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									                             PRESTON
                                RESOURCES LIMITED
                                  ABN 30 003 207 467



              NOTICE OF ANNUAL GENERAL MEETING
                                        AND

                 EXPLANATORY MEMORANDUM




       tillAIlrluai &mxai hketing 01”Preston Resources Limted will be held at
          10 am on Monday 15 July 2002 at Technology Park Function Centre.
                 2 Brodie-Hall Drive, Bentley, Western Australia, 6102.




Please read the Notice and Explanatory Memorandum carefully.

If you are unable to attend the Annual General Meeting of Shareholders please complete
and return the enclosedproxy form in accordance with the specified directions.
             CORPORATE DIRECTORY

Registered   i   Directors
             i
             j   Adrian Griffin (Chairman)                          Level 1 , 16 Ord Street
                      Matthelvs
                 I revor              Ulrector)
                              (txecutlve                                      Western
                                                                    West Perth,     Austraha         6UU3
             j   Terry Topping (Non-Executive Director)             (PO Box 1596, West Perth, Western Australia 6872)
                                                                    Telephone:           +61893224166
                                                                    Facsimile:           +61 8 9 3 2 2 4 6 9 0
                                                                    Emaii:               preston@prestonres.com.au
                                                                    Website:
                                                          www.prestonres.com.au

                 Company Secretary                                  Share Registry

                 Trevor MatthenS                                    Advanced Share Registry Services.
                                                                         ~~                   ~         .
                                                                                                        ..
                                                                    7th Floor, 200 Adelaide Terrace
                                                                    Perth. Western Australia 6000

                 Home Stock Exchange                                Bankers

                 Australian Stock Exchange Limited                  Bank of Western Australia Ltd
                 Exchange Plaza                                     1OS St Georges Terrace
                 2 The Esplanade                                    Perth, Western Australia 6000
                 Perth, Western Australia 6000
                                                                    Barclays Bank Plc
                                                                    5 The North Colonnade
                                                                    Canary Wharf
                                                                    London, United Kingdom E 13 4BB

                 Legal Advisers                                     Auditors

                 Freehills                                          Andersen
                 140 St Gecrges Terrace                             225 St Georges Terrace
                 Perth. Western Australia 6000                      Perth, Western Australia 6000

                 Skadden Arps Slate Meagher & Flom
                 1 Canada Square
                 Canary Wharf
                 London. United Kingdom E14 5DS

                 Tax Advisers

                 Ernst & Young
                 152 St Georges Terrace
                 Perth, Wzstern Australia 6000
   CONTENTS PAGE

      Action Required by Shareholders
      Chairman's Letter
      Notice of Annual General Meeting
      Notice of Class Meeting
      Explanatory Memorandum
      1 - Overview of the proposed restructure
      1.1      Background
      1.2      Restructure of the  Company
      1.3       Implementation of the   restructure
      1.4 precedent
     Conditions
      1.5               the
                       of
                Benefitsrestructure
   l 1.6             impact
                Financial
      l .7      Risksassociated with the     restructure
      1 .S      Implications if therestructuredoes not proceed
      1.9       Timing
      1.10          relevant
                Other        information
      1.1 1     Directorsrecommendation
      2 - Additional information relating to resolutions 3 a n d 4 - Cancellation of Resolute Shares in the
      Company and release of Resolute by the Company
      2.1Purpose           of resolutionsand
                                          3         4
      2.2
Background
      2.3        ResoluteDeed of Release
      2.4Implications            of the
                                      capital reduction
    1 2.5        Effect if resolutions 3 and 4 notpassed
                                                                                                              l
    I 2.6                      for
                 Kequlrementshareholder     approval
                 Directors' recommendation
   I  :':Additional
      3,1
                         information relating to resolution 5 - Disposal of the Company's main undertaking
                 Purpose uf resutution 5
       3.2       Key effects the
                              of disposal
       3.3       Potential            of disposal
                          advantages the
       3.4       Potentialdisadvantages of the      disposal
       3.5Effect         if resolution 5 not   passed
         Requirement shareholder
       3.6            for            approval
       3.7 recommendation
      Directors'
       4 - Resolution 1 - Election Trevor Matthews as a director the Company
                                                                     of
       5 - Resolution 2 - Appointment of new auditor


       Glossary

       Notice of Nomination of New Auditor
       Proxy Form - Annual General Meeting
           AC'I'ION KEQUlKED BY SHAREHOLDERS

           Step l : Read the Notice and Explanatory Memorandum

                                                                                                 at
           The Explanatory Memorandum sets out details of the resolutions to be voted on the Annual
           C-"?"", ?ilxtin_=.
                 ,
                ,!          This i n f o r n s t i o ~ importar?!. You shccld read this document ca-efu!!y 2nd
                                                      Is
           if necessaryseekyour o\vn independent advice on any aspects about which you are not
           certain.

           Step 2: l-ote on the resolutions

           Your vote is important. The Annual General Meeting is scheduled to be held at 10 am on
           15 July 2002 at Technology Park Function                2
                                                             Centre,        Brodie-Hall Drive, Bentley,
           Western Australia, 6 102. You should complete proxy the           form that accompanies    this
-- -
"      "



           document and return i t x m r e p l y paid enveiope provided so that the form is receiveci
           am
           (Perthtime) on 13 July2002,whetheror           notyou proposeto attend theAnnualGeneral
           Meeting.

           For details on hen. to complete and lodge the proxy form. please refer to the instructions on
           the form.

           The directors recommend you vote "FOR" each of the resolutions by completing and
           returning the enclosed proxy form or attending the Annual General Meeting.

           QUESTIONS

           I f you ha\.e any questions about any matter contained in theNotice of Annual General
           Meeting or the attached Explanatory Memorandum, please contact Adrian Griffin (Chairman)
           011
           (08) 9322 1 66.
                      1

           KEY DATES

           Details                                                    Dates
           Last date for acceptance of proxies                    ~          (Perth time) on 13 2002
                                                                      10:OO am                 July
           Date for determining entitlement to vote at the        i
                                                                  l
                                                                      5:00 pm (Perth time) on 13 July2002
           Annual General Meeting                                 l
           Date of Xt1nua:l General Meeiing                       i   1O:OO am (Perth h e ) on I 5 July 2002
                                  PRESTON
                                     RESOURCES LIMITED
                                         ABN 30 003 207 467



12June2002


Dear Shareholder
As previously announced, the Company has proposed a restructure of the debt and equity of
itstwo wholly-owned subsidiaries, Bulong Operations Pty Ltd (BulongOperations) and
      Nickel
Bulong Pty            Ltd (Bulong Nickel)(together the Bulong    Companies).      Bulong
Operations and Bulong Nickel jointly own and operate the principal commercial undertaking
of the Company, the Bulong Nickel Project, which is located near Kalgoorlie in Western
Australia.
Since its acquisition by the Company in 1998, the Bulong Nickel Project has not performed to
expectations. As a result, the Company has been unable to satisfy its financial obligations to
;to ”,.....,,,-l
l L 3 3bbulbu b l ~ u I c u 1 3 The Coxpmj; has proposed a fiiimcid resiruciure ofthe debt and equity
                 .A+ -
                 ,, : ”
                                .

of the Bulong           Companies.
Terms of the restructure
The restructure willbe effected by means of two schemes of arrangement under Part 5.1 of the
Corporations Act (Bulong Schemes of Arrangement). Under thetermsoftheBulong
                             ~~
                                                              ~~
                                                                                          ~~




Schemes of Arrangement:
0      The Company will be released from all substantive financial obligations and liabilities
       relating to theBulong Nickel Project and the Marlborough Nickel Project.The
                                                        all
       Company currently guarantees the repayment of amounts             by
                                                                   owing Bulong
       OperationsandBulong Nickel totheir secured creditors inrelationtotheBulong
       Nickel Project. As at 30 April 2002 the Bulong Companiesowedtheir             secured
       creditors approximately $710,000,000.
0       The Company will be released from its obligations to pay Resolute Limited (Resolute)
        an amount of approximately $62,000,000 owing to Resolute in connection with the
        acquisition of the Bulong Nickel Project in 1998.
                  shares
        17,439,855 in  the       Company held by   Resolute     will be cancelled and the
        Company will be released from its obligations to issue 25,186,812 further shares to
        Resolute.
0       The Company will release Resolute from any potential liability with respect to certain
        warranties provided by Resolute in relation to the Bulong Nickel Project.
0       Barclays Bank Plc and certain other secured creditorsoftheBulongCompanieswill
        receive 95% of the issued capital of Bulong Operations, with the result that the Bulong
        Nickel Project willin substance be disposed of by the Company to its secured
        creditors.



                                                  2
              Benefits of the restructure
              I; Lilt: culiJiL;uIls p1cct:citmL LU ~ht:
                                                     Zuiullg SL~KIIIG:~I I ~ I I ~ C I ~alt:M
                                                                    U A
                                                                     :                   I ~ saLi:bCt:ci. Lilac wiii Lc

              substantial benefits for the Company. The Company will be released from very substantial
              debts and obligations owed to its secured creditors and Resolute. Whilst there will be some
              continuing obligations for the Company in relation to the Bulong Nickel Project after the
              Bulong Schenes of Arrangeneat are implemented, these obligati or,^ are not onerous nor, in
              the opinion of the directors, material in the context of the financial restructure overall.
              The result of the sitcccssful implementation of the financial restructure of the Companyis that
              the Company will not have any material debts or obligations. It will be able to look for further
              investments and projects. If the financial restructure is successful, the directors of the
              Company intend to commence a capital raising with a view to applying for re-quotation of the
              Company's shares on Australian Stock Exchange (ASX). Preliminary negotiations have been
              held with ASX to discuss that possibility.
- _"
"      - --           r   .>
                    U1    Lllt:

              Arrangement is that the Shareholders of the Company pass resolutions 3, 4 and 5 as proposed
              in the Notice of Annual General Meeting. To take advantage of the benefits of the financial
                                           need to vote in favour of each of those resolutions.
              restructure, Shareholders will
              Effect if resolutions 3 , 4 and 5 not passed
              If the resolutions are not passed, the financial restructure will fail. If that happens, the most
              likely outcome is that the directors will appoint an administrator to the Company, and that this
              will ultimately lead to the liquidation of theCompany.
              Directors recommendation
              The directors unanimously recommend that you vote in favour of each of the resolutions
              proposed in the Notice of Annual General Meeting. Each of the directors who hold shares in
              the Company intend to vote in favour of all resolutions for all shares under their control.
              Fullparticulars of the proposed resolutions are set out in the Notice of Annual General
              Meeting and accompanying Explanatory Memorandum. I urge you to carefully consider the
              information set out in those documents and vote on the resolutions. If you cannot attend the
              meeting on 15 July 2002, please complete and return the enclosed proxy form in accordance
              with the instructionson that form.
              Yours sincerely


                                    -.


