Abn 84 121 700 105

Important InformatIon:

this is an important document that you should read in its entirety. If you do not understand it, you should consult your professional adviser without delay. the shares offered by this prospectus should be considered speculative. refer to section 10 for detail relating to investment risks.

p r o s p e c t u s

ABN 84 121 700 105

Unit 7, 11 Colin Grove WESt pErtH Wa 6005

tel +61 8 9463 6656fax +61 8 9463 6657

Web www.malagasyminerals.com

for the offer of 50,000,000 shares each at $0.20 per share to raise $10,000,000

Lead manager to the issue: Element Capital pty Ltd

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highlights of the issuehighlights of the issue

Malagasy Minerals Limited Prospectus 1

MALAGASY MINERALS – A SOLID PROJECT PORTFOLIO

Nickel-copper-coal-cobalt-PGE mineralisation in south-central Madagascar

Eight (8) 100%-owned projects - totalling 6,300 square kilometres of tenure

Five priority projects identified including defined targets of interpreted Voisey’s Bay style nickel-copper-PGE mineralisation and basin coal at Sakoa

Immediate follow up targets incorporating up to 24,000m of drilling planned for the first 18 months after completion of the Offer

Building Value In MadagascarExperienced and successful management team•

Long-term presence and experience in Madagascar•

Established operations bases in Madagascar•

Senior operations management personnel based in •Madagascar

100%-owned tenements (8 projects – 6,300 sq km) – all •located in Madagascar

Acquisition of BRGM – Madagascar key assets; including •3 drilling rigs

Coal assets in Sakoa region in southern Madagascar.•

Focussed on target commodities & mineralisation styles •(Ni-Coal-Cu-Co-PGE-VMS)

Defined follow-up targets for interpreted Voisey’s Bay style •mineralisation at Ampanihy Project

Up to 24,000 metres drilling planned for first 18 months •after completion of the Offer

Malagasy Minerals Ltd – The AssetsMadagascar - a New Frontier•

Significant yet under explored metals province

Over 7,000 recorded historical mineral occurrences

World-class mineral resource projects (e.g. Ni-Co- ilmenite) currently under development

Recent junior explorer success

Madagascar – Strongly Prospective•

Geologically linked to central-eastern Africa (Kenya- Tanzania) & western India.

Complex variety of rock associations and intrusions – and abundance & variety of minerals occurrences

Madagascar – Investment Friendly•

Fourth largest island in the world – approximate size of NSW Australia

Politically stable democracy – President recently re- elected (2006)

National mining culture – low operating costs

New mining code – modern transparent tenement administration regime

Major ongoing foreign-assisted upgrade in geological data infrastructure

Major infrastructure development – 9,000km of roads rehabilitated

Malagasy Minerals Limited – an established presence in •Madagascar

10 years in-country experience

Successful exploration track record

BRGM – Madagascar: acquisition & ongoing co-operation

Established operational bases with several drilling rigs

Ongoing cash flow from quarrying dimension stone operations

BRGM Assets:Acquiring three drilling rigs with operators & support •equipment

Operating assay laboratory and staff•

Adjacent to Ministry of Mines & mining tenements national •offices for Madagascar

19,000 square metre commercial property base in •Antananarivo, the capital of Madagascar

Company offices and management residences on-site•

Ongoing co-operation and mutual support agreements •with BRGM

Objectives and StrategyCreate Shareholder wealth through focused exploration, •discovery & development of significant nickel, coal, PGE & copper ore bodies.

Utilise the technically competent & experienced resource •team assembled by the Company.

Fast track evaluation & exploration of the Company’s •priority projects utilising its own drilling rigs & established service base.

Continually assess existing projects & create new •opportunities whilst remaining a focussed nickel-copper-coal-PGE explorer in southern Madagascar.

Exploration ProgramsFive (5) priority projects identified with immediate follow up •and/or drill-ready targets delineated.

2 Malagasy Minerals Limited Prospectus

Focussing on rapid target delineation and aggressive •follow-up with up to 24,000 metres of drilling planned within the first 18 months post-listing.

Utilising established exploration teams and logistical •support infrastructure to enable sustained momentum in target generation and follow-up.

Well-established in-country expertise will facilitate •acquisition of additional prospective exploration acreage.

Key Investment Risks

The following are risks the Company considers to be key •investment risks:

Failure of exploration to define economic mineral deposits

Unforeseen advent of political instability in Madagascar

A downturn in commodity prices

Failure of third parties to perform contractual obligations

Refer to Section 10 for more information on investment •risks that could adversely affect MML’s financial performance and the value of its Shares.

This section is not intended to provide full information for investors •considering an application for Shares offered pursuant to this Prospectus. The Prospectus should be read and considered in its entirety.

Village of Miadakafeno west of Antsirabe

Countryside southeast of Tulear

DirectorsMax Cozijn – Chairman

Steven Goertz – Managing Director

Guy LeClezio – Non Executive Director

Peter Woods – Non Executive Director

Company SecretaryMax Cozijn

Registered and Corporate OfficeUnit 7, 11 Colin GroveWEST PERTH WA 6005

Telephone: +61 8 9463-6656Facsimile: +61 8 9463-6657Internet: www.malagasyminerals.com

Postal AddressPO Box 2818WEST PERTH WA 6872

Share RegistrySecurity Transfer Registrars Pty Ltd770 Canning HighwayAPPLECROSS WA 6153

Telephone: +61 8 9315 2333Facsimile: +61 8 9315 2233

Stock Exchange ListingASX LimitedASX Code: MGY

Auditor & Investigating AccountantWHK HorwathLevel 6, 256 St Georges TerracePERTH WA 6000

Independent GeologistRSG Global Pty LtdGround floor1162 Hay StreetWEST PERTH WA 6005

Solicitors to the CompanyHardy Bowen LawyersLevel 1, 28 Ord StreetWEST PERTH WA 6005

Solicitors (Madagascar)Lexel Juridique & FiscalZone Tana Water FrontAmbodivonaAntananarivo 101 Madagascar

Madagascar Corporate AdvisorsFidafrica MadagascarRue Rajakoba AugustinAnkadivato – Antananarivo 101Madagascar

Lead ManagerElement Capital Pty Ltd52 Ord StreetWest Perth WA 6005

corporate directory


MML Office Staff - Madagascar


important notices & statementsGeneralThis Prospectus is dated and was lodged with ASIC on 23 May 2008. Neither ASIC nor ASX take responsibility for the contents of this Prospectus.

No Shares will be issued or granted on the basis of this Prospectus after the Closing Date which will be not later than 13 months after the date of this Prospectus.

The Prospectus will generally be made available in electronic form during the Exposure Period by being posted on the Company’s website at www.malagasyminerals.com. Persons having received a copy of this Prospectus in its electronic form may obtain an additional paper copy of this Prospectus and the Application Form (free of charge) from the Company’s principal place of business during the Offer Period by contacting the Company. The Offer constituted by this Prospectus in electronic form is only available to persons receiving an electronic version of this Prospectus and Application Form within Australia.

Applications for Shares will only be accepted on the Application Form accompanying this Prospectus or in its paper copy form as downloaded in its entirety from www.malagasyminerals.com. The Corporations Act prohibits any person from passing on to another person the Application Form unless it is accompanied by or attached to a complete and unaltered copy of this Prospectus.

No person is authorised to give any information or to make any representation in connection with the Offer other than as is contained in this Prospectus. Any information or representation not contained in the Prospectus should not be relied on as having been made or authorised by the Company or its Directors in connection with the Offer.

The Company is not admitted to the Official List of ASX. The Company will apply, within 7 days of the date of this Prospectus, for admission of the Company and Official Quotation of the Shares to the Official List.

Foreign InvestorsNo offer is made by this Prospectus in any jurisdiction outside Australia. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. This Prospectus does not constitute an offer of Shares in any jurisdiction where it would be unlawful to issue this Prospectus.

Exposure PeriodApplications for Shares under this Prospectus will not be processed until after expiry of the Exposure Period pursuant to Chapter 6D of the Corporations Act. No preference will be conferred on Applications received during the Exposure Period. All Applications received during the Exposure Period will be treated as if they were simultaneously received on the date on which the Offer opens. If the Exposure Period is extended by ASIC, Applications will not be processed until after expiry of the extended Exposure Period.

The purpose of the Exposure Period is to enable examination of this Prospectus by market participants prior to the acceptance of Applications and the raising of funds. That examination may result in the identification of deficiencies in the Prospectus and, in those circumstances any Application that has been received may need to be dealt with in accordance with section 724 of the Corporations Act.

Speculative InvestmentThe Shares offered under this Prospectus are considered speculative. There is no guarantee that the Shares offered by this Prospectus will make a return on the capital invested, that dividends will be paid on the Shares or that there will be an increase in the value of the Shares in the future.

Potential investors should carefully consider whether the Shares offered by this Prospectus are an appropriate investment for them in light of their personal circumstances, including their financial and taxation position. Refer to Section 10 for details relating to the risks associated with investing in the Company.

Using this ProspectusPersons wishing to subscribe for Shares offered by this Prospectus should read this Prospectus in its entirety in order to make an informed assessment of the assets and liabilities, financial position and performance, profits and losses and prospects of the Company and the rights and liabilities attaching to the Shares offered pursuant to this Prospectus. If persons considering subscribing for the Shares offered by this Prospectus have any questions, they should consult their stockbroker, solicitors, accountants or professional advisers for advice.

Investors wishing to subscribe for Shares should complete the relevant Application Form included in, or accompanying, this Prospectus as applicable.

GlossaryDefined terms and abbreviations used in this Prospectus are explained in the Glossary in Section 14. Additionally, defined geological terms can be found in the Glossary accompanying the Independent Geologists Report in Section 5.


Indicative Timetable of the OfferLodgement of Prospectus with ASIC 23 May 2008

Expected Opening Date 1 30 May 2008

Expected Closing Date 2 30 June 2008

Expected Allotment Date 3 7 July 2008

Proposed date of trading of Shares on ASX to commence3 21 July 2008

Notes1 Subject to the Exposure Period. Any extension of the Exposure Period will impact on the Opening Date.

2 Investors are encouraged to submit their Applications as early as possible. The Directors reserve the right to close the Offer earlier or later than as indicated above without prior notice to investors.

3 Anticipated dates only. The date the Shares are expected to be issued and/or commence trading on ASX may vary with any change to the Closing Date.

Contents

1. Letter from the Chairman 6

2. Details of Offer 7

3. The Company’s Projects 12

4. Board and Management 35

5. Independent Geologist’s Report 36

6. Independent Accountant’s Report 75

7. Tenement Report 89

8. Material Contracts Summary 104

9. Corporate Governance 108

10. Risk Factors 111

11. Rights Attaching to Shares 115

12. Additional Information 116

13. Authorisation 120

14. Glossary of Terms 121

Application Forms & Instructions

Ianapera coal sample

Labradorite in outcrop at Ianapera


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letter from the chairmanDear Investor,

It is my pleasure on behalf of the Board of Directors of Malagasy Minerals Limited (“MML”) to invite you to become a Shareholder in the Company pursuant to this Prospectus offer.

The Company is seeking to raise $10 million with the issue of 50 million fully paid ordinary Shares at an issue price of 20 cents per Share.

MML was established specifically to pursue the rapid development of mineral resources in Madagascar, the world’s fourth largest island, which hosts significant under explored mineral provinces. The country has a mining culture and in the past decade has made significant advances in establishing a modern mining code and a politically stable democracy.

The Company has fast tracked its development since incorporation on 22nd September 2006 with the acquisition of 100% of the issued capital of Mada Aust SARL (“MDA”) a Madagascar-based exploration company established more than 10 years ago, holding approximately 2,000 sq km of granted prospective tenements in the south of Madagascar. MDA is managed by Mr. Jules LeClezio, a French Mauritian by birth, assisted by Dr Peter Woods (geologist) and Mr Guy LeClezio (his brother) both based in Perth, has successfully built an experienced team of geologists and administrative personnel in Madagascar. Following the acquisition of MDA in April 2007, MML commenced negotiations with the French based geoscientific group, Bureau de Recherchés Géologiques et Minières (“BRGM”) to acquire their commercial drilling and assaying business in addition to land and buildings on approximately 19,000 sqm of land which includes a number of offices, warehouses and residences, as well as the BRGM drilling and assaying facilities, at their base in Antananarivo, the capital city of Madagascar. These negotiations were successfully concluded on 13th December 2007 in Orleans France, with the execution of legal agreements.

The purpose of this Prospectus raising is to allow for the funding of the acquisition costs of MDA and the BRGM assets, and to provide exploration funds to aggressively explore and develop the company’s tenement holdings which now cover approximately 6,300 sq km of tenements, with a primary commodity focus on Coal, Nickel, Copper & PGE mineral occurrences.

There are five main projects that will be rapidly assessed and drilled within the first 18 months of listing. These include the Ampanihy Nickel, Copper, PGE project which has a structural setting similar to the Voisey’s Bay area in eastern Canada, where a massive nickel deposit is associated with Labradorite intrusives. In Madagascar these Labradorite intrusives are being quarried by three companies on a Royalty basis, while MDA retains the rights to all other minerals. The Labradorites contain numerous disseminations of sulphide, as evidenced by prior and current field exploration programmes and (petrographic) study of cut samples. Interpretation of airborne geophysical data in and around these intrusives has indicated several areas of prospectivity worthy of follow up; these deposits constitute our primary target.

Additionally, at the Vohibory Project MML has identified the Ianapera coal occurences and significant copper anomalies with surface samples of up to 29% copper.

Through these strategic acquisitions, MML has developed a significant local presence in Madagascar with an experienced work force through out the group of over 50 personnel, the majority of whom are locals. It is envisaged that Managing Director Mr. Steven Goertz will relocate his family to Madagascar post listing, and that the operations will be run and managed from Madagascar, with only the corporate administration services being managed from Perth.

The primary objectives of MML are to “Create Shareholder wealth through focused exploration, discovery and development of significant nickel, coal, copper & PGE ore bodies, utilising modern exploration techniques and the technically competent and experienced resource team assembled in Madagascar”.

I recommend that you read this Prospectus thoroughly and we look forward to your participation as a Shareholder in advancing our exciting projects for the benefit of all stakeholders.

Yours sincerely,

Max CozijnChairman

23 May 2008

details of offer


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2.1 The OfferThis Prospectus invites investors to apply for up to 50,000,000 Shares at an issue price of $0.20 per share to raise $10,000,000.

The Offer is subject to the Minimum Subscription of $8,000,000. Refer to Section 2.6 for details of the Minimum Subscription.

The Shares issued under this Prospectus will be fully paid and rank equally with other Shares on issue.

2.2 Capital structure

Minimum Subscription Offer

$ % of Shares $ % of Shares

Present issued capital 30,000,003 35.3 30,000,003 31.6

Shares to be issued on Official Quotation1 15,000,000 17.6 15,000,000

115.8

Shares to be issued under this Prospectus.

40,000,000 47.1 50,000,000 52.6

Total Shares 85,000,003 100% 95,000,003 100%

Options: Number of Options

All Options proposed to be issued will have an exercise price of 20 cents per share and have a 5 year term

Options to be issued to Directors subject to Shareholder approval following Official Listing 3,000,000

Options to be issued to Midas Consultancy Ltd upon Official Listing 1,000,000

Options that maybe issued to parties assisting in the IPO2 5,000,000

Note 1: The Company currently has 15,000,000 preference shares on issue, which will convert into Shares upon Official Quotation.

Note 2: The Company reserves the right to issue up to 5,000,000 options to any party assisting in this Offer after Official Quotation.

Country around Amphanihy


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Although the proceeds of the Offer are primarily to be used as summarised in the above table, the actual allocation of funds may change depending upon the results of exploration programmes and the analysis of those results, and the timing of the grant of the tenements under application.

Working Capital AdequacyThe Directors consider that the monies to be raised pursuant to the Offer will provide sufficient working capital to carry out its stated objectives set out in this Prospectus.

2.4 Priority Invitation – MRNL ShareholdersAs the formation of MML was supported by MRNL, each MRNL shareholder will be given a priority invitation to acquire a minimum parcel of 10,000 Shares. The Company will make a total of up to 10 million Shares available in priority to MRNL

shareholders. MRNL directors who are MRNL shareholders may elect to participate in the priority invitation as well.

Subject to each MRNL shareholder’s priority invitation to acquire a minimum of 10,000 Shares, the Directors of MML will allocate the 10,000,000 Shares available to MRNL shareholders in their absolute discretion.

2.5 Minimum application under OfferApplications under the Offer must be for a minimum of 10,000 Shares ($2,000) and thereafter in multiples of 1,000 Shares ($200). Applications to subscribe for Shares under the Offer will only be accepted on the Application Form attached to this Prospectus.

Expenditure Minimum Subscription ($8m) Offer ($10m)

Yr 1* Yr 2* TOTAL ($) Yr 1* Yr 2* TOTAL ($)

Exploration Expenditure 1,299,000 951,000 2,250,000 2,129,000 1,971,000 4,100,000

Corporate Costs:

Administration Costs 570,000 650,000 1,220,000 570,000 650,000 1,220,000

Costs of the Offer 650,000 nil 650,000 750,000 nil 750,000

BRGM Acquisition 3,988,000 nil 3,988,000 3,988,000 nil 3,988,000

MASARL Payment 750,000 nil 750,000 750,000 nil 750,000

Working Capital 32,000 nil 32,000 82,000 nil 82,000

TOTAL ($) 7,289,000 1,601,000 $8,890,000 8,269,000 2,621,000 $10,890,000

Available Funds:

Balance of Seed Capital 890,000 890,000 890,000 890,000

Gross Funds raised IPO 8,000,000 8,000,000 10,000,000 10,000,000

TOTAL ($) 8,890,000 $8,890,000 10,890,000 $10,890,000

2.3 Purpose of the Offer and use of fundsThe Company is seeking to raise $10,000,000 pursuant to the Offer.

The table below sets out the proposed use of funds based on achievement of full subscription of the Offer and the Minimum Subscription.

* Year commencing from the date of the commencement of Official Quotation of the Company’s Shares on the Official List of ASX in the case of ‘YR 1’ or the anniversary of that listing in the case of ‘YR 2’.


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2.6 Minimum SubscriptionThe minimum subscription is $8,000,000 (40,000,000 Shares) (“Minimum Subscription”).

None of the Shares offered by this Prospectus will be issued if valid Applications for 40,000,000 Shares are not received. Should valid Applications for 40,000,000 Shares not be received within four months from the date of this Prospectus, the Company will either repay the Application Monies to Applicants or issue a supplementary prospectus or replacement prospectus and allow Applicants one month to withdraw their Applications and Application Monies will be repaid (without interest).

2.7 Lead ManagerThe Offer is not underwritten.

The Company has appointed Element Capital as lead manager to the Offer who will be paid fees as detailed in Section 8.8.

2.8 How to applyIf you wish to invest in the Company complete the Application Form attached to this Prospectus. Completed Application Forms should be returned to the Company’s Share Registry, together with the Application Monies in full, prior to 5.00pm (WST) on the Closing Date. Alternatively complete a paper copy of the electronic Application Form which accompanies the electronic version of the Prospectus which can be found and downloaded from www.malagasyminerals.comCompleted Application Forms and Application Monies should be returned to the Share Registry as follows:

By post to:Malagasy Minerals Limitedc/- Security Transfer Registrars Pty LtdPO Box 535APPLECROSS WA 6953

Or delivered to:Malagasy Minerals Limitedc/- Security Transfer Registrars Pty Ltd770 Canning HighwayAPPLECROSS WA 6153

Refer to the instructions on the back of the Application Form when completing your Application. Cheques must be made payable to ‘Malagasy Minerals Limited – Subscription Account’ and crossed ‘Not Negotiable’. All cheques must be in Australian currency.

The Offer may be closed at an earlier date and time at the discretion of the Directors, without prior notice. Applicants are therefore encouraged to submit their Application Forms as early as possible. However, the Company reserves the right to extend the Offer or accept late Applications.

2.9 Official QuotationApplication for admission of the Company to Official Quotation of the Shares on the Official List will be made within 7 days of the date of this Prospectus.

The fact that ASX may admit the Company to the Official List is not taken in any way as an indication of the merits of the Company or the Shares offered by this Prospectus. ASX takes no responsibility for the contents of this Prospectus.

If ASX does not grant permission for Official Quotation of the Shares within three months after the date of this Prospectus (or within such longer period as may be permitted by ASIC) none of the Shares offered by this Prospectus will be allotted and issued. If no allotment and issue is made, all Application Monies will be refunded to Applicants (without interest).

2.10 AllotmentApplication Monies will be held in trust for Applicants until allotment of the Shares. Any interest that accrues will be retained by the Company. No allotment of Shares under this Prospectus will occur until the Minimum Subscription is reached.

The Company reserves the right to reject any Application or to issue a lesser number of Shares than those applied for. Where the number of Shares issued is less than the number applied for, surplus Application Monies will be refunded (without interest) as soon as reasonably practicable after the Closing Date.

Shares under the Offer are expected to be allotted, and shareholding statements dispatched, on or before the Allotment Date.

2.11 CHESSThe Company will apply to participate in the Clearing House Electronic Sub-register System (CHESS), operated by ASX Settlement and Transfer Corporation Pty Ltd (ASTC) (a wholly owned subsidiary of ASX), in accordance with the Listing Rules and ASTC Operating Rules. On admission to CHESS, the Company will operate an electronic issuer-sponsored sub-register and an electronic CHESS sub-register. The two sub-registers together will make up the Company’s register of Shareholders.

The Company will not issue certificates to Shareholders. Instead, as soon as is practicable after allotment, successful Applicants will receive a holding statement which sets out the number of Shares issued.

A holding statement will also provide details of a security holder’s Holder Identification Number (HIN) (in the case of a holding on the CHESS sub-register) or Shareholder Reference Number (SRN) (in the case of a holding on the issuer sponsored sub-register).

Following distribution of these initial holding statements, an updated holding statement will only be provided at the end of any month during which changes occur to the number of Shares held. Shareholders may also request statements at any other time (although the Company may charge an administration fee).

2.12 Dividend policyThe extent, timing and payment of any dividends in the future will be determined by the Directors based on a number


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of factors, including future earnings and the financial performance and position of the Company.

At the date of issue of this Prospectus the Company does not intend to declare or pay any dividends in the immediately foreseeable future.

2.13 Risk factors of an investment in the CompanyProspective investors should be aware that an investment in the Company should be considered speculative and involves a number of risks inherent with mineral exploration. Section 10 contains details of key risk factors which investors should be aware of. It is recommended that potential investors consider these risks carefully before deciding whether to invest in the Company.

This Prospectus should be read in its entirety as it provides information for potential investors to decide whether to invest in the Company. If you have any questions about the desirability of, or procedure for, investing in the Company please contact your stockbroker, accountant or independent adviser.

2.14 Overseas applicantsNo action has been taken to register or qualify the Shares, or the Offer, or otherwise to permit the public offering of the Shares, in any jurisdiction outside Australia.

The distribution of this Prospectus within jurisdictions outside Australia may be restricted by law and persons into whose possession this Prospectus comes should inform themselves about and observe any such restrictions. Any failure to comply with these restrictions may constitute a violation of those laws.

The Prospectus does not constitute an offer of Shares in any jurisdiction where, or to any person to whom, it would be unlawful to issue this Prospectus.

It is the responsibility of any overseas Applicant to ensure compliance with all laws of any country relevant to his or her Application. The return of a duly completed Application Form will be taken by the Company to constitute a representation and warranty that there has been no breach of such law and that all necessary approvals and consents have been obtained.

2.15 Restricted SharesChapter 9 of the Listing Rules prohibits holders of restricted securities from disposing of those securities or an interest in those securities or agreeing to dispose of those securities or an interest in those securities for the relevant restriction periods. The holder is also prohibited from granting a security interest over those securities.

None of the Shares issued pursuant to the Offer are expected to be restricted securities.

In accordance with the Listing Rules, the Directors expect the ASX may classify the some of the Shares and Options on issue as at the date of this Prospectus as restricted securities.

2.16 WithdrawalThe Directors may at any time decide to withdraw this Prospectus and the Offer in which case the Company will return all Application Monies without interest within 28 days of giving notice of the withdrawal.

2.17 EnquiriesEnquiries relating to this Prospectus or requests for additional copies of this Prospectus should be directed to the Company Secretary at Unit 7, 11 Colin Grove, West Perth, Western Australia 6005 or by telephoning (08) 9463 6656.

Granite intrusive near Ambatolampy south of Antananarivo


madagascar:project areas

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the company’s projects3.1 OverviewHistory, Physiography, Culture & Government

Madagascar is located in the Indian Ocean off the eastern coast of southern Africa, separated from the mainland by the Madagascar Channel. It is the fourth largest island in the world, approximately 1600km in length and 500km in width, comprising some 590,000 square kilometre’s; approximately equivalent to the size of the state of New South Wales, Australia.

Due to its size, Madagascar is comprised of several distinct geographic regions, a high central plateau, largely deforested tropical east coast, scrubby savannah lowlands along the west coast, and desert in the south. The topography is generally hilly, the thick jungle regrowth of the east coast providing a logistically difficult environment in which to operate.

The Tropic of Capricorn passes across the south of the island; hence it is subject to frequent cyclonic weather in the December to June period, particularly along the east coast.

Madagascar has an ethnically diverse population of approximately 18 million people, comprising peoples of Indo-Asian, African, Arab, Indian and Portuguese origin. The dominant ethnicity within Madagascar are the Merina people, a group predominantly of Indonesian origin. They comprise the highlanders, occupying the central highland plateau of Madagascar, with people of African descent occupying the coastal parts of the country; Arabian and Portuguese in the extreme north. Additionally, Indians are ubiquitous throughout Madagascar.

Madagascar is officially bilingual; French being the language of government, business and the educated elite, with Malagasy comprising the official ‘local’ language. English is taught in schools but is not widely spoken outside of business and government circles. The average official literacy rate is 70%.

The capital of Madagascar is Antananarivo (‘Tana’ / ‘Tananarive’) a city of approximately 1,500,000 people located in the central eastern area of the island. The name means ‘a thousand towns’ and the city layout resembles a ‘growing together’ of numerous smaller population centres. Located approximately 150 kilometres inland from the central – eastern coast of Madagascar, Antananarivo lies at an elevation of just over 4000 ft above sea level.

Subsequent to 65 years of French colonial rule, Madagascar gained its independence in 1960. Despite an ongoing association with the former Soviet Union during the following two decades, the French maintained a reasonably strong presence that continues to this day. Madagascar is governed under a unitary, bicameral system comprising a National Assembly (Lower House) and a Senate, overseen by an Executive branch comprising a directly elected President and a Prime Minister and PM-appointed Cabinet. The current President is Marc Ravalomanana, a successful businessman who has put a priority on integrating Madagascar into the international community. Having decisively won the most recent national election in December 2006, Mr Ravalomanana is well positioned to continue with his progressive reform programme.

Mineral Sector & Legal Framework

The minerals sector and mining law generally are currently well advanced on a programme of comprehensive restructuring, a process likely to be ongoing for some time.

The International Monetary Fund and the World Bank have previously proposed a USD38.65M programme, the ‘Mineral Resources Governance Project’, to facilitate reform of the Malagasy minerals sector. This programme is far-reaching, encompassing significant taxation reform, geologic, geochemical and geophysical mapping programmes and promotion of private investment in the Malagasy mining sector.

At the instigation of the World Bank, a new mining code was promulgated in 1999, followed in 2000 by a decree on the conditions of application. In conjunction with this step, the ‘Bureau du Cadastre Minière de Madagascar’ (also known as the ‘Mining Cadastre Registry’); was established in May 2000. The Mining Cadastre Registry is designed to serve as a ‘one-stop tenement office’ for mining operators.

The mineral tenement database has successfully been upgraded to a fully computerised database. The tenement research and application regime is now quite transparent and largely free from much of the opacity and associated uncertainties of the previous system.

A detailed discussion of the regulations and application of mineral tenure in Madagascar is included in this document at Section 6.

3.2 Geological setting & mineralisation potentialMadagascar comprises a fragment of the African Plate, rifted from the vicinity of Tanzania at the time of the break-up of Gondwana some 200 million years ago. At that time Madagascar remained joined with India; moving east-by-south until the late Cretaceous (i.e. approximately 70 million years ago), whereupon the two land masses split apart.

The eastern two-thirds of Madagascar is composed of Precambrian basement complex of Archaean to Neoproterozoic age (the Malagasy Shield). The rocks provide a record of the opening and closing of a major Neoproterozoic ocean and mountain building event during the assembly of Gondwana. This amalgamation formed one the largest orogenic belts known on the planet, the East African Orogen, stretching from the Middle East to southern Africa, a distance of 7,000km. In Madagascar, a series of accreted Proterozoic terraines were thrust over a fragment of Archaean basement, thought to have once been part of the Dharwar Craton of India. These orogenic belts and associated thrust sheets show variable but generally high (upper amphibolite to granulite facies) metamorphic deformation.

Nonconformably overlying the crystalline rocks of the Malagasy Shield is a sequence of Upper Palaeozoic to middle Mesozoic sediments. These unmetamorphosed sediments comprise the western third of the country and are dominated by the Karoo Supergroup, so named due to its known similarity and presumed correlation to its namesake sequence in South Africa. Various components of the Karoo sediments host the bulk of known uranium and coal occurrences in Madagascar.


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Madagascar is interpreted as having undergone several periods of structural deformation in the mid-Proterozoic to early Palaeozoic, equating with the amalgamation of Gondwanaland. In its latter stages, this process was associated with the intrusion of granite and later pegmatite. A major resultant feature of this formational process is the NW-SE striking Bongolava - Ranotsara Shear Zone, a sinistral structure which truncates the Malagasy Shield over a 400km extent and has been correlated with equivalent structures on the African mainland and Sri Lanka.

Subsequent rifting associated with the separation of India and Madagascar in the late Mesozoic resulted in numerous volcanic events of varying composition.

Initial orogenic activity provided the driving force for metalliferous mineralisation within Madagascar, with subsequent early Palaeozoic granite intrusions and Cretaceous rhyolitic volcanism providing a primary source for uranium and the various gemstones for which the country is so well known.

There are a wide variety of mineral deposits in Madagascar, including precious, base and strategic metals, non-metalliferous and gemstones. The vast majority of these however can be classified only as occurrences, as few have been mined or explored sufficiently to delineate them for tonnage and grade.

Nickel, Copper, Cobalt and PGE

Examples of known nickel mineralisation in Madagascar currently comprise lateritic deposits, the abovementioned Ambatovy project being the most advanced. Additionally, recorded (historical) lateritic nickel mineralisation occurs at nearby Bemainty (also called ‘Nickelville’), located northwest of the eastern port of Tamatave. To the south, extensive nickel – cobalt laterites also occur along the central eastern coast in the Mananjary region, with known resources just inland from Mananjary at Valozoro. From historical records of the Geological Survey of Madagascar, these deposits average in the range of two (2) and five (5) million tonnes at 1.3% to 1.75% nickel (NB: whilst these mineralisation quantifications are included for reference and information purposes, the reader is cautioned that these are historical figures; that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration in these areas will result in the determination of a Mineral Resource.)

Nickel sulphide occurrences within Madagascar are poorly recorded. Through separate joint venture agreements, (AIM-listed) Jubilee Platinum are currently active at

their Ambodilafa project in the Valozoro region, their Londokomanana project in the Andriamena massif north of Tana and the Itsindra / Lanjanina project west of Ambodilafa. These programmes are all targeting intrusive-related Ni-Co-PGE mineralisation, with Itsindra additionally targeting skarn-hosted Cu-Pb-Zn-Mo mineralisation.

According to historical records of the Madagascar Geological Survey, modest deposits of copper occur at Ambatovarahina (approximately 250,000 T averaging 4.75% Cu) in central Madagascar southeast of the Capital, Besakoa (Vohibory area - approximately one million tonnes averaging 0.6% Cu) adjacent to Company projects in the south and Daraina in the extreme north. These are generally hydrothermally generated polymetallic deposits with a Cu-Pb-Zn-(Ag) association. Surface indicators commonly manifest as Cu-rich gossans (NB: whilst these mineralisation quantifications are included for reference and information purposes, the reader is cautioned that these are historical figures; that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration in these areas will result in the determination of a Mineral Resource).

No significant occurrences of PGE’s are currently known within Madagascar. PGE’s are known to occur within comparatively small (i.e. 1 to 5 km long x 1 to 2km wide) ultramafic intrusives of dunitic to pyroxenitic composition (e.g. Andriamena Cr deposit). PGE concentrations in these environments are in the range of 50 to 100 ppb (Pt + Pd), with historical nickel-copper values in drilling in excess of 2% nickel and 0.4% copper. Additionally, the abovementioned Jubilee Platinum are exploring PGE occurrences within their various tenement holdings in central and eastern Madagascar.

On the available evidence the most likely model for economic PGE mineralisation occurrence within Madagascar is the Country Rock Contamination Type. At Noril’sk and Voisey Bay (two of the largest Ni-Cu-PGE deposits in the world), sulphur saturation is attributed to contamination of the magma by sulphur or silica from rocks with which the magma comes into contact. Felsic and sedimentary rocks may cause this contamination. Conduits or feeder zones through which magma is fed into the intrusion are important sites of potential contamination and sulphide accumulation. Sulphides may collect in embayments in the feeder zone or at the entrance and/or floor of an intrusion where the relatively heavy sulphide droplets settle out of the magma. The sulphides become progressively enriched in metals through reaction with fresh batches of magma passing through the conduit.

Intrusions that host Ni-Cu-PGE deposits have a variety of forms ranging from large layered intrusions such as the Bushveld Complex to dykes and sills, e.g. the Great Dyke, Pechenga and Noril’sk, or smaller complex intrusions such as Lac des Iles and Voisey Bay. The anorthosite host intrusive at Voisey Bay is also found within the Company’s Ampanihy Project. Initial prospecting around the margins of these bodies has yielded indications of Pt-Pd mineralisation associated with Cu locally along the intrusive margin.

Coal

Deposits of coal in Madagascar are primarily found in the south-central region of the country, within sediments of the Karoo Supergroup. The coal-bearing Sakoa Member of the Madagascar Karoo is equivalent to its counterparts on the African mainland.

Gondwana supercontinent showing Madagascar in red


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figure 1:

Composite geological map of Ampanihy, Vohibory & Miary projects


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Within the Sakoa Member, a vast coalfield stretching over 100 kilometres, termed the ‘Sakoa Coal Measures’ occurs centred approximately 150 kilometres east of the town of Tulear. The Sakoa coal comprises bituminous or “black’ coal, a variety midway in quality between lignite (‘brown coal’) and anthracite or ‘coking’ coal. Bituminous coal is also commonly referred to as ‘thermal’ or ‘steaming’ coal.

Historical exploration in the Coal Measures dates from the 1920s; with mining taking place at Andranomanintsy (Sakoa Field) during WW2 and the 1950s with a total combined production of approximately 50,000 tonnes. The Sakoa and Sakamena Basins were subsequently explored by various parties over an eleven – year period from 1979; also in the general area of the Andranomanintsy mine.

3.3 MML priority projectsRanking & Key Targets within Primary Projects

Exploration tenure comprises eight (8) projects covering approximately 6,300 square kilometres of mineral tenure within 114 permits in southern and central Madagascar. Five (5) of these permits totalling 181 square kilometres, were granted subsequent to the completion of the Independent Geologists Report in Section 5 of this Prospectus.

The MML tenement portfolio is prospective for commodities as diverse as coal, nickel, copper, cobalt, silver, base metals, manganese, ilmenite (titanium) and silica. In order to enhance the opportunities for early exploration success the Company has ranked all of its projects; with a decision to focus primarily on the top five (5) projects in the first 12 months after completion of the Offer.

(a) Ampanihy (Ni-Cu-PGE)

Nickel sulphide targets delineated with strong similarities •to Voisey’s Bay

Coincident surface geochemical and aeromagnetic •anomalism indicating possible sulphide-hosted Ni-Cu (+/-PGE) mineralization

Early results from sampling of sulphides: 0.67% Ni; 0.64% •Cu; 0.12% Co; 26ppb (Pt+Pd)

Immediate follow up targets from geophysical •interpretation and surface geochemistry

Planned exploration (2 yrs): A$1.0M including 6,000m •drilling

(b) Ianapera Coal

• ProjectoverlieseasternportionofSakoaCoalFieldwithextensive mapped coals beds of the southern Ianapera Coal Basin

• MMLholdsapproximately22strikekmofcoalbedswithinthe Ianapera basin

• Recentstrongcompetitorinterestinadjacentcoalprovince; ≤ AU$394m in two (2) acquisition transactions in last four months (Straits Resources Ltd. U$45m –

≤U$225m & Asia Thai Mining C$141M) to develop direct extraction projects

• Currentdatasuggestsgenerallyimprovedsubsurfacestrike and depth continuity to mapped coal seams. Seam thicknesses (Sakoa-Sakamena) range from one (1) to 12 metres. The Ianapera situation may exhibit similar to identical characteristics

• Historicalfeasibilitystudiesdemonstrateviabilityofunderground extraction, amenability to beneficiation and trans-shipping

• Coalexhibitscomparativelyinexpensiveexplorationand delineation costs, with respective hole densities of 1,000m2 & 500m2 being sufficient for indicated & inferred category resources (average hole depths – 50 – 200 metres)

(c) Vohibory (Cu-Zn-Ag-[Au])

Polymetallic ‘Besshi’-type VMS mineralisation targeted. •(Historical production from Japanese Besshi deposit comprised 30 million Tonnes averaging 2.5% Cu; 0.3% Zn; 7gpt Ag & 0.2gpt Au)

Numerous surface Cu-mineralisation indications suggest a •possible new Cu-Zn-Ag VMS mineralisation district

On-strike between historical (Cu) production (Besatrana) •centre and recent anomalous competitor drilling (21m @ 0.7% Cu; 1.1% Zn; 0.5gpt Au; 21gpt Ag)

MML surface sampling in late 2007: results of up to 29% •Cu; 175g/t Au and 2,000ppm Ni; 100ppm Cu; 40ppb Pt from rock chips and 110ppm Cu; 15ppb Au from soils within defined mineralisation corridor over 20km

Planned exploration (2 yrs): A$730K including 4,500m •

drilling (Coal & VMS)

(d) Satrokala (Ni-Co)

Lateritic Ni-Co mineralisation targeted of similar style as •Dynatec Ambatovy Project in Madagascar

Observed lateritic nickel development in regolith - •historical sampling assays in nickel-bearing horizons of up to 0.60% Ni

25 strike kilometres of prospective lithologies within the •project tenements

Planned exploration (2 yrs): A$546K including 3,400m •drilling

(e) Mananjary Regional (Cu-Ni-PGE)

Conceptual targeting of Noril’sk mineralisation styles•

Large tenement holding close to (eastern) coast – •amenable to airborne geophysical interpretation and regional geochemical sampling evaluation

Planned exploration (2 yrs): A$911K including 5,100m •drilling


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figure 2: Composite plan magnetic imagery of Ampanihy, Vohibory & Miary projects

Ampanihy Project (Cu-Ni-PGE)

Location and Tenure

The Ampanihy Project is the second largest of the Company’s projects. Centred north of its namesake town of Ampanihy in south-central Madagascar, the project comprises a total of 56 permits of 1,775 sq km area, covering approximately 80km of regional strike. The permits are 100% beneficially owned by MML, with title held by MDA.

Geology, Exploration History and Targets

The project overlies a prominent 20km wide zone of folded and assemblage of graphite and quartz-feldspar schists (<60% graphite), quartzite and marble units, with lesser intercalated amphibolite and leucogneiss. This zone, termed the Ampanihy Belt is a core component of the Neoproterozoic Graphite System. The belt is interpreted as a ductile shear zone accreted from rocks of both sedimentary and volcanic origin. Strong localised copper and manganese mineralisation are observed in association within the graphite schists and marble units.

Two large intrusions of lenses of Proterozoic anorthosite (i.e. labradorite – each approximately 20km in diameter), Ankafotia in the north and Saririaky in the south, intrude the central Ampanihy belt about 70km apart. The lensoid shape of the anorthosites within this belt suggests that there may be low pressure zones around the bodies (e.g. orthogonal the compressional stress direction), which could be loci for mineralisation.

Sampling of the Ampanihy Anorthosite bodies has found sulphides in the form of disseminated crystals (0.5-1mm) and small blebs (10-20cm) of massive sulphides, the latter returning results up to 0.67% Ni, 0.64% Cu, 0.12% Co, 26ppb (Pt+Pd) and 21ppb Au.

A program of stream sediment sampling to identify areas anomalous in base and precious metals was concluded in mid 2004; with follow up programmes completed in 2005. Results highlight a number of areas that are anomalous in Ni/Cu/Co/Cr with one area anomalous in Au and several others anomalous in Pt and Pd.

The surrounding rocks are mapped as folded meta-sediments (some of which are noted as sulphide-bearing) with numerous small serpentinite and pyroxenite intrusions. In addition, numerous occurrences of manganese mineralisation are noted in the suture zone.

The Ankafotia (Ianapera) anorthosite, covering approximately 75sq km, is elliptical with marble and graphite bands running parallel to its outcropping margin. Preliminary exploration around this intrusion found blebs of copper and nickel sulphides containing nickel (0.54%), copper (0.42%), and cobalt (980ppm) in waste material around a quarry at its northern tip. Along the eastern margin, gossanous manganese mineralisation up to 26% Mn was encountered locally associated with moderately anomalous copper-gold (300ppm-60ppb respectively). Inspection of the in-situ anorthosite in the quarries has revealed the presence of disseminated sulphides throughout, but few blebs and stringers, while the soil in the area is pale reflecting the


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Figure 3: Detailed aeromagnetics and geochemical - Ianapera

Figure 4: Detailed aeromagnetics and geochemical - Maniry


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dominant feldspar bedrock. Observed magnetic character of the sulphide assemblage indicates the efficacy of utilising aeromagnetic data to assist in identifying target areas.

