AUSQUEST LIMITED — AGM Information 2011

Oct 20, 2011

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ABN 35 091 542 451 8 Kearns Crescent Ardross WA 6153 Telephone: 08 9364 3866 Facsimile: 08 9364 4892 Email: graeme@ausquest.com.au Web: www.ausquest.com.au

21 October 2011

The Manager Company Announcement Office Australian Securities Exchange

By Electronic Lodgement

Dear Sir

NOTICE OF ANNUAL GENERAL MEETING

Please find attached the Notice of Annual General Meeting which has been dispatched to shareholders today.

Yours faithfully

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Darren Crawte Company Secretary

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AUSQUEST LIMITED

ABN 35 091 542 451

NOTICE OF ANNUAL GENERAL MEETING EXPLANATORY STATEMENT AND

PROXY FORM

TIME : 10.00 am (WST) DATE : 22 November 2011 PLACE : Ward Room, South of Perth Yacht Club, Applecross, Western Australia

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 9463 2463.

C ON TENTS PA G E

Notice of Annual General Meeting	3
Explanatory Statement	5
Glossary	8
Annexure A	9
Annexure B	11

TIME A ND PLA C E OF MEETIN G A ND HO W TO VO TE

VENUE

The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 10.00 am (WST) on 22 November 2011 at:

Ward Room, South of Perth Yacht Club, Applecross, Western Australia

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important.

VOTING IN PERSON

To vote in person, attend the Annual General Meeting on the date and at the place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

• (a) post to AusQuest Limited, 8 Kearns Crescent, Ardross WA 6153; or

• (b) facsimile to the Company on facsimile number +61 8 9364 4892.

so that it is received not later than 10.00 am (WST) on 20 November 2011.

Proxy Forms received later than this time will be invalid.

N O TIC E O F A NN UAL G EN ERA L MEETIN G

Notice is given that the Annual General Meeting of Shareholders will be held at 10.00 am (WST) on 22 November 2011 at The Ward Room, South of Perth Yacht Club, Applecross, Western Australia.

The Explanatory Statement to this Notice of Meeting provides additional information on matters to be considered at the Annual General Meeting. The Explanatory Statement and the Proxy Form are part of this Notice of Meeting.

The directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders of the Company at 5.00 pm (WST) on 18 November 2011.

Terms and abbreviations used in this Notice of Meeting and Explanatory Statement are defined in the Glossary.

AGENDA

1. ANNUAL REPORT

To receive and consider the financial report of the Company together with the reports of the directors and the auditor for the financial year ended 30 June 2011.

2. RESOLUTION 1 – ADOPTION OF THE REMUNERATION REPORT

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

“That, for the purposes of section 250R(2) of the Corporations Act and for all other purposes, the remuneration report for the financial year ended 30 June 2011 be adopted”.

Short Explanation: The Remuneration Report is in the Directors' Report section of the Company's Annual Report. Listed companies are required to put the Remuneration Report to the vote for adoption at the Company's Annual General Meeting. The vote on this resolution is advisory only and does not bind the Directors or the Company.

Voting Prohibition Statement: A vote on this resolution must not be cast (in any capacity) by or on behalf of either of the following persons:

• (a) a member of the key management personnel, details of whose remuneration are included in the Remuneration Report;

• (b) a closely related party of such a member.

However any of those persons may cast a vote on the resolution if:

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

• (b) the vote is not cast on behalf of a person described in paragraphs (a) or (b) above.

If you appoint the Chairman of the Meeting as your proxy, the Company encourages you to direct the Chairman how to vote on this advisory Resolution. The Chairman, as one of the Key Management Personnel of the Company, is not permitted to cast any votes in respect of this advisory Resolution that arise from undirected proxies held.

3. RESOLUTION 2 – ELECTION OF MR CRAIG MOULTON AS A DIRECTOR

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

“That, Mr Craig Moulton, a director of the Company who retires in accordance with clause 3.3 and clause 3.6 of the Company’s constitution and, being eligible, offers himself for re-election, be re-elected as a director of the Company”.

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4. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO CONSULTANTS AND EMPLOYEES

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

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, the shareholders ratify and approve the issue of 1,750,000 Options to employees and consultants on the terms and conditions set out in the Explanatory Statement.”

Short Explanation: An equity issue can be ratified by shareholders in accordance with ASX Listing Rule 7.4. This allows the company the flexibility to issue shares and options to subscribe for fully paid ordinary shares in the future up to the threshold of 15% of its total ordinary securities in any 12 month period. Please refer to the Explanatory Statement for details.

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any associates of those persons. The Company need not disregard a vote if it is cast by a person as a 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 a direction on the Proxy Form to vote as the proxy decides.

