203026627_1 1

EMPEROR MINES LIMITED

PROSPECTUS

This Prospectus has been issued by DRD (Offshore) Limited for the offer of 823,291,603 ordinary shares in Emperor Mines Limited ACN 007 508 787 for sale by way of institutional

bookbuild

Brokers to the Offer

Corporate Advisors Legal Advisors

This is an important document and should be read in its entirety. If you are in doubt about what to do, you should consult your professional advisor without delay. For

per

sona

l use

onl

y

203026627_1 2

IMPORTANT NOTICE

This Prospectus is dated 18 October 2007 and was lodged with ASIC on that date. Neither ASIC nor ASX takes any responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

No Shares will be offered for sale on the basis of this Prospectus after the date of close of the Institutional Bookbuild referred to in Section 1.

The Shares are admitted to quotation on ASX.

Important document

It is important that you carefully read this Prospectus in its entirety before deciding to invest in Emperor and, in particular, that you consider the assumptions underlying any prospective financial information and the risk factors that could affect the financial performance of Emperor. 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 advisor before deciding whether to invest.

No person is authorised to give any information or to make any representation in connection with the Shares that is not contained in this Prospectus. Any information or representation not contained in this Prospectus may not be relied on as having been authorised by DRD or Emperor in connection with the Shares. Neither DRD, Emperor nor any other person warrants the future performance of Emperor or any return on any investment made under this Prospectus, except as required by law and then, only to the extent so required.

Proposed Merger

Nothing in this Prospectus should be read as providing an indication of whether the Proposed Merger will succeed, or should be relied on by Emperor shareholders or prospective investors for the purposes of informing themselves in relation to the Proposed Merger.

The Proposed Merger is conditional on a number of factors, including Emperor shareholders approving the Proposed Merger. If DRD completes the sale of the Shares under this Offer, the success of the Proposed Merger will still be subject to the satisfaction or waiver of all conditions precedent including Shareholders’ approval. The terms of the Proposed Merger are more particularly summarised in Section 3 and a summary of the key terms is included in Annexure A.

As required by law, if the Proposed Merger proceeds Emperor will issue an explanatory statement about the Proposed Merger to its shareholders. At the date of this Prospectus, this explanatory statement was in preparation. Emperor shareholders or prospective investors should not rely on the information contained in this Prospectus for the purposes of informing themselves in relation to the Proposed Merger, but should read the explanatory statement in its entirety before making any decision in relation to the Proposed Merger.

The information concerning Intrepid Mines Limited (being Emperor's proposed merger partner under the terms of the Proposed Merger) in section 5 has been prepared by Intrepid. Intrepid and its directors and officers do not assume any responsibility for the accuracy or completeness of any information in this Prospectus other than the information contained in section 5.

Prospectus availability

This Prospectus will be available to Institutional Investors who participate in the Offer. A copy will be provided upon request to DRD or Emperor at the addresses given on the inside back cover, and a copy is available on Emperor's website at www.emperor.com.au.

Restrictions on the distribution of this Prospectus

This Prospectus does not constitute an offer of Shares in any place in which, or to any person to whom, it would not be lawful to do so. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and any person into whose possession this Prospectus comes (including nominees, trustees or custodians) should seek advice on and observe those restrictions. Emperor Shares have not been, and will not be, registered under the US Securities Act 1993 (as amended) and may not be offered or sold in the United States or to, or for the account of or benefit of, US persons. Accordingly neither this Prospectus nor any application letter may be sent to investors in the United States or otherwise distributed in the United States.

Defined terms and abbreviations

Defined terms and abbreviations used in this Prospectus are explained in the Glossary of Terms.

For

per

sona

l use

onl

y

203026627_1 3

CONTENTS

1. DETAILS OF THE OFFER 4

2. EFFECT OF THE OFFER ON EMPEROR 6

3. THE PROPOSED MERGER 8

4. PROFILE OF EMPEROR 11

5. PROFILE OF INTREPID 28

6. PROFILE OF THE PROPOSED MERGED ENTITY 49

7. INVESTIGATING ACCOUNTANT’S REPORT 60

8. TAX IMPLICATIONS 67

9. SUMMARY OF INDEPENDENT EXPERT’S REPORT ON THE PROPOSED MERGER 75

10. RISK FACTORS 91

11. ADDITIONAL INFORMATION 96

ANNEXURE A 110

ANNEXURE B 118

ANNEXURE C 118

CORPORATE DIRECTORY 120 For

per

sona

l use

onl

y

1. DETAILS OF THE OFFER

1.1 Institutional Bookbuild

On 18 September 2007, Emperor announced that DRD intended to offer the Shares for sale, which comprise all of DRD's shareholding in Emperor and represents 78.72% of the total number of Emperor Shares. A copy of the announcement is set out in Annexure A.

DRD has engaged ABN AMRO Morgans and Tricom to conduct the Offer to Institutional Investors.

Under the Institutional Bookbuild, Institutional Investors, including professional and sophisticated investors, will be invited by ABN AMRO Morgans and Tricom (on behalf of DRD) to bid to buy the Shares. Bids are to be lodged with ABN AMRO Morgans or Tricom, who are the brokers to the Offer.

This Prospectus has been issued by DRD for the purpose of making the Offer of the Shares to Institutional Investors. Emperor has provided assistance in the preparation of this Prospectus.

1.2 Indicative Timetable *

Lodgement of Prospectus 18 October 2007

Commencement of Institutional Bookbuild 18 October 2007

Close of Institutional Bookbuild 19 October 2007

Settlement 29 October 2007

* These dates are indicative only and are subject to change.

1.3 Nature of the Shares

Shares which are the subject of the Offer comprise ordinary fully-paid Emperor Shares.

A summary of the rights attaching to Emperor Shares is set out in section 11.1.

1.4 ASX quotation

The Shares are admitted to quotation on ASX.

1.5 Risk factors

In addition to the general risks applicable to all investments in companies, there are specific risks associated with an investment in Emperor, which are set out in section 10.

For

per

sona

l use

onl

y

5

1.6 Taxation implications

This Prospectus does not contain advice regarding the taxation consequences of investing in Emperor Shares. DRD, Emperor, their advisors and their officers do not accept any responsibility or liability for any taxation consequences. As a result, investors should consult their own professional tax advisors in connection with any investment in Emperor.

A taxation opinion regarding the proposed Scheme of Arrangement, as prepared by Price Waterhouse Coopers for inclusion in the Scheme Booklet, can be found in its entirety in section 8 of this Prospectus.

For

per

sona

l use

onl

y

6

2. EFFECT OF THE OFFER ON EMPEROR

2.1 Change of control of Emperor

The completion of the Offer will result in a change of control of Emperor, whereby the majority shareholder will be replaced by a broader shareholder base. Emperor presently has approximately 2,125 shareholders, which is likely to increase as a result of the DRD sell down.

2.2 Increased Liquidity

The completion of the Offer is likely to result in an increase in the volume of Emperor Shares traded on the ASX given that after the Offer, 100% of Emperor’s Shares will be held by retail and institutional investors.

2.3 Composition of the Emperor Board

DRD has indicated that its nominees to the Emperor Board, Mr John Sayers and Mr Geoffrey Campbell, will resign upon completion of the sale of the Shares. The continuing directors will be the Chief Executive Officer, Mr Brad Gordon, Mr Robert McDonald and Mr Ian McMaster. Mr Geoffrey Campbell will re-join the Emperor Board as an independent director subsequent to the sale of the Shares.

2.4 Effect of the Offer on the Proposed Merger

It is a condition precedent to the Proposed Merger that DRD successfully completes the sale of all of its Shares as contemplated by the Offer prior to the scheme meeting.

If DRD notifies Emperor in writing that DRD is unable to sell the Shares at a price or prices acceptable to DRD, Emperor may terminate the Merger Implementation Deed.

2.5 Emperor Reporting and Disclosure Obligations

Emperor is a listed disclosing entity for the purposes of the Corporations Act and as such is subject to regular reporting and disclosure obligations. Broadly, these obligations require Emperor to prepare both yearly and half-yearly financial statements and a report on the operations of Emperor during the relevant accounting period together with an audit or review report by Emperor’s auditor and quarterly production statements. Copies of these and other documents lodged with ASIC may be obtained from or inspected at an ASIC office and on Emperor’s website at www.emperor.com.au.

Emperor will provide a copy of any of the following documents free of charge to any person who requests a copy:

(a) the financial report for the year ended 30 June 2007 lodged with ASIC; and

(b) any continuous disclosure notices lodged after the date of the financial report for the year ending 30 June 2007.

A list of documents lodged by Emperor with ASX in recent months is contained in Annexure B.

For

per

sona

l use

onl

y

7

As a company listed on ASX, Emperor must ensure that ASX is continuously notified of information about specific events and matters as they arise for the purpose of ASX making the information available to investors on ASX. Emperor has an obligation under the Listing Rules to notify ASX immediately of any information concerning it of which it becomes aware, which a reasonable person would expect to have a material effect on the price or value of its securities, subject to certain exclusions.

ASX maintains files containing publicly disclosed information about all listed companies. The file of Emperor is available for inspection at ASX during normal business hours. In addition, Emperor as a registered company in Australia is also required to lodge various documents with ASIC. Copies of documents lodged with ASIC by Emperor may be obtained from, or inspected at, an ASIC office.

For

per

sona

l use

onl

y

8

3. THE PROPOSED MERGER

3.1 Announcement

On 18 September 2007, Emperor and Intrepid jointly announced the Proposed Merger by way of a scheme of arrangement. A copy of the announcement is set out in annexure A.

Emperor is an ASX listed gold company (ASX: EMP) with a focus on the Asia-Pacific region that has a market capitalisation of around A$85 million. Intrepid is a gold mining company listed on both the TSX and the ASX (ASX: IAU – TSX: IAU, IXN) with assets in Australia and South America and a market capitalisation of around A$68 million. For further details on the respective companies, see sections 4 and 5.

3.2 Preparation of Explanatory Statement for Proposed Merger

As required by law, if the Proposed Merger proceeds Emperor will issue an explanatory statement about the Proposed Merger to its shareholders. At the date of this Prospectus, this statement was in preparation. Holders of Emperor Shares will be provided with information about the Proposed Merger in the explanatory statement to be despatched to Shareholders by early November 2007.

Shareholders should not rely on the information contained in this Prospectus for informing themselves in relation to the Proposed Merger, but should read the explanatory statement in its entirety before making any decision in relation to the Proposed Merger.

3.3 Summary of the Proposed Merger

The Terms

The Proposed Merger will take place by way of a scheme of arrangement, with Shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held. Certain existing unlisted Emperor Share options held by employees are to be either cancelled for cash or new Intrepid options issued on equivalent terms and conditions.

Overview and Rationale

If the Proposed Merger proceeds, the Merged Entity will be an international gold producer, developer and explorer listed on both the TSX and ASX.

The combination of Emperor’s balance sheet strength, Intrepid’s producing Paulsens gold mine and its Casposo development project, and both companies’ exploration assets, together with the combined skills of the two management teams, will create a company with the stated aim of adding significant value for its shareholders.

In particular, the Merged Entity's strengthened balance sheet and the aim to secure project finance, will allow the Merged Entity to move forward immediately with new corporate objectives, including: • accelerated underground exploration at the Paulsens gold mine; • development of the Casposo gold/silver project in Argentina and examination of

early expansion options;

For

per

sona

l use

onl

y

9

• exploration at Taviche (Mexico) and Tujuh Bukit exploration project (Indonesia) and an expanded exploration budget of up to approximately A$8 million per annum; and

• improved capacity to target project and corporate acquisition opportunities.

For further details of the Merged Entity, please see Section 6.

Merger Implementation Deed

Emperor and Intrepid have entered into a Merger Implementation Deed under which they have agreed to certain undertakings and arrangements to facilitate the merger. Key terms of the Merger Implementation Deed are summarised in Section 9.3. The Proposed Merger remains conditional on, amongst other things: (a) DRD selling its shareholding in Emperor, as contemplated by the Offer; (b) Emperor shareholder approval; (c) Intrepid shareholder approval; (d) The acquisition or cancellation of all Emperor Share options; (e) Emperor having surplus net cash of at least A$54 million immediately prior to

the second Court hearing to approve the Proposed Merger (taking into account any amounts provided by Emperor to Intrepid, any sum expended in respect of the Tujuh Bukit exploration project and any other expenditure approved by Intrepid);

(f) any other necessary regulatory approvals, and TSX consent; and (g) Court approval.

Further details of the terms and conditions to the Proposed Merger are set out in the announcement of the Proposed Merger (Annexure A).

Emperor and Intrepid have entered into no solicitation - no talk provisions customary for this type of transaction. In addition Emperor has provided financial accommodation to Intrepid Minerals Corporation, a wholly owned subsidiary of Intrepid, amounting to A$5 million and holds an option to convert this loan into Intrepid shares.

Timetable The indicative timetable for the Proposed Merger is as follows: • Despatch Emperor shareholder documentation early November 2007 • Emperor shareholder meeting early December 2007 • Implementation date early January 2008

For

per

sona

l use

onl

y

10

3.4 Implication if the Offer does not proceed

It is a condition precedent to the Proposed Merger that DRD successfully completes the sale of all of its Shares as contemplated by the Offer prior to the scheme meeting.

Emperor may terminate the Merger Implementation Deed if DRD notifies Emperor in writing that DRD is unable to sell the Shares at a price or prices acceptable to DRD.

For

per

sona

l use

onl

y

11

4. PROFILE OF EMPEROR

4.1 Introduction

Emperor is an international gold producer, developer and explorer focusing on the Australasian region with interests in PNG and Indonesia. Emperor is listed on the ASX (ASX code: EMP) and its head office is in Brisbane, Australia.

Emperor’s vision is to become a 500,000 oz per annum equivalent gold producer from a portfolio of producing assets combined with exploration projects to secure the future growth of the company. Emperor has a highly experienced management group comprised of a team of skilled and internationally experienced resource sector professionals and combined with its strong balance sheet is well placed to achieve its vision.

4.2 Principal activities

The principal activities of Emperor are the Tolukuma Mine and the Tujuh Bukit gold-silver exploration project in Indonesia and PNG exploration assets. Until recently it also owned a 20% interest in the Porgera gold mine, PNG, which was sold to Barrick Gold Corporation on 16 August 2007 for US$255 million.

The main assets of Emperor are set out in the following chart:

4.2.1 Tolukuma Mine

The Tolukuma Mine is located in the Central Province of PNG, approximately 100km north of the capital Port Moresby. The mine is at an elevation of approximately 1,550m in steep, mountainous and heavily vegetated terrain. It is comprised of an underground mine containing high grade, narrow epithermal veins. Annual rainfall in the region averages around 3,000mm and there are distinct wet and dry seasons. Unlike most other mining operations in PNG, the Tolukuma Mine is totally isolated from the national land transport network and all access to site is by helicopter.

Other Shareholders

DRD

21.1% 78.7%

Tolukuma

100% Earning up to 70%

Tujuh Bukit

PNG Exploration Licences

Emperor Mines

For

per

sona

l use

onl

y

12

The Tolukuma Mine is owned by TGM which in turn is 100% owned (via a wholly owned subsidiary) by Emperor. TGM is a limited liability company incorporated in PNG. TGM is currently the registered holder of mining lease 104 (“ML 104”) and 11 Exploration Licences (“EL”) in PNG. The tenements that are contiguous with ML 104 are EL 580, 683, 894, 1264, 1284 and 1379.

Tolukuma Geology

The Tolukuma gold-silver deposit is an epithermal, low sulphidation quartz vein system, notable for its high-grade "bonanza" style mineralisation. Quartz veins average one to two metres in width over a strike length of approximately one kilometre. The primary structures extend 7 km on strike with economic mineralisation usually occurring in well-defined zones on dip and along strike.

The Tolukuma deposit is comprised of two sub-parallel structures – the Tolukuma and Zine structures - that are connected by a series of linked structures – Tinabar, Gulbadi - trending generally from north-west to south east. Individual quartz veins average 0.2m to 2.0m in width over a strike length of approximately 1km.

The pre-mined resource at Tolukuma exceeds 1Moz. Production to date has been approximately 750,000 ozs and the current resource is 410,000oz. Discovery of the Zine structure as a major ore source was announced by Emperor on 28th April 2006. The Zine structure runs parallel to the Tolukuma structure and represents a N-S trending master vein. There are defined zones within the Zine structure which contain bonanza grades. This is supported by recent drilling (public announcement 27th April, 2007) at depth below current development on Zine which intersected 1.66m @ 241.7g/tAu and 63.2g/tAg, and 1.15m @ 91.8g/tAu and 394.9g/tAg. These intercepts are ~70m apart, with the upper hole being 31m below development. Additional ‘pockets’ of high grade material along Zine are to be expected. A systematic drilling programme with pierce points approximately 100m apart is being undertaken.

For

per

sona

l use

onl

y

13

The current 30 June 2007 Ore Reserve and Mineral Resource figures are set out below.

Tolukuma Mine – Mineral Reserves

Mt Au g/t Au koz Probable 0.207 20.6 137

Total 0.207 20.6 137

Tolukuma Mine – Mineral Resources

Mt Au g/t Au koz Indicated 0.227 21.9 159

Inferred 0.453 17.2 250

Total 0.680 18.7 410

Tolukuma Mine Production

Open pit production began in 1995 and underground mining in mid-1997. Currently ore is only sourced from an underground mine which is a low capacity (18,000 tonne per month), narrow vein, high-grade operation and employs in the order of 630 people. Only 2.5% of the employees are expatriates giving an effective localisation rate of 97.5%.

The average mining depth is 150m below surface or approximately 1,450m above mean sea level. Access to underground workings is via decline. Mining methods vary according to local ground conditions and are generally mechanised cut and fill methods. Stoping widths range from a minimum of 1.3m to around 4m or more in some areas.

The metallurgical plant is relatively simple and follows conventional gold extraction technology. It is located on a steep ridge in mountainous terrain. Ore is trucked to the plant, then milled and treated through the plant which incorporates gravity recovery, intense cyanide leaching (Acacia Reactor) and CIP gold recovery processes. The Tolukuma Mine processing plant has been operating for more than ten years.

As the Tolukuma Mine is situated in a remote area, it is self-sufficient with regard to the generation of power. Power is generated through a combination of diesel-driven generator sets and hydro-turbine driven generator sets. The table below details the operating and production results for the last 5 years.

Tolukuma Mine – Operating and Production result for last 5 years 2003 2004 2005 2006 2007 Ore Milled (kt) 161 198 213 214 185 Grade (g/t) 13.2 13.6 11.2 7.96 8.42 Gold produced (oz) 68,096 85,715 76,314 54,790 44,181 Cash Costs (US$/oz) N/A 273 352 537 814

The Tolukuma Mine is a high cash cost operation primarily due to lower grades over the last few years and higher transport and logistics costs. Given that over 20% of the production costs of the mine are spent on transportation and logistics due to its remoteness, the higher cost of fuel had a material impact on the costs of the logistics involved in keeping the mine supplied with consumables and services.

For

per

sona

l use

onl

y

14

There is no road or fixed wing aircraft access to the mine site and all materials and personnel must be airlifted by helicopter to site. All supplies are transported from Port Moresby or from Veimauri by helicopter, resulting in high consumable costs.

Near Mine Exploration

Several epithermal gold prospects exist within 10km, to the east and southeast, of the Tolukuma Mine some of which are summarised below. The most advanced of these, and the most highly rated is the Saki prospect. Others, less advanced include Seri-Seri, Soju-Sindo, Yava, and the Samanalan-Ijav area. Another prospect, Daikoku, exhibits both low sulphidation and high sulphidation epithermal characteristics.

The Mt Sen, Kimono and Miliamba (also referred to as Kunda) prospects occur within ML 104 and are all considered highly prospective. Kunda has seen some previous drilling.

In addition, several porphyry copper-gold prospects exist within 20km of the Tolukuma Mine some of which are also summarised below. Many were defined during the period of exploration undertaken by CRA in 1978 – 1983. The main target, and that which is most advanced is the Hula - Etasi – Genga area. These also lie within the Tolukuma transfer zone.

Smaller porphyry targets occur to the NW of the Tolukuma deposit. These exhibit classic porphyry copper features but sampling to date has identified only low grades.

i) Saki

The Saki Prospect is located approximately 3km east of the Tolukuma Mine and has seen several periods of exploration comprising geological mapping, various stream sediment sampling programmes, soil sampling, rock chip sampling and trenching, and 28 shallow diamond drill holes have been completed for a total of 2318.4m (hole depths ranged from 44.2 to 126.3m).

Recent exploration and data compilation has identified drilling targets in the deeper zones of the Saki system. Drill pads have been prepared to allow this program to commence when drilling rigs are available.

ii) Kunda

The Kunda area (also referred to as Milihamba) is located 2 km along strike, to the south, of the Tolukuma Mine. Multiple NW trending veins occur over an area of 400 x 200m. 15 shallow diamond drill holes have been completed and have returned anomalous Au-Ag results (highest to 68g/t). Significant trench assay results have also been returned (up 3.4m @ 13.54g/t Au). Work concluded that the veins were in the upper part of a typical epithermal system and recommended additional drilling at depth. This has not yet been completed.

iii) Daikoku

The Daikoku prospect is located approximately 10km ENE of the Tolukuma Mine and reconnaissance scale sampling has identified both low sulphidation epithermal veining and more widespread high sulphidation alteration. The prospect lies within the

For

per

sona

l use

onl

y

15

intersection zone of the Tolukuma Corridor and the NNW trending extensional zone. Even though in its early stages, the area is considered to be highly prospective.

iv) Etasi-Genga-Badim

The prospects in the Etasi region of EL 894 lie along the NNE trending Tolukuma transfer structure and comprise two porphyry prospects, a skarn prospect, and several low sulphidation epithermal Au-Ag prospects.

The results of prior exploration work have outlined a low grade porphyry system at Etasi. Recent work by TGM has focussed on assessing the historical results in the context of a more regional approach (see Hula below), and compilation of all sets of geochemical data.

Exploration for skarn associated mineralisation at Genga has not adequately tested the anomalies defined to date – there exists potential for the definition of additional areas worthy of follow up based on soil and rock chip results.

The Badim prospect is a porphyry system discovered by CRA and which was tested with 2 diamond drill holes. Like Etasi the holes intersected a low grade system.

The Etasi-Genga-Badim district does require another thorough review of all data to identify additional areas worthy of follow-up.

v) Hula

The Hula prospect is located ~6km northeast of Etasi. It has received much less exploration that the Etasi region however the fundamental datasets suggest that the area is well worthy of follow-up and represents arguably the best porphyry (+/- epithermal gold) target in the district.Significant Contracts

The significant contracts entered into by TGM in connection with the operation of the Tolukuma Mine are:

Party Services

Heli Niugini Transport of personnel and supplies

AGR Matthey Refining services

Tax

The Internal Revenue Commission of Papua New Guinea (“IRC”) has issued tax assessments to TGM for the years 1996 to 2004 in which they have reduced the amount of allowable capital expenditure claimed in respect of these years with a resulting increase in potential tax payable of A$2,755,000 (Kina 6,800,000).

TGM has lodged an objection with the IRC in relation to this matter on the grounds that the Tolukuma Mine life, based on reserves and annual production, was in accordance with claims in the tax return. The IRC have allowed TGM to defer payment of this assessment until such time as the matter is resolved.

For

per

sona

l use

onl

y

16

No provisions have been recorded in respect of this item as presented in the June 2007 financial statements.

Environmental

As described below, the Tolukuma Mine has a number of site specific environmental issues associated with its operations, mainly in relation to the disposal of treated tailings and waste rock. The Tolukuma Mine follows a government approved Environmental Management and Monitoring Programme and has at all times been in compliance with the relevant laws and government approved criteria.

The mining processes are designed to minimise the effect on the environment from mining operations, and processes and practices can be geared to reduce the impact of the mine on the environment. Extensive monitoring is undertaken to ensure that this remains the case, using processes that were developed in conjunction with the PNG Department of Environment and Conservation.

The most significant environmental issue concerning the mine arises from the use of riverine tailings disposal for the mine’s tailings stream.

Due to Tolukuma Mine’s physical location in mountainous terrain, which is subject to high rainfall and landslides, the PNG Government has approved riverine disposal as the most appropriate method for treated tailings and soft incompetent waste rock at the mine. This is the case with a number of Papua New Guinea mines, including Ok Tedi and Porgera.

There has been an increased public and political focus on the Tolukuma Mine’s practice of riverine tailings disposal since March 2007, and this publicity has included claims that the disposal of riverine tailings from the Tolukuma Mine is causing health problems in communities downstream of the mine. Renewed interest in this matter surfaces from time to time and recently certain provincial administration members have made public statements in this regard.

Through its environmental management practices and monitoring procedures the mine goes to great lengths to ensure the safety and well-being of those living downstream of the Tolukuma Mine. As a matter of course all such claims are investigated but no evidence has been found to substantiate such allegations.

TGM has gone to considerable effort and expense to ensure that environmental monitoring of the Tolukuma Mine operation, as detailed in the Environmental Management and Monitoring Programme for the mine and approved by the PNG Department of Environment and Conservation, is rigidly followed. The programme is designed to monitor the impact of the operation using measurement techniques and methods that are recognised internationally.

No provisions have been recorded in respect of this item as presented in the financial statements as presented for the year ended 30 June 2007.

Community relations

The Tolukuma Mine operates under a range of agreements, the most significant of which is the Memorandum of Agreement (“MOA”), an agreement originally made

For

per

sona

l use

onl

y

17

between TGM, the Yulai people, the Central Provincial Government and the State of Papua New Guinea in 1997.

The MOA sets out the framework for the development and operation of the Tolukuma Mine and contains a number of the key obligations and rights of the mine operators, the Yulai landowners, the provincial government and the national Government.

There is an automatic review mechanism within the MOA, which in theory provides for the various stakeholders to discuss and review the plan every two years.

The first review, which commenced in 2000, stalled following conflict between the then mine management and government stakeholders. A further attempt to conduct that review was made in 2004, but stalled for similar reasons. The latest round of MOA negotiations occurred in the second half of 2006, following which a draft amended MOA was developed and circulated to key parties.

Negotiations and discussions with the view to finalising the review of the MOA are currently underway. The key difference from previous drafts of a revised MOA is the introduction of four separate activity reporting groups within the MOA (described as “Development Plans”), which form the basis for assessing company obligations under the agreement and the inclusion of the Woitape Local Landowners Group as a party to the MOA.

Litigation

The Central Provincial Government has commenced an action against the Minister for Mining, State and TGM challenging the State’s extension of term of ML 104 as unlawful. If successful, the litigation could materially impact on TGM’s rights in respect of ML 104.

