior to the 1980’s consisted of predominantly reconnaissance investigations by Utah, Inco, Pacminex, CRAE and Marathon Petroleum, with the majority of this activity focused on an area extending north from the northern third of the tenement. The main target of this work was conglomerate hosted uranium and gold mineralisation and was focused on the area to the north of the Cooya Pooya Dolerite. This work included three modest drilling programs, however it failed to identify any significant grades of uranium or gold.

Dominion Mining Limited pegged exploration licences over the project area in 1988 following the late 1987 release of the 1985 BMR regional aeromagnetic survey data that covered the area. This data reinforced the concept of a large layered mafic – ultramafic intrusion beneath the rocks of the Fortescue Group and this formed the basis of Dominion’s exploration model. Dominion’s exploration included the processing and interpretation of regional aeromagnetic, gravity and Landsat Thematic Mapper data, field reconnaissance/mapping and ground magnetics. This work failed to identify any surface mineralisation, however it confirmed the location and tenor of the Mt Wohler magnetic anomaly interpreted to represent a concealed layered mafic – ultramafic intrusion. Dominion surrendered its project without drill testing the magnetic target due to the expected high cost of drilling the interpreted deep target.

3.5. EXPLORATION PROGRAM AND BUDGET

Initial exploration is proposed to consist of compilation of the data available across the project area including ground truthing, and where appropriate field mapping and surface sampling. This will be followed by a detailed low level aeromagnetic survey to assist in defining the basement rocks with potential for an airborne electromagnetic survey to test the prospectivity of any magnetic anomalies identified. A limited program of RC drilling may be required to target any defined electromagnetic anomalies.

The focus in the second year may be on the infill RC and diamond drilling of target zones defined in year 1, with the aim of scoping out any identified mineralised zones.

! ! Page !10 ! Table 1 – Mt Wohler Project – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL Data Acquisition and Review 8,000 3,250 11,250 25,000 7,500 32,500 Land Management 17,700 19,150 36,850 17,700 19,150 36,850 Geological Mapping 3,500 2,250 5,750 15,000 10,000 25,000 Surface Sampling and Prospecting 3,000 2,000 5,000 20,000 7,500 27,500 Geophysics 75,000 0 75,000 125,000 0 125,000 RAB/AC Drilling 17,500 0 17,500 25,000 0 25,000 RC Drilling 0 65,000 65,000 40,000 125,000 165,000 Diamond Drilling 0 25,000 25,000 0 80,000 80,000 Assays 11,900 25,500 37,400 30,600 53,380 83,980 TOTAL 136,600 142,150 278,750 298,300 302,530 600,830

In the event that the Company raises the minimum subscription it will modify its exploration activities such that the quantum of geophysics and follow up RC and diamond drilling is reduced. This reduction would have the effect of extending the evaluation period of any identified mineralised zones. Expenditures would remain in excess of statutory expenditure commitments.

4. PYRAMID PROJECT

4.1. EXPLORATION POTENTIAL

The exploration model for the project is the identification of layered mafic - ultramafic intrusion or greenstone hosted mineralisation within the Archaean granite – greenstone basement sequence beneath the rocks of the Fortescue Group. Magnetic anomalies, including an elongate north north east trending magnetic anomaly extending along the trend of the George River, identified through the 1985 BMR regional aeromagnetic survey data are interpreted to represent either concealed greenstone sequences or layered mafic - ultramafic intrusions. These exploration targets have not been effectively evaluated by previous explorers in the area with the Fortescue Group rocks and recent cover likely to have masked any surface expression of potential buried mineralisation.

There is potential for the Pyramid project to host gold and/or base metal mineralisation within the interpreted concealed greenstone sequences or layered mafic - ultramafic intrusions. Modern exploration techniques, incorporating a detailed low level airborne magnetic survey and an electromagnetic survey, would be required to assist in defining the extent of the magnetic anomalies and providing an estimate of the depth to basement. This work could then be followed by broad spaced “stratigraphic” drilling to test the defined targets.

This project is at a very early stage of exploration with a number of conceptual targets defined without any surface expression, which require drill testing to confirm the concept; however the opportunity exists for the identification of significant base metal and/or gold mineralisation.

! ! Page !11 ! 4.2. LOCATION AND TENURE

The Pyramid project is located between 50 and 70 kilometers south east of the regional centre of Karratha. The north trending Robe River Railway passes through the western portion of Pyramid and the Hamersley Iron Railway passes to the south west. Access is east from Karratha on the Great Northern Highway, then either south along the Robe River Railway road or south on the Roebourne – Wittenoom road, which runs through the eastern portion of the project area. Access within the project area is predominantly on a network of station tracks.

The Harding Dam is located in the north western portion of the project, with large areas of the western third of the project covered by Harding Dam catchment areas. The project extends southward to the northern boundary of the Millstream – Chichester National Park, which broadly forms the southern boundary of the project area, and extends to the north east towards the Pyramid Station Homestead.

The project consists of eight granted exploration licences covering 362 sub blocks.

Tenement Grant Date Ex pir y Date Area Commitment Rent E47/109 3 1 3/06/07 12/06/12 69BL $69 ,000 $12 ,736 E47 /109 4 1 3/06/0 7 12 /06/ 12 7 0BL $70,000 $12 ,9 21 E47 /1095 1 3/06/0 7 12 /06/ 12 55 BL $55,000 $10, 152 E47 /1812 2 /0 7/09 1 /0 7/14 3BL $15,000 $356 E47/181 3 2/07/09 1/07/14 70BL $70 ,000 $8,3 01 E47/1814 2/07/09 1/07/14 30BL $3 0,000 $3, 557 E47/1815 2/07/09 1/07/14 30BL $3 0,000 $3, 557 E47 /1817 2 /0 7/09 1 /0 7/14 35 BL $35,000 $4,150 Tota l 36 2BL $3 74 ,000 $55, 730 Table 2 – Pyramid Project – Tenement Schedule

4.3. LOCAL GEOLOGY

The project area is dominated by the Cooya Pooya Dolerite sequence, with the geology from south to north consisting of broadly flat lying units of the Fortescue Group: the Lyle Creek Member of the Hardey Formation – massive felsic to intermediate volcaniclastic sandstone and conglomerate, the Hardey Formation – argillite, sandstone, conglomerate, basaltic flows and breccia, the Cooya Pooya Dolerite – a fine to medium grained dolerite, and the Mount Roe Basalt – basaltic flows and breccia, and basaltic volcaniclastic sandstone.

! ! Page !12 ! The unconformity contact with the Archaean granite – greenstone sequence is adjacent to the north west and northern boundary of the project, with the geology in this area dominated by a north east trending package of basaltic and andesite flows, and rhyolite and dacite flows, including the interpreted extension of the Whundo – Yannery mine sequence. Flood plains and colluvium associated with the Harding River, a multi channel north north west flowing river system, cover the central western portion of the project area. The eastern portion of the project is dominated by the flood plain and associated colluvium of the George River, a multi channel north north east flowing river system that is up to 10 kilometres wide.

There are no recorded mineral occurrences within the project area, however the Mt Oscar iron deposit is located within 5 to 10 kilometres of the northern boundary of the project, the Yannery Hill Cu-Zn, Whundo Cu-Zn-Ag, Elizabeth Hill Ag and Munni Munni PGE-Ni-Cu deposits are located within 10 to 20 kilometres to the west of E47/1093 and the Top Camp gold prospect of the Croydon Mining area is located within Archaean sediments about 25 kilometres east of E47/1095. The Whundo – Yannery mine sequence is interpreted to trend to the north east parallel to the north west boundary of the project area, with a number of gold and base metal occurrences documented in this area 2 – 5 kilometers from the E47/1093 tenement boundary.

Regional aeromagnetic data over the project area shows two parallel east north east trending magnetic highs within E47/1093, a north trending magnetic high in the centre of the project area and an elongate north north east trending magnetic anomaly coincident with the current George River within E47/1095. These magnetic anomalies are interpreted to represent features within the Archaean granite – greenstone bedrock beneath the rocks of the Fortescue Group.

4.4. PREVIOUS EXPLORATION

There has been minimal modern exploration over the project area other than regional reconnaissance and prospecting programs. The majority of exploration in recent times has focused on the area to the north west of the project area covering the interpreted north eastern extension of the Whundo – Yannery mine sequence.

Dominion Mining Limited held an exploration licence over the East Well area – excluding the East Well gold occurrences – from 1993. Exploration undertaken included prospecting, interpretation of regional magnetics and Landsat TM and the review of previous exploration. A number of base metal and gold prospects were identified across the project area associated with interpreted intrusive complexes along strike from the Whundo – Yannery deposits.

Dominion Mining Limited also completed an assessment of the E47/1095 area in the late 1980’s following the release of the 1985 BMR regional aeromagnetic survey data. Processing and interpretation of the regional aeromagnetic survey data and Landsat Thematic Mapper data for the area confirmed the presence of an elongate north north east trending magnetic anomaly. The Thematic Mapper imagery indicated that the George River drainage system contains extensive and probably deep overburden.

! ! Page !13 ! Dominion concluded that the magnetic anomaly associated with the George River is almost certainly related to concealed greenstones. No further work was undertaken.

In 1996 Xplore Pty Ltd explored the East Well area – named the Comet Well Project – specifically for gold mineralisation. Xplore focused on three specific prospects – East Well South, East Well Copper Zinc and Sullam Gold. Work completed, including field reconnaissance, downgraded the three target areas and Xplore relinquished the tenement.

Dragon Resources Limited held tenure surrounding the Whundo Cu-Zn-Ag deposit and extending to the north east as part of its large West Pilbara Project which it explored between 1993 and 2000. Dragon flew an aeromagnetic survey over most of its holding in 1994 and in 1997 entered into a joint venture with Stockdale Prospecting Limited to explore for diamonds over a number of lease including the area closest to the north western boundary of the project. Stockdale completed reconnaissance stream sediment sampling over the joint venture area and selected the leases closest to the project for follow up exploration.

Figure 3 – Pyramid Project Summary Map

! ! Page !14 ! 4.5. EXPLORATION PROGRAM AND BUDGET

The focus of the first year’s exploration will be the compilation of all available data, geological mapping and prospecting, surface sampling and a detailed low level aeromagnetic survey undertaken to identify magnetic anomalies within basement rocks. This may be followed by an airborne electromagnetic survey across any magnetic anomalies defined to identify possible drill targets within these anomalies. Limited programs of RAB and RC drilling would be carried out as a first pass test of targets identified.

Activity in the second year would be expected to be dominated by RC and diamond drilling of target zones identified from work competed in the first year, with the aim of quantifying any potential mineralised zones.

Table 3 – Pyramid Project – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL Data Acquisition and Review 18,700 5,490 24,190 35,000 15,000 50,000 Land Management 60,750 62,220 122,970 60,750 62,220 122,970 Geological Mapping 9,000 6,250 15,250 20,000 12,500 32,500 Surface Sampling and Prospecting 11,000 6,000 17,000 22,500 12,500 35,000 Geophysics 200,000 0 200,000 350,000 0 350,000 RAB/AC Drilling 50,000 0 50,000 50,000 50,000 100,000 RC Drilling 0 170,000 170,000 50,000 200,000 250,000 Diamond Drilling 0 75,000 75,000 0 175,000 175,000 Assays 34,000 68,000 102,000 51,000 125,800 176,800 TOTAL 383,450 392,960 776,410 639,250 653,020 1,292,270

In the event that the Company raises the minimum subscription exploration activities will be modified such that there would be a reduction in the geophysics and follow up drilling. This would extend the period required to evaluate any identified mineralised zones, however expenditures would remain in excess of statutory expenditure commitments.

5. MAITLAND PROJECT

5.1. EXPLORATION POTENTIAL

The exploration model for the project is the identification of layered mafic - ultramafic intrusion and/or greenstone hosted base metal, PGE and/or gold mineralisation. The project predominantly overlies Archaean granite – greenstone rocks, albeit that a large proportion of the area is masked by colluvium and the bedrock is dominated by granites, with only a small area in the south covered by Fortescue Group rocks.

This project is at a relatively early stage of exploration, with previous exploration both on the area covered by the tenement and adjacent to the tenement having identified a number of conceptual exploration targets. These targets, interpreted to represent layered mafic - ultramafic intrusions or greenstone sequences, consist of magnetic anomalies identified through the 1985 BMR regional aeromagnetic survey data, with one

! ! Page !15 ! in the eastern portion of the tenement under colluvial cover and two in the south west beneath the Fortescue Group rocks. An additional target is the potential north or south strike extension of the Toorare Pool intrusive prospect which has identified PGE and base metal anomalism adjacent to the tenement boundary.

There is potential to host significant base metal, PGE and/or gold mineralisation within the interpreted concealed greenstone sequences or layered mafic - ultramafic intrusions, with modern exploration techniques incorporating detailed low level airborne magnetics and electromagnetics required to assist in defining the extent of the anomalies and an estimate of the depth of cover. Broad spaced drilling would then be required to test the defined targets.

5.2. LOCATION AND TENURE

Maitland is located about 25 kilometres south east of the regional centre of Karratha. Access is south east from Karratha along the Hamersley Iron Railway road, then via station tracks to the west into the project area. The Weymul Aboriginal Community is located in the south eastern portion of the tenement.

The project consists of a single granted exploration licence (E47/1096) covering an area of 49 sub blocks. The tenement was granted on 6 September 2007 and expires on 5 September 2012. Annual expenditure commitment is $49,000 and tenement rental is $9,044.

Figure 4 – Maitland Project Summary Map

! ! Page !16 ! 5.3. LOCAL GEOLOGY

The unconformity contact between the Archaean granite – greenstone sequence and the Fortescue Group rocks of the Mount Bruce Supergroup of the Precambrian Hamersley Basin is located along the southern portion of the tenement. Archaean granites dominate the central and northern portions of the tenement, with minor outcrop of Archaean sediments, gabbros and ultramafics occurring along the eastern portion. Hardey Formation sediments and basalts of the Fortescue Group outcrop in the south west portion of the project area.

Flood plains and colluvium associated with the Maitland River, a north west flowing river system, cover the majority of the central and eastern portions of the project area.

No known mineral occurrences are located within the tenement area, however the Radio Hill Ni-Cu-(PGE) deposit is located about fine kilometres to the east and the Munni Munni PGE-Ni-Cu and Whundo Cu-Zn-Ag deposits are located within 10 kilometres of the south east corner of E47/1096. The Mount Sholl layered intrusive deposits are located within 10 – 20 kilometres east of the northern portion of the tenement.

5.4. PREVIOUS EXPLORATION

There has been extensive previous exploration in the areas to the east and south east of the tenement with particular emphasis on the Radio Hill, Mount Sholl and Munni Munni – Whundo areas. Modern exploration activity on, or very close to, the project area has included work by Hunter Resources Limited, Legend Mining NL, Newcrest Mining Limited, Resolute Samantha Limited and Renwick Nominees Pty Ltd.

As part of Hunter Resources exploration in the broader West Pilbara in the late 1980’s it held projects in the north east and south west portions of the tenement area. In the north east Hunter Resources explored the Toorare Pool intrusive prospect, which is surrounded on three sides by E47/1096. Exploration involved detailed mapping, soil, stream sediment and rock chip sampling, a low level aeromagnetic survey and a single drill hole. The work identified a north south trending gabbro – pyroxenite intrusive containing anomalous PGE and base metal mineralisation, however the single hole drilled did not return any significant intersections.

In the south west portion of the project Hunter Resources completed interpretation of the 1985 BMR regional aeromagnetic survey data and field reconnaissance. This work identified two magnetic highs beneath rocks of the Fortescue Group, which may represent concealed greenstone sequences or layered mafic - ultramafic intrusions in the basement rocks. No further follow up was undertaken on these anomalies.

In the early 1990’s Newcrest Mining Limited held ground that covered the northern half of the project area. Newcrest completed reconnaissance soil sampling but did not define any geochemical anomalies.

Resolute Samantha Limited held tenements over the majority of the area covered by the project in the early to mid 1990’s as part of its larger Karratha Project. Exploration

! ! Page !17 ! included a regional stream sediment sampling program which defined a number of weak to moderate tenor gold – base metal – PGE anomalies in the southern half of the E47/1096 from streams draining from the Fortescue Group rocks. Follow up stream sediment and soil sampling failed to deliver the same tenor of anomalism and the anomalies were interpreted to be associated with the “leakage” from the unconformity.

From 1993 – 1996 Legend Mining NL explored an area to the north east of the tenement which included the Toorare Pool and Little Dingo prospects. Work completed included reconnaissance sampling, geological mapping, shallow RAB drilling and the drilling of 3 RC holes at the Little Dingo prospect based on a weak zinc anomaly derived from the RAB drilling. The RC drilling returned anomalous base metal, gold and PGE values but no economic intersections.

Renwick Nominees Pty Ltd held ground over the northern half of the project area from 1995 to 1998, completing reconnaissance geological and geophysical work which defined a magnetic anomaly along the north eastern portion of E47/1096 that was interpreted to represent a colluvium covered greenstone sequence. This feature was not drilled.

