Peninsula Energy Limited: Exhibit 4.11 - Filed by newsfilecorp.com





CONVERTIBLE BRIDGE LOAN AGREEMENT 

DATED  APRIL 22, 2016 

Between 

PENINSULA ENERGY LIMITED 
as Borrower 

EACH PERSON DESCRIBED IN SCHEDULE 1 
As Guarantors


RESOURCE CAPITAL FUND VI L.P. 
as Lender 

 

 

 

 




CONTENTS 

	Clause
      	  	Page
      
	  	  	  
	1.
      	Definitions
      and interpretation 	1
      
	2.
      	Loan
      	11
      
	3.
      	Conditions
      precedent 	12
      
	4.
      	Interest
      	17
      
	5.
      	Payment,
      repayment and prepayment 	17
      
	6.
      	Convertible
      Note 	19
      
	7.
      	Representations
      and warranties 	22
      
	8.
      	Undertakings
      	24
      
	9.
      	Events
      of Default 	30
      
	10.
      	Taxes,
      costs and expenses 	33
      
	11.
      	Indemnity
      	34
      
	12.
      	Assignment
      	34
      
	13.
      	Guarantee
      and Indemnity 	34
      
	14.
      	Confidentiality
      	38
      
	15.
      	PPSA
      exclusions 	39
      
	16.
      	General
      	40
      
	 	 
	Schedules 	  
	 	  
	Guarantors
      	43
      
	Notice
      details 	44
      
	Funding
      notice 	46
      
	Intercreditor
      Principles 	47
      
	Verification
      certificates 	49
      
	Form
      of Certificate 	55
      
	form
      of conversion notice 	56
      
	  	  	  
	signatories
      	57
      






THIS AGREEMENT is dated April 22, 2016 and is made

BETWEEN: 

	(1) 	
      PENINSULA ENERGY LIMITED (ABN 67 062 409 303) of
      Unit 17, Level 2, 100 Railway Road, Subiaco WA 6008 (the
      Borrower);

	 	 
	(2) 	
      EACH PARTY NAMED IN SCHEDULE 1 (the
      Guarantors); and

	 	 
	(3) 	
      RESOURCE CAPITAL FUND VI L.P. of 1400 Sixteenth
      Street, Suite 200, Denver, Colorado 80202, USA (the
  Lender).



IT IS AGREED as follows: 

	1. 	
      DEFINITIONS AND
INTERPRETATION



The meanings of the terms used in this
agreement are set out below. 

	1.1 	
      Definitions



In this agreement; 

Accounting Standards means
generally accepted accounting principles in Australia. 

Affiliate means, in relation to
any person, a Subsidiary of that person or a Holding Company of that person or
any other Subsidiary of that Holding Company, and includes (for the purposes of
the Lender only) any partnership, limited partnership, entity or trust that is
managed by RCF Management LLC or Resource Capital Funds Management Pty Ltd.


Annual Budget means the
consolidated annual budget for the Group, broken down on a monthly basis, in
reasonable detail for such financial year as customarily prepared by management
of the Borrower for its internal use, setting out the principal assumptions upon
which that budget is based, prepared by the Borrower and provided to the Lender,
in a form reasonably acceptable to the Lender. 

Arrangement Fee Shares has the
meaning given to it in clause 2.4. 

ASIC means the Australian
Securities and Investments Commission. 

ASX means ASX Limited or the
Australian Securities Exchange, as the context requires. 

Australian Dollars or AU$
means the lawful currency of Australia. 

Authorisation means: 

	 	(a) 	
      any consent, registration, filing, agreement, notice of
      non objection, notarisation, certificate, licence, approval, permit,
      authority or exemption from, by or with a Regulatory Authority;
  or

	 	 	 
	 	(b) 	
      in relation to anything which a Regulatory Authority may
      prohibit or restrict within a specific period, the expiry of that period
      without intervention or action or notice of intended intervention or
      action.



1 




BCFM has the meaning given in
the Senior Facility Agreement. 

Beneficiary has the meaning
given to that term in the Security Trust Deed. 

Bill means a bill of exchange as
defined in the Bills of Exchange Act 1909 (Cth). 

Business Day means a day (not
being a Saturday, Sunday or public holiday in that place) on which banks are
open for general banking business in each of Perth and Sydney, Australia, New
York, United States of America, and London, United Kingdom, excluding a
Saturday, Sunday or public holiday. 

Certificate means a Certificate
for a Convertible Note, substantially in the form of Schedule 6. 

Change of Control of the
Borrower means where a person who at the date of this agreement has Control of
the Borrower ceases to have Control of the Borrower or one or more persons
acquires Control of the Borrower after the date of this agreement, other than
any change in the percentage of Shares held by either the Lender or Pala. 

Condition Subsequent means the
conditions set out in clause 3.3(a) . 

Control of a corporation
includes the direct or indirect power to directly or indirectly: 

	 	(a) 	
      direct the management or policies of the
    corporation;

	 	 	 
	 	(b) 	
      appoint or remove more than one half of the directors of
      the corporation;

	 	 	 
	 	(c) 	
      cast or control the casting of a majority of the votes
      which may be cast at a meeting of directors of the corporation;
  or

	 	 	 
	 	(d) 	
      cast or control the casting of 20% or more of the maximum
      number of votes which may be cast at a general meeting of members of the
      corporation.



Conversion means the conversion
of the Lender’s participation in any principal amount outstanding under the Loan
and/or any interest accrued but unpaid thereon into Shares in accordance with
clause 6. 

Conversion Date means the
Business Day on which a Conversion is to occur, which shall be a Trading Day not
less than 5 Business Days after the date on which a Conversion Notice is given
by the Lender. 

Conversion Notice means notice
of a required Conversion, substantially in the form of Schedule 7. 

Conversion Notice Date means the
date on which a Conversion Notice is given by the Lender. 

Convertible Note means a
convertible note issued by the Borrower on, and subject to, the terms set out in
clause 6, as evidenced by a Certificate. 

Corporations Act means the
Corporations Act 2001 (Cth). 

CS Transaction Documents means:


	 	(a) 	
      the Intercreditor Agreement – Investec;

	 	 	 
	 	(b) 	
      the Convertible Note; and



2 





	 	(c) 	
      each Security Document other than the Security Trust
      Deed.



Distributions means any
dividend, distribution or other amount declared or paid by any Obligor on any
Marketable Securities issued by it. 

Encumbrances means an interest
or power: 

	 	(a) 	
      reserved in or over an interest in any asset including,
      but not limited to, any retention of title; or

	 	 	 
	 	(b) 	
      created or otherwise arising in or over any interest in
      any asset under a security agreement, bill of sale, mortgage, charge,
      lien, pledge, trust or power or any other agreement having similar
      effect,



by way of, or having similar commercial
effect to, security for the payment of a debt, any other monetary obligation or
the performance of any other obligation, and includes, but is not limited to,
any agreement to grant or create any of the above and includes a security
interest within the meaning of section 12(1) of the PPSA. 

Event of Default means any event
specified in clause 9.2. 

Exchange Rate means the spot
rate of exchange denominated in US Dollars per Australian Dollar (AU$/US$),
taken from the Reserve Bank of Australia’s website. 

Excluded Tax means any Tax
imposed by any jurisdiction on the net income of the Lender but not a Tax: 

	 	(a) 	
      calculated on or by reference to the gross amount of any
      payment (without allowance for any deduction) derived by the Lender under
      any Transaction Document or any other document referred to in a
      Transaction Document; or

	 	 	 
	 	(b) 	
      imposed as a result of the Lender being considered a
      resident of or organised or doing business in that jurisdiction solely as
      a result of it being a party to any Transaction Document or any
      transaction contemplated by any Transaction
Document.



Face Value means the principal
amount outstanding under the Loan. 

Financial Indebtedness means any
debt or other monetary liability in respect of moneys borrowed or raised or any
financial accommodation including under or in respect of any: 

	 	(a) 	
      Bill, bond, debenture, note or similar
  instrument;

	 	 	 
	 	(b) 	
      acceptance, endorsement or discounting
  arrangement;

	 	 	 
	 	(c) 	
      Guarantee in respect of any moneys borrowed or raised or
      any financial accommodation;

	 	 	 
	 	(d) 	
      finance or capital lease;

	 	 	 
	 	(e) 	
      agreement for the deferral of a purchase price or other
      payment in relation to the acquisition of any asset or service for more
      than 90 days;

	 	 	 
	 	(f) 	
      obligation to deliver goods or provide services paid for
      in advance by any financier;



3 





	 	(g) 	
      agreement for the payment of capital or premium on the
      redemption of any preference shares;

	 	 	 
	 	(h) 	
      interest or currency swap or hedge arrangement, financial
      option, futures contract or analogous transaction (the amount of such
      Financial Indebtedness being the marked to market value of the relevant
      transaction); or

	 	 	 
	 	(i) 	
      counter indemnity obligation in respect of a guarantee,
      bond, standby or documentary letter of credit or any other instrument
      issued by a bank or financial institution,



and irrespective of whether the debt or
liability: 

	 	(j) 	
      is present or future;

	 	 	 
	 	(k) 	
      is actual, prospective, contingent or
otherwise;

	 	 	 
	 	(l) 	
      is at any time ascertained or unascertained;

	 	 	 
	 	(m) 	
      is owed or incurred alone or severally or jointly or both
      with any other person; or

	 	 	 
	 	(n) 	
      comprises any combination of the
above.



Financial Reports means in
relation to an entity, the following financial statements and information in
relation to the entity, prepared for its financial half year or financial year:


	 	(a) 	
      a statement of financial performance;

	 	 	 
	 	(b) 	
      a statement of financial position; and

	 	 	 
	 	(c) 	
      a statement of cashflows,



together with any notes to those
documents and any accompanying reports, statements, declarations and other
documents or information. 

Funding Notice means a notice
given under clause 2.2(b) . 

Government Agency any government
or any governmental, semi-governmental, administrative, fiscal or judicial body,
department, commission, authority, tribunal, agency or entity. 

Group means the Borrower and its
Subsidiaries. 

GST means the goods and services
tax levied under the A New Tax System (Goods and Services Tax) Act 1999
(Cth). 

Guarantee means any guarantee,
suretyship, letter of credit, letter of comfort or any other obligation
(whatever called and of whatever nature): 

	 	(a) 	
      to provide funds (whether by the advance or payment of
      money, the purchase of or subscription for shares or other securities, the
      purchase of assets or services, or otherwise) for the payment or discharge
      of;

	 	 	 
	 	(b) 	
      to indemnify any person against the consequences of
      default in the payment of; or

	 	 	 
	 	(c) 	
      to be responsible for, any debt or monetary liability of
      another person or the assumption of any responsibility or obligation in
      respect of the insolvency or the financial condition of any other person.
      



4 




Holding Company means, in
relation to a person, any other person in respect of which it is a
Subsidiary. 

Insolvent means, in relation to
an Obligor, unable to pay its debts when they are due or is or becomes unable to
pay its debts within the meaning of the Corporations Act or is presumed to be
insolvent under the Corporations Act. 

Intercreditor Agreement –
Investec means an intercreditor agreement to be entered into between,
amongst others, the Lender, Pala, the Senior Lender and the Security Trustee in
relation to the Loan, the Pala Loan, the Senior Facility and the Security, which
will be consistent with the Intercreditor Principles. 

Intercreditor Agreement –
RCF/Pala means an intercreditor agreement to be entered into between,
amongst others, the Lender and Pala in relation to the Loan, the Pala Loan and
the Security. 

Intercreditor Principles means
the principles set out in Schedule 4. 

Interest Conversion Amount means
the amount of any interest accrued but unpaid on the principal amount
outstanding under the Loan to be converted into Shares in accordance with clause
6, as specified by the Lender in a Conversion Notice. 

Interest Payment Date has the
meaning given in clause 4.1(a) . 

Interest Conversion Price has
the meaning given to it in clause 6.4(b) . 

Interest Conversion Shares means
the Shares to which the Lender is entitled on conversion of the Interest
Conversion Amount as calculated pursuant to clause 6.3. 

Life of Mine Plan has the
meaning given in the Senior Facility Agreement. 

Listing Rules means the listing
rules of the ASX. 

Loan means the aggregate amount
of US$9,630,000 to be made available by the Lender to the Borrower in accordance
with this agreement or the principal amount outstanding for the time being of
that loan (as the context requires). 

Loan Conversion Amount means the
principal amount outstanding under the Loan to be converted into Shares in
accordance with clause 6, as specified by the Lender in a Conversion Notice.


Loan Conversion Price means the
price determined in accordance with clause 6.4. 

Loan Conversion Shares means the
Shares to which the Lender is entitled on conversion of the Loan Conversion
Amount as calculated pursuant to clause 6.3. 

Marketable Securities means
marketable securities as defined in section 9 of the Corporations Act. 

Market Share Price means, in
respect of a Share, the volume weighted average market price quoted in AU$ on
the ASX for the 5 Trading Days immediately prior to: 

	 	(a) 	
      in respect of Clause 4.5, the relevant Interest Payment
      Date; or



5 





	 	(b) 	
      in respect of Clause 2.4(b), the date of the drawing of
      the Loan.



Maturity Date means 12 months
from the date of advance of the Loan to the Borrower. 

Material Adverse Effect means a
material adverse effect upon: 

	 	(a) 	
      an Obligor's ability to perform any of its obligations
      under any Transaction Document;

	 	 	 
	 	(b) 	
      the enforceability or priority of a Transaction Document
      or any Encumbrance provided for by a Transaction Document;

	 	 	 
	 	(c) 	
      the assets, prospects, business, condition (financial or
      otherwise) or operations of any Obligor; or

	 	 	 
	 	(d) 	
      the value of the Secured
Property.



Meeting Materials means all
materials to be provided to Shareholders for the purposes of passing the
Shareholder Resolutions, including the independent expert's report and the
notice of meeting. 

Obligor means the Borrower or a
Guarantor. 

Officer means: 

	 	(a) 	
      in relation to any member of the Group, a director or
      secretary, or a person notified to be an authorised officer, of such
      entity; and

	 	 	 
	 	(b) 	
      in relation to the Lender, any officer or authorised
      person of the Lender.



Outstanding Money means all
debts and monetary liabilities of any Obligor to the Lender under or in relation
to any Transaction Document and in any capacity, irrespective of whether the
debts or liabilities: 

	 	(a) 	
      are present or future;

	 	 	 
	 	(b) 	
      are actual, prospective, contingent or
  otherwise;

	 	 	 
	 	(c) 	
      are at any time ascertained or unascertained;

	 	 	 
	 	(d) 	
      are owed or incurred by or on account of any Obligor
      alone, or severally or jointly with any other person;

	 	 	 
	 	(e) 	
      are owed to or incurred for the account of the Lender
      alone, or severally or jointly with any other person;

	 	 	 
	 	(f) 	
      are owed to any other person as agent (whether disclosed
      or not) for or on behalf of the Lender;

	 	 	 
	 	(g) 	
      are owed or incurred as principal, interest, fees,
      charges, taxes, duties or other imposts, damages (whether for breach of
      contract or tort or incurred on any other ground), losses, costs or
      expenses, or on any other account; or

	 	 	 
	 	(h) 	
      comprise any combination of the
above.



Pala means Pala Investments
Limited of 12 Castle Street, St Helier, Jersey JE2 3RT. 

6 




Pala Loan means the ‘Loan’ as
defined in the Pala Loan Agreement. 

Pala Loan Agreement means the
loan agreement dated on or about the date of this agreement between the Obligors
and Pala. 

Pala Transaction Documents means
the Transaction Documents as defined in the Pala Loan Agreement.

Permitted Disposal has the
meaning given to that term in the Senior Facility Agreement. 

Permitted Encumbrances means:


	 	(a) 	
      the Security (as defined in the Pala Loan
    Agreement);

	 	 	 
	 	(b) 	
      Encumbrances in existence and disclosed to (and accepted
      by) the Lender in writing prior to the date of this agreement to secure
      Financial Indebtedness; and

	 	 	 
	 	(c) 	
      Encumbrances coming within the definition of Permitted
      Encumbrance in the Senior Facility Agreement.



Permitted Financial
Accommodation has the meaning given to that term in the Senior Facility
Agreement.

Permitted Financial Indebtedness
means: 

	 	(a) 	
      the Outstanding Moneys (as defined in the Pala Loan
      Agreement); and

	 	 	 
	 	(b) 	
      Financial Indebtedness coming within the definition of
      Permitted Finance Debt in the Senior Facility
Agreement.