TGM and the State contended that the originating summons and the process adopted was an abuse of process because the challenge to the grant should have been brought pursuant to the Judicial Review of Administration Action Rules (which are contained in Order 16 of the National Court Rules) and the applicant should have obtained leave for judicial review under the rule against private intermeddlers in public affairs. In addition it was contended that there was no legal basis for the claim on the basis of the legislation. An application was brought to strike out the Originating Summons. The chamber judge declined to make the order.

Both TGM and the State sought leave to appeal (being an interlocutory order from which leave to appeal is needed) and TGM also sought a stay of the action in the National Court pending the appeal. The Supreme Court sitting in motions granted leave to both the State and TGM to appeal and also granted the order for stay of the action pending the appeal. The Court also ordered the appeals be consolidated. At present the parties are settling the appeal books and awaiting for the appeal to come on for hearing.

Compensation arrangements

In accordance with the Mining Act, the various compensation agreements signed as part of the development of the mine provide for the compensation of landowners directly affected by the mine and its activities.

For

per

sona

l use

onl

y

18

In general, these arrangements follow a prescribed formula developed under the Mining Act, and are guided by the original MOA and associated agreements. These arrangements are agreed with legitimate customary landowners, and set out the obligations of Emperor in respect of each type of compensation paid.

Proposed Tolukuma Sale

On 10 September 2007 Emperor announced its intention to sell Tolukuma as part of the ongoing implementation of its growth strategy and focus on lower cost, larger gold assets.

At the date of this Prospectus, the divestment process for this asset continues. A number of potential investors have expressed interest in the Tolukuma Mine and several have initiated due diligence efforts. Emperor has entered into a period of exclusivity with one of these parties with the objective of negotiating a satisfactory agreement for the sale of the asset. The outcome of these negotiations is expected to be known in the near future at which time an announcement will be made summarising the agreement reached or the divestment process will continue.

Impact of the proposed Tolukuma Sale

If the Tolukuma Sale is completed and the Proposed Merger:

(a) is not implemented, the remaining assets of Emperor will be cash, the PNG exploration licences and the interest in the Tujuh Bukit project; or

(b) is implemented:

(i) and provided that the Tolukuma Sale has been entered into prior to the date of the final Court hearing for the Proposed Merger, becomes unconditional prior to the effective date for the Proposed Merger (subject only to third party regulatory approvals) and is unconditionally completed by 31 March 2008, the net proceeds of sale received by Emperor for the Tolukuma Sale are to be distributed to Emperor Shareholders recorded in the share register of Emperor as at 10.00 pm on the record date for the Proposed Merger;

(ii) but the binding agreement for the Tolukuma Sale is entered into after the Scheme Meeting, then any proceeds from the sale of the Tolukuma Mine shall be retained by the Merged Entity. In addition, if the value of the Tolukuma Mine and the Tolukuma Exploration Rights is not positive, based on an independent valuation obtained by Emperor in accordance with the Merger Implementation Deed, there will be a reduction in the proportion of Intrepid shares issued to Shareholders. If the value is a positive number there will be no adjustment.

If the Tolukuma Sale is not completed, the Tolukuma Mine and the Tolukuma Exploration Rights shall continue to be part of the Merged Entity’s operations but there may be an adjustment to the scheme consideration as summarised in (b) (ii) above and detailed in the Merger Implementation Deed.

For

per

sona

l use

onl

y

19

4.2.2 PNG Exploration Licences

Whether or not the Tolukuma Sale proceeds, Emperor will retain 5 exploration licences currently held by TGM (the “Tolukuma Exploration Rights”) and which provide exploration rights for areas outside of ML 104 and the contiguous ELs held by TGM. The Tolukuma Exploration Rights are comprised of EL 1271, 1297, 1327, 1352 and 1366.

EL 1352 is located approximately 60km NW of the Tolukuma Mine. The region comprises a series of porphyry Cu-Au and low sulphidation epithermal Au prospects over and around a bulls-eye magnetic anomaly that is ~9km diameter and centred on the Yule Transfer structure. The magnetic anomaly comprises an inferred intrusive complex that lies beneath a caldera-like volcanic landform that incorporated Mt Yule. The cluster of prospects is located at the nexus between the regional NNE trending Yule transfer and NW and NNW-trending structures. Multiple stream sediment anomalies attesting to different mineralisation styles in the region imply that the Ipi River and Variza Creek prospects are part of a larger magmatic hydrothermal system. The Ipi River prospect itself was discovered CRA and later explored by BHP. BHP drilled three holes for 600m and intersected a large low grade porphyry system.

Exploration by TGM has followed up on these earlier programmes and has confirmed the presence of a large porphyry system. Recent stream sediment sampling has defined Au and Cu anomalous drainages associated with areas of porphyry geology. Specific rock chip sampling of sulphide bearing veins has returned assays of up to 3.75g/t Au and 10.14% Cu.

ELs 1271, 1297, 1327 and 1366 are contiguous with one another and are located approximately 70km NE of the Tolukuma Mine, on the north side of the Owen Stanley range. These ELs contain numerous historical gold occurrences, many of which are alluvial, but some are bedrock related. TGMs exploration focus will be on the Gira and Milton Creek areas within EL 1297, and the Aikora area within EL 1327. Rock chip values exceeding 1g/t have commonly been recorded. No historical drilling has been completed.

4.2.3 Tujuh Bukit

(a) Background

On 19 August 2007 Emperor entered into an Alliance Agreement with a group of Indonesian and Australian investors to explore a large gold-silver-copper project in eastern Java, Indonesia.

The Alliance Agreement between Emperor, Indonesian company PT Indo Multi Niaga (IMN) and BVI company IndoAust Mining Limited (IndoAust) sets out the framework for entering into a Joint Venture Agreement and undertaking further exploration on a property of approximately 116km2 located in the Southeastern portion of Java.

The Australian Investors hold 65% of the issued share capital of IndoAust. The remaining 35% is held by Indonesian Investors who also own all issued shares in IMN.

For

per

sona

l use

onl

y

20

(b) Mining rights

IMN holds a mining permit (kuasa pertambangan or “KP”) issued by the Regent of Banyuwangi dated 16 February 2007 concerning. This Exploration KP is granted to IMN to allow mining activity of elements, which include gold, silver and copper located in the Pesanggaran District, Banyuwangi Regency, East Java in total an area of 11,621.45 hectares. The KP is valid for 3 years as of its issuance.

A KP grants exclusive mining rights within a defined area to the holder for specified minerals or metals for a defined stage of mining activity (survey, exploration and exploitation) and a defined time period.

Under the Indonesian mining law, KPs can only be granted to and held by Indonesian individuals, and wholly Indonesian- owned companies or other legal entities.

(c) Indonesian Forestry Law issues

A portion of the KP area is situated within a protected forest area.

On 27 July 2007, the delegate of the Minister of Forests granted approval to conduct exploration activities within protected forest areas contained in the KP area for a period of 2 years.

The Indonesian Forestry Law, Law No 41/1999 restricts non forestry activities within protected forests. Article 38 (4) of the Forestry Law provides that mining using an open pit method is prohibited in protected forest areas.

As Indonesian law currently only permits underground mining in protected forest areas, Emperor is evaluating the appropriate application process that would allow the company to conduct open cut mining operations, should exploration be successful within the relevant forest area.

(d) Proposed structure

In accordance with the Alliance Agreement the indicative structure is as follows:

(i) Emperor and IndoAust will incorporate a company in Singapore (Singapore Co) as an incorporated joint venture vehicle;

(ii) Singapore Co and the Indonesian Investors will incorporate an Indonesian foreign investment company (PMA Co), to provide mining services to IMN;

(iii) IMN and PMA Co will enter into a Cooperation and Development Agreement, through which PMA Co will derive its economic interest in the KP;

The Alliance Agreement further provides for the creation of a new Indonesian company to be the holder of the KP. It is proposed that IMN will transfer the KP and assign all rights deriving from the contractual arrangement to the newly- created company.

Emperor may spend up to $5 million over five years, to earn a 51% interest in the project. An option exists for Emperor to earn a further 19% interest in the project by funding an additional $3 million to be used for exploration subject to certain conditions including the obtaining of relevant permits and licences. Emperor may then

For

per

sona

l use

onl

y

21

provide further funding of up to an additional $42 million to fund ongoing obligations and feasibility studies.

After Emperor has completed its funding obligations, the parties have agreed to make capital contributions and bear all expenditures, debts, losses, obligations and liabilities of the project in proportion to their respective interests.

During the initial stages, Emperor has agreed to make cash payments of up to $800,000 upon reaching certain project implementation milestones.

In addition, Emperor has agreed to make a resource payment to IMN of $7.5 per ounce of gold equivalent in excess of 500,000oz of JORC compliant Indicated Resource up to a maximum payment of $7.5 million. The resource payment is subject to:

• obtaining the reclassification of those parts of the KP which are currently classified as “protected forest” to “production forest” for purposes of the Forestry Law and all other purposes; and

• calculation of JORC Compliant Indicated Resource Estimate to be undertaken by Hellman & Schofield Pty Ltd (or such other competent person as agreed by Emperor and IMN).

Emperor shall make a resource payment to IMN if the Indicated Resource Estimate is greater than 500,000oz of gold or gold equivalent. The resource payment shall be payable on that portion of the Indicated Resource Estimate which exceeds 500,000oz of gold or gold equivalent.

(e) Exploration

The Tujuh Bukit project is located in the province of East Java in Indonesia. The project area contains extensive alteration and the main prospect area exhibits evidence of a high-sulphidation Au-Ag telescoped on a porphyry Cu-Au zone. Other areas show evidence of upper level porphyry mineralisation.

Tujuh Bukit was previously explored in 1999 and 2000 by a junior exploration corporation, Golden Valley, and by Placer Dome – both under joint venture with a local partner. Exploration included geological mapping, surface geochemistry, geophysics (Induced Polarisation), and diamond drilling (14 holes).

Drilling and surface geochemistry results outlined a near surface Au-Ag mineralised zone over an area of 2.5 x 1.5km. The zone geometry is interpreted to be roughly horizontal with some sub-vertical structural control. Mineralisation is defined by wide uniform intercepts. Cover thickness ranges from zero to a few meters.

The Au-Ag zone overlies a porphyry Cu-Au system which has been identified in the lower zones of some drill holes and does occur in outcrop in the northwestern portion of the prospect. The outcropping porphyry copper zone occurs on an island (connected to the mainland at low tide) at the northwest tip of the known Au-Ag zone. Rock chip samples have returned 47m @ 1.29% Cu & 1.71g/t Au.

The IP geophysics has defined chargeability zones which correspond with at least a portion of the known porphyry mineralisation. The chargeability anomalies occur over an area of 1.5 x 1.5km.

For

per

sona

l use

onl

y

22

A second area of gold and copper surface anomalism occurs at Salakan prospect which is located 6km NW of Tumpangpitu. No drilling has been undertaken at Salakan but rock samples have been collected that contain Cu-sulphides and stream sediment geochemistry samples show anomalous copper and gold.

4.3 Financial overview

4.3.1 Summary financial position

Set out below is a summary of Emperor’s financial results extracted from its Full Year Financial Report for the period ended 30 June 2007. The Financial Report for the year ended 30 June 2007 contains details on the accounting policies of the financial results for the respective period. Copies of Emperor’s financial reports are available on www.asx.com (ASX Code: EMP).

Emperor had a consolidated loss after tax from continuing operations for the twelve months ended 30 June 2007 of A$41.6 million (twelve months ended 30 June 2006: A$20.6 million loss) and a consolidated loss after tax from discontinued operations for the twelve months ended 30 June 2007 of A$195.4 million.

The result for the twelve months to June 2007 included an impairment charge against the shutdown and disposal of the Vatukoula Gold Mine, related to the occupation of the mine by military forces in Fiji.

Operating performance for the year to June 2007 saw production of 44,181 ounces from the Tolukuma Mine, 26,910 ounces from the Vatukoula Gold Mine and 71,570 ounces from the Porgera Joint Venture.

As at 30 June 2007, Emperor’s cash holding was A$7.7 million and it had total loans and borrowings of A$156.8 million (including a secured debt facility of A$11.9

For

per

sona

l use

onl

y

23

million with ANZ Bank, a senior debt facility with ANZ Investment Bank of A$70.4 million and loan facilities with DRD of A$30.1 million).

4.3.2 Material changes in Emperor’s financial position since 30 June 2007

The following material changes to Emperor’s financial position have occurred since 30 June 2007:

Disposal of Porgera assets and liabilities which were classified as held for sale at 30 June 2007 and recognition of sale proceeds of US$255 million;

Repayment of debt and bank overdraft with the proceeds from the disposal of the Porgera assets as well as close out of all hedging contracts;

Capital distribution to shareholders of A$52.2 million;

Payment of restructuring and bank fees of US$7.7 million; and

Payment of withholding tax on dividends paid by DRD Porgera, a PNG subsidiary of Emperor, of US$3.1 million.

4.4 Capital structure and ownership

As at the date of this Prospectus:

(a) 1,046,005,621 ordinary fully paid Emperor Shares are on issue; and

(b) 7,380,9001 unquoted options. The various classes of options on issue are as follows:

No. of Options Exercise Price2 Issue Date Expiry Date

3,450,000 $0.08 1 June 2007 2 January 2012

3,430,900 $0.36 8 May 2006 8 May 2011

400,000 $0.58 2 December 2004 2 December 2009

100,000 $0.52 31 October 2002 30 October 2007

4.5 Emperor share price performance

The following chart shows the closing price of Emperor Shares on the ASX over recent times.

1 Emperor will issue further 2,450,000 options under the Employee Share Option Plan.

2 In accordance with the terms of Emperor’s Employee Share Option Plan the exercise price of all issued option has been adjusted to reflect the capital return distribution approved by shareholders at the general meeting held on 30 July 2007.

For

per

sona

l use

onl

y

24

$0.02

$0.03

$0.04

$0.05

$0.06

$0.07

$0.08

$0.09

$0.10

$0.11

Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07

Shar

e Pr

ice

(A$)

Emperor Share Price Performance

Source: Bloomberg

The closing price of Emperor shares on the ASX shortly before the date of this Prospectus was A$0.081 on 16 October 2007. During the twelve months ended 16 October 2007:

the highest recorded daily closing price for Emperor shares on the ASX was A$0.33* on 24 October 2006 ; and

the lowest recorded daily closing price for Emperor shares on the ASX was A$0.065 on 24 September 2007.

The last recorded sale price for Emperor Shares on the ASX before the public announcement of the Proposed Merger was A$0.069 on 17 September 2007.

* Adjusted for the capital return of A$0.05 per share

For

per

sona

l use

onl

y

25

4.6 Directors of Emperor

Geoffrey Campbell BSc (Geology) Chairman Mr Campbell was appointed as Non-Executive Director and Chairman on 26 June 2006. A qualified geologist, Mr Campbell has worked on gold mines in Wales and Canada. He spent 15 years in the stockbroking and international funds management industry. During this time he had managed the Merrill Lynch Investment Managers’ Gold and General Fund, one of the largest gold mining investment funds. He was also research director for Merrill Lynch Investment Managers. Mr Campbell is Managing Director of Boatlaunch Limited, a Director of Oxford Abstracts, and the Non-Executive Chairman of DRD.

Brad A Gordon BSc (Min.Eng.), MBA Chief Executive Officer, Executive Director Mr Gordon was appointed to the Emperor Board of Emperor Mines Limited on 26 April 2006. He has more than 10 years’ experience in senior management positions in the gold industry in Australia, PNG and Fiji. Most recently employed as Managing Director of Placer Dome Niugini Ltd and prior to that as General Manager of Porgera, Mr Gordon has also held General Manager or Operations Manager roles at Kalgoorlie West for Aurion Gold, Kanowna Belle for Delta Gold, Leonora for Sons of Gwalia and Vatukoula and Tuvatu for Emperor.

Ian McMaster AM BE (Metallurgy) ME Independent Director Mr McMaster was appointed on 8 June 2007. Mr McMaster served as Chief Executive Officer of CSR Sugar from 1999 until 2006, and prior to that held various senior management roles over a 30 year career with BHP. He holds a Masters in Engineering awarded by the University of Newcastle, and was made an Honorary Fellow of the University of Wollongong in 1996. Mr McMaster was recently appointed as a Member of the Order of Australia for his contribution to the sugar and steel industries.

Robert J McDonald B Comm, MBA (Hons) Independent Director Mr McDonald was appointed on 6 April 2006. He is currently the Principal of the Minera Group and is a Non-Executive Director of Sedgman Limited. He was previously a Managing Director of NM Rothschild & Sons (Australia) Limited and a Principal of Resource Finance Corporate, and prior to that held various roles within the Rio Tinto Group. Mr McDonald has more than 30 years’ broad mining industry experience.

John Sayers BA (Hons), CA (SA & UK) Non-Executive Director Mr Sayers was appointed Non-Executive Director on 10 November 2006. Mr Sayers is currently the Chief Executive Officer for DRD Gold Limited. He has almost 40 years’ financial experience, most recently as Financial Director of Nampak Limited, from 1996 to 2004, and as Financial Director of Altron Limited, from 1989 to 1996. Mr Sayers has a BSc (Hons) degree in Econometrics and Statistics, and is qualified as a Chartered Accountant in both England and South Africa.

For

per

sona

l use

onl

y

26

4.7 Senior Management

The senior management of Emperor includes:

Malcolm Norris BSc (Hons) MSc Executive General Manager Exploration and New Business Mr Norris is a highly regarded exploration specialist, and came to Emperor after holding the position of General Manager – Exploration and Business Development at Indophil Resources since 2005. Mr Norris has previously held senior positions with WMC Resources, including, among others, the roles of Group Manager – Exploration (2003 – 2005), Global Exploration Manager – Gold (2001 – 2002) and serving several years as Country Manager for WMC Resources in the Philippines.

Vanessa Chidrawi B.Com LLB General Counsel and Company Secretary Ms Chidrawi had 12 years' private practice experience in commercial law and litigation, practising for her own account in Johannesburg. Prior to joining Emperor in May 2006 as Corporate Counsel, and later Company Secretary, Ms Chidrawi project-managed Emperor's acquisition of DRD’s PNG assets.

Frazer Bourchier BASc MASc General Manager Business Development Frazer Bourchier is a qualified mining engineer with Bachelor’s and Master’s degrees in Applied Science. He has more than 16 years’ experience in the gold mining industry, most of which were spent with the Placer Dome Group in Canada, South Africa and PNG. Prior to his appointment as General Manager of Emperors’ Vatukoula Gold Mine in Fiji in June 2006, he was Mining Manager and Alternate General Manager at the Porgera Joint Venture in PNG.

Brendan Gill BBus CPA Chief Financial Officer Prior to joining Emperor Mines, Mr Gill held the senior financial positions in the BHP Billiton group of Vice President Finance, Carbon Steel Materials division (2006) and Chief Financial Officer, Stainless Steel Materials division (2003-2006). He has previously held a number of other senior positions with the BHP Billiton group, including the role of Chief Financial Officer of the Nickel division (2001-2002) and Global Lead Risk Management and Audit (2000-2001). Mr Gill joined Emperor in June 2007.

Bradley Sampson B Eng MBA General Manager: Papua New Guinea Brad Sampson was appointed to his current position in August 2006, with principal responsibility for Tolukuma Mine in PNG and for overseeing Emperors’ 20% stake in the Porgera Joint Venture. He was previously General Manager at Gold Fields Limited’s St Ives Mine in Western Australia and Kloof operation in South Africa, and has also held positions with Anglo American, Ross Mining NL and Comalco. F

or p

erso

nal u

se o

nly

27

John Wallace General Manager, Human Resources John Wallace has over 20 years’ experience in the mining industry, primarily in the South Pacific region with extended periods working in human resources at Misima, Ok Tedi and Lihir in PNG; Kaltim Prima Coal in Indonesia; and Gold Ridge in the Solomon Islands. He has extensive knowledge of the working conditions and requirements in these regions.

4.8 Corporate Governance

As a listed company on the ASX, Emperor reports on its main corporate governance practices by reference to the best practice recommendations of the ASX Corporate Governance Council), which were released on 31 March 2003.).

4.9 Litigation

The Emperor Board continues to review a potential claim on its political risk insurance policies in relation to the closure and subsequent divestment of Vatukoula mine.

Other than the contingent liabilities disclosed in this Prospectus, the DRD directors and the Emperor Board are not aware, of current or threatened civil litigation, arbitration proceedings or administrative appeals or criminal or governmental prosecutions of a material nature involving Emperor (directly or indirectly) which are likely to have a material adverse effect on the business or financial position of Emperor.

For

per

sona

l use

onl

y

28

5. PROFILE OF INTREPID

5.1 Introduction

Intrepid is an international precious metals (gold-silver) producer, developer and explorer operating in Australia, Argentina, Canada, El Salvador and Mexico. It was formed through the merger of Canadian-based Intrepid Minerals Corporation and Australian-based NuStar Mining Corporation Limited in July 2006. Intrepid’s head office is in Toronto, Canada and it is listed on the Australian and Toronto stock exchanges (ASX: code IAU and TSX code: IAU, IXN).

Intrepid’s vision has been to grow into a mid-tier international gold and silver producer with a focus on identifying properties with one million or more ounces of gold potential, or 50 million ounces of silver potential, or a combination of both.

5.2 Principal activities

The principal activities of Intrepid are the operation of the Paulsens gold mine in Western Australia, development of the Casposo gold-silver Project in Argentina, and exploration of its areas of interest.

5.2.1 Paulsens Gold Mine (100%)

The Paulsens gold mine is located in Western Australia’s Ashburton mineral field approximately 1,000 kilometres north of Perth. Paulsens is an underground mine extracting ore from two mineralised zones, designated the Upper Zone and the Lower Zone respectively, located within a single massive quartz vein.

Ore is treated on site using a conventional carbon-in-leach process. First gold was produced in June 2005 and to 30 June 2007, 150,614 ounces have been produced. Throughput is approximately 300,000 tonnes of ore per annum and gold production since inception has averaged around 70,000 ounces per annum.

Paulsens gold mine – unaudited operating results for the 18 months to 30 June 2007 1 Ore processed 6 months to

30 Jun 2007 12 months to 31 Dec 2006

Tonnes treated (t) 158,072 317,499 Head grade (g/t) 7.05 7.65 Recovery (%) 93.1 94.4 Gold produced (oz) 33,348 73,736 Total cash cost (US$/oz) 430 349

1 Source: Intrepid, Management’s Discussion and Analysis – Unaudited Three Months Ended 30 June 2007.

Mining, ore crushing, power generation and camp management are carried out by contractors. Intrepid employees operate and maintain the processing plant and carry out all technical and administrative functions at the mine. All personnel commute to the mine by charter aircraft from Perth and are accommodated on site during their roster.

The significant contracts entered into by Intrepid in connection with the operation of Paulsens are:

For

per

sona

l use

onl

y

29

Party Services

Barminco Limited Mining

ESS Camp management

Powerwest Power generation

Downer EDI Crushing contract

Skippers Aviation Transport / Commuting

Westpac Project Facility

The majority of these operational contracts are due for renewal / extension within the next 12 months and the Westpac Project Facility is scheduled to be complete by no later than 31 December 2008.

Resources and reserves for the Paulsens gold mine are summarised in the following tables. They were updated in February 2007 (as of 31 December 2006) resulting in an increase in both categories. The previous estimates were carried out in August 2006.

The main change was an increase in Indicated Mineral Resource in the deeper portion of the deposit after incorporating results from the 2006 drilling programme. The increase to Measured and Indicated resources since the last estimate net of mining depletion was 77,100 ounces gold. The increase to Reserve net of mining depletion was 66,150 ounces gold. The new reserve was calculated at a cut-off of 4.8 grams per tonne gold versus the August 2006 reclassification of 4.0 grams per tonne gold in conformance with revised stope design parameters.

Paulsens Deposit – Mineral Resources as at 31 December 2006 1, 2, 3 (calculated as at February 2007) Measured Indicated Measured & Indicated Inferred Zone Tonnes

t Au g/t

Tonnes t

Aug/t

Tonnes t

Au g/t

Au ounces

Tonnes t

Au g/t

Au ounces

Upper 342,000 8.2 494,000 11.0 836,000 9.9 264,900 42,000 7.3 9,900 Lower

50,000 18.0 219,000 12.2 269,000 13.3 114,800 - - -

Other - - - - - - - 80,000 10.3 26,500 Total 392,000 9.4 713,000 11.4 1,106,000 10.7 379,700 122,000 9.3 36,400

1 Estimate of undiluted resource remaining at 31 December 2006 using a cut-off grade of 4.0g/t Au for resources confined to 1210mRL – 640mRL mine levels.

2 The resource estimate is inclusive of reserve. 3 The resource estimates set out in the above table were prepared under the supervision of Mr Paul Payne CPGeo, a Qualified

Person as defined in Canadian National Instrument 43-101 (standards of Disclosure for Mineral Projects 4 Variations may occur due to rounding.

For

per

sona

l use

onl

y

30

Paulsens Deposit – Ore Reserves as at 31 December 2006 1, 2 (calculated as at February 2007) Proven Probable Total Tonnes

t Au g/t

Au Ounces

Tonnes t

Au g/t

Au ounces

Tonnes t

Au g/t

Au ounces

Upper 218,000 7.1 49,900 388,000 10.1 126,000 606,000 9.0 175,900 Lower 56,000 12.0 21,600 146,000 9.4 44,000 202,000 10.1 65,600 Stockpiles 13,000 5.7 2,400 - - - 13,000 5.7 2,400 Total 287,000 8.0 73,900 534,000 9.9 170,000 821,000 9.2 243,000

1 Cut-off grade of 4.8g/t Au. 2 The reserve estimates set out in the above table were prepared under the supervision of Mr Neville Price and Per Scrimshaw.

Qualified Persons as defined in Canadian National Instrument 43-101 (standards of Disclosure for Mineral Projects. 3 Variations may occur due to rounding.

Based on these updated reserves the Paulsens gold mine has a defined three year mine plan at current production targets from 1 January 2007. Deeper exploration below the 300 metre historical reserve limit continues to provide further opportunity to expand the mine resource. The deepest intersection of the Paulsens vein structure to date is 490 metres vertically below surface (approximately 150 metres below the current mine reserve as at 31 December 2006). The structure remains open at depth.

5.2.2 Casposo Gold-Silver Project (100%)

The Kamila mining license is the key value driver of the 100 square kilometres Casposo gold-silver project located in the Cordillera Frontal, San Juan Province, Argentina. Intrepid owns 100% of this property as well as rights of way that connect the property to the region’s paved road infrastructure. Intrepid also holds 92.5% ownership of the 75,000 hectare condominium surface land position covering the Kamila Deposit and surrounding areas. Intrepid also holds an additional 19 exploration properties in the region.

