CARAVEL MINERALS LIMITED

CARAVEL MINERALS LIMITED ABN 41 120 069 089

NOTICE OF GENERAL MEETING

The General Meeting of the Company will be held at Level 3, 18 Richardson Street West Perth, Western Australia on 27 August 2015 at 10 am (WST).

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

An Independent Expert’s Report is attached to this Notice of Meeting as Annexure A. The report concludes that the transaction the subject of Resolution 1 in this Notice of Meeting is not fair but reasonable to the Company’s non-associated Shareholders for the reasons set out in the report.

CARAVEL MINERALS LIMITED ABN 41 120 069 089

NOTICE OF GENERAL MEETING

Notice is given that a general meeting of Shareholders of Caravel Minerals Limited ( Company ) will be held at Level 3, 18 Richardson Street West Perth, Western Australia on 27 August 2015 at 10 am (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 form 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 25 August 2015 at 5.00 pm (WST).

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

AGENDA

1. Resolution 1 – Approval of the disposal of a 50.1% interest in the Calingiri Copper-Molybdenum Project

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

"Subject to Resolution 2 being approved, that, for the purposes of Listing Rule 10.1 and for all other purposes, approval is given for:

(1) the Company’s wholly owned subsidiary Quadrio Resources Pty Ltd to dispose of a 50.1% interest in the Calingiri Tenements to First Quantum Minerals (Australia) Pty Ltd;
(2) the grant by Quadrio Resources Pty Ltd of the Mining Mortgage in favour of First Quantum Minerals (Australia) Pty Ltd as it stands and as amended by the Supplementary Deed;
(3) any subsequent disposals by Quadrio Resources Pty Ltd to First Quantum Minerals (Australia) Pty Ltd of all of its interest in the Calingiri Tenements (or its Joint Venture Interest) as a result of the exercise by First Quantum Minerals (Australia) Pty Ltd of certain rights under the FIA JV and/or the Mining Mortgage as described in paragraph 1.1(d) of Part A of the Explanatory Memorandum, which relate to First Quantum Minerals (Australia) Pty Ltd’s:
(i) buy-out right in the event of Quadrio Resources Pty Ltd suffering an ‘insolvency event’ (as defined in the FIA JV);
(ii) buy-out right in the event of a material breach of the FIA JV by Quadrio Resources Pty Ltd;

(iii) for the period of 6 months that follow First Quantum Minerals (Australia) Pty Ltd earning a 50.1% Joint Venture Interest, the right to offer to acquire Quadrio Resources Pty Ltd’s Joint Venture Interest;
(iv) first right of refusal in the event Quadrio Resources Pty Ltd wishes to assign its Joint Venture Interest to a third party; and
(v) enforcement rights under the Mining Mortgage.

on the terms and conditions as set out in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by First Quantum Minerals (Australia) Pty Ltd or any associates of First Quantum Minerals (Australia) Pty Ltd.

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.

2. Resolution 2 – Approval of issue of Shares under Convertible Loan Agreement

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

"Subject to Resolution 1 being approved, that, for the purpose of Listing Rule 7.1, and for all other purposes, approval is given for the Company to issue up to 48,356,154 Shares to First Quantum Minerals (Australia) Pty Ltd under the Convertible Loan Agreement (as amended), for the purpose and on the terms set out in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by First Quantum Minerals (Australia) Pty Ltd, being the person who may participate in the proposed issue, or any associates of First Quantum Minerals (Australia) Pty Ltd.

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.

3. Resolution 3 – Ratification of previous issue of Shares

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

"That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders approve and ratify the issue of 25,898,445 Shares to contractors carrying out exploration

activities for the Company, for the purpose and on the terms set out in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by any of the above contractors, being the persons who participated in the issue, or any associates of those contractors.

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 – Ratification of previous issue of Tranche 1 Shares to Exempt Investors

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

"That, for the purposes of Listing Rule 7.4 and for all other purposes, Shareholders approve and ratify the issue of 140,134,291 Shares to investors who do not require disclosure under section 708 of the Corporations Act 2001 (Cth), for the purpose and on the terms set out in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by any person who participated in the issue, or any associates of those persons.

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 – Issue of Tranche 2 Shares and Options to Exempt Investors

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

"That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of 60,142,860 Shares and 100,138,576 Options to investors who do not require disclosure under section 708 of the Corporations Act 2001 (Cth), for the purpose and on the terms set out in the Explanatory Memorandum."

The Company will disregard any votes cast on this Resolution by any person who may participate in the issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares if the Resolution is passed, and any of their 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 – Issue of Tranche 2 Shares and Options to Executive Director and CEO – Marcel Hilmer

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

"That, for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 5,714,286 Shares and 2,857,143 Options to Marcel Hilmer (or his nominee), for the purpose and on the terms set out in the Explanatory Memorandum."

The Company will disregard any votes cast on this Resolution by Marcel Hilmer or 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 – Issue of Tranche 2 Shares and Options to Director – Peter Alexander

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

"That, for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 714,286 Shares and 357,143 Options to Peter Alexander (or his nominee), for the purpose and on the terms set out in the Explanatory Memorandum."

The Company will disregard any votes cast on this Resolution by Peter Alexander or 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.

8. Resolution 8 – Issue of Tranche 2 Shares and Options to Director – James Harris

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

"That, for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 714,586 Shares and 357,143 Options to James Harris (or his nominee), for the purpose and on the terms set out in the Explanatory Memorandum."

The Company will disregard any votes cast on this Resolution by James Harris or 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.

9. Resolution 9 – Issue of Options to corporate advisor

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

"That, for the purposes of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 12 million Options to Palladion Partners Pty Ltd (or its nominee), for the purpose and on the terms set out in the Explanatory Memorandum."

The Company will disregard any votes cast on this Resolution by Palladion Partners Pty Ltd and any of its 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.

OTHER BUSINESS

To transact any other business that may legally be brought before the meeting.

RESOLUTIONS 1 AND 2 ARE INTERDEPENDENT

Resolution 1 may not be passed by Shareholders if Resolution 2 is not passed by Shareholders (and vice versa). Resolutions 3, 4, 5, 6, 7, 8 and 9 are not interdependent on any other Resolutions being passed.

CHAIRMAN AND CHAIRMAN’S VOTING INTENTIONS FOR UNDIRECTED PROXIES

It is proposed that the Chairman of the Meeting be James Harris. It is the Chairman’s intention as Chairman of the Meeting to vote undirected proxies (i.e. open proxies) which he holds as proxy in favour of all Resolutions.

By Order of the Board

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Simon Robertson Company Secretary

24 July 2015

CARAVEL MINERALS LIMITED ABN 41 120 069 089

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 Level 3, 18 Richardson Street West Perth, Western Australia on 27 August 2015 at 10 am (WST).

The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions in the Notice. A Proxy Form is included with this Explanatory Memorandum.

This Explanatory Memorandum contains two parts. Part A (Background to Resolutions 1 and 2) and Part B (Resolutions).

Action to be taken by Shareholders

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

A Proxy Form is included with 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, sign and return the Proxy Form to the Company in accordance with the instructions thereon. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

Please note that:

(a) a member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy;
(b) a proxy need not be a member of the Company; and
(c) a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed Proxy Form provides further details on appointing proxies and lodging Proxy Forms.

PART A

1. Background to Resolutions 1 and 2

1.1 Farm-in and Joint Venture Agreement

(a) Farm-in interest

As announced on 8 July 2015, the Company and its wholly-owned subsidiary Quadrio Resources Pty Ltd ( Quadrio ) entered into a Farm-in and Joint Venture Agreement ( FIA

JV or Farm-in Agreement ) with First Quantum Minerals (Australia) Pty Ltd ( First Quantum ).

Under the FIA JV, First Quantum has a right to earn a 50.1% interest in the Calingiri Tenements by spending a total of $3.6 million on exploration expenditure on the Calingiri Tenements within 24 months ( Earning Period ).

First Quantum must spend a minimum of $1.2 million on exploration expenditure within 12 months and may only withdraw from the FIA JV once it has expended at least $1.2 million. If First Quantum withdraws, it will not earn any interest in the Calingiri Tenements and the FIA JV will terminate (except in respect of breaches occurring before termination).

The Company is appointed ‘Farm-in Manager’ (i.e., operator) and carry out and manage First Quantum’s exploration operations on the Calingiri Tenements.

The Company is entitled to an allowance to recover overhead and administrative costs in providing the services as Farm-in Manager.

The Company and First Quantum will form an exploration management committee with the Company and First Quantum each being entitled to appoint 1 representative as members of the committee and 1 alternate. The exploration management committee will determine the nature and scope of exploration operations and otherwise provide directions to the Farm-in Manager during the Earning Period.

All decisions before the exploration management committee will be decided by majority vote. The First Quantum representative is entitled to 50.1% of the votes and the Company’s representative is entitled to 49.9% of the votes.

The Farm-in Manager is responsible for preparing programmes and budgets for consideration and approval of the exploration management committee and must be prepared for periods each of 6 months duration.