Potential Event of Default means
any event or circumstance which, with the giving of notice, lapse of time,
satisfaction of a condition or a determination (or any combination of these),
would be an Event of Default. 

Power means any right, power,
authority, discretion or remedy conferred on the Lender by any Transaction
Document or any applicable law. 

PPSA means the Personal
Property Securities Act 2009 (Cth). 

Project Document has the meaning
given to that term in the Senior Finance Documents. 

Proportionate Share means in
relation to: 

	 	(a) 	
      Pala, at the time of advance of the Loan 35.8% and,
      thereafter at any time, the proportion that the Pala Loan outstanding at
      that time bears to the total of the Pala Loan outstanding and the Loan
      outstanding at that time; and

	 	 	 
	 	(b) 	
      the Lender, at the time of advance of the Loan 64.2% and,
      thereafter at any time, the proportion that the Loan outstanding at that
      time bears to the total of the Loan and the Pala Loan outstanding at that
      time.



Quarter means a period of 3
calendar months ending on 31 March, 30 June, 30 September and 31 December in
each year. 

7 




Related Body Corporate has the
same meaning that it has in the Corporations Act but on the basis that
Subsidiary has the meaning given in this agreement and that body corporate
includes any partnership, limited partnership, entity and trust. 

RCF Information means
information regarding the Lender provided by the Lender to the Borrower in
writing for inclusion in the Meeting Materials. 

Regulatory Authority includes
ASX and any Government Agency.

Security means each Security
Document as defined in the Senior Facility Agreement, each for the purposes of
securing the Outstanding Moneys and any other obligation of any Obligor under
the Transaction Documents. 

Security Documents means each
Security, the Security Trust Accession Deed, the Security Trust Amendment Deed
and the Security Trust Deed. 

Secured Property means the
property subject to the Security. 

Security Trust Accession Deed
means an accession deed to be entered into between the Obligors, the Senior
Lender, the Security Trustee, Pala and the Lender by which Pala and the Lender
are joined as Beneficiaries to the Security Trust Deed.

Security Trust Amendment Deed
means a deed to be entered into between the Senior Lender, the Security
Trustee, the Obligors, the Lender and Pala by which the terms of the Security
Trust Deed are amended as necessary to reflect the Intercreditor Principles and
the joining of the Lender and Pala as Beneficiaries to the Security Trust Deed.


Security Trust Deed means the
security trust deed dated 11 December 2015 between the Obligors, the Senior
Lender, Investec Australia Limited and Investec Bank Plc as Original Hedge
Counterparties and the Security Trustee.

Security Trustee means the
security trustee from time to time pursuant to the Security Trust Deed, which as
at the date of this document is Investec Australia Limited (ACN 140 381 184).


Senior Facility means the
facilities made available under the Senior Facility Agreement. 

Senior Facility Agreement means
the facility agreement dated 11 December 2015 between the Obligors, the Senior
Lender and the Security Trustee, in the form it was in as at the date of this
agreement as amended with the approval of the Lender from time to time. 

Senior Finance Documents means
each Finance Document as defined in the Senior Facility Agreement. 

Senior Lender means Investec
Bank Plc. 

Shareholder Meeting means a
meeting of Shareholders convened by the Borrower to consider the Shareholder
Resolutions. 

Shareholder Resolutions means
ordinary resolutions of the Shareholders for the purposes of: 

	 	(a) 	
      section 611, item 7 of the Corporations Act approving the
      maximum voting power pursuant to the issue of Arrangement Fee Shares,
      Interest Conversion Shares and Loan Conversion Shares, to the Lender and
      any nominee of the Lender;



8 





	 	(b) 	
      ASX Listing Rule 10.11 approving the issue of Arrangement
      Fee Shares and the Convertible Note, if ASX exercises its discretion
      pursuant to ASX Listing Rule 10.11.2:

	 	 	 
	 	(c) 	
      ASX Listing Rule 10.1 approving the grant of the Security
      in accordance with the Transaction Documents in favour of the Lender;
      and

	 	 	 
	 	(d) 	
      any other Authorisation considered necessary by the
      Lender for the implementation of the transactions contemplated under the
      Transaction Documents.



Shareholders means the
shareholders of the Borrower. 

Shares means ordinary shares in
the issued share capital of the Borrower. 

Subsidiary has the meaning given
in the Corporations Act, but also includes in relation to an entity,
partnership, limited partnership or trust: 

	 	(a) 	
      an entity, partnership, limited partnership or trust that
      is controlled (within the meaning of the Corporations Act) by the first
      mentioned entity;

	 	 	 
	 	(b) 	
      a trust, where the trust would have been a Subsidiary of
      the first mentioned entity if the unit or other beneficial interest of the
      trust was a share; and

	 	 	 
	 	(c) 	
      a corporation or a trust that would have been a
      Subsidiary of a trust if that trust were a
corporation.



Tax means:

	 	(a) 	
      any tax, including the GST, levy, charge, impost, duty,
      fee, deduction, compulsory loan or withholding; or

	 	 	 
	 	(b) 	
      any income, stamp or transaction duty, tax or
    charge,



which is assessed, levied, imposed or
collected by any Government Agency and includes, but is not limited to, any
interest, fine, penalty, charge, fee or other amount imposed on or in respect of
any of the above. 

Title Documents means any
original, duplicate or counterpart certificate or document of title including
any real property certificate of title, a certificate of units in a unit trust,
share certificate or certificate evidencing an Investment Instrument or
Negotiable Instrument. 

Total Convertible Amount means
the amount equal to the principal amount outstanding under the Loan plus accrued
and unpaid interest payments (calculated in accordance with clause 4).


Trading Day means a day on which
the ASX is open for business. 

Transaction Documents means:


	 	(a) 	
      this agreement;

	 	 	 
	 	(b) 	
      the Convertible Note;

	 	 	 
	 	(c) 	
      the Intercreditor Agreement – RCF/Pala;

	 	 	 
	 	(d) 	
      the Intercreditor Agreement –
Investec;



9 





	 	(e) 	
      each Security Document;

	 	 	 
	 	(f) 	
      any other document that the Borrower and the Lender agree
      in writing is a Transaction Document; and

	 	 	 
	 	(g) 	
      any document or agreement entered into or given under any
      of the above.



US Dollars or US$ means
the lawful currency of the United States of America. 

	1.2 	
      Interpretation



In this agreement, headings and bold
type are for convenience only and do not affect the interpretation of this
agreement and, unless the context otherwise requires: 

	 	(a) 	
      words indicating the singular include the plural and vice
      versa;

	 	 	 
	 	(b) 	
      words indicating a gender include any gender;

	 	 	 
	 	(c) 	
      other parts of speech and grammatical forms of a word or
      phrase defined in this agreement have a corresponding meaning;

	 	 	 
	 	(d) 	
      an expression importing a natural person includes any
      company, partnership, joint venture, association, corporation or other
      body corporate and any Government Agency;

	 	 	 
	 	(e) 	
      a reference to any thing (including, but not limited to,
      any right) includes a part of that thing but nothing in this clause 1.2(e)
      implies that performance of part of an obligation constitutes performance
      of the obligation;

	 	 	 
	 	(f) 	
      a reference to a clause, party, attachment, exhibit or
      schedule is a reference to a clause of, and a party, attachment, exhibit
      and schedule to, this agreement and a reference to this agreement includes
      any attachment, exhibit and schedule;

	 	 	 
	 	(g) 	
      a reference to a document includes all amendments or
      supplements to, or replacements or novations of, that document;

	 	 	 
	 	(h) 	
      a reference to a party to any document includes that
      party’s successors and permitted assigns;

	 	 	 
	 	(i) 	
      no provision of this agreement will be construed
      adversely to a party solely on the ground that the party was responsible
      for the preparation of this agreement or that provision;

	 	 	 
	 	(j) 	
      a covenant or agreement on the part of two or more
      persons binds them jointly and severally; and

	 	 	 
	 	(k) 	
      a reference to liquidation includes official management,
      appointment of an administrator, compromise, arrangement, merger,
      amalgamation, reconstruction, winding up, dissolution, assignment for the
      benefit of creditors, scheme, composition or arrangement with creditors,
      insolvency, bankruptcy, or any similar procedure or, where applicable,
      changes in the constitution of any partnership or person, or
  death.




	1.3 	
      Business Day



Where the day on or by which any thing
is to be done is not a Business Day, that thing must be done on or by the
preceding Business Day.

10 





	1.4 	
      Agreement components



This agreement includes any schedule.


	1.5 	
      Security Trust Deed, Intercreditor Agreement and
      Intercreditor Principles



This agreement is to be read in
conjunction with the Intercreditor Principles and following the Lender becoming
a party to the Security Trust Deed or the Intercreditor Agreement - Investec,
each of those documents. Where there is any inconsistency between this agreement
and the Intercreditor Principles, the Intercreditor Principles shall take
precedence to the extent of the inconsistency and, following the Lender becoming
a party to the Security Trust Deed or the Intercreditor Agreement – Investec,
where there is any inconsistency between this agreement and either of those
documents, the Security Trust Deed or Intercreditor Agreement-Investec, as
appropriate, shall take precedence to the extent of the inconsistency. 

	1.6 	
      PPSA incorporated
definitions



The following words and phrases defined
in the PPSA have the same meaning in this agreement: 

	 	(a) 	
      Chattel Paper;

	 	 	 
	 	(b) 	
      Investment Instrument; and

	 	 	 
	 	(c) 	
      Negotiable Instrument.




	2. 	
      LOAN




	2.1 	
      Amount



The Lender agrees to provide the Loan
to the Borrower on the terms and conditions contained in this agreement. 

	2.2 	
      Drawing




	 	(a) 	
      The Lender is only required to provide the Loan as a
      single drawing of no less than US$9,630,000.

	 	 	 
	 	(b) 	
      If the Borrower wants to draw the Loan the Borrower must
      provide a Funding Notice in the form set out in Schedule 3 at least 3
      Business Days before the nominated funding date.

	 	 	 
	 	(c) 	
      If the Borrower provides a Funding Notice requesting the
      drawing of the Loan, the Borrower must also provide a Funding Notice (as
      defined in the Pala Loan Agreement) requesting the drawing of the Pala
      Loan.




	2.3 	
      Purpose



The Borrower must apply the Loan
together with the proceeds of any Pala Loan only for the following purposes up
to the following limits: 

	 	(a) 	
      for advancing by way of loan up to US$5,500,000 to Strata
      Energy Inc to be used by Strata Energy Inc for working capital
      expenditure;

	 	 	 
	 	(b) 	
      by applying up to US$2,000,000 towards working capital
      expenditure of the Borrower;



11 





	 	(c) 	
      by applying up to US$1,500,000 towards project
      development costs on the Karoo Project; and

	 	 	 
	 	(d) 	
      by applying up to US$6,000,000 towards project
      development costs on the Lance Project,



which must be applied in a manner
approved by the Lender, until the Condition Subsequent in clause 3.3(a)(v) has
been satisfied, and thereafter must be applied in accordance with the approved
BCFM (including the rolling cashflow forecast) or as otherwise approved by the
Lender, acting reasonably. 

	2.4 	
      Arrangement Fee




	 	(a) 	
      The Borrower shall pay to the Lender an arrangement fee
      of US$192,600 (calculated at 2.00% of the maximum amount of the Loan
      (being US$9,630,000)) which shall be due and payable on the date of the
      drawing of the Loan (Arrangement Fee).

	 	 	 
	 	(b) 	
      The Lender may by written notice to the Borrower, on or
      before the date of the drawing of the Loan, elect that the Arrangement Fee
      be satisfied by the issue and allotment to the Lender of a number of
      Shares as determined by dividing:




	 	(i) 	
      the Arrangement Fee (converted from US$ into AU$ based on
      the Exchange Rate on the Conversion Notice Date); by

	 	 	 
	 	(ii) 	
      an issue price equal to the lower of AU$0.80 per Share
      and the Market Share Price,



and rounding the resulting number up
to the nearest whole number of Shares (Arrangement Fee Shares).

	 	(c) 	
      If the Lender makes an election in accordance with Clause
      2.4(b), then subject to satisfaction of the Conditions Subsequent in
      clause 3.3(a)(i)(C) and 3.3(a)(i)(D) if required to issue the Shares in
      accordance with this clause (Relevant Conditions Subsequent), the
      Shares must be issued and allotted under the disclosure document to be
      issued in accordance with Clause 3.5. If the Relevant Conditions
      Subsequent are required and have not been satisfied within 120 days of the
      date of the drawing of the Loan, then the Borrower must pay the
      Arrangement Fee in cash within 5 Business Days of the earlier of the end
      of that 120 day period and the Shareholders not approving the issue of the
      Shares.

	 	 	 
	 	(d) 	
      The Borrower must do everything reasonably necessary to
      complete an issue and allotment of Shares in accordance with this clause
      2.4 (including, but not limited to, obtaining any required Shareholder
      approval) and to apply for listing of those Shares on
  ASX.




	3. 	
      CONDITIONS PRECEDENT

	 	 
	3.1 	
      Documents to be provided



The Lender is not obliged to provide
the Loan until the Lender has received all of the following in form and of
substance satisfactory to the Lender: 

	 	(a) 	
      Transaction Documents: each Transaction Document,
      other than the CS Transaction Documents, duly executed by all parties to
      them;

	 	 	 
	 	(b) 	
      Information regarding Secured Property: such
      information in relation to the Senior Finance Documents and Secured
      Property as the Lender reasonably requires to ensure that the Security
      will become fully effective and perfected in a manner satisfactory to the
      Lender, following satisfaction of the Conditions
  Subsequent;



12 





	 	(c) 	
      Corporate authorisations and other approvals: a
      certificate from 2 directors (or otherwise a director and company
      secretary) of each Obligor substantially in the form of Schedule 5
      completed in accordance with the instructions in that schedule and with
      the attachments referred to in it;

	 	 	 
	 	(d) 	
      Fees and expenses: evidence that all fees and
      expenses due and payable under or in respect of the Transaction Documents
      have been paid or will be paid from the proceeds of the Loan;

	 	 	 
	 	(e) 	
      Investment Committee approval: confirmation that
      the Lender has completed its investment committee approval to its
      satisfaction;

	 	 	 
	 	(f) 	
      Reports: copies of the BCFM and Life of Mine Plan
      in the form approved by the Senior Lender in accordance with the Senior
      Finance Documents, each in a form acceptable to the Lender;

	 	 	 
	 	(g) 	
      Searches: a schedule of all registrations under
      the PPSA [and similar registers in other jurisdictions] in respect of each
      Obligor and its assets together with evidence to the reasonable
      satisfaction of the Lender as to the nature of the PPSA registrations and
      that they are consistent with the requirements of the Transaction
      Documents and the Senior Finance Documents;

	 	 	 
	 	(h) 	
      Pala Loan:




	 	(i) 	
      a copy of each of the Pala Transaction Documents other
      than the CS Transaction Documents (as defined in the Pala Loan Agreement),
      duly executed by all parties to them; and

	 	 	 
	 	(ii) 	
      evidence that all conditions precedent under the Pala
      Loan Agreement have been satisfied or waived (or will be satisfied or
      waived upon the conditions precedent under this agreement having been
      satisfied or waived); and




	 	(i) 	
      Other matters: any other certificates,
      Authorisations, documents, matters or things which the Lender reasonably
      requires.




	3.2 	
      Conditions precedent to the
Loan



The obligation of the Lender to provide
the Loan is subject to the condition that, on the date on which the Funding
Notice is given and on the date on which the Loan is to be provided: 

	 	(a) 	
      No default: no Event of Default or Potential Event
      of Default is continuing or would occur as a result of providing the
      drawing of the Loan;

	 	 	 
	 	(b) 	
      Representations true: each representation and
      warranty under the Transaction Documents is true and correct;
and

	 	 	 
	 	(c) 	
      Pro rata drawings: the Lender has received
      evidence satisfactory to it that Pala will provide the Pala Loan to the
      Borrower on or before the date of the drawing of the Loan (including a
      copy of the relevant funding notice under the Pala Loan
  Agreement).