5.5. EXPLORATION PROGRAM AND BUDGET

In the first year of exploration it is proposed to compile previous exploration data and undertake a program of geological mapping, surface sampling and prospecting. A detailed low level aeromagnetics survey is proposed to assist in the definition of magnetic anomalies beneath cover, with an airborne electromagnetic survey likely to follow across any magnetic anomalies defined. First pass RAB and RC drill testing of identified targets is proposed for the first year.

Exploration in the second year would be expected to consist of follow up RC and diamond drilling of target zones identified in year 1 to assist in scoping any identified mineralised zones.

Table 4 – Maitland Project – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL Data Acquisition and Review 13,500 3,500 17,000 25,000 7,500 32,500 Land Management 14,100 14,850 28,950 14,100 14,850 28,950 Geological Mapping 3,500 1,800 5,300 6,000 3,000 9,000 Surface Sampling and Prospecting 5,250 2,800 8,050 9,000 5,500 14,500 Geophysics 45,000 0 45,000 95,000 0 95,000 RAB/AC Drilling 25,000 0 25,000 50,000 0 50,000 RC Drilling 0 55,000 55,000 20,000 135,000 155,000 Diamond Drilling 0 25,000 25,000 0 85,000 85,000 Assays 17,000 22,100 39,100 40,800 57,460 98,260 TOTAL 123,350 125,050 248,400 259,900 308,310 568,210

! ! Page !18 ! Exploration activities would be modified resulting in a reduction in the level of geophysics and follow up RC and diamond drilling in the event that the Company raises the minimum subscription. This reduced activity would still be sufficient to evaluate the potential of the project, although the evaluation period may be extended. Expenditures would remain in excess of statutory expenditure commitments.

6. KYLENA PROJECT

6.1. EXPLORATION POTENTIAL

The Kylena Project is located in a very remote and rugged region of the West Pilbara and has been subjected to negligible historic exploration. A single drill hole completed by CRA to the east of the project area indicates that the Fortescue Group rocks in the southern and central portion of the project are very thick, thereby discounting the prospectivity of the basement Archaean granite – greenstone sequence in these areas.

The north of the project covers a portion of the unconformity contact between the basement Archaean granite – greenstone sequence and the overlying Fortescue Group rocks of the Mount Bruce Supergroup of the Precambrian Hamersley Basin, indicating that the cover in this area is likely to be thinner. Detailed low level aeromagnetics would be required to assess the potential of this area. Any magnetic highs identified would require follow up electromagnetic surveys and/or stratigraphic drilling to test the targets.

Kylena is a very early stage project with no known mineralisation occurrences. Exploration for all but the northern portion of the tenement would be logistically difficult and therefore expensive. There remains some prospectivity for base metal, PGE and/or gold mineralisation within basement greenstone sequences or layered mafic - ultramafic intrusions, particularly in the northern portion of the tenement, however the depth of cover rocks in the southern and central portions of the tenement would appear prohibitive to economic development.

6.2. LOCATION AND TENURE

Kylena is an elongate north north east trending project with the northern end located about 50 kilometres south south west of the regional centre of Karratha and the southern end located about 20 kilometres north of the mining town of Pannawonica. Access is south east from Karratha along the Hamersley Iron Railway road, then south west on station tracks and old exploration tracks.

The terrain in the project area appears to be very rugged with limited vehicular access possible. The Fortescue River crosses the southern portion of the tenement.

The project consists of a single granted exploration licence (E47/1097) covering an area of 70 sub blocks. The tenement was granted on 26 August 2008 and expires on 25 August 2013. Annual expenditure commitment is $70,000 and tenement rental is $8,301.

! ! Page !19 ! 6.3. LOCAL GEOLOGY

E47/1097 is an elongate tenement extending over 40 kilometres from the south west to the north east and is almost wholly within Fortescue Group rocks of the Mount Bruce Supergroup of the Precambrian Hamersley Basin.

The geology from south to north ranges from: the Maddina Formation – massive to amygdaloidal basalts and breccias, andesite, dacite and rhyolite, local thin beds of sandstone and dolomite, minor Tumbiana Formation – mafic to intermediate volcaniclastic sandstone, argillite, basaltic flows and breccia, chert, stromatolitic limestone and dolerite, and calcareous sandstone, extensive Kylena Formation – basaltic flows, andesite, dacite and rhyolite, locally intruded by a series of dolerite dykes, minor Cooya Pooya Dolerite – a fine to medium grained dolerite, minor Hardey Formation – argillite, sandstone, conglomerate, basaltic flows and breccia, and with minor zones of Archaean granites cross cutting the Hardey Formation, Cooya Pooya Dolerite and Kylena Formation rocks in the north of the tenement area.

There are no known mineral occurrences within the tenement area, with the Munni Munni PGE-Ni-Cu deposit located about 20 kilometres east of the northern portion of the tenement and the Robe River iron ore deposits located about 25 kilometres south of the southern portion of Kylena.

! ! Page !20 ! Figure 5 – Kylena Project Summary Map

6.4. PREVIOUS EXPLORATION

There has been negligible modern exploration recorded over the project area or its immediate environs.

In the mid 1980’s CRA Exploration Pty Ltd held a large ground position covering the Fortescue Group which broadly abutted the eastern edge of Kylena and then extended eastwards. CRA had identified a potential discrepancy between the estimated thickness of the Fortescue Group and an apparent thickening of the sequence as defined by regional geophysical data. Exploration was targeting palaeoplacer precious metal and uranium mineralisation. One stratigraphic diamond hole was completed, confirming a thickening of the Fortescue Group rocks in this region to >2.0 kilometres and returning spotty high grade gold values, which was not considered worthy of follow up.

! ! Page !21 ! 6.5. EXPLORATION PROGRAM AND BUDGET

Exploration in the first year would consist of data compilation, geological mapping and surface sampling, to be followed by a program of detailed low level aeromagnetics to identify magnetic anomalies within the basement rocks. An airborne electromagnetic survey is proposed to identify possible drill targets within these anomalies, with potential for limited programs of RAB and RC drilling to test identified targets. The difficult logistics of this project would make any ground based exploration activity expensive. Activity in the second year may consist of RAB, RC and diamond drilling of target zones identified in year 1. Table 5 – Kylena Project – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL Data Acquisition and Review 10,500 3,500 14,000 20,000 5,000 25,000 Land Management 13,300 14,050 27,350 13,300 14,050 27,350 Geological Mapping 4,050 2,000 6,050 5,500 2,500 8,000 Surface Sampling and Prospecting 3,500 2,200 5,700 8,500 6,000 14,500 Geophysics 45,000 0 45,000 135,000 0 135,000 RAB/AC Drilling 12,500 0 12,500 30,000 50,000 80,000 RC Drilling 0 45,000 45,000 20,000 70,000 90,000 Diamond Drilling 0 15,000 15,000 0 65,000 65,000 Assays 8,500 17,340 25,840 27,200 66,640 93,840 TOTAL 97,350 99,090 196,440 259,500 279,190 538,690

If the Company raises the minimum subscription the exploration activities would be modified with an expected reduction in geophysics and the follow up drilling of anomalies identified. This may extend the time required for the evaluation of any identified mineralised zones, however expenditures would remain in excess of statutory expenditure commitments.

! ! Page !22 ! 7. BENGKULU PROVINCE, SUMATRA, INDONESIA

Bengkulu Province is located in the south west of Sumatra, one of the five major islands that make up the majority of Indonesia, the largest archipelagic state in the world. Sumatra is 1,650 kilometres long, from Banda Aceh in the north to Tanjungkarang in the south, ranges form 100 – 200 kilometres wide in the north to 350 kilometres wide in the south and covers an area of about 435,000 km 2.

Sumatra is interpreted to have formed as a result of colliding plates, with the present structure of Sumatra being a direct result of active subduction. The Barisan Range, which forms the backbone of Sumatra, runs along the western side of the island, with the north west to south east trending Great Sumatran Fault running along the centre of the Barisan Range.

Weathering of the igneous sequences associated with the volcanic centres that occur along the Great Sumatran Fault has resulted in the deposition of extensive sedimentary sequences of Tertiary to Recent age along the western side of the island. These sediments are variably magnetite and ilmenite bearing, with these heavy minerals generally sourced from the weathering of andesitic lavas. The heavy minerals tend to accumulate in deltaic and sand dune environments along the west coast of the island and generally occur as distinct bands within the sand beds.

Figure 6 –Seluma Iron Sands Project Location

! ! Page !23 ! 8. SELUMA IRON SANDS PROJECT, SUMATRA

8.1. EXPLORATION POTENTIAL

The Seluma Iron Sands Project has been subjected to minimal modern exploration, with the project vendors PT PRU and Pilbara having completed a series of surface sampling programs in the central portion of the lease and two limited shallow drilling programs. Results from this work have confirmed the presence of potentially economic concentrations of Iron Sands within the lease, albeit that the sampling was reconnaissance in nature and in part selective of the mineralised horizons.

Initial reconnaissance sampling by PT PRU returned two higher concentrations of Iron Sands mineralisation located inland which may represent potential strand lines sub parallel to the present coast line. Subsequent surface sampling and drilling programs have not investigated this opportunity. The drilling completed by PT PRU was on lines sub parallel to the present coast line and is therefore not likely to have tested the potential for strand line mineralisation.

The project has the potential to host a large deposit of Iron Sands mineralisation amenable to relatively low cost extraction and processing, however it is at a relatively early exploration stage. Systematic staged exploration is required to fully evaluate the potential of the project area, with a broad spaced reconnaissance drilling program possibly supported by detailed low level airborne magnetics to assist in defining the extent of Iron Sands mineralisation.

8.2. LOCATION AND TENURE

The Seluma Iron Sands Project is located about 75 kilometres south of the city of Bengkulu, Bengkulu Province, Sumatra. The project is centred on the village of Pasor Talo on the south west coast of Sumatra and includes about 6.2 kilometres of beach frontage. Access is along the Trans Sumatran Highway from Bengkulu via the town of Seluma, then south west toward the coast predominantly on poorly formed gravel / dirt roads.

The lease covers an area of approximately 2,000 hectares, with 1,130 hectares on shore and the balance off the coast.

! ! Page !24 ! 8.3. LOCAL GEOLOGY

The terrestrial portion of the project extends from 1.0 – 2.0 kilometres inland from the beach front and consists of a coastal plain dominated by beach sands and sand dune ridges. The profile broadly consists of fine to medium grained beach sands interbedded with sandy gravel layers, representing varying depositional environments. Basement sediments have been intersected at depths of +10m.

Iron Sand mineralisation occurs as layers of varying width and concentration throughout the beach sand and sandy gravel profile, with layers of higher concentrations of Iron Sands typically being 0.3 – 1.0m in width.

Local landholders and others operate small scale dredging and beach sand mining operations to the north of the project area, exploiting Iron Sands mineralisation to depths of up to 2.0 – 3.0m.

8.4. PREVIOUS EXPLORATION

There has been limited modern exploration completed over the project area with no record of exploration activity prior to 2007.

In 2007 a reconnaissance field survey of the area around the village of Pasar Talo was completed by an Indonesian technical team on behalf of the project vendors, PT PRU, to assess the areas prospectivity for concentrations of Iron Sands. Field activity included the excavation and sampling of four test pits, with the reported concentration of Iron Sands shown in the following table. The iron content of the Iron Sands was not reported.

Table 6 – 2007 test pit samples

Test Pit Northing Easting Iron Sands Concentration PRU Pit 1 9,528,821 242,010 17.6% PRU Pit 2 9,529,109 242,212 11.0% PRU Pit 3 9,529,114 242,717 67.0% PRU Pit 4 9,528,821 243,424 63.2%

In early 2008 PT PRU conducted a limited hand auger drilling program within the central portion of the lease. The program consisted of 10 holes; with two lines of five holes oriented parallel to the coast approximately 500m and 1,000m back from the beach. Hole depths ranged from 6.5m to 12.3m, with an average depth of 10.5m.

! ! Page !25 ! Figure 7 – Seluma Iron Sands Project Summary Map

Geological logging of the holes confirmed the presence of Iron Sands mineralisation within the profile, with concentrations ranging from “low” to “high”, however no assay data has been reported for this drilling.

Based on the logging all holes drilled on the line closest to the beach (holes 1 – 5) intersected broad zones of Iron Sands mineralisation interbedded with sandy gravel layers. None of the holes appear to have penetrated the basement sediments. Hole 2 was abandoned in “high” concentration Iron Sands. Of the holes drilled on the second line (holes 6 – 10) only hole 7 intersected significant Iron Sands mineralisation, with holes 6, 8 and 9 intersecting minor Iron Sands layers and hole 10 intersecting minimal mineralisation. The majority of these holes intersected broad zones of sandy gravel and holes 8 to 10 are reported to have penetrated the basement sediments.

In August 2008 a consulting geologist, Geologica Pty Ltd (“Geologica”), carried out a limited sampling program within the central portion of the lease. Four samples were collected; sample 1 was from a shallow (1 – 1.5m deep) test pit on the beach, samples 2 and 3 were of heavy mineral rich horizons from a “cliff” face on the beach and sample 4 was from an area back from the beach adjacent to the Talo River.

! ! Page !26 ! Table 7 – Geologica Heavy Mineral Samples

Sample Northing Easting Fe Content Location 1 9,527,216 244,504 11.0% Test pit – central beach 2 9,527,146 244,194 22.5% “Cliff” face – central beach 3 9,527,146 244,194 16.1% “Cliff” face – central beach 4 9,527,463 243,752 10.7% Adjacent to Talo River

Representatives of Pilbara visited the site in December 2008 and collected seven samples, predominantly from hand dug pits (to a depth of 1.5 – 2.0m) from the beach area in the central portion of the lease. Samples were collected as continuous “channels” from near surface to the base of the pits.

Results from the Pilbara sampling program, as shown in Table 4, were of a generally lower tenor than the Geologica samples. This could be due to the sampling methodology which may have incorporated more overburden and interburden beach sand than the more selective Geologica sampling.

Table 8 – Pilbara heavy mineral sample locations and iron content

Sample Northing Easting Fe Content Location F01 9,527,125 244,216 6.84% Test pit – central beach F02 6.63% 15m south west of F01 F03 11.8% 50m north west of F01 F04 9,527,086 244,357 4.82% F05 9,527,008 244,332 7.77% F06 9,527,582 243,569 6.99% F07 9,527,640 243,475 17.9%

In late July 2009 Pilbara commenced an aircore drilling program designed to evaluate the Iron Sands potential of the project. Due to unforeseen land access issues the program was limited to 5 holes, which formed part of a section across the prospective stratigraphy in the south east of the project area along strike from previous hand auger drilling that had returned only minor to low levels of Iron Sands mineralisation. The holes completed were mostly located in swampy country between two sand dune systems and did not extend to the coast and therefore did not test the coastal dune system or the beach. Assays from this limited program returned only weakly anomalous results.

Table 9 – Pilbara Aircore Drilling Summary

Hole No Northing Easting Depth (m) Intersections SAC001 9,527,927 245,734 22 3m @ 5.89% Fe from surface SAC002 9,527,876 245,360 20 N.S.I. SAC003 9,527,737 245,218 20 N.S.I. SAC004 9,527,588 245,079 20 1m @ 4.69% Fe from 8.0m SAC005 9,527,456 244,932 20 N.S.I.

! ! Page !27 ! 8.5. EXPLORATION PROGRAM AND BUDGET

In the first year of exploration it is proposed to complete the acquisition and review of all available data and undertake field mapping / reconnaissance of areas of proposed drilling. A first pass wide spaced air core drilling program across the entire project area is proposed to an indication of the distribution of iron ands mineralisation. This may be followed by a ground magnetic survey of any areas with higher concentrations of iron sands to map out the extent of these zones. This program should provide sufficient data to enable an initial mineral resource estimate and a scoping study on the potential development of an iron sands operation.

Exploration in the second year may involve infill aircore drilling of any zones of higher concentrations of iron sands plus more extensive ground magnetics to extend the outlines of any potential mineralised zones. This work should lead to an update of the initial mineral resource estimate and provide sufficient data to enable the completion of a pre feasibility study on the development of an iron sands operation.

Table 10 – Seluma Iron Sands Project – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL Data Acquisition and Review 10,000 5,000 15,000 15,000 7,500 22,500 Geological Mapping 20,000 8,500 28,500 27,500 16,000 43,500 Geophysics 40,000 70,000 110,000 50,000 100,000 150,000 Air Core Drilling 84,000 90,000 174,000 174,000 240,000 414,000 Assays 35,000 37,500 72,500 72,500 100,000 172,500 Mining Studies 45,000 55,000 100,000 75,000 122,500 197,500 TOTAL 234,000 266,000 500,000 414,000 586,000 1,000,000

In the event that the Company raises the minimum subscription activities would be modified such that there would be a reduction in the scope of the ground magnetics survey and the quantum of air core drilling. This would be likely to have the effect of focusing activities within a smaller portion of the project to enable the phased development of any potential operation.