              Chairman
              Preston Resources Limited




                                                                  2
                                 PRESTON
                                     RESOURCES LIMITED
                                        ABN 30 003 207 467




NOTICE IS HEREBY GIVEN THAT an Annual General Meeting of the Shareholders of
PRESTON RESOURCES LIMITEDwill be held at the following time and place:

        Time:          1O:OO am
        Date:          15 July 2002
        Place:         Technology Park Function Centre, 2 Brodie-Hall Drive, Bentley,
                       Western Australia, 6102

If you are unable to attend the meeting, we encourage you to complete and return the enclosed
proxy form. The completed proxy form must be received by Trevor Matthews (Company
Secretary) by no later than 1O:OO am (Perth time) on Saturday 13 July 2002.

AGENDA

The following resolutions to be considered at the Annual General Meeting are explained in
the attached Explanatory Memorandum.
ORDINARY BUSINESS
1.    Financial Reports
      To receive and consider the financial reports for the year ended 30 June 2001 , and the
      directors' and auditor's reports.
2.    Election of Trevor Matthews as a director of the Company
      Resolution 1 - To consider, and if thought fit,passthe        following resolution as an
      ordinary resolution:
                 That Trevor John Matthews, being       a director of the Company who
                 retires automatically pursuant to regulation 13.6 of the Company's
                 constitution,andbeingeligible,isre-electedas          a director o the
                                                                                   f
                 Company.
SPECIAL BUSINESS


3.    Appointment of new auditor
                                                                                  as
      Resolution 2 - To consider and, ifthought fit, pass the following resolution a special
      resolution:
                 That the Company, having received a consent to act as auditor of the
                 Company from Ernst & Young in accordance with section 327(7) of
                 the Corporations Act 2001, appoints Ernst & Young as the auditor o f

                                                 4
                             the
                              Company          accordance section
                                               in      with 327(10)(a)                           of the
                             rnrnnrntinnr   A c t 700 l
                                1



               5.   Cancellation of the ordinary shares in the Company held by Resolute Limited
                    Resolution 3 - To consider and, if thought fit, to pass the following resolution as a
                    special resolution:
                             That, subject to and conditional on Resolutions 4 and 5 having been
                            carried, the approval by Resolute Limited         of the cancellation of its
                            sl~arel~olding the Cornpatzy andtheapproval
                                           in                                         of theschemes o    f
                            arrangement for each of BulongOperationsPtyLtdandBulong
                            NickelPtyLtdbytheSupremeCourt                   o Western
                                                                             f           Australia,  the
                            cancellation of the 17,439,855 ordinary shares the issued capital of
                                                                                 in
                            the Company held by Resolute Limited on the terms and conditions
                            contained in the Explanatory Memorandum accompanying this Notice
 .-
-. -   "
       .   -
                            OJ Annual CieTeral M e e t i n g , - i s h e r s b y a ~ e d f o r - apurposes,
"              "



                                                                                                   ~
                            including for the purpose of section 256C(2)(a) of the Corporations
                            Act 2001.
               6.   Release of Resolute Limited by the Company
                    Resolution 4 - To consider and, if thought fit, pass the following resolution as
                    an ordinary resolution:
                             That, subject to and conditional on Resolutions 3 and 5 having been
                             curried, the approval by Resolute Limited    o the cancellation of its
                                                                           f
                             shnr-eholding i n the Company and the approval      of the schemes of
                             crr-rangentent for each of BulongOperations PtyLtdandBulong
                             Nickel Pty Ltdby the Supreme Courtof Western Australia, the release
                             bJ, the CompaTy of Resolute Limited from certain of its obligations
                             and liabilities under the sale agreement dated 3 November 1998 and
                             the technical services agreement dated 4 November 1998 in relation
                             to the Bulong hltckel Pyoject on the terms and conditions contained in
                             the Explanatory Memorandum accompanying this Notice of Annual
                             General Meeting, is hereby approved for all purposes, includingfor
                             the purposes of pule 10.1 o the Listing Rules of Australian Stock
                                                           f
                             Exchange Limited.
               7. Disposal of the Company's main undertaking
                    Resolution 5 - To consider and, if thought fit, pass the following resolution as an
                    ordinary resolution:
                             That, subject to a d conditional 031 Resolutiorzs 3 and 4 having been
                             carried, the approval by Resolute Limited of the cancellation    o its
                                                                                               f
                             shareholding in the Company and the approval        o the schemes of
                                                                                  f
                             arrangement for each of BulongOperationsPtyLtdandBulong
                             NickelPtyLtdbytheSupremeCourtofWesternAustralia,the
                             disposal b.y the Company of its main undertaking, the Bulong Nickel
                             Project, b-v theissue of anaggregate of 2,904,707,174sharesin
                             BuIongOperationsPtyLtdtoBarclaysBankPlcanditsrelated
                             entities and the other holders of the 12.5% senior secured notes due
                                          by
                             2008 issuedBulong  Operations           Pty Ltd on the    terms    aizd
                             conditions contained in the Explanato~y  Memorandum accompanying
                this Notice o Annual General Meeting, is hereby approved for all
                             f
                purposes, including for the purposeof rule l I .2 the Listing Rules
                                                                 of               of
                Australian Stock Exchange Limited.
Explanatory Memorandum
Shareholders are referred to the Explanatory Memorandum accompanying and forming part of
this Notice of Annual General Meeting. Terms defined in the Explanatory Memorandum and
used in the Notice of Annual General Meeting have the same meaning as in the Explanatory
Memorandum.
                               the
Determining who holds shares for purpose of the Annual General Meeting
TheCompany has determined that for the purposes of the Corporations Act, thepersons
eligible to attend and vote at the Annual General Meeting are those persons whoare registered
members of the Company 5:OO pm (Perth time) on Saturday 13 July 2002.
                            at
Proxies
In accordance with section 249L of the Corporations Act, Shareholders are advised that:
     each Shareholder who is entitled to attend and vote has a right to appoint a proxy, and if
     a Shareholder is entitled to cast two or more votes that Shareholder may appoint 2
     proxies;
     a proxy need not be a Shareholder of the Company; and
     if a Shareholder       2
                     appoints                                         the
                                  proxies, the Shareholder may specify proportionor
     number of votes each proxy is appointed to exercise.
In accordance with regulation 12.6 of the Company's constitution, Shareholders are further
advised that if a Shareholder appoints two proxies and the appointment does not specify the
proportion or number of votes, each                        half
                                    proxy may exercise one of the Shareholder's votes.
In accordance with section 250BA of the Corporations Act, Shareholders are advised that for
the purposes ofreceipt of the proxy forms, proxy forms must be:
      received by Trevor Matthews (Company Secretary) at the Company's Registered Office;
      or
      faxed to Trevor Matthews at the Company's Registered Office on + 61 8 9322 4690,
by no later than 10 am (Perth time) on 13July 2002.
Voting Exclusion Statement
In accordance with theCorporations Act, the Company will disregard any votescast on
Resolution 3 by:
       any personwho will receive consideration as part ofthe reduction ofcapital of the
       Company; or
          any associate of such person.
In accordance with the Listing Rules of Australian Stock Exchange Limited, the Company
will disregard any votes cast on Resolution 4 by:
0         anypersonwhoisa     party to the contemplated transaction; or
          any associate of such person.
In accordance with the Listing Rules of Australian Stock Exchange Limited, the Company
will disregard any votes cast on Resolution 5 by:

                                                 6
       any personwho          might obtain a benefit, except for a benefit obtained solely in the
       r a n a r i t v nf R s h a r e h n l d e r nf t h e Cnmvany i f wsnllltinn 5   is ynssd:   nr

       any associate of such person.
However, the Company need not disregard a vote on a resolution if it is cast by a person as
proxy for a person whois entitled to vote in accordance with the directions on the   proxy form,
or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote in
                              on
accordance with a direction the proxy form to vote as the proxy decides.

Dated: 12 June 2002


By Orderof the Board




      j
Trevor Matthews
Company Secretary
                                 PRESTON
                                     RESOURCES LIMITED
                                       ABN 30 003 207 467



                         NOTICE OF CLASS MEETING

NOTICE IS HEREBY GIVEN THAT a class meeting of Shareholders of the Company
whose shares areto be cancelled under the resolution set out below, namely Resolute Limited,
will be held at the following time and place:

          Time:      9:45 am
          Date:       15 July 2002
             Technology
          Place:                   Park Function Centre, 2 Brodie-Hall Drive, Bentley,
                     Western Australia, 6 102

SPECIAL BUSINESS
Cancellation of the ordinary shares in the Company held by Resolute Limited
To consider and if thought fit, to pass the following resolution as a special resolution:
           That, subject to and conditional on the approval of resolutions 3, 4 and 5 set
           out in the Noticef Annual General Meeting which accompanies this notice,
                             o
           and the approvul of thesehemes of arrangement for each of Butong
           Operations Pty Ltd and Bulong Nickel Pty Ltd       by the Supreme Court o    f
                                                of
           Western Australia, the cancellation the 17,439,855 ordinary shares in the
           issued capital o the Company held by Resolute Limited is hereby approved
                           f
          f o r all purposes, including f o r the purpose of section 256C(2} of the
           Corporations Act2001.
Explanatory Memorandum
Resolute Limited isreferred to the Explanatory Memorandum accompanying and forming part
of this Notice of Class Meeting. Terms defined in the Explanatory Memorandum and used in
this Notice of ClassMeeting have the same meaning as in the Explanatory Memorandum.
Voting
Only Resolute Limited is entitled to vote at the class meeting.
Proxies
In accordance with section 249L of the Corporations Act, Shareholders are advised that:
0     each Shareholder who is entitled to attend and vote has a right to appoint a proxy, and if
      aShareholder is entitled to cast two or more votes that Shareholder may appoint 2
      proxies;
0     a proxy need not be a Shareholder of the Company; and
0      a
      if Shareholder appoints 2 proxies, the Shareholder may specify the proportion or
      number of votes each proxy is appointed to exercise.
                                                8
In accordance with regulation 12.6 of the Company's constitution, Shareholders are further
advised that if a Shareholder appoints two proxies and the appointment does not specify the
proporiiorl or rlumber of votes, each proxy may exercise one haif of the Shareholder's votes.
In accordance with section 250BA of the Corporations Act 2001, Shareholders are advised
that for the purposes ofreceipt of the proxy forms, proxy forms must be:
0    received by l revor Matthews (Company Secretary) at the Company's Registered Office;
     or
0     faxed to Trevor Matthews at the Company's Registered Office on + 61 8 9322 4690,
no later than 9:45 am (Perth time) on 13 July 2002.