5. RESOLUTION 4 – ADOPTION OF THE AUSQUEST LONG TERM INCENTIVE SCHEME (LTIS)

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

"That, for the purposes of item 9 to Listing Rule 7.2 of the Listing Rules of the Australian Securities Exchange (operated by ASX Limited), approval is given to the issue of options under the AusQuest Limited Long Term Incentive Scheme as detailed in the Explanatory Memorandum accompanying this Notice."

Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution by Directors of the Company. The Company need not disregard a vote if it is cast by a person as a 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 a direction on the Proxy Form to vote as the proxy decides.

DATED: 21 OCTOBER 2011

BY ORDER OF THE BOARD

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________DARREN CRAWTE ___ COMPANY SECRETARY

Voting Exclusion Note:

Where a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a 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 a direction on the Proxy Form to vote as the proxy decides.

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EXPLA NATO R Y STA TEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting to be held at 10.00 am (WST) on 22 November 2011 at The Ward Room, South of Perth Yacht Club, Applecross, Western Australia.

The purpose of this Explanatory Statement is to provide information which the directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in the Notice of Meeting.

1. ANNUAL REPORT

Section 317 of the Corporations Act requires the reports of the directors and of the auditors and the Annual Report, including the financial statements to be put before the Annual General Meeting and the Constitution provides for those reports and statements to be received and considered at the Annual General Meeting. Neither the Corporations Act nor the Constitution requires a vote of Shareholders at the Annual General Meeting on the reports or statements. However, Shareholders will be given the opportunity to raise questions on the reports and the statements at the Annual General Meeting.

The Company’s 2011 Annual Report is available at www.ausquest.com.au. Those shareholders that elected to receive a printed copy of the Annual Report will have received a copy with this Notice of Annual General Meeting.

2. RESOLUTION 1 – ADOPTION OF THE REMUNERATION REPORT

The Remuneration Report is in the Directors Report section of the Company's Annual Report.

By way of summary, the Remuneration Report:

• (a) explains the Company's remuneration policy and the process for determining the remuneration of its Directors and executive officers;

• (b) addresses the relationship between the Company's remuneration policy and the Company's performance; and

• (c) sets out remuneration details for each Director and each of the Company's executives named in the Remuneration Report for the financial year ended 30 June 2011.

Section 250R(2) of the Corporations Act requires companies to put a resolution to their members that the Remuneration Report be adopted. The vote on this resolution is advisory only, however, and does not bind the Board or the Company. The Board will consider the outcome of the vote and comments made by Shareholders on the Remuneration Report at the meeting when reviewing the Company's remuneration policies.

The Chairman will give Shareholders a reasonable opportunity to ask questions about or to make comments on the Remuneration Report.

Under the Corporations Act, if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive AGMs, Shareholders will be required to vote at the second of those AGMs on a resolution that a further meeting is held at which all of the Company’s Directors (other than the Managing Director) must go up for re-election. Voting on this resolution will be determined by a poll at the meeting rather than a show of hands.

Undirected proxies

Any undirected proxies held by the Chair of the meeting will not be voted on this resolution.

Accordingly, if you appoint the Chair of the meeting as your proxy, you should direct him how to vote on this resolution if you want your shares to be voted.

The same will apply if you appoint any other Director of the Company, any other of its key management personnel or any of their closely related parties.

Key management personnel of the Company has the same meaning as set out in the accounting standards and includes the Directors of the Company and those other persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly. The Remuneration Report identifies the Company’s key management personnel for the financial year to 30 June 2011. Their closely

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related parties are defined in the Corporations Act, and include certain members of their family, dependents and companies they control.

3. RESOLUTION 2 – ELECTION OF MR CRAIG MOULTON AS A DIRECTOR

Clause 3.3 of the Constitution provides that a Director appointed during the year must retire from office at the next annual general meeting and is eligible for election by that general meeting. An election of directors must also be held at each annual general meeting in accordance with clause 3.6 of the Constitution. Mr Craig Moulton retires from office in accordance with these requirements and being eligible, offers himself for reelection by shareholders as a director of the Company, with effect from the end of the meeting.

Mr Moulton was appointed as a director on 5 August 2011.

Mr Moulton holds a Bachelor of Science (Geology) with Honours from the University of Western Australia and has over 18 years experience in the mining industry in Australia and overseas. He is currently General Manager Exploration Asia Pacific for Cliffs Natural Resources. Prior to Cliffs, he held senior mining, development and exploration roles in Rio Tinto Iron Ore, Fujitsu Australia and Rio Tinto Copper Projects.

The Board unanimously recommends that shareholders vote in favour of the re-election of Mr Moulton as a director.

4. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO CONSULTANTS AND EMPLOYEES

4.1 General

On 3 December 2010, the Company allotted and issued 1,750,000 options to employees and consultants of the Company and/or their respective nominees on the terms and conditions set out below. The options have an exercise price of 40 cents per option and an expiry date of 30 November 2013.

