CANYON RESOURCES LIMITED — Proxy Solicitation & Information Statement 2010

Dec 23, 2010

CANYON RESOURCES LIMITED ACN 140 087 261

NOTICE OF GENERAL MEETING

TIME : 9am (WST) DATE : 21 January 2011 PLACE : 41 Stirling Highway Nedlands, 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) 6389 8100.

CONTENTS PAGE

Notice of General Meeting (setting out the proposed resolutions)	4
Explanatory Statement (explaining the proposed resolutions)	6
Glossary	14
Schedule 1 – Terms and Conditions of Convertible Securities	15
Proxy Form	Enclosed
TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The general meeting of the Shareholders to which this Notice of Meeting relates will be held at 9am (WST) on 21 January 2011 at:

41 Stirling Highway Nedlands, Western Australia

YOUR VOTE IS IMPORTANT

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

VOTING IN PERSON

To vote in person, attend the 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 the time and in accordance with the instructions set out on the Proxy Form.

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NOTICE OF GENERAL MEETING

Notice is given that the general meeting of Shareholders will be held at 9 am (WST) on 21 January 2011 at 41 Stirling Highway, Nedlands, Western Australia.

The Explanatory Statement provides additional information on matters to be considered at the 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 General Meeting are those who are registered Shareholders of the Company at 7.00pm (Sydney time) on 19 January 2011.

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

AGENDA

1. RESOLUTION 1 – APPROVAL TO ISSUE NEW CLASS OF SECURITIES

To consider and, if thought fit, to pass, the following resolution as a special resolution:

“That, for the purposes of Section 246B of the Corporations Act, clause 2.4 of the Constitution and for all other purposes, the Company is authorised to issue Convertible Securities on the terms and conditions set out in the Explanatory Statement.”

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE OF SHARES UNDER SALE AGREEMENT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 3,250,000 Shares on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by a person who participated in the issue and any of their associates. However, 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.

3. RESOLUTION 3 – APPROVAL TO ISSUE SHARES AND CONVERTIBLE SECURITIES

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, subject to and conditional on the passing of Resolution 1, for the purposes of Listing Rule 7.1 of the Listing Rules of ASX Limited and for all other purposes, approval is given for the Company to allot and issue:

• (a) up to 8,750,000 Shares; and

• (b) 5 Class A Convertible Securities; and

• (c) 10 Class B Convertible Securities,

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to the Vendors on the terms and conditions set out in the Explanatory Statement accompanying this Notice; and

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed. However, 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.

4. RESOLUTION 4 – APPROVAL TO ISSUE SHARES FOR ACQUISITION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 300,000 Shares on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, and any associates of those persons. However, 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 5 – PLACEMENT – SHARES

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Directors to allot and issue up to 8,000,000 Shares on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, and any associates of those persons. However, 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 DECEMBER 2010

BY ORDER OF THE BOARD

PHIL MACLEOD COMPANY SECRETARY

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 9am (WST) on 21 January 2011 at 41 Stirling Highway, Nedlands, Western Australia.

This 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. BACKGROUND

1.1 History of Acquisitions

On 1 September 2010, the Company announced to ASX that representatives of the Company had undertaken a site visit to Burkina Faso to visit gold projects held there by Askia Sarl Pty Ltd ( Askia ). Subsequently on 2 September 2010, the Company announced to ASX that it had entered into a binding agreement to acquire 100% of the issued shares in Askia from the Askia shareholder ( Sale Agreement ).

On 10 December 2010, the Company also announced to ASX that it had entered into an agreement with the local holders of two additional tenements in Burkina Faso ( Tenement Acquisition Agreement ).

Copies of these announcements are available from the Company’s website at www.canyonresources.com.au.

1.2 Summary of Key Terms of the Askia Sale Agreement

On or about 1 September 2010, the Company and Canyon West Africa Pty Ltd, a wholly owned subsidiary of the Company) ( Canyon West Africa ) entered into an agreement to acquire 100% of the issued shares in ASkia from the current holder ( Vendor ). The consideration payable for the shares in Askia is as follows:

The consideration payable for the shares in Askia is as follows:

• (a) in consideration for 100% of the shares in Askia, the Company agrees to issue 3,250,000 Shares, 5 Class A Convertible Securities and 10 Class B Convertible Securities to the Vendor or his nominees;

