ASF GROUP LIMITED — AGM Information 2011

Oct 27, 2011

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ASF Group Limited ACN 008 924 570

Notice of 2011 Annual General Meeting and Explanatory Memorandum

Date of meeting: 28 November 2011

Time of meeting: 10:30 am

Place of meeting: The Harbour Room, Quay Grand Suites Sydney, 61 Macquarie Street, East Circular Quay, Sydney NSW 2000

This is an important document. If you are in any doubt as to how to act you should consult your financial or legal adviser.

ASF GROUP LIMITED

ACN 008 924 570

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Meeting of the shareholders of the Company will be held at The Harbour Room, Quay Grand Suites Sydney, 61 Macquarie Street, East Circular Quay, Sydney NSW 2000 on Monday, 28 November 2011 commencing at 10:30 am.

The Explanatory Memorandum that accompanies and forms part of this Notice of Meeting describes the various Resolutions to be considered at the Meeting.

AGENDA

1. BUSINESS

Financial Statements and Reports

• (1) To receive and consider the financial statements of the Company and the consolidated entity for the year ended 30 June 2011 and the related Directors’ Report and Auditor’s Report.

• (2) Note: there is no requirement for shareholders to approve these reports.

Resolution 1: Adoption of the Remuneration Report

To consider the Remuneration Report as it appears in the Directors’ Report which is contained in the Annual Report of the Company for the financial year ended 30 June 2011 and, if thought fit, pass the following Resolution as an ordinary Resolution in accordance with section 250R(2) of the Corporations Act:

‘That the Remuneration Report for the year ended 30 June 2011, submitted as part of the Directors’ Report for the year ended 30 June 2011, be adopted pursuant to sections 250R(2) and 250R(3) of the Corporations Act 2001 (Cth).’

Note: the vote on this Resolution is advisory only and does not bind the Directors or the Company.

Voting Exclusion Statement

According to s 250R(4) of the Corporations Act, a vote on this Resolution 1 must not be cast (in any capacity) by or on behalf of either a member of the KMP details of whose remuneration are included in the remuneration report or a closely related party of such KMP.

However, pursuant to s 250R(5) of the Corporations Act, a KMP or its closely related party may cast a vote on this Resolution if:

• the person does so as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and

• the vote is not cast on behalf of a KMP or its closely related party.

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Resolution 2: Re­election of a Director, Mr Geoff Baker

To consider and, if thought fit, pass the following Resolution as an ordinary Resolution :

‘Mr Geoff Baker retires by rotation in accordance with article 79.2 of the Company’s Memorandum and Articles of Association and, having offered himself for re­election and being eligible, is hereby re­elected as a director of the Company.’

Resolution 3: Re­election of a Director, Mr Wai Sang Ho

To consider and, if thought fit, pass the following Resolution as an ordinary Resolution :

‘Mr Wai Sang Ho retires by rotation in accordance with article 79.2 of the Company’s Memorandum and Articles of Association and, having offered himself for re­election and being eligible, is hereby re­elected as a director of the Company.’

Resolution 4: Reduction of interest in major asset

To consider and, if thought fit, pass the following Resolution as an ordinary Resolution :

‘That, for the purposes of ASX Listing Rule 11.4 and for all other purposes, approval be given for the issue by ASF Resources Limited, a company in which ASF Group Limited holds an 89% interest, of 81,818,182 fully paid ordinary shares in ASF Resources Limited to Beijing Guoli Energy Investment Co., Ltd. (or another entity controlled by Beijing Guoli Energy Investment Co., Ltd) in consideration for $16,000,000, as set out in the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting.’

Voting Exclusion Statement

For the purposes of this Resolution 4, the Company will disregard any votes cast by:

• (1) Beijing Guoli Energy Investment Co., Ltd or another party to the transaction; and

• (2) any associates of Beijing Guoli Energy Investment Co., Ltd or another party to the transaction.

However, the Company need not disregard a vote in respect of this Resolution if it is cast by a person:

• (3) as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

• (4) chairing the meeting as a proxy for a person who is entitled to vote in accordance with a direction on the proxy form.

2. PROXY AND VOTING INSTRUCTIONS

• 2.1 Voting in person

• (1) A Shareholder that is an individual may attend and vote in person at the meeting. If you wish to attend the meeting, please bring the enclosed proxy form to the meeting to assist in registering your attendance and number of votes. Please arrive 15 minutes prior to the start of the meeting to facilitate this registration process.

