AMENDMENT
      NO. 2 TO AGREEMENT AND PLAN OF MERGER

     

    This
      AMENDMENT NO. 2 TO AGREEMENT AND PLAN OF MERGER is entered into as of August
      8,
      2006 (this “Amendment”)
      among
      NOVASTAR RESOURCES LTD., a Nevada corporation (“Company”), TP ACQUISITION CORP.,
      a Delaware corporation and wholly-owned subsidiary of Company (“Acquisition
      Sub”), and THORIUM POWER, INC., a Delaware corporation (“Thorium Power”).
      Capitalized terms used, but not otherwise defined, herein have the meanings
      ascribed to such terms in the Agreement (as defined below).

     

    BACKGROUND

     

    The
      Parties entered into an Agreement and Plan of Merger on February 14, 2006 (the
      “Agreement”)
      relating to the acquisition by Company of one hundred percent (100%) of the
      outstanding common stock of Thorium Power through a reverse merger of
      Acquisition Sub with and into Thorium Power. The Agreement was thereafter
      amended on June 12, 2006. The Parties now desire to enter into this Amendment
      to
      further modify the terms of the Agreement as more specifically set forth
      herein.

     

    AGREEMENT

     

    NOW,
      THEREFORE, in consideration of the mutual promises of the parties hereto, and
      of
      good and valuable consideration, the receipt and sufficiency of which are hereby
      acknowledged, the parties hereto agree as follows:

     

    1. Amendment
      to Section 1.2(a).
      Section
      1.2(a) of the Agreement is deleted in its entirety and in lieu thereof the
      following new Section 1.2(a) is inserted:

     

    “(a)        
      Purchase
      Price.
      

     

    (i) At
      the
      Closing, each issued and outstanding share of Thorium Power’s common stock,
      $0.05 par value per share (the “Thorium
      Power Common Stock”)
      other
      than shares of Thorium Power Common Stock held by Company shall be converted
      into the right to receive 25.628 shares of Company’s common stock, $0.001 par
      value per share (the “Company
      Common Stock”).

     

    (ii) At
      the
      Closing, each Exchangeable Security that has an exercise price of $5.00 or
      $1.00
      (constituting the only prices at which Exchangeable Securities are exercisable)
      shall be converted into the right to receive 22.965 and 12.315 shares of Company
      Common Stock, respectively.

     

    (iii) All
      shares of Thorium Power Common Stock and all Exchangeable Securities will no
      longer be outstanding and will automatically be cancelled and retired and shall
      cease to exist, and each holder of a certificate representing any such shares
      of
      Thorium Power Common Stock or certificate or other instrument evidencing any
      such Exchangeable Securities that are so exchanged shall cease to have any
      rights with respect thereto, except the right to receive the shares of Company
      Common Stock to be issued in consideration therefor upon the surrender of such
      certificate or other instrument in accordance with Section 1.2(c), without
      interest.

     

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    (iv)
      Any
      securities convertible into or exercisable for shares of Thorium Power Common
      Stock (the “Thorium
      Power Convertible Securities”)
      immediately prior to the Effective Time (other than the Exchangeable Securities)
      will become, at the Effective Time, securities exercisable for such number
      of
      shares of Company Common Stock as the holder of such securities would have
      received had such holder converted such securities into Thorium Power Common
      Stock immediately prior to the Closing. Appropriate adjustment will be made
      to
      any exercise or conversion price of such securities.”

     

    2.            
      Agreement.
      In all
      other respects, the Agreement shall remain in full force and
      effect.

     

    3.           
      Counterparts.
      This
      Amendment may be executed in two or more counterparts, each of which shall
      be
      deemed an original but all of which together shall constitute one and the same
      instrument.

     

    [REMAINDER
      OF PAGE INTENTIONALLY LEFT BLANK]


    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

     

    IN
      WITNESS WHEREOF, the parties hereto have duly executed this Amendment as of
      the
      date first above written.

     

    
      	 	 	 
	 	NOVASTAR
              RESOURCES
              LTD.
	 
 	 
 	 
 
	 	By:  	/s/ Seth
              Grae
	 	
              
Name:
              Seth Grae
	 	Title:
              President and Chief Executive Officer


    

     

    
      	 	 	 
	 	TP
              ACQUISITION
              CORP.
	 
 	 
 	 
 
	 	By:  	/s/ Seth
              Grae
	 	
              
Name:
              Seth Grae
	 	Title:
              President and Chief Executive Officer


    

    
      	 	 	 
	 	THORIUM
              POWER,
              INC.
	 
 	 
 	 
 
	 	By:  	/s/ Seth
              Grae
	 	
              
Name:
              Seth Grae
	 	Title:
              President and Chief Executive Officer