Matrix Metals | Copper Production and Exploration

Dear Shareholder,

We are writing to you to ensure you are aware of the announcement made to the Australian Stock Exchange on 25 January 2001 detailing the proposal by Summo Minerals Corporation to acquire a major shareholding in Matrix and provide significant funding support to your Company. A copy of the December 2000 Quarterly Report which contains this announcement, is attached for your information.

In late February 2001 you will receive the formal Notice of Meeting and Explanatory Memorandum in relation to this transaction, however the Board felt you may wish at this interim stage to understand some background to the transaction and the Board's views of its relative merits when compared with other opportunities considered by the Company. The Board also wished to ensure that shareholders have a clear understanding of the important role that they have to play in approving this transaction, and the timetable for this approval process.

Subject to approval of shareholders, excluding Murchison and Majestic, Summo intends to acquire for 25 cents per share (less the costs of the transaction) the shareholdings of Murchison (40%) and Majestic (8%) in Matrix. These shareholdings represent a controlling block in the Company. Both these shareholders signalled at the time of our Initial Public Offering (IPO) that their shareholding in the Company was to be held only for the short term.

Matrix had no role in these share acquisition negotiations between Summo, Murchison and Majestic other than to ascertain that Summo did not believe it appropriate to make a full takeover bid for the Company because:

• the price Summo would have been likely to offer for all Matrix shares, Murchison and Majestic would not have accepted;
• of their desire to use Matrix as a listed vehicle for further expansion in the Asia Pacific region; and -
• because of the additional funding requirements which Summo could then be called upon to satisfy Matrix's own projects.

Against this background and in the knowledge of the funding requirements of the Company, the Matrix Board had to form a view on the type of transaction which would be in the best interests of the Company and its shareholders. In their deliberations the Board considered a number of alternatives to those offered by Summo, including introducing other strategic shareholders, joint ventures of the assets, equity raisings and debt facilities.

Regarding the latter, the early stage of feasibility assessment on our assets dictated that no bank funding could be sourced at this time. Equity raisings were canvassed with two brokers with both advising that given the present market, the raisings could only be completed at significant discount to the current Matrix share price, on extended timeframes and without any certainty of outcome. The joint ventures considered by Matrix offered a dilution to our existing ownership position at a discount to our purchase price. The Board recognised that it needed to encourage the introduction of shareholders who could provide the funding support required and add to the vision for the Company.

Having considered the other strategic investors in this sector who may have had an interest in supporting the Company, the Directors formed the view that Summo had excellent credentials to assist the Company to achieve its objectives as:

• Summo would add to the share register an interested and supportive shareholder, replacing two neutral if not disinterested shareholders, a factor which the Board considers to be of significant merit in respect of the short and long term future of Matrix.
• The formation of a relationship between Summo and Matrix would be of substantial benefit to the operational and development objectives of Matrix, both in the short and longer term. The synergy between Summo and Matrix is strong, and can be summarised as follows:

• both companies are involved in the pursuit of oxide copper and processing via the SX/EW process;
• both companies are committed to the copper industry and have a positive view of the outlook for the copper price;
• the technical and management experience of each company is complementary;
• the separate geographic locations of each company will ensure they are not competing for projects or tenements and ensure each has a distinct and vibrant growth path;
• the broader vision and exposure will assist in raising the profile of both companies in this sector; and
• the strength of the financial support available through the backing of Summo's major shareholder, Resource Capital Fund, will provide additional leverage to both companies.

RCF is a private equity investment fund with a mandate to invest in small base metal focused companies. RCF sees a niche market opportunity to create medium sized metal producers, with Summo and Matrix having been selected by the Fund as having the assets, management and potential to move into this niche market for copper production with the appropriate backing and support.

Matrix has been advised that Summo had conducted a worldwide search for copper opportunities to which they could add their particular value and in this search spoke to Murchison about their shareholding in Matrix. To secure their agreement to sell Summo offered Murchison and Majestic an exit from Matrix at the subscription price paid by IPO shareholders of 25 cents (less transaction costs).

The Directors consider both Summo's acquisition of these shares, at the IPO price, which is at a premium to recent trading levels, and the provision of funding support as a positive vote for the value of the assets and the future of the Company.

Although the Board has provided its support to Summo in this transaction, we advise that the Directors are free to recommend any bona fide alternative proposal if such a proposal is made during the course of the transaction with Summo.

It is proposed that the Notice for the Extraordinary General Meeting (EGM) and Explanatory Memorandum will be dispatched to shareholders in the last week of February. This will provide full details of the Resolutions to be proposed at the EGM, details of the proposed transaction and an Independent Expert's Report and Valuation by KPMG of Matrix's assets. It is envisaged the EGM will be held in late March 2001.

In the time period between the issue of the Notice of Meeting and the EGM, Summo's CEO, Mr Greg Hahn, and Matrix's CEO, Mr Andrew Chapman will conduct an Australia wide tour presenting the details and merits of the transaction and the respective objectives of both Matrix and Summo in regard to the future. The presentations will be to both current and prospective investors in Matrix.

In light of the production issues that have faced the Company over the last two months (details of which are provided in the December 2000 Quarterly Report) and the support Summo will provide to ensure the Company's business plan is moved back on track, we urge you to consider the proposed transaction in a positive light realising its inherent benefit to the minority shareholders.

As always, we would welcome contact from shareholders to discuss issues in relation to the Summo transaction or others matter in respect of Matrix. Contact numbers are detailed in the attached Quarterly Report.

Yours sincerely,