(b) Conditions precedent

First Quantum’s right to earn an interest in the Calingiri Tenements is conditional upon and subject to:

(i) First Quantum obtaining Foreign Investment Review Board approvals or letters of ‘no objection’ to the proposed transaction; and
(ii) the Company obtaining all necessary shareholder approvals required for the transactions contemplated by the FIA JV and the Supplementary Deed (summarised at paragraph 1.2 below).

(c) Formation of a joint venture

Under the FIA JV, once First Quantum’s farm-in obligation has been satisfied, it will earn a 50.1% Joint Venture Interest. Upon that interest being earned, Quadrio will transfer to First Quantum a 50.1% interest in the Calingiri Tenements and First Quantum and Quadrio will form an unincorporated joint venture under the terms of the FIA JV.

At that stage, First Quantum will be appointed ‘JV Manager’ (i.e., operator) and will be entitled to remain as JV Manager whilst it holds a Joint Venture Interest of 50% or greater.

First Quantum and Quadrio will each be entitled to appoint up to 2 representatives (and 2 alternates) to the operating committee. Each representative will have 1 vote for each

whole percentage point of that participant’s Joint Venture Interest as at the date of the meeting.

The main function of the operating committee is to review and give directions to the JV Manager and shall consider and approve the nature and content of programmes and budgets relating to joint venture operations proposed by the JV Manager.

In the event that the operating committee passes a resolution to commence mining operations on the Calingiri Tenements, the participants will in good faith negotiate and enter into a production joint venture agreement to replace the FIA JV but the FIA JV will continue to apply until that new document has been executed by the participants.

(d) Subsequent disposals by Quadrio under the FIA JV

If Quadrio suffers an ‘insolvency event’ (as defined in the FIA JV) during the Earning Period, First Quantum has an option to acquire the whole (but not less than the whole) of the Calingiri Tenements free from encumbrances at a price equal to the fair market value of the Calingiri Tenements. The fair market value may be agreed by First Quantum and Quadrio but in the absence of agreement, an independent expert appointed in accordance with the FIA JV will determine the value. First Quantum’s rights in this regard are secured by the Mining Mortgage (summarised at paragraph 1.3 below).

If Quadrio commits a material breach of the FIA JV after the Earning Period and that breach is not remedied for a period of not less than 30 days after notice of the breach, First Quantum will have the option to acquire the whole (but not less than the whole) of Quadrio’s Joint Venture Interest by giving notice to Quadrio. The consideration payable on exercise of the option will be 95% of the fair market value of Quadrio’s Joint Venture Interest which will either be agreed by First Quantum and Quadrio or determined by an independent expert appointed in accordance with the FIA JV in the absence of agreement. The consideration must be paid within 30 days after the exercise of the option and the determination of the fair market value.

First Quantum will have a right, for the period of six months that follow First Quantum earning a 50.1% Joint Venture Interest, to make an offer to acquire the whole of Quadrio’s Joint Venture Interest by giving notice in writing to Quadrio setting out the terms of its offer. The offer must include consideration equal to the fair market value of Quadrio’s Joint Venture Interest, and the parties must negotiate in good faith. Quadrio is not obliged to accept such an offer.

Each party has a right of first refusal in the event that the other party wishes to sell its Joint Venture Interest. If a party wishes to transfer its Joint Venture Interest to a third party, it must first offer the other party that interest on the same terms and conditions as the third party offer. The non-transferring party has 45 days to accept an offer to acquire the interest.

(e) Granting of and disposals under the Mining Mortgage

The Convertible Loan Agreement and Mining Mortgage provide that First Quantum has been granted and has a right to enforcement of its security over the Tenements under the Mining Mortgage. At present, if Quadrio defaults on the Convertible Loan Agreement, the Convertible Loan Agreement and Mining Mortgage provide that approval is sought for the grant of the Mining Mortgage and its potential enforcement.

First Quantum may enforce its security which may result in the disposal of the Tenements. Further, if conditions under the FIA JV are met, and Quadrio suffers an ‘insolvency event’ (as defined under the FIA JV) during the Earning Period, the FIA JV provides that First Quantum may enforce its security which protects First Quantum’s option to purchase Quadrio’s Joint Venture Interest.

Either one of these scenarios could potentially result in a subsequent disposal of Quadrio’s interest in the Calingiri Tenements. In the second scenario, First Quantum protects its option to purchase Quadrio’s interest in the Joint Venture at the fair market value of the Tenements which will either be agreed by First Quantum and Quadrio or determined by an independent expert appointed in accordance with the FIA JV in the absence of agreement. The progression and terms of Mining Mortgage, and further details as to First Quantum’s security can be found at 1.3.

1.2 Supplementary Deed – Convertible Loan Agreement

As stated in the Company’s Notice of Annual General Meeting dated 10 October 2014, the Company and First Quantum are parties to the Convertible Loan Agreement, dated 25 September 2014 (as amended) ( Convertible Loan Agreement ). A summary of the transactions contemplated by the Convertible Loan Agreement was announced to the ASX on 25 September 2014 and 28 October 2014.

Under the Convertible Loan Agreement, First Quantum has provided $600,000 of interim funding to the Company to enable it to continue to advance its flagship Calingiri CopperMolybdenum Project in Western Australia. First Quantum has the option to convert any amount owing under the loan (including both principal and interest outstanding) into Shares by notice to the Company before and at the ‘maturity date’, which is 1 year from the date the applicable conditions under the Convertible Loan Agreement were satisfied (or waived in writing by First Quantum).

The amount of the loan outstanding as at the date of the Meeting is expected to be $628,630. The ‘conversion price’ under the Convertible Loan Agreement is the greater of the volume weighted average trading price of the Shares on the ASX for the 5 trading days prior to the date of conversion and or $0.017. Pursuant to Listing Rule 7.1, Shareholder approval for the issue of up to 35,294,118 Shares under the Convertible Loan Agreement was sought and received at the general meeting of Shareholders on 20 November 2014.

On 7 July 2015, the Company and First Quantum entered into a Supplementary Deed Convertible Loan Agreement in which they have agreed that subject to the conditions precedent to the FIA JV being satisfied, First Quantum will be deemed to have irrevocably converted all the loan amount (as defined in the Convertible Loan Agreement) into Shares at an adjusted conversion price of $0.013 in full satisfaction of the loan ( Supplementary Deed ).

As a result of the decrease in conversion price from $0.017 to $0.013 under the Supplementary Deed, additional Shares may be issued on conversion of the loan and the Company considers it is prudent to seek further shareholder approval under Listing Rule 7.1.

If the loan amount remains at $628,630 as at the date Shares are issued, a total of 48,356,154 Shares will be issued to First Quantum on conversion. The Supplementary Deed also gives First Quantum the right to nominate such number of board members so that First Quantum’s board representation in the Company is not less than one-third of the total number of Board members from time to time. Currently, the Company has 3 Directors on the Board which means that First Quantum will be entitled to appoint 1 nominee to the Board when the conditions precedent to the FIA JV have been satisfied. First Quantum will cease to have board appointment rights if it withdraws from the FIA JV, disposes of its Joint Venture Interest or the Calingiri Joint Venture is otherwise terminated.

The Company is seeking approval for the issue of up to 48,356,154 Shares to First Quantum on conversion of the loan under the Convertible Loan Agreement (as amended by the Supplementary Deed).

1.3 Mining Mortgage

In connection with the Convertible Loan Agreement, Quadrio granted a mining mortgage over the Calingiri Tenements in favour of First Quantum on 29 October 2014 to secure First Quantum’s right to be repaid the loan amount under the Convertible Loan Agreement ( Mining Mortgage ).

The Mining Mortgage has been registered with the Department of Mines and Petroleum over the Calingiri Tenements. First Quantum has also registered a financing statement on the Personal Property and Security Register in relation to the Mining Mortgage.

Presently, the Mining Mortgage provides that, if Quadrio defaults on its obligations under the Convertible Loan Agreement, First Quantum may, amongst other rights;

(i) declare the secured monies under the Convertible Loan Agreement immediately due and payable;
(ii) terminate or suspend any of its obligations; or
(iii) enforce its security.

First Quantum may, in turn, appoint a controller to act as a receiver and manager of the Calingiri Tenements under the Mining Mortgage. The controller would have vast powers over the secured property, including the ability to lease out or sell the secured property. First Quantum could also exercise the powers of the controller. Any monies generated under these powers of First Quantum or any appointed controller, will first be used for costs, then the discharge of the Mining Mortgage, any other secured interest First Quantum is aware of, and finally any surplus would be remitted to Quadrio (without interest).

The Mining Mortgage will be amended, with effect 2 business days after the conditions precedent to the FIA JV have been satisfied, subject to the conversion of the loan amount (as defined in the Convertible Loan Agreement) owing under the Convertible Loan Agreement into Shares, so that First Quantum will have the right to enforce its security if Quadrio suffers an ‘insolvency event’ (as defined by the FIA JV) during the Earning Period. The Mining Mortgage will protect First Quantum’s option to buy-out Quadrio’s Joint Venture Interest at the fair market value of the Tenements which will either be agreed by First Quantum and Quadrio or determined by an independent expert appointed in accordance with the FIA JV in the absence of agreement.