! ! Page !28 ! 9. EXPLORATION BUDGET

Pilbara intends to focus the majority of its exploration activities on the projects in the West Pilbara region of Western Australia. These projects are considered to be prospective for base metals, PGE and/or gold mineralisation associated with concealed greenstone sequences or layered mafic – ultramafic intrusions. Pilbara’s Seluma Iron Sands Project in Sumatra, Indonesia is considered to be prospective for iron rich heavy mineral sands within beach sands and sand dunes.

Exploration activity in the first year will include data compilation, geological mapping, surface sampling and a detailed low level aeromagnetics survey across all of the projects to identify magnetic anomalies within basement rocks. An airborne electromagnetic survey is proposed to follow this work to identify possible drill targets associated with these magnetic anomalies. Limited programs of RAB and RC drilling would be expected to be carried out in the first year as an initial test of targets identified.

Subject to the results of the first years work program exploration activity in the second year would be expected to be dominated by drilling, predominantly RC and diamond drilling to scope out any mineralised zones defined.

Exploration at the Seluma Iron Sands Project will include data compilation and geological mapping leading to wide spaced air core drilling across the project to define areas of higher concentrations of iron sands. Ground magnetics is proposed to assist in defining the extent of these zones to provide targets for follow up drilling. Resource estimation is expected to follow this stage leading to a potential scoping study. The activities in the second year would be expected to consist of further ground magnetics to define mineralised corridors followed by infill aircore drilling to enable the estimation of an updated resource and leading to a possible pre feasibility study.

Detailed work programs and budgets are presented in the body of the report. They are conceptual in nature and stages of exploration are dependent on success of the previous stage, with potential for changes to the program as results are received. The levels of expenditure are considered to be reasonable and warranted based on the prospectivity of the projects.

Table 11 – Proposed Exploration Expenditure

Minimum Subscription Maximum Subscription Project Year 1 Year 2 TOTAL Year 1 Year 2 TOTAL $ $ $ $ $ $ West Pilbara - Mt Wohler 136,600 142,150 278,750 298,300 302,530 600,830 - Pyramid 383,450 392,960 776,410 639,250 653,020 1,292,270 - Maitland 123,350 125,050 248,400 259,900 308,310 568,210 - Kylena 97,350 99,090 196,440 259,500 279,190 538,690 Seluma Iron Sands 234,000 266,000 500,000 414,000 586,000 1,000,000 TOTAL 974,750 1,025,250 2,000,000 1,870,950 2,129,050 4,000,000

! ! Page !29 ! 10. REFERENCES

Blayden, I.D., 2007 – “Preliminary Assessment of Tenements to be Acquired by Pilbara Mining Pty Ltd”. Pilbara Mining Pty Ltd. Unpublished.

Daley, L.M., 1992 – “Annual and Final Report for E47/548, Cardan Pool, for the Period 25 November 1991 to 13 July 1992”. Newcrest Mining Limited.

Davis, Brian., 2008. Unpublished report. Appraisal Report 3 on the Seluma Iron Sands Exploration Property near Bengkulu, Sumatra, Indonesia on behalf of Iron Range Ltd. Geologica Pty Ltd August 26 th 2008.

Hickman, A.H., Huston, D.L., Van Kranendonk, M.J. and Smithies, R.H., 2006 – “Geology and Mineralization of the West Pilbara – A Field Guide”. Geological Survey of Western Australia – Record 2006/17.

Holmes, J. S., 2008. Unpublished report. Independent Geological Assessment, Seluma Iron Sands Project, Exploration and Development Potential. Zephyr Consulting Group Pty Ltd, September 2008.

Jackson, V.L., 1998 – “Annual Exploration Report – West Pilbara Project, for the Exploration Licences E47/616-617, 626, 635, 643, 645, 646, 777 and 795, January – December 1997, Combined Annual Report M8279”. Dragon Resources Limited.

Keillor, B., 1996 – “Karratha Project, Radio Hill, E47/702, E$7/703 – Annual Report – February 2006”. Resolute Samantha Limited.

Lyons, Allen., 2008. Exploration Potential of the Two Iron Sands Projects situated North West of Padang. Independent Geological Assessment prepared by Ravensgate for Coziron Resources Ltd.

Macleod, M., 1998 – “Surrender report to Department of Minerals and Energy, Exploration Licence 47/804, Gregory Well Project, Reporting Period 6 May 1997 to 5 May 1998”. Renwick Nominees Pty Ltd.

Marshall, A.E., 1990 – “Pyramid Project, Surrender Report, Mt Wohler E47/391, Langewell Gorge E47/392, West Pilbara Mineral Field, Western Australia, December 1990”. Dominion Mining Limited.

McIntyre, J., 1988 – “Corringer Creek, E47/305, Surrender Report”. Hunter Resources Ltd.

McIntyre, J., 1989 – “Toorare Pool Prospect, E47/178, Annual Report 1988”. Hunter Resources Ltd.

Meakins, A.L., 1987 – “Final Report on Exploration Completed Within the Mingar Project Area, Yarraloola 1:250,000 Sheet, Pilbara Region, Western Australia”. CRA Exploration Pty Limited.

! ! Page !30 ! Prentice, I., 2009. Unpublished report. Independent Geological Assessment, Seluma Iron Sands Project. Zephyr Consulting Group Pty Ltd, February 2009.

Rohde, C., 1994 – “Annual Report, East Well, E47/599, from 9 March 1993 to 8 March 1994, West Pilbara Mineral Field”. Dominion Mining Limited.

The Technical Team, PT. Pringgondani Rizki Utama., 2007. The Reserve of Iron Sand (Fe), Area of Pasar Talo, Sub District Ilir Talo and Talo Kecil, Regency Seluma, Bengkulu.

Thorne, A.M. and Trendall, A.F., 2001 – “Geology of the Fortescue Group Pilbara Craton Western Australia”. Geological Survey of Western Australia – Bulletin 144.

Voermans, F.M., 1997 – “Annual Report, Exploration Licence 47/567, Radio Hill West, West Pilbara Mineral Field, Western Australia, for the Period 10th August 1996 to 9th August 1997”. Legend Mining NL.

Xplore, 1997 – “Comet Well Project, E47/761, Annual and Final Report, 1996 – 1997, July 1997”. Xplore Pty Ltd.

Younger, A.H. and Bright, D.V., 1994 – “Report to M. Creasy on the Reverse Circulation Drilling of the Top Camp Locality in the Croydon Area, Western Australia, March 1994”. Geochemex Australia.

! ! Page !31 ! 11. GLOSSARY OF TECHNICAL TERMS ! aeolian Formed or deposited by wind. aerial photography Photographs of the earth’s surface taken from an aircraft. aeromagnetic A survey undertaken by helicopter or fixed-wing aircraft for the purpose of recording magnetic characteristics of rocks by measuring deviations of the earths magnetic field. aircore Drilling method employing a drill bit that yields sample material which is delivered to the surface inside the rod string by compressed air. alluvial Pertaining to silt, sand and gravel material, transported and deposited by a river. alluvium Clay silt, sand, gravel, or other rock materials transported by flowing water and deposited in comparatively recent geologic time as sorted or semi-sorted sediments in riverbeds, estuaries, and flood plains, on lakes, shores and in fans at the base of mountain slopes and estuaries. alteration The change in the mineral composition of a rock, commonly due to hydrothermal activity. anomalies An area where exploration has revealed results higher than the local background level. anticline A fold in the rocks in which strata dip in opposite directions away from the central axis. Archaean The oldest rocks of the Precambrian era, older than about 2,500 million years. Au Chemical symbol for gold. basalts A volcanic rock of low silica (<55%) and high iron and magnesium composition, composed primarily of plagioclase and pyroxene. bedrock Any solid rock underlying unconsolidated material. BIF A rock consisting essentially of iron oxides and cherty silica, and possessing a marked banded appearance. BLEG sampling Bulk leach extractable gold analysis; an analytical method for accurately determining low levels of gold. chert Fine grained sedimentary rock composed of cryptocrystalline silica. colluvium A loose, heterogeneous and incoherent mass of soil material deposited by slope processes. copper A reddish metallic element, used as an electrical conductor and the basis of brass and bronze. depletion The lack of gold in the near-surface environment due to leaching processes during weathering. diamond drill hole Mineral exploration hole completed using a diamond set or diamond impregnated bit for retrieving a cylindrical core of rock. dilational Open space within a rock mass commonly produced in response to folding or faulting. dolerite A medium grained mafic intrusive rock composed mostly of pyroxenes and sodium-calcium feldspar. dykes A tabular body of intrusive igneous rock, crosscutting the host strata at a high angle. fault zone A wide zone of structural dislocation and faulting. felsic An adjective indicating that a rock contains abundant feldspar and silica. folding A term applied to the bending of strata or a planar feature about an axis. g/t Grams per tonne, a standard volumetric unit for demonstrating the concentration of precious metals in a rock. gabbro A fine to coarse grained, dark coloured, igneous rock composed mainly of calcic plagioclase, clinopyroxene and sometimes olivine. geochemical Pertains to the concentration of an element. gneissic Coarse grained metamorphic rocks characterised by mineral banding of the light and dark coloured constituent minerals. granite A coarse-grained igneous rock containing mainly quartz and feldspar minerals and subordinate micas. granodiorite A coarse grained igneous rock composed of quartz, feldspar and hornblende and/or biotite. haematite Iron oxide mineral, Fe 2O3. igneous Rocks that have solidified from magma. infill Refers to sampling or drilling undertaken between pre-existing sample points. interflow Refers to the occurrence of other rock types between individual lava flows within a stratigraphic sequence.

! ! Page !32 ! intermediate A rock unit which contains a mix of felsic and mafic minerals. intrusions A body of igneous rock which has forced itself into pre-existing rocks. ironstone A rock formed by cemented iron oxides. komatiitic Magnesium-rich mafic to ultramafic extrusive rock. laterite A cemented residuum of weathering, generally leached in silica with a high alumina and/or iron content. lead A metallic element, the heaviest and softest of the common metals. lithological contacts The contacts between different rock types. magnetite A mineral comprising iron and oxygen which commonly exhibits magnetic properties. metamorphic A rock that has been altered by physical and chemical processes involving heat, pressure and derived fluids. monzogranite A granular plutonic rock containing approximately equal amounts of orthoclase and plagioclase feldspar, but usually with low quartz content. nickel Silvery-white metal used in alloys. open pit A mine working or excavation open to the surface. outcrops Surface expression of underlying rocks. palaeo channels An ancient preserved stream or river. PGE Platinum group elements including platinum, palladium, etc. pisolitic Describes the prevalence of rounded manganese, iron or alumina-rich chemical concretions, frequently comprising the upper portions of a laterite profile. ppb Parts per billion; a measure of low level concentration. Proterozoic An era of geological time spanning the period from 2,500 million years to 570 million years before present. RAB drilling A relatively inexpensive and less accurate drilling technique involving the collection of sample returned by compressed air from outside the drill rods. RC drilling A drilling method in which the fragmented sample is brought to the surface inside the drill rods, thereby reducing contamination. regolith The layer of unconsolidated material which overlies or covers insitu basement rock. residual Soil and regolith which has not been transported from its point or origin. resources Insitu occurrence of valuable or useful minerals. rock chip sampling The collection of rock specimens for mineral analysis. saprolite Disintegrated, in-situ rock, partially decomposed by the chemical and physical processes of oxidation and weathering. satellite imagery The images produced by photography of the earth’s surface from satellites. schist A crystalline metamorphic rock having a foliated or parallel structure due to the recrystallisation of the constituent minerals. sedimentary A term describing a rock formed from sediment. shale A fine grained, laminated sedimentary rock formed from clay, mud and silt. sheared A zone in which rocks have been deformed in response to applied stress. soil sampling The collection of soil specimens for mineral analysis. stratigraphic Composition, sequence and correlation of stratified rocks. stream sediment sampling The collection of samples of stream sediment with the intention of analysing them for trace elements. subcrop Poorly exposed bedrock. sulphide A general term to cover minerals containing sulphur and commonly associated with mineralization. supergene Process of mineral enrichment produced by the chemical remobilisation of metals in an oxidised or transitional environment. syncline A fold in rocks in which the strata dip inward from both sides towards the axis. tholeiitic A descriptive term for basalt with little or no olivine. ultramafic Igneous rocks consisting essentially of ferromagnesian minerals with trace quartz and feldspar. vacuum sampling A drill sampling method using vaccum drilling to penetrate upper horizons and obtain a sample from lower in the hole. veins A thin infill of a fissure or crack, commonly bearing quartz. volcaniclastics Pertaining to clastic rock containing volcanic material. volcanics Formed or derived from a volcano. zinc A lustrous, blueish-white metallic element used in many alloys including brass and bronze. !

! ! Page !33 !

10. INVESTIGATING ACCOUNTANT’S REPORT

12 March 2010

The Directors Pilbara Minerals Limited Suite 9, 1200 Hay Street WEST PERTH WA 6005

Dear Sirs

INVESTIGATING ACCOUNTANT’S REPORT

INTRODUCTION

This Investigating Accountant’s Report (“Report”) has been prepared for inclusion in a prospectus to be dated on or about 12 March 2010 (“Prospectus”) for the issue by Pilbara Minerals Limited ( “PLS” or the “Company”) of up to 30,000,000 ordinary shares at an issue price of 20 cents each, to raise a total of up to $6,000,000 before the expenses of the issue.

The minimum subscription under the offer is $3,000,000.

This Report has been included in the Prospectus to assist potential investors and their financial advisers to make an assessment of the financial position and performance of the Pilbara Minerals Limited.

STRUCTURE OF REPORT

This Report has been divided into the following sections:

1. Background information; 2. Scope of Report; 3. Financial information; 4. Subsequent events; 5. Statements; and 6. Declaration.

1. B ACKGROUND INFORMATION

PLS was incorporated on 10 January 2005 as Portland International Limited before changing its name to Marginbet Limited on 23 April 2007. The company was admitted to the official list of the ASX on 14 September 2007 before changing its name to Fortuna Minerals Limited on 1 April 2008. The Company changed its name to Pilbara Minerals Limited on 17 December 2009. PLS was suspended from trading its shares on the ASX in March 2008.

HLB Mann Judd (WA Partnership) ABN 22 193 232 714 Level 4 130 Stirling Street Perth WA 6000. PO Box 8124 Perth BC 6849 WA. Telephone +61 (08) 9227 7500. Fax +61 (08) 9227 7533. Email: [email protected]. Website: www.hlb.com.au Liability limited by a scheme approved under Professional Standards Legislation

HLB Mann Judd (WA Partnership) is a member of International, a world-wide organisation of accounting firms and business advisers Investigating Accountant’s Report

1. B ACKGROUND INFORMATION (CONT )

Currently its principal activities as outlined in its most recent Annual Report and Half Year reports are:

Exploration for natural resources

The current directors of PLS are Mr Matthew Walker, Mr James Robinson and Mr Gavan Farley.

HLB Mann Judd was appointed as the Company’s auditors on 20 March 2009.

As at the date of this Prospectus, the issued share capital of the Company is 37,175,000 ordinary fully paid shares.

We understand that the funds raised by the issue of shares under the Prospectus will be applied as follows:

To prioritise and evaluate projects and identify potential acquisition opportunities; Provide working capital; and To satisfy the requirements of the Listing Rules for re-admission to the Official List and paying costs associated with the Offer.

2. S COPE OF REPORT

You have requested HLB Mann Judd (“HLB”) to prepare this Report presenting the following information:

a) the historical financial information of PLS, comprising the historical Statement of Financial Position as at 31 December 2009 and the historical Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the half year ended 31 December 2009 as set out in Appendix 1 to this Report; and

b) the proforma financial information for PLS, comprising the proforma Statement of Financial Position as at 31 December 2009 and the proforma Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the half year then ended. This information is presented under the following two scenarios:

$3,000,000 capital raising (minimum subscription), and $6,000,000 capital raising (full subscription).

The Directors have prepared and are responsible for the historical and proforma information. We disclaim any responsibility for any reliance on this Report or on the financial information to which it relates for any purposes other than that for which it was prepared. This Report should be read in conjunction with the full Prospectus.

The historical financial information as set out in Appendix 1 has been extracted from the reviewed financial statements of PLS for the half year ended 31 December 2009. A modified review report, containing an emphasis of matter in relation to going concern, was issued on 10 February 2010.

Investigating Accountant’s Report

We performed a review of the historical financial information and the proforma financial information of PLS as at 31 December 2009 in order to ensure consistency in the application of applicable Accounting Standards and other mandatory professional reporting requirements. Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements.