	3.3 	
      Conditions subsequent




	 	(a) 	
      It is a condition subsequent to the Loan that the
      Obligors procure that the following conditions are satisfied, to the
      reasonable satisfaction of the Lender, in the case of the Conditions
      Subsequent in clauses 3.3(a)(i), (ii), (iii) and (iv) within 120 days of
      the date of the drawing of the Loan and in the case of the Condition
      Subsequent in clause 3.3(a)(v) within 21 days of the date of the drawing
      of the Loan (Initial Period as applicable):




13 





	 	(i) 	
      Approvals:




	 	(A) 	
      the ASX grants a waiver of Listing Rule 10.1 on terms and
      conditions acceptable to the Lender in respect of the Security;

	 	 	 
	 	(B) 	
      the Borrower obtains the approval of its Shareholders for
      the purposes of Listing Rule 10.1 for the grant of the Security in favour
      of the Lender and to the extent necessary the entry into the Transaction
      Documents;

	 	 	 
	 	(C) 	
      If ASX exercises its discretion pursuant to ASX Listing
      Rule 10.11.2:




	 	I. 	
      ASX grants a waiver of ASX Listing Rule 10.13.3 to enable
      Arrangement Fee Shares to be issued, if required, and the Interest
      Conversion Shares and Loan Conversion Shares to be issued after 1 month of
      the Shareholder Resolutions being approved; and

	 	 	 
	 	II. 	
      ASX grants a waiver of ASX Listing Rule 10.13.5 to enable
      the Meeting Materials not to contain an issue
price;




	 	(D) 	
      the Borrower obtains the approval of its Shareholders for
      the Shareholder Resolutions;




	 	(ii) 	
      CS Transaction
Documents:




	 	(A) 	
      each of the CS Transaction Documents is agreed by each
      party to the CS Transaction Documents; and

	 	 	 
	 	(B) 	
      each CS Transaction Document is duly executed by all
      parties to them; and

	 	 	 
	 	(C) 	
      evidence that each Security has been registered and is a
      valid and perfected security for the Outstanding Moneys and all other
      obligations of the Obligors under the Transaction
  Documents;




	 	(iii) 	
      Title Documents: evidence that the Security
      Trustee holds each Title Document required to be lodged with the Senior
      Lender under the Senior Finance Documents or the Lender under any
      Transaction Document, including share certificates and duly executed blank
      transfers of any Marketable Securities forming part of the Secured
      Property;

	 	 	 
	 	(iv) 	
      Opinions: legal opinions from lawyers acceptable
      to the Lender in each jurisdiction where an Obligor is incorporated as to
      the due incorporation of the Obligor and the due execution and
      enforceability of each of the CS Transaction Documents; and

	 	 	 
	 	(v) 	
      Updated BCFM: the Borrower delivers to the Lender,
      in form and substance acceptable to the Lender, an updated BCFM including
      a rolling 13 week cashflow forecast.




	 	(b) 	
      The Obligors must use all reasonable endeavours to
      procure that the Conditions Subsequent are satisfied as soon as possible
      after the date of this agreement and continue to be satisfied at all times
      that such conditions are required to remain in force. Without limiting the
      forgoing the Borrower must engage with all relevant Regulatory Authorities
      promptly after the date of this agreement to confirm that the nature and
      extent of any Authorisation necessary to implement the arrangements
      contemplated by the Transaction Documents, including consulting the ASX to
      determine whether it proposes to apply its discretion under ASX Listing
      Rule 10.11.2 with respect to the issue of Shares to the Lender and apply
      for all such Authorisations, including those required to satisfy the
      Conditions Subsequent. 



14 





	 	(c) 	
      The Borrower must:




	 	(i) 	
      Regulatory approval: prior to the provision of any
      application for an Authorisation to a Regulatory Authority for the purpose
      of satisfying any Condition Subsequent, provide a draft of each such
      application to the Lender and allow the Lender a reasonable opportunity to
      review and provide comments on each such application;

	 	 	 
	 	(ii) 	
      Preparation of Meeting Materials: as soon as is
      practicable after the date of this agreement, prepare the Meeting
      Materials in accordance with all applicable laws, the Corporations Act,
      ASIC RG 74 and the Listing Rules;

	 	 	 
	 	(iii) 	
      RCF comments on Meeting Materials and disclosure
      document: provide the Lender with a copy of the draft Meeting
      Materials and the disclosure document referred to in clause 3.5, so that
      the Lender has reasonable time to provide comments on the draft Meeting
      Materials and the disclosure document and take account of such comments in
      preparation of the Meeting Materials and the disclosure
document;

	 	 	 
	 	(iv) 	
      Independent Expert: promptly appoint an
      independent expert and provide all assistance and information reasonably
      requested by the independent expert in connection with the preparation of
      the independent expert’s report for inclusion in the Meeting Materials
      (including any updates to such report);

	 	 	 
	 	(v) 	
      Directors’ recommendation: include in the Meeting
      Materials a statement by the board of directors of the Borrower (other
      than any director appointed by the Lender or an Affiliate of the Lender)
      recommending that the Borrower’s shareholders vote in favour of the
      Shareholder Resolutions; and

	 	 	 
	 	(vi) 	
      Shareholder Meeting: convene the Shareholder
      Meeting to seek the approval by the Shareholders of the Shareholder
      Resolutions and finalise, approve and despatch the Meeting Materials, in a
      form approved by the Lender (such approval not to be unreasonably withheld
      or delayed), to Shareholders.




	 	(d) 	
      If the Conditions Subsequent in clauses 3.3(a)(ii),
      (a)(iii) and (a)(iv) (CS Transaction Document Conditions
      Subsequent) have not been satisfied by the end of the Initial Period
      then, provided that the Lender reasonably determines that the CS
      Transaction Document Conditions Subsequent remain capable of satisfaction
      within a reasonable period, the Lender and the Borrower shall negotiate in
      good faith to agree a reasonable period within which to satisfy the CS
      Transaction Document Conditions Subsequent.




	 	(e) 	
      If:




	 	(i) 	
      any of the Conditions Subsequent in clause 3.3(a) are not
      satisfied in accordance with clause 3.3(a) by the end of the applicable
      Initial Period; and

	 	 	 
	 	(ii) 	
      in the case of the Conditions Subsequent in clauses
      3.3(a)(ii), (a)(iii) and (a)(iv) the Lender and the Borrower are unable to
      agree to a reasonable further period within which the CS Transaction
      Document Conditions Subsequent must be satisfied in accordance with clause
      3.3(d) or if, having agreed such a period, the CS Transaction Document
      Conditions Subsequent are not satisfied within that period,
  



15 




then in any such case the Lender may
by notice to the Borrower declare the Outstanding Monies and all other amounts
owing under the Transaction Documents immediately due and payable. 

	3.4 	
      Lender's obligations



The Lender must: 

	 	(a) 	
      Lender information: as soon as is reasonably
      practicable after the date on which the Borrower provides the Lender with
      a draft of the Meeting Materials, the Lender will prepare and provide to
      the Borrower the RCF Information for inclusion in the Meeting Materials,
      including all information required by all applicable laws, ASIC RG 74 and
      the ASX Listing Rules, and provide written consent to the Borrower for the
      inclusion of that information in the Meeting Materials;

	 	 	 
	 	(b) 	
      Review of Meeting Materials: review the drafts of
      the Meeting Materials prepared by the Borrower and provide comments
      promptly on those drafts in good faith;

	 	 	 
	 	(c) 	
      Independent Expert's Report: provide any
      assistance or information reasonably requested by the Borrower or by the
      independent expert in connection with the preparation of the independent
      expert’s report to be sent together with the Meeting Materials (including
      any updates to such report);

	 	 	 
	 	(d) 	
      accuracy of RCF Information: confirm in writing to
      the Borrower the accuracy of the RCF Information in the Meeting Materials;
      and

	 	 	 
	 	(e) 	
      update RCF Information: until the date of the
      Shareholder Meeting, provide to the Borrower any information that arises
      after the Meeting Materials have been despatched that is necessary to
      ensure that the RCF Information contained in the Meeting Materials does
      not contain any material statement that is false or misleading in a
      material respect, including because of any material omission from that
      statement.




	3.5 	
      Disclosure document and Convertible
  Note



The Borrower must: 

	 	(a) 	
      as soon as practical and not later than 2 Business Days
      after satisfaction of the Condition Subsequent in clause 3.3(a)(i)(D),
      issue a disclosure document in accordance with the Corporations Act under
      which it will offer to the Borrower the Arrangement Fee Shares and the
      Convertible Note, provided that, if the Condition Subsequent in Clause
      3.3(a)(i)(D) is not satisfied and Shareholder approval is not required to
      issue the Arrangement Fee Shares and the Lender issues a notice under
      clause 2.4(b), the Borrower must issue a disclosure document in respect of
      the Arrangement Fee Shares not later than 2 Business Days after the date
      of the Shareholder Meeting; and

	 	 	 
	 	(b) 	
      do all things necessary to cause the issue of the
      Arrangement Fee Shares and the Convertible Note, including a Certificate,
      and to ensure that the Arrangement Fee Shares and any Shares issued under
      the Convertible Note are freely tradeable.



16 





	4. 	
      INTEREST

	 	 
	4.1 	
      Interest Outstanding
Moneys




	 	(a) 	
      The Borrower must pay interest in arrears on the
      outstanding amount of the Loan on the last day of each Quarter and on the
      Maturity Date and on any earlier date on which the Loan (or any portion of
      the Loan) is repaid (Interest Payment Date).

	 	 	 
	 	(b) 	
      Interest under this clause 4.1 is calculated on the daily
      balance of the Loan and accrues on the last day of each Quarter, on the
      Maturity Date and on any earlier date on which the Loan (or any portion of
      the Loan) is repaid.




	4.2 	
      Interest rate



The rate of interest payable under
clause 4.1 is 8% per annum. 

	4.3 	
      Interest overdue
amounts




	 	(a) 	
      The Borrower must pay interest
on:




	 	(i) 	
      any of the Outstanding Moneys due and payable, but
      unpaid; and

	 	 	 
	 	(ii) 	
      any interest payable but unpaid under clauses 4.1 and
      4.3.




	 	(b) 	
      The rate of interest payable under this clause is 15% per
      annum.




	4.4 	
      Accrual of Interest



The interest payable under clause 4.3:


	 	(a) 	
      accrues from day to day from and including the due date
      for payment up to the actual date of payment, before and, as an additional
      and independent obligation, after any judgment or other thing into which
      the liability to pay the Outstanding Moneys becomes merged; and

	 	 	 
	 	(b) 	
      may be capitalised by the Lender at monthly
    intervals.




	4.5 	
      Interest payment by way of
Shares



The Lender may by delivering a
Conversion Notice to the Borrower, on or before an Interest Payment Date, elect
that the interest payment due on that Interest Payment Date (Interest
Payment) be satisfied by the issue and allotment to the Lender of a number
of Interest Conversion Shares in accordance with clause 6.

	5. 	
      PAYMENT, REPAYMENT AND PREPAYMENT

	 	 
	5.1 	
      Time and method of payment



The Borrower must repay the Outstanding
Moneys to the Lender: 

	 	(a) 	
      by telegraphic transfer of immediately available
      funds;

	 	 	 
	 	(b) 	
      in US Dollars;

	 	 	 
	 	(c) 	
      not later than 5:00 pm (London time) on the Maturity
      Date; and



17 





	 	(d) 	
      to the account specified by the Lender to the Borrower,
      or



in any other manner as the Lender
directs. 

	5.2 	
      Payments in gross



The Obligors must make all payments due
under the Transaction Documents without any set off, counterclaim or condition
or any deduction or withholding for any Tax or any other reason (other than
Excluded Tax), unless the required to make a deduction or withholding by
applicable law. 

	5.3 	
      Additional payments



If:

		(a) 	
      any Obligor is required to make a deduction or
      withholding in respect of Tax (other than Excluded Tax) from any payment
      to be made to the Lender under any Transaction Document; or 

	 	  	
      

		(b) 	
      the Lender is required to pay any Tax (other than
      Excluded Tax) in respect of any payment it receives from any Obligor under
      any Transaction Document, 

	 	  	
      

	 	the Borrower: 
	 	  	
      

	 	(c) 	
      indemnifies the Lender against that Tax; and 

	 	  	
      

		(d) 	
      must pay to the Lender an additional amount which the
      Lender determines to be necessary to ensure that the Lender receives when
      due a net amount (after payment of any Tax in respect of each additional
      amount) that is equal to the full amount it would have received if a
      deduction or withholding or payment of Tax had not been made.
  




	5.4 	
      Voluntary Prepayment



The Borrower may not prepay the whole
or any part of the Loan, without the prior written consent of the Lender and
Pala, which consent is not to be unreasonably withheld.

	5.5 	
      Mandatory Prepayment -
  unlawfulness



If, in any applicable jurisdiction, it
becomes unlawful for the Lender to perform any of its obligations as
contemplated by the Transaction Documents or to fund or maintain the Loan: 

	 	(a) 	
      the Lender shall promptly notify the Borrower upon
      becoming aware of that event;

	 	 	 
	 	(b) 	
      upon the Lender notifying the Borrower, the obligation of
      the Lender to provide the drawing of the Loan will be immediately
      cancelled; and

	 	 	 
	 	(c) 	
      the Borrower shall repay the Loan on the date specified
      by the Lender in the notice delivered to the Borrower (being no earlier
      than the last day of any applicable grace period permitted by law), unless
      the Lender delivers a Conversion Notice in accordance with clause
  6.




	5.6 	
      Pro-rata payments




	 	(a) 	
      Subject to clause 5.6(b) and the terms of the
      Intercreditor Agreement - RCF/Pala, the Borrower may not pay, repay or
      prepay any of the Outstanding Moneys (as defined in the Pala Loan
      Agreement) unless, at the same time, it makes a payment, repayment or
      prepayment of the Outstanding Moneys under the Transaction Documents on
      the basis that the Lender and Pala will each receive their Proportionate
      Share of the total aggregate amount paid, repaid or prepaid under the Loan
      to the Lender and under the Pala Loan to Pala.



18 





	 	(b) 	
      Nothing in clause 5.6(a) prevents either the Lender or
      Pala separately exercising their conversion rights under clause 6 of this
      agreement or the Pala Loan Agreement respectively and the portion of the
      Loan or the Pala Loan which is converted pursuant to such rights being
      treated as repaid and satisfied in accordance with those clauses. If
      either of the Lender or Pala exercises their conversion rights under
      clause 6 of this agreement or the Pala Loan Agreement respectively then
      their Proportionate Share of any further amount paid, repaid or prepaid by
      the Borrower shall be adjusted in accordance with the definition of
      Proportionate Share.




	6. 	
      CONVERTIBLE NOTE

	 	 
	6.1 	
      General Terms



Each Convertible Note: 

	 	(a) 	
      is paid for in full on issue by the Borrower;

	 	 	 
	 	(b) 	
      constitutes an acknowledgement of the indebtedness of the
      Borrower to the Lender in respect of the Total Convertible Amount;
    and

	 	 	 
	 	(c) 	
      may be converted into Shares in accordance with the terms
      of the Convertible Note and this clause 6.




	6.2 	
      Conversion Right



Subject to satisfaction of the
Condition Subsequent in clause 3.3(a)(i)(D): 

	 	(a) 	
      the Convertible Note entitles the Lender to convert at
      any time, and on one or more occasions, into Shares all or part of the
      Loan Conversion Amount and/or Interest Conversion Amount the subject of
      the Convertible Note (Conversion Right); and

	 	 	 
	 	(b) 	
      at any time prior to the Maturity Date, the Lender may
      exercise its Conversion Right, in whole or in part, on one or more
      occasions, by delivering a Conversion Notice to the Borrower specifying
      the Loan Conversion Amount and/or Interest Conversion Amount, the
      Conversion Date, the Loan Conversion Price and/or Interest Conversion
      Price and the number of Loan Conversion Shares and/or Interest Conversion
      Shares.



6.3          
Loan Conversion Shares 

The number of Loan Conversion Shares
will be determined in accordance with the following formula: 

 

where, 

x (rounded down to the nearest
whole number) is the number of Loan Conversion Shares; 

19 




LCA is the Loan Conversion
Amount to be converted from US$ into AU$ based on the Exchange Rate on the
Conversion Notice Date; and 

LCP is the Loan Conversion Price
in effect on the Conversion Notice Date. 

	6.4 	
      Interest Conversion Shares



The number of Interest Conversion
Shares will be determined by dividing: 

	 	(a) 	
      the total amount of the relevant interest payment
      (converted from US$ into AU$ based on the Exchange Rate on the Conversion
      Notice Date); by

	 	 	 
	 	(b) 	
      an issue price equal to the Market Share Price
      (Interest Conversion Price),



and rounding the resulting number up to
the nearest whole number of Shares. 