PART B

1. Resolution 1 – Approval of the disposal of a 50.1% interest in the Calingiri Copper-Molybdenum Project

As set out in Part A, the Company, First Quantum and Quadrio (as applicable) have entered into the FIA JV, the Supplementary Deed and the Mining Mortgage ( Transaction Documents ) in relation to First Quantum’s right to acquire a 50.1% interest in the Calingiri Tenements.

The key terms and conditions precedent to the Transaction Documents are set out in

Part A.

Resolution 1 relates to the disposal by Quadrio of a 50.1% interest in the Calingiri Tenements to First Quantum the grant of the Mining Mortgage as it stands and as amended, and any future disposals of Quadrio’s interest in the Calingiri Tenements or its

Joint Venture Interest pursuant to the Transaction Documents as described in paragraphs 1.1(d) and 1.3 of Part A.

Listing Rule 10.1 provides that an entity (or an entity which is controlled by the body corporate within the meaning of section 50AA of the Corporations Act or a subsidiary of the entity) must not acquire a substantial asset from, or dispose of a substantial asset to (among others) a substantial holder (if the person and the person’s associates have a Relevant Interest, or had a Relevant Interest at any time in the 6 months before the transaction, in at least 10% of the total votes attached to the voting securities) without the approval of holders of the entity’s ordinary securities.

A substantial asset is defined as an asset whose value, or the consideration for it, is 5% or more of the equity interests in the company.

First Quantum is a substantial holder holding a 11.17% interest in the Company as at the date of this Notice. The consideration for First Quantum earning a 50.1% interest in the Calingiri Tenements from Quadrio is $3.6 million, which is more than 5% of the equity interests in the Company. Accordingly, Shareholder approval is required under Listing Rule 10.1.

Listing Rule 10.10 provides that the notice of meeting that seeks approval must include a voting exclusion statement under which a party to the transaction and its associates must not vote and an independent expert’s report which states whether the transaction is fair and reasonable to holders of the entity’s ordinary securities whose votes are not disregarded.

Accompanying this Notice at Annexure A is an Independent Expert’s Report prepared by Stantons International Securities. The Independent Expert has concluded that the disposals of the Calingiri Tenements and Joint Venture Interests under the terms of the transaction documents is not fair but reasonable to the non-associated Shareholders.

Shareholders are encouraged to read the Independent Expert’s Report carefully.

The Board unanimously recommends that Shareholders vote in favour of Resolution 1.

A voting exclusion statement is set out in the Notice.

2. Resolution 2 – Approval of issue of Shares under Convertible Loan Agreement

As set out in paragraph 1.2 of Part A, Shareholder approval for the issue of up to 35,294,118 Shares under the Convertible Loan Agreement was sought and received at the general meeting of Shareholders on 20 November 2014.

Since then, the Company and First Quantum have amended the terms of the Convertible Loan Agreement by the Supplementary Deed and have amended the conversion price from $0.017 to $0.013. The loan amount, as at the date of the Meeting is expected to be $628,630.

The new conversion price will result in the issue of up to 48,356,154 Shares to First Quantum on conversion of the loan amount, which will occur under the Convertible Loan Agreement (as amended) 2 business days after the conditions precedent to the FIA JV have been satisfied.

Accordingly, the Company is seeking approval for the issue of up to 48,356,154 Shares to First Quantum under the Convertible Loan Agreement (as amended).

Listing Rule 7.1 restricts the number of Equity Securities a company may issue (or agree to issue) in any 12 month period without shareholder approval to 15% of the number of ordinary securities on issue at the commencement of that 12 month period (subject to specified exceptions).

The effect of passing Resolution 2 will be to allow the Company to issue up to 48,356,154 Shares during the three month period after the Meeting (or a longer period, if allowed by ASX), without using the Company's 15% placement capacity under Listing Rule 7.1.

As at the date of this Notice the Company has 886,072,424 Shares on issue. If Resolution 2 is passed and the 48,356,154 Shares are issued, the dilution effect will be approximately 5.17% (based on the total number of Shares on issue as at the date of this Notice).

The proposed issue of up to 48,356,154 Shares will be without disclosure under the exceptions provided in section 708 of the Corporations Act.

Listing Rule 7.3 requires the following information to be provided:

(a) Up to 48,356,154 Shares may be issued.
(b) The Shares will be issued no later than three months after the date of the Meeting (subject to any ASX waivers) and will be issued in full, not progressively.
(c) The Shares will be issued at $0.013 per Share.
(d) The Shares to be issued will be fully paid ordinary shares in the capital of the Company.
(e) The Shares will be issued to First Quantum.
(f) The Company will not raise any funds through the issue of Shares.

The Board unanimously recommends that Shareholders vote in favour of Resolution 2.

A voting exclusion statement is set out in the Notice.

3. Resolution 3 – Ratification of previous issue of Shares

During the last 12 months, the Company issued 25,898,445 Shares to contractors for carrying out exploration activities for the Company without disclosure to investors under the exceptions provided in section 708 of the Corporations Act.

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

Under this Resolution, the Company seeks from Shareholders approval for, and ratification of, the issue of securities set out below so as to limit the restrictive effect of Listing Rule 7.1 on any further issues of securities by the Company in the next 12 months.

Listing Rule 7.5 requires the following specific information to be provided:

(a) 25,898,445 Shares were issued.

(b) 25,898,445 Shares were issued in exchange for services carried out for the Company.
(c) The Shares were 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 were issued to the Company’s contractors who have carried out exploration activities for the Company.
(e) The Company did not raise any funds through the issue of Shares

The Board unanimously recommends that Shareholders vote in favour of Resolution 3.

A voting exclusion applies to Resolution 3 in the terms set out in the Notice of Meeting.

4. Resolution 4 – Ratification of previous issue of Tranche 1 Shares to Exempt Investors

In July 2015, the Company offered a placement of 207,420,009 Shares at an issue price of $0.007 per Share plus one free attaching unlisted Option exercisable at $0.013 on or before 31 January 2017 for every 2 Shares issued ( Placement ).

The purpose of the Placement is to provide for additional working capital and to support and supplement the funds being invested in the Company’s flagship Calingiri Project in WA as part of the definitive Farm-in and Joint Venture Agreement with First Quantum.

The Placement contains 2 Tranches. Tranche 1 of the Placement has completed and resulted in the issue of 140,134,291 Shares under the Company’s placement capacity under Listing Rules 7.1 and 7.1A to investors who do not require disclosure under section 708 of the Corporations Act ( Exempt Investors ).

The remainder of the Shares to be issued under the Placement and the free attaching Options will be issued under Tranche 2 of the Placement as follows:

(a) 60,142,860 Shares and 100,138,576 Options will be issued to Exempt Investors that are not Directors;
(b) 5,714,286 Shares and 2,857,143 Options will be issued to Marcel Hilmer, a Director;
(c) 714,286 Shares and 357,143 Options will be issued to Peter Alexander, a Director; and
(d) 714,286 Shares and 357,143 Options will be issued to James Harris, a Director.

The issue of Shares and Options under Tranche 2 of the Placement is subject to Shareholder approval (refer to Resolutions 5, 6, 7 and 8).

This Resolution asks Shareholders to ratify the issue of 140,134,291 Shares under Tranche 1 of the Placement in order to allow the Company to maintain its maximum placement capacity under Listing Rule 7.1.

Listing Rule 7.5 requires the following specific information to be provided:

(a) 140,134,291 Shares were issued.
(b) 140,134,291 Shares were issued at 0.007 per Share.
(c) The Shares were 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 were issued to Exempt Investors.
(e) The Company raised gross proceeds of $980,940 in total through the issue of the Shares.

The Board unanimously recommends that Shareholders vote in favour of Resolution 4.

A voting exclusion applies to Resolution 4 in the terms set out in the Notice of Meeting.

5. Resolution 5 – Issue of Tranche 2 Shares and Options to Exempt Investors

Please refer to the Explanatory Memorandum for Resolution 4 above in relation to the Tranche 2 of the Placement.

This Resolution asks Shareholders to approve the issue of 60,142,860 Shares and 100,138,576 Options under Tranche 2 of the Placement to those Exempt Investors that are not Directors.

Approving this resolution will allow the Company to maintain its maximum placement capacity under Listing Rule 7.1.

Listing Rule 7.3 requires the following information to be provided in relation to the Shares proposed to be issued under Tranche 2 of the Placement:

(a) Up to 60,142,860 Shares may be issued.
(b) The Shares will be issued no later than three months after the date of the Meeting and will be issued in full, not progressively.
The Shares will be issued at $0.007 per Share.
(c) The Shares will be issued at $0.007 per Share. (d) The Shares to be issued will be fully paid ordinary shares in the capital of the Company.
(e) The Shares will be issued to Exempt Investors.
(f) The Company will raise gross proceeds of approximately $421,000 through the issue of the Shares.

Listing Rule 7.3 requires the following information to be provided in relation to the Options proposed to be issued under Tranche 2 of the Placement:

(a) Up to 100,138,576 Options may be issued.
(b) The Options will be issued no later than three months after the date of the Meeting and will be issued in full, not progressively.
The issue price for the Options is nil.
(c) The issue price for the Options is nil. (d) The full terms of the Options are set out at Annexure B.
(e) The Options will be issued to Exempt Investors.
(f)
The Company will not raise any funds through the issue of the Options.