Dated: 12 June 2002

                                                                                "               .
                                                                                                .

By Order of the Board




Company Secretary




                                              9
                                 RESOURCES LIhTITED
                                   ABN 30 003 207 467




                   EXPLANATORY MEMORANDUM



This Explanatory Memorandumhas been prepared to assist the Shareholders of Preston
Resources Limited in understanding the details of the proposed resolutions set out in the
accompanying Noticeof Annual General Meeting and Notice of Class Meeting.


This Explanatory Memorandum is intended to form part of and be read in conjunction with
the Notice of Annual General Meeting and Notice of Class Meeting.


The Directors recommend that you read this Explanatory Memorandum in full before making
any decision in relation to the resolutions set out in the accompanying Notice of Annual
General Meeting and Notice of Class Meeting.




                                           10
    l. Overview of the proposed restructure
        1 . Background
           l
             Acquisition of the Bulong Nickel Project
             l n 1 998, Preqtnn Nirkpl H n l & y , a whn!!y-pTrncd s~~hcidjlr\,l the C 9 r a p ~ ~ y ,
                                                                             nf
             acquired the Bulong Nickel Project from Resolute, through the acquisition of
             all of the issued shares in Bulong Operations. The Bulong Nickel Project is a
             nickel and cobalt project located 30 kilometres east of Kalgoorlie, Western
             Australia.
             Financing of the Bulong Nickel Project
             To enable Preston Nickel Holdings to complete the acquisition of the Bulong
             Nickel Project, Barclays made bridging finance available to Preston Nickel
-                                                           5 N e e ! . !??g*
             As part of the refinancing of that bridging finance, Bulong Operations issued
             US$185,000,000 aggregate principal amount of 12.5% secured notes due 2008.
             The terms of the Notes are governed by an indenture dated 17 December 1998
             between Bulong Operations, Bulong Nickel, Preston Nickel Holdings and
             HSBC Bank USA as indenture trustee. Undertheterms of the Indenture,
             Bulong Operations is obliged to make interest payments to the Noteholders on
             15 June and 15 December in each year up to the maturity date of the Notes in
             December 2008.
             In addition tu the finance raised through the issue of the Notes, the Bulong
             Companies have:
             (a)     borrowed funds for working capital purposes from Barclays. Barclays
                     currently provides working capital facilities to the Bulong Companies
                     in an aggregate principal amount of up to $40,470,000. Barclays also
                     holds a number of Notes; and
             (b)     entered a number of foreign exchange and commodity hedging
                     transactions under a hedging facility made available to the Bulong
                     Companies by Barclays. As at 28 February 2002, the currency hedging
                     agreements entered into by the Bulong Companies had a net negative
                     value on a mark to market basis of approximately US$124,852,000.
             Performance ofthe Bulong Nickel Project
             Since the acquisition of the Bulong Nickel Project by Preston Nickel Holdings,
               Bulong Nickel Project has experienced a number of equipment and
             the
             processing problems which have resulted in significant production delays and
             lower than anticipated revenue.
              Those problems commenced in December 1998 when the         Bulong processing plant
                                                                  a
              suffered a failure of agitator blades which caused period of extended downtime.
              These delays meant that commercial production of nickel did not commence until
              March 1999 and cobalt until May 1999. Since that time, the     Bulong processing
              plant has suffered number of significant operational problems and at the date of
                                 a                                               as
              the Noticeof Annual General Meeting, has not achieved design
                                                      it                       metal production
                                                  the                               in
              capacity. The problems suffered by processing plant are detailed the Monthly
                                                 of
              Reports prepared by management the Bulong Nickel Project       which are available
                                  the
              to Shareholders on Company websiteat www.prestonres.com.au.
      As a result the Bulong Nickel Project not performing to expectations,
                   of                                                             the Company
      has been unable to satisfy its financial obligations to its secured creditors. Bulong
      Operations has been unable to generate sufficient cashflow to pay Noteholders the
      interest that was due on 15 June 2000, 15 December 2000, 15 June 2001 and 15
      December2001andtheBulongCompanieshavebeenunable                                     their
                                                                                to satisfjr
                  to     the
      obligations repay worlung           facilities
                                    capital                 by
                                                    provided Barclays.                      The
      Company is a guarantor all financial obligations owed by the Bulong Companies.
                                 of
      As at 30 April         the
                        2002, Bulong    Companies       a
                                                   owedtotal                 of approximately
      $710,000,000 to their secured creditors.

1.2   Restructure of the Company
      As a resultof the Company’s inability to satisfy its financial obligations, the Company
                                                                          of
      has sought to negotiate a financial restructure the debt and equity the Company
                                                   of
      and the Bulong Companies.
                                         as follows:
      The main elements of the restructure are
                                                                          fi-om
              The Noteholders and Barclays will release the Company all substantive
              financial obligations and liabilities in relation to the Bulong Nickel Project
              and Marlborough Nickel Project.
              95% of the issued share capital of Bulong Operations will be issued to the
              secured creditors of the Bulong Companies, with the result that the Bulong
                                                        of
              Nickel Project will substance be disposed by the Company to its secured
                                 in
              creditors.
              Rcsdutc ,will LelcAc;:U ~ G u r q d l y Gvlu ail d ~ b a d other obiigaLions oithe
                                        C                            u
              Company owing to Resolute in connection with the acquisition Bulong  of the
              Nickel Project, apart from certain minor continuing obligations.
                                   .~
                                    ~




                                                       of
              Resolute will agree to the cancellation its existing shares in the Company
              and the termination of its right to receive other shares in the Company to
              which it is entitled.
              TheCompanywillreleaseResolute         fi-om certain of itsobligationsand
              liabilitiesundertheBulongSaleAgreementandtheTechnicalServices
              Agreement, in relation to the Bulong Nickel Project.
              The payment obligations Bulong Operations and Bulong Nickel under the
                                           of
                                                                               of debt
              Notes will be substantially restructured. There will be 2 tiers under the
              Notes: one tier (Tier 1) of the debt will have a fixed maturity date       of 31
              March 2012 and the other tier (Tier 2) will have no fixed maturity. both For
              tiers of debt, payments of principal or interest prior to 31 March 2012 will
              only be made out of cash available for that purpose f?om Bulong Nickel
              Project cash flows, the difference between the 2 tiers being that, to the extent
                                      from
              it has not been repaid Bulong Nickel Project cash flows, the principal        of
                                                 31
              the Tierl debt must be paid on March 2012.

      As the Company will not, after the financial restructure has been implemented, have
      any material ownership interest in Bulong Operations and the Bulong Nickel Project,
      this Explanatory Memorandum does not describe  in detail the terms the financial
                                                                       of
      restructure as it affects Bulong Operations and Bulong Nickel.
                                  l.3        Implementation of the restructure
                                                                                                           of two schemes
                                             The restructure of the Bulong Companies will be eflected by means
                                                                    at
                                             of arrangement underP r 5.1 of the Corporations Act.
                                             A scheme of arrangement is an agreement    or arrangement between a debtor company
                                             (in this case, each c6 Bv!nng 3erztions ?nd Bchcg %&e!\ Y x d its creditm, GI- 2
                                             class of its creditors (in this case, the Noteholders).
                                             The terms of the Bdong Schemes of Pxmgernerd are outlinedi the Bulong Senior
                                                                                                        a
                                                Restructuring
                                             Debt                         Deed
                                                              Co-ordination dated           11 April 2002 betweenBulong
                                             Operations,BulongNickel,PrestonNickelHoldings,MarlboroughNickel,the
                                             Company, Barclays, Perpetual and        ak
                                                                             HSBC B n USA.
                             Under the Bulong Schemes of Arrangement, the terms of the secured debts of the
                             Bulong Companies will be amended and the Company will be released
 . . .
... ..   .
         "           " & g " "
                  .. . ..
             ....... ".. .   ..         ""
                                                               . .        . .          & its V         fiom
                                                                                                         .                               ."." . .. ."..



                             the repayment of the secured debts of the Bulong Companies. The secured debts of
                             the Bulong Companies amounted to approximately$710,000,000 at 30 April 2002.
                                                                                         95%
                             The secured creditors the Bulong Companies will receive of the issued share
                                                  of
                             capital of Bulong Operations and, as a result, control of the Bulong Nickel Project
                             will pass to the secured creditors.
                                             The successhl implementation of the Bulong Schemes of Arrangement will mean
                                             that the Company is releasedfi-om all of its liabilities and obligations to Barclays and
                                                                                          of
                                             the Noteholders, other than a small number continuing obligations and covenants.
                                             Those continuing covenants include:
                                             (a)anobligationbytheCompanytoprovideallreasonableassistance,including
                                                    access to documentation and personnel of the Company and its advisers, to
                                                    Barclays and Perpetual(as security trustee under the Preston Nickel Security
                                                    Trust on behalf of, among others, the Noteholders) to enable Barclays and
                                                    Perpetual to protect their respective security interests relating to the Bulong
                                                    Nickel Project and to respond to any enquiry of any authority in relation to
                                                    the Bulong Nickel Project; and
                                             (b) a warranty given by the Company that     it has disclosed in writing all material
                                                                                                of
                                                     information relating to the Bulong Schemes Arrangement to Barclays and
                                                     Perpetual.

