CAPRICORN METALS LTD — AGM Information 2008

Oct 22, 2008

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23 October 2008

ASX Limited 10[th] Floor, 20 Bond Street SYDNEY NSW 2000

Dear Sir / Madam,

RE: NOTICE OF ANNUAL GENERAL MEETING – 25 NOVEMBER 2008

Please find attached hereto a copy of Notice of Annual General Meeting for 25 November 2008, including an Explanatory Memorandum and Proxy Form, forwarded to shareholders today with the Annual Report for 2008.

For and on Behalf of the Board

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Max Cozijn Company Secretary

Attach:

cc: Directors

Malagasy Minerals Ltd. (ACN 121 700 105), Suite 7, 11 Colin Grove, WEST PERTH WA 6005 Tel: +61 8 9463 6656, Fax: +61 8 9463 6657

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NOTICE OF ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at the Celtic Club, First Floor, 48 Ord Street, West Perth, Western Australia on Tuesday 25 November 2008 at 5.00PM (WST).

Shareholders are urged to attend or vote by lodging the proxy form attached to this Notice.

Notice of Annual General Meeting

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NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of Shareholders of Malagasy Minerals Limited ( Company ) will be held at the Celtic Club, First Floor, 48 Ord Street, West Perth, Western Australia on Tuesday, 25 November 2008 at 5.00PM (WST) ( Meeting ).

The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form comprises part of this Notice.

The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders on Sunday, 23 November 2008 at 5.00PM (WST).

Terms and abbreviations used in this Notice and the Explanatory Memorandum are defined in Schedule 1.

AGENDA

Financial, Directors’ and Auditor’s Reports

To receive the Financial Report, Directors’ Report and Auditor’s Report for the financial year ended 30 June 2008.

1. Resolution 1 – Approve Remuneration Report

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

“That the Remuneration Report be adopted by the Shareholders on the terms and conditions in the Explanatory Memorandum.”

2. Resolution 2 – Re-election of Mr Max Cozijn as Director

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

“That Mr Max Cozijn, who retires in accordance with the Constitution and, being eligible, offers himself for reelection, be re-elected as a Director.”

3. Resolution 3 – Approve issue of Options to Mr Max Cozijn

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

“That in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act, Shareholders approve the issue of 1,000,000 Options to Mr Max Cozijn or his nominees on the terms and conditions in the Explanatory Memorandum.”

Voting exclusion

The Company will disregard any votes cast on this Resolution by Mr Max Cozijn or any of his associates. However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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 – Approve issue of Options to Mr Guy Le Clezio

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

“That in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act, Shareholders approve the issue of 500,000 Options to Mr Guy Le Clezio or his nominees on the terms and conditions in the Explanatory Memorandum.”

Voting exclusion

The Company will disregard any votes cast on this Resolution by Mr Guy Le Clezio or any of his associates.

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However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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 – Approve issue of Options to Dr Peter Woods

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

“That in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act, Shareholders approve the issue of 500,000 Options to Dr Peter Woods or his nominees on the terms and conditions in the Explanatory Memorandum.”

Voting exclusion

The Company will disregard any votes cast on this Resolution by Dr Peter Woods or any of his associates. However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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.

6. Resolution 6 – Approve issue of Consultancy Options

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

“That in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act, Shareholders approve the issue of 2,000,000 Consultancy Options to Hendry Consulting or its nominee on the terms and conditions in the Explanatory Memorandum.”

Voting exclusion

The Company will disregard any votes cast on this Resolution by Hendry Consulting or any of his associates. However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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.

7. Resolution 7 – Approve the Execution of Directors’ Deeds of Indemnity, Access and Insurance

To consider, and if it thought fit, pass as an ordinary resolution with or without amendment the following: “Pursuant to Chapters 2D.2 and 2E of the Corporations Act and for all other purposes approval be given to the Company, to:

• (a) indemnify each Director, during the period of directorship and after the cessation of directorship, in respect of certain claims should any be made against that director whilst acting in his or her capacity as a Director;

• (b) use its reasonable endeavours to procure an insurance policy and pay the premiums of insurance as assessed at market rates applicable from time to time for each such Director in respect of certain claims made against that Director acting in his or her capacity of a Director (except to the extent such insurance cannot be procured at a reasonable cost or is otherwise unavailable to the Company);

• (c) use its reasonable endeavours to ensure that an insurance policy for the Director is at all times covered under an insurance policy for the period of 7 years from the date a director ceases to be Director (Insurance Run-Off Period) , which will be on terms not materially less favourable to each Director than the terms of insurance applicable at the date of termination of his or her directorship and to continue to pay those premiums during that Insurance Run-Off Period (except to the extent such insurance cannot be procured at a reasonable cost or is otherwise unavailable to the Company); and

• (d) provide the Director with access, upon the cessation for any reason of his directorship and for a period of not less than 7 years following that cessation, to any Company records which are either prepared or provided to the Director during the period of his directorship,

and on the terms and conditions in the Explanatory Memorandum accompanying this Notice.”