The Board unanimously recommends that Shareholders vote in favour of Resolution 5. A voting exclusion statement is set out in the Notice.

6. Resolutions 6, 7 and 8 – Issue of Shares and Options to Directors

Please refer to the Explanatory Memorandum for Resolution 4 above in relation to the Tranche 2 of the Placement.

Resolutions 6, 7 and 8 asks Shareholders to approve the issue of 7,142,858 Shares and 3,571,429 Options under Tranche 2 of the Placement to Directors as follows:

(a) Mr Marcel Hilmer – 5,714,286 Shares and 2,857,143 Options.
(b) Mr Peter Alexander – 714,286 Shares and 357,143 Options.
(c) Mr James Harris – 714,286 Shares and 357,143 Options.
The Options will be unlisted and quotation of the Options will not be sought.

Approvals required

Shareholder approval is sought for the purposes of Listing Rule 10.11 for the Company to issue the above Shares and Options.

Listing Rule 10.11

Listing Rule 10.11 provides that the Company must not issue Equity Securities to a related party unless one of a number of exceptions applies, or shareholder approval is obtained. Further, Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue, or agree to issue, during any 12 month period any equity securities (or other securities with rights to conversion to equity), if the number of those securities exceeds 15% of the number of ordinary securities on issue at the commencement of that 12 month period. Shares issued under this Resolution would fall within an exception. If approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

One of the effects of Resolutions 6, 7 and 8 will be to allow the Company to issue the above Shares and Options without using the Company’s 15% placement capacity.

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided in respect of the Shares and Options under Resolutions 6, 7 and 8:

(a) The Number of Shares to be issued is 7,142,858
(b) The Shares will be issued no later than 1 month after the date of the Meeting and will be issued in full, not progressively.
The Shares will be issued at $0.007 per Share.
(c) The Shares will be issued at $0.007 per Share. (d) The Shares to be issued will be fully paid ordinary shares in the capital of the Company.
(e) 5,714,286 Shares will be issued to Mr Marcel Hilmer (or his nominee), 714,286 Shares will be issued to Mr James Harris (or his nominee) and 714,286 Shares will be issued to Mr Peter Alexander (or his nominee).
(f) The Company will raise gross proceeds of approximately $50,000 through the issue of the Shares.

Options

(a) The Number of Options to be issued is 3,571,429.

(b) The Options will be issued no later than 1 month after the date of the Meeting and will be issued in full, not progressively.
(c) The issue price for the Options is nil.
(d) The full terms of the Options are set out at Annexure B.
(e) 2,857,143 Options will be to Mr Marcel Hilmer (or his nominee), 357,143 Options will be issued to Mr James Harris (or his nominee) and 357,143 Options will be issued to Mr Peter Alexander (or his nominee).
(f) The Company will not raise any funds through the issue of the Options.

Listing Rules 7.1 and 7.2 and 15% restriction

If shareholder approval is given under Listing Rule 10.11 for Resolutions 6, 7 and 8 then the Listing Rules provide that shareholder approval will not be required for the purposes of the 15% restriction in Listing Rule 7.1 as that Listing Rule applies to the issue of the Shares and the Options.

7. Resolution 9 – Issue of Options to Corporate advisor

This Resolution asks Shareholders to approve the issue of up to 12 million Options to the Company’s corporate advisor Palladion (or its nominee) for assisting the Company with facilitating and implementing the Placement.

The Options will be on the same terms as the Options being issued under Tranche 2 of the Placement, the terms of which are set out in Annexure B.

Palladion will also be paid a 6% fee based on the total amount raised under the Placement, made up of a 2% transaction management fee and a 4% placement fee which will be paid to brokers or other intermediaries as an incentive for the participation of their clients in the Placement. The 4% placement fee will not be applied to amounts raised by the Directors and management.

The number of Options that will be issued to Palladion will be determined by the total amount of funds raised by the Company under the Placement as follows:

Amount raised under the Placement	Number of Options issued
Up to $500,000	Nil
Greater than $500,000 to $1.25 million	6.5 million Options
Greater than $1.25 million	12 million Options

Palladion may use some of the Options it is entitled to be issued to incentivise broker groups to support the Placement, however any such allocations will be at the Company’s discretion.

Approving this Resolution will allow the Company to maintain its maximum placement capacity under Listing Rule 7.1. In the event that this Resolution is not approved by Shareholders, the Company will seek to issue the Options to Palladion under any existing placement capacity the Company has under the Listing Rules, to the extent possible.

Listing Rule 7.3 requires the following information to be provided in relation to the Options proposed to be issued to Palladion (or its nominee):

(a) Up to 12 million Options may be issued.
(b) The Options will be issued no later than three months after the date of the Meeting and will be issued in full, not progressively.
(c) The issue price for the Options is nil.
(d) The full terms of the Options are set out at Annexure B.
(e) The Options will be issued to Palladion (or its nominee).
(f) The Company will not raise any funds through the issue of the Options.

The Board unanimously recommends that Shareholders vote in favour of Resolution 9.

A voting exclusion statement is set out in the Notice.

SCHEDULE 1 DEFINITIONS

In this Explanatory Memorandum, Notice and Proxy Form:

"associate" has the meaning given in the Listing Rules.

"ASX" means ASX Limited and where the context permits the Australian Securities Exchange operated by ASX Limited.

"Board" means the board of Directors.

"Calingiri Tenements" means exploration licences E70/4476 and E70/2788.

"Calingiri Joint Venture" means the unincorporated joint venture to be formed by Quadrio and First Quantum in accordance with the FIA JV

"Chair or Chairman" means the person appointed to chair the Meeting convened by this Notice.

"Company or CVV" means Caravel Minerals Limited ABN 41 120 069 089.

"Convertible Loan Agreement" has the meaning given in paragraph 1.2 of Part A of the Explanatory Memorandum.

"Corporations Act" means the Corporations Act 2001 (Cth).

"Director" means a director of the Company.

"Earning Period" has the meaning given in paragraph 1.1 of Part A of the Explanatory Memorandum.

"Equity Securities" has the same meaning as in the Listing Rules.

"Exempt Investor" has the meaning given in Part B of the Explanatory Memorandum.

"Explanatory Memorandum" means the explanatory memorandum to the Notice.

"FIA JV or Farm-in Agreement" has the meaning given in paragraph 1.1 of Part A of the Explanatory Memorandum.

"First Quantum" means First Quantum Minerals (Australia) Pty Ltd.

"Joint Venture Interest" means each participants interest in the Calingiri Joint Venture.

"Listing Rules" means the Listing Rules of ASX.

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

"Mining Mortgage" has the meaning given in paragraph 1.3 of Part A of the Explanatory Memorandum.

"Notice" means this notice of meeting.

"Option" means an unlisted option to acquire a Share.

"Optionholder" means a holder of an Option.

"Palladion" means Palladion Partners Pty Ltd.

"Placement" has the meaning given in Part B of the Explanatory Memorandum.

"Proxy Form" means the proxy form attached to the Notice.

"Quadrio" means Quadrio Resources Pty Ltd.

"Relevant Interest" has the meaning given to that term in section 608 of the Corporations Act.

"Resolution" means a resolution contained in this Notice.

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

"Shareholder" means a shareholder of the Company.

"Supplementary Deed" has the meaning given in paragraph 1.2 of Part A of the Explanatory Memorandum.

"Transaction Documents" has the meaning given in paragraph 1 of Part B of the Explanatory Memorandum.

"WST" means Western Standard Time, being the time in Perth, Western Australia. In this Notice, words importing the singular include the plural and vise versa.

ANNEXURE A Independent Expert’s Report (Resolution 1)

PO Box 1908 West Perth WA 6872 Australia

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Level 2, 1 Walker Avenue West Perth WA 6005 Australia

Tel: +61 8 9481 3188 Fax: +61 8 9321 1204

22 July 2015

ABN: 42 128 908 289 AFS Licence No: 448697 www.stantons.com.au

The Directors Caravel Minerals Limited Level 3, 38 Richardson Street WEST PERTH WA 6005

The Independent Expert has concluded that the Proposals the subject of Resolution 1 outlined in this Notice of General Meeting are not fair but reasonable to the Shareholders of the Company (not associated with First Quantum Minerals Limited) as at the date of this report.

Dear Sirs

Re: CARAVEL MINERALS LIMITED (ABN 41 120 069 089) ON THE PROPOSALS WITH FIRST QUANTUM MINERALS (AUSTRALIA) PTY LTD (“FQM”) RELATING TO THE CALINGIRI PROJECT AS MORE FULLY DESCRIBED BELOW - SHAREHOLDERS MEETING PURSUANT TO AUSTRALIAN SECURITIES EXCHANGE LIMITED (“ASX”) LISTING RULES 10.1

1. Introduction

1.1 We have been requested by the Directors of Caravel Minerals Limited (“Caravel” or “the Company”) to prepare an Independent Expert’s Report to determine the fairness and reasonableness of various proposals with FQM as noted in Resolution 1 of the Notice of Meeting (“The Notice”) and as more fully described in Part A of the Explanatory Memorandum (“EM”) attached to the Notice and as outlined below in paragraph 1.8.
1.2 FQM,(a subsidiary of First Quantum Minerals Limited) on or around 6 June 2015 entered into a farm-in and joint venture agreement with Quadrio Resources Pty Ltd (“Quadrio”) a wholly owned subsidiary of Caravel over certain tenements (“Tenements”) owned by Quadrio. FQM is a wholly owned subsidiary of First Quantum Minerals Limited, a Canadian listed company with a recent market capitalisation of approximately $13 billion. The First Quantum Minerals Limited Group operates seven mines and is developing five projects worldwide (mainly in copper, nickel, zinc and platinum) in Australia, Africa and Europe. In addition projects are being investigated in Zambia, Peru, Finland and Panama. The farm-in agreement was then formalised through a definitive Farm-In and Joint Venture Agreement (“FIA”) on or around 8 July 2015 (as announced to the market on 8 July 2015).