• (b) in addition, the Company can elect to issue a further 5,500,000 Shares with 2,500,000 of those Shares to be issued on 30 April 2011 and 3,000,000 Shares issued on 30 April 2012;

• (c) where the Company elects not to issue the Shares referred to in paragraph (b) above, the Vendor can require that Canyon West Africa transfer 100% of the shares in Askia back to the Vendor for nominal consideration;

• (d) the Class A Convertible Securities and the Class B Convertible Securities are to be issued on the terms and conditions outlined in Schedule 1 to this Explanatory Statement. Where Shareholders do not approve the issue of the Class A Convertible Securities or the performance milestones of the Class A Convertible Securities are not met within four years after the date of issue and the Company subsequently identified an inferred mineral resource of 500,000 ounces of gold within the tenements acquired the Sale Agreement, the Company must, subject to Shareholder approval, either issue 5,000,000 Shares to the Vendor or its Nominees or pay the equivalent

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value consideration based on the current market price of the Shares of the Company trading on ASX at the time; and

(e) where Shareholders do not approve the issue of the Class B Convertible Securities or the performance milestones of the Class B Convertible Securities are not met within four years after the date of issue and the Company subsequently identified an inferred mineral resource of 1,000,000 ounces of gold within the tenements acquired the Sale Agreement, the Company must, subject to Shareholder approval, either issue 10,000,000 Shares to the Vendor or its Nominees or pay the equivalent value consideration based on the current market price of the Shares of the Company trading on ASX at the time.

2. RESOLUTION 1 – APPROVAL TO ISSUE NEW CLASS OF SECURITIES

Resolution 1 seeks Shareholder approval for the Company to be authorised to issue Convertible Securities.

A company with a single class of shares on issue that proposes to issue new shares not having the same rights as its existing shares, is taken to vary the rights of existing shareholders unless the Constitution already provides for such an issue.

Section 246B of the Corporations Act, and clause 3.2(b) of the Constitution provides:

“(b) Where the share capital of the Company is divided into different classes of Securities unless the terms of issue of the Securities of any class provide otherwise:

(i) the rights attached to that class may be varied or abrogated in any way by a Special Resolution passed at a separate meeting of the Holders of the issued Securities of that class or with the consent in writing of the Holders of three-quarters of the issued Securities of that class; and

(ii) the rights conferred upon the Holders of Securities of any class issued with preferred or other rights will not be varied or abrogated by the creation or issue of further Securities ranking equally with those Securities.”

Pursuant to the Sale Agreement, the Company proposes issuing 5 Class A Convertible Securities and 10 Class B Convertible Securities ( Convertible Securities ) that will convert into a total of 5,000,000 Shares and 10,000,000 Shares respectively. The terms of the Convertible Securities are outlined in Schedule 1.

The purpose of the issue of the Convertible Securities is to link part of the consideration under the Sale Agreement to certain key performance criteria. If the milestones are not achieved within the prescribed timeframe, the Company will redeem the Convertible Securities.

The Company currently has only one class of shares on issue being fully paid ordinary shares ( Shares ). The terms of the Convertible Securities are not the same as the Shares. Accordingly, the Company seeks approval from Shareholders for the issue of the Convertible Securities.

The terms of the Convertible Securities have been approved by ASX.

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3. RESOLUTION 2 – RATIFICATION OF PREVIOUS ISSUE OF SHARES UNDER SALE AGREEMENT

3.1 General

As referred to in Section 1.1 above, the Company has previously announced that it has entered into the Sale Agreement.

As at the date of this Notice of Meeting, the parties have not yet settled under the Sale Agreement and none of the Shares have been issued under the Sale Agreement. However, the Directors consider that they have adequate reason to believe that settlement will occur after the date of this Notice of Meeting but before the date of the General Meeting and that the Company will have therefore issued the first tranche of 3,250,000 Shares under the Sale Agreement. The purpose of Resolution 2 therefore is to seek the approval of Shareholders to ratify the issue of the 3,250,000 Shares on the basis that those Shares are issued prior to the date of the General Meeting.

If settlement under the Sale Agreement does not occur prior to the date of the General Meeting, the Directors will withdraw this Resolution 2 and instead seek the approval for the issue of the 3,250,000 Shares under Resolution 3 below.