	6.5 	
      Loan Conversion Price



Subject to clauses 6.6 and 6.7, the
Loan Conversion Price will be the lower of: 

	 	(a) 	
      AU$0.80 per Share; and

	 	 	 
	 	(b) 	
      the lowest price per Share paid in any equity raising of
      the Borrower while the Loan remains
outstanding.




	6.6 	
      Reconstruction



If at any time after the date of this
agreement there occurs any reconstruction of the issued capital of the Borrower
including, without limitation: 

	 	(a) 	
      any reduction, repayment by way of reduction,
      consolidation or reclassification or division of the issued capital of the
      issuer;

	 	 	 
	 	(b) 	
      an issue of shares by way of capitalisation of profits or
      reserves;

	 	 	 
	 	(c) 	
      an issue of shares in lieu of dividends or distributions;
      or

	 	 	 
	 	(d) 	
      any options, warrants or further convertible instruments
      are issued,



then the basis for conversion of the
Convertible Note set out in this agreement will be reconstructed in the same
proportion and manner as the reconstruction of the issued capital of the
Borrower or otherwise in a manner that would eliminate any disadvantage to the
Lender and subject to the same provisions (if any) with respect to the rounding
of entitlements as are sanctioned by the meeting of Shareholders which approves
that reconstruction, but in all other respects the terms of the conversion of
the Loan and any amount of interest owing remain unchanged. 

	6.7 	
      Bonus Share issue



Where the Borrower declares a bonus
Share issue at any time after the date of this agreement, the basis for
conversion of the Convertible Notes set out in this agreement will be adjusted
by the number of bonus Shares that the Lender would have received if the
Convertible Note had been exercised prior to the record date for the bonus
issue. The Borrower will notify the Lender of any such adjustment. No change
will be made to the Loan Conversion Price. 

20 





	6.8 	
      Conversion procedure




	 	(a) 	
      On receipt of a Conversion Notice, the Borrower must, on
      the Conversion Date, issue and allot the Loan Conversion Shares and/or
      Interest Conversion Shares to the Lender in accordance with the
      constitutional documents of the Borrower and the relevant provisions of
      the Corporations Act and Listing Rules.

	 	 	 
	 	(b) 	
      If required for the Loan Conversion Shares and/or
      Interest Conversion Shares to be freely tradable, the Borrower must on or
      within 5 Business Days of the Conversion Date lodge with the ASX a notice
      in accordance with section 708A of the Corporations Act in relation to the
      Loan Conversion Shares, or if the Borrower is unable to do so, the
      Borrower must lodge a disclosure document with ASIC within 5 Business Days
      of the Conversion Date.

	 	 	 
	 	(c) 	
      The Borrower must make an application for official
      quotation by the ASX of all Shares issued and allotted on Conversion as
      soon as reasonable practicable after such issue and allotment.

	 	 	 
	 	(d) 	
      Within 5 Business Days of an issue and allotment of
      Shares to the Lender on Conversion, the Lender must be issued with a
      holding statement from the registry of the Borrower for the
  Shares.

	 	 	 
	 	(e) 	
      If any stamp duties, documentary, issue, transfer or
      registration taxes or duties are imposed on the Conversion, the Borrower
      must pay any such taxes or duties.

	 	 	 
	 	(f) 	
      All Shares issued and allotted on Conversion will be
      credited as fully paid and carry the right to participate in full in all
      dividends and other distributions declared, paid or made on the ordinary
      share capital of the Borrower and shall rank pari passu in all other
      respects and form one class with the Shares.




	6.9 	
      Exercise of Conversion
Right




	 	(a) 	
      The issue and allotment of:




	 	(i) 	
      Loan Conversion Shares on Conversion will be in full
      satisfaction and discharge of the Loan Conversion Amount; and

	 	 	 
	 	(ii) 	
      Interest Conversion Shares on Conversion will be in full
      satisfaction of the Interest Conversion Amount,



and will not operate to discharge any
Obligor in any way from its obligations to make any other payments to the Lender
in accordance with the Transaction Documents. 

	 	(b) 	
      Any Convertible Note in respect of which a Conversion
      Right is exercised in accordance with this agreement will be cancelled
      (save that the Borrower will remain bound to fully perform its obligations
      with respect to any exercise of the Conversion Right) and the Borrower
      must immediately issue to the Lender a replacement Convertible Note at
      Face Value and deliver to the Lender a duly executed Certificate for that
      Convertible Note.




	6.10 	
      Shares issued to the
Lender




	 	(a) 	
      Unless otherwise directed by the Lender, any issue and
      allotment of Shares to the Lender under the terms of this agreement is to
      be settled electronically with the Lender's custodian as
  follows:



21 





	 	CHESS HIN: 	X0067771397 
	 	 	 
	 	CHESS PID: 	03666 
	 	 	 
	 	  	Merrill Lynch (Australia) Nominees Pty Ltd
  
	 	 	 
	 	  	Level 21, 120 Collins Street 
	 	 	 
	 	  	Melbourne Victoria 3000 
	 	 	 
	 	For the benefit of: 	Resource Capital Fund VI L.P. 
	 	 	 
	 	Custodial Acc. No.: 	6L9-07332 



	 	(b) 	
      The Borrower must also ensure that email confirmation is
      sent to Merrill Lynch Australia, attention Julie Michaels at
      Julie.Michaels@baml.com with a copy to each of custodymlan@baml.com and
      SCroasdale@rcflp.com.




	7. 	
      REPRESENTATIONS AND WARRANTIES

	 	 
	7.1 	
      Representations and
warranties



Each Obligor represents and warrants to
and for the benefit of the Lender that: 

	 	(a) 	
      Registration: it is a corporation duly
      incorporated or registered (or taken to be registered) and validly
      existing under the applicable companies law in its jurisdiction of
      incorporation or registration;

	 	 	 
	 	(b) 	
      Corporate power: it has the corporate power to own
      its assets and to carry on its business as it is now being
    conducted;

	 	 	 
	 	(c) 	
      Authority: it has power and authority to enter
      into and perform its obligations under this agreement and subject to
      satisfaction of the Conditions Subsequent, each of the other Transaction
      Documents;

	 	 	 
	 	(d) 	
      Authorisations: it has taken all necessary action
      to authorise the execution, delivery and performance of this agreement
      and, subject to satisfaction of the Conditions Subsequent, each of the
      other Transaction Documents;

	 	 	 
	 	(e) 	
      Binding obligations: this agreement constitutes
      legal, valid and binding obligations and, subject to any necessary
      stamping and registration, is enforceable in accordance with its terms
      subject to laws generally affecting creditors’ rights and to principles of
      equity and, subject to satisfaction of the Conditions Subsequent, each of
      the other Transaction Documents will constitute legal, valid and binding
      obligations and, subject to any necessary stamping and registration, will
      be enforceable in accordance with its terms subject to laws generally
      affecting creditors’ rights and to principles of equity;

	 	 	 
	 	(f) 	
      Transaction permitted: the execution, delivery and
      performance by it of this agreement and, subject to satisfaction of the
      Conditions Subsequent, each of the other Transaction Documents to which it
      is a party will not breach or result in a contravention
  of:




	 	(i) 	
      any law, regulation or Authorisation;

	 	 	 
	 	(ii) 	
      its constitution or other constituent documents;
  or



22 





	 	(iii) 	any Encumbrance or agreement which is binding
      on it, 
	 	 	 
	 	and will not result in: 
	 	 
		(iv) 	the creation or imposition of any Encumbrance
      on any of its assets other than as permitted under a Transaction Document;
      or 
	 	 	 
		(v) 	the acceleration of the date for payment of any
      obligation under any agreement which is binding on it;




	 	(g) 	
      Disclosure: all information provided to the Lender
      by or on its behalf in relation to it, its assets, business or affairs was
      correct and not misleading (by omission or otherwise) as at the time it
      was provided;

	 	 	 
	 	(h) 	
      No failure to disclose: it has not withheld from
      the Lender any information which a reasonable person in the Obligor's
      position would consider material to enter into this agreement or, subject
      to satisfaction of the Conditions Subsequent, any other Transaction
      Document;

	 	 	 
	 	(i) 	
      No Event of Default: no Event of Default or
      Potential Event of Default has occurred or will occur as a result of
      entering into this agreement or, subject to satisfaction of the Conditions
      Subsequent, any other Transaction Document;

	 	 	 
	 	(j) 	
      Legal and beneficial owner: it is the legal and
      beneficial owner of its Secured Property;

	 	 	 
	 	(k) 	
      No other interests: other than any Permitted
      Encumbrance:




	 	(i) 	
      no person holds or has the benefit of an Encumbrance or
      other interest in its Secured Property; and

	 	 	 
	 	(ii) 	
      there is no agreement, filing or registration that would
      enable another party to obtain priority over the
  Security;




	 	(l) 	
      Security:




	 	(i) 	
      the Security includes security over all assets and
      undertaking of the Borrower and a mortgage over all of the shares in the
      capital of Strata Energy Inc held by Peninsula USA Holdings Inc;

	 	 	 
	 	(ii) 	
      subject to satisfaction of the Conditions Subsequent,
      each Security creates the Encumbrance purported to be created by it over
      the assets purported to be encumbered by it; and

	 	 	 
	 	(iii) 	
      each Security has the priority it is intended to
    have;




	 	(m) 	
      Commercial benefit: the entering into and
      performance by it of its obligations under this agreement and, subject to
      satisfaction of the Conditions Subsequent, each of the other Transaction
      Documents, is for its commercial benefit and is in its commercial
      interests;

	 	 	 
	 	(n) 	
      Compliance with laws: it has complied in all
      material respects with all applicable laws and regulations where failure
      to comply is likely to have a Material Adverse Effect;

	 	 	 
	 	(o) 	
      No litigation: there is no current, pending or (to
      its knowledge, having made due enquiry), threatened proceeding,
      investigation or claim affecting it or any of its Subsidiaries or any of
      their assets before a court, authority, commission or arbitrator in which
      a decision against it or the Subsidiary is likely and which (either alone
      or together with other decisions) would be likely to have a Material
      Adverse Effect; and



23 





	 	(p) 	
      Senior Finance Documents: each of the
      representations and warranties set out in the Senior Finance Documents is
      correct and not misleading as if set out in full in this
  agreement.




	7.2 	
      Survival and repetition of representations and
      warranties




	 	(a) 	
      The representations and warranties given under this
      agreement survive the execution of each Transaction Document.

	 	 	 
	 	(b) 	
      Each Obligor makes the representations and warranties
      under this agreement (other than the representation and warranty at clause
      7.1(h)) on:




	 	(i) 	
      the date of this agreement;

	 	 	 
	 	(ii) 	
      the date of each Transaction Document;

	 	 	 
	 	(iii) 	
      the date of each Funding Notice and the date of the
      drawing of the Loan,



by reference to the facts and
circumstances then existing. 

	7.3 	
      Reliance by Lender



Each Obligor acknowledges that the
Lender has entered into this agreement in reliance on the representations and
warranties given under this agreement. 

	8. 	
      UNDERTAKINGS

	 	 
	8.1 	
      Provision of information and
  reports



The Borrower must provide to the Lender
the following: 

	 	(a) 	
      Annual Financial Reports: no later than 120 days
      after the end of each financial year, copies of the annual audited
      Financial Report of the Group for that financial year;

	 	 	 
	 	(b) 	
      Annual Budget: a copy of its Annual Budget
      promptly after it is prepared and after each update to the Annual
      Budget;

	 	 	 
	 	(c) 	
      Half yearly accounts: no later than 90 days after
      the end of each half of each of its financial years the half yearly audit
      reviewed Financial Report for the Group for that financial half
    year;

	 	 	 
	 	(d) 	
      Quarterly report: no later than 45 days after the
      end of each Quarter the consolidated unaudited Financial Report for the
      Group for that Quarter;

	 	 	 
	 	(e) 	
      Monthly reports: as soon as practicable but in any
      event not later than 21 days after the end of each calendar month a report
      to include a summary description of the operations and the expenditures of
      the Group for that month together with such other information reasonably
      requested by the Lender; and



24 





	 	(f) 	
      Weekly report: a weekly operational and financial
      report in form and substance acceptable to the
Lender.




	8.2 	
      Information: miscellaneous



Each Obligor must supply to the Lender:


	 	(a) 	
      copies of all documents dispatched by the Borrower to its
      shareholders (or any class of them) or its creditors generally (or any
      class of them) at the same time as they are dispatched to the extent such
      document and information is not available on the ASX website;

	 	 	 
	 	(b) 	
      promptly upon becoming aware of them, the details of any
      litigation, arbitration or administrative proceedings which are current,
      threatened or pending against any Obligor and which might, if adversely
      determined, have a Material Adverse Effect;

	 	 	 
	 	(c) 	
      promptly after receipt, copies of any notices of default
      or claims of breach received or sent relating to any Project
    Document;

	 	 	 
	 	(d) 	
      promptly, notice of any change in authorised signatories
      of any Obligor signed by a director or secretary of the Obligor
      accompanied by specimen signatures of any new signatories; and

	 	 	 
	 	(e) 	
      any other information which the Lender reasonably
      requests in relation to any member of the Group or any of their
    assets.




	8.3 	
      Notification of
default




	 	(a) 	
      Each Obligor must notify the Lender of any Event of
      Default or Potential Event of Default (and the steps, if any, being taken
      to remedy it) promptly upon becoming aware of its occurrence.

	 	 	 
	 	(b) 	
      At the Lender’s request, the Borrower must provide to the
      Lender a certificate signed by at least 2 directors of the Borrower
      stating:




	 	(i) 	
      if an Event of Default or Potential Event of Default has
      occurred; and

	 	 	 
	 	(ii) 	
      if so, full details of the relevant Event of Default or
      Potential Event of Default and the remedial action being taken or
      proposed.




	8.4 	
      Proper accounts



Each Obligor must: 

	 	(a) 	
      keep accounting records which give a true and fair view
      of its financial condition and state of affairs; and

	 	 	 
	 	(b) 	
      ensure that the accounts it provides under clause 8.1 are
      prepared in accordance with the Accounting
Standards.




	8.5 	
      Notices to the Lender



Each Obligor must immediately notify
the Lender as soon as it becomes aware of any intention by it to exercise any
right, power or remedy under any Project Document to which any Obligor is a
party as a consequence of any default under it. 

25 





	8.6 	
      Compliance with laws and
  Authorisations



Each Obligor must: 

	 	(a) 	
      comply with all laws and legal requirements, including
      each judgment, award, decision, finding or any other determination of a
      Government Agency, which applies to it or any of its assets;

	 	 	 
	 	(b) 	
      obtain, maintain and comply
with:




	 	(i) 	
      all Authorisations required for the enforceability
      against it of each Transaction Document to which it is a party, or to
      enable it to perform its obligations under each Transaction Document to
      which it is a party; and

	 	 	 
	 	(ii) 	
      all material Authorisations required in relation to it or
      any of its assets; and




	 	(c) 	
      not do anything which would prevent the renewal of any
      Authorisation referred to in clause 8.6(b) or cause it to be renewed on
      less favourable terms.




	8.7 	
      Changes to constitution, corporate name, place of
      registration



Each Obligor must not:

	 	(a) 	
      Amendments to constitution: amend its constitution
      or any other constituent document of it without the Lender’s prior consent
      which consent must not be unreasonably withheld;

	 	 	 
	 	(b) 	
      Name change: change its name without first
      notifying the Lender of the new name not less than 21 days before the
      change takes effect; or

	 	 	 
	 	(c) 	
      Place of registration or incorporation: change its
      place of registration or incorporation.




	8.8 	
      Negative pledge and disposal of
  assets




	 	(a) 	
      Each Obligor must not create or allow to exist or agree
      to any Encumbrance over any of its assets other than a Permitted
      Encumbrance unless expressly permitted to do so by a Transaction
      Document.

	 	 	 
	 	(b) 	
      Each Obligor must not acquire an asset which is, or upon
      its acquisition will be, subject to an Encumbrance other than a Permitted
      Encumbrance without the prior consent of the Lender.

	 	 	 
	 	(c) 	
      Each Obligor must not sell, assign, transfer or otherwise
      dispose of or part with possession of any of its assets or allow any
      interest in them to arise or be varied (or agree, attempt or take any step
      to do so) whether in one or more voluntary transactions or not, except a
      Permitted Disposal.