Tenements means:

(a) exploration licences 70/4476 and 70/2788;
(b) any other mining tenement or interest in a mining tenement acquired by the Joint Venture; and
(c) any mining tenement or mining tenements applied for or granted in renewal, extension or substitution for any mining tenement referred to in this definition.

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Liability limited by a scheme approved under Professional Standards Legislation

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1.3 The Tenements are related to the Calingiri Copper- Molybdenum Project (“Calingiri Project”) in Western Australia and the Calingiri Project is the main flagship project of the Caravel Group (owned by Quadrio).
1.4 The basic terms of the FIA relevant to this report are set out below. The numbering noted relates to the numbering in the FIA.
Earning Expenditure
3.1 Quadrio grants to FQM the right to earn, and FQM may earn a 50.1% interest in the Tenements by:
(a) spending a minimum of $1,200,000 on Earning Expenditure within 12 months of the Commencement Date; and
(b) spending a minimum of $3,600,000 on Earning Expenditure within 24 months of the Commencement Date (including the Earning Expenditure referred to in clause 3.1(a);
(c) FQM’s obligation under clause 3.1(a) is a firm commitment and FQM must pay any shortfall in the committed expenditure of $1,200,000 to Quadrio as at the expiry of 12 months from the Commitment Date.
3.2 Exploration for Minerals
- During the Earning Period:
(a) FQM shall have a non-exclusive licence, right and liberty to enter (by its employees, agents or contractors, and with or without vehicles and temporary or permanent plant) on the Tenements for the purposes of this Agreement;
(b) FQM shall, through the Farm-in Manager and in accordance with this Agreement, have the exclusive right to carry out Exploration Operations on the Tenements in such manner as it, in its sole discretion, thinks fit in accordance with this Agreement;
(c) Quadrio shall ensure that FQM can gain access to and from the Tenements at all reasonable times during the Earning Period; and
(d) FQM, its employees, agents or contractors, enter onto the Tenements at their own risk.

3.3 Withdrawal during Earning Period

(a) FQM may withdraw from this Agreement at any time during the Earning Period by giving 28 days' notice in writing to Quadrio provided that it has expended at least $1.2 million in Earning Expenditure.
(b) If FQM withdraws from this Agreement pursuant to this clause 3.3 then upon such withdrawal, this Agreement will terminate and, except for breaches of this Agreement occurring before termination, the Parties will have no further right, interest or obligation under this Agreement and FQM must deliver all Mining Information to Quadrio within 14 days of termination.

3.4 Effect of failure to spend

If FQM does not comply with either clause 3.1(a) or clause 3.1(b) within the time required then FQM shall be deemed to have withdrawn from this Agreement without having earned any interest in the Tenements and clauses 3.1(c) and (b) shall apply.

3.6 Insolvency event

If an Insolvency Event occurs in respect of Quadrio during the Earning Period then:

(a) FQM will have the option to acquire the whole (but not less than the whole) of the Tenements free from encumbrances.
(b) In order to exercise the option FQM must give notice in writing to Quadrio.
(c) The consideration will be an amount equal to the fair market value of the Tenements (as agreed between FQM and Quadrio or in the absence of agreement, determined by an independent expert appointed under clause 9.3).

CAR7433/ Caravel IER on the Proposals July 2015

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(d) The consideration must be paid within 30 days after the later of the acceptance of the offer and the determination of the fair market value in exchange for which Quadrio must provide to FQM:
(i) unstamped but otherwise registrable transfers in respect of the Tenements, in favour of FQM as transferee, duly executed by Quadrio as transferor and
(ii) any other document or thing required by FQM to give full effect to the transfer of the Tenements to FQM free from encumbrances.
Contributions
FQM will fund Earning Expenditure in advance by paying funds to the Farm-in Manager as follows:
(a) an initial payment of $500,000 paid on the Commencement Date to contribute towards the Initial Budget; and
(b) thereafter commencing from the first day of the Quarter which follows the Commencement Date, Quarterly payments for Earning Expenditure to be undertaken in the Quarter in accordance with the Initial Budget and/or the relevant Approved Programme and Budget (as applicable).

The initial Farm-In Manager is Caravel.

7.1 Formation of Joint Venture and Joint Venture Interests

FQM must promptly notify Quadrio once it has complied with clause 3.1(b). Upon issuing that notice:

(a) FQM will have earned a 50.1% Joint Venture Interest and Quadrio will promptly transfer a 50.1% interest in the Joint Venture Property to FQM; and
(b) the Participants will associate in an unincorporated joint venture in accordance with the terms of this Agreement under which the initial Joint Venture Interests of the Participants will be:
- (i) FQM 50.1%
- (ii) Quadrio 49.9%.
7.2 Transfer of Joint Venture Interest

Promptly after the notice is given under clause 7.1(a), Quadrio must provide to FQM:

(a) unstamped but otherwise registrable transfers in respect of a 50.1% interest in the Tenements, in favour of FQM as transferee, duly executed by Quadrio as transferor; and
(b) any other document or thing required by FQM to give full effect to the transfer of a 50.1% interest in the Tenements to FQM free from encumbrances.
7.3 Purposes of the Joint Venture

The purposes of the Joint Venture are to:

(a) explore the Tenements for Minerals; and
(b) if a commercially viable Mineral resource or Mineral resources is or are established, develop and mine the relevant part of the Tenements ,

on the terms and subject to the conditions set out in this Agreement .

In effect, if FQM spends the monies to earn a 50.1% interest in the Tenements (an effective 50.1% in the Calingiri Project), a joint venture will be formed in which FQM’s interest will be an initial 50.1% and Quadrio’s interest will be an initial 40.9% interest. The initial Joint Venture Manager would be FQM (this wording is not part of the edited extract from the FIA).

CAR7433/ Caravel IER on the Proposals July 2015

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7.9 Option to acquire

(a) For the period of 6 months following the notice given under clause 7.1(a), FQM will have the option to offer to acquire the whole of Quadrio’s Joint Venture Interest free of encumbrances.
(b) In order to exercise the option FQM must give notice in writing to Quadrio setting out the terms of its offer.
(c) The offer must include consideration equal to the fair market value of Quadrio’s Joint Venture Interest (as agreed between the Participants).
(d) The parties must negotiate in good faith in relation to an offer under this clause 7.9, but Quadrio is not obliged to accept such an offer.
Default under the Joint Venture
9.1 Breach and option to buy

If, after the Earning Period, a Participant commits a material breach of any of the terms of this Agreement and that breach continues unremedied for a period of not less than 30 days after the JV Manager or other Participant has served a notice to rectify or an Insolvency Event occurs in respect of a Participant, the Participant will be deemed to be a "Defaulting Party". In that event, the non-defaulting Participant will have the option to acquire the whole (but not less than the whole) of the Joint Venture Interest of a Defaulting Party.

9.2 Exercise of option

In order to exercise the option the non-defaulting Participant must give notice in writing to the Defaulting Party. The consideration will be an amount equal to 95% of the fair market value of the Defaulting Party's Joint Venture Interest (as agreed between the Participants or in the absence of agreement, determined by an independent expert appointed under clause 9.3) subject to adjustment for any amounts already paid by the non-defaulting Participant on behalf of the Defaulting Party. This consideration must be paid within 30 days after the later of the exercise of the option and the determination of the fair market value in exchange for which the Defaulting Party must provide to the non-defaulting Party:

(a) unstamped but otherwise registrable transfers in respect of the Defaulting Party’s interest in the Tenements, in favour of the non-defaulting Party as transferee, duly executed by the Defaulting Party as transferor and
(b) any other document or thing required by the non-defaulting Party to give full effect to the transfer of the Defaulting Party’s Joint Venture Interest to the non-defaulting Party free from encumbrances.

9.3 Expert valuation

Where a valuation is to be referred to an independent expert under clause 3.6 and clause 9.2, the Participants must use their best endeavours to agree upon the expert, and failing agreement within 5 Business Days of the request by either Participant, either Participant request the President for the time being of AusIMM to nominate the expert and the Participants agree to accept that nomination.

End of edited extract from the FIA

1.5 Further and complete details are set out in the EM attached to the Notice.
1.6 FQM who is owed principal $600,000 by way of a convertible note (“Note”) issued by Caravel agrees to convert the Note to shares in Caravel. The conversion price is 1.3 cents per Note. It is expected that interest on the Note to the 27 August 2015 (expected date to convert) would approximate $18,630 and thus the potential conversion may total $628,630.