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Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person to whom the Resolution would permit a financial benefit to be given (except a benefit solely in their capacity as holders of ordinary securities) if the Resolution is passed, or any associate of such a person.

However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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.

8. Resolution 8 – Section 195 Approval

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

“That, for the purposes of section 195(4) of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to complete the transactions as contemplated in this Notice of General Meeting.”

Dated 23 October 2008

By Order of the Board

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Max Cozijn Company Secretary

Notice of Annual General Meeting

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EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at the Celtic Club, First Floor, 48 Ord Street, West Perth, Western Australia on Tuesday, 25 November 2008 at 5.00PM (WST ).

1. Financial, Directors’ and Auditor’s Reports

Shareholders will be offered the opportunity to discuss the Financial Report, Directors’ Report and Auditor’s Report for the financial year ended 30 June 2008 copies of which are on the Company’s website at www.malagasyminerals.com or by contacting the Company on telephone number +61 8 9463 6656.

Shareholders will be offered the opportunity to ask questions or make comment on the management of the Company.

2. Resolution 1 – Approve Remuneration Report

Pursuant to section 250R(2) of the Corporations Act, the Company is required to put the Remuneration Report to the vote of Shareholders. The Financial Report for the year ended 30 June 2008 contains a Remuneration Report which sets out the remuneration policy for the Company and reports the remuneration arrangements in place for the managing Director, specified executives and non-executive Directors.

The provisions of the Corporations Act provide that Resolution 1 need only be an advisory vote of Shareholders. Therefore, Resolution 1 is advisory only and does not bind the Directors. Of itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report. However, the Board will take the outcome of the vote into consideration when considering the remuneration policy.

The chairman of the Meeting will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on, the Remuneration Report.

3. Resolution 2 – Re-election of Mr Max Cozijn as Director

Article 6.3(c) of the Constitution requires that one third of the Directors must retire at each annual general meeting (rounded down to the nearest whole number).

Article 6.3(f) provides that a Director who retires under Article 6.3(c) is eligible for re-election.

Pursuant to these Articles, Mr Max Cozijn will retire by rotation and seek re-election.

A brief resume of Mr Cozijn is contained in the Annual Report.

The Board believes that Mr Cozijn has performed the duties and responsibilities of a director diligently and professionally, in the best interests of all Shareholders.

The Board unanimously supports the re-election of Mr Cozijn.

4. Resolutions 3 to 6 – Approve Issue of Options to Mr Max Cozijn, Mr Guy Le Clezio and Dr Peter Woods and Approve Issue of Consultancy Options to Hendry Consulting

4.1 General

Resolutions 3 to 6 seek Shareholder approval pursuant to Listing Rule 10.11 and Chapter 2E of the Corporations Act for the issue of a total of 2,000,000 Options and 2,000,000 Consultancy Options as follows:

Mr Max Cozijn (or his nominee) 1,000,000 Options Mr Guy Le Clezio (or his nominee) 500,000 Options Dr Peter Woods (or his nominee) 500,000 Options Hendry Consulting (or its nominee) 2,000,000 Consultancy Options

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Shareholder approval is required under Listing Rule 10.11 and section 208 of the Corporations Act because the Directors are related parties of the Company.

Furthermore, Shareholder approval of the issue of Options means that this issue will not reduce the Company’s 15% placement capacity under Listing Rule 7.1.

No application will be made for quotation of the Options or Consultancy Options.

The purpose of the issue of the Options is for the Company to retain directors of high calibre. The Company acknowledges that the issue of options to non-executive Directors is contrary to recommendation 9.3 of the Principles of Good Corporate Governance and Best Practice Recommendations. However, the Board considers the issue of Options in Resolutions 3 to 5 to be reasonable in the circumstances given the Company’s size, stage of development and the need to attract and retain directors of high calibre while still maintaining a cash reserve.

The Company, Hendry Consulting (as consultant) and Mr Steven Goertz entered into a consultancy agreement dated 7 February 2008 ( Consultancy Agreement ) under which the Company has engaged Hendry Consulting, through Mr Steven Goertz, to provide executive management services for a 3 year period from the commencement date of the Consultancy Agreement, being 3 July 2008.

Under the Consultancy Agreement, the Company is required, subject to Shareholder approval, to issue 2,000,000 Consultancy Options to Hendry Consulting (or its nominee). The purpose of Resolution 6 is to obtain Shareholder approval to issue the Consultancy Options to Hendry Consulting, which is a related party of the Company.

4.2 Specific information required by Listing Rule 10.13 and section 219 of the Corporations Act

Listing Rule 10.13 and section 219 of the Corporations Act requires that the following information be provided to Shareholders for the purpose of obtaining Shareholder approval for the issue:

• (a) 2,000,000 Options will be granted to the Directors (or their nominees) as follows:

Name of Director Maximum number of securities to be issued

Mr Max Cozijn 1,000,000 Options Mr Guy Le Clezio 500,000 Options Dr Peter Woods 500,000 Options

• (b) 2,000,000 Consultancy Options will be granted to Hendry Consulting, which is a company controlled by Mr Steven Goertz.

