Acn 112 425 788 Notice of Annual General Meeting

FORTUNA MINERALS LIMITED (TO BE RENAMED PILBARA MINERALS LIMITED) ACN 112 425 788 NOTICE OF ANNUAL GENERAL MEETING

TIME : 9.00 am (WST)

DATE : 14 December 2009

PLACE : Suite 9, 1200 Hay Street West Perth WA 6005

This Notice of Meeting sho uld be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 6460 4960.

CONTENTS PAGE

Notice of Annual General Meeting (setting out the proposed resolutions) 3

Explanatory Statement (explaining the proposed resolutions) 7

Glossary 23

Schedule 1 – Terms and Conditions of Options 25

Annexure A – Independent Expert’s Report 27

Proxy Form

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 9.00 am (WST) on 14 December 2009 at:

Suite 9, 1200 Hay Street West Perth WA 6005

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Annual General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post to Fortuna Minerals Limited, PO Box 281, West Perth WA 6872; or

(b) facsimile to the Company on facsimile number (+61 8) 9324 3045, so that it is received not later than 9.00 am (WST) on 12 December 2009.

Proxy Forms received later than this time will be invalid.

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of Shareholders will be held at 9.00 am (WST) on 14 December 2009 at Suite 9, 1200 Hay Street, West Perth, Western Australia.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Annual General Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders of the Company at 9.00 am (WST) on 12 December 2009.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

ORDINARY BUSINESS

Financial Statements and Reports

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2009 together with the declaration of the directors, the directors’ report, the remuneration report and the auditor’s report.

1. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution :

“That, for the purpose of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the Company’s annual financial report for the financial year ended 30 June 2009.”

2. RESOLUTION 2 – RE-ELECTION OF DIRECTOR – JAMES ROBINSON

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

“That, for the purpose of clause 9.2 of the Constitution and for all other purposes, James Robinson, a Director who was appointed on 30 September 2009, retires, and being eligible, is re-elected as a Director.”

3. RESOLUTION 3 – RE-ELECTION OF DIRECTOR – GARRY RALSTON

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

“That, for the purpose of clause 6.1 of the Constitution and for all other purposes, Garry Ralston, a Director who retires by rotation, and being eligible, is re-elected as a Director.”

4. RESOLUTION 4 – ADOPTION OF NEW CONSTITUTION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That, pursuant to Section 136(2) of the Corporations Act and for all other purposes, the Company adopts a new constitution in the form as signed by the chairman of the Annual General Meeting for identification purposes, in lieu of the existing constitution of the Company, with effect from the close of the Meeting.”

5. RESOLUTION 5 – RATIFICATION OF PRIOR ISSUE

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

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 1,333,320 Shares on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

6. RESOLUTION 6 – PLACEMENT – OPTIONS

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

“That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 9,000,000 Options on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

7. RESOLUTION 7 – CHANGE TO NATURE OF ACTIVITIES

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

“That, for the purpose of ASX Listing Rule 11.1.2 and for all other purposes, approval is given for the Company to make a significant change to the nature of its activities as described in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the

person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

8. RESOLUTION 8 – PLACEMENT – SHARES

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

“That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 6,000,000 Shares on the terms and conditions set out in the Explanatory Statement.”

9. RESOLUTION 9 – ACQUISITION OF WEST PILBARA MINERAL TENEMENTS

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

“That, subject to the passing of Resolutions 7 & 8, for the purpose Item 6 of Section 611 of the Corporations Act and for all other purposes, approval is given for:

(a) the Directors to allot and issue 12,000,000 Shares; and

(b) the acquisition of a relevant interest in the issued voting shares of the Company by Pilbara Mining Pty Limited and the Relevant Interest Parties in excess of the threshold prescribed by section 606(1) of the Corporations Act by virtue of the issue of the Shares,

on the terms and conditions set out in the Explanatory Statement.”

Independent Expert’s Report: Shareholders should carefully consider the Independent Expert’s Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd for the purposes of the Shareholder approval required under Section 611 (Item 7) of the Corporations Act. The Independent Expert’s Report comments on the fairness and reasonableness of the transaction to the non-associated Shareholders. The Independent Expert has determined the issue of Shares to Pilbara Mining is not fair but reasonable to the non-associated Shareholders.

Voting Exclusion : Under Item 7 of Section 611 of the Corporations Act, no votes may be cast in favour of the resolution by:

(a) the person proposing to make the acquisition and their associates; or

(b) the persons (if any) from whom the acquisition is to be made and their associates.

Accordingly, the Company will disregard any votes cast on this Resolution by Pilbara Mining Pty Limited and the Relevant Interest Parties and any of their associates.

10. RESOLUTION 10 – CHANGE OF NAME

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution :

“That, subject to the passing of Resolutions 7, 8 and 9, pursuant to Section 157(1) of the Corporations Act and for all other purposes, the name of the Company be changed to Pilbara Minerals Limited.”

11. RESOLUTION 11 – CAPITAL RAISING

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

“That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 50,000,000 Shares on the terms and conditions set out in the Explanatory Statement.”

DATED: 3 NOVEMBER 2009

BY ORDER OF THE BOARD

JAMES ROBINSON DIRECTOR / COMPANY SECRETARY

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting to be held at 9.00 am (WST) on 14 December 2009 at Suite 9, 1200 Hay Street, West Perth, Western Australia.

This purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

1. FINANCIAL STATEMENTS AND REPORTS

In accordance with the Constitution, the business of the Annual General Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2009 together with the declaration of the directors, the directors’ report, the remuneration report and the auditor’s report.

The Company is no longer required to provide a hard copy of the Company’s annual financial report to Shareholders unless a Shareholder has specifically elected to receive a printed copy.

Whilst the Company will not provide a hard copy of the Company’s annual financial report unless specifically requested to do so, Shareholders may view the Company annual financial report on its website at www.fortunaminerals.com.au .

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

The Corporations Act requires that at a listed company’s annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the Directors or the Company.

The remuneration report sets out the Company’s remuneration arrangements for the Directors and senior management of the Company. The remuneration report is part of the Directors’ report contained in the annual financial report of the Company for the financial year ending 30 June 2009.

A reasonable opportunity will be provided for discussion of the remuneration report at the Annual General Meeting.

3. RESOLUTION 2 – RE-ELECTION OF DIRECTOR – JAMES ROBINSON

Clause 9.1 of the Constitution allows the Directors to appoint at any time a person qualified to be a Director as an addition to the existing Directors, but so that the total number of Directors does not at any time exceed the number fixed in accordance with the Constitution.

Any Director so appointed holds office only until the next following annual general meeting and is then eligible for re-election.

James Robinson will retire in accordance with clause 9.2 of the Constitution and being eligible seeks re-election.

4. RESOLUTION 3 – RE-ELECTION OF DIRECTOR – GARRY RALSTON

Clause 6.1 of the Constitution requires that at each annual general meeting after the first annual general meeting one-third of the Directors for the time being, or, if their number is not 3 nor a multiple of 3, then the number nearest to but not exceeding one-third, retire from office but no Director may retain office for more than 3 years without submitting himself or herself for re-election even though the submission results in more than one-third of the Directors retiring from office.

The Company currently has 3 Directors and accordingly 1 must retire.

A Director who retires by rotation under clause 6.1 of the Constitution is eligible for re-election.

Garry Ralston retires by rotation and seeks re-election.

5. RESOLUTION 4 – ADOPTION OF NEW CONSTITUTION

Section 136(2) of the Corporations Act provides that a company may adopt a new constitution after registration if the company passes a special resolution to adopt a new constitution.

Resolution 4 seeks the approval of Shareholders to the adoption of a new constitution for the Company.

If Resolution 4 is passed, the Company’s existing constitution will be replaced by the new constitution with effect from the close of the Meeting.

The Company’s existing constitution is out of date, with references to Portland International Limited, a previous name of the Company.

A copy of the proposed new constitution will be sent to any Shareholder upon request and will also be available for inspection at the Company’s registered office during normal business hours prior to the Meeting and available for inspection at the Meeting.

6. RESOLUTION 5 – RATIFICATION OF PRIOR ISSUE

6.1 General

On 23 April 2009, the Company issued 1,333,320 Shares to raise $66,666 for working capital purposes.

No subscriber pursuant to this issue was a related party of the Company.

Resolution 5 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Shares ( Ratification ).

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue during any 12 month period any equity securities, or other securities with rights to conversion to equity (such as an option), if the number of those securities exceeds 15% of the number of securities in the same class on issue at the commencement of that 12 month period.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and provided that the previous issue did not breach

ASX Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of ASX Listing Rule 7.1.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

6.2 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the Ratification:

(a) 1,333,320 Shares were allotted;

(b) the issue price was $0.05 per Share;

(c) the Shares issued were all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

(d) the Shares were allotted and issued to Brendan Michael Anthony Hopkins (666,660 Shares) and Rigi Investments Pty Ltd (666,620 Shares); and

(e) the funds raised from this issue were used for working capital purposes.

7. RESOLUTION 6 – PLACEMENT – OPTIONS

7.1 General

Resolution 6 seeks Shareholder approval for the allotment and issue of 9,000,000 Options (Option Placement ).

The subscriber pursuant to this issue will not be a related party of the Company.

A summary of ASX Listing Rule 7.1 is set out in Section 6.1 above.

The effect of Resolution 6 will be to allow the Directors to issue the Options pursuant to the Option Placement during the period of 3 months after the Annual General Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

7.2 Technical information required by ASX Listing Rule 7.1

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Option Placement:

(a) the maximum number of Options to be granted is 9,000,000;

(b) the Options will be issued no later than 3 months after the date of the Annual General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;

(d) the Options will be allotted and issued to CK Locke and Partners (or their nominee);

(e) the Options will be issued on the terms and conditions set out in Schedule 1; and

(f) no funds will be raised from the Option Placement as the Options are being issued in consideration for corporate advisory services.

8. BACKGROUND TO RESOLUTIONS 7 TO 9

8.1 Background to the Acquisition

On 13 October 2009, the Company announced it had entered into a conditional agreement (Agreement ) with Pilbara Mining Pty Ltd ( Pilbara Mining ) to acquire 6 granted exploration licences in the West Pilbara region of Western Australia ( West Pilbara Mineral 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 completing a capital raising of not less than $500,000;

(iii) the removal of all and any encumbrances on or in respect of any of the Tenements; and

(iv) 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 14 December 2009.