CAR7433/ Caravel IER on the Proposals July 2015

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If the shares are issued, the Note amount of $628,630 would be extinguished to $nil and Caravel would issue 48,356,134 shares (“Note Shares”) to FQM.

In connection with the Convertible Loan Agreement, Quadrio granted a mining mortgage over the Calingiri Tenements in favour of First Quantum on 29 October 2014 to secure FQM’s right to be repaid the loan amount under the Convertible Loan Agreement (“Mining Mortgage”).

The Mining Mortgage has been registered with the Department of Mines and Petroleum over the Calingiri Tenements. FQM has also registered a financing statement on the Personal Property and Security Register in relation to the Mining Mortgage.

The Mining Mortgage will be amended so that it will secure performance by Quadrio under the FIA JV. This was undertaken by the signing of a Supplementary Deed - Convertible Loan Agreement in July 2015.

The amendments to the Mining Mortgage will take effect 2 business days after the conditions precedent to the FIA JV have been satisfied.

1.7 ASX Listing Rule 10.1 provides that an entity must not acquire a substantial asset from, or dispose of a substantial asset to a related party. A substantial asset is an asset valued at greater than 5% of the equity interests of a company. For the purposes of ASX Listing Rule 10.1, FQM is a substantial shareholder of the Company (owned approximately 11.17% (83,333,333 shares) of the issued share capital of Caravel as at 8 July 2015 and after the recent Tranche 1 Placement now owns approximately 9.41%) and is therefore deemed a related party. The consideration being paid (the potential payment by FQMA of up to $3.6 million to earn up to a 50.1% interest in the Tenements owned by Quadrio) is deemed to be worth more than 5% of the audited net assets as at 30 June 2014. Accordingly, the Company is seeking shareholder approval for the purpose of ASX Listing Rule 10.1 for the potential deemed disposal of a significant asset (the Calingiri Project”) to FQM.
1.8 ASX Listing Rule 10.1 provides that shareholder approval sought for the purpose of ASX Listing Rule 10.1 must include a report on the proposed acquisition from an independent expert. Stantons International Securities Pty Ltd has been requested to provide an opinion on the fairness and reasonableness to the non-associated shareholders of Caravel on the proposals with FQM and in particular whether:
the grant of the earn-in right under the farm-in agreement is fair and reasonable;
the transfer of a 50.1% interest in the Tenements on completion of the earn-in is fair and reasonable;
the first right to offer and negotiate a buy-out if FQM earns-in is fair and reasonable;
the option to acquire the Tenements for fair market value during the earn-in period in the event of insolvency of Quadrio is fair and reasonable’
the buy-out right in the event of a default for 95% of fair market value is fair and reasonable;
the right of first refusal during the joint venture phase is fair and reasonable; and
the grant by Quadrio of the Mining Mortgage in favour of FQM (as amended by the Supplementary Deed)

( the Proposals ).

CAR7433/ Caravel IER on the Proposals July 2015

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The actual wording of the actual Resolution 1 (that covers all of the Proposals) is as follows:

(1) the Company’s wholly owned subsidiary Quadrio Resources Pty Ltd to dispose a 50.1% interest in the Calingiri Tenements to First Quantum Minerals (Australia) Pty Ltd;
(2) the grant by Quadrio Resources Pty Ltd of the Mining Mortgage in favour of First Quantum Minerals (Australia) Pty Ltd as amended by the Supplementary Deed;
(3) (any subsequent disposals by Quadrio Resources Pty Ltd to First Quantum Minerals (Australia) Pty Ltd of all of its interest in the Calingiri Tenements (or its Joint Venture Interest) as a result of the exercise by First Quantum Minerals (Australia) Pty Ltd of certain rights under the FIA JV and the Mining Mortgage as described in paragraph 1.1(d) of Part A of the Explanatory Memorandum, which relate to First Quantum Minerals (Australia) Pty Ltd’s:
(i) buy-out right in the event of Quadrio Resources Pty Ltd suffering an ‘insolvency event’ (as defined in the FIA JV);
(ii) buy-out right in the event of a material breach of the FIA JV by Quadrio Resources Pty Ltd;
(iii) for the period of 6 months that follow First Quantum Minerals (Australia) Pty Ltd earning a 50.1% Joint Venture Interest, the right to offer to acquire Quadrio Resources Pty Ltd’s Joint Venture Interest;
(iv) first right of refusal in the event Quadrio Resources Pty Ltd wishes to assign its Joint Venture Interest to a third party; and
(v) enforcement rights under the Mining Mortgage.

on the terms and conditions as set out in the Explanatory Memorandum."

1.9 The Proposals are outlined in Resolution 1 of the Notice and we are reporting on the fairness and/or reasonableness of each of the Proposals. We are not specifically reporting on the planned conversion of $600,000 of Notes owned by FQM in Caravel at 1.3 cents each but do note that if converted (to be converted as part of the agreement with FQM), the beneficial shareholding of First Quantum Minerals Limited (includes FQM) in Caravel would increase from approximately 11.17% (83,333,333 shares) as at 8 July 2015 (and approximately 9.41% after the issue of the Tranche 1 shares noted below) to approximately 13.15% (131,689,487 shares) after the issue of the Tranche 2 shares (as noted below) and the 48,356,154 Note Shares to FQM.

Based on an announcement made by the Company on 13 July 2015, the Company is to make a placement of 207,420,009 shares in two tranches at 0.7 cents per share to raise a gross $1,451,940. 1 free attached share option will be issued for every 2 shares issued and each share option will be exercisable at 1.3 cents each, on or before 31 January 2017. The first tranche is the issue of 140,134,291 shares to raise an initial $980,940 (“Tranche 1) and the second tranche will be the issue of 67,285,718 shares (“Tranche 2”) and the Tranche 2 issue of securities will be issued after shareholders approve the Tranche 2 issue (including shares to be issued to Directors and related entities). 122,991,429 of the Tranche 1 shares were issued on or about 17 July 2015 and the remaining 17,142,862 Tranche 1 Shares were issued on 22 July 2015) and the Tranche 2 Shares (along with 103,710,005 free attached share options) is expected to occur at the same time as the issue of the Note Shares to FQM (following shareholder approval in late August 2015 or early September 2015).

1.10 Apart from this introduction, this report considers the following:
Summary of opinion
Implications of the Proposals
Corporate history and nature of business of Caravel

CAR7433/ Caravel IER on the Proposals July 2015

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Future direction of Caravel
Valuation of the Calingiri Project
Fairness and conclusion as to fairness
Reasonableness and conclusions of the Proposals
Shareholder decision
Sources of information
Appendix A, our Financial Services Guide and the Valuation Report on the Tenements
1.11 In determining the fairness and reasonableness of the Proposals as noted above and in resolution 1, we have had regard for the definitions set out by the Australian Securities and Investments Commission (“ASIC”) in its Regulatory Guide 111, “Content of Expert Reports”. Regulatory Guide 111 states that an opinion as to whether an offer is fair and/or reasonable shall entail a comparison between the offer price and the value that may be attributed to the securities under offer (fairness) and an examination to determine whether there is justification for the offer price on objective grounds after reference to that value (reasonableness). The concept of “fairness” is taken to be the value of the offer price, or the consideration, being equal to or greater than the value of the securities in the above mentioned offer. Furthermore, this comparison should be made assuming 100% ownership of the “target” and irrespective of whether the consideration is scrip or cash.

An offer is “reasonable” if it is fair. An offer may also be reasonable, if despite not being ”fair”, there are sufficient grounds for security holders to accept the offer in the absence of any higher bid before the close of the offer. Although in this case the Proposals with FQM do not relate to a takeover offer, we have considered the general principals noted above to determine our opinions on fairness and reasonableness.

1.12 In our opinion, taking into account the factors noted in this report, the Proposals as outlined in paragraph 1.8 and Resolution 1 may, on balance, taking into account the factors referred to in 9 below and elsewhere in this report, be considered to be not fair but reasonable to the shareholders of Caravel (not associated with First Quantum Minerals Limited that includes FQM) as at the date of this report.
1.13 The opinions expressed above must be read in conjunction with the more detailed analysis and comments made in this report, including the 9 July 2015 Agricola Valuation Report on the Tenements owned by Quadrio prepared by Agricola Mining Consultants Pty Ltd (“Agricola”) a copy of which is attached as an appendix to the Notice.
Implications of the Proposals
2.1 The Company will receive an upfront payment of $500,000 from FQM as part of the initial farm-in funding by FQM.
Quadrio grants to FQM the right to earn, and FQMA may earn a 50.1% interest in the Tenements by:
(a) spending a minimum of $1,200,000 on Earning Expenditure within 12 months of the Commencement Date; and
(b) spending a minimum of $3,600,000 on Earning Expenditure within 24 months of the Commencement Date (including the Earning Expenditure referred to in clause 3.1(a); and.
(c) FQM’s obligation under clause 3.1(a) is a firm commitment and FQM must pay any shortfall in the committed expenditure of $1,200,000 to Quadrio as at the expiry of 12 months from the Commitment Date.
2.2 In the event that FQM does not meet its obligation to spend $3,600,000 within 24 months of the Commencement Date, FQM will not have earned a 50.1% (or any percentage) in the Tenements.