Our review of the historical financial information and the proforma information of PLS was carried out in accordance with Australian Auditing Standard ASRE 2410 “Review of an Interim Financial Report performed by the Independent Auditor of the Entity” and included such enquiries and procedures which we considered necessary for the purposes of this Report. The review procedures undertaken by HLB in our role as Investigating Accountants were substantially less in scope than that of an audit examination conducted in accordance with generally accepted auditing standards. Our review was limited primarily to an examination of the historical financial information and the proforma information, analytical review procedures and discussions with senior management. A review of this nature provides less assurance than an audit and, accordingly, this Report does not express an audit opinion on the historical financial information and proforma information included in this Report or elsewhere in the Prospectus.

In relation to the information presented in this Report:

a) support by another person, corporation or an unrelated entity has not been assumed; b) the amounts shown in respect of assets do not purport to be the amounts that would have been realised if the assets were sold at the date of this Report; and c) the going concern basis of accounting has been adopted.

3. F INANCIAL INFORMATION

Set out in Appendix 1 (attached) are:

a) The Statement of Financial Position of PLS as at 31 December 2009, and the Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the half year then ended; and b) The proforma Statement of Financial Position of PLS as at 31 December 2009 and proforma Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows for the half year then ended as they would appear after incorporating the following significant events and proposed transactions by the Company subsequent to 31 December 2009:

i) the issue of 3,000,000 ordinary shares at deemed value of 10 cents each and payment of $60,000 in consideration for the acquisition of 7 mineral tenements from Seefingan Exploration Pty Ltd (subject to shareholder and regulatory approval);

ii) the issue of 107,038 ordinary fully paid shares at $0.10 raising $10,704, which was received prior to the 31 December and is shown as a component of current liabilities as at that date;

iii) the issue by the Company pursuant to this Prospectus of 30,000,000 ordinary shares at an issue price of 20 cents each, raising $6,000,000;

Investigating Accountant’s Report

iv) the issue by the Company of 150,000 ordinary fully paid shares at 20 cents each to Empire Securities as part consideration for its services as the Company’s Corporate Advisor in relation to the offer;

v) the issue by the Company of 10,000,000 unlisted options to Empire Securities, exercisable at 20 cents on or before 31 December 2012, as part consideration for its services as the Company’s Corporate Advisor in relation to the offer valued at $601,000 (refer Appendix 2);

vi) the issue by the Company of 5,000,000 unlisted options to C K Locke and Partners, exercisable at 20 cents on or before 31 December 2012, as part consideration for its services as joint Sponsoring Broker to the offer valued at $300,500 (refer Appendix 2); and

vii) the write off to the issued capital account of the cash costs of the Prospectus being an estimated $530,000, $6,996 of which was incurred prior to 31 December 2009 and is shown as a component of Receivables at that date, as detailed below:

Total ($) ASIC fees 2,010 ASX fees 12,750 Joint Sponsoring Broker to the Offer fees 60,000 Broker Commissions 360,000 Legal Fees 45,000 Independent Geologist’s Fees 10,000 Investigating Accountant’s Fees 8,500 Printing and Distribution 15,000 Miscellaneous 16,740 530,000

This information is presented under the following two scenarios: $3,000,000 capital raising (minimum subscription) – on this basis the total cash costs of the Prospectus reduce by $185,000 to $345,000. $6,000,000 capital raising (full subscription).

c) Notes to the historical financial information and proforma information.

4. S UBSEQUENT EVENTS

In our opinion, there have been no material items, transactions or events subsequent to 31 December 2009 not otherwise disclosed in the Prospectus that have come to our attention during the course of our review that would require comment in, or adjustment to, the content of this Report or which would cause such information included in this Report to be misleading.

5. S TATEMENTS

Based on our review, which was not an audit, we have not become aware of any matter that causes us to believe that:

a) the historical financial information of Pilbara Minerals Limited as at 31 December 2009 as set out in Appendix 1 of this Report, does not present fairly the financial position of PLS as at that date in accordance with the measurement and recognition Investigating Accountant’s Report

requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia and its performance as represented by its results of its operations and its cash flows for the half year then ended; and

b) the proforma information of Pilbara Minerals Limited as at 31 December 2009 as set out in Appendix 1 of this Report, does not present fairly the financial position of PLS as at that date in accordance with the measurement and recognition requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory reporting requirements in Australia and its performance as represented by its results of its operations and its cash flows for the half year then ended, as if the transactions referred to in Section 3 (b) of this Report had occurred during that period.

6. D ECLARATION

a) HLB will be paid its usual professional fees based on time involvement, for the preparation of this Report and review of the financial information, at our normal professional rates (expected to be $8,500).

b) Apart from the aforementioned fee, neither HLB, nor any of its associates will receive any other benefits, either directly or indirectly, for or in connection with the preparation of this Report.

c) A related entity, HLB Judd Corporate (WA) Pty Ltd received a fee for the preparation of an Independent Experts Report, included in the Notice of Meeting dated 3 November 2009.

d) Neither HLB, nor any of its employees or associated persons has any interest in Pilbara Minerals Limited or the promotion of the Company.

e) Unless specifically referred to in this Report, or elsewhere in the Prospectus, HLB was not involved in the preparation of any other part of the Prospectus and did not cause the issue of any other part of the Prospectus. Accordingly, HLB makes no representations or warranties as to the completeness or accuracy of the information contained in any other part of the Prospectus.

f) HLB has consented to the inclusion of this Report in the Prospectus in the form and context in which it appears. The inclusion of this Report should not be taken as an endorsement of the Company or a recommendation by HLB of any participation in the Company by an intending subscriber.

Yours faithfully HLB MANN JUDD

N G NEILL Partner Investigating Accountant’s Report

- APPENDIX 1 - PILBARA MINERALS LIMITED STATEMENT OF FINANCIAL POSITION AS AT 31 DECEMBER 2009

Proforma $3M raising $6M raising Notes $ $ $

CURRENT ASSETS Cash and cash equivalents 2 135,163 2,737,159 5,552,159 Receivables 52,590 45,594 45,594

TOTAL CURRENT ASSETS 187,753 2,782,753 5,597,753

NON CURRENT ASSETS Exploration and evaluation expenditure 3 1,800,585 2,160,585 2,160,585

TOTAL NON-CURRENT ASSETS 1,800,585 2,160,585 2,160,585

TOTAL ASSETS 1,988,338 4,943,338 7,758,338

CURRENT LIABILITIES Trade and other creditors 4 132,079 121,375 121,375

TOTAL CURRENT LIABILITIES 132,079 121,375 121,375

TOTAL LIABILITIES 132,079 121,375 121,375

NET ASSETS 1,856,259 4,821,963 7,636,963

EQUITY Issued capital 5 8,125,598 10,189,802 13,004,802 Reserves 1,227,281 2,128,781 2,128,781 Accumulated losses (7,496,620) (7,496,620) (7,496,620) TOTAL EQUITY 1,856,259 4,821,963 7,636,963

This statement should be read in conjunction with the accompanying notes. Investigating Accountant’s Report

PILBARA MINERALS LIMITED STATEMENT OF COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 31 DECEMBER 2009

Proforma $3M raising $6M raising $ $ $ Income from ordinary activities 2,599 2,599 2,599 Employee benefits expense (146,250) (146,250) (146,250) Finance costs (782) (782) (782) Audit and assurance fees (9,935) (9,935) (9,935) Professional costs (10,925) (10,925) (10,925) Legal fees (5,250) (5,250) (5,250) Rent (24,000) (24,000) (24,000) Travel (36,257) (36,257) (36,257) Share option expenses (109,026) (109,026) (109,026) Other expenses (40,691) (40,691) (40,691) Loss from ordinary activities before income tax (380,697) (380,697) (380,697) Income tax expense relating to ordinary activities - - - Loss from ordinary activities after income tax (380,697) (380,697) (380,697) expense

This statement should be read in conjunction with the accompanying notes.

PILBARA MINERALS LIMITED STATEMENT OF CASH FLOWS FOR THE HALF YEAR ENDED 31 DECEMBER 2009

Proforma $3M raising $6M raising $ $ $ Cash Flows From Operating Activities Payments to suppliers and employees (203,536) (203,536) (203,536) Interest received 2,599 2,599 2,599 Net Cash Used In Operating Activities (200,937) (200,937) (200,937)

Cash Flows From Investing Activities Payments for exploration expenditure (544,849) (604,849) (604,849) Net Cash Used In Investing Activities (544,849) (604,849) (604,849)

Cash Flows From Financing Activities Proceeds from issue of shares 532,849 3,532,849 6,532,849 Share issue costs paid (6,996) (345,000) (530,000) Net Cash Provided By Financing Activities 525,853 3,187,849 6,002,849

Net (decrease)/increase in Cash Held (219,933) 2,382,063 5,197,063

Cash at the beginning of the financial period 355,096 355,096 355,096 Cash At The End Of The Financial Period 135,163 2,737,159 5,552,159

This statement should be read in conjunction with the accompanying notes. Investigating Accountant’s Report

PILBARA MINERALS LIMITED STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 31 DECEMBER 2009

Contributed Accumulated Option Equity Losses Reserve $ $ $ Balance as at 30 June 2009 6,392,749 (7,115,923) 1,118,075 Shares issued during the period 1,732,849 - - Options issued during the year - - 109,206 Loss for the period - (380,697) - As at 31 December 2009 8,125,598 (7,496,620) 1,227,281

$3M raising Proforma adjustments: Issue of shares at $0.10 10,704 - - Issues of shares as part consideration for the acquisition of tenements 300,000 - - Issue of shares to Empire Securities 30,000 Issue of shares pursuant to Prospectus 3,000,000 - - Issue of options to Empire Securities - - 601,000 Issue of options to C K Locke - - 300,500 Share issue expenses (1,276,500) - - $3M raising Proforma total 10,189,802 (7,496,620) 2,128,781

$6M raising Proforma adjustments: Issue of shares pursuant to Prospectus 3,000,000 - - Share issue expenses (185,000) - - $6M raising Proforma total 13,004,802 (7,496,620) 2,128,781

This statement should be read in conjunction with the accompanying notes

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies which have been adopted in the preparation of the historical and proforma financial information reported under Australian Equivalents to International Financial Reporting Standards (“AIFRS”) are shown below.

(a) Basis of preparation The financial statements have been prepared in accordance with the measurement requirements (but not all of the disclosure requirements) of applicable Accounting Standards and other mandatory professional reporting requirements in Australia using the accrual basis of accounting, including the historical cost convention.

Compliance with IFRS The financial information complies with Australian Accounting Standards, which include Australian equivalents to International Financial Reporting Standards (“AIFRS”). Compliance with AIFRS ensures that the financial information, comprising the financial statements and notes thereto, comply with measurement requirements but not all of the disclosure requirements of the International Financial Reporting Standards.

Historical cost convention These financial statements have been prepared under the historical cost convention. Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(b) Critical accounting judgements and key sources of estimation uncertainty The application of accounting policies requires the use of judgements, estimates and assumptions about carrying values of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions are recognised in the period in which the estimate is revised if it affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

(c) Revenue Recognition Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The following specific recognition criteria must also be met before revenue is recognised: (i) Interest income Interest revenue is recognised on a time proportionate basis that takes into account the effective yield on the financial asset.

(d) Cash and cash equivalents Cash comprises cash at bank and in hand. Cash equivalents are short term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes in value.

(e) Trade and other receivables Trade receivables are measured on initial recognition at fair value. Trade receivables are generally due for settlement within periods ranging from 15 days to 30 days.

Impairment of trade receivables is continually reviewed and those that are considered to be uncollectible are written off by reducing the carrying amount directly. An allowance account is used when there is objective evidence that the Company will not be able to collect all amounts due according to the original contractual terms. Factors considered by the Company in making this determination include known significant financial difficulties of the debtor, review of financial information and significant delinquency in making contractual payments to the Company.

The amount of the impairment loss is recognised in the Statement of Comprehensive Income within other expenses. When a trade receivable for which an impairment allowance had been recognised becomes uncollectible in a subsequent period, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited against other expenses in the Statement of Comprehensive Income.

(f) Derecognition of financial assets and financial liabilities (i) Financial assets A financial asset (or, where applicable, a part of a financial asset or part of a Company of similar financial assets) is derecognised when: the rights to receive cash flows from the asset have expired; the Company retains the right to receive cash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a ‘pass-through’ arrangement; or Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) the Company has transferred its rights to receive cash flows from the asset and either:

(a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.

When the Company has transferred its rights to receive cash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Company’s continuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original carrying amount of the asset and the maximum amount of consideration received that the Company could be required to repay. When continuing involvement takes the form of a written and/or purchased option (including a cash-settled option or similar provision) on the transferred asset, the extent of the Company’s continuing involvement is the amount of the transferred asset that the Company may repurchase, except that in the case of a written put option (including a cash-settled option or similar provision) on an asset measured at fair value, the extent of the Company’s continuing involvement is limited to the lower of the fair value of the transferred asset and the option exercise price.

(ii) Financial liabilities A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expires.

When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in profit or loss.

(g) Income tax Current tax assets and liabilities for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the Statement of Financial Position date.

Deferred income tax is provided on all temporary differences at the Statement of Financial Position date between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes.

Deferred income tax liabilities are recognised for all taxable temporary differences except: when the deferred income tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and that, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the taxable temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, and the timing of the reversal of the temporary difference can be controlled and it is probable that the temporary difference will not reverse in the foreseeable future. Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

Deferred income tax assets are recognised for all deductible temporary differences, carry- forward of unused tax assets and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences and the carry-forward of unused tax credits and unused tax losses can be utilised, except: when the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; or when the deductible temporary difference is associated with investments in subsidiaries, associates or interests in joint ventures, in which case a deferred tax asset is only recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable future and taxable profit will be available against which the temporary difference can be utilised.

The carrying amount of deferred income tax assets is reviewed at each Statement of Financial Position date and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilised.

Unrecognised deferred income tax assets are reassessed at each Statement of Financial Position date and are recognised to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realised or the liability is settled, based on tax rates (and tax laws) that have been enacted or substantively enacted at the Statement of Financial Position date.

Income taxes relating to items recognised directly in equity are recognised in equity and not in profit or loss.

Deferred tax assets and deferred tax liabilities are offset only if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred tax assets and liabilities relate to the same taxable entity and the same taxation authority.

(h) Other taxes Revenues, expenses and assets are recognised net of the amount of GST except: when the GST incurred on a purchase of goods and services is not recoverable from the taxation authority, in which case the GST is recognised as part of the cost of acquisition of the asset or as part of the expense item as applicable; and receivables and payables, which are stated with the amount of GST included. The net amount of GST recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the Statement of Financial Position.

Cash flows are included in the Statement of Cash Flows on a gross basis and the GST component of cash flows arising from investing and financing activities, which is recoverable from, or payable to, the taxation authority are classified as operating cash flows.

Commitments and contingencies are disclosed net of the amount of GST recoverable from, or payable to, the taxation authority. Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(i) Impairment of assets The Company assesses at each reporting date whether there is an indication that an asset may be impaired. If any such indication exists, or when annual impairment testing for an asset is required, the Company makes an estimate of the asset’s recoverable amount. An asset’s recoverable amount is the higher of its fair value less costs to sell and its value in use and is determined for an individual asset, unless the asset does not generate cash inflows that are largely independent of those from other assets or groups of assets and the asset's value in use cannot be estimated to be close to its fair value. In such cases the asset is tested for impairment as part of the cash-generating unit to which it belongs. When the carrying amount of an asset or cash-generating unit exceeds its recoverable amount, the asset or cash- generating unit is considered impaired and is written down to its recoverable amount.

In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. Impairment losses relating to continuing operations are recognised in those expense categories consistent with the function of the impaired asset unless the asset is carried at revalued amount (in which case the impairment loss is treated as a revaluation decrease).

An assessment is also made at each reporting date as to whether there is any indication that previously recognised impairment losses may no longer exist or may have decreased. If such indication exists, the recoverable amount is estimated. A previously recognised impairment loss is reversed only if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised. If that is the case the carrying amount of the asset is increased to its recoverable amount. That increased amount cannot exceed the carrying amount that would have been determined, net of depreciation, had no impairment loss been recognised for the asset in prior years. Such reversal is recognised in profit or loss unless the asset is carried at revalued amount, in which case the reversal is treated as a revaluation increase. After such a reversal the depreciation charge is adjusted in future periods to allocate the asset’s revised carrying amount, less any residual value, on a systematic basis over its remaining useful life.

(j) Trade and other payables Trade payables and other payables are carried at amortised costs and represent liabilities for goods and services provided to the Company prior to the end of the financial year that are unpaid and arise when the Company becomes obliged to make future payments in respect of the purchase of these goods and services.

(k) Provisions Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. When the Company expects some or all of a provision to be reimbursed, for example under an insurance contract, the reimbursement is recognised as a separate assets but only when the reimbursement is virtually certain. The expense relating to any provision is presented in the Statement of Comprehensive Income net of any reimbursement. If the effect of the time value of money is material, provisions are discounted using a current pre-tax rate that reflects the risks specific to the liability. When discounting is used, the increase in the provision due to the passage of time is recognised as a borrowing cost.

Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) (l) Share-based payment transactions The Company provides benefits to employees (including senior executives) of the Company in the form of share-based payments, whereby employees render services in exchange for shares or rights over shares (equity-settled transactions).

The cost of these equity-settled transactions with employees is measured by reference to the fair value of the equity instruments at the date at which they are granted.

In valuing equity-settled transactions, no account is taken of any performance conditions, other than conditions linked to the price of the shares of Pilbara Minerals Limited (market conditions) if applicable.

The cumulative expense recognised for equity-settled transactions at each reporting date until vesting date reflects (i) the extent to which the vesting period has expired and (ii) the Company’s best estimate of the number of equity instruments that will ultimately vest. No adjustment is made for the likelihood of market performance conditions being met as the effect of these conditions is included in the determination of fair value at grant date. The Statement of Comprehensive Income charge or credit for a period represents the movement in cumulative expense recognised as at the beginning and end of that period.

No expense is recognised for awards that do not ultimately vest, except for awards where vesting is only conditional upon a market condition.

If the terms of an equity-settled award are modified, as a minimum an expense is recognised as if the terms had not been modified. In addition, an expense is recognised for any modification that increases the total fair value of the share-based payment arrangement, or is otherwise beneficial to the employee, as measured at the date of modification.

If an equity-settled award is cancelled, it is treated as if it had vested on the date of cancellation, and any expense not yet recognised for the award is recognised immediately.

However, if a new award is substituted for the cancelled award and designated as a replacement award on the date that it is granted, the cancelled and new award are treated as if they were a modification of the original award, as described in the previous paragraph.

Cash settled transactions: The Company also provides benefits to employees in its electronics segment in the form of cash-settled share-based payments, whereby employees render services in exchange for cash, the amounts of which are determined by reference to movements in the price of the shares of Pilbara Minerals Limited.

The cost of cash-settled transactions is measured initially at fair value at the grant date using the Black-Scholes formula taking into account the terms and conditions upon which the instruments were granted. This fair value is expensed over the period until vesting with recognition of a corresponding liability. The liability is re-measured to fair value at each Statement of Financial Position date up to and including the settlement date with changes in fair value recognised in profit or loss.

(m) Issued capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(n) Earnings per share Basic earnings per share is calculated as net profit attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference share dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element.

Diluted earnings per share is calculated as net profit attributable to members of the parent, adjusted for: costs of servicing equity (other than dividends) and preference share dividends; the after tax effect of dividends and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses during the period that would result from the dilution of potential ordinary shares; divided by the weighted average number of ordinary shares and dilutive potential ordinary shares, adjusted for any bonus element.

(o) Exploration and evaluation Exploration and evaluation expenditures in relation to each separate area of interest are recognised as an exploration and evaluation asset in the year in which they are incurred where the following conditions are satisfied: (i) the rights to tenure of the area of interest are current; and (ii) at least one of the following conditions is also met: (a) the exploration and evaluation expenditures are expected to be recouped through successful development and exploration of the area of interest, or alternatively, by its sale; or (b) exploration and evaluation activities in the area of interest have not at the reporting date reached a stage which permits a reasonable assessment of the existence or otherwise of economically recoverable reserves, and active and significant operations in, or in relation to, the area of interest are continuing.

Exploration and evaluation assets are initially measured at cost and include acquisition of rights to explore, studies, exploratory drilling, trenching and sampling and associated activities and an allocation of depreciation and amortised of assets used in exploration and evaluation activities. General and administrative costs are only included in the measurement of exploration and evaluation costs where they are related directly to operational activities in a particular area of interest.

Exploration and evaluation assets are assessed for impairment when facts and circumstances suggest that the carrying amount of an exploration and evaluation asset may exceed its recoverable amount. The recoverable amount of the exploration and evaluation asset (for the cash generating unit(s) to which it has been allocated being no larger than the relevant area of interest) is estimated to determine the extent of the impairment loss (if any). Where an impairment loss subsequently reverses, the carrying amount of the asset is increased to the revised estimate of its recoverable amount, but only to the extent that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset in previous years.

Where a decision has been made to proceed with development in respect of a particular area of interest, the relevant exploration and evaluation asset is tested for impairment and the balance is then reclassified to development. Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

(p) Proforma transactions The proforma Statement of Financial Position, Statement of Comprehensive Income, Statement of Changes in Equity and Statement of Cash Flows have been derived from the historical financial information as at 31 December 2009 adjusted to give effect to the following actual or proposed significant events and transactions by the Company subsequent to 31 December 2009:

ii) the issue of 107,038 ordinary fully paid shares at $0.10 raising $10,704, which was received prior to the 31 December and is shown as a component of current liabilities as at that date;

iii) the issue by the Company pursuant to this Prospectus of 30,000,000 ordinary shares at an issue price of 20 cents each, raising $6,000,000;

Reviewed Proforma $3M raising $6M raising $ $ $ 2. CASH AND CASH EQUIVALENTS Balance as at 31 December 2009 135,163 135,163 135,163 Purchase of mining tenements - (60,000) (60,000) Shares issued pursuant to this Prospectus - 3,000,000 6,000,000 Share issue costs - (338,004) (523,004) 135,163 2,737,159 5,552,159

Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009 Reviewed Proforma $3M raising $6M raising

$ $ $

3. EXPLORATION AND EVALUATION EXPENDITURE Balance as at 31 December 2009 1,800,585 1,800,585 1,800,585 Acquisition of tenements from Seefingan Exploration Pty Ltd

- Shares - 300,000 300,000 - Cash - 60,000 60,000 Total deferred exploration and evaluation expenditure 1,800,585 2,160,585 2,160,585

4. PAYABLES Other payables and accruals 132,079 121,375 121,375

5. ISSUED CAPITAL Issued and paid up share capital Shares issued: 37,067,962 ordinary fully paid shares 8,125,598 8,125,598 8,125,598 107,038 ordinary fully paid shares issued at $0.10 each - 10,704 10,704 3,000,000 fully paid shares issued at 10 cents each in consideration for purchase of mineral tenements (1) - 300,000 300,000 150,000 ordinary fully paid shares at $0.20 each - 30,000 30,000 Prospectus issue - 3,000,000 6,000,000 Share issue costs - (1,276,500) (1,461,500) Balance at end of period 8,125,598 10,189,802 13,004,802

$3M raising $6M raising Number $ Number $ Movements in number of fully paid ordinary shares since 31 December 2009: Shares on issue at 31 December 2009 37,067,962 8,125,598 37,067,962 8,125,598 Proforma adjustments: 107,038 ordinary fully shares issued at 10 cents each 107,038 10,704 107,038 10,704 12,000,000 ordinary fully shares issued at 10 cents each issued as part consideration for purchase of mineral tenements (1) 3,000,000 300,000 3,000,000 300,000 150,000 ordinary fully paid shares at $0.20 each 150,000 30,000 150,000 30,000 Prospectus issue 15,000,000 3,000,000 30,000,000 6,000,000 Share issue costs (1,276,500) (1,461,500) Proforma total 55,325,000 10,189,802 70,325,000 13,004,802

(1) The Company agreed to issue shares as part consideration for the purchase of 7 mineral tenements from Seefingan Exploration Pty Ltd. A total of 3,000,000 shares at deemed value of 10 cents each are to be issued (subject to shareholder approval).

Investigating Accountant’s Report

PILBARA MINERALS LIMITED NOTES TO THE FINANCIAL STATEMENTS FOR T HE HALF YEAR ENDED 31 DECEMBER 2009

Reviewed Proforma $3M raising $6M raising

6. SHARE OPTIONS RESERVES $ $ $ Share options 11,278,500 options on issue at 30 June 2009 (2) 1,118,075 1,118,075 1,118,075 9,000,000 options exercisable at 20 cents on or before 31 December 2012 109,206 109,206 109,206 10,000,000 options exercisable at 20 cents on or before 31 December 2012 - 601,000 601,000 5,000,000 options exercisable at 20 cents on or before 31 December 2012 - 300,500 300,500 1,227,781 2,128,781 2,128,781 (2) Full details are disclosed in the 30 June 2009 Annual Report.

7. CONTINGENCIES AND COMMITMENTS

Details of planned expenditure commitments are outlined in Section 4.6 of the Prospectus. The Directors are not aware of any other contingencies.

8. RELATED PARTY TRANSACTIONS Details of Directors’ interests in the Company’s issued capital and transactions with the Company are included in Section 13.4 and 13.5 of the Prospectus.

Investigating Accountant’s Report

- APPENDIX 2 -

We have determined an indicative value for the options as outlined in Section 3 using the Black and Scholes Option Pricing Model. The model describes the value of an option as being a function of five variables: (i) Value of the underlying share; (ii) The risk free rate of return; (iii) The variance (or volatility) of the share price; (iv) The exercise price of the option; and (v) The remaining time to maturity.

A) OPTIONS PROPOSED TO BE ISSUED

Set out below is our understanding of the options proposed to be issued. The options are not transferable and no application will be made to the ASX for quotation of the options.

Total Number of Options: 15,000,000 Exercise Price: $0.20 Expiry Date: 31 December 2012

B) V ALUATION

Our calculation of the value of each option has been performed based on the following assumptions:

(i) We have based the underlying value of each share in the Company on the fair market value per share determined for this purpose to be the offer price - $0.20; (ii) Risk free rate of return – 4.81% (estimated, based on the 5 year bond indicator rate as at 24 February 2010); and (iii) We have determined a volatility of the share price of 60%.

C) T HEORETICAL VALUATION

Based on the above factors, the Black and Scholes Option Pricing Model attributes a theoretical value to each option of 8.59 cents

D) I NDICATIVE VALUATION

The Black and Scholes Option Pricing Model assumes that the options the subject of the valuation can be sold on a secondary market. Accordingly a discount for lack of marketability is required to determine an indicative fair value of the options.

For the purposes of arriving at an appropriate discount rate we have considered that discounts have traditionally been applied in the range of 10% to 30% to reflect the non– negotiability of unlisted equities; and the fact that the options will be unlisted.

On the basis of the above we have applied a discount factor of 30% to our theoretical valuation of the options. Our valuation of the options, based on their theoretical valuation, less a discount of 30% for lack of negotiability is 6.01 cents.

The value of the options is determined to be:

Issued to Empire Securities – 10,000,000 options at 6.01 cents $601,000 Issued to C K Locke and Partners – 5,000,000 options at 6.01 cents $300,500

11. SOLICITOR’S REPORT ON AUSTRALIAN TENEMENTS

12 March 2010

The Board of Directors Pilbara Minerals Limited Suite 9 1200 Hay Street WEST PERTH WA 6005

Dear Sirs

SOLICITOR’S REPORT ON AUSTRALIAN TENEMENTS

This Report is prepared for inclusion in a prospectus for the issue of up to 30,000,000 shares in the capital of Pilbara Minerals Limited (Company ) at an issue price of 20 cents per share to raise up to $3,000,000 (Prospectus ).

1. SCOPE

We have been requested to report on certain Australian mining tenements in which the Company has an interest (the Tenements ).

The Tenements are located in Western Australia. Details of the Tenements are set out in Part I of the attached Schedule, which forms part of this Report.

2. SEARCHES

For the purposes of this Report, we have conducted searches and made enquiries in respect of all of the Tenements as follows:

(a) we have obtained searches of the Tenements from the registers maintained by the Western Australian Department of Mines and Petroleum (Department of Mines ). These searches were conducted on 9 March 2010. Key details on the status of the Tenements are set out in Part I of the Schedule;

(b) we have obtained extracts of any registered native title claims, native title determinations and Indigenous Land Use Agreements ( ILUAs ) that apply to the Tenements, as determined by the National Native Title Tribunal ( NNTT ). This material was obtained on 9 March 2010. Details of

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any native title claims, native title determinations and ILUAs are set out in Section 7 of this Report and Part III of the Schedule; and

(c) we have reviewed all material agreements relating to the Tenements provided to us or registered as dealings against the Tenements as at the date of the Department of Mines searches and have summarised the material terms (details of which are set out in Part II of the Schedule).

3. OPINION

As a result of our searches and enquiries, but subject to the assumptions and qualifications set out in this Report, we are of the view that, as at the date of the relevant searches:

(a) (Company’s Interest ): this Report provides an accurate statement as to the Company’s interest in the Tenements;

(b) (Good Standing ): this Report provides an accurate statement as to the validity and good standing of the Tenements; and

(c) (Third party interests ): this Report provides an accurate statement as to third party interests, including encumbrances, in relation to the Tenements.

The Company has recently acquired E47/1092-1097 from Pilbara Mining Pty Ltd. However, we note that searches of the Tenements identify Ripplesea Pty Ltd (Ripplesea ) and Precious Metals Engineering (WA) Pty Ltd (Precious Metals ) as the registered holders of E47/1092-1097.

We further note that searches of E47/1092-1096 state that transfers were lodged with respect to these Tenements on or about 23 December 2009 and are currently pending registration. However, a search of E47/1097 does not indicate that any transfer has recently been lodged with respect to the Tenement.

The Company has provided us with copies of signed tenement transfers to transfer a 50% interest from each of Ripplesea and Precious Metals to Pilbara Mining Pty Ltd in respect of E47/1092-1097. We have also sighted copies of signed tenement transfers to transfer a 100% interest in each of E47/1092-1097 from Pilbara Mining Pty Ltd to the Company.

Given that the Company is not recorded as being registered as the holder of a legal interest with respect to the Tenements, the Company may lodge a caveat to protect its interest and we have advised the Company to do so in order to protect its prior equitable claim to an interest in the Tenements.

4. DESCRIPTION OF THE TENEMENTS

The Tenements comprise exploration licences granted under the Mining Act 1978 (WA) ( Mining Act ). Schedule I provides a list of the Tenements. Set out below is a description of the nature and key terms of exploration licences as set out in the Mining Act.

(a) Application : A person may lodge an application for an exploration licence and the Minister decides whether to grant the application. An application for an exploration licence (unless a reversion application) cannot be legally transferred and continues in the name of the applicant.

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(b) Rights : The holder of an exploration licence is entitled to enter the land and undertake operations for the purposes of exploration for minerals.

• the exploration licence was granted before 10 February 2006, by a further period or periods of 1 or 2 years; and

• the exploration licence was granted after 10 February 2006, by a further period of 5 years followed by a further period or periods of 2 years.

Where an exploration licence is transferred before a renewal application has been determined, the transferee is deemed to be the applicant.

(d) Retention Status : The holder of an exploration licence granted after 10 February 2006 may apply for approval of retention status for the exploration licence. The Minister may approve the application where there is an identified mineral resource within the exploration licence but it is impractical to mine the resource for prescribed reasons. Where retention status is granted, the minimum expenditure requirements are reduced in the year of grant and cease in future years. However, the Minister has the right to impose a programme of works or require the holder to apply for a mining lease. The holder of an exploration licence applied for or granted before 10 February 2006, can apply for a retention licence (see below).

(e) Conditions : Exploration licences are granted subject to various standard conditions, including conditions relating to minimum expenditure, the payment of prescribed rent and royalties and observance of environmental protection and reporting requirements. A failure to comply with these conditions may lead to forfeiture of the exploration licence.

(f) Relinquishment : The holder of an exploration licence granted or applied for before 10 February 2006 must relinquish not less than half of the blocks comprising the licence at the end of the third year. A further relinquishment of not less than half of the remaining blocks is required at the end of the fourth year. The holder of an exploration licence applied for and granted after 10 February 2006 must relinquish not less than 40% of the blocks comprising the licence at the end of the fifth year.

(g) Priority to apply for Mining Lease : The holder of an exploration licence has priority to apply for a mining lease over any of the land subject to the exploration licence. Any application for a mining lease must be made prior to the expiry of the exploration licence. The exploration licence remains in force until the application for the mining lease is determined.

(h) Transfer : No legal or equitable interest in an exploration licence can be transferred or otherwise dealt with during the first year of its term without the prior written consent of the Minister. Thereafter, there is no restriction on transfer or other dealing.

5. ABORIGINAL HERITAGE

There may be areas or objects of Aboriginal heritage located on the Tenements.

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We have not undertaken searches to ascertain if any Aboriginal sites or objects have been registered in the vicinity of the Tenements, as there is no obligation under the relevant legislation to register sites or objects. Furthermore, the exact location of Aboriginal sites cannot be ascertained from these searches.

The Company must ensure that it does not breach the Commonwealth and applicable State legislation relating to Aboriginal heritage as set out below. To ensure that it does not contravene such legislation, it would be prudent for the Company (and it would accord with industry practice and Aboriginal expectations) to conduct heritage surveys to determine if any Aboriginal sites or objects exist within the area of the Tenements. Any interference with these sites or objects must be in strict conformity with the provisions of the relevant legislation. It may also be necessary for the Company to enter into separate arrangements with the traditional owners of the sites.