ASX Listing Rule 7.4 states that an issue by a company of securities made without approval under ASX Listing Rule 7.1 is treated as having been made with approval for the purpose of ASX Listing Rule 7.1 if the issue did not breach ASX Listing Rule 7.1 and the Company’s members subsequently approve it.

Resolution 3 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of the 1,750,000 options issued on 3 December 2010. By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% threshold set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

4.2 Technical Information Required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the ratification:

(a) a total of 1,750,000 options were issued to employees and consultants of the Company on 3 December 2010 as follows:

2010 as follows:
Employee/Consultant	Number of options
James Thornett	250,000
Paul Pearson	200,000
Michael Sherington	150,000
Renee Balodis	100,000
Grant Boxer	200,000
David George Jackson	250,000
Adrienne Meakins	250,000
Laurence Capill	100,000
Brian Crowder	50,000
Martin Gole	200,000

(b) The options were issued for nil consideration and as such no funds were raised during the issue.

(c) the exercise price per option was 40 cents and the options have an expiry date of 30 November 2013.

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• (d) Each option once exercised will convert to one fully paid ordinary share in the capital of the Company issued on the same terms and conditions as, and ranking equally (from the date of their issue) with, the Company’s existing Shares; and

• (e) The purpose of the options is to provide employees and consultants with an opportunity to acquire a financial interest in the Company in the event certain targets are met, which will align their interests -

• more closely with Shareholders and provide greater incentive for them to focus on the Company's long term goals.

A copy of the key terms and conditions of the options is set out in Annexure A to the Explanatory Memorandum.

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

5. RESOLUTION 4 – ADOPTION OF THE AUSQUEST LONG TERM INCENTIVE SCHEME (LTIS)

ASX Listing Rule 7.1 requires a listed company to obtain shareholder approval prior to the issue of shares, or securities convertible into shares, representing more than 15% of the issued capital of that company in any rolling 12 month period.

An exception to ASX Listing Rule 7.1 is set out in ASX Listing Rule 7.2 (Exception 9) which provides that issues under an employee incentive plan are exempt for a period of 3 years from the date on which shareholders approve the issue of securities under the plan as an exception to ASX Listing Rule 7.1.

Resolution 4 seeks Shareholder approval for the Company to issue securities under the “Long term incentive scheme” (LTIS) as an exception to ASX Listing Rule 7.1 in accordance with ASX Listing Rule 7.2 (Exception 9).

The purpose of the LTIS is to recognise the ability and efforts of the Directors and employees of the Company who have contributed to the success of the Company; provide an incentive to Directors and employees to achieve the long term objectives of, and improve the performance of the Company; attract persons of experience and ability to the Company and foster and promote loyalty between the Company and its Directors and employees.

In order to take advantage of the exemption from ASX Listing Rule 7.1 contained in ASX Listing Rule 7.2 (Exception 9) and allow the Company greater flexibility to issue securities, Shareholders are requested to approve the LTIS as an exemption from ASX Listing Rule 7.1.

For the purpose of exception 9 of Listing Rule 7.2:

• (a) As at the date of this Meeting, no securities will have been issued under the Long Term Incentive Scheme.

• (b) A copy of the key terms of the LTIS is set out in Annexure B to the Explanatory Memorandum.

A copy of the LTIS will be sent to any Shareholder upon request and will also be available for inspection both at the Company’s registered office during normal business hours prior to the Meeting and at the Meeting venue during the Meeting.

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

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G LO SSARY

$ means Australian dollars.

Annual General Meeting means the meeting convened by the Notice of Meeting.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of Directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Company means AusQuest Limited (ABN 35 091 542 451).

Constitution means the Company’s Constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current Directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

Notice of Meeting or Notice of Annual General Meeting means this notice of annual general meeting including the explanatory statement.

Remuneration Report means the remuneration report in the Directors' Report section of the Company's Annual Report.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

Shareholder means a holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

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A NN EXURE A – TER MS AN D C O ND ITIO N S O F O PTIO N S TO C ON SU LTA NTS A ND EMPLO YEES

Granted to: Consultants and employees of the Company.

Total number of options granted: 1,750,000.

Vesting Conditions: The options vested immediately upon issue.

Exercise Price: The exercise price is 40 cents per share.

Expiry date: The expiry date is 30 November 2013.

General Terms of Options

Other than the exercise price, expiry date and vesting conditions as set out above, the terms of the options are as follows:

1. No monies will be payable for the issue of the options.

2. The options shall expire on the Expiry Date.

3. Each option shall carry the right in favour of an option holder to subscribe for one Share.

4. Shares allotted to option holders on the exercise of options shall be issued at the exercise price.

5. The Board may, in its absolute discretion, impose performance hurdles on the exercise of options by an optionholder. Performance hurdles must be specified in the offer of options made and state that the relevant options cannot be exercised unless the performance hurdles are satisfied.