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• (2) A Shareholder that is a corporation may appoint an individual to act as its representative to vote at the meeting in accordance with the requirements of section 250D of the Corporations Act. The appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission, together with any authority under which it is signed. A form of the certificate may be obtained from the Company’s share registry or at www.boardroomlimited.com.au .

2.2

Voting by proxy

• (1) A Shareholder who is entitled to vote at the Meeting may appoint one proxy if the Shareholder is only entitled to one vote and one or two proxies if the Shareholder is entitled to more than one vote. 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 half of the votes, in which case any fraction of votes will be disregarded. A proxy need not be a Shareholder of the Company and a Shareholder may appoint an individual or a body corporate to act as its proxy.

• (2) In order for an appointment of proxy to be effective, the Proxy Form (and the power of attorney or other authority, if any, under which the proxy form is signed or a certified copy the power of attorney or other authority) must be lodged at the Company’s share registry: Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia or by facsimile +612 9290 9655 no later than 48 hours before the time for holding the meeting.

• (3) 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. A proxy given by a foreign corporation must be executed in accordance with the laws of that corporation’s place of incorporation.

• (4) A Proxy Form accompanies this Notice of Meeting.

2.3 Voting Intentions

• (1) If you wish to direct your proxy how to vote on any or all of the Resolutions, place a mark “X” in the “For”, “Against” or “Abstain” box. If you do not direct your proxy how to vote, your proxy may vote as he, she or it sees fit. If you mark the abstain box, you are directing your proxy not to vote on your behalf in respect of that Resolution and your votes will not be included on a show of hands or on a poll.

• (2) Please refer to the Proxy Form that accompanies this Notice of Meeting for instructions on its completion and lodgement.

• (3) The Chairperson of the Company intends to vote proxies in favour of all the Resolutions contained in the Notice of Annual General Meeting unless directed otherwise (subject to the voting exclusions statement in connection with Resolution 1 and the Chairperson’s directions below).

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2.4 Directions to Chairperson of meeting on Resolution 1: Adoption of the Remuneration Report

• (1) If the Chairperson of the meeting is appointed, or is taken to be appointed, as a proxy, the Shareholder can direct the Chairperson of the meeting to vote “For”, “Against” or “Abstain” from voting on Resolution 1 by marking the appropriate box in Step 2 on the Proxy Form.

• (2) However, if the Chairperson of the meeting is appointed, or is taken to be appointed, as a proxy and the Shareholder does not wish to direct the Chairperson how to vote, the Shareholder can mark the box at the bottom of Step 1 (Important for Resolution 1) on the Proxy Form. By marking that box, the relevant Shareholder’s proxy will be taken as a direction to the Chairperson of the meeting to vote in accordance with the Chairperson’s stated voting intentions, which is to vote in favour of the Resolution 1. If the Shareholder does not mark that box and has not directed the Chairperson how to vote, the Chairperson of the meeting will not cast their votes on the resolution and their votes will not be counted in calculating the required majority if a poll is called.

• (3) By marking the box at the bottom of Step 1 (Important for Resolution 1) on the Proxy Form, Shareholder will be taken to authorise the Chairperson of the meeting to exercise the proxy even if the relevant resolution is connected directly or indirectly with the remuneration of a member of the KMP or the Chairperson has an interest in the outcome of the resolution.

2.5 Resolution 1 – Remuneration Report Undirected Proxies

If:

• (1) you appoint a director of the Company (other than the Chairperson) or other KMP or any of their closely related parties as your proxy; and

• (2) you do not direct the proxy how to vote on Item 1 (Resolution 1 – Adoption of the Remuneration Report),

your proxy will not be able to exercise your vote on your behalf on that resolution Item 1 (Resolution 1 – Adoption of the Remuneration Report).

2.6 Voting Entitlement

For the purposes of determining voting entitlements at the General Meeting, shares will be taken to be held by the persons who are registered as holding the shares at 10:30 am (Sydney time) on 26 November 2011 on the Company’s Register of Members. Transactions registered after that time will, therefore, be disregarded in determining entitlements to attend and vote at the Meeting.

