Highlights

• The Cloncurry region, North West Queensland, is an area of proven major ore and extensive mineralisation with established mining, processing & transport infrastructure.
• Extensive properties focused on 47 granted Mining Leases (MLs) that are able to proceed rapidly into production, supported by 5 Mining Lease Applications (MLAs), 2 Exploration Permits, 4 EPM applications and 3 Mining Claims totaling 243 square kilometres.
• The Company has cash on hand of $5.2 million.
• Cash flow in the near term available from the Mt Norma copper sulphate and vat leaching operations from an existing processing plant. Copper sulphate inventory of 80,000kg is available for sale.
• QMC has important exploration opportunities for drilling gold copper prospects - Group 4 - Morris Creek, Jessivale, Flamingo, Sally and Little Beauty.
• Duck Creek anticline tenements hold opportunities for new discoveries as well as copper oxide ore supplies to feed Mt Norma vat leaching operations.
• EPMA 15706, Morris Creek project abuts to the south and west of the Cudeco Ltd Rocklands’ project containing the important copper, gold & cobalt discovery and adjoining along the eastern boundary of the Xstrata Ltd’s Chum Project.

Risks

An investment in QMC has risks and prospective investors in the Company should refer to Section 8 – Risk Factors, headings listed below.

• Exploration Risk – – The resource tenements of the Company as described in this Prospectus are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings which can be hampered by force majeure circumstances, cost over-runs, inconsistent grades and other unforeseen events.
• Operating Risks
• Title Risks and Native Title
• Access and Compensation
• Commodity price volatility and exchange rate risks
• Environmental Risks
• New registration of assigments and tranfers with DME
• 14 specific risks as set out on page 51
• The Company in its aquisition programme has relied to a large extent on non-JORC code information and such information may not prove to be accurate

Exploration Risk

The resource tenements of the Company as described in this Prospectus are at various stages of exploration, and potential investors should understand that mineral exploration and development are high-risk undertakings which can be hampered by force majeure circumstances, cost over-runs, inconsistent grades and other unforeseen events. To prosper, it relies on the successful exploration and/or acquisition of ore reserves, design and construction of efficient mining/processing facilities, competent operation and managerial performance and proficient marketing of the product.

There can be no assurance that exploration of the project areas described in this Prospectus, or any other tenements that may be acquired in the future, will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited.

Operating Risks

The operations of the Company may be affected by various factors, including: failure to locate or identify mineral deposits; – failure to achieve predicted commercial grades in – exploration and mining; operational and technical difficulties encountered in – mining; competition for exploration rigs and equipment; – difficulties in commissioning and operating plant and – equipment; mechanical failure or plant breakdown; – unanticipated metallurgical problems which may affect – extraction costs; adverse weather conditions; – industrial and environmental accidents; – industrial disputes; and – unexpected shortages or increases in the costs of – consumables, labour, spare parts, plant and equipment. No assurances can be given that QMC will achieve commercial viability through the successful exploration and/or mining of its tenement interests.

Commodity Price Volatility and Exchange Rate Risks

If QMC achieves success leading to mineral production, the revenue it will derive through the sale of commodities exposes the potential income of the Company to commodity price and exchange rate risks. Commodity prices fluctuate and are affected by many factors beyond the control of QMC. Such factors include supply and demand fluctuations for precious and base metals, technological advancements, forward selling activities and other macro-economic factors. Furthermore, international prices of various commodities are denominated in United States dollars, whereas the income and expenditure of the Company are and will be taken into account in Australian currency, exposing the Company to the fluctuations and volatility of the rate of exchange between the United States dollar and the Australian dollar as determined in international markets.

Environmental Risks

The operations and proposed activities of the Company are subject to State and Federal laws and regulations concerning the environment. Exploration and development of any resources will be dependent on the projects meeting environmental guidelines. The grant of development permits are dependent on approval of environmental programmes and other criteria.

As with most exploration projects and mining operations, the Company’s activities are expected to have an impact on the environment, particularly if advanced exploration or mine development proceeds. It is the Company’s intention to conduct its activities to the highest standard of environmental obligation, including compliance with all environmental laws. Nevertheless, there are certain risks inherent in the Company’s activities which could lead to extensive liability of the Company, such as accidental spills, leakages or other unforeseen circumstances.

Title Risks and Native Title

Interests in tenements in Australia are governed by the respective State legislation and are evidenced by the granting of licences or leases. Each licence or lease is for a specific term and carries with it annual expenditure and reporting commitments, as well as other conditions requiring compliance. Consequently, QMC could lose title to or its interest in tenements if licence conditions are not met or if insufficient funds are available to meet expenditure commitments. In addition, Queensland legislation requires the holders of a Queensland Exploration Tenement to periodically reduce the area of an Exploration Tenement. It is also possible that, in relation to tenements which the Company has an interest in or will in the future acquire such an interest; there may be areas over which legitimate common law native title rights of indigenous Australians exist. If native title rights do exist, the ability of QMC to gain access to tenements (through obtaining consent of any relevant landowner), or to progress from the exploration phase to the development and mining phases of operations, may be adversely affected. The Directors will closely monitor the potential effect of native title claims involving tenements in which the Company has or may have an interest. Reference should be made to the relevant section of the Tenement Report set out in Section 11 of this Prospectus for information on the issue of title and a description of the native title regime in Queensland.