The southern body Saririaky (Maniry), is larger (i.e. ~100sq km) and more circular, but again the bands of graphite and quartzite closely parallel its margin. The rocks along the eastern contact of central Saririaky anorthosite appear to iron-enriched though not anomalous in base metals.

MRNL commissioned Fugro Surveys to undertake local aeromagnetic and radiometric surveying over the immediate area of the Ianapera and Maniry intrusives in 2004. MML subsequently commissioned detailed interpretations of the aeromagnetic data over these areas; which has delineated several areas of probable low pressure ‘centres’, some of which are associated with copper anomalism.

MML subsequently commissioned Southern Geoscience to conduct a detailed interpretation of the Fugro survey data, the results of which successfully outlined several areas of coincident aeromagnetic and geochemical anomalism. These data are displayed in figures 3 and 4, for Ianapera and Saririaky areas respectively. Strongly coincident with existing geochemical anomalism, they have the best potential to delineate early drill targets.

There are a number of similarities between the Ampanihy Anorthosites and the geological environment at Voisey’s Bay in eastern Canada. Voisey’s Bay sulphide-hosted Ni-Cu mineralisation lies within a troctolite body (i.e. an intrusive rock of mafic composition composed primarily of olivine and plagioclase feldspar), part of an anorthosite suite (intrusive rock of plagioclase and mafic mineral composition) that has intruded along a major suture zone. The mineralisation is attributed to metalliferous magma that became enriched in sulphides as it passed though sulphide-bearing country rocks.

The significant factors associated with the Voisey’s Bay deposit includes:

• amajorsuturezone,

• anorthositeandtroctoliterocksand

• sulphide-bearingcountryrocks

There are a number of similarities between the Voisey Bay area and southwest Madagascar including:

• amajorstructure,

• anorthositeandtroctoliterocks,

• countryrocks,someofwhicharesulphide-bearingand

• NiandCusulphideswithintheanorthositesandtroctolite.

Based on apparent similarities with the Voisey Bay area, the Ianapera and Maniry anorthosite bodies in southwest Madagascar, with confirmed Ni and Cu sulphides, are considered prospective for nickel and copper (and associated gold-PGE).

Proposed Exploration Program & BudgetIn the first instance, it is proposed to assess areas of known Ni-Cu-PGE (surface geochemical) anomalism around interpreted ‘low-pressure’ zones along the margins of the anorthosite bodies. Following completion of the interpretation of existing airborne magnetic data, Southern Geoscience have indicated that completion of airborne aeromagnetic and VTEM surveys will be highly effective in detecting concealed sulphide bodies around the anorthosites. This will be undertaken as a complement to the surface geochemical sampling currently underway. The objective will be to have multiple drill targets defined by mid-2008 to allow initial drilling to be completed prior to the onset of the 2008/09 wet season. The proposed budget for Ampanihy A$1.02M and allows for the completion of nearly 6,000 metres of drilling on the first 18 months after completion of the Offer.

Vohibory-Ianapera Project (Coal, Cu-VMS)

Location and Tenure

The Vohibory-Ianapera Project comprises three (3) permits of 24 Squares covering a total of 150sq km, located 140km east-southeast of Tulear. The permits are 100% beneficially owned by MML, held under title by MDA. They were granted in early to mid February 2005 for 10 years.

Geology, Exploration History and Targets - Ianapera coal basin

The project lies within amphibolites and quartz-feldspar gneisses of the Vohibory System, nonconformably overlain by coal and red-beds of the Sakoa Member of the Karoo Supergroup. Within the Sakoa formation a vast bituminous coalfield extending in excess of 100 kilometres in strike extent has developed in the Ampanihy region. The coalfield encompasses several basins (northeast to southwest): Imaloto, Ianapera, Sakoa and Sakamena; the latter two being the largest and best developed; having previously been mined prior to 1960 (i.e. ‘Andranomanintsy’ - 30,000 tonnes averaging 17% ash and a calorific content of 6,500 cal/ton – refer Figure 5).

The Vohibory Project overlies the southern portion of the Ianapera Coal Basin, located ENE of the adjacent Sakoa Basin. Coal beds of the Ianapera Coal Basin outcrop semi-contiguously over the central and southern portions of the tenement area. MML is currently evaluating the potential of its coal holdings via assessment of historical data and direct field prospecting.

There has been a significant increase in interest in the Sakoa Coalfield of late. Australian company Straits Resources Limited have recently paid A$41M for a 35% stake in a 500 square kilometre tenement block covering the Sakoa and Sakamena Coal Basins to the west of Ianapera. Additionally, Thailand-based Asia Thai Mining have paid C$141M to acquire the Malagasy mineral assets of (TSX-listed) Pan African Mining; the primary asset being approximately 600 square kilometres of tenements overlying the Sakoa-Sakamena area adjacent to the Straits acquisition. These holdings abut MML tenements to the west, with Pan African having completed drilling and limited materials testing of the coal seams as recently as the end of 2006.


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The Sakoa coal comprises bituminous or “black’ coal, a variety midway in quality between lignite (‘brown coal’) and anthracite or ‘coking’ coal. Bituminous coal is also commonly referred to as ‘thermal’ or ‘steaming’ coal. The Coal Measures are characterised by multiple seams of varying thickness from under 1 metre to 12 metres. Several seams of 4 to 5 metres thickness are known to strike continuously for segments in excess of 10 km.

Composition of individual seams is variable; frequently containing mudstone partings. Coal is (characteristically) of an alternating light and dull banded habit and is weathered to an average depth of 10 metres BNS. Intercalated sediments comprise feldspar rich (arkosic) sandstones and mudstones. The beds generally dip between 20 and 30 degrees and are characterised by quasi-regional (NNW-SSE) faulting at intervals of several kilometres. These faults do not seem to translate into higher density local faulting however; leaving individual segments of the seams relatively intact.

Coal quality is variable between individual seams. Inherent moisture content averages 2% to 3%, ash content from 15% to 35% (NB: averaging 17% - dry) and sulphur content fairly low at under 1%. Volatiles average 20% to 30% (raw – dry basis) with calorific content varying inversely to ash content, between 5,000 kcal/kg to >7,000 kcal/kg. As no dolerite intrusives have been mapped within the Measures, it is not anticipated that devolatised coal will be encountered.

Pan African reports that washability tests completed on coal seams in the southern Sakoa Field produced a 70% - yield product of 13.5% ash and 6,550 kcal/kg.

Prior feasibility studies conducted as recently as 1989 concluded that the average seam dips would not be problematic for mining extraction, and that coal from the thicker (i.e. ≥4m true thickness) seams was amenable to beneficiation; with trans-shipment to the coast and subsequent ship loading not presenting particular problems. Improved technology and economics in today’s pricing regime would likely enhance these conclusions.

Noteworthy from the Pan African-commissioned recent studies are (i) the significantly inadequate amount of exploration testing conducted across the Sakoa Field outside of the Andranomanintsy area, and (ii) the below-ground consistency (and sometimes improvement) in thickness and continuity of mapped beds; the latter factor related to the abovementioned depth of weathering of the residual regolith. These observations are applicable across the entirety of the Coal Measures, inclusive of the MML holdings over the Ianapera Coal Basin.

Review of historical mapping data (refer Figure 5) indicates that some cumulative 22 strike kilometres of coal seams of the southern and central Ianapera Coal Basin lie within the Vohibory Project tenements. In view of the outcomes of historical and recent studies of the Sakoa Coal Field it is suggested that potential exists to delineate a reasonable black (thermal) coal resource within the central and southern portions of the Vohibory Project.

This asset will therefore be assessed as a priority in conjunction with exploration programmes targeting polymetallic VMS mineralisation to the north and east. MML has obtained coal rights to its permits in this area and intends to aggressively explore and develop the coal potential of this area.

Follow up of the coal potential within the Ianapera Basin will comprise a programme of detailed geological mapping prior to broad-spaced drilling (average collar density of 800 metres), with the objective of delineating a contained resource at the earliest opportunity.

Polymetallic Cu-VMS

The project lies within amphibolites and quartz-feldspar gneisses of the Vohibory System; partially overlain nonconformably by coal and red-beds of the Sakoa Member of the Karoo Supergroup. The assemblage adjoins the eastern margin of the Beseva granite-pegmatite intrusive. The amphibolites contain numerous intercalated ultramafic units; generally chromite-layered serpentinite lenses; the assemblage being interpreted as remnant oceanic crust. There are strong similarities between the Vohibory amphibolites/ultramafic assemblage and similar ophiolitic units in Ethiopia, Kenya and Tanzania and more importantly along strike in Mozambique.

Numerous gold, copper and related (Zn-Ag) mineralisation occurrences are recorded along the Beseva-Vohibory boundary. These occur within a defined sub-contiguous corridor that follows the approximate intrusive contact trend (e.g. refer Figures 5 and 6). The prominent flexure zone adjacent to the eastern ‘apex’ of the mineralisation corridor (Figure 6) remains untested by drilling. Additionally, the eastern project area overlies the northern portion of a N-S corridor of similar mineralisation occurrences.

To the northwest, the historical Besatrana (shear-hosted) polymetallic Cu-Zn-Ag-Au mine reportedly (i.e. Madagascar Geological Survey) produced approximately 6,000 tonnes of ore averaging 3.5% copper plus associated silver, gold and antimony. It lies at the northern extremity of the western ‘wrap-around’ corridor.

To the south is the Besakoa polymetallic Cu-Zn-Ag Project, owned by Canadian-listed Majescor Resources. Exploration drilling in late 2006 by Majescor returned intersections up to 21 metres grading 0.70% Cu; 1.1% Zn; 0.50gpt Au & 21gpt Ag. The main sulphide lens in this area reportedly averages up to 10 m in true thickness over a minimum 500 m strike length, and is open at depth. Recent limited resampling by Majescor of 1950s vintage BRGM drill core returned values up to 65gpt Ag and 2gpt Au.

In November and December 2007, MML completed a programme of surface geochemical sampling at Vohibory comprising minus 80-mesh soil sampling and rock chip grab sampling. These works have returned results of up to 29% Cu;

Ianapera coal sample


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Sampling at Vohibory Prospecting at Vohibory

figure 5: Summary geological map of the Vohibory Project area showing interpreted extent of coal-bearing beds and known (VMS) mineralisation corridors


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175g/t Au (eastern corridor) and 2,000ppm Ni; 100ppm Cu; 40ppb Pt from rock chips and 110ppm Cu; 15ppb Au from soils (western corridor – refer Figures 5 & 6). It is noteworthy that the 29% Cu; 175g/t Ag sample was collected from a zone located 10km north of the Besakoa intercept within the same mineralisation corridor.

With the availability of good quality regional aeromagnetic data and Landsat Imagery, subsequent field work will target aeromagnetic anomalies and mineralised areas delineated from surface geochemistry/prospecting. In particular, the distinct ‘wrap-around’ of the regional lithologies and mineralised trends suggest strong potential for ‘flexure’ zones within which significant zones of mineralisation could be developed.

Proposed Exploration Program & Budget

The presence of known concentrations of sulphides coincident with areas of mineralisation will allow use of detailed airborne magnetic and VTEM geophysical survey data as well as existing aeromagnetic data. These data will be utilised in conjunction with geological mapping and surface geochemical sampling of mineralised areas.

The objective will be to generate initial drill targets in sufficient time frame to allow completion of initial drill holes prior to the onset of the 2008/09 wet season. The proposed budget for Vohibory allows for 4,500 metres of drilling in the first 18 months after completion of the Offer. Phase I of MML’s exploration strategy will focus on the following:

figure 6: Total Magnetic Intensity (TMI) image of the Vohibory Project area showing known mineralised trends and location of MML and competitor exploration and results


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Coal

• Completesurfacegeologicalmappingfollowedbybroadspaced (i.e. average 800 metre collar centres) drilling of identified coal seams for early delineation of inferred resources over defined target areas.

Cu-VMS

• Completesurfacegeochemicalsamplingofprospectiveareas along the Beseva-Vohibory contact zone and Besakoa-Ianapera mineralisation trend.

• CompletedetailedairbornemagneticandVTEMsurveyingof the project area and carry out a detailed structural interpretation of the area based on the geophysical data and Landsat imagery.

• AssessareasofknownCu-Zn-Ag-Au(streamsediment)anomalism around the margins of the Beseva Granite Pegmatite for massive sulphide VMS-type mineralisation through mapping, and ground geophysics such as EM.

• Drillingofpreliminarytargetsinthearea(theobjectivewillbe to have multiple drill targets defined by mid-2008 to allow initial drilling to be completed prior to the onset of the 2008/09 wet season).

Phase II is contingent on positive results being delivered in Phase I, and includes a provision for exploratory RC/DC drilling. A total of A$730K has been budgeted for the first two years post-IPO at Vohibory.

Mananjary Regional (Ni-Cu-PGE)

Location and Tenure

The Mananjary Regional Project comprises 43 permits totalling just over 3,600 sq km in area. It is located along the central-eastern seaboard of Madagascar, extending for over 350 kilometres and centred on the towns of Mananjary and Manakara. The northern tenement group is located to the southeast of Jubilee Platinum’s Ambodilafa (Ni/Cu/PGE) project.

The Mananjary Regional Project area overlies rugged and densely vegetated eastern coastal margin of Madagascar. Consequently, access within the project areas is difficult; necessitating the use of helicopter support to facilitate mobility.


The Mananjary Regional Project tenements overlie a variable sequence of (Cretaceous) flood basalts and rhyolite in the north (Area ‘A’ – Ambodilafa South Group) and (Proterozoic) quartz-feldspar gneisses and schists in the south (Area ‘B’ – Manakara Group); the latter frequently intruded by charnockites and amphibolites. Some of these intrusives may be of noritic composition. In the extreme south of the project area is the Ranomena area, overlying Proterozoic gneisses of charnockite composition intruded by syenite with subsequent igneous / volcanic activity in the form of charnockite intrusives and rhyolite volcanics.

The voluminous Cretaceous flood basalts underlying the Ambodilafa South Group (refer Figure 7) have parallels with Analalava in the extreme north of Madagascar where Ni-Cu-PGE’s are known to be associated with gabbroic intrusives.

Geologists working in the region recently postulated an analogy with Noril’sk style mineralisation for this area.

Historical regional stream sediment sampling by the BRGM north of Mananjary originally identified the Ambodilafa gabbroic intrusive; currently under exploration by (AIM-listed) Jubilee Platinum. Drilling in 2006 by Jubilee Platinum returned intercepts up to 2 metres grading 1.3% Ni; 0.31%Cu & 0.31gpt 2PGE. Exploration continues within this area, which also hosts the (historical) Bebasy gold operation, recent surface sampling of which returned results up to 48gpt Au.

The regional scale BRGM work was never followed up, and the possibility exists that additional intrusives of charnockite –gabbroic composition intrude the Androyen schists and gneisses south of Ambodilafa and are exposed within the Cretaceous rhyolites and basalts that underlie the Company’s Ambodilafa South tenements.

To the south, government of Madagascar magnetic data suggest sills of (Cretaceous) pillow basalts occur within the eastern margin of the Proterozoic basement gneisses within the Manakara group. This interpretation is consistent with the known presence of numerous intrusive sills of charnockite composition in this area.

Unlike the above Area ‘A’ to the north, Area ‘B’ (Manakara) remains essentially unexplored yet contains similarly prospective lithological assemblages to those both within the area the area that hosts the Ambodilafa Project and with other areas of Ni-Cu-PGE prospectivity in Madagascar (e.g. Analalava).


MML plans to utilise airborne geophysical data (aeromagnetics & EM) combined with the (proven effective) technique of regional stream geochemical sampling, to delineate prospective areas. By dividing the Mananjary Regional Project into three (3) distinct zones, the Company will be better able to target each area systematically and sequentially.

Depending on the results of initial exploration, MML has budgeted for 5,200 metres of follow up drilling of any targets identified from initial exploration programmes. A total of A$0.91M has been budgeted to Mananjary.

Satrokala Project (Ni-Co)

Location and Tenure

Satrokala is located 50km northwest of Ihosy, in south-central Madagascar. It comprises a single permit of 413 sq km, beneficially owned 100% by MML through MDA. The Satrokala Project is located in a region of moderate topographic relief. Vegetation cover is primarily grassland as the forests have been previously denuded by indigenous logging operations. Access is via the National Highway to the town of Ihosy south of Fianarantsoa, and thence via local unsealed roads and tracks connecting various small settlements.


The Satrokala Project overlies a Proterozoic sequence of intercalated ultramafics, micaschists, amphibolites,


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figure 7: mananjary regional project area


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satrokala project area

bekisopa project area


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garnetiferous quartz-feldspar schists and quartzite units of the Androyen and Vohibory Systems. The project was acquired for postulated nickel-cobalt potential; historical assessment having demonstrated potential for development of nickeliferous laterite. Initial sampling by the Madagascar Geological Survey returned up to 0.60% Ni from observed garnierite horizons. Garnierite is a nickel-bearing mineral common in weathered material overlying Ni-prospective ultramafic rocks.

Lateritic nickel – cobalt mineralisation is developed in the residual regolith overlying serpentinised cumulates. Weathering processes acting upon these rocks produce the residual regolith profile in which the nickel concentration is commonly increased from 0.20% to 0.25% bedrock concentration to in excess of 0.5% to 3% Ni.

Areas of moderate topographic relief, where residual regolith profiles are best developed (i.e. thickest), provide the most prospective target areas for nickeliferous laterite deposits. Additionally, since vertical percolation of meteoric water is a primary formational mechanism of this style of mineralisation, regions of comparatively higher density faulting / fracturing of the bedrock are generally more prospective.

Vertical zonation within nickeliferous laterite is distinct, with nickel content generally increasing with depth. Garnierite, the principal saprolite nickel host mineral, is a variety of serpentine, a silicate mineral developed below base of total oxidation in the weathering profile. Overprinted on the saprolite is an iron oxide zone of massive, microscopic scale goethite (limonite) needles termed ‘ferralite’. This zone is characterized by higher iron and manganese and lower magnesium content than the saprolite (garnierite) horizon. The presence of higher proportions of manganese oxides (‘asbolite’) can frequently result in bonanza grades of cobalt (up to 3% locally), which readily incorporates into the asbolite crystal structure.

The uppermost portion of the profile is characterised by hematite replacing limonite/goethite in a higher oxidation environment. Where indurated, this zone is termed the ‘carapace’. The comparatively rigid crystal structure of hematite precludes the incorporation of larger metal cations such as nickel and cobalt and as such the carapace is notably deficient in these elements.

The carapace and ferralite zones are commonly referred to by the collective term ‘Laterite’, whilst that portion of the profile below base of total oxidation is termed ‘Saprolite’.

The primary characteristic of lateritic nickel mineralisation is that it occurs very near surface and is essentially flat-lying. This allows for effective assessment via shallow vertical drilling. Consequently, the existence of clearly defined target areas will allow the Company to rapidly progress Satrokala to a decision point on either resource development or relinquishment.

Approximately 25 to 30 strike kilometres of potentially prospective ultramafic units have been mapped within the Satrokala project permits; variably overlain by laterite.


Given the nature of the postulated target (i.e. Ni-Co laterite), initial follow-up techniques will comprise detailed

interpretation of aeromagnetic data in the first instance. The project is readily accessible, and overlies open country of moderate topographic relief. This will facilitate completion of geological mapping and geochemical sampling programmes to complement the project scale interpretive works. Additionally, historical indications of garnierite mineralisation will allow early targeting of drill holes.

The Company has planned an aggressive programme incorporating 3,400 metres of drilling in the first 18 months post - IPO.

3.4 MML other projects

Bekisopa Project (Ni-Co)

Location and Tenure

Located 150km west of Fianarantsoa, and comprising two (2) semi-contiguous permits, totalling 88 sq km, the Bekisopa (formerly Soatanimbary) Project was granted over the period February to July 2005 for a period of 10 years. Both permits are beneficially owned by MML under title of MDA.


The Bekisopa Project overlies a Proterozoic sequence of intercalated ultramafics, micaschists, amphibolites, marbles and quartzite units of the Androyen and Vohibory Systems. Whilst there are numerous ultramafic bodies in Madagascar, few have been tested for Ni and PGE’s. The Bekisopa permit covers a 5km long stratiform ultramafic body with reported garnierite outcrops.

Although assay results from MRNL (2005) reconnaissance sampling were inconclusive, historical work by the Malagasy Geological Survey reported visible garnierite in weathered ultramafics. This work was not followed up. Additionally, observations from MML field assessment work at Bekisopa indicate potential for development of Ni-Co bearing laterite.


Given the nature of the postulated target (Ni-Co laterite), initial follow-up techniques will comprise detailed interpretation of aeromagnetic data in the first instance. Additionally, the defined extent of the known ultramafic units (to which the lateritic Ni-Co mineralisation will be restricted) will allow early targeting of drilling programmes. The MML project budget for Bekisopa allows for 2,100 metres of drilling in the first instance to allow a timely decision regarding prospectivity of the area.

Anjeba Project (U-Th under application)

Location and Tenure

Located in the extreme south of Madagascar, approximately 300km southeast of Tulear, near the town of Jafaro, the Anjeba project comprises a sub-contiguous set of two (2) permits totalling nine (9) permits for 56.25sq km. Beneficial ownership resides with the Company, with title held in the name of MDA.


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Anjeba Project overlies Proterozoic amphibolites and orthopyroxenites of the Androyen System, immediately east of their disconformable contact with the younger Graphite System. The country rocks have been intruded by early Palaeozoic granites, whilst intercalated phlogopite, orthopyroxenite and quartzite units are ubiquitous in the country rocks.

Subsequent to MRNL assessment in 2005, the Anjeba Project area has returned encouraging indications of uranium-thorium mineralisation. Scintillometer readings up to 2,000cps combined with anomalous (13.5ppm) thorium in soil indicate that the orthopyroxenites units adjacent to the granitic intrusives may host uranothorianite mineralisation.

Androyen orthopyroxenites have provided the host for the bulk of historical uranothorianite mining in Madagascar and these units within the Anjeba Project area will be the focus of initial follow-up exploration programmes.


Anjeba has been selected for early assessment to determine retention or relinquishment. The focus will be on surface geochemical testing of orthopyroxenites located in proximity to granite intrusives in the southern project area. The main priority will be to follow up areas that have returned anomalous scintillometer responses from (2005) MRNL programmes.

The MML project budget for Anjeba incorporates between 350 and 1,300 metres of follow up drilling depending on (i) the results of surface follow up programmes and (ii) responses returned from initial drill programmes.

Miary Project (Mn)

Location and Tenure

The Miary Project comprises a single permit of 25 sq km. The permit was granted in late January 2005 for a term of 10 years. It is located 30km east of the southern extremity of the Ampanihy project. Minerals under title include Ni-Cu-Au, with an application for Mn and other minerals lodged by MML in 2006.


The Miary Project lies within a portion of the Bekily Belt, which adjoins the Ampanihy Belt to the east. The tenements cover an area of known historical manganese mineralisation, within a sequence of graphite schists, migmatites and quartzites of the (Proterozoic) Graphite System. Additionally, the prospect lies along strike to the north of the Mahambahy anorthosite (gabbro) intrusive. Two small anorthosite lenses occur to the south and east. The country rock units are interpreted as orogenic supracrustal material.

Proposed Exploration Program

The Miary Project is a relatively small project designed to look for manganese (+/-graphite) mineralisation. Additionally, the proximity of the anorthosite/gabbroic intrusives may indicate Cu-Ni mineralisation potential.

Miary has been identified for early assessment to determine retention or relinquishment. It is proposed to focus on surface geochemical sampling and follow up of reported historical manganese occurrences with limited drilling in the first instance of 730 metres.

anjeba project area Typical manganese outcrop in the Miary – Ampanihy region


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Majunga Project (Ilmenite)

Location and Tenure

Located on the northwest coast of Madagascar, 35km southwest of the port city of Majunga, the Majunga Project comprises a single permit of four (4) permits totalling 25.0 square kilometres. The exploration (RP) permits were granted in March 2005 for a period of 10 years. They are beneficially owned by the Company with title held by MDA.


The Majunga Project is located in an area prospective for Quaternary alluvial – hosted ilmenite mineralisation (mineral sands). Early assessment of the project has indicated a favourable mineralisation environment. An additional advantage is provided by proximity to significant coastal port facilities. Majunga is located in an area of environmental sensitivity, a factor which may complicate project advancement going forward. However the strength of the experience base of the MDA management team should allow effective negotiation of any regulatory hurdles.

No systematic field programmes have been completed by MRNL over this area; the permits were acquired on the knowledge that they contain deposits of ilmenite-rich sands and that MRNL possesses significant expertise in the development of such deposits.


It is initially planned to utilise the expertise of MDA personnel (Toliara Sands Project) to conduct an initial first-pass assessment of this project. The exploration rationale involves surface mapping and auger sampling in the first instance, followed by metallurgical testing of any ilmenite-bearing material delineated. Favourable results from this exercise will allow transition to targeted drill testing of prospective areas. A total of 660 metres drilling have been allocated for this purpose.

majunga project area


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Vohibory Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m

Activity Year 1 (A$) Year 2 (A$) Year 1 (A$) Year 2 (A$)

Drilling (Total Cost) 120,000 110,000 280,000 276,000

Surface geochemistry & mapping 25,000 15,000 25,000 15,000

Geophysical surveys & data interpretation 25,000 14,000 25,000 15,000

Field plant & equipment 15,000 15,000 15,000 15,000

Travel & accommodation 10,000 10,000 15,000 10,000

Staff & contractors 15,000 15,000 15,000 15,000

Tenement costs 5,000 6,000 57,000 6,000

Total 215,000 185,000 377,000 352,000

Mananjary Regional Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m




Geophysical surveys & data interpretation 70,000 - 70,000 -




Tenement costs 55,000 34,000 55,000 34,000

Total 300,000 200,000 451,000 460,000

Satrokala Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 3,000 4,000 3,000 4,000

Total 156,000 144,000 256,000 290,000

3.5 Project budgets

Ampanihy Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 57,000 49,000 57,000 49,000

Total 294,000 256,000 522,000 480,000


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Bekisopa Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 2,000 3,000 2,000 3,000

Total 107,000 98,000 177,000 197,000

Anjeba Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m


Drilling (Total Cost) 44,000 - 81,000 78,000






Tenement costs 2,000 3,000 2,000 3,000

Total 99,000 41,000 136,000 119,000

Miary Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 1,000 1,000 1,000 1,000

Total 61,000 26,000 87,000 72,000

Majunga Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m


Drilling (Total Cost) 24,000 - 82,000 -

Surface geochemistry & mapping 11,000 - 10,000 -


Field plant & equipment 5,000 - 5,000 -

Travel & accommodation 10,000 - 10,000 -

Staff & contractors 10,000 - 10,000 -

Tenement costs 1,000 1,000 1,000 1,000

Total 67,000 1,000 123,000 1,000


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3.6 Proposed exploration programs and budget summaries

3.7 Operations – Labradorite Dimension Stone

Labradorite Operations (Dimension Stone)

Location and Tenure

MML holds significant tenement interests over both the Ankafotia (northern) and Saririaky (southern) anorthosite bodies. The two tenement blocks are centred 40km apart, along a NNE-SSW trend. They are centred approximately 170km ESE of Tulear in the south-central portion of Madagascar. At Ankafotia (Ianapera) in the north, the Company controls approximately 50% of the permits covering the anorthosite body. At Saririaky (Maniry) in the south, MDA holds title to some 90% of permits over the lithologies of interest. All permits covered by labradorite contracts are of exploitation (i.e. mining) type. They were granted in 2002 and are valid for 40 years. Beneficial ownership of the Permits resides with the Company, with tenement title held by MDA.

Geology and Production History

Labradorite is a calcium-rich variety of feldspar that exhibits an attractive internal refractance (termed ‘schiller’) akin to that seen with opal. Colour reflectance exhibits a mottled habit that varies between green, gold and blue, with the latter being most common.

MML, through its acquisition of MDA, has agreements with three (3) entities, giving the latter rights to mine labradorite-bearing anorthosite dimension stone from the two gabbroic anorthosite intrusives within the Ampanihy tenement group.

Two Italian companies (MAGRAMA SARL & EUROMAD SA) are operating two quarries for a combined production of approximately 3,000 metric tonnes per year. In addition, one Indian company (SQNY International) is preparing a further quarry and plans to be in production during 2007. Metallicmineral rights to all optioned Permits remain with MML / MDA.

The labradorite operations comprise a key aspect of the MML strategy going forward; providing valuable pre and after completion of the Offer cash flow to the Company, with a high likelihood of long operational life and increased cash flow in the medium to longer term. This will be utilised in providing a cash flow subsidy to operational funds.

Summary by Project: Minimum Subscription A$8m Maximum Subscription A$10m

Project Year 1 (A$) Year 2 (A$) Total (A$) Year 1 (A$) Year 2 (A$) Total (A$)

Ampanihy Group 294,000 256,000 550,000 522,000 480,000 1,002,000

Vohibory 215,000 185,000 400,000 377,000 352,000 729,000

Satrokala 156,000 144,000 300,000 256,000 290,000 546,000

Bekisopa 107,000 98,000 205,000 177,000 197,000 374,000

Mananjary Regional 300,000 200,000 500,000 451,000 460,000 911,000

Anjeba 99,000 41,000 140,000 136,000 119,000 255,000

Miary 61,000 26,000 87,000 87,000 72,000 159,000

Majunga 67,000 1,000 68,000 123,000 1,000 124,000

Total 1,299,000 951,000 2,250,000 2,129,000 1,971,000 4,100,000

Summary by Activity Type: Minimum Subscription A$8m Maximum Subscription A$10m

Activity Year 1 (A$) Year 2 (A$) Total (A$) Year 1 (A$) Year 2 (A$) Total (A$)

Drilling (Total Cost) 598,000 507,000 1,105,000 1,418,000 1,515,000 2,933,000

Surface geochemistry & mapping 154,000 70,000 224,000 153,000 70,000 223,000

Geophysical surveys & data interpretation 176,000 49,000 225,000 175,000 50,000 225,000

Field plant & equipment 78,000 74,000 152,000 88,000 84,000 172,000

Travel & accommodation 80,000 73,000 153,000 82,000 73,000 155,000

Staff & contractors 87,000 77,000 164,000 87,000 78,000 165,000

Tenement costs 126,000 101,000 227,000 126,000 101,000 227,000

Total 1,299,000 951,000 2,250,000 2,129,000 1,971,000 4,100,000


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3.8 BRGM – Madagascar: Acquisition & Ongoing Co-OperationOn 6th August 2007 a Memorandum of Understanding was signed with BRGM (a French state owned company) in respect of acquiring certain of their assets in Madagascar. These include a 19,000 square-metre block of land in northern Antananarivo, incorporating substantial (resource-related) building infrastructure and existing drilling and assaying businesses, also included in the acquisition. The total price of the transaction is EUR2,000,000, exclusive of statutory taxes and charges.

Subsequent to completion of the MOU, MML and BRGM negotiated the Business Sale Agreement and Long Term Lease. These were completed utilising two of the Company’s wholly-owned MML subsidiary companies, and were executed on 13th December 2007. Under the terms of these agreements the operating (drilling & assay) businesses were valued at EUR500,000 with the remaining EUR1,500,000 ascribed to the Long Term Lease for a period of 99-years; renewable for a further 99 years. Should the property laws in Madagascar change in the future in respect of foreign land ownership, MML may elect to have BRGM transfer the lease land as freehold title to the Company or its nominated subsidiary for no additional consideration.

Labradorite in outcrop - Ianapera Polished section of labradorite

Labradorite showing gold ‘schiller’ Magrama quarrying operations at Maniry


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malagasy land & buildings (to be acquired from BRGM)


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The BRGM business assets to be acquired include drilling rigs and support equipment as well as extensive maintenance and storage facilities, light and support vehicles and experienced personnel. Combined annual costs in respect of the latter average AUD40,000.

The property itself contains (i) MML office facilities, (ii) expatriate residences and (iii) several third party leases; all of which provide revenue to BRGM. Post-acquisition these revenues will flow to the Company.

The primary advantages to MML of acquiring the BRGM operations include:

• Availabilityof3drillingrigstoexpeditedrillingofMMLprojects,

• Availabilityofin-countryassayingfacilitytoutiliseonan arms-length basis through third-party farm-in and development.

• Accesstoexperiencedtechnicalstaffandindustryintelligence.

• Longterm99yearleaseoverexistingbuildings,officesand premises covering 19,000 sq m of commercial property in the capital of Madagascar, suitable for long term utilization and commercial redevelopment.

It is intended to develop a joint venture drilling company with an experienced drilling operator, so that the Company’s drilling operations will be autonomously managed, and to ensure that the Company has priority availability of drilling rigs. This arrangement will allow the Company to benefit from the experience and skills set of the drilling operator without losing focus on its core activities of exploration and mineral resource delineation.

Likewise it is intended to seek the participation of an experienced assay laboratory to operate and upgrade the laboratory facility on an arm’s length basis. This will provide the Company with a modern laboratory to serve its assaying needs in Madagascar.

3.9 Social Responsibility, Community Development and the Environment

MML and its partners have an established track record in local community support, both generally and in its own area of operations. These efforts are spread amongst several priority areas: education and training, health, environmental management and community participation.

Social Responsibility and Community Development

MML has a commitment to recruit and train local personnel of all skill levels, providing training and personal/professional development. The Company views this policy both as an investment in its operations and a way to facilitate the sharing of the benefits of direct resources investment in Madagascar amongst the local community.

The Company actively recruits young professional graduates directly from the local universities. Additionally the company’s

partners have constructed a school at Maniry in the southern part of the Ampanihy Project.

Safety, Health and Environment Policy

MML is committed to protecting the health and safety of everybody who play a part in our operations or who lives in the communities in which we operate. MML policy recognises that (i) land is generally occupied or used by local communities and (ii) the natural environment is important and should not be significantly altered without first understanding it.

Additionally, the safety of the people with whom our company comes in contact is of paramount importance. This goes beyond the implementation of first-world standards in actual work programmes, but also extends proactively into the areas of safety training and preventative health services.

MML seeks to earn the trust of the people in our areas of operations and to be recognised as a responsible corporate citizen.

BRGM (MML) drilling rig & crew in the field


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board and management4.1 Directors’ profilesThe names and details of the Directors in office at the date of this Prospectus are:

Mr Max Dirk Jan Cozijn B.Com ASA, MAICD (Age 58) Director, Chairman – Finance Director & Company Secretary

Mr Cozijn graduated from the University of Western Australia in 1972 with a Bachelor of Commerce degree and is an Associate of the Australian Society of Certified Practising Accountants. He has over 30 years experience in the administration of listed mining and industrial companies. Mr Cozijn is Finance Director and Company Secretary of Metex Resources Ltd, Non-Executive Chairman of Oilex Ltd and Finance Director and Company Secretary of Magma Metals Limited.

Mr Steven Goertz BSc (Geology), MAusIMM / MAIG (Age 47) Managing Director

Mr Goertz graduated from the University of British Columbia in 1986 with a Bachelor of Science in Geology and is a corporate member of both the Australasian Institute of Mining and Metallurgy and the Australian Institute of Geoscientists. He is a geologist with 25 years experience in exploration and mining in Canada, Australia, New Caledonia, Philippines and Madagascar. During this time Mr Goertz has worked in a variety of management and operational roles involving a diverse range of commodities and mineralisation styles, including gold, silver, base metals, PGE’s, nickel, cobalt, antimony and gemstones. He has been involved with Madagascar since 1999 when he began developing a project concept for the country. Mr Goertz’s services have been retained through his consulting company as detailed in the Material Contracts Report in Section 8.

Mr Guy Francois Marie Le Clezio BA (Age 52) Non-Executive Director

Mr Le Clezio holds a Bachelor of Arts from the University of Western Australia. He has had 20 years experience in the mining and exploration industry and was an Executive Director of Eyres Reed Ltd and Canadian Imperial Bank of Commerce who were leading Western Australian stockbrokers specialising in the mining industry. He is a founding director of MRNL.

Dr Peter James Woods BScH / PhD (Geol), MAIG (Age 61) Non-Executive Director

Dr Woods holds a Bachelor of Science (Honours) and a Doctorate of Philosophy (Geology) from the University of Western Australia. He has had over 20 years experience in the mining and exploration industry specialising in base metals, gold and industrial minerals, and as a consulting environmental scientist. He has worked in Madagascar since 1994 and in that time discovered the 710 million tonne Ranobe mineral sand deposit currently the subject of a bankable feasibility study being carried out by Exxaro of South

Africa. He is a founding director of MRNL and a member of the Australian Institute of Geoscientists.

4.2 Country Manager ProfileMr Jules LeClezio Country Manager – Madagascar (Age 55)

Mr Le Clezio has been MRNL’s representative in Madagascar since 1996. He has been responsible for establishing and overseeing of all administrative, public relations and logistical functions of MRNL and its subsidiary companies. He was an integral part of the team that found the Ranobe deposit and a key negotiator in finalising the various contracts in respect of labradorite operations within the Company’s tenements. He is fluent in English and French and has a good working knowledge of mineral exploration in Madagascar. Mr Le Clezio’s services have been retained through his consulting company as detailed in the Material Contracts Report in Section 8.

Church at Ampanihy


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independent geologist’s report

7 May 2008

The DirectorsMalagasy Minerals LimitedUnit 7, 11 Colin GroveWest Perth WA 6005Australia

Dear Sirs,

RSG Global Pty Ltd (“RSG Global”) has been commissioned by Malagasy Minerals Limited (“MML”) to provide an Independent Geologist’s Report on mineral exploration properties located in Madagascar in which MML has, or is earning, an interest. This report is to be included in a Prospectus to be lodged with the Australian Securities and Investments Commission (“ASIC”) on or about the 23rd of May, 2008, offering for subscription 50,000,000 Shares at an issue price of 20¢ per Share (the “Prospectus”), to raise a total of $10,000,000 (before costs associated with the issue). The funds raised will be used for the purpose of exploration and evaluation of the mineral properties.

RSG Global has not been requested to provide an Independent Valuation, nor have we been asked to comment on the Fairness or Reasonableness of any vendor or promoter considerations, and we have therefore not offered any opinion on these matters.

RSG Global has based its review of the MML projects on information provided by MML, along with technical reports by Government agencies, previous tenements holders, and other relevant published and unpublished data. A site visit was undertaken to the projects by the primary author Vincent Morel between the 18th April and 29th April 2007. A final draft of the report was also provided to MML, along with a written request to identify any material errors or omissions prior to lodgement. Where appropriate, and in accordance with ASIC Practice Note 55 and Update 183, consent has been obtained to quote data and opinions expressed in unpublished reports prepared by other professionals on the properties concerned.

The MML projects are understood to consist of 109 granted Exploration Permits covering an aggregate area of approximately 6,148 square kilometres. The legal status

of the Exploration Permits is addressed in Section 7 of this Prospectus. These matters have not been independently verified by RSG Global. The present status of tenements listed in this report is based on information provided by MML, and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation.

The Independent Geologist’s Report has been prepared in accordance with the Code and Guidelines for Assessment and Technical Valuation of Mineral and Petroleum Assets and Mineral Securities for Independent Expert Reports (“The Valmin Code”), which is binding upon Members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the rules and guidelines issued by such bodies as the ASIC and Australian Stock Exchange (ASX), which pertain to Independent Expert Reports.

The mineral properties, in which MML has an interest, are considered to be “Exploration Projects” which are inherently speculative in nature. RSG Global considers, nonetheless, that the projects have been acquired on the basis of sound technical merit. The properties are also considered to be sufficiently prospective, subject to varying degrees of exploration risk, to warrant further exploration and assessment of their economic potential, consistent with the proposed programs.

Exploration and evaluation programs summarised in the report amount to a total expenditure of approximately $4.10 million of which MML plans to spend approximately $2.12 million in the first year of assessment. MML intends to raise $10 million, and at least half the liquid assets held, or funds proposed to be raised by MML, are understood to be committed to acquisition, exploration, development and administration of the mineral properties, including those not referred to in this

RSG Global Consulting Pty Ltd

Head Office: 1162 Hay Street

West Perth WA 6005

P O Box 1671 West Perth WA 6872

Telephone: +61 8 9324 8800 Facsimile: +61 8 9324 8877

Email: [email protected] Web: http://www.rsgglobal.com

RSG Global Consulting Pty Ltd (ACN 121 184 290) trading as RSG Global (ABN 14 121 184 290)

P E R T H J O H A N N E S B U R G A C C R A


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report, satisfying the requirements of ASX Listing Rules 1.3.2(b) and 1.3.3(b). RSG Global also understands that MML has enough working capital to carry out its stated objectives, satisfying the requirements of ASX Listing Rule 1.3.3(a). MML has prepared staged exploration and evaluation programs, specific to the potential of the reported projects, which are consistent with the budget allocations. RSG Global considers that the relevant areas have sufficient technical merit to justify the proposed programs and associated expenditure satisfying the requirements of ASX Listing Rule 1.3.3(a). The proposed exploration budget also exceeds the anticipated minimum annual statutory expenditure commitment on the various project tenements.

The Independent Geologist’s Report has been prepared on information available up to and including 30 April 2008. RSG Global has provided consent for the inclusion of the Independent Geologist’s Report in the Prospectus in the form and context in which the report and those statements appear, and has not withdrawn that consent before lodgement of the Prospectus with the ASIC.

RSG Global is an integrated mineral industry consulting firm, which has been providing services and advice to international mining companies and financial institutions since 1987. The primary author of this report, Mr V.P.I. Morel, is a professional geologist with more than 14 years experience in the exploration and evaluation of mineral properties within Australia and elsewhere internationally. Mr Morel is a Senior Consultant with RSG Global, and a Member of the AIG. Mr Morel has the appropriate relevant qualifications, experience, competence and independence to be considered an “Expert” under definitions provided in the VALMIN Code, however has less than the required five years experience in uranium geology and uranium exploration.

Neither RSG Global, nor the author of this report, has or has had previously, any material interest in MML or the mineral properties in which MML has an interest. Our relationship with MML is solely one of professional association between client and independent consultant. This report is prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this report.