(b) (Consideration ): The Company will satisfy the consideration for the Acquisition as follows:

(i) subject to the adjustment as set out in Section 8.1(c) below, the issue and allotment of 12,000,000 Shares at a deemed issue price of $0.20 per Share; and

(ii) a cash payment equivalent to:

(A) $380,737 (being the amount expended by Pilbara Mining on the Tenements and notified to the Department of Mines and Petroleum pursuant to a Form 5 as at the date of the Agreement); and

(B) such additional amount expended by Pilbara Mining on the Tenements up to a maximum of $600,000 and provided that written evidence of such expenditure can be demonstrated to the sole and absolute satisfaction of the Company.

(c) (Adjustment of consideration ): The number of Shares to be issued by the Company to Pilbara Mining as set out in Section 8.1(b)(i) above, will be

reduced by 1,000,000 Shares for each one of the Tenements that is not in Good Standing (i.e. minimum annual expenditure has been incurred or a valid application for exemption has been lodged and best endeavours are used by Pilbara Mining to obtain the grant of the exemption) as at the settlement date of the Agreement.

(d) (Appointment of non-executive director ): The Company agrees to procure the appointment of a nominee of Pilbara Mining as a non-executive director of the Company following settlement of the Acquisition.

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

(f) (Other ): The Agreement otherwise contains terms and conditions typical for an agreement of this nature.

8.2 West Pilbara Mineral Tenements

The Tenements being acquired from Pilbara Mining comprise six granted exploration licences forming five project areas over 365 blocks and cover approximately 1,095 square kilometres and are located south of the regional centre of Karratha in the West Pilbara region of Western Australia.

Access to the 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 project areas are broadly aligned along the unconformity between the Archaean granite – greenstone sequence in the north and the younger Fortescue Group sediments and mafic volcanic in the south.

The granite – greenstone sequence in the West Pilbara is characterised by the presence of a series of large layered mafic – ultramafic intrusions. These intrusions host significant PGE-Ni-Cu mineralisation in areas adjacent to some of the Tenements. The granite – greenstone sequence also hosts significant VMS Cu-Pb-Zn mineralisation. The Fortescue Group, the lowest group in the Mount Bruce Supergroup of the Precambrian Hamersley Basin, is an unmetamorphosed and largely undeformed sequence. No significant mineral occurrences have been recorded with the Fortescue Group rocks in the area of the Tenements.

Project Geology

Four of the Tenements cover rocks of the Fortescue Group adjacent to the unconformity contact with the Archaean granite – greenstone sequence with large portions of two of these Tenements covered by colluviums associated with major drainage systems. One of the Tenements straddles the unconformity contact and predominantly covers the granite – greenstone sequence, although outcrop is generally masked by colluviums. The remaining Tenement is wholly within the Fortescue Group.

Previous exploration

The Tenements have not been the subject of systematic exploration in the past and are considered prospective for iron ore, gold and base metals, particularly copper and nickel.

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 Tenements are located. Past exploration has generally focussed on these anomalies, however there has been no drilling or modern geophysics completed on the targets.

Potential targets

The magnetic highs identified by the BMR survey have been identified in four of the five project areas comprising the Tenements and have also 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 three of the four project areas in which the magnetic highs have been identified although previous modelling has indicated that the cover could range from 500 to 2,000 metres in one 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.

8.3 Risk factors

The risk profile of the West Pilbara Mineral Tenements is similar to that of the Christmas Bore project which has previously been disclosed to Shareholders in the notice of meeting for the general meeting held on 28 March 2008.

9. RESOLUTION 7 – CHANGE TO NATURE OF ACTIVITIES

9.1 General

Resolution 7 seeks approval from Shareholders for a change to the nature of the activities of the Company to conduct exploration on the West Pilbara Mineral Tenements.

As outlined in Section 8.1 above, the Company has entered into an agreement to acquire a 100% interest in the West Pilbara Mineral Tenements. A detailed description of the West Pilbara Mineral Tenements is outlined in Section 8.2 above.

9.2 Legal requirements

ASX Listing Rule 11.1 provides that where an entity proposes to make a significant change, either directly or indirectly, to the nature or scale of its activities, it must provide full details to ASX as soon as practicable and comply with the following:

(a) provide to ASX information regarding the change and its effect on future potential earnings, and any information that ASX asks for;

(b) if ASX requires, obtain the approval of holders of its shares and any requirements of ASX in relation to the notice of meeting; and

(c) if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX Listing Rules as if the company were applying for admission to the official list of ASX.

ASX has indicated to the Company that the acquisition of the West Pilbara Mineral Tenements requires the Company to obtain Shareholder approval for the purposes of ASX Listing Rule 11.1.2.

9.3 Re-compliance with Chapters 1 and 2 of the ASX Listing Rules

Although recompliance with Chapters 1 and 2 of the ASX Listing Rules is not required for the change to activities contemplated in Resolution 7 this process is still required to be completed from the initial change of activities approved by Shareholders on 28 March 2008 in order for the Company’s securities to be requoted on the Australian Securities Exchange.

It is the Company’s intention to re-comply and this process will involve the issue of the Prospectus in relation to the Capital Raising as contemplated by Resolution 11.

9.4 Indicative timetable

Date Event

By 12 November 2009 Notice of Meeting dispatched to Shareholders 20 November 2009 Lodgement of Prospectus 14 December 2009 Annual General Meeting 14 December 2009 Completion of Capital Raising 18 December 2009 Anticipated date trading on ASX to recommence

9.5 Pro-forma balance sheet

An unaudited pro forma balance sheet of the Company following completion of the Acquisition and all issues of Shares and Options contemplated by this Notice is set out on the following page.

Fortuna Minerals Limited Pro-Forma Consolidated Balance Sheet Unaudited Pro-Forma As at 30 September 2009 $ $

ASSETS CURRENT ASSETS Cash and cash equivalents 1 161,988 9,705,251 Other current assets 36,985 36,985 TOTAL CURRENT ASSET 198,973 9,742,236

NON-CURRENT ASSETS Exploration and evaluation expenditure 2 161,036 1,741,773 TOTAL NON-CURRENT ASSETS 161,036 1,741,773 TOTAL ASSETS 360,009 11,484,009

LIABILITIES CURRENT LIABILITIES Trade and other payables 125,844 125,844 TOTAL CURRENT LIABILITIES 125,844 125,844

NON-CURRENT LIABILITIES - - - TOTAL NON-CURRENT LIABILITIES - - TOTAL LIABILITIES 125,844 125,844

NET ASSETS 234,165 11,358,165

EQUITY Issue capital 3 6,392,749 17,516,749 Accumulated losses (7,276,659) (7,276,659) Option Reserves 1,118,075 1,118,075 TOTAL EQUITY 234,165 11,358,165

Notes: The following pro-forma items have been adjusted on the following basis:

1 Cash and cash equivalents : Completion of both the Share Placement (Resolution 8) and the Capital Raising (Resolution 11) and estimated expenses of the Capital Raising being $676,000.

2 Exploration and evaluation expenditure : The Tenements being acquired pursuant to the Acquisition are deemed to be valued at $1,580,737 (being 12,000,000 Shares at a deemed issue price of 10 cents per Share based on the valuation contained in the Independent Expert’s Report plus $380,737 being the confirmed cash consideration of the Acquisition).

3 Issued capital : Completion of the Share Placement (Resolution 8), the issue of Shares pursuant to the Acquisition at a deemed issue price of 10 cents per Share (Resolution 9) and the Capital Raising (Resolution 11) and estimated expenses of the Capital Raising being $676,000.

9.6 Pro-forma capital structure

The capital structure of the Company following completion of all issues of Shares and Options contemplated by this Notice is set out below:

Number

Shares currently on issue 19,717,962

Shares to be issued pursuant to Resolution 8 6,000,000

Shares to be issued pursuant to Resolution 9 12,000,000

Shares to be issued pursuant to Resolution 11 50,000,000

Total Shares 87,717,962

Options

Number

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

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) 9,000,000 (exercise price 20 cents / expiry date 31 December 2012)

Options to be issued pursuant to Resolution 6 9,000,000 (exercise price 20 cents / expiry date 31 December 2012)

Total Options 20,278,500

10. RESOLUTION 8 – PLACEMENT – SHARES

10.1 General

Resolution 8 seeks Shareholder approval for the allotment and issue of up to 6,000,000 Shares at an issue price of $0.10 per Share (Share Placement ).

None of the subscribers pursuant to this issue will be related parties of the Company.

A summary of ASX Listing Rule 7.1 is set out in Section 6.1 above.

The effect of Resolution 8 will be to allow the Directors to issue the Shares pursuant to the Share Placement during the period of 3 months after the Annual General Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

10.2 Technical information required by ASX Listing Rule 7.1

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Share Placement:

(a) the maximum number of Shares to be issued is 6,000,000;

(b) the Shares will be issued no later than 3 months after the date of the Annual General Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;

(d) the Shares will be allotted and issued to sophisticated investor clients of Empire Securities Group Pty Limited and no one party will acquire more than a 5% interest in the Company;

(e) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares; and

(f) the Company intends to use the funds raised from the Share Placement towards the cash consideration of the Acquisition.

11. RESOLUTION 9 – ACQUISITION OF WEST PILBARA MINERAL TENEMENTS

11.1 General

As outlined in Section 8.1, the Company has entered into the Agreement pursuant to which the Company will, subject to Shareholder approval, allot and issue 12,000,000 Shares to Pilbara Mining in consideration for the Acquisition.

Resolution 9 seeks Shareholder approval for the allotment and issue of the Shares to Pilbara Mining as well as the acquisition of a relevant interest in the issued voting shares of the Company by Pilbara Mining and the Relevant Interest Parties (identified in Section 11.2) in excess of the threshold prescribed by Section 606(1) of the Corporations Act by virtue of the issue of the Shares.

Approval pursuant to ASX Listing Rule 7.1 is not required for the issue of Shares proposed by Resolution 9 as approval is being obtained under Item 7 of Section 611 of the Corporations Act. Accordingly, the issue of Shares to Pilbara Mining will not

be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

The Corporations Act and ASIC Regulatory Guide 74 set out a number of regulatory requirements which must be satisfied. These are summarised below.

11.2 Item 7 of Section 611 of the Corporations Act

Pursuant to Section 606(1) of the Corporations Act, a person must not acquire a relevant interest in issued voting shares in a listed company if the person acquiring the interest does so through a transaction in relation to securities entered into by or on behalf of the person and because of the transaction, that person’s or someone else’s voting power in the company increases:

(a) from 20% or below to more than 20%; or

(b) from a starting point that is above 20% and below 90%.

The voting power of a person in a body corporate is determined in accordance with Section 610 of the Corporations Act. The calculation of a person’s voting power in a company involves determining the voting shares in the company in which the person and the person’s associates have a relevant interest.