3.2 ASX Listing Rules

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1 (and provided that the previous issue did not breach ASX Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of ASX Listing Rule 7.1.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

3.3 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 Share Ratification:

• (a) 3,250,000 Shares will be issued and allotted;

• (b) the Shares will be issued as the initial consideration under the Sale Agreement;

• (c) the Shares to be issued are all fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (d) the Shares will be allotted and issued to the following parties as the nominees of the Vendor:

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Nominee	No. of Shares
Kingslane Pty Ltd	1,200,000
The Purple Bougainvillea Pty Ltd	600,000
Precambrian Pty Ltd	600,000
Morou Francois Ouedrago	600,000
Amadou Malga	250,000

None of these nominees are related parties of the Company.

(e) no funds will be raised from the issue of the Shares as they will be issued as part consideration under the Sale Agreement in accordance with the terms and conditions of the Sale Agreement outlined above.

4. RESOLUTION 3 – APPROVAL TO ISSUE SHARES AND CONVERTIBLE SECURITIES

4.1 General

As outlined above, the Company has entered into the Sale Agreement, the key terms of which are summarised in Section 1.2 above.

The purpose of Resolution 3 is to seek the approval of Shareholders to issue the Shares and Convertible Securities in accordance with the terms and conditions of the Sale Agreement.

As referred to in Section 3.1 above, Resolution 2 seeks the approval to ratify the previous issue of 3,250,000 Shares under the Sale Agreement assuming that settlement occurs prior to the date of the General Meeting.

Where settlement under the Sale Agreement doesn’t occur before the date of the General Meeting, Resolution 3 seeks approval to issue those 3,250,000 Shares in addition to the remaining Shares and Convertible Securities issuable under the Sale Agreement. For the avoidance of doubt, Shareholders should note that the Shares and Convertible Securities issuable by the Company are as outlined in Section 1.2 above.

4.2 ASX Listing Rules

A summary of the requirements of ASX Listing Rule 7.1 is outlined above.

4.3 ASX Waiver

The Company intends to apply to ASX for a waiver from the requirement of the Listing Rules that all of the Shares under Resolution 3 be issued within three (3) months after the date of the General Meeting. As at the date of this Notice of Meeting however the Company has not yet made such application to ASX.

The reason for this waiver application is, as outlined in Section 1.2, the Shares for which the Company is seeking approval are issuable under the Sale Agreement over a period of 14 months.

In the event that ASX does not grant the waiver to enable the Company to issue the Shares outside of the three (3) month period, the Company may need to either seek further Shareholder approvals, or otherwise issue the Shares under the 15% placement capacity granted to the Directors under Listing Rule 7.1.

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As at the date of this Notice of Meeting, ASX has not yet considered the Company’s waiver application.

4.4 Technical Information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Resolution 3:

• (a) the maximum number of Shares to be issued is 8,750,000 Shares, 5 Class A Convertible Securities and 10 Class B Convertible Securities;

• (b) subject to the granting of the waiver referred to in Section 4.3 above, the Company intends to issue the Shares on the following dates:

No. of Shares	Date of Issue
3,250,000	Within three (3) months from the date of the General Meeting
2,500,000	No later than 30 April 2011
3,000,000	No later than 30 April 2012

It is intended that allotment will occur on the same date as the issue;

• (c) the Shares will be issued as consideration for the acquisition of the shares in Askia under the Sale Agreement;

(d) the Shares will be allotted and issued to the following parties, being the nominees of the Vendor:

Nominee	Initial tranche	30 April 2011 Shares	30 April 2012 Shares
Kingslane Pty Ltd	1,200,000	1,000,000	1,200,000
The Purple Bougainvillea Pty Ltd	600,000	500,000	600,000
Precambrian Pty Ltd	600,000	500,000	600,000
Morou Francois Ouedrago	600,000	500,000	600,000
Amadou Malga	250,000	Nil	Nil

(e) the Class A Convertible Securities and the Class B Convertible Securities will be issued to the following parties, being the nominees of the Vendor:

Nominee	Class A Convertible Securities	Class B Convertible Securities
Kingslane Pty Ltd	2	4
The Purple Bougainvillea Pty Ltd	1	2
Precambrian Pty Ltd	1	2
Morou Francois Ouedrago	1	2

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• (f) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (g) the Class A Convertible Securities and the Class B Convertible Securities will be issued on the terms and conditions outlined in Schedule 1. Each Class A Convertible Security will be convertible into 1,000,000 Shares upon the satisfaction of the performance milestone and each Class B Convertible Securities will convert into 1,000,000 Shares upon the satisfaction of the performance milestone; and

• (h) no funds will be raised from the issue of the Shares and the Convertible Securities as they will be issued pursuant to the terms of the Sale Agreement as consideration for the acquisition of the Assets.