Kamila is a gold-silver system where exploration drilling has intersected multi-ounce gold and silver values over widths of 5-10 metres to depths of 250 metres. The deposit sits within a structural corridor of approximately 7 kilometres by 1 kilometre with multiple targets along strike and at depth of which Kamila is the principal discovery to date. The deposit is considered to be geologically analogous to multi-million ounce gold-silver deposits such as the Cerro Vanguardia Mine in Argentina and the Pajingo Mine in Australia. Over 40,000 metres of core drilling have been completed at Kamila.

Intrepid has published a resource estimate for the Casposo Project. The estimate was prepared in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum Standards on Mineral Resources and Reserves Definition by Eugene Puritch, P.Eng, in November 2006. Resource information from this estimate was incorporated in the final feasibility study for the Casposo gold-silver project was delivered to Intrepid by AMEC (Peru) in March 2007. Highlights of the feasibility study include:

For

per

sona

l use

onl

y

31

Mineral resources (indicated only): 2.2 million tonnes containing 315,700 ounces of gold and 8.1 million ounces of silver, grading 4.46 grams per tonne gold and 116 grams per tonne silver. (See the resource table below for further detail.)

Total mineral reserves open cut and underground: 1.8 million tonnes containing 270,089 ounces of gold at 4.69 grams per tonne (weighted average) and 6.6 million ounces of silver grading 114 grams per tonne (weighted average). 75% of reserve tonnes are derived the proposed open cut. (See the reserve table below for further detail.)

Average annual production of 50,478 ounces of gold and 1.1 million ounces of silver or 68,500 ounces of gold equivalent annually using base case gold and silver pricing.

Average annual operating cost: $248 per ounce of gold equivalent, or $168 per ounce of gold after silver credits (of $8.50 per ounce).

Capital costs, including 12% contingency, $45.5 million.

Average annual surplus operating cash flow (at $500 per ounce and $8.50 silver) after sustaining capital: $13.8 million.

Internal rate of return 15% at a base gold price of $500 per ounce and $8.50 per ounce of silver, rising to 33% at $600 per ounce of gold and $11.50 per ounce of silver.

Construction period: 15 months.

Casposo Project – Mineral Resources Reported by Intrepid Mines (November, 2006) (1, 2, 3) Tonnes

Mt Aug/t

Ag g/t

Au ounces

Ag ounces

Au Eq ounces

Indicated Kamila 1.960 4.76 120.0 300,100 7,563,400 398,400 Mercado 0.248 1.95 72.2 15,600 576,000 23,000 Total Indicated 2.208 4.45 114.7 315,700 8,139,400 421,400 Inferred Kamila 0.131 2.14 86.1 9,000 362,400 13,700 Mercado 0.007 1.67 28.3 400 6,200 500 Total Inferred 0.138 2.12 83.2 9,400 368,600 14,200

(1) AuEq cut-off = (US$15.70 process cost + US$3.35/t G&A cost)/[(US$450/oz/31.1035) x (94%)] = 1.40g/t AuEq. (2) Au/Ag ratio = 77:1. (3) Information in the above table is based on information provided by Qualified Persons as defined in Canadian National

Instrument 43-101 (standards of Disclosure for Mineral Projects) and contained in the report “An Updated Resource Estimate and Report of Exploration Activities for the Casposo Property, Department of Calingasta, San Juan Province, Argentina, November 9th, 2006” by William McGuinty P. Geo. And Eugene Puritch P.Eng. and lodged on SEDAR on November 9th, 2006, www.sedar.com).

(4) Variations may occur due to rounding. For

per

sona

l use

onl

y

32

Casposo – Summary of Project Probable Reserves 1, 2,,3

Grade Contained Metal Mining Area Reserves

‘000t Au g/t

Ag g/t

Au Eq g/t

Au ounces

Ag ounces

Au Eq ounces

Kamila open pit 1,188 5.61 92.6 6.77 214,427 3,538,323 258,656 Kamila underground

439 3.31 191.7 5.70 46,638 2,704,631 80,446

Mercado open pit 80 2.19 93.5 3.36 5,647 241,173 8,661 Low grade ore (stockpile)

84 1.25 24.9 1.56 3,377 67,577 4,222

Total 1,791 4.69 113.8 6.11 270,089 6,551,704 351,985 1 All reserves are in the Probable category. 2 Au/Ag ratio = 77:1. 3 Information in the above table is based on information provided by Qualified Persons as defined in Canadian National

Instrument 43-101 (standards of Disclosure for Mineral Projects) and contained in the report “Casposo Project - San Juan, Argentina - Technical Report on Feasibility Study” William Colquhoun, FSAIMM, Gary Taylor, P. Eng., Rodrigo Marinho, CPG, AIPG and Armando Simon, R. P. Geo. MAIG, March 30, 2007, lodged on ASX on 7 June 2007, www.asx.com.au and on SEDAR, 5 June 2007, www.sedar.com).

4 Variations may occur due to rounding.

Since completion of the feasibility study, AMEC were contracted by Intrepid to update the current mineral resources and reserves for the Kamila deposit by including additional drill holes that were completed after the feasibility study effective date cut-off in 2007. Final results of this study are pending.

The feasibility study is based on a hybrid open pit / underground operation and proposes the mining of the separate Kamila and Mercado deposits. The Kamila deposit is much larger (95% of global reserve tonnage) than Mercado and would be mined first. The top part of Kamila would be mined by open pit and the deeper portion mined by underground sub level retreat. The Kamila pit would consist of a large pit (Kamila Main pit) and a small satellite pit located 100 metres to the southeast (Kamila SE pit).

The underground mine would be accessed by a decline and exploited using a long hole open stoping mining method with sublevel retreat. The underground mine has been designed with a temporary crown pillar below Kamila Main pit floor and with the ramp portal and ventilation raise collar located beyond the perimeter of the Kamila Main pit such that both the open pit and the underground mines can be operated concurrently. The production rate for the mine would be 365,000 tonnes per annum with all production for the first two years coming from the Kamila open pits. Underground ore production would start in year three. The Mercado open pit would be mined in the final year of the mine life due to its lower grade and its more distant location from the processing plant. The current estimated mine life for Kamila and Mercado is five years. Intrepid intends to use a combination of direct and contractor employed personnel.

A cross-section of the Kamila deposit showing compiled results of drilling to mid 2006 and the outline of the proposed open-pit and underground development area, and a plan of the Casposo structural corridor, are illustrated below.

For

per

sona

l use

onl

y

33

Composite cross-section of Kamila proposed Main Pit and drill intercepts 2004-2006

For

per

sona

l use

onl

y

34

Plan of Casposo structural corridor

An Environmental Impact Assessment Report has been completed by Intrepid and its principal contractor and submitted on 19 June 2007 in San Juan, Argentina to the Secretariat of Mining, the authority for mining and mining environmental matters in the Province of San Juan. The process for government and public review has been completed and Intrepid is awaiting the final report of the evaluation commission (CEMAM) in order to complete the project’s Environmental Impact Statement. Environmental approvals for the project are expected in the last quarter of 2007.

Intrepid is currently reviewing alternatives for financing the Casposo gold-silver project.

Based on the agreement signed with the vendors of the Casposo Property on 22 May 2002, a “Reserve Royalty” was established of US$1/oz of gold equivalent (up to a maximum of US$450,000). The Reserve Royalty is based on mineable and recoverable reserves defined by a feasibility study and was to be paid on or before 1 July 2005. The agreement was then re-structured to provide that beginning in 2006, annual payments of US$150,000 were scheduled to be paid by Intrepid to the vendors each July, until the royalty total of US$450,000 is paid, or the property attains commercial production. A payment of US$150,000 was made in June 2006, a further US$150,000 was paid in July 2007. On production, a “Production Royalty” of US$6/oz of gold equivalent will be paid to the vendors, net of any advanced royalties.

For

per

sona

l use

onl

y

35

Gold equivalent ounces mined surpassing 450,000 oz will be subject to reduced royalty payments of US$5/oz of gold equivalent. Other royalties applicable at production include the Provincial mining royalty which is capped at 3% of the mineral’s mouth-of-mine value. In the case of downstream value added production activities being developed for mine production, royalty payments can be reduced. At the federal level exports of dorè bars are subject to a 5% export tax. This is a tax applied on value of export and is similar to a royalty

5.2.3 Exploration

Current advanced exploration activities are focused in Argentina and Australia where Intrepid controls large land positions. In addition, Intrepid is exploring earlier stage projects and evaluating exploration opportunities in emerging districts of El Salvador and Mexico.

Intrepid’s exploration strategy in the Americas and Australia is to identify properties with one million or more ounces of gold or gold equivalent potential and access to reasonable local infrastructure.

A summary of Intrepid’s main areas of interest and recent activities follows.

Canada

Greyhound Lake, Nunavut

In June 2006, Intrepid signed an option agreement with Aura Silver Resources Inc. whereby Intrepid can acquire an interest in the Greyhound Property located 40km north of Baker Lake, Nunavut. Intrepid has completed its minimum of $200,000 commitment for 2006 to earn a 25% interest in the project. Intrepid can earn an additional 25% interest by spending a further $150,000 in 2007, for a total direct interest of 50%.

In 2006, Intrepid completed a MEGATEM airborne survey. Additionally, a brief 5 day prospecting program was conducted on the property, tracing known iron formation and bedded horizons as a basis for comparison with airborne results.

The project received a three week mapping and ground follow-up program in July and August of 2007 consisting of mapping and geophysical anomaly follow –up and geochemical sampling porgrams. The results of this program are being evaluated with a view to testing the property via drilling if warranted.

Argentina

Casposo Project (100%)

The primary focus of Intrepid’s exploration in Argentina is expanding the Casposo project resource and increasing the life of mine proposed in the Feasibility Study by testing vein extensions accessible by pit extensions and enhanced development of underground vein targets.

Subsequent to completion of the feasibility study, a total of 3,315 metres of core drilling has been undertaken in programmes concluded in May 2007. Of particular note are very strong values in intercepts obtained from drill hole CA-07-200, which

For

per

sona

l use

onl

y

36

intersected 7.0 metres of 9.02 grams per tonne gold and 338 grams per tonne silver at shallow depth along the proposed Kamila Main pit wall. This additional near surface information will be used to re-determine pit design in the initial year of mining. Drill holes CA-07-205 intersected 4.3 metres of 4.18 grams per tonne gold and 256 grams per tonne silver from 116.20 metres to 120.50 metres, and CA-07-216 intersected 3.0 metres of 8.60 grams per tonne gold and 579 grams per tonne silver from 109.80 metres to 112.80 metres. Both intercepts test down dip extensions of a new section of the Inca vein defined by drill holes CA-06-183, 184, 197 in September of 2006. This new upper section of the Inca vein is located 30-40 metres outside of the current pit wall boundary and extends below the current pit floor elevation. Other holes completed in the recent programme (CA-07-202 to 204, 206 to 209), show continuity of the Inca vein as it extends to the southeast and to depths where underground mining present a solution to access this mineralisation.

These results, once incorporated into the resource and mine models may lead to consideration of a larger pit design of the Kamila open pit and of additional underground mining potential. The new information will also assist in determining the pit floor for a revised mine plan.

A cross-section of the Kamila deposit showing the 2007 drill intercepts is illustrated below.

Composite cross-section of Kamila Deposit Drill intercepts 2007

Regional exploration - San Juan Province Argentina (100%)

The Cordillera west of the Uspallata graben in San Juan Province is characterised by a number of historic gold silver districts extending over an area of approximately 1500km2. These districts comprise both low- and high-sulphidation precious mineral systems and have been actively, if intermittently, explored over the past twenty years. Intrepid has 19 applications and mineral exploration concessions within this very prospective belt and have spent the past several years in regional reconnaissance level evaluation programmes with a view to developing generative exploration projects through discovery and property acquisition.

For

per

sona

l use

onl

y

37

Also in San Juan, Intrepid has been assembling a package of exploration tenements in the Paleozoic-aged pre-Cordillera sedimentary belt, targeting sediment (predominantly limestone) hosted gold deposits. The exploration area currently encompasses approximately 1200km2 and is being systematically sampled and prioritized for follow-up work.

The Uspallata graben region showing several of Intrepid’s key exploration districts is illustrated below.

Regional exploration map, Central San Juan province

For

per

sona

l use

onl

y

38

Mexico

Taviche Project (Earning 35%)

The Taviche property is located in Oaxaca State, Mexico. Intrepid optioned the property in 2006 from Plata Panamericana S.A. de C.V. a subsidiary of Pan American Silver Corp. The property comprises two concessions totalling 13,724 hectares.

The agreement calls for Intrepid to commit to spending a total of US$4.0 million over five years and making option payments totalling US$790,000 over the same period to earn a 70% interest in the Concessions. Plata holds the right to back-in at the end of the fifth anniversary if a NI 43-101 compliant report has identified a measured and indicated resource estimate of at least 50 million ounces of contained silver. Should Plata exercise their right, they can recover 40% of the property interest, for an aggregate 70% by funding 100% of subsequent expenditures over a four year period. These expenditures will equal three times Intrepid's aggregate investment to that date.

In 2007, Intrepid entered into an agreement with Aura Silver Resources Inc. whereby the companies will jointly earn a 70% interest in the concessions. As a result, Intrepid and Aura Silver may each earn up to 35% each in this project. Intrepid acts as operator and began field activities in January 2007.

Aura Silver has funded the first year exploration agreement commitments defined under the Intrepid agreement with Plata Panamericana. Aura and Intrepid are now engaged in equally funding a Phase 1 drilling programme at the project on the Taviche West concession.

Selected samples from veins and old mine dumps contain values up to 94.2 grams per tonne gold and 1,845 grams per tonne silver. The geochemical and textural results suggest an epithermal vein environment that is exposed at relatively high-levels in the northern extent of the vein system and at somewhat lower levels in the south.

The West Taviche Block contains two significant, north-south trending, sub-parallel vein systems: the West and the East. The West system has been traced over 7.0 kilometres and consists of four distinct veins: La Noria, El Viejo, San Antonio, and San Martin. The East system, located about two kilometres east, can be followed along a series of anastamozing veins for about 6.0 kilometres and contains the Portillo, Donaji/Marias and San Jose/Corona vein segments. The northern three kilometres of the East System (the San Jose/Corona segment) is held by Fortuna Silver Mines and Continuum Resources, who announced a 43-101-qualified resource comprising an indicated mineral resource of 1.47 million tonnes grading 262.2 grams per tonne silver and 2.19 grams per tonne gold containing 17.7 million silver equivalent ounces and an inferred mineral resource of 3.9 million tonnes grading 260.6 grams per tonne silver and 2.57 grams per tonne gold containing 49.1 million silver equivalent ounces. The Fortuna Silver project is surrounded by the West Taviche concession. Drilling along the northern boundary of the Fortuna property with Taviche indicates that the on-strike, down plunge extension potential for the San Jose vein system may lie in the northern portion on Intrepid's West Taviche Concession.

For

per

sona

l use

onl

y

39

In addition to the detailed studies along the two known vein systems, a reconnaissance programme has been conducted by Intrepid geologists over the remainder of the West Taviche Block where initial visits have identified several large, prospective areas. Analytical results from samples collected in these areas are currently pending. A reconnaissance programme has also been conducted over the East Taviche Block where the Mexican Government geological service has identified numerous gold-silver bearing vein prospects.

Intrepid, together with its partner, has completed the permitting process for a proposed Phase 1 drilling programme at Taviche totalling 3,800 metres. This programme is planned to commence in the fourth quarter of 2007.

El Salvador

San Cristobal Project (100%)

The San Cristobal District encompasses approximately 250 square kilometres and has been aggressively explored by Intrepid since 1997. Intrepid has a 10-year history in the region and is a significant mineral title holder in the country. Exploration at San Cristobal is pending a review based on the results of drill programmes conducted in the latter part of 2006 and environmental permit approval for drilling at the San Pedro concession. Intrepid is planning further exploration work at the Minitas prospect based on the positive results of drilling reported in 2006 including hole MN01-06: 2.75 metres at 112.90 metres depth grading 20.58 grams per tonne gold and 1,056 grams per tonne silver, and 6.50 metres at 126.10 metres depth grading 7.95 grams per tonne gold and 295 grams per tonne silver, and hole MN06-06: 4.90 metres at 47.05 metres depth grading 10.11 grams per tonne gold and 167 grams per tonne silver.

Potonico Joint Venture (50% joint venture interest)

The Potonico property consists of 4 mineral concessions covering approximately 150 square kilometres in area. These concessions are held in a joint venture with Tribune Uranium Corp. Tribune is a successor company to Aura Silver Resources Inc. The companies effected a transaction in August 2007 whereby Aura’s fifty percent interest was transferred to Tribune. The exploration concessions subject to the agreement are Arcatao, Santa Catarina, Cerro Petancol and Ojo Blanco) Initial exploration via mapping and sampling has delineated stockwork veins over an area of approximately 10 square kilometres at the intersection of two regional scale structural corridors. Anomalous gold values ranging from trace amounts to 55 grams per tonne gold have been obtained from the system. The vein characteristics and low-sulphidation textures are representative of epithermal gold deposits and vary in thickness from a few tens of centimetres to over eight metres. Individual veins can be traced for up to two kilometres along strike.

In late September 2005 members of an Intrepid Aura joint venture field crew encountered members of a local community at one of the explorations sites. This group objected to the presence of the workers in the area. After meeting with the leadership of this group the companies decided to limit their activities for the balance of the year, during which period the partners could ascertain the best means of creating a stronger community relationship. Aura, in association with Intrepid personnel, met with local community groups and institutions with a view to creating a social framework for exploration and development in the Potonico area. A process

For

per

sona

l use

onl

y

40

involving improved communication of exploration activities, community participation in project monitoring and involvement in community based development projects during the exploration stage has been proposed and discussed in several of the seven municipalities located within the limits of the Potonico District exploration licenses. In 2007, Aura elected to withdraw from the joint venture and Intrepid continued with these efforts. Tribune acquired Aura’s joint venture interest with a pledge to commit financial and human resources to continuing this effort.

Discussions with the local community leadership, regulatory and government authorities continue with a view to implementing a continuation of early stage exploration programmes in the area.

Australia

Ashburton regional exploration

Intrepid has a substantial exploration position in the Ashburton goldfield in the vicinity of the Paulsens gold mine, holding over 20 individual mining and exploration tenements. Intrepid is exploring a number of nearby prospects to identify satellite deposits which could be mined and shipped to Paulsens for processing. These prospects include the Belvedere, Gossan Ridge and Gossan Hill group of tenements.

Intrepid is conducting a review of the Ashburton tenement package using their personnel with experience with Carlin style orebodies. This review is providing a different perspective for approaching future exploration in the area.

Recent exploration has defined extensive areas of structurally controlled silicification and brecciation with potential to host Carlin-style, sediment hosted, disseminated gold deposits. These new targets can extend for up to several kilometres along strike and can be up to 150 metres wide. Several areas have been recommended for more detailed work. Follow-up work will include detailed sampling and mapping and drilling where warranted.

5.3 Financial overview

5.3.1 Summary financial position

Set out below is a summary of Intrepid’s financial results extracted from its Half Year Financial Report and Management’s Discussion and Analysis for the period ended 30 June 2007 released on 14 August 2007. The Intrepid Annual Report for the year ended 31 December 2006, released on 27 April 2007, contains details on the accounting policies and detailed discussion and analysis by Intrepid’s management of the financial results for the respective period. Copies of Intrepid’s financial reports are available on www.asx.com (ASX Code: IAU).

Intrepid had a consolidated loss after tax from continuing operations for the six months ended 30 June 2007 of US$27.0 million (six months ended 30 June 2006: US$3.5 million profit). F

or p

erso

nal u

se o

nly

41

The result for the six months to June 2007 included an impairment charge of US$30 million against the business combination that took place in July 2006 between NuStar Mining Limited and Intrepid Minerals Corporation. Intrepid was required to allocate the accounting value attributed from the merger. The AIFRS value assigned was US$66.2 million which was based on the share price around the date the merger was completed. The Canadian GAAP value attributed would have been based on the value of the shares around when the merger was announced which was US$36.7 million. Foreign exchange movements resulted in an increase in the attributed value. With completion of the feasibility study for the Casposo gold-silver project, the Intrepid board determined that the AIFRS accounting carrying value should be reduced by US$30 million with a corresponding reduction in the associated deferred tax liability of US$9 million.

Operating performance at the Paulsens gold mine for the quarter to June 2007 saw production of 15,854 ounces compared to 22,148 ounces in the previous June 2006 quarter.

As at 30 June 2007, Intrepid’s cash holding was US$1.1 million and it had total borrowings of US$17.1 million (including a secured debt facility of US$12 million with Westpac Banking Corporation and US$4.1 million relating to a convertible note,convertible into equity by 31 December 2008, such convertible note having subsequently been converted in September 2007).

Until the Westpac debt is extinguished no later than 31 December 2008, Intrepid requires separate funding of its America’s operations. During the period prior to implementation of the Proposed Merger, Intrepid and Emperor have made allowance for C$3.1million to be raised by Intrepid for these purposes and such funds may be raised by way of equity or loan arrangements between Intrepid (or Intrepid Minerals Corporation) and Emperor.

5.3.2 Hedging

Intrepid’s gold hedging commitment profile as at 30 June 2007 is summarised in the table below. Gold hedges will be delivered over the period to December 2008. The mark to market value of the forward gold hedge contracts at 30 June 2007 was an unrealised loss of US$9.8 million. The contracts are timed to mature monthly.

Forward sales Ounces A$/ounce

2007 (remaining 6 months) 24,669 A$627 2008 44,571 A$627 Total contracts 69,240 A$627

For

per

sona

l use

onl

y

42

5.3.3 Material changes in Intrepid’s financial position since 30 June 2007

On 28 August 2007, Intrepid Minerals Corporation (a wholly owned subsidiary of Intrepid) executed a loan agreement with Emperor for a loan of A$5 million to Intrepid Minerals Corporation to be used to meet working capital, corporate and exploration, capital development and debt repayment.

On 20 September 2007, the Claymore Convertible Note for A$5.3 million was exercised. The conversion fully extinguished all obligations under the Note and has resulted in the issue of 17,199,176 ordinary shares and 2,000,000 options to acquire ordinary shares. The option exercise price is A$0.36 with an expiry date of 20 September 2009.

5.4 Capital structure and ownership

As at 15 October 2007, issued securities consisted of:

181,573,419 shares, comprising 163,714,266 ordinary shares of Intrepid, 17,859,153 exchangeable shares of Intrepid NuStar Exchange Corporation (TSX code: IXN), and 1 special voting share of Intrepid1;

9,079,839 unlisted options to acquire ordinary shares; and

7,728,000 unlisted warrants to acquire ordinary shares.

1 The exchangeable shares are held by Canadian former shareholders of Intrepid Minerals Corporation who elected to defer capital gains tax consequences of the July 2006 merger. The special voting share in Intrepid facilitates the holders of exchangeable shares voting at Intrepid meetings with substantially the same rights as the holders Intrepid Share. All remaining exchangeable shares will compulsorily convert into ordinary shares no later than July 2009.

As at the date of this Prospectus, the substantial shareholders in Intrepid were:

Sprott Asset Management 7.6%

Lion Selection Limited 5.0%

For

per

sona

l use

onl

y

43

5.5 Recent Intrepid share price performance

The following chart shows the closing price of Intrepid shares on the ASX and TSX over recent times.

$0.20

$0.25

$0.30

$0.35

$0.40

$0.45

$0.50

$0.55

$0.60

$0.65

$0.70

Mar 07 Apr 07 May 07 Jun 07 Jul 07 Aug 07 Sep 07 Oct 07

Shar

e Pr

ice

(A$)

ASX TSX

Intrepid Share Price Performance

Source: Bloomberg

The closing price of Intrepid shares on the ASX and the TSX shortly before the date of this Prospectus was A$0.36 and C$0.34 respectively on 16 October 2007. During the twelve months ended 16 October 2007:

the highest recorded daily closing price for Intrepid shares on the ASX was A$1.045 on 10 November 2006 ; and

the lowest recorded daily closing price for Intrepid shares on the ASX was A$0.23 on 31 August 2007.

The last recorded sale price for Intrepid Shares on the ASX before the public announcement of the Proposed Merger was A$0.285 on 17 September 2007.

5.6 Board and senior management 5.6.1 Directors

Colin G. Jackson M.Sc, B.Sc (Hons), Grad Dip Bus Admin, DIC

Non-executive Chairman

Mr Jackson is a metallurgist-mineral process design engineer graduate of Birmingham University and the Royal School of Mines, Imperial College, London University.

After ten years’ mine design and operating experience with Selection Trust Limited and RGC Limited, Mr Jackson became Director of Research and Corporate for McIntosh Securities Ltd (now known as Merrill Lynch Australia) where he raised equity for a significant number of gold companies, including the initial public

For

per

sona

l use

onl

y

44

offerings of Kidston Gold Mines and Placer Pacific Limited, over a twelve year period. The next eight years were dedicated to communications and investor relations roles at Newcrest Mining Limited and Normandy Mining Limited where he was Group Executive Corporate.

Mr Jackson is Chairman of Red 5 Limited and a non-executive Director of EIM Capital Managers Pty Limited. Mr. Jackson was a non-executive director of Terramin Australia Limited from October 2003 to December 2005, a role relinquished to become Chairman of that company’s technical committee.

Mr Jackson is a non-executive director, Chairman of the Board and Chairman of the Audit and Nomination Committees, and a member of the Strategy Committee.

Laurence W. Curtis PhD, P.Geo

Executive director

Dr Curtis is President and Chief Executive Officer of Intrepid. Dr Curtis is a geologist (PhD, 1974, Toronto) with over thirty five years of international experience in the natural resource sector with direct experience in Africa, Greenland, North, South and Central America, and in the Pacific. He has spent over fifteen years working in the Caribbean Basin and has been responsible for several epithermal discoveries during this time.

Dr Curtis was President of Curtis & Associates, a mineral resource consulting firm, from 1980 to 1996. He founded Intrepid Minerals Corporation in 1995 and was President, Chief Executive Officer and director for eleven years.

Dr Curtis is a member of the Association of the Professional Geoscientists of Ontario and is currently a director of High River Gold Mines Ltd and Alturas Minerals Corporation.

Dr Curtis is an executive director, Chairman of the Strategic Review Committee and a member of the Nomination Committee.

Brett T. Lambert B.Sc (Mining Eng), MAusIMM

Non-executive director

Mr Lambert is a mining engineer with over twenty five years’ experience in mining operations and project development. From 1983 he worked for Western Mining Corporation in various operational roles. In 1989 Mr Lambert joined Herald Resources where he was responsible for the establishment of the Three Mile Hill gold mine, later becoming Resident Manager of Herald’s Coolgardie Operations.