6. An optionholder is not entitled by reason only of being a holder of options to participate in any new issue or any issue of rights to subscribe for additional Shares or any other securities to be issued by the Company. The optionholder cannot participate in any new issue or any such issue of rights without exercising the options prior to the record date for the determination of entitlements to the issue of securities and participating as a result of being a holder of Shares.

7. If the Company, while an option remains unexercised, reconstructs its issued capital (including a reduction, return, subdivision or consolidation of share capital or a reorganisation of share capital), the rights of the optionholder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

8. An option will lapse on the earlier of:

9. (a) the expiry date;

10. (b) a determination of the Board that the optionholder has, in the Board’s opinion:

11. i. been dismissed or removed from office for a reason which entitles a company in the Group to dismiss the optionholder without notice or has committed any act of fraud, defalcation or gross misconduct in relation to the affairs of that company (whether or not charged with an offence); or

12. ii. done any act which brings the Group or any company in the Group into disrepute;

13. (c) unless otherwise determined by the Board in respect of any of the following Eligible Persons as optionholders, where:

14. i. in the case of an Eligible Person who is an employee, the employment of that Eligible Person by the Company or a Related Body Corporate ceases; or

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• ii. in the case of an Eligible Person who is a Director of the Company or a Director of a Related Body Corporate and not an employee of the Company or a Related Body Corporate, the directorship of that Eligible Person ceases.

• On an option lapsing, all rights of an optionholder under the Plan in respect of an option shall cease, regardless of whether the option has become exercisable.

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ANNEXURE B –AUSQUEST’S LONG TERM INCENTIVE SCHEME

Employment Option Incentive Scheme Terms and Conditions

AusQuest Limited ACN 091 542 451

AusQuest Employment Option Incentive Scheme

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Table of contents

	Table of contents
1	DEFINITIONS AND INTERPRETATION............................................................................... 2
2	OFFER AND ACCEPTANCE ................................................................................................ 4
3	TOTAL NUMBER OF OPTIONS SUBJECT TO THE SCHEME ........................................... 4
4	SHAREHOLDER APPROVAL BEFORE OPTIONS ISSUED TO RELATED PARTIES....... 5
5	EXERCISE OF OPTIONS...................................................................................................... 5
6	GENERAL CONDITIONS RE OPTIONS............................................................................... 6
7	SHARES ARISING ON EXERCISE OF OPTIONS................................................................ 6
8	CERTIFICATE AND REGISTERS......................................................................................... 6
9	CAPITAL CHANGES ............................................................................................................ 6
10	TAKEOVERS ........................................................................................................................ 7
11	TERMS AND CONDITIONS BINDING.................................................................................. 7
12	OVERRIDING RESTRICTIONS ON ISSUE AND EXERCISE............................................... 7
13	COMMITTEE OF DIRECTORS ............................................................................................. 8
14	AMENDMENTS OF TERMSAND CONDITIONS.................................................................. 8
15	TAXATION ............................................................................................................................ 8
16	JURISDICTION...................................................................................................................... 8

AusQuest Employment Option Incentive Scheme

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Background

• A The following are the terms and conditions of the AusQuest Employment Option Incentive Scheme.

• B The purpose of the Scheme is to provide a sense of ownership in the Company. The Scheme is designed to encourage broad equity ownership and to align the rewards of Eligible Persons with the strategic long-term goals and performance of the Company.

Operative Provisions

10. DEFINITIONS AND INTERPRETATION

• 1.1 The following expressions have these meanings in these Terms and Conditions unless the contrary intention appears:

ASIC means the Australian Securities and Investments Commission.

Associated Body Corporate means:

• (a) a Body Corporate that is a Related Body Corporate of the Company; or

• (b) a Body Corporate that has Voting Power in the Company of not less than 20%; or

• (c) a Body Corporate in which the Company has Voting Power of not less than 20%.

Board means the board of directors of the Company duly constituted in accordance with the Constitution, or a committee of the Directors of the Company duly authorised to act in respect of the Scheme.

Body Corporate has the meaning given in section 9 of the Corporations Act .

Business Day has the meaning given in the Listing Rules.

Company means AusQuest Limited ACN 091 542 451.

Company Employee Incentive Schemes means this Scheme, and any other scheme which may be implemented by the Company from time to time pursuant to which Shares or Options may be offered to an Eligible Person.

Constitution means the constitution of the Company.

Contractor means a contractor who has worked for the Company or an Associated Body Corporate for more than one year and who:

• (a) received 80% or more of their income in the preceding year from the Company; or

• (b) otherwise qualifies as a contractor in the opinion of the Board.