                                  -l
                                   .4                 precedent
                                             Conditions
                                                                                of
                                             The restructureis subject to a number conditions precedent. These include:
                                             0       Shareholderapproval of the emeellation of the Resolute Shares at a g e n d
                                                                                      under
                                                     meeting. This approval is sought resolution                out
                                                                                                            3 set       in the
                                                     accompanying Notice of Annual General Meeting.
                                             a       Shareholder approval of the release by the Company of Resolute from certain
                                                     of its obligations and liabilities under the Bulong Sale Agreement and the
                                                     Technical Services Agreement.       This approval is sought under resolution4 set
                                                     out in the accompanying Notice ofAnnua1 General Meeting.
                                             a                of cancellation
                                                     Approvalthe                        Resolute
                                                                                   of the            by       by
                                                                                               Shares Resolute, a
                                                     resolutiononwhichonlyitwillvote.Thisapproval         is soughtunderthe
                                                                                                 of Class Meeting.
                                                     resolution set out in the accompanying Notice

                                                                                '?
                                                                                ,   Id
      0               approval
             Shareholder       disposal
                              the by
                              of     the
                                      Company                                 main
                                                                         of its
                                                       general meeting.This approval is
             undertaking, the Bulong Nickel Project, aat
             sought under resolution 5 setoutintheaccompanyingNoticeofAnnual
             General Meeting.
      0      Approval of the Bulong Schemes of Arrangement by the requisite majority of
             NoteholdersandtheCourt.Thedate            of themeeting of Noteholdersto
             approve the Bulong Schemes of Arrangement will be before the meeting of
             Shareholders, and the Directors will be able to report as to that vote at the
             meeting of Shareholders.
      0      Execution of theResoluteDeed of Release,referredtoinsection          2 below,
             and satisfaction of the conditions precedent to the operation of the Resolute
             Deed of Release.

1.5   Benefits of the restructure
      If the proposed Bulong Schemes Arrangement take effect, there will substantial
                                         of                                    be
      benefitsfortheCompany.Foremost,theCompanywill                 be released &om very
      substantial debts and obligations owed to Barclays, the Noteholders and Resolute.
      The Company and its related entities oweamount of approximately $7 10,000,000
                                                 an
      to Barclays and the Noteholders and an amount of approximately         $62,000,000 to
      Resolute and its related entities.
      wniist fnere wiii be some continuing obiigations for the Company in relation to the
      "I




      BulongNickel       after Bulong
                  Project the                of             have
                                     Schemes -4rrangement been
      implemented, these obligations are not onerous nor,in the opinion of the Directors.
      material in the context the restructure overall.
                             of
      The result of thesuccesshl implementation of the restructure of the Companythat is
      the Conpuqwill not haveany mbstmt~ve          -d&sur &ligations and me Company
      should be able to continue operating without having to appoint  an administrator. The
      Directors anticipate that &er the release of its substantive debts and obligations the
      Company will be able to look to develop its existing projects and possibly look for
      fiuzher investments and projects.
      Further, the Directors intend to undertake a capital raising with a view to applying for
      re-quotation of the Company's shares on the ASX. The Company has conducted
                                  ASX on ths matter.
      preliminary negotiations with

1.6   Financial impact
      To illustrate the impactthattherestructure    is expected to have on the financial
      position of theCompany,theCompanyhaspreparedaproformastatement                    of
             position
      financial    showingthe
                           financial
                                  position                    of the Company        as at
      31 July 2002 based on the assumption that the restructure has been completed as at
      that date. The pro forma statement of financial position has been prepared on the basis
      of the assumptions set out in the notes the statement of financial position. The pro
                                             to
      forma statement of financial position has not been subject to an audit or independent
      review.
            PRESTON RESOURCES LIXlITED ABN 30 003 207 467
                STATEMENT OF FINANCIAL POSITION

                                                                    Pro Forma                           Statement of
                                                                   Statement of                      Financial Position
                                                                Financial Position                   as at 31 December
                                                                as at 31 Julv 2002                           2001
                                                                      ($000)                                ($000)
       CURRENT ASSETS
       Cash assets                    438                                            26
       Receivables                          20,341                                   20
       Inventories                                                                                               9,801
       Other                                                                          15                          1,414
       TOTAL CURRENT ASSETS                   1,994             3                    61
.. .   3:oA~~x-T..~s~s                                ""    " .. .. .. . - .
                                                           . .. ." . . .. . ... ..         -. .. . ... . ". .... .. .-. .. . .
                                                                                                       .                 .
                                                                                            . . . . . . . . .. . . " " . .
                                                                                             .                   .               . . .... .. .. ... . .. . ...
                                                                                                                                 .. .. .                      .


       Other financial assets                                                                                       924
       Property, plant and equipment                                                 44                       105,576
       Other                                                                                                        131
       TOTAL NON-CZJRRENT ASSETS                                                     44                       106,631
       TOTAL ASSETS                           138,625                            105
       CURRENT LIABILITIES
       Payables                             67,895                                   197
       Interest-bearing liabilities                                                                           535,678
       Other - forward contract liabilities                                                                   247,796
       Other   ~   provisions                                                                                     1,139
       TOTAL CURRENT L1,ZBILITIES                                                197                          552,508
       NON-CURRENT LIABILITIES
       Payables                                                                                                   1,112
       Other   ~   provisions                                                                                    3,484
       TOTAL NON-CURRENT LIABILITIES                                                                             4,596
       TOTAL LIABILITIES                                                         197                          857,104
       S E T LIABILITIES                                                         (92)                       (718,479)
       EQUITY
       Contributed equity                                                 102,137                             102,137
       Accumulated losses                                              ( 102,229)                           (820,616)
       TOTAL DEFICIENCY OFEQUITY (718,479)                                       (92)

       Notes:
       1. The Statement of Financial Position as at 31 December 2001 has not been audited and
            should be read in conjunction with the notes to that statementas set outin the
            Company's Interim Financial Report for the Half-Year ended 31 December 2001 which
            112s Deen lodged w l t h ASIC and 1s available ro Shareholders from ASX.

       3.      The key assumptions on which the above Pro Forma Statement of Financial Position as
               at 3 1 July 2002 has been prepared are:
               (a)     the financial restructure beingimplemented substantially on the terms described
                        this
                       in       Explanatory Memorandum,  which     includes the loss of control  and
                       subsequent deconsolidation of the Bulong Companies;
                  the remaining 5% interest in Bulong Operations Pty Ltd after the disposalof the
                  95% interest in the Bulong Companies being valued at $nil;
                  the release of the Company fromthe guarantees of its subsidiaries' obligations to
                  the Noteholders and Barclaysas the provider of the Working Capital Facilities
                  and Hedging Facility;
                  the loss of control of Marlborough Nickel Pty Ltd due the proposed financial
                                                                         to
                  restructure of the Preston group of companies. In the directors' opinion, the
                  proposed financial restructure would result in2 loss of control by the Ccmpany
                  for the purposes of consolidation as described in Note 1 (Principles of
                  Consolidation) to the Preston Resources Limited Annual Report for the year
                  ended 30 ;,ne 2OOi ; and
                  no additional funding through the completion of a successful capital raising has
                  been included in the Pro Forma Statement of Financial Position.

1.7   Risks associated with the restructure
                                                              of
      After the implementation of the Bulong SchemesArrangement,            the
      Company will have assets of $105,000, as indicated in the pro forma statement
      of financial position referred to above. The Company will need to raise further
      capital to enable the shares of the Company to be re-quoted on ASX. There is a
      possibility that the Company's future efforts to raise capital will not be
      successful and that, as a result, the shares of the Company will not be re-quoted
      on ASX.
      The major asset of the Company after the implementation oftheBulong
      Schemes of Arrangement will be the Marlborough Nickel Project. The assets
      comprising thc 3larlborougl.1Sickcl Projcct are and &ill continue to be secured
      in favour of Barclays. The Directors have conducted preliminary discussions
      with Barclays concerning the further development of the Marlborough Nickel
      Project. There is a risk-th-afthose discussions wilI not be successful and that the
      Company will not be able to further develop the Marlborough Nickel Project.
      Currently, the Marlborough Nickel Project is in a preliminary stage of
      development and does not produce revenue for the Company.

l.8   Implications if the restructure does not proceed
      If resolutions 3, 4 and 5 , as set out in the accompanying Notice of Annual
      General Meeting, and the resolution set out in the Notice of Class Meeting, are
      not passed the Bulong Schemes of Arrangement will not become effective and
      the restructure of the Company will fail.
      Ifthe restructure fails, the Company will not be able to meet its financial
      obligations and it is the opinion of the Directors that the Company will not be
      in a position to continue operating the Bulong Nickel Project. If that happens,
      the most likely outcome is that the Directors will appoint an administrator to
      the Company under the Corporations Act and that this will ultimately lead to
      the liquidation of the Company. On liquidation, as the Company has a material
      excess of liabilities over assets, Shareholders would receive no payment.
      The Directors do not believe that there is any prospect of the Shareholder's
      equity inthe Company regaining any value other than by means of the
      proposed restructure.



                                          16
1.9   Timing
          beioh i s a table w n m sets          0111                relatlcrn lo the t~ulong
                                                       lmportanr dares   n
                                                                         !
      Schemes of Arrangement.The final dateshown is indicativeonlyand                              is
      provided by the Company only as a guide. That date represents the                     earliest
      possible date                 the
                         on which Bulong Schemes               of Arrangement be      may
      iiiiplciiiciitcd (2S;Li;;iiig                    l',   '
                                                                 iu u c : nu l, i i g ~ L I ~ G I ~UT C >
                                        iuliulLlullb pL~c.I;;IcIli        o u,l       fl,           ~

      Arrangement are satisfied).