A person ( second person ) will be an “associate” of the other person ( first person ) if:

(a) the first person is a body corporate and the second person is:

(i) a body corporate the first person controls;

(ii) a body corporate that controls the first person; or

(iii) a body corporate that is controlled by an entity that controls the first person;

(b) the second person has entered or proposed to enter in a relevant agreement with the first person for the purpose of controlling or influencing the composition of the Company’s board or the conduct of the Company’s affairs; and

(c) the second person is a person with whom the first person is acting or proposed to act, in concert in relation to the Company’s affairs.

Pursuant to Section 608(1) of the Corporations Act, a person has a “relevant interest” in securities if they:

(a) are the holder of the securities;

(b) have the power to exercise, or control the exercise of, a right to vote attached to the securities; or

It does not matter how remote the relevant interest is or how it arises. If two or more people can jointly exercise one of these powers, each of them is taken to have that power.

Pursuant to Section 608(3) of the Corporations Act, a person is deemed to have a “relevant interest” in securities that a company has if their voting power in the company is above 20% or they control the company.

The following parties are deemed to have a relevant interest in the securities of Pilbara Mining because their voting power in Pilbara Mining is each above 20%:

(a) Felix Bay Capital Pty Ltd (Felix Bay );

(b) Mark Hamish Lochtenberg (Lochtenberg ); and

(Relevant Interest Parties ).

At completion of the Acquisition, Pilbara Mining will be issued with 12,000,000 Shares which will result in Pilbara Mining acquiring a relevant interest in the issued voting shares of the Company of greater than 20% (assuming only the Shares contemplated by this Notice are issued and no Options exercised). In addition, the Relevant Interest Parties, who are each deemed to have a relevant interest in the securities of Pilbara Mining, will also acquire a relevant interest in the issued voting shares of the Company of greater than 20%. Each of these acquisitions is in excess of the threshold prescribed by Section 606(1) of the Corporations Act.

Item 7 of Section 611 of the Corporations Act provides an exception to the prohibition in Section 606(1) of the Corporations Act, whereby a person may acquire a relevant interest in a company’s voting shares with the approval of the shareholders of that company.

Accordingly, the Company seeks Shareholder approval under Item 7 of Section 611 of the Corporations Act for the issue of the Shares to Pilbara Mining as well as the acquisition of a relevant interest in the issued voting shares of the Company by Pilbara Mining and the Relevant Interest Parties in excess of the threshold prescribed by Section 606(1) of the Corporations Act by virtue of the issue of the Shares.

11.3 Specific information required by Section 611 (Item 7) of the Corporations Act & ASIC Regulatory Guide 74

The following information is required to be provided to Shareholders under ASIC Regulatory Guide 74 and the Corporations Act in respect of obtaining approval pursuant to Section 611 (Item 7) of the Corporations Act.

The identity of the acquirer and their associates and any person who will have a relevant interest in the Shares to be acquired

The acquirer is Pilbara Mining.

Details of the parties that are deemed to have a relevant interest in the Shares to be issued to the acquirer (the Relevant Interest Parties) are set out in Section 11.2.

As the sole director of Pilbara Mining, Mark Hamish Lochtenberg is an associate of Pilbara Mining. As at the date of this Notice, Pilbara Mining does not hold any Shares, however, Rigi Investments Pty Limited, an entity controlled by Mark Hamish Lochtenberg, holds 666,660 Shares.

Full particulars (including the number and percentage) of the Shares to which Pilbara Mining is or will be entitled immediately before and after the Acquisition AND the maximum extent of the increase in Pilbara Mining’s and the Relevant

Interest Parties’ voting power in the Company (including their associates) as a result of the Acquisition.

Pilbara Mining Felix Bay Lochtenberg Hopkins Event (and its (and its (and his (and his associates) associates) associates) associates)

No. of Shares (% of voting power) held as at the date of 666,660 1,000,000 666,660 666,660 this Notice (3.38%) (5.07%) (3.38%) (3.38%) (Total Shares = 19,717,962) No. of Shares (% of voting power) held after Acquisition (and all other Share issues 12,666,660 13,000,000 12,666,660 12,666,660 contemplated by this Notice (33.6%) (34.5%) (33.6%) (33.6%) except the Capital Raising) (Total Shares = 37,717,962) No. of Shares (% of voting power) held after Acquisition (and all other Share issues 12,666,660 13,000,000 12,666,660 12,666,660 contemplated by this Notice (14.4%) (14.8%) (14.4%) (14.4%) including the Capital Raising) (Total Shares = 87,717,962) No. of Shares (% of voting power) held on a fully diluted basis (including all other Share 12,666,660 13,000,000 12,666,660 12,666,660 and Option issues (11.7%) (12.0%) (11.7%) (11.7%) contemplated by this Notice) (Total Shares = 107,996,462)

The identity, associations (with Pilbara Mining and any of its associates) and qualifications of any person who it is intended will become a Director if Shareholders approve the Acquisition.

As noted in Section 8.1(d), the Company agrees to procure the appointment of a nominee of Pilbara Mining as a non-executive director of the Company following settlement of the Acquisition. As at the date of this Notice, Pilbara Mining has not decided who the nominee will be.

The nominee, when appointed as a director of the Company, will be subject to the usual requirements for retirement by rotation and re-election in accordance with ASX Listing Rules and the Constitution.

A statement of the purchaser’s intentions regarding the future of the Company if Shareholders agree to the Acquisition.

Other than as disclosed elsewhere in this Explanatory Statement, at the date of this Notice of Meeting the Company understands that Pilbara Mining does not intend to:

(a) make any significant changes to the business of the Company;

(b) inject further capital into the Company;

(d) any property will be transferred between the Company and Pilbara Mining or any person associated with any of them;

(e) otherwise redeploy the fixed assets of the Company; and

(f) change significantly the financial or dividend policies of the Company.

Further details of the Acquisition are set out throughout this Explanatory Statement. Shareholders are also referred to the Independent Expert’s Report set out in Annexure A.

11.4 Reasons for the Acquisition

Advantages

The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder’s decision on how to vote on Resolution 9:

(a) the Acquisition provides an opportunity for the Company to diversify its current business operations; and

(b) the Acquisition provides an opportunity for the Company to attract new investors providing additional working capital and a larger asset base to assist the Company’s recompliance with Chapters 1 and 2 of the ASX Listing Rules in order for the Company’s securities to be requoted on the Australian Securities Exchange.

Disadvantages

The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder’s decision on how to vote on Resolution 9:

(a) the Independent Expert has assessed the Acquisition to be not fair; and

(b) current Shareholders will have their interests in the Company diluted.

11.5 Recommendations of Directors

The Directors do not have any personal interests in the outcome of Resolution 9 and recommend that Shareholders vote in favour of the Resolution as they consider the proposed issue of Shares to Pilbara Mining to be in the best interests of Shareholders for the following reasons:

(a) after assessment of the advantages and disadvantages referred to in Section 11.4; and

(b) the Independent Expert has determined the issue of Shares to Pilbara Mining to be not fair but reasonable to the non-associated Shareholders.

11.6 Independent Expert’s Report

The Independent Expert's Report prepared by HLB Mann Judd Corporate (WA) Pty Ltd sets out a detailed examination of the proposed Acquisition to enable non- associated Shareholders to assess the merits and decide whether to approve the issue of Shares to Pilbara Mining.

To the extent that it is appropriate, the Independent Expert’s Report sets out further information with respect to the Acquisition and concludes that the issue of Shares to Pilbara Mining is not fair but reasonable to the non-associated Shareholders.

Shareholders are urged to carefully read the Independent Expert’s Report set out in Annexure A to understand its scope, the methodology of the valuation and the sources of information and assumptions made.

12. RESOLUTION 10 – CHANGE OF NAME

Section 157(1) of the Corporations Act provides that a company may change its name if the company passes a special resolution adopting a new name.

Resolution 10 seeks the approval of Shareholders to the adoption of Pilbara Mining Limited as the new name for the Company.

If Resolution 10 is passed the change of name will take effect when ASIC alters the details of the Company’s registration. The proposed name has been reserved by the Company and if Resolution 10 is passed, the Company will lodge a copy of the special resolution with ASIC following the Meeting in order to effect the change.

The Board proposes this change of name on the basis that it more accurately reflects the proposed future operations of the Company.

13. RESOLUTION 11 – CAPITAL RAISING

13.1 General

Resolution 11 seeks Shareholder approval for the allotment and issue of up to 50,000,000 Shares at an issue price of $0.20 per Share (Capital Raising ).

The Company intends to conduct the Capital Raising through a prospectus as part of its re-compliance with Chapters 1 and 2 of the ASX Listing Rules ( Prospectus ).

None of the subscribers pursuant to this issue will be related parties of the Company.

A summary of ASX Listing Rule 7.1 is set out in Section 6.1 above.

The effect of Resolution 11 will be to allow the Directors to issue the Shares pursuant to the Capital Raising during the period of 3 months after the Annual General Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

13.2 Technical information required by ASX Listing Rule 7.1

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Capital Raising:

(a) the maximum number of Shares to be issued is 50,000,000;

(d) the Directors will determine to whom the Shares will be issued but these persons will not be related parties of the Company;

(e) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares; and

(f) the Company intends to use the funds raised from the Capital Raising towards exploration activities on the West Pilbara Mineral Tenements and its existing Seluma Iron Sands Project as well as working capital.

14. ENQUIRIES

Shareholders are required to contact the Company Secretary on (+ 61 8) 6460 4960 if they have any queries in respect of the matters set out in these documents.

G L OS S A R Y

$ means Australian dollars.

Acquisition means the acquisition of the Tenements by the Company from Pilbara Mining pursuant to the Agreement.

Agreement means the agreement between the Company and Pilbara Mining in relation to the Acquisition and as further described in Section 8.1.

Annual General Meeting or Meeting means the meeting convened by the Notice of Meeting.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Capital Raising means the allotment and issue of up to 50,000,000 Shares at an issue price of $0.20 per Share to raise up to $10,000,000 as contemplated by Resolution 11.

Company means Fortuna Minerals Limited (ACN 112 425 788).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

Independent Expert means HLB Mann Judd Corporate (WA) Pty Ltd (ACN 008 878 555).

Independent Expert’s Report means the report prepared by the Independent Expert and annexed to this Notice of Meeting as Annexure A.

Notice or Notice of Meeting or Notice of Annual General Meeting means this notice of annual general meeting including the Explanatory Statement.

Option means an option to acquire a Share with the terms and conditions set out in Schedule 1.

Optionholder means a holder of an Option.

Pilbara Mining means Pilbara Mining Pty Limited (ACN 119 871 546).

Prospectus means the prospectus to be issued by the Company in relation to the Capital Raising.