Current Market Price means the weighted average market price of a Share on the Exchange over the five trading days preceding the date of the relevant Offer.

Director means a director of the Company or an Associated Body Corporate.

Eligible Person means a person who at the time of the Offer is:

• (a) an Employee;

• (b) a Director;

AusQuest Employment Option Incentive Scheme

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(c) a Contractor (who may be an “eligible employee” under ASIC Class Order 03/184 or where ASIC has otherwise provided relief); and

(d) a nominee of any person referred to in paragraphs (a) to (c) of this definition. Employee means a full time or part time employee of the Company or an Associated Body Corporate.

Exchange means the Australian Securities Exchange or such other stock exchange upon which Shares are listed for quotation from time to time.

Listing Rules means the listing rules of the Exchange or such other listing rules as apply to the Company from time to time.

Offer means an offer of Options made to an Eligible Person pursuant to these Terms and Conditions.

Option means an option to subscribe for one Share.

Performance Hurdle means hurdles and criteria determined by the Board which relate to issues including management, operational, financial, corporate or shareholder value issues.

Permanent Disability means physical or mental disability caused through bodily injury, illness, disease, infirmity or accident which the Board, after considering such medical and other evidence as it thinks fit, considers will render the person concerned unlikely ever to be able to perform his or her duties as an Employee, Director or Contractor of the Company or Associated Body Corporate.

Register means the share register of the Company and includes any branch register.

Related Body Corporate has the meaning given in section 50 of the Corporations Act .

Related Party has the meaning given in section 228 of the Corporations Act and Listing Rule 10.14.

Retirement , in relation to an Employee, means retirement at age 55 or over after not less than 5 years service as an Employee.

Scheme means the Employment Option Incentive Scheme constituted by these Terms and Conditions.

Share means an ordinary fully paid share in the capital of the Company.

Takeover Bid has the meaning given in section 9 of the Corporations Act .

Terms and Conditions means the terms and conditions contained in this document together with any schedules or annexures as amended from time to time.

Voting Power has the meaning given in section 610 of the Corporations Act .

1.2 A reference to these Terms and Conditions, the Constitution, the Listing Rules or any other instrument includes any variation or replacement of any of them.

• 1.3 The singular includes the plural and vice versa.

• 1.4 The word ‘person’ includes a firm, a body corporate, an unincorporated association or an authority.

• 1.5 A reference to a person includes a reference to the person’s executors, administrators, successors and permitted assigns.

AusQuest Employment Option Incentive Scheme

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• 1.6 Headings are inserted for convenience and do not affect the interpretation of these Terms and Conditions.

11. OFFER AND ACCEPTANCE

• 2.1 The Board may make an Offer at any time it may determine.

• 2.2 No monies will be payable for the issue of the Options.

• 2.3 The Options are to be for a term not exceeding 5 years from the date of issue, or such longer term as the members in general meeting approve, and may not be exercised after the expiry of that term.

• 2.4 The exercise price of all Options shall be determined by the Board at the date of the Offer but shall be at least the Current Market Price.

• 2.5 The Board may impose, at the time of the Offer, such other restrictions on exercise of the Options as it considers appropriate. For example, the issue or exercise of Options may be subject to the Eligible Person being continuously employed by the Company, or satisfying Performance Hurdles.

• 2.6 The Eligible Person to whom an Offer is made may accept the Offer within 10 Business Days of the date of the Offer. Acceptances shall not be valid and shall be deemed not to have been made until actually received by the Company. Each Offer may be accepted in whole or in part so long as acceptance is in multiples of 1,000 Options, or such higher multiple as the Board approves. If an Offer is accepted in part only, then it will lapse in respect of those Options not accepted by the Eligible Person. Acceptance of Offers must be in writing in the form from time to time prescribed by the Board or otherwise accepted by the Board.

12. TOTAL NUMBER OF OPTIONS SUBJECT TO THE SCHEME

• 3.1 No Offer may be made unless the total number of:

• 3.1.1 Options offered to Eligible Persons under this Scheme;

• 3.1.2 Shares which would be issued were each outstanding offer or Option pursuant to a Company Employee Incentive Scheme accepted or exercised; and

• 3.1.3 Shares issued during the previous 5 years pursuant to a Company Employee Incentive Scheme,

but disregarding any offer of Option or Share:

• 3.1.4 by way of an offer to a person situated at the time of receipt of the offer outside Australia; or

• 3.1.5 that was an excluded offer on invitation within the meaning of the Corporations Law as it stood prior to the commencement of Schedule 1 to the Corporate Law Economic Reform Program Act 1999; or

• 3.1.6 that did not need disclosure to investors because of section 708 of the Corporations Act,

• 3.1.7 issued under this Scheme and lapsed or otherwise not exercised,

does not exceed 5% of the total number of issued Shares at the time of the Offer.