      1 Actual or Indicative Date           I                      Event                        I

      1 17 May
            2002                            ISupremeCourt of Western        made
                                                                     Australia an                           ~




                                            1order convening the meetings of Noteholders  to
      1                                      consider the Bulong Schemes of Arrangement on 1
      ~
                        June                 20       2002.                                     I
      ' 20 June 2002                                                       will
                                             Meetings of the Noteholders be held to vote
          ~                                                                                         ""



      I
                                           k t h e g ~ c s o f a n g e m e n t .                !
                                                                                                            ~




              28 June 2002                                                             an
                                             The Company will apply to the Court for order
      i
                                                                              of
                                             approving the Bulong Schemes Arrangement.
              15 July 2002                   Annual General Meeting of  Company.
                                                                       the                                  ~




              (approximately)                The Bulong Schemes of Arrangement become
              25 July 2002                 1 effective and Bulong issues
                                                              Operations shares                             I
                                             representing 95% of its issuedsharecapital to      1
                                             Barclays and the Noteholders other than  Barclays.

l.l Other relevant information
  0
            Bulong
          The     Companies                                                Explanatory
                                           lodged an affidavit attaching the
          Statement for the Bulong Schemes of Arrangement with the Court on 12 April
          2002. The Explanaloly Statement explains the effect of the Bulong Schemes of
          Arrangement and sets out the information prescribed by the Corporations Act.
          TheExplanatory Statement wassubsequentlyamendedandsupplementary
          affidavits lodged n i t 1 1 the Court on 16 May 2002 and 17 May 2002 attaching
          revisions to and an updated version of the Explanatory Statement.
              TheExplanatoryStatement,including                       annexures and other
                                                         its schedules,
              attachments, is more than 1,000 pages long. For that reason the Explanatory
              Statement has not been attached to this Notice of Annual General Meeting.
              Instead, a copy of the Explanatory Statementisavailableforinspectionby
              Shareholders at the Registered Office of the Company by appointment,
              The Directors encourage all Shareholders to take the opportunity to inspect the
              ExplanatoryStatementand the attachments to that document.Shareholders
              should contact Trevor Matthews, Company Secretary, at the Registered Office
              of the Company to arrange for a time to inspect the Explanatory Statement.
              TheDirectors are not awareofany other informationwhichtheyconsider
              material to a Shareholder's decision whether to vote in favour of the proposed
              resolutions, other than information w-hich is disclosed in thisExplanatory
              Memorandum orlvhich has previously been disclosed to Shareholders.
 .
l l Directors recommendation
      The Directors unanimously recommend that the Shareholders vote in favour of
      each of the proposed resolutions as set out intheaccompanyingNoticeof
      Annual General Meeting.
      In particular, all the Directors are in favour of the financial restructure of the
      Company and recommend that Shareholders vote in favour of resolutions 3, 4
      and 5 (which are required for the implementation of the restructure) as they
      believe them to be in the best interests of the Shareholders.
      The Directors \rvho are S"--- 1 1 -- 1 the Company jdireciiy or t'nrough
                                   llalelloluels In
      associated entities) intend to vote in favour of each of the resolutions.


Additional information relating
                              to     resolutions 3 and 4                              ,-


cancellation of Resolute Shares in the Company and release
of Resolute by the Company

2.1   Purpose of resolutions 3 and 4
      The purpose of proposed resolutions 3 and 4, as set out in the accompanying
      Notice of Annual General Meeting, is to:
       1
      ()                r&&=fi =f c q i t a ! by a cance!]a:ion of 17,439,855 ordiilary
                        2

             shares held by Resolute in the issued capital of the Company;and
      (b)    approve the release bv the Companv of Resolute from rertain
             obligations and liabilities under the Bulong Sale Agreement and the
             Technical Services Agreement.
                   ~~




2.2   Background
      Under the Bulong Sale Agreement, the Company, through its wholly-owned
      subsidiary Preston Nickel Holdings, purchased from Resolute the issued share
      capital of Bulong Operations and certain other assets relating to the Bulong
      Nickel Project. Bulong Operations and its wholly-owned subsidiaryBulong
      Nickel jointly ownall of theassets comprising the BulongNickel Project.
      Under the terms of the BulongSale Agreement, Resolute agreed to make
      available a number of key employees who were integral in the development of,
      and had a detailed knowledge of, the Bulong Nickel Project. Resolute and
      Bulong Operations entered into an agreement called the Technical Services
      Agreement dated 4 November 1998 under which those key employees were to
      make their services available to Bulong Operations.
      Under the terms of the Bulong Sale Agreement, Resolute gave warranties in
      relation to the sale of the shares inBulongOperationsto      Preston Nickel
      Holdings. The warranties related to the shares themselves, the status of the
      Bulong Nickel Project and the financial condition of Bulong Operations and
      Bulong Nickel as at the date of settlement.
      Under the Bulong Sale Agreement, the Company, Preston Nickel Holdings,
      Bulong Operations and Bulong Nickel each has material financial obligations
      and liabilities owing to Resolute which they have not satisfied. The Company,
      Preston Nickel Holdings, Bulong Operations and Bulong Nickel want to be

                                      18
      released from these obligations to Resolute in return for releasing Resolute
      from certain ohlieations and liabilities under the RlllonP Sale Aoreement and
                                                               -
      the Technical Services Agreement.
      A compromise has been proposed under which the Company, Preston Nickel
      Holdings and the Bulong Companies will release Resolute from certain
      3bIig2,tiens 222 !izSl!ities !x2er : e 3 J ! 2 c g S z k *~i,-rzzzxct zzd thz Tz:kLicd
                                         h
      Services Agreement, in return for:
      .
      -        a re:ease by Reso:.Uie of a:: delots and iialoijiiies o\iiiiig io it or io its
              related entities by the Company, Preston 'Nickel Holdings, Bulong
              Operations and Bulong Nickel. The total amount owing by the
              Company and its subsidiaries to Resolute which is to be released is
              approximately $62,000,000;
      0       cancellation of Resolute's existing shareholding in the Company; and
                            ~~                   ~




      0                              the
              a release by Resolute of          Company's obligations to issue further
              shares to Resolute.
      The terms of the Resolute Deed of Release to give effect to the mutual release
      of the obligations of the Preston Group and the Resolute Group have been
      substantially agreed to by the parties. However, as at the date of the Notice of
      Annual General Meeting, it has not been signed.

2.3   Resolute Deed of Release
      Conditions precedent
      The Resolute Deed of Release will not become effective until the following
      conditions precedent are satisfied:
              Shareholders approve the cancellation of the Resolute Shares at a
              general meeting. This approval is sought under resolution 3 as set out in
              the accompanying Notice of Annual General Meeting.
              Shareholder approval of the release by the Company of Resolute from
                       its
              certain of      obligations and liabilities under the BulongSale
              Agreement and the Teehnieal Services Agreement. This approval is
              sought under resolution 4 set out in the accompanying Notice of Annual
              General Meeting.
              Resolute, bya resolution on which only it will vote, approves the
              cancellation of the Resolute Shares. This approval is sought under the
              resolution set out in the accompanying Notice of Class Meeting.
              the Shareholders approve the disposal by the Companyofits main
              undertaking, the Bulong Nickel Project, in general meeting.   This
              approval is sought under resolution 5 as set out in the accompanying
              Notice ofAnnual General Meeting.
              the Bulong Schemes of Arrangement are approved bythe requisite
              majority of Noteholders. The date of the meeting of Noteholders to
              approve the Bulong Schemes of Arrangement will be before the
              meeting of Shareholders, and the Directors will be able to report as to
              that vote at the meeting of Shareholders.
(f)        the Company is satisfied that certain obligations to Macquarie  Bank
           have been assigned to Resolute and released under the Resolute Deed of
           Release. Evidence as to the assignment has already been produced by
           Resolute.
(g)        Resolute, the Bulong Companies and Allianz enter into a deed on terms
           acceptable to Resolute and the Bulong Companies in relation to certain
           performance bonds issued by Allianz. A draft of this document has been
           circulated and substantially agreed to by the parties. The Directors will
           be able to report as to thestatusofthisconditionprecedent         at the
           meeting of Shareholders.
All the conditions to the operation of the Resolute Deed of Release must be
satisfied or waived on orbefore 30 September 2002.
      condition precedent to the operation to the
It is a                                              BulongSchemes        of
Arrangement that the Resolute Deed of Release be executed and the conditions
precedent to its operation satisfied.
Benefits to the Company, Preston Nickel Holdings and Bulong Operations
Under the Resolute Deed of Release, the Company, Preston Nickel Holdings
and Bulong Operations will be released from a number of substantial liabilities
and obligations and will receive other benefits.
Tl.. -    - :.-
       IIMII berielits io the Company under tine Resoiute Deed of Release are as
      _”



II ~ G
follows:
0          TTnder the R l l l m z Cale AgreemTn!, R . ~ c c ! c ~ ?p l > r i d ~ccrt3in ! c x s f ~ r
                                                                                 d
           completion of the Bulong Nickel Project. Those loans were made to the
           Company, which on-lent them through Preston Nickel Holdings to
           Bulong Operations. These debts the Company be reteased.
                                        of           will
0          In addition to the loans made by Resolute to theCompany, under the
           Bulong Sale Agreement the Company has an obligation to re-imburse
           Resolute for certain expenditure related to the Bulong Nickel Project
           which it had incurred. This included amounts paid by Resolute toW C
           Resources Ltd as   a pre-payment under an acid supply      agreement,                    ’


           payments by Resolute to unwind an interest rate swap with Citibank,
           and payments by Resolute to the financiers of theBulong Nickel
           Project, including interest owing to Citibank, amountsowing to the
           providers of leveraged lease structured finance facilities and a
           convertible note issued by the Company to Macquarie Bank and
           acquired by Resolute. These re-imbursement obligations of the
           Company will be released.
0          Under the terms of the Bulong Sale Agreement, as affected by a
           document described as the Offer for .Sale      of Residual Loan,  the
           Company agreed to issue 15,960,000 fully paid ordinary shares as part
           of the acquisition cost of the Bulong Nickel Project. The obligation to
           issue those shares will be cancelled.
 0         Resolutewas sub-underwriter for the equity raising which theCompany
           undertook to finance the acquisition of the Bulong Nickel Project. Not
           all the shares to which Resolute was entitled under the sub-undenvriting



                                        20
                     arrangenlents have been issued. The obligation to issue those shares will
                     be cancelled.
              0      Resolute currently holds 17,439,855 ordinary shares in the Company,
                     representing approximately 25.9% of the Company's issued capital.
                     Resolute has agreed to the cancellation of its existing shareholding in
                     the Cnrnyany

