circular , page-6

The following is the Circular I received. FH appears to be following procedures straight from the book. To receive this circular you need to have contacted FH and "registered' your interest as a shareholder.

CIRCULAR TO SHAREHOLDERS
I confirm that Darren Weaver, Steven Sherman and I were appointed Joint and Several Administrators of CMR pursuant to Section 436A of the Corporations Act 2001 (¡§the Act¡¨)
on 29 January 2009. We were also appointed Joint and Several Voluntary Administrators of Compass Mining Pty Ltd, a wholly owned subsidiary of CMR and the vehicle through which CMR¡¦s joint venture operations were run.

I note that we are liaising closely with CMR¡¦s joint venture partners HNC (Australia) Resources Pty Limited and its holding company Hunan Nonferrous Metals Corp Ltd
(collectively ¡§HNC¡¨) with a view to the future of the joint venture operations and ultimately CMR. It is however too early to comment further on the status of those negotiations.

I enclose an information sheet published by the Australian Securities and Investments Commission (¡§ASIC¡¨), which provides general advice to shareholders whose investment is
in voluntary administration (please refer to page 4 in particular).

This circular is to advise you about the status of your position in the administration of CMR.

A. Timing in the Administration

The Voluntary Administration process is largely a time driven sequence of events leading to a resolution of each companies¡¦ affairs, either by way of restructuring its affairs allowing the business to continue, or by winding them up. The steps are summarised below:
(a) Voluntary Administrators have been appointed by the company.
(b) Within eight business days of the appointment of the Voluntary Administration, a meeting of creditors is held to confirm the Administrators' appointment and, if necessary, to appoint a Committee of Creditors (Tuesday 10 February 2009).
(c) Within 20 business days of the appointment, the Administrators must convene a second meeting of creditors to be held within 25 business days after the appointment (so, on or before 5 March 2009 unless an application is made to the Court for an extension beyond this date). To convene the meeting, the Administrators must prepare a report to creditors, which details any proposal for
a Deed of Company Arrangement (¡§DOCA¡¨) and the result of the investigations into the affairs of the company.
(d) At the second meeting of creditors, the creditors are given the opportunity to decide the fate of each company by way of resolution, being either acceptance of any DOCA proposal, placing the company in liquidation, or returning the control of the company to the directors.
(e) The second meeting of creditors may be adjourned for a period of up to forty-five (45) business days, which is often sought to ensure the Administrators complete
their investigations and assessment of any proposed DOCA.
(f) If a DOCA is proposed to and is accepted by creditors, it must be executed within twenty-one (21) days. Upon execution, the Voluntary Administrators become Administrators of the Company subject to a Deed of Company Arrangement.
B. Shareholders¡¦ Investment Status and Updates
Shareholders¡¦ interests are to the profits of a trading company (traditionally through dividends), but more specifically to the surplus which remains after creditors¡¦ claims are paid. Accordingly, the Administrators are not required to provide a written update to each shareholder. That said, we will provide updates of the status of the Administration to shareholders via the CMR announcements section on the ASX website.

In only recent years, the Courts have recognised that in particular circumstances, shareholders may be entitled to claim as creditors, with equal rights of return. Accordingly, you may wish to consider obtaining independent legal advice as to whether you have a claim against CMR, and therefore are entitled to also participate as a creditor of CMR. If so, the enclosed Informal Proof of Debt form may be submitted to my office, with appropriate details as to the basis and quantum of your claim.
There are four areas of testing that will be carried out in order to assess your claim correctly:
1. Your existence as a shareholder (i.e. whether it can be confirmed that you are a shareholder);
2. Quantum of your claim (i.e. whether the value of your claim has been calculated correctly);
3. Causation of damages (i.e. whether CMR¡¦s actions can be shown to have caused your damage); and
4. Correct execution of the Informal Proof of Debt and witnessed Shareholder
Statement.

At this early stage of the Administration, I am unable to say what the likely outcome of the Administration will be for employees, creditors and shareholders, though I do note that there is the real prospect of CMR (perhaps in some altered form) trading again on the ASX. In this regard, we will be working with the major creditors, including HNC, in relation to a range of possible measures to facilitate same, including, but not limited to:
„h subordination of related party debts;
„h ongoing operations with a view to going concern sale (if necessary);
„h creditors¡¦ trust mechanism; and
„h debt for equity swaps.
For further information concerning the Voluntary Administration process generally and Ferrier Hodgson, you may wish to visit our website at www.ferrierhodgson.com.
Should you have any queries in relation to this matter, please do not hesitate to contact me or in my absence, Clinton Roberts on (08) 9214 1412 or [email protected]
MARTIN JONES
Joint and Several Administrator of
Compass Resources Limited