	 	 	 
	 	(d) 	
      Each Obligor must not deposit money with a person in
      circumstances where the money is not repayable unless the Obligor or
      another person performs obligations (including to pay money) in an amount
      equal to or greater than US$250,000 individually or in total.

	 	 	 
	 	(e) 	
      Each Obligor must not enter into any arrangement which,
      if complied with, would prevent any member of the Group from complying
      with its obligations under the Transaction
Documents.



26 





	8.9 	
      Financial obligations



Each Obligor must not incur any
Financial Indebtedness other than: 

	 	(a) 	
      under the Transaction Documents;

	 	 	 
	 	(b) 	
      Permitted Financial Indebtedness; or

	 	 	 
	 	(c) 	
      further financial accommodation to be provided by the
      Senior Lender of up to US$2,500,000, provided that the terms of such
      additional financial accommodation are consistent with the Senior Facility
      Agreement or are otherwise approved by the Lender and Pala, each acting
      reasonably,



provided that in the case of clauses
8.9(b) and 8.9(c) no such Financial Indebtedness is incurred after the date of
this agreement and prior to satisfaction of the Conditions Subsequent in
accordance with clause 3.3. 

	8.10 	
      No change to business



Each Obligor must not engage in any
business other than, or do anything which would result in substantial changes
to, its existing core businesses and operations. 

	8.11 	
      Financial accommodation



Each Obligor must not provide any
financial accommodation, or give any Guarantee in respect of any financial
accommodation, to or for the benefit of any person other than Permitted
Financial Accommodation. 

	8.12 	
      Restrictions on dealings



Each Obligor must not: 

	 	(a) 	
      enter into an agreement;

	 	 	 
	 	(b) 	
      acquire or dispose of an asset;

	 	 	 
	 	(c) 	
      obtain or provide a service;

	 	 	 
	 	(d) 	
      obtain a right or incur an obligation; or

	 	 	 
	 	(e) 	
      implement any other transaction,



with any person unless it does so on
terms which are no less favourable to it than arm’s length terms. 

	8.13 	
      Restrictions on Distributions and
  fees



Each Obligor must not: 

	 	(a) 	
      make any Distribution to anyone other than another
      Obligor; or

	 	 	 
	 	(b) 	
      pay any director fees, management fees, consultancy fees,
      broker fees or other like payments to any director or Related Body
      Corporate of any Obligor unless those fees or other payments are
      reasonable and are no more or less favourable than it is reasonable to
      expect would be the case if the relevant persons were dealing with each
      other at arm’s length.



27 





	8.14 	
      Corporate structure and
documents



Each Obligor agrees not to: 

	 	(a) 	
      No transfer or reconstruction: transfer or change
      its jurisdiction of incorporation or formation or enter into any
      amalgamation, demerger, merger, consolidation or corporate reconstruction
      (except to carry out a reconstruction or amalgamation while solvent on
      terms approved by the Lender); and

	 	 	 
	 	(b) 	
      Constitution: amend its constitution or
      constitutional documents, or permit it to be amended, in any way which
      would be likely to have a Material Adverse Effect; and

	 	 	 
	 	(c) 	
      Documents: materially amend or agree or permit to
      be materially amended, in any way, any of the following, without the prior
      written consent of the Lender:




	 	(i) 	
      any Senior Finance Document;

	 	 	 
	 	(ii) 	
      any Project Document;

	 	 	 
	 	(iii) 	
      any Pala Transaction Document; or

	 	 	 
	 	(iv) 	
      the BCFM, the Life or Mine Plan, the Annual
  Budget.




	8.15 	
      Board



The Borrower shall ensure that the
number of directors appointed to its board of directors shall not at any time
exceed seven (7) within 90 days of the date of this agreement. 

	8.16 	
      Brokers fees



Each Obligor shall not, without the
consent of the Lender, pay any broker or similar fees in connection with the
completion of the Transaction Documents or the Pala Transaction Documents other
than the arrangement fee under clause 2.4 and a similar fee under the Pala
Transaction Documents. 

	8.17 	
      Maintenance of Secured
Property



Each Obligor must: 

	 	(a) 	
      maintain and protect its Secured Property;

	 	 	 
	 	(b) 	
      remedy every defect in its title to any part of its
      Secured Property;

	 	 	 
	 	(c) 	
      take or defend all legal proceedings to protect or
      recover any of its Secured Property; and

	 	 	 
	 	(d) 	
      keep its Secured Property valid and subsisting and free
      from liability to forfeiture, cancellation, avoidance or
  loss.




	8.18 	
      Further assurances



Each Obligor must: 

	 	(a) 	
      do anything which the Lender reasonably requests
    to:



28 





	 	(i) 	
      ensure or enable the Lender to ensure that the Security
      and any Power are fully effective, enforceable and perfected with the
      contemplated priority;

	 	 	 
	 	(ii) 	
      more satisfactorily assure or secure to the Lender its
      Secured Property in a manner consistent with any provision of any
      Transaction Document; or

	 	 	 
	 	(iii) 	
      aid the exercise of any Power of the
  Lender,



including, executing any document,
delivering Title Documents or Chattel Paper or executing and delivering blank
transfers; and 

	 	(b) 	
      without limiting clause 8.18(a), when the Lender
      requests, execute:




	 	(i) 	
      a legal or statutory mortgage in favour of the Lender
      over any real property; or

	 	 	 
	 	(ii) 	
      any other form of security which the Lender considers
      appropriate for the property to be subject to that
  security,



each in form and substance required by
the Lender, (but the Lender cannot require an obligation for which there is no
equivalent obligation in any Transaction Document or which is more onerous than
any equivalent obligation contained in any Transaction Document). 

	8.19 	
      Perfection, registration and protection of
      security




	 	(a) 	
      Subject to satisfaction of the Conditions Subsequent,
      each Obligor must ensure that:




	 	(i) 	
      the Security is perfected in relation to all the Secured
      Property in all jurisdictions; and

	 	 	 
	 	(ii) 	
      that Security is registered and filed in all registers in
      all jurisdictions,



in which it must be perfected,
registered and filed to ensure the enforceability, validity, perfection and
priority of the Security against all persons and to be effective as a security.


	 	(b) 	
      Subject to satisfaction of the Conditions Subsequent,
      whenever the Lender requires that the Security be perfected in a
      particular way in relation to any part of the Secured Property, the
      Borrower must ensure that the Security is perfected in that
  way.




	8.20 	
      Inspection




	 	(a) 	
      Each Obligor must permit any representatives designated
      by the Lender from time to time, but not more often than once in any
      Quarter, to visit and inspect the property, projects and operations of the
      Obligors, and inspect and take copies of the Obligors associated books and
      records, at reasonable times and at those times to discuss the affairs,
      finances, accounts and condition of the Obligor with the officers,
      employees and advisors of the Lender (including independent
      accountants).

	 	 	 
	 	(b) 	
      Without limiting the preceding clause, at any time
      following the occurrence of a Potential Event of Default or Event of
      Default, each Obligor must permit any representatives designated by the
      Lender to visit and inspect the financial records and the property of the
      Obligor, at reasonable times and as often as reasonably requested and to
      make extracts from and copies of the financial records, and permit any
      representatives of the Obligor to discuss the affairs, finances, accounts
      and condition of the Obligor with the officers, employees and advisors of
      the Lender (including independent accountants).



29 





	 	(c) 	
      The Obligors shall pay or reimburse the Lender for all
      reasonable costs and expenses of the Lender in exercising its
    rights:




	 	(i) 	
      under clause 8.20(a) for up to one site visit by the
      Lender or its representatives per Quarter; and

	 	 	 
	 	(ii) 	
      under clause 8.20(b) at any time while a Potential Event
      of Default or Event of Default is continuing.




	8.21 	
      Equivalent undertakings



Each Obligor must (to the extent that
it is so obliged under the Senior Finance Documents) comply with and perform
each of its covenants and undertakings set out in clause 12 of the Senior
Finance Documents as if that clause (and all defined terms used in that clause)
were set out in full in this agreement, with such amendments as are necessary to
reflect an agreement between the Lender and the Obligors including that
references to ‘Finance Parties’ is a reference to the ‘Lender’ (and irrespective
of whether the relevant Senior Finance Document has been terminated). 

	8.22 	
      Senior Finance Documents



Each Obligor must (to the extent that
it is so obliged under the Senior Finance Documents): 

	 	(a) 	
      comply with the terms of the Senior Finance Documents and
      perform each of its covenants and undertakings in the Senior Finance
      Documents; and

	 	 	 
	 	(b) 	
      that no ‘Event of Default’ or ‘Potential Event of
      Default’, each as defined in the Senior Finance Documents, occurs under
      the Senior Finance Documents.




	8.23 	
      Term of undertakings



Unless the Lender otherwise agrees in
writing, until: 

	 	(a) 	
      the Loan is cancelled; and

	 	 	 
	 	(b) 	
      any Outstanding Moneys are unconditionally repaid in full
      or have been converted into shares; and

	 	 	 
	 	(c) 	
      each Security is discharged,



each Obligor must, at its own cost,
comply with its undertakings in this clause 8. 

	9. 	
      EVENTS OF DEFAULT

	 	 
	9.1 	
      Effect of Event of Default



Upon the occurrence of an Event of
Default the Outstanding Moneys and all other monies owing under any Transaction
Document become immediately due and payable to the Lender without the need for
any demand or notice to be given. 

	9.2 	
      Event of Default



It is an Event of Default if, whether
or not it is within the control of any Obligor: 

30 





	 	(a) 	
      Failure to pay: any Obligor fails to pay or repay
      any amount due under any Transaction Document when due and such default
      continues for a period of 3 Business Days;

	 	 	 
	 	(b) 	
      Non remediable failure: any Obligor fails to
      perform or observe any other undertaking, obligation or agreement
      expressed or implied in any Transaction Document and that failure is not
      remediable;

	 	 	 
	 	(c) 	
      Remediable failure: the failure described in
      clause 9.2(b) is remediable, the relevant Obligor does not commence
      remedial action within 5 days of the failure and has not remedied the
      failure within 20 days of the Lender notifying the Borrower of the non-
      compliance, or an Obligor becoming aware of the failure to comply
      (whichever is the earlier);

	 	 	 
	 	(d) 	
      Authorisations: any Obligor fails to obtain any
      Authorisation necessary to enable it to comply with its obligations under
      any Transaction Document or required in relation to the Secured Property
      or any Authorisation of that kind ceases to be in full force and
      effect;

	 	 	 
	 	(e) 	
      Misrepresentation: a representation, warranty or
      statement made, or taken to be made, by or on behalf of the Obligor or
      Group member in a Transaction Document (or any document given by or on
      behalf of any Obligor or Group member in connection with a Transaction
      Document) is incorrect or misleading when made or taken to be made and, if
      the circumstances giving rise to the misrepresentation can be remedied,
      the Obligor does not remedy them within 10 Business Days of the Lender
      notifying the Borrower, or the Obligor or Group member becoming aware of
      the relevant circumstances (whichever is the earlier);

	 	 	 
	 	(f) 	
      Senior Finance Documents: any event of default, or
      mandatory prepayment event (in each case however defined) occurs under a
      Senior Finance Document or any other event occurs which enables the
      acceleration of any payment to be made under any Senior Finance Document
      or the enforcement, termination or rescission of any Senior Finance
      Document;

	 	 	 
	 	(g) 	
      Cross default:




	 	(i) 	
      any Event of Default (as defined in the Pala Loan
      Agreement) occurs;

	 	 	 
	 	(ii) 	
      any present or future, or actual, prospective or
      contingent, indebtedness of any Obligor or member of the Group in respect
      of any financial accommodation (other than under any Transaction Document)
      for amounts totalling more than US$500,000 (or its equivalent) including,
      but not limited to, moneys payable under a
Guarantee:




	 	(A) 	
      is or becomes due and payable or is or becomes capable of
      being declared due and payable before the due date for payment;
  or

	 	 	 
	 	(B) 	
      is not paid when due or upon the expiration of any period
      of grace which may apply;




	 	(h) 	
      Encumbrance: any Encumbrance is or becomes
      enforceable against any asset of any member of the Group for amounts
      totalling more than US$250,000 (or its equivalent);

	 	 	 
	 	(i) 	
      Termination: any termination or failure, or
      threatened termination of any material licenses, permits and consents
      necessary for the operation of the business of the
Group.



31 





	 	(j) 	
      Judgment: a judgment in an amount exceeding
      US$1,000,000 is obtained against any Obligor or member of the Group and is
      not set aside or satisfied within 7 days or has not been stayed pending
      the outcome of an appeal to any higher court;

	 	 	 
	 	(k) 	
      Execution: any distress, attachment, execution or
      other process of a Government Agency in an amount exceeding US$1,000,000
      is issued against, levied or enforced upon any of the assets of any
      Obligor or member of the Group and is not set aside or satisfied within 7
      days;

	 	 	 
	 	(l) 	
      Receiver: a receiver, receiver and manager,
      official manager, trustee, administrator, other controller (as defined in
      the Corporations Act) or similar official is appointed, or steps taken for
      such appointment, over any of the assets or undertaking of any Obligor or
      member of the Group;

	 	 	 
	 	(m) 	
      Insolvency: any Obligor or member of the Group is
      or becomes unable to pay its debts when they are due or is or becomes
      unable to pay its debts within the meaning of the Corporations Act or is
      presumed to be insolvent under the Corporations Act;

	 	 	 
	 	(n) 	
      Arrangements: any Obligor or member of the Group
      enters into or resolves to enter into any arrangement, composition or
      compromise with, or assignment for the benefit of, its creditors or any
      class of them;

	 	 	 
	 	(o) 	
      Ceasing business: any Obligor or member of the
      Group ceases or threatens to cease to carry on business;

	 	 	 
	 	(p) 	
      Administrator: an administrator is appointed or a
      resolution is passed or any steps are taken to appoint, or to pass a
      resolution to appoint, an administrator to any Obligor or member of the
      Group;

	 	 	 
	 	(q) 	
      Winding-up: an application or order is made for
      the winding-up or dissolution of any Obligor or member of the Group or a
      resolution is passed or any steps are taken to pass a resolution for the
      winding-up or dissolution of any Obligor or member of the Group otherwise
      than for the purpose of an amalgamation or reconstruction which has the
      prior written consent of the Lender;

	 	 	 
	 	(r) 	
      Analogous event: anything analogous to or having a
      substantially similar effect to any of the events specified in clauses
      9.2(l) to 9.2(q) happens in relation to any Obligor or member of the Group
      under the laws of any jurisdiction;

	 	 	 
	 	(s) 	
      Vitiation of Transaction
  Documents:




	 	(i) 	
      all or any part of any provision of any Transaction
      Document is or becomes illegal, void, voidable, unenforceable or otherwise
      of limited force or effect;

	 	 	 
	 	(ii) 	
      any person becomes entitled to terminate, rescind or
      avoid all or any material part or material provision of any Transaction
      Document;

	 	 	 
	 	(iii) 	
      the execution, delivery or performance of any Transaction
      Document by any Obligor violates, breaches or results in a contravention
      of any law, regulation or Authorisation; and

	 	 	 
	 	(iv) 	
      an Encumbrance created by or purportedly created by a
      Security does not have or ceases to have the priority it is expressed to
      have under the relevant Transaction Document or becomes ineffective to
      secure the payment of the money or compliance with the obligations which
      it purports to secure, otherwise than solely due to the fraud, negligence
      or misconduct of the Lender;



32 





	 	(t) 	
      Vitiation of Pala Transaction Documents: any event
      or circumstance referred to in paragraph (s) above occurs or exists in
      relation to a Pala Transaction Document;

	 	 	 
	 	(u) 	
      Delisting: any securities of the Borrower are
      removed from the official list of ASX or suspended from trading on the ASX
      for 15 consecutive Trading Days, provided that the suspension in place at
      the date of this agreement shall not be an Event of Default so long as the
      suspension is lifted and the securities of the Borrower recommence trading
      within 5 days of the date of this agreement or such other period as agreed
      by the Lender;

	 	 	 
	 	(v) 	
      Change of Control: without the consent of the
      Lender, a Change of Control occurs or there is a change in ownership of
      any Obligor (other than the Borrower); and

	 	 	 
	 	(w) 	
      Adverse change: an event occurs which has, or is
      likely to have (or a series of events occur which, together, have or are
      likely to have) a Material Adverse Effect.