In 1994 Mr Lambert began a career of almost ten years with Western Metals, holding the positions of General Manager Development, Executive General Manager Operations and Managing Director of Padaeng Industry PCL, a Thai based zinc mining and smelting company.

Mr Lambert joined NuStar Mining in February 2004 as General Manager and was appointed Chief Executive Officer of NuStar Mining in April 2005.He became an executive director and Chief Operating Officer after the merger with Intrepid in July

For

per

sona

l use

onl

y

45

2006. Mr. Lambert retired as an executive of Intrepid on 16 March 2007 and became a non-executive director at that time. Mr Lambert is also currently Managing Director of Thundelarra Exploration Limited.

David D. Davidson M.Sc, MBA

Non-executive director

Mr Davidson is a Partner and Senior Analyst of Paradigm Capital Inc and also a director of High River Gold Mines. He was previously Vice President and Director of Newcrest Capital Inc. From 1990–1997, Mr Davidson was a managing director of CIBC Wood Gundy Inc. From 1987-1990 Mr Davidson was President of D.D. Davidson and Associates Ltd, providing geological and geophysical services to the mining industry principally with respect to South America and Africa. From 1971 to 1987, Mr Davidson was Senior Geologist with Placer Dome Ltd, a company involved in base metal and gold exploration worldwide.

Mr Davidson is a fellow in the Geological Association of Canada and a member of the Canadian Institute of Mining and Metallurgy and the Prospectors and Developers Association of Canada.

Mr Davidson is a non-executive director and a member of the Remuneration and Risk Committees.

Kevin A. Dundo LLB, B.Com, FCPA

Non-executive director

Mr Dundo practises as a lawyer in Perth. He specialises in the commercial and corporate areas (in particular, mergers and acquisitions) with experience in the mining sector, the service industry and the financial services industry. Mr Dundo is a member of the Law Society of Western Australia and the Law Council of Australia, a Fellow of the Australian Society of Certified Practising Accountants and a member of the Australian Institute of Company Directors. He is a non-executive director of Imdex Limited, Computer Corp Limited and Sino Gas & Energy Limited. Mr Dundo gained a Bachelor of Commerce from the University of Western Australia and a Bachelor of Laws from the Australian National University.

Mr Dundo is a non-executive director and Chairman of the Remuneration Committee.

David V. Mosher B.Sc

Non-executive director

Mr Mosher has twenty-five years of experience as a geologist with direct experience in Australia, Canada, the United States, Asia and Africa. Over the past decade, he has been active in the reconstructing and refinancing of a number of junior resource companies, both private and public. As a project manager for Pancontinental Mining, Mr Mosher led the team that discovered the world’s largest uranium deposit, the Jabiluka deposit in Australia.

Mr Mosher was co-founder of Intrepid Minerals Corporation with Mr Curtis. Mr Mosher has held the position of President and Chief Executive Officer of High River

For

per

sona

l use

onl

y

46

Gold Mines Ltd since 1992 and is a director of RosCan Minerals Corporation, Equinox Minerals Limited, Pancontinental Uranium Corporation and High River Acquisition Corporation.

Mr Mosher is a non-executive director and a member of the Risk Management, Nomination, Audit and Strategic Review Committees.

Daniel G. Vanin B.Eng

Non-executive director

Mr Vanin has more than thirty years of experience in the international mining industry in both open pit and underground mining operations and an extensive corporate development background. He has significant mining and development expertise in Latin America, particularly in Argentina where he was responsible for the feasibility study and environmental permitting for the El Pachon Project in San Juan Province, located 100 km from Intrepid’s Casposo Project.

Mr Vanin has held senior management and technical positions (General Manager and Managing Director) with major international mining companies including Lac Minerals Ltd, Glencore International AG, Cambior Inc, and RBG Resources PLC of Bolivia. Mr Vanin is currently Executive Vice President and Chief Operating Officer of High River Gold Mines Ltd and is a director of OJSC Buryatzoloto and Somita S.A. Burkina Faso.

Mr Vanin is a non-executive director and a member of the Audit and Remuneration Committees.

5.6.2 Senior Management

Ann Candelario

Vice President, Investor Relations

Ms Candelario has more than fifteen years experience in the investor relations field. She joined Intrepid in September 2006. Previously, she directed and managed the investor relations programme at International Network Services Inc., a network consulting and services company which was acquired by Lucent Technologies. In 1999, she participated in the successful initial public offering of CacheFlow, Inc., a Silicon Valley-based network appliance company.

Derek J. Humphry B.Com, ACA

Chief Financial Officer

Mr Humphry is a chartered accountant with sixteen years experience. He joined Intrepid Mines (previously NuStar Mining) in November 2004 from LionOre Australia where he held the position of Financial Controller. Mr Humphry completed four years with chartered accounting firm Arthur Andersen before moving to the building products division of Boral and then entering the mining industry in finance roles with Western Australian based and internationally focused industrial mineral sands, gold and nickel companies.

For

per

sona

l use

onl

y

47

Rod Jacobs B.Sc (Mining Eng)

General Manager, Paulsens Gold Mine

Rod Jacobs has in excess of twenty years’ experience as a mining engineer, working as an underground manager, mining manager and resident manager for various companies including Asarco Gold, Dominion Mining, Coeur Gold (NZ) Ltd, Gold Mines of Sardinia, Cable Sands and Croesus Mining. Rod became General Manager at Paulsens in 2005 and has since taken up the position of General Manager Operations, Australia for Intrepid Mines.

Bill McGuinty P.Geo.

Vice President, Exploration

Mr McGuinty is a graduate of the University of Ottawa. He is a geologist who has worked in mineral exploration with junior exploration companies and consulting firms for over 25 years in Canada and overseas. From 1988 to 1998 he held positions as Exploration Manager for Queenston Mining Inc. in Canada, resident country manager in Cuba for Joutel Resources Limited and in Honduras for Mar-West Resources Ltd. during the discovery and resource development of the San Martin gold deposit now owned by Goldcorp. Prior to joining Intrepid, Mr McGuinty worked as industry liaison for the Ontario Ministry of Northern Development and Mines promoting Ontario mineral resources and government/industry initiatives. He is a member of the Association of Professional Geoscientists of Ontario and the Association of Professional Engineers and Geoscientists of Saskatchewan. He is fluent in Spanish and French.

Donna McLean B.A.

Treasurer

Prior to joining Intrepid, Ms McLean served as Chief Financial Officer of Intrepid Minerals Corporation from April 2005 to July 2006. From 1999 to 2005, Ms McLean was founder and principal of DMc Corporate Services, a provider of accounting and administrative services for small to mid-sized businesses in the Greater Toronto Area. Prior to that she held senior management positions in a number of publicly-traded, private and not-for-profit organisations including that of V.P. Finance and Treasurer for several mining companies.

Kathleen E. Skerrett B.Com, LLB.

Canadian Corporate Secretary

Ms Skerrett is a partner with Gardiner Roberts LLP. She has been practising in the fields of corporate and securities law since being called to the bar in the Province of Ontario in 1996. Ms Skerrett was Corporate Secretary as well as counsel to Intrepid Minerals Corporation prior to the merger in July 2006 and has continued in those roles with Intrepid Mines Limited.

For

per

sona

l use

onl

y

48

5.7 Corporate Governance

Intrepid is committed to a high standard of corporate governance and has implemented the majority of the Principles of Good Corporate Governance published by the Australian Stock Exchange Corporate Governance Council, the Toronto Stock Exchange and the Canadian Securities Administrators.

Complete details of Intrepid’s Corporate Governance Policies are posted on its website www.intrepidmines.com.

5.8 Litigation

Intrepid is not currently involved in any litigation.

5.9 Continuously disclosing entity

Intrepid is a company listed on ASX and TSX and is a reporting issuer in the provinces of Alberta, British Columbia, Manitoba, Nova Scotia and Ontario in Canada (the "Jurisdictions"). Intrepid is subject to the periodic and continuous disclosure requirements of the Corporations Act, the securities act in each of the Jurisdictions and the Listing Rules of the ASX and the TSX. Broadly, these obligations require Intrepid to announce price sensitive information as soon as it becomes aware of the information, subject to exceptions for certain confidential information.

A list of Intrepid’s continuous disclosure notices which have been lodged with ASX, www.asx.com (and in the case of documents also required to be lodged on SEDAR, on www.sedar.com) since its last annual report was released is set out in Annexure C of this Prospectus.

Copies of the following documents may be downloaded from ASX's website at: www.asx.com:

Intrepid’s Half Year Financial Report and Management’s Discussion and Analysis for the period ended 30 June 2007;

Intrepid’s 2006 Annual Report for the period ended 31 December 2006;

any continuous disclosure notices given by Intrepid after the release of its last annual report and before lodgement of this Prospectus by ASIC; and

Intrepid’s constitution.

Further announcements concerning developments at Intrepid will also be made available on ASX, www.asx.com (and in the case of documents also required to be lodged on SEDAR, on www.sedar.com) after the date of this Prospectus.

For

per

sona

l use

onl

y

49

6. PROFILE OF THE PROPOSED MERGED ENTITY

This Section contains a summary of the operations of the Proposed Merged Entity (“Merged Entity”) assuming the Proposed Merger is approved by Shareholders and the Court and all conditions precedent are satisfied. An Investigating Accountant's Report in Section 7 of this Prospectus provides pro forma financial information about the Merged Entity.

6.1 Overview of the Merged Entity

The Proposed Merger of Emperor and Intrepid will create an international gold producer, developer and explorer, with a strong balance sheet that is listed on both the ASX and TSX. The Merged Entity will be named Intrepid Mines Limited.

The principal assets of the Merged Entity will be:

the operating Paulsens gold mine in Western Australia (100% interest) – see Section 5;

the Casposo gold/silver development project in Argentina (100% interest) – see Section 5; and

advanced exploration projects at Taviche (Mexico – earning a 35% interest, gold/silver – see Section 5) and Tujuh Bukit Project (Indonesia – earning up to 70% interest, gold/silver/copper – see Section 4).

An indicative map of the Merged Entity’s principal assets is illustrated below.

For

per

sona

l use

onl

y

50

Together with Emperor’s surplus cash and the combined skills of the two management teams, these operations and projects will result in a Merged Entity that is diversified on a geographical and project basis, with a solid platform for future growth.

The Merged Entity’s positive net asset position and ability to secure project finance, will allow the Merged Entity to immediately move forward with corporate objectives, including:

accelerated underground exploration at the Paulsens gold mine;

imminent development of the Casposo gold/silver project and continued examination of early expansion options;

immediate exploration at Taviche and Tujuh Bukit, and an expanded exploration budget of up to approximately A$8.0 million per annum; and

improved capacity to target project and corporate acquisition opportunities.

The Proposed Merger is expected to deliver an expanded production profile and near term increased gold inventory potential, leveraging exposure to the gold price.

6.2 Capital structure and ownership

Under the terms of the Proposed Merger, Shareholders will be offered 1 Intrepid ordinary share for every 4.25 Emperor Shares held. Existing unlisted Emperor employee options will be either cancelled for cash or new Intrepid options issued on equivalent terms and conditions.

Should the Proposed Merger be approved by Shareholders at the Scheme Meeting and subsequently approved by the Court following satisfaction of all other conditions to the Proposed Merger, Intrepid will issue approximately 246 million additional shares to Emperor Shareholders and will acquire a 100% interest in Emperor pursuant to the Scheme.

The capital structure of the Merged Entity will then become:

427,692,389 ordinary shares (including 17,859,153 exchangeable shares of Intrepid NuStar Exchange Corporation (TSX code: IXN) and 1 special voting share of Intrepid 1;

10,126,897 unlisted options to acquire ordinary shares2; and

7,728,000 unlisted warrants to acquire ordinary shares.

1 The exchangeable shares are held by Canadian former shareholders of Intrepid Minerals Corporation who elected to defer capital gains tax consequences of the July 2006 merger. All remaining exchangeable shares will compulsorily convert into ordinary shares no later than July 2009.

2 The unlisted options referred to above as being on issue in the Merged Entity assume the issue of a further 2,450,000 Emperor Options of which only 1,000,000 will be converted in accordance with the Scheme ratio into new Intrepid options, prior to the implementation of the Proposed Merger.

For

per

sona

l use

onl

y

51

As described in the announcement on 18 September 2007 referred to in Section 1 of this Prospectus, Emperor’s 78.72% shareholder, DRD intends to re-focus its attention on opportunities in South Africa and so intends to seek to realise its investment in an orderly manner prior to the Scheme Meeting convened by the Court to approve the Proposed Merger. Emperor has agreed to work with DRD to seek to facilitate such an exit. The Proposed Merger is therefore subject to DRD being able to successfully realise its investment in Emperor prior to this time. As at the date of this Prospectus, there are no other Shareholders who will become substantial shareholders of the Merged Entity as a result of the Proposed Merger being implemented.

6.3 Board and management of the Merged Entity

Management of the Merged Entity will be led by Mr Brad Gordon as Chief Executive Officer and Mr Laurence Curtis as President. The Merged Entity’s head office will be located in Brisbane, Australia and the capital markets and the Americas exploration office will be located in Toronto, Canada.

The board of directors of the Merged Entity will comprise at least three representatives from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman of the Merged Entity.

The existing corporate and operational management teams of Emperor and Intrepid will be integrated into the business of the Merged Entity.

6.4 Emperor Board’s intentions for Emperor post the Scheme Meeting

If the Proposed Merger is approved by the Emperor Shareholders at the shareholders meeting and by the Court, Emperor will become a wholly owned subsidiary of Intrepid pursuant to the Scheme. The Merged Entity intends to replace the existing members of the Emperor Board with nominees of the Merged Entity. It will then be for the reconstituted Emperor Board to determine its intentions as to:

changes to be made to the business of Emperor; and

the future employment of the present employees of Emperor.

If the Proposed Merger is not approved, the Emperor Board will continue to assess its asset portfolio and optimal corporate and management structure on an ongoing basis.

On 10 September 2007, Emperor announced that following a review of its property portfolio, the Emperor Board determined that the Tolukuma Mine in Papua New Guinea does not fit with newly developed future plans for Emperor. Accordingly, Emperor has initiated a divestment process for the mine and a portfolio of associated exploration tenements as described in Section 4.2.1.

For

per

sona

l use

onl

y

52

6.5 Merged Entity Board’s intentions for the Merged Entity post the Scheme Meeting

6.5.1 Overview

The statements of intention contained in this Section 6.5 are based on the information concerning the Merged Entity, its business and the general business environment which is known to Emperor at the time of preparation of this Prospectus. Final decisions will only be reached by the Merged Entity in light of increased knowledge through exposure to the business of the Merged Entity and material information and circumstances at the relevant time. Accordingly, the statements set out in this Section 6.5 are statements of current intentions only, which may change as new information becomes available or circumstances change.

6.5.2 Conduct of business and other corporate matters

If the Proposed Merger is implemented, the Merged Entity’s strengthened balance sheet and ability to secure project finance will allow the Merged Entity proceed with corporate objectives, including:

accelerated underground exploration at the Paulsens gold mine;

development of the Casposo gold/silver project and continued examination of early expansion options;

exploration at Taviche and Tujuh Bukit, and an expanded exploration budget of approximately A$8.0 million per annum; and

targeting project and corporate acquisition opportunities.

6.5.3 Management and employees

The current intention is that the majority of existing corporate and operational management teams of Intrepid and Emperor will be integrated into the business of the Merged Entity. Some redundancies and associated costs may arise as a result of the implementation of the Proposed Merger.

The Merged Entity’s head office will be located in Brisbane, Australia and the capital markets and the Americas exploration office will be located in Toronto, Canada. It is the current intention to close the Perth office of Intrepid.

6.6 Merged Entity financial information

6.6.1 Basis of Preparation

The financial information set out in this section 6.6 comprises historical financial information of Emperor and Intrepid, and the pro forma historical financial information of the Merged Entity as if the proposed merger had occurred at 30 June 2007 in accordance with the recognition and measurement principles prescribed under AIFRS and other mandatory professional reporting requirements in Australia.

Intrepid presents its financial statements in US dollars and Emperor presents its financial statements in Australian dollars. Financial information of the Merged Entity

For

per

sona

l use

onl

y

53

contained within this section is presented in US dollars and for the convenience of prospective investors, the historical financial information of Emperor has been presented in US dollars. The functional and presentation currency of the Merged Entity will be determined on merger completion.

The historical financial information included in this section comprises:

the balance sheet for Emperor as at 30 June 2007 extracted from audited financial statements and converted to US$ using a spot foreign exchange rate at 30 June 2007 of 0.8468; and

the balance sheet for Intrepid as at 30 June 2007 extracted from reviewed financial statements.

The pro forma historical financial information included in this section comprises:

the balance sheet for the Merged Entity as at 30 June 2007 based on the audited balance sheet of Emperor, reviewed balance sheet of Intrepid and pro forma adjustments.

The historical and pro forma historical financial information is presented in an abbreviated form insofar as it does not include all the disclosures and notes required by AIFRS applicable to annual financial reports and notes prepared in accordance with the Corporations Act.

The historical and pro forma historical financial information is supplemented by the significant accounting policies set out in section 6.7.

KPMG Transaction Services (Australia) Pty Limited (“Investigating Accountant”) has prepared an Investigating Accountant’s Report in respect of the pro forma historical Merged Entity balance sheet included in this section. The financial information in this section should be read in conjunction with the Investigating Accountant’s Report included in section 7.

For

per

sona

l use

onl

y

54

6.6.2 Balance sheet

Balance sheets as at 30 June 2007 (US$ million)

Emperor (1)

Emperor Pro forma

adjustments

EmperorPro

forma

Intrepid (2)

Intrepid Pro forma

adjustments

Intrepid Pro

forma

Merger adjustments

Pro forma

Merged Entity

Current assets Cash and cash equivalents 6.5 50.9 57.4 1.1 - 1.1 (0.5) 58.0 Trade and other receivables 2.7 (1.0) 1.7 1.1 - 1.1 - 2.8 Inventories 7.4 (7.4) 3.7 - 3.7 - 3.7 Current tax receivable 0.2 - 0.2 - - - - 0.2 Derivative financial instruments 0.8 (0.8) - - - - - - Assets held for sale 117.3 (108.0) 9.3 0.5 - 0.5 - 9.8 Total current assets 134.9 (66.3) 68.6 6.4 - 6.4 (0.5) 74.5 Non current assets Property, plant & equipment 3.5 (1.5) 2.0 11.0 - 11.0 - 13.0 Mining properties - - - 64.3 - 64.3 - 64.3 Deferred tax assets - - - 3.4 - 3.4 - 3.4 Other payables - - - 0.3 - 0.3 - 0.3 Intangible assets - - - - - - 28.4 28.4 Assets held for sale - 1.5 1.5 0.1 - 0.1 - 1.6 Total non current assets 3.5 - 3.5 79.1 - 79.1 28.4 111.0 Total assets 138.4 (66.3) 72.1 85.5 - 85.5 27.9 185.5 Current liabilities Bank overdraft 13.0 (13.0) - - Trade and other payables 7.6 (4.2) 3.4 5.9 (4.1) 1.8 - 5.2 Loans and borrowings 132.8 (132.8) - 13.0 - 13.0 - 13.0 Provisions 0.8 (0.6) 0.2 0.5 - 0.5 - 0.7 Derivative financial instruments - - - 6.2 - 6.2 - 6.2 Liabilities held for sale 18.2 (11.8) 6.4 - - - - 6.4

Total current liabilities 172.4 (162.4) 10.0 25.6 (4.1) 21.5 - 31.5

Non current liabilities Loans and borrowings - - 4.1 - 4.1 - 4.1 Provisions 1.7 (1.6) 0.1 0.4 - 0.4 - 0.5 Derivative financial instruments - - 3.6 - 3.6 - 3.6 Deferred tax liabilities 14.7 14.7 12.8 - 12.8 - 27.5 Liabilities held for sale - - - - - - - Total non current liabilities 16.4 (1.6) 14.8 20.9 - 20.9 - 35.7 Total liabilities 188.8 (164.0) 24.8 46.5 (4.1) 42.4 - 67.2 Net assets (50.4) 97.7 47.3 39.0 4.1 43.1 27.9 118.3 Equity Share capital 227.5 (44.2) 183.3 103.1 4.2 107.3 (108.2) 182.4 Reserves (83.8) - (83.8) 1.2 (0.1) 1.1 83.9 1.2 Retained (losses)/earnings (194.1) 141.9 (52.2) (65.3) - (65.3) 52.2 (65.3) Total Shareholders equity (50.4) 97.7 47.3 39.0 4.1 43.1 27.9 118.3

(1) Financial information has been extracted from the audited financial statements of Emperor at 30 June 2007 and converted to US$ using a spot exchange rate of 0.8468

(2) Financial information has been extracted from the reviewed financial statements of Intrepid at 30 June 2007

For

per

sona

l use

onl

y

55

6.6.3 Pro forma adjustments

The following adjustments have been made to the balance sheets of Emperor and Intrepid as at 30 June 2007 to reflect the impact of the transactions outlined below had they taken place as at that date:

Impact of Proposed Merger

The pro forma information has been prepared assuming the proposed merger had occurred at 30 June 2007 with Emperor shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held. Based on information available at the date of this prospectus and the requirements of accounting standards, Intrepid is assumed to be the acquirer for accounting purposes. The fair value of consideration will be determined by reference to the Intrepid share price at the date of acquisition. For the purposes of the pro forma balance sheet, the consideration is assumed to be US$75.7 million comprising US$75.2 million based on an Intrepid share price of A$0.360 per share at 16 October 2007 being the most recent share price available, and estimated costs attributable to the acquisition of US$0.5 million.

The US$28.4 million difference between the consideration for the acquisition and the net assets of Emperor at 30 June 2007 has been recognised as intangible assets. The Directors are not in a position as at the date of the Offer to assess the fair value of the assets of Emperor being acquired or identify separately identifiable intangible assets. The fair value assessment of Emperor assets will be performed post the acquisition (including identification of any intangible assets acquired) and it is possible that this amount will be allocated to other assets and goodwill of Emperor.

Emperor

Porgera sale

It is assumed that Emperor’s Porgera Mine which was sold in August 2007 was sold as at 30 June 2007 and transactions associated with the sale occurred on that date. This includes the recognition of the:

Disposal of Porgera assets and liabilities which were classified as held for sale at 30 June 2007 and recognition of sale proceeds of US$253.4 million (A$299.2 million);

Repayment of debt and bank overdraft with the proceeds from the disposal;

Capital distribution to shareholders of US$ 44.2 million (A$52.2 million);

Payment of restructuring and bank fees of US$ 7.7 million (A$9.1 million); and

Payment of withholding tax to the PNG IRC on payment of a dividend from DRD Porgera to its parent company of US$3.1 million (A$3.7 million). For

per

sona

l use

onl

y

56

Tolukuma proposed sale

On 10 September 2007 Emperor announced that its holding in the Tolukuma mine in Papua New Guinea did not fit in with newly developed future plans for the Company. Emperor has initiated a divestment process for the mine and a portfolio of associated exploration tenements. Pro forma adjustments have been made to re-classify the Tolukuma assets of US$10.8 million and liabilities of US$6.4 million as held for sale.

Other adjustments

Other pro forma adjustments have been made as follows:

Existing derivative contracts US$0.8 million (A$0.9 million) held by Emperor were closed out after 30 June 2007; and

Expected transaction costs to be incurred by Emperor in respect of the Offer and the proposed merger in the order of US$1.6 million (A$1.9 million) have been adjusted against cash. A deferred tax asset has not been recognised in respect of the transaction costs on the basis its recoverability is uncertain

Intrepid

Convertible Notes

On 20 September 2007, the Claymore Convertible Note for A$5.3 million was exercised. The conversion fully extinguished all obligations of IML under the Note and has resulted in the issue of 17,199,176 ordinary shares and 2,000,000 options to acquire ordinary shares. The option exercise price is A$0.36 with an expiry date of 20 September 2009. An amount of US$4.1 million has been reflected as a pro forma adjustment being the US$ accounting value of the Convertible Note recognised on issue.

6.7 Significant accounting policies

The significant accounting policies which have been adopted in the preparation of the historical and pro forma historical financial information in Section 6.6 are based on the accounting policies of Emperor and Intrepid where applicable. There are no significant differences between the accounting policies of Intrepid and Emperor which would materially impact the historical or pro forma historical financial information presented in Section 6.6.

(a) Basis of preparation

The financial information has been prepared in accordance with the recognition and measurement principles of Australian Accounting Standards (AASBs) (including Australian Interpretations) adopted by the Australian Accounting Standards Board (AASB) and the Corporations Act 2001.

The Financial Information is presented in US dollars, the expected functional currency of the Merged Entity and is prepared on an historical basis. The functional currency and presentation currency of the Merged Entity will be determined on merger completion.

For

per

sona

l use

onl

y

57

(b) Available-for-sale financial assets

Available-for-sale financial assets, comprising principally of marketable equity securities, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date.

Purchases and sales of investments are recognised on the trade-date which is the date on which the entity commits to purchase or sell the asset. Investments are initially recognised at fair value plus transaction costs for all financial assets not carried at fair value through profit or loss. Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired or have been transferred and the entity has transferred substantially all the risks and rewards of ownership.

Available-for-sale financial assets and financial assets through profit and loss are subsequently carried at fair value. Loans and receivables and held-to-maturity investments are carried at amortised cost using the effective interest method. Realised and unrealised gains and losses arising from changes in the fair value of the “financial assets at fair value through profit or loss” category are included in the income statement in the period in which they arise.

If the market for a financial asset is not active (and for unlisted securities), the entity establishes fair value by using valuation techniques. These include reference to the fair values of recent arm’s length transactions, involving the same instruments or other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances.

The entity assesses at each balance date whether there is objective evidence that a financial asset or group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of a security below its cost is considered in determining whether the security is impaired. If any such evidence exists for available-for-sale financial assets, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognised in profit and loss – is removed from equity and recognised in the income statement. Impairment losses recognised in the income statement on equity instruments are not reversed through the income statement.

(c) Mine property, plant and equipment

Property, plant and equipment are carried at cost, including costs associated with properties under development, or at revalued amounts to reflect a permanent diminution in value.

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 merged 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.

The asset’s 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

For

per

sona

l use

onl

y

58

the asset’s carrying amount is greater than its estimated recoverable amount.

Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement.

Where items of plant and equipment have separately identifiable components which are subject to regular replacement, those components are assigned useful lives distinct from the item of plant and equipment to which they relate.

(d) Exploration, evaluation and development expenditure

Exploration costs are charged against earnings as incurred. Significant costs related to property acquisition including undeveloped mineral interests are capitalised until the viability of the area of interest is determined.

