1 April 2015 The Directors

Equator Resources Limited Level 2, Spectrum

100 Railway Road

SUBIACO WA 6008

Dear Sirs

PO Box 1908

West Perth WA 6872

Australia

Level 2, 1 Walker Avenue West Perth WA 6005

Australia

Tel: +61 8 9481 3188

Fax: +61 8 9321 1204

ABN: 42 128 908 289

AFS Licence No: 448697 www.stantons.com.au

RE: EQUATOR RESOURCES LIMITED ('EQUATOR' OR 'THE COMPANY') (ACN 127 411 796)

ON THE PROPOSAL THAT SHAREHOLDERS APPROVE THE DISPOSAL OF 100% OF THE LIBERIAN MINERAL ASSETS OF THE COMPANY VIA THE SALE OF ALL OF THE SHARES IN BUKON JEDEH HOLDINGS LTD TO THE ORIGINAL VENDORS OF BUKON JEDEH HOLDINGS LTD PARTLY UNDERTAKEN VIA A SELECTIVE BUY BACK OF SHARES IN THE COMPANY -

MEETING OF SHAREHOLDERS PURSUANT TO AUSTRALIAN SECURITIES EXCHANGE

('ASX') LISTING RULE 10.1 AND SECTIONS 256C(2)

1. Introduction

   
   

2. We have been requested by the Directors of Equator to prepare an Independent Expert's Report to determine the fairness and reasonableness relating to the proposals as outlined in Resolutions 5 and 6 to the Notice of Meeting ('Notice') and the Explanatory Statement ('ES') attached to the Notice relating to the proposal to sell the Liberian Mining Assets of the Equator Group (as proposed under Resolution 6) and as consideration selectively buy back 44,476,294 shares and one B class performance share in Equator ((as noted in Resolution 5). It is noted that Resolution 1 to a Special General Meeting of Shareholders will seek approval to cancel the 45,163,251 shares and one B class performance share.

   
   

   It is proposed that Equator, through BJH, will sell its sell its interest in the Bukon Jedeh Gold Project and other Liberian gold projects to the 17 original vendors (known as the 'Bukon Jedeh Original Investor group' or BJO Investors') of BJH via selling back to the BJO Investors all of the shares in BJH. Further details are noted below.

   
   

3. The Company (originally known as NT Resources Limited), since June 2011 holds 100% of the issued capital of Isle of Man registered company, Bukon Jedeh Holdings Ltd ('BJH') and BJH owns 100% of Liberian registered company, Bukon Jedeh Resources In ('BJR'). BJH through BJR ultimately controls the Bukon Jedeh Gold Project in Liberia (three licences owned prospective for gold and know as the Bukon Jedeh, River Gee and Maryland Projects).

   
   

4. In June 2011, Equator acquired all of the shares in BJH from the BJO Investors for a total deemed consideration of $4,544,502 made up of:

   
   

   • 37,250,000 fully paid shares in Equator ($4,097,500)

   • 18,625,000 share options in Equator, exercisable at 20 cents each on or before 30 June 2013 (since expired) ($447,000);

   • 2 Performance Shares ($2) which on reaching certain milestones will each convert to 2,500,000 fully paid shares in Equator as follows:

     
     

     
     

     Liability limited by a scheme approved under Professional Standards Legislation

     • The volume weighted average share price ('VWAP') of Equator shares trades on ASX at not less than 20 cents for a period of 20 consecutive trading days on the ASX (this performance condition was met and the First Performance Share converted to 2,500,000 ordinary shares in Equator in February 2012); and

     • Second B Performance Share converts after Equator reports a JORC resource in respect of the Bukon Jedeh Concession of greater than 1 million ounces of gold (performance milestone not met to 22 September 2014).

       
       

       Further details on the Liberian Mineral Assets are referred to in the Valuation Report noted in paragraph 1.13 below.