5. RESOLUTION 4 – APPROVAL TO ISSUE SHARES UNDER TENEMENT ACQUISITION AGREEMENT

5.1 General

Resolution 4 seeks approval for the Company to issue 300,000 Shares as part consideration under the Tenement Acquisition Agreement for the acquisition of two tenements in Burkina Faso, announced by the Company to ASX on 10 December 2010.

The recipients of the Shares under Resolution 4 will not be related parties of the Company.

A summary of ASX Listing Rule 7.1 is outlined in Section 3.2 above.

5.2 Summary of the key terms of Tenement Acquisition Agreement

As outlined in the ASX announcement on 10 December 2010, the Company will earn up to a 100% interest in the two tenements by paying a total of US$50,000 and issuing 750,000 shares over a three (3) year period as follows:

• (a) US$20,000 and 300,000 Shares at settlement;

• (b) US$10,000 and 150,000 Shares on the first anniversary of settlement;

• (c) US$10,000 and 150,000 Shares on the second anniversary of settlement; and

• (d) US$10,000 and 150,000 Shares on the third anniversary of settlement.

In addition, the Company must meet minimum expenditure commitments on the two tenements of US$800,000 over the three years and pay a royalty of 2% of the net revenue post smelting on any gold derived from the tenements. The net smelting revenue royalty payable to the vendor may be bought out for $2,000,000 per tenement. The Company will acquire a 51% interest in the tenements on the first anniversary date of the agreement having paid a total of US$30,000, issued 450,000 Shares and meeting minimum expenditure of US$200,000.

The Company will only acquire 100% of the interest in the tenements on the third anniversary of the date of the agreement having paid the total US$50,000, issued the full 750,000 Shares and met the minimum expenditure commitment of US$800,000.

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5.3 Technical Information required by ASX Listing

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to the Resolution 4:

• (a) the maximum number of Shares to be issued is 300,000, being the initial tranche of Shares to be issued by the Company under the terms of the Tenement Agreement Shares;

• (b) the Shares will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;

• (c) the Shares will be issued as consideration for the acquisition of the tenements under the Tenement Acquisition Agreement;

the Shares will be allotted and issued to Coremi Sarl (a company incorporated in Burkina Faso), who is the holders of the tenements the subject of the Tenement Acquisition Agreement;

• (d) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (e) no funds will be raised from the issue of the Shares as they will be issued pursuant to the terms of the Tenement Acquisition Agreement as part consideration for the acquisition of the two tenements in Burkina Faso.

6. RESOLUTION 5 – PLACEMENT OF SHARES FOR CAPITAL RAISING

6.1 General

Resolution 5 seeks Shareholder approval for the allotment and issue of up to 8,000,000 Shares for the purpose of enabling the Company to undertake a placement to raise funds for its ongoing exploration on its Burkina Faso assets.

None of the subscribers pursuant to this issue will be related parties of the Company.

A summary of ASX Listing Rule 7.1 is set out in Section 3.2 above.

The effect of Resolution 5 will be to allow the Directors to issue the Shares pursuant to the Share Placement during the period of 3 months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

6.2 Technical information required by ASX Listing Rule 7.3

Pursuant to and in accordance with ASX Listing Rule 7.3, the following information is provided in relation to Resolution 5:

• (a) the maximum number of Shares to be issued is 8,000,000 Shares;

• (b) the Shares will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;

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• (c) the issue price will be not less than 80% of the average market price for Shares calculated over the five (5) days on which sales in the Shares are recorded before the day on which the issue is made or, if there is a prospectus, over the last five (5) days on which sales in the Shares were recorded before the date the prospectus is signed;

• (d) the Directors will determine to whom the Shares will be issued but there persons will not be related parties of the Company;

• (e) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares; and

• (f) the Company intends to use the funds raised under Resolution 5 for the purpose of continuing the Company’s exploration programmes on its recently acquired Burkina Faso projects.

7. ENQUIRIES

Shareholders are requested to contact Phil MacLeod on (+ 61 8) 6389 8100 if they have any queries in respect of the matters set out in these documents.

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GLOSSARY

ASIC means the Australian Securities and Investments Commission.