Yours faithfully

RSG Global Pty Ltd

Vincent Morel

Exploration Projects Manager - International


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Executive SummaryRSG Global Consulting Pty Ltd (RSG Global) has been commissioned by Malagasy Minerals Limited (MML) to provide an Independent Geologist’s Report for inclusion in a Prospectus to facilitate the listing of MML on the Australian Stock Exchange. MML holds a 100% interest, through it’s a wholly owned subsidiaries MADA-AUST SARL (MDA) and Mazoto Minerals SARL (MZT), in the Ampanihy, Vohibory, Miary, Anjeba, Bekisopa, Satrokala, Mananjary and Majunga projects in Madagascar.

Property

MML’s exploration land tenure comprises 109 permits covering approximately 6,148 square kilometres of mineral tenure. These are grouped into 8 projects established to explore for a diverse range of commodities.

The project areas include the Vohibory Project (Cu, Zn, Ag, Au, coal), the Ampanihy Project (Cu, Ni, PGE), the Anjeba Project (U-Th) and the Miary Project (Mn) in southern Madagascar; it also includes the Bekisopa (Ni-Fe), Satrokala (Ni) and Mananjary Regional Project (Ni-Cu) in central Madagascar, and the Majunga Project (heavy mineral sand ilmenite- zircon -rutile) in north western Madagascar. MML operates all these projects from a central office in Antananarivo and a regional office in Toliary, in south western Madagascar. The south west Madagascar projects (Ampanihy, Vohibory, Miary and Anjeba) represent some sixty two permits totalling 2006.25km2.

The central Madagascar projects include the Bekisopa, Satrokala and Mananjary Regional projects, and are total some forty six permits covering 4,116.4km2.

The Majunga Project in the north western part of Madagascar comprises a single license of 25km2.

Location

The south western projects are located in Toliary Province of southwest Madagascar, approximately 1000 kilometres from the country’s capital city of Antananarivo. They are centred on the town of Ampanihy. The town of Ampanihy can be accessed from the RN7 via the RN10, and is located roughly 150km south of Andrianavory. The Vohibory area can be accessed by road from the RN10 to Lazarivo via Betioky. The Miary project is located some 30km east of the southern extremity of the Ampanihy project whereas the Anjeba Project is located in the extreme south of Madagascar, approximately 300km southeast of Toliary, near the town of Jafaro.

The central Madagascar projects, Bekisopa and Satrokala, are situated in southern central Madagascar, 150km west of Fianarantsoa, on the central plateau adjacent to the eastern edges of the Morondava Basin and on the margins of the Horombe Plateau some 50km NW of Ihosy, respectively. The Mananjary Regional Project is located along the central-eastern seaboard of Madagascar, north and south of the town of Mananjary.

The Majunga Project is located on the northwest coast of Madagascar, 35km southwest of the port city of Majunga.

Ownership

Under the terms of a Share Sale Agreement entered into with Madagascar Resources NL (MRNL) on 4th April 2007, MML has agreed to acquire 100% of the issued capital of MDA for a consideration of 10,000,000 preference shares in MML, plus A$2.2 million in cash, with A$750,000 payable upon successful listing of MML, and the balance being payable out of 70% of the net Royalty receipts due under the existing three Labradorite Royalty agreements. The share sale agreement is conditional upon MML listing by 31 July 2008, and is secured by way of an escrow over the MDA shares.

The Ampanihy project comprises a total of 56 permits of 1775km2 area, covering approximately 70km of regional strike, whereas the Vohibory Project comprises three permits covering a total of 150km2. The Miary and Anjeba projects comprise a single permit of 25km2 and a sub-contiguous set of two permits totalling 56.25km2, respectively.

MML, through its acquisition of MDA, has agreements with three entities, giving the latter rights to mine labradorite-bearing anorthosite dimension stone from the two gabbroic anorthosite intrusives within the Ampanihy tenement group.

The Bekisopa project comprises two contiguous permits, totalling 87.5km2. The Bekisopa project was granted over the period February to July 2005 for a period of 10 years.

The Satrokala project comprises one permit, totalling 412.896km2. The tenements were granted on the 11th of July 2007 for a term of 5 years; renewable for a further 5 years. The permit is beneficially owned by MML under title of MDA.

The Mananjary Project area consists of a large (3,616.4km2) group of tenements, centred primarily on the Mananjary region to the south of Jubilee’s Ambodilafa (Ni/Cu/PGE) project. The permits will be beneficially owned by MML under title of MDA and MZT.

The Majunga Project comprises a single permit totalling 25km2. The exploration (PR) permits were granted in March 2005 for a period of 10 years.

All permits are 100% beneficially owned by MML, through wholly-owned subsidiary companies in Madagascar.

Geology and Mineralization

The eastern two thirds of Madagascar are underlain by Precambrian rocks, sporadically intruded by Cretaceous through Neogene basalts and rhyolites, whereas the western third is composed of two large basins of mid-Palaeozoic to Recent sedimentary rocks. Different continental blocks of Indian and African origin amalgamated at ±550Ma to build the present architecture of the Island.

The Precambrian basement of Madagascar consists of a variety of lithologies and tectono-metamorphic units probably derived from the Rodinia supercontinent which began to break up at ±800Ma. The structures in this basement are related to those of the Mozambique Belt which is a major Pan-African continental collision zone.

Broadly defined, all the south-western and south central projects are located within three terrains or “systems”:


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Androyen System – This is the basal (oldest) terrain and consists of a highly metamorphosed sequence characterised by the predominance of quartz-feldspar gneiss and migmatite (‘leptynites’), with lesser intercalated quartzite, pyroxenite and amphibolite units.

Graphite System – Stratigraphically, the Graphite System overlies the Androyen gneisses and migmatites. The lithologies are characterised by graphite-rich schists and gneiss, granitic and gabbroic intrusive activity and a broad range of metamorphic grades ranging from upper greenschist to granulite facies.

Vohibory System – this (uppermost) assemblage differs from the older two systems in that it is dominated by amphibolite and pre-Palaeozoic basaltic lavas. The Vohibory System is noted for its importance as a host to a comparatively high concentration of economic mineral deposits; particularly polymetallic copper-zinc and gold.

Madagascar contains numerous historical mineral occurrences and resources, many of which are now the target of modern exploratory investigations.

The most significant (metallic) mineral deposits currently known within Madagascar are:

The Andriamena chromite deposit, located 150km north of Tana, where chromite concentrate is being extracted at an average rate of 100Kt of concentrate / year. The operation is controlled by the ‘Société Kraomita Malagasy’ (known as ‘KRAOMA’), a formerly ‘parastatal’ entity recently privatised under World Bank / IMF reforms.

The Fort Dauphin ilmenite deposit located at Toalagnaro (formerly Fort Dauphin) on the SE coast. This (Rio Tinto [QMM] / OMNIS – joint venture) project is currently awaiting environmental approval. This project is scheduled to commence operations by the end of 2008; with a planned initial annual production rate of 750,000 tonnes of ilmenite and 25,000 tonnes of zircon and an estimated mine life of 40 years. A similar style deposit is located along the south coast approximately 45km to the west of Toalagnaro. It is owned by Phelps Dodge but remains largely undeveloped to date.

The Toliara (Ranobe) mineral sands deposit on the SW coast of Madagascar. Currently managed by a subsidiary of MRNL, the project is under option to South Africa’s Exxaro (formerly Kumba) Resources Ltd., who are currently completing a feasibility study subsequent to a successful 10,000m drilling programme. In 2006, MRNL calculated a resource of 710MT averaging 6.3% heavy minerals (‘HM’). Exxaro is assessing the project as potential additional feed for its (formerly Ticor SA-owned) smelting operations at Richard’s Bay (SA).

The Ambatovy lateritic Ni/Co deposit located ENE of Tana, and controlled by Canadian-based Dynatec Corporation (75%) and Sumitomo Metals (25%). Dynatec have recently completed a US$20M feasibility study and a US$1.2B fundraising preparatory to moving into production. Scheduled to commence production in late CY2009 and containing reported resources of 125Mt grading 1.04% Ni and 0.099% Co, the project has an estimated life of 27 years at an average metal production of 59kT nickel and 5.3kT cobalt. Start up capital costs are estimated at USD2.5B, with a projected production cost per pound nickel of USD0.77 after by-product credits. The World Bank estimates the project will generate export earnings of USD185M pa.

Modest deposits of copper occur at Ambatovarahina in central Madagascar southeast of Antananarivo (252,000 T @ 4.75% Cu), Besakoa (Vohibory) adjacent to MML projects in the south (1MT @ 0.6% Cu) and Daraina in the extreme north. These are generally hydrothermally generated polymetallic deposits with a Cu-Pb-Zn-(Ag) association. Surface indicators commonly manifest as Cu-rich gossans.

Examples of known nickel mineralisation in Madagascar currently comprise lateritic deposits, the abovementioned Ambatovy project being the most advanced. Additionally, recorded (historical) lateritic nickel mineralisation occurs at nearby Bemainty (also called ‘Nickelville’), located northwest of the eastern port of Tamatave (1.6MT @ 1.3% Ni). To the south, extensive nickel – cobalt laterites also occur along the central eastern coast in the Mananjary region, with known resources just inland from Mananjary at Valozoro (3.7MT @ 1.75% Ni). From historical records of the Geological Survey of Madagascar, these deposits average between two (2) and five (5) million tonnes at 1.3% to 1.75% nickel. These historical resources are described for reference and information purposes only, the reader is cautioned that there has been insufficient exploration to define a Mineral Resource and that it is uncertain if further exploration in these areas will result in the determination of a Mineral Resource.

No significant occurrences of PGE’s are currently known within Madagascar. PGE’s are known to occur within comparatively small (i.e. 1 to 5km long x 1 to 2km wide) ultramafic intrusives of dunitic to pyroxenitic composition (e.g. Andriamena Cr deposit). PGE concentrations in these environments are in the range of 50 to 100ppb (Pt + Pd).

During the 1950s, there was a significant thorium industry based on uranothorianite-bearing (ortho)pyroxenites in south-eastern Madagascar. These deposits generally contain just under 0.5% mineral by host-rock volume, with the ore mineral composition averaging between 50% and 75% thorium and 3% to 25% uranium.

The bulk of known coal deposits in Madagascar occur within the Permian Sakoa Formation, the basal member of the Karoo Supergroup. Coal deposits in the country comprise lignite and bituminous shales, with no anthracite currently recorded.

Numerous deposits of gold occur throughout Madagascar. These include Ampanihy in the south, Andavakoera in the northeast, Farafangana and Mananjary on the central East Coast, Maevatanana in the central northwest and Miandrivazo-Dabolava in the central west.

Field investigations and rock chip sampling by MRNL of the pyritic leptynite units in the Besakoa and Vohibory areas of the Vohibory Belt, and the anorthosite bodies in the Ampanihy Belt to the east, indicate that these areas have potential to host Ni/Cu/Co, Au/Cu, and Cu/Pb/Zn mineralisation.

Review of BRGM and Department of Energy and Mines data indicate the presence of Au/Cu and Cu/Pb/Zn mineralisation associated with major faults within the Proterozoic of the Vohibory Belt, around Vohibory and Besakoa. In addition a number of anorthosite/troctolite bodies are mapped in the north-trending Ampanihy Belt, immediately to the east. Previous work in these areas has confirmed the presence of:


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Au/Cu mineralisation at Vohibory.

Au/Cu/Pb/Zn mineralisation at Besakoa.

Cu mineralisation associated with ultramafic bodies in the Vohibory Belt.

Ni/Cu/Co sulphides in a northern anorthosite (Ankafotia).

Anomalous Au (0.25g/t) in a southern troctolite (Anabohitsy).

The Majunga project is a heavy minerals project situated in broad alluvial plains overlying Karoo sediments deposited into the Majunga Basin. The Karoo sediments are composed of basal terrigenous fluvial sediments (argillites and sandstones), epicontinental evaporitic sedimentary units, and overlying calcareous marine platform sediments.

Exploration Status

The exploration status of all the project areas is at grass roots stage, as no systematic and sustained exploration has been carried out in the past by any of the historical explorers.

MML’s exploration objective will be to have defined multiple drill targets by the middle of the initial field season through systematic remote sensing, surface geochemistry and reconnaissance mapping, to allow initial drilling to be completed prior to the onset of the 2008/09 wet season.

The Majunga Project is a grass-roots project for which early assessment by MRNL has indicated a favourable mineralisation environment. The project area, however, is located close to an area of environmental sensitivity, and hence an environmental management plan will have to be established prior to commencing exploration activities.

Conclusions and Recommendations

Reconnaissance field work by MRNL and regional work carried out under the auspices of the BRGM has confirmed the existence of an array of mineral occurrences for various commodities throughout the Proterozoic rocks of south-western Madagascar.

Given the lack of basic geophysics data or up-to-date mapping, and the logistical difficulties of mapping and sampling a relatively large area (100km by 150km), airborne geophysics is seen as a valuable tool to be used in assessing the potential of the Vohibory and Ampanihy Belts, followed by focussed soil sampling and reconnaissance stream sediment sampling.

Smaller projects such as Miary, Anjeba, and Bekisopa represent grass roots projects with very small land holdings, and have been selected for early assessment to determine retention or relinquishment.

5.1 IntroductionRSG Global Pty Ltd (‘RSG Global’) has been commissioned by Malagasy Minerals Limited (‘MML”) to provide an Independent Geologist’s Report on mineral exploration properties in Madagascar in which MML has an interest. This report is to

be included in a Prospectus to be lodged with the Australian Securities and Investments Commission. The MML Projects comprise 109 licences covering approximately 6,148 square kilometres of mineral tenure. These are grouped into 8 projects.

Under the terms of a Share Sale Agreement entered into with MDA on 4 April 2007, MML has agreed to acquire 100% of the issued capital of MDA for a consideration of 10,000,000 preference shares in MML, plus A$2.2 million in cash. Of this A$750,000 is payable upon successful listing of MML and the balance being payable out of 70% of the net Royalty receipts due under the existing three Labradorite Royalty agreements. This sale agreement is conditional upon MML listing by 31 July 2008, and is secured by way of an escrow over the MDA shares.

The legal status of the MML Projects is addressed in Section 7 of the Prospectus. These matters have not been independently verified by RSG Global. The present status of tenements listed in this report is based on information provided by MML and the report has been prepared on the assumption that the tenements will prove lawfully accessible for evaluation.

RSG Global has based its review of the MML properties on information provided by MML, along with technical reports by government agencies and previous tenement holders, and other relevant published and unpublished data. MML has prepared reports summarising previous exploration activities and these reports are listed with other principal sources of information in the Bibliography. Technical translations were independently completed by the author.

A site visit was undertaken to the Madagascar Projects by the primary author in April 2007. RSG Global has made all reasonable enquires to establish the authenticity and completeness of the technical data on which it has relied. A final draft of the report was also provided to MML, along with a written request to identify any material errors or omissions, prior to lodgement.

Where appropriate, and in accordance with ASIC Practice Note 55 and Update 183, consent has been obtained to quote opinions expressed in unpublished reports prepared by other professionals on the properties concerned. The Independent Geologist’s Report has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (‘The VALMIN Code’), which is binding upon Members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG), and the rules and guidelines issued by such bodies as the ASIC and Australian Stock Exchange (ASX), which pertain to Independent Expert Reports.

The Independent Geologist’s Report has been prepared on information available up to and including 30 April 2008. RSG Global has provided consent for the inclusion of the Independent Geologist’s Report in the Prospectus in the form and context in which the report appears and has not withdrawn that consent prior to lodgement of the Prospectus with the ASIC.

RSG Global is an integrated mineral industry consulting firm, which has been providing services and advice to international mining companies and financial institutions since 1987.


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The primary author of this report is Mr V.P.I. Morel, who is a professional geologist with more than 14 years experience in the exploration and evaluation of mineral properties within Australia and elsewhere internationally. Mr Morel is a Senior Consultant with RSG Global, and a Member of the AIG.

In general circumstances Mr Morel has the appropriate relevant qualifications, experience, competence and independence to be considered an ‘Expert’ under the definition provided in the VALMIN Code, however has less than the required five years experience in uranium geology and uranium exploration.

Neither RSG Global, nor the author of this report, has or has had previously, any material interest in MML or the mineral properties in which MML has an interest. Our relationship with MML is solely one of professional association between client and independent consultant. This report is prepared in return for professional fees based upon agreed commercial rates and the payment of these fees is in no way contingent on the results of this report.

5.2 Background Information

5.2.1 Geography and Demographics

Madagascar is the fourth-largest island in the world, with an area of 587,040km2, extending 1,601km NNE–SSW and 579km ESE–WNW. The island is located off the southeast coast of Africa, and is separated from the African mainland by the Mozambique Channel. Madagascar claims a number of small islands in the Mozambique Channel which are administered by France. These are the Îles Glorieuses, Bassas da India, Juan de Nova, and Europa—covering about 28km2. Madagascar’s capital city, Antananarivo, is located near the centre of the island.

5.2.1.1 Topography

Madagascar consists mainly of a block of crystalline rocks. It is generally described as a plateau, rising sharply from the narrow plain of the east coast and descending in a series of steps to the strip of sedimentary rocks along the west coast. The high plateau is much indented and, on the eastern edge, cut by deep gorges and waterfalls. There are numerous volcanic outcrops that produce heights over 1,800m. The highest point is Mount Maromokotro (2,876m) in the Tsaratanana Massif. The eastern coast is almost straight and has very few anchorages. Behind its coral beaches there is an almost continuous line of lagoons from Foulpointe to Farafangana. These are linked by manmade channels to form an inland waterway called the Pangalanes Canal. The island’s major rivers flow westward and are navigable for about 160km inland.

5.2.1.2 Climate

The climate of the eastern and north western coasts is dominated by the almost constant blowing of the south easterly trade winds, which carry heavy rains during the austral winter (May to September). The central plateau and the western coast are sheltered from these winds but receive rain from the monsoon winds, which blow during the austral summer (October to April). Neither the trade winds nor

the monsoons reach the southern part of the island, which consequently receives little rain and is, in places, a semi-desert. The central plateau enjoys a tropical mountain climate with well-differentiated seasons. Generally speaking, the climate throughout the island is moderated by altitude, with the coast being hotter (average temperatures 21– 27°C) and wetter than the plateau (average temperatures 13–19°C). Toamasina (Tamatave), on the east coast, has 2840mm of rainfall annually, while Antananarivo, inland, and has about 1400mm. Occasional cyclones have been devastating.

5.2.1.3 Population, Ethnicity, Languages and Religion

The population of Madagascar in 2003 was estimated by the United Nations (UN) at 17,404,000. In that year approximately 3% of the population was over 65 years of age, with another 45% of the population under 15 years of age. According to the UN, the annual population growth rate for 2000–2005 is 2.84%, with the projected population for the year 2015 at 24,000,000. The population density in 2002 was 29 per km2. The western part of the country is the least densely populated.

The Population Reference Bureau estimate urbanization levels at 30% in 2001, with the major centres being Antananarivo, the capital city, with a population of 1,432,000, Fianarantsoa (300,000); Antsiranana (220,000); Toamasina (230,000); Antsirabe (220,000); and Majunga (200,000). According to the UN, the urban population growth rate for 2000–2005 was 4.8%.

The Malagasy people are the result of the intermingling of immigrants. The original immigrants are believed to have been members of an Afro-Malagasy race that lived on the East African coastline. Later arrivals were Africans, Arabs, and, much more recently, immigrants from Europe, China, and India. The distinct African ethnic groups now recognized represent the political groupings forged before the arrival of the first Europeans. The major ethnic groups, according to 1998 numbers, are the Malayo-Indonesian (Merina and related Betsileo), the Cotiers (mixed African, Malayo-Indonesian) and the groups of Arab ancestry (Betsimisaraka, Tsimihety, Antaisaka, and Sakalava).

The Merina (about 25% of the population) and Betsileo (about 12%) live in the central highlands and show evidence of Asian origin, while the coastal peoples, such as the Betsimisaraka, Tsimihety, and Sakalava, are of predominantly African origin. The Merina have been the ascendant group since the late 18th century. The course that colonialism took in Madagascar strengthened their domination of the political and intellectual life of the island. Resentment of the Merina and their dominant position by the other ethnic groups is still a source of social unrest.

There are also significant numbers of French, Indian, Creole, and Comoran peoples.

The principal and official languages are French and Malagasy. Malagasy is a Malayo-Polynesian language which has different but mutually intelligible dialects and is spoken throughout Madagascar. The Merina dialect has come to be considered the standard literary form of the language. Instruction in French is preferred by the coastal peoples, as it avoids connotations of Merina cultural dominance.


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Over half of the Malagasy are traditional tribal religionists, some exclusively and others practicing in conjunction with Christian beliefs. Although there are many variations in detail, nearly all Malagasy share certain basic religious ideas, the central one being belief in the soul and its immortality.

Christianity was introduced to the Malagasy in the early 19th century, and it is influenced to a large extent by traditional beliefs. According to a 2002 report, most of the population is at least nominally Christian. Of the 15.9 million-person population, about 4.5 million are Roman Catholics; 3.5 million are Protestants belonging to the Church of Jesus Christ in Madagascar (mostly from Fianarantsoa North); 2 million are Lutherans (mostly from Fianarantsoa South); and less than 1 million are Anglicans (mostly in Antananarivo and Toamasina). Muslims, concentrated mostly in the north and northwest, constitute approximately 10% of the population. There is also a small number of Hindus among the Indian population.

5.2.2 History of Madagascar

Madagascar had no human inhabitants until about 2,500 years ago, when immigrants came, probably from Indonesia via the East African coast. This wave of immigration continued for at least 1,000 years, and there was also an influx of African peoples.

Additional immigrants from Africa, Arabia, and the Persian Gulf and, much later, from Europe, India, and China did little more than supplement a fully settled population. The French claimed a protectorate over parts of the Sakalava kingdom by virtue of treaties made in 1840, and disputes over this claim and over French properties on the island resulted in a war in 1883 which was ended in 1885 by a treaty giving the French control over Merina foreign policy.

The British recognized the French position under the terms of the Anglo-French Agreement of 1890, in exchange for French recognition of a British protectorate over Zanzibar.

Subsequent to 65 years of French colonial rule, Madagascar overwhelmingly voted for the new French constitution in the 1958 referendum, and became an autonomous republic in the new French Community. As the Malagasy Republic, it became a sovereign independent nation on 26 June 1960 and on 20 September 1960 was elected to UN membership.

In December 1975, a draft constitution was approved in a referendum by 95% of the voters and the Second Malagasy Republic, to be called the Democratic Republic of Madagascar, was proclaimed. Despite an ongoing association with the former Soviet Union during the following two decades, the French maintained a reasonably strong presence that continues to this day. Madagascar is governed under a unitary, bicameral system comprising a National Assembly (Lower House) and a Senate, overseen by an Executive branch comprising a directly elected President and a Prime Minister and (PM appointed) Cabinet.

The current President is Marc Ravalomanana (since February 2002), a successful businessman who has put a priority on integrating the Malagasy nation into the international community. Having decisively won the most recent National election in December 2006, Mr. Ravalomanana is well positioned to continue with his progressive reform programme.

5.2.3 Economy and Infrastructure

Since the mid-1990s, Madagascar has been following a policy of privatization and liberalization, which has placed the country on a slow and steady growth path. Agriculture, including fishing and forestry, is a mainstay of the economy, accounting for 25% of GDP and employing 80% of the population.

One potentially positive development was the decision of the International Monetary Fund and the World Bank in 2000 to grant Madagascar $1.5 billion in debt relief.

Export earnings are primarily generated in the small industrial sector, which features textile manufacturing and agriculture processing and accounts for about 12% of GDP. Deforestation and erosion, aggravated by the use of firewood as the primary source of fuel are serious concerns. Poverty reduction will be the driving force of economic policy for the next few years.

Significant industries comprise meat processing, soap, breweries, tanneries, sugar, textiles, glassware, cement, automobile assembly plant, paper, petroleum, and tourism, providing annual export earnings of some US$700M.

Imports are primarily capital goods, petroleum, food and consumer items. Current foreign aid inputs average more than US$800M. Officially, unemployment and inflation average 5.9% and 7.4% respectively, with average per capita income at around US$300pa.

Infrastructure is steadily improving. Of a total of 50,000km of highways within the country, some 12% (approximately 6,000km) are sealed, with the remainder comprising a combination of seasonal and year-round unsealed roads. The country currently has 900km of railways, centred in the central eastern portion of the country between major population centres and the East Coast. The Malagasy Government has embarked upon the implementation of a Rural Transport Policy, which, with the assistance of the World Bank, will see the upgrading and repair of the railway system and approximately 9000km of roads.

Electricity is provided by a combination of coal-fired and hydroelectric means. Reliability of supply is a priority issue with the current administration.

5.2.4 Mining

Madagascar is the tenth-largest producer of chromite (chemical- and metallurgical-grade), and its mining industry has also been known for the production and export of phlogopite mica and high-quality crystalline flake graphite.

Gems such as amazonite, amethyst, beryl, citrine, cordierite, garnet, sapphire, and tourmaline, as well as ornamental stones such as agate, apatite, aragonite, calcite, jasper, and labradorite) and stones for electrical geodes (quartz— industrial, rose, and smoky—and celestine), are mined. Madagascar also produced a small amount of gold, natural abrasives, feldspar, kaolin, cipoline marble, marine salt, and dimension stone. Industrial calcite, clays, sand and gravel, and stone are currently also produced. Uranium occurrences have also been recognized in the larger basins covered by Karoo sediments.


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Extensive prospecting has led to the discovery of recoverable deposits of iron ore (the deposit near Soalala the most notable), bauxite (330–335 million tons in resources, in the south eastern part of the country), and nickel (168 million tons; the largest resources were in the Ambatovy lateritic deposit).

Smaller deposits of coal (Sakoa), copper (Besavoa), lead, manganese, platinum, tin, titanium, zinc, and zirconium have also been delineated. Rio Tinto is currently exploiting a large deposit of mineral sands near Fort Dauphin in the south of Madagascar.

Madagascar’s considerable mineral potential has remained largely unexploited; due to a combination of poorly maintained infrastructure, its poor power distribution systems, underfunded health and education facilities, and the inability to reform the economy and deal with chronic malnutrition, deforestation, land erosion, and population growth.

5.2.4.1 Mining Legislation

In 2000, the “Bureau du Cadastre Minier de Madagascar” (BCMM) was established, to serve as a one-stop service for mining operators. An overhaul of mining regulations created a new system of strictly defined permits and mining concessions.

The new Mining Code clearly defines the nature and extent of mineral permits within Madagascar; a vast improvement on the old Marxist-based administration. The new system of licences (“permits”) is based on one or more standard surface units of 0.40km2 (625m x 625m), termed a “Square” or “Carré”. Permits are applied for on a (UTM-based) graticular system, granted on a first-come first-served basis, are (partially) commodity-specific, and are classified as either ‘Recherche’ (Exploration) or ‘Exploitation’ (Mining) type. Summary characteristics of each type follows:

Temporary Exploration Permits (‘AERP’) are valid for three (3) months, with no drilling or pitting allowed (surface prospecting and remote sensing only). They are granted immediately upon application and are convertible upon expiry to either Research or Exploitation permits. Maximum area per application is 15,000km2 (38,400 Squares) at a cost of A$0.20/Square (maximum A$7,700).

Exploration Permits (Permis de Recherche - ‘PR’) allow exclusive prospecting rights within a maximum area of 10,000km2 (25,600 Squares). The initial term is for five (5) years; renewable twice more for three (3) years each. The cost is A$19 per unit. A 200km2 Exploration Permit (comparable to the WA EL equivalent) would comprise 500 Squares, for a total cost of A$9,500, with 25% (A$2,400) payable on application and the remainder upon grant. A reclamation plan, baseline environmental study, closure plan and other plans of action are required with the PR application (collectively termed an “Environmental Impact Statement” – EIS). Turnaround time on granting of permits averages between one and three months.

Mining Permits (Permis d’Exploitation - ‘PE’) allow full-scale mining of defined mineral deposits. These are valid for 40 years, renewable in 20 year instalments. Environmental protection criteria are more rigorous than for PR’s, with turnaround on granting of licence varying

according to project scale, commodity and location. PE’s can be up to 1024km2 (2,560 Squares), at a cost of A$32 per Square, and are valid for 40 years (multiple 20 year renewable).

Mineral commodities deemed to be of a strategic significance to the country, such as uranium, coal and oil, are available for acquisition under joint venture with the Malagasy government, with the latter holding a free-carried 20% interest in any tenement/project. The government agency through which this occurs is the ‘Office des Mines Nationales et des Industries Stratégiques’ [OMNIS - 1976], a research and promotional organ of the Malagasy government. The most common structure involves the establishment of a stand-alone corporate entity in which OMNIS is allocated 20% equity.

There is a 2% royalty on mineral production. Mining wages average US$100pm, with overtime payable for work in excess of 40 hrs / week.

As a complement to the new Mining Act, the World Bank further assisted the Government of Madagascar in drafting legislation specific to larger-scale projects. The ‘Loi sur les Grands Investissements Minières’ (Large Investments in Mining Act - LGIM) was enacted in 2002, and provides for additional incentives to foreign entities undertaking significant (i.e. >USD20M) resource investment projects in the country. Key points of this legislation are:

Taxation and Legal stability guaranteed for 25 years from project initiation. This incorporates inter alia that the terms of Exploration, Exploitation and Environmental Permits will not be changed once granted/approved.

International dispute arbitration and waiver of sovereign immunity on the enforcement of arbitrated awards.

Ability to maintain and operate offshore bank accounts.

Reduced corporate income tax; 10% for projects which transform minerals into value-added products, and 25% for straight mining and beneficiation operations.

Investment tax credit based on capital investment, applied against taxes due and payable.

Reduced royalty payments; 1% for value-added mineral products, a 50% reduction on standard royalty rates.

Up to 75% debt-financing, from external or shareholder sources, and repayment of loan principle and interest without withholding tax; 10% withholding tax on dividends to foreign shareholders; elimination of value-added tax (VAT) for operations and subcontractors.

Elimination of customs duties and dedicated customs posts for import/export with the exception of 5% customs duty on consumables at the mine. Standard importation duties on equipment apply at a rate of 10%.

In addition to the Mining Act and the LGIM, the Government of Madagascar has updated corporate and labour laws. A new Company Code was enacted in 2003 and the Labour Code was enacted in 2004. The existing Competition Code and LGIM are currently undergoing update and revision.


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5.2.5 Malagasy Minerals Projects

MML’s exploration land tenure comprises eight projects covering approximately 6,148 square kilometres of mineral tenure in southern and central Madagascar, as well as north western Madagascar for commodities as diverse as nickel, cobalt, copper, silver, base metals, coal, manganese, ilmenite (titanium) and silica. Additionally, the company is currently building a tenement portfolio over ground prospective for uranium mineralisation.

The project areas include the Vohibory Project, the Ampanihy Project, the Anjeba Project and Miary Project in southern Madagascar, the Bekisopa and Satrokala Projects in central Madagascar, the Majunga Project in north western Madagascar and the Mananjary Regional Project in eastern Madagascar. MML operates all these projects from a central office in Antananarivo and a regional office in Toliary, in south western Madagascar.

Figure 2.5_1 illustrates all the MML projects held through its wholly owned company.

5.3 Geology Of Madagascar5.3.1 Precambrian Geology of Madagascar

The eastern two thirds of Madagascar are underlain by Precambrian rocks, sporadically intruded by Cretaceous through Neogene basalts and rhyolites, whereas the western third is composed of two large basins of mid-Palaeozoic to Recent sedimentary rocks. Different continental blocks of Indian and African origin amalgamated at ±550Ma to build the present architecture of the Island.

Archaean rocks occur throughout Madagascar, from Isle St. Marie in the northeast of the island to the Ranotsara shear zone in the south. Rocks older than 3,000Ma include the

Antongilian granitoids, the Ambodiriana migmatites and the Masora Group, all located in the east, the Ankazabe Group in the west, the Angavo Group in the centre, and the Behara Group in the south.

Assemblages formed during Meso-Archaean and Neo-Archaean times (3,000- 2,500Ma) are assigned to the Shamvaian Supergroup and are represented by the following groups: Manapotsy, Ranomena, Antriamena, Marvatanana, Andriba, Ambarolampy, Tolongoina, Beforama, Alaotra, Androna, Vondroza, Ampasary, Soakibany, Vavatenina, Sahantaha and Antenina.

Large assemblages of rocks in the northern part of the island, originally described as “schist verte, quartzite avec magnetite and micaschiste”, can be considered as typical greenstone belts, which are either of Archaean or Palaeoproterozoic age.

Belonging to the Palaeoproterozoic time interval are the following groups: Isahara, Fort Dauphin, Ranotsara, Antsakomiary, Ste Luce, Tranomaro, Sahambano and Tsitondroina. The Fort Dauphin leptynites, granulites and their gneissic intercalations are superimposed on the Archaean Ranomena Group. The neighbouring Tranomaro Group contains calc-magnesium paragneisses, bands of granite and charnockites.

A large, well-preserved, mostly Mesoproterozoic sequence of continental shelf sediments (quartzite, marble, schist), referred to as the “Quartzo-Schisto-Calcaire-Series”, occurs in central Madagascar. A shallow continental shelf environment is indicated by flat lamination, wave and current ripples, dune cross bedding in quartzites, domal and pseudocolumnar stromatolites in carbonates and high K and Al chemistry in pelites.

There are extensive areas of granitoids and/or migmatites, many of which trend approximately N-S, and which are of Neoproterozoic (mostly 900-400Ma) age. At least two major events in the Early and Late Neoproterozoic seem to be represented. Some granitoids, especially those of Late Neoproterozoic age, appear to have been emplaced as concordant sheets or sills up to 500m thick, referred to as the “stratoid” granites of Madagascar.

The Precambrian basement of Madagascar consists of a variety of lithologies and tectono-metamorphic units (Figure 3_1) probably inherited from the Rodinia supercontinent, the dislocation of which began at ±800Ma. The structures in this basement are related to those of the Mozambique Belt which is a major Pan-African continental collision zone.

The Malagasy Precambrian can be divided into the following major units (Figure 3_1):

The Antongil Unit (Ag) in the east contains the oldest rocks known in Madagascar. These are 3200Ma tonalitic gneiss and 2500Ma granitic orthogneisses associated with amphibolite facies metasediments. It is generally accepted that Antongil Unit is a part of the Indian continental crust (Dharwar Craton).

The Antananarivo Unit (At) in the central area is a vast ensemble of poorly differentiated and probably Archaean aged gneiss and migmatites. It includes many granitic intrusions with ages around 2500Ma.

Figure 2.5_1: MML Project Locations in Madagascar


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The Betsimisaraka Unit (Bs) is made of gneiss and mica schist with many intercalations of basic and ultrabasic rocks. Where the metamorphism is of relatively high pressure, the zone has been interpreted as a 550-500Ma collisional suture between the Indian block (Antongil) and the African block (Antananarivo). This collision is thought to have occurred during the accretion of Eastern Gondwana.

The Tsaratanana Unit (Ts) consists of gneisses and migmatites associated with many basic and ultrabasic rocks dated at 2500Ma and 800Ma, respectively. It

contains economic deposits for chromite such as the Andriamena Chromite deposit, where the chromite occurs as segregations or inclusions in pyroxenites. This unit could be interpreted as an Archaean Greenstone Belt, affected by high-temperature metamorphism. In some places, there is evidence that this unit has been thrust over the Antananarivo Unit.

The following units were mainly derived from sedimentary and volcano-sedimentary Proterozoic formations and show strong lithological differences with the Archaean Antananarivo and Tsaratanana Units:

Figure 3_1: Tectono-Metamorphic Units of the Precambrian in Madagascar

After Ashwal (1997) and Besairie (1964)


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The Itremo Unit (It) is made of quartzites, mica schists and dolomitic marbles, integrated into a platform series (probably deposited between 1500 and 1700Ma) and affected by a low-intensity metamorphism (Greenschist to Amphibolite facies). This unit is crosscut by granites and gabbros dated at 800 My and also by 550 My granites. It was thrust eastwards over the Antananarivo Unit.

The Ikalamavony Unit (Ik) is mainly of volcanogenic origin and was metamorphosed to amphibolite facies. It seems to be the lateral equivalent of the Itremo Unit. The Ikalamavony Unit is also thrust towards the east over the Antananarivo Unit. Its distribution appears limited in the south by the NW-SE trending Bongalava-Ranotsara Shear Zone (BRSZ). However, based on recent aeromagnetic data, this shear zone cannot be interpreted as a major tectonic boundary and consequently the Ikalamavony Unit must continue towards the south.

To the south of the BRSZ, the Toalagnaro-Ampanihy Unit (Ta) makes up the majority of the southern granulitic domain. It is discussed in greater detail in Section 3.3.

At the South-Westernmost end of the granulitic domain, the Vohibory Unit (Vh) is characterized by abundant basic and ultrabasic rocks and by high pressures metamorphic conditions (10 -12kb). The metamorphism is dated there at 650-630Ma and the age of the protolith is around 700-750Ma.

In the northern extreme of the Precambrian basement, the east west trending Bemarivo Unit (Bm), is undoubtedly thrust southwards over the Betsimisaraka and Antananarivo units. This unit seems to have been amalgamated into the Precambrian of Madagascar more recently than others. In the northern part, a volcano-sedimentary series, with a Greenschist-Amphibolite facies metamorphism, was dated at 715Ma. In the southern part, metamorphism was more intense, with occurrences of charnockites dated at 510-520Ma.

One of the most striking features of Malagasy geology is a prominent NW-SE trending, sinistral shear belt, the Bongolava-Ranotsara Shear Zone (BRSZ). This zone appears to separate two different crustal terranes, a northern predominantly Archaean crust and a southern predominantly Proterozoic crust (Figure 3.2_1).

5.3.2 Sedimentary Basins of Madagascar

Depositional sequences equivalent to the Permian Karoo Supergroup of continental Africa are found along the entire western and north western coast of Madagascar. Although the depositional sequences form a continuous belt, they are generally subdivided into the Morondava Basin along the western coast and the Diego Basin on the north western extremity of the island. The succession is subdivided into three lithostratigraphic units, which in ascending order are the Sakoa Group, the Sakamena Group and the Isalo Group.

The Sakoa and Sakamena Groups are time equivalents of the Karoo Supergroup on the continent and were deposited in individual graben structures. The sequence commences with glaciogene deposits, which are overlain by a coal bearing succession. The succeeding sedimentary strata rest in some places disconformably on the latter or overstep onto basement.

The overlying Jurassic Isalo Group drapes across the Karoo-equivalent sequence and represents the post-Karoo pericratonic basin facies.

5.3.3 Geology of South Western Madagascar

The geology of south western Madagascar is discussed in greater detail as it underlies a significant part of MML’s ground holdings, and is most relevant to this document.

The Precambrian rocks southwest of the BRSZ comprise six north-south trending belts of granulites and upper amphibolite facies paragneisses, with concordant granites and granulites. Quartzo-felspathic gneisses predominate with layers of marble, quartzite, diopsidite of sedimentary origin, and amphibolite layers of probable volcanic origin. Granitic veins are concentrated in major migmatite belts with calc-alkaline and crustal melt bodies several kilometres across. The six belts are distinguished on the basis of lithostratigraphy and structure. The boundaries between the belts are marked by zones of finely banded, highly strained, gneisses that separate domains with older, more open structures. The Vohibory and Ampanihy belts underlie MML’s Vohibory and Ampanihy projects, whereas the Bekily Belt underlies the Miary and Anjeba projects.

These belts are all found within the Early Precambrian continental crust represented by the Toalagnaro-Ampanihy Unit (Ta) or the Bekily Block, as it is sometimes referred to. The Ta unit was strongly reworked during Pan-African times (600±530Ma).

Figure 3.2_1: Geology of Madagascar


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The Ta unit is limited to the west by the N-S trending Ampanihy Shear Zone and in the north-east by the BRSZ. It is also crossed by other similar structures such as the Beraketa Shear Zone (Figure 4.1.3_1) and the Vorokafotra Shear Zone. The lithologies are composed of gneiss, leptynites, marbles, and rare amphibolites. They reflect a predominantly sedimentary origin with mainly acid volcanic intercalations. The age of metamorphism and granite intrusion is ±570Ma in the eastern part. In the western part, some granitic intrusions and anorthosites have yielded ages of 900-1000Ma.

Broadly defined, the Ta Unit or Bekily Block comprises three terrains or “systems”:

Androyen System – This is the basal (oldest) terrain and consists of a highly metamorphosed sequence characterised by the predominance of quartz-feldspar gneiss and migmatite (‘leptynites’), with lesser intercalated quartzite, pyroxenite and amphibolite units.

Graphite System – Stratigraphically, the Graphite System overlies the Androyen gneisses and migmatites. The lithologies are characterised by graphite-rich schists and gneiss, granitic and gabbroic intrusives and display a broad range of metamorphic grades ranging from upper greenschist to granulite facies. The Graphite System encompasses the Ampanihy and Bekily belts.

Vohibory System – This System encompasses the Vohibory Belt, and represents the uppermost assemblage, and differs from the older two systems in that it is dominated by amphibolites and Precambrian basaltic lavas. The Vohibory System is noted for its importance as a host to a comparatively high concentration of mineral occurrences; particularly polymetallic copper-zinc and gold.

The Vohibory Belt consists of a gently folded sequence of orthogneiss and paragneiss with interlayered marble, amphibolite units and tourmaline granite. The amphibolites contain intercalated ultramafic units, and are commonly interpreted as remnant oceanic crust. This belt is interpreted as a deformed and metamorphosed, thin skinned supracrustal fold and thrust unit. The belt contains ophiolite relics (ultramafic-gabbroic-basaltic) and has similarities with other ophiolite-bearing units in Ethiopia, Kenya, Tanzania and along strike in Mozambique. The Belt also lacks phlogopite and has a greenschist to granulite metamorphic imprint.

