KinetikoEnergyLtdInformationMemorandumforSeedCapital(January2010)

8/8/2019 KinetikoEnergyLtdInformationMemorandumforSeedCapital(January2010)

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CB35025

(ACN Pending)

InformationMemorandum

For the Issue of 3,000,000 shares

At an issue price of $0.10 per share to raise$300,000.00

January 2010



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010

DISCLAIMER & CONFIDENTIALITY NOTICE

This Information Memorandum (“Memorandum”) is not a disclosure document. ThisMemorandum is specifically provided to the receiving party (“Recipients”) for the purpose of reviewing the investment opportunity in Kinetiko Energy Ltd (“Kinetiko”). Any informationcontained in this Memorandum, or subsequently provided to the Recipient whether orally or inwriting by or on behalf of the Company or its respective employees, agents or consultants(“Information”) is provided to the Recipient on the terms and conditions set out in thisMemorandum.

The information contained in this Memorandum is confidential and proprietary to Kinetiko andhas been prepared to assist the recipient in an evaluation of an investment in Kinetiko and is

only being provided to selected persons who are entitled to be offered and issued Sharespursuant to Section 761G of the Corporations Act without the need for a disclosure document. The offer may only be accepted by the person to whom it is made. This Memorandum isconfidential and is not to be copied or disseminated in any form to any other person without theprior written consent of Kinetiko.

Before deciding to invest in Kinetiko, the Recipient should read the entire Memorandum and, inparticular, in considering the prospects for Kinetiko, the Recipient should consider the risk factors thatcould affect the financial performance of Kinetiko. Investors should carefully consider these factorsin light of personal circumstances (including financial and taxation issues). Kinetiko is in the earlystages of development and the risks are therefore significant. The Shares offered by thisMemorandum should be considered speculative. Refer to Section 9 of this Memorandum for detailsrelating to risk factors. Investors should seek professional advice from an accountant, stockbroker,lawyer or other professional advisor before deciding whether to invest.

The Memorandum (and the information contained therein) is confidential to Kinetiko and it is notintended for and should not be distributed to any other person other than as permitted herein. Byits acceptance, the Recipient agrees that it will not transmit, reproduce or make available theMemorandum (or any information contained herein) to anyone other than to its professionaladvisers without the prior consent of Kinetiko. Any such disclosure to the advisers of the Recipientmust be on a confidential basis, for the purpose only of assessing the information contained herein asadviser to the Recipient.

The Memorandum does not purport to contain all the information that a prospective investor mayrequire. In all cases, before acting in reliance on any information, the Recipient should conduct itsown investigation and analysis in relation to the business opportunity and should check theaccuracy, reliability and completeness of the information and obtain independent and specificadvice from appropriate professional advisers.

Kinetiko makes no representation or warranty (express or implied) as to the accuracy, reliability or

completeness of the information. Kinetiko and its respective directors, employees, agents andconsultants shall have no liability (including liability to any person by reason of negligence ornegligent misstatement) for any statements, opinions, information or matters (express or implied)arising out of, contained in or derived from, or for any omissions from the Memorandum, exceptliability under statute that cannot be excluded.

The Memorandum contains reference to certain intentions, expectations and plans of Kinetiko. Thoseintentions, expectations and plans may or may not be achieved. They are based on certainassumptions which may not be met or on which views may differ. The performance and operationsof Kinetiko may be influenced by a number of factors, many of which are outside the control of Kinetiko. No representation or warranty, express or implied, is made by Kinetiko or any of itsrespective directors, officers, employees, advisers or agents that any intentions, expectations orplans will be achieved either totally or partially or that any particular rate of return will be achieved.

Kinetiko reserves the right to reject any expression of interest and to withdraw this Memorandum

at any time without giving notice of reasons to Recipients. The lodgement of an expression of interest by a Recipient may or may not result in an offer being made to the Recipient, on suchterms as Kinetiko may determine.

This Memorandum replaces the previous information memorandum issued by Kinetiko andsupersedes all the statements and representations made therein.