Askia means Askia Sarl Pty Ltd.

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.

Class A Convertible Securities means the proposed convertible securities convertible into Shares upon the achievement of the milestone and on the terms and conditions outlined in Schedule 1.

Class B Convertible Securities means the proposed convertible securities convertible into Shares upon the achievement of the milestone and on the terms and conditions outlined in Schedule 1.

Company means Canyon Resources Limited (ACN 140 087 261).

Constitution means the Company’s constitution.

Convertible Securities means the Class A Convertible Securities and the Class B Convertible Securities.

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.

General Meeting or Meeting means the meeting convened by the Notice.

Notice or Notice of Meeting or Notice of General Meeting means this notice of general meeting including the Explanatory Statement and the Proxy Form.

Proxy Form means the proxy form accompanying the Notice.

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.

Tenement Acquisition Agreement means the agreement entered into between the Company and Coremi Sarl dated on or around 9 December 2010.

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

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SCHEDULE 1 – TERMS AND CONDITIONS OF CONVERTIBLE SECURITIES

1. Definitions

In these terms and conditions:

ASX means ASX Limited (ABN 98 009 624 691) and, where the context permits, the Australian Securities Exchange operated by ASX Limited.

Canyon means Canyon Resources Limited (ACN 140 087 261).

Change in Control Event means:

• (e) the occurrence of:

• (i) the offeror under a takeover offer in respect of all Shares announcing that it has achieved acceptances in respect of 50.1% or more of the Shares; and

• (ii) that takeover bid has become unconditional; or

• (f) the announcement by Canyon that shareholders of Canyon have at a court convened meeting of shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement under which all Shares are to be either:

• (i) cancelled; or

• (ii) transferred to a third party; and

the court, by order, approves the proposed scheme of arrangement.

Company means Askia Sarl Pty Ltd (ACN 138 993 709).

Convertible Security means an "A" convertible security or a "B" convertible security as the case may be, issued by Canyon in accordance with the Terms Sheet and subject to these terms.

Convertible Securityholder means the holder of a Convertible Security.

Corporations Act means the Corporations Act 2001 (Cth).

Directors mean the directors from time to time of Canyon.

Expiry Date means in the case of "A" Convertible Securities, 4 years from the date of issue, and in the case of "B" Convertible Securities, 5 years from the date of issue.

Listing Rules means the official listing rules of ASX, as amended, added to or replaced from time to time.

Milestone means:

• (a) in the case of "A" Convertible Securities, an ASX announcement by Canyon that a competent person on behalf of the Company has identified an inferred mineral resource of 500,000 ounces of gold within the Tenements or the Subsequent Tenements, as that term is defined in the JORC Code; and

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• (b) in the case of "B" Convertible Securities, an ASX announcement by Canyon that a competent person on behalf of the Company has identified an inferred mineral resource of 1,000,000 ounces of gold within the Tenements or the Subsequent Tenements, as that term is defined in the JORC Code.

Section 606(1) means section 606(1) of the Corporations Act.

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

Shareholder means a holder of Shares.

Terms Sheet means the agreement between Canyon, Canyon West Africa Pty Ltd (ACN 146 068 788) and the Vendor dated 2 September 2010 for the sale of the single issued share in the Company to Canyon West Africa Pty Ltd (ACN 146 068 788), and to the extent a fuller agreement is entered into, includes that fuller agreement.

Tenements or the Subsequent Tenements is defined in the Terms Sheet.

2. Dividend

Convertible Securityholders are not entitled to a dividend.

3. Conversion

(a) Conversion

The Convertible Securities will convert into Shares in accordance with this clause 3.

(b) Conversion Milestones

Subject to clause 3(e), upon the satisfaction of the Milestone prior to the Expiry Date, each Convertible Security will convert into Shares on a one for one million basis such that one Convertible Security will convert into one million Shares.

(c) Conversion on Change in Control

Subject to clause 3(e), if prior to the Expiry Date a Change in Control Event occurs then each Convertible Security will convert into Shares on a one for one million basis such that one Convertible Security will convert into one million Shares, provided that the maximum number of Convertible Securities that can be converted into Shares and issued on a Change of Control Event must not exceed 10% of the issued Share capital of the Company as at the date of the Change of Control, to be issued on a pro rata basis to the Convertible Securityholders according to the number of Convertible Securities held on the date of the Change of Control. Any Convertible Securities which are not converted by virtue of this limitation will continue to be held by the Convertible Securityholders.