5.1 Commonwealth Legislation

The Aboriginal and Torres Strait Islander Heritage Protection Act 1984 (Cth) (Commonwealth Heritage Act ) is aimed at the preservation and protection of any Aboriginal areas and objects that may be located on the Tenements.

Under the Commonwealth Heritage Act, the Minister for Aboriginal Affairs may make interim or permanent declarations of preservation in relation to significant Aboriginal areas or objects, which have the potential to halt exploration activities. Compensation is payable by the Minister for Aboriginal Affairs to a person who is, or is likely to be, affected by a permanent declaration of preservation.

It is an offence to contravene a declaration made under the Commonwealth Heritage Act.

5.2 Western Australian Legislation

Tenements are granted subject to a condition requiring observance of the Aboriginal Heritage Act 1972 (WA) (WA Heritage Act ).

The WA Heritage Act makes it an offence to alter or damage sacred ritual or ceremonial Aboriginal sites and areas of significance to Aboriginal persons.

The Minister’s consent is required where any use of land is likely to result in the excavation, alteration or damage to an Aboriginal site or any objects on or under that site.

Aboriginal sites may be registered under the WA Heritage Act. However, there is no requirement for a site to be registered and the WA Heritage Act protects all registered and unregistered sites.

6. NATIVE TITLE

6.1 Introduction

This section of the Report examines the effect of native title on the Tenements.

The existence of native title rights held by indigenous Australians was first recognised in Australia in 1992 by the High Court in the case Mabo v. Queensland (no.2) (1992) 175 CLR 1 (Mabo no.2 ).

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Mabo no. 2 held that certain land tenure existing as at the date of that case, including mining tenements, where granted or renewed without due regard to native title rights, were invalid.

As a result of Mabo no. 2, the Native Title Act 1993 (Cth) ( NTA ) was passed to:

(a) provide a process for indigenous people to lodge claims for native title rights over land, for those claims to be registered by the National Native Title Tribunal ( NNTT ) and for the Courts to assess native title claims and determine if native title rights exist. Where a Court completes the assessment of a native title claim, it will issue a native title determination that specifies whether or not native title rights exist;

(b) provide (together with associated State legislation) that any land tenures granted or renewed before 1 January 1994 were valid despite Mabo no. 2. This retrospective validation of land tenure was subsequently extended by the NTA to include freehold and certain leasehold (including pastoral leases) granted or renewed before 23 December 1996; and

(c) provide that an act that may affect native title rights (such as the grant or renewal of a mining tenement) carried out after 23 December 1996 (a Future Act ) must comply with certain requirements for the Future Act to be valid under the NTA. These requirements are called the Future Act Provisions .

6.2 Future Act Provisions

The Future Act Provisions vary depending on the Future Act to be carried out. In the case of the grant of a mining tenement, typically there are three alternatives: the Right to Negotiate, an Indigenous Land Use Agreement ( ILUA ) and the Expedited Procedure. These are summarised below.

Right to Negotiate

The Right to Negotiate involves a formal negotiation between the State, the applicant for the Tenement and any registered native title claimants and holders of native title rights. The aim is to agree the terms on which the Tenement can be granted. The applicant for the Tenement is usually liable for any compensation that the parties agree to pay to the registered native title claimants and holders of native title. The parties may also agree on conditions that will apply to activities carried out on the Tenement (eg in relation to heritage surveys).

If agreement is not reached to enable the Tenement to be granted, the matter may be referred to arbitration before the NNTT, which has six (6) months to decide whether the Tenement can be granted and if so, on what conditions. The NNTT usually requires the parties to have had at least 6 months of negotiations before it will accept a referral for arbitration.

ILUA

An ILUA is a contractual arrangement governed by the NTA. Under the NTA, an ILUA must be negotiated with all registered native title claimants for a relevant area. The State and the applicant for the Tenement are usually the other parties to the ILUA.

An ILUA must set out the terms on which a tenement can be granted. An ILUA will also specify conditions on which activities may be carried out within the tenement. The applicant for a tenement is usually liable for any compensation

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that the parties agree to pay to the registered native title claimants and holders of native title in return for the grant of the Tenement being approved. These obligations pass to a transferee of the tenement.

Once an ILUA is agreed and registered, it binds the whole native title claimant group and all holders of native title in the area (including future claimants), even though they may not be parties to it.

Expedited Procedure

The NTA establishes a simplified process for the carrying out of a Future Act that is unlikely to adversely affect native title rights ( Expedited Procedure ). The grant of a tenement can occur under the Expedited Procedure if:

(a) the grant will not interfere directly with the carrying on of the community or social activities of the persons who are the holders of native title in relation to the land;

(b) the grant is not likely to interfere with areas or sites of particular significance, in accordance with their traditions, to the persons who are holders of native title in relation to the land; and

(c) the grant is not likely to involve major disturbance to any land or waters concerned or create rights whose exercise is likely to involve major disturbance to any land.

If the State considers the above criteria are satisfied, it commences the Expedited Procedure by giving notice of the proposed grant of the Tenement in accordance with the NTA. Persons have until three (3) months after the notification date to take steps to become a registered native title claimant or native title holder in relation to the land to be subject to the Tenement.

If there is no objection lodged by a registered native title claimant or a native title holder within four (4) months of the notification date, the State may grant the Tenement.

If one or more registered native title claimants or native title holders object within that four (4) month notice period, the NNTT must determine whether the grant is an act attracting the Expedited Procedure. If the NNTT determines that the Expedited Procedure applies, the State may grant the Tenement. Otherwise, the Future Act Provisions (eg Right to Negotiate or ILUA) must be followed before the Tenement can be granted.

The State of Western Australia currently follows a policy of granting prospecting and exploration licenses under the Expedited Procedure where the applicant has entered into a standard aboriginal heritage agreement with the relevant registered native title claimants and native title holders. The standard heritage agreement (and ancillary agreements) usually provide for payment of compensation by the applicant for the tenement and conditions that apply to activities carried out within the tenement.

Exception to requirement to comply with Future Act Provisions

The grant of a Tenement does not need to comply with the Future Act Provisions if in fact native title has never existed over the land covered by the Tenement, or has been validly extinguished prior to the grant of the Tenement. We have not undertaken the extensive research needed to determine if in fact native title does not exist, or has been validly extinguished in relation to the Tenements.

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Unless it is clear that native title does not exist (eg in relation to freehold land), the usual practice of the State is to comply with the Future Act Provisions when granting a Tenement. This ensures the grant will be valid in the event a court determines that native title rights do exist over the land subject to the Tenement and as such, the Future Act Provisions apply.

Where a Tenement has been retrospectively validated or validly granted under the NTA, the rights under the Tenement prevail over any inconsistent native title rights.

Application to the Tenements

The following sections of the Report identify:

(a) any native title claims, native title determinations and ILUAs that are registered against the Tenements (see Section 6.3);

(b) any Tenements which have been retrospectively validated under the NTA as being granted before 23 December 1996 (see Section 6.4);

(c) any Tenements which have been granted after 23 December 1996 and as such will need to have been granted following compliance with the Future Act Provisions to be valid under the NTA. This Report assumes that the Future Act Provisions have been complied with in relation to these Tenements (see Section 6.4); and

(d) any Tenements which are yet to be granted and as such may need to be granted in compliance with the Future Act Provisions in order to be valid under the NTA (see Section 6.4).

6.3 Registered Native Title Claims and Determinations and ILUAs

Our searches indicate that the Tenements are subject to the following registered native title claims and determinations.

Tenement Native Title Claim Native Title ILUA Determination

E47/1092 - WC99/14 - E47/1093 E47/1094 E47/1095 E47/1096 E47/1811 E47/1812 E47/1813 E47/1814 E47/1815 E47/1816 E47/1817

E47/1097 WC96/89 - - WC99/12

The status of any native title claims, native title determinations and ILUAs is summarised in Part III of the Schedule.

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Native title claimants, holders of native title under the determinations and native title parties under ILUAs are entitled to certain rights under the Future Act Provisions.

6.4 Validity of Tenements under the NTA

The sections below examine the validity of the Tenements under the NTA.

Tenements granted after 23 December 1996

Our searches indicate all of the Tenements were granted after 23 December 1996.

We have assumed that the Tenements were therefore granted in accordance with the Future Act Provisions and as such are valid under the NTA.

Tenements renewed after 23 December 1996

Renewals of mining tenements made after 23 December 1996 must comply with the Future Act Provisions in order to be valid under the NTA.

An exception is where the renewal is the first renewal of a mining tenement that was validly granted before 23 December 1996 and the following criteria are satisfied:

• the area to which the mining tenement applies is not extended;

• the term of the renewed mining tenement is not longer than the term of the old mining tenement; and

• the rights to be created are not greater than the rights conferred by the old mining tenement.

In such cases, the mining tenement can be renewed without complying with the Future Act Provisions. It is currently uncertain whether this exemption applies to a second or subsequent renewal of such a mining tenement.

Our searches indicate that none of the Tenements were renewed after 23 December 1996. However, renewals of Tenements in the future will need to comply with the Future Act Provisions in order to be valid under the NTA. The registered native title claimants and holders of native title identified in Section 6.3 of this Report will need to be involved as appropriate under the Future Act Provisions.

7. QUALIFICATIONS AND ASSUMPTIONS

This Report is subject to the following qualifications and assumptions:

(a) we have assumed the accuracy and completeness of all Tenement searches, register extracts and other information or responses which were obtained from the relevant department or authority including the NNTT;

(b) we assume that the registered holder of a Tenement has valid legal title to the Tenement;

(c) this Report does not cover any third party interests, including encumbrances, in relation to the Tenements that are not apparent from our searches and the information provided to us;

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(d) we have assumed that any agreements provided to us in relation to the Tenements are authentic, were within the powers and capacity of those who executed them, were duly authorised, executed and delivered and are binding on the parties to them;

(e) with respect to the granting of the Tenements, we have assumed that the State and the applicant for the Tenements have complied with, or will comply with, the applicable Future Act Provisions;

(f) we have assumed the accuracy and completeness of any instructions or information which we have received from the Company or any of its officers, agents and representatives;

(g) unless apparent from our searches or the information provided to us, we have assumed compliance with the requirements necessary to maintain a Tenement in good standing;

(h) with respect to the application for the grant of a Tenement, we express no opinion as to whether such application will ultimately be granted and that reasonable conditions will be imposed upon grant, although we have no reason to believe that any application will be refused or that unreasonable conditions will be imposed;

(i) references in the Schedule to any area of land are taken from details shown on searches obtained from the relevant department. It is not possible to verify the accuracy of those areas without conducting a survey; and

(j) the information in the Schedule is accurate as at the date the relevant searches were obtained. We cannot comment on whether any changes have occurred in respect of the Tenements between the date of the searches and the date of the Prospectus.

8. FORFEITURE ON GROUNDS OF NON-COMPLIANCE

As shown in the Part I of the attached Schedule, the prescribed expenditure commitments for the previous expenditure year in respect of each of E47/1092- 1097 were not met. We note that it has been more than 8 months since the commencement of the following expenditure year for each of E47/1092-1095. However, an application for forfeiture may be made by a third party on the grounds of non-compliance in respect of E47/1096 and E47/1097 on or before 5 May 2010 and 25 April 2010 respectively.

9. CONSENT

This report is given solely for the benefit of the Company and the directors of the Company in connection with the issue of the Prospectus and is not to be relied on or disclosed to any other person or used for any other purpose or quoted or

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referred to in any public document or filed with any government body or other person without our prior consent.

Yours faithfully

STEINEPREIS PAGANIN

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P ART I

TENEMENT SCHEDULE

TENEMENT REGISTERED HOLDER SHARES GRANT DATE / EXPIRY DATE AREA ANNUAL RENT MINIMUM ANNUAL EXPENDITURE ENCUMBR- BONDS NATIVE TITLE CLAIMS / APPLICANT HELD APPLICATION SIZE (NEXT RENTAL ANCES/ / DETERMINATIONS / DATE (Blocks) YEAR) DEALINGS ILUAs E47/1092 Ripplesea Pty Ltd 50 13/06/2007 12/06/2012 52 $9,598.16 $52,000 N/A - WAD6017/96 Precious Metals 50 An Exemption from Expenditure for Engineering the year ending 12/06/2009 was (WA) Pty Ltd lodged on 14/10/2009 for underexpenditure of $35,375. The exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $3,537 was imposed and subsequently paid on 6/01/2010. E47/1093 Ripplesea Pty Ltd 50 13/06/2007 12/06/2012 69 $12,736.02 $69,000 N/A - WAD6017/96 Precious Metals 50 An Exemption from Expenditure for Engineering the year ending 12/06/2009 was (WA) Pty Ltd lodged on 14/10/2009 for underexpenditure of $45,812. The exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $4,581 was imposed and subsequently paid on 6/01/2010. E47/1094 Ripplesea Pty Ltd 50 13/06/2007 12/06/2012 70 $12,920.60 $70,000 N/A - WAD6017/96 Precious Metals 50 An Exemption from Expenditure for Engineering the year ending 12/06/2009 was (WA) Pty Ltd lodged on 14/10/2009 for underexpenditure of $46,502. The

TENEMENT REGISTERED HOLDER SHARES GRANT DATE / EXPIRY DATE AREA ANNUAL RENT MINIMUM ANNUAL EXPENDITURE ENCUMBR- BONDS NATIVE TITLE CLAIMS / APPLICANT HELD APPLICATION SIZE (NEXT RENTAL ANCES/ / DETERMINATIONS / DATE (Blocks) YEAR) DEALINGS ILUAs exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $4,650 was imposed and subsequently paid on 6/01/2010. E47/1095 Ripplesea Pty Ltd 50 13/06/2007 12/06/2012 55 $10,151.90 $55,000 N/A - WAD6017/96 Precious Metals 50 An Exemption from Expenditure for Engineering the year ending 12/06/2009 was (WA) Pty Ltd lodged on 14/10/2009 for underexpenditure of $36,517. The exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $3,652 was imposed and subsequently paid on 6/01/2010. E47/1096 Ripplesea Pty Ltd 50 06/09/2007 05/09/2012 49 $9,044.42 $49,000 N/A - WAD6017/96 Precious Metals 50 An Exemption from Expenditure for Engineering the year ending 05/09/2009 was (WA) Pty Ltd lodged on 26/10/2009 for underexpenditure of $32,298. The exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $3,230 was imposed and subsequently paid on 6/01/2010.

TENEMENT REGISTERED HOLDER SHARES GRANT DATE / EXPIRY DATE AREA ANNUAL RENT MINIMUM ANNUAL EXPENDITURE ENCUMBR- BONDS NATIVE TITLE CLAIMS / APPLICANT HELD APPLICATION SIZE (NEXT RENTAL ANCES/ / DETERMINATIONS / DATE (Blocks) YEAR) DEALINGS ILUAs E47/1097 Ripplesea Pty Ltd 50 26/08/2008 25/08/2013 70 $8,300.60 $70,000 N/A - WC96/89; Precious Metals 50 An Exemption from Expenditure for WC99/12 Engineering the year ending 25/08/2009 was (WA) Pty Ltd lodged on 26/10/2009 for underexpenditure of $47,672. The exemption was refused on 10/12/2009 and the registered holder was issued with a Notice of Intention to Forfeit pursuant to Regulation 50. Following consideration of the forfeiture process, a fine of $4,767 was imposed and subsequently paid on 6/01/2010. E47/1811 Seefingan 100 02/07/09 01/07/14 7 $830.06 $20,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1812 Seefingan 100 02/07/09 01/07/14 3 $355.74 $15,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1813 Seefingan 100 02/07/09 01/07/14 70 $8,300.60 $70,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1814 Seefingan 100 02/07/09 01/07/14 30 $3,557.40 $30,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1815 Seefingan 100 02/07/09 01/07/14 30 $3,557.40 $30,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1816 Seefingan 100 02/07/09 01/07/14 19 $2,253.02 $20,000 N/A - WAD6017/96 Exploration Pty Ltd E47/1817 Seefingan 100 02/07/09 01/07/14 35 $4,150.30 $35,000 N/A - WAD6017/96 Exploration Pty Ltd

Key to Tenement Schedule E – Exploration Licence

All of the native title claims listed in the Schedule have been accepted and entered on the Register of Native Title Claims. Please refer to Part III of this Report for the status of the native title claims.

Unless otherwise indicated, capitalised terms have the same meaning given to them in the Prospectus.

PART II – MATERIAL CONTRACT SUMMARY

Tenement Sale Agreement – Mt Wellard Tenements

As announced to the Australian Securities Exchange on 12 January 2010, the Company entered into a conditional tenement sale agreement (Agreement ) with Seefingan Exploration Pty Ltd (ACN 124 685 374) ( Seefingan ) pursuant to which Seefingan agreed to sell, and the Company agreed to acquire, 7 granted exploration licences (being E47/1811-1817) in the West Pilbara region of Western Australia ( Mt Wellard Tenements ) (the Acquisition ).