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TABLE OF CONTENTS

1.CORPORATE DIRECTORY 4

2.EXECUTIVE SUMMARY 5

3.LETTER FROM CHAIRMAN 6

4.PROPOSED CAPITAL STRUCTURE 7

5.PROPOSED APPLICATION OF FUNDS . 7

6.COMPANY OVERVIEW & OBJECTIVES .. 8

7.CURRENT AND PROSPECTIVE PROJECTS. . 9

0.MANAGEMENT TEAM

8.RISK FACTORS .

9.GLOSSARY OF TERMS 21



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1.CORPORATE DIRECTORY

Executive Chairman Agapitos M. (Geoff) MICHAELC/- 283 Rokeby RoadSubiaco WA 6008Phone +61 8 6314 0556

Managing Director: Dr. D. James SEARLEC/- 283 RokebyRoad Subiaco WA6008

Phone +61 8 6314 0556

Executive Director: Michael M. MICHAEL

C/- 283 RokebyRoad Subiaco WA6008Phone +61 8 6314 0556

Registered Office: C/- Price Sierakowski Lawyers

Level 24, 44 St Georges Terrace Perth WA 6000

Solicitors: Price Sierakowski Lawyers

Level 24, 44 St Georges Terrace Perth WA 6000

Accountants: Barrington Partners283 Rokeby RdSubiaco WA 6008

Corporate Advisors: Trident Capital Pty LtdLevel 24, 44 St George’s

Terrace Perth WA 6000

Ageus Ltd283 Rokeby Rd

Subiaco WA6008

Bankers: ANZ BankHay St Subiaco



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2.EXECUTIVE SUMMARY

PROFILE Kinetiko’s objective is to create wealth for its shareholders through

the development of its energy prospects via theimplementation of sound strategies and action plans.

MANAGEMENT Kinetiko is managed by competent and experiencedprofessionals

with a strong background in exploration and theadministration of companies. In addition, the Companyhas associations with and access to some of the industry’sbest corporate, engineering and resource consultants.

PROSPECTS The Company is pursuing a portfolio considered to be highlyprospective due to the quality of exploration targets in theareas selected and historical references.

THE OFFER The Company is seeking to raise seed capital of up to $300,000by the issue of 3,000,000 fully paid ordinary shares at10.0 cents per share to persons whom exceptions inSection 761G of the Corporations Act apply. The Board of the Company reserves the right to extend this offer andraise additional seed capital.

MINIMUM The minimum subscription to be raised pursuant to thisSUBSCRIPTION Memorandum is $300,000. No Shares will be allotted by

theCompany until minimum subscription has beenreached. The Board of the Company reserves the right tochange the minimum subscription.

USE OF FUNDS Funds raised pursuant to this Issue will be used to fundthe

operation, management and administration of theCompany, to secure and establish the portfolio of exploration properties.

EXIT STRATEGY The Directors intend pursuing liquidity options forshareholders

such as a trade sale, joint venture or listing on the ASX viaan IPO in the short to medium term should it be viableto do so. The Directors cannot guarantee that theCompany will achieve any of these outcomes and theraising of funds is not conditional upon this occurring.

APPLICATIONS FORSHARES

To apply for Shares offered pursuant to thisMemorandum, the Application Form accompanying thisMemorandum must be completed in accordance with

the instructions accompanying it.

The Company reserves the right to decide whether or notto make offers and to issue Shares to such persons as



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010 The Company will make offers to personal, sophisticatedand professional investors in accordance with therequirements of Section 761G of the Corporations Actand others as permitted.



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3.LETTER FROM CHAIRMAN

Dear Investor,

On behalf of the Board of Directors, I am pleased to invite you to become a shareholder of Kinetiko Energy Ltd.

The Company was incorporated with a view to giving investors the opportunity for earlyparticipation in emerging energy exploration and development opportunities. By this

Information Memorandum, the Company seeks to raise sufficient capital and gainsufficient shareholder spread to enable it to seek out and evaluate opportunities before ittoday in the Republic of South Africa. In particular and with focus on the proposed JointVenture with Badimo Gas on its Coal Bed Methane Licences in Amersfoort South Africa.