Dated: 28 October 2011

By Order of the Board

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William Kuan Company Secretary

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EXPLANATORY MEMORANDUM

1. INTRODUCTION

• 1.1 This Explanatory Memorandum accompanies and forms part of the Notice of Meeting of ASF Group Limited and it is intended to provide Shareholders of the Company with information to assist them in assessing the merits of the Resolutions contained in the Business to be conducted at the Meeting to be held on 28 November 2011.

• 1.2 A glossary of defined terms used in the Notice of Meeting and this Explanatory Memorandum is set out at the end of this Explanatory Memorandum.

• 1.3 Shareholders should note that the Directors unanimously support all Resolutions contained in the Notice of Meeting.

• 1.4 The Directors recommend that Shareholders read the Explanatory Memorandum before making any decisions in relation to the Resolutions set out in the Notice of Meeting.

• 1.5 If any Shareholder is in doubt as to how they should vote, they should seek advice from their professional adviser prior to voting.

2. FINANCIAL STATEMENTS AND REPORTS

• 2.1 Section 317 of the Corporations Act requires the Directors to lay before the Meeting the Company’s Financial Statements, Directors’ Report and Auditor’s Report for the year ended 30 June 2011.

• 2.2 There is no requirement that Shareholders approve the Financial Statements and associated Reports and no Resolution in relation to this matter will be put to the Meeting.

• 2.3 The Company’s 2011 Annual Report contains the Financial Statements and the Directors’ and Auditor’s Reports and has been sent to Shareholders who elected to receive a printed copy. Shareholders can access the 2011 Annual Report on the Company’s website at www.asfgroupltd.com.

• 2.4 Shareholders will be provided with a reasonable opportunity at the Meeting to ask questions or make comments on the Financial Statements and the Reports and on the Company’s management and business generally. Representatives of the Company’s Auditor, PricewaterhouseCoopers, will be attending the Meeting. Shareholders will be given a reasonable opportunity to ask the Auditor relevant questions including those relating to the conduct of the audit, the preparation and content of the Auditor’s report, the accounting standards adopted by the Company and the independence of the Auditor.

• 2.5 If shareholders would like to submit a written question to the Company’s auditor, please send your question to the registered office of the Company or fax it to (612) 9251 9066 for the attention of the Company Secretary. Written questions must relate to the content of the Auditor’s Report to be considered at the Meeting or the conduct of the audit. All questions must be received by the Company no later than five (5) Business Days before the day on which the Meeting is held.

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3. ADOPTION OF REMUNERATION REPORT: RESOLUTION 1

• 3.1 The Remuneration Report is included in the Directors’ Report and set out in the Company’s 2011 Annual Report. Pursuant to section 250R(2) of the Corporations Act, the Company is required to put a Resolution that the Remuneration Report be adopted to a vote of Shareholders at the Meeting. However, Shareholders should note that, pursuant to section 250R(3) of the Corporations Act, the vote on the Remuneration Report is advisory only and the outcome of the vote does not bind the Directors or the Company. The Remuneration Report sets out the Company’s remuneration policy and reports on the remuneration arrangements in place for Directors and key executives of the Company.

• 3.2 Shareholders will be provided with a reasonable opportunity at the Meeting to ask questions or make comments on the Remuneration Report.

• 3.3 As a result of the amendment to the Corporations Act which came into effect on 1 July 2011, a ‘two‐strikes and re‐election’ process has been introduced as follow:

• (1) where the Company’s Remuneration Report receives a ‘no’ vote of 25% or more, the Company’s subsequent Remuneration Report must explain the Board’s proposed action in response or, if the Board does not propose any action, the Board’s reasons for inaction; and

• (2) where the Company’s subsequent Remuneration Report receives a ‘no’ vote of 25% or more, a Resolution must be put ( spill Resolution ) to shareholders at the same Meeting.

• (3) If the spill Resolution passes with 50% or more of the eligible votes cast, another meeting of the Company’s shareholders ( spill meeting ) must be held within 90 days. At the spill meeting, all Directors (other than the Managing Director) who were in office when the Directors’ Report was considered at the most recent Meeting will be required to stand for re‐election.

3.4 Directors’ Recommendation

The Directors unanimously recommend that Shareholders vote in favour of this ordinary Resolution.