The Ampanihy Belt, which adjoins the Vohibory Belt to the east, is a prominent 20km wide linear, folded, shear zone. It was produced by intense flattening events associated with granulite metamorphism and is characterised by isoclinal folding, flattened sheaths, steep to vertical foliations and sheath-like geometry of massif-type anorthosite bodies. The belt consists of graphitic, hornblende-biotite gneiss with minor leptynite, marble and quartzite. Two prominent Proterozoic anorthosite bodies occur within the Ampanihy belt. These display sheath-like geometry produced by intense flattening and exhibit well preserved igneous textures overprinted by strong granulite facies metamorphism. A smaller troctolite body outcrops further south. The belt is interpreted as a dextral strike slip ductile shear zone or a zone of pure shear or flattening deformation.

The Bekily Belt, which adjoins to the east of the Ampanihy belt, consists of gently folded paragneiss, continuous layers of

metasediments (marble and quartzite), monzonite and granite. Phlogopite mineralisation is a characteristic of this and the other belts to the east. Two anorthosite bodies occur to the south. This unit is interpreted as supracrustal material.

Apart from the younger Vohibory Belt, the other tectonic belts of southern Madagascar have a similar sedimentary protolith. They are made up of paragneiss (including phlogopite diopsidites), marbles, quartzites, and layers enriched in Mg, B and A. Interference fold patterns are common due to a late north-south fold phase superimposed on compressional folding due to thrust tectonics. Metamorphic grade varies from sillimanite-almandine-cordierite to hornblende granulite facies.

Comparable tectonic developments to those known from Karoo basins in continental East Africa also took place in Madagascar. Here the Early Permian glaciogene and coal-bearing graben fills of the Sakoa Group are overstepped by the Permo-Triassic Sakamena Group. The structure of the Permo-Triassic basins of Madagascar appears almost identical to that described from the coastal Karoo basins of eastern Africa.

5.4 Southern Madagascar ProjectsThe southern Madagascar projects include the Ampanihy, Vohibory, Miary and Anjeba projects, and in total represent some 62 permits totalling 2,006km2 surface area.

5.4.1 Ampanihy Project

The Ampanihy project is the largest of the MML projects, and is centred on the Ampanihy Shear Zone (ASZ), which stretches from the town of Ampanihy in the south to Ianapera in the north.

5.4.1.1 Location, Access and Physiography

The project is centred north of the town of Ampanihy in Mahafaly Country, in south-western Madagascar. The town of Ampanihy can be accessed from the RN7 via the RN10, and is located roughly 150km south of Andrianavory (Figure 4.1.1_1).

The Mahafaly Country is representative of south-western Madagascar and is an arid, sub-desert countryside with vegetation adapted to hot arid conditions. Typical flora includes baobabs, leafless trees and an abundance of cacti. The topography is generally flat with gently undulating grasslands and the elevation is less than 300m above mean sea level (Figure 4.1.1_2). Temperatures vary between 20 – 30°C in summer, and become colder in the winter, sometimes reaching sub-zero temperatures.

5.4.1.2 Tenure

The project comprises a total of 56 permits of 1775km2 area, covering approximately 80km of regional strike. The permits are 100% beneficially owned by MML, with title held by MDA, a wholly owned subsidiary of Malagasy Minerals Limited. The tenure is shown on Table 4.1.2_1 and Figure 4.1.2_1.


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Figure 4.1.1_1: Southern Madagascar Project – Project Location

Figure 4.1.1_2: Ampanihy Project – Physiography


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MML, through its acquisition of MDA, has agreements with three dimension stone miners (Magrama, Euromad and SQNY), giving them rights to mine labradorite-bearing anorthosite dimension stone from the two gabbroic anorthosite intrusives within the Ampanihy tenement group.

5.4.1.3 Geology

The project overlies the 20km wide Ampanihy Belt. It consists mainly of folded assemblages of graphite schist, quartz-feldspar schists (<60% graphite), quartzite, marble and lesser intercalated amphibolite and leucogneiss (Figure 4.1.3_1). The Ampanihy Belt is a core component of the Neoproterozoic

Graphite System, and is interpreted as a ductile shear zone developed from rocks of both sedimentary and volcanic origin (Figure 4.1.2_1). Strong localised copper and manganese mineralisation is observed in association within the graphite schists and marble units.

The Ampanihy shear zone planes (S2 deformation) are mainly vertical, and are believed to be rotated in the vicinity of the two Proterozoic anorthositic massifs, Ankafotia (Ianapera) in the north and Saririaky (Maniry) in the south. These behaved as rigid bodies in a ductile matrix. The two massifs are roughly 70km apart, and are mainly composed of anorthositic centres (labradorite composition) and leuconoritic margins.

Figure 4.1.2_1: Ampanihy Project – Tenement Location Plan on Geology Background


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Table 4.1.2_1Southern Madagascar Project AreaTenement Schedule

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Grant Date Expiry Date

Ampanihy - Central (Big 'S')

PR 3432 MDA* 116 725.00 $60,129 10 18/06/2001 18/06/2011

Ampanihy - Ianapera PE 5391 MDA * 1 6.256 $759 40 20/11/2002 20/11/2042Ampanihy - Ianapera PE 5392 MDA * 1 6.256 $759 40 20/11/2002 20/11/2042Ampanihy - Ianapera PE 5393 MDA* 1 6.256 $759 40 20/11/2002 20/11/2042Ampanihy - Maniry PE 5494 MDA* 3 18.768 $2,278 40 20/11/2002 20/11/2042Ampanihy - Ianapera PR 13064 MDA 3 18.768 $666 10 4/02/2005 4/02/2015Ampanihy - Maniry PR 13089 MDA 3 18.768 $666 10 4/02/2005 4/02/2015Ampanihy - Maniry PR 13811 MDA 3 18.768 $666 10 14/02/2005 14/02/2015Ampanihy - Maniry PR 13812 MDA 6 37.536 $1,333 10 14/02/2005 14/02/2015Ampanihy - Ianapera PR 13827 MDA 18 112.608 $3,919 10 14/02/2005 14/02/2015Ampanihy - Maniry PR 13831 MDA 2 12.512 $444 10 14/03/2005 14/02/2015Ampanihy - Maniry PR 13832 MDA 1 6.256 $222 10 14/03/2005 14/03/2015Ampanihy - Maniry PR 13877 MDA 1 6.256 $222 10 14/03/2005 14/03/2015Ampanihy - Ianapera PR 13882 MDA 1 6.256 $222 10 14/03/2005 14/03/2015Ampanihy - Ianapera PR 14618 MDA 2 12.512 $444 10 26/01/2005 26/01/2015Ampanihy - Maniry PR 14619 MDA 1 6.256 $222 10 26/01/2005 26/01/2015Ampanihy - Ianapera PR 14620 MDA 3 18.768 $666 10 26/01/2005 26/01/2015Ampanihy - Ianapera PR 14622 MDA 4 25.024 $889 10 26/01/2005 26/01/2015Ampanihy - Ianapera PR 14623 MDA 9 56.304 $1,999 10 26/01/2005 26/01/2015Ampanihy - Ianapera PR 16746 MDA 5 31.280 $1,111 10 9/09/2005 9/09/2015Ampanihy - Maniry PR 16747 MDA 3 18.768 $666 10 9/09/2005 9/09/2015Ampanihy - Ianapera PR 16748 MDA 4 25.024 $889 10 9/09/2005 9/09/2015Ampanihy - Maniry PR 16749 MDA 1 6.256 $222 10 9/09/2005 9/09/2015Ampanihy - Maniry PR 16750 MDA 5 31.280 $1,111 10 9/09/2005 9/09/2015Ampanihy - Maniry PR 16753 MDA 3 18.768 $666 10 9/09/2005 9/09/2015Ampanihy - Maniry PR 19003 MDA 1 6.256 $148 10 23/02/2006 23/02/2016Ampanihy - Ianapera PR 19851 MDA 2 12.512 $444 10 4/02/2005 4/02/2015Ampanihy - Maniry PE 19932 MDA*** 7 43.792 $2,658 40 10/03/2006 9/03/2046Ampanihy - Maniry PE 19933 MDA*** 1 6.256 $380 40 10/03/2006 9/03/2046Ampanihy - Ianapera PR 19934 MDA 1 6.256 $222 10 26/01/2005 26/01/2015Ampanihy - Ianapera PR 19935 MDA 1 6.256 $222 10 26/01/2005 26/01/2015Ampanihy - Maniry PR 19936 MDA 2 12.512 $444 10 4/02/2005 4/02/2015Ampanihy - Maniry PR 21059 MDA^ 1 6.256 $0 NYG AERP Current AERP CurrentAmpanihy - Maniry PR 21060 MDA 1 6.256 $148 10 30/10/2006 30/10/2016Ampanihy - Maniry PR 21061 MDA 1 6.256 $148 10 30/10/2006 30/10/2016Ampanihy - Maniry PR 21063 MDA 2 12.512 $296 10 30/10/2006 30/10/2016Ampanihy - Maniry PR 21064 MDA 1 6.256 $148 10 30/10/2006 30/10/2016Ampanihy - Maniry PR 24864 MDA 3 18.768 $222 5 08/05/2007 08/05/2012Ampanihy - Ianapera PE 25093 MDA** 1 6.256 $380 40 18/01/2007 18/01/2047Ampanihy - Ianapera PE 25094 MDA** 1 6.256 $380 40 18/01/2007 18/01/2047Ampanihy - Maniry PE 25095 MDA** 3 18.768 $1,139 40 18/01/2007 18/01/2047Ampanihy - Maniry PR 25605 MDA 5 31.280 $2,592 10 18/06/2001 18/06/2011Ampanihy - Maniry PR 25606 MDA 1 6.256 $518 10 18/06/2001 18/06/2011Ampanihy - Maniry AERP/PR 29020 MDA 2 12.512 $148 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28340 MZT 10 62.560 $1,519 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28341 MZT 1 6.256 $152 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28345 MZT 3 18.768 $456 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28346 MZT 1 6.256 $152 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28347 MZT 7 43.792 $1,063 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28348 MZT 1 6.256 $152 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28349 MZT 1 6.256 $152 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28350 MZT 2 12.512 $304 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28351 MZT 7 43.792 $1,063 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28352 MZT 6 37.536 $911 NYG AERP Current AERP CurrentAmpanihy - Maniry AERP/PR 28353 MZT 6 37.536 $911 NYG AERP Current AERP Current

* EUROMAD & MAGRAMA - Royalty and partial tenement fees payable to MDA; MAGRAMA and EUROMAD are dimension stone miners** SQNY - Royalty and Partial Tenement Fees Payable to MDA.^ Not yet Granted - Geol Protégé*** MAGRAMA - Royalty & Partial Tenement Fees Payable to MDAX Currently under MDA; to be transferred to EXM pre-IPO (for a sum of MGA1,053,000)

NYG – not yet granted, MDA – MADA-AUST SARL (a wholly owned subsidiary of MML), MZT - MAZOTO MINERALS SARL (a wholly owned subsidiary of MML), PR – permis de recherché, PE – permis d’exploitation, AERP – application de permis.


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5.4.1.4 Exploration and Evaluation History

Interpretation of aeromagnetic data over the project area indicates several areas of probable low “low strain zones”, some of which are associated with copper anomalism. These areas are strongly coincident with existing geochemical anomalism and have the best potential to delineate early drill targets.

Historic exploration has targeted Voisey’s Bay type Ni-Cu deposits associated with the anorthosites. Previous exploration has identified Ni-Cu anomalism near the village of Benonoky in the northern portions of the Ankafotia massif.

Soil sampling traverses carried out by MRNL in 2005 have also shown copper anomalism associated with a graphite schist septum in the southeastern portion of the Ankafotia massif. Copper staining has been identified in the intercalated schists (Figure 4.1.4_1).

Rock chip sampling of the Ampanihy Anorthosite bodies has found sulphides in the form of disseminated crystals (0.5-1mm) and small blebs/stringers (10-20cm) of massive sulphides, the latter returning results up to 0.67% Ni, 0.64% Cu, 0.12% Co, 26ppb (Pt+Pd) and 21ppb Au. The Ankafotia anorthosite massif exhibits strong sulphidation, if somewhat surficially limited, and associated with leuconoritic assemblages (Figure 4.1.4_2).

Stream sediment and soil geochemical sampling programmes by MRNL around these intrusives in 2004/5 delineated a number of areas that were anomalous in PGE (≤68ppb

[Pt+Pd]), Ni (≤630ppm), Cu (≤220ppm),-Co (≤40ppm) and Cr (≤1100ppm), with one area anomalous in Au (18ppb).

The Ankafotia (Ianapera) anorthosite, covering approximately 75 sq km, is elliptical with marble and graphite bands running parallel to its outcropping margin. Preliminary exploration by MRNL around this intrusion found blebs of copper and nickel sulphides containing nickel (0.54%), copper (0.42%), and cobalt (980ppm) in waste material around a quarry

Figure 4.1.3_1: Ampanihy Project – Regional Structural Interpretation

Figure 4.1.4_1: Ankafotia Massif – Copper Mineralisation

After Martelat et Al. (1999)

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at its northern tip. Along the eastern margin, gossanous manganese mineralisation up to 26% Mn was encountered locally associated with moderately anomalous copper-gold (300ppm-60ppb respectively). Inspection of the in-situ anorthosite in the quarries has revealed the presence of disseminated sulphides throughout, but few blebs and stringers, while the soil in the area is pale reflecting the dominant feldspar bedrock. Observed magnetic character of the sulphide assemblage indicates the efficacy of utilising aeromagnetic data to assist in identifying target areas.

The southern body (Saririaky), at 100 sq km, is larger and more circular, but again the bands of graphite and quartzite closely parallel its margin. The rocks along the eastern contact of central Saririaky anorthosite appear to be iron-enriched though not anomalous in base metals.

The two anorthosite massifs, Saririaky in the south, and Ankafotia in the North, have been targeted by Italian, Indian and local companies for labradorite (dimension stone). Magrama has established quarries on both massifs; Red Graniti has a quarry in the Benonoky area on Ankafotia, whereas an Indian company (SQNY) has established a quarry on the Saririaky anorthosite massif.

In 2004 Fugro Surveys were engaged by MRNL to undertake local aeromagnetic and radiometric surveying over the immediate area of the Ianapera and Saririaky intrusives. MML subsequently commissioned Southern Geoscience Consultants to conduct detailed interpretations of the aeromagnetic data over these areas in late 2006. This work has delineated several areas of probable low pressure ‘centres’, some of which are associated with copper anomalism.

Figures 4.1.4_2 and 4.1.4_3 respectively; show magnetic interpretation collated with surface geochemical anomalies for Ianapera and Saririaky areas. These areas, strongly coincident with existing geochemical anomalism, have the best potential to delineate early drill targets. Southern Geoscience have recommended follow-up with detailed aeromagnetic and VTEM surveying to detect and define any significant sub-surface sulphide bodies.

MML is currently following up these results with a soil geochemical programme targeting areas of interest around the margins of the anorthosites. This programme is currently ongoing.

MML interpret some similarities between the Ampanihy Anorthosites and the geological environment at Voisey’s Bay in eastern Canada. The similarities include a major structure, locally (Ni-Cu) sulphidic anorthositic intrusive rocks, and sulphide-bearing country rocks.

The Voisey’s Bay sulphide-hosted Ni-Cu mineralisation lies within a troctolite body (i.e. an intrusive rock of mafic composition composed primarily of olivine and plagioclase feldspar), part of an anorthosite suite (intrusive rock of plagioclase and mafic mineral composition) that has intruded along a major suture zone. The mineralisation is attributed to metalliferous magma that became enriched in sulphides as it passed though sulphide-bearing country rocks. The significant factors associated with this deposit include a major suture zone, anorthosite and troctolite intrusive bodies associated with an anorthositic complex and sulphide-bearing country rocks.

Figure 4.1.4_2: Summary of Ianapera Geochemical and Geophysical Anomalies

Figure 4.1.4_3: Summary of Saririaky Geochemical and Geophysical Anomalies


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Based on apparent similarities with the Voisey’s Bay area, the Ianapera and Maniry anorthosite bodies in southwest Madagascar, with confirmed Ni and Cu sulphides and anomalous PGE geochemistry, can be considered prospective for nickel, copper and associated gold-PGE.

5.4.1.5 Exploration and Development Potential

Although the Ampanihy Project covers a large area, the areas in and adjacent to the anorthosite massifs represent the greatest potential for Voisey Bay style sulphide-hosted Ni-Cu mineralisation (Figure 4.1.5_1). The greatest part of the Ampanihy shear zone has undergone granulite facies metamorphism, and represents an extremely ductile segment of the geology. It is unlikely that the area between the two massifs will yield any significant Ni-Cu-PGE mineralisation.

Although MML have sourced significant geological information, it is recommended that further reconnaissance and detailed mapping, as well as rock chip sampling, and a wide spaced surface geochemical survey are carried out in order to swiftly assess the potential of this area. Prior assessment by MRNL personnel noted frequent occurrences of manganese along the Ampanihy Shear between Ianapera and Maniry.

The anorthosite massifs are also prospective for hard rock ilmenite mineralization. Abundant alluvial ilmenite scree is present in the western parts of the Ankafotia massif, and its source should be assessed through mapping, stream sediment sampling and rock chip sampling.

5.4.1.6 Exploration and Evaluation Strategy

MML has provided RSG Global with an exploration strategy for the Ampanihy Project to cover an initial two year period following admission to ASX. MML has separated the proposed exploration strategy into two phases.

Phase I of MML’s exploration strategy will focus on the following:

Assess areas of known Ni-Cu-PGE (stream sediment) anomalism around interpreted ‘low-pressure’ zones along the margins of the anorthosite bodies. Initial soil geochemical sampling is currently underway.

Completion of detailed aeromagnetic and VTEM surveys over both anorthosite intrusives and their surrounds.

Systematic follow-up prospecting of surface geochemical anomalies generated.

Drill follow up on targets defined by ground geophysics and surface sampling.

The objective will be to have multiple drill targets defined by ground geophysics and surface geochemistry so that initial drilling can be done by mid-2008 to be completed prior to the onset of the 2008/09 wet season.

Phase II is contingent on positive results being delivered in Phase I, and includes a provision for exploratory RC/DD drilling.

MML has also provided RSG Global with an exploration budget for the Ampanihy Project covering the initial two year period to October 2009 as summarised in Table 4.1.6_1.

The maximum subscription budget allows for respective completion of 2,975 and 2,900 metres of diamond core drilling in Years 1 and 2.

The minimum proposed expenditure of A$0.55M over the initial two year period is considered to be consistent with the potential of the Ampanihy Project and is considered adequate to cover the costs of the proposed program.

Figure 4.1.4_4: Ankafotia Massif – Disseminated Sulphides in Leuconorites

Figure 4.1.5_1: Ampanihy Project – Airborne Magnetic Survey Image, Mineralisation and Ni-Cu Targets


5

5.4.2 Vohibory Project


The property is located in Toliary Province of southwest Madagascar. From Toliary, the Vohibory area can be accessed by road (via the RN7, which is tarred, and then the RN10 to Lazarivo via Betioky), a distance of approximately 240 kilometres of which 70 kilometres are paved (Figure 4.2.1_1). Within the project area, access is limited to poorly maintained tracks and the use of 4WD is recommended. The region is sparsely populated with habitation concentrated in a few scattered villages.

Relief is mostly undulating, with surface elevations generally ranging from 250m above mean sea level in the main river valleys to 500m in the more topographically pronounced eastern regions. Streams and rivers flow heavily during the months of December and January but are usually dry for the remainder of the year.

The climate is dry tropical with maximum temperatures of 37°C in November and minimum temperatures of 7°C in June. Average precipitation is 600mm with the rainy season usually extending from November to February. Dry scrub and woodlands are developed over areas underlain by sedimentary rocks while savannah grassland predominates on crystalline basement.

5.4.2.2 Tenure

The Vohibory Project comprises three permits covering a total of 150km2, located 140km east-southeast of Tulear (Table 4.2.2_1).

The permits are 100% beneficially owned by MML, held under title by MDA. They were granted in early to mid February 2005 for 10 years.

5.4.2.3 Geology

The project lies within amphibolites and quartz-feldspar gneisses of the Vohibory System or Belt (Figure 4.1.2_1 and 4.2.3_1). These are unconformably overlain by coal and red-beds of the Sakoa Member of the Karoo Supergroup. The Sakoa Member is equivalent in age to the Permian Karoo Supergroup of the African mainland. It comprises four formations named from oldest to youngest, the Glacial Series, the Coal Measures, the Red Series and the Vohitolia Limestone. The coal-bearing geological formation Sakoa, has counterparts in Mozambique and South Africa.

The Sakoa formation contains vast bituminous coalfield (i.e. ‘black’ or ‘thermal’ coal) that extends in excess of 100 kilometres in strike extent, developed in the Ampanihy region. The coalfield encompasses several basins (northeast to southwest): Imaloto, Ianapera, Sakoa and Sakamena; the latter two being the largest and best developed; having previously been mined prior to 1960 (i.e. 30,000 tonnes averaging 17% ash and a calorific content of 6,500 cal/ton). Historical estimates put the Sakoa resources at around 55 million tonnes of contained material.

The Vohibory Project overlies the southern portion of the Ianapera Coal Basin, located ENE of the adjacent Sakoa Basin. The Ianapera coal beds are exposed sub-contiguously in the central and southern portions of the permit area for a combined strike of over 20 kilometres (Figure 4.2.3_1)

The Vohibory Belt consists of a gently folded sequence of orthogneiss and paragneiss with interlayered marble, amphibolite units and tourmaline granite. Possible ophiolite remnants are represented by over 50 chromite-layered serpentinite lenses. These occur with pillowed amphibolites, metagabbro and metatroctolite (and associated Mn, Fe, Au and Cu mineralisation). The basic rocks have been metamorphosed to garnet granulites. There are strong similarities between the Vohibory amphibolites/ultramafic assemblage and similar ophiolitic units in eastern and south eastern Africa.

The assemblage adjoins the eastern margin of the Beseva granite-pegmatite intrusive.


BRGM carried out regional reconnaissance and rock chip sampling in the greater Vohibory area. In the late nineties Madagascar Resources NL carried out some minor reconnaissance surface geochemistry on widely spaced grid lines and associated stream sediment sampling for copper mineralisation.

Review of BRGM and Department of Energy and Mines data by Madagascar Resources geologists indicate the presence of Au/Cu and Cu/Pb/Zn mineralisation associated with major faults within the Proterozoic of the Vohibory Belt, around Vohibory and Besakoa. Field trips between 1995 and 1999 to these areas have confirmed the presence of Au-Cu mineralisation at Vohibory, Au-Cu-Pb-Zn mineralisation at Besatrana, and Cu mineralisation associated with ultramafic bodies in the Vohibory Belt.

Table 4.1.6_1 Ampanihy Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 57,000 49,000 57,000 49,000

Total 294,000 256,000 522,000 480,000


5

Figure 4.2.1_1: Vohibory Project – Location

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Application Date

Granted

Vohibory PR 13063 MDA 21 131.376 $4,665 10 4/02/2005 4/02/2015

Vohibory PR 13508 MDA 1 6.256 $222 10 4/02/2005 4/02/2015

Vohibory PR 13829 MDA 2 12.512 $444 10 14/02/2005 14/02/2015

NYG – not yet granted, MDA – MADA-AUST SARL (a wholly owned subsidiary of MML), , PR – permis de recherche

Table 4.2.2_1 Vohibory Project: Tenement Schedule

5


Figure 4.2.3_1 Vohibory Project – Geology


5

In November and December 2007 MML completed a programme of surface geochemical sampling at Vohibory comprising minus 80 mesh soil sampling and rock chip grab sampling. These works have returned results of up to 29% Cu; 175g/t Au and 2,000ppm Ni; 100ppm Cu; 40ppb Pt from rock chips and 110ppm Cu; 15ppb Au from soils. These results were returned over 10km and are within known historical polymetallic mineralisation trends (refer Figure 4.2.3_1). In particular, the sample returning 29% Cu occurs along the same trend where exploration drilling in 2006-07 by Majescor Resources generated a 21 metre intercept averaging 0.7% Cu; 0.50g/t Au; 1.1% Zn and 21.4g/t Ag.

MML advises that it intends to prioritise follow-up of the target areas generated by its recent sampling within Vohibory.


Numerous copper occurrences are recorded along the Beseva-Vohibory contact. To the north of the MML tenements, the historical Besatrana polymetallic Cu-Zn-Ag-Au mine was being reinvestigated in 2006 by Majescor Resources. Besatrana is a Besshi type greenstone belt-hosted, volcanogenic massive sulphide (VMS) deposit hosted in a volcano-sedimentary unit that was reported by the Madagascar Geological Survey to have produced approximately 6,000 tonnes of ore averaging 3.5% copper plus associated silver, gold and antimony.

Mineralisation occurs as polymetallic sulphide lenses containing massive to semi-massive chalcopyrite, pyrite, pyrrhotite, sphalerite, molybdenite and galena. Historical work has also shown that limited gold mineralization is present.

Historical data shows that the areas surrounding Besatrana contain a series of untested sulphide occurrences, and may represent a potential new Neoproterozoic VMS type mineralization district.

There are numerous reported occurrences of gold and copper mineralisation in the Vohibory area. Despite the relatively low Au-Cu values in surface samples the association of Au-Cu mineralisation with a major structure indicates that further work is warranted (mapping, soil sampling, geophysics, drilling).

The Vohibory Project area contains coal-bearing formations of the Ianapera Coal Basin, which are exposed semi-contiguously in the central and southern portions of the permit area. MML is currently evaluating the potential of its coal holdings via assessment of historical data and direct field assessment.

Recent exploration within the Sakoa and Sakamena Coal Fields has been undertaken by Pan African Mining Corp and Red Island Minerals. Work by Pan African has included drilling to 200 metres below natural surface and limited property testing of coal seam material. This work has confirmed historical material property evaluation of the coal in terms of calorific and ash content and further demonstrated the material to have low sulphur content (generally less than 1%) and to be amenable to beneficiation.

Coal seams vary from one to twelve metres in thickness, with several seams in excess of two metres average thickness. Coal seams in the Sakoa and Sakamena areas generally show good strike continuity; often over distances in excess of

10 kilometres. MML tenements overlie the southern portion of the Ianapera Coal Basin, which include approximately 22 kilometres strike of coal beds (Figure 4.2.3_1). MML is currently undertaking on-site geological assessment of the coal seams utilising surface mapping and sampling. The company intends to mobilise drill rigs to site immediately post listing to delineate the extent of the coal seams in the area.


MML has provided RSG Global with a preliminary exploration plan for the Vohibory Project to cover an initial two year period following admission to ASX.

Availability of (non-aeromagnetic) geophysical data will be examined in conjunction with mapping and surface geochemical sampling of mineralised areas.

The presence of known concentrations of sulphides with mineralisation will allow use of IP and EM geophysical data as well as existing aeromagnetic data. With the availability of good quality regional aeromagnetic data and Landsat imagery, field work will target aeromagnetic anomalies and mineralised areas delineated from surface geochemistry/prospecting.

MML has separated the proposed exploration strategy into two phases.


Complete surface geochemical sampling of prospective areas along the Beseva-Vohibory contact zone and Besakoa-Ianapera mineralisation trend.

Complete surface geological mapping followed by broad spaced (i.e. average 800 metre collar centres) drilling of identified coal seams for early delineation of inferred resources over defined target areas.

Complete detailed airborne magnetic and VTEM surveying of the project area and carry out a detailed structural interpretation of the area based on the geophysical data and Landsat imagery.

Assess areas of known Cu-Zn-Ag-Au (stream sediment) anomalism around the margins of the Beseva Granite Pegmatite for massive sulphide VMS-type mineralisation through mapping, and ground geophysics such as EM.

Drilling of preliminary targets in the area (the objective will be to have multiple drill targets defined by mid-2008 to allow initial drilling to be completed prior to the onset of the 2008/09 wet season).

Phase II is contingent on positive results being delivered in Phase I, and includes a provision for exploratory RC/DC drilling.

MML has provided RSG Global with an exploration budget for the Vohibory Project covering the initial two year period to October 2009 as summarised in Table 4.2.6_1.

The minimum proposed expenditure of A$0.4M over the initial two year period is considered to be consistent with the potential of the Vohibory Project and is considered adequate to cover the costs of the proposed program. The budget also


5

allows for 2,250 and 2,220 metres of core drilling in Years 1 and 2, respectively.

5.4.3 Miary Project


The Miary project is located some 30km east of the southern extremity of the Ampanihy Project in southwest Madagascar (Figure 4.3.1_1). The area is arid, and vegetation is adapted to dry and hot conditions. The topography is generally flat, with gently undulating grasslands with low shrub (Figure 4.1.1_2) and the elevation is less than 300m above mean sea level. Temperatures vary between 20 – 30°C in summer and become colder in the winter, occasionally reaching sub-zero temperatures.

5.4.3.2 Tenure

The Miary project comprises a single permit of 25.024km2. The permit was granted in late January 2005 for a term of 10 years (Table 4.3.2_1). Current mineral rights incorporate Ni-Cu-Au; with an application for Mn and other minerals lodged by MML in late 2007.

5.4.3.3 Geology

The Miary Project lies within a portion of the Bekily Belt, which adjoins the Ampanihy Belt to the east, and forms part of the Graphite System. The Project covers an area of known historical manganese occurrences within a sequence of graphite schists, migmatites and quartzites interpreted as orogenic supracrustal rocks. The geological setting for the area is shown on Figure 4.1.2_1.

Two anorthosite bodies (Manambahy and Volovolo) are also identified south and east of the Ampanihy Belt. The Miary Prospect lies along strike to the north of the Manambahy gabbroic anorthosite intrusive.


The Miary project has historical occurrences of manganese mineralisation, based on rock chip sampling from previous explorers. No details of any past exploration in this area have been sighted and the exploration history on this project is vague and it is not clear if any work, other than some initial regional reconnaissance, has been carried out in the area.

It is unsure what lithologies are associated with manganese mineralisation, as very little detail is available regarding the local geology and no systematic mapping of the area has been carried out.


Miary is a relatively small project and has indications of manganese (+/-graphite) mineralisation, although these could not be verified. It is believed that graphite indicators are associated with the abundant regional distribution of the graphite schists in a more regional context. Additionally, the proximity of the anorthosite/gabbroic intrusives would suggest possible Cu-Ni mineralisation potential.

Miary is very much considered a grass roots project, and it has been identified for early assessment to determine retention or relinquishment.


MML has provided RSG Global with a comprehensive exploration strategy for the Miary Project to cover an initial two year period following admission to ASX.

It is proposed to focus on a detailed geological mapping of the area with an associated soil sampling program to follow up of reported historical manganese occurrences. As no details are available for this area, it is anticipated that some reconnaissance drilling will be carried out by MML.

Table 4.2.6-1 Vohibory Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 5,000 6,000 57,000 6,000

Total 215,000 185,000 377,000 352,000

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Application Date

Granted

Miary PR 14614 MDA 4 25.024 $889 10 26/01/2005 26/01/2015

MDA – MADA-AUST SARL (a wholly owned subsidiary of MML), PR – permis de recherche

Table 4.3.2_1 Miary Project: Tenement Schedule


5

MML has also provided RSG Global with an exploration budget for the Miary Project covering the initial two year period to October 2009 as summarised in Table 4.3.6_1 below.

The minimum proposed expenditure of A$87K over the initial two year period is considered to be consistent with the potential of the Miary Project and is considered adequate to cover the costs of the proposed program. The budget also allows for 370m of core drilling in Year 1 and 360 metres of core drilling in Year 2.

5.4.4 Anjeba Project

1.1.1 Location, Access and Physiography

The Anjeba Project is located in the extreme south of Madagascar, approximately 300km southeast of Toliary, near the town of Jafaro (Figures 4.3.1_1 and 4.4.3_1).

The Anjeba area is typical of southwest Madagascar, as it is arid, with vegetation adapted to these dry and hot conditions. The topography is generally flat with gently undulating grasslands and low shrub. The elevation is less than 300m above mean sea level. Temperatures vary between 20 – 30ºC in summer, reaching sub-zero temperatures in the winter.

5.4.3.2 Tenure

The Anjeba project comprises a sub-contiguous set of two permits totalling 9 carres for 56.25km2 (Table 4.4.2_1). Beneficial ownership resides with MML, with title held in the name of MDA.

5.4.3.3 Geology

The Project is underlain by Proterozoic amphibolites and orthopyroxenites of the Androyen System, immediately east of their disconformable contact with the younger Graphite System (Figure 4.4.3_1). The country rocks include ubiquitous intercalated phlogopite, orthopyroxenite and quartzite units intruded by early Palaeozoic granites.


Other than forming part of current regional mapping programs carried out under the auspices of GAF, and some scintillometer work carried out in the area, no systematic

exploration has taken place over the project area. MNRL carried out a reconnaissance field trip over the area in 2005.


Historically, orthopyroxenites of the Androyen System have provided the host for the bulk of historical uranothorianite mining in Madagascar.

The Anjeba project area overlies uranothorianite-prospective sequences of the Androyen System. MRNL assessed the Anjeba project in 2005, and subsequent to that, the project area has yielded encouraging indications of uranium-thorium enrichment.

Aeromagnetic data suggest that such prospective horizons and structures are likely as outliers within the southern extremity of current MML permits. Areas deemed to be uranium-prospective will be assessed as a matter of priority. Radiometric data and surface geochemical sampling have returned encouraging results. Scintillometer readings up to 2,000cps, combined with anomalous Thorium (13.5ppm) in soil indicate that the orthopyroxenites units adjacent to the granitic intrusives may host uranothorianite mineralisation.


The Anjeba Project has been selected for early assessment to determine retention or relinquishment. Exploration will focus on the orthopyroxenites located in proximity to granite intrusives in the southern project area.

It is proposed to initially focus a ground gamma ray spectrometer survey as a first pass check for thorium, and follow up of reported historical thorium anomalism based on regional scintillometry. Surface mapping and soil sampling is also proposed.

MML has also provided RSG Global with an exploration budget for the Anjeba Project covering the initial two year period to July 2009 as summarised in Table 4.4.6_1.

The minimum proposed expenditure of A$140K over the initial two year period is considered to be consistent with the potential of the Anjeba Project and is considered adequate to cover the costs of the proposed program. The budget also allows for 650 metres of core drilling in Year 1 and 630m in Year 2.

Table 4.3.6-1 Miary Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 1,000 1,000 1,000 1,000

Total 61,000 26,000 87,000 72,000


5

Figure 4.3.1_1: Location and Access to the Miary and Anjeba Project Areas

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Application Date

Granted

Anjeba (Antinimora/Jafaro) PR 18915 MDA 7 43.792 $1,016 10 13/03/2006 10/03/2016

Anjeba (Antinimora/Jafaro) PR 18916 MDA 2 12.512 $290 10 23/02/2006 23/02/2016


Table 4.4.2_1 Anjeba Project: Tenement Schedule


5

Figure 4.4.3_1: Anjeba Project – Tenement Holding on Interpreted Geology

Table 4.4.6_1 Anjeba Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 2,000 3,000 2,000 3,000

Total 99,000 41,000 136,000 119,000


5

5.5 Central MadagascarThe central Madagascar projects include the Bekisopa and Satrokala projects and the Mananjary Regional projects, and in total represent some 46 permits totalling 4,116.4km2 area.

The Bekisopa project is situated in southern central Madagascar on the central plateau adjacent to the eastern edges of the Morondava Basin. Satrokala is situated south of Bekisopa, on the margins of the Horombe Plateau.

The Mananjary regional project is situated along the central east coast of Madagascar.

5.5.1 Bekisopa Project


The Bekisopa nickel project is located some 150km west of Fianarantsoa, near the township of Bekisopa, south of the

Mananantanana River (Figures 5.1.1_1 and 5.1.2_1). Access to the project area is gained from Andonaka on the RN7, some 75km northeast of Ihosy. From Andonaka, access to the Bekisopa is via 120km of poorly maintained gravel roads and cart tracks.

The area is marked by rolling hills in a semi-arid climate, with the densest vegetation near river beds and in the valleys. No exploration work can be contemplated during the rainy season, which extends from mid-November to mid-April. The climate is generally warm and dry, but temperatures are affected by the altitude.

5.5.1.2 Tenure

The Bekisopa project comprises two contiguous permits, totalling 14 (PR) carrés and 87.6km2. The Bekisopa (formerly Soatanimbary) project was granted over the period February to July 2005 for a period of 10 years. Both permits are beneficially owned by MML under title of MDA (Table 5.1.2_1).

Figure 5.1.1_1: Southern Central Projects – Location and Access

Bekisopa Project (red permit outline) and Satrokala Project (purple permit outline; approximate location of the project area relative to the RN7 (main road – dark red line).


5

5.5.1.3 Geology

The Bekisopa permits overlie a Proterozoic sequence of intercalated ultramafics, mica schists, amphibolites, marbles and quartzite units of the Androyen and Vohibory Systems (Figure 5.1.2_2). The marbles and quartzite units trend in a NNW-SSE direction, and are believed to be steeply dipping. Mineral occurrences are spatially associated with the contacts of the ultramafic units and gneissic amphibolites.


The project area has undergone little exploration in the past for nickel and cobalt. Whilst there are numerous ultramafic bodies in Madagascar, few have documented exploration for Ni and PGE’s. The Bekisopa permit covers a 5km long stratiform ultramafic body with garnierite reported from some outcrops. Observations from initial field assessment have demonstrated potential for nickeliferous laterite development. Additionally, assessment by the Madagascar Geological Survey in the seventies reported garnierite developed in lateritised peridotite.

Shallow vertical drilling of the laterite profile is proposed to rapidly and effectively test the lateritic Ni potential at Bekisopa.


Given the nature of the postulated target (Ni-Co laterite), initial follow-up techniques will comprise detailed interpretation of aeromagnetic data in the first instance. This process will allow a focused follow-up in the field for secondary surface sampling.

MML has provided RSG Global with an exploration strategy for the Bekisopa Project to cover an initial two year period following admission to ASX. MML has separated the proposed exploration strategy into two phases.


Conversion of all available exploration data into digital format.

Development of a GIS database and geological model.

Acquisition and interpretation of airborne geophysical data.

Figure 5.1.2_1: Bekisopa Project - Tenement Location Plan on Geology Background


5 Table 5.1.5_1 Bekisopa Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 2,000 3,000 2,000 3,000

Total 107,000 98,000 177,000 197,000

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Application Date

Granted

Bekisopa (Soatanimbary)

PR 13507 MDA 5 31.280 $1,111 10 N/A 4/02/2005

Bekisopa (Soatanimbary)

PR 15778 MDA 9 56.304 $1,999 10 N/A 20/07/2005


Table 5.1.2_1 Bekisopa Project Area: Tenement Schedule

Phase II is contingent on positive results being delivered in Phase I, and includes a provision for exploratory RC and/or Diamond drilling.

MML has also provided RSG Global with an exploration budget for the Bekisopa Project covering the initial two year period to September 2009 as summarised in Table 5.1.5_1.

The minimum proposed expenditure of A$205K over the initial two year period is considered to be consistent with the potential of the Bekisopa Project and is considered adequate to cover the costs of the proposed program. The budget also allows for 910 metres of core drilling in Year 1 and 1160m in Year 2.

5.5.2 Satrokala Project


The Satrokala project is located some 50km Northwest of Ihosy, in south central Madagascar (Figure 5.1.1_1). Access to the project area is gained from the RN7 towards Satrokala. Access to the site is via a combination of poorly maintained gravel roads and cart tracks for some 20km from Satrokala village.

In the central and western parts of Madagascar vast expanses of secondary grassland now cover nearly the entire landscape (Figure 5.2.1_1). The “Hauts Plateaux” (the High Plateau) feature mainly gentle rolling hills and valleys, as well as outcropping peaks consisting of rock such as granite and or quartz ridges. The physiography of the Horombe Plateau is typified by a very sparse vegetation and gentle rolling hills.

The interior escarpment and high plateau regions have a seasonal climate with frost often occurring in mid winter but snow is extremely rare. Temperatures vary considerably across the different regions.

5.5.2.2 Tenure

The Satrokala project comprises one permit, totalling 66 (PR) carrés and 412.896km2 (Table5.2.2_1). The permit will be beneficially owned by MML under title of MDA.

5.5.2.3 Geology

The Satrokala Permit is located in the northern portions of the Androyen System, and is underlain by a Proterozoic sequence of intercalated ultramafics, micaschists, garnetiferous quartz-

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Application Date

Granted

Satrokala PR 26341 MDA 66 412.896 4,887 5 18/05/2007 11/07/2007


Table 5.2.2_1 Satrokala Project Area: Tenement Schedule


5

feldspar schists, amphibolites, marbles and quartzite units (Figures 5.2.3_1 and 5.2.3_2). Approximately 25 to 30 strike kilometres of variably laterite covered, potentially prospective, ultramafic units have been mapped within the Satrokala project permits.


Satrokala was acquired for postulated nickel-cobalt potential; historical assessment demonstrated potential for development of nickeliferous laterite, with initial sampling by Malagasy Geological Survey returning up to 0.60% Ni from observed garnierite horizons. Very limited grass roots exploration, including minor rock chip sampling, was carried out during past mapping campaigns.


Given the nature of the postulated target (Ni-Co laterite), initial follow-up techniques will comprise detailed interpretation of aeromagnetic data in the first instance. This process will allow a focused follow-up in the field for secondary surface sampling.

MML has provided RSG Global with a comprehensive exploration strategy for the Satrokala Project to cover an initial two year period following admission to ASX. RSG Global has separated the proposed exploration strategy into two phases.


Conversion of all available exploration and drilling data into digital format.



Phase II is contingent on positive results being delivered in Phase I, and includes a provision for exploratory RC and/or Diamond drilling.

RSG Global deems that the budget is sufficient to cover the initial two year period to October 2009 as summarised in Table 5.2.5_1.