With an experienced Board of Directors, a spread of supportive shareholders, and theability to raise further funds, I believe the Company will be able to progress theseopportunities and to develop then further to the advantage of The Company and itsshareholders.

In determining the suitability of these opportunities and further development, your directors will use their knowledge and experience to analyse these opportunities in

Southern Africa. To get The Company to this point they have involved themselves in aprocess to locate and identify prospective Coal bed Methane fields and Joint Venturepartners with the following criteria:

Exploration targets in known coal fields with gassy coal deposits of the correct nature

Prospective Joint Venture partners with the correct attributes and abilities

Locations within infrastructure serviced regions assisting with development

Ability to achieve realistic commercial milestones to develop and explore the projects.

Due to the uncertainties inherent in the process of identifying and acquiring a suitableacquisition and the nature of exploring and developing existing projects, an investment in

the Company should be considered speculative in nature.

I look forward to welcoming you as a shareholder of the Company.

Yours faithfully

A.M.G (Geoff) Michael

Chairman



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4.PROPOSED CAPITAL STRUCTURE

ITEM

Shares Seed

5 Cents

Seed

10 cents

IPO

20 cents

Options

Promoters andfacilitators 20,000,000 29,000,000

Seed Investors 2,000,000

Seed Investors 3,000,000 1,000,000

IPO and Listing of Kinetiko 35,000,000

SUB TOTALS: 20,000,000 2,000,000 3,000,000 35,000,000 30,000,000

TOTAL SHARES & OPTIONS: 60,000,000 30,000,000

5.PROPOSED APPLICATION OF FUNDS

The company intends raising a minimum $300,000 by this issue, which itcurrently expects to expend as follows including capital raised in the initialseed raising of $100,000 (expenditure may change at the direction of the

Board),

Travel $ 35,000.00

Geological Consultants $ 20,000.00

Land Tenure Advice & Search $ 15,000.00

Data Acquisition $ 20,000.00

Legal Advice Domestic $ 15,000.00

Legal Advice Overseas $ 30,000.00

Corporate Overheads $ 15,000.00

Operation Expenses $ 40,000.00

IPO - Corporate Advisory $ 30,000.00

IPO - Accounting & Legals $ 25,000.00

IPO - Ind. Geologist Rep/Apps. $ 55,000.00

IPO - Corporate Services $ 30,000.00

IPO - ASX / ASIC Fees $ 10,000.00

IPO - Printing & Production $ 20,000.00

Contingency $ 40,000.00

TOTAL: $ 400,000.00



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6.COMPANY OVERVIEW & OBJECTIVES

The Company is an unlisted Australian public company with the keyobjective to capitalise the Company and provide a spread of additionalshareholders. In this position the Company will then be able to engage in theexploration and possible development of energy related coal seam gas/ coalbed methane opportunities as are currently before The Company in SouthernAfrica.

The Company’s Board will actively seek out and examine these investmentopportunities drawing upon their significant corporate experience and networkof contacts to evaluate the viability of these projects and investmentopportunities that will add shareholder wealth. It will also use thesecapabilities to seek out and locate other opportunities for The Company atthe appropriate time.

Investment Criteria

The Board will be seeking to provide solid returns for its shareholders overtime by participating in business and/or investment opportunities in energyrelated projects.

The Company’s philosophy is to provide an appropriate return to shareholderswith an acceptable degree of risk in the medium to longer term in accordancewith the guidelines and processes detailed below.

Investment Guidelines

In determining the suitability of these opportunities, your Directors haveused their knowledge and experience plus carried out appropriate researchand field trips to Southern Africa to establish the correct opportunities topursue. The principal investment criteria for CSG/CBM opportunities inSouthern Africa are:

Exploration targets in known coal fields with gassy coal deposits of the correct nature

Prospective Joint Venture partners with the correct attributes and abilities

Locations within infrastructure serviced regions assisting with exploration,development and commercialization

Ability to achieve realistic commercial milestones to develop and explore theprojects.