4. RE­ELECTION OF A DIRECTOR, MR GEOFF BAKER: RESOLUTION 2

• 4.1 Mr Geoff Baker retires by rotation in accordance with article 79.2 of the Constitution and the ASX Listing Rules and, being eligible, offers himself for re‐election as a Director.

• 4.2 Mr Baker was appointed a non‐executive Director on 30 November 2006. He is a qualified lawyer in Australia and Hong Kong with a Commerce degree (Accounting and Financial management), a Law degree and Masters of Business Administration. Mr Baker assists in the international operations of the Group. He joined the Company after practising extensively for 30 years as a lawyer in Australia, Japan, Asia and China.

4.3 Directors’ Recommendation

The Directors (with Mr Baker abstaining) unanimously recommend that Shareholders vote in favour of this ordinary Resolution.

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5. RE­ELECTION OF A DIRECTOR, MR WAI SANG HO: RESOLUTION 3

• 5.1 Mr Wai Sang Ho retires by rotation in accordance with article 79.2 of the Constitution and the ASX Listing Rules and, being eligible, offers himself for re‐election as a Director.

• 5.2 Mr Ho was appointed a non‐executive Director on 30 November 2006. He is a Hong Kong resident and a large property developer in Southern China. He has substantial property interests in Hong Kong and China.

5.3 Directors’ Recommendation

The Directors (with Mr Ho abstaining) unanimously recommend that Shareholders vote in favour of this ordinary Resolution.

6. REDUCTION OF INTEREST IN MAJOR ASSET: RESOLUTION 4

As announced to ASX on 9 September 2011, the Company proposes to reduce its interest in ASFR, in which it holds 89% of its issued share capital, by the proposed issue of 81,818,182 ASFR Shares (referred to in this explanatory memorandum as the Guoli Shares ) to Beijing Guoli Energy Investment Co., Ltd or another entity controlled by Beijing Guoli Energy Investment Co., Ltd (referred to in this explanatory memorandum as Guoli ), which are independent third parties not related to the Company or any of its subsidiaries, in consideration for the payment to ASFR of $16 million.

Following the issue of the Guoli Shares, the Company, ASFR and Guoli have agreed under the terms of the Investment Agreement to take all reasonable steps to demerge the Company’s interest in ASFR by distributing approximately 80% of its shareholding in ASFR to the Company’s shareholders and to list ASFR on the official list of ASX Limited or any other stock exchange by way of an IPO.

6.1

ASX Listing Rule Requirements

Without shareholder approval, ASX Listing Rule 11.4 precludes the Company from disposing of a major asset if, at the time of the disposal, it is aware that the person acquiring the asset intends to issue or offer securities with a view of becoming listed.

Following the issue of the Guoli Shares, the Company, ASFR and Guoli have agreed under the Investment Agreement to take all reasonable steps to demerge the Company’s interest in ASFR by distributing approximately 80% of its shareholding in ASFR to the Company’s shareholders and to list ASFR on the official list of ASX Limited or any other stock exchange by way of an IPO. For further information on the terms of the Investment Agreement, please refer to paragraph 6.2 below.

Accordingly, Shareholder approval is required pursuant to ASX Listing Rule 11.4.

6.2 Background

• (1) The Company, ASFR and Guoli entered into a conditional Investment Agreement on 1 September 2011 ( Investment Agreement ) pursuant to which Guoli is to subscribe for the Guoli Shares representing 45% of the enlarged issued share capital for ASFR for an investment of $16.0 million ( Subscription Amount ).

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• (2) On 19 September 2011, Guoli paid a deposit of US$1.0 million to ASFR as part payment of the Subscription Amount, in accordance with the terms of the Investment Agreement.

• (3) The balance of the Subscription Amount is to be paid by Guoli to ASFR on completion, which is to occur no later than 15 December 2011, subject to the conditions of the Investment Agreement either being satisfied or waived, after which Guoli and the Company will respectively hold 45% and 48.95% of the issued share capital of ASFR.

• (4) The Company, after completion of the Investment Agreement, is to proceed to demerge its interest in ASFR by distributing approximately 80% of its shareholding in ASFR to the Company’s shareholders (subject to Shareholders approval) after which the parties agree to take all reasonable steps to proceed with an ASFR Listing.