Relevant Interest Parties means the parties deemed to have a relevant interest in the securities that Pilbara Mining has as further described in Section 11.2.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

Tenements or West Pilbara Mineral Tenements means the six granted exploration licences located in the West Pilbara region of Western Australia to be acquired by the Company from Pilbara Mining.

WST means Western Standard Time as observed in Perth, Western Australia.

SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

The Options entitle the holder to subscribe for Shares on the following terms and conditions:

(a) Each Option gives the Optionholder the right to subscribe for one Share. To obtain the right given by each Option, the Optionholder must exercise the Options in accordance with the terms and conditions of the Options.

(b) The Options will expire at 5:00 pm (WST) on 31 December 2012 (Expiry Date ). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

(d) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

(e) An Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:

(i) a written notice of exercise of Options specifying the number of Options being exercised; and

(ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

(Exercise Notice ).

(f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

(g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.

(h) The Options are not transferable.

(i) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.

(j) The Company will not apply for quotation of the Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 Business Days after the date of allotment of those Shares.

(k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

(l) There are no participating rights or entitlements inherent in the Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

(m) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

ANNEXURE A – INDEPENDENT EXPERT’S REPORT

Independent Expert’s Report –2 November 2009 Fortuna Minerals Limited In connection with the proposed acquisition of exploration assets from Pilbara Mining Pty Ltd

FINANCIAL SERVICES GUIDE Dated 1 March 2009

1. HLB Mann Judd Corporate (WA) Pty Ltd

HLB Mann Judd Corporate (WA) Pty Ltd ABN 69 008 878 555 (“HLB Mann Judd Corporate” or “we” or "us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

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

This FSG includes information about:

who we are and how we can be contacted; the services we are authorised to provide under our Australian Financial Services Licence, Licence No. 250903 ; remuneration that we and/or our staff and any associates receive in connection with the general financial product advice; any relevant associations or relationships we have; and our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to: securities; interests in managed investment schemes excluding investor directed portfolio services; superannuation; and debentures, stocks or bonds issued or proposed to be issued by a government

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

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

4. General financial product advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs.

You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product and there is no statutory exemption relating to the matter, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

HLB Mann Judd Corporate (WA) Pty Ltd AFSL 250903 Level 2 15 Rheola Street West Perth 6005 PO Box 263 West Perth 6872 Western Australia. Telephone +61 (08) 9481 0977. Fax +61 (08) 9481 3686. Email: [email protected]. Website: http://www.hlb.com.au

HLB Mann Judd Corporate (WA) Pty Ltd is a member of International, a world-wide organisation of accounting firms and business advisers

5. Benefits that we may receive

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

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

6. Remuneration or other benefits received by us

HLB Mann Judd Corporate has no employees. All personnel who complete reports for HLB Mann Judd Corporate are either partners or staff of HLB Mann Judd (WA Partnership). None of either those partners or staff is eligible for bonuses directly or indirectly in connection with any engagement for the provision of a report.

7. Referrals

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

8. Associations and relationships

HLB Mann Judd Corporate is wholly owned by HLB Mann Judd (WA Partnership). Also, our directors are partners in HLB Mann Judd (WA Partnership). Ultimately the partners of HLB Mann Judd (WA Partnership) own and control HLB Mann Judd Corporate.

From time to time HLB Mann Judd Corporate or HLB Mann Judd (WA Partnership) may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1. Internal complaints resolution process As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. Complaints must be in writing, addressed to The Complaints Officer, HLB Mann Judd Corporate (WA) Pty Ltd, 2 nd Floor, 15 Rheola Street, West Perth WA 6005.

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 7 days and investigate the issues raised. As soon as practical, and not more than one month after receiving the written complaint, we will advise the complainant in writing of the determination.

9.2. Referral to external disputes resolution scheme A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited ( “FOS ”). FOS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry. HLB Mann Judd Corporate is a member of FOS (member number 11791).

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

Financial Ombudsman Service Limited GPO Box 3 Melbourne VIC 3001 Toll free: 1300 78 08 08 Facsimile: (03) 9613 6399

10. Contact details

You may contact us using the details at the foot of page 1 of this FSG.

0910 FOR022 REP

2 November 2009

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

Dear Sirs

INDEPENDENT EXPERT’S REPORT – FORTUNA MINERALS LIMITED

1. INTRODUCTION

HLB Mann Judd Corporate (WA) Pty Ltd (“HLB”) has been engaged by the directors of Fortuna Minerals Limited (“FTN” or the “Company”) to prepare an Independent Expert’s Report (“Report”) to determine the fairness and reasonableness of the acquisition of certain exploration assets from Pilbara Mining Pty Ltd as detailed in the Notice of Annual General Meeting of FTN shareholders (“the Notice”) for the meeting to be held on or about 14 December 2009. As announced to the Australian Securities Exchange (“ASX”) on 13 October 2009, the Company has entered into a Sale Agreement (“Sale Agreement ”) with Pilbara Mining Pty Ltd (“Vendor ”) pursuant to which the Company has agreed, subject to Shareholder approval and the completion of a capital raising of not less than $500,000, to acquire six (6) mineral tenements in the West Pilbara region of Western Australia from the Vendor (“the Tenements”) in consideration for the issue of 12,000,000 ordinary Shares and the reimbursement of documented tenement expenditure up to a maximum of $600,000 (“Transaction”). A summary of the material terms of the Transaction (in the context of this Report) is set out at Section 4 of this Report, with a full explanation contained in Section 8.1 of the explanatory statement accompanying the Notice (“Explanatory Statement”). This Report has been divided into the following sections: 1. Introduction 2. Purpose of the Report 3. Summary of Opinion 4. Summary of Sale Agreement 5. Implications of the Transaction to FTN 6. Corporate History and Nature of Business 7. Basis of Evaluation 8. Assessment as to Fairness 9. Assessment as to Reasonableness 10. Conclusion Appendices

HLB Mann Judd Corporate (WA) Pty Ltd is a member of International, a world-wide organisation of accounting firms and business advisers

Fortuna Minerals Limited -2-

2. PURPOSE OF THE REPORT

HLB has been engaged by the directors of the Company to prepare this Report to accompany the Notice and Explanatory Statement to be sent to shareholders in connection with the Transaction.

Our report has been prepared solely for the purpose of assisting the non-associated shareholders of FTN in considering the Transaction, details of which are included in the Explanatory Statement and summarised in Section 4 of this report.

We note that there are other resolutions to be put before the shareholders. This Report does not address the impact of any other resolutions as they are considered to be independent of Resolution 9, which is the subject of this report.

Section 606 of the Corporations Act 2001 (“Act”) prohibits the acquisition of an interest in a public company with more than 50 members if the transaction increases that person’s interest from 20% or below to more than 20%. An exception to this general prohibition is set out in Section 611(7), whereby such an acquisition is allowed when approved by a majority of shareholders at a general meeting and where no votes are cast in respect of shares held by the acquirer or its associates.

As the sole director of the Vendor, Mark Hamish Lochtenberg is an associate of the Vendor. Currently, the Vendor, holds no shares in the issued capital of FTN, however, Rigi Investments Pty Limited, an entity controlled by Mark Hamish Lochtenberg, the sole director of Pilbara Mining holds 666,660 Shares. Should the Transaction be approved, the Vendor and its associates will have the ability to hold up to approximately 33.58%.

Regulatory Guide 111 issued by the Australian Securities and Investments Commission (“ASIC”) suggests that the obligation to supply shareholders with all information that is material to the decision on how to vote on the resolution can be satisfied by the commissioning of an Independent Expert’s Report.

The independent expert should state whether a proposal is fair and reasonable to the non- associated shareholders and the opinion should be formed after considering all the circumstances of a proposal. The independent expert must compare the likely advantages and disadvantages for the non-associated shareholders if a proposal is agreed to, with the advantages and disadvantages to those shareholders if it is not.

This report is to be included with the Notice and Explanatory Statement to assist the Company’s non-associated shareholders in their consideration of Resolution 9.

3. SUMMARY OF OPINION

We have considered the terms of the Sale Agreement between the Company and the Vendor and have concluded that the transaction is not fair, but reasonable to the non-associated shareholders of the Company.

A summary of our analysis in forming this opinion is provided below.

Fortuna Minerals Limited -3-

Fairness

Due to the factors outlined in section 8 of this Report, the transaction is considered to be not fair to the non-associated shareholders.

Reasonableness

We have considered the analysis in section 9 of this Report, in terms of the advantages and disadvantages of approving the transaction and the position of non-associated shareholders if the transaction does not proceed.

The respective advantages and disadvantages considered are summarised below: Advantages and Disadvantages of Approving the Transaction: Advantages Disadvantages

Opportunity to diversify and expand Determined to be not fair current exploration focus Dilution of current shareholders interests Could attract new investors and may provide a better base for the Company to Significant future outlay of funds may be seek re-listing on the ASX required

It is likely that the Vendor shares would Company has a need to raise additional be escrowed should the Company re-list funds regardless of whether or not the transaction occurs Capital will be raised as part of the Transaction

Absence of alternative offers.

In our opinion, the position of non-associated shareholders if the Transaction proceeds is more advantageous than the position if the Transaction does not proceed. Accordingly, we believe that the Transaction is reasonable to the non-associated shareholders of the Company.

4. SUMMARY OF SALE AGREEMENT

FTN has entered into a share sale agreement to acquire the tenements, which are located in the west Pilbara region of Western Australia.

FTN will issue to the Vendor a total of 12,000,000 new shares and pay an amount of up to $600,000 as reimbursement of prior expenditure as follows:

a) $380,737 (being the amount expended by the Vendor on the Tenements and notified to the Department Mines and Petroleum pursuant to a Form 5) ; and

b) Such additional amount expended by the Vendor on the Tenements up to a maximum of $600,000, provided that such expenditure can be demonstrated (in writing) to the sole and absolute discretion of FTN.

Fortuna Minerals Limited -4- The Sale Agreement is conditional upon the satisfaction of the following conditions precedent, all of which are fundamental to the Transaction proceeding:

(i) the Company obtaining all shareholder approvals required by the Corporations Act and the ASX Listing Rules; (ii) FTN completing a capital raising of not less than $500,000; (iii) The removal of all and any encumbrances on or on respect of any of the Tenements; and. (iv) Completion of all necessary governmental consents and approvals.

The acquisition will result in the Vendor and its associates owning 33.58% of the issued capital of FTN.

A full explanation of the principal terms of the Share Sale Agreement, together with details of the tenements is contained in Section 8 of the Explanatory Statement.

5. IMPLICATIONS OF THE TRANSACTION TO FTN

5.1 If the Transaction is approved by Shareholders, FTN will issue 12,000,000 ordinary shares in FTN to the Vendor and pay up to $600,000.