The minimum proposed expenditure of A$300K over the initial two year period is considered to be consistent with the

Figure 5.2.3_1: Satrokala Project - Tenement Location Plan on Geology Background


5

Figure 5.2.1_1: Satrokala Project – Physiography Figure 5.2.3_2: Satrokala Project – Quartz Intercalations

potential of the Satrokala Project and is considered adequate to cover the costs of the proposed program. The budget allows for 1,510 metres of exploratory drilling in Year 1 and 1,860m in Year 2.

5.5.3 Mananjary Regional Project


The Mananjary Regional Project is located along the central-eastern seaboard of Madagascar, north and south of the town of Mananjary (Figures 2.5_1 and 5.3.3_1). The Project area consists of a large (3,616km2) group of tenements, centred primarily on the Mananjary region to the south of Jubilee’s Ambodilafa (Ni/Cu/PGE) project. The Project area overlies rugged and densely vegetated eastern coastal margin of Madagascar. Consequently, access within the project areas is difficult; necessitating the use of helicopter support to facilitate mobility.

The east coast of Madagascar consists of a narrow band of lowlands, about fifty kilometres wide, formed from the sedimentation of alluvial soils, and an intermediate zone, composed of steep bluffs alternating with ravines bordering an escarpment of about 500 meters in elevation, which gives access to the central highlands. The coastal region extends

roughly from north of Baie d’Antongil, the most prominent feature on the east coast of the island formed by the Masoala Peninsula, to the far south of the island. The coastline is straight, with the exception of the bay, offering less in the way of natural harbours than the west coast.

The east coast has a subequatorial climate and, being most directly exposed to the trade winds, has the heaviest rainfall, averaging as much as 3.5 meters annually. This region is notorious not only for a hot, humid climate in which tropical fevers are endemic but also for the destructive cyclones that occur during the rainy season, coming in principally from the direction of the Mascarene Islands.

5.5.3.2 Tenure

The Mananjary project comprises forty three permits, totalling 580 (PR) carrés and 3,616km2 (Table 5.3.2_1). The permits which are currently in the process of being granted will be beneficially owned by MML under title of MDA and MZT.

5.5.3.3 Geology

The Project tenements overlie a variable sequence of (Cretaceous) flood basalts and rhyolite in the north (Area ‘A’ – “Ambodilafa South Group”) and (Proterozoic) quartz-feldspar

Table 5.2.5_1 Satrokala Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 3,000 4,000 3,000 4,000

Total 156,000 144,000 256,000 290,000


5

gneisses and schists in the south (Area ‘B’ – “Manakara Group”); the latter frequently intruded by Charnockites and amphibolites. Some of these intrusives may be of Noritic composition. In the extreme south of the project area is the Ranomena area, overlying Proterozoic gneisses of charnockite composition intruded by syenite with subsequent igneous / volcanic activity in the form of charnockite intrusives and rhyolite volcanics (Figure 5.3.3_1).

The voluminous flood basalts of Cretaceous age have parallels with Analalava in the NW of Madagascar where Ni-Cu-PGE’s are known to be associated with gabbroic intrusives. Geologists working in the area recently postulated an analogy with Noril’sk style mineralisation. Additionally PGRM magnetic data suggest sills of (Cretaceous) pillow basalts occur within the eastern margin of the Proterozoic basement gneisses in Area ‘B’.


The voluminous Cretaceous flood basalts underlying the Ambodilafa South Group have parallels with Analalava in the extreme north of Madagascar where Ni-Cu-PGE’s are known to be associated with gabbroic intrusives. Geologists working in the region have postulated an analogy with Noril’sk style mineralisation for this area. Historical regional stream sediment sampling by the BRGM north of Mananjary originally delineated the Ambodilafa gabbroic intrusive; currently under exploration by (AIM-listed) Jubilee Platinum. Drilling in 2006 by Jubilee returned intercepts up to 2 metres grading 1.3% Ni; 0.31% Cu & 0.31g/t 2PGE. Exploration continues within this area, which also hosts the (historical) Bebasy gold operation, recent surface sampling of which returned results up to 48g/t Au.

Table 5.3.2_1Mananjary Project AreaTenement Schedule

NameTen Type

Ten No.

HolderArea BL

Area km2 Rent

Term (yrs)

Grant Date Expiry Date

Mananjary Reg. AERP/PR 28130 MDA 54 337.824 8203 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28131 MDA 66 412.896 10025 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28181 MDA 8 50.048 1215 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28182 MDA 5 31.280 759 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28183 MDA 1 6.256 152 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28184 MDA 3 18.768 456 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28185 MDA 2 12.512 304 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28186 MDA 3 18.768 456 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28188 MDA 12 75.072 1823 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28191 MDA 24 150.144 3646 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28192 MDA 18 112.608 2734 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28193 MDA 1 6.256 152 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28194 MDA 4 25.024 608 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28195 MDA 1 6.256 152 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28196 MDA 7 43.792 1063 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28197 MDA 1 6.256 152 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28198 MDA 19 118.864 2886 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28199 MDA 1 6.256 152 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28200 MDA 3 18.768 456 NYG 24/08/2007 NYGMananjary Reg. AERP/PR 28359 MDA 4 25.024 608 NYG 06/09/2007 NYGMananjary Reg. AERP/PR 28424 MZT 258 1614.048 39190 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28427 MZT 13 81.328 1975 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28428 MZT 7 43.792 1063 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28429 MZT 3 18.768 456 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28430 MZT 31 191.590 4652 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28431 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28433 MZT 5 31.280 759 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28434 MZT 2 12.512 304 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28435 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28436 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28437 MZT 4 25.024 608 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28438 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28439 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28440 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28441 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28442 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28443 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28444 MZT 3 18.768 456 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28445 MZT 3 18.768 456 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28446 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28447 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28448 MZT 1 6.256 152 NYG 13/09/2007 NYGMananjary Reg. AERP/PR 28449 MZT 1 6.256 152 NYG 13/09/2007 NYG

NYG – not yet granted, MDA – MADA-AUST SARL (a wholly owned subsidiary of MML), MZT - MAZOTO MINERALS SARL (a wholly owned subsidiary of MML), PR – permis de recherché, PE – permis d’exploitation, AERP – application de permis.


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Figure 5.3.3_1: Mananjary Regional Project - Tenement Location Plan on Geology Background


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The regional scale BRGM work was never followed up, and the possibility exists that additional intrusives of charnockite –gabbroic composition intrude the Androyen schists and gneisses south of Ambodilafa and are exposed within the Cretaceous rhyolites and basalts that underlie MML’s Ambodilafa South tenements.

To the south, Malagasy Government magnetic data suggest sills of (Cretaceous) pillow basalts occur within the eastern margin of the Proterozoic basement gneisses within the Manakara group. This interpretation is consistent with the known presence of numerous intrusive sills of charnockite composition in this area.

Whilst Area ‘A’ was historically subjected to regional-scale stream geochemistry by the BRGM, Area ‘B’ remains essentially unexplored yet contains similarly prospective lithological assemblages to those both within the area the area that hosts the Ambodilafa Project and with other areas of Ni-Cu-PGE prospectivity in Madagascar (e.g. Analalava).

MML plans to utilise airborne geophysical data (Aeromagnetics & EM) combined with regional stream geochemical sampling to delineate prospective areas. This project has been designated for early assessment to determine retention or relinquishment.


Given the nature of the postulated target (Ni), initial follow-up techniques will comprise detailed interpretation of aeromagnetic data in the first instance. This process will allow a focused follow-up in the field for secondary surface sampling.

MML has provided RSG Global with an exploration strategy for the Mananjary Project to cover an initial two year period following admission to ASX. MML’s exploration strategy will focus on the following:

Conversion of all available exploration and drilling data into digital format.



Surface geochemical sampling and follow-up drilling.

MML plans to utilise airborne geophysical data (Aeromagnetics & EM) combined with (proven effective)

regional stream geochemical sampling to delineate prospective areas. By dividing the Project into three (3) distinct zones, MML will be better able to target each area systematically and sequentially.

Depending on the results of the IPO, MML has budgeted for between 1,900 and 5,155 metres of follow up drilling of any targets identified from initial exploration programmes.

MML has provided RSG Global with an exploration budget for the Mananjary Project. RSG Global deems that a budget, outlined in Table 5.3.5_1, is sufficient to cover the initial two year period to October 2009.

The minimum proposed expenditure of A$0.5M over the initial two year period is considered to be consistent with the potential of the Mananjary Project and is considered adequate to cover the costs of the proposed program.

5.6 Majunga Project5.6.1 Location Access and Physiography

The Majunga Project is located on the northwest coast of Madagascar, 35km southwest of the port city of Majunga (Figure 6.1_1). The Majunga area is marked by broad alluvial plains, with numerous coastal indentations, deep bays and well protected natural harbours providing shelter to the common cyclones passing through the area.

The climate is generally tropical with temperatures ranging from the mid teens to the lower thirties. Monthly rainfall varies from less than 20mm in the winter months to 1500mm in the summer months (November-March).

5.6.2 Tenure

The Majunga Project comprises a single permit of 4 carrés totalling 25.0km2 (Table 6.2_1). The exploration (RP) permits were granted in March 2005 for a period of 10 years. They are beneficially owned by MML with title held by MDA.

5.6.3 Geology

Following the Pan-African Orogeny, the Precambrian Domain of Madagascar has remained emerged until the Carboniferous, when Karoo-type marine platform sediments were deposited. The sedimentation phase corresponds to the Karoo rifting episode; the initial break-up of Gondwana; an

Table 5.3.5_1 Mananjary Regional Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m








Tenement costs 55,000 34,000 55,000 34,000

Total 300,000 200,000 451,000 460,000


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NameTen Type

Ten No.

HolderArea BL

Area km2 Rent Expenditure

Application Date

Granted

Majunga PR 12834 MDA 4 25.00 $871 1/03/2005 1/03/2007


Table 6.2_1 Majunga Project Area: Tenement Schedule

Table 6.5_1 Majunga Project: Proposed Exploration Expenditure Minimum Subscription A$8m Maximum Subscription A$10m


Drilling (Total Cost) 24,000 - 82,000 -

Surface geochemistry & mapping 11,000 - 10,000 -


Field plant & equipment 5,000 - 5,000 -

Travel & accommodation 10,000 - 10,000 -

Staff & contractors 10,000 - 10,000 -

Tenement costs 1,000 1,000 1,000 1,000

Total 67,000 1,000 123,000 1,000

Figure 6.1_1: Majunga Project - Tenement Location Plan


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5.7 Glossary°C Temperature in degrees Celsius

African Plate A large portion of the Earth’s crust covering the continent of Africa and extending westward to the mid-Atlantic Ocean.

Ag Chemical symbol for silver.

AIG Australian Institute of Geoscientists

airborne geophysical data Data pertaining to the physical properties of the earth’s crust at or near surface and collected from an aircraft.

airborne geophysical survey Survey pertaining to the physical properties of the earth’s crust at or near surface and collected from an aircraft.

airborne geophysics Data pertaining to the physical properties of the earth’s crust at or near surface and collected from an aircraft.

Al Chemical symbol for aluminium.

alluvial Silt, sand and gravel material, transported and deposited by rivers.

amazonite Form of feldspar.

amethyst Form of silica (SiO2).

amphibolite A metamorphic crystalline rock consisting mainly of amphibole and some plagioclase.

Androyen System Refers to a group of metamorphic rocks comprising part of the crystalline basement rocks of Madagascar.

anorthosite A plutonic rock comprised almost entirely of calcium-rich plagioclase feldspar (labradorite).

Archaean An era of geological time spanning the period from 3,800 million years to 2,500 million years before present.

argillite A rock composed predominantly of clay minerals, or having a notable proportion of clay in its composition.

Au Chemical symbol for gold.

AusIMM Australian Institute of Mining and Metallurgy

beryl A beryllium-alumino silicate mineral, Be3Al2Si6O18, often found in pegmatites. Emerald is a gem variety of beryl.

Besshi Deposit A VMS style Zn-Cu-Pb deposit located in southwestern Japan

event that spans from the Upper Carboniferous to the Lower Jurassic Periods. The Karoo sediments were deposited into two major sedimentary basins along the western coast of Madagascar; the Majunga Basin in the north-west and the Morondava Basin in the southwest. They are composed of terrestrial fluvial (river) and evaporite sediments, and overlying calcareous marine sediments.

Subsequent (mid-Jurassic) opening of basins in the north and west of Madagascar has been confirmed with the deposition of a series of marine sediments. The development of the basins was halted by the initial Indo-Malagasy rifting during the Upper Cretaceous and marked by the opening of basins in the north and east of Madagascar.

This resulted in deposition of a series of Mesozoic and Tertiary sediments. During the Quaternary, material eroded from these sediments, including second-generation heavy minerals (e.g. ilmenite, rutile and zircon), was transported to the coast by rivers and reworked into sand spits, storm ridges and dunes.

5.6.4 Exploration and Development Potential

Previous work by MRNL has confirmed that the small Quaternary sand deposits along coast near Majunga contain a potentially economic suite of heavy minerals. The Permit was acquired on the basis that it covered what appears to be the most significant sand body along the coast.

The Permit is located close to the town and port of Majunga. The coastal zone is, however, environmentally sensitive, a factor which has restricted exploration of the Permit. The MDA management team does have significant experience working in Madagascar and this should allow effective progression through the regulatory process.

5.6.5 Exploration and Evaluation Strategy

It is initially planned to utilise the expertise of MDA personnel (who identified the Ranobe-MM mineral sands deposit north of Tulear) to conduct an aggressive first-pass assessment of

this project. A proposed budget for two (2) years post-IPO is detailed below. The budget structure allows for up to 1500 meters of shallow drilling in Year 2, subject to favourable results from initial programmes in Year 1.

MML has provided RSG Global with an exploration strategy for the Majunga Project to cover an initial two year period following admission to ASX. This strategy has been divided into two (2) phases; with the second phase contingent on positive results from the first.

Phase 1 may include some or all of the following:

• Conversionofallavailableexplorationdataintodigitalformat

• DevelopmentofaGISdatabaseandgeologicalmodel

• Fieldinspectionofthesandbodiesandhandaugerdrillingof prospective areas

• Analysisoftheheavymineralsuite

• Analysisof200mspacedregionalairbornemagneticandradiometric data

Should Phase 1 demonstrate potential for significant heavy mineral occurrence, Phase 2 will commence; incorporating the following programmes:

• Follow-upclosespacedshallowdrilling

• Bulksamplingandanalysisofheavyminerals

• Developmentofanenvironmentalstrategyforfurtherexploration

MML has also provided RSG Global with an exploration budget for the Majunga Project covering the initial two year period to September 2009 as summarised in Table 6.5_1.

The minimum proposed expenditure of A$68K over the initial two year period is considered to be consistent with the potential of the Majunga Project and is considered adequate to cover the costs of the proposed program.


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Bisha Deposit A VMS style Cu-Au-Zn-Ag deposit in the country of Eritrea, Africa

BRGM Bureau de Recherches Géologiques et Minières

Calc-alkaline An igneous rock in which the proportion of lime and alkalies is such that the dominant minerals are feldspars, hornblende and/or augite.

Cambrian The oldest period of the Palaeozoic era, between approximately 545 million years and 490 million years ago.

Carboniferous Period of the Palaeozoic era, between approximately 354 million years and 298 million years ago.

chalcopyrite A copper iron sulphide, CuFeS2.

charnockite A type of intrusive rock of granitic composition & containing orthopyroxene, found within metamorphic geological environments.

chromite An oxide of chromium, (Mg,Fe)Cr2O4, some varieties of which can represent an indicator of diamonds.

cordierite A silicate of magnesium and aluminium, Mg2Al3 (AlSi5O18), found as an accessory mineral in granite and metamorphic rocks.

Cretaceous The third and final period of the Mesozoic era, between 141 and 65 million years ago.

Cross bedding Having minor beds or laminae lying oblique to the main beds of stratified rock. Commonly developed in sandstones deposited by the action of wind or water.

Crustal melt Material derived from the melting of the solid outer shell of the earth’s surface.

Cu Chemical symbol for copper

Dharwar Craton An area of Archaean age continental rocks in southern India.

diamond drilling Method of obtaining cylindrical core of rock by drilling with a diamond set or diamond impregnated bit.

diopside A white to light green calcium-magnesium silicate mineral.

disconformity Time break between parallel strata demonstrating erosional relief.

dolomite A mineral of magnesium and calcium carbonate.

ductile Deformation of rocks or rock structures involving stretching or bending in a plastic manner without breaking.

East African Orogen A large orogenic belt extending from Arabia, across continental Africa and through Mozambique and Madagascar

EM survey A geophysical technique whereby transmitted electromagnetic fields are used to energise and detect conductive material beneath the earth’s surface.

epicontinental Pertaining to the continental shelf and or continental interior.

evaporite Sediment, including various salts, deposited from aqueous solution as a result of evaporation.

facies The aspect belonging to a geologic unit of sedimentation, including mineral composition, type of bedding, fossil content, etc.

fault A natural break in rock resulting from geological forces causing movement of one block of rock against another

Fe Chemical symbol for iron

feldspar A group of rock forming minerals.

fluvial Pertaining to sediments deposited by the action of streams and rivers.

gabbro A fine to coarse grained, dark coloured, igneous rock composed mainly of calcic plagioclase, clinopyroxene and sometimes olivine.

galena A grey sulphide ore of lead, PbS.

garnet A brown-red silicate mineral.

garnierite A hydrous nickel silicate mineral, a member of the serpentinite group of minerals.

GIS A system devised to present partial data in a series of compatible and interactive layers that are georeferenced to the Earth. GIS stands for Geographical Information System.

glaciogene Sediment which has an origin relating to erosion, transport and deposition from glacial processes.

gneiss A metamorphic rock of coarse grain size, usually exhibiting banding.

Gondwana A palaeo supercontinent that included most of the land masses in the present southern hemisphere, and existed as a cohesive land mass between 500 million and 200 million years ago.

granite A coarse-grained igneous rock containing mainly quartz and feldspar minerals and subordinate micas.

granulite Metamorphic rocks formed by high temperature and/or pressure metamorphism.

Graphite System Refers to a group of metamorphic rocks comprising part of the crystalline basement rocks of Madagascar.

Graticular system Geographical map subdivision, commonly using degrees or metric units.

greenschist A metamorphosed rock which owes its colour and schistosity to abundant chlorite.

greenstone belt A broad term used to describe an elongate belt of rocks that have undergone regional metamorphism to greenschist facies.

heavy mineral sand Economic mineral suite usually dominated by varying proportions of ilmenite, rutile and zircon.

ilmenite An iron and titanium oxide (FeTiO3).

intrusive Refers to a magma which has solidified before reaching the earth’s surface.

IP survey Induced polarisation survey, an electrical geophysical method used to detect buried deposits formed by disseminated sulphide minerals.

Jurassic The middle division of the Mesozoic era.

K Chemical symbol for potassium

Karoo Supergroup A large belt of sedimentary rocks of late Cambrian to early Mesozoic age, stretching the length of western Madagascar.

labradorite Calcium-rich plagioclase; commonly exhibits iridescence.

Landsat Imagery Images of the earth’s surface collected by satellite and commonly processed to enhance particular features.

laterite A cemented, residuum of weathering, generally leached in silica with a high alumina and/or iron content and often containing rounded pisolites.

leptynite A banded variety of high grade metamorphic rock (granulite).

leuco A combining form prefix denoting rock having lighter than normal colour for a given rock variety.

leuconorite A variety of gabbro characterised by a lighter than normal colour for that rock type.

limestone A sedimentary rock containing at least 50% calcium or calcium-magnesium carbonates.

lithology A generalised term for a rock type.

magnetic surveys Determination of the deviation in the earth’s magnetic field in response to the inherent magnetism of different rock types.

Malagasy Shield A complex assemblage of Precambrian rocks that comprise the eastern two-thirds of Madagascar

marl A calcareous clay.

MDA Mada-Aust SARL, a wholly-owned subsidiary of MML in Madagascar


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Meta- Implies that the rock has undergone metamorphism.

metallurgical test work The testing of representative ore samples in order to define the physical properties and metallurgical characteristics of the ore.

metamorphism Alteration of rock and changes in mineral composition, most generally due to increase in pressure and/or temperature.

migmatite Composite rock composed of metamorphic rocks that have undergone incipient melting.

Miocene The fourth of the five epochs into which the Tertiary period is divided, between 25 million years and 5 million years before present.

MML Malagasy Minerals Limited

Mn Chemical symbol for manganese

molybdenite A sulphide of molybdenum, MoS2.

MRNL An unlisted Australian public company, Madagascar Resources NL

mudstone Sedimentary rock formed from mud or clay.

MZT Mazoto Minerals SARL, a wholly-owned subsidiary of MML in Madagascar

Neogene Including the Pliocene, Miocene and Oligocene epochs, 38 million years to 1.8 million years before present.

Neoproterozoic The era of geologic time comprising the end of the Proterozoic Era & covering the period between 1,000 and 545 million years ago.

Ni Chemical symbol for nickel

nonconformable A geological event in which sedimentary rocks are deposited directly over eroded intrusive or metamorphic rocks.

ophiolite A sequence of mafic and ultramafic igneous rocks (usually metamorphosed) formed at the sea floor as part of the oceanic crust.

orogenic belt Long, frequently continental-scale linear structures, usually mountainous, that are the end product of one or more orogeny events.

orogeny A deformation and/or magmatic event in the earth’s crust, usually caused by collision between tectonic plates.

ortho- Pertaining to metamorphic rocks originally of igneous precursor.

orthopyroxene Any of several pyroxene minerals that crystallize in the orthorhombic system.

palaeo A combining form denoting an attribute of great age or remoteness in regard to time.

palaeochannel A preserved, inactive river channel in-filled with partially consolidated fluvial sediments.

Palaeozoic The era of geologic time between the Late Precambrian and the Mesozoic era, 545 to 251 million years ago.

para- Pertaining to metamorphic rocks originally of sedimentary precursor.

Pb Chemical symbol for lead

Pd Chemical symbol for palladium

pegmatite A very coarse grained intrusive igneous rock which commonly occurs in dyke-like bodies containing lithium-boron-fluorine-rare earth bearing minerals.

Permian The last geological Period of the Palaeozoic era, between about 298 million years and 251 million years ago.

PGE A group of elements that includes platinum and palladium.

phlogopite A brown magnesium mica similar to biotite, but containing little iron.

Pliocene The last division of the Tertiary period, between approximately 5 and 1.8 million years ago.

polymetallic Relating to the presence of several economically significant trace elements, typically including the base metals and gold.

Precambrian Pertaining to all rocks formed before Cambrian time (older than 545 million years).

Proterozoic An era of geological time within the Precambrian, spanning the period from 2,500 million years to 545 million years before present.

Pt Chemical symbol for platinum

pyrite An iron sulphide mineral, FeS2.

pyroxenite A coarse grained mafic igneous intrusive rock composed primarily of the mineral pyroxene.

pyrrhotite An iron sulphide mineral, FeS(n-1).

Quaternary The younger of the two geologic periods in the Cenozoic era, between 1.8 million years before present and the present day.

radiometric Data relating to the radioactivity emitted by rocks at or near the earth’s surface.

radon A heavy, radioactive, gaseous element; inert; the heaviest known gas. Symbol, Rn. Formed by the disintegration of uranium.

RC drilling Drilling method employing a percussive action to break the rock, and in which sample material is delivered to the surface inside the rod string by compressed air.

rhyolite Fine-grained felsic igneous volcanic rock containing a high proportion of silica and feldspar, similar in composition to granite.

RN Route Nationale (main access roads of Madagascar)

rutile An oxide of titanium (TiO2) and a common detrital heavy mineral.

Sakoa Member Part of the Karoo Supergroup; an assemblage of sediments averaging approximately 500 million years age, stretching along the western side of Madagascar.

sandstone A sedimentary rock composed of cemented or compacted detrital minerals, principally quartz grains.

schist A crystalline metamorphic rock having a foliated or parallel structure due to the recrystallisation of the constituent minerals.

scintillometer A Scintillometer is a scientific device used to measure small atmospheric optical disturbances called scintillations, which are caused by fluctuations of the refractive index of air along a propagation path, caused by variations in temperature, humidity, and pressure.

scintillometry Scintillometry identifies the presence of the natural radioelements potassium, uranium, and thorium; multi-channel spectrometers can provide measures of individual radioelement abundances.

scree The rubble composed of rocks that have formed down the slope of a hill or mountain by physical erosion.

Shear zone A zone in which shearing has occurred on a large scale, such that the rock is deformed dominantly by ductile deformation.

shearing A form of fault in rocks where blocks of rock slide past one another without a natural break forming.

sinistral Refers to the relative horizontal direction of movement of blocks on either side of a fault or shear, with sinistral referring to left directional movement of the opposite side block

soil sampling The collection of soil specimens for trace element analysis.

stratiform Occurring parallel to the rock strata, and deposited at the same time.

stratigraphy Pertaining to the vertically stacked succession of rocks.

Stream sediment sampling The collection of bulk or sieved sample of sand or silt collected from an active or ephemeral stream-bed with the intention of analysing them for trace elements.


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5.8 Bibliography

Andriamarofahatra, J., De La Boisse, H., Nicollet, C. 1990. Datation U+/-Pb sur monazites et zircons du dernier épisode tectono-métamorphique granulitique majeur dans le Sud-est de Madagascar. Comptes Rendus à l’Académie des Sciences Paris 310, 1643±1648.

Argold Holdings Pty. Ltd. 2005. Report on a program of soil and stream sediment sampling in southern Madagascar May-June, 2005. Madagascar Resources NL Internal report, October 2005.

Ashwal, L.D. 1997. Geology of Madagascar: Brief Outline.- In: Ashwal, L. D. (ed.), Proterozoic Geology of Madagascar - Guidebook to Field Excursions, Miscellaneous Publications 6, Gondwana Research Group, 4-9; Osaka and Auckland Park.

AusIMM. 1995. Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (The Valmin Code) Issued April 1998.

AusIMM. 1998. Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (The Valmin Code), issued April 1998. The Australasian Institute of Mining and Metallurgy

Besairie, H.H. 1964. Madagascar Carte Géologique, Echelle 1:1,000,000.- Service Géologique, Société des Pétroles de Madagascar, Bur. Rech. Géologiques Minières, Commissariat Energie Atomique, Inst. Rech. Scient., Soc. Ugine Péchiney; Antananarivo.

Besairie, H.H. 1970. Map Ampanihy, scale 1:500,000. Service géologique de Madagascar.

Caen-Vachette, M. 1979. Le Précambrien de Madagascar. Radiochronométrie par isochrones Rb/Sr sur roches totales. Revue de Géologie Dynamique et de Géographie Physique 21, 331±338.

GAF, A.G., Dahl,R. 2005. Madagascar: Une présentation générale. BPGRM, Nov. 2005.

Goncalves, P., Nicollet, C, Lardeaux, J-M. 2003. Finite Strain pattern in Andriamena unit (north-central Madagascar) : evidence for late Neoproterozoic-Cambrian thrusting during continental convergence. Precambrian Research, v 123: pp. 135 – 157.

Malagasy Minerals Ltd. 2007. Information Memorandum.

Martelat, J-E., Schulmann, K., Lardeaux, J-M., Nicollet, C., Cardon, H. 1999. Granulite microfabrics and deformation mechanisms in Southern Madagascar. J Struct. Geology 21, pp 671 – 687.

Paquette, J-L., Nedelec, A., Moine, B., Rakotondrazafy, M. 1994. U±Pb, Single Zircon Pb-Evaporation, and Sm±Nd Isotopic Study of a granulite domain in SE Madagascar. Journal of Geology 102, 523±538.

Shackleton, R. M. 1986. Precambrian collision tectonic in Africa. In: Coward, M.P., Ries, A.C. (Eds.), Collision Tectonics, 9. Geological Society Special Publication, pp. 329±349.

Windley, B.F., Razafiniparany, A., Razakamanana, T., Ackerman, D. 1994. Tectonic framework of the Precambrian of Madagascar and its Gondwana connections: a review and reappraisal. Geologische Rundschau 83, 642±659.

www.clinemining.com 2007

www.panafrican.com 2007

stromatolite Marine organism that secretes calcareous material to form a dome shape and is typically found in shallow water.

tectonism The processes of deformation in the earths crust that produce its continents, ocean basins, mountains, and major folds and faults.

terrigenous Derived from the land.

Th Chemical symbol for thorium

Ti Chemical symbol for titanium

tonalite A coarse grained granitic rock composed of quartz, sodium-calcium feldspar and a high proportion of iron rich minerals.

tourmaline A complex aluminium silicate mineral containing boron.

Triassic The earliest period comprising in the Mesozoic era, between approximately 250 and 205 million years ago.

troctolite A gabbro that is composed chiefly of calcic plagioclase (labradorite) and olivine with little or no pyroxene.

tuff A rock formed of compacted volcanic fragments, generally smaller than four millimetres in diameter.

U Chemical symbol for uranium

ultrabasic Igneous rocks consisting essentially of ferromagnesium minerals with trace quartz and feldspar.

ultramafic Igneous rocks consisting essentially of ferromagnesium minerals with absent or trace quartz and feldspar.

uraninite An oxide mineral or uranium, UO2.

uranothorianite An oxide mineral of uranium and thorium

USD United States Dollar ($)

VMS Volcanogenic massive sulphide ore deposit, a Cu-Zn rich metal sulphide ore deposit associated with sea floor volcanic activity

Vohibory System Refers to a group of metamorphic rocks comprising part of the crystalline basement rocks of Madagascar.

Voisey’s Bay Refers to a significant sulphide-hosted Ni-Cu-Co deposit on the north eastern coast of Canada owned by Brazilian company Vale Limited.

volcanics Pertaining to igneous material poured out on the surface of the earth in a molten state and to fragmental material of all sizes erupted from volcanic vents.

VTEM Versatile Time Domain Electromagnetic System, a type of airborne geophysical testing of the earth, often used to detect concentrations of sulphides below surface.

Zr Chemical symbol for zircon

independent accountant’s report


66.1 IntroductionWe have prepared this Independent Accountant’s Report (Report) at the request of the Directors of Malagasy Minerals Limited and its controlled entities herein referred to as the Company, for inclusion in a Prospectus dated on or about 23 May 2008 relating to the issue of up to 50,000,000 ordinary shares at an issue price of 20 cents per share to raise $10m before capital raising costs (the Offer). The Offer is not underwritten.

This Report covers the Historical Financial Information and Proforma Financial Information set out in Appendix 1 of the Prospectus. Where necessary, amounts in this Report have been translated from Euros( ) into Australian Dollars ($) using an exchange rate of 1 = $1.70.

Expressions defined in the Prospectus have the same meaning in this report.

6.2 ScopeWe have been requested to prepare an Independent Accountant’s Report covering the following financial information:

Historical Financial Information comprising the •Consolidated Historical Balance Sheet as at 30 June 2007 and the Consolidated Historical Income Statement, Consolidated Historical Statement of Changes in Equity and the Consolidated Historical Cash Flow Statement for the period ended 30 June 2007 as set out in Appendix 1 of this report;

Historical Financial Information comprising the •Consolidated Historical Balance Sheet as at 31 December 2007 and the Consolidated Historical Income Statement, Consolidated Historical Statement of Changes in Equity and the Consolidated Historical Cash Flow Statement for the period 1 July 2007 to 31 December 2007 as set out in Appendix 1 of this report; and

Proforma Financial Information comprising the •Consolidated Proforma Balance Sheet as at 31 December 2007 which assumes completion of the following contemplated transactions as at that date as set out in Appendix 1 of this report:

The issue of 40,000,000 shares at an issue price of 20 −cents per share to raise the Minimum Subscription of $8m and the issue of 50,000,000 shares at an issue price of 20 cents per share to raise $10m under the Offer.

The payment and recognition directly in equity, of costs −incurred by the Company with respect to the capital raising, of $650,000 and $750,000 in relation to the Minimum Subscription and the Offer, respectively. This includes an amount of $110,272 already recognised in the Historical Financial Information for the period ended 31 December 2007, which will be reclassified from ‘Other Current Assets’ to ‘Issued Capital’ upon the Company obtaining listing on the ASX.

Adjusted for the following significant transactions which −have taken place since 31 December 2007:

On 4 April 2007, the Company, Madagascar Resources NL, Jules LeClezio, Guy LeClezio, Peter Woods and Graeme Boden executed a Share Sale Agreement in relation to the acquisition by the Company of 100% of the issued capital of Mada-Aust Sarl, a company incorporated in the Republic of Madagascar. The following purchase consideration is payable by the Company to Madagascar Resources NL:

The issue and allotment of 10,000,000 fully paid preference shares on execution of the Share Sale Agreement, which was 4 April 2007. These preference shares convert into an equivalent number of fully paid ordinary shares upon the Company achieving ASX listing.

Payment of $750,000 cash upon the Company listing on the ASX. The remaining consideration of $1.45m is payable out of 70% of the net royalty receipts due to the Company (via its 100% interest in Mada-Aust Sarl) under three existing Labradorite royalty agreements with the following companies incorporated in the Republic of Madagascar:

Euromad Miniere Sarl;•

Magrama SA; and•

Sqny International Sarl.•

As the payment of the $1.45m to Madagascar Resources NL is contingent upon the sufficiency of the Labradorite royalty stream, which is unable to be reliably estimated at this point in time, it has been excluded from the Pro-forma Financial Information.

The Board of DirectorsMalagasy Minerals LimitedUnit 7, 11 Colin GroveWEST PERTH WA 6005

21 May 2008

Dear Sirs


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It should be noted that Mr Guy LeClezio and Mr Peter Woods are directors of the Company and Madagascar Resources NL. Mr Jules LeClezio is a director of Midas Consultancy Ltd (Midas), which holds 5,000,000 preference shares in the Company. The Company and Midas executed a three year Consultancy Agreement on 4 April 2007 for the provision of consultancy services by Mr LeClezio. The preference shares issued to Midas convert into an equivalent number of fully paid ordinary shares upon the Company achieving ASX listing.

On 6 August 2007, the Company executed a Memorandum of Understanding (MOU) with the Bureau de Recherches Géologiques et Minières (BRGM) in relation to the acquisition of BRGM’s business and in relation to the entering of a long-term lease agreement covering certain BRGM commercial real estate properties in the Republic of Madagascar for a period of 99 years with a 99 year option. On 13 December 2007, the Company formally executed the Share Sale Agreement and Long Term Lease, which gave effect to the MOU. In accordance with the Share Sale Agreement and Long-term Lease Agreement, the 2,000,000 cash consideration payable by the Company is allocated as follows: property, plant & equipment ( 400,000), intangibles (100,000) and the long-term lease ( 1,500,000). These amounts are payable to BRGM as follows:

100,000 ($170,000) on execution of the Share Sale Agreement and Long Term Lease. This amount is already included in the reviewed financial information for the period 1 July 2007 to 31 December 2007.

100,000 ($170,000) payable in two instalments of 50,000 each on 15 April 2008 and 30 June 2008.

925,000 ($1.57m) upon the Company listing on the Australian Securities Exchange Limited (ASX) on or before 31 July 2008.

490,000 ($833,000) payable by 31 December 2008 and 385,000 ($654,500) payable by 31 March 2009.

The payment of 46,515 ($79,075) in stamp duty and taxes with respect to the BRGM transaction at the date of the Company achieving ASX listing.

The payment of VAT in relation to the Share Sale

Agreement ( 100,000 = $170,000 payable on ASX listing and expected to be recovered within 12 months) and the Long-term Lease Agreement ( 300,000 = $510,000 of which $255,000 is payable on ASX listing and the balance payable by equal instalments on 31 December 2008 and 31 March 2009. These amounts are not expected to be recovered within 12 months).

The allotment on 9 May 2008 of 3,300,000 shares to seed capital investors, to raise $330,000.

The Historical and Proforma Financial Information set out in Appendix 1 of this Report has been prepared in accordance with the measurement and recognition principles prescribed in Accounting Standards and other mandatory professional reporting requirements and accounting policies adopted by the Company, as disclosed in Appendix 1 of this Report. Not all of the annual financial statement disclosure requirements of Australian Accounting Standards and the Corporations Act 2001 have been provided.

The Historical Financial Information has been extracted from the audited and reviewed records of the Company for the period ended 30 June 2007 and 31 December 2007 respectively, which was audited and reviewed (respectively) by the WHK Horwath Perth Audit Partnership and on which an unqualified audit and review opinion (respectively) was issued.

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

Review of Historical Financial Information

We have conducted a review of the Historical Financial Information in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Historical Financial Information is not presented fairly in accordance with the measurement and recognition principles (but not all of the disclosure requirements) of prescribed Accounting Standards and other mandatory professional reporting requirements in Australia and accounting policies adopted by the Company, as disclosed in Appendix 1 of this Report.

Our review has been conducted in accordance with Australian Accounting Standards applicable to review engagements and has been limited to the reading of relevant Board minutes, inquiries of management personnel, analytical procedures applied to the financial data and certain limited verification procedures. The procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and accordingly we do not express an audit opinion on the Historical Financial Information.

Review of Proforma Financial Information

We have conducted a review of the Proforma Financial Information in order to state whether on the basis of the procedures described, anything has come to our attention that would cause us to believe that the Proforma Financial Information has not been prepared in accordance with the basis of preparation set out in Appendix 1 of this Report and is not in accordance with the measurement and recognition principles (but not all of the disclosure requirements) of prescribed Accounting Standards and other mandatory professional reporting requirements in Australia and accounting policies adopted by the Company, as disclosed in Appendix 1 of this Report.


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Our review has been conducted in accordance with Australian Auditing Standards applicable to review engagements and has been limited to the reading of relevant Board minutes, inquiries of management personnel, analytical procedures applied to the financial data and certain limited verification procedures. We have also determined whether the proforma transactions form a reasonable basis for the preparation of the consolidated Proforma Balance Sheet. These procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than that given in an audit. We have not performed an audit and accordingly, we do not express an opinion on the consolidated Proforma Balance Sheet.

6.3 Review StatementsHistorical Financial Information

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that the Historical Financial Information, as set out in Appendix 1 of this Report, does not present fairly the historical consolidated financial position of the Company as at 31 December 2007, in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements, and accounting policies adopted by the Company, disclosed in Appendix 1 of this Report.

Proforma Financial Information

Based on our review, which is not an audit, nothing has come to our attention which causes us to believe that the Proforma Financial Information, as set out in Appendix 1 of this Report, does not present fairly the proforma financial position of the Company as at 31 December 2007:

• on the basis of the proforma transactions and/or adjustments; and

• in accordance with the recognition and measurement principles prescribed in Accounting Standards and other mandatory professional reporting requirements in Australia, and accounting policies adopted by the Company, disclosed in Appendix 1 of this Report.

6.4 Subsequent EventsSince 31 December 2007 and to the date of this Report, the Company has incurred costs associated with the production of this Prospectus and managing of the Company’s assets.

Apart from the matters dealt with in this Report and having regard to the scope of our Report, to the best of our knowledge and belief there have been no material transactions or events outside the ordinary course of business of the Company, subsequent to 31 December 2007, which have come to our attention and require comment on or adjustment to the information referred to in our Report or that would cause such information to be misleading or deceptive.

6.5 Independence and Disclosure of Interest

WHK Horwath does not have any interest in the outcome of the Offer, other than for the preparation of this Report and for acting as auditors of the Company for which normal professional fees will be received.

The Company has agreed to indemnify and hold harmless WHK Horwath and its employees from any claims arising out of misstatements or omission in any material or information supplied by the Company.

6.6 ResponsibilityWHK Horwath has consented to the inclusion of this Investigating Accountant’s Report in the Prospectus in the form and context in which it is so included, but has not authorised the issue of the Prospectus. Accordingly, WHK Horwath makes no representation regarding, and takes no responsibility for, any other statements, or material in, or omissions from the Prospectus.

6.7 General Advice WarningThis Report has been prepared, and included in the Prospectus, to provide investors with general information only and does not take into account the objectives, financial situation or needs of any specific investor. It is not intended to take the place of professional advice and investors should not make specific investment decisions in reliance on the information contained in this Report. Before acting or relying on any information, an investor should consider whether it is appropriate for their circumstances having regard to their objectives, financial situation and needs.