When it has been established that an area of interest is commercially mineable and a decision has been made to formulate a mining plan (which occurs upon completion of a positive economic analysis of the area of interest), the costs subsequently incurred to develop a mine on the property prior to the start of mining operations are capitalised.

Capitalised amounts may be written down if future cash flows, including potential sales proceeds, related to the property are projected to be less than the carrying value of the property. If no mineable ore body is discovered, capitalised acquisition costs are expensed in the period in which it is determined that the area of interest has no future economic value.

(e) Rehabilitation and restoration costs

The entity recognises management’s estimate of the fair value of liabilities for asset retirement obligations in the year in which the obligations are incurred. A corresponding increase to the carrying amount of the related asset is recorded and depreciated over the life of the asset. Where a related asset is not easily identifiable with a liability, the change in fair value over the course of the year is expensed. Over time, the liability will be increased each year to reflect the interest element (accretion) reflected in its initial measurement at fair value, and will also be adjusted for changes in the estimate of the amount, timing and cost of the work to be carried out. Actual costs incurred in future years related to the disruption to date could differ materially from the undiscounted future value estimated by the consolidated entity at 30 June 2007. Additionally, future changes to environmental laws and regulations could increase the extent of reclamation and remediation work required to be performed by the entity.

(f) Derivative financial instruments

Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently re-measured to their fair value at each reporting date. Changes in the fair value of any derivative instrument are recognised immediately in the income statement.

The derivative instruments held by the consolidated entity include interest rate swaps, gold forward contracts and gold call options.

(g) Business combinations

For

per

sona

l use

onl

y

59

The purchase method of accounting is used for all business combinations regardless of whether equity instruments or other assets are acquired. Cost of acquisition is determined as the fair value of the assets given up, shares issued or liabilities undertaken at the date of acquisition plus incidental costs directly attributable to the acquisition. Where equity instruments are issued in an acquisition, the value of the instruments is their fair value as at the acquisition date. Transaction costs arising on the issue of equity instruments are recognised directly in equity.

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost of acquisition over the fair value of the entity’s share of the identifiable net assets acquired is recorded as mine properties and development. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognised directly in the income statement, but only after a reassessment of the identification and measurement of the net assets acquired.

(h) Stripping costs

Mining costs incurred related to the removal of waste rock prior to the operating phase of the mine are capitalised (commonly referred to as “pre-stripping costs”)

For

per

sona

l use

onl

y

KPMG Transaction Services (Australia) Pty Limited ABN: 65 003 891 718 Australian Financial Services Licence No. 245402 Riparian Plaza 71 Eagle Street Brisbane Qld 4000 GPO Box 223 Brisbane Qld 4001 Australia

Telephone: +61 7 3233 3111 Facsimile: +61 7 3233 3100 www.kpmg.com.au

7. INVESTIGATING ACCOUNTANT’S REPORT

The Directors Emperor Mines Limited Level 1 WBM Building 490 Upper Edward St Spring Hill QLD 4004

The Directors DRD (Offshore) Limited 14/15 Mount Havelock Douglas IM1 2QG Isle of Man

18 October 2007

Dear Sir

Investigating Accountant’s Report and Financial Services Guide

Investigating Accountant’s Report

Introduction

KPMG Transaction Services (Australia) Pty Limited (“KPMG Transaction Services”) has been engaged by Emperor Mines Limited (“EML”) and DRD (Offshore) Limited (“DRD”) to prepare this report for inclusion in the Prospectus to be dated 18 October 2007, and to be issued by EML and DRD in respect of the proposed offer of 823,291,603 shares in EML by DRD.

Expressions defined in the Prospectus have the same meaning in this report.For

per

sona

l use

onl

y

Emperor Mines LimitedInvestigating Accountant’s Report and Financial

Services Guide18 October 2007

Financial information

KPMG Transaction Services has been requested to prepare a report covering the pro forma historical Merged Entity balance sheet as at 30 June 2007 as disclosed in Section 6.6.2 of the Prospectus.

The pro forma historical Merged Entity balance sheet has been derived from: • the balance sheet of EML as at 30 June 2007, as extracted from the financial

statements of EML for the year ended 30 June 2007 and converted to US$ using a spot exchange rate of 0.8468; and

• the balance sheet of Intrepid Mines Limited (“IML”) as at 30 June 2007, as extracted from the financial statements of IML for the half year ended 30 June 2007,

after adjusting for the pro forma transactions and/or adjustments described in section 6.6.3 of the Prospectus.

The financial statements of EML for the year ended 30 June 2007 were audited by KPMG in accordance with Australian Auditing Standards. The opinion issued to the members of EML relating to those financial statements was unqualified.

The financial statements of IML for the half year ended 30 June 2007 were reviewed by IML’s external auditor in accordance with Australian Auditing Standards. The opinion issued to the members of IML relating to those financial statements was unqualified, but included an emphasis of matter in respect of a material uncertainty regarding continuation as a going concern.

The directors of EML are responsible for the preparation and presentation of the pro forma historical Merged Entity balance sheet, including the determination of the pro forma transactions and/or adjustments.

The pro forma historical Merged Entity balance sheet is presented in an abbreviated form insofar as it does not include all of the disclosures required by the Australian Accounting Standards applicable to annual financial reports prepared in accordance with the Corporations Act.

For

per

sona

l use

onl

y

62

Emperor Mines LimitedInvestigating Accountant’s Report and Financial

Services Guide18 October 2007

Scope

We have reviewed the pro forma historical Merged Entity balance sheet in order to report whether anything has come to our attention which causes us to believe that the pro forma historical Merged Entity balance sheet, as set out in section 6.6.2 of the Prospectus, does not present fairly the pro forma historical financial position of the Merged Entity as at 30 June 2007:

• on the basis of the pro forma transactions and/or adjustments described in section 6.6.3 of the Prospectus; and

• in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards (including the Australian Accounting Interpretations), and accounting policies to be adopted by the Merged Entity disclosed in section 6.7 of the Prospectus.

Our review has been conducted in accordance with Australian Auditing Standard AUS 902 “Review of Financial Reports”. We made such enquiries and performed such procedures as we, in our professional judgement, considered reasonable in the circumstances, including:

• review of the extraction of the balance sheet of EML as at 30 June 2007 from the

financial statements of EML for the year ended 30 June 2007;

• review of the conversion of the balance sheet of EML as at 30 June 2007 to US$ using a spot exchange rate of 0.8468;

• review of the extraction of the balance sheet of IML as at 30 June 2007 from the financial statements of IML for the half year ended 30 June 2007;

• consideration of the pro forma transactions and/or adjustments made to the historical financial information;

• consideration of work papers, accounting records and other documents;

• a comparison of consistency in application of the recognition and measurement principles in Australian Accounting Standards (including the Australian Accounting Interpretations), and the accounting policies to be adopted by the Merged Entity disclosed in section 6.7 of the Prospectus; and

• enquiry of directors, management and others.

The procedures do not provide all the evidence that would be required in an audit, thus the level of assurance provided is less than given in an audit. We have not performed an audit and, accordingly, we do not express an audit opinion. F

or p

erso

nal u

se o

nly

63

Emperor Mines LimitedInvestigating Accountant’s Report and Financial

Services Guide18 October 2007

Qualification

At the date of this report, control of EML has not passed to IML. Hence, the fair value of the consideration to be paid cannot be determined by IML. In addition, IML has not had sufficient access to the operations, information and management of EML to complete its assessment of the fair values of the assets, liabilities and contingent liabilities of EML to be acquired. Consequently, IML has been unable to record the proposed acquisition of EML in accordance with AASB 3 “Business Combinations”. Therefore, in relation to the pro forma historical financial information, IML has not been able to determine the fair value adjustments that may be required to recognise the identifiable assets, liabilities and contingent liabilities of EML, or to determine the goodwill arising on the acquisition of EML.

Review statement

Based on our review, which is not an audit, except for the effects on the pro forma historical Merged Entity balance sheet of the matter referred to in the qualification paragraph, nothing has come to our attention which causes us to believe that the pro forma historical Merged Entity balance sheet, as set out in section 6.6.2 of the Prospectus, does not present fairly the pro forma historical financial position of the Merged Entity as at 30 June 2007:

• on the basis of the pro forma transactions and/or adjustments described in section 6.6.3 of the Prospectus; and

• in accordance with the recognition and measurement principles prescribed in Australian Accounting Standards (including the Australian Accounting Interpretations), and accounting policies to be adopted by the Merged Entity disclosed in section 6.7 of the Prospectus.

Independence

KPMG Transaction Services does not have any interest in the outcome of the issue and the proposed Prospectus, other than in connection with the preparation of this report and participation in due diligence procedures for which normal professional fees will be received. KPMG is the auditor of EML and DRD and from time to time, KPMG also provides EML and DRD with certain other professional services for which normal professional fees are received.

Responsibility

KPMG Transaction Services 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, KPMG Transaction Services makes no representation regarding, and takes no responsibility for, any other statements, or material in, or omissions from, the Prospectus.

For

per

sona

l use

onl

y

64

Emperor Mines LimitedInvestigating Accountant’s Report and Financial

Services Guide18 October 2007

General advice warning

This 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 or needs.

Yours faithfully

Robert S Jones

Director

For

per

sona

l use

onl

y

KPMG Transaction Services (Australia) Pty Limited ABN: 65 003 891 718 Australian Financial Services Licence No. 245402 Riparian Plaza 71 Eagle Street Brisbane Qld 4000 GPO Box 223 Brisbane Qld 4001 Australia

Telephone: +61 7 3233 3111 Facsimile: +61 7 3233 3100 www.kpmg.com.au

Financial Services Guide Dated 18 October 2007

KPMG Transaction Services

KPMG Transaction Services (Australia) Pty Limited ABN 65 003 891 718 (“KPMG Transaction Services” or “we” or “us” or “ours” as appropriate) holds an Australian Financial Services Licence (“AFSL”) issued by the Australian Securities and Investment Commission on 11 March 2004. Our AFSL number is 245402.

We have been engaged by Emperor Mines Limited (“EML”) and DRD (Offshore) Limited (“DRD“) to issue general financial product advice, about EML‘s financial products, in the form of an Investigating Accountant’s Report to be provided to you. We are required to include this FSG in our Report because we have authorised the product issuer to include our Investigating Accountant’s Report in the Prospectus for EML’s financial products.

Purpose of the FSG

The purpose of this FSG is to:

• help you decide whether to consider the Investigating Accountant's Report;

• contain information about remuneration to be paid to us in relation to the Investigating Accountant's Report;

• contain information on the financial services we are authorised to provide under our AFSL; and

• contain information on how you can complain against us.

Financial services we are licensed to provide

Our AFSL authorises us to provide financial product advice in relation to interests in managed investment schemes (excluding investor directed portfolio services) and securities (such as shares and debentures) to wholesale and retail clients.

General Financial Product Advice

In the Investigating Accountant's Report, we provide general financial product advice, not personal financial product advice. It has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on any advice contained in the Investigating Accountant's Report.

For

per

sona

l use

onl

y

66

Fees, commissions and other benefits

We charge fees for providing reports. These fees are agreed with, and paid by, the product issuer. Fees are agreed on either a fixed fee or a time cost basis. In this instance, EML has agreed to pay us in the range of $25,000 to $30,000 for providing the Investigating Accountant’s Report.

Except for the fees referred to above, neither KPMG Transaction Services, nor its representative, or any of its employees, involved in the provision of the report, receive any pecuniary or other benefits, directly or indirectly, for or in connection with, the provision of the Investigating Accountant's Report.

All our employees receive a salary and our directors or employees may receive partnership distributions from KPMG or bonuses based on overall productivity, but not directly in connection with any engagement for the provision of a report.

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

Associations and relationships

Through a variety of corporate and trust structures, KPMG Transaction Services is ultimately wholly owned by, and operates as part of, KPMG’s Australian professional advisory and accounting practice. Our directors may be partners in KPMG’s Australian partnership. From time to time KPMG Transaction Services or KPMG and/or KPMG related entities may provide professional services, including audit, tax and financial advisory services, to financial product issuers in the ordinary course of its business.

Complaints

If you have a complaint, please raise it with us. All complaints must be in writing, addressed to The Complaints Officer, KPMG Transaction Services, PO Box H67, Australia Square, Sydney NSW 1213. When we receive a written complaint we will record the complaint, acknowledge receipt of the complaint within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

If you are not satisfied with the outcome of the above process, or our determination, you have the right to refer the matter to the Financial Industry Complaints Service Limited (“FICS”). FICS is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry. Further details about FICS are available at the FICS website: www.fics.asn.au. FICS can also be contacted by telephone on 1300 78 08 08.

Contact details

You may contact us using the details set out at the top of our letterhead on page 1 of this FSG. F

or p

erso

nal u

se o

nly

8. TAX IMPLICATIONS

Emperor has requested Price Waterhouse Coopers to provide a taxation opinion for Emperor Shareholders on the proposed Scheme of Arrangement with Intrepid for inclusion in the scheme booklet. This taxation opinion is included in its entirety in this section 8 on the pages that follow.

For

per

sona

l use

onl

y

PricewaterhouseCoopers ABN 52 780 433 757 Riverside Centre 123 Eagle Street BRISBANE QLD 4000 GPO Box 150 BRISBANE QLD 4001 DX 77 Brisbane Australia www.pwc.com/au Telephone +61 7 3257 5000 Facsimile +61 7 3257 5999 Direct Phone 07 3257 8526 Direct Fax 07 3031 9275

The Directors Emperor Mines Limited Level 1, WBM Building 490 Upper Edward Street SPRING HILL QLD 4004

5 October 2007 Dear Directors Taxation Opinion Scheme of Arrangement with Intrepid Mines Limited We refer to your request for the preparation of a Taxation Opinion for the Shareholders of Emperor Mines Limited (“Emperor”) for inclusion in the Scheme Booklet to be dated on or about [10 October] 2007 to be provided to the Shareholders of Emperor in relation to the Scheme of Arrangement with Intrepid Mines Limited (“Intrepid”). 1.0 Executive Summary The key Australian income tax implications in relation to the proposed arrangements between Emperor and Intrepid are summarised as follows: • The Capital Gains Tax (“CGT”) consequences upon the sale of Shares in Emperor by

Shareholders to Intrepid will need to be considered. To the extent that the market value of the shares received differ from the CGT cost base or reduced cost base, a capital gain or capital loss respectively may arise.

• However, to the extent that Intrepid Shares are received as consideration in relation to the

sale of Emperor Shares, a Shareholder may elect to obtain rollover relief under the CGT scrip for scrip rules. On this basis, any capital gain realised by Shareholders on the sale of Emperor Shares to Intrepid may be deferred until the Intrepid Shares received are sold or otherwise dealt with for CGT purposes. Under the scrip for scrip rollover, the CGT cost base of the Intrepid Shares received will be equal to the CGT cost base of the Emperor Share exchanged (on a proportional basis) and the Intrepid Shares received will have a deemed acquisition date which corresponds to the relevant Emperor Shares exchanged for CGT purposes. F

or p

erso

nal u

se o

nly

• The Australian tax implications associated with owning Intrepid Shares (for example in relation to dividends received and upon a future sale) will be similar to the current ownership of Emperor Shares.

2.0 Scope of Taxation Opinion This Taxation Opinion provides a general summary of the Australian taxation position of Australian resident Shareholders of Emperor in relation to the proposed acquisition by Intrepid of all the Ordinary Shares in Emperor (the “Merger Proposal”). We have considered within the scope of our opinion only the Australian Income Tax, CGT and Goods and Services Tax (“GST”). We have not considered any New South Wales, Western Australia or Papua New Guinea Stamp Duty in providing this opinion. In providing this opinion, PricewaterhouseCoopers has relied upon certain facts set out in the Scheme Booklet, that have not been independently reviewed or verified by PricewaterhouseCoopers. This Taxation Opinion has been prepared for the purposes of the Scheme Booklet and should be read in conjunction with the Scheme Booklet. The taxation summary contained in this Taxation Opinion regarding the Australian tax considerations does not purport to be a complete analysis of the potential tax consequences of the Merger Proposal, and is intended as a general guide to the Australian tax implications only. It applies to Australian resident Emperor Shareholders who are individuals, trustees, companies or complying superannuation funds and who hold their Emperor Ordinary Shares (“Emperor Shares”) on capital account. The summary does not apply to Emperor Shareholders who are not residents of Australia for tax purposes or who hold their Emperor Shares as trading stock or on revenue account, nor does it apply to those who hold Emperor Options. The taxation summary contained in this Taxation Opinion should not be a substitute for advice from an appropriate professional adviser having regard to the Shareholder’s individual circumstances. All Shareholders are strongly advised to obtain their own professional advice on the tax implications based on their own specific circumstances. The comments below are based on our opinion of the law and understanding of the practice of the tax authorities in Australia as at the date of this document. The law is complex and subject to change periodically as is the interpretation by the courts and the Australian Tax Office (“ATO”). We have not sought to have our opinion ruled upon by the ATO and therefore there is a risk that the ATO may not agree with our opinion or aspects of it. 3.0 Taxation Summary for Ordinary Shareholders We have been advised that pursuant to the Merger Proposal each Emperor Shareholder will be entitled to receive consideration for the transfer of their Emperor Shares to Intrepid in the form

For

per

sona

l use

onl

y

70

of Intrepid Ordinary Shares (“Intrepid Shares”). The Australian tax implications for Emperor Shareholders in relation to this arrangement are summarised below. 3.1 Disposal of Shares Pursuant to the Merger Proposal, Intrepid will acquire 100% of the Emperor Shares. Emperor Shareholders will receive Intrepid Shares (proposed to be 1 Intrepid Share for each 4.25 Emperor Shares, subject to any variations as specified in the Merger Proposal terms) as consideration for the disposal of their Emperor Shares. The transfer of shares in Emperor by Emperor Shareholders to Intrepid will constitute a CGT event resulting in a capital gain or loss arising for income tax purposes. Prima facie, a capital gain will arise for the Shareholder where the value of the Intrepid Shares acquired pursuant to the Merger Proposal exceeds the CGT cost base of the Emperor Shares disposed. A capital loss will arise where the value of the Intrepid Shares acquired is less than the reduced cost base of the Emperor Shares disposed. 3.1.1 Rollover Relief Emperor Shareholders who would make a capital gain from the exchange of their Emperor Shares for Intrepid Shares, may choose to obtain CGT rollover relief under the CGT scrip for scrip rules. Where a capital loss arises in relation to the exchange of the Emperor Shares for Intrepid Shares, no rollover relief is available. Eligibility of a particular Emperor Shareholder for CGT scrip for scrip rollover relief will not be impacted by whether one or more Emperor Shareholders do not elect for CGT scrip for scrip rollover relief. Where CGT rollover relief applies, any capital gain realised on the transfer of the Emperor Shares to Intrepid may be disregarded for tax purposes and is effectively deferred until the Intrepid Shares received in exchange are ultimately sold or otherwise dealt with for CGT purposes. The CGT cost base of the Intrepid Shares received will be equal to the CGT cost base in the Emperor Shares that were exchanged (on a proportional basis). In addition, the Intrepid Shares received in exchange for the Emperor Shares will be taken to have been acquired on the same date that the original Emperor Shares were acquired or taken to be acquired. For individuals, trustees and complying superannuation funds, this acquisition date will be relevant for the purposes of determining whether any entitlement to the CGT discount is available in respect of future dealings with the Intrepid Shares acquired. A pro forma scrip for scrip rollover election notice is attached to this Taxation Opinion. It is recommended that Shareholders wishing to obtain roll-over relief complete the election and retain it for their taxation files to evidence that rollover relief has been chosen.

For

per

sona

l use

onl

y

71

3.1.2 No Rollover Relief In relation to any capital gain arising, Emperor Shareholders who do not elect to obtain CGT rollover relief, will realise that gain during the income year in which the Merger Proposal becomes effective. For CGT purposes, the amount of the sale proceeds deemed to be received by Emperor Shareholders will be the market value of the Intrepid Shares acquired on the date when the Merger Proposal becomes effective. The same amount will also become the Shareholder’s CGT cost base for Shares in Intrepid so acquired.

3.2 Ownership of Intrepid Shares The taxation consequences of owning Intrepid Shares, with respect to receiving dividends and share disposals, will be similar to the current ownership of Emperor Shares. The general taxation consequences for Shareholders in relation to holding and disposing of Intrepid Shares are outlined below. 3.2.1 Franked Dividends Generally, dividends received by individuals, trustees, superannuation funds or companies will be required to be included in the assessable income of the Shareholder in the income year in which the dividend is paid. Where the dividend paid is fully or partly franked, the franking credits attaching to the dividend will also be required to be included in the Shareholder’s assessable income, and may be offset against the Shareholder’s income tax liability. Where the income tax payable of an individual or complying superannuation fund Shareholder (before the application of any tax offsets which may be available) is less than the franking credit offset available to that Shareholder in respect of any franked dividend received, the excess franking credits may be refunded to the individual or complying superannuation fund Shareholder. Any excess franking credits are unable to be refunded to a corporate Shareholder. However, excess franking credits are able to be converted by a corporate Shareholder to a tax loss that may be utilised in future years (subject to the loss carry forward tests for companies). In addition, a corporate Shareholder is entitled to a credit in its franking account for franking credits received which are then available for distribution as a franked dividend to its shareholders. It should be noted that subject to certain exemptions, a Shareholder will be required to have held their shares for at least 45 days materially “at risk” in order to be eligible for the franking credit benefits outlined above.

For

per

sona

l use

onl

y

72

3.2.2 Unfranked Dividends In the circumstances where Intrepid Shareholders receive an unfranked dividend from Intrepid, the amount will be required to be included in the Shareholder’s assessable income in the income year in which the dividend is paid. As no franking credits will be attached to such dividends, no additional amount is required to be included in the Shareholder’s assessable income and no franking offset will be available. 3.2.3 Disposal of Intrepid Shares Any future disposal of Intrepid Shares will constitute a CGT event resulting in a capital gain or loss arising for income tax purposes, subject to the differences (described below) in the case of Emperor Shareholders who choose CGT scrip for scrip rollover relief in relation to the exchange of their Emperor Shares for Intrepid Shares, and those that do not. For Intrepid Shareholders that are individuals, trustees or complying superannuation funds, any net capital gain arising from the disposal of Intrepid Shares may be reduced by 50%, 50% and 33% respectively where they have held their Intrepid Shares for at least 12 months and one day before the date on which they dispose of the shares. All capital gains and capital losses realised in an income year (including but not limited to capital gains and capital losses attributable to the disposal of the Intrepid Shares) will be aggregated to determine whether the Intrepid Shareholder has realised a net capital gain or loss. Any net capital gain, following the application of appropriate discounts, will then be required to be included in the Shareholder’s assessable income and will be subject to income tax at the applicable marginal rate. Capital losses may be applied to offset current year capital gains but may not be deducted against revenue gains for income tax purposes. To the extent that capital losses are not utilised in reducing current year gains, they may be carried forward to offset future capital gains (subject to meeting any relevant capital loss carry forward tests). 3.2.3.1 Where Rollover Relief Was Elected For Shareholders who elected to obtain CGT scrip for scrip rollover relief, the CGT cost base of their Intrepid Shares received as consideration will be equal, on a proportional basis, to the CGT cost base of the Emperor Shares which they exchanged. Emperor Shareholders who are individuals, trustees and superannuation funds may determine their compliance with the 12 months and one day minimum ownership requirement for discount capital gain treatment (refer above), by reference to the period of time from their original acquisition of Emperor Shares until their disposal of Intrepid Shares which they received in exchange for those Emperor Shares.

For

per

sona

l use

onl

y

73

3.2.3.2 Where Rollover Relief Was Not Elected Where CGT rollover is not elected by the Shareholder in respect of the disposal of Emperor Shares, the CGT cost base of the Intrepid Shares, which are received in exchange for the Emperor Shares, will be equivalent to the market value of the Intrepid Shares at the effective date of the Merger Proposal. In this case, Emperor Shareholders who are individuals, trustees or superannuation funds must determine their compliance with the 12 months and one day minimum ownership requirement for discount capital gain treatment on the disposal of Intrepid Shares, by reference to the date of acquisition of the Intrepid Shares (i.e. not from the date of acquisition of their Emperor Shares). 3.3 Other Tax Issues 3.3.1 Goods and Services Tax No GST should be payable by Emperor Shareholders in respect of the Merger Proposal. This is on the basis that share transfers are classed as a “financial supply” for GST purposes and are input taxed. In this respect, the disposal of Emperor Shares and the acquisition of Intrepid Shares should not be subject to GST.

4.0 Other Relevant Matters To persons receiving this document in Australia: The information contained in this document does not constitute “financial product advice” within the meaning of the Corporations Act 2001 (Cth) (Corporations Act). The PricewaterhouseCoopers partnership which is providing this advice is not licensed to provide financial product advice under the Corporations Act. To the extent that this document contains any information about a “financial product” within the meaning of the Corporations Act, taxation is only one of the matters that must be considered when making a decision about the relevant financial product. This material has been prepared for general circulation and does not take into account the particular objectives, financial situation or needs of any recipient. Accordingly, before acting on this advice, recipients should consider: • Taking advice from a person who is licensed to provide financial product advice under the

Corporations Act; and • The appropriateness of this material having regard to their objectives, financial situation and

needs and consider obtaining independent financial advice.