5.2 As at 15 September 2009 the number of issued shares in FTN totalled 19,717,962 and the top 20 shareholders were as follows: No of Ordinary % of issued

Shares capital WALKER MATHEW DONALD 2,000,000 10.14% AUSTOCK INV PL 2,000,000 10.14% BATIO PL 1,350,000 6.85% FELIX BAY CAP 1,000,000 5.07% ROHDE STEPHEN C + C D 719,400 3.65% RIGI INV PL 666,660 3.38% HOPKINS BRENDAN M A 666,660 3.38% RALSTON GARRY 602,000 3.05% HOBBS STEPHEN DOWNER . 600,000 3.04% RAMSAY PAUL + TERREL 600,000 3.04% MIKADO PL 500,000 2.54% SABRELINE PL 423,214 2.15% HOBBS STEPHEN + JUSTA 320,000 1.62% NG YEW KWANG 300,000 1.52% CHAUS CAP PL 292,000 1.48% DAWNFIELD INV PL 268,305 1.36% DYAB PL 250,000 1.27% VERIGREEN PL 227,000 1.15% FREWAR P + LANGLEY K 200,000 1.01% BASSETT NEVILLE JOHN 200,000 1.01%

TOTAL 13,185,239 66.87%

5.3 The top 20 shareholders therefore control 66.85% of the Company. If the Transaction is approved, the effects on the percentage shareholdings of these shareholders and the Vendor would be as follows:

Fortuna Minerals Limited -5-

FTN shares % held by Top % held by % held by

on issue 20 Vendors and Other shareholders associates shareholders Current position 19,717,962 66.87% 3.38% 29.75% Issue of shares 6,000,000 Acquisition of tenements 12,000,000 TOTAL 37,717,962 34.96% 1 33.58% 31.46%

1 – Assumes that none of the Top 20% participate in the proposed placement

6. CORPORATE HISTORY AND NATURE OF BUSINESS

6.1. FTN FTN was incorporated on 10 January 2005 as Portland International Limited before changing its name to Marginbet Limited on 23 April 2007. The company listed on the ASX on 18 September 2007 before changing its name to Fortuna Minerals Limited on 1 April 2008. FTN was suspended from trading its shares on the ASX in March 2008. 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 FTN are Mr Matthew Walker, Mr James Robinson and Mr Garry Ralston.

6.2. THE TENEMENTS

The Tenements being acquired from the Vendor comprise six granted exploration licences forming five project areas over 365 blocks and cover approximately 1,095 square kilometres and are located south of the regional centre of Karratha in the West Pilbara region of Western Australia.

Further details are set out in Section 8.2 of the Explanatory Statement and in the Independent Technical Report at Appendix 3.

7. BASIS OF EVALUATION

In determining whether the transaction is fair and reasonable, we have referred to Regulatory Guides 111 and 112 issued by the ASIC.

Regulatory Guide 111 requires that we should identify the advantages and disadvantages of the transaction to security holders not associated with the transaction, as well as providing an opinion on whether the advantages of the transaction outweigh the disadvantages.

We have satisfied the requirements of Regulatory Guide 111 by completing the following comparisons:

A comparison of the value of the consideration being given up by the Company and the value of assets being acquired (see Section 8 of our Report, “Assessment as to Fairness”); and

Fortuna Minerals Limited -6- An analysis of the reasonableness of the Transaction by reference to the advantages and disadvantages of the proposal (see Section 9 of our Report, “Assessment as to Reasonableness”).

In determining the fairness of the Transaction, we have considered the following methodologies:

7.1 Capitalised Maintainable Earnings/Discounted Cash Flow FTN currently does not have a reliable cash flow or profit history from a business undertaking. Therefore, we do not believe that this methodology is appropriate to use for the purposes of this Report. FTN’s primary operational focus is on mining exploration activities.

7.2 Takeover Bid We have been advised by the directors of FTN that they do not believe that there would be a likelihood of a takeover bid for the Company. To the best of our knowledge, there are no current bids in the market place for the shares in FTN.

7.3 Market Price of FTN Shares FTN shares were suspended from trading on the ASX on 28 March 2008.

As a result, this reduces the reliability of the ASX market price valuation and its impact on our assessment on the value of FTN’s shares.

Since that date the Company has raised the following amounts of capital

4,246,534 ordinary shares at $0.05 raising $212,327 in the period 22 September 2008 to 23 April 2009;

5,050,000 ordinary shares at $0.10 raising $505,000 in period 12 May 2009 to 11 June 2009.

We also note that shareholders are being asked to consider a capital raising of up to $600,000, (6,000,000 ordinary shares at $0.10), to satisfy a condition precent to the transaction.

Based on the above a value per share of $0.10 is indicated.

7.4 Adjusted Net Asset Backing A summary of the unaudited, balance sheet of FTN as at 30 September 2009 is presented below, together with a proforma balance sheet comprising the balance sheet at 30 September 2009 adjusted for changes in the valuations of certain assets and liabilities we considered appropriate for the purposes of this Report.

Based on our assessment, the following valuation adjustments are required as at 30 September 2009:

i) Reduction of other assets of $17,449. These amounts relate to prepayments which will be expensed over time; and

ii) No adjustments have been made to the value of the Company’s interests in current projects. These projects have all been recently acquired (at arms length) and have incurred minimal expenditure.

Fortuna Minerals Limited -7-

Unaudited Audited 30 30 June Adjustments Valuation September 2009 2009 $ $ $ Current Assets Cash and cash equivalents 355,096 161,987 161,987 Other 19,303 36,985 (17,449) 19,536 Total Current Assets 374,399 198,972 (17,449) 181,523 Total Non-Current Assets Deferred exploration expenditure 55,736 161,036 161,036 Total Non-Current Assets 55,736 161,036 161,036 Total Assets 430,135 360,008 342,559 Current Liabilities Trade and other payables 35,234 125,843 125,843 Total Current Liabilities 35,234 125,843 125,843 Total Non-Current Liabilities 35,234 125,843 125,843 Total Liabilities 35,234 125,843 125,843 Net Assets 394,901 234,165 216,716

Number

Fully paid shares on issue 19,717,962 Fair market value per share 1.10 cents

7.5 Summary

The following values (per ordinary share) have been determined from the above information: Value Market value (based on recent capital raisings) 10 cents Adjusted net asset backing 1.10 cents

We are of the opinion that the best indicator of the value of a share is based on recent capital raisings.

Therefore, we consider that the underlying net asset value of a share in FTN to be 10 cents. This ignores the value of any non-booked tax benefits.

8. ASSESSMENT AS TO FAIRNESS

8.1 Comparison of the Value of Assets acquired to consideration 8.1.1 Valuation of the Tenements Zephyr Consulting Group Pty Ltd (“Zephyr”) was engaged to provide an independent technical report on the mineral assets being acquired. Full details of Zephyrs’ report are contained in Appendix 3. The assets being acquired have been determined to have the following values by Zephyr.

Fortuna Minerals Limited -8-

Low ($m) High ($m) Preferred ($m) E47/1092 0.14 0.28 0.25 E47/1095 0.11 0.26 0.25 E47/1093& 1094 0.28 0.57 0.35 E47/1096 0.26 0.60 0.55 E47/1097 0.02 0.04 0.02 0.82 1.75 1.42

8.1.2 Value of consideration:

a) Valuation of shares

12,000,000 ordinary shares are to be issued as consideration for the acquisition of the Tenements. Based on the values determined in section 6, the value of these shares has been determined to be 10 cents per share.

b) Summary Low High Consideration: $A $A

Issue of shares 1,200,000 1,200,000 Cash (reimbursement of expenditure) 380,737 600,000 Total 1,580,737 1,800,000

8.2 Conclusion as to Fairness of the Transaction Based on the above assessment, the transaction is considered to be not fair to the non- associated shareholders of the Company as the preferred value is lower than the low point of the range of the value of the consideration.

9. ASSESSMENT AS TO REASONABLENESS

ASIC Regulatory Guide 111 considers an offer to be reasonable if: the offer is fair; or despite not being fair, but considering other significant factors, shareholders should approve the transaction in the absence of any superior offer. Our conclusion that the transaction is not fair has caused us to consider whether it is reasonable. In doing so, we have considered the advantages and disadvantages of the transaction.

9.1 Advantages the Transaction will provide the Company the opportunity to diversify and expand its mineral exploration portfolio;

the Transaction could attract new investors providing additional working capital; and provides a bigger asset base for the Company to seek re-listing on the ASX;

It is likely that the Vendor shares would be escrowed should the company re-list on the ASX;

Fortuna Minerals Limited -9- Additional capital will be raised as part of the Transaction; and

There are no current alternative offers under consideration and there does not exist nor is there likely to exist a higher alternative offer.

9.2 Disadvantages

The transaction is considered to be not fair for the reasons stated in section 8.2 of this Report;

Should the resolution be passed and implemented the Company will issue 12,000,000 Shares to the Vendor. Accordingly, existing Shareholders will have their ownership and voting power diluted;

Significant future outlays of funds will be reviewed in the form of exploration commitments; and

Regardless of whether the Transaction proceeds or not the Company will need to raise additional funds to continue to operate.

9.3 Conclusion as to the Reasonableness of the Transaction

Based on the above assessment, the Transaction is considered to be reasonable to the non- associated shareholders of the Company as the advantages of approving the Transaction outweigh the disadvantages.

10. CONCLUSION

Based on the foregoing, we are of the opinion that the Transaction is not fair but reasonable to the non-associated shareholders of the Company.

Yours faithfully HLB MANN JUDD CORPORATE (WA) PTY LTD Licensed Investment Advisor (AFSL Licence number 250903)

N G NEILL Authorised Representative

Fortuna Minerals Limited

APPENDIX 1 SOURCES OF INFORMATION

In preparing this Report we have had access to the following principal sources of information:

FTN’S annual report for the year ended 30 June 2009 and management reports for the period ended 30 September 2009;

Sale Agreement between the Vendor and Fortuna Minerals Limited (undated)

Draft Notice of General Meeting and Explanatory Statement which this Report will accompany.

Independent Technical Review performed by Zephyr Consulting Group Pty Ltd dated 29 October 2009.

Discussions with, and information provided by, the directors and management of FTN;

Announcements to the ASX by FTN during the 2008 and 2009 years.

Fortuna Minerals Limited

APPENDIX 2 QUALIFICATIONS, DECLARATIONS AND CONSENTS

HLB, which is a wholly owned entity of HLB Mann Judd (WA Partnership), is a Licensed Investment Adviser and holder of an Australian Financial Services Licence under the Corporations Act (“Act”) and its authorised representative is qualified to provide this Report. The authorised representative of HLB responsible for this Report has not provided financial advice to FTN.