	10. 	
      TAXES, COSTS AND EXPENSES

	 	 
	10.1 	
      Tax




	 	(a) 	
      The Obligors must pay any Tax, other than an Excluded Tax
      in respect of the Lender, in respect of the execution, delivery,
      performance, release, discharge, amendment, enforcement or attempted
      enforcement or otherwise in respect of any Transaction Document and any
      transaction contemplated under any Transaction Document.

	 	 	 
	 	(b) 	
      The Obligors must pay any fine, penalty or other cost in
      respect of a failure to pay any Tax described in clause 10.1(a) except to
      the extent that the fine, penalty or other cost is caused by the Lender’s
      failure to lodge money received from the Borrower within 3 days before the
      due date for lodgement.

	 	 	 
	 	(c) 	
      Each Obligor indemnifies the Lender against any amount
      payable under this clause.




	10.2 	
      Costs and expenses



The Obligors must pay all reasonable
costs and expenses of the Lender and any employee, Officer, agent or contractor
of the Lender in relation to: 

	 	(a) 	
      the negotiation, preparation, execution, delivery,
      stamping, registration, completion, perfection of Security, variation and
      discharge of any Transaction Document;

	 	 	 
	 	(b) 	
      the enforcement, protection or waiver, or attempted or
      contemplated enforcement or protection, of any rights under any
      Transaction Document;

	 	 	 
	 	(c) 	
      the consent or approval of the Lender given under any
      Transaction Document; and

	 	 	 
	 	(d) 	
      any enquiry by any Government Agency involving any
      Obligor,



including, but not limited to, any
administration costs of the Lender in connection with the matters referred to in
clause 10.2(b) and (d) and any legal costs and expenses and any professional
consultant’s fees for any of the above on a full indemnity basis. Each Obligor
must pay its own costs and expenses in relation to the negotiation, preparation,
execution, delivery, stamping, registration, completion, perfection of Security,
variation and discharge of any Transaction Document. 

33 





	11. 	
      INDEMNITY




	 	(a) 	
      Each Obligor indemnifies the Lender against any claim,
      action, damage, loss, liability, cost, charge, expense, outgoing or
      payment which the Lender pays, suffers, incurs or is liable for, in
      respect of any of the following:




	 	(i) 	
      the Loan not being made for any reason including any
      condition precedent contained in clause 3.1 or 3.2 not being fulfilled,
      but excluding any default by the Lender;

	 	 	 
	 	(ii) 	
      the occurrence of any Event of Default or potential Event
      of Default;

	 	 	 
	 	(iii) 	
      the Lender exercising its Powers consequent upon or
      arising out of the occurrence of any Event of Default or potential Event
      of Default; and

	 	 	 
	 	(iv) 	
      failure to pay any amount in the currency it is required
      to be paid.




	 	(b) 	
      Without limiting the indemnity contained in clause 11(a),
      that indemnity includes the amount determined by the Lender as being
      incurred by reason of the liquidation or re- employment of deposits or
      other funds acquired or contracted for by the Lender to fund the Loan and
      includes, but is not limited to, loss of margin.

	 	 	 
	 	(c) 	
      Any amount payable to the Lender under this indemnity is
      payable on demand.




	12. 	
      ASSIGNMENT




	12.1 	
      Assignment by the Obligors



No Obligor may transfer or assign any
of its rights or obligations under any Transaction Document without the prior
written consent of the Lender. 

	12.2 	
      Assignment by Lender



The Lender may at any time assign any
of its rights or transfer by novation any of its rights and obligations under
any Transaction Document to any person or combination of persons or to any bank
or financial institution or to any combination of banks and financial
institutions (New Lender). The Lender will promptly, after the
assignment, transfer or novation, notify the Borrower of the new entity.

	13. 	
      GUARANTEE AND INDEMNITY

	 	 
	13.1 	
      Guarantee and indemnity



Each Guarantor jointly and severally
and irrevocably and unconditionally: 

	 	(a) 	
      guarantees to the Lender punctual performance by each
      Obligor of all that Obligor's obligations under the Transaction
      Documents;

	 	 	 
	 	(b) 	
      undertakes with the Lender that, whenever an Obligor does
      not pay any amount when due under or in connection with any Transaction
      Document (or anything which would have been due if the Transaction
      Document or the amount was enforceable, valid and not illegal), it must
      immediately on demand pay that amount as if it were the principal obligor
      in respect of that amount; and



34 





	 	(c) 	
      indemnifies the Lender immediately on demand against any
      cost, loss or liability suffered by the Lender directly or indirectly as a
      result of:




	 	(i) 	
      any amount claimed by the Lender under this Clause 13.1
      not being recoverable from the Guarantor on the basis of a guarantee (for
      any reason); or

	 	 	 
	 	(ii) 	
      any obligation guaranteed by it being or becoming
      unenforceable, invalid, illegal or avoided.



The amount of the cost, loss or
liability must be equal to the amount which the Lender would otherwise have been
entitled to recover. 

Each of paragraphs (a), (b) and (c)
above are separate obligations. None is limited by reference to the other. 

	13.2 	
      Continuing guarantee



This guarantee is a continuing
guarantee and will extend to the ultimate balance of all sums payable by any
Obligor under the Transaction Documents, regardless of any intermediate payment
or discharge in whole or in part. 

	13.3 	
      Reinstatement



If any payment to or any discharge
given by the Lender (whether in respect of the obligations of any Obligor or any
security for those obligations or otherwise) is avoided or reduced for any
reason (including, without limitation, as a result of insolvency, breach of
statutory duties or any similar event): 

	 	(a) 	
      the liability of each Obligor will continue as if the
      payment, discharge, avoidance or reduction had not occurred; and

	 	 	 
	 	(b) 	
      the Lender is entitled to recover the value or amount of
      that security or payment from each Obligor, as if the payment, discharge,
      avoidance or reduction had not occurred.




	13.4 	
      Waiver of defences



The obligations of each Guarantor under
this clause will not be affected by any act, omission or thing (whether or not
known to it or the Lender) which, but for this Clause 13, would reduce, release
or prejudice any of its obligations under this Clause 13. This includes: 

	 	(a) 	
      any time, waiver, postponement or other concession
      granted to, or composition or arrangement with, any Obligor or any other
      person;

	 	 	 
	 	(b) 	
      any full, partial or conditional release or discharge of
      any Obligor or any other person by operation of law or under the terms of
      any composition or arrangement with any creditor of any person;

	 	 	 
	 	(c) 	
      the taking, variation, compromise, exchange, renewal or
      release of, or refusal or neglect to perfect, take up or enforce, any
      rights against, or security over assets of, any Obligor or any other
      person under the Transaction Documents or otherwise;

	 	 	 
	 	(d) 	
      any non-presentation or non-observance of any formality
      or other requirement in respect of any instrument or any failure to
      realise the full value of any security;



35 





	 	(e) 	
      any incapacity or lack of power, authority or legal
      personality of or dissolution or change in the members or status of any
      Obligor or any other person;

	 	 	 
	 	(f) 	
      any variation, amendment or replacement (however
      fundamental and whether or not such variation, amendment or replacement
      imposes any additional liability or disadvantages any Obligor or any other
      person) of any Transaction Document or any other document or security (in
      each case other than this agreement);

	 	 	 
	 	(g) 	
      any unenforceability, illegality, invalidity,
      non-provability or frustration of any obligation of any person under any
      Transaction Document or any other document or security;

	 	 	 
	 	(h) 	
      any set-off, combination of accounts or
    counterclaim;

	 	 	 
	 	(i) 	
      any insolvency, liquidation, dissolution or similar
      proceedings or anything resulting from such proceedings which affects any
      obligation of an Obligor or any other person;

	 	 	 
	 	(j) 	
      any determination, rescission, repudiation or termination
      of any Transaction Document or any obligations under any Transaction
      Document or any other document or security by any person (or the
      acceptance of any of those actions by any person);

	 	 	 
	 	(k) 	
      the release or substitution of any property the subject
      of any Security;

	 	 	 
	 	(l) 	
      the failure to obtain any Encumbrance or the loss or
      impairment of any Encumbrance by operation of law or otherwise, whether or
      not the same is in breach of an express or implied condition to obtain or
      preserve that Encumbrance or is in breach of any equitable duty which
      might otherwise have been imposed on the Lender;

	 	 	 
	 	(m) 	
      the transfer, assignment or novation by the Lender or any
      other person of all or any of its rights or obligations under any
      Transaction Document;

	 	 	 
	 	(n) 	
      any failure by the Lender to disclose to the Guarantor or
      any other person any material or unusual fact, circumstance, event or
      thing known to, or which ought to have been known by, the Lender relating
      to or affecting any Obligor or any other person at any time before or
      during the currency of any Transaction Document, whether prejudicial or
      not to the rights and liabilities of any Guarantor and whether or not the
      Lender was under an obligation or duty to disclose that fact,
      circumstance, event or thing to any person; and

	 	 	 
	 	(o) 	
      any person, whether named as a party or not, does not
      execute any Transaction Document or the execution of any Transaction
      Document by any person is invalid, forged or irregular in any
  way.



References in clause 13.1 to any
obligations of an Obligor or amounts due will include what would have been
obligations or amounts due but for any of the above, as well as obligations and
amounts due which result from any of the above. 

	13.5 	
      Immediate recourse




	 	(a) 	
      Each Guarantor waives any right it may have of first
      requiring the Lender (or any trustee or agent on its behalf) to proceed
      against or enforce any other right or security or claim payment from any
      person before claiming from that Guarantor under this clause 13.

	 	 	 
	 	(b) 	
      This waiver applies irrespective of any law or any
      provision of a Transaction Document to the
contrary.



36 





	13.6 	
      Appropriations



Until all amounts which may be or
become payable by the Obligors under or in connection with the Transaction
Documents have been irrevocably paid in full, the Lender (or any trustee or
agent on its behalf) may, without affecting the liability of any Guarantor under
this clause 13: 

	 	(a) 	(i) 	
      refrain from applying or enforcing any other moneys,
      security or rights held or received by the Lender (or any trustee or agent
      on its behalf) against those amounts; or




	 	(ii) 	
      apply and enforce them in such manner and order as it
      sees fit (whether against those amounts or otherwise);
  and




	 	(b) 	
      hold in an interest-bearing suspense account any moneys
      received from any Guarantor or on account of that Guarantor's liability
      under this clause 13.




	13.7 	
      Deferral of Guarantors'
rights



Until all amounts which may be or
become payable by the Obligors under or in connection with the Transaction
Documents have been irrevocably paid in full and unless the Lender otherwise
directs, no Guarantor will: 

	 	(a) 	
      exercise any rights which it may have by reason of
      performance by it of its obligations under the Transaction
    Documents:




	 	(i) 	
      to be indemnified by an Obligor;

	 	 	 
	 	(ii) 	
      to claim any contribution from any other guarantor of, or
      provider of security for, any Obligor's obligations under the Transaction
      Documents; or

	 	 	 
	 	(iii) 	
      to take the benefit (in whole or in part and whether by
      way of subrogation or otherwise) of any rights of the Lender under the
      Transaction Documents or of any other guarantee or security taken pursuant
      to, or in connection with, the Transaction Documents by the
  Lender;




	 	(b) 	
      institute any proceedings against any Obligor or make or
      join in making any application to any court for an administration, winding
      up, receivership or other similar order to be made in relation to any
      Obligor;

	 	 	 
	 	(c) 	
      unless instructed to do so by the Lender, set off any
      money owing by that Guarantor against any liability owing to that
      Guarantor by any other Obligor or permit any Obligor to set off any money
      owing by that Guarantor against any liability owing to that Obligor by
      that Guarantor; or

	 	 	 
	 	(d) 	
      in any form of insolvency process of or in relation to an
      Obligor (including liquidation, winding up, bankruptcy, administration,
      dissolution or receivership or any analogous process) prove for or claim,
      or exercise any vote or other rights in respect of, any indebtedness of
      any nature owed to it by the Obligor.




	13.8 	
      Additional security



This guarantee is in addition to and is
not in any way prejudiced by any other guarantee or security now or subsequently
held by the Lender. 

37 





	14. 	
      CONFIDENTIALITY

	 	 
	14.1 	
      Confidential
information




	 	(a) 	
      Subject to clause 14.2, the parties will not disclose any
      confidential or unpublished information or documents supplied to it by or
      on behalf of any other party in connection with the Transaction Documents
      which are specifically indicated by that other party to be
      confidential.




	 	(b) 	
      Each party is entitled to disclose
  information:




	 	(i) 	
      which is publicly available, other than as a result of a
      breach by the disclosing party of this clause 14;

	 	 	 
	 	(ii) 	
      in connection with any legal or arbitration
      proceedings;

	 	 	 
	 	(iii) 	
      if required to do so under any law or
  regulation;

	 	 	 
	 	(iv) 	
      to a governmental, banking, taxation or other regulatory
      authority;

	 	 	 
	 	(v) 	
      to its auditors and professional advisers;

	 	 	 
	 	(vi) 	
      to its Affiliates;

	 	 	 
	 	(vii) 	
      to any rating agency on a confidential basis;

	 	 	 
	 	(viii) 	
      to the extent allowed under paragraph (d) below to
      another Obligor or any other member of the Group;

	 	 	 
	 	(ix) 	
      to the extent permitted under any other Transaction
      Document; or



with the agreement or prior consent of
the non-disclosing party to which the information being disclosed relates, such
consent not to be unreasonably withheld or delayed. 

	 	(c) 	
      The Lender may, for the purpose of exercising any Power,
      disclose to any person any document or record of, or information about,
      any Transaction Document, or the assets, business or affairs of any member
      of the Group, whether or not confidential, and whether or not the
      disclosure would be in breach of any law or of any duty owed to any member
      of the Group.

	 	 	 
	 	(d) 	
      The Lender may disclose to any person (a third
      party) with (or through) whom the Lender enters into (or may enter
      into) any kind of transfer, participation or hedge agreement (in each
      case, so long as that person is a New Lender and not a competitor of any
      Obligor) in relation to any Transaction Document or any other transaction
      under which payments are to be made by reference to any Transaction
      Document or any Obligor:




	 	(i) 	
      a copy of any Transaction Document; and

	 	 	 
	 	(ii) 	
      any information which the Lender has acquired under or in
      connection with any Transaction Document.



However, before a third party may
receive any confidential information, it must agree with the Lender to keep that
information confidential on the terms of this clause 14 as if it were the
Lender. 

38 





	 	(e) 	
      Notwithstanding any other provision of any Transaction
      Document, each party agrees that no party will disclose any information of
      the kind referred to in section 275(1) of the PPSA in response to a
      request of the type referred to in that section in relation to any
      Transaction Document unless section 275(7) of the PPSA applies. No Obligor
      will authorise disclosure of any such information under section 275(7)(c)
      of the PPSA unless the Lender expressly agrees to the
disclosure.

	 	 	 
	 	(f) 	
      This Clause 14 supersedes any previous confidentiality
      undertaking given by the Lender in connection with a Transaction Documents
      prior to it becoming a party to that Transaction
  Document.




	14.2 	
      Announcements



Neither party will, without the other
party's prior written consent, reveal to any person (other than in accordance
with the terms of the Transaction Documents) or otherwise announce the existence
of the Transaction Documents, their terms, subject matter and contents of
related negotiations or discussions. The restrictions in this clause will not
apply if, and to the extent that, an announcement is required by law, rule,
regulation or any judicial, governmental or competent supervisory or regulatory
authority (including without limitation, any securities exchange) provided that,
to the extent reasonably practicable, the announcing party shall consult in
advance with the other party first on the proposed form, timing, nature and
purpose of the announcement. 

	15. 	
      PPSA EXCLUSIONS




	 	(a) 	
      No Lender need give any notice under the PPSA (including
      a notice of a verification statement) unless the notice is required by the
      PPSA and cannot be excluded.

	 	 	 
	 	(b) 	
      To the extent the law
permits:




	 	(i) 	
      for the purposes of sections 115(1) and 115(7) of the
      PPSA:




	 	(A) 	
      the Security Trustee need not comply with sections 95,
      118, 121(4), 125, 130, 132(3)(d) or 132(4); and

	 	 	 
	 	(B) 	
      sections 142 and 143 are
excluded;




	 	(c) 	
      for the purposes of section 115(7) of the PPSA, the
      Lender need not comply with sections 132 and 137(3);

	 	 	 
	 	(d) 	
      if the PPSA is amended after the date of this document to
      permit a grantor and a secured party to agree to not comply with or to
      exclude other provisions of the PPSA, the Lender may notify the grantor of
      a security interest that any of these provisions is excluded, or that the
      Lender need not comply with any of these provisions as notified to the
      grantor by the Lender; and

	 	 	 
	 	(e) 	
      the grantor of a security interest agrees not to exercise
      its rights to make any request of the Lender under section 275 of the
      PPSA, or to authorise the disclosure of any information under that section
      or to waive any duty of confidence that would otherwise permit non-
      disclosure under that section.