AusQuest Employment Option Incentive Scheme

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• 3.2 The provisions of clause 3.1 do not entitle the Company to issue more than the maximum number of Options which are permitted to be subject to the Scheme under the Listing Rules.

• 3.3 For the purposes of this clause 12, an Option is considered to be subject to the Scheme until such time as the Option has been exercised and the Share allotted.

• 3.4 Where the Company declares a bonus issue of Shares, and Options participate in the bonus issue, then those bonus Shares are also deemed to be subject to the Scheme.

13. SHAREHOLDER APPROVAL BEFORE OPTIONS ISSUED TO RELATED PARTIES

Options will only be issued under the Scheme to an Eligible Person who is also a Related Party of the Company after the members of the Company have approved by resolution the proposed issue, if such approval is required by the Listing Rules or the Corporations Act or both.

14. EXERCISE OF OPTIONS

• 5.1 The provisions of this clause 14 and clause 15 apply generally to Options, subject to any special conditions of issue determined by the Board and applied to an Option on its issue.

• 5.2 An Option may not be exercised if at the time it is sought to be exercised:

• 5.2.1 the holder of the Option (or the person who nominated the holder) has not been an Employee, a Director or a Contractor for at least one year;

• 5.2.2 the holder of the Option (or the person who nominated the holder), in the opinion of the Board, has failed to comply in a material respect with these Terms and Conditions; or

• 5.2.3 the Board has determined that the holder of the Option (or the person who nominated the holder) has acted fraudulently, dishonestly or in breach of his or her obligations to the Company or Associated Body Corporate.

• 5.3 Upon the death, Permanent Disability or Retirement of an Employee, Director or Contractor, there shall be a period of one year from the time of such death, Permanent Disability or Retirement of the Employee, Director or Contractor, during which the Options held by the relevant Eligible Person may be exercised, and if not exercised in that period the Options shall lapse.

• 5.4 Upon an Employee, Director or Contractor ceasing to be an Employee, Director or Contractor other than by death, Permanent Disability or Retirement, the Options held by the relevant Eligible Person may be exercised within 90 days after the Employee, Director or Contractor so ceases to be an Employee, Director or Contractor. The Board may, in its absolute discretion, extend the exercise period. If the Options are not exercised during the exercise period (including any extended exercise period approved by the Board), they will lapse.

• 5.5 The holder of an Option may only exercise it by giving notice to the Company on a Business Day that is not a Business Day on which the Register is closed for the determination of dividends or other entitlements.

• 5.6 In respect of each issue of Options, the holder may exercise the Options at the times specified in the Offer, subject to these Terms and Conditions.

AusQuest Employment Option Incentive Scheme

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• 5.7 Subject to these Terms and Conditions, a holder of Options may exercise the Options by completing and signing a form approved by the Board for that purpose (or that the Board otherwise accepts), and lodging the form and Option certificate with the company secretary of the Company together with payment of the exercise price.

• 5.8 Options may only be exercised in multiples of 1,000 or such lower multiple as the Board approves.

15. GENERAL CONDITIONS OF OPTIONS

• 6.1 Options will not be listed for quotation on any stock exchange.

• 6.2 A holder of an Option shall not sell, transfer, mortgage, pledge or otherwise encumber the Option without the consent of the Board.

16. SHARES ARISING ON EXERCISE OF OPTIONS

• 7.1 The Share issued upon the exercise of an Option shall be allotted within 15 Business Days after receipt by the Company of all documentation for the exercise of the Option and a new share certificate or holding statement despatched within 5 Business Days after the date of allotment, or within such shorter period as is required under the Listing Rules. Where appropriate, a changed holding statement will be despatched within 5 Business Days after the end of the month in which there is a change to a person’s holding or within such shorter period as is required under the Listing Rules.

• 7.2 Shares issued upon the exercise of Options shall, from the date of issue, rank pari passu in all respects with Shares which are listed for quotation on the Exchange.

• 7.3 The Company shall make application within 10 Business Days after the date upon which Shares are issued as a result of the exercise of Options for quotation of those Shares on the Exchange or within such shorter period as is required under the Listing Rules .

17. CERTIFICATE AND REGISTERS

• 8.1 The Company shall issue to holders of Options a certificate in such form as is determined by the Board from time to time. The holder shall be entitled to one certificate for the whole of his or her holding of Options or to a number of certificates in reasonable denominations. Where Options are issued to an Eligible Person who is a nominee of an Employee, Director or Contractor, the Option certificate shall specify the name of the Employee, Director or Contractor in relation to whom the Option holder is a nominee.

• 8.2 The Company shall establish and keep at its registered office a register or registers of Option holders. All such registers shall be maintained in accordance with the Corporations Act and the Listing Rules.