Prior to accepting this engagement, HLB considered its independence with respect to FTN with reference to ASIC Regulatory Guide 112. In HLB’s opinion, it is independent of FTN.

This Report has been prepared specifically for the shareholders of FTN. It is not intended that this Report be used for any other purpose other than to accompany the Notice of General Meeting and Explanatory Statement to be sent to the FTN shareholders. In particular, it is not intended that this Report should be used for any purpose other than as an expression of the opinion as to whether or not the transaction is fair and reasonable to the non-associated shareholders of FTN. HLB disclaims any assumption of responsibility for any reliance on this Report to any person other than those for whom it was intended, or for any purpose other than that for which it was prepared.

The statements and opinions given in this Report are given in good faith and in the belief that such statements and opinions are not false or misleading. In the preparation of this Report, HLB has relied on and considered information believed, after due inquiry, to be reliable and accurate. HLB has no reason to believe that any information supplied to it was false or that any material information has been withheld.

HLB has evaluated the information provided to it by FTN and other parties, through inquiry, analysis and review, and nothing has come to its attention to indicate the information provided was materially misstated or would not provide a reasonable basis for this Report. HLB has not, nor does it imply that it has, audited or in any way verified any of the information provided to it.

In accordance with the Act, HLB provides the following information and disclosures:

HLB will be paid its usual professional fees (estimated to be $8,000 plus GST) based on time involvement at normal professional rates, for the preparation of this Report.

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.

HLB, nor any of its directors or associates, have any interest in FTN or the tenements.

Neither HLB nor HLB Mann Judd (WA Partnership) has had any relationship with FTN or any associate of FTN or the Vendors, other than HLB Mann Judd (WA Partnership) also acts as Auditor of FTN.

Fortuna Minerals Limited

APPENDIX 3 INDEPENDENT TECHNICAL REPORT

INDEPENDENT TECHNICAL REVIEW of the MINERAL ASSETS of PILBARA MINING PTY LTD Prepared by Zephyr Consulting Group Pty Ltd on behalf of: HLB Mann Judd Corporate (WA) Pty Ltd

Author : Ian Prentice, B.Sc.(Geol), GradDipAppFin (Sec Inst), MAusIMM,

! Director of Zephyr Consulting Group Pty Ltd !

Date : 29 October 2009

Level 2, 79 Hay Street

Subiaco, WA, 6008

Tel: +61 8 9200 4474 Fax: +61 8 9200 4475 !

TABLE OF CONTENTS

1. INTRODUCTION ...... 7

1.1. TERMS OF REFERENCE ...... 7 1.2. QUALIFICATIONS ,EXPERIENCE AND INDEPENDENCE ...... 8 1.3. PRINCIPAL SOURCES OF INFORMATION ...... 8 2. TECHNICAL SUMMARY OF THE PILBARA MINING PTY LTD MINERAL ASSETS ...... 9 2.1. E47/1092 ...... 9 2.1.1 Project Location ...... 9 2.1.2 Tenure ...... 9 2.1.3 Local Geology ...... 9 2.1.4 Previous Exploration ...... 10 2.1.5 Exploration Potential ...... 11 2.2. E47/1095 ...... 12 2.2.1 Project Location ...... 12 2.2.2 Tenure ...... 12 2.2.3 Local Geology ...... 12 2.2.4 Previous Exploration ...... 12 2.2.5 Exploration Potential ...... 13 2.3. E47/1093 AND E47/1094 ...... 14 2.3.1 Project Location ...... 14 2.3.2 Tenure ...... 14 2.3.3 Local Geology ...... 14 2.3.4 Previous Exploration ...... 15 2.3.5 Exploration Potential ...... 16 2.4. E47/1096 ...... 16 2.4.1 PROJECT LOCATION ...... 16 2.4.2 TENURE ...... 16 2.4.3 LOCAL GEOLOGY ...... 17 2.4.4 PREVIOUS EXPLORATION ...... 18 2.4.5 EXPLORATION POTENTIAL ...... 19 2.5. E47/1097 ...... 19 2.5.1 PROJECT LOCATION ...... 19 2.5.2 TENURE ...... 19 2.5.3 LOCAL GEOLOGY ...... 19 2.5.4 PREVIOUS EXPLORATION ...... 21 2.5.5 EXPLORATION POTENTIAL ...... 21 3. TECHNICAL VALUATION BACKGROUND ...... 22 3.1. VALUATION METHODS ...... 22 4. VALUATION OF THE PILBARA MINING PTY LTD MINERAL ASSETS ...... 24

4.1. E47/1092 ...... 24 4.2. E47/1095 ...... 24 4.3. E47/1093 AND E47/1094 ...... 25 4.4. E47/1096 ...... 25 4.5. E47/1097 ...... 26 4.6. VALUATION SUMMARY ...... 26 5. PRINCIPAL SOURCES OF INFORMATION ...... 27

Page !2!of !27 ! !

Table of Figures and Tables

Figure 1 – West Pilbara Regional Geology and Project Location ...... 4

Figure 2 – E47/1092 Project Summary Map ...... 11

Figure 3 – E47/1095 Project Summary Map ...... 13

Figure 4 – E47/1093 and E47/1094 Project Summary Map...... 15

Figure 5 – E47/1096 Project Summary Map ...... 17

Figure 6 – E47/1097 Project Summary Map ...... 20

Table 1 – Pilbara Mining Pty Ltd’s Mineral Assets Valuation Summary ...... 26

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EXECUTIVE SUMMARY

This independent technical report has been prepared at the request of HLB Mann Judd Corporate (WA) Pty Ltd to provide an opinion as to the present value of the mineral assets of Pilbara Mining Pty Ltd (“Pilbara Mining”). HLB Mann Judd Corporate (WA) Pty Ltd has been engaged by Fortuna Minerals Limited (“Fortuna”) to prepare an Independent Expert’s Report in relation to Fortuna’s proposed acquisition of the mineral assets of Pilbara Mining.

Pilbara Mining owns a group of tenements in the West Pilbara region of Western Australia which form five project areas; from east to west being E47/1092, E47/1095, E47/1093 & E47/1094, E47/1096 and E47/1097. The project areas are broadly aligned along the unconformity between the Archaean granite – greenstone sequence in the north and the younger Fortescue Group sediments and mafic volcanics in the south. The granite – greenstone sequence in the West Pilbara is characterised by the presence of a series of large layered mafic/ultramafic intrusions. The Fortescue Group, the lowest group in the Mount Bruce Supergroup of the Precambrian Hamersley Basin, is an unmetamorphosed and largely undeformed sequence.

Figure 1 – West Pilbara Regional Geology and Project Location

Page !4!of !27 ! !

GEOLOGY OVERVIEW

The Archaean granite – greenstone sequence in the West Pilbara, with its associated series of large layered mafic/ultramafic intrusions, is host to a wide range of mineralisation. Significant deposits include: 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 Yannery Hill – a VMS Cu-Zn 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 Mons Cupri – an epigenetic Pb-Zn-Cu deposit

In addition there are also numerous lode gold and gold – antinomy deposits related to hydrothermal alteration in shear zones, epigenetic gold – (copper) mineralisation in shear zones, high level epithermal gold mineralisation and pegmatite associated tin – tantalum – lithium mineralisation.

The Fortescue Group is known to host gold mineralisation (Nullagine, Marble Bar), uranium occurrences, base metal (Cu-Pb-Zn-Ag) mineralisation and fluorite, however there are no known mineralisation occurrences within Fortescue Group rocks in the area of the Pilbara Mining tenements.

The Pilbara Mining tenements have generally been subjected to a modest level of modern exploration. All of the projects are to varying degrees prospective for base metals, PGE and/or gold mineralisation associated with concealed greenstone sequences or layered mafic - ultramafic intrusions. E47/1093 and E47/1094, E47/1092 and E47/1095 are all located in areas of Fortescue Group rocks just south of the unconformity contact with the Archaean granite – greenstone sequence. E47/1096 is predominantly located within the Archaean granite – greenstone sequence, with the unconformity contact occurring in the southern portion of this tenement. E47/1097 is an elongate north south trending tenement that predominantly covers Fortescue Group rocks and extends south from adjacent to the unconformity contact.

A regional aeromagnetic survey completed by BMR in the mid 1980’s has identified a number of magnetic highs beneath Fortescue Group rocks in this portion of the West Pilbara, which have been interpreted as having potential to represent concealed greenstone sequences or layered mafic - ultramafic intrusions in the Archaean basement rocks. Magnetic highs from this regional survey data have been identified in all of the projects other than E47/1097. Past exploration has generally focused on these anomalies, however there has been no drilling or modern geophysics completed on the targets.

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The depth of the Fortescue Group cover rocks overlying the magnetic highs is unknown in E47/1093 and E47/1094, E47/1092 and E47/1095, although previous modeling has indicated that the cover could range from 500 – 2,000m in E47/1092. 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.

The prospectivity of E47/1097 appears limited largely due to the expected deeper Fortescue Group cover rocks overlying the Archaean basement.

The valuation of Pilbara Mining’s mineral assets based on a 100% equity interest in the various assets is provided in the table below. The valuations are expressed in Australian dollars (A$) unless otherwise stated.

Pilbara Mining Limited Mineral Assets Valuation Summary

(as at 29 October 2009)

Low ($m) High ($m) Preferred ($m)

E47/1092 0.14 0.28 0.25

E47/1095 0.11 0.26 0.25

E47/1093 & 1094 0.28 0.57 0.35

E47/1096 0.26 0.60 0.55

E47/1097 0.02 0.04 0.02

TOTAL 0.82 1.75 1.42

The value of the 100% interest in Pilbara Mining’s mineral assets is considered to lie in a range from $0.82 million to $1.75 million, with Zephyr selecting a preferred technical value of $1.42 million .

Page !6!of !27 ! !

1. INTRODUCTION

1.1. TERMS OF REFERENCE

Zephyr Consulting Group Pty Ltd (“Zephyr”) has been commissioned by HLB Mann Judd Corporate (WA) Pty Ltd to provide an independent technical report (“ITR”) on the mineral assets of Pilbara Mining Pty Ltd (“Pilbara Mining”) as part of an Independent Expert’s Report HLB Mann Judd Corporate (WA) Pty Ltd is preparing for Fortuna Minerals Limited (“Fortuna”). Fortuna has entered in to a transaction with Pilbara Mining whereby Fortuna is proposing to acquire a group of mineral assets from Pilbara Mining.

As part of the ITR, Zephyr will provide an opinion as to the value of the Pilbara Mining mineral assets. This valuation has been prepared in accordance with the Code for the Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports (“The VALMIN Code”), 2005 edition. 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 Committee of the Australasian Institute of Mining and Metallurgy, the Australian Institute of Geoscientists and the Minerals Council of Australia, effective December 2004.