39 





	16. 	
      GENERAL

	 	 
	16.1 	
      Performance by Lender of the Obligors’
      obligations



If any Obligor defaults in fully and
punctually performing any obligation contained or implied in any Transaction
Document, the Lender may, without prejudice to any Power, do all things
necessary or desirable, in the opinion of the Lender, to make good or attempt to
make good that default to the satisfaction of the Lender. 

	16.2 	
      Set-off



If an Event of Default is continuing,
the Lender may set off any amount owing by the Lender to an Obligor (whether or
not due for payment) against any amount due for payment by the Obligor to the
Lender in connection with a Transaction Document.

	16.3 	
      Notices




	 	(a) 	
      Any notice or other communication under the Transaction
      Documents (Notice) must be in legible writing and in English and
      delivered by hand or sent by prepaid post or fax to a party at the address
      or the fax number for that party in Schedule 2 or as otherwise specified
      by a party by Notice.

	 	 	 
	 	(b) 	
      Email or similar electronic means of communication must
      not be used to give Notices under any Transaction Document.

	 	 	 
	 	(c) 	
      A Notice sent by post is regarded as given and received
      on the second Business Day following the date of postage.

	 	 	 
	 	(d) 	
      A fax is regarded as given and received on production of
      a transmission report by the machine from which the fax was sent that
      indicates that the fax was sent in its entirety to the recipient’s fax
      number, unless the recipient informs the sender that the Notice is
      illegible or incomplete within 4 hours of it being transmitted.

	 	 	 
	 	(e) 	
      A Notice delivered or received other than on a Business
      Day or after 4.00pm (recipient’s time) is regarded as received at 9.00am
      on the following Business Day and a Notice delivered or received before
      9.00am (recipient’s time) is regarded as received at 9.00am.

	 	 	 
	 	(f) 	
      Each Obligor irrevocably authorises the Borrower to give
      and receive communications on its behalf. Each other party may rely on any
      such communication as if it was made by an Obligor, and the Obligor is
      bound by it.




	16.4 	
      Governing law and
jurisdiction



This agreement is governed by the law
of Western Australia and each party irrevocably and unconditionally submits to
the non-exclusive jurisdiction of the courts of Western Australia. 

	16.5 	
      Appointment of Process
Agent




	 	(a) 	
      Without prejudice to any mode of service allowed under
      any relevant law, each Obligor (other than an Obligor incorporated,
      formed, or registered as a foreign company, in
  Australia):




	 	(i) 	
      irrevocably appoints the Borrower as its process agent to
      receive any document in an action in connection with any Transaction
      Document; and



40 





	 	(ii) 	
      agrees that failure by a process agent to notify the
      relevant Obligor of any document in an action in connection with any
      Transaction Document will not invalidate the action
  concerned.




	 	(b) 	
      If for any reason the Borrower ceases to be able to act
      as process agent, each relevant Obligor must appoint another person
      acceptable to the Lender (acting reasonably) and ensure that the
      replacement process agent accepts its appointment and confirms its
      appointment to the Lender.

	 	 	 
	 	(c) 	
      The Borrower accepts its appointment as the process
      agent.

	 	 	 
	 	(d) 	
      Each relevant Obligor agrees that service of documents on
      its process agent is sufficient service on it.




	16.6 	
      Prohibition and
enforceability




	 	(a) 	
      Any provision of, or the application of any provision of,
      any Transaction Document or any Power which is prohibited in any
      jurisdiction is, in that jurisdiction, ineffective only to the extent of
      that prohibition.

	 	 	 
	 	(b) 	
      Any provision of, or the application of any provision of,
      any Transaction Document which is void, illegal or unenforceable in any
      jurisdiction does not affect the validity, legality or enforceability of
      that provision in any other jurisdiction or of the remaining provisions in
      that or any other jurisdiction.




	16.7 	
      Waivers




	 	(a) 	
      Waiver of any right arising from a breach of any
      Transaction Document or of any Power arising upon default under any
      Transaction Document or upon the occurrence of an Event of Default must be
      in writing and signed by the party granting the waiver.

	 	 	 
	 	(b) 	
      A failure or delay in exercise, or partial exercise,
      of:




	 	(i) 	
      a right arising from a breach of any Transaction Document
      or the occurrence of an Event of Default; or

	 	 	 
	 	(ii) 	
      a Power created or arising upon default under any
      Transaction Document or upon the occurrence of an Event of
  Default,



does not result in a waiver of that
right or Power. 

	 	(c) 	
      A party is not entitled to rely on a delay in the
      exercise or non exercise of a right or Power arising from a breach of any
      Transaction Document or on a default under any Transaction Document or on
      the occurrence of an Event of Default as constituting a waiver of that
      right or Power.

	 	 	 
	 	(d) 	
      A party may not rely on any conduct of another party as a
      defence to exercise of a right or Power by that other party.

	 	 	 
	 	(e) 	
      This clause may not itself be waived except by
      writing.




	16.8 	
      Variation



A variation of any term of any
Transaction Document must be in writing and signed by the parties. 

41 





	16.9 	
      Cumulative rights



The Powers are cumulative and do not
exclude any other right, power, authority, discretion or remedy of the Lender.


	16.10 	
      Certificates of Lender




	 	(a) 	
      A certificate under the hand of an Officer of the Lender
      detailing the amount of the Outstanding Moneys due and payable under any
      Transaction Document whether currently due and payable or not is
      sufficient evidence unless the contrary is proved.

	 	 	 
	 	(b) 	
      A certificate under the hand of an Officer of the Lender
      stating the opinion of the Lender as to any thing is sufficient evidence
      of that opinion at the date stated on the certificate or failing that as
      at the date of that certificate unless the contrary is
  proved.




	16.11 	
      Set-off authorised



If any Obligor has not paid any amount
(including, but not limited to, principal, interest, fees, costs, expenses or
taxes, whether contingent or otherwise) at any time due and payable by it to the
Lender in respect of any Transaction Document, the Borrower authorises the
Lender to apply any credit balance in any currency in any account of the
Borrower with any branch or office of the Lender in and towards satisfaction of
that amount. 

	16.12 	
      Counterparts




	 	(a) 	
      This agreement may be executed in any number of
      counterparts.

	 	 	 
	 	(b) 	
      All counterparts, taken together, constitute one
      instrument.

	 	 	 
	 	(c) 	
      A party may execute this agreement by signing any
      counterpart. Signatures to this agreement transmitted by facsimile
      transmission, by electronic mail in ‘portable document format’ (‘pdf’)
      form, or by any other electronic means intended to preserve the original
      graphic and pictorial appearance of a document, will have the same effect
      as physical delivery of the paper document bearing the original
      signature.




	16.13 	
      Attorneys



Each of the attorneys executing this
agreement states that the attorney has no notice of the revocation of the power
of attorney appointing that attorney. 

42 




SCHEDULE 1 

GUARANTORS 

	Name 	Address details 	Jurisdiction 
	P.M. Prospecting Pty Ltd 	Unit 17, 100 Railway Road, Subiaco,
      WA, 6008 	Western Australia 
	ABN 22 116 293 184 	  	  
	P.M. Energy Pty Ltd 	Unit 17, 100 Railway Road, Subiaco,
      WA, 6008 	Western Australia 
	ACN 120 462 919 	  	  
	Peninsula USA Holdings Inc 	Unit 17, 100 Railway Road, Subiaco,
      WA, 6008 	Delaware 
	Strata Energy Inc. 	Unit 17, 100 Railway Road, Subiaco,
      WA, 6008 	Delaware 
	Peninsula Uranium Limited 	Unit 17, 100 Railway Road, Subiaco,
      WA, 6008 	United Kingdom 


43 




SCHEDULE 2 

NOTICE DETAILS 

	Borrower 	Peninsula Energy Limited 
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 
	 	 
	Guarantor 	P.M. Prospecting Pty Ltd ABN 22 116 293
      184 
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 
	 	 
	Guarantor 	P.M. Energy Pty Ltd ACN 120 462 919
  
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 
	 	 
	Guarantor 	Peninsula USA Holdings Inc 
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 
	 	 
	Guarantor 	Strata Energy Inc 
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 
	 	 
	Guarantor 	Peninsula Uranium Limited 
	 	 
	Address 	Unit 17, Level 2, 100 Railway Road, Subiaco WA
      6008 
	 	 
	Attention 	The Company Secretary 
	 	 
	Fax 	+61 8 9381 5064 


44 





	Lender 	Resource Capital Fund VI L.P. 
	 	 
	Address 	1400 Sixteenth Street – Suite 200 
	  	Denver, Colorado 80202 USA 
	 	 
	Attention 	General Counsel 
	 	 
	Fax 	+1 (720) 946-1450 


45 




SCHEDULE 3 

FUNDING NOTICE 

Funding Notice 

	To: 	[Name of Lender] (Lender) 
	 	 
	Attention: 	General Counsel 


We refer to the convertible bridge loan agreement between
Peninsula Energy Limited and Resource Capital Fund VI L.P. dated on or about [
](Convertible Bridge Loan Agreement).

Expressions defined in the Convertible Bridge Loan Agreement
have the same meaning when used in this Funding Notice. 

Under the Convertible Bridge Loan Agreement: 

	(a) 	
      we give you notice that we wish to draw under the Loan on
      [ ];

	 	 
	(b) 	
      the aggregate amount to be drawn is US$9,630,000 and paid
      into the following account:

	 	 
		
      [Insert bank account details of Borrower, including
      swift code and BSB]

	 	 
	(c) 	
      the proceeds of the Loan are to be used in accordance
      with clause 2.3 of the Convertible Bridge Loan Agreement;

	 	 
	(d) 	
      we represent and warrant that no Event of Default is
      subsisting or will result from the provision of the Loan; and

	 	 
	(e) 	
      as at the date of this certificate, each representation
      and warranty in the Convertible Bridge Loan Agreement is true, correct and
      not misleading.



_______________________________________ 
Signature of
Officer 

_______________________________________ 
Name of Officer


46 




SCHEDULE 4 

INTERCREDITOR PRINCIPLES 

The Intercreditor Agreement – Investec will be consistent with
the following principles: 

	1. 	
      There will be no repayment of principal amounts owing
      under this agreement or the Pala Loan Agreement (collectively referred to
      as the Bridge Loan) for so long as any amounts remain outstanding
      under the Senior Facility Agreement, and until the Senior Lender has
      confirmed to the Security Trustee acting on behalf of the Lender and Pala
      (collectively the Junior Lenders) that all amounts owing under the
      Senior Facility Agreement have been fully and finally received, provided
      that if the Junior Lenders can demonstrate to the satisfaction of the
      Senior Lender (acting reasonably) that the repayment of any or all of the
      Bridge Loan would not be reasonably likely to have a Material Adverse
      Effect (as defined in the Senior Facility Agreement) then the Senior
      Lender will consent to the Borrower making that repayment of the Bridge
      Loan.

	 	 
	2. 	
      Notwithstanding paragraph 1, the Bridge Loan may be
      reduced and/or repaid in full by the issue of Shares in favour of the
      Junior Lenders, provided the Senior Lender is notified of the amount which
      is taken to be repaid by the issue of Shares.

	 	 
	3. 	
      Scheduled interest under the Bridge Loan may be paid to
      the Junior Lenders, provided that before each interest payment is made,
      the Senior Lender confirms to the Security Trustee
that




	 	(a) 	
      all amounts which are owing to the Senior Lender and have
      fallen due for payment under the Senior Facility have been fully and
      finally received by the Senior Lender, and

	 	 	 
	 	(b) 	
      there is no outstanding Event of Default, Potential Event
      of Default or Review Event (however defined) under the Senior Finance
      Documents.




	4. 	
      The Junior Lenders cannot take any steps to enforce the
      Security, accelerate repayment of moneys owing under the Bridge Loan, or
      issue any proceedings with a view to winding up the Borrower or appointing
      an administrator, receiver and manager or similar officer, in each case
      while any amounts remain outstanding to the Senior Lender under the Senior
      Facility, without the prior written consent of Senior Lender. For the
      avoidance of doubt, the Junior Lender may call (but not enforce) an Event
      of Default and accrue (but not receive) default interest, and may exercise
      other rights including inspection of assets and records and obtaining,
      reviewing and receiving information and notices. Notwithstanding the
      preceding sentences, the Junior Lenders can enforce their security at any
      time if the Senior Lender has confirmed to the Security Trustee acting on
      behalf of the Junior Lenders that all amounts payable to the Senior Lender
      under the Senior Facility have been fully and finally received by the
      Senior Lender.

	 	 
	5. 	
      If the Senior Lender enforces its security package and
      identifies one or more purchasers for the assets which are the subject of
      the security forming part of the Senior Finance Documents, the Junior
      Lenders rights under the Security Documents and the Security Trust Deed
      will be disregarded to the extent required to enable the Senior Lender to
      complete the sale of the relevant assets. If the Security Trustee enforces
      its security package and recovers amounts in excess of the aggregate
      amount owing to the Senior Lender under the Senior Facility, the Security
      Trustee will pay such excess amount to the Junior Lenders. As and when all
      amounts have been fully and finally paid to the Senior Lender in full
      under the Senior Facility, the Senior Lender will resign as security
      trustee and a new security trustee nominated by the Lenders will be
      appointed.



47 





	6. 	
      If an event of default has occurred under the Senior
      Facility or the Bridge Loan, then either the Senior Lender or the Junior
      Lenders (in their Proportionate Share or either of them if only one wishes
      to do so) shall be entitled to purchase each other's debt at par, provided
      the purchase is completed within 5 Business Days (or such other period as
      the parties may agree) of the Senior Lender and/or the Security Trustee
      acting on behalf of the Junior Lenders notifying the other of the
      existence of such event of default.

	 	 
	7. 	
      Neither the Senior Lender nor the Junior Lenders can
      assign or transfer any interest in their loans to a third party (other
      than, in the case of the Senior Lender, other members of the Senior Lender
      Group) without providing each other a first right of refusal to match such
      proposed assignment on the same terms.

	 	 
	8. 	
      Notwithstanding the restrictions on incurring Financial
      Indebtedness in the Senior Facility Agreement, this agreement and the Pala
      Loan Agreement, the Junior Lenders consent to the Senior Lender providing
      further financial accommodation to the Borrower; provided
  that:




	 	(a) 	
      the amount of such further financial accommodation does
      not exceed US$2,500,000;

	 	 	 
	 	(b) 	
      the terms of such further financial accommodation are
      consistent with the Senior Facility Agreement or are otherwise approved by
      the Lender and Pala, each acting reasonably; and

	 	 	 
	 	(c) 	
      such additional financial accommodation is not provided
      after the date of this agreement and prior to satisfaction of the
      Conditions Subsequent in accordance with clause 3.3 of this
    agreement.



For the avoidance of doubt, this does
not prevent the Senior Lender from incurring or recovering from the Borrower and
the Guarantors, any costs or expenses which are incurred by the Senior Lender
under the Senior Facility, including an enforcement scenario. 

	9. 	
      The Junior Lenders cannot make any material change to the
      Bridge Loan (including without limitation in respect of the principal
      amount of the Bridge Loan, the maturity date and the amount of interest
      payable on the Bridge Loan) without the prior written consent of the
      Senior Lender not to be unreasonably withheld or
delayed.



48 




SCHEDULE 5 

VERIFICATION CERTIFICATES 

PART A: AUSTRALIAN OBLIGORS 

	To: 	[Name and address of the Financier]
      (“Financier”) 
	 	 
	Attention: 	[Insert] 


[Date] 

[Note: Must be a date no earlier than 5 Business Days before
the drawing of the Loan.] 

Verification Certificate – Convertible Bridge Loan Agreement
between Peninsula Energy Limited and Resource Capital Fund VI L.P. dated [ ]
(“Facility Agreement”)

We, #insert names# are #directors / a director and company
secretary# of each Australian Obligor. We refer to the Facility Agreement. 

The “Definitions and interpretation” clause of the Facility
Agreement applies to this certificate as if it was fully set out in the
certificate. 