For

per

sona

l use

onl

y

74

If this material relates to the acquisition or possible acquisition of a particular financial product, a recipient in Australia should obtain any relevant disclosure document prepared in respect of that product and consider that document before making any decision about whether to acquire the product. Yours sincerely

Tom Seymour Partner Tax and Legal Services

For

per

sona

l use

onl

y

75

Grant Thornton Corporate Finance

Level 17, 383 Kent Street Sydney NSW 2000 PO Locked Bag Q800 QVB Post Office Sydney NSW 1230 T +61 2 8297 2400 F +61 2 9299 4445 E info@gtnsw.com.au W www.grantthornton.com.au Grant Thornton Corporate Finance Pty Ltd ABN 59 003 265 987 Holder of Australian Financial Services License No: 247140 Liability limited by a scheme approved under Professional Standards Legislation. Grant Thornton Corporate Finance Pty Ltd is an independent business entitled to trade under the international name Grant Thornton. Grant Thornton is a trademark owned by Grant

9. SUMMARY OF INDEPENDENT EXPERT’S REPORT ON THE PROPOSED MERGER

Board of Directors Emperor Mines Limited Level 1 WBM Building 490 Upper Edward Street SPRING HILL QLD 4004 17 October 2007 Dear Sirs, EMPEROR MINES LIMITED ABSTRACT INDEPENDENT EXPERT’S REPORT 1. SUMMARY The Directors of Emperor Mines Limited (“EMP” or the “Company”) have requested Grant Thornton Corporate Finance Pty Ltd (“Grant Thornton Corporate Finance”) to prepare an independent expert’s report (“Report” or “IER”) as to whether the proposed merger (“Merger”) between the Company and Intrepid Mines Limited (“IAE” or “Intrepid”) by way of a Scheme of Arrangement (“Scheme”) is in the best interest of EMP Shareholders. The Directors of the Company have commissioned the IER to assist the EMP Shareholders to assess the merits of the Scheme. This report is an abstract of the Independent Expert Report (“Abstract Report”) and it will be included, together with the whole Report, in the Scheme Booklet to be issued in connection with the Merger. In our opinion the proposed Merger between EMP and Intrepid is fair and reasonable and therefore in the best interest of the Shareholders of EMP in the absence of a superior offer. We note that our independent expert opinion as set out above may be subject to changes given it is based on documents (primarily Technical Reports) yet to be finalised and verification procedures still to be completed. Refer to section 7 for further information. The Abstract Report does not constitute and under no circumstances should be used or considered as, an offer of securities for issue or sale, an invitation to apply for the issue of securities, an invitation to offer to purchase securities, or an offer to underwrite securities. We will not assume responsibility for losses occasioned to any party as a result of the circulation, reproduction or use of this Abstract Report outside its scope. F

or p

erso

nal u

se o

nly

76

2. BACKGROUND EMP is an international gold producer, developer and explorer focussing on the Australasia region with interest in PNG and Indonesia. EMP is listed on the ASX and had a market capitalisation of approximately A$72 million before announcement of the Merger. The main assets of EMP are comprised of the gold mine of Tolukuma (“Tolukuma Mine”) located in the central province of PNG and exploration assets in Indonesia and PNG. As at the date of this Abstract Report, EMP has a cash balance of approximately A$64 million (excluding a loan to Intrepid for A$5 million). Intrepid is an international precious metals (gold-silver) producer, developer and explorer operating in Australia, Argentina, Canada, El Salvador and Mexico. It was formed through the merger of Canadian based Intrepid Minerals Corporation and Australian based NuStar Mining Corporation Limited in July 2006. The principal activities of Intrepid are the operation of the Paulsens gold mine in Western Australia (“Paulsens Mine”) and the development of the Casposo Gold-Silver project in Argentina (“Casposo Project”). Intrepid also has various exploration licences in Australia, Argentina, Canada, El Salvador and Mexico. Intrepid is dual listed on the ASX and Toronto Stock Exchange (“TSX”) and it had a market capitalisation of approximately A$57 million before announcement of the Merger. 3. TERMS OF THE PROPOSED MERGER EMP and Intrepid announced on 18 September 2007 that their respective boards had signed a merger implementation deed (“MID”) to merge the two companies by way of scheme of arrangement. As a result of the proposed Merger, EMP Shareholders will receive one New Intrepid Share for every 4.25 EMP Shares they hold. EMP’s 78.7% shareholder, DRD (Offshore) Limited (“DRDGold”), has informed EMP that it intends to re-focus its attention on opportunities in South Africa and so intends to seek to realise its investment in an orderly manner prior to the scheme meeting convened by the Court to approve the proposed scheme. EMP has agreed to work with DRDGold to seek to facilitate such an exit. The proposed merger with Intrepid is therefore subject to DRDGold being able to successfully realise its investment in EMP. We understand DRDGold’s investment in EMP will be realised by way of an institutional placement of EMP shares to professional and sophisticated investors. The details of this placement are set out in a prospectus to be dated on or around 18 October 2007. Implementation of the Merger is also subject to the other conditions precedent set out in the MID being satisfied or waived prior to the Scheme Meeting, including but not limited to:

• the EMP and Intrepid Boards recommendation to vote in favour of the Scheme;

For

per

sona

l use

onl

y

77

• net cash position of EMP (plus any sum advanced to Intrepid, any sum expended in respect of the Tujuh Bukit Joint Venture or any other expenditure approved by Intrepid in writing) is no less than A$56 million as at 30 September 2007 and no less than A$54 million as at the day prior to the Second Court hearing date for the Scheme;

• approval of the Scheme by EMP Shareholders and if required, Intrepid Shareholder

approval for the issue of New Intrepid Shares for the purpose of the Scheme by the Second Court Hearing date;

• subject to Court approval; and • the EMP Board not changing or withdrawing its intention to sell the Tolukuma

project prior to the Second Court Hearing date. Refer to section 5 below for further details;

Refer to section 4.1 of the MID for a detailed overview of the conditions precedent of the Merger. The proposed Merger will result in the issue of approximately 246 million shares in Intrepid to the EMP Shareholders. EMP Shareholders, as a whole, will control approximately 58% of the Merged Entity shares following completion of the Merger. The Board of Directors of the Merged Entity will comprise at least three representatives from each of Intrepid and EMP. The current Chairman of Intrepid, Mr Colin Jackson will continue as Chairman of the Merged Entity. The current CEO of EMP, Mr Brad Gordon, will lead the Merged Entity Management Team. 4. PURPOSE OF REPORT Grant Thornton Corporate Finance has been engaged by the Directors of EMP to provide an independent expert report stating whether, in its opinion, the Scheme is in the best interest of EMP Shareholders. This report is an abstract of the Independent Expert Report (“Abstract Report”) and it will be included, together with the whole Report, in the Scheme Booklet to be issued in connection with the Merger. The whole Report and this Abstract IER are prepared for the exclusive purpose of assisting the EMP Shareholders in their consideration of whether the Merger is in their best interest. This Abstract Report has not been prepared to provide information to parties considering the purchase or disposal of any EMP shares. Accordingly, we do not assume any responsibility or liability for any losses suffered as a result of the use of this Abstract IER contrary to the provisions of this paragraph. The Report and this Abstract Report are for the benefit of EMP Shareholders as a whole. The investment and voting decisions of each shareholder are based on their own views of value of the Company and expectations about future market conditions, Company’s performance, risk profile and investment strategy. EMP Shareholders should seek their own professional advice.

For

per

sona

l use

onl

y

78

Grant Thornton Corporate Finance on behalf of the Directors of EMP engaged BDA to prepare a Technical Report having regard to the Paulsens and Tolukuma mines, the Casposo Project and other exploration assets of Intrepid. As at the date of this Abstract IER, we have been provided with a draft copy of the BDA’s technical reports. BDA’s technical reports primarily focus on a review of the technical assumptions underlying the financial and operational projections of the Tolukuma and Paulsens Mines, the Casposo Project and the other exploration assets of Intrepid. Grant Thornton Corporate Finance on behalf of the Directors of EMP engaged MA to prepare a Technical Report having regard to the exploration assets of EMP. We collectively refer to BDA and MA as the Technical Experts. The technical reports prepared by the Technical Expert are in accordance with the Valmin Code. 5. BRIEF OVERVIEW OF EMP The principal activities of EMP are the operation of the Tolukuma Mine, the Tujuh Bukit gold-silver exploration project in Indonesia and the PNG Exploration Assets. Tolukuma Gold Mine Limited (TGM) is a company incorporated in PNG and is the owner of Tolukuma Gold Mine and Tolukuma Exploration Rights. TGM is current registered holder of 11 Exploration Licences in PNG and mine production project. The Tolukuma Mine produced 44,181 oz of gold in 2007 with a grade of 8.42 (g/t). Based on the existing level of reserves and resources of the Tolukuma Mine, BDA has assessed the remaining ‘life of mine’ (“LOM”) at 5 years. We note that the LOM of the Tolukuma Mine has been extended on a several occasions. On 10 September 2007, the Directors of EMP announced their intentions to sell the Tolukuma Mine. We understand a potential purchaser is conducting due diligence on an exclusive basis as at the date of this Abstract Report. As set out in clause 6.2 (f) of the MID, if EMP has entered into an unconditional binding agreement for the sale of the Tolukuma Mine prior to the Second Court Date and the agreement is unconditionally completed before 31 March 2008, the net proceeds of the sale of the Tolukuma Mine will be for the exclusive benefit of the EMP Shareholders on the record date set out in the Scheme and will be distributed to them upon receipt. If EMP has not entered into a binding agreement for the sale of the Tolukuma Mine prior to the Scheme Meeting, the following will occur:

• If the valuation of the Tolukuma Mine (for the purposes of clause 6.2 of the MID) performed by an expert appointed by EMP is greater than zero, there will be no adjustment to the Scheme Consideration. We note as at the date of this Abstract Report, valuation for the purposes of clause 6.2 of the MID has not yet been undertaken by BDA or another expert; For

per

sona

l use

onl

y

79

• If the valuation of the Tolukuma Mine performed by the expert is negative, then a one

off adjustment to the Scheme Consideration will be made such that the number of New Intrepid Shares issued for every EMP share is adjusted on a pro rata basis, in accordance with the valuation. This valuation will be disclosed in the Scheme Booklet.

Based on the terms of the MID, the exchange ratio of 1 Intrepid share for every 4.25 EMP shares has been determined assuming the following:

• The Tolukuma Mine is sold before 31 March 2008 (i.e. net proceeds distributed to EMP Shareholders only); or

• The independent valuation of the market value of the Tolukuma Mine, to be performed by an independent technical expert appointed in accordance with clause 6.2 of the MID, does not generate a negative value.

Whether or not the sale of the Tolukuma Mine will proceed, EMP will retain 5 exploration licenses currently held by TGM. 6. BRIEF OVERVIEW OF INTREPID Intrepid produces gold through its operations of the Paulsens Mine. In the 12 months to 30 June 2007, Intrepid treated 320,612 tonnes of ore at a head grade of 6.7 g/t and produced 64,408 oz of gold. As of 30 June 2007, Intrepid had gold forward contracts for 69,240 ounces at a price of A$627 per ounce. The other major asset of Intrepid is the Casposo gold-silver project located in San Juan province of Argentina. Recent feasibility study of Casposo indicates the production of 50,000 oz of gold and 1 million oz of silver per year for a period of five years from a combined open pit and underground operations with initial projected capital cost of US$45.7 million Intrepid also has advanced exploration tenements in Mexico for epithermal silver-gold, two epithermal gold-silver projects in El Salvador, exploration tenements in the Paulsens district of Western Australia, exploration tenements in the San Juan province of Argentina and a JV with Aura silver Resources Inc for silver base metal deposits in proterozoic and archean terranes. 7. SUMMARY OF OPINION In our opinion the proposed Merger between EMP and Intrepid is fair and reasonable and therefore in the best interest of the Shareholders of EMP in the absence of a superior offer. There is no statutory or regulatory definition of the expression “in the best interest”. The interpretation of “in the best interest” is a matter of judgement for the expert having regard to the guidance and market practice. In accordance with market best practice, in forming our opinion as to whether the Merger is in the best interest of the shareholders of EMP we have analysed whether the Merger is fair and reasonable to EMP Shareholders.

For

per

sona

l use

onl

y

80

We note that our independent expert opinion as set out above may be subject to changes given it is based on documents yet to be finalised and verification procedures still to be completed. In particular, we note the following: • We have only reviewed a first draft of the following documents:

o Technical reports provided by the Technical Experts; and

o Scheme Booklet regarding the proposed Merger.

• The Management of EMP and Intrepid have not reviewed the whole IER for factual

accuracy. The Management of EMP and Intrepid have only reviewed the factual accuracy of the summary financial information underlying our valuation assessment of EMP and Intrepid on a stand alone basis;

• We have applied limited procedures to the verification of the technical assumptions

underlying the projections of the Tolukuma Mine and Casposo Project as provided by the Technical Experts;

• Our independent expert opinion may also be subject to changes due to the following:

o material adverse changes in the market place between the date of this Abstract

Report and the date of the final IER prior to the lodgement of the Scheme Booklet; and

o whether the sale of Tolukuma does not complete before implementation of the

Merger. 8. FAIRNESS OF THE MERGER In our assessment of the fairness of the Merger, we have compared: • the assessed equity value per share of EMP prior to the Merger, having regard to the

existing assets and operations of EMP as at 30 September 2007; and • the assessed equity value per share of Intrepid prior to the Merger, having regard to the

existing assets and operations of Intrepid as at 30 September 2007. We have conducted our assessment of EMP and Intrepid on a portfolio basis due to the following: • EMP Shareholders, as a whole, will control 58% of the issued capital of the Merged

Entity, so explicitly we have not applied a control premium to the value of EMP; • The Board of Directors of the Merged Entity will comprise at least three representatives

from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman of the Merged Entity;

For

per

sona

l use

onl

y

81

• The current CEO of EMP, Mr Brad Gordon, will continue as CEO of the Merged Entity;

• Immediately following completion of the proposed Merger, the Merged Entity will be a

public company with a high diversified shareholder base; and • The current market value of EMP is mainly comprised of cash resources which usually

do not attract a control premium.

8.1 Assessed value of EMP As previously discussed, EMP is currently running a process for the sale of the Tolukuma Mine and associated Exploration Assets. If the sale is completed before 31 March 2008, the net proceeds will be distributed to the EMP Shareholders only, otherwise the Tolukuma Mine and associated exploration assets will be part of the assets of the Merged Entity. Accordingly, in our valuation assessment of EMP for the purpose of assessing the fairness of the Merger, we have had regard to the following 2 scenarios: • Scenario 1: the sale of Tolukuma Mine and associated exploration assets does not

complete – we have included in our assessed value per share of EMP the market value of Tolukuma Mine and associated exploration assets; and

• Scenario 2: the sale of Tolukuma Mine and associated exploration assets is completed –

our value per share of EMP for the purpose of assessing the exchange ratio does not include the net proceeds of this sale, given they will be distributed to EMP Shareholders only.

Share Price The market value of listed securities is based on the Efficient Market Hypothesis (“EMH”), which states that the share price at any point in time includes all publicly available information. EMH effectively implies that the share price is always correct at the point in time having regard to what is then generally known, as the price changes ‘almost’ instantaneously when new information becomes available. EMP announced on 10 September 2007 the commencement of a divestment process of the Tolukuma Mine and associated exploration assets. On 18 September 2007, the proposed Merger with Intrepid was announced. In our assessment of the share price of EMP, we have had regard to the volume weighted average price (“VWAP”) of EMP prior to the announcement of the Merger on 18 September 2007. The assessed share price of EMP has been reduced by our assessed value of the net proceeds from the sale of the Tolukuma Mine and associated exploration assets under Scenario 2. The share price of the Company prior to the proposed Merger incorporates the market assessment of the value of the Tolukuma Mine and associated exploration assets. Based on the MID and the

For

per

sona

l use

onl

y

82

assumptions underlying Scenario 2, the net proceeds from the sale of the Tolukuma Mine and associated exploration assets will be distributed to the EMP shareholder only. DCF In our assessment of the value of EMP using the discounted cash flow methodology, we have relied on the technical assumptions on the Tolukuma Mine provided by BDA and on the market value of the EMP’s exploration assets provided by MA. We have normalised the current level of corporate overheads of the Company based on the current operational structure of the Company prior to the proposed Merger and having regard to the different assumptions under Scenario 1 and Scenario 2.

8.2 Assessed value of Intrepid Share Price In our assessment of the share price of Intrepid, we have had regard to the VWAP of Intrepid prior to the announcement of the Merger on 18 September 2007. Discounted Cash Flow In our assessment of the value of Intrepid using the discounted cash flow methodology, we have relied on the technical assumptions on the Paulsens Mine and Casposo Project provided by BDA and on the market value of the Exploration Assets of Intrepid provided by BDA.

8.3 Quantitative assessment “fairness” of the Merger We set out below a comparison between our assessment of the exchange ratio based on the value of EMP and Intrepid before the Scheme compared with the proposed exchange ratio of 1 Intrepid share for every 4.25 EMP shares.

Figure: 1 Valuation summary

Exchange ratio Low High Low High

Ref. A$ A$ A$ A$

Implied exchange ratio 4.331 4.410 4.819 5.141

Proposed exchange ratio 4.250 4.250 4.250 4.250

Scenario 1 Scenario 2

Source: Calculations Grant Thornton Corporate Finance has assessed the exchange ratio between 4.331 and 4.410 EMP shares for 1 Intrepid share assuming the sale of the Tolukuma Mine will not be completed. Grant Thornton Corporate Finance has assessed the exchange ratio between 4.819 and 5.141 EMP shares for 1 Intrepid share assuming the sale of the Tolukuma Mine will be completed. We note that under this Scenario the assessed value per share of EMP does not

For

per

sona

l use

onl

y

83

include the net proceeds from the sale of the Tolukuma Mine and associated explorations assets that will be distributed to the EMP Shareholders only. The proposed exchange ratio is 4.25 EMP shares for 1 Intrepid share. Accordingly in the opinion of Grant Thornton Corporate Finance the proposed Scheme is fair to the EMP Shareholders. 9. QUALITATIVE ASSESSMENT “REASONABLENESS” In accordance with ASIC Regulatory Guide 75 “Independent Expert Report to Shareholders” (“RG 75”), an offer is reasonable if it is fair. On this basis, in our opinion the proposed Merger is reasonable. We have also considered the following factors in assessing the reasonableness of the Merger. Advantages The shareholders of EMP will benefit from the Merger, due to the following: • Historically EMP has been a high cash cost gold producer with operations in PNG.

Following the Merger EMP Shareholders will gain exposure to a producing gold mine in Western Australia (Paulsens) with cash costs ranking in the second quartile of global producers. The cash costs at Casposo, Argentina are expected to be in the lowest quartile of global producers;

• Through the Merger, EMP Shareholders will become part of a diversified international

gold company with existing production in Western Australia and substantial project development pipelines in Casposo, Argentina and Tujuh Bukit, Indonesia;

• The Merger will result in a company with a more diverse shareholder base with TSX

and ASX Listings. The Directors expect that the greater critical mass and dual listing will attract investment from institutions which should result in a more marketable and liquid security. The Merged Entity will also be able to source capital from both Australian and North American Capital Markets;

• EMP Shareholders may benefit from a re-rating of the market price of EMP on

completion of the proposed Merger as a result of the combination of the significant cash resources of EMP and the attractive assets profile of Intrepid. This is consistent with the trend in the share price of EMP following announcement of the proposed Merger;

• The Merged Entity’s relatively strengthened balance sheet, greater critical mass and

wider access to capital markets will allow the Merged Entity to aggressively pursue growth opportunities in a rising gold price environment;

• The increased financial strength of the Merged Entity will allow the accelerated

underground exploration at the Paulsens Gold Mine and the imminent development of the Casposo Gold-Silver Project. It will also facilitate the immediate exploration of the Taviche and Tujuh Bukit Project with an expanded global exploration budget of up to A$8 million per annum;

For

per

sona

l use

onl

y

84

• After the Merger, EMP Shareholders will gain access to the cash flows of the Paulsens

Mine and Casposo Project, which are likely to provide a superior return to the interest generated on the cash reserves held by the Company;

• In the absence of the proposed Merger, it is possible that EMP’s shares could trade at

prices below those achieved recently if the proposed Merger is not approved. • EMP Management team have extensive experience and strong management skills to

enhance the value identified in Intrepid, a company which Management believe is complementary to EMP. The Merged Entity will also benefit from the skills and international experience and of the combined management teams, with personnel who have held senior positions with major resource companies; and

• The Merger is contingent on DRDGold selling its majority interest in EMP. The sale of

DRDGold majority stake will increase the free float and liquidity in the Merged Entity’s stock.

• After the proposed Merger, EMP Shareholders will have interests in a gold mine and

exploration Assets in Australia, Argentina, Canada, El Salvador, Mexico, PNG and Indonesia. This reduces the Company’s exposure to individual operational variability.

• DRDGold currently holds 78.7% of the issued capital of EMP. The current shareholder

structure of EMP will prevent any transaction involving a change of control without DRDGold approval. If the proposed Merger completes, due to the revised shareholder base of the Merged Entity, with the largest shareholder holding no more than 12% of the issued capital, the prospect of the Merged Entity being subject to a takeover may be enhanced and accordingly the ability of the shareholders to receive a control premium in the future may also be increased. The share price of the Merged Entity may incorporate a takeover premium allowance following completion of the Merger.

• The directors of EMP have undertaken a process of evaluating a range of potential

transactions. As a result of this process, the proposed Merger was identified as the best fit and most likely to provide the best opportunity to maximise shareholder value among the alternatives available. As at the date of this document, EMP has not received a superior proposal to the proposed Merger with Intrepid.

Disadvantages The disadvantages and risks of the Merger for the shareholders of EMP are: • Material cash transaction costs are expected to have been incurred or committed by

EMP and Intrepid;

For

per

sona

l use

onl

y

85

• The construction and commissioning schedules at various mining development and

exploration projects rely on the timely completion of a number of critical activities of the proposed merger so as to continue the relevant funding of those projects. Any delay may slow the construction and commissioning activities and accordingly deferred related operating cash flows.

• Gold reserve estimates are expressions of judgement based on knowledge, experience

and industry practice while no assurances are provided on the indicated amount of gold and its recovery grade and may require revision based on actual production. Any alterations in reserves and production plans may adversely affect EMP investment interests.

• Our valuation assessment of EMP includes the market value of the exploration assets of

EMP in Indonesia provided by MA and based on the historical exploration expenses incurred as at the date of this Abstract Report. Based on discussion with the Management of the EMP, we understand the market value of this exploration asset may not be fully reflected in the valuation based on this methodology.

• Revenue of the Merged Entity is relatively more exposed to the volatility on gold price

and US dollar exchange rate movements, given the market value of EMP prior to the Merger is mainly comprised of cash resources. Where factors affecting the market price of gold are beyond the control of EMP, such as central bank sales, demand for precious metals, forward buying and selling by purchasers and producers of gold, production cost levels in major gold producing regions and macro-economic factors.

• Spread of mining assets across various geographic regions will expose EMP to changes

in the fiscal, monetary and regulatory policies of respective governments, as it will influence the outlook of various projects and actual and potential return to shareholders.

• Intrepid has a gold hedging commitment profile of 69,240 ounces at a price of A$627

per ounce between 2007 and 2008. If the gold price increases above the current level, the hedging losses of the Merged Entity will increase.

• If the proposed Merger is approved, the pro-forma balance sheet of the Merged Entity

will result in the recognition of intangible assets of approximately A$28 million (i.e. approximately 25% of the net assets of the Merged Entity). The fair value assessment of EMP will be performed post Merger. In accordance with AIFRS, any goodwill recognised is required to be tested for impairment on a yearly basis. If the goodwill will result impaired in the following years, the impairment charge may adversely impact the accounting profit and earnings per share of the Merged Entity.

We have considered the likely advantages and disadvantages of the Merger for the shareholders of EMP, and the advantages and disadvantages for the same shareholders if the Merger does not proceed. It is the opinion of Grant Thornton Corporate Finance that the benefits, in the absence of a superior offer, that are likely to accrue to the shareholders as a result of the Merger outweigh the disadvantages if the Merger does not proceed.

For

per

sona

l use

onl

y

86

Accordingly, in the opinion of Grant Thornton Corporate Finance, the Merger is reasonable.

Grant Thornton Corporate Finance has prepared a Financial Services Guide in accordance with the Corporations Act 2001. The Financial Services Guide is included in Appendix A of this Report.

Yours faithfully GRANT THORNTON CORPORATE FINANCE PTY LTD

SCOTT GRIFFIN NEIL COOKE Director Director

For

per

sona

l use

onl

y

87

APPENDIX A

FINANCIAL SERVICES GUIDE

17 October 2007 1. Grant Thornton Corporate Finance Pty Ltd Grant Thornton Corporate Finance Pty Ltd (“Grant Thornton Corporate Finance”) carries on a business at Level 17, 383 Kent Street, Sydney NSW 2000. Grant Thornton Corporate Finance holds Australian Financial Services Licence No 247140 authorising it to provide financial product advice in relation to securities and superannuation funds to wholesale and retail clients. Grant Thornton Corporate Finance has been engaged by Emperor Mines Limited (“EMP” or “the Company” or “the Entity”) to provide general financial product advice in the form of an independent expert’s report (“the Report”) in relation to the proposed merger (“Merger”) between the Company and Intrepid Mines Limited (“Intrepid”) by way of Scheme of Arrangement (“Scheme”) is in the best interest of EMP Shareholders. 2. Financial Services Guide This Financial Services Guide (“FSG”) has been prepared in accordance with the Corporations Act 2001 and provides important information to help retail clients make a decision as to their use of general financial product advice in a report, the services we offer, information about us, our dispute resolution process and how we are remunerated. 3. General Financial Product Advice In our Report we provide general financial product advice. The advice in a report does not take into account your personal objectives, financial situation or needs. Grant Thornton Corporate Finance does not accept instructions from retail clients. Grant Thornton Corporate Finance provides no financial services directly to retail clients and receives no remuneration from retail clients for financial services. Grant Thornton Corporate Finance does not provide any personal retail financial product advice directly to retail investors nor does it provide market-related advice directly to retail investors. 4. Remuneration When providing the Report, Grant Thornton Corporate Finance’s client is the Entity. Grant Thornton Corporate Finance receives its remuneration from the Entity. In respect of the Report, Grant Thornton Corporate Finance will receive from EMP a fixed fee based on commercial rate plus reimbursement of out-of-pocket expenses for the preparation of the whole Report. Our directors and employees providing financial services receive an annual salary, a performance bonus or profit share depending on their level of seniority. Except for the fees referred to above, no related body corporate of Grant Thornton Corporate Finance, or any of the directors or employees of Grant Thornton Corporate Finance or any of those related bodies or any associate receives any other remuneration or other benefit attributable to the preparation of and provision of the Report.F

or p

erso

nal u

se o

nly

88

5. Independence Grant Thornton Corporate Finance is required to be independent of the Entity in order to provide a Report. The guidelines for independence in the preparation of Reports are set out in Practice Note 42 issued by the Australian Securities Commission (the predecessor to the Australian Securities & Investments Commission) on 8 December 1993. The following information in relation to the independence of Grant Thornton Corporate Finance is stated below. “Grant Thornton Corporate Finance and its related entities do not have at the date of this report, and have not had within the previous two years, any shareholding in or other relationship with EMP (and associated entities) or Intrepid (and associated entities) that could reasonably be regarded as capable of affecting its ability to provide an unbiased opinion in relation to the Merger. Grant Thornton Corporate Finance has no involvement with, or interest in the outcome of the Merger, other than the preparation of this report. Grant Thornton Corporate Finance will receive a fixed fee based on commercial rates for the preparation of this report. This fee is not contingent on the outcome of the Merger. Grant Thornton Corporate Finance’s out of pocket expenses in relation to the preparation of the report will be reimbursed. Grant Thornton Corporate Finance will receive no other benefit for the preparation of this report. Grant Thornton Corporate Finance considers itself to be independent in terms of Practice Note 42 issued by the ASIC (previously known as Australian Securities Commission) on 8 December 1993.” 6. Complaints Process Grant Thornton Corporate Finance has an internal complaint handling mechanisms and is a member of the Financial Industry Complaints Services’ Complaints Handling Tribunal, No F-3986. All complaints must be in writing and addressed to the Chief Executive Officer at Grant Thornton Corporate Finance. We will endeavour to resolve all complaints within 30 days of receiving the complaint. If the complaint has not been satisfactorily dealt with the complaint can be referred to the Financial Industry Complaints Service who can be contacted at: PO Box 579 – Collins Street West Melbourne, VIC 8007 Telephone: 1800 335 405 Grant Thornton Corporate Finance is only responsible for the Report and this FSG. Complaints or questions about the Scheme Booklet or Prospectus should not be directed to Grant Thornton Corporate Finance, which is not responsible for these document. Grant Thornton Corporate Finance will not respond in any way that might involve any provision of financial product advice to any retail investor.