The valuations expressed in the ITR are valid as at the valuation date, being 29 October 2009, and may vary with time. All dollar values included in the report are in Australian dollars (A$) unless otherwise stated.

Zephyr has not been requested to provide comment on the fairness or reasonableness of the transaction contemplated and has therefore not offered any opinion on these matters.

Zephyr has based its report on information provided by Pilbara Mining and Fortuna, as well as investigations of all public domain data that may have relevance to the review of the mineral assets. Zephyr is not aware of any material data not disclosed by any of the above mentioned parties and is not responsible for the exclusion of any such data in this report. A final draft of this report has been provided to HLB Mann Judd Corporate (WA) Pty Ltd for verification prior to publication.

Page !7!of !27 ! !

1.2. QUALIFICATIONS, EXPERIENCE AND INDEPENDENCE

Zephyr is an independent privately owned consulting firm providing exploration management and project assessment services to the Australian minerals industry.

The author, Ian Prentice, is a geologist with over 20 years experience in exploration and mining geology and property evaluation. He is a Director of Zephyr and 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 VALMIN and JORC Codes respectively.

Zephyr, its employees and associates are not, nor intend to be directors, officers or other direct employees of Fortuna or Pilbara Mining and have no material interest in the Projects, Fortuna or Pilbara Mining.

1.3. PRINCIPAL 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 listing of the principal sources of information is included in Section 5 of this report.

Page !8!of !27 ! !

2. TECHNICAL SUMMARY OF THE PILBARA MINING PTY LTD MINERAL ASSETS

The granite – greenstone sequence in the West Pilbara is characterised by the presence of a series of large layered mafic – ultramafic intrusions. These intrusions host significant PGE- Ni-Cu mineralisation in areas adjacent to some of the Pilbara Mining tenements. The granite – greenstone sequence also hosts significant VMS Cu-Pb-Zn mineralisation. The Fortescue Group, the lowest group in the Mount Bruce Supergroup of the Precambrian Hamersley Basin, is an unmetamorphosed and largely undeformed sequence. No significant mineral occurrences have been recorded within the Fortescue Group rocks in the area of the Pilbara Mining tenements.

Tenements E47/1092, E47/1093, E47/1094 and E47/1095 cover rocks of the Fortescue Group adjacent to the unconformity contact with the Archaean granite – greenstone sequence. Large portions of E47/1094 and E47/1095 are covered by colluvium associated with major drainage systems. E47/1096 straddles the unconformity contact and predominantly covers the granite – greenstone sequence, although outcrop is generally masked by colluvium. E47/1047 is wholly within the Fortescue Group.

2.1. E47/1092

2.1.1 P ROJECT LOCATION

E47/1092 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 west 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.

2.1.2 T ENURE

The project consists of a single granted exploration licence (E47/1092) covering an area of 52 sub blocks. The tenement was granted on 13 June 2007 and expires on 12 June 2012. Annual expenditure commitment is $52,000 and tenement rental is $9,598. The southern boundary of the tenement adjoins the Millstream – Chichester National Park.

2.1.3 L OCAL GEOLOGY

E47/1092 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.

Page !9!of !27 ! !

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.

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 E47/1092. Previous exploration and mining activities at Top Camp have identified and exploited modest tonnages of high grade alluvial gold mineralisation.

Regional aeromagnetic data over E47/1092 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.

2.1.4 P REVIOUS EXPLORATION

Exploration of the E47/1092 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.

Page !10 !of !27 ! !

Figure 2 – E47/1092 Project Summary Map

2.1.5 E XPLORATION POTENTIAL

The primary exploration target within E47/1092 is the aeromagnetic target 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. Modelling 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 large 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.

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2.2. E47/1095

2.2.1 P ROJECT LOCATION

E47/1095 is located about 70 kilometres south east of the regional centre of Karratha. Access is east from Karratha on the Great Northern Highway, then south on the Roebourne – Wittenoom road. The tenement extends from just south of the Pyramid Station Homestead southward to the northern boundary of the Millstream – Chichester National Park. The Roebourne – Wittenoom road broadly defines the western boundary of the tenement.

2.2.2 T ENURE

The project consists of a single granted exploration licence (E47/1095) covering an area of 55 sub blocks. The tenement was granted on 13 June 2007 and expires on 12 June 2012. Annual expenditure commitment is $55,000 and tenement rental is $10,152. The southern boundary of the tenement adjoins the Millstream – Chichester National Park.

2.2.3 L OCAL GEOLOGY

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. The tenement is on the northern edge of the Mount Bruce Supergroup of the Precambrian Hamersley Basin and covers rocks of the Fortescue Group about 10 kilometres south of the unconformity contact with the Archaean granite – greenstone sequence.

Outcrop is limited to parts of the western and eastern portions of the tenement, on the flanks of the George River flood plain, and is dominated by Cooya Pooya Dolerite – a fine to medium grained dolerite. The Lyle Creek Member of the Hardey Formation – massive felsic to intermediate volcaniclastic sandstone and conglomerate – outcrops on the flanks of the George River flood plain to the south of the Cooya Pooya Dolerite.

There are no recorded mineral occurrences within the project area, with the Top Camp gold prospect of the Croydon Mining area located within Archaean sediments about 25 kilometres east of E47/1095.

Regional aeromagnetic data over E47/1095 has identified an elongate north north east trending magnetic anomaly coincident with the current George River.

2.2.4 P REVIOUS EXPLORATION

There has been limited modern exploration in the area of E47/1095. Dominion Mining Limited completed an assessment of the project area in the late 1980’s following the late 1987 release of the 1985 BMR regional aeromagnetic survey data that covered the area. 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.

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

Page !12 !of !27 ! !

Figure 3 – E47/1095 Project Summary Map

2.2.5 E XPLORATION POTENTIAL

The magnetic anomaly, interpreted to represent a concealed greenstone sequence, remains a valid exploration target. Limited previous exploration has been completed in the project area, with the extensive cover restricting the effectiveness of prospecting and surface sampling.

There is potential for E47/1095 to host gold and/or base metal mineralisation within the interpreted concealed greenstone sequence, however the presence of deep overburden and potentially Fortescue Group rocks overlying the target sequence negates the effectiveness of surface geochemical exploration.

Modern exploration, incorporating a detailed low level airborne magnetic survey, would assist in defining the magnetic anomaly, prior to broad spaced “stratigraphic” drilling to test the defined targets.

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

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2.3. E47/1093 AND E47/1094

2.3.1 P ROJECT LOCATION

E47/1093 and E47/1094 form a contiguous project area about 50 kilometres south east of Karratha. The north trending Robe River Railway passes through the eastern portion of E47/1093 while the Hamersley Iron Railway passes to the south west of E47/1093. Access is either south east from Karratha along the Hamersley Iron Railway road or east from Karratha on the Great Northern Highway, then south along the Robe River Railway road. Access within the project area is predominantly on a network of station tracks.

The Harding Dam is located in the northern portion of E47/1093 and large areas of the project are covered by Harding Dam catchment areas. The project extends southward to the northern boundary of the Millstream – Chichester National Park.

2.3.2 T ENURE

The project consists of two granted exploration licences (E47/1093 & E47/1094) covering a combined area of 139 sub blocks. The tenements were granted on 13 June 2007 and expire on 12 June 2012, with annual expenditure commitment of $69,000 and tenement rental of $12,736 for E47/1093 and annual expenditure commitment of $70,000 and tenement rental of $12,921 for E47/1094. Part of the southern boundary of each tenement adjoins the Millstream – Chichester National Park.

2.3.3 L OCAL 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.

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 and most of the eastern portions of the project area.

There are no recorded mineral occurrences within the project area, however 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. 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.

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Regional aeromagnetic data over the project area show two parallel east north east trending magnetic highs within E47/1093 and a north trending magnetic high on the eastern side of E47/1094. These magnetic anomalies are interpreted to represent features within the Archaean granite – greenstone bedrock beneath the rocks of the Fortescue Group.

Figure 4 – E47/1093 and E47/1094 Project Summary Map

2.3.4 P REVIOUS 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.

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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.

2.3.5 E XPLORATION 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 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 evaluated by previous explorers in the area with the Fortescue Group rocks likely to have masked any surface expression of potential buried mineralisation.

There is potential 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 with no surface expression defined, however the opportunity exists for the identification of significant base metal and/or gold mineralisation.

2.4. E47/1096

2.4.1 PROJECT LOCATION

E47/1096 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.

2.4.2 TENURE

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.

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2.4.3 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.

Figure 5 – E47/1096 Project Summary Map

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2.4.4 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 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.

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2.4.5 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 tenement 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 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.

2.5. E47/1097

2.5.1 PROJECT LOCATION

E47/1097 is an elongate north north east trending tenement 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.

2.5.2 TENURE

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.

2.5.3 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.

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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 E47/1097.

Figure 6 – E47/1097 Project Summary Map

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2.5.4 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 E47/1097 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 in the project area, confirming a thickening of the Fortescue Group rocks in this region to >2.0 kilometres and returning spotty high grade gold mineralisation, which was not considered worthy of follow up exploration.

2.5.5 EXPLORATION POTENTIAL

E47/1097 is located in a very remote and rugged region of the West Pilbara and has been subjected to negligible historic exploration. The single drill hole completed by CRA 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.

E47/1097 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.

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3. TECHNICAL VALUATION BACKGROUND

3.1. VALUATION METHODS

There are a range of recognised methods used in valuing mineral assets, with the selection of the most appropriate method dependent on a number of factors, including the type and quantity of information available and the relative stage of the mineral asset. The VALMIN Code defines the various stages of mineral assets as:

Exploration Areas – properties where mineralisation may or may not have been identified, but where a mineral resource has not been identified

Advanced Exploration Areas – properties where considerable exploration has been undertaken and specific targets have been identified that warrant further detailed evaluation. A resource estimate may or may not have been made but sufficient work will have been undertaken to provide both a good understanding of the type of mineralisation present and encouragement that further work will elevate one or more of the prospects to the resource category.

Pre–Development Projects – properties where mineral resources have been identified and their extent estimated but where a decision to proceed with development has not been made.

Development Projects – properties for which a decision has been made to proceed with construction and/or production, but which are not yet commissioned or are not yet operating at design levels.

Operating Mines – properties that have been commissioned and are in production.

The range of recognised valuation methods are designed to provide the most accurate estimate of the asset value in each of these stages. In some instances a mineral property may include assets that fall under more than one of these stages.