• (c) The Company will issue the Options and the Consultancy Options no later than one month after the date of the Meeting (or such longer period of time as ASX may in its discretion allow).

• (d) Each Option will be issued for nil consideration. Each Option entitles the holder to subscribe for one (1) Share at an exercise price of $0.20, exercisable on or before 5 years after they are granted. The Options will not be quoted on ASX. Further terms and conditions of the Options are in Schedule 2.

• (e) Each Consultancy Option will be issued for nil consideration and entitles the holder to subscribe for one (1) Share at an exercise price of $0.20, exercisable on or before 3 July 2013. 1,000,000 Consultancy Options vest on 3 January 2010 and 1,000,000 vest on 3 July 2011. The Consultancy Options will not be quoted on ASX. Further terms and conditions of the Options are in Schedule 3.

• (f) Each Director has an interest in the Resolutions under which Options will be granted and therefore believes it inappropriate to make a recommendation.

• (g) A voting exclusion statement is included in the Notice.

• (h) No funds will be raised by the issue of the Options or the Consultancy Options as they are being issued for nil consideration.

• (i) On the basis of the assumptions below, utilizing the Black & Scholes option pricing model we have determined the technical value of one Option and one Consultancy Option to approximate $0.04. This valuation imputes a total value of $160,000 to the Options and Consultancy Options. Using this valuation as basis for determining the amount of the financial benefit to Directors, Mr Steve Goertz will receive a financial benefit of $80,000, Mr Max Cozjin will receive a financial benefit of $40,000 and Mr Guy Le Clezio and Dr Peter Woods will receive a financial benefit of $20,000 each. The value may go up or down after that date as it will depend on the future price of a Share. Black & Scholes methodology has been used, together with the following assumptions:

• (i) interest rate set at the Commonwealth Government securities rate of 6.0%;

• (ii) the date of valuation is for the purposes of settling the current market value of a share is 14 October 2008;

• (iii) at this date the share price was $0.065 which is the price used in the valuation; and

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• (iv) the volatility factor is set as 100% which is based on the history of the last 30 day Share trading on ASX.

• (j) Under the accounting standard AASB Share based Payments, the Company would recognise the fair value of options granted to each of the Directors as an expense of $192,000 in its income statement with a corresponding adjustment to equity.

• (k) The following table demonstrates the dilution of all other Shareholders’ holdings in the Company, upon issue of the Options to the Directors and the Consultancy Options to Hendry Consulting (on a fully diluted basis):

diluted basis):
Shares on issue fully diluted at date of this Notice of Meeting	96,000,003
Options to be issued to Directors under Resolutions 3 to 5	2,000,000
Consultancy Options to be issued to Mr Steven Goertz under Resolution 6	2,000,000
Dilution effect of Options grant to Directors (on a fully diluted basis)1	4%

Note 1 – Assumes Resolutions 3 to 6 are passed by Shareholders and all Options and Consultancy Options are granted.

• (l)) The market price of Shares would normally determine whether or not the Options or Consultancy Options will be exercised. If the Options or Consultancy Options are exercised at a price that is lower than the price at which Shares are trading on ASX, there may be a perceived cost to the Company.

• (m) Shareholders have approved an aggregate amount of up to $200,000 to be paid as non-executive Directors’ fees.

• The Directors remuneration is as follows:

Director Base Remuneration Superannuation Other fees Total or fees(per annum) (per annum) (per annum)	Director Base Remuneration Superannuation Other fees Total or fees(per annum) (per annum) (per annum)	Director Base Remuneration Superannuation Other fees Total or fees(per annum) (per annum) (per annum)	Director Base Remuneration Superannuation Other fees Total or fees(per annum) (per annum) (per annum)	Director Base Remuneration Superannuation Other fees Total or fees(per annum) (per annum) (per annum)
Mr Max Cozijn	$70,0001	$6,300		$76,300
Mr Guy Le Clezio	$20,000	$1,800		$21,800
Dr Peter Woods	$20,000	$1,800		$21,800
Mr Steven Goertz	$20,000	$1,800	$165,0002	$186,800

Note 1 – Mr Cozijn receives $20,000 per annum as Directors’ fees and $50,000 for his services as Company Secretary and finance Director (excluding superannuation).

Note 2 – Hendry Consulting is a company associated with Mr Goertz. Pursuant to the Consultancy Agreement, Hendry Consulting’s fees are as follows:

• (a) An annual fee of A$165,000 comprising base fees of A$150,000 per annum plus A$15,000 per annum superannuation (the superannuation is payable by Hendry Consulting to Mr Goertz).

• (b) Fully serviced motor vehicle to be provided for the private use of Mr Goertz in Madagascar.

• (c) 2,000,000 Options exercisable at $0.20 and expiring on the fifth anniversary of the Commencement Date granted to Hendry Consulting (or its nominee) as follows:

• (i) 1,000,000 Options vest on the date that is 18 months after the Commencement Date; and

• (ii) 1,000,000 Options vest on the date that is the third anniversary of the Commencement Date.