• (5) The Investment Agreement is conditional upon:

• (a) all necessary consents being obtained under the regulatory requirements of China and of Australia, including Australian foreign investment approval by the Foreign Investment Review Board; and

• (b) the approval of the shareholders of the Company.

• (6) In the event that Guoli is unable to obtain necessary regulatory approvals in China, the US$1.0 million deposit paid by Guoli will be forfeited. If any of the other conditions are not satisfied by 15 December 2011, then the deposit will be refunded by ASFR and the Investment Agreement terminated.

• (7) On completion, subject to the execution of a shareholders’ agreement between the Company, ASFR, Guoli and Yongbin, ASFR will issue Guoli with the Guoli Shares for approximately A$0.1956 per ASFR Share less the deposit.

• (8) Upon completion, Guoli is entitled to appoint two directors to the board of directors of ASFR.

• (9) The Investment Agreement contemplates an ASFR Listing and therefore the approval of this Resolution is a condition of this subscription being completed.

6.3 Guoli Transaction Details

The following information is disclosed to Shareholders in relation to the Guoli Transaction:

(1) ASFR :

• (a) ASFR was incorporated on 29 August 2006 as a wholly owned subsidiary of the Company for the purpose of acquiring, exploring and developing the Company’s mineral interests. ASFR was converted to a public company on 22 March 2011.

• (b) The Company currently owns 89% of the total issued share capital of ASFR.

• (c) ASFR holds exploration tenements in the Canning Basin, Western Australia. ASFR’s Canning Basin Project comprises eight exploration

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licences covering a total area of 1,343km[2] in the South Ellendale area of the Canning Basin in Western Australia. At the date of this Explanatory Memorandum, the ASFR Tenements have an annual expenditure commitment of $523,000. The target commodity within the Canning Basin is sub‐bituminous thermal coal within the Permian Lightjack Formation.

• (d) At the date of this Explanatory Memorandum, ASFR’s exploration licences comprise:

E04/1428 E04/1433 E04/1434 E04/1435 E04/1436 E04/1512 E04/1670 E04/1774 E04/1887 E04/1886

• These two exploration licences (E04/1433 and E04/1436) are subject to an agreement between ASFR and Kaili, under which Kaili will acquire an 80% interest in the exploration licences. ASFR is in the process of transferring the interest of these tenements to Kaili. The remaining 20% interest in these exploration licences will be held by another subsidiary of the Company. Upon completion of the transaction with Kaili, ASFR will no longer hold interest in these tenements.

• (e) ASFR has been exploring these tenements for sub bituminous thermal coal deposits.

• (f) ASFR undertook an initial drilling program in 2009 and further small drilling programs in 2010 and 2011. As announced by the Company in its 2011 Annual Report, a further work program of exploration drilling for coal was initiated during the financial year ended 30 June 2011 and this program is currently in progress.

(2) Reduction in Company’s investment in ASFR :

• (a) Under the terms of the Investment Agreement, subject to the satisfaction or waiver of the applicable conditions, Guoli will subscribe for, and ASFR will issue, 81,818,182 fully paid ordinary shares in the capital of ASFR in consideration for $16 million.

• (b) Following the issue of the Guoli Shares to Guoli , the capital structure of ASFR will be as set out below:

ASFR Shareholder	ASFR Shares	Percentage
Company	89,000,000	48.95%
Yongbin	11,000,000	6.05%
Guoli	81,818,182	45.00%
Total	181,818,182	100.00%

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• (c) After the issue of the Guoli Shares, the Company is to proceed to demerge its interest in ASFR by distributing approximately 80% of its shareholding in ASFR to the Company’s shareholders (subject to Shareholders approval) after which ASFR and Guoli will take all reasonable steps to list ASFR on the official list of ASX Limited or any other stock exchange by way of an IPO.

(3) Value of ASFR :

As at 30 June 2011, the net assets value of ASFR was negative $2.2 million as reflected in the Company’s consolidated financial statements for year ended 30 June 2011.

The following exploration and development costs have been incurred by ASFR in relation to the ASFR Tenements.

Financial year ended	30	June	2009	$371,610
Financial year ended	30	June	2010	$1,624,429
Financial year ended	30	June	2011	$356,367

Expenditure incurred in relation to the ASFR Tenements has been fully capitalised.