18. CAPITAL CHANGES

• 9.1 An Option holder shall be entitled to be allotted one Share for each Option exercised in accordance with these Terms and Conditions.

• 9.2 An Option holder may only participate in new issues of securities to holders of Shares if the Option has been exercised and the Share is allotted in respect of the Option before the record date for determining entitlements to the issue in accordance with the Listing Rules.

AusQuest Employment Option Incentive Scheme

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• 9.3 If the Company makes a bonus issue of Shares or other securities pro rata to holders of Shares (other than an issue in lieu of dividends or by way of dividend reinvestment) and no Shares have been allotted in respect of an Option before the record date for determining entitlements to the bonus issue then that Option, if exercised, will entitle the holder to receive the bonus issue in respect of the Shares resulting from exercise of the Option as if the Option had been exercised and the Shares allotted before the record date.

• 9.4 If the Company makes an offer of Shares pro rata to holders of Shares (other than an issue in lieu of dividends or by way of dividend reinvestment or bonus issue) for a subscription price which is less than the market price and no Shares have been allotted in respect of an Option before the record date for determining entitlements to the rights issue then the exercise price of that Option will be reduced in accordance with ASX Listing Rule 6.22 as amended from time to time.

• 9.5 If Options are exercised simultaneously then the holder may aggregate the number of Shares or fractions of Shares or other securities to which the holder is entitled to subscribe under those Options. Fractions in the aggregate number only will be disregarded in determining the total entitlement to subscribe.

• 9.6 The Company must give notice to Option holders of any adjustment to the number of Shares which the holder is entitled to subscribe for on exercise of an Option or the exercise price per Share in accordance with the Listing Rules.

• 9.7 In the event of a reorganisation of the capital of the Company, the rights of an Option holder will be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

19. TAKEOVERS

If prior to the exercise of any Option a Takeover Bid is made to holders of Shares, within 10 Business Days of the Company becoming aware of the Takeover Bid the Company shall forward a notice notifying each Option holder of the Takeover Bid and from the date of such notification each Option holder shall have 120 days to exercise the Options notwithstanding any other terms and conditions applicable to the Option (including the circumstance that the non-exercise period has not expired or the Performance Hurdle has not been met), provided all the other provisions of these Terms and Conditions shall remain applicable except where inconsistent with the right of exercise. If the Options are not exercised within the period of 120 days of the date of notification of the Takeover Bid, the Options may be exercised at any other time according to their terms of issue.

20. TERMS AND CONDITIONS BINDING

By accepting an Offer the acceptor agrees to be bound by these Terms and Conditions.

21. OVERRIDING RESTRICTIONS ON ISSUE AND EXERCISE

Notwithstanding any Terms and Conditions of any Option, no Option may be offered, issued or exercised if to do so:

• 12.1 would contravene the Corporations Act or the Listing Rules; or

• 12.2 would contravene the local laws or customs of an Eligible Person’s or prospective Eligible Person’s country of residence or in the opinion of the Board would require actions to comply with those local laws or customs which are impractical.

AusQuest Employment Option Incentive Scheme

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22. COMMITTEE OF DIRECTORS

The Board may act for the purposes of the Scheme by a committee of the Board appointed for that purpose.

23. AMENDMENTS OF TERMS AND CONDITIONS

• 14.1 Subject to clause 14.2, these Terms and Conditions may be amended from time to time by a resolution of the Board but no amendment may be made which prejudices the right then accrued to an Option holder without the prior consent of the Option holder, or in the case of the following alterations, without the sanction of a resolution of members of the Company:

• 14.1.1 extending the class of persons who may participate in the Scheme;

• 14.1.2 varying the method by which the price payable for Shares is calculated; or

• 14.1.3 varying the method by which the issue price or exercise price of Options is calculated.

• 14.2 Where the Listing Rules require that a provision of these Terms and Conditions may be amended only following approval of the amendment by a resolution of the members of the Company passed at a general meeting, the amendment will have no effect until such a resolution is passed or a waiver is obtained from the Exchange.

24. TAXATION

None of the Company, any advisers to the Company or the Board shall be liable for any taxes, imposts or duties assessed against or imposed upon a person participating in the Scheme and none of them represent or warrant that any person will gain any taxation advantage by participating in the Scheme.

25. JURISDICTION

These Terms and Conditions are governed by and shall be construed in accordance with the laws of Western Australia and each person bound by these Terms and Conditions submits to the nonexclusive jurisdiction of the Courts of Western Australia.