• (d) Reimbursement of the following expenses (reasonably incurred) during the term of the Consultancy Agreement:

• (i) Mr Goertz’s rent in Madagascar, which shall not include reimbursement for any outgoings such as water, electricity and gas;

• (ii) The costs of relocating Mr Goertz and his immediate family to Madagascar;

• (iii) Return airfares from Madagascar to Perth every 12 months for Mr Goertz and his immediate family;

• (iv) Full medical insurance and hospital benefits for Mr Goertz and his immediate family in Madagascar;

• (v) School fees for Mr Goertz’s child in Madagascar at a school nominated by Mr Goertz;

• (vi) Expenses connected with sub-section (b) above; and

• (vii) At the end of the term or earlier determination of the Consultancy Agreement, the full relocation costs for Mr Goertz and his immediate family and personal effects back to Perth, Western Australia.

(n) Mr Guy Le Clezio and Dr Peter Woods are directors of Madagascar Resources NL. The Company has paid a total of approximately $300,000 in reduction of a loan from Madagascar Resources NL, plus

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$750,000 in consideration in accordance with a share sale agreement dated 4 April 2007 (as amended on 9 November 2007 and 14 March 2008). Further information in respect of the loan and the share sale agreement is contained in the Company’s prospectus dated 23 May 2008. Madagascar Resources NL also holds 10,000,000 shares in the Company.

(o) The Directors’ interests in the Company (both current and if Resolutions 3 to 6 are passed) are as follows:

Director Shares Options Options proposed to be issued under Resolutions 3-6	Director Shares Options Options proposed to be issued under Resolutions 3-6	Director Shares Options Options proposed to be issued under Resolutions 3-6	Director Shares Options Options proposed to be issued under Resolutions 3-6
Mr Max Cozijn1	5,140,001	Nil	1,000,000
Mr Guy Le Clezio	250,000	Nil	500,000
Dr Peter Woods	Nil	Nil	500,000
Mr Steven Goertz	5,000,0012	Nil	2,000,0003

Note 1 – Max Cozijn holds 10,001 Shares, Diplomat Holdings Pty Ltd holds 5,000,000 Shares and Diplomat Holdings Pty Ltd holds 130,000 Shares. Diplomat Holdings Pty Ltd is a company associated with Max Cozijn. Note 2 – Mr Goertz holds 1 Share directly and 5,000,000 Shares are held indirectly by the Goertz Super Fund.

Note 3 – 2,000,000 Consultancy Options are proposed to be issued to Hendry Consulting pursuant to the Consultancy Agreement. Hendry Consulting is a company associated with Mr Steven Goertz.

(p) Historical share price information for the last three months is as follows:

	Price	Date
Highest	$0.22	23 July 2008
Lowest	$0.052	13 October 2008
Last	$0.065	14 October 2008

(q) Other than the information above and otherwise in this Explanatory Memorandum, the Company believes that there is no other information that would be reasonably required by Shareholders to pass Resolutions 3 to 6.

As Shareholder approval is sought under Listing Rule 10.11, approval under Listing Rule 7.1 is not required.

5. Resolution 7 – Approve the Execution of Directors’ Deeds of Indemnity, Access and Insurance

5.1 Background

The purpose of Resolution 7 is to enable the Company, to provide each Director with a reasonable level of protection in relation to claims made against a Director acting as a director of the Company, effective from the date of the Directors’ appointment.

Given their duties and responsibilities as directors of a public company and their potential liabilities, the Directors consider it appropriate that they be suitably protected from certain claims made against them. The proposed protection will not extend to the extent it is prohibited by the Corporations Act.

As a person may be called to account for his or her actions several years after ceasing to be a director of a company, it is considered reasonable that suitable protection should extend for a period of time after a Director has ceased to be a director of the Company.

It is generally recognised that a director or former director of a company may face considerable difficulty in properly answering or defending any claim made against him or her, particularly, as is often the case, where the claim is brought after the director ceases to hold office. Difficulties may arise by reason of the following:

(a) No indemnity after directorship ends

While a company’s constitution provides directors with an indemnity in respect of claims made while they remain directors arguably, that indemnity ceases when the directorship ends. Without the benefit of an indemnity, the cost of defending such a claim in respect of the actions of a director or former director, even if the claim is ultimately proven to be without merit, can be considerable and beyond the financial resources of the individual director.

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• (b) Maintenance of insurance policies

Directors’ and Officers’ insurance policies generally only provide cover for claims made during the currency of the insurance policy, i.e. while insurance premiums continue to be paid on the policy. Generally, unless insurance premiums continue to be paid after the time a person ceases to be a director, claims made after cessation of the directorship will not be covered by the insurance policy. The cost to a former director of personally maintaining insurance cover after ceasing to be a director can be prohibitive, particularly given the number of years for which insurance must be maintained and given the former director will no longer be receiving any income from the Company.