(4) Consideration for Guoli Transaction :

Guoli must pay the Subscription Amount (being $16.0 million) to subscribe for the Guoli Shares, which will represent 45% of the expanded share capital of ASFR after the issue of the Guoli Shares.

Under the Guoli Transaction, Guoli will acquire each ASFR Share at approximately $0.1956 per ASFR Share.

ASFR has received the deposit of US$1.0 million as part payment of the Subscription Amount by Guoli, in accordance with the terms of the Investment Agreement.

(5) Material Agreements relating to the Guoli Transaction :

The issue of the Guoli Shares is subject to the terms and conditions set out in the Investment Agreement.

A summary of the material terms of the Investment Agreement is set out in paragraph 6.2 above.

(6) Why Guoli Transaction is in the Company’s best interests :

• (a) ASFR, as a controlled entity of the Company, has been funded by shareholder loans from the Company amounting to approximately $5.1 million as reflected in the audited financial statements of the Company for the year ended 30 June 2011.

• (b) To fund the activities of ASFR, the amount of the shareholder loan by the Company to ASFR is expected to increase prior to ASFR Listing.

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• (c) Under the Guoli Transaction, Guoli will pay the Subscription Amount to ASFR which will provide additional working capital for ASFR to continue its exploration and development activities in relation to the ASFR Tenements.

• (d) The Directors consider that the issue of the Guoli Shares to Guoli is in the best interests of the Company because:

• (i) with the new equity investment from Guoli, ASFR will be self‐ sustainable and operating independently from the Company;

• (ii) the Company will no longer be required to provide funding to ASFR and is accordingly able to focus its financial resources on other business activities which will in turn increase its shareholders value.

• (e) In this regard, the mineral interests of ASFR require significant further exploration expenditures, the funding of which is more appropriately carried out directly by ASFR rather than via the Company.

(7) Company’s future activities and direction without majority interest in ASFR :

In terms of ASFR Tenements, mineral exploration requires significant ongoing funding and specialist management expertise. The Directors consider that the ability to raise additional funds for further exploration and development activities in relation to the ASFR Tenements, negotiate potential joint ventures and secure appropriate management expertise for ASFR will be more achievable if ASFR becomes a separate independent entity rather than a controlled entity of the Company, particularly if ASFR becomes a separately listed entity.

Other than the Company’s interests in ASFR, the Company has other businesses in the property, travel, commodities trading, infrastructure and financial services sectors. The Guoli Transaction will also facilitate the Company’s focus on developing these other businesses.

The Company has generated significant growth over the past 12 months and, if the Guoli Transaction is completed, the Company intends to continue its existing strategy as a listed investment holding company. The recent focus by the Company on mineral resources is reflective of the current level of economic activity in this sector in Australia and China and is not suggestive that the Company is moving to become a resources company. Other investment interests of the Company are anticipated to become more prominent in future.

6.4 Information about Guoli

• (1) Guoli is a limited liability company which was registered with Beijing Administration of Industry and Commerce on 24 February 1993. Guoli is incorporated in the People’s Republic of China since 1993 with a registered capital of RMB300 million.

• (2) Currently, Guoli has nine shareholders which are SDIC Assets Management Company ( SDIC Assets ), Beijing Electric Power Industry Development Corporation (Beijing Electric Power) , North United Power Corporation ( North United ), Beijing Capital Assets Management Co., Ltd. ( Capital Assets ), Zhangjiagang Jincheng Investment & Development Co., Ltd. ( Zhangjiagang

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Jincheng ), Beijing Guohua Real‐Estate Co., Ltd., Zhangjiagang Junma Polyester Fibre Products Co., Ltd. and Shanghai Tongwei Investment Co., Ltd., which respectively hold 10% shares of Guoli; and Zhangjiagang Zhonghe Rongtong Electric Power Science & Technology Development Co., Ltd. which holds 20% shares of Guoli.

• (3) Five of these shareholders, SDIC Assets, Beijing Electric Power, North United, Capital Assets and Zhangjiagang Jincheng, are wholly state‐owned enterprises or state‐controlled enterprises; the remaining four companies are private‐ owned enterprises.

• (4) Guoli is engaged in a variety of businesses including energy and resources, real estate and investments. An overview of these businesses is set out below.