Yours faithfully

WHK HORWATH PERTH AUDIT PARTNERSHIP

CYRUS PATELLPrincipal


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Audited22 September 2006

to 30 June 2007

$

Reviewed1 July 2007

to 31 December 2007

$

Revenue 221,010154,975

Employee Benefits expense (13,806)(18,133)

Depreciation expense (18,273)(948)

Impairment of Assets (3,948)-

Finance costs (8,819)(3,280)

Administration costs (264,714)(215,327)

Exploration expenditure (6,603)(3,185)

Tenement Holding costs (49,813)(99,037)

Share-based payments (100,000)-

Loss before income tax expense (244,966)(184,935)

Income tax expense (2,638)-

Net Loss attributable to members of the parent entity (247,604) (184,935)

6.8 Financial Information Appendix 1

Consolidated Historical Income Statement


6Notes

Audited30 June

2007

Reviewed31 December

2007

Proforma

Minimum Subscription

2007

Proforma

$10m Offer

2007

$ $ $ $

Current Assets

Cash and Cash Equivalents Note 3(a) 747,785 453,473 5,247,169 7,147,169

Trade and Other Receivables Note 3(b) 95,877 102,474 272,474 272,474

Other Current Assets Note 3(c) 80,529 133,665 23,393 23,393

Total Current Assets 924,191 689,612 5,543,036 7,443,036

Non-Current Assets

Property, Plant & Equipment Note 3(d) 41,956 252,497 3,381,373 3,381,373

Intangible Assets Note 3(e) - - 180,200 180,200

Receivables Note 3(f) - - 510,000 510,000Deferred Exploration and Evaluation Note 3(g) 345,148 340,404 1,090,404 1,090,404

Total Non-Current Assets 387,104 592,901 5,161,977 5,161,977

TOTAL ASSETS 1,311,295 1,282,513 10,705,013 12,605,013

Current Liabilities

Trade and Other Payables Note 3(h) 257,048 259,376 1,219,876 1,219,876

Short-term Provisions 1,362 1,362 1,362 1,362

Total Current Liabilities 258,410 260,738 1,221,238 1,221,238

Non-Current Liabilities

Other Payables Note 3(i) - - 782,000 782,000

Total Non-Current Liabilities - - 782,000 782,000

TOTAL LIABILITIES 258,410 260,738 2,003,238 2,003,238

NET ASSETS 1,052,885 1,021,775 8,701,775 10,601,775

EQUITY

Issued Capital Note 3(j) 1,300,003 1,470,003 9,150,003 11,050,003

Reserves 2,349 (10,521) (10,521) (10,521)

Accumulated Losses (249,467) (437,707) (437,707) (437,707)

TOTAL EQUITY 1,052,885 1,021,775 8,701,775 10,601,775

Consolidated Balance Sheet

6.8 Financial Information Appendix 1 continued


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Consolidated Historical Cash Flow Statement

Audited22 September 2006

to 30 June 2007

$

Reviewed1 July 2007

to 31 December 2007

$

Cash flows from Operating Activities

Payments to suppliers and employees (154,119) (177,465)

Interest received 11,225 17,040

Net cash used in operating activities (142,894) (160,425)

Cash flows from Investing Activities

Payments for property, plant and equipment (60,229) (209,594)

Payments for exploration and evaluation expenditure (349,095) (94,293)

Net cash used in investing activities (409,324) (303,887)

Cash flows from Financing Activities

Proceeds from issues of shares 1,300,003 170,000

Net cash flows provided by financing activities 1,300,003 170,000

Net increase(decrease) in cash held 747,785 (294,312)

Cash at the beginning of the period - 747,785

Cash at the end of the period 747,785 453,473



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Consolidated Historical Statement of Changes in Equity

Reviewed1 July 2007 to 31 December 2007

Issued CapitalAccumulated

Losses

Foreign Currency Translation

Reserve Total$ $ $ $

Balance at 30 June 2007 1,300,003 (249,467) 2,349 1,052,885

Shares issued during the period 170,000 - - 170,000

Loss attributable to members of parent entity

- (184,935) - (184,935)

Adjustment from translation of foreign controlled entities

- - (12,870) (12,870)

Preference dividends paid or provided for

- (3,305) - (3,305)

Balance at 31 December 2007 1,470,003 (437,707) (10,521) 1,021,775

Audited22 September 2006 to 30 June 2007

Issued CapitalAccumulated

Losses

Foreign Currency Translation

Reserve Total$ $ $ $

Balance at 30 June 2006 - - - -

Shares issued during the year 1,300,003 - - 1,300,003

Loss attributable to members of parent entity

- (247,604) - (247,604)

Adjustment from translation of foreign controlled entities

- - 2,349 2,349

Preference dividends paid or provided for

- (1,863) - (1,863)

Balance at 30 June 2007 1,300,003 (249,467) 2,349 1,052,885

Consolidated Historical Statement of Changes in Equity



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Notes to the Historical and Proforma Financial Information

Note 1. Statement Of Significant Accounting Policies

Basis of Preparation

The financial information has been prepared in accordance with the measurement but not all of the disclosure requirements of Australian Accounting Standards and other mandatory professional reporting requirements in Australia. In the view of the Directors of Malagasy Minerals Limited (the “Company”), the omitted disclosures would provide no further relevant information to potential investors.

The proforma financial information includes proforma balance sheets assuming the capital raising had taken place at 31 December 2007. Separate proforma balance sheets have been prepared on the basis of the capital raising being fully subscribed and on the basis that the Minimum Subscription level is achieved.

a. Principles of Consolidation

A controlled entity is any entity controlled by Malagasy Minerals Limited. Control exists where Malagasy Minerals Limited has the capacity to dominate the decision-making in relation to the financial and operating policies of another entity so that the other entities operate with Malagasy Minerals Limited to achieve the objectives of Malagasy Minerals Limited. All controlled entities have a 30 June financial year-end.

All inter-company balances and transactions between entities in the economic entity, including any unrealised profits or losses, have been eliminated on consolidation. Accounting policies of subsidiaries have been changed where necessary to ensure consistencies with those policies applied by the parent entity.

Where controlled entities have entered or left the economic entity during the year, their operating results have been included from the date control was obtained or until the date control ceased.

Minority equity interests in the equity and results of the entities that are controlled are shown as a separate item in the consolidated financial report.

b. Income Tax

The charge for current income tax expense is based on the profit for the year adjusted for any non-assessable or disallowed items. It is calculated using tax rates that have been enacted or are substantively enacted by the balance sheet date.

Deferred tax is accounted for using the balance sheet liability method in respect of temporary differences arising between the tax bases of assets and liabilities and their carrying amounts in the financial statements.

No deferred income tax will be recognised from the initial recognition of an asset or liability, excluding a business combination, where there is no effect on accounting or taxable profit or loss.

Deferred tax is calculated at the tax rates that are expected to apply to the period when the asset is realised or liability is settled. Deferred tax is credited in the income statement except where it relates to items that may be credited directly to equity, in which case the deferred tax is adjusted directly against equity.

Deferred income tax assets are recognised to the extent that it is probable that future tax profits will be available against which deductible temporary differences can be utilised.

The amount of benefits brought to account or which may be realised in the future is based on the assumption that no adverse change will occur in income taxation legislation and the anticipation that the economic entity will derive sufficient future assessable income to enable the benefit to be realised and comply with the conditions of deductibility imposed by the law.

c. Property, plant and equipment

Each class of property, plant and equipment is carried at cost less, where applicable, any accumulated depreciation.

Plant and Equipment

Plant and equipment are measured on the cost basis less depreciation and impairment losses.

The carrying amount of plant and equipment is reviewed annually by directors to ensure it is not in excess of the recoverable amount from these assets. The recoverable amount is assessed on the basis of the expected net cash flows which will be received from the asset’s employment and subsequent disposal. The expected net cash flows have been discounted to their present values in determining recoverable amounts.

Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the economic entity and the cost of the item can be measured reliably. All other repairs and maintenance are charged to the income statement during the financial period in which they are incurred.

Depreciation

The depreciable amount of all fixed assets including capitalised leased assets is depreciated on the reducing balance method commencing from the time the asset is held ready for use.

The depreciation rates used for each class of depreciable assets are:


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Class of Fixed Asset Depreciation Rate

Plant and Equipment 25%Motor Vehicles 20%

Field Equipment 37.5%

Office Furniture 7.5%

Office Equipment 37.5% to 50%

The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.

An asset’s carrying amount is written down immediately to its recoverable amount if the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with the carrying amount. These gains and losses are included in the income statement. When revalued assets are sold, amounts included in the revaluation reserve relating to that asset are transferred to retained earnings.

d. Exploration, Evaluation and Development Expenditure

Exploration, evaluation and development expenditure incurred is either written off as incurred or accumulated in respect of each identifiable area of interest. Tenement acquisition costs are initially capitalised. Costs are only carried forward to the extent that they are expected to be recouped through the successful development of the area, sale of the respective areas of interest or where activities in the area have not yet reached a stage, which permits a reasonable assessment of the existence of economically recoverable reserves.

Accumulated costs in relation to an abandoned area are written off in full against profit in the year in which the decision to abandon the area is made.

When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest.

Restoration, rehabilitation and environmental costs necessitated by exploration and evaluation activities are expensed as incurred and treated as exploration and evaluation expenditure.

e. Financial Instruments

Recognition

Financial instruments are initially measured at cost on trade date, which includes transaction costs, when the related contractual rights or obligations exist. Subsequent to initial recognition these instruments are measured as set out below.

Financial assets at fair value through profit and loss

A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management and within the requirements of AASB 139: Recognition and Measurement of Financial Instruments. Derivatives are also categorised as held for trading unless they are designated as hedges. Realised and unrealised gains and losses arising from changes in the fair value of these assets are included in the income statement in the period in which they arise.

Loans and receivables

Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market and are stated at amortised cost using the effective interest rate method.

Financial liabilities

Non-derivative financial liabilities are recognised at amortised cost, comprising original debt less principal payments and amortisation.

Derivative instruments

Derivative instruments are measured at fair value. Gains and losses arising from changes in fair value are taken to the income statement unless they are designated as hedges.

Fair value

Fair value is determined based on current bid process for all quoted investments. Valuation techniques are applied to determine the fair value for all unlisted securities, including recent arms length transactions, reference to similar instruments and option pricing models.

Impairment

At each reporting date, the economic entity assesses whether there is objective evidence that a financial instrument has been impaired. In the case of available-for sale financial instruments, a prolonged decline in the value of the instrument is considered to determine whether impairment has arisen. Impairment losses are recognised in the income statement.

f. Impairment of Assets

At each reporting date, the economic entity reviews the carrying values of its tangible and intangible assets to determine whether there is any indication that those assets have been impaired. If such an indication exists, the recoverable amount of the assets, being the higher of the asset’s fair value less costs to sell and value in use, is compared to the asset’s carrying value. Any excess of the asset’s carrying value over the recoverable amount is expensed to the income statement.

Impairment testing is performed annually for goodwill and intangible assets with indefinite lives.


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Where it is not possible to estimate the recoverable amount of an individual asset, the economic entity estimates the recoverable amount of the cash-generating unit to which the asset belongs.

g. Interest in Joint VenturesThe economic entity’s share of the assets, liabilities, revenue and expenses of joint venture operations are included in the appropriate items of the consolidated income statement and the balance sheet.

h. Foreign Currency Transactions and Balances

Functional and presentation currency

The functional currency of each entity within the economic entity is measured using the currency of the primary economic environment in which that entity operates. The consolidated financial statements are presented in Australian dollars which is the parent entity’s functional and presentation currency.

Transactions and balances

Foreign currency transactions are translated into functional currency using the exchange rates prevailing at the date of the transaction. Foreign currency monetary items are translated at the year-end exchange rate. Non-monetary items measured at historical cost continue to be carried at the exchange rate at the date of the transaction. Non-monetary items measured at fair value are reported at the exchange rate at the date when fair values were determined.

Exchange differences arising on the translation of monetary items are recognised in the income statement, except where deferred in equity as a qualifying cash flow or net investment hedge.

Exchange differences arising on the translation of non-monetary items are recognised directly in equity to the extent that the gain or loss is directly recognised in equity, otherwise the exchange difference is recognised in the income statement.

Group Companies

The financial results and position of foreign operations whose functional currency is different from the Group’s presentation currency are translated as follows:

•assetsandliabilitiesaretranslatedatyear-endexchange rates prevailing at that reporting date;

• incomeandexpensesaretranslatedataverageexchange rates for the period; and

• retainedearningsaretranslatedattheexchangerate prevailing at the date of the transaction.

Exchange differences arising on translation of foreign operations are transferred directly to the economic entity’s foreign currency translation reserve in the balance sheet. These differences are recognised in the

income statement in the period in which the operation is disposed.

i. Employee BenefitsProvision is made for the economic entity’s liability for employee benefits arising from services rendered by employees to the balance date. Employee benefits expected to be settled within one year together with entitlements arising from wages and salaries and annual leave which will be settled after one year, have been measured at the amounts expected to be paid when the liability is settled, plus related on costs. Other employee benefits payable later than one year have been measured at the present value of the estimated future cash outflows to be made for those benefits.

j. ProvisionsProvisions are recognised when the economic entity has a legal or constructive obligation, as a result of past events, for which it is probable that an outflow of economic benefits will result and that outflow can be reliably measured.

k. Cash and cash equivalents Cash and cash equivalents includes cash on hand, deposits held at call with banks, other short-term highly liquid investments with original maturities of three months or less.

l. Revenue

Revenue from the sale of goods is recognised upon the delivery of goods to customers.

Interest revenue is recognised on a proportional basis taking into account the interest rates applicable to the financial assets.

Revenue from the rendering of a service is recognised upon the delivery of the service to the customers.

All revenue is stated net of the amount of goods and services tax (GST).

m. Goods and services tax (GST)

Revenues, expenses and assets are recognised net of the amount of GST, except where the amount of GST incurred is not recoverable from the Australian Tax Office. In these circumstances the GST is recognised as part of the cost of acquisition of the asset or as part of an item of the expense. Receivables and payables in the Balance Sheet are shown inclusive of GST.

Cash flows are presented in the cash flow statement on a gross basis, except for the GST component of investing and financing activities, which are disclosed as operating cash flows.


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n. Contributed EquityIssued and paid up capital is recognised at the fair value of the consideration received by the Company. Any transaction costs arising on the issue of ordinary shares are recognised directly in equity as a reduction of the share proceeds received.

o. Comparative FiguresThe parent entity was incorporated on 22 September 2006, hence the period 22 September 2006 to 30 June 2007 is the first reporting period of the economic entity.

p. IntangiblesAcquired identifiable intangible assets in relation to client lists are initially recorded at cost and are amortised over the period over which future economic benefits embodied in the asset are expected to be derived.

Critical Accounting Estimates and JudgmentsThe directors evaluate estimates and judgments incorporated into the financial report based on historical knowledge and best available current information. Estimates assume a reasonable expectation of future events and are based on current trends and economic data, obtained both externally and within the economic entity.

Key Estimates – Impairment

The economic entity assesses impairment at each reporting date by evaluating conditions specific to the economic entity that may lead to impairment of assets. Where an impairment trigger exists, the recoverable amount of the asset is determined. Value-in-use calculations performed in assessing recoverable amounts incorporate a number of key estimates.

No impairment has been recognised in respect of costs carried forward as exploration assets. The ultimate recoupment of value is dependent on the successful development and commercial exploitation or sale of the respective areas.

Name Holding Company ownership interest

Nature of Operations

Mazoto Minerals SARL * 90% Tenement Holding Company

Mada-Aust SARL 100% Tenements/Labradorite/Royalties/ Personnel & Vehicles

Energex SARL 100% Tenement Holding Company: Uranium/Fossil fuels

Mining Services SARL 100% BRGM Drilling & Assaying Business

Saint Denis Holdings SARL 100% BRGM Commercial Land Holding: Office & Residential

*Managing Director, Mr Steven Goertz holds a 10% interest on trust for Malagasy Minerals Limited.

Note 2. Controlled Entities

Controlled entities of the Company are as follows:


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Proforma


2007$

Proforma

$10m Offer2007

$

Balance as at 31 December 2007 453,473 453,473

Proceeds from Share Issue (40,000,000 shares) 8,000,000 -

Share issuance costs (539,729) -

Proceeds from Share Issue (50,000,000 shares) - 10,000,000

Share issuance costs - (639,729)

Seed capital raising 330,000 330,000

Payments to BRGM (1,742,500) (1,742,500)

Stamp duty and taxes on BRGM acquisition (79,075) (79,075)

Payment in relation to Mada-Aust Sarl acquisition (750,000) (750,000)

VAT payable on BRGM acquisition upon ASX listing (425,000) (425,000)

Proforma cash balance as at 31 December 2007 5,247,169 7,147,169

b) Reconciliation of Trade and Other Receivables Balance as at 31 December 2007 102,474 102,474

VAT recoverable in relation to BRGM Sales Agreement 170,000 170,000

Proforma Trade and Other Receivables as at 31 December 2007 272,474 272,474

c) Reconciliation of Other Current Assets


Transfer of share issuance costs to Issued Capital on ASX listing (110,272) (110,272)

Proforma Other Current Assets as at 31 December 2007 23,393 23,393

d) Reconciliation of Property, plant & equipment


BRGM payments on 15 April 2008 & 30 June 2008 170,000 170,000

BRGM acquisition of business 807,500 807,500

Stamp duty and taxes paid in relation to BRGM assets acquired 40,800 40,800

BRGM Long Term Lease Agreement 2,082,500 2,082,500

Stamp duty and taxes in relation to Long Term Lease Agreement 28,076 28,076

Proforma Property, plant & equipment as at 31 December 2007 3,381,373 3,381,373

Reconciliation of adjustments to Casha)

Note 3. Notes to the Pro-forma Financial Information


6e) Reconciliation of Intangible Assets

Balance as at 31 December 2007 - -

Acquisition of BRGM client list 170,000 170,000

Stamp duty and taxes paid in relation to BRGM client list acquired 10,200 10,200

Proforma Intangible Assets as at 31 December 2007 180,200 180,200

f) Reconciliation of Non-Current Receivables


VAT recoverable in relation to BRGM Long Term Lease Agreement 510,000 510,000

Proforma Non-Current Receivables as at 31 December 2007 510,000 510,000

g) Reconciliation of Deferred Exploration and Evaluation


Payment in relation to acquisition of Mada-Aust Sarl, on ASX listing 750,000 750,000

Proforma Deferred Exploration and Evaluation as at 31 December 2007 1,090,404 1,090,404

h) Reconciliation of Current Trade & Other Payables


BRGM deferred consideration payment due by 31 December 2008 833,000 833,000

VAT payable on Long-Term Lease Agreement with BRGM on 31 December 2008 127,500 127,500

Proforma Current Trade & Other Payables as at 31 December 2007 1,219,876 1,219,876

i) Reconciliation of Non-Current Trade & Other Payables


BRGM deferred consideration payment due by 31 March 2009 654,500 654,500

VAT payable on Long-Term Lease Agreement with BRGM on 31 March 2009 127,500 127,500

Proforma Non-Current Trade & Other Payables as at 31 December 2007 782,000 782,000

j) Reconciliation of Issued Capital

Balance as at 31 December 2007 1,470,003 1,470,003

Proceeds from Share Issue (40,000,000 shares) 8,000,000 -

Share issuance costs (650,000) -

Seed capital raising 330,000 330,000

Proceeds from Share Issue (50,000,000 shares) - 10,000,000

Share issuance costs - (750,000)

Proforma Issued Capital as at 31 December 2007 9,150,003 11,050,003

Proforma


2007$

Proforma

$10m Offer2007

$

Note 3. Notes to the Pro-forma Financial Information continued


6

Note 3. Notes to the Pro-forma Financial Information continued

Proforma


2007Number

Proforma

$10m Offer2007

Number

Balance as at 31 December 2007

- Fully paid ordinary shares 26,700,003 26,700,003

- Cumulative preference shares 15,000,000 15,000,000

Share issue – fully paid ordinary shares 40,000,000 50,000,000

Conversion of preference shares issued to Madagascar Resources NL to fully paid ordinary shares on listing of the Company on the ASX:

- Cumulative preference shares (10,000,000) (10,000,000)


Seed capital raising 3,300,000 3,300,000

Conversion of preference shares issued to Midas Consultancy Limited to fully paid ordinary shares on listing of the Company on the ASX:

- Cumulative preference shares (5,000,000) (5,000,000)


Proforma Issued Capital (Number) as at 31 December 2007 - Fully paid ordinary shares - Cumulative preference shares

85,000,003-

95,000,003-

k) Reconciliation of Issued Capital - Number


77

tenement report

Malagasy Minerals Limited (‘MML’) intends to lodge a prospectus with the Australian Securities and Investments Commission under the Corporations Act so that it can undertake an initial public offer and list its shares on the Australian Securities Exchange. We have been requested to make all reasonable enquiries and to establish a report on the tenements owned by MML and its subsidiaries, Mada Aust and Mazoto Minerals.

7.1 Documents and Searches(a) Documents reviewed

For the purposes of the above, we have examined the following documents provided to us:

List of tenements held by Mada-Aust and Mazoto (i) Minerals;

Copies of licenses held by Mada-Aust;(ii)

Copies of licenses held by Mazoto Minerals;(iii)

Copies of receipts of payment of administration (iv) fees for the year 2008 for Mada-Aust and Mazoto Minerals Sarl

Copy of the sublease between Exploitation (v) Madagascar Sarl, Mada-Aust and Magrama SA dated 19 November 2001

Copy of the sublease agreement between Mada-(vi) Aust and SQNY International Sarl dated 3 November 2006; and

Copy of the sublease agreement between (vii) Exploitation Madagascar, Mada-Aust and Euromad Minière Sarl dated 17 November 2005.

Copies of the environmental authorizations for 9 (viii) PE and 36 PR held by Mada-Aust Sarl

Copy of acknowledgement of receipts of (ix) application for extension of mineral resources.

(b) Searches

Furthermore, for the purposes of the present report and especially in order to attest validity and regularity of the mining permits above, we have also approached BCMM to obtain:

certificates of registration or attestation of (x) conversion for each permit held by Mada-Aust and Mazoto Minerals.

Detailed list of tenements held by Mada-Aust and (xi) Mazoto Minerals

In addition, we have examined the following documents:

Mining Code n° 99-022 of 19 August 1999 modified (xii) by law 2005-021 of 17 October 2005; and

Decree 2006-910 of 19 December 2006 regulating (xiii) the Mining Code 99-022, which was modified by the Law 2005-021 of 17 October 2005.

Order 12032 of 6 November 2000 regulating (xiv) mining sector with regards to environmental protection

In such examination, we have assumed the genuineness of all signatures and the authenticity of all documents submitted to us as originals; the conformity with the originals of all documents submitted to us as copies or in final form; that each of the documents is issued by the relevant person having the authority to do so, and have been validly authorized and executed and delivered by the relevant authority. We have also assumed the accuracy of all information and certifications contained in any such documents.

Based upon such examination and having regard to any legal considerations as we have deemed relevant, and subject to the additional qualifications and matters referred to below, we provide hereafter (a) our opinion and comments in relation to minerals rights that MML holds in Madagascar via its two subsidiaries Mada Aust Sarl and Mazoto Sarl, and (b) summary of the general mining law applicable in Madagascar.

08 May 2008

Directors ofMalagasy Minerals Ltd (MML)Unit 7, 11 Colin GroveWest PerthWestern Australia, 6005


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7.2 Mineral rights(a) Description of types of tenements held by

Mada-Aust and Mazoto Minerals

Based on the certificates we obtained from BCMM on 27 August, 17 and 20 September 2007, receipt of payment of administration fees for year 2008, and detailed list of tenements we received on 2 May 2008,

(i) Mada-Aust Sarl

Mada-Aust owns seventy six (76) mining permits, composed of sixty two seven (67) research permits (PR), nine (9) exploitation permits (PE).

Further details of Mada-Aust’s tenements are contained in the schedule.

(ii) Mazoto Minerals Sarl

According to documents we examined and information we got from MML and BCMM, we conclude that, Mazoto Minerals holds thirty eight (38) mining titles composed of seventeen (17) research permits (PR) and has filed twenty one (21) applications for conversion of AERP into research permits (PR).

According to the documents we examined and information we got from BCMM, the PR applications have been validly made. Until obtention of the PR, all AERP converted into PR are valid.

(b) Joint owners of the tenements

Based on documents provided to us, Mada-Aust has concluded the following sublease agreements

(i) Sublease agreement signed on 19 November 2001 with Magrama SA, a corporate company registered under the law of Madagascar having a registered share capital of Ariary (‘Ar’) 1.700.000.000, having its registered office at Lot VO8 ter Manakambahiny, Antananarivo, Madagascar registered at the commercial court register under 2004B00262, statistical number 522 842 and tax identification number 105 001 771.

Terms and conditions of the sublease agreement are detailed as follows:

Number of squares: 21 squares. •

Identification of the Permit and squares: •According to information we received, the permits subject of sublease to Magrama are Exploitation permit n° 19932 and n° 19933 and Exploration permits n° 25605 – 25606 and 3432:

Seven (7) squares from Permit E n° 19932 o granted on 10 March 2001 to Mada-Aust Sarl and valid until 9 March 2046.

One (1) square from Permit E n° 19933 o granted on 10 March 2001 to Mada-Aust Sarl and valid until 9 March 2046.

Three (3) squares from Permit R n° 25605 o granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2011.

One (1) square from Permit R n° 25606 o granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2011.

Nine (9) suares from Permit R n° 3432 granted o on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2011.

Region: Maniry/Toliara, Madagascar.•

Mineral substances: “Labradorite”. Mada-Aust •reserves the right to explore and exploit minerals substances other than Labradorite;

Duration: 10 years (which will expire on 21 •November 2015), and is renewable for a new period of 10 years, but cannot exceed the validity period of the mining title.

Licence fees: 30 Euros plus VAT per tonne of •Labradorite extracted, with a minimum monthly fee of 4.250 Euros plus VAT.

According to the certificate dated 17 September 2007 delivered by BCMM, the sublease agreement with Magrama was duly registered at BCMM on 12 June 2006.

(ii) Sublease agreement signed on 3 November 2006 with SQNY International Sarl, a limited liability company with a share capital of 10.000.000 Ar, having its registered office at Cité des 67 ha Nord Est, Madagascar registered at the commercial court registry under 2005B00395, statistical number 14101200510178 and tax identification number 8661813.

Terms and conditions of the sublease agreement are detailed as follow:

(A) Number of squares: 7 squares

(B) Identification of the Permits and squares: Exploitation Permits n° 25093, 25094 and 25095 and Exploration Permit n° 3432:

- One (1) square from Exploitation Permit n° 25093 granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2041;

- One (1) square from Exploitation Permit n° 25094 granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2041;

- Three (3) squares from Exploitation Permit n° 25095 granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2041;


7

- Two (2) squares from Exploration Permit n° 3432 granted on 18 June 2001 to Mada-Aust Sarl and valid until 17 June 2011;

(C) Region: Maniry and Ankafotia (Toliara), Madagascar.

(D) Mineral substances: “Labradorite”. Mada-Aust reserves the right to explore and exploit minerals substances other than Labradorite.

(E) Duration: 5 years (which will expire on 2 November 2011), and renewable, but cannot exceed the validity period of the mining title.

(F) Licence fees: Until 3.000 tonnes/year of Labradorite extracted, the licence fee is fixed at 30 Euros (VAT not included) per tonne and 17,14 Euros plus VAT per tonne, for surplus. In any case, a minimum monthly fee of 4.250 Euros plus VAT is payable.

The sublease agreement with SQNY International has not been registered at BCMM.

(iii) Sublease agreement signed on 17 November 2005 with Euromad Minière Sarl, a limited liability company with a share capital of 20.000.000 Ar, having its registered office at Rue de l’Eglise Khodja, 601 Toliara 1, Madagascar, registered at the commercial court register under 2005B0009, statistical number 610381 and tax identification number 6014936.

Terms and conditions of the sublease agreement are detailed as follow:

(A) Number of squares: 6 squares

(B) Identification of the Permits and squares: Exploitation permits n° 5391 – 5392, 5393, 5394 and 25605:

• One(1)squarefromExploitationpermitn° 5391 granted on 18 June 2001 and valid until 17 June 2041;

• One(1)squarefromExploitationpermitn° 5392 granted on 18 June 2001 and valid until 17 June 2041;

• Onesquare(1)fromExploitationpermitn° 5393 granted on 18 June 2001 and valid until 17 June 2041;

• Twosquares(2)fromExploitationpermitn° 5394 granted on 18 June 2001 and valid until 17 June 2041, and

• OnesquarefromExploitationpermitn°25605 granted on 18 June 2001 and valid until 17 June 2041

(C) Region: Maniry (Fianarantsoa) and Ankafotia, Madagascar

(D) Mineral substances: “Labradorite”. Mada-Aust reserves the right to explore and exploit mineral substances other than Labradorite.

(E) Duration: 5 years (which will expire on 2 November 2011), and renewable, but cannot exceed the validity period of the mining title.

(F) Licence fees: Until 3.000 Tonnes/year of Labradorite is extracted, the licence fee is fixed at 30 Euros (VAT not included) per tonne. Over 3.000 tonnes of Labradorite is extracted per year, then 17,14 Euros plus VAT per tonne is applicable. In any case, a minimum monthly fee of 4.250 Euros plus VAT is payable.

The sublease agreement with Euromad Minière has not been registered at BCMM.

According to article 63 of mining code, in the absence of such notification Mada Aust Sarl is the only holder and operator of the mining title, towards BCMM. Sublessee has only obligations towards Mada Aust. In any case, the non registration of the sublease does not affect the validity of the agreement, nor the right of Mada-Aust Sarl on the mining title.

In addition, based on the provisions of the sublease agreements concluded by Mada-Aust as mentioned above, Magrama SA or SQNY International Sarl or Euromad Minière Sarl, has the right of first refusal if Mada-Aust decides to sell the mining titles which constitute the object of the sublease. In that case, Mada-Aust must notify the interested party at least one (1) month before the execution of the transfer for the purposes of making an offer.

(c) Terms and conditions attaching to any tenements

Pursuant to the provision of article 22 of the (xv) Mining Code, Exclusive Authorization of reservation of Perimeters (AERP) gives to its owner within 3 months from the date of issue of such AERP:

(A) exclusive right to prospect over the defined perimeters,

(B) right to start environmental impact study over the defined perimeters, and

(C) priority right to file application for research/exploration or exploitation permit on part of or, the totality of the perimeters subject to the AERP licence. AERP licence is not renewable. AERP remains valid until the application for PR is processed

Pursuant to the provisions of article 33 of the (xvi) Mining Code, Research Permit (PR) gives to its holder:

(A) exclusive right to carry out exploration activities for the authorized minerals within the perimeters and during the period of validity of the permit for all substances mentioned in the permit,


7

(B) priority right in filing application for exploitation permit on the perimeters subject to the exploration permit title for the same substances.

Pursuant to article 37 of the Mining Code, (xvii) Exploitation Permit (PE) gives to its holder:

(A) exclusive right to exploit authorised mineral resources and

(B) to continue exploration and research of such minerals within the perimeters during the period of validity of the permit,

(C) right to build any permanent or temporary structures and to use woods and waters existing and available within the perimeters, subject to prior authorization by the landowner.

Therefore, no person other than the holder can claim any right over any valid exploitation permit in respect of related minerals or substances to which the permit relates.

(d) Other Ministerial consents

(i) Environmental consents

Pursuant to the Mining Code, prior to any prospecting and exploitation activity within the perimeters, a permit holder is required to obtain prior approval of the environmental commitment plan (plan d’engagement environnemental or PEE) for prospecting activities (PR) and of the environmental impact study (Etude d’impact environmental or EIE) for exploitation activities.

In addition, all permit holders must take the necessary action in order to protect the environment and to restore any damage caused by their activities. Indeed, pursuant to article 102 of the Mining Code, holders of tenements must constitute allowances for the rehabilitation and protection of the environment.

Pursuant to the Order 4355 of 13 May 1997, when a perimeter overlies a zone presenting a sensitivity or fragility with regards to human activity, such perimeter is declared by the Mining Authority as Sensible Zone.

Pursuant to Order 12032 of 6 November 2000, a prior approval for environmental impact study (EIE) is required in order to conduct any prospecting mining activity within sensible zone.

The government can also decide that a perimeter is unavailable for any mining activity. Such areas mainly National park, natural resources reserve are called protected zone. Pursuant to article 104 of the mining law, no mining operation can be carried on within a Protected zone . In addition, no mining activity is authorized within an area of eighty (80) meters from the delimitation of the

protected zone. Such delimitation can be extended per decision taken by Ministry of mining, where necessary. If such extension affects an existing mining title, the Holder of such mining title can claim for compensation.

(ii) Situation of Mada-Aust Sarl and Mazoto Minerals Sarl with regards to the above

Regarding PE: All environmental impact studies proposed in relation to all PE owned by Mada-Aust have been approved by the Ministry of Environment.

Regarding PR: 36 PR held by Mada- Aust Sarl have obtained environmental authorizations. Environment commitment plans process for the other PR’s are in progress to be filed at the BCMM. This fact does not affect the validity of the permit as long as no activity is performed. In our experience, the authorization is usually granted if the commitment plan conforms with the recommendations of the environmental authorities.

According to information delivered by the BCMM, the following mining titles held by Mada-Aust Sarl and Mazoto Minerals Sarl lie partially or fully within sensible zones:

partially included within sensible zone: PE 5394 - PR 3432 - 25605 – 13827 – 16750 – 18915 – 18916 and 21062;

fully included within sensible zone: PR 12834 – 17388 – 21059 – 28185 – 28186 – 28198 – 28199 – 28200 – 28433 – 28434 – 28435 – 28436 – 28437 – 28438 – 28439 – 28440 – 28441 – 28442 – 28443 – 28444 – 28445 – 28446 – 28447 – 28448 – 28449 – 29082 – 29085 and 29757.

Furthermore, none of the mining titles held by Mada-Aust Sarl and Mazoto Minerals Sarl lies within protected zone or is likely to be declared to be within a protected zone.

(e) Restriction on accessing the land the subject of the mining titles.

(i) Relationship with the landowner

According to articles 125 and 126 of the Mining Code, the holder of a permit has to inform the concerned landowners of its right to occupy portions of land required for its project, whether or not covered by the permit.

The permit holder must make necessary enquiries in order to identify the landowner the subject of the mining titles, especially at the Fokontany and if it is not successful at the Communes. When the owner of the land is identified, the parties must convene their respective rights and obligations under a lease agreement. In case


7

of disputes, the litigation must be submitted to the competent authority of the Province autonomic or the “Collectivité territoriale décentralisée” (Madagascar Administrative Divisions) before referring the matter to the Comité Provincial des mines (Mining provincial Committee). The Committee introduces a conciliation procedure in order to help the parties to find an arrangement. Decision taken by this later is binding on both parties.

If no lease agreement has been concluded between the landowner and the holder of mining titles, the landowner has the right to ask for the ejection of the holder of tenements subject to payment of compensation to the holder of tenements, pursuant to article 326 of the Decree. However, the holder of mining titles can continue the work if it is declared a public utility matter, allowing the Ministry in charge of mining to engage process for compulsory purchase. All costs will be supported paid by the holder of mining license.

As per the information we got from MML, the perimeters covered by the mining title belong to the Malagasy state. Then, the risk related to possible ejection is minor, if it exists. In any case, as mentioned below, the Malagasy Government can declare the project as public interest works in order to settle a dispute between a holder of mining title and a landowner, and to allow the permit holder to exercise its right under the mining title.

(ii) Relationship with the traditional occupants of the land

Pursuant to article 327 to 331 of the Mining Code, the holder of tenements must come to an arrangement with the people who may hold customary title and live actually on the site. Such people should be organized under a partnership (association) which should conclude an agreement with the holder of tenements. Indeed, the partnership has the right to be indemnified by the holder of tenements.

In case the holder of tenements and the partnership cannot come to an arrangement, the holder of tenements can refer the case to a Tribunal.

We got information from Mada-Aust and Mazoto that the process to identify any people with customary title or who inhabit the land has been initiated.

(iii) Relationship with native title holders, heritage or environmental restriction

Pursuant to article 332 to 335 of the Mining Code, the holder of tenements must come to an arrangement with usufructuaries (beneficial occupants) and heirs. These later should be organized under a partnership (association), which

should conclude an agreement with the holder of tenements. Indeed, the partnership has the right to be indemnified by the holder of tenements. Usufructuaries are persons who have the right to benefit from any products issued from the land. Generally, usufructuaries are the same as traditional occupants.

In case the holder of tenements and the partnership of usufructuaries cannot come to an arrangement, the holder of tenements can as a last resort refer the case to the Tribunal which may impose the conditions of the agreement between parties.

According to information we received from MML, Mada-Aust and Mazoto are in the process of identifying any usufructuaries or heirs.

(iv) Situation of Mada-Aust and Mazoto Minerals in relation to the above

The documents we got from BCMM and those provided to us by MML do not reveal any information concerning the existence of an environmental restriction or any land dispute.

According to information we got from Mada-Aust for which we have no supporting document, the perimeter covered by the mining title belongs to the Malagasy State. Mada-Aust and Mazoto are in the process to lodge an application for lease agreement with the Malagasy State.

As last resort, according to article 128 of the Mining Code, some large works of fitting out and installation can, upon request addressed by the Holder to the Minister in charge of Mining, be declared as public interest works and subject to a procedure of expropriation of the landowner in compliance with the provisions of Ordinance 62-023.

(f) Encumbrances on the tenements

Based on the certificates of registration dated 17 September 2007 delivered by the BCMM, there are no encumbrances on the permits held by Mada-Aust and Mazoto Minerals at this date.

We were informed from MML that Mada-Aust Sarl and Mazoto Minerals Sarl did not take any new commitments on the permits held by each of them from 17 September 2007 up to date.

Furthermore, the documents provided to us or information we got from MML do not reveal the existence of any security or encumbrance granted on the permits held by Mada-Aust and Mazoto Minerals

(g) Rent obligations on the tenements

Administrative fees:

Pursuant to the provisions of article 53 of the Mining Code, each permit is subject to the payment of annual administrative fees. The amount of administrative fees


7

is calculated according to rates fixed each year by decree and the number of squares covering the mining permit. Administrative fees must be paid before 1st April of each year. According to article 199 of the Mining Code, a permit is revoked if the permit holder does not pay annual fees after notice to pay has been given by BCMM. Decision of revocation is taken by the BCMM.

The following fees are applicable for year 2008:

AERP license is subject to a fixed fee of 2 000 •Ariary per square.

PR license is subject to an annual administrative •fees per square as described in the table below:

Exchange (Approx): 1 AUD = 1580 Ariary

A PE license is subject to an annual administrative •

fee per square as described in the table below:

Exchange (Approx): 1 AUD = 1580 Ariary

According to receipts of payment delivered by the BCMM, administrative fees for year 2008 for mining titles issued in the name of Mada-Aust Sarl and Mazoto Minerals Sarl have been paid.

Furthermore, we did not find any notice from BCMM concerning the non-payment of any administrative fees.

Royalties

Sale of mineral products is subject to royalty at a rate of 2%. According to the law, such royalty is distributed as follows:

0,6% as royalty for the mining authorities -

1,4% as ristourne for Province Autonomic, the region - (Fokontany) and Communes.

Rent for occupying the land

The permit holder and the landowner shall determine under a lease agreement the rent payable by the holder to the landowner.

There are no documents provided to us related to any lease agreement concluded by Mada-Aust and Mazoto Minerals with the landowners.

(h) Expenditures obligations on the tenements

The law does not impose an expenditure obligation on the tenements. However, article 52.1 of the Mining Code provides that if there is no commencement of research work or exploitation work, the renewal of permit or conversion of permit into Exploitation permit should be limited to half the area of the initial permit.

In addition, prior to any research or exploitation works, the permit holder must undertake an environmental impact study.

(i) Restrictions affecting the tenements

We are not aware of any restriction affecting the tenements. Permits and certificates we examined do not contain any remark or notice concerning the existence of any irregularity, dispute or other issues.

7.3 A brief summary and overview of Malagasy mining law

(a) General comments:

(i) The Mining Code is established under the Law n° 99-022 of 19 August 1999 modified by the Law 2005-021 of 17 October 2005, and under its decree of application n° 2006-910 of 19 December 2006.

(ii) All prospecting, research, exploitation, possession, transportation, transformation and commercialisation of minerals except for water and hydrocarbons are ruled by the Mining Code. Research and exploitation of minerals are authorized under an appropriate permit license. Research, exploitation, transformation, packaging, transportation and commercialization of radioactive minerals require special agreement with the Malagasy State.

(iii) For the purpose of permit license, Madagascar is divided into squares of 0,39 km² (625 m each). The Government can declare some areas unavailable for mining activities. None of the permits held by MML via Mada-Aust and Mazoto has been declared unavailable.

PR Year Amount in Ariary

1 15,000 2 15,000 3 30,000 4 30,000 5 40,000 6 40,000 7 60,000 8 60,000 from 9 80,000

PE Year Amount in Ariary

1 45,000 2 45,000 3 65,000 4 65,000 5 85,000 6 85,000 7 110,000 8 110,000 from 9 130,000


7

(b) Types of mining permits

There are 3 categories of permits available for a company operator:

(i) Temporary Exploration Permits (AERP), which are valid for three months and are not renewable. Only surface prospecting and remote sensing are authorized. Drilling and pitting are not allowed on AERP. AERP permits are granted immediately upon application, and can be convertible to either Research or Exploitation permits within a three month period. Maximum surface area allowed per applicant and its affiliates is limited to 15,000km² corresponding to 38,400 squares. The cost of an AERP permit is approximately 0.20 USD. AERP cannot be transferred. Two companies are affiliates if they are controlled by the same person or investor.

Until granting of the PR, all AERP converted into PR remain valid.

(ii) Research (Exploration) Permits (PR), which allows it holder to:

(A) conduct exploration activities for minerals within the perimeters and during the period of validity of the permit for all substances mentioned in the permit;

(B) have a priority right in filing application for exploitation permit on the perimeters subject to conduct exclusive prospecting work on the area covered by the permit.

The PR permit does not allow its holder to commercialize products extracted from the premises during the prospecting work.

The initial term of a PR is for five (5) years renewable for two (2) periods of three (3) years each. The maximum number of squares that an applicant and its affiliates can ask for under PR is limited to 25,600 squares.

PR permit is a movable asset, which can be transferred, leased or used as security.

(iii) Exploitation Permit (PE) which gives a holder an exclusive right to exploit authorised minerals and to continue exploration and research of such minerals inside the perimeters during the period of validity of the permit. No other person than the holder can claim any right over any valid exploitation permit in respect of related minerals or substances to which the permit relates. PE permits are valid for 40 years and renewable for a period of 20 years. The number of squares, which can be granted to a holder and its affiliates is limited to 2560 squares. An Exploitation Permit allows its holder to commercialise product extracted from the premises.

PE permit is an immovable asset, which can be transferred, leased or mortgaged.

(c) The right conferred to the holder of a permit.

The holder of mining title has a right to occupy the surface of the area concerned, subject to payment of rent to be determined with the owner of the surface areas. The parties must convene their respective rights and obligations under a lease agreement.

In the event that the owner of the surface areas cannot come to an agreement with the permit holder, litigation must be referred to the competent authority of the Province autonomic or the “Collectivité territoriale décentralisée” (Madagascar Administrative Divisions) before referring the matter to the Comité Provincial des mines (Mining Provincial Committee), in order to find out an amicable settlement.

Furthermore, exploration or exploitation permit gives to its holder the right to build any permanent or temporary structures and to use wood and water situated within the permit boundary. The permit holder has also the right to erect infrastructure inside or outside the perimeters such as electrical, telecommunication installation, water bores and canals, warehousing, staff accommodation, communication means of every nature including pipeline.