(d) Lapse after Expiry Date

If on or prior to the relevant Expiry Date:

(i) the Milestone affecting the 'A' Convertible Securities, is not met, the "A" Convertible Securities will lapse without affecting the "B" Convertible Securities; and

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(ii) The Milestone affecting the "B" Convertible Securities is not met, the "B" Convertible Securities will lapse.

(e)

Takeover Provisions

If the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) would result in any person being in contravention of Section 606(1) then the conversion of each Convertible Security that would cause the contravention shall be deferred until such time or times thereafter that the conversion would not result in a contravention of Section 606(1).

The Convertible Securityholders shall give notification to the Company in writing if they consider that the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) may result in the contravention of Section 606(1) failing which the Company shall assume that the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) will not result in any person being in contravention of Section 606(1).

The Company may (but is not obliged to) by written notice request the Convertible Securityholders to give notification to the Company in writing within seven (7) days if they consider that the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) may result in the contravention of Section 606(1). If the Convertible Securityholders do not give notification to the Company within seven (7) days that they consider the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) may result in the contravention of Section 606(1) then the Company shall assume that the conversion of Convertible Securities (or part thereof) under clauses 3(b) or 3(c) will not result in any person being in contravention of Section 606(1).

(f)

After Conversion

The Shares issued on conversion of any Convertible Security will as and from 5.00pm (WST) on the date of allotment rank equally with and confer rights identical with all other Shares then on issue and application will be made by the Company to ASX for official quotation of the Shares issued upon conversion.

4. Issue of Shares for No Consideration

The Company shall allot and issue Shares upon conversion of the Convertible Securities for no consideration and shall record the allotment and issue in the manner required by the Corporations Act and the Listing Rules.

5. Reconstruction

In the event of any reconstruction, consolidation or division of and the Shares, the Convertible Securities and their terms of conversion shall be reconstructed, consolidated or divided in the same manner such that no additional benefits are conferred on the Convertible Securityholders by virtue of such reconstruction, consolidation or division.

6. Winding Up

If the Company is wound up prior to conversion of all of the Convertible Securities into Shares then the Convertible Securityholders will have no right to participate in surplus assets or profits of the Company on winding up.

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7. Transferable

The Convertible Securities are transferable provided assignment is notified to Canyon within three days of doing so.

8. Copies of Notices and Reports

The Convertible Securityholders have the same right as Shareholders to receive notices, reports and audited accounts and to attend general meetings of the Company but are only entitled to vote in the circumstances referred to in clause 9.

9. Voting Rights

The Convertible Securityholders shall have no right to vote, subject to the Corporations Act.

10. Participation in new issues

There are no participation rights or entitlements inherent in the Convertible Securities and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Convertible Securities.

11. Quotation

The Convertible Securities are unquoted. No application for quotation of the Convertible Securities will be made by the Company.

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Lodge your vote:

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By Mail:

Canyon Resources Limited PO Box 681 Nedlands WA 6909 Australia

Alternatively you can fax your form to (within Australia) 08 9389 8327 (outside Australia) +61 8 9389 8327

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

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For your vote to be effective it must be received by 9.00am (WST) Wednesday 19 January 2011

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage or number of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable Forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

Turn over to complete the form

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View your securityholder information, 24 hours a day, 7 days a week:

www.investorcentre.com

Review your securityholding

Update your securityholding

Your secure access information is:

SRN/HIN:

PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001/i

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----- Start of picture text -----

I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes.

I 9999999999

I ND

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Proxy Form

Please mark

to indicate your directions

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Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Canyon Resources Limited hereby appoint

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the Chairman of the meeting

OR

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PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

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 to act generally at the meeting 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) at the General Meeting of Canyon Resources Limited to be held at 41 Stirling Highway, Nedlands, Western Australia on Friday, 21 January 2011 at 9.00am (WST) and at any adjournment of that meeting.

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Items of Business

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

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Resolution 1 Approval to Issue New Class of Securities Resolution 2 Ratification of Prior Issue of Shares Under Sale Agreement Resolution 3 Approval to Issue Shares and Convertible Securities Resolution 4 Approval to Issue Shares for Acquisition Resolution 5 Placement - Shares

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The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.

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Signature of Securityholder(s) This section must be completed.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime
Name Telephone Date / /
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C A Y

9 9 9 9 9 9 A