Regardless of valuation method used, the consideration must reflect the perceived “fair market value”, being “the estimated amount of money, or the cash equivalent, for which in the opinion of the Expert reached in accordance with the provisions of the VALMIN Code, the mineral asset should change hands on the valuation date between a willing buyer and a willing seller in an arms length transaction, wherein each party has acted knowledgeably, prudently and without compulsion”.

For Pre-Development, Development and Operating Mine Projects where measured and indicated resources (and/or proven and probable reserves) have been estimated, and mining and processing considerations are known or can reasonably be determined, valuations can be derived by developing a discounted cashflow (“DCF”) and determining the net present value (“NPV”) of the project.

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Where mineral resources are in the inferred category, indicating that the use of mining and processing considerations is not possible, the use of DCF and NPV is not appropriate. In this situation it can be appropriate to use the in-situ resource (“Benchmark”) method to value the asset. This method involves the use of a heavily discounted value of the contained in- situ metal, usually in the range of 2 – 4.5% of the metal price at the time of valuation. This range may vary subject to a series of factors such as proximity to processing facilities, infrastructure, physiography and geometry of the mineralisation.

The potential of Exploration and Advanced Exploration Areas is speculative compared to projects which contain estimated mineral resources, making valuation of these assets more dependent on the informed, professional opinion of the valuer.

An appropriate valuation technique where previous and committed future exploration expenditure is known or can be estimated is the Multiple of Exploration Expenditure (“MEE”) method. This involves applying a discount or premium to the past and committed future expenditure, known as the Effective Base (“EB”), by the use of a Prospectivity Enhancement Multiplier (“PEM”) which relates to the success of previous exploration and an assessment of the future potential of the asset.

Sale transactions relating to mineral assets of a similar nature to the asset being valued can be used to assist in confirming the findings of the MEE method, subject to the sale being on an “arms length” basis in accordance with the VALMIN Code.

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4. VALUATION OF THE PILBARA MINING PTY LTD MINERAL ASSETS

The following valuations of the Pilbara Mining mineral assets are based on a 100% equity interest in the various assets.

4.1. E47/1092

E47/1092 has been valued by applying the MEE method, which provides a valuation range for the projects exploration potential. Recorded exploration expenditure since 1990 for the project as far as has been reasonably ascertained is approximately $0.09 million (the applicable EB). This exploration expenditure has been related to regional surveys and reconnaissance work and does not include the cost of the regional aeromagnetic survey completed in the mid 1980’s.

The majority of the exploration work completed is considered to have been effective. Although targets on E47/1092 are conceptual in nature the project is located in a well mineralised province and there is a reasonable likelihood of future exploration success given the continuation of systematic exploration activities. As such it has been decided to apply a PEM range of 1.5 to 3.0, with the upper end of the range reflecting the implied value of the regional aeromagnetic survey, indicating that every dollar spent on regional exploration has returned between $1.50 and $3.00 in value.

Using the range of PEM’s from 1.5 to 3.0 and an EB of $0.09 million derives a valuation range for the exploration potential of E47/1092 of $0.14 to $0.28 million. The selected preferred value of $0.25 million reflects the exploration potential of the project area.

4.2. E47/1095

E47/1095 has been valued by applying the MEE method, which provides a valuation range for the projects exploration potential. Recorded exploration expenditure for the project as far as has been reasonably ascertained is approximately $0.07 million (the applicable EB), however it has been determined that exploration expenditure has not been reported for all exploration completed on the project area. This exploration expenditure has been related to regional surveys and reconnaissance work and does not include the cost of the regional aeromagnetic survey completed in the mid 1980’s.

The majority of the exploration work completed is considered to have been effective. Although targets on E47/1095 are conceptual in nature the project is located in a well mineralised province and there is a reasonable likelihood of future exploration success given the continuation of systematic exploration activities. As such it has been decided to apply a PEM range of 1.5 to 3.5, with the upper end of the range reflecting the implied value of the regional aeromagnetic survey plus the quantum of undisclosed exploration expenditure, indicating that every reported dollar spent on regional exploration has returned between $1.50 and $3.50 in value.

Using the range of PEM’s from 1.5 to 3.5 and an EB of $0.07 million derives a valuation range for the exploration potential of E47/1095 of $0.11 to $0.26 million. The selected preferred value of $0.25 million reflects the exploration potential of the project area.

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4.3. E47/1093 AND E47/1094

This project has been valued by applying the MEE method, which provides a valuation range for the projects exploration potential. Recorded exploration expenditure for the project as far as has been reasonably ascertained is approximately $0.19 million (the applicable EB). This exploration expenditure has been related to regional surveys and reconnaissance work and does not include the cost of the regional aeromagnetic survey completed in the mid 1980’s.

The majority of the exploration work completed is considered to have been effective. Although targets on E47/1093 and E47/1094 are conceptual in nature the project is located in a well mineralised province and there is a reasonable likelihood of future exploration success given the continuation of systematic exploration activities. As such it has been decided to apply a PEM range of 1.5 to 3.0, with the upper end of the range reflecting the implied value of the regional aeromagnetic survey, indicating that every dollar spent on regional exploration has returned between $1.50 and $3.00 in value.

Using the range of PEM’s from 1.5 to 3.0 and an EB of $0.19 million derives a valuation range for the exploration potential of the project of $0.28 to $0.57 million. The selected preferred value of $0.40 million reflects the exploration potential of the project area.

4.4. E47/1096

E47/1096 has been valued by applying the MEE method, which provides a valuation range for the projects exploration potential. Recorded exploration expenditure since the early 1990’s for the project as far as has been reasonably ascertained is approximately $0.17 million (the applicable EB), however it has been determined that exploration expenditure has not been reported for all exploration completed on the project area. This exploration expenditure has been related to regional surveys and reconnaissance work and does not include the cost of the regional aeromagnetic survey completed in the mid 1980’s.

The majority of the exploration work completed is considered to have been effective. Although targets on E47/1096 are conceptual in nature the project is located in a well mineralised province and there is a reasonable likelihood of future exploration success given the continuation of systematic exploration activities. As such it has been decided to apply a PEM range of 1.5 to 3.5, with the upper end of the range reflecting the implied value of the regional aeromagnetic survey plus the quantum of undisclosed exploration expenditure, indicating that every dollar spent on regional exploration has returned between $1.50 and $3.50 in value.

Using the range of PEM’s from 1.5 to 3.5 and an EB of $0.17 million derives a valuation range for the exploration potential of E47/1096 of $0.26 to $0.60 million. The selected preferred value of $0.55 million reflects the exploration potential of the project area.

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4.5. E47/1097

E47/1097 has been valued by applying the MEE method, which provides a valuation range for the projects exploration potential, albeit that previous exploration has been negligible, with recorded exploration expenditure for the project as far as has been reasonably ascertained of approximately $0.02 million (the applicable EB). This exploration expenditure has been related to regional surveys, reconnaissance work and data collation.

Access appears limited for the majority of the project area, with conceptual targets defined in only the northern portion of the tenement. Exploration on E47/1097 will be logistically challenging and prospectivity is generally deemed to be moderate, as such it has been decided to apply a PEM range of 1.0 to 2.0, indicating that every dollar spent on regional exploration has returned between $1.00 and $2.00 in value.

Using the range of PEM’s from 1.0 to 2.0 and an EB of $0.02 million derives a valuation range for the exploration potential of E47/1097 of $0.02 to $0.04 million. The selected preferred value of $0.02 million reflects the moderate exploration potential of the project.

4.6. VALUATION SUMMARY

A summary of the valuation range for Pilbara Mining’s mineral assets on a 100% equity basis are summarised in Table 1 below.

Pilbara Mining Limited Mineral Assets Valuation Summary

(as at 29 October 2009)

Low ($m) High ($m) Preferred ($m)

E47/1092 0.14 0.28 0.25

E47/1095 0.11 0.26 0.25

E47/1093 & 1094 0.28 0.57 0.35

E47/1096 0.26 0.60 0.55

E47/1097 0.02 0.04 0.02

TOTAL 0.82 1.75 1.42

Table 1 – Pilbara Mining Pty Ltd’s Mineral Assets Valuation Summary

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5. PRINCIPAL SOURCES OF INFORMATION

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.

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.

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.

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.

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

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.

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PROXY FORM

APPOINTMENT OF PROXY FORTUNA MINERALS LIMITED ACN 112 425 788 ANNUAL GENERAL MEETING

I/We of

being a member of Fortuna Minerals Limited entitled to attend and vote at the Annual General Meeting, hereby Appoint

Name of proxy

OR the Chair of the Annual General Meeting as your proxy or failing the person so named or, if no person is named, the Chair of the Annual General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the Annual General Meeting to be held at 9.00 am (WST), on 14 December 2009 at Suite 9, 1200 Hay Street, West Perth, Western Australia, and at any adjournment thereof. If no directions are given, the Chair will vote in favour of all the Resolutions.

Voting on Business of the Annual General Meeting FOR AGAINST ABSTAIN Resolution 1 – Adoption of remuneration report Resolution 2 – Re-election of Director – James Robinson Resolution 3 – Re-election of Director – Garry Ralston Resolution 4 – Adoption of New Constitution Resolution 5 – Ratification of Prior Issue Resolution 6 – Placement – Options Resolution 7 – Change to Nature of Activities Resolution 8 – Placement – Shares Resolution 9 – Acquisition of West Pilbara Mineral Tenements Resolution 10 – Change of Name Resolution 11 – Capital Raising

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll. Signature of Member(s): Date: ______

Individual or Member 1 Member 2 Member 3

Sole Director/Company Secretary Director Director/Company Secretary

Contact Name: ______Contact Ph (daytime): ______

FORTUNA MINERALS LIMITED ACN 112 425 788 Instructions for Completing ‘Appointment of Proxy’ Form

1. (Appointing a Proxy ): A member entitled to attend and vote at an Annual General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.

2. (Direction to Vote ): A member may direct a proxy how to vote by marking one of the boxes opposite each item of business. Where a box is not marked the proxy may vote as they choose. Where more than one box is marked on an item the vote will be invalid on that item.

3. (Signing Instructions ):

• (Individual ): Where the holding is in one name, the member must sign.

• (Joint Holding ): Where the holding is in more than one name, all of the members should sign.

• (Power of Attorney ): If you have not already provided the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

• (Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held.

4. (Attending the Meeting ): Completion of a Proxy Form will not prevent individual members from attending the Annual General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the Annual General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the Annual General Meeting.

5. (Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post to Fortuna Minerals Limited, PO Box 281, West Perth WA 6872; or

(b) facsimile to the Company on facsimile number +61 8 9324 3045,

so that it is received not later than 9.00 am (WST) on 12 December 2009.

Proxy forms received later than this time will be invalid.