• (c) Access to board papers

Directors have a statutory right to inspect the books of the Company:

• (i) whilst they hold office; and

• (ii) for a period of 7 years after the director ceases to hold office,

at all reasonable times for the purpose of a legal proceeding to which the director is a party, that the director proposes in good faith to bring or that the director has reason to believe will be brought against him or her.

Despite this statutory right, Directors may require access to company documents which are relevant to the director’s holding office as a director of the Company and not strictly required for the purpose of anticipated, threatened or commenced legal proceedings. Furthermore, although a proceeding may be instituted within six years after a cause of action arises, that six year period is calculated from the date

the damage is found to have occurred – this may be long after the conduct in question, from which the later damage arose, actually occurred.

Given these difficulties a person may be unwilling to become or to remain as a director of a public company without suitable protection being provided by the Company. The benefit to the Company in providing such protection is that it will continue to be able to attract persons of suitable expertise and experience to act as Directors.

5.2 Summary of the Directors’ Indemnity, Insurance and Access Deed

The Company will, subject to Shareholder approval, enter into a Deed, which will require:

• (a) the Company to indemnify each Director during the period of his or her directorship and after the cessation of his directorship, in respect of certain claims made against that director in his or her capacity as a director of the Company to the extent allowable under the Corporations Act;

• (b) the Company to use its reasonable endeavours (subject to cost and availability) to maintain an insurance policy and pay the premiums of insurance as assessed at market rates applicable from time to time, to the extent available under the Corporations Act, for each Director in respect of certain claims made against him or her in his or her capacity as a director of the Company and to continue to pay those premiums for a period of up to 7 years following the termination of his directorship;

• (c) that if the Company cannot procure an insurance policy for a Director at a reasonable cost it shall advise such Director who may refer the matter to an expert (whose decision shall be final and binding on the parties) for determination that the Company has not used its reasonable endeavours and the expert may direct the Company to obtain an insurance policy on the best available terms; and

• (d) the Company to provide each Director with access, upon ceasing for any reason to be a director of the Company and for a period of up to 7 years following that cessation, to any the Company records which are either prepared or provided to the Director during the period during which the person was a director of the Company.

• The Deed will also require each Director to maintain confidentiality and to protect the Company’s intellectual property.

5.3 Summary of indemnity and insurance provisions in the Corporations Act

In considering the resolution, members should be aware of the following limitations in the Corporations Act concerning the provision of indemnities and insurance to the Company’s officers. The deed for which member approval is sought under the resolution, complies with these limitations.

• (a) Section 199A of the Corporations Act The Corporations Act now sets out specific prohibitions to the Company’s ability to grant indemnities for liabilities and legal costs.

The Company is prohibited from indemnifying its officers against a liability if it is a liability:

• (i) to the Company or any of its related bodies corporate;

• (ii) to a third party that arose out of conduct involving a lack of good faith; or

• (iii) for a pecuniary penalty order or a compensation order under the Corporations Act (such orders

• being made for breaches such as breaches of director’s duties, the related party rules and insolvent trading rules).

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• the Company is also prohibited from indemnifying its officers against legal costs incurred:

• (iv) in defending actions where an officer is found liable for a matter for which he or she cannot be indemnified by the Company as set out immediately above;

• (v) in defending criminal proceedings where the officer is found guilty;

• (vi) in defending proceedings brought by the ASIC or a liquidator for a court order if the grounds for making the order are found by the court to be established; or

• (vii) in connection with proceedings for relief to the director under the Corporations Act where the court denies the relief.

• (b) Section 199B of the Corporations Act

• If the Company, or a related body corporate of the Company, pays the premium on an insurance policy in favour of a Director, then section 199B of the Corporations Act requires the Company to ensure that the relevant contract of insurance does not cover liabilities incurred by the officer arising out of conduct involving either:

• (i) a wilful breach of duty in relation to the Company; or

• (ii) contravention of the provisions relating to an officer making improper use of information or improper use of his or her position for his or her advantage or gain, or to the detriment of the Company.

5.4 Member approval

To enable the Company to enter into Deeds with each Director, Resolution 7 seeks member approval in accordance with the following provisions of the Corporations Act:

• (a) Section 200B of the Corporations Act

• Section 200B of the Corporations Act relevantly provides that the Company cannot give a benefit to a Director in connection with the retirement of that Director from his or her office, without member approval of the Company.

• The Directors consider that as the:

• (i) proposed payment of insurance premiums;

• (ii) benefit of the indemnity in relation to liabilities incurred during the period a Director holds office; and

• (iii) Director’s access to Company records,

continues for a period of up to 7 years after the Director ceases to hold office, this may be viewed as the provision of a benefit given ‘in connection with’ the Director’s retirement from the Board for the purposes of section 200B of the Corporations Act.

The insurance premiums under each Deed will be calculated at the market rates applicable from time to time.

A copy of all company documents will be kept at the Company’s registered office and made available for inspection and copying by each Director for a period of 7 years after he or she ceases to hold office, for whatever reason.