              The main benefits to Preston Nickel Holdings and Bulong Operations are as
              fol!ows:
              0      Preston Nickel Holdings will be released from      an obligation to pay an
                     amount of $7,500,000, which was deferred consideration to be paid by
                     Preston Nickel Holdings to Resolute for a patent application relating to
                     the extraction process at the Bulong processing plant and a limestone
                     quarry-
- - .--....   0      ~u+oo-n~g"~p~rons ~ ~ . ~ e " . r ~ e ~ . r ~ ~ m " o ~ ~ ~ a ~ ~ ~ n . r o " ~ ~ y " a e s o l u r e
                                         w  ""




                     certain amounts owing to Resolute under the Technical Services
                     Agreement, and also amounts owing to Resolute in connection with the
                     conduct of arbitration proceedings against Bulong Operations by Stork
                     ICM Australia Pty Limited, the piping contractor for the Bulong
                     processing plant.
              The total amount owing by the Preston Group to the Resolute Group which is
              to be released under the Resolute Deed of Release     is     approximately
              $62,000,000.
              The total number of shares which the Company is obliged to issue to Resolute
              which will be released under the Resolute Deed of Release is 25,186,812.
              The total number of shares held by Resolute w;:iich will be cancelled by the
              Company under the Resolute Deed of Release is 17,439,855.
              Benefits to Resolute
              Under the Resolute Deed of Release, the Resolute Group will be released from
              all past, present and future obligations under the Bulong Sale Agreement and
              the Technical Services Agreement, apart from (in the case of the Bulong Sale
              Agreement) certain continuing obligations.
              The release includes a release of all obligations of the Resolute Group with
              respect to the warranties given by them in the Bulong Sale Agreement (apart
              from a small number of continuing obligations) including warranties in relation
              to the shares in Bulong Operations, the status of the Bulong Nickel Project and
              the financial condition of Bulong Operations and Bulong Nickel.
              To evaluate the meritsof giving a release of the above warranties, the Directors
              have undertaken a due diligence review process to determine whether or not
              there is a material prospect of any substantial claim being made against
              Resolute by Preston Nickel Holding for a breach of the warranties given by
              Resolute under the Bulong Sale Agreement. In the course of that due diligence
              process, the Company undertook a nunber of steps, including:
              (a)    identifying the warranties in the Bulong Sale Agreement which
                     potentially gave rise to claims with respect to BulongOperations,
                     Bulong Nickel, the Bulong Nickel Project and its performance
                     problems;
                                                  "
      obtaining written legal advice as to the matters of fact which would
      need to be shown in order to establish a breach of the     relevant
      warranties;
      establishing a duediligence committee for the purposes of investigating
      whether there was a   possible claim for breach of warranty.    The
      members of that committee were people who were regarded as having
      particular knowledge which   was     relevant tothe     review being
      undertaken;
      making enquiries throughout the Sulong Compxcies for infezzticn
      which might help to establish that there had been a breach of warranty
      by Resolute;
      obtaining legal advice as to the enquiries and procedures which should
      be made and followed bytheCompany            in thecourse ofthedue
      diligence exercise;
      engaging an independent treasury expert to advise in relation to certain
      matters relating to the warranties by Resolute as to the hedge contracts
      which were taken on the by         Bulong Companies   as    part of the
      acquisition by the Company;
      holdinga number of meetings of the due diligence committee to
      evaluate the infnrmation gathered by the C ! m p x y in the ccurse cf the
      due diligence exercise and preparing a comprehensive duediligence
      report; and
       engaging Freehills to review the due diligence procedures,the due
       diligence files, the due diligence report and the information gathered
       from the due diligence exercise, and expess a view as tQ t h e . l i k e l i h d
       of success in a warranty claim.
Based on the information obtained during the course of theduediligence
process described above, the Directors decided that the benefits the Company
would receive under the Resolute Deed of Release outweighed the valueof the
                                                               of
rights being given up by theCompany under the Resolute Deed Release.
In the course of reaching this decision, the Directors also had regard to the
following:
       any proceedings commenced against Resolute to enforce thewarranties
       given under the Resolute Deed of Release would most likely be strongly
       resisted by Resolute;
0      there would most likely be substantial delays in obtaining an outcome
       in relation to those proceedings; and
       there is always uncertainty as to the result of Court proceedings and no
       guarantees that a claim will be successful.
                                                     Continuing obligations
                                                 "

                                                     L J I ~ G I GIG                    c                             release tne
                                                                       KGsuiulc p l ~ ~ o ii Kcicast:? tilt: Kesoiule Group   WIII
                                                     Company,Bulong Operations, Bulong Nickel and PrestonNickelHoldings
                                                     from all obligations to pay any amounts owing to the Resolute Group under or
                                                     in connection with the Bulong SaleAgreement.
                                                 The effect of this is that after the Resolute Deed of Release becomes effective,
                                                 no money will be payable by the Preston Group to the Resolute Group, unless
                                                 it arises out ofa failure by the Company to perform certaincontinuing
                                                 obligations outlined in theResolute Deed of Release.
                                                 The Directors have considered the                                  in
                                                                                  continuing obligations outlined the
                                                 Resolute Deed of Release and have concluded that those obligations are not
                                                 material obligations.
.. ... . . . .
  . . . .. -.    ..   . . .. "
                         .
                        . .           .   .
                                 .. -.." .. ..
                                 .-. . . . .     Resolute also has a
                                                 """"   "_          number of continuing oblkations under the Resolute Deed
                                                                                                                          .
                                                                                                                          "          "
                                                                                                                                     ".          ". "
                                                                                                                                                   .
                                                                                                                                                . ""

                                                 of Release. Those obligations include an obligation to provide all reasonable
                                                 assistance to Bulong Operations and Bulong Nickel in relation to certain legal
                                                 proceedings involving the Bulong Companies and Stork ICM Australia Pty
                                                 Limited.

                                     2.4         .   Implications of the capital reduction
                                                     Capital structure implications
                                                     The current capital structure of the Company and the effect of the cancellation
                                                     of the ResoluteShares is summarised as follows:

                                                      Details                                                                  Number
                                                      Number of fully paid ordinary shares on issue                            67,335,348
                                                                                                                                            '
                                                      Number of shares held by Resolute to be cancelled                        17,439,855
                                                      Number of fully paid ordinary shares on issue after the                  49,895,493
                                                      cancellation of the Resolute Shares

                                                     The proporfionate ownership interest of each SharehoMer wi~l€ be    increased by
                                                     approximately (to the nearest percent) 35% after the reduction of capital.
                                                     Financial implications
                                                     The Directors consider that the cancellation of the Resolute Shares will not
                                                     materially affect the financial position of the Company, except as part of the
                                                     broader financial restructure of the Company. Refer to section 1.4 of this
                                                     Explanatory Memorandum for a pro forma statement of financial position of
                                                     the Company after the restructure is implemented.
                                                     Effect if resolutions 3 and 4 not passed
                                                     The cancellation of the Resolute Shares and the associated release bythe
                                                     Company of Resolute from certain of its obligations and liabilities under the
                                                     Bulong Sale Agreement and the Technical Services Agreement are conditions
                                                     precedent to the implementation of the Bulong Schemes of Arrangement (see
                                                     sections 1.3, 1.4 and 2.3 above). Therefore, if resolutions 3 and 4, as set out in
     the accompanying Notice of Annual General Meeting, are not passed, the
                                  will
     Bulong Schemes of Arrangement not become effective.
     If the BulongSchemesofArrangement            do not become effective, the most
     likely outcomeis that the Directors will appoint an administrator tothe
     Company under the Corporations Act and that this will lead to the winding up
     and liquidation of the Company. On liquidation, as the Company has a material
     excess of liabilities over assets, Shareholders would receive no payment.

2.6Requirement                 for shareholderapproval
     Resolution 3 - Section 256C of the Corporations Act
     Under section 256B(1) of the Corporations Act, a company is permitted to
     reduce its share capital provided the reduction:
     (a)     is fair and reasonable to the company’s shareholders as a whole;
     (b)     does not materially prejudice the company’s ability to pay its creditors;
             and
     (c)     is approved by shareholders in the manner specified in the Corporations
             Act.
     The Corporations Act provides for two types of capital reduction. The proposed
     cancellation of the Resolute Shares would constitute a “selective reduction” of
     capital as it relates only to the ordinary shares in the Company held by
     Resolute and not to the ordinary shares in the Company held byany other
     Shareholder.
     If the “selective reduction” of capital involves a cancellation of shares, section
     256C(2) of the Corporations Act requires that the cancellation be approved by:
                ~   ~~   ~~~   ~
                                                    ~    ~




     (a)     a special resolution passed at a general meeting of the company, with no
             votes being cast in favour of the resolution by any person who is to
             receive consideration as part of the reduction or whose liability to pay
             amounts onshares is to be reduced, or by their associates; or
     (b)     a resolution agreed to, at a general meeting, by all ordinary
             shareholders,
      and
     (c)     a special resolution passed at a meeting of the shareholders whose
     shares are to be cancelled.
     Shareholder approval is sought under resolution 3, as set out in the
     accompanying Notice of Annual General Meeting, for the proposed capital
     reduction by way of the cancellation of the Resolute Shares. As Resolute will
     “receive consideration as part of the reduction”, neither Resolute, nor any
     associate of Resolute, is entitled to vote on Resolution 3.
      The Company has also called a class meeting of Shareholders whose shares are
      to be cancelled under resolution 3. As Resolute is the only Shareholder whose
      shares will be cancelled, Resolute is the only Shareholder entitled to vote at the
      class meeting. For further information see the accompanying Notice of Class
      Meeting.