CAR7433/ Caravel IER on the Proposals July 2015

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2.3 If FQM spends the monies to earn a 50.1% interest in the Tenements (an effective 50.1% in the two main tenements comprising the Calingiri Project), a joint venture will be formed in which FQM’s interest will be an initial 50.1% and Quadrio’s interest will be an initial 40.9% interest. The initial Joint Venture Manager would be FQM.
2.4 If an Insolvency Event occurs in respect of Quadrio during the Earning Period then:
(a) FQM will have the option to acquire the whole (but not less than the whole) of the Tenements free from encumbrances.
(b) In order to exercise the option FQM must give notice in writing to Quadrio.
(c) The consideration will be an amount equal to the fair market value of the Tenements (as agreed between FQM and Quadrio or in the absence of agreement, determined by an independent expert appointed under clause 9.3).
(d) The consideration must be paid within 30 days after the later of the acceptance of the offer and the determination of the fair market value in exchange for which Quadrio must provide to FQM:
- (i) unstamped but otherwise registrable transfers in respect of the Tenements, in favour of FQM as transferee, duly executed by Quadrio as transferor and
- (ii) any other document or thing required by FQM to give full effect to the transfer of the Tenements to FQM free from encumbrances.
2.5 The current Board of Directors may change in the near future as a result of the Proposals as under the FIA a representative of First Quantum Minerals Limited may be appointed to be a Board member but at this stage no nominee has been nominated. As at 22 July 2015, the Board comprised Marcel Hilmer, Peter Alexander and James Harris. The Company Secretary is Simon Robertson. FQM has the right to nominate such persons to the Board that will ensure that the nominees of FQM represent not less than one-third of the total number of persons on the Board from time to time.

Corporate History and Nature of Businesses

Caravel

3.1 Principal Activities and Significant Assets

Caravel is an ASX listed mineral exploration and evaluation company having achieved an ASX listing on 3 November 2006. It was formerly known as Silver Swan Group Limited, but shareholders approved the change of name to Caravel Minerals Limited on 19 November 2012. The Caravel Group’s most significant mineral interests are as follows:

Calingiri Project – a copper-gold-molybdenum project in Western Australia (two main targets being called Bindi and Dasher that are located on the Tenements); and
Wynberg Project – a copper-gold project in Queensland (attempting to farm out or sale).

Future Directions of Caravel

We have been advised by the directors and management of Caravel that:

There are no proposals currently contemplated either whereby Caravel will farm-out any further properties or assets to FQM but as noted there are opportunities for FQM to acquire an initial 50.1% interest in the Tenements and acquire all of the Tenements (via Insolvency of Quadrio or an offer to Quadrio to acquire 100% of the Tenements);
The composition of the Board may change in the short term as noted above;
The Company may raise further capital in 2015/16 if the needs arise and subject to market conditions (refer paragraph 1.9 above as to the Placement of shares);

CAR7433/ Caravel IER on the Proposals July 2015

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No dividend policy has been set; and
The Company will endeavour to enhance the value of its interests in its mining assets and in particular the Calingiri Project.

5. Value of the Tenements (the subject of the FIA with FQM)

5.1 In order for us to assess the fairness of the Proposals with FQM, we sought an independent valuation of the Tenements, the subject of the FIA. We in conjunction with the Company commissioned Agricola (Author of the Valuation Report was Malcolm Castle) to prepare a valuation report of the Tenements owned by QRL and subject to the FIA. The Agricola Valuation Report of 9 July 2015 should be read in its entirety and a full copy of the Agricola Valuation Report is attached as an Appendix to the Notice and EM. The Agricola Valuation Report ascribes a range of values to the Tenements and for the purposes of our report we have referred to the low, high and mid range valuations referred to in the Agricola Valuation Report and concluded based on the preferred valuation.
5.2 We have used and relied on the Agricola Valuation Report on the Tenements and have satisfied ourselves that:
Agricola is a suitably qualified consulting firm and has relevant experience in assessing the merits of mineral projects and preparing mineral asset valuations (also the principal author of the report Malcolm Castle is suitably qualified and experienced);
Agricola and Malcolm Castle are independent from Caravel; and
Agricola has to the best of our knowledge employed recognised methodologies in the preparation of the 9 July 2015 Agricola Valuation Report on the Tenements.
5.3 Agricola has ascribed a range of values to the Tenements as follows:

E70/2788 E70/4476	Low $ 2,900,000 2,800,000 5,700,000	Preferred $ 3,900,000 3,800,000 7,700,000	High $ 6,500,000 6,200,000
			12,700,000

Thus, a 50.1% interest in the Tenements is valued at between $2,855,700 (low) and $6,362,700 (high) with a preferred valuation of $3,857,700.

It is noted that as at 1 June 2015, the date of the announcement of the proposals with FQM, the market capitalisation of the Company approximated $8,200,000 and notwithstanding low volumes of trades, the minority shareholders are ascribing a value to the Calingiri project close to the preferred fair value by Agricola. .

6. Conclusion as to Fairness

6.1 The proposal to allow FQM to earn an initial 50.1% interest in the Tenements is believed to be fair to Caravel’s non-associated shareholders if the value of the consideration offered is equal to or less than the value of the consideration payable by FQM to earn a 50.1% interest in the Tenements.
6.2 The valuation of mining interests and valuing future profitability and cash flows is extremely subjective as it involves assumptions regarding future events that are not capable of independent substantiation.
6.3 We make a comparison on the value of a 50.1% current interest in the Tenements with the potential consideration payable by FQM to earn a 50.1% interest in the Tenements.

Low Preferred High Value of a 50.1% interest in the Tenements $2,855,700 $3,857,700 $6,362,700

CAR7433/ Caravel IER on the Proposals July 2015

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Consideration payable over 24 months to earn a 50.1% Interest in the Tenements $3,600,000 $3,600,000 $3,600,000

As the consideration payable by FQM is less than the fair market value of the Tenements as ascribed by Agricola (except for the low value), the proposal to grant the earn-in right and allow a potential transfer of a 50.1% in the Tenements to FQM are on its own not fair.

6.4 In the event of insolvency of Quadrio during the earn-in period, FQM has the option to acquire 100% of the Tenements at fair market value. As FQM, if this event occurred, would be paying what would be considered fair market value and thus the option to acquire the Tenements (and the price payable) would be considered fair. It is noted that the downside is that some other party may be prepared to pay more than fair market value but this is unlikely.
6.5 It is noted that FQM has the right (option) to offer and negotiate a buy-out of the Tenements at fair market value once FQM has earned a 50.1% interest in the Tenements. In effect, FQM would have acquired a 50.1% interest in the Tenements for $3,600,000 (below market value) and even though FQM would need to pay fair market value to acquire the remaining 49.9% interest in the Tenements, overall FQM to acquire a 100% interest have paid less than 100% of fair market value at the date of buy-out (if it occurred) and on such a parameter the overall acquisition by FQM of 100% of the Tenements would not be fair.

However, in isolation (excluding the initial 50.1% interest that we have concluded is not fair), the acquisition of the remaining 49.9% interest in the Tenements at fair market value would be considered fair.

6.6 If, after the Earning Period, a Participant in the Joint Venture commits a material breach of any of the terms of this Agreement and that breach continues unremedied for a period of not less than 30 days after the JV Manager or other Participant has served a notice to rectify or an Insolvency Event occurs in respect of a Participant, the Participant will be deemed to be a "Defaulting Party". In that event, the non-defaulting Participant will have the option to acquire the whole (but not less than the whole) of the Joint Venture Interest of a Defaulting Party.

In order to exercise the option the non-defaulting Participant must give notice in writing to the Defaulting Party. The consideration will be an amount equal to 95% of the fair market value of the Defaulting Party's Joint Venture Interest (as agreed between the Participants or in the absence of agreement, determined by an independent expert appointed under clause 0) subject to adjustment for any amounts already paid by the non-defaulting Participant on behalf of the Defaulting Party. This consideration must be paid within 30 days after the later of the exercise of the option and the determination of the fair market value

It is possible that if Quadrio was the defaulting party and did not remedy the breaches, FQM could obtain the remaining 49.9% interest in the Joint Venture owned by Quadrio at 95% of the then fair market value of such interest. As the potential payout by FQM is less than 100% of fair market value, the proposal that would allow FQM to acquire the 49.9% interest in the Joint Venture from Quadrio as described, would technically not be fair.

6.7 Quadrio granted a mining mortgage over the Calingiri Tenements in favour of FQM on 29 October 2014 to secure First Quantum’s right to be repaid the loan amount under the Convertible Loan Agreement. The Mining Mortgage will be amended so that it will secure performance by Quadrio under the FIA JV. It is not unusual for a potential majority joint venture party to seek security over assets to protect its interests. The Mining Mortgage is already in place and notwithstanding that the $600,000 of Notes is to be extinguished by the issue of 46,153,846 Note Shares (ordinary shares in Caravel), it is our view that the new terms to protect FQM’s interest in the FIA are not unusual and thus may be considered fair.
6.8 As noted above, some of the individual Proposals may be fair on their own and others are not fair . As there is only one resolution shareholders can vote for on the Proposals, it is our view that overall the Proposals as noted in resolution 1 are not fair to the shareholders of Caravel not associated with First Quantum (including FQM).