• (b) Section 208 of the Corporations Act

Chapter 2E of the Corporations Act prohibits a public company, or an entity that the public company controls, from giving a financial benefit to a related party of the public company unless either:

• (i) the giving of the financial benefit falls within one of the nominated exceptions to the provision (e.g. section 212); or

• (ii) prior shareholder approval of the public company is obtained to the giving of the financial benefit.

For the purposes of Chapter 2E, each of the Directors of the Company is considered to be a related party of the Company.

The provision of insurance and indemnity to existing Directors may involve the provision of a financial benefit to related parties of the Company within the prohibition provided by Chapter 2E of the Corporations Act. The Directors consider that, although the payment of insurance premiums and the provision of indemnities by the Company are ‘reasonable in the circumstances’ of the Company and therefore are exceptions from the prohibition in Chapter 2E of the Corporations Act, consideration of the reasonable nature of the provision of any indemnity or insurance is an appropriate matter for the Shareholders of the Company.

In accordance with section 219 of the Corporations Act, the following information is provided to Shareholders to allow them to assess the proposed resolution:

The Company proposes to take out an insurance policy which will provide insurance cover for Directors against all permitted liabilities incurred by Directors acting as a director of the Company.

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• (i) the insurance premiums payable each will be calculated at market rates applicable from time to time, if insurance is available, with an indicative range of $5,000 - $10,000 per Director per annum.

• (ii) the following Directors are each related parties of the Company to whom the proposed resolutions would permit the giving of benefits:

• (A) Mr Max Cozijn;

• (B) Mr Steven Goertz;

• (C) Mr Guy Le Clezio; and

• (D) Dr Peter Woods;

• (iii) the nature of the benefit to be given to each of the Directors is the benefit under the Deed, the terms of which are summarised in Section 5.2.

• (iv) none of the Directors are entitled to or wish to make a recommendation to shareholders about the proposed resolution as each holds an interest in the benefit proposed to be given by the Company to each of them, as each is a proposed party to the Deed.

• (v) neither the Directors nor the Company are aware of any other information that would be reasonably required by shareholders to make a decision in relation to the benefits contemplated by the proposed resolution.

• (vi) the reasons and basis for the benefit are set out in Section 5.1.

• (vii) the Directors have determined that the following director’s fees will be paid:

Participating Base Super Other Total Director remuneration contributions remuneration or fees	Participating Base Super Other Total Director remuneration contributions remuneration or fees	Participating Base Super Other Total Director remuneration contributions remuneration or fees	Participating Base Super Other Total Director remuneration contributions remuneration or fees
Mr Max Cozijn $70,0001	$6,300	Nil	$76,300
Mr Steven Goertz $20,000	$1,800	$165,0002	$186,800
Mr Guy Le Clezio $20,000	$1,800	Nil	$21,800
Dr Peter Woods $20,000	$1,800	Nil	$21,800

Note 1 – Mr Max Cozijn receives $20,000 per annum as Directors’ fees and $50,000 per annum for his services as Company Secretary and finance director (excluding superannuation).

Note 2 – Hendry Consulting is paid $165,000 per annum for consultancy fees under the Consultancy Agreement. In addition to

this, Hendry Consulting receives other benefits more particularly described in section 4.3(l) of the Explanatory Memorandum.

6. Resolution 8 – Section 195 Approval

Section 195 of the Corporations Act essentially provides that a director of a public company may not vote or be present during meetings of directors when matters in which that director holds a ‘material personal interest’ are being considered.

Some of the Directors may have a material personal interest in the outcome of Resolutions 3 to 6. In the absence of this Resolution 8, the Directors may not be able to form a quorum at directors meetings necessary to carry out the terms of Resolutions 3 to 6.

The Directors have accordingly exercised their right under section 195(4) of the Corporations Act to put the issue to Shareholders to resolve upon.

7. Action to be taken by Shareholders

Shareholders should read this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a ‘proxy’) to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, to sign and return the Proxy Form to the Company in accordance with the instructions provided. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

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Schedule 1 – Definitions

In this Explanatory Memorandum and Notice:

Annual Report means the 2008 Annual Report of the Company and its controlled entities (if any) a copy of which was lodged with the ASX.

Article means an article of the Constitution.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited ABN 98 008 624 691 and where the context permits the Australian Securities Exchange operated by ASX Limited.

Auditor’s Report means the auditor’s report on the Financial Report.

Board means the board of Directors.

Company means Malagasy Minerals Limited ABN 84 121 700 105.

Constitution means the Constitution of the Company.

Consultancy Agreement has the meaning in section 4.1 of the Explanatory Memorandum.

Consultancy Option means an option to subscribe for a Share having an exercise price of $0.20, expiring 3 July 2013 and the terms and conditions in Schedule 3.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company and Directors means the directors of the Company.

Directors Report means the annual directors report prepared under Chapter 2M of the Corporations Act for the Company and its controlled entities (if any).