With the exception of environmental impact study and environmental management plan which are prerequisites for the initiation of exploration or exploitation activities, these conditions of use may be considered as ordinary course of business obligations to be complied with as, when applicable, to the permit holder.

According to the provisions of article 30 of the mining code, in case the holder of permits finds indications of other mineral substances that are not authorized by the mining title, the holder can file an application for exploration/exploitation of other mineral substances at the BCMM. The right to explore/exploit the other mineral substances should be legitimately granted to the holder, subject to environmental authorization, where necessary.

No additional environmental authorization is required if the new mineral substances, the subject of the extension of right, are in the same nature of the previous authorized minerals, unless it is required to modify the initial works plan.

Furthermore, in case the new mineral substances are radioactive, the Holder must comply with the provisions of article 8 of the mining code, which provides that a specific agreement with the Malagasy State is required in case of research, exploration, exploitation, transportation, commercialisation of radioactive mineral substances. Extension of mineral substances is confirmed and registered as an amendment of the initial title.

The extension of minerals implies modification of the mining title. Such modification is subject to payment of complementary fees determined by decision of the Minister of mining. The applicable fee for year 2007 according to Order n° 10907/2007 of 4 July 2007 is 5.000 A per operation plus 100 Ar per square.


7

Mining authority told us that fees applicable for year 2008 are not yet determined. The extension of mineral substances is confirmed and registered by the BCMM after the payment of complementary fees. The mention of the additional mineral substances is recorded as an amendment in the existing mining title. The law does not provide any limitation in the number of mineral substances that can be covered by a mining title.

Mada-Aust Sarl has filed applications for extension of minerals on 18 January 2008, and obtained new mining titles accordingly, save three (3) PR mining titles (PR 29020– 21059 – 21062) which lie within sensible zone and the PR 26341 in process to be transferred to Mazoto.

(d) Obligations of the holder

Before starting any activity, the holder of a permit must contact the administrative authorities in charge of the areas covered by the permit. Without such formalities, the Administrative Authorities cannot arbitrate any litigation between the holder and the landowner where necessary. To our understanding, MML has yet to observe such formalities. MML should do this for all mining title even if Mada Aust is already known by the Administrative authorities. Any prospecting and exploitation activity within the perimeters must be subject to prior environmental impact study prepared and agreed according to the applicable law in Madagascar. All permit holders must take the necessary action in order to protect the environment and to restore any damages caused by their activities.

As mentioned above, the environmental commitment plans process as required by law for Research Permit has been launched and in progress. For PR’s within ‘sensible zones’, MML should carry out an environmental impact study. In addition, environmental impact studies in relation to the Exploitation Permit owned by Mada-Aust have been approved by the Ministry of environment.

(e) Failure

A Mining title can be terminated if the holder fails to pay the annual administrative fees. Such a holder cannot apply for new permit during five years following such failure.

Late payment of royalties is subject to interest currently at the rate of 2%.

In addition, the permit can be suspended in case of non-respect of an important obligation of the holder.

7.4 Confirmation that Fidafrica has prepared its report as an independent expert

Fidafrica Madagascar confirms that we have prepared this report as an independent expert.

This opinion has been prepared for inclusion in a prospectus to be lodged by MML dated on or about 29 January 2008.

This opinion is limited to Malagasy Law of general application as at the date of this opinion and is given on the basis that it will be governed by and construed in accordance with the laws of Madagascar. We have made no investigation of, and do not express or imply any views on, the laws of any country other than Madagascar.

Best regards,

Dominique Taty Partner

Andriamisa RAVELOMANANASenior Manager

For and on behalf of Fidafrica Madagascar Member of PricewaterhouseCoopers


7

Title Holder Permit Appl’n Grant Expiry Term Project Minerals Total Tenement Note Number Type Date Date Date Name currently Area Fees 2008 under title (km2) $A

Totals: 6328,406 242 614

3432 MDA PR NA 18/06/01 17/06/11 10Ampanihy -

Central (Big ‘S’)

Ni, Cu, Co, Labradorite,

Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag

725,000 70 481 9

5391 MDA PE NA 18/06/2001 17/06/2041 40Ampanihy - Ianapera



6,250 1 114 10




6,250 1 114 10




6,250 1 114 10

13064 MDA PR NA 04/02/2005 03/02/2015 10Ampanihy - Ianapera

Ni, Cu, Au, Co, Cr, Fe,

Mn, Pt, Pd, Rh, Ag, Zn.

18,750 911


Ni, Cu, Au, Cr, Co, Fe,

Mn, Pt, Pd, Rh, Ag, Zn.

112,500 5 468


Ni, Cu, Au, Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn.

6,250 304

14614 MDA PR NA 26/01/2005 25/01/2015 10 ToliaraNi, Cu, Au, Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn.

25,000 1 215



12,500 608



18,750 911



25,000 1 215



56,250 2 734


Ni, Cu, Co, Cr, Fe, Mn,

Pt, Pd, Rh, Ag, Au, Zn.

31,250 1 519




25,000 1 215



12,500 608


Ni, Cu, Au, Cr, Fe, Mn, Pt, Pd, Rh, Ag, Zn,

Co.

6,250 304



Co.

6,250 304




6,250 1 114 3




6,250 1 114 3

4

10


7

5394 MDA PE NA 18/06/2001 17/06/2041 40Ampanihy -

Maniry



18,750 3 342 11


Maniry

Ni, Cu, Au, Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn

18,750 911


Maniry

Ni, Cu, Au, Cr, Co, Fe, Mn,

Pt, Pd, Rh, Ag, Zn.

18,750 911


Maniry

Ni, Cu, Au, Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn

37,500 1 823


Maniry


12,500 608


Maniry


6,250 304


Maniry


6,250 304


Maniry


6,250 304


Maniry



18,750 911


Maniry



6,250 304


Maniry



31,250 1 519


Maniry

Ni, Cu, Co , Cr, Fe, Mn,


18,750 911


Maniry

Ni, Cu, Co , Cr, Fe, Mn,


6,250 152


ManiryNi, Cu, Co, Labradorite

43,750 3 190 8


ManiryNi, Cu, Co, Labradorite

6,250 456 6


Maniry


Co.

12,500 608

21059 MDA PR 06/07/2006 14/09/2007 13/09/2012 5Ampanihy -

ManiryNi, Cu, Co 6,250 152

12,2

21060 MDA PR 05/12/2005 30/10/2006 29/10/2011 5Ampanihy -

Maniry

Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Ag, Zn, Au

6,250 152


Maniry

Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Ag, Zn, Au

6,250 152


Maniry

Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Ag, Au, Zn

12,500 304


Maniry

Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd,

Rh, Ag, Au6,250 152



7


Maniry


Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag,

18,750 3 342 5


Maniry



31,250 3 038107


Maniry



6,250 608 6

21062 MDA PR 06/07/2006 03/10/2007 02/10/2012 5 Ampanihy-Maniry Ni, Cu, Co, 12,500 3042

13

24864 MDA PR 10/05/2007 08/05/2007 07/05/2012 5 Ampanihy-Maniry

Ni, Cu, Labradorite, Cr, Fe, Mn,

Pt, Pd, Rh, Ag, Co, Au

18,750 456

28340 MZT PR 06/09/2007 08/01/2008 07/01/2013 5 Ampanihy-ManiryNi, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

62,500 1 519


6,250 152


18,750 456


6,250 152


43,750 1 063


6,250 152


6,250 152


12,500 304


43,750 1 063


37,500 911


37,500 911

18915 MDA PR NA 10/03/2006 09/03/2016 10Anjeba

(Antinimora/Jafaro)

Cu, Co, Ni, Fe, Mn, Ag,

Au, Zn.43,750 1 063

18916 MDA PR NA 23/02/2006 22/02/2016 10Anjeba

(Antinimora/Jafaro)

Cu, Co, Ni, Fe, Mn, Ag,

Au, Zn.12,500 304

13507 MDA PR NA 04/02/2005 03/02/2015 10Bekisopa

(Soatanimbary)

Ni, Cu, Cr, Co, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

31,250 1 519

15778 MDA PR NA 20/07/2005 19/07/2015 10Bekisopa

(Soatanimbary)

Ni, Co, Cr, Cu, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

56,250 2 734

12834 MDA PR NA 01/03/2005 28/02/2015 10 Majunga Ilménite 25,000 1 215 2



7


28130 MDA PR 24/08/2007 26/10/2007 25/10/2012 5 Mananjary Reg.Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

337,000 8 190


412,500 10 025


50,000 1 215


31,250 759


6,250 152


18,750 456

28185 MDAAERP N/A 25/05/2007 12/10/2007

5 Mananjary Reg.Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

12,500 304 1PR 24/08/2007 N/A N/A

28186 MDAAERP N/A 25/05/2007 12/10/2007 5

Mananjary Reg.Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

18,750 456 1PR 24/08/2007 N/A N/A


75,000 1 823


150,000 3 646


112,500 2 734


6,250 152


25,000 608


6,250 152


43,750 1 063


6,250 152

28198 MDAAERP N/A 25/05/2007 12/10/2007


118,750 2 886 1PR 24/08/2007 N/A N/A

28199 MDAAERP N/A 25/05/2007 12/10/2007


6,250 152 1PR 24/08/2007 N/A N/A

28200 MDAAERP N/A 25/05/2007 12/10/2007


18,750 456 1PR 24/08/2007 N/A N/A


25,000 608


7

28427 MZT PR 13/09/2007 21/01/08 20/01/2013 5 Mananjary Reg.Ni, Cu, Co, Cr, Fe, Mn, Pt, Pd, Rh, Au, Ag, Zn

81,250 1 975


43,750 1 063


18,750 456


191,406 4 652

28433 MZTAERP N/A 14/06/2007 02/11/2007


31,250 759 1PR 13/09/2007 N/A N/A

28434 MZTAERP N/A 14/06/2007 02/11/2007


12,500 304 1PR 13/09/2007 N/A N/A

28435 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28436 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28437 MZTAERP N/A 14/06/2007 02/11/2007


25,000 608 1PR 13/09/2007 N/A N/A

28438 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28439 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28440 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28441 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28442 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28443 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28444 MZTAERP N/A 14/06/2007 02/11/2007


18,750 456 1PR 13/09/2007 N/A N/A

28445 MZTAERP N/A 14/06/2007 02/11/2007


18,750 456 1PR 13/09/2007 N/A N/A



7

28446 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28447 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

28448 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 NYG NYG

28449 MZTAERP N/A 14/06/2007 02/11/2007


6,250 152 1PR 13/09/2007 N/A N/A

26341 MZT PR 18/05/2007 11/07/2007 10/07/2012 5 SatrokalaNi, Cu, Co, Cr, Fe, Pt, Pd, Au

412,500 10 025215

13063 MDA PR NA 04/02/2005 03/02/2015 10 Vohibory

Cu, Au, Ni, Co, Cr, Fe,

Mn, Pt, Pd, Rh, Ag, Zn. Coal

131,250 6 380


Cu, Au, Ni, Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn.

Coal

6,250 304



Coal

12,500 608

29020 MDA PR 19/07/2007 26/10/2007 25/10/2012 5Ampanihy -

ManiryCo - Cu - Ni 12,500 304

214


1612,500 39 190

29757 MZT

AERP N/A 14/06/2007 03/11/2007


6,250 152 1

PR 13/09/2007 N/A N/A

17388 MDA PR N/A 28/07/2005 27/07/2015 10 Ankililoaka Illménite 18,750 911 2

24873 MDA PR N/A 08/05/2007 07/05/2012 5 MiadakafenoCu, Fe, Mn, Au, Ag, Zn.

12,500 304

29082 MZTAERP N/A 30/07/2007 18/12/2007

5 TranomaroNi, Cu, Co, Fe, Mn, Ag,

Zn, Au87,500 2 127 1

PR 29/10/2007 N/A N/A

29084 MZTAERP N/A 30/07/2007 18/12/2007


Zn, Au6,250 152 1

PR 29/10/2007 N/A N/A

29085 MZTAERP N/A 30/07/2007 18/12/2007


Zn, Au56,250 1 367 1

PR 29/10/2007 N/A N/A



7

GlossaryAERP has the meaning in section 1.2(c)(i) of this report.

Ariary means the currency of Madagascar.

BCMM means the Malagasy Cadastral Survey Office or “Bureau des Cadastres Miniers de Madagascar.

Exploitation Permits (PE) has the meaning in section 1.2(c)(iii) of this report.

Mada-Aust or MDA means Mada-Aust Sarl, a wholly owned subsidiary of MML, registered in Madagascar.

Mazoto Minerals or MZT means Mazoto Minerals Sarl, a wholly owned subsidiary of MML, registered in Madagascar.

Mining Code means the mining code° 99-022 of 19 August 1999 modified by law 2005-021 of 17 October 2005;

MML means Malagasy Minerals Limited.

Research Permits (PR) has the meaning in section 1.2(c)(ii) of this report.

Cu means Copper

Fe means Iron

Mn means Manganese

Au means Gold

Ag means Silver

Zn means Zinc

U means Uranium

Th means Thorium

Ta means Tantalum

Nb means Niobium

Sc means Scandium

Ni means Nickel

Pt means Platinum

Pd means Palladium

Rh means Rhodium, and

Co means Cobalt

Notes1. AERP is valid until PR is obtained.

2. New mining title not yet available.

3. According to the contract with SQNY International dated on 03/11/06, Right of Exploration/ Exploitation of Labradorite on 1 square was granted to SQNY International for 5 Years from the date of contract. Not registered at BCMM.

4. According to the contract with SQNY International dated on 03/11/06, Right of Exploitation of Labradorite on 2 squares was granted to SQNY International for 5 Years from the date of contract. Not registered at BCMM.

5. According to the contract with SQNY International dated 03/11/06, Right of Exploration/ Exploitation of Labradorite on 3 squares were granted to SQNY International for 5 Years from the date of contract. Not registered at BCMM.

6. According to the contract with MAGRAMA dated on 21/11/2005, Right of Exploration/ Exploitation of Labradorite on 1 square was granted to MAGRAMA for 10 Years from the date of contract. Registered at BCMM.

7. According to the contract with MAGRAMA dated on 21/11/2005, Right of Exploration/ Exploitation of Labradorite 3 squares were granted to MAGRAMA for 10 years from the date of contract. Registered at BCMM.

8. According to the contract with MAGRAMA dated on 21/11/2005, Right of Exploration/ Exploitation of Labradorite on 7 squares were granted to MAGRAMA for 10 Years from the date of contract. Registered at BCMM.

9. According to the contract with MAGRAMA dated on 21/11/05, Right of Exploitation of Labradorite on 13 squares was granted to MAGRAMA for 10 Years from the date of contract

10. According to the contract with EUROMAD dated on 17/11/05, Right of Exploration/ Exploitation of Labradorite on 1 square was granted to EUROMAD for 10 Years from the date of contract. Not registered at BCMM.

11. According to the contract with EUROMAD dated on 17/11/05, Right of Exploration/ Exploitation of Labradorite on 2 squares was granted to EUROMAD for 10 Years from the date of contract. Not registered at BCMM.

12. Extension on substances has been applied for Cr, Co, Fe, Mn, Pt, Pd, Rh, Ag, Zn.

13. Extension on substances has been applied for Cr, Fe, Mn, Pt, Pd, Rh, Ag, Zn, Au.

14. Extension on substances has been applied for: Cr, Fe, Mn, Au, Ag, Zn, Ta, Nb, Sc.

15. Extension on substances has been applied for Mn, Rh, Ag, Zn


8

material contracts summary8.1 Share Sale AgreementOn or about 4 April 2007, the Company (as purchaser) entered into a share sale agreement with MRNL (as vendor), Jules Le Clezio, Guy Le Clezio, Peter Woods and Graeme Boden (as covenantors) to purchase all of MRNL’s shares in MDA, a company registered in Madagascar, as amended on 9 November 2007 and 14 March 2008 (“Share Sale Agreement”).

MRNL shall transfer all of its shares held in MDA to MML for the consideration of 10,000,000 preference shares in MML which will convert to Shares on the Company being admitted to the Official List.

After completion, the Company shall:

(a) procure repayment of the loan to MRNL by applying 70% of any royalty (in Section 8.7) received by MDA. However, if the amount of the MDA royalties are insufficient to repay MRNL all of the outstanding loan then MRNL shall have no further recourse against the Company in respect of the loan; and

(b) pay to MRNL $750,000 within 30 days of MML’s listing on ASX and on payment of the outstanding amount of the MRNL loan, pay to MRNL an amount equal to up to 70% of the royalty payments payable to MDA until the amount of $1,450,000 (net of the MRNL loan) has been repaid. However, if the amount of the MDA royalties are insufficient to repay MRNL all of the $1,450,000 then MRNL shall have no further recourse against the Company in respect of that amount.

The Share Sale Agreement contains a non-competition clause preventing the covenantors being involved in a business relating to the conduct of mineral exploration and mining activities for any minerals (except the mining and extraction of limestone and the provision of project management services to third parties relating to the development of infrastructure). The restraint area is Madagascar except an area comprising a 75 kilometre radius from the centre of the town of Toliara, Madagascar. The restraint does not apply to tenements held by MRNL at the time of executing the Share Sale Agreement.

The Share Sale Agreement includes standard warranties not inconsistent with an agreement of this kind, including warranties regarding the assets and liabilities of MDA and the standing of the Tenements.

The maximum liability of MRNL is $2,200,000. To make a claim the aggregate of any claim must exceed $100,000. The Company must notify MRNL of any claim within 12 months from the completion and the Company is required to prosecute any claim within 24 months thereafter.

If the Company has not been admitted to the Official List by 31 July 2008 (or such later date that is mutually agreed) then the following shall apply:

(a) within 10 business days the Company must sell and MRNL must buy all of the Company’s MDA’s shares;

(b) consideration will be the cancellation of the 10,000,000 preference shares and MRNL’s forgiveness of the cash consideration of $2,200,000 (including the amounts of the loan owing from MDA to MRNL) or any

other amounts outstanding in respect of the balance of the purchase price of MDA shares;

(c) MRNL will assume repayment of any loan owed by MML to MRNL or any other amounts still outstanding in respect of the balance of the purchase price for the MDA shares issued to MML; and

(d) MML and MRNL will do all things necessary to effect the transfer of the MDA shares and register MRNL as the legal and beneficial owner of them.

If the 10,000,000 preference shares are to be cancelled then MRNL and the Company agree to do all that is necessary to procure the passing of any such shareholder resolutions that maybe required for MML to cancel the preference shares for no return of capital by way of selective reduction of capital.

8.2 Escrow AgreementMRNL (as vendor) entered into an escrow agreement with the Company (as purchaser) and Blakiston & Crabb (as escrow agent) dated 27 April 2007 and amended on 21 January 2008 and 20 March 2008 (“Escrow Agreement”).

The Escrow Agreement relates to the issue of shares in the Company to MRNL as consideration for the transfer of MRNL’s shares in MDA.

Under the Escrow Agreement, the parties appointed Blakiston & Crabb (a law firm), as escrow agent, to hold a signed transfer form assigning the MDA shares to the Company, subject to completion of all of the purchaser’s obligations required to be completed under the Share Sale Agreement.

The transfer will be released to the Company if it is admitted to the Official List by 31 July 2008 and has paid $750,000 to MRNL within 30 days of Official Listing. The transfer will be returned to MRNL if these conditions are not satisfied.

8.3 Business Sale AgreementMining Services, a wholly owned subsidiary of MML, has entered into a sales agreement with BRGM dated 13 December 2007 as amended on 14 March 2008 (“Business Sale Agreement”) to purchase BRGM’s drilling business and geotechnical assay laboratory business in Antananarivo, Madagascar (“Business”). MML has guaranteed the performance of Mining Services’ obligations under the Business Sale Agreement.

The purchase price for the Business is 500,000 Euros (excluding taxes) comprising 25,000 Euros payable on execution of the Business Sale Agreement, 12,500 Euros payable by 15 April 2008, 12,500 Euros payable by 30 June 2008, 325,000 Euros payable by 31 July 2008, 115,000 Euros payable by 31 December 2008 and 10,000 Euros payable by 31 March 2009 (“Purchase Price”).

The Purchase Price includes 100,000 Euros for intangible property such as clientele, 200,000 Euros for materials and commercial furniture and 200,000 Euros for existing stock.

The Business includes the clientele of the Business, commercial furniture and materials, certain materials and equipment described in the Business Sale Agreement, utilities and structures and installations.


13


8

Mining Services takes title to and possession of the Business on the “Effective Date”, being the date that the Conditions Precedent are satisfied (“Effective Date”).

The Business Sale Agreement is subject to and conditional upon Official Quotation, payment of the 325,000 Euro portion of the Purchase Price to the escrow agent, payment by St Denis of 675,000 Euros in accordance with the Long Term Lease, simultaneous payment by Mining Services of any taxes payable on the whole of the Purchase Price and simultaneous payment by Saint Denis of any taxes payable on the Rent under the Long Term Lease by 31 July 2008 (“Conditions Precedent”).

Mining Services undertakes to accept the Business sold in its current state, pay all taxes and levies on the Business, deal with all insurance policies taken out by BRGM regarding the Business so as to avoid any claim against BRGM and to insure against fire, take over all work contracts to which BRGM has subscribed and which have not been terminated and subscribe to all utilities to which BRGM has subscribed and to pay all premiums by the due date for payment.

BRGM undertakes to carry out and manage the Business’ activities in normal conditions and not to cause any prejudice to any part of the Business (including clientele, materials and the equipment, commercial movables, utilities and structures, installations) until the Effective Date.

BRGM is restrained from re-establishing or setting up, directly or indirectly, in Madagascar any type of activity related to drilling or a geotechnical testing laboratory for a five year period commencing 13 December 2007.

Up to and including the Effective Date, BRGM shall not enter into any new agreement for the provision of services connected with the Business without the prior consent of Mining Services.

BRGM makes the usual warranties with respect to ownership of the Business and assets and transfer of title to Mining Services.

BRGM has a priority right of payment over any creditor in the event that the business is sold prior to payment of the Purchase Price.

All title to and risk in the Business shall pass to Mining Services on the Effective Date.

325,000 Euro, being that part of the Purchase Price payable on 31 July 2008, shall be paid to and held by an escrow agent, being Mauritius Commercial Bank SA. Mining Services will bear the cost of the escrow agent.

If the Conditions Precedent are not satisfied, the Business Sale Agreement shall terminate and the parties shall return to the position they would have been in had the Business Sale Agreement not been entered into, except that BRGM is entitled to keep Mining Services’ 50,000 Euro deposit as compensation.

If the Purchase Price is not paid in full by 31 March 2009, the Business Sale Agreement may be terminated and the parties shall return to the position that they would have been in had the Business Sale Agreement not been entered into, except that BRGM is entitled to keep an aggregate amount of 1,000,000 Euros (excluding taxes) from the money paid

under the Business Sale Agreement and the Long Term Lease, as compensation.

Any disputes in relation to the Business Sale Agreement shall be referred to the jurisdiction of the Court of Antananarivo, Madagascar.

The Company guarantees Mining Services’ obligations of the performance and observance of the Business Sale Agreement, including but not limited to the payment of all monies reserved by the Business Sale Agreement and payable by Mining Services.

The Business Sale Agreement contains a clause requiring strict compliance with deadlines.

The French version of the Sale Agreement prevails.

8.4 Long Term Lease Agreement

Saint Denis has entered into a lease agreement with BRGM in respect of two properties in Madagascar (“Long Term Lease”) dated 13 December 2007 as amended on 14 March 2008. The land the subject of the Long Term Lease covers an area of approximately 20,000 square metres and is the land upon which BRGM operates its business, the subject of the Business Sale Agreement (“Land”).

The term of the Long Term Lease is 99 years with an option to renew for a further 99 years commencing on the date that the Conditions Precedent are satisfied.

The Long Term Lease is conditional on Official Quotation, payment of 675,000 Euros, payment of 325,000 Euros by Mining Services to BRGM under the Business Sale Agreement, simultaneous payment by Mining Services of any taxes payable on the Purchase Price under the Business Sale Agreement and simultaneous payment by St Denis of any taxes payable on 750,000 Euros (comprising part of the Rent under the Long Term Lease) by 31 July 2008 (“Conditions Precedent”).

Rent is 1,500,000 Euros (excluding taxes) payable as follows, 75,000 Euros payable on the date of execution of the Long Term Lease, 37,500 Euros payable by 15 April 2008, 37,500 Euros payable by 30 June 2008, 600,000 Euros payable on 31 July 2008, 375,000 Euros payable by 31 December 2008 and 375,000 Euros payable on 31 March 2009 (“Rent”).

St Denis agrees to lease the premises in its current state at its own risk with all encumbrances and without any claim against BRGM.

St Denis is able to carry out development works on the Land. Subject to all of the Rent being paid and the full amount of the Purchase Price being paid under the Business Sale Agreement, St Denis is entitled to compensation for any installations, works or new constructions constructed by St Denis on the Land in the event of expiry or termination of the Long Term Lease.

The Land can only be used as or for “offices, residences, commerce or any other way which is useful to the performance of the drilling and geotechnical assay activities”


8

and may be leased and subleased before full payment of the Rent. After full payment of the Rent, the Land may be used for any purpose that St Denis deems necessary.

St Denis must insure all constructions on the Land

BRGM has a right to mortgage the land the subject of the Long Term Lease until such time as the Rent is paid in full. After the Rent is paid in full, BRGM must take all steps to remove any mortgage that it has lodged in respect of the Land. After the Rent is paid in full (and BRGM’s mortgage is discharged), St Denis may mortgage the Land.

Subject to full payment of the Rent, St Denis is entitled to transfer its leasehold right under the Long Term Lease. The Long Term Lease will be rescinded if St Denis transfers its leasehold interest under the Long Term Lease prior to making full payment of the Rent.

Provided that any mortgage registered over the Land by BRGM has been discharged and all Rent has been paid, St Denis may use the Long Term Lease as surety for a loan or any other financial transaction with third parties.

St Denis shall pay all taxes levied on the Land and shall be responsible for connections to all public and related services.

St Denis may encumber the property provided that the encumbrance is removed at the end of the term of the Long Term Lease.

St Denis is entitled to a right of access to the leased premises during the Long Term Lease.

BRGM declares that there are no legal or contractual obstacles or restrictions in relation to either the free leasing and occupation of the premises or to the conclusion of the Long Term Lease and the Land and the real immovable property is not encumbered.

BRGM guarantees to St Denis peaceful enjoyment of the Land.

BRGM shall not, during the term of the Long Term Lease, sell, dispose of or lease the Land or subject it to any encumbrances. A breach of this clause entitles St Denis to claim damages.

If the Conditions Precedent are not satisfied by 31 July 2008 the Long Term Lease will terminate and both parties shall return to the position they would have been in had the Long Term Lease had not been entered into, except BRGM is entitled to keep St Denis’ 150,000 Euro deposit as compensation.

BRGM shall assign any existing leases in respect of the Land to St Denis from and including the Effective Date.

If the laws in Madagascar change to allow St Denis to purchase the Land then BRGM shall transfer ownership of the Land to St Denis without any additional consideration being payable.

If St Denis, the Company or a subsidiary controlled by the Company decides to transfer the Land to a third party within 5 years from 13 December 2007, then BRGM shall be paid an amount equal to half of the net gain received from the sale (less the value of any buildings constructed on the Land by St Denis or the Company).

If the Rent is not paid in full by 31 March 2009, the Long Term Lease may be terminated and the parties shall return to the position that they would have been in had the Long Term Lease not been entered into, except that BRGM is entitled to keep an aggregate amount of 1,000,000 Euros (excluding taxes) from the money paid under the Business Sale Agreement and the Long Term Lease, as compensation.

Any disputes under the Long Term Lease shall be referred to the jurisdiction of the Court of Antananarivo, Madagascar.

The Company guarantees the performance and observance of St Denis’ obligations under the Long Term Lease, including but not limited to the payment of all monies reserved by the Long Term Lease and payable by St Denis.

The Long Term Lease contains a clause requiring strict compliance with deadlines.

The French version of the Long Term Lease prevails.

8.5 Consulting Agreement – Hendry ConsultingThe Company, Hendry Consulting (as consultant) and Mr Steven Goertz entered into a consultancy agreement dated 7

February 2008 (“Consultancy Agreement”) under which the Company has engaged Hendry Consulting, through Mr Steven Goertz, to provide executive management services for a 3 year period from Official Listing.

The Consultancy Agreement requires Hendry Consulting to procure Mr Goertz to provide the consultancy services on its behalf.

The Consultancy Agreement may be terminated by either party giving 3 months written notice to the other party. There is also provision for the Company to summarily terminate the Consultancy Agreement where:

(a) Hendry Consulting or Mr Goertz wilfully breaches the Consultancy Agreement, grossly or wilfully disobeys the reasonable instructions of the Company, does not comply with Hendry Consulting’s duties under the Consultancy Agreement or Company policies, grossly or wilfully engages in misconduct, dishonesty, insubordination or neglect, engages in conduct which in the reasonable opinion of the Company might tend to injure the reputation of the Company’s business or is bankrupt or suspends payment or compounds with or assigns its or his estate for the benefit of its or his creditors.

(b) Mr Goertz becomes of unsound mind, bankrupt (or enters into an arrangement with creditors) or ceases to be a director of Hendry Consulting or the Company.

The consultancy fee payable to Hendry Consulting comprises an annual fee of $165,000 payable monthly, a fully serviced motor vehicle, 2,000,000 options exercisable at $0.20 and expiring on the fifth anniversary of the commencement date of the Consultancy Agreement of which 1,000,000 options are granted 18 months after the commencement date and 1,000,000 options are granted on the third anniversary of the Consultancy Agreement, subject to obtaining shareholder approval.


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The Company must pay, during the term of the Consultancy Agreement, Mr Goertz’s rent in Madagascar, the costs of Mr Goertz and his family relocating to and from Madagascar, yearly return airfares to Perth for Mr Goertz and his family, medical and hospital benefits for Mr Goertz and his family, school fees for Mr Goertz’s family and other expenses as agreed.

The consultancy services comprise those services typically performed by a managing director.

8.6 Consulting Agreement – Midas and Le ClezioThe Company entered into a consultancy agreement with Midas Consulting, on or about 6 April 2007 under which the Company engaged Midas Consulting, through Mr Jules Le Clezio, to provide managerial services for a 3 year period from the date of execution of the consultancy agreement.

The consulting services are to be provided for a minimum of 8 days a month.

Remuneration for the consulting services is $600 per day and the issue to Midas Consulting of 5,000,000 preference shares in the Company. The 5,000,000 preference shares convert to Shares on Official Listing.

If, and only if, the Company is advised that it will be admitted to the Official List, the Toronto Stock Exchange or the alternative investment market of London Stock Exchange plc, Midas Consulting will be paid a monthly retainer of $5,000 payable monthly in arrears. The consultancy fees for each month will be set off against the retainer for that month until they total $5,000.

Midas Consulting is required to provide operational assistance in Madagascar.

If a party breaches the consultancy agreement then the non-defaulting party may give a default notice to the defaulting party requiring the breach to be remedied within 21 days. If the breach is not remedied then the non-defaulting party may terminate the consultancy agreement by notice in writing.

Midas shall maintain its own insurance throughout the term of the consultancy agreement.

Midas has agreed to indemnify the Company for any taxes arising in relation to the payment of any money from the Company to Midas and for any negligent act of Midas.

8.7 Royalty Agreements – MDARefer to section 7.2(b) of the Tenement Report in Section 7 of the Prospectus.

8.8 Corporate Services Consultancy Agreement - Element Capital

The Company has entered into an agreement with Element Capital Pty Ltd dated 30 April 2008 for the provision of corporate consultancy services. The Company has exclusively engaged Element Capital to:

(a) provide advice, arrange and facilitate the Company’s initial public offer and listing on ASX and any subsequent capital raisings for 12 months after the Company is listed on ASX;

(b) provide general corporate advice to the Company including advice relating to the Company’s initial public offer, post Offer marketing services and general advice on the Company’s strategy.

Element Capital will be paid:

(c) a management fee of 2% of any capital raisings (excluding seed capital raisings) up to and including 12 months after the Company is listed on ASX;

(d) a success fee of 4% of any capital raisings up to and including 12 months after the Company is listed on ASX. Element Capital can elect to have any of the success fees earned by third parties paid directly to third parties;

(e) a monthly retainer of $10,000 from the date the Company is listed on ASX for a period of 12 months, totaling a minimum of $120,000. No retainer is payable if Element Capital does not successfully complete the Minimum Subscription.

(f) Reasonable out of pocket expenses provided that such expenses in excess of $1,000 will not be incurred without the Company’s prior approval.

The above fees do not include GST.

The Company indemnifies Element Capital and its directors, employees, officers and agents and each of its related bodies corporate against any direct or indirect loss arising out of or in connection with this agreement.

Either party may terminate the agreement with 3 months written notice to the other party. If the agreement is terminated by the Company then the Company must pay to Element Capital the balance of any retainer and any fees or expenses that have accrued.

If the agreement is terminated by Element Capital then the Company’s obligation to pay the retainer ceases immediately upon termination. The Company is still liable to pay any management fees, success fees or expenses prior to termination.


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corporate governance9.1 Corporate governanceMML has adopted comprehensive systems of control and accountability as the basis for the administration of corporate governance. The Board is committed to administering the policies and procedures with openness and integrity, pursuing the true spirit of corporate governance commensurate with the Company’s needs. To the extent they are applicable; the Company has adopted the Corporate Governance Principles and Recommendations (“Recommendations”) as published by ASX Corporate Governance Council.

A summary of the Company’s corporate governance practices is set out below.

Summary of Board Charter

The role of the Board is to provide leadership for and supervision of the Company’s senior management. The Board provides the strategic direction of the Company and regularly measures the progression by senior management of that strategic direction. The Board is responsible for promoting the success of the Company through its oversight role. The Board also reviews the Company’s policies on risk oversight and management, internal compliance and control, its Code of Conduct (as defined below), and legal compliance. There are mechanisms in place so that the Board can satisfying itself that senior management has developed and implemented a sound system of risk management and internal control in relation to financial reporting risk and material business risk. The Board monitors and reviews senior management’s performance and implementation of strategy.

The Board delegates to senior management the responsibility of the day-to-day activities in fulfilling the Board’s responsibility. The Board has adopted a Board charter which sets out quantitative and qualitative materiality thresholds.

The Board Charter describes the division of responsibilities between the Chair, the lead independent director (if any) and the Managing Director.

The role of non executive and independent directors is also set out in the Board Charter.

Summary of Audit Committee Charter

The role of the audit committee is to monitor and review the integrity of the financial reporting of the Company and to review significant financial reporting judgments. The audit committee is also to review the Company’s internal financial control system and risk management systems and to monitor, review and oversee the external audit function.

The audit committee has the power to conduct or authorize investigations into any matters within the audit committee’s scope of responsibilities. The audit committee has the authority, as it deems necessary or appropriate, to retain independent legal, accounting or other advisors.

The audit committee also assesses whether external reporting is consistent with audit committee members’ information and knowledge and is adequate for shareholder needs and assesses the management processes supporting external reporting.

Summary of Nomination Committee Charter

The role of the nomination committee is to effectively examine the selection and appointment practices of the Company. The nomination committee regularly reviews the size and composition of the Board and makes recommendations to the Board on any appropriate changes. The nomination committee identifies and assesses necessary and desirable Director competences with a view to enhancing the Board.

The nomination committee also regularly reviews the time required from non executive directors and whether non executive Directors are meeting that requirement. The nomination committee is responsible for developing a process for evaluation of the performance of the Board, Board committees (if any), and when deemed appropriate by the Chair, individual Board members.

Initial director appointments are made by the Board. A new Director will be required to stand for election at the Company’s next general meeting.

Summary of Remuneration Committee Charter

The function of the remuneration committee is to review and make appropriate recommendations on remuneration packages of executive directors, non executive Directors and senior executives. The remuneration committee is also responsible for reviewing any employee incentive and equity-based plans including the appropriateness of performance hurdles and total payments proposed.

Summary of Remuneration Policy

Emoluments of Directors and senior executives are set by reference to payments made by other companies of similar size and industry, and by reference to the skills and experience of the Directors and executives.

The Company’s policy is to remunerate non executive Directors at market rates (for comparable companies) for time, commitment and responsibilities. Fees for non-executive Directors are not linked to the performance of the Company. Given the Company is a junior explorer and the financial restrictions placed on it, the Company may consider it appropriate to issue unlisted Options to non executive directors, subject to obtaining the relevant approvals.

Executive pay and reward consists of a base salary and performance incentives. Long term performance incentives may include Options granted at the discretion of the Board and subject to obtaining the relevant approvals.

Executives are prohibited from entering into transactions or arrangements which limit the economic risk of participating in unvested entitlements.

Summary of Code of Conduct

The Company has adopted a code of conduct, which sets out the principles and standards which the Board, management and employees of the Company are encouraged to strive towards when dealing with each other, Shareholders and the broad community (“Code of Conduct”).


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The Company is to comply with all legislative and common law requirements which affect its business. The Company will deal with others in a way that is fair and will not engage in deceptive practices.

The Code of Conduct sets out directives for Directors, management and staff relating to conflicts of interests, protection of the Company’s the assets and confidentiality.

The Company has a policy forbidding bribes. The Company does not support making facilitation payments as a matter of policy, and expects employees and officers to make every effort to avoid them.

Summary of Policy and Procedure for Selection and (Re)Appointment of Directors

In considering new candidates for appointment as a Director, the nomination committee (or equivalent) evaluates the range of skills, experience and expertise of the existing Board. In particular, the nomination committee (or equivalent) is to identify the particular skills that will best increase the Board’s effectiveness. Consideration is also given to the balance of independent Directors on the Board. Reference is made to the Company’s size and operations as they evolve from time to time. Any appointment made by the Board is subject to ratification by Shareholders at the Company’s next general meeting.

All Directors are required to consider the number and nature of their directorships and calls on their time from other commitments.

Shareholders shall be informed of the names and details of candidates submitted for election as Directors, in order to enable Shareholders to make an informed decision regarding the election.

Summary of Process for Performance Evaluation

The Chair is responsible for evaluation of the Board and, when deemed appropriate, Board committees and individual Directors. The Board is also responsible for evaluating the Managing Director. Other senior executives are evaluated by the Managing Director.

Summary of Policy for Trading in Company Securities

The Board has adopted a policy which prohibits dealing the Company’s securities by Directors, officers and employees when those persons possess inside information. The Policy provides that the written acknowledgement of the Chair must be obtained prior to trading.

Summary of Compliance Procedures

The Board has adopted compliance procedures to assist it to comply with the disclosure requirements under the Listing Rules (“Compliance Procedures”). Under the Compliance Procedures, a responsible officer is appointed who is primarily responsible for ensuring the Company complies with its disclosure obligations. The duties of the responsible officer are set out in the Compliance Procedures. The Compliance

Procedures provide guidelines as to the type of information that needs to be disclosed and encourages thorough recording of disclosure decision making. The Compliance Procedures contain information on avoiding a false market, safeguarding confidentiality of corporate information, and information on external communication for the purpose of protecting the Company’s price sensitive information. The Compliance Procedures also provide guidance relating to potential disclosure material.

Summary of Procedure for the Selection, Appointment and rotation of External Auditor

The Board is responsible for the initial appointment of the external auditor and the appointment of a new external auditor when any vacancy arises, as per the recommendations of the audit committee, with the decision being ratified by Shareholders at the next annual general meeting of the Company.

Candidates for the position of external auditor of the Company must be able to demonstrate complete independence from the Company and an ability to maintain independence through the engagement period.

The audit committee will review the performance of the external auditor on an annual basis and make any recommendations to the Board.

Summary Shareholder Communication Strategy

The Board aims to ensure that Shareholders are informed of all major developments affecting the Company. All Shareholders receive the Company’s annual report. The Company maintains a website on which the Company makes certain information available on a regular basis.

Summary of Risk Management Policy

The Board has adopted a risk management policy. Under the policy, the Board delegates day-to-day management of risk to the Managing Director. The risk management policy sets out the role of the Managing Director and accountabilities. It also contains the Company’s risk profile and describes some of the policies and practices the Company has in place to manage specific business risks.

As the Company’s activities develop in size, nature and scope, the size of the Board and the implementation of additional corporate governance structures will be given further consideration.

The Board sets out below its “if not, why not” report in relation to those matters of corporate governance where the Company’s practices depart from the Recommendations.

Principle 2 Recommendation 2.1: A majority of the board should be independent directors.


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Notification of departure: The Company does not have a majority of independent directors as currently none of the Directors are independent.

Explanation for departure:The Board considers that the composition of the Board is adequate for the Company’s current size and operations, and includes an appropriate mix of skills and expertise, relevant to the Company’s business.

Principle 2 Recommendation 2.2: The chair should be an independent director.

Notification of departure: The Chair, Mr Max Cozijn, is not an independent director as he acts in an executive capacity for the Company. Further, Mr Cozijn has a substantial shareholding.

Explanation for departure:The current Board composition does not allow for the Company to follow recommendation 2.2. However, the Board believes that Mr Cozijn is the most appropriate person for the position of Chair because of his qualifications and experience. Further, the Board has adopted a policy on independent professional advice to assist Directors with independent judgement.

Principle 2 Recommendation 2.4: The Board should establish a nomination committee.

Notification of departure: There is no separate nomination committee.

Explanation for departure:The Board considers those matters that would usually be the responsibility of a nomination committee. Given that the Board comprises only four Directors, the Board considers that no efficiencies or other benefits would be gained by establishing a separate committee. The Board has adopted a nomination committee charter.

Principle 4 Recommendations 4.1 & 4.2: The Board should establish an audit committee and structure it in accordance with Recommendation 4.2.

Notification of departure: A separate audit committee has not been formed and therefore is not structured in accordance with the compositional recommendation.

Explanation for departure:The role of the audit committee is carried out by the Board. The Board considers that given its size and composition, no efficiencies or other benefits would be gained by establishing a separate committee. When considering audit related matters, the Board functions in accordance with its Audit Committee Charter. The Audit Committee Charter also provides that

the Board may meet with the external auditor, without management present, as required.