                                           24
      The Directors consider that the cancellation of the Resolute Shares does         not
                             rnmnanx?c a h i l i t v tn n m r it. rrdw-ltor~,
      r n a t w i a l l,v InrPi11rlir-P t h e
                            J     l             "   i   r
                                                        .'i




      Resolution 4 - Listing Rule 10.1
      Listing Rule 10.1 broadly provides that a company must ensure that neither it,
      nor any of its child entities, disposes of a substantial asset to a substantial
      shareholderwhois entitled to at least 10% ofthe voting securities of the
      company unless the transaction is approved by shareholders of the company.
      Resolute currently holds 25.9% of the issued ordinary shares in the Company
      and accordingly is a substantial shareholder of the Company.
      An asset is a substantial asset if itsvalue, or the value of the consideration for it
      is 5% or more of the equity interests of the company. On the basis that the
      Companyhasa material excess of liabilities over assets and accordingly a
      negativevalue for its equity interests, the release of       Resolute from any
      potential liabilities with respect to the           Sale
                                                   Bulong Agreement               and the
      TechnicalServices Agreement may constitute the disposal of a substantial
      asset.
      Preston has sought and received a waiver from the ASX in relation to Listing
      Rule 10.10.2, to permit the Company to seek shareholders' approval to release
      Resolute fi-om any potential liabilities with respect to the BulongSale
      Agreement and the Technical Services Agreement without including an
      independent expert's report in the notice of meeting sent to shareholders in
      relation to that approval.

2.7   Directors' recommendation
      The Directors have formed the view that the cancellation oftheResolute
      Shares and the associated release in favour of Resolute is in the
                                                                      best interests of
      the Company and is fair and reasonable to the Shareholders as a whole.
      The Directors unanimously recommend that the Shareholders approve the
      cancellation of the Resolute Shares and the associated release in favour of
      Resolute by voting infavour of resolutions 3 and 4.
3   Additional information relating to resolution 5 Disposal of                -
    the Company's main undertaking

    3.1   Purpose of resolution 5
          Under the Bulong Schemes of Arrangement (further details   of which are set out
          in section 1.3 above) Barclays and the other Noteholders will receive 95% of
          the issued share capital of Bulong Operations, with the result that the Bulong
                  n
                  rrojwl w m in substance be disposed of by the Company to its secured
          -KT: - S - - >
          IYILK~;~
                           - - L       '
                                   .-~.-%



          creditors.
          Thepurpose of Resolution 5 is to approvethesaleoftheBulongNickel
                                                   Company's main undertaking.
          Project, which constitutes a disposal of the

    3.2   Key effects o the disposal
                       f
          Corporate structure
          After the issue of 95% of the shares in Bulong Operations to the Noteholders
          and Barclays (Barclays will be receiving shares in Bulong Operations in its
          capacity as aNoteholderand,separately,       in itscapacity as aprovider of
                                                                              5%
          working capital and hedging facilities), the Company will retain only of the
          shares in BuiongOperations.Thoseshareswiii          be heid by PrestonNickel
          Holdings. As aresult,thecorporatestructureoftheCompany             will be as
          follows:

                                            1   Preston
                                                     Resources   Limited   j



                                                          I   100%




               Marlborough Nickel Pty
                        Ltd




                                                     26
Residual interest in the Bulong Nickel Project
Htkr   lne issue of   Y ~ W A I   n i tne snares   n
                                                   i truinng qera1ions   10   rile luotennratys
and Barclays under the Bulong Schemes of Arrangement, the Company will
hold, through Preston Nickel Holdings, 5% of the shares in Bulong Operations.
However, the Company's shareholding in Bulong Operations will be secured in
favour of the Noteholders and Barclays as a provider of working capital and
hedging facilities to the Bulong Companies. That shareholding is secured to
repay the entire amount of the secured debts owing by the Bulong Companies
to its secured creditors, which is an amount of approximately $710,000,000.
Accordingly, the remaining 5% of Bulong Operations which will be owned by
Preston Nickel Holdings isunlikely to have value to the Company.
Interest in Marlborough Nickel Project
T                  -
U T I I ~ 1 1 1 "f t
                   5       l     p    l    t     Cy
                                                 G- rT
                                                   the
documentation, Marlborough Nickel (owner of Marlborough                Nickel
Project) has given security over all of its assets in favour of Barclays. The
    owned
assets by             Marlborough Nickel secure all amounts by  owing
Marlborough Nickel under a    working capital facility made available by
Barclays to Marlborough Nickel, and all amounts owing the   by Bulong
Companies to Barclays under the hedging facility made available to the Bulong
Companies by Barclays. As at 28 February 2002, the hedging transactions had
a net negative value on a mark to market basis of US$124,852,000.
                                                 the
A result of the successful implementation of Bulong       Schemes of
Arrangement is that the net negative value of the hedging transactions will be
crystallised as a debt owing to Barclays. That debt will continue to be secured
by the assets of the Marlborough Nickel Project.
Nature of operations
The disposal of the Bulong Nickel Project would change the scale of activities
of the Company. TheBulong Nickel Project represents the Company's primary
asset. It is currently the Company's only operating asset with regular cash
flows. If the Bulong Schemes of Arrangement proceed, in the absence of the
development or acquisition of other profit generating operations, the Company
will not have the cashflows which the Bulong Nickel Project provides.
Future direction of the Company
After the implementation of the Bulong Schemes of Arrangement, the
Company will retain an interest in the Marlborough Nickel Project. The assets
relating to the Marlborough Nickel Project are secured in favour of Barclays as
described in section 3.2 above.
The Company has conducted preliminary discussions with Barclays in relation
to the further development and exploitation of the Marlborough Nickel Project.
In those preliminary discussions, Barclays has indicated a preparedness to
continue discussions with a view to reaching a commercial agreement in
relation to the Marlborough Nickel Project which would enable the Company
to have a role in the development of that project. It is anticipated that, subject
to the implementation of the Bulong Schemes of Arrangement, further
discussions will be held with Barclays to that end.

                                         ,.. ..
                                         I ,
3.3   Potential advantages of the disposal
      If thevote to approve the resolution to disposeoftheCompany'smain
      undertaking is approved by Shareholders, and the other conditionsprecedent to
      theBulong Schemes of Arrangement are satisfied, the Companywill be
      released from all substantive financial obligations to its current secured
      creditors.
      That release will allow the Company to conduct an equity raising at some stage
      in the future and opens the way for the re-quotation of the ordinary shares of
      the Company on ASX. The Company has conducted p r e h i m r y discussioss
      with ASX to discuss that possibility. It is noted, however, that thereis a
      possibility that any future capital raising will not be successful and that, as a
      result, the shares of the Company will not be re-quoted on ASX.

3.4   Potential disadvantages of the disposal
      TheBulongNickel       Project representstheCompany'sprincipalasset.       It is
      currently the Company's only operating asset with regular cashflows. If the
      Bulong Schemes ofArrangements proceeds, in the absence of the development
      or acquisition of other profit generating operations, the Company willnot have
      the cashflows which the Bulong Nickel project provides.

? C
U.U   Effect if rssslutioii 5 fist passed
      The disposal by the Company of the Bulong Xickel Project, by the issue of
      95% o f the sha.res in Rt~long     Clperations tn the Noteholders and Earclzys, iz 3
      condition precedent to the implementation of the Bulong             Schemes       of
      Arrangement. Therefore, if the resolution to dispose of the Company's main
      d e t 2 a k i n g i s not passed, the B u h g Schemes o f Anartgement will not
      become effective. In those circumstances, it is the opinion of the Directors
      that they will not be in position to continue operating the Bulong Nickel
      Project. If that happens, the most likely outcome is that the Directors will
      appoint an administrator to the Company under the Corporations Act and that
      this will ultimately lead to the winding up and liquidation of the Company. On
      liquidation, as the Company has a material excess of liabilities over assets,
      Shareholders would receive no payment.

3.6   Requirement for shareholder approval
      Listing Rule 11.2 provides that an entity must not dispose of its main undertaking
      without the approval of holders ordinary shares.
                                    of its
      The disposal of the Bulong Nickel Project, by the issue of 95% of the shares in
      Bulong Operations, represents the disposalof the Company's main undertalung and
      accordingly shareholder approval is required in accordance with Listing11.2.
                                                                               Rule

3.7   Directors' recommendation
      The directors unanimously recommend that the Shareholders approve the
      disposal of the Bulong Nickel Project, by the issue of 95% of the shares in
      Bulong Operations to the Noteholders and Barclays, required as a condition
      precedent to the implementation of the Bulong Schemes of Arrangement, by
      voting in favour of Resolution 5.

                                       28
                          4                                 -
                                         Kesolution 1 Election of Trevor Matthews as a director of
                                         the Company
                                                Mr Matthews was appointed as an executive director of the Company on 10
                                                 ...-
                                                T111y 2Qn! !c f ! C1,SL!2! T’1,Cl??C:’ WhjCh h2d 1,?-iSPE frnE thP resigr_atin??nf
                                                                 !
                                                                ! 1,
                                                Colin Tkin in late June 2001 and Chris Cowan in early July 2001.
                                                In accordance with regulation 13.6 of the constitution of the Company, Mr
                                                Matthews must automatically retire as a director of the Company at the next
                                                Annual General Meeting and is eligible for re-appointment as a director of the
                                                Company at that general meeting.
                                                Since January 1998, Mr Matthews has served as the Chief Financial Officer
                                                                        the
                                                and Company Secretary of Company.         Previously, Mr Matthews held
.. . .. ...
 ...       .   .. -. . . .. -
               .. . . . .       --   .
                                     ”   .. .
                                         .. .
                                                                                              f                                      -
                                                was the financial controller for Lone Star Exploration NL. Mr Matthews is
                                                also a member of the   Remuneration and Due Diligence Committees of the
                                                Company (as referred to in the Directors’ Report for the financial year ended 30
                                                June 2001 accompanying the Notice of Annual General Meeting).
                                                Thedirectors unanimously recommend that Shareholders votein            favour of
                                                resolution 1.
5                         -
        Resolution 2 Appointment of new auditor
             Section 329(5) of the Corporations Act states that an auditor of a company
             may,by notice in writing given to the company, resign as auditor of the
             company, if the auditor has, by notice in writing given to ASIC, applied for
             consent to the resignation and stated the reasons for the application and, at or
             about the same time as the notice was given to ASIC, notified the company in
             writing of the application to ASIC and the consent of ASIChas been given.
             In accordance with the requirements in section 329(5) Andersen has applied for
             ASIC’s consent to the resignation. In addition, Andersen has notified the
             Company in writing of the application to ASIC to resign as auditor. Itis
             proposed that upon receipt of ASIC’s consent, Andersen will resign as auditor
             with effect from the date of ASIC’s consent.