For

per

sona

l use

onl

y

89

GLOSSARY

Abstract Report Abstract of Independent Expert Report

ASX Australian Securities Exchange

BDA Behre Dolbear Australia Pty Limited

Casposo Project Casposo Gold-Silver Project in Argentina

Court Supreme Court of Queensland or the Brisbane Registry of the Federal Court of Australia to approve proposed merger in accordance with s411(4)(b) of the Australian Corporations Act.

DCF Discounted cash flow

Directors of the Company Directors of Emperor Mines Limited

DRDGold DRD (Offshore) Limited

EBITDA Earnings before interest, tax, depreciation and amortisation

EMH Efficient Market Hypothesis

EMP Emperor Mines Limited

EMP Shareholders Shareholders of EMP

FME Future maintainable earnings

Grant Thornton Corporate Finance Grant Thornton Corporate Finance Pty Ltd

IER Independent Expert Report

IAE Intrepid Mines Limited

Intrepid Intrepid Mines Limited

LOM Life of Mine based on current reserves and resources and exploration potential relating to the current mine site as assessed by BDA.

MA Mineral Associates Pty Limited

Management EMP Management

MID Merger Implementation Deed

Merger Proposed merger between EMP and IAE by way of a Scheme of Arrangement.

Merged Entity New entity after the proposed merger of IAE and EMP.

New Intrepid Shares New shares issued by Intrepid to EMP Shareholders in lieu for 4.25 EMP shares they hold.

Paulsens Mines Paulsens Gold Mine in Western Australia

PNG Papua New Guinea

For

per

sona

l use

onl

y

90

PNG Exploration Assets Exploration Licences held by EMP in PNG.

Report Independent Expert Report

RG 75 ASIC Guidance Rule No 75 “ Independent Expert to Shareholders”

Scheme Scheme of Arrangement for the proposed merger between Emperor Mines Limited and Intrepid Mines Limited.

Scheme Booklet Emperor Scheme Booklet specifying Scheme of Arrangements between EMP and IAE.

Scheme of Arrangement Scheme of Arrangement for the proposed merger between Emperor Mines limited and Intrepid Mines Limited.

Scheme Consideration New Intrepid Shares issued by IAE to EMP Shareholders as specified by MID.

Scheme Meeting Meeting of the EMP Shareholders to vote on the Merger between EMP and IAE.

Taviche Exploration project in Mexico

Technical Report technical report prepared by BDA or MA

Technical Experts BDA and MA

TGM Tolukuma Gold Mine Limited

Tolukuma Mine Gold Mine owned by TGM

Tolukuma Project Tolukuma Gold Mine and associated Exploration Licences in the surrounding area of the mine.

Tujuh Bukit Joint Venture EMP signed an Alliance Agreement with a group of Indonesian and Australian investors to explore the Tujuh Bukit Prospect, a large gold-silver-copper project in eastern Java.

Valmin Code Australasian Institute of Mining and Metallurgy Code.

VWAP Volume weighted average share price

For

per

sona

l use

onl

y

91

10. RISK FACTORS

10.1 Introduction

A number of risks, which are both specific to Emperor and of a more general nature, may affect the future operating and financial performance of Emperor, the value of Emperor Shares and its future funding requirements. These risks include, but are not limited to, the risks set out in this Section.

The risks have been divided into Key Risks and General Equity Market Risks. The selection of risks has been based on an assessment of a combination of the probability of the risk occurring and impact of the risk if it did occur. This assessment was based on the knowledge of DRD and the DRD board of directors as at the date of this Prospectus and there is no guarantee or assurance that the importance of different risks will not change.

You should read this Prospectus and consult your stockbroker, accountant, solicitor or other professional advisor before deciding whether to invest in the Shares.

10.2 Key Risks

The following risks are business risks associated with Emperor and should be taken into account when applying for Emperor Shares:

(a) Risk arising from the Proposed Merger not going ahead

Until such time as the Proposed Merger is completed, the price of Emperor Shares will be affected by market sentiment and speculation about the likelihood of success of the Proposed Merger. If the Proposed Merger is completed, Shareholders will receive shares in Intrepid in place of their shares in Emperor on the terms of the Proposed Merger. As a consequence, the value of Emperor Shares is affected by the Proposed Merger. Furthermore, the Proposed Merger is subject to various conditions precedent, including the successful completion of the sale of the Shares under the Offer by DRD. If the Proposed Merger does not proceed, the price of Emperor Shares may be adversely affected

(b) Risks Arising from Change in Investments

Over the course of 2007, Emperor divested subsidiaries which managed the Vatukoula mining and exploration operation in Fiji, which was shut down in December 2006. It also divested its largest gold producing asset, comprising its interest in the Porgera gold mine in Papua New Guinea. As a consequence, Emperor changed its focus to new exploration and corporate opportunities, in particular the Tujuh Bukit joint venture in Indonesia announced to ASX on 20 August 2007 and the Proposed Merger with Intrepid announced on 18 September 2007. Should the Tolukuma Sale proceed and the Proposed Merger not proceed, Emperor will have no remaining producing assets and continue as an exploration company only. Accordingly, Emperor's future performance will be primarily affected by the success or failure of these opportunities.

For

per

sona

l use

onl

y

92

(c) Production and other Operational Risks

Gold mining involves significant degrees of risk, including those related to mineral exploration success, unexpected geological or mining conditions, the development of new deposits, climatic conditions, sourcing mining and processing inputs, equipment and/or service failures and other general operating risks. The Tolukuma Mine can only be accessed by helicopter, the operation is exposed to a significant degree of risk in relation to the availability or helicopter services, weather conditions and fuel prices. Many of these risks are outside of the ability of the management of Emperor to control.

(d) Tujuh Bukit Risks

A portion of the KP relating to the Tujuh Bukit is situated within a protected forest area, in which open cut mining activities are currently prohibited by Indonesian law. As Indonesian law currently only permits underground mining in protected forest areas, Emperor is evaluating the appropriate application process that would allow the company to conduct open cut mining operations, should the exploration program be successful, within the relevant forest area. In addition the successful development of the project is subject to obtaining all necessary permits and licences for the conduct of the mining operations. No assurances can be given that Emperor will obtain the necessary these permits, licences and authorisation to develop an open cut mine

(e) Environmental Risks

The Emperor operations have environmental impacts, including land and riverine resulting from water use, drainage run-off, and riverine disposal of tailings.

While the Emperor operations in PNG currently comply with the applicable licence conditions accepted by the PNG government in granting project approval, the environmental impacts of the either operation could be greater than estimated. In such event, the PNG government could require Emperor to remedy such consequences. The costs of such remediation could be material and could result in the cessation of production.

(f) Gold Loss

Gold loss through theft is a significant risk for gold producers. In March 2007, a gold theft of approximately 1400 ounces was suspected at the Tolukuma Mine. This was identified from the production reconciliation contained in the metallurgical accounting system. Independent experts subsequently confirmed the accuracy of Tolukuma Minemetallurgical accounting system. Emperor immediately commenced an internal security review and implemented security improvements including further restricting employee access to the gold room, installing additional lockout procedures and an additional camera in the reaction chamber.

In July 2007, the metallurgical accounting system detected a further loss of approximately 1000 ounces of gold. Emperor immediately contracted gold security experts from Australia to provide a complete review of Tolukuma Mine gold security and to provide recommendations to reduce the risk of future losses. Implementation of the key recommendations from the security audit have commenced. Emperor has

For

per

sona

l use

onl

y

93

also been working with the company’s insurance advisor to evaluate the prospects of making an insurance claim in respect of these losses.

(g) Reserves Estimates

No assurance can be given that the indicated amount of gold will be recovered or at the rates estimated. Gold reserve estimates are expressions of judgment based on knowledge, experience and industry practice, and may require revision based on actual production experience. Estimates are necessarily imprecise and depend to some extent on statistical inferences, which may prove unreliable. Should Emperor encounter mineralization or formations different from those predicted by past drilling, sampling and similar examinations, reserve estimates may have to be adjusted and mining plans may have to be altered in a way that might adversely affect Emperor's operations. Fluctuations in the market price of gold, or increased production costs or reduced recovery rates, may render ore reserves containing relatively lower grades of mineralization uneconomic to recover, and may ultimately result in a restatement of reserves.

(h) PNG and Indonesia Political Risk

The primary Emperor operation is located in PNG and the Tujuh Bukit project is located in Indonesia. PNG and Indonesia are countries subject to a higher degree of political risk than that of Australia. Emperor is therefore subject to political, economic, social and other uncertainties, including the risk of civil rebellion, expropriation, nationalisation, landownership disputes, renegotiation or termination of existing contracts, mining licenses and permits or other agreements, changes in laws or taxation policies, currency exchange restrictions, changing political conditions and international monetary fluctuations. The effects of these factors cannot be accurately predicted and any combination of one or other of the above may impede the operation or development of a project and even render it uneconomic.

(i) Gold Price Risk

All of Emperor’s production revenues are derived from the sale of gold, Emperor’s earnings are closely related to the price of gold. Gold prices fluctuate widely and are affected by numerous industry factors beyond Emperor’s control, such as central bank sales, demand for precious metals, forward selling by producers and purchasers of gold, production cost levels in major gold producing regions and macro-economic factors. All these factors are beyond Emperor’s control and accordingly it is impossible for the management of Emperor accurately to predict future movements in gold prices.

(j) Currency Risk

Capital expenditures and future operating costs in PNG and Indonesia are (and will be) principally incurred in Australian Dollars and US Dollars. Revenues from the Tolukuma Mine are in the form of US Dollars. Given that Emperor's revenue and a large proportion of expenditure is denominated in US Dollars, Emperor does not hedge its foreign exchange exposure. However, Emperor's non-US Dollar costs and capital expenditures may be subject to changes beyond its control due to fluctuations in these and other currency exchange rates.

For

per

sona

l use

onl

y

94

(k) Insurance Risk

Insurance against all risks associated with mining exploration and development is not always available and the cost can be high. The insurance cover for DRD currently includes Emperor and its subsidiaries. Upon completion of the sale process under the Offer, the insurance cover provided by DRD will immediately cease to be available. Emperor is currently arranging replacement insurance cover, however Property and Business Interruption Insurance is proving difficult to obtain, at commercially acceptable levels, for Tolukuma Gold Mines. No assurances can be given that all insurances will be in place on completion of the sell down process or available in the future on commercially reasonable terms or that any cover will be adequate and available to cover any or all claims.

(l) Risks arising from the Proposed Merger proceeding

Should the Proposed Merger proceed, then the business risks associated with Intrepid, as well as Emperor, should be taken into account when applying for Emperor Shares. These risks are considered similar to those confronting Emperor and include:

• Gold price and currency risk – as summarized in (i) and (j) above with the addition that Intrepid has capital expenditures and costs incurred in South America which may involve currencies other than US Dollars;

• Reserve estimates – as summarized in (g) above;

• Production and other Operational Risks – the same general risks as summarized in (c) above apply to the Paulsens operation and the Casposo project;

• Political risk – the Casposo project is located in Argentina and many of Intrepid’s exploration projects are located in other South American countries. These countries are subject to a higher degree of political risk than Australia as summarized in (h) above.

• Key Personnel/Human Resources risk – As with all mining companies, Intrepid faces the cost and challenge of retaining key staff in a competitive environment where skilled employees are in short supply.

10.3 General Equity Market Risks

Investors should be aware that there are risks associated with any investment listed on ASX. The value of Emperor Shares may rise or fall, depending on the financial condition and operating performance of Emperor and external factors over which Emperor and the Directors have no control. These external factors include:

(a) economic conditions in Australia and overseas;

(b) investor sentiment in the local and international stock markets;

(c) changes in fiscal, monetary, regulatory and other government policies;

(d) geo-political conditions such as acts or threats of terrorism or military conflicts; and

For

per

sona

l use

onl

y

95

(e) developments and general conditions in the markets in which Emperor operates.

Changes in the general economic climate in which Emperor operates may adversely affect the financial performance (ie future costs and revenues) of the company. In particular, commodity prices (especially gold) can change rapidly and significantly and this could have a substantial effect on the value of company’s assets. Changes in government fiscal, monetary and regulatory policies as government, monetary policies, taxation and other laws and regulations can also have a significant influence on the outlook for projects and companies and the actual and potential returns to investors.

For

per

sona

l use

onl

y

96

11. ADDITIONAL INFORMATION

11.1 Rights and liabilities attaching to Shares

This section 11.1 contains a summary of the rights and liabilities attaching to the Shares as at the date of this Prospectus. The summary does not contain all rights and liabilities. It also does not constitute a definitive statement of the rights and liabilities of Shareholders. Rights and liabilities can involve complex questions arising from the interaction of the constitution of Emperor, statutes, common law and ASX Listing Rules requirements. To obtain a definitive assessment of the rights and liabilities which attach to the Shares in any specific circumstances, investors should seek their own advice.

(a) Rights attaching to Emperor Shares

The rights and liabilities attaching to Emperor Shares are set out in Emperor's constitution, and, in certain circumstances, are regulated by the Corporations Act, the ASX Listing Rules and general law. The constitution of Emperor may be inspected during normal business hours at the registered office of Emperor.

(i) General meeting and notices

Each member is entitled to receive notice of, and to attend and vote at, general meetings of Emperor and to receive all notices, accounts and other documents required to be sent to members under Emperor's constitution, the Corporations Act or the ASX Listing Rules.

(ii) Voting rights

Subject to any rights or restrictions for the time being attached to any class or classes of shares, at a general meeting of Emperor every holder of fully-paid ordinary Emperor Shares present in person or by an attorney, representative or proxy has one vote on a show of hands (unless a member has appointed 2 proxies or has appointed a proxy who is also a member, in which case the proxy or proxies has or have no vote on a show of hands) and one vote per share on a poll.

A person who holds a share which is not fully-paid is entitled, on a poll, to a fraction of a vote equal to the proportion which the amount paid bears to the total issue price of the share.

Where there are 2 or more joint holders of a share and more than one of them is present at a general meeting, in person or by proxy, attorney or representative, and tender a vote in respect of the share, Emperor will count only the vote cast by, or on behalf of, the member whose name appears first in Emperor's register of members.

(iii) Issues of further shares

The Directors may, on behalf of Emperor, issue, grant options over or otherwise dispose of unissued shares to any person on the terms, with

For

per

sona

l use

onl

y

97

the rights, and at the times that the Directors decide. However, the Directors must act in accordance with the restrictions imposed by Emperor's constitution, the ASX Listing Rules, the Corporations Act and any rights for the time being attached to the Emperor Shares in any special class of those shares.

(iv) Variation of rights

At present, Emperor has on issue one class of shares only, namely ordinary shares.

Subject to the Corporations Act, if Emperor issues different classes of shares or divides issued shares into different classes, the rights attached to the shares in any class may be varied or cancelled only with the written consent of the holders of at least three-quarters of the issued shares of the affected class, or by special resolution passed at a separate meeting of the holders of the issued shares of the affected class.

(v) Transfer of shares

Subject to Emperor's constitution, the Corporations Act and the ASX Listing Rules, Emperor Shares are freely transferable.

The Emperor Shares may be transferred by any computerised or electronic system of transferring or dealing with shares established or recognised by the Corporations Act, the ASX Listing Rules or the ASTC Settlement Rules and as otherwise permitted by the Corporations Act or by a document, the usual form of which is permitted by law.

The Directors may refuse to register a transfer of shares only if that refusal would not contravene the ASX Listing Rules or the ASTC Settlement Rules. If the Directors refuse to register a transfer, Emperor must give the lodging party written notice of the refusal and the reasons for it within 5 business days after the transfer is delivered to Emperor. The Directors must not register a transfer of shares if the Corporations Act, the ASX Listing Rules or the ASTC Settlement Rules forbid registration.

(vi) Partly-paid shares

The Directors may, subject to compliance with Emperor's constitution, the Corporations Act and the ASX Listing Rules, issue partly-paid shares upon which there are outstanding amounts payable. See paragraph (a)(ii) above for voting rights for partly-paid shares and paragraph (a)(vii) below for dividend rights.

(vii) Dividends

Subject to Emperor's constitution and the Corporations Act, the Directors may resolve to pay any dividend it thinks appropriate and fix

For

per

sona

l use

onl

y

98

the time for payment. Subject to the terms of issue of shares, Emperor may pay a dividend on one class of shares to the exclusion of another class.

Each share of a class on which the Directors resolve to pay a dividend carries the right to participate in the dividend in the same proportion that the amount for the time being paid on the share (excluding any amount paid in advance of calls) bears to the total issue price of the share.

(viii) Winding up

Subject to the terms of issue of shares, if Emperor is wound up, Shareholders will be entitled to participate in any surplus assets of Emperor in proportion to the percentage of the capital paid up on their shares.

(ix) Dividend reinvestment and share plans

The Directors may adopt and implement dividend reinvestment plans (under which any member may elect that dividends payable by Emperor be reinvested by way of subscription for fully-paid shares in Emperor) and any other share plans (under which any member may elect to forego any dividends that may be payable on all or some of the shares held by that member and to receive instead some other entitlement, including the issue of fully-paid shares).

(b) Directors

Emperor's constitution states that the minimum number of Directors is three.

(c) Powers of the Directors

Except as otherwise required by the Corporations Act, any other law, the ASX Listing Rules or Emperor's constitution, the Board has power to manage the business of Emperor and may exercise every right, power or capacity of Emperor to the exclusion of the members (except to sell or dispose of the main undertaking of Emperor).

(d) Share buy-backs

Subject to the provisions of the Corporations Act and the ASX Listing Rules, Emperor may buy back Emperor Shares in itself on terms and at times determined by the Directors.

11.2 CHESS and issuer sponsorship

Emperor participates in CHESS. All trading on ASX in the Shares will be settled through CHESS. ASTC, a wholly-owned subsidiary of ASX, operates CHESS in accordance with the ASX Listing Rules and the ASTC Settlement Rules. Computershare Limited operates an electronic issuer-sponsored sub-register and an electronic CHESS sub-register. Both these sub-registers constitute Emperor's principal register of shareholders.

For

per

sona

l use

onl

y

99

Holders of Shares will not receive a certificate but will receive a statement of their holding. If you are sponsored by a broker or other participant in CHESS, you will receive a CHESS statement which will set out the number of Shares sold to you under this Prospectus, provide details of your HIN (holder identification number), and provide the participant identification number of the sponsor.

If you are registered on the issuer-sponsored sub-register, your statement of holdings will contain the number of Shares you hold and your SRN (securityholder reference number).

A CHESS statement or issuer-sponsored statement will be sent to Shareholders at the end of any calendar month during which the balance of their shareholding changes. Shareholders may request a statement at any other time, however, a charge may be made for additional statements.

11.3 JORC compliance statements

The information in this Prospectus on Emperor relating to Exploration Results, is based on information compiled by Mr Malcolm Norris who is a member of the Australasian Institute of Mining and Metallurgy. Mr Norris is a full time employee of Emperor, employed in the role of Executive General Manager Exploration.

The information in this Prospectus on Emperor relating to Mineral Resources, is based on information compiled by Mr Roger Cooper who is a member of the Australasian Institute of Mining and Metallurgy. Mr Cooper is principal geologist of Bateleur Mineral Limited.

The information in this Prospectus on Emperor relating to Ore Reserves, is based on information compiled by Mr Brad Sampson who is a member of the Australasian Institute of Mining and Metallurgy. Mr Sampson is a full time employee of Emperor, employed in the role of General Manager.

The information in this Prospectus on Intrepid relating to Mineral Resources at Paulsens is based on information compiled by Mr Paul Payne, who is a member of the Australasian Institute of Mining and Metallurgy. Mr Payne is a principal geologist with Resource Evaluations Pty Ltd.

The information in this Prospectus on Intrepid relating to Ore Reserves at Paulsens is based on information compiled by Mr Per Scrimshaw and Mr Neville Price, who are members of the Australasian Institute of Mining and Metallurgy. Mr Scrimshaw is a consultant mining engineer at Mintech Services Pty Ltd and Mr Price was at the time of publishing the Ore Reserves also a consultant mining engineer at Mintech Services Pty Ltd

The information in this Prospectus on Intrepid relating to Mineral Resources at Casposo is based on information compiled by Mr Eugene Puritch, who is a member of the Professional Engineers Ontario.

The information in this Prospectus on Intrepid relating to Mineral Reserves at Casposo is based on information compiled by Mr Gary Taylor, who is a member of the Association of Professional Engineers of Saskatchewan.

For

per

sona

l use

onl

y

100

The information in this Prospectus on Intrepid relating to Mineral Resources at Casposo and Exploration Results is based on information compiled by Mr William McGuinty, who is a member of the Association of Professional Geoscientists of Ontario and the Association of Professional Engineers and Geoscientists of Saskatchewan. Mr McGuinty is employed by Intrepid in the role of Vice President Exploration.

Each of Mr Norris, Mr Cooper, Mr Sampson, Mr Payne, Mr Scrimshaw, Mr Price, Mr Puritch, Mr Taylor and Mr McGuinty has sufficient experience, which is relevant to the style of mineralisation and the type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for Reporting of Mineral Resources and Ore Reserves".

11.4 Material contracts related to this Prospectus

In relation to this Prospectus, on 28 September 2007, DRD has entered into a joint mandate letter with ABN AMRO Morgans and Tricom. The following is a summary of the material terms of the joint mandate letter.

ABN AMRO Morgans and Tricom, (together the Brokers) have been appointed to act as financial adviser and placement agent to DRD in relation to the sale of the Shares.

The sale of the Shares will occur by way of Institutional Bookbuild to be jointly managed by the Brokers so as to determine demand for the Shares at various sale prices;

The implementation of the Institutional Bookbuild is subject to a number of factors, including market conditions, which are outside of DRD’s control and so the indicative timetable for the Offer may be changed without notice.

DRD will assess the level of interest received under the Institutional Bookbuild before making a final decision as to whether to proceed with the sale of the Shares, and if it decides to proceed, the proposed sale price for the Shares. DRD is under no obligation to proceed with the sale of any or all of its Shares prior to setting the final sale price for its Shares, which it will do in consultation with the Brokers;

All activities under the mandate of the Brokers will be suspended if the law is breached;

DRD retains the right to sell the Shares outside the Institutional Bookbuild, provided that DRD notify the Brokers of the number of Shares to be sold outside the Insitutional Bookbuild, no later than 2 business days prior to the commencement of the roadshow to market the sale of Shares;

No contract of sale will be entered into unless a prospectus has been provided;

No Shares will be offered, sold or delivered to any person in any jurisdiction where it would be unlawful to do so;

For

per

sona

l use

onl

y

101

The Brokers will inform every acquirer of Shares that the purchase will not result in having more than 20% voting power;

DRD and the Brokers will consult each other in respect of any material public announcements, statements or releases in respect of the sale;

Each Broker undertakes to keep information obtained under the mandate letter strictly confidential except where disclosure is required by law or the information is already in the public domain or DRD grants consent for disclosure of such information;

The Brokers can terminate the mandate letter, if DRD breaches any clause of the mandate letter or withdraws the sale prior to determining the sale price. DRD can terminate the mandate letter any time prior to determining the sale price.

If DRD elects to terminate the mandate after forming the view that the Institutional Bookbuild process is unlikely to be successful in, resulting in the sale of all of the Shares for a sale price of not less than the floor price, DRD will incur a termination fee;

DRD agrees that the investment, management and trading activities of the Brokers will not be restricted by the mandate letter provided that the Brokers do not use non-public or confidential information received from DRD;

The Brokers reserve the right to purchase up to 10% of the EMP shares.

11.5 DRD's interests and benefits

(a) Other than as set out below or elsewhere in this Prospectus, DRD does not hold, or has not held at any time during the last 2 years before the date of this Prospectus, any interest in:

• the formation or promotion of Emperor;

• any property acquired or proposed to be acquired by Emperor in connection with its formation or promotion or in connection with the Offer, or

• the Offer.

(b) The table below shows the interest of DRD in securities of Emperor during the period of 2 years prior to the date of this Prospectus:

Date DRD Shareholding Percentage

17 October 2007 823,391,603 78.7% 5 April 2007 157,765,579 45.3%

For

per

sona

l use

onl

y

102

11.6 Directors' interests and benefits

(a) Other than as set out below or elsewhere in this Prospectus, no director or proposed director of DRD or Emperor, and no firm in which a director or proposed director of DRD or Emperor is a partner, holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

• the formation or promotion of Emperor;

• any property acquired or proposed to be acquired by Emperor in connection with its formation or promotion or in connection with the Offer, or

• the Offer,

and no amounts have been paid or agreed to be paid and no benefits have been given or agreed to be given to any director or proposed director of DRD or Emperor:

• to induce them to become, or to qualify them as, a director; or

• for services rendered by them in connection with the formation or promotion of Emperor or in connection with the Offer.

(b) Directors of Emperor are not required under Emperor's constitution to hold any shares in Emperor.

(c) The table below shows the interest of each director of DRD (whether held directly or indirectly) in securities of Emperor as at the date of this Prospectus:

Director Shares Options

Geoffrey Campbell 500,000 Nil

Directors may hold the relevant interests in shares shown above directly, or through holdings by companies, trusts or other persons with whom they are associated.

(d) The table below shows the interest of each director of Emperor (whether held directly or indirectly) in securities of Emperor as at the date of this Prospectus:

Director Shares Options

Geoffrey Campbell 500,000 Nil

John Sayers Nil Nil

Brad Gordon 1,000,000 1,280,500Robert McDonald 100,000 1,200,000Ian McMaster Nil Nil

For

per

sona

l use

onl

y

103

Directors may hold the relevant interests in shares shown above directly, or through holdings by companies, trusts or other persons with whom they are associated.