Future Funding

The Company may continue to raise additional capital in the future (atprices to be determined) to ensure appropriate prudential reserves aremaintained to secure and protect shareholder funds. These future equityraisings may be through a public offering or private placement of stock withstrategically selected investors. The impact of these future raisings maydilute the position of current shareholders and Investors under this InformationMemorandum.



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7.CURRENT PROJECTS.

Kinetiko has executed a Memorandum of Understanding, “The MOU”with Badimo Gas Pty Ltd to form a Joint Venture to explore and

develop 4 CBM / CSG licences at Amersfoort in Eastern South Africaas set out in the Overview and Context below.

The MOU is a precursor to a Joint venture agreement that will seeKinetiko enter into an, ‘Earn in Agreement’ to spend ZAR 26,000,000before December 2011.

It is proposed at present that once the funds have expended at thedirection of Kinetiko and Kinetiko exercises its rights and executesits obligations to continue with the Amersfoort proj ect, Kinetiko willhave a 49% commercial interest in the Amersfoort project via a JVcompany with Badimo that will direct and manage all activities of

the JV by Mutual consent. The current proposed structure and possibleevents are set out in the diagram below.

Amersfoort Coal Bed Methane Project Overviewand Context

IntroductionThe Amersfoort Coal Bed Methane (CBM) Project has the potential tobe a significant long term supplier of gas and chemical feedstock into a growing and energy hungry domestic market in the Republic of South Africa. With CBM Gas in Place (GIP) of 1.7 Tcf (trillion cubic feet)calculated for the project exploration licences there is theopportunity for exploration and production testing to rapidly and costeffectively demonstrate a viable gas production potential which willsupport a range of commercialisation scenarios. The project is furtherenhanced by the potential for conventional gas originally generated



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010by the coal maturation process but now trapped within sandstonereservoirs adjacent to the

independent eseams. The current CBM GIP estimate prepared by xperts GustavsonandAssociates of Denver, Colorado, of 1.7tcf does not yet includeconventional gas.



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Demands for all forms of energy are growing throughout sub Saharan Africa. The South African parastatal electrical generator and transmission companyEskom has in recent years been finding it increasingly difficult to meet peakdemands of the countries that constitute the Southern African Power Poolincluding South Africa. Eskom not only faces considerable challenges infinancing and building new generating and transmission capacity but has alsohad issues with supply of coal to its power stations. Demand is also growing inthe region for petrochemicals, fertilizers and transport fuels. The AmersfoortCBM Project is located close the majority of South Africa’s powergeneration infrastructure and the majorpopulation and manufacturing centreof Johannesburg. The Majuba Power Station, a 4,110MW coal fired facility islocated within sight of the Amersfoort CBM Project. Originally the powerstation was to be fed by the Majuba Colliery in the Amersfoort area before itwas closed prematurely for technical reasons that included methane gas issues.

Kinetiko Energy is earning a 49% interest in the Amersfoort Project byspending R26 million (A$4m) on exploration within a 2 year period.

Exploration and development then be funded by Kinetiko (49%) and Badimo(51%). Kinetiko will also pay Badimo Gas R10m on conclusion of the earn inphase as partial re-imbursement of costs once regulatory approval for transferof Kinetiko’s 49% interest is completed.



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Amersfoort Coal and CBM Geology

The most productive coal measures of Southern Africa are Permian in agecontained within the extensive Permo-Triassic basins containing the KarooSupergroup. These temperate climate coals are generally equivalent to thesimilarly aged coals of Eastern Australia. At Amersfoort the most significant coalseams are contained within the Vryheid Formation of the Ecca Group. The shalesand sandstones of the Vryheid are intruded by dolerite sills and dykes.

The Amersfoort Project is located in the Ermelo Coalfield within the coal bearingregion of Permian coals that has been supplying a significant portion of Southern Africa’s energy needs for over a century. However the coals of theAmersfoort area have proved difficult to mine commercially. The MajubaColliery near Amersfoort was intended to supply the nearby Majuba PowerStation; however a range of technical factors including methane gas

terminated operations in 1993. Exploration drilling for coal during the early1980’s in the deeper parts of the Ermelo Coalfields around Amersfoort areahas defined with considerable detail the distribution and depth of the seamsbeneath the Kinetiko-Badimo CBM licences and the geology of overlyingsandstones and intruding dolerite dykes and sills. As part of this exploration854 diamond core holes were drilled on or near what are now the Amersfoortgas exploration licenses. This data has provided detailed information on coaldepths, thicknesses that form the basis of the independent resourceassessment by Gustavson and Associates of 1.7tcf of gas in place (GIP) withinthe Kinetiko-Badimo gas exploration licenses.