             In accordance with section 328(1) of the Corporations Act a nomination has
             been received by the CompanyfromMr Adrian Griffin, a member of the
             Company, to appoint Ernst & Young as auditors to the Company. A copy of
             the nomination accompanies this Notice of Annual General Meeting in
             accordance with section 328(3) of the Corporations Act.

              Section 32’i(’ij ofthe Corporations Act states that a Company maynot appoint
                           im
              a person or fr as auditor of the Company unless that person or f r has given
                                                                              im
              written consent to the Company prior to the appointment.
              In accordance with the requirements in section 327(7) of the Corporations Act,
              the Company has received a signed notice in writing from Ernst & Young
              cunsenting to act as the auaifor of the Company.
The directors unanimously recommendthat Shareholders vote in favour of resolution 2.




                                             30
                        means Australian Business Number.
                        means Allian7 Australia insurance Limited (ARN 1 S 000 122
                        850).
ASIC                    means the Australian Securities and Investments Commission.
ASX                     means Australian Stock Exchange Ltd (ABN 98 008 624 691).
Barclays                means Barclays Bank Plc and its related entities.
Bulong Companies        means BulongOperations and Bulong Nickel.
Bulong Nickel           means BulongNickel Pty Ltd (ABN 38 000 807 036).
Bulong Nickel Project   means the Bulong   nickel and cobalt mining project located 30
                        kilometres east of Kalgoorlie, Western Australia, owned jointly
                                                a.
Bulong Operations       means Bulong Operations Pty Ltd (ABN 99 008 930 881).
Bulong Sale Agreement   means the agreement dated 3 November 1998 between
                        Resolute, Preston Nickel Holdings, the Company and certain
                        related companies of Resolute.
Bulong Schemes of       means the schemes of arrangement in accordance with Part 5.1
Arrangement             of the Corporations Act to'be entered into by Bulong
                        Operations and the Noteholders and, separately, by Bulong
                        Nickel and the Noteholders, to effect the terms of the Co-
                        ordination Deed.
Citibank                means Citibank N.A. (ARBN 072814 058).
Company                 means Preston Resources Ltd (ABN 30 003 207       467).
Co-ordination Deed      means the deed dated 11 April 2002 between the Company,
                        Bulong Operations, Bulong Nickel, Preston Nickel Holdings,
                        Marlborough Nickel, Barclays, Perpetual and HSBC Bank USA
                        (as trustee under the Indenture).
Corporations Act        means the Corporations Act 2001 (Cth).
Court                   means the Supreme Court of WesternAustralia.
Explanatory             means this explanatory memorandum accompanyingand
Memorandum              forming part of the Notice of Annual General Meeting.
Explanatory Statement   means the explanatory statement for the Bulong Schemes of
                        Arrangement drafted in accordance with section 412 of the
                        Corporations Act, a copy of which   may be inspected by
                        Shareholders at the Registered Office of the Company by
                        appointment.
Indenture               means the indenture dated 17 December 1998 between Bulong
                        Operations, Bulong Nickel, Preston Nickel Holdings and HSBC
                        Bank USA (formerly Marine Midland Bank) trustee.
                                                                       as
Macquarie Bank          means Macquarie Bank Limited (ABN 46 008583 542).
Listing Rules           means the official listing rules of ASX.
Marlborough Assets      means the assets of Marlborough Nickel.
Marlborough Nickel      means MadboroughNickel ?ty Ltd (PBN 97 070 403 873).
Marlborough Nickel      means the construction, development and operation of anickel
Project                  and cobalt project located 70 kilometres north-west of
                         Rockhampton, Queensland owned by Marlborough        Nickel.
Noteholders              means the holders of the Kotes.
Notes                      means US$185,000,000principal amount of 12.5% senior
                           secured notes due 2008, issued by Bulong Operations in 1998
                           in accordance with an indenture dated 17 December 1998
                           between BulongOperations, Bulong Nickel, Preston Nickel
                           Holdings and HSBC Bank USA (formerly known as Marine
                           Midland Bank).
Offer for Residual Loan    means the offer dated 15 December 1998 made by Resolute to
                           Preston Nickel Holdings in relation to a loan of $39,900,000
                           owed by the Bulong Companiesto Resolute.
                           X!32CS P!3ri;&da! TTdStiX CGEipZily Liiiiikd (/&x 42 888 081
                           007).
Preston Group              means the Company and its related entities.
Preston Nickel Holdings    means Preston Nickel Holdings Pty Ltd (ABN 71 083 334 936).
Preston Nickel Security    means the trust created under the Preston Nickel Security Trust
Trust                      Deed dated 3 November 1998 in favour of, among other,
                           Barclays and the Noteholders.
Registered Office          means the registered office of the Company referred to in the
                           Corporate Directory on page 1 of the Notice of Annual General
                           Meeting.
Resolute                   means Resolute Limited (ABN 27 009 069 014).
Resolute Deed of Release   means the deed of release and variation to be entered into by the
                           C o n p m y , !?restoil Nickel Eoiriings, Buiong Bperations,
                           Bulong Nickel, Resolute and certain related entities of
                           Resolute.
Resolute Group             meam Resolute and its related entities
Resolute Shares            means the 17,439,855 shares in the Company held by Resolute.
Shareholders               means the shareholders of the Company.
Technical Services         means the technical services agreement dated 4 November 1998
Agreement                  between Resolute and Bulong Operations.




                                          32
                                     Notice of Nomination of New Auditor


                 12June2002

                 To:        Matthews
                        Trevor
                        Company Secretary
                        Preston Resources Limited
                        Al3N 30 003 207 467


                 I, Adrian Griffin, being a member of Preston Resources Limited (Company) nominate Ernst
                 & Young of 152 St Georges Terrace, Perth for appointment as auditor of the Company, at the
. .. . . - ..
 " ...      ..   ~ - ~ - u - a * c e n e r ~ ~ ~ ~ ~ c - o ~ ~ ~ ~ ~ r ~ ~ ~ "_ .   ~-  .   .               ~

                 I instruct the Company Secretary to provide a copy of this notice to Emst & Young and to
                 each person entitled to receive notice of a general meeting of the Company.




                 Adrian Griffin
  Preston Resources Limited
  ABN 30 003 207 467


  Proxy form -Annual General Meeting

  Ilwe
  of



member
  being
   a              of PRESTON RESOURCESholding
                                            and
                                              shares
                                        LIMITED                                                                           in the
  capital of the Company hereby appoint:
                                                                                                                   (Name of P~oxy)



  of


  or,failing h i d h e r , the Chairman of the meeting as myiour proxy   to voteonmy/ourbehalfattheAnnual
  General Meeting of the Company         to be held at the Technology Park Function Centre, 2 Brodie-Hall Drive,
  Bentley, Western Australia, 61 02 on 15 July 2002, at 1O:OOam and any adjournment thereof.




          1 Thic; prnyy   is   appointed tn reprewnt       O/* nf m:' vntjno rjnht
                                                                           D   0 . '.   ny   if 2   yqy-py   3yp                     Il
                     proxy
              appointed           1 represents       YOand proxy 2 represents                        YOof my total votes.


  It is the Chairman's intention to vote a11 undirected-proxies granted in his favour in favour of each of the
  resolutions.

         do not wish to direct your proxy how to vote, please
  ~ J J O U                                                 pluce n mark in the box               0
  By marking this box you acknowledgethat the Chairman may exercise your proxy even if he has an interest in
  the outcome of the resolution and votes cast by him other than a proxy holder will be disregarded because of
                                                                 as
  that interest.
  lf you wish to direct your proxy how to vote, you should place (I cross in the appropriate hox(es) helow;
                                                        or
  otherwise the proxy may vote as he or she thinks fit, abstain from voting.

   Ordinary Business
                 Abstain                       Against                   For


                   Matthews
                    Mr
   Resolution 1 : Trevor
                  Re-elect                        as a
                                                director.                 0                         CI               c1

   Special Business


   Resolution 2: Appoint a new auditor.                                   0                         3                l
                                                                                                                     L
   Resolution 3: Cancel the ordinary sharesin the Company held            U                         U                CI
                 by Resolute Limited.
                       release
   Resolution 4: Approve the              of Resolute Limited by the      0                         0                0
                 Company.
                           the of
                      Company's
   Resolution 5: Approve main disposal                                    l
                                                                          L                         Q                0
                 undertaking.
                                                                          Dlrector!Sole Dlrector and Sole Secretary




                                                                          DirectoriCompany Secretary


           Note:
           1 . A mcmbcr entitled to attend and vote i s entitled to appoint not more than two proxies who need not be members of the
               Company. Where more than one proxy is appointed each proxy should be appointed to represent a specified proportion
..... ..
       .        QfdXDCdXr'S.YQt&~&bk                                ..
                                                                    ..                                                             ..
                                                                                                                                    .    .
                                                                                                                                         . ... .   ... .   ... .

           2. Every member present in person or by one proxy shall on a show of hands have one vote. Where a member I S
              represented by two proxies, neither proxyshall be entitled to a vote on a show of hands. Where a proxy has 2 or more
              appointments that specify different ways to vote, the proxy shall not be entitled to vote on a show of hands. On a poll
              every member present in person or by proxy, attorney or representative shall have one vote foreach share held.
                                                          be
           3. The instrument appointing a proxy shall in writing under the hand of the appointer or of his or her attorney duly
              authorised in writing or, if the appointer is a corporation, under the hand of 2 directors ora director and company
              secretary. A proxy need not be a membcr of the Company.
           4. The instrument appointing a proxyand the power of attorney or other authority ( I f any) under which it is signed or a
              notarially certified copy of that power or authority shall be deposited ar the office of the Company, Level 1,
              16 Ord Street, West Perth, Western Australia, 6005 in person, by mail sent to the registered office in the reply paid
              envelope providcd with the Notice of Annual General Meeting or by facsimile to +61 8 9322 4690 to be rcceived not
              less than 48 hours before the time for holding the meeting or any adjournment thereof at which the person named in the
              i5styui77ent py~posc:t.3 \.o:e a13 : c default. :hc i r s t r l ; ~ ~ : ~ f ~ : ~ ' ; ?rha" 7 0 : !X t-ratci! ;:S va!id.
                                                                                      n;

								
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