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AUSQUEST LIMITED ABN 35 091 542 451 PROXY FORM

The Company Secretary AusQuest Limited 8 Kearns Crescent Ardross WA 6153

Ph (+61 8) 9364 3866 Fax (+61 8) 9364 4892

ANNUAL GENERAL MEETING

I/We

being a member(s) of AusQuest Limited and entitled to attend and vote at the Annual General Meeting, hereby

Appoint

Name of proxy OR

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Mark this box if you wish to appoint the Chair of the Annual General Meeting as your proxy

or failing the person/body corporate so named or, if no person/body corporate is named, the Chair of the Annual General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the Annual General Meeting of the Company to be held at 10.00 am (WST), on 22 November 2011 at The Ward Room, South of Perth Yacht Club, Applecross, Western Australia, and at any adjournment thereof.

Any undirected proxy held by the Chair or key management personnel or any of their closely related parties will not be voted on Resolution 1. If you appoint the Chair or key management personnel or any of their closely related parties as your proxy, you should direct him or her how to vote on the Resolution 1 if you want your shares to be voted on that item of business.

If you appoint a proxy, the Company encourages you to direct your proxy how to vote on each item of business. The Chair of the Meeting intends to vote all undirected proxies, which the Chairman is entitled to vote, in favour of each item of business. Voting on Business of the General Meeting

	FOR	AGAINST ABSTAIN	AGAINST ABSTAIN	AGAINST ABSTAIN	AGAINST ABSTAIN	AGAINST ABSTAIN
ote on	that Resolution on		a show of hands or on a			p
		%

Resolution 1 – Adoption of the Remuneration Report Resolution 2 – Election of Mr Craig Moulton as a director Resolution 3 – Ratification of Prior Issue of Options Resolution 4 – Adoption of the AusQuest Long Term Incentive Scheme

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

If two proxies are being appointed, the proportion of voting rights this proxy represents is

Signed this day of 2011

	Individuals and joint holders		**Companies (affix common seal if appropriate) **
	Signature		Director
	Signature		Director/Company Secretary
	Signature		Sole Director and Sole Company Secretary

By: Individuals and joint holders

AUSQUEST LIMITED ABN 35 091 542 451

Instructions for Completing Proxy Form

1. A member entitled to attend and vote at an Annual General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.

2. If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting, please write the full name of that individual or body corporate in the space provided. If you leave both the box and 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. A proxy may be an individual or a body corporate.

Under recent changes to the Corporations Act, if your appointment of a proxy specifies the way the proxy is to vote on a particular resolution and your appointed proxy is not the Chairman of the meeting and at the meeting a poll is duly demanded on the question that the resolution be passed, then if either your proxy is not recorded as attending the meeting (if a record of attendance is made) or your proxy does not vote on the resolution, the Chairman is taken, before voting on the resolution closes, to have been appointed as your proxy for the purposes of voting on the resolution at that meeting.

1. You may direct your proxy how to vote by placing 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 place. 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.

Under recent changes to the Corporations Act, if you direct your proxy how to vote on a particular resolution, the proxy need not vote on a show of hands but if the proxy does so, the proxy must vote as directed. If the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands. If the proxy is the Chairman, the proxy must vote on a poll, and must vote as directed and if the proxy is not the Chairman, the proxy need not vote on the poll, but if the proxy does so, the proxy must vote as directed.

If the Chairman of the Meeting or any other member of the Key Management Personnel of the Company or a Closely Related Party of a member of the Key Management Personnel is your nominated proxy and you have not directed the proxy how to vote on Resolution 1 (Remuneration Report), that person will not cast any votes on Resolution 1.

1. Where a member’s holding is in one name the holder must sign. Where the holding is in more than one name, all members should sign.

2. Where a Proxy Form of a corporate representative is lodged and is executed under a power of attorney, the power of attorney must be lodged in like manner as this Proxy Form.

3. Corporate members should comply with the execution requirements set out on the Proxy Form or otherwise with the provisions of Section 127 of the Corporations Act. Section 127 of the Corporations Act provides that a company may execute a document without using its common seal if the document is signed by:

4. 2 directors of the company;

a director and a company secretary of the company; or

for a proprietary company that has a sole director who is also the sole company secretary – that director.

For the Company to rely on the assumptions set out in Section 129(5) and (6) of the Corporations Act, a document must appear to have been executed in accordance with Section 127(1) or (2). This effectively means that the status of the persons signing the document or witnessing the affixing of the seal must be set out and conform to the requirements of Section 127(1) or (2) as applicable. In particular, a person who witnesses the affixing of a common seal and who is the sole director and sole company secretary of the company must state that next to his or her signature.

1. Completion of a Proxy Form will not prevent individual members from attending the Annual General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the Annual General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the Annual General Meeting.

2. To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

3. (a) post to AusQuest Limited, 8 Kearns Crescent, Ardross WA 6153; or

4. (b) facsimile to the Company on facsimile number +61 8 9364 4892

so that it is received not later than 10.00 am (WST) on 20 November 2011.

Proxy forms received later than this time will be invalid.