The geology of the Amersfoort area is exceptionally well defined due to coalexploration drilling.



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Average depths to the most significant coal seams range from 315 to 385m,total coal thicknesses range from less than 1 to 16m. The coals range fromhigh volatile bituminous to medium bituminous. Gas contents of the coals inexcess of 10m3/t were measured in studies associated with the various mining

attempts. For the GIP calculations a mean value of 5m3/t was used.

The conventional gas potential of the Amersfoort area stems fromconsideration of the maturation history of the coals. Burial and basin heat flowsbegan the coal maturation but the process would have been on-going andoverlapping with the emplacement of the dolerite sills. There is clearevidence of devolatilization of the coals in proximity to the dolerites (Kavonicet al ,1987). During maturation coals typically generate over 10 times theamount of methane gas that can be retained in the coals (Eddy etc al ,1982, Rightmire, 1984). This normally migrates over time from the hostsequences. However there is the potential for the dolerites and siltstones tohave trapped this fugitive gas in conventional accumulations in the porous

sandstones.

Gas escaping from a drill hole Gas bubbling in drill hole standing water.

Evidence for the conventional gas potential in the Amersfoort area isindicated by the escape of gas that has been occurring from a number of thecoal exploration drill holes that have not been sealed. Gas can be seenvigorously bubbling up through the standing water in the drill holes, andreports from local farmers indicate this has been occurring continuously since

the holes were drilled nearly 30 years ago. The gas is unlikely to be derived bydesorption from the coal seams as hydrostatic pressure would be keeping theCBM in place.



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Exploration and reserve definition strategies

As the Amersfoort Project already has a GIP estimate of 1.7tcf and welldefined coal distributions exploration has the opportunity to rapidly increase thevalue of the project by moving towards independently certifiable reserveswithin a 2 year period. The abundance of existing coal exploration drill holesmeans there is limited need for drilling to define coal distribution in greaterdetail. Exploration can commence with core drilling to recover material fromalready defined coal sequences for CBM desorption testing and rapidlyprogress to site selection for production test wells. Completion of productiontest wells in tandem with commercialisation studies will then enable thecertification of reserves for the project. Kinetiko considers this progressioncould be achieved within 2 years.

Amersfoort is a well defined exploration play with the potential forrapid cost effective

definition of resources and reserves.



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CBM Commercialisation

oposed expenditure and program for Amersfoort exploration and resource definition.

ently commercialisation scenarios for Amersfoort gas are varied in both nature and scale. However a

The 4,110Mw Majuba Power Plant viewed

from the Amersfoort Gas Project

the different energy demand sectors due to competition for inputslike coal and gas and regulatory measures that have sought to try anddiversify energy demand to overcome increasing shortages in particularsectors like electrical power. The optimal commercialisation route orroutes for Amersfoort CBM will depend on many factors not the leastbeing how different gas demand profiles compare with differentdevelopment, ramp up and production profiles that can only reliably bedetermined at the production testing stage.



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Amersfoort CBM Project located at the heart of

South Africa's energy and transport infrastructure

Demand is growing but funding for increased power generationis hard to come by.



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Commercialisation scenarios for Amersfoort include but are not limited to :

Independent Power Production either grid coupled or direct to a major customer.

Mini LNG interfaced IPP for peak load and distributed demand.

Gas sales into the existing coal powered generation plants for flame control

and ultimately for full co-generation.

CNG production and distribution by road and rail for to manufacturing

customers and fleet transport depots.

New generation plants (smaller capital) for synfuels and chemical feedstock

production probably in conjunction with a major industry partner or partners.