We certify as follows: 

1            Attached
to this certificate are complete copies of the following documents: 

	 	(a) 	
      The certificate of registration of each Australian
      Obligor and the constitution of each Australian Obligor.

	 	 	 
	 	(b) 	
      An extract of the minutes of a properly convened and held
      meeting of the board of directors of each Obligor held on #insert date#,
      showing properly passed resolutions:




	 	(i) 	
      authorising the Obligor to enter into and deliver the
      Transaction Documents to which it is a party, to comply with its
      obligations under them and to allow them to be enforced; and

	 	 	 
	 	(ii) 	
      appointing authorised Officers of the Obligor;
  and

	 	 	 
	 	(iii) 	
      which acknowledge that the Obligor benefits by entering
      into the Transaction Documents to which it is a party; and

	 	 	 
	 	(iv) 	
      which acknowledge that the directors are acting for a
      proper purpose; and

	 	 	 
	 	(v) 	
      which acknowledge that the Obligor was solvent and there
      were reasonable grounds to expect that the Obligor would continue to be
      solvent after executing, and complying with its obligations under, the
      Transaction Documents.




	2 	
      Each document attached to this certificate is correct and
      not misleading in any material respect (including by omission) and is in
      full force and effect as at a date no earlier than the date of this
      certificate.



49 





	4 	
      No Authorisations (other than those attached to this
      certificate) are required for the Obligor to enter into the Transaction
      Documents to which it is a party, to comply with its obligations under
      them and to allow them to be enforced.

	 	 
	5 	
      The Obligor is not Insolvent. Entry into the Transaction
      Documents and compliance with obligations under them has not contravened
      and will not contravene Chapter 2E or Part 2J.3 of the Corporations
      Act.

	 	 
	6 	
      There has been no change in its financial position (or if
      it is required to prepare consolidated financial statements, that there
      has been no change in the financial position of the consolidated entity
      constituted by it and the entities it is required to include in the
      consolidated financial statements) since the date to which its Financial
      Report last given to the Finance Parties was prepared which has had, or is
      likely to have, a Material Adverse Effect

	 	 
	7 	
      Below are the signatures of each authorised Officer of
      the Obligor and of each other person who is authorised to sign and deliver
      a Transaction Document for the Obligor:




	 	Name 	Position Held 	Signature 
	 	[insert name] 	[insert position] 	  


________________________
[Name of person] being 
a
Director of 
[Name of Obligor] 

_________________________
[Name of person] being 
a
[Director/Company Secretary] of 
[Name of Obligor] 

50 




PART B – UK GUARANTOR 

	To: 	[Name and address of the Financier]
      (“Financier”) 
	 	 
	Attention: 	[Insert] 


[Date] 

[Note: Must be a date no earlier than 5 Business Days before
the drawing of the Loan.] 

Verification Certificate – Convertible Bridge Loan Agreement
between Peninsula Energy Limited and Resource Capital Fund VI L.P. dated [ ]
(“Facility Agreement”)

We, [#insert names#] are #directors / a director and company
secretary# of Peninsula Uranium Limited ("PUL"). We refer to the Facility
Agreement. 

The “Definitions and interpretation” clause of the Facility
Agreement applies to this certificate as if it was fully set out in the
certificate. 

We certify as follows: 

	1 	
      Attached to this certificate are true, complete and up-to
      date copies of the following documents:




	 	(a) 	
      the certificate of incorporation (and any certificate of
      incorporation on change of name) of PUL and the memorandum of association
      and articles of incorporation of PUL;

	 	 	 
	 	(b) 	
      the minutes of a properly convened and held meeting of
      the board of directors of PUL held on [#insert date#] (including the
      resolutions passed at that meeting):




	 	(i) 	
      approving and authorising the execution, delivery and
      performance of each Transaction Document to which it is to be a party on
      the terms and conditions of those documents;

	 	 	 
	 	(ii) 	
      showing that the relevant board meeting was quorate, that
      due consideration was given by all the relevant directors present of PUL's
      liabilities arising under those documents and that all declarations of
      interest required in connection with any Transaction Document to which it
      is to be a party were made;

	 	 	 
	 	(iii) 	
      showing that in considering the transactions contemplated
      by the Transaction Documents to which PUL is party, the relevant meeting
      had regard (among other matters) to the factors referred to in section
      172(1) of the Companies Act 2006 in each case insofar as they considered
      such factors likely to be affected by or otherwise relevant to those
      transactions;

	 	 	 
	 	(d) 	
      resolving that the transactions contemplated by the
      Transaction Documents to which PUL is party would be most likely to
      promote the success of PUL for the benefit of its members as a whole;
      and

	 	 	 
	 	(e) 	
      authorising any director whose name and specimen
      signature is set out in those minutes and below in paragraph 6 to sign or
      otherwise attest the execution of those documents and any other documents
      to be executed or delivered pursuant to those
documents;



51 





	 	(d) 	
      a resolution signed by the Borrower, as the holder of the
      entire issued shares in PUL, approving the terms of, and the transactions
      contemplated by, the Transaction Documents to which PUL is a party;
  

	 	  	
       

	 	(e) 	
      each other Authorisation necessary for PUL to enter into
      the Transaction Documents to which it is a party, to comply with its
      obligations under them and to allow them to be enforced; [and] 

	 	  	
       

	 	(#) 	
      [Each power of attorney under which a person signs a
      Transaction Document for PUL showing evidence of stamping and
      registration]. 




	2 	
      Each document attached to this certificate is correct and
      not misleading in any material respect (including by omission) and is in
      full force and effect as at a date no earlier than the date of this
      certificate.

	 	 
	3 	
      No Authorisations (other than those attached to this
      certificate) are required for PUL to enter into the Transaction Documents
      to which it is a party, to comply with its obligations under them and to
      allow them to be enforced.

	 	 
	4 	
      PUL is not Insolvent.

	 	 
	5 	
      There has been no change in its financial position (or if
      it is required to prepare consolidated financial statements, that there
      has been no change in the financial position of the consolidated entity
      constituted by it and the entities it is required to include in the
      consolidated financial statements) since the date to which its Financial
      Report last given to the Finance Parties was prepared which has had, or is
      likely to have, a Material Adverse Effect

	 	 
	6 	
      Below are the signatures of each authorised Officer of
      PUL and of each other person who is authorised to sign and deliver a
      Transaction Document PUL:




	 	Name 	Position Held 	Signature 
	 	[insert name] 	[insert position] 	  


______________________
[Name of person] being 
a Director
of 
Peninsula Uranium Limited 

______________________
[Name of person] being 
a
[Director/Company Secretary] of 
Peninsula Uranium Limited 

52 




PART C - US GUARANTORS 

	To: 	[Name and address of the Financier]
      (“Financier”) 
	 	 
	Attention: 	[Insert] 


[Date] 

[Note: Must be a date no earlier than 5 Business Days before
the drawing of the Loan.] 

Verification Certificate – Convertible Bridge Loan Agreement
between Peninsula Energy Limited and Resource Capital Fund VI L.P. dated [ ]
(“Facility Agreement”)

I, ______________, am the Secretary of [Peninsula USA Holdings
Inc. / Strata Energy, Inc.] (the “Company”). We refer to the Facility Agreement.


The “Definitions and interpretation” clause of the Facility
Agreement applies to this certificate as if it was fully set out in the
certificate. 

I certify as follows: 

	1. 	
      A properly noticed and convened meeting of the board of
      directors of the Company was held on December __, 2015 (including the
      resolutions passed at that meeting) during which the board of
      directors:




	 	(a) 	
      approved and authored the execution, delivery and
      performance of each Transaction Document to which it is to be a party on
      the terms and conditions of those documents;

	 	 	 
	 	(b) 	
      with a quorum present, gave due consideration (by all
      directors present) of the Company’s liabilities arising under any
      Transaction Document and that all declarations of interest required in
      connection with any Transaction Document to which it is to be a party were
      made;

	 	 	 
	 	(c) 	
      considered the transactions contemplated by the
      Transaction Documents to which the Company is party in the relevant
      meeting of the board of directors, pursuant to Delaware General
      Corporations Law, Title 8, Section 142(a) (8 Del. C. § 142(a)), and
      considered such factors likely to be affected by or otherwise relevant to
      those transactions with due care, in good faith and without of conflicts
      of interest;

	 	 	 
	 	(d) 	
      resolved that the transactions contemplated by the
      Transaction Documents to which the Company is party would be most likely
      to promote the success of the Company for the benefit of its members as a
      whole; and

	 	 	 
	 	(e) 	
      authorized any director whose name and specimen signature
      is set out below in paragraph 7 to sign or otherwise attest the execution
      of those documents and any other documents to be executed or delivered
      pursuant to those documents.




	2 	
      Attached to this certificate are true, complete and up-to
      date copies of the following documents:




	 	(a) 	
      the certificate of incorporation (and any amendments
      thereto) of the Company and the bylaws of the
Company;



53 





	 	(b) 	
      a resolution signed by the Borrower, as the holder of the
      entire issued shares in the Company, approving the terms of, and the
      transactions contemplated by, the Transaction Documents to which the
      Company is a party; and

	 	 	 
	 	(c) 	
      each other Authorisation necessary for the Company to
      enter into the Transaction Documents to which it is a party, to comply
      with its obligations under them and to allow them to be
  enforced.




	2 	
      Each document attached to this certificate is correct and
      not misleading in any material respect (including by omission) and is in
      full force and effect as at a date no earlier than the date of this
      certificate.

	 	 
	3 	
      No Authorisations (other than those attached to this
      certificate) are required for the Company to enter into the Transaction
      Documents to which it is a party, to comply with its obligations under
      them and to allow them to be enforced.

	 	 
	4 	
      The Company is not Insolvent.

	 	 
	5 	
      There has been no change in its financial position (or if
      it is required to prepare consolidated financial statements, that there
      has been no change in the financial position of the consolidated entity
      constituted by it and the entities it is required to include in the
      consolidated financial statements) since the date to which its Financial
      Report last given to the Finance Parties was prepared which has had, or is
      likely to have, a Material Adverse Effect.

	 	 
	6 	
      Below are the signatures of each authorised Officer of
      the Company and of each other person who is authorised to sign and deliver
      a Transaction Document for the Company:




	 	Name 	Position Held 	Signature 
	 	[insert name] 	[insert position] 	  



	 	__________________________________
	 	[Name of person] 
	 	Being the Secretary of 
	 	[Peninsula USA Holdings Inc. 
	 	/ Strata Energy Inc.] 


ATTEST: 

__________________________________
[Name of person]

Being a Director of 
[Peninsula USA Holdings Inc. / 
Strata Energy
Inc.] 

54 




SCHEDULE 6 

FORM OF CERTIFICATE 

The Convertible Notes covered hereby have not been registered
under the United States Securities Act of 1933, as amended and may not be
offered or sold within the United States or to or for the benefit of United
States persons, except pursuant to an applicable exemption from registration.


PENINSULA ENERGY LIMITED ACN: 062 409 303 


	Certificate number: [ • ] 	Issue Date: [ • ] 
Maturity Date: [ • ]
    	Face Value: [ • ] 



We refer to the Convertible Bridge Loan Agreement between
Peninsula Energy Limited (the Company) and Resource Capital Fund VI LP
(RCF) dated [ • ] (Convertible Bridge Loan Agreement). Capitalised
terms used but not defined in this notice have the meanings given in the
Convertible Bridge Loan Agreement. 

This is to certify that RCF is the registered holder of a
Convertible Note with a Face Value set out above plus interest accruing in
accordance with the Convertible Bridge Loan Agreement. The Convertible Note is
convertible into Shares in the Company in accordance with the Convertible Bridge
Loan Agreement. The terms of the Convertible Note as set out in clause 6 of the
Convertible Bridge Loan Agreement are deemed to be included or endorsed on this
certificate. 

The Convertible Note is issued with the benefit of, and
subject to the terms and conditions set out in, the Convertible Bridge Loan
Agreement. The Convertible Note is fully transferable in accordance with the
provisions of the Convertible Bridge Loan Agreement providing for assignment of
the Loan by the Lender. 

This Certificate must be returned to the Company for
cancellation on conversion in accordance with the Convertible Bridge Loan
Agreement and in the case of a conversion of less than the Total Convertible
Amount the Company must issue a replacement Certificate for the portion not
converted. If the Certificate is not cancelled on or before the Maturity Date,
it must be returned to the Company on the Maturity Date. 

This certificate and the Convertible Note is governed by the
laws of Western Australia, Australia. 

DATED: [ • ] 

EXECUTED by PENINSULA ENERGY
)                                                               )
LIMITED
in accordance with section 127 of
)                                                     
 )
the Corporations Act 2001 (Cth):
)                                                                         
)

	 	 	 
	Signature of director 	 	Signature of director/company secretary 
	 	 	 
	 	 	 
	 	 	 
	 	 	 
	Name of director 	 	Name of director/company secretary
  


55 




SCHEDULE 7 

FORM OF CONVERSION NOTICE 

TO:         PENINSULA
ENERGY LIMITED (the Company) 

	FROM: [ 	], as Lender 
	Date: [ 	], the Conversion Notice Date



PENINSULA ENERGY LIMITED – US$9,630,000 Convertible Bridge
Loan Agreement dated [ ] (the Convertible Bridge Loan Agreement)


	1. 	
      We refer to the Convertible Bridge Loan Agreement and the
      Convertible Note. This is a Conversion Notice.

	 	 
	2. 	
      Terms defined in the Convertible Bridge Loan Agreement
      have the same meaning when used in this Conversion Notice.

	 	 
	3. 	
      We wish to discharge [all / part of] our entitlement to
      an interest payment [and/or] participation in the principal amount
      outstanding under the Loan in exchange for Shares on the following
      terms:




	 	(a) 	Loan Conversion Amount: 	[ 	] 	 
	 	(b) 	Interest Conversion Amount: 	[ 	] 	 
	 	(c) 	Conversion Date: 	[ 	] 	 
	 	(d) 	Loan Conversion Price: 	[ 	] 	 
	 	(e) 	Interest Conversion Price: 	[ 	] 	 
	 	(f) 	Loan Conversion Shares: 	[ 	] 	 
	 	(g) 	Interest Conversion Shares: 	[ 	] 	 
	 	(h) 	Transferee: 	[ 	] 	 


Date [ • ] 

___________________________________________
Name:

Authorised signatory for the Lender 

56 




SIGNATORIES 

Borrower 

	EXECUTED by PENINSULA ENERGY 	)	
	LIMITED in accordance with section 127 of 	)	
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	the Corporations
      Act 2001 (Cth): 	)	
	  	 	  
	  	 	  
	 	 	 
	  	 	  
	  	 	  
	Signature of director 	 	     Signature of
      director/company secretary 
	 	 	 
	 	 	 
	 	 	 
	Name of director 	 	     Name of director/company
      secretary 


Guarantors 

	EXECUTED by PM PROSPECTING PTY 	)	
	LTD in accordance with section 127 of the 	)	
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	Corporations Act
      2001 (Cth): 	)	
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	Signature of director 	 	     Signature of
      director/company secretary 
	 	 	 
	 	 	 
	 	 	 
	Name of director 	 	     Name of director/company
      secretary 



	EXECUTED by PM ENERGY PTY LTD in 	)	
	accordance with section 127 of the Corporations 	)	
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	Act 2001 (Cth):
	)	
	  	 	  
	  	 	  
	  	 	  
	  	 	  
	Signature of director 	 	     Signature of
      director/company secretary 
	 	 	 
	 	 	 
	 	 	 
	Name of director 	 	     Name of director/company
      secretary 


57 




STRATA ENERGY, INC., 
a Delaware Corporation 

By:______________________________

Its
______________________________


PENINSULA USA HOLDINGS, INC., 
a Delaware Corporation


By:______________________________

Its
______________________________


Executed by PENINSULA URANIUM LIMITED 
acting
by                                                                                                
and

                                                                                                                                    
____________________________

                                                                                                                                    Director


                                                                                                                                   
____________________________

                                                                                                                                  
Director / Secretary 

Lender 

Signed by
Resource Capital Fund VI L.P. 

By:    Resource Capital Associates VI L.P.,
General Partner 
By:    RCA VI GP Ltd., General Partner
By: 

sign
here                           
                    
                              _____________________________________________
                            
Catherine J. Bloggs, General Counsel in the presence of: 

                             _____________________________________________
                           
Signature of witness 

                           _____________________________________________
                          
Name of witness (print) 

58