RIMFIRE PACIFIC MINING NL ABN 59 006 911 744

NOTICE OF ANNUAL GENERAL MEETING

and

EXPLANATORY MEMORANDUM

Date of Meeting: 27 November 2003 Time of Meeting: 10.00am Place of Meeting: Level 5, 175 Eagle Street BRISBANE QUEENSLAND 4000

This Notice of Annual General Meeting and Explanatory Memorandum should be read in their entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.

RIMFIRE PACIFIC MINING NL ABN 59 006 911 744

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of shareholders of Rimfire Pacific Mining NL ("Company") will be held at Level 5, 175 Eagle Street, Brisbane, on 27 November 2003 at 10.00am (Brisbane time).

The Explanatory Memorandum which accompanies and forms part of this Notice of Annual General Meeting describes the various matters to be considered at the annual general meeting.

AGENDA

ORDINARY BUSINESS

To consider and, if thought fit, pass the following resolutions, with or without amendment, as ordinary resolutions of the Company:

$\mathbf{1}$ . FINANCIAL STATEMENTS AND REPORTS

"To receive, consider and adopt the Company's Annual Report comprising the Directors' and Auditor's Report, Directors' Declaration, Statement of Financial Performance for the year ended 30 June 2003, Statement of Financial Position for the year ended 30 June 2003, Statement of Cash Flows for the year ended 30 June 2003 and Notes to and forming part of the accounts for the year ended 30 June $2003.$ "

$2₁$ RE-ELECTION OF NORBERT CHARLES CALABRO AS A DIRECTOR

"That Mr Norbert Charles Calabro, who retires in accordance with Article 40 of the Company's constitution and being eligible, offers himself for re-election, be reelected as a Director."

SPECIAL BUSINESS

To consider and, if thought fit, pass the following resolutions, with or without amendment, as ordinary resolutions of the Company:

$3₁$ APPROVAL OF ISSUE OF OPTIONS TO DIRECTORS

"That in accordance with the provisions of Listing Rule 7.1 of the Official Listing Rules of the Australian Stock Exchange Limited ("ASX Listing Rules"), Listing Rule 10.11 of the ASX Listing Rules and Chapter 2E of the Corporations Act 2001 (Cwlth) ("Corporations Act"), and for all other purposes, the Company be authorised to issue options to acquire ordinary shares in the capital of the Company exercisable at eight cents (\$0.08) on or before 30 September 2006 ("Options"), to the following persons, being directors of the Company (each a "Recipient"), in the amounts and on the terms set out below and in the Explanatory Memorandum accompanying this Notice:

• Norbert Calabro 3.000.000 Options: $(a)$
• $(b)$ Graham Billinghurst - 2,400,000 Options:
• $(c)$ Geoffrey Stuart - 2,400,000 Options."
• A copy of this Notice and the Explanatory Memorandum which accompanies $(a)$ this Notice has been lodged with the Australian Securities & Investments Commission in accordance with Section 218 of the Corporations Act:
• $(b)$ The Company intends to issue the Options as soon as practicable after 30 November 2003 and in any event no later than one (1) month from the date of the Meeting:
• The Company will disregard any votes cast on this resolution by: $(c)$
• each Recipient: or
• any associate of any Recipient.

However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is 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 accordance with the direction on the proxy form to vote as the proxy decides.

$\overline{4}$ . RATIFICATION OF PREVIOUS ISSUE OF SHARES

"That in accordance with Listing Rule 7.4 of the ASX Listing Rules, and for all other purposes, the previous issue of eight million eight hundred thousand (8,800,000) ordinary shares in the Company ("Shares") at an issue price of 2.5 cents (\$0.025) each to clients of DataTech Financial Services Pty Ltd ("the Placees") be hereby ratified.

• $(a)$ Full details of the placement of shares to the Placees are set forth in the Explanatory Memorandum accompanying this Notice;
• $(b)$ The Company will disregard any votes cast on this resolution by:
• the Placees: or
• any associate of the Placees.

However, the Company need not disregard a vote if:

• it is cast by a person as proxy for a person who is 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 accordance with the direction on the proxy form to vote as the proxy decides.

GENERAL BUSINESS

To consider any other business as may be lawfully put forward in accordance with the constitution of the Company.