Explanatory Memorandum means the explanatory memorandum to the Notice.

Financial Report means the annual financial report prepared under Chapter 2M of the Corporations Act of the Company and its controlled entities (if any).

Listing Rules means the Listing Rules of ASX.

Meeting has the meaning given in the introductory paragraph of the Notice.

Notice means this notice of meeting.

Option means an option to subscribe for a Share having an exercise price of $0.20, expiring 5 years after the date of grant and the terms and conditions in Schedule 2.

Optionholder means a person who holds an Option or a Consultancy Option (as the case may be).

Proxy Form means the proxy form attached to the Notice.

Remuneration Report means the remuneration report of the Company contained in the Annual Report.

Resolution means a resolution contained in this Notice.

Schedule means a Schedule to this Notice.

Share means, as contemplated by this Notice, fully paid ordinary share in the capital of the Company.

Shareholder means a shareholder of the Company.

WST means Western Standard Time, being the time in Perth, Western Australia.

Schedule 2 – Terms and Conditions of Options

1. Each Option entitles the Option holder to subscribe for and be allotted one Share in the Company upon the payment of the Exercise Price of 20 cents per Option.

2. The expiry date of the Options will be 5.00 pm 5 years from issue ( Expiry Date ).

3. The Options are exercisable at any time on or prior to the Expiry Date by notice in writing to the directors of the Company accompanied by payment of the Exercise Price for each Option being exercised.

4. All Shares issued upon exercise of the Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for official quotation by the ASX of all Shares issued upon exercise of the Options within the time period prescribed by the Listing Rules.

5. There are no participating rights or entitlements inherent in the Options and Option holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Options. However, the Company will send a notice to each holder of Options at least nine business days before the relevant record date for determination of Shareholders. This will give Option holders the opportunity to exercise their Options

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• prior to the date for determining entitlements to participate in any such issue.

If from time to time on or prior to the expiry of the Options the Company makes an issue of shares to the holders of Shares by way of capitalisation of profits or reserves (Bonus Issue), then upon exercise of their Options an Option holder will be entitled to have issued to them (in addition to the Shares which would otherwise be issued to him upon such exercise) the number of Shares of the class which would have been issued to him under that Bonus Issue (Bonus Shares) if on the record date for the Bonus Issue they had been registered as the holder of the number of Shares of which they would have been registered as holder if, immediately prior to that date, they had duly exercised their Options and the Shares the subject of such exercise had been duly allotted and issued to them. The Bonus Shares will be paid up by the Company out of profits or reserves (as the case may be) in the same manner as was applied in relation to the Bonus Issue.

In the event of any re-organisation of the issued capital of the Company on or prior to the expiry of the Options, the rights of an Option holder will be changed to the extent necessary to comply with the applicable Listing Rules in force at the time of the re-organisation.

1. In the event of a pro rata issue or bonus issue of securities by the Company, the exercise price and the number of underlying securities over which the Options may be exercised (as applicable) will be varied in accordance with Listing Rule 6.22.

2. The Options are to be unlisted.

Schedule 3 – Terms and Conditions of Consultancy Options

1. Each Consultancy Option entitles the Consultancy Option holder to subscribe for and be allotted one Share in the Company upon the payment of the Exercise Price of 20 cents per Option.

3. The expiry date of the Consultancy Options will be 5.00pm (WST) on 3 July 2013 (Expiry Date) .

4. Unless agreed otherwise by Company and the Option holder the Consultancy Options will vest and may be exercised in whole or part prior to the Expiry Date as follows:

5. (a) 1,000,000 Consultancy Options any time after 3 January 2010; and

6. (b) 1,000,000 Consultancy Options any time after 3 July 2011.

7. The Consultancy Options that have vested are exercisable at any time on or prior to the Expiry Date by notice in writing to the directors of the Company accompanied by payment of the Exercise Price for each Consultancy Option being exercised.

8. All Shares issued upon exercise of the Consultancy Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for official quotation by the ASX of all Shares issued upon exercise of the Consultancy Options within the time period prescribed by the Listing Rules.

9. There are no participating rights or entitlements inherent in the Consultancy Options and Consultancy Option holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Consultancy Options. However, the Company will send a notice to each holder of Consultancy Options at least nine business days before the relevant record date for determination of Shareholders. This will give Consultancy Option holders the opportunity to exercise their Consultancy Options prior to the date for determining entitlements to participate in any such issue.

10. If from time to time on or prior to the expiry of the Consultancy Options the Company makes an issue of shares to the holders of Shares by way of capitalisation of profits or reserves (Bonus Issue), then upon exercise of their Consultancy Options a Consultancy Option holder will be entitled to have issued to them (in addition to the Shares which would otherwise be issued to him upon such exercise) the number of Shares of the class which would have been issued to him under that Bonus Issue (Bonus Shares) if on the record date for the Bonus Issue they had been registered as the holder of the number of Shares of which they would have been registered as holder if, immediately prior to that date, they had duly exercised their Consultancy Options and the Shares the subject of such exercise had been duly allotted and issued to them. The Bonus Shares will be paid up by the Company out of profits or reserves (as the case may be) in the same manner as was applied in relation to the Bonus Issue.