• (a) Energy and Resources Business : Guoli holds 25% the issued share capital of Beijing Sanjili Energy Co., Ltd., ( Sanjili Energy ) which is engaged in the investment, development and operational management of electric power and coal projects. Currently, Sanjili Energy owns five power plants which have an aggregate generating capacity of 5.5 million kilowatts.

• (b) Real Estate Business : The area of developed real estate exceeds 1 million square meters. The real estate projects which currently are under construction or are for sale include: Beijing Guoxing Green Lake International Project, Beijing Guoxing Yu Lang Dong Yuan Project, Chongqing Guoxing Bei An Jiang Shan Project.

Beijing Rongda Investment Co., Ltd. ( Rongda Company ), a wholly owned subsidiary of Guoli, holds 52.22% shares of the listed company Guoxing Rongda Real Estate Co., Ltd.

• (c) Investments : Rongda Company together with Sanjili Energy hold an aggregate of 80.01% equity interests in Sino‐Australian International Trust Company Limited. Other investments held by Guoli include a 90% interest in Lianyungang Sanjili Chemical Industry Co., Ltd.

• (5) FIRB

Guoli has lodged an application with the Foreign Investment Review Board for approval under its foreign investment policy on 21 October 2011.

6.5 Directors’ Recommendation

The Directors consider that the placement of ASFR Shares to Guoli is in the best interests of the Company and the Shareholders as a whole. The mineral interests of ASFR require significant further exploration expenditures, the funding of which is more appropriately carried out directly by ASFR rather than via the Company. The Directors’ unanimously recommend that eligible Shareholders vote in favour of Resolution 4.

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GLOSSARY

In this Explanatory Memorandum and the associated Notice of Meeting, unless the contrary intention appears or the context requires otherwise:

$ means Australian dollars. All amounts in this Notice of Meeting are in Australian dollars unless otherwise indicated.

ASFR means ASF Resources Limited ABN 24 121 465 405.

ASFR Listing means the proposed listing of ASFR on the ASX or other stock exchange as the directors of ASFR may determine.

ASFR Share means a fully paid ordinary share in the capital of ASFR

ASFR Shareholder means a person who is registered in ASFR’s register of members as a holder of ASFR Shares and ASFR Shareholders has a corresponding meaning.

ASFR Tenements means the eight exploration licences held by ASFR covering a total area of 1,343km[2] in the South Ellendale area of the Canning Basin in Western Australia, as detailed in section 6.3(1) of the Explanatory Memorandum.

ASX means ASX Limited.

ASX Listing Rules means the Official Listing Rules of the ASX.

Board means the board of directors of the Company.

Business Day has the same meaning as that given in ASX Listing Rules.

Company means ASF Group Limited ABN 50 008 924 570.

Corporations Act means the Corporations Act 2001 (Cth) and associated regulations.

Director means a director of the Company and Directors has a corresponding meaning.

Explanatory Memorandum means this explanatory memorandum that accompanies the Notice of Meeting.

Guoli means Beijing Guoli Energy Investment Co., Ltd or another entity controlled by Guoli.

Guoli Shares means 81,818,182 ASFR Shares.

Guoli Transaction means the proposed subscription by Guoli, and the issue by ASFR, of the Guoli Shares for the Subscription Amount payable to ASFR.

Investment Agreement means the conditional agreement dated 1 September 2011 entered into between the Company, ASFR and Guoli in relation to the Guoli Transaction.

IPO means initial public offering.

Kaili means Kaili Holdings Limited.

KMP means key management personnel and has the same meaning as that given in Corporations Act.

Meeting means the Company’s 2011 Annual General Meeting.

Notice of Meeting means the notice of Meeting dated 28 October 2011.

Resolution means a resolution referred to in the Notice of Meeting.

Rongda Company means Beijing Rongda Investment Co., Ltd.

Sanjili Energy means Beijing Sanjili Energy Co., Ltd.

Share means an ordinary share in the capital of the Company and Shares has a corresponding meaning.

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Shareholder means a person who is registered in the Company’s register of members as a holder of Shares and Shareholders has a corresponding meaning.

Subscription Amount means $16 million.

Yongbin means Yongbin International Holdings Ltd.

