BDO Bordeaux Energy (Tier2)

Magma Metals Limited (TSX:MMW)(ASX:MMW) ("Magma" or the "Company") notes the
announcement yesterday by Panoramic Resources Limited ("Panoramic") that it has
acquired a relevant interest in 54.15% of Magma shares. Today Magma released its
Second Supplementary Target's Statement in response, a copy of which is
available on the Company's website at www.magmametals.com.au and is filed under
the Company's profile on SEDAR at www.sedar.com.


As a consequence of Panoramic acquiring a relevant interest in more than 50% of
Magma's shares, Magma shareholders who accept (or have already accepted)
Panoramic's offer will now receive 1 Panoramic share for every 7 Magma shares
("Revised Offer").


Having regard to the matters discussed below, the Magma Directors are unanimous
in their view that Magma shareholders should now ACCEPT the Revised Offer.


As at the date of this announcement, and in the absence of a superior proposal,
it is the intention of the Magma Directors to accept the Revised Offer in
respect of Magma shares owned or controlled by them, representing approximately
4% of Magma shares on issue.


Magma requested BDO Corporate Finance (WA) Pty Ltd ("BDO") to review the
conclusions in its Independent Expert's Report dated 2 March 2012 in light of
developments since that time. A copy of the Supplementary Independent Expert's
Report from BDO dated 15 May 2012 is appended to the Second Supplementary
Target's Statement. In summary, BDO has concluded:


"In our opinion the Revised Offer is not fair, however, in our opinion, it is
reasonable."


In considering their revised recommendation, the Directors also took account of
the following matters:




--  With more than 50% of the Magma shares, Panoramic will have the ability
    to determine the composition of the Magma Board such that it has
    effective control of the Company.

--  Magma shareholders who do not accept the Revised Offer risk being locked
    in as minority holders after the close of the offer if Panoramic does
    not achieve more than 90% acceptances and thereby move to compulsory
    acquisition. It is likely that the market for Magma shares on ASX and
    TSX in those circumstances will be illiquid. 

--  Magma and its advisers undertook a comprehensive process to test the
    market for alternative proposals which may have delivered superior value
    compared to the Panoramic Offer. No such proposals were forthcoming, and
    while a superior proposal still cannot be ruled out, it now appears
    unlikely.

--  If Panoramic does not acquire 100% of the shares in Magma, it is likely
    that Magma will, at some point, need to raise additional equity capital
    in order to pursue its corporate objectives. Equity market conditions,
    particularly for junior explorers and developers, continue to prove
    challenging and there is no guarantee that such equity capital would be
    available on acceptable terms. While the Magma Board would expect
    Panoramic to provide financial support to Magma, this may be on terms
    that require minority shareholders to provide additional funds or face
    further dilution of their equity. 



Magma Chairman Max Cozijn said: "While the Board has confidence in the potential
of Magma's assets, we also believe that, in light of the change in circumstances
since the time of our initial recommendation, Magma shareholders should now
accept the Revised Offer."


Based on the closing price of Panoramic shares on ASX yesterday of $0.965, the
Revised Offer values Magma at approximately $0.138 per Magma share, representing
a premium of 73% to the pre-offer price of Magma shares. While this is still
significantly below the valuation range contained in BDO's Independent Expert's
Report dated 2 March 2012, the Magma Directors consider the Revised Offer to be
reasonable in the circumstances, particularly having regard to the risks of
remaining as a minority shareholder in a potentially illiquid company.


Magma shareholders should be aware that the Panoramic share price may fall
further, following the close of Panoramic's Revised Offer, if holders of new
Panoramic shares issued as a result of the Revised Offer decide to sell those
shares.


If Magma shareholders have any doubts in relation to their response to the
Revised Offer, or the consequences of accepting the Revised Offer, they should
seek independent professional advice without delay. 


Instructions on how to accept the Revised Offer are contained in Panoramic's
Bidder's Statement.




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Magma Shareholder Information Line                                          
Australia:          1800 452 002 (Toll Free)                                
North America:      1 866 921 3145 (Toll Free)                              
Elsewhere:          +61 2 8256 3379                                         
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Cautionary Statement

Certain information contained in this announcement constitutes "forward-looking
information" under Canadian securities legislation. Generally, forward-looking
information can be identified by the use of forward-looking terminology such as
"plans", "expects", "is expected", "estimates", "intends", or variations of such
words and phrases or statements that certain actions, events or results "may",
"could", "would", "might" or "will be taken", "occur" or "be achieved". Although
management believes that the expectations expressed in such forward-looking
information disclosed herein are based on reasonable assumptions, these
statements are not guarantees of future performance. A number of factors could
cause actual results, performance or achievements to differ materially from
those in the forward-looking information. Such factors include future metal
prices, exploration and evaluation results, future availability of capital and
general economic, market or business conditions, government regulation of mining
operations, failure of equipment or processes to operate as anticipated, risks
inherent in mineral exploration and development including unusual or unexpected
geological formations. Descriptions of these risks can be found in the Company's
various statutory reports, including its Annual Information Form available on
its website at www.magmametals.com.au and on the SEDAR website at www.sedar.com.
Magma Metals Limited makes no representation and can give no assurance,
guarantee or warranty, express or implied, as to, and can take no responsibility
and assume no liability for, the authenticity, validity, accuracy or
completeness of, or any errors in or omission from, any information, statement
or opinion contained in this report.


ABN 72 114 581 047

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