Sasol’s Secunda coal and gas to liquids complex 60km E of Amersfoort



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8. MANAGEMENT TEAM

Donald James Searle B.Sc., PhD, MAusIMM, MAICD

Dr. Searle is a geologist, mining company executive and consultant with over30 years experience worldwide in precious and base metals and energyminerals. As an exploration geologist he has directed and participated in anumber of exploration programs resulting in significant commercial golddiscoveries. Corporately he has been involved at senior management andboard level leadership in resource project identification, acquisition,financing, development and management in Australia and overseas. DrSearle was CEO and Executive Director of ASX listed Nordic goldminer DragonMining Ltd for 8 years until 2005, and was instrumental in the company acquiring,financing and developing gold mining projects in Sweden and Finland.

In the energy sector Dr Searle has been involved in oil and gas exploration andresearch into modern marine sedimentation analogues of hydrocarbonreservoirs. He has also provided consulting advice to major marineengineering project proponents, governmental and international agencies oncoastal and near shore dynamics in Australia and South East and SouthernAsia.

Dr Searle has served on the boards of a number of stock exchange listedmining and exploration companies in executive and non executive capacitiesover the last 14 years. He is currently Chairman of the ASX listed copperexploration and development company Redbank Copper Ltd.

Agapitos Marcus Geoffrey Michael B.A. (UWA)

Mr. Michael’s expertise and commercial experience lie in the areas of project development, consulting and delivery in Australia, Europe and SouthEast Asia. He has experience in running projects and organizational basedenterprises in multi jurisdictional scenarios and putting together a best forproject team of professionals for the project delivery and operation.

Mr. Michael has been responsible for the creation and management of various joint venture companies, investment syndicates and business start-ups across a range of asset classes, from property investment, throughmining services and drilling to engineering and resources for over 20 years.

This has involved asset, property and equipment purchases, capital raisings,structured finance, project feasibility, management and delivery, managementof the enterprises and assets along with devising correct and appropriatelytimed exit strategies from investments to maximize return and managefinancial risk.

Prior to this, Mr. Michael had been involved with a family owned contractingoperation specializing in earthworks and civil construction on a large scale. This involvement has endowed Mr. Michael with practical construction and civilcontracting experience.



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010 These areas of expertise are essential when dealing with project basedoperations and

outcome delivery as are present in the mining and exploration sectoralong with

understanding of the operations and complexities of Joint Ventures and otherforms of financial and outcome partnering.

Partners and clients include: Multiplex Constructions Australia and UnitedKingdom ( in JV), Grange Resources Ltd, British Telecom PLC, BT SyntegraBenelux BV (The Netherlands), KPN Telephonica, Kantor Fond DeNetherlands, Life Care, Delta Health Care, Kailis Consolidated, BarringtonPartners, Quest Serviced Apartment Group, Coldwell Banker Pro Property,Shangri –La Hotels and Resorts, Kerry City Properties Shanghai and variousprivate clients, investment syndicates and partners.

Geoff is also a Director of the engineering and construction contractor UnisonHoldings Ltd, Ageus Ltd a boutique corporate advisory practice, Lambrose Ltda focused property funds manager and is Chairman of Metaliko ResourcesLtd an unlisted public gold exploration company active in WA and Victoria.

Michael Marcus Michael B.A. (UWA), B.Bus. (ECU), AAIM, MAICD

Mr. Michael has accumulated many years of practical experience in founding,

developing and operating businesses in the roles of Executive and Non-Executive Director, Managing Director, and Chairman. Many of which havebeen enterprises in start-up.

Mr. Michael is skilled in areas as diverse as concept origination, innovation,demand and commercial environment analysis, feasibility and due diligencepreparation, promotion and equity raising, joint venturing, competitivepresentations, sales and marketing.

Mr. Michael is tasked with designing, maintaining and implementing overallplanning frameworks for strategy formulation and change, optimalorganizational structure, and decision making processes to achieve a limiting

of contingent liability through financial and process control and reportingsystems for risk management, financial performance and profit maximizationthrough budgeting and cost control, and the provision of high product qualityand customer service based on identified competitive advantage, teambuilding and human resource management.