The material terms of the Agreement are as follows:

(a) (Conditions precedent ): The Acquisition is conditional upon the satisfaction or waiver of the following conditions precedent:

(i) the Company obtaining all necessary shareholders approvals under the Corporations Act and the ASX Listing Rules to the Acquisition and the matters contemplated by the Agreement;

(ii) the Company confirming to Seefingan that it is satisfied with the results of its due diligence investigations in relation to the Mt Wellard Tenements within 14 days of the date of the Agreement (which has since occurred);

(iii) Pilbara Mining Pty Ltd transferring 2,000,000 Shares to Seefingan;

(iv) the Company obtaining conditional approval from ASX on terms satisfactory to the Company for the quotation of its Shares on the official list of ASX;

(v) as at settlement of the Acquisition ( Settlement ), the Mt Wellard Tenements being in good standing, full force and effect and free of encumbrances; and

(vi) all necessary governmental consents and approvals to the matters set out in the Agreement to transfer the Tenements in accordance with the Agreement,

on or before 5.00 pm (WST) on 30 April 2010.

(b) (Settlement ): Settlement will occur on the date which is 5 business days after satisfaction or waiver of the conditions precedent set out above;

(i) the issue and allotment of 3,000,000 Shares to Seefingan; and

(ii) a cash payment of $60,000 in total where:

(A) a non-refundable amount of $30,000 was payable within 14 days of execution of the Agreement (and which has since been paid by the Company); and

(B) $30,000 is payable at Settlement; and

(d) (Warranties ): The Agreement contains standard warranties and representations on behalf of Seefingan typical for an agreement of this nature.

The Agreement otherwise contains terms and conditions typical for an agreement of this nature.

P A R T I I I

STATUS OF NATIVE TITLE CLAIMS AND NATIVE TITLE DETERMINATIONS

TRIBUNAL FEDERAL APPLICATION REGISTERED/ IN STATUS NUMBER COURT NAME/FEDERAL COURT DETERMINATION MEDIATION NUMBER NAME DATE

WC99/12 WAD6090/98 Jean Lockyer & Others Registered from Not Not on behalf of the Kuruma 24/6/1999 Available Available Marthudunera People v The State of Western Australia (Kuruma Marthudunera (combined))

WC99/14 WAD6017/96 Daniel v State of Determination Not Determined Western Australia (on made on Applicable behalf of the Ngarluma 02/05/2005 People and Yindjibarndi People) WC96/89 WAD127/97 Valerie Holborow (nee Registered from Not Not Cosmos) & Others on 01/08/1996 Applicable Available behalf of the Yaburara & Mardudhunera People v The State of Western Australia (Yaburara & Mardudhunera people)

STATUS OF ILUAs

Searches of the Register of Indigenous Land Use Agreements and Notified Indigenous Land Use Agreements did not identify the existence of any ILUAs affecting the land under the Tenements.

12. REPORT ON INDONESIAN TENEMENTS

103 The Directors Pilbara Minerals Limited Suite 9, 1200 Hay Street West Perth WA 6005

12 March 2010

Dear Sirs, INDONESIAN LEGAL DUE DILIGENCE REPORT

On or about 4 February 2009, Pilbara Minerals Limited (formerly Fortuna Minerals Limited) (Company ) entered into an option agreement with CV. Resource Management (formerly PT Seluma Mining Indonesia) (CVRM ) and PT Pringgodani Rizki Utama ( PT PRU ) pursuant to which CVRM and PT PRU granted to the Company an exclusive option to acquire a 100% interest in the issued capital of a company to be registered under the laws of Indonesia which will be established to hold, explore, develop and, if warranted, mine on KP number KW.08 JNP ( Seluma Iron Sands Project ) (and any replacement or successor tenements) ( Option Agreement ).

We have been engaged by the Company to prepare a due diligence report on the Company’s interests in the Seluma Iron Sands Project under the Option Agreement from an Indonesian legal perspective. This report is to be included in a Prospectus to be lodged by the Company with the Australian Securities and Investments Commission for the offer of up to 30,000,000 fully paid ordinary shares in the capital of the Company ( Share ) at a price of $0.20 per Share to raise $6,000,000 (before costs of the offer) ( Prospectus ). CVRM gives its consent for the inclusion of this report in the Prospectus in the form and context in which it appears.

This report was compiled using information available up to and including the date of the report. CVRM has no reason to doubt the authenticity or substance of the information provided.

In the preparation of this report, we have conducted all necessary searches and made all enquiries with respect to the legal matters relating to the Company which are reasonable in the circumstances. We consider that we are competent to make the enquiries in respect of these legal matters.

We confirm that we have sighted and reviewed all documents which purport to be material contracts relating to the Seluma Iron Sands Project. For the purposes of providing this opinion, we have perused what purport to be true copies of, amongst other things:

(i) proof of the legal status of PT PRU;

(ii) the names of the individuals who own and control PT PRU;

(iii) proof of validity of the exploration licence (KP number KW.08 JNP);

(iv) proof that PT PRU are the legal and registered holders of KP number KW.08 JNP; and

(v) proof of validity of the Option Agreement.

We confirm that a notarized copy of the above documents were sent to the Company’s registered offices by courier on 8th January 2010.

Based upon our legal due diligence investigations and a review of the above documentation, it is our opinion that: (a) CVRM is a going concern Indonesian private corporation registered on 15 th July 2009 and validly existing under the laws of Indonesia. CVRM has the corporate power to own its assets and carry on its business according to the objects set out in its constituent documents and, as such, is duly qualified to carry on business and to own property in Indonesia;

(b) PT PRU is a going concern Indonesian private corporation registered on 4 th January 2008 and validly existing under the laws of Indonesia. PT PRU has the corporate power to own its assets and carry on its business according to the objects set out in its constituent documents and as such is duly qualified to carry on business and to own property in Indonesia;

(c) there is no pending, threatened or actual litigation against or involving the Seluma Iron Sands Project, CVRM or PT PRU in Indonesia;

(d) the parties are not prevented by any applicable Indonesian laws from carrying out the transactions contemplated by the Option Agreement and the Option Agreement is otherwise valid and has been entered into in accordance with the laws of Indonesia;

(e) the registered holders of the KP comprising the Seluma Iron Sands Project (being KP KW.08 JNP) are PT PRU;

(f) KP KW.08 JNP was granted on 11 March 2008 and expired on 11 March 2010. The term of KP KW.08 JNP can be extended by its registered holder (ie. PT PRU). This process involves the submission of exploration and environmental reports, and the payment of certain fees, to the Indonesian Government. If the term is extended, KP KW.08 JNP will also subsequently be converted into a new form of mining right, known as a Mining Business Permit (Ijin Usaha Pertambangan) ( IUP ).

The application to extend the term of KP KW.08 JNP must be made to the Indonesian Government on or before 26 March 2010. PT PRU is currently in the process of preparing an application to extend the term of KP KW.08 JNP and convert it into an IUP and we are not aware of any reasons why such an application will not be granted by the Indonesian Government.

The table set out in paragraph (g) below provides an outline of the costs and expenses involved in extending the term of KP KW.08 JNP and converting it into an IUP. Upon renewal of KP KW.08 JNP and conversion into an IUP, such IUP will be valid for a further 10 years;

(g) as at the date of this report, KP KW.08 JNP is not subject to any minimum annual expenditure obligation. However, the estimated costs and expenses associated with the extension of KP KW.08 JNP and its subsequent conversion into an IUP are as follows:

Indonesian Costs and Expenses Rupiahs (IDR)

Dinas pertambangan / Mining Department 100,000,000

Bupati (including head village & Camat, etc.) 230,000,000

Landren / Land Tax Local Government 11,040,000

Amdal/Preparation of Environmental Report 125,000,000

Deposito berjangka / Deposit to Government 30,000,000 (refundable)

Pembuatan Laporan explor / Preparation of Exploration Report 8,500,000

Total IDR : 504,540,000*

Notes: *Based on a conversion rate of AUD1 = IDR8,280.39, this total amount equates to approximately AUD61,000;

(h) KP KW.08 JNP is valid, in good standing and free of encumbrances; and

(i) there are no environmental or native title issues affecting KP KW.08 JNP.

Summary of Relevant Indonesian Mining Laws

Indonesian law recognises two forms of company, being: (a) Foreign Investment Companies (Penanaman Modal Asing) ( PMA ), in which any amount of the shares are held by foreign entities; (b) 100% locally-owned companies, which may be either: (i) Domestic Capital Investment Companies (Penanaman Modal Dalam Negeri) (PMDN ); or (ii) General Indonesian Companies (Perseroan Terbatas Biasa) ( General Indonesian Companies ), (together referred to as Local Indonesian Companies ).

Pursuant to Law No. 4/1967 concerning Mining (the Previous Mining Law ), mining rights were traditionally in the form of: (a) Contracts of Work (Kontrak Karya) ( COW ) between the Government of the Republic of Indonesia ( GOI ) and PMA Companies; (b) Coal Contracts of Works ( CCOW ) between either: (i) the GOI and PMDN Companies; or (ii) the GOI and PMA Companies; and (c) Kuasa Pertambangan ( KPs ), which were issued to Local Indonesian Companies.

However, Law No. 4 of 2009 concerning Mineral and Coal Mining Law (the New Mining Law ) became effective on 12 January 2009 and repealed the Previous Mining Law. The New Mining Law abolishes the existing system of COWs, CCOWs and KPs and introduces a new form of mining right, known as a Mining Business Permit (Ijin Usaha Pertambangan) ( IUP ).

Significantly, the New Mining Law contemplates that IUPs may be held by both PMA Companies and General Indonesian Companies. This is distinct from the Previous Mining Law to date where PMA Companies could only directly hold COWs and CCOWs and not KPs. While there are saving and transitional provisions for COWs and CCOWs, the New Mining Law makes no mention of the continuity of KPs. The New Mining Law contemplates that numerous implementing regulations are to be issued which may provide further detail and clarify some of the uncertainties with the New Mining Law. While several drafts of the implementing regulations have been circulated, to date, only the Mining Services Regulation (as described below) has been issued. The Government of Indonesian ( GOI ) recently announced that the remaining implementing regulations may not be issued until March 2010.

The GOI has issued Minister of Energy and Mineral Resources Regulation No.28/2009 concerning the Implementation of Mineral and Coal Mining Services Business ( Mining Services Regulation ). Pursuant to the Mining Services Regulation: (a) a prohibition has been introduced against mining service providers paying a fee to concession holders. In other words, royalty and production sharing-style arrangements which are contemplated by cooperation agreements may no longer be entered into; (b) an implied limitation exists that mining services companies may only provide stripping and transportation services to IUP holders. This implied limitation is an apparent contradiction to the New Mining Law and is yet to be clarified by the GOI; (c) existing cooperation arrangements will have three years to adjust to the Mining Services Regulation. In other words, existing cooperation agreements which provide for royalties or production-sharing arrangements will not automatically be invalid. Rather, the operations must be restructured within 3 years; (d) mining services companies in the form of PMA Companies must be licensed by the Directorate-General of Minerals, Coal and Geothermal (DGMCG ) in the classification of Other Mining Services Businesses; and (e) holders of IUPs are required to utilise local or national mining services companies (ie. Local Indonesian Companies which are mining services companies). However, where these are not available, the services of a PMA mining services company can be used providing required media announcements are made confirming that no local or national mining services company is financially or technically capable in the circumstances and that the PMA mining services company sub-contracts part of the work to a local mining services company.

The DGMCG also released a Circular on 30 January 2009 that was signed for and on behalf of the Minister of Energy and Natural Resources and, while not yet formal legislation, provides guidance and direction to relevant government officers. The Circular includes a provision that KPs, including any upgrades issued under the old mining laws, are valid until their term expires and will be converted to IUPs by 12 January 2010. However, all KPs issued after 12 January 2009 are null and void.

Although there still remains some uncertainty surrounding the affects of the New Mining Law, the validity of the KP the subject of the Seluma Iron Sands Project is not affected by such laws. However, an application to extend the term of KP KW.08 JNP and convert it into an IUP will need to be submitted to the Indonesian Government prior to 26 March 2010. As noted above, the registered holder of KP KW.08 JNP, PT PRU, is currently in the process of preparing this application and we are not aware of any reason why such application will not be granted.

13. ADDITIONAL INFORMATION

13.1 Rights attaching to Shares

The following is a summary of the more significant rights attaching to Shares. This summary is not exhaustive and does not constitute a definitive statement of the rights and liabilities of Shareholders. To obtain such a statement, persons should seek independent legal advice.

Full details of the rights attaching to Shares are set out in the Constitution, a copy of which is available for inspection at the Company’s registered office during normal business hours.

(a) General Meetings

Shareholders are entitled to be present in person, or by proxy, attorney or representative to attend and vote at general meetings of the Company.

Shareholders may requisition meetings in accordance with Section 249D of the Corporations Act and the Constitution of the Company.

(b) Voting Rights

Subject 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 or representative of a Shareholder has one vote; and

(iii) on a poll, every person present who is a Shareholder or a proxy, attorney or representative of a Shareholder shall, in respect of each fully paid Share held by him, or in respect of which he is appointed a proxy, attorney or representative, have one vote for the Share, but in respect of partly paid Shares shall have such number of votes as bears the same proportion to the total of such Shares registered in the Shareholder’s name as the amount paid (not credited) bears to the total amounts paid and payable (excluding amounts credited).

Subject to the rights of persons (if any) entitled to Shares with special rights to dividend the Directors may declare a final dividend out of profits in accordance with the Corporations Act and may 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 such interim dividends as appear to the Directors to be justified by the profits of the Company. Subject to the rights of persons (if any) entitled to Shares with special rights as to dividend all dividends are to be declared and paid according to the amounts paid or credited as paid on the Shares in respect of which the

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dividend is paid. Interest may not be paid by the Company in respect of any dividend, whether final or interim.

(d) Winding-Up

If the Company is wound up, the liquidator may, with the authority of a special resolution of the Company, 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, and may determine how the division is to be carried out as between the Shareholders or different classes of Shareholders. The liquidator may, with the authority of a special resolution of the Company, vest the whole or any part of any such property in trustees upon such trusts for the benefit of the contributories as the liquidator thinks fit, but so that no Shareholder is compelled to accept any Shares or other securities in respect of which there is any liability. Where an order is made for the winding up of the Company or it is resolved by special resolution to wind up the Company, then on a distribution of assets to members, Shares classified by ASX as restricted securities at the time of the commencement of the winding up shall rank in priority after all other Shares.

(e) Changes to Capital Structure

The Company may by ordinary resolution and subject to the Corporations Act and the Listing Rules:

(i) increase its share capital by the issue of new shares of such amount as is specified in a resolution;

(ii) consolidate and divide all or any of its share capital into shares of larger amounts than its existing shares;

(iii) sub-divide all or any of its shares into shares of smaller amount than is fixed by the Constitution, but so that in the sub-division the proportion between the amount paid and the amount (if any) unpaid on each such share of a smaller amount is the same as it was in the case of the share from which the share of a smaller amount is derived; and

(iv) cancel shares that, at the date of the passing of the resolution, have not been taken or agreed to be taken by any person or have been forfeited and reduce its share capital by the amount of the shares so cancelled.

(f) Transfer of Shares

Generally, Shares in the Company are freely transferable, subject to formal requirements, the registration of the transfer not resulting in a contravention of or failure to observe the provisions of a law of Australia and the transfer not being in breach of the Corporations Act or the ASX Listing Rules.

(g) Variation of Rights

Pursuant to Section 246B of the Corporations Act, the Company may, with the sanction of a special resolution passed at a meeting of Shareholders vary or abrogate the rights attaching to Shares.

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If at any time the share capital is divided into different classes of Shares, the rights attached to any class (unless otherwise provided by the terms of issue of the Shares of that class), whether or not the Company is being wound up may be varied or abrogated with the consent in writing of the holders of three-quarters of the issued Shares of that class, or if authorised by a special resolution passed at a separate meeting of the holders of the Shares of that class.

13.2 Options

As at the date of this Prospectus, the Company has 20,278,500 Options on issue with the various exercise prices and expiry dates as set out in Section 4.7 of this Prospectus.

As detailed in Section 5.12 of this Prospectus, the Company also intends to issue 10,000,000 unlisted options exercisable at $0.20 each on or before 31 December 2012 to Empire Securities (or its nominee) and 5,000,000 unlisted options exercisable at $0.20 each on or before 31 December 2012 to CK Locke & Partners (or its nominee) in consideration for their services as corporate adviser to the Offer and joint sponsoring broker to the Offer respectively. As indicated in Section of 5.2 this Prospectus, shareholder approval will be sought for the issue of these Options at a general meeting to be held on or about 19 April 2010.

13.3 Material Contracts

(a) Tenement Sale Agreement

Please refer to the material contract summary set out in Part II of the Solicitor’s Report on Australian Tenements contained in Section 11 of this Prospectus.