In the event of any re-organisation of the issued capital of the Company on or prior to the expiry of the Consultancy Options, the rights of an Consultancy Option holder will be changed to the extent necessary to comply with the applicable Listing Rules in force at the time of the re-organisation.

In the event of a pro rata issue or bonus issue of securities by the Company, the exercise price and the number of underlying securities over which the Consultancy Options may be exercised (as applicable) will be varied in accordance with Listing Rule 6.22.

1. The Consultancy Options are to be unlisted.

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P R O X Y F O R M

The Company Secretary Unit 7 11 Colin Grove WEST PERTH WA 6009

For information on returning this proxy form please see instructions over the page.

I/We[1] ___________________

of _______________

being a Shareholder/Shareholders of the Company and entitled ________

votes in the Company, hereby appoint[2] ___________

or failing such appointment the chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the annual general meeting of the Company to be held at the Celtic Club, First Floor, 48 Ord Street, West Perth, Western Australia on Tuesday, 25 November 2008 at 5.00PM (WST) and at any adjournment thereof in the manner indicated below or, in the absence of indication, as he thinks fit. If 2 proxies are appointed, the proportion or number of votes of this proxy is authorised to exercise is * [ ]% of the Shareholder’s votes*/ [ ] of the Shareholder’s votes. (An additional Proxy Form will be supplied by the Company, on request).

INSTRUCTIONS AS TO VOTING ON RESOLUTIONS IMPORTANT:

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If the chairman of the Meeting is to be your proxy and you have not directed your proxy how to vote on Resolutions 3 and 7 please tick this box. By marking this box you acknowledge that the chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of Resolutions 3 and 7 and that votes cast by him, other than as proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the chairman of the Meeting will not cast your votes on Resolutions 3 and 7 and your votes will not be counted in computing the required majority if a poll is called on these Resolutions.

The chairman of the Meeting intends to vote undirected proxies in favour of the Resolution. The proxy is to vote for or against the Resolution referred to in the Notice as follows:

As Ordinary	Resolutions	For	Against Abstain	Against Abstain
Resolution 1.	Approve Remuneration Report
Resolution 2.	Re-election of Mr Max Cozijn as Director
Resolution 3.	Approve issue of Options to Mr Max Cozijn
Resolution 4.	Approve issue of Options to Mr Guy Le Clezio
Resolution 5.	Approve issue of Options to Dr Peter Woods
Resolution 6.	Approve issue of Consultancy Options to Hendry Consulting
Resolution 7.	Approve the Execution of Directors’ Deeds of Indemnity, Access and Insurance
Resolution 8.	Section 195 Approval

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Authorised signature/s This section must be signed in accordance with the instructions below to enable your voting instructions to be implemented.

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

Individual or Shareholder 1 Shareholder 2 Shareholder 3
Sole Director and Sole Company Director Director/Company Secretary
Secretary
____ ____ _____
Contact Name Contact Daytime Telephone Date
[1] Insert name and address of Shareholder 2 Insert name and address of proxy Omit if not applicable
----- End of picture text -----*

Proxy Notes:

A Shareholder entitled to attend and vote at the Meeting may appoint a natural person as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting. If the Shareholder is entitled to cast 2 or more votes at the Meeting the Shareholder may appoint not more than 2 proxies. Where the Shareholder appoints more than one proxy the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If such proportion or number of votes is not specified each proxy may exercise half of the Shareholder’s votes. A proxy may, but need not be, a Shareholder of the Company.

If a Shareholder appoints a body corporate as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting, the representative of the body corporate to attend the Meeting must produce the Certificate of Appointment of Representative prior to admission. A form of the certificate may be obtained from the Company’s share registry.

You must sign this form as follows in the spaces provided:

Joint Holding: where the holding is in more than one name all of the holders must sign. Power of Attorney: if signed under a Power of Attorney, you must have already lodged it with the registry, or alternatively, attach a certified photocopy of the Power of Attorney to this Proxy Form when you return it. Companies: a Director can sign jointly with another Director or a Company Secretary. A sole Director who is also a sole Company Secretary can also sign. Please indicate the office held by signing in the appropriate space.

If a representative of the corporation is to attend the Meeting the appropriate ‘Certificate of Appointment of Representative’ should be produced prior to admission. A form of the certificate may be obtained from the Company’s Share Registry.

Return of Proxy Forms

Proxy Forms (and the power of attorney or other authority, if any, under which the Proxy Form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the Proxy Form (and the power of attorney or other authority) must be deposited at or received by facsimile transmission at the Company’s office as set out below not less than 48 hours prior to the time of commencement of the annual general meeting (WST).

Facsimile: +618 9463 6657 Post: PO Box 2818 WEST PERTH WA 6872 Delivery: Unit 7 11 Colin Grove WEST PERTH WA 6005

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