Mr. Michael has a track record on both coasts and abroad, demonstrating theexpertise to instruct and coordinate various professionals such as lenders,capital raisers, funds managers and merchant bankers, accountants,lawyers, town planners, architects, engineers and scientists, building andcivil contractors, that are all needed to deliver a project based outcome for a

financially driven solution in areas highly controlled by regulation andgovernance.

Mr. Michael also has extensive experience in large scale earthmoving and



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010mining services businesses at managerial and board level. This hasincluded being Non-Executive Founding Chairman of a drilling and miningservices company.

Mr. Michael is the serving President of the Hellenic Australian Chamber of Commerce and Industry in Western Australia.

9. RISK FACTORS

As with any share investment, there are risks involved. This section identifiesthe major areas of risk associated with an investment in Kinetiko; howeverthey should not be taken as an exhaustive list of the risk factors to which theCompany and its shareholders are exposed. Potential investors should readthe entire Memorandum and consult their professional advisor beforedeciding whether to apply for Shares.

Investment Risk The Shares to be issued pursuant to this Memorandum should beconsidered speculative. They carry no guarantee as to liquidity, payment of dividends, return of capital or the market value of the Shares. While theDirectors commend the Offer, prospective investors must make their ownassessment of the likely risks and determine whether an investment in Kinetikois appropriate to their own circumstances.

There are a number of risk factors that may impact on the future performanceof Kinetiko and the achievement of the Company’s financial objectives. Some of these risks can be mitigated by appropriate safeguards and risk management

systems, but may are outside the control of the Company and cannot bemitigated.

Investors need to consider the risks involved in an investment in Kinetiko beforemaking a decision whether or not to apply for Shares. The principal risk factorsinclude, but are not limited to, the following:

Non Diversification of Investments

The risk of non-diversified asset portfolio is generally higher than that of a fullydiversified investment portfolio.

The Company intends not to diversify its investments but rather focus onidentifying a few meaningful transactions.

Investors should note that a decision not to diversify may increase the overallrisk profile of the Company.

No liquid market to sell Shares and Options

Shareholders will not have a ready market to sell Shares and Options in theCompany because although the Shares and Options are freely transferable theCompany is at this stage a public unlisted company.

Additional Requirements for Capital/Debt Finance

The Company’s capital requirements depend on numerous factors. Dependingon the Company’s investment opportunities and its ability to generate



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Confidential: Kinetiko Energy Limited - Information Memorandum January 2010income from its investments, the Company may require further financing inaddition to the amounts raised pursuant to the offer. For a number of reasonsthese funds may not be readily available.

Additional equity financing will dilute shareholdings and debt financing mayinvolve restrictions on future financing and operating activities. If theCompany is unable to obtain additional financing as required, the Companymay be required to review the scope of its operations.



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Reliance on Personnel

The Company’s success depends in part on the ability of the Directors tooperate effectively, both independently and as a group. The Company’s

success is wholly dependent on the ability of the Directors to identify andacquire an investment business or project which fits the investment guidelines. To manage its growth, the Company must also in due course identify, hire,train, and retain skilled personnel and senior management. The Companypresently has no employees and no Director has a service contract with theCompany.

Other Business Risks

The Company, depending upon the investment it makes may be exposed to anumber of other business risks which include higher than anticipated operatingcosts, an increase in competition and loss or damage to the Company’s

intellectual property and other assets, all of which may have a materialadverse affect on the business and financial position of the Company.

Timing

The Company has not presently identified a sustainable asset or project. Thetiming of such asset identification is not known and the Directors can give noassurance as to the ultimate timing or whether a suitable asset or project willbe identified at all.

Economic Risk and External Factors

Factors such as, but not limited to, economic slow-down or recession,political movements, stock market trends, changing customer preferences,interest rates, inflation levels, technological innovation, industrial disruption,international competition and taxation changes may all have an adverseimpact on the Company and the Company cannot, to a degree of certainty,predict how they will impact on the Company.

Investment May Not be Successful

Although the Company will adopt an extensive approach to analysing aninvestment opportunity there is no guarantee that the investment will

ultimately be successful.