BY ORDER OF THE BOARD

$\mathscr{A}$

Graham Billinghurst Company Secretary DATED: 23 October 2003

PROXY, REPRESENTATIVE AND VOTING ENTITLEMENT INSTRUCTIONS

PROXY AND BODY CORPORATE REPRESENTATIVE INSTRUCTIONS

Shareholders are entitled to appoint up to two individuals to act as proxies to attend and vote on their behalf. Where more than one proxy is appointed each proxy may be appointed to represent a specific proportion of the shareholder's voting rights. If the appointment does not specify the proportion or number of votes each proxy may exercise, each proxy may exercise half of the votes.

Shareholders who are a body corporate are able to appoint representatives to attend and vote at the Meeting under Section 250D of the Corporations Act 2001 (Cwith).

The proxy form (and the power of attorney or other authority, if any, under which the proxy form is signed) and certificates appointing body corporate representatives or a copy or facsimile which appears on its face to be an authentic copy of the proxy form (and the power of attorney or other authority) or certificate appointing a body corporate representative must be deposited at, posted to, or sent by facsimile transmission to the Company's office, Level 13, 379 Queen Street, Brisbane (GPO Box 725, Brisbane Queensland 4001) or fax # (07) 3221 7166, not less than 48 hours before the time for holding the Meeting, or adjourned meeting as the case may be, at which the individual named in the proxy form proposes to vote.

The proxy form must be signed by the shareholder or his/her attorney duly authorised in writing or. if the shareholder is a corporation, in a manner permitted by the Corporations Act.

The proxy may, but need not, be a shareholder of the Company.

In the case of shares jointly held by two or more persons, all joint holders must sign the proxy form.

A proxy form is attached to this Notice.

VOTING ENTITLEMENT

For the purposes of determining voting entitlements at the Meeting, shares will be taken to be held by the persons who are registered as holding the shares at 10.00am, 25 November 2003. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

RIMFIRE PACIFIC MINING NL ABN 59 006 911 744 GPO Box 725 Brisbane, Queensland, 4001 Telephone: (07) 3211 7177 Fax: (07) 3221 7166

PROXY FORM

By marking this box, you acknowledge that 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 as proxy holder will be disregarded because of that interest.

The Chairman, Mr Norbert Calabro, advises that it is his intention to vote in favour of all resolutions in respect of any undirected proxies which may be granted in favour of the Chairman.

I/we direct my/our proxy to vote as indicated below:

Signature of Attorney

Signature of Witness

RIMFIRE PACIFIC MINING NL ABN 59 006 911 744

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

$\mathbf{1}$ Introduction

This Explanatory Memorandum has been prepared for the information of members of Rimfire Pacific Mining NL ABN 59 006 911 744 ("Rimfire" or "Company") in connection with the business to be conducted at the Annual General Meeting of members to be held Level 5, 175 Eagle Street, Brisbane Old 4000 on 27 November 2003 at 10.00am ("Meeting").

The Notice of Meeting sets out the details of four (4) separate resolutions to be put to Shareholders comprising the following:

• Resolution 1 seeks the approval of the Annual Report, Directors' and Auditor's Report and Financial Statements of the Company for the financial year ended 30 June 2003:
• Resolution 2 seeks the approval to re-elect Mr Norbert Calabro as a Director of the Company;
• Resolution 3 seeks the approval for the issue of in aggregate 7,800,000 options to acquire shares in the Company to Directors of the Company.
• Resolution 4 seeks shareholder ratification of a previous issue of 8,800,000 ordinary shares.

Resolutions 1 and 2 are standard for an Annual General Meeting of the Company, and no further comments are made below. Specific comments relating to Resolutions 3 and 4 are set out below.

$2¹$ Resolution 3 - Approval of Issue of Options to Directors

$21$ Introduction

Each of the current directors the Company, namely Mr Norbert Calabro, Mr Graham Billinghurst and Mr Geoff Stuart (each a "Recipient") hold options to acquire ordinary shares in the capital of the Company exercisable at twelve cents (\$0.12) on or before 30 November 2003 ("Existing Options") in the following amounts:

• Norbert Calabro 2,500,000; $(a)$
• $(b)$ Graham Billinghurst - 2,000,000;
• Geoff Stuart 2,000,000. $(c)$

Each of the above directors have indicated that they currently do not intend to exercise any of the Existing Options, which would therefore expire on 30 November 2003.