(b) Option Agreement

The Company entered into an Option Agreement dated on or about 4 February 2009 ( Execution Date ) with PT Seluma Mining Indonesia ( PT Seluma ) and PT Pringgodani Rizki Utama ( PT PRU ) (as varied) pursuant to which PT Seluma and PT PRU granted to the Company an exclusive option (Exclusive Option ) to acquire a 100% interest in the issued capital of a company to be registered under the laws of Indonesia ( Indonesian Co ) which will be established to hold, explore, develop and, if warranted, mine on KP number KW.08 JNP (Seluma Iron Sands Project ) (and any replacement or successor tenements) ( Option Agreement ).

The Option Agreement contains the following material terms and conditions:

(i) (Option Consideration ): in consideration of the grant of the Exclusive Option, the Company paid a non-refundable fee of RP1,000,000 to PT Seluma and PT PRU;

(ii) (Exercise of Option ): the Company can exercise the Option by giving written notice to PT Seluma and PT PRU at any time during the period commencing on the Execution Date and expiring on 30 June 2010 (Option Period ). The Option will immediately lapse upon expiry of the Option Period;

(iii) (Acquisition Consideration ): as consideration for the purchase of the shares in the capital of the Indonesian Company

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(Indonesian Co Shares ) ( Acquisition), the Company agrees to pay PT PRU a royalty in the amount of $4 per tonne of concentrate obtained and actually sold on and from the date of settlement of the Acquisition (Settlement Date ). In addition, PT Seluma will receive a royalty in the amount of $5 per tonne of concentrate obtained and actually sold on and from the Settlement Date in consideration for PT Seluma introducing the transaction the subject of the Option Agreement to the Company;

(iv) (Due Diligence ): during the Option Period, the Company will conduct due diligence investigations on the Indonesian Company and the KP;

(v) (Pre-Settlement Obligations ): during the period from the Execution Date until the Settlement Date:

(A) the Company will be entitled, but not obliged, to incur expenditure on the Seluma Iron Sands Project; and

(B) PT Seluma and PT PRU will be responsible for maintaining the Seluma Iron Sands Project in good standing in accordance with applicable laws;

(vi) (Conditions Precedent to Settlement ): upon exercise of the Exclusive Option ( Exercise Date ), settlement of the Acquisition is subject to the satisfaction of the following within 30 days of the Exercise Date:

(A) the Company confirming to PT Seluma and PT PRU that it is satisfied with the results of its due diligence investigations;

(B) the Indonesian Co being validly registered under the laws of Indonesia;

(D) the Indonesian Co holding unencumbered legal title to the KP the subject of the Seluma Iron Sands Project;

(E) the Company receiving a satisfactory legal opinion from its counsel as to the validity and enforceability of the transactions contemplated by the Option Agreement under Indonesian law; and

(F) the parties obtaining any necessary shareholder, governmental, regulatory or other consents and approvals,

(together, the Conditions Precedent );

(vii) (Settlement ): settlement of the Acquisition will occur on that date which is 5 business days after satisfaction of the last of the Conditions Precedent or such other date as may be agreed between the parties;

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(viii) (Decision to Mine ): the Company must make a decision to commence mining operations on the Seluma Iron Sands Project (Decision to Mine ) prior to exercising the Option; and

(ix) (Loan ): upon making a Decision to Mine, or at an earlier date if mutually agreed to by the parties, and subject to the parties entering into a formal loan agreement on terms acceptable to the Company, the Company will make available to PT PRU a loan in the amount of up to $600,000 ( Loan ), where such Loan shall be repayable from the royalty payments made to PT PRU pursuant to the royalty arrangement referred to in paragraph (iii) above.

The Option Agreement is otherwise on terms and conditions standard for an agreement of this nature.

13.4 Disclosure of Interests

Directors are not required under the Company’s Constitution to hold any Shares. As at the date of this Prospectus, the Directors have relevant interests in Securities as set out in the table below:

Director Shares Options Mathew Walker 2,000,000 5,000,000 1 James Robinson 423,214 2 - Gavan Farley - -

Notes: 1 These Options are exercisable at $0.20 each on or before 31 December 2012. 2 These Shares are held by Sabreline Pty Ltd as trustee for the JPR Investment Trust. Mr Robinson is sole director and controller of Sabreline Pty Ltd and a beneficiary of the JPR Investment Trust.

13.5 Remuneration

The Company’s Constitution provides that the remuneration of Directors will be not more than the aggregate fixed sum determined by a general meeting. The aggregate remuneration for Directors has been set at an amount not to exceed $250,000 per annum.

The Company paid to its board of directors a total of $85,861 (excluding superannuation) for the year ended 30 June 2008. The total remuneration paid to each of the Directors (excluding superannuation) in the financial year ended 30 June 2009 and the year to date in the current financial year is as follows:

Director Remuneration ($) Financial Year Ended Current Financial 30 June 2009 Year Mathew Walker - 75,000 James Robinson 23,333 10,000 Gavan Farley - -

Directors, companies associated with the directors or their associates are also

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reimbursed for all reasonable expenses properly incurred in the course of conducting their duties which include, but are not in any way limited to, out of pocket expenses, travelling expenses, disbursements made on behalf of the Company and other miscellaneous expenses.

Mr Walker is also a director of, and the holder of a 40% interest in, Cicero Corporate Services Pty Ltd ( Cicero Corporate ). Mr Robinson is also a director of, and the holder of a 20% interest in, Cicero Corporate. Cicero Corporate currently receives a monthly fee of $5,000 plus GST from the Company in respect of rent and administration services it provides to the Company.

13.6 Fees and Benefits

Other than as set out below or elsewhere in this Prospectus, no:

(a) Director or proposed Director;

(b) person named in this Prospectus as performing a function in a professional advisory or other capacity in connection with the preparation or distribution of this Prospectus;

(d) underwriter (but not a sub-underwriter) to the issue or a financial services licensee named in this Prospectus as a financial services licensee involved in the issue,

has, or had within 2 years before lodgement of this Prospectus with the ASIC, any interest in:

(a) the formation or promotion of the Company;

(b) any property acquired or proposed to be acquired by the Company in connection with its formation or promotion or in connection with the Offer; or

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any of those persons as an inducement to become, or to qualify as, a Director of the Company or for services rendered in connection with the formation or promotion of the Company or the Offer.

Zephyr Consulting Group Pty Ltd has acted as Independent Geologist and has prepared the Independent Geologist’s Report which is included in Section 9 of this Prospectus. The Company estimates it will pay Zephyr Consulting Group Pty Ltd a total of $10,000 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, Zephyr Consulting Group Pty Ltd has received fees from the Company in the amount of $55,160 (excluding GST but including disbursements).

HLB Mann Judd has acted as Investigating Accountant and has prepared the Investigating Accountant’s Report which is included in Section 10 of this Prospectus. The Company estimates it will pay HLB Mann Judd a total of $8,500 (excluding GST) for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, HLB Mann Judd has received fees from the Company in the amount of $32,000.

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Steinepreis Paganin has acted as the solicitors to the Company in relation to the Offer and has prepared the Solicitor’s Report on Australian Tenements which is included in Section 11 of this Prospectus. The Company estimates it will pay Steinepreis Paganin $45,000 (excluding GST) for these services. Subsequently, fees will be charged in accordance with normal charge out rates. During the 24 months preceding lodgement of this Prospectus with the ASIC, Steinepreis Paganin has received fees from the Company in the amount of $153,543 (excluding GST and disbursements).

CV Resource Management has acted as the Company’s Indonesian Tenement Advisers in relation to the Offer and has prepared the Report on Indonesian Tenements which is included in Section 12 of this Prospectus. The Company was not required to pay any fees to CV Resource Management for these services. During the 24 months preceding lodgement of this Prospectus with the ASIC, CV Resource Management has received fees from the Company in the amount of $30,760.

Novus Capital Limited (Novus Capital ) is to act as joint sponsoring broker to the Offer. The Company estimates it will pay Novus Capital approximately $30,000 (excluding GST) for these services. Novus Capital will also receive a commission of 6% (exclusive of GST) of any amounts subscribed through it pursuant to the Offer (being a fee of up to $360,000 in the event that the maximum subscription is raised through Novus Capital). Please refer to Section 5.13 for further details of commissions payable under the Offer. During the 24 months preceding lodgement of this Prospectus with the ASIC, Novus Capital has not received any other fees from the Company.

CK Locke & Partners Pty Ltd ( CK Locke & Partners ) is to act as joint sponsoring broker to the Offer. The Company will pay CK Locke & Partners approximately $30,000 for these services. CK Locke & Partners will also receive a commission of 6% (exclusive of GST) of any amounts subscribed through it pursuant to the Offer (being a fee of up to $360,000 in the event that the maximum subscription is raised through CK Locke & Partners). Please refer to Section 5.13 for further details of commissions payable under the Offer. In addition, the Company will issue to CK Locke & Partners (or its nominee) the securities referred to in Section 5.12 of this Prospectus for its services. During the 24 months preceding lodgement of this Prospectus with the ASIC, CK Locke & Partners has received $35,640 (excluding GST) from the Company.

Empire Securities Group Pty Limited (Empire Securities ) has acted as the Company’s corporate advisor in relation to the Offer. The Company will issue to Empire Securities (or its nominee) 150,000 Shares and 10,000,000 unlisted options exercisable at $0.20 each on or before 31 December 2012, subject to the receipt of all necessary shareholder approvals for its services. Subsequently, Empire Securities will be paid a monthly fee of $5,000 (excluding GST) for ongoing corporate advisory services provided to the Company. During the 24 months preceding lodgement of this Prospectus with the ASIC, Empire Securities has not received any other fees from the Company.

13.7 Consents

Each of the parties referred to in this Section:

(a) does not make, or purport to make, any statement in this Prospectus other than those referred to in this Section; and

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(b) to the maximum extent permitted by law, expressly disclaim and take no responsibility for any part of this Prospectus other than a reference to its name and a statement included in this Prospectus with the consent of that party as specified in this Section.

Zephyr Consulting Group Pty Ltd has given his written consent to being named as Independent Geologist in this Prospectus and to the inclusion of the Independent Geologist’s Report in Section 9 of this Prospectus in the form and context in which the report is included. Zephyr Consulting Group Pty Ltd has not withdrawn his consent prior to lodgement of this Prospectus with the ASIC.

HLB Mann Judd has given its written consent to being named as auditor to the Company and Investigating Accountant in this Prospectus and to the inclusion of the Investigating Accountant’s Report in Section 10 of this Prospectus in the form and context in which the information and report is included. HLB Mann Judd has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Steinepreis Paganin has given its written consent to being named as the solicitors to the Company in this Prospectus and to the inclusion of the Solicitor’s Report on Australian Tenements in Section 11 of this Prospectus in the form and context in which the report is included. Steinepreis Paganin has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

CV Resource Management has given its written consent to being named as the Company’s Indonesian Tenement Adviser in this Prospectus and to the inclusion of the Report on Indonesian Tenements in Section 12 of this Prospectus in the form and context in which the report is included. CV Resource Management has not withdrawn its consent prior to the lodgement of this Prospectus with the ASIC.

Novus Capital Limited (Novus Capital ) has given its written consent to being named as joint sponsoring broker to the Offer in this Prospectus. Novus Capital has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

CK Locke & Partners Pty Ltd ( CK Locke & Partners ) has given its written consent to being named as joint sponsoring broker to the Offer in this Prospectus. CK Locke & Partners has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

Empire Securities Group Pty Limited (Empire Securities ) has given its written consent to being named as the Company’s corporate advisor in this Prospectus. Empire Securities has not withdrawn its consent prior to lodgement of this Prospectus with the ASIC.

13.8 Expenses of the Offer

The total expenses of the Offer (excluding GST) are estimated to be approximately $345,000 for minimum subscription or $530,000 for full subscription and are expected to be applied towards the items set out in the table below:

Item of Expenditure Minimum Full Subscription Subscription ($) ($) ASIC fees 2,010 2,010 ASX fees 8,850 12,750 Joint Sponsoring Broker to the Offer 60,000 60,000

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Fees Broker Commissions 180,000 360,000 Legal Fees 45,000 45,000 Independent Geologist’s Fees 10,000 10,000 Investigating Accountant’s Fees 8,500 8,500 Printing and Distribution 15,000 15,000 Miscellaneous 15,640 16,740 TOTAL 345,000 530,000

13.9 Litigation

As at the date of this Prospectus, the Company is not involved in any legal proceedings and the Directors are not aware of any legal proceedings pending or threatened against the Company.

13.10 Electronic Prospectus

Pursuant to Class Order 00/44, the ASIC has exempted compliance with certain provisions of the Corporations Act to allow distribution of an electronic prospectus and electronic application form on the basis of a paper prospectus lodged with the ASIC, and the publication of notices referring to an electronic prospectus or electronic application form, subject to compliance with certain conditions.

If you have received this Prospectus as an electronic Prospectus, please ensure that you have received the entire Prospectus accompanied by the Application Form. If you have not, please contact the Company and the Company will send you, for free, either a hard copy or a further electronic copy of this Prospectus or both. Alternatively, you may obtain a copy of this Prospectus from the website of the Company at www.pilbaraminerals.com.au/ .

The Company reserves the right not to accept an Application Form from a person if it has reason to believe that when that person was given access to the electronic Application Form, it was not provided together with the electronic Prospectus and any relevant supplementary or replacement prospectus or any of those documents were incomplete or altered.

13.11 Taxation

The acquisition and disposal of Shares in the Company will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to obtain independent financial advice about the consequences of acquiring Shares from a taxation viewpoint and generally.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisors accept no liability and responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

13.12 Financial Forecasts

The Directors have considered the matters set out in ASIC Regulatory Guide 170 and believe that they do not have a reasonable basis to forecast future earnings on the basis that the operations of the Company are inherently uncertain. Accordingly, any forecast or projection information would contain such a broad range of potential outcomes and possibilities that it is not possible to prepare a reliable best estimate forecast or projection.

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14. DIRECTORS’ AUTHORISATION

This Prospectus is issued by the Company and its issue has been authorised by a resolution of the Directors.

In accordance with Section 720 of the Corporations Act, each Director has consented to the lodgement of this Prospectus with the ASIC.

Mr Mathew Walker For and on behalf of PILBARA MINERALS LIMITED

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15. GLOSSARY

Where the following terms are used in this Prospectus they have the following meanings:

A$ or $ means an Australian dollar.

Application Form means the Priority Offer Application Form or the General Offer Application Form as relevant attached to or accompanying this Prospectus relating to the Offer.

ASIC means Australian Securities & Investments Commission.

ASX means ASX Limited (ABN 98 008 624 691).

ASX Listing Rules means the official listing rules of ASX.

Board means the board of Directors as constituted from time to time.

Closing Date means the closing date of the Offer as set out in Section 4.2 of this Prospectus (subject to the Closing Date being extended or the Offer being closed early).

Company means Pilbara Minerals Limited (ACN 112 425 788).

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the directors of the Company at the date of this Prospectus.

Eligible Shareholder means a Shareholder registered as at 5.00pm (WST) on the Record Date.

Entitlement means that number of Shares an Eligible Shareholder is entitled to under the Priority Offer.

Exposure Period means the period of 7 days after the date of lodgement of this Prospectus, which period may be extended by the ASIC by not more than 7 days pursuant to Section 727(3) of the Corporations Act.

General Offer means the offer to the public to apply for Shares set out in Section 5.4 of this Prospectus.

General Offer Application Form means the general offer application form accompanying this Prospectus relating to the General Offer.

IUP means Ijin Usaha Pertambangan (a new form of mining right, known as a mining business permit).

KP means Kuasa Pertambangan (an Indonesian mining licence).

Offer means the offer of Shares pursuant to this Prospectus as set out in Section 5 of this Prospectus.

Official List means the official list of ASX.

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Official Quotation means official quotation by ASX in accordance with the ASX Listing Rules.

Option means an option to acquire a Share.

Option Agreement means the option agreement entered into on or about 4 February 2009 between the Company, PT Seluma and PT PRU (as varied).

Priority Offer means the offer to subscribe for 4,000,000 Shares being made to Shareholders registered as at the Record Date and as further described in Section 5.4 of this Prospectus.

Priority Offer Application Form means the pro-rata priority offer application form accompanying this Prospectus relating to the Priority Offer.

Prospectus means this prospectus.

PT PRU means PT Pringgodani Rizki Utama.

PT Seluma means PT Seluma Mining Indonesia.

Record Date means the date for determining entitlement to participate in the Priority Offer and is as set out in Section 4.2 of this Prospectus.

Securities means Shares and Options.

Seluma Iron Sands Project means the tenement the subject of the Option Agreement, being KP number KW.08 JNP.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of Shares.

Tenement Sale Agreement means the agreement entered into between the Company and Seefingan Exploration Pty Ltd as summarised in Part II of the Solicitor’s Report on Australian Tenements contained in Section 11 of this Prospectus.

West Pilbara Mineral Tenements means the 13 granted exploration licences located south of the regional centre of Karratha in the West Pilbara region of Western Australia.

WST means Western Standard Time as observed in Perth, Western Australia.

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