Principle 8 Recommendation 8.1: The Board should establish a remuneration committee.

Notification of departure: There is no separate remuneration committee.

Explanation for departure:The role of the remuneration committee is carried out by the Board. The Board considers that no efficiencies or other benefits would be gained by establishing a separate remuneration committee. However, the Board has adopted a Remuneration Committee Charter, which it applies when convening as the remuneration committee. No Directors participate in any deliberations regarding their own remuneration or related issues.


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risk factorsThere are factors, both specific to the Company and of a general nature, which may affect the future operating and financial performance of the Company and the value of its Shares. Many of these factors are outside the control of the Company and the Directors.

This Section outlines the principal risks associated with an investment in the Company. Each of the risks set out below could, if it were to eventuate, have a material adverse impact on the Company’s operating performance, profits and Share price.

The summary of risks below is not exhaustive and before deciding to invest in the Company, potential investors should read the entire Prospectus and consider the following risk factors that could affect the financial performance of the Company and the value of its Shares. There can be no guarantee that MML will achieve its stated objectives and you should carefully consider these factors in light of your personal circumstances (including financial and taxation issues) and seek professional advice from your accountant, stockbroker, lawyer or other professional adviser before deciding whether to apply for Shares in the Offer.

10.1 Risks Specific to the Company

(a) Limited operating history of MML

The prospects of the Company must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly in the mineral exploration sector, which has a high level of inherent uncertainty.

(b) Operating in developing countries

The Company’s current projects are located in Madagascar and any potential projects that it may acquire an interest in, may be located in Madagascar or other developing countries. Operating in such regions carries additional risks including but not limited to the failure of infrastructure and loss or damage due to any number of unpredictable circumstances. Furthermore, retaining and attracting technical personnel to live and work in such areas is challenging and may delay the Company from achieving its objectives if it cannot satisfactorily address this issue.

(c) Operating in Madagascar

Madagascar and other developing countries may be subject to political, economic and other uncertainties, some of which may not be found in other countries such as Australia, the United Kingdom or the United States. Future government activities concerning the economy, foreign ownership or the operation and regulation of facilities such as mines or mineral exploration operations, could have a significant effect on the Company.

The Board anticipates that the value of the Company’s exploration and mining interests are most likely to be derived from the Madagascar operations (although it

is noted that these risks may apply in other developing countries that the Company may operate in). As a result, the Company may be exposed to a number of risks customary for international operations, including but not limited to:

(i) Political Risk

The Company’s investment in exploration projects in Madagascar may be exposed to adverse political developments that could affect the economics of the project. The government of Madagascar has supported the Company with its exploration activities to date, but there is no assurance that this support will continue. The Company’s investment in exploration projects in Madagascar may be exposed to adverse political developments that could affect the economics of its projects.

(ii) Uncertainty of Laws and Enforcement of Laws

The government of Madagascar has been developing a comprehensive system of commercial laws, and considerable progress has been made in introducing laws and regulations dealing with economic matters such as foreign investment, corporate organisation and governance, commerce, taxation and trade. However, because these laws and regulations are relatively new, and because of the limited volume of published cases and their non-binding nature, interpretation and enforcement of these laws and regulations involve uncertainties. In addition, as the legal system in Madagascar develops, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on the Company’s business operations.

(iii) Foreign Exchange Risk

The value or sale price of the commodities that may be produced by the Company (if any) will expose the income of the Company to the changes in the exchange rate.

The international price of most commodities are denominated in United States dollars, whereas the income and expenditure of the Company are, and will be accounted for, in Australian dollars. The revenues of the Company will be exposed to the fluctuations and volatility of the price of minerals and the rate of exchange between the United States dollar and the Australian dollar, as determined in international markets.

(iv) Repatriation of Profits and Adverse Taxation Consequences

There is no certainty that all future revenues can be repatriated. Further, any material changes in taxation legislation in relation to the returning of


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revenues from Madagascar may affect the viability and profitability of the Company.

(d) Limited explorations of the Company’s projects

The Tenements are in the early stages of exploration and potential investors should understand that mineral exploration, development and mining are high-risk enterprises, only occasionally providing high rewards.

There is no assurance that exploration of the mineral interests currently held by the Company, or any other projects that may be acquired in the future, will result in the discovery of an economically viable mineral deposit. Even if an apparently viable mineral deposit is identified, there is no guarantee that it can be profitably exploited.

(e) Title

The grant of a tenement or the renewal of the term of a tenement of the Company is at the discretion of various authorities in Madagascar and the government of Madagascar, the place where the Company intends to conduct its exploration activities.

If a tenement is not granted or renewed, the Company may suffer significant damage through loss of the opportunity to develop and discover mineral deposits on that tenement.

(f) Reliance on Key Personnel

The Company is reliant on a number of key employees, including the Directors of the Company. The loss of one or more of its key personnel could have an adverse impact on the business of the Company.

It may be difficult for the Company to attract and retain suitably qualified and experienced people, given the current high demand in the industry and relatively small size of the Company, compared with other industry participants.

(g) Commodity Prices

Commodity prices fluctuate and are affected by numerous factors beyond the control of the Company. These factors include world demand for base metals, oil and gas, forward selling by producers and production cost levels.

Moreover, commodity prices are also affected by macroeconomic factors such as expectations regarding inflation, interest rates and global and regional demand for, and supply of, the commodity as well as general global economic conditions. These factors may have an adverse affect on the Company’s exploration activities, as well as on its ability to fund those activities and the price of the Company’s listed securities.

(h) Future Capital Requirements

The Company’s activities will require substantial expenditures. There can be no guarantees that the funds raised pursuant to this Prospectus will be sufficient to successfully achieve all the objectives of the Company’s overall business strategy. If the Company is unable to use debt or equity to fund expansion after the substantial exhaustion of the net proceeds raised pursuant to this Prospectus, there can be no assurances that the Company will have sufficient capital resources for that purpose, or other purposes, or that it will be able to obtain additional resources on terms acceptable to the Company or at all. Any additional equity financing maybe dilutive to Shareholders and any debt financing if available, may involve restrictive covenants, which limited the Company’s operations and business strategy.

The company’s failure to raise capital if and when needed could delay or suspend the Company’s business strategy and could have a material adverse effect on the Company’s activities and the price of its securities.

(i) Potential Acquisitions

As part of it’s business strategy, the Company may make acquisitions of, or significant investments in, companies, products, technologies or resource projects. Any such future transactions would be accompanied by the risks commonly encountered in making acquisitions of companies, products, technologies or resource projects.

(j) Joint Venture Parties, Contractors and Contractual Disputes

The Directors are unable to predict the risk of:

(i) financial failure or default by a participant in any joint venture to which the Company is, or may become, a party;

(ii) insolvency or other managerial failure by any of the operators and contractors used by the Company in its exploration activities; or

(iii) insolvency or other managerial failure by any of the other service providers used by the Company or its operators for any activity.

10.2 Mineral Industry Risks

(a) Exploration, Development, Mining, Processing and Operating Risks

By its nature, the business of mineral exploration and/or production, which the Directors intend the Company to undertake, contains risks. Prosperity depends on the successful exploration and/or acquisition of recoverable and economic deposits, design and construction of efficient processing facilities, competent operation and proficient marketing of the product.


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The operations of the Company, if and when it commences production, may be disrupted by a variety of risks and hazards which are beyond the control of the Company, including environmental hazards, industrial accidents, technical failures, labour disputes, unusual or unexpected rock formations, formation damage, flooding and extended interruptions due to inclement or hazardous weather conditions, fire and explosions.

These risks and hazards could also result in damage to, or destruction of, production facilities, personal injury, environmental damage, business interruption, monetary losses and possible legal liability. While the Company currently intends to maintain insurance within ranges of coverage consistent with industry practice, no assurance can be given that the Company will be able to obtain such insurance coverage at reasonable rates (or at all), or that any coverage it obtains will be adequate and available to cover any such claims.

Whether or not income will result from projects undergoing exploration, development and production programs, depends on successful establishment of exploration operations. Factors including costs, equipment availability and metal prices affect successful project development as does the design and construction of efficient exploration facilities, competent operation and management and prudent financial administration, including the availability and reliability of appropriately skilled and experienced consultants.

(b) Resource Estimations Resource estimates are expressions of judgment

based on knowledge, experience and resource modelling. As such, resource estimates are inherently imprecise and rely to some extent on interpretations made. Despite employing qualified professionals to prepare resource estimates, such estimates may nevertheless prove to be inaccurate. Furthermore, resource estimates may change over time as new information becomes available. Should the Company encounter mineralisation or geological formation different from those predicted by past drilling, sampling and interpretations, resource estimates may need to be altered in a way that could adversely affect the Company’s operations.

(c) Payment obligations

Under the exploration tenements and certain other contractual agreements to which the Company is or may in the future become a party, the Company is or may become subject to payment and other obligations. Failure to meet these work commitments will render the tenement or licence liable to be cancelled. Further, if any contractual obligations are not complied with when due, in addition to any other remedies that may be available to other parties, this could result in dilution or forfeiture of interest held by the Company.

(d) Occupants and owners of land Some or all of the mining tenements held by the

Company are occupied or owned by third parties.

Should the Company be unable to obtain access to its Tenements on terms acceptable to the occupier or owner of the land upon which the Tenements are located then there is a risk that this may cause delays to or prevent any mining operations on the Tenements.

(e) Metallurgy

Metal and/or mineral recoveries are dependent upon the metallurgical process, and by its nature contain elements of significant risk such as:

(i) Identifying a metallurgical process through testwork to produce a saleable metal and/or concentrate;

(ii) Developing an economic process route to produce a metal and/or concentrate; and

(iii) Changes in mineralogy in the ore deposit can result in inconsistent metal recovery, affecting the economic viability of the project.

10.3 Environmental Risks

(a) General

The Company’s projects will be subject to regulations regarding environmental matters and the discharge of hazardous wastes and materials. The government of Madagascar and other authorities that administer and enforce environmental laws determine these environmental requirements. As with all mining projects, the projects would be expected to have a variety of environmental impacts should development proceed. The Company intends to conduct its activities in an environmentally responsible manner and in accordance with applicable laws.

The cost and complexity of complying with the applicable environmental laws and regulations may prevent the Company from being able to develop potentially viable mineral deposits.

Although the Board believes that it is in compliance in all material respects with all applicable environmental laws and regulations, there are certain risks inherent to its activities, such as accidental spills, leakages or other unforseen circumstances, which could subject the Company to extensive liability.

Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities. The Company is unable to predict the effect of additional environmental laws and regulations, which may be adopted in the future, including whether any such laws or regulations would materially increase the Company’s cost of doing business or affect its operations in any area.

There can be no assurances that new environmental laws, regulations or stricter enforcement policies, once implemented, will not oblige the Company to incur significant expenses and undertake significant


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investments in such respect which could have a material adverse effect on the Company’s business, financial condition and results of operations.

(b) Previous Exploration and Mining

Previous exploration and mining activities undertaken by past tenement holders could in the future give rise to costs for environmental, rehabilitation, damage, control and losses. As at the date of this Prospectus, the Company has received no indication or instruction that rehabilitation of these areas is required. The enforcement of any environmental regulation could lead to increased costs for the Company which in turn could adversely affect the Company’s financial performance and available cash reserves.

10.4 General Risks

(a) Investment in Shares

Applicants should be aware that there are risks associated with any investment in securities. The prices at which the Shares offered under this Prospectus trade may be above or below the Offer price, and may fluctuate in response to a number of factors.

Further, the stock market, and in particular the market for mining and exploration companies, has experienced extreme price and volume fluctuations that has often been unrelated or disproportionate to the operating performance of such companies. There can be no guarantee that these trading prices will be sustained. These factors may materially affect the market price of the Shares, regardless of the Company’s operational performance.

(b) Share Market Conditions

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

(c) Policies and Legislation

Any changes in government policies or legislation, including changes to the taxation system or changes affecting mining and exploration activities may affect the Company’s future earnings, profitability and the relative attractiveness of investing in the Company.

(d) Economic Risk

Changes in the general economic climate in which the Company operates may adversely affect the financial performance of the Company. Factors that may contribute to that general economic climate include, the level of direct and indirect competition against the Company, industrial disruption, the rate of growth of gross domestic product in Australia and Madagascar

(and any other jurisdictions in which the Company may acquire mineral exploration assets), interest rates and the rate of inflation.

(e) Competition

MML will compete with other companies, including major mineral exploration and mining companies. Some of these companies have greater financial and other resources than the Company and, as a result, may be in a better position to compete for future business opportunities. Many of the Company’s competitors not only explore for and produce minerals, but also carry out refining operations and produce other products on a worldwide basis. There can be no assurance that the Company can compete effectively with these companies.

10.5 Investment Speculative The above risk factors ought not to be taken as

exhaustive of the risks faced by the Company or by investors in the Company. The above factors, and others not specifically referred to above, may in the future materially affect the financial performance of the Company and the value of the Shares offered under this Prospectus.

Therefore, the Shares to issued pursuant to the Prospectus carry no guarantee with respect to the payment of dividends, returns of capital or the market value of those Shares.

Potential investors should consider that the investment in the Company is speculative and should consult their professional advisor before deciding whether to apply for Shares.


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rights attaching to sharesA summary of the rights attaching to Shares in the Company is set out below. This summary is qualified by the full terms of the Constitution (a full copy of the Constitution is available from the Company on request free of charge) and does not purport to be exhaustive or to constitute a definitive statement of the rights and liabilities of Shareholders. These rights and liabilities can involve complex questions of law arising from an interaction of the Constitution with statutory and common law requirements. For a Shareholder to obtain a definitive assessment of the rights and liabilities which attach to Shares in any specific circumstances, the Shareholder should seek legal advice.

(a) Voting

At a general meeting, on a show of hands every Shareholder present in person has one vote. At the taking of a poll, every Shareholder present in person or by proxy and whose Shares are fully paid has one vote for each of his or her Shares. On a poll, the holder of a partly paid share has a fraction of a vote with respect to the share. The fraction is equivalent to the proportion which the amount paid (not credited) bears to the total amount paid and payable (excluding amounts credited).

(b) General Meetings

Each Shareholder is entitled to receive notice of, attend and vote at general meetings of the Company and to receive all notices, financial statements and other documents required to be sent to Shareholders under the Constitution of the Company, the Corporations Act and the Listing Rules.

(c) Dividends The Directors may pay to Shareholders any interim

and final dividends as, in the Directors’ judgement, the financial position of the Company justifies. The Directors may fix the amount, the record date for determining eligibility and the method of payment. All dividends must be paid to the Shareholders in proportion to the number and the amount paid on the Shares held.

(d) Transfer of Shares

Generally, all Shares in the Company are freely transferable subject to the procedural requirements of the Constitution, and to the provisions of the Corporations Act, the Listing Rules and the ASTC Operating Rules. The Directors may decline to register an instrument of transfer received where the transfer is not in registrable form or where refusal is permitted under the Listing Rules or the ASTC Operating Rules. If the Directors decline to register a transfer the Company must give reasons for the refusal. The Directors must decline to register a transfer when required by the Corporations Act, the Listing Rules or the ASTC Operating Rules.

(e) Variation of Rights The Company may only modify or vary the rights

attaching to any Shares with the prior approval by

a special resolution of the Shareholders, or with the written consent of the holders of at least three-fourths of the issued Shares.

(f) Directors

The minimum number of Directors is three and the maximum is ten. Currently, there are five Directors. Directors must retire on a rotational basis so that one-third of Directors must retire at each annual general meeting. Any other Director who has been in office for three or more years must also retire. A retiring Director is eligible for re-election. The Directors may appoint a director either in addition to existing Directors or to fill a casual vacancy, who then holds office until the next annual general meeting.

(g) Decisions of Directors

Questions arising at a meeting of Directors are decided by a majority of votes. The Chairman has a casting vote.

(h) Issue of Further Shares

Subject to the Constitution, the Corporations Act 2001 and the Listing Rules, the Directors may issue, or grant options in respect of, Shares to such persons on such terms as they think fit. In particular, the Directors may issue preference shares, including redeemable preference shares, and may issue shares with preferred, deferred or special rights or restrictions in relation to dividends, voting, return of capital and participation in surplus on winding up.

(i) Officers’ Indemnity

To the full extent permitted by the law and to the extent not covered by insurance, the Company must indemnify each officer of the Company against all losses and liabilities incurred by the person as an officer of the Company, including costs and expenses incurred in defending proceedings in which judgement is given in favour of the person or in which the person is acquitted or in connection with relief granted to the person in an application under the Corporations Act 2001 in respect to such proceedings.

(j) Alteration to the Constitution

The Constitution can only be amended by a special resolution passed by at least 75% of Shareholders present and voting at a general meeting. At least 28 days’ notice of the intention to propose the special resolution must be given.

(k) ASX Listing Rules Prevail

To the extent that there are any inconsistencies between the Constitution and the Listing Rules, the Listing Rules prevail.


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additional information12.1 Company history, tax status

and financial yearThe Company was incorporated on 22 September 2006 under the Corporations Act as a public company.

The Company’s financial year ends on 30 June annually and the Directors expect that the Company will be taxed in Australia.

12.2 Continuous disclosureThe Company is subject to regular reporting and disclosure obligations under the Corporations Act. Copies of documents lodged with the ASIC in relation to the Company may be obtained from, or inspected at, an ASIC office.

Further, the Company will adopt a continuous disclosure policy so as to comply with its continuous disclosure obligations once listed on ASX.

Those obligations will include being required to notify the ASX immediately of any information concerning the Company of which it is, or becomes aware of, and which a reasonable person would expect to have a material effect on the price or value of the Company’s Shares. Exceptions apply for certain information which does not have to be disclosed.

Other documents that are required to be lodged include:

(a) Quarterly activities and cash flow reports to be provided to the ASX within a specified time following the end of each quarter

(b) half yearly reports and preliminary financial statements, to be provided to the ASX within 2 months of the end of each half and full year accounting period respectively; and

(c) financial statements, to be lodged with the ASX within a specified time after the end of each accounting period.

12.3 Privacy disclosureThe Company collects information about each Applicant provided on an Application Form for the purposes of processing the Application and, if the Application is successful, to administer the Applicant’s security holding in the Company.

By submitting an Application Form, each Applicant agrees that the Company may use the information provided by an Applicant on the Application Form for the purposes set out

in this privacy disclosure statement and may disclose it for those purposes to the Share Registry, the Company’s related bodies corporate, agents, contractors and third party service providers, including mailing houses and professional advisers, and to the ASX and regulatory authorities.

If an Applicant becomes a Shareholder, the Corporations Act requires the Company to include information about the Shareholder (including name, address and details of the securities held) in its public register. The information contained in the Company’s public register must remain there even if that person ceases to be a Shareholder. Information contained in the Company’s register is also used to facilitate distribution payments and corporate communications (including the Company’s financial results, annual reports and other information that the Company may wish to communicate to its security holders) and compliance by the Company with legal and regulatory requirements.

If you do not provide the information required on the Application Form, the Company may not be able to accept or process your Application. An Applicant has a right to gain access to the information that the Company holds about that person subject to certain exemptions under law. A fee may be charged for access. Access requests must be made in writing to the Company’s registered office.

12.4 Taxation implicationsThe acquisition and disposal of Shares will have tax consequences, which will differ depending on the individual financial affairs of each investor. All potential investors in the Company are urged to take independent financial advice about the taxation and any other consequences of investing in the Company.

To the maximum extent permitted by law, the Company, its officers and each of their respective advisers accept no liability or responsibility with respect to the taxation consequences of subscribing for Shares under this Prospectus.

12.5 LitigationLegal proceedings may arise from time to time in the course of the Company’s business. As at the date of this Prospectus the Company is not involved in any legal proceedings, nor so far as the Directors are aware, are any legal proceedings pending or threatened against the Company, or its subsidiaries, the outcome of which will have a material adverse effect on the business or financial position of the Company.


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12.6 Directors’ interests(a) Directors’ Interest in Shares

The Directors and their related entities have the following interests in the Securities of the Company as at the date of this Prospectus:

No of Shares held Proposed

Direct Indirect Options(2)

Mr S.B. Goertz 1 5,000,000 2,000,000(3)

Mr M.D.J. Cozijn 1 5,000,000 1,000,000(4)

Mr G.F.M. Le Clezio (1) 250,000 - -

Dr P.J. Woods (1) - - -

(1)Madagascar Resources NL (“MRNL”) holds 10,000,000 Preference Shares in MML which will revert to fully paid ordinary shares upon listing; Mr G.F. Le Clezio & Dr P.J. Woods are also Directors & Shareholders of MRNL(2)It is proposed that these Options be issued upon the successful listing of MML on the ASX. Any grant of Options will be subject to Shareholder approval following successful listing on the ASX(3) 2,000,000 Options will be granted to Hendry Consulting Sarl, a company of which Mr Goertz is a sole director and shareholder, as fees associated with a consultancy agreement more particularly described in Section 8.5.(4) 1,000,000 Options are proposed to be granted to Mr. Cozijn or his nominee after Official Quotation and completion of this Offer, subject to Shareholder approval.

Directors are not required to hold any Shares in the Company under the Constitution of the Company.

(b) Directors Participation in Offer

Nothing in this Prospectus will be taken to preclude Directors, officers, employees or advisors of MML from applying for Shares on the same terms and conditions as offered pursuant to this Prospectus.

(c) Remuneration of Directors

The Constitution provides that the Company may remunerate the Directors. The remuneration shall, subject to any resolution of a general meeting, be fixed by the Directors.

The Constitution of the Company provides that Non-Executive Directors may collectively be paid as remuneration for their services a fixed sum not exceeding the aggregate maximum of $200,000 per annum which has been set by the Company in general meeting. It is currently resolved that all Directors will each receive fees of $20,000 per annum.

A Director may be paid fees or other amounts as the Directors determine, where a Director performs duties or provides services outside the scope of their normal Director’s duties. A Director may also be reimbursed for out of pocket expenses incurred as a result of their directorship or any special duties.

Mr Steven Geortz is presently paid a retainer of $5,000 per month plus GST through his consultancy company until completion of the Offer, and has been paid a total of $60,000 as at the date of the Prospectus.

It is intended that Mr Max Cozijn be paid remuneration of $50,000 per annum plus 9% Superannuation for his services as Finance Director and Company Secretary following the

successful completion of the Offer and listing of the Company on the ASX.

Except as disclosed in this Prospectus, no Director holds, or during the last two years has held, any interest in:

the formation or promotion of the (i) Company;

property acquired or proposed to be (ii) acquired by the Company in connection with its formation or promotion; or

the Offer,(iii)

and no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid to any Director to induce him to become or to qualify as a Director or otherwise for services rendered by him or her in connection with the formation or promotion of the Company or the Offer.

There were no transactions with Directors since incorporation other than those set out in this Section 12.6 and other Sections of this Prospectus.

(d) Other Interests

Mr Steven Goertz is employed by the Company through i. a consultancy agreement with his company Hendry Consulting (refer Material Contracts section item 8.5)

Mr Guy Le Clezio and Dr Peter Woods are Directors ii. of MRNL which has entered into the Share Sale Agreement with MML. MML has paid a total of approximately $300,000 in reduction of a loan from MRNL and for working capital in accordance with the Share Sale Agreement (refer Material Contracts section item 8.1)


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12.7 Expenses of the OfferThe total expenses of the Offer payable by the Company are estimated at approximately $650,000 if only the Minimum Subscription is received and $750,000 if the Maximum Subscription is received. These expenses include management and broker fees, expert fees, accounting fees, legal fees,

ASX and ASIC fees, the cost of printing and distributing this Prospectus and other miscellaneous expenses.

These expenses have been paid or will be payable by the Company.

12.8 Major ShareholdersAs at the date of the Prospectus the major Shareholders of the Company holding 5% or more of the issued capital are:

Shareholder No. of Shares

MRNL 10,000,000

Goertz Super Fund (Steven Goertz) 5,000,000

Diplomat Holdings Pty Ltd (Supermax RF) – (Max Cozijn) 5,000,000

Midas Consultancy Ltd (Jules Le Clezio) 5,000,000

Harpendon Nominees Pty Ltd 5,000,000

12.9 Interests of promoters, experts and advisorsExcept as disclosed in this Prospectus, no promoter or other person named in this Prospectus that has performed a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus holds, or in the past two years has held, any interest in:

(a) the formation or promotion of the Company; or

(b) property acquired or proposed to be acquired by the Company in connection with its formation or promotion or the Offer; or

(c) the Offer,

and no amounts of any kind (whether in cash, Shares or otherwise) have been paid or agreed to be paid to a promoter or any person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of the Prospectus for services rendered by that person in connection with the formation or promotion of the Company or the Offer.

Jules Le Clezio has provided consulting services to the Company. In the past two years the Company has paid approximately $36,000 and intends to grant Mr Le Clezio or his nominee 1,000,000 Options on the successful completion of this offer and listing of the Company on the ASX.

Hardy Bowen Lawyers act as solicitors to the Company and in that capacity have been involved in providing legal advice to the Company in relation to the Offer. The Company will pay approximately $40,000 to Hardy Bowen Lawyers for these services. Hardy Bowen Lawyers have provided general legal advice in relation to the various tenement acquisition agreements and have or will be paid $10,000 for these services.

RSG Global Pty Ltd / Coffey Mining International have prepared the Independent Geologist’s Report included

in Section 5 of this Prospectus. The Company will pay approximately $60,000 to RSG Global Pty Ltd for these services.

WHK Horwath has prepared the Investigating Accountant’s Report included in Section 6 of this Prospectus. The Company will pay approximately $15,000 to WHK Horwath for these services.

WHK Horwath are auditors of the Company and will be paid for these services on standard industry terms and conditions.

FidAfrica Madagascar have prepared the Tenement Report in Section 7 of this Prospectus. The Company will pay approximately $40,000 to FidAfrica for these services.

Security Transfer Registrars Pty Ltd has been appointed to conduct the Company’s share registry functions and to provide administrative services in respect to the processing of Applications received pursuant to this Prospectus, and will be paid for these services on standard industry terms and conditions.

Element Capital has been engaged as Lead Manager to the Offer and will receive a management fee of 2% of the Offer (and any other capital raisings for 12 months after listing), a success fee of 4% of the Offer (and any other capital raisings for 12 months after listing) and a monthly retainer of $10,000 for a period of 12 months after Official Listing.

The amounts disclosed above are exclusive of any amount of goods and services tax payable by the Company in respect of those amounts.

12.10 ConsentsEach of the parties referred to in this Section:

(a) has not made any statement in this Prospectus or any statement on which a statement in this Prospectus is based, other than specified below;


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(b) to the maximum extent permitted by law, expressly disclaims all liability in respect of, makes no representation regarding, and takes no responsibility for, any part of this Prospectus, other than the references to its name and the statement(s) and/or report(s) (if any) specified below and included in this Prospectus with the consent of that party; and

(c) has given and has not, before the date of this Prospectus, with ASIC, withdrawn its written consent:

(i) to be named in this Prospectus in the form and context which is named; and

(ii) to the inclusion in this Prospectus of the statement(s) and/or report(s) (if any) by that person in the form and context in which it appears in this Prospectus.

(d) has not outsourced or caused to be issued the Prospectus or the making of this Offer.

Name Role Statement/Report

RSG Global Pty Ltd Independent Geologist Independent Geologist’s Report

WHK Horwath Investigating Accountant Investigating Accountant’s Report

FIDAFRICA Madagascar Tenement status Tenement Report

WHK Horwath Auditors Nil

Hardy Bowen Lawyers Lawyers Nil

Security Transfer Registrars Pty Ltd Share Registry Nil

Element Capital Pty Ltd Corporate Advisers/Lead Manager Nil

12.11 Restricted SecuritiesASX may classify certain existing Shares on issue in the Company (as apposed to those to be issued under this Prospectus) as being subject to the restricted securities provisions of the Listing Rules. If so classified, such Shares would be required to be held in escrow for a period determined by ASX and would not be able to be sold, mortgaged, pledged, assigned or transferred for that period without the prior approval of ASX.

12.12 Distribution of ProspectusThe Prospectus has been prepared by the Company. In preparing the Prospectus, the Company has taken reasonable steps to ensure that the information in the Prospectus is not false or misleading. In doing so, the Company has had regard to the prospectus requirements of the Corporations Act.

Prospective investors should read the full text of the Prospectus as the information contained in individual sections is not intended to and does not provide a comprehensive review of the business and financial affairs of the Company nor the securities offered pursuant to the Prospectus.

No person is authorised to give any information in relation to or to make any representation in connection with the Offer described in the Prospectus that is not contained in the Prospectus. Any such information or representation may not be relied upon as having been authorised by the Company in connection with the Offer.

This Prospectus provides information to assist investors in deciding whether they wish to invest in the Company and

should be read in its entirety. If you have any questions about its contents or investing in the Company you should contact your stockbroker, accountant or other financial adviser.

12.13 Commission to BrokersThe Company will pay fees in accordance with details in Section 8.8 to Element Capital and Stockbrokers and member organisation of ASX and other parties and accepted by the Company. The Company may also issue up to 5,000,000 unlisted options to any party or parties assisting the Offer. These options will be exercisable at 20 cents per share and will expire 5 years after the date of issue and maybe subject to ASX Escrow provisions.

12.14 Documents Available for Inspection

Copies of the following documents are available for inspection during normal office hours free of charge at the registered office of MML at Unit 7, 11 Colin Grove, West Perth WA 6005 for a period of not less than 12 months from the date of this Prospectus:

(1) Directors consents for the lodgement of this Prospectus;

(2) The Constitution; and

(3) Consents referred to in Section 12.10.


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authorisationThis Prospectus is authorised by each of the Directors of the Company and each has consented to the lodgement of this Prospectus in accordance with section 720 of the Corporations Act.

This Prospectus is signed for and on behalf of Malagasy Minerals Limited by:

Max Cozijn

Chairman

Dated 23 May 2008


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glossary of termsThese definitions are provided to assist persons in understanding some of the expressions used in this Prospectus.

Terms used in the Independent Geologists Report in Section 5 have the same meaning throughout this Prospectus unless otherwise defined.

Allotment Date The day, as determined by the Directors, on which the Shares offered under this Prospectus are allotted.

Ampanihy Project The Company’s Ampanihy project as described in Section 3.3.

Anjeba Project The Company’s Anjeba project as described in Section 3.4.

Application Form(s) or Form(s) The application form attached to this Prospectus for this Offer.

Applicant A person who submits an Application Form.

Application A valid application for Shares made on an Application Form.

Application Monies Application monies received by the Company for an Application.

ASIC Australian Securities and Investments Commission.

ASTC ASX Settlement and Transfer Corporations Pty Ltd ACN 008 504 532.

ASTC Operating Rules Operating rules of ASTC, except to the extent of any relief given by ASTC.

ASX ASX Limited ACN 008 624 691 and where the context permits, the Australian Securities Exchange operated by ASX Limited.

Bekisopa Project The Company’s Bekisopa project as described in Section 3.4.

Board The board of Directors.

BRGM The French-based geoscientific group, Bureau de Recherches Géologiques et Minières.

Business Day A day on which ASX is open for trading.

Business Sale Agreement The business sale agreement defined in Section 8.3.

Business The business defined in Section 8.3.

CHESS Clearing House Electronic Subregistry System.

Closing Date The date specified as the closing date in the Indicative Timetable of the Offer.

Conditions Precedent The conditions precedent under the Business Sale Agreement as defined in Section 8.3(m) or the Long Term Lease as defined in Section 8.4(e) (as the case maybe).

Constitution The current constitution of the Company.

Consultancy Agreement The consultancy agreement defined in Section 8.5.

Corporations Act Corporations Act 2001 (Cth).

Directors The directors of the Company.

Effective Date The effective date defined in Section 8.3(d).

Element Capital Element Capital Pty Ltd ACN 123 870 762.

Escrow Agreement Means the escrow agreement defined in Section 8.2.

Exposure Period In accordance with section 727(3) of the Corporations Act, the period of 7 days (which may be extended by ASIC to up to 14 days) after lodgement of this Prospectus with ASIC during which the Company must not process Applications.

GST Goods and Services Tax.

Hendry Consulting Hendry Consulting, a company registered in Mauritius of which Mr Steven Goertz is a sole director and sole shareholder.

Indicative Timetable Means the indicative timetable of the Offer in the introduction to this Prospectus.

Investigating Accountant WHK Horwath Perth Audit Partnership

Investigating Accountant’s Report The report prepared by the Investigating Accountant that appears in Section 6.

Independent Geologist RSG Global Pty Ltd.

Independent Geologist Report The report prepared by the Independent Geologist that appears in Section 5.

Jubilee Platinum A company, Jubilee Platinum PLC, trading on the Alternative Investment Market of the London Stock Exchange

Land The land defined in Section 8.4.

Listing Rules The official listing rules of ASX and any other rules of ASX which are applicable while any Shares are admitted to the Official List of ASX, each as amended or replaced from time to time, except to the extent of any express written waiver by ASX.

Long Term Lease The long term lease defined in Section 8.4.

Majunga Project The Company’s Majunga project as described in Section 3.4.

Mananjary Regional Project The Company’s Mananjary regional project as described in Section 3.3.

MDA Mada-Aust SARL, a wholly-owned subsidiary of the Company registered in Madagascar.

Miary Project The Company’s Miary project as described in Section 3.4.

Midas Consulting Sarl A company registered in Mauritius of which Mr Jules Le Clezio is sole director and sole shareholder.

Minimum Subscription The minimum subscription defined in Section 2.6.

Mining Services Mining Services Sarl a wholly owned subsidiary of MML registered in Madagascar.

MML (or Company) Malagasy Minerals Ltd ABN 84 121 700 105.

MRNL Madagascar Resources NL (ABN 58 061 622 011).

Noritic A type of igneous rock (norite) comprising feldspar, pyroxene and olivine.

Offer The Offer in Section 2.1.

Offer Period The period from the Opening Date up to and including the Closing Date.

Official List The official list of ASX.


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Official Quotation Official quotation of the Company’s Shares on the official list.

Opening Date The date specified as the opening date in the Indicative Timetable.

Option An option granted by the Company to subscribe for one Share.

Optionholder Any person holding Options.

Prospectus This prospectus with the date in Section 13.

Purchase Price The purchase price in Section 8.3(a).

Rent The rent defined in Section 8.4(b).

Saint Denis Saint Denis Holdings Sarl, a wholly owned subsidiary of MML registered in Madagascar.

Satrokala Project The Company’s Satrokala project as described in Section 3.3.

Section A section of this Prospectus.

Securities A Share or Option issued or granted (as the case may be) by the Company.

Securityholder Any person holding Securities.

Share or Shares An ordinary fully paid voting share in the capital of the Company.

Share Registry Security Transfer Registrars Pty Ltd (ABN 95 008 894 488).

Share Sale Agreement The share sale agreement defined in Section 8.1.

Shareholder Any person holding Shares.

Tenements The tenements referred to in Tenement Report.

Tenement Report The tenement report that appears in Section 7.

Vohibory Project The Company’s Vohibory project as described in Section 3.3.

WST Western Standard Time, being the time in Perth, Western Australia.

Malagasy Minerals LimitedACN 121 700 105

APPLICATION FORMPlease read all instructions on reverse of this form

Share Registrars use only

Broker reference – stamp only

A Number of Shares applied for B Total amount payable cheque(s) to equal this amount

at $0.20 each = A$

you may be allocated all of the Shares above or a lesser number

Broker code Adviser Code

C Full name details title, given name(s) (no initials) and surname or company name Name of applicant 1

Name of joint applicant 2 or <account name>


D Tax file number(s) Or exemption category

Applicant 1/company

Joint applicant 2/ trust

Joint applicant 3/exemption

E Full postal address Number/street

Suburb/town State/postcode

F Contact details Contact name Daytime telephone number

( ) Contact email address

G CHESS HIN (if applicable)

H Cheque payment details please fill out your cheque details and make your cheque payable to: ‘Malagasy Minerals Limited – Subscription Account’

Drawer Cheque number BSB number Account number Total amount of cheque

I Return of the Application Form with your cheque for the Application monies will constitute your offer to subscribe for Shares in the Company. I/We declare that:

(a) this Application is completed according to the declaration/appropriate statements on the reverse of this form and agree to be bound by the Constitution of the Company; and

(b) I/we have received personally a copy of the Prospectus accompanying the Application Form, before applying for Shares.

No signature is required.

You should read the Prospectus dated 23 May 2008 carefully before completing this Application Form. The Corporations Act 2001 (Cth) prohibits any person from passing on this Application Form (whether in paper or electronic form) unless it is attached to or accompanies a complete and unaltered copy of the Prospectus and any relevant supplementary prospectus (whether in paper or electronic form).

guide to Malagasy Minerals Limited application form

This Application Form relates to the Offer of up to 50,000,000 Shares in Malagasy Minerals Limited at $0.20 per Share pursuant to the Prospectus dated 23 May 2008. The expiry date of the Prospectus is the date which is 13 months after the date of the Prospectus. The Prospectus contains information about investing in the Shares of the Company and it is advisable to read this document before applying for Shares. A person who gives another person access to this Application Form must at the same time and by the same means give the other person access to the Prospectus, and any supplementary prospectus (if applicable). While the Prospectus is current, the Company will send paper copies of the Prospectus, and any supplementary prospectus (if applicable), and an Application Form, on request and without charge.

Please complete all relevant sections of the Application Form using BLOCK LETTERS. These instructions are cross referenced to each section of the Application Form. Further particulars and the correct forms of registrable titles to use on the Application Form are contained below.

A Insert the number of Shares you wish to apply for.

B Insert the relevant amount of Application monies. To calculate your Application monies, multiply the number of Shares applied for by the sum of $0.20.

C Write the full name you wish to appear on the statement of holdings. This must be either your own name or the name of the company. Up to three joint Applicants may register. You should refer to the table below for the correct forms of registrable title. Applicants using the wrong form of title may be rejected. Clearing House Electronic Sub-Register System (CHESS) participants should complete their name and address in the same format as that are presently registered in the CHESS system.

D Enter your Tax File Number (TFN) or exemption category. Where applicable, please enter the TFN for each joint Applicant. Collection of TFN(s) is authorised by taxation laws. Official Quotation of your TFN is not compulsory and will not affect your Application.

E Please enter your postal address for all correspondence. All communications to you from the share registry will be mailed to the person(s) and address as shown. For Joint Applicants, only one address can be entered.

F Please enter your telephone number(s), area code, email address and contact name in case we need to contact you in relation to your Application.

G The Company will apply to ASX to participate in CHESS, operated by ASX Settlement and Transfer Corporation Pty Ltd, a wholly owned subsidiary of Australian Stock Exchange Limited.

If you are a CHESS participant (or are sponsored by a CHESS participant) and you wish to hold securities allotted to you under this Application in uncertificated form on the CHESS subregister, complete Section G or forward your Offer Application Form to your sponsoring participant for completion of this section prior to lodgement. Otherwise, leave Section G blank and on allotment, you will be sponsored by the Company and an SRN will be allocated to you. For further information refer to section 2.11 of the Prospectus.

H Please complete cheque details as requested:

Make your cheque payable to ‘Malagasy Minerals Limited – Subscription Account’ in Australian currency and cross it ‘Not Negotiable’. Your cheque must be drawn on an Australian Bank. The amount should agree with the amount shown in Section B. Sufficient cleared funds should be held in your account, as cheques returned unpaid are likely to result in your Application being rejected.

I Before completing the Offer Application Form the Applicant(s) should read the Prospectus to which the Application relates. By lodging the Application Form, the Applicant(s) agrees that this Application is for Shares in the Company upon and subject to the terms of this Prospectus, agrees to take any number of Shares equal to or less than the number of Shares indicated in Section A that may be allotted to the Applicant(s) pursuant to the Prospectus and declares that all details and statements made are complete and accurate. It is not necessary to sign the Offer Application Form.

Privacy – Please refer to Section 12.3 of the Prospectus for details about the collection, holding and use of your personal information. If you do not provide the information required on this Offer Application Form, the Company may not be able to accept or process your Application.

Correct form of Registrable Title Note that only legal entities are allowed to hold Shares. Applications must be in the name(s) of a natural person(s), companies or other

legal entities acceptable to the Company. At least one full given name and the surname is required for each natural person. The name of the beneficiary or any other non-registrable title may be included by way of an account designation if completed exactly as described in the example of correct forms of registrable title below:

Type of investor Correct form ofRegistrable Title

Incorrect form of Registrable Title

IndividualUse names in full, no initials

Mr John Alfred Smith JA Smith

Minor (a person under the age of 18)Use the name of a responsible adult; do not use the name of a minor.

John Alfred Smith<Peter Smith>

Peter Smith

CompanyUse company title, not abbreviations

ABC Pty LtdABC P/LABC Co

TrustsUse trustee(s) personal name(s), do not use the name of the trust

Mrs Sue Smith<Sue Smith Family A/C>

Sue Smith Family Trust

Deceased EstatesUse executor(s) personal name(s), do not use the name of the deceased

Ms Jane Smith <Est John Smith A/C>

Estate of late John Smith

PartnershipsUse partners personal names, do not use the name of the partnership

Mr John Smith and Mr Michael Smith <John Smith and Son A/C>

John Smith and Son

Return your completed Application Form to:



Application Forms must be received no later than 5.00 pm WST time on the Closing Date.






at $0.20 each = A$







Applicant 1/company










































Peter Smith











John Smith and Son














at $0.20 each = A$







Applicant 1/company






































Peter Smith











John Smith and Son





Important InformatIon:

this is an important document that you should read in its entirety. If you do not understand it, you should consult your professional adviser without delay. the shares offered by this prospectus should be considered speculative. refer to section 10 for detail relating to investment risks.

p r o s p e c t u s

ABN 84 121 700 105

Unit 7, 11 Colin Grove WESt pErtH Wa 6005

tel +61 8 9463 6656fax +61 8 9463 6657

Web www.malagasyminerals.com

for the offer of 50,000,000 shares each at $0.20 per share to raise $10,000,000

Lead manager to the issue: Element Capital pty Ltd

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