By virtue of this Resolution 3, the Company proposes to issue replacement options to each of the Recipients exercisable at eight cents (\$0.08) each on or before 30 September 2006 ("Options") in the following amounts:

Norbert Calabro - 3,000,000 Options: $(a)$

• $(b)$ Graham Billinghurst - 2,400,000 Options;
• $(c)$ Geoff Stuart - 2.400.000 Options.

A summary of the material terms of the Options is set out below:

• The securities to be issued to each Recipient are options to subscribe for ordinary shares in the capital of the Company:
• The exercise price of the Options issued will be eight cents (\$0.08) per Option:
• Shares issued on exercise of the Options will rank pari passu with all existing ordinary shares of the Company from the date of issue;
• The Options may be exercised wholly or in part by notice in writing to the Company received at any time on or before 30 September 2006 ("Expiry Date") together with a cheque for the exercise price of eight cents (\$0.08) and the options certificate (if any) for those Options for cancellation by the Company;
• Quotation of the Options on the Australian Stock Exchange Limited ("ASX") will not be sought. The Company will allot the number of shares the subject of any exercise notice, and apply at its cost for listing of the shares so allotted;
• Holders of the Options will be permitted to participate in new issues of securities of the Company on the prior exercise of the Options, in which case the holders of the Options will be afforded the period of at least ten (10) business days notice prior to and inclusive of the books closing date (to determine entitlements to the issue) to exercise the Options:
• In the event of any reconstruction (including consolidation, sub division, reduction or return) of the issued capital of the Company;
• $\circ$ the number of Options, the exercise price of the Options, or both will be reconstructed (as appropriate) in a manner consistent with the Listing Rules of the ASX, but with the intention that such reconstruction will not result in any benefits being conferred on the holders of the Options which are not conferred on shareholders; and
• subject to the provisions with respect to rounding of entitlements as sanctioned by a $\circ$ meeting of shareholders approving a reconstruction of capital, in all other respects the terms for the exercise of the Options will remain unchanged.

The Company intends to issue the Options to the Recipients as soon as practicable after the expiry of the Existing Options (that is, 30 November 2003), but in any event not later than one (1) month from the date of the Meeting.

No funds will be raised from the issue of the Options, however the company will receive the benefit of subscription monies in the event that all or part of the Options are exercised.

$2.2$ Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act 2001 (Cwith) ("Corporations Act") prohibits a public company from giving a financial benefit to a related party of the public company unless the benefit falls within one of various exceptions to the general prohibition or where the company first obtains the approval of its shareholders in general meeting in circumstances where the requirements of Chapter 2E in relation to the convening of that meeting have been met.

A "related party" for the purposes of the Corporations Act is defined widely and it includes a director of the public company.

A "financial benefit" for the purposes of the Corporations Act has a very wide meaning. It includes the public company paying money or issuing securities to the related party. In determining whether or not a financial benefit is being given, it is necessary to look to the economic and commercial substance and effect of what the public company is doing (rather than just the legal form). Any consideration which is given for the financial benefit is to be disregarded, even if it is full or adequate.

This proposed resolution, if passed, will confer a financial benefit to each Recipient and the Company seeks to obtain member approval in accordance with the requirements of Chapter 2E of the Corporations Act and for this reason and for all other purposes the following information is provided to shareholders.

The related party to whom the resolution would permit the financial benefit to be given $(a)$

Each of Mr Norbert Calabro, Mr Graham Billinghurst and Mr Geoff Stuart (or their respective nominees), being directors of the Company.

$(b)$ The nature of the financial benefit

The nature of the proposed financial benefit to be given is the issue of in aggregate 7,800,000 Options to acquire ordinary shares in the capital of the Company, in the proportions described above.

Directors' Recommendation $(c)$

As each of the directors of the Company are interested in the outcome of this resolution (being Recipients), they accordingly make no recommendation to shareholders in respect of this Resolution.

Costs and Detriments of Providing Financial Benefit $(d)$

The opportunity costs and benefit forgone by the Company issuing the Options to each recipient, is the obligation of the Company to issue shares in the future at potentially less than their market price at the time. The future exercise of the Options will also have a dilutionary impact on the issued share capital of the Company.