       
       

5. Pursuant to a Binding Term Sheet signed in February 2014, Equator will sell 100% of the shares in BJH '(the Transactions') for the consideration of:

   
   

   • Cancellation of all of the BJO Investor Shares held by the BJO Investors in Equator (39,439,401 shares as at 30 June 2014 plus 5,036,893 to be issued pursuant to Resolutions 1 to 3 as outlined in the Notice and ES (45,163,251 ordinary shares in total and one B Performance Share); and

   • Assumption by the BJO Investors of the agreed /approved creditors relating to the BJR Exploration Licences and Liberian in-country costs (estimated at $1,248,940 as at 30 June 2014). Any additional BJR Exploration Licences and Liberian in-country costs incurred post 30 June 2014 may also be assumed by the BJO Investors and these are estimated not to exceed $75,000 however we have excluded such costs and assume the assumed total will be the figure as per the Notice of $1,248,940.

     
     

     Furthermore, we have been advised that the BJO Investors have agreed that the convertible notes (BJO Notes) totalling $446,610 owing to various BJO Investors by Equator will be cancelled and will no longer be payable. Furthermore, Messrs Niles Helmboldt and Charles Waterman will resign as Directors of Equator.

     
     

6. The above cancellation of BJO Investor Shares and assumption by the BJO Investors of the agreed /approved creditors relating to the BJR Exploration Licences and Liberian in-country costs (and the write off of the BJO Notes) are known in this report as the Considerations.

   
   

   This report outlines below our view of the Considerations being provided to Equator as a result of the Transactions.

   
   

   It is expected that the sale will leave Equator with an interest in various Northern Territory Exploration Assets (part of the Acacia-Frazer Project - originally sold to TUC Resources Limited ('TUC') in June 2012 but transferred back to Equator in 2014 and via a 3 year option to buy back into the Plenty River Project - originally sold to an unrelated private company, FAR Resources Pty Ltd in the September 2012 quarter).

   
   

7. This report outlines below our view of the Considerations being provided to Equator as a result of the Transactions.

   
   

8. Section 256C (2) of TCA provides that a company may reduce its share capital in a way that is not otherwise authorised by law if the reduction:

   
   

   • is fair and/or reasonable to the company's shareholders as a whole; and

     
     

   • does not materially prejudice the company's ability to pay its creditors; and

     
     

   • is approved by shareholders.

     Section 256C (2) of TCA provides that a selective reduction must be approved by either:

     
     

     • 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 unpaid on shares is to be reduced, or by their associates; or

       
       

     • a resolution agreed to, at a general meeting, by all ordinary shareholders.

     
     

9. Listing Rule 10.1 of the ASX Listing Rules provides that shareholder approval is required before a listed company may sell a substantial asset from various persons in a position of influence. This includes acquiring a substantial asset from a related party or a substantial shareholder. The BJO Investors are proposing to acquire the 100% interest in the share capital of BJH for the Considerations noted above that includes the cancellation of BJO Investor Shares held by the BJO Investors in Equator as noted in paragraph 1.3 above and Resolution 6 in the Notice. The sale of the shares in BJH to the BJO Investors is a substantial asset for the purposes of ASX Listing Rule 10.1. The Listing Rule requires an Independent Expert's Report as to whether the relevant transactions are fair and reasonable to non-associated shareholders.

   
   

10. The proposals under Resolution 6 are for the shares in BJH to be sold to the BJO Investors for the Considerations (including cancellation of the BJO Investor Shares) and the sale of the BJH Shares being sold represents a sale of a substantial asset as the sale of the BJH Shares represents more than 5% of the Company's last audited net assets (only available to June 2012). The consideration for the BJH shares includes the cancellation of all of the BJO Investor Shares held by the BJO Investors in Equator. The cancellation of the BJO Investor Shares is deemed to be a selective reduction in capital. The Directors believe that the selective capital reduction is fair and reasonable to shareholders and that the capital reduction will not prejudice the interests of shareholders or the Company's ability to pay its creditors. However it is noted that the Company currently has a deficiency in working capital and will need to raise new capital shortly to survive in the medium term. The assumption of certain liabilities reduces the extent of creditors to be repaid.