11.7 Officers' indemnities

Emperor insures the Directors, officers and employees of Emperor and related bodies corporate. The liabilities insured are legal costs that may be incurred in defending civil or criminal proceedings that may be brought against the officers in their capacity as officers of entities in the consolidated entity, and any other payments arising from liabilities incurred by the officers in connection with such proceedings. This does not include liabilities that arise from conduct involving a wilful breach of duty by the officers or the improper use by the officers of their position or of information to gain advantage for themselves or someone else or to cause detriment to Emperor.

11.8 Interests of other persons

Other than as set out below or elsewhere in this Prospectus, no person named in this Prospectus as performing a function in a professional, advisory or other capacity in connection with the preparation or distribution of this Prospectus, no promoter of DRD or Emperor and no underwriter to the Offer holds, or held at any time during the last 2 years before the date of this Prospectus, any interest in:

(a) the formation or promotion of Emperor;

(b) any property acquired or proposed to be acquired by DRD or Emperor in connection with its formation or promotion or in connection with the Offer, or

(c) the Offer,

and no amounts have been paid or agreed to be paid and no benefit has been given or agreed to be given to any of these persons for services rendered by them in connection with the formation or promotion of Emperor or in connection with the Offer.

ABN AMRO Morgans and Tricom have acted as brokers to the Offer, in respect of which each of them will be entitled to receive fees and commissions of 1.5% of the proceeds of the sale of Shares plus a performance fee of $50,000 for every 0.1 cent per Share over the floor price plus GST and out of pocket expenses.

Blake Dawson Waldron has provided various legal services and has or will receive professional fees of approximately $50,000 for legal work undertaken by them in connection with this Prospectus and the Offer.

Behre Dolbear Australia have provided professional mining expertise, covering all aspects from resource/reserve definition, mine planning and operations, metallurgical and environmental planning and review, project engineering and financial analysis and valuation in connection with the preparation of the summary of an independent expert's report.

Mining Associates have provided geological services in connection with the preparation of the summary of an independent expert's report.

For

per

sona

l use

onl

y

104

Grant Thornton prepared the summary of an independent expert's report for the Proposed Merger. Emperor has agreed to pay between $75,000 to $85,000 plus GST and expenses in connection with the preparation of that report.

PricewaterhouseCoopers have acted as tax advisors to Emperor in connection with the Offer and have or will receive fees of approximately $2,000.

Gryphon Partners has acted as corporate advisor to Emperor in connection with the Offer.

KPMG has acted as independent accountant to Emperor. Emperor has paid or agreed to pay approximately $25,000 to $30,000 in connection with preparation of an investigating accountant's report.

11.9 Consents

Each of the parties referred to in this section:

(a) has not authorised or caused the issue of this Prospectus;

(b) does not make, or purport to make, any statement in this Prospectus other than as specified in this section;

(c) has not made any statement on which a statement in this Prospectus is based, other than as specified in this section; and

(d) 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 reference to its name and the statement (if any) included in this Prospectus with the consent of that party as specified in this section.

Emperor has given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to the inclusion of the information regarding Emperor appearing in section 4 of this Prospectus.

ABN AMRO Morgans has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to being named in this Prospectus as joint broker to the Offer in the form and context in which it is named.

Blake Dawson Waldron have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as legal advisors to Emperor in respect of the Offer in the form and context in which they are named.

Gryphon Partners have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as corporate advisors to Emperor in respect of the Offer in the form and context in which they are named.

KPMG has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to being named in this Prospectus as investigating accountants in respect of the Offer in the form and context in which it is named.

For

per

sona

l use

onl

y

105

Intrepid has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to the inclusion of the information regarding Intrepid appearing in section 5 of this Prospectus.

Tricom has given and, at the time of lodgement of this Prospectus, has not withdrawn their written consent to being named in this Prospectus as joint broker to the Offer in the form and context in which it is named.

Behre Dolbear Australia have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as independent geologists in connection with the preparation of the summary of an independent expert's report in the form and context in which they are named.

Mining Associates have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as independent geologists in connection with the preparation of the summary of an independent expert's report in the form and context in which they are named.

Grant Thornton have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named as independent experts in connection with the Proposed Merger.

Mr Malcolm Norris, Mr Brad Sampson and Mr Roger Cooper have given and, at the time of lodgement of this Prospectus, have not withdrawn their written consent to being named in this Prospectus as competent persons for the purpose of compiling information relating to Exploration Results, Mineral Resources or Ore Reserves of Emperor in the form and context in which they are named.

Mr William McGuinty. Mr Payne, Mr Scrimshaw, Mr Neville Price, Mr Puritch and Mr Gary Taylor (AMEC) have given and, at the time of lodgement of this Prospectus, has not withdrawn their written consents to being named in this Prospectus as a competent person for the purpose of compiling information relating to Exploration Results, Mineral Resources or Ore Reserves of Intrepid in the form and context in which they are named.

Computershare has given and, at the time of lodgement of this Prospectus, has not withdrawn its written consent to being named in this Prospectus as the share registry to Emperor in respect of the Offer in the form and context in which it is named.

PricewaterhouseCoopers has given and, at the time of lodgement of this Prospectus has not withdrawn its consent to being named in the Prospectus as tax advisors in respect of the Offer.

For

per

sona

l use

onl

y

For

per

sona

l use

onl

y

107

GLOSSARY OF TERMS

$ or A$ Australian dollars

Ag Silver

Au Gold

ABN AMRO Morgans ABN AMRO Morgans Limited

ASIC Australian Securities and Investments Commission

ASTC ASX Settlement and Transfer Corporation Pty Ltd ABN 49 008 504 532

ASTC Settlement Rules The operating rules of ASTC

ASX ASX Limited ABN 98 008 624 691 and, where the context requires, the market operated by ASX

ASX Listing Rules The official listing rules of ASX.

BDA Behre Dolbear Australia Pty Ltd.

CHESS Clearing House Electronic Subregister System

Computershare Computershare Investor Services Pty Limited

Corporations Act Corporations Act 2001 (Cth)

Cu Copper

Directors The directors of Emperor

DRD DRD (Offshore) Limited (incorporated in the Isle of Man)

Emperor Emperor Mines Limited ACN 007 508 787

Emperor Board The board of Directors of Emperor

Emperor Shares Fully paid ordinary shares in the capital of Emperor

Epithermal Mineralisation deposited at shallow depth by ascending hot fluids, commonly in fault zones or fissures

Exploration Results Has the meaning given in the JORC Code

Indicated Mineral Resource Has the meaning given in the JORC Code

For

per

sona

l use

onl

y

108

Inferred Mineral Resource Has the meaning given in the JORC Code

Institutional Bookbuild The process for determining the price at which the Shares may be sold to Institutional Investors as described in Section 1.1

Institutional Investor A person to whom Offers may lawfully be made:

(a) in Australia without the need for disclosure to investors under Chapter 6D of the Corporations Act; or

(b) outside Australia without any other lodgement, registration or approval with or by a government agency (other than one which DRD, in its absolute discretion, is willing to comply).

Intrepid Intrepid Mines Limited ACN 060 156 452

JORC Code The Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves

Measured Mineral Resources Has the meaning given in the JORC Code

Merged Entity Intrepid after completion of the scheme of arrangement referred to in Section 3 whereby Emperor would become a wholly owned subsidiary of Intrepid

Merger Implementation Deed The Merger Implementation Deed dated 18 September 2007 between Emperor and Intrepid relating to the Proposed Merger

Mineral Resources Has the meaning given in the JORC Code

Mining Associates Mining Associates Pty Ltd

Offer The offer of Emperor Shares by DRD for sale pursuant to the Institutional Bookbuild

Ore Reserves Has the meaning given in the JORC Code

Oz or oz Ounces of gold

Paulsens The Paulsens gold mine owned by Intrepid referred to in section 5.2.1

PNG Papua New Guinea

For

per

sona

l use

onl

y

109

Porphyry An igneous rock containing phenocrysts, in which larger crystals are surrounded by a groundmass of finer grains

Proposed Merger The proposed merger of Emperor and Intrepid described in section 3

Shares 823,391,603 Emperor Shares held by DRD and offered for sale under the Offer

Shareholders Holders of Emperor Shares

TGM Tolukuma Gold Mines Limited (incorporated in PNG)

Tolukuma Exploration Rights The exploration rights described in section 4.2.2

Tolukuma Mine The Tolukuma gold mine owned and operated by TGM, a wholly owned subsidiary of Emperor, under Mining Lease 104

Tolukuma Sale The sale of TGM described in section 4.2.1

Total Mineral Resource Has the meaning given in the JORC Code

Tricom Tricom Equities Limited

TSX Toronto Stock Exchange

Tujuh Bukit The Tujuh Bukit exploration project of Emperor referred to in section 4.2.3

US$ or USD United States dollars

US Persons The meaning given to that term by regulations made under the US Securities Act 1993 (as amended)

For

per

sona

l use

onl

y

110

ANNEXURE A

Announcement of the Proposed Merger

For

per

sona

l use

onl

y

111

INTREPID AND EMPEROR TO CREATE A DYNAMIC AND WELL FUNDED GOLD PRODUCER, DEVELOPER AND EXPLORER

18 SEPTEMBER 2007

Intrepid Mines Limited (TSX: IAU, IXN & ASX: IAU) and Emperor Mines Limited (ASX: EMP) are pleased to announce that their respective Boards have signed an agreement to merge the two companies.

The Merged Company

The new company, to be named Intrepid Mines Limited, will be a dynamic and well funded international gold producer, developer and explorer listed on both the TSX and ASX.

The combination of Emperor’s balance sheet strength, Intrepid’s producing Paulsens Gold Mine and its Casposo development project, and both companies’ exploration assets, together with the combined skills of the two management teams, will create a well balanced company capable of adding significant value for its shareholders.

In particular, the merged Intrepid’s strengthened balance sheet and the ability to secure project finance, will allow the company to immediately move forward with corporate objectives, including:

• accelerated underground exploration at the Paulsens Gold Mine;

• imminent development of the Casposo gold/silver Project in Argentina on an unhedged basis and continued examination of early expansion options;

• immediate exploration at Taviche (Mexico) and Tujuh Bukit Project (Indonesia) and an expanded exploration budget of up to approximately A$8.0 million per annum; and

• improved capacity to target project and corporate acquisition opportunities.

The proposed merger, if it proceeds, will take place by way of a scheme of arrangement.

Emperor’s 78.7% shareholder, DRDGOLD, has informed Emperor that it intends to re-focus its attention on opportunities in South Africa and so intends to seek to realise its investment in an orderly manner prior to the scheme meeting convened by the Court to approve the proposed scheme. Emperor has agreed to work with DRDGOLD to seek to facilitate such an exit. The proposed merger with Intrepid is therefore subject to DRDGOLD being able to successfully realise its investment in Emperor prior to this time.

The boards of directors of Emperor and Intrepid have resolved to support the proposed merger.

Overview

The merger will take place by way of a scheme of arrangement, with Emperor shareholders receiving 1 Intrepid share for every 4.25 Emperor shares held. Existing unlisted Emperor employee options are to be either cancelled for cash or new Intrepid options issued on equivalent terms and conditions.

For

per

sona

l use

onl

y

112

Board and Management Structure

The merged company will benefit from the skills and international experience of the combined management teams, with personnel who have held senior positions with major resource companies such as Placer Dome, BHP Billiton, and Western Mining Corporation.

Management of the merged company will be led by Mr Brad Gordon as Chief Executive Officer and Mr Laurence Curtis as President. The merged company’s head office will be located in Brisbane, Australia and the capital markets and the Americas exploration office will be located in Toronto, Canada.

The Board of the merged company will comprise at least three representatives from each of Intrepid and Emperor. Mr Colin G Jackson will continue as Chairman of the merged company.

Synergy and Benefits of the Merged Company

The principal assets of the merged company will be:

• Paulsens operating gold mine in Western Australia (100% interest);

• Casposo gold/silver development project in Argentina (100% interest); and

• advanced exploration projects at Taviche (Mexico – earning a 35% interest, gold/silver) and Tujuh Bukit Project (Java, Indonesia – earning up to 70% interest, gold/silver/copper).

The merger is expected to deliver an expanded production profile and near term increased gold inventory potential, leveraging exposure to the gold price.

Transaction Implementation

Emperor and Intrepid have entered into a Merger Implementation Deed under which they have agreed to certain undertakings and arrangements to facilitate the merger. The complete document may be found on the companies’ websites or on www.sedar.com, the official site that provides access to most public securities’ documents and information filed by public companies and investment funds with the Canadian Securities Administrators in the SEDAR filing system. Key terms of the Merger Implementation Deed are summarised in Appendix A.

The proposed merger is conditional on, amongst other things:

i) Emperor shareholder approval;

ii) Intrepid shareholder approval;

iii) DRDGOLD selling its shareholding in Emperor;

iv) The acquisition or cancellation of all Emperor options;

v) Each of Emperor and Intrepid being satisfied with the results of their respective due diligence enquiries;

vi) Emperor having surplus net cash of at least A$54 million immediately prior to the second Court hearing to approve the scheme (taking into account any amounts provided by Emperor to Intrepid, any sum expended in respect of the Tujuh Bukit Joint Venture and any other expenditure approved by Intrepid);

vii) Any other regulatory approvals, no regulatory action, no material adverse change, no prescribed occurrences, TSX consent; and

viii) Court approval.

Both companies have entered into no solicitation - no talk provisions customary for this type of transaction. In addition Emperor has provided financial accommodation to Intrepid Minerals Corporation, a wholly owned subsidiary of Intrepid, amounting to A$5.0 million and holds an option to convert this loan into Intrepid shares.

For

per

sona

l use

onl

y

113

Timetable

The proposed timetable to complete the merger involves:

• Despatch Emperor shareholder documentation early-November

• Emperor scheme meeting early-December

• Implementation date early-January

Advisors

Emperor’s financial advisor in relation to this transaction is Gryphon Partners and legal advice is being provided by Blake Dawson Waldron. Intrepid’s legal advisors are Q Legal and Gardiner-Roberts.

Market Briefing/Conference Calls

Emperor and Intrepid will host two conference calls to discuss the benefits of the proposed merger. For further details on the conference calls, please refer to Appendix B.

For further details please contact:

Brad Gordon Laurence Curtis Emperor Mines Limited Intrepid Mines Limited Ph: +61 (7) 3007 8011 Ph: +1 (416) 368 4525

Rob Greenslade Ann Candelario Gryphon Partners Intrepid Mines Limited Ph: +61 (8) 8418 8525 Ph: +1 (416) 368 4525

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This release contains certain forward-looking statements that may involve a number of risks and uncertainties. Actual events or results could differ materially from the Company’s expectations and projections. The TSX & ASX has neither approved nor disapproved the information contained in this press release. Except for statements of historical fact relating to the Corporation, certain information contained herein constitutes "forward-looking statements". Forward-looking statements are frequently characterized by words such as "plan", "expect", "project", "intend", "believe", "anticipate" and other similar words, or statements that certain events or conditions "may" or "will" occur. Forward-looking statements are based on the opinions and estimates of management at the date the statements are made, and are subject to a variety of risks and uncertainties and other factors that could cause actual events or results to differ materially from those projected in the forward-looking statements. These factors include the inherent risks involved in the exploration and development of mineral properties, the uncertainties involved in interpreting drilling results and other ecological data, fluctuating metal prices, the possibility of project cost overruns or unanticipated costs and expenses, uncertainties relating to the availability and costs of financing needed in the future and other factors. Circumstances or management's estimates or opinions could change. The reader is cautioned not to place undue reliance on forward-looking statements.

For

per

sona

l use

onl

y

114

Appendix A

Summary of Key Terms of the Merger Implementation Deed

Conditions Precedent to the Scheme

The principal conditions precedent to the implementation of the Scheme include:

• approvals from applicable regulatory bodies such as ASIC, ASX, TSX and, if required, FIRB;

• continued recommendation of the Scheme by the Emperor and Intrepid Boards;

• Emperor shareholder approval of the Scheme at the Scheme Meeting by the requisite majorities under the Corporations Act;

• if required by TSX, ASX or applicable laws of Australia and Canada, Intrepid shareholder approval of the Scheme;

• DRDGOLD selling their Emperor shares prior to the Scheme Meeting;

• approval of the Scheme by Intrepid's third party providers of finance;

• Court approval of the Scheme in accordance with s411(4)(b) of the Corporations Act;

• no Emperor or Intrepid Material Adverse Change occurs;

• Intrepid executing the Deed Poll;

• no Emperor or Intrepid Prescribed Occurrence occurs;

• confirmation that the actual Net Cash Position of Emperor (plus any sum advanced under the Emperor Working Capital Funding or any other expenditure approved by Intrepid) is no more than $6 million below the forecast $62 million Net Cash Position of Emperor as at 30 September 2007;

• confirmation that as at the Business Day prior to the Second Court Date, the actual Net Cash Position of Emperor (plus any sum advanced under the Emperor Working Capital Funding, any sum expended in respect of the Tujuh Bukit Joint Venture or any other expenditure approved by Intrepid) is no more than $8 million below the forecast $62 million Net Cash Position of Emperor as at 30 September 2007;

• no changes in any material respect to the intention of Emperor to effect the Sale of Tolukuma (as announced on 10 September 2007), other than as approved by Intrepid in writing, before 8.00am on the Second Court Date;

• all Emperor options to subscribe for shares having been exercised, cancelled or acquired by Intrepid; and

• Emperor and Intrepid being satisfied with their respective due diligence investigations.

Scheme Consideration

The Scheme will be concluded on terms which will provide for the issue of 1 Intrepid Share for every 4.25 Emperor Shares held by Scheme Participants.

Subscription Option Intrepid has granted to Emperor an option to subscribe for up to 20 million shares in Intrepid at Intrepid’s 20 day volume weighted average price at the time of exercising the option. Should the option be exercised, the funds due to Intrepid under the option exercise shall be applied to extinguishing the existing A$5.0 million loan with Intrepid Minerals Corporation.

Independent Expert's report

Emperor has discretion whether or not to commission an Independent Expert to provide an opinion as to whether the Scheme is in the best interests of Emperor Shareholders ("Expert Report"). Emperor is not obliged to commission an Expert Report.

For

per

sona

l use

onl

y

115

If Emperor does decide to commission an Expert Report, then a further condition precedent to the implementation of the Scheme will be that the Expert Report concludes that the Scheme is in the best interests of the Scheme Participants.

No talk and no shop obligations

Each party must ensure that during the Exclusivity Period:

• (No Shop) It, nor any of its Representatives, directly or indirectly solicits, invites, facilitates any discussions or negotiations (or encourages, or communicates any intention to do any of these things), with a view to obtaining any expression of interest, offer or proposal from any Person for or in respect of a Competing Transaction in relation to that party; and

• (No Talk) It, nor any of its Representatives, in connection with or for the purposes of a Competing Transaction in relation to that party, without the other party's prior written consent, directly or indirectly participate or engage in any negotiations or discussions with any Person or provide or make available any information to any Person (including any information or access for the purposes of undertaking due diligence investigations of the party or any of its Related Bodies Corporate).

Limitations to no talk obligation

The no talk provision summarised above does not restrict a party from responding to a bona fide offer or proposal which was not solicited or initiated by it, and to the extent necessary to discharge their fiduciary duties as a director of Emperor or Intrepid in accordance with the written opinion of senior counsel ("Fiduciary Carve-out").

Competing Transactions and the parties' right to respond

If a party ("Recipient") is approached by another person during the Exclusivity Period with a Competing Transaction to which the No Talk or No Shop provisions apply, they must promptly notify the other party of such approach.

The Recipient must not enter into any agreement in relation to that Competing Transaction unless, after notifying the other party, the other party has not within 3 Business Days of notification submitted a written proposal which is on terms no less favourable than the Competing Transaction ("Counterproposal"). If the Counterproposal is on terms no less favourable than the Competing Transaction, then in the absence of a more favourable offer, the parties must proceed exclusively with the Counterproposal, otherwise the Recipient may proceed exclusively with the Competing Transaction.

There are various capitalised terms used in this summary which are defined in the Merger Implementation Deed.

For

per

sona

l use

onl

y

116

APPENDIX B

CONFERENCE CALL DETAILS Conference Call One The call is scheduled for 18 September 2007 and will be hosted by Intrepid Mines Chairman Mr. Colin Jackson, President, Mr. Laurence Curtis, and Emperor Mines CEO Mr. Brad Gordon. An invitation is extended to all interested investors, analysts or media representatives to attend. Timing and dial in details appear below, with AEST meaning Australian Eastern Standard Time. Schedule of events:

1:50 pm AEST To participate in the conference call, dial 1800 148 258 and

reference Conference ID 17374994 (if calling from outside Australia, dial +61 2 8524 6650)

2:00 pm AEST Conference call commences

An audio recording of the teleconference will be available approximately 4 hours after the call. To listen to the audio recording of the call, visit Emperor’s website at www.emperor.com.au. Conference Call Two The call is scheduled for 18 September 2007 and will be hosted by Intrepid Mines President, Mr. Laurence Curtis, Chairman Mr. Colin Jackson and Emperor Mines CEO Mr. Brad Gordon. An invitation is extended to all interested investors, analysts or media representatives to attend. Timing and dial in details appear below; Schedule of events:

10:00 am (Toronto eastern time) To participate in the conference call, dial (toll free) 1-888-300-0053 or (international/local) 1-647-427-3420. Conference ID 17401204.

An audio replay of the call will be available for one week by dialing 1-800-365-8354 (passcode 17401204), and will also be available on Intrepid’s website at www.intrepidmines.com.

For

per

sona

l use

onl

y

117

ANNEXURE B

Emperor Announcements

ASX ANNOUNCEMENTS BY EMPEROR POST 30 JUNE 2007

Document Lodgement date

Emperor and Intrepid Join Forces: Merger Presentation 1 October 2007

Financial Report – 30 June 2007 28 September 2007

IAU: Merger Implementation Deed, Intrepid Mines and Emperor 24 September 2007

IAU: Intrepid Announces Merger 18 September 2007

Emperor announces Merger with IAU 18 September 2007

Change to Property Portfolio 10 September 2007

Preliminary Final Report 31 August 2007

Emperor announces Indonesian Alliance 20 August 2007

Completion of Porgera Sale 17 August 2007

Water Supply Study at Tolukuma 13 August 2007

Correction - Quarterly Report 31 July 2007

Results of General Meeting 30 July 2007

Comment on Quarterly Review 30 July 2007

Quarterly Activities Report 30 July 2007

CEO`s address to shareholders 30 July 2007

Lapse of issued options 23 July 2007

Appendix 3B 23 July 2007

Tolukuma impacted by Power Generation Fault 17 July 2007

For

per

sona

l use

onl

y

118

ANNEXURE C

Intrepid Announcements

ASX ANNOUNCEMENTS BY INTREPID POST LODGEMENT OF ANNUAL REPORT

Document Lodgement date

Annual Report to 31 December 2006 27 April 2007

Appendix 3B 30 April 2007

First Quarter Activities Report 30 April 2007

March 2007 Quarterly Report – Press Release 1 May 2007

Exchangeable Share Disclosure 2 May 2005

Appendix 3B 7 May 2007

Intrepid Implements Silver-Gold Programme in Mexico 8 May 2007

Appendix 3B 11 May 2007

First Quarter 2007 MD&A 16 May 2007

First Quarter 2007 Interim Unaudited Financial Report 16 May 2007

Appendix 3B 18 May 2007

Chairman's Address to Shareholders 30 May 2007

May 2007 CEO Presentation 30 May 2007

Results of May 2007 Annual Meeting of Shareholders 31 May 2007

Exchangeable Share Disclosure 6 June 2007

Appendix 3B 6 June 2007

Certification of Exchangeable Share Movement – May 2007 7 June 2007

Casposo Project – AMEC 43-101 Reserve Report 7 June 2007

Final Director's Interest Notice 7 June 2007

Appendix 3B 14 June 2007

Submits Casposo Project EIA Report 20 June 2007

Appendix 3B 27 June 2007

Alignment of Paulsens Debt Repayment Schedule with LOM Plan

29 June 2007

Exchangeable share disclosure 2 July 2007

Appendix 3B 5 July 2007

For

per

sona

l use

onl

y

119

IAU Reports Additional Positive Drill Results at Casposo 12 July 2007

IAU Reports Additional Positive Drill Results at Casposo 13 July 2007

Change in Substantial Holding from LST 17 July 2007

Appendix 3B 18 July 2007

Appendix 3B 26 July 2007

Advisory – Second Quarter 2007 Results and Conference Call

31 July 2007

June 2007 Quarterly Activities Report 1 August 2007

Exchangeable Share Disclosure July 2007 1 August 2007

Exchangeable Share Disclosure July 2007 correction 1 August 2007

Appendix 3B 13 August 2007

Half Yearly Report and Accounts 15 August 2007

Appendix 3B 21 August 2007

Response to ASX Price Query 3 September 2007

Appendix 3B 4 September 2007

Exchangeable Share Disclosure 4 September 2007

EMP: Emperor announces Merger with IAU 18 September 2007

Intrepid Announces Merger 18 September 2007

Convertible Note Conversion – Strengthens Balance Sheet 21 September 2007

Merger Implementation Deed, Intrepid Mines and Emperor Mines

24 September 2007

Appendix 3B 28 September 2007

Intrepid and Emperor Merger Presentation 1 October 2007

Intrepid and Aura to Commence Drilling at Taviche Project 2 October 2007

Exchangeable share disclosure 3 October 2007

Secondary Trading Notice 3 October 2007

Appendix 3B 8 October 2007

Update of Option details 15 October 2007

For

per

sona

l use

onl

y

120

CORPORATE DIRECTORY

DRD (Offshore) Limited 14/15 Mt Havelock Douglas Isle of Man Directors of DRD (Offshore) Limited Paul Flood Matthews Michael Gisborne Geoffrey Campbell EMPEROR Level 1, WBM Building 490 Upper Edward Street Spring Hill Queensland 4004 Australia Directors of Emperor Geoffrey Campbell Brad Gordon Robert McDonald Ian McMaster John Sayers CORPORATE ADVISOR Gryphon Partners Ground Floor, 60 Hindmarsh Square Adelaide South Australia 5000 Australia AUSTRALIAN LEGAL ADVISORS Blake Dawson Waldron 123 Eagle Street Brisbane Queensland 4000 Australia

BROKERS OF THE OFFER ABN AMRO Morgans Limited Level 29 Riverside Centre 123 Eagle Street Brisbane Queensland 4000 Australia Tricom Equities Limited Level 27 Governor Phillip Tower 1 Farrer Place Sydney New South Wales 2000 Australia INVESTIGATING ACCOUNTS KPMG Transaction Services (Australia) Pty Limited Riparian Plaza 71 Eagle Street Brisbane Queensland 4000 Australia

For

per

sona

l use

onl

y