Investment is Speculative

An investment in the Company is speculative. The Company intends toacquire a business or project that falls within its investment guidelines. There is no guarantee that it will be able to acquire such a business orproject, if it does, there is no guarantee that any business or project will beprofitable. There are risks associated with the uncertainty surrounding theCompany’s future investments.



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IPO

10. GLOSSARY OF TERMS

Application Form —The application form attached to, and forming part of

this Memorandum

ASX — Australian Stock Exchange

A$ — Australian Dollars

Board — The board of directors of Kinetiko

Corporations Act — Corporations Act 2001 (Cth)

Directors — Directors of the Company

Kinetiko or Company — Kinetiko Energy Ltd A.C.N. Pending

— Initial Public Offering

Issue — The offer of Shares pursuant to this Memorandum

Share — One (1) fully paid ordinary share in Kinetiko



CB35025

APPLICATION FORM

Please read all instructions on the reverse of this form

I/We apply for_________Shares in Kinetiko Energy Ltd at $A0.10 per Share.

I/We accept that the Shares that are to be allotted to me/us shall be inaccordance with the terms and conditions as appearing in the InformationMemorandum to which this Application Form is attached and subject to theConstitution of the Company.

I/We enclose full application monies of $_____________.

Title, Given Name(s) & Surname or Company name

Joint Applicant 2 or Designated Account

Postal Address Number Street Road

Suburb/Town State Postcode

Contact Name Telephone Number - Business Hours

Telephone Number - After Hours

CHESS HIN (Where applicable)

Tax File Number or Exemption - Applicant # 1

Tax File Number or Exemption - Applicant # 2

You should only attempt to complete this Application Form after you have

fully and carefully considered the contents of the Information Memorandum.



INSTRUCTIONS TO APPLICANTS

Each Applicant must complete all applicable sections of the Application Form(in block letters) and return it together with a cheque for the total amountdue to:

Kinetiko Energy LtdC/- Price SierakowskiLawyers Level 24,44 St George’s Terrace

PERTH WA 6000

Enquiries in respect of this Issue should be addressed to Mr Geoff Michaelat [email protected] or to the above address or by telephone onmobile:(+61 4) 17 09 45 08

Enter the number of Shares that you are applying for on the face of theApplication Form. Applications can be accepted or rejected at the absolutediscretion of the Directors.

Multiply the number of Shares that you are applying for on the face of the

Application form by $0.10 per share then fill in the details in the spacesprovided and send your cheque/draft and completed Application Form to theabovementioned address.

All cheques/bank drafts (which are to be expressed in Australian currency)are to be made payable to "Kinetiko Energy Ltd” and crossed "NotNegotiable”.

If the Application Form is lodged on behalf of joint Applicants then eachApplicant must sign the Form. Forms lodged by incorporated bodies mustbe executed under the common seal of the body, duly affixed in accordancewith its constituent documents or by a properly authorised Attorney. The ACN

or ABN (if applicable) for the company should also be indicated.

The collection of Tax File Numbers ("TFN”) is authorized by the relevant taxlaws and the Privacy Act. Quotation of a Shareholders TFN is not compulsorybut if a Shareholder chooses not to quote his her or its TFN or exemption, taxmust be taken out at the top personal marginal rate plus Medicare levy(currently 48.5 percent in aggregate) from any dividends paid by the Company(to the extent that they are unfranked) on shares which may be received.Completion of this section does not constitute notice to the Company of trust.Applicants who have questions on the use of TFN’s or the exemptions that maybe available are asked to contact their local branch of the Australian Taxation

mailto:[email protected]

mailto:[email protected]



Office.

Please note that if an Application Form is not completed correctly, or if theaccompanying payment is for the wrong amount, it may still be accepted.Any decision of the Directors as to whether to accept an Application Form,and how to construe, amend or complete it, shall be final. An Application Formwill not be treated as being an offer to subscribe for more Shares than isindicated by the amount of the accompanying cheque.

Documents

KinetikoEnergyLtdInformationMemorandumforSeedCapital(January2010)