    
    

11. In determining the fairness and reasonableness of the Transactions, we have had regard for the definitions set out by the Australian Securities and Investments Commission ('ASIC') in its Regulatory Guide 111, 'Content of Expert Reports'. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of 'fairness' is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. An offer is 'reasonable' if it is fair.

    
    

    An offer may also be reasonable, if despite not being 'fair', there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. In this case, there is no offer bid but we have considered other factors in determining whether the proposals are reasonable and these are set out in section 8 of this report.

    
    

12. The Company has requested Stantons International Securities Pty Ltd trading as Stantons International Securities to prepare an Independent Expert's Report to determine whether the proposals outlined in Resolutions 5 and 6 are fair and/or reasonable to the shareholders of Equator (not associated with the BJO Investors). Under TCA our opinion on the buy back of the BJO Investor Shares pursuant to Resolution 6 requires conclusion as to whether the proposals sunder Resolution 5 are in the best interests of Equator and its shareholders other than the BJO Investors and their associates.

13. Apart from this introduction, this report considers the following:

    
    

    • Summary of opinion;

    • Implications of the proposals;

    • Corporate history and nature of business of Equator;

    • Future directions of Equator;

    • Basis of valuation of Equator shares;

    • Basis of valuation of the Considerations ;

    • Fairness and Reasonableness of the proposals under Resolutions 5 and 6;

    • Conclusion as to fairness and reasonableness;

    • Shareholders Decision;

    • Sources of information; and

    • Appendix A and our Financial Services Guide.

    
    

14. In our opinion, the proposals as outlined in Resolutions 5 and 6 are on balance, fair and reasonable to the shareholders of Equator not associated with the BJO Investors and the proposal noted in Resolution 5 is in the best interests of shareholders.




The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this Report, including the independent valuation report (the Maynard Valuation Report') on the Liberian Mineral Assets prepared by Al Maynard & Associates ('Maynard') and included as an Appendix to the Notice.




15. Implications of the Proposals pursuant to Resolutions 5 and 6 (and other Resolutions)




2.1 As at 1 April 2015, there are 130,098,286 ordinary fully paid shares on issue in Equator and one B Performance Share (see paragraph 1.3 above). The significant registered fully paid shareholders as at 25 August 2013 (refer below), based on the top 20 shareholders list were disclosed as follows:




No. of fully paid shares	% of issued fully paid shares
Citicorp Nominees Pty Ltd	9,891,157	7.60
Terry Graham Stanley	8,650,000	6.65
Treecity Pty Ltd	8,150,000	6.26
Silverwood Ventures Ltd	7,576,270	5.82
111Kenneth Alfred Ross	6,134,061	4.71
Ross Stanley	6,000,000	4.61
46,401,488	35.65




The top 20 shareholders at 25 August 2013 owned approximately 73.80% of the ordinary issued capital of the Company and the BJO Investors hold an approximate 23.74% of the ordinary issued capital of Equator at that date. No updated Register of Members is available as the Share Registrars are owed monies and are not processing and transfers (minimal as the Company has been suspended from trading from September 2013).




Mr Ross Stanley via shareholdings in his own name and that of companies under his control own a total of 21,876,270 shares in Equator, representing approximately 16.81% of the total shares on issue. Currently, Ross Stanley is financially supporting the Company.




It is proposed pursuant to Resolutions 1 to 4 to issue a total of 17,036,983 ordinary shares of which 5,036,983 are to be issued to the BJO Investors and effectively cancelled as part of the Transactions. The issue of such shares are not raising any funds and, are in effect being issued based on past agreements to eliminate debts due by the Equator Group to various parties and from past placements of shares. This report assumes all of the new shares will be