Access and Compensation

The MRA requires that prior to grant or renewal the holder of the Queensland Applications for Mining Tenements and the Queensland Mining Tenements must enter into a land compensation agreement with each background land owner. Whilst negotiations are continuing, there is presently no record of a compensation agreement for the Mt Norma ML 2506. The Company considers that it has good relations with landowners, however, any failure to obtain water access rights or a compensation agreement, or any disputes with a landowner could adversely affect the Company.

Share Market Conditions

The price of the Shares when quoted on the ASX will be influenced by international and domestic factors affecting conditions in equity, financial and commodity markets. These factors may affect the general level of prices for listed securities of mining and exploration companies quoted on the ASX.

General Investment Risks

There is a risk that the price of Shares and returns to Shareholders may be affected by changes in: local and world economic conditions; – interest rates; – levels of tax, taxation law and accounting practice; – government legislation or intervention; – inflation or inflationary expectations; and – natural disasters, social upheaval or war in Australia or – overseas, as well as other factors beyond the control of the Company.

Specific Risks Associated with the Company

There are also a number of specific risks associated with the Company which may adversely affect the Company’s financial position, prospects and price of its listed securities. In particular, the Company is subject to risks relating to the exploration and development of mineral properties which are not generally associated with other businesses.

Set out below are specific risks that may adversely affect the Company:

• The Company cannot guarantee that those tenements where applications have been lodged with DME will ultimately be granted in whole or in part pursuant to the MRA. There is a competing application for Mt Brownie EPM 16628, lodged on the same day. If applications are lodged on the same day, they take the priority the Minister decides, taking into account the relative merits of each application.
• The Company has in the last 12 months acquired a significant number of new tenements. Whilst the Company has signed transfers from the registered owners in relation to these tenements, the transfers have not yet been registered. All transfers are subject to Minister for Mines consent.
• The Company has a number of tenements which are due for renewal and an application for renewal of those tenements has been lodged – see Section 11 for details. The Directors do not know of any reason why the application for renewal of the term of these tenements may not be granted. However, the Company has no guarantee that the applications for renewals will be successful. For further information on the issue of title refer to the Tenements Report in Section 11 of this Prospectus.
• The DME is responsible for regulating mining tenure in Queensland and from time to time, review the environmental bond’s that are placed on tenements. The Directors are not in a position to state whether a review is imminent or whether the outcome of such a review would be detrimental to the funding needs of the Company.
• The exploration costs of the Company described in Section 5 of this Prospectus are based on certain assumptions with respect to the method and timing of exploration. By their nature, these estimates and assumptions are subject to significant uncertainties and, accordingly, the actual costs may materially differ from these estimates and assumptions. Accordingly, no assurance can be given that the cost estimates and the underlying assumptions will be realised in practice, which may materially and adversely affect the Company’s viability.
• Occupational Health and Safety is a prime focus area for the Company. In particular, the Company has invested considerable resources, under the guidance and supervision of the DME, in addressing safety issues which had previously arisen at the Mt Norma mine prior to its acquisition by the Company. Whilst the Company has every reason to believe that those issues have been resolved, any new serious issues which arise would negatively impact on the operations of the Company. In addition, in respect of staffing, occupation health and safety requirements may affect the revenue of the Company.
• The revenues of the Company may be affected by the availability and reliability of staff and equipment.
• Whilst the Directors have substantial experience in exploration, project management and public company administration, the Company has no track record of mining operations.
• Whilst the Directors of the Company believe there is no liability from the decision not to exercise the Stanton Option – see Section 12.2.1 for details, and that the Company has satisfied its expenditure commitments under the Stanton Option, the Company has not yet received verification of that fact.
• The DME may not accept the Plans of Operation proposed by the Company in respect of a tenement delaying the commencement of operations. Please refer to the Tenement Report – Section 11.
• The Directors are aware of a prior underspending on the Duck Creek EPM 13336 tenement as detailed on page 122. While it is recognised that considerable work has been carried out and budgeted to take place on this tenement within the next six months, the renewal or retaining sub-blocks within the EPM and the EPM will be subject to DME approval or reduction of the EPM.
• The Company may be affected by legislation restricting a person holding an interest in more than two mining claims. The Company has acquired three mining claims comprising the Mt Debbie Claims, and may be required to show cause why one should not be cancelled. However QMC proposes to convert the mining claims to a mining lease as soon as possible.
• Activities conducted by the Company are likely to result in the creation of environmental liabilities for the Company, and the extent of likely rehabilitation of each tenement is not certain, and will depend upon the legal requirements at the relevant time.
• The future capital requirements of the Company will depend on many factors including its business activities. The Company believes its available cash and the net proceeds of this Offer should be sufficient to fund business development, exploration and other Company objectives in the short term as stated in the Prospectus. Any inability to obtain additional funding, if required, could have a material adverse effect on the Company’s business.