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ASF Group Limited ABN 50 008 924 570

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ASF Group Limited

FOR ALL ENQUIRIES CALL: (within Australia) 1300 737 760 (outside Australia) +61 2 9290 9600

FACSIMILE +61 2 9290 9655

< Shareholder Name 3>

• < Shareholder Name 4>

ALL CORRESPONDENCE TO:

Boardroom Pty Limited GPO Box 3993 Sydney NSW 2001 Australia

Your Address

This is your address as it appears on the company’s share register. If this is incorrect, please mark the box with an “X” and make the correction on the form. Securityholders sponsored by a broker should advise your broker of any changes. Please note, you cannot change ownership of your securities using this form.

YOUR VOTE IS IMPORTANT

FOR YOUR VOTE TO BE EFFECTIVE IT MUST BE RECORDED BEFORE10:30AM SATURDAY 26 NOVEMBER 2011

TO VOTE BY COMPLETING THE PROXY FORM

STEP 1 Appointment of Proxy

Indicate here who you want to appoint as your Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chairman of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a security holder of the company. Do not write the name of the issuer company or the registered securityholder in the space.

Proxy which is a Body Corporate

Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an “Appointment of Corporate Representative” prior to admission. An Appointment of Corporate Representative form can be obtained from the company’s securities registry.

Appointment of a Second Proxy

You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s securities registry or you may copy this form.

To appoint a second proxy you must:

(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together in the same envelope.

STEP 2 Voting Directions to your Proxy

You can tell your Proxy how to vote

To direct your proxy how to vote, place a mark in one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of securities you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

STEP 3 Sign the Form

The form must be signed as follows :

Individual: This form is to be signed by the securityholder.

Joint Holding : where the holding is in more than one name, all the securityholders must sign.

Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. Please indicate the office held by signing in the appropriate place.

STEP 4 Lodgement of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below not later than 48 hours before the commencement of the meeting at 10:30am on Monday, 28 November 2011 . Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxies may be lodged using the reply paid envelope or:

BY MAIL - Share Registry – Boardroom Pty Limited, GPO Box 3993, Sydney NSW 2001 Australia

BY FAX - + 61 2 9290 9655

IN PERSON - Share Registry – Boardroom Pty Limited, Level 7, 207 Kent Street, Sydney NSW 2000 Australia

Attending the Meeting

If you wish to attend the meeting please bring this form with you to assist registration .

ASF Group Limited

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< Shareholder Name 3> < Shareholder Name 4>

STEP 1 - Appointment of Proxy

I/We being a member/s of ASF Group Limited and entitled to attend and vote hereby appoint

the Chairman of the Meeting (mark with an OR ‘X’)

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If you are not appointing the Chairman of the Meeting as your proxy please write here the full name of the individual or body corporate (excluding the registered Securityholder) you are appointing as your proxy.

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy at the Annual General Meeting of ASF Group Limited to be held at The Harbour Room, Quay Grand Suites Sydney, 61 Macquarie Street, East Circular Quay, Sydney NSW 2000 on Monday, 28 November 2011 at 10:30am and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit.

Important for Resolution 1 :

If the Chairman of the Meeting is appointed as your proxy or may be appointed by default, and you do not wish to direct your proxy how to vote in respect of Resolution 1, please mark this box with an ‘X’.

By marking this box, you acknowledge that the Chairman of the Meeting may vote as your proxy even if he has an interest in the outcome of the resolution and votes cast by the Chairman of the Meeting for those resolutions, other than as proxy holder, will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called.

By marking this box I/we acknowledge the Chairman of the Meeting can exercise my/our proxy even though he has an interest in the outcome of the resolution and unless a specific voting direction has been specified in Step 2 below, the Chairman of the Meeting is directed to vote in accordance with his voting intention as set out below.

The Chairman of the Meeting will vote all undirected proxies in favour of Resolution 1 .

STEP 2 - Voting directions to your Proxy – please mark � to indicate your directions

Business For Against Abstain* Resolution 1 Adoption of the Remuneration Report Resolution 2 Re-election of a Director, Mr Geoff Baker Resolution 3 Re-election of a Director, Mr Wai Sang Ho Resolution 4 Reduction of interest in major asset

In addition to the intentions advised above. The Chairman of the Meeting intends to vote undirected proxies in favour of each of the items of business.

*If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3 - PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact Name ……………………………….…….. Contact Daytime Telephone ………………………………….. Date / / 2011
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