Directors' Interest $(e)$

Each of the Recipients have a material personal interest in the outcome of the resolution, as a total of 7,800,000 Options in the proportions described above would be issued to them (or their nominees) under the Resolution. Upon their issue, the Options issued to the Recipients pursuant to this Resolution 3 will represent the directors' only holding of the Options.

$(f)$ Valuation

The Options are not to be quoted on the ASX and as such have no market value. The Options each grant the holder thereof a right of grant of one ordinary share in the Company upon exercise of the Option and payment of the exercise price of the Option described above. Accordingly, the Options may have a present value at the date of their grant.

The Options may acquire future value dependent upon the extent to which the shares exceed the exercise price of the Options during the term of the Options.

The Company has estimated the value of the Options and has done so using the Black-Scholes Model, which is the most widely used and recognised model for pricing options. The value of an option calculated by the Black-Scholes Model is a function of the relationship between a number of variables, being the share price, the exercise price, the time to expiry, the risk-free interest rate and the volatility of the Company's underlying share price.

Inherent in the application of the Black-Scholes Option Price Model are a number of inputs, some of which must be assumed. The data relied upon in applying the Black-Scholes Option Price Model was:

• The exercise price of the Options of eight cents (\$0.08);
• Expiry Date being 30 September 2006:
• The share price of the Company as at 20 October being 4.7 cents (\$0.047);
• A volatility measure of 40% (This measure was determined having regard to the low and high values of the Company's shares over the last 52 weeks and general risk factors associated with exploration companies such as Rimfire);
• A risk-free interest rate of 5.6%; and
• No expected dividend yield (assumed data).

Some relatively minor variables were included in the calculation to estimate the value of Option as "American style" options (being exercisable at any time prior to the stated expiry Theoretically, the Black-Scholes Model prices "European style" options (being date). exercisable only on this exercise date).

Based on this information, the Company has adopted an indicative value for the Options of 0.7 cents (\$0.007) each. On that basis, the respective value of the Options to be issued pursuant to Resolution 3 are as follows:

• $(i)$ Norbert Calabro - \$21,000;
• $(ii)$ Graham Billinghurst - \$16,800:
• $(iii)$ Geoff Stuart - \$16,800.

Any other information that is reasonably required by shareholders to make a decision $(a)$ and that is known to the Company or any of its Directors

There is no other information known to the Company or any of its directors save and except as follows:

Opportunity Costs

The opportunity costs and benefits foregone by the Company issuing the Options to each of the Recipients is the potentially dilutionary impact on the issued share capital of the Company (in the event that the Options are exercised). Until exercised, the issue of the Options will not impact upon the number of ordinary shares on issue in the Company. To the extent that upon their exercise the dilutionary impact caused with the issue of shares will be detrimental to the Company, this is more than offset by the advantages accruing from the Company securing the services of experienced and skilled directors on appropriately incentives terms.

It is also considered that the potential increase of value in the Options is dependent upon a concomitant increase in the value of the Company generally.

Taxation Consequences

In so far as the Company is aware, there are no adverse taxation consequences to the Company arising from the proposed issue of the Options in accordance with Resolution 3

$3₁$ Resolution 4 – Ratification of previous issue of Shares to the Placees

By virtue of Resolution 4, the Company is seeking shareholders to ratify the previous issue of in aggregate eight million eight hundred thousand (8,800,000) ordinary shares in the issued capital of the Company ("Shares"), in accordance with the provisions of Listing Rule 7.4 of the ASX Listing Rules.

The Shares were issued to clients of DataTech Financial Services Pty Ltd ("Placees") at an issue price of 2.5 cents (\$0.025) per Share as follows:

• $(a)$ 17 April 2003 - 4,000,000 Shares; and
• $(b)$ 12 May 2003 - 4,800,000 Shares.

The Shares issued to the Placees the subject of this Resolution 4 rank equally with all other issued ordinary shares of the Company.

The amount raised by the issue of the Shares to the Placees totalled \$220,000 which was expended or intended to be expended by the Company to enable the Company to continue its exploration activities.

000000

On behalf of the Directors of Rimfire Pacific Mining NL, I commend the above resolutions for your favourable consideration.

Kalahu

Norbert Calabro Chairman 23 October 2003