CAR7433/ Caravel IER on the Proposals July 2015

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7. Reasonableness of the Proposals

7.1 We set out below some of the advantages and disadvantages and other factors pertaining to the Proposals that we considered in arriving at our conclusion on the reasonableness of the Proposals (and Resolution 1).

Advantages

7.2 The Company has very limited funds at the date of this report and the ability of junior explorers such as Caravel to raise significant sums of money on commercial terms is quite low and even if it could occur, it would be very dilutive. The current share price is around 0.8 cents to 1.1 cents. Even if monies could be raised, the discount to market value may be between 15% and 40% (and possibly higher). It is noted that subsequent to commencing a draft of this report, Caravel has negotiated a Placement at 0.7 cents to raise a gross $1,451,940 (in two Tranches as noted in paragraph 1.9 above of which Tranche 1 has now been issued) and a net approximately $1,380,000. We have been advised that the Placement was able to be achieved due to the announcement of the Proposals with FQM. The discount to the market prices in June 2015 to 8 July 2015 was between 12.5% and 36.36%. The FIA allows Caravel to save spending $3,600,000 over a 24 month period on the Tenements that form part of the Caravel Group’s flagship project (the Calingiri Project). Notwithstanding the Placement (part completed), Caravel does not currently have sufficient funds to spend further significant monies on the Tenements. FQM would fund the on-going exploration and evaluation of the Tenements.
7.3 The Company may be better placed to raise further funds by way of share equity in the event that FQM acquires a 50.1% interest in the Tenements. It is unlikely that FQM will spend the whole of the $3,600,000 over 24 months if the Tenements were not proving to be potentially commercial. The value of the Tenements may In 24 month time (after FQM has spent $3,600,000) may arguably be worth more than current assessed values (refer section 5 above) and thus the ability to raise new equity in 24 months after commencement of the earn-in period would arguably be enhanced.
7.4 There is an incentive to Caravel and FQM, to successfully exploit the Tenements as FQM will need to pay $3,600,000 to earn a 50.1% interest in the Tenements and it currently has a significant 9.14% shareholding interests in Caravel (was 11.17% before the issue of the Tranche 1 Placement Shares) (that could increase to approximately 13.15% on conversion of the $628,630 of Notes that includes accrued interest of $28,630 as referred to above and the issue of the Tranche 2 Placement Shares). It is noted that FQM needs to spend a minimum of $1,200,000 in the first year from Commencement and that if FQM withdraws before spending $3,600,000 the FIA ceases and FQM would hold no interest in the Tenements.

Disadvantages

7.5 If FQM spend the $3,600,000 and earns a 50.1% interest in the Tenements, the Caravel Group’s interest in the tenements reduces from 100% to 49.9% and thus has a lesser interest if the Tenements were commercialised via production.
7.6 There is always the risk that the Caravel Group cannot raise sufficient funds to funds its 49.9% interest in the Joint Venture (assuming FQM has earned its 50.1% interest). Under such a scenario, FQM may acquire Quadrio’s interest at less than market value (95% of market value as noted above) and thus the Caravel’s interest in the Tenements would be nil (but the Caravel Group would receive cash equal to 95% of a 49.9% interest in the Tenements).

Other Factors

7.7 It would be expected that any proposed new board member (to be nominated by FQM but not yet named) should bring further technical and business experience to the Board of Caravel.

CAR7433/ Caravel IER on the Proposals July 2015

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7.8 Although not noted in the FIA, it has been agreed that FQM will convert the $600,000 Note and accrued interest of $28,630 (owing by Caravel to FQM) at 1.3 cents per share (the original conversion price was 1.7 cents per share). If shareholders approve the new conversion terms and FQM converts the Note to share equity in Caravel and all Placement Shares are issued (Tranche 1 has been issued, FQM’s shareholding interest in Caravel will increase to approximately 13.15% (from 11.17% as at 8 July 2015 and now 9.41% as at 22 July 2015) and the number of shares on issue increases from 745,938,133 to 1,001,314,696. It is noted that the proposed new conversion price is at a premium of between 18.18% and 85.71% to share prices of Caravel shares trading on ASX in the April 2015 to June 2015 period (62.5% premium based on a Caravel share price on 22 July 2015 of 0.8 cents). It is noted that the Placement is being completed at 0.7 cents per Placement Share and the exercise price of the free attached share options (to the Placement Shares) is 1.3 cents.

By conversion to share equity of the Note principal of $600,000 and the accrued interest to 27 August 2015 estimated at $28,630, the liabilities of the Caravel Group reduce by $628,630 (any interest owing after 27 August 2015 in the event of conversion after that date will be paid to FQM in cash).

7.9 The basic terms of the FIA are not that different to other farm-in agreements/Joint Venture agreements sighted by us over the past few years. The Mining Mortgage as amended to include securing performance by Quadrio under the FIA JV. As FQM is in effect financing exploration over the next 2 years of up to $3,600,000 (with no guarantee that it will earn a 50.1% interest in the Tenements until all expenditure has been incurred), it is not unreasonable for FQM wanting to protect its potential 50.1% interest.
7.10 In the event of insolvency by Quadrio (and probably its parent, caravel), an Administrator appointed would seek to maximise value by negotiating with interested parties to acquire the Tenements. In most cases, under an Administration scenario, the realisable value of assets are materially less than book values and technical values ascribed by recognised valuers – investors/buyers look for buying opportunities to take advantage of the poor state of affairs of the seller. In the case of Quadrio, under an insolvency arrangement, FQM has the option to acquire the Tenements at fair market value which may be more than a forced sale value.
7.11 The market capitalisation of the Caravel group in May/June 2015 ranged between approximately $5.96 million and $8.20 million with a mid-point of around $7.08 million ($5.96 million as at 17 July 2015 before the issue of the Tranche 1 Placement Shares) and $7.08 million after the issue of the Tranche 1 Placement Shares (approximately $7.08 million as at 22 July 2015). The cash and other current assets of the Caravel Group approximate liabilities (before the Tranche 1 Placement) and thus, in effect, the investors are ascribing the value of the Caravel Group’s mineral assets to be between $5.96 million and $8.20 million. Anecdotal evidence would lead to the conclusion that the “value” is predominately attributable to the Calingiri Project being the flagship project of the Caravel Group.

A 50.1% value would range between $2.989 million and $4.110 million ($3.547 million as at 22 July 2015) and the Consideration payable by FQM to earn a 50.1% interest in the Tenements over 24 months is $3.6 million.

Conclusion as to Reasonableness
8.1 After taking into account the factors referred to in 7 above and elsewhere in this report, we are of the opinion that the advantages to the existing shareholders outweigh the disadvantages and thus the Proposals as noted in paragraphs 1.8 and Resolution 1 in the Notice are considered, on balance, to be reasonable to the existing non-associated shareholders of Caravel at the date of his report.

CAR7433/ Caravel IER on the Proposals July 2015

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9. Shareholder Decision

9.1 Stantons International Securities Pty Ltd has been engaged to prepare an independent expert’s report setting out whether in its opinion the Proposals are fair and reasonable and state reasons for that opinion. Stantons International Securities Pty Ltd has not been engaged to provide a recommendation to shareholders in relation to the Proposals under Resolution 1 but we have been requested to determine whether the Proposals pursuant to Resolution 1 are fair and/or reasonable to those shareholders not associated with FQM. The responsibility for such a voting recommendation lies with the directors of Caravel.
9.2 In any event, the decision whether to accept or reject Resolution 1 (and all other Resolutions) is a matter for individual shareholders based on each shareholder’s views as to value, their expectations about future market conditions and their particular circumstances, including risk profile, liquidity preference, investment strategy, portfolio structure and tax position.

If in any doubt as to the action they should take in relation to the proposals under Resolution 1 (and all other Resolutions), shareholders should consult their own professional adviser.

9.3 Similarly, it is a matter for individual shareholders as to whether to buy, hold or sell shares in Caravel. This is an investment decision upon which Stantons International Securities Pty Ltd does not offer an opinion and is independent on whether to accept the proposals under Resolution 1 (and all other resolutions). Shareholders should consult their own professional adviser in this regard.

10. Sources of Information

10.1 In making our assessment as to whether the Proposals as noted in paragraph 1.8 and Resolution 1 are fair and reasonable, we have reviewed relevant published available information and other unpublished information of the Company, Quadrio and the Tenements that is relevant to the current circumstances. In addition, we have held discussions with the management of Caravel about the present and future operations of the Company. Statements and opinions contained in this report are given in good faith but in the preparation of this report, we have relied in part on information provided by the directors and management of Caravel.
10.2 Information we have received includes, but is not limited to:
a) Drafts of Notice of Caravel and EM to 22 July 2015;
b) Discussions with management of Caravel and a representative of QRL;
c) Details of historical market trading of Caravel ordinary fully paid shares recorded by ASX for the period 1 June 2014 to 22 July 2015;
d) Shareholding details of Caravel as supplied by the Company’s share registry as at 10 July 2015;
e) Audited consolidated financial statements of the Caravel Group as at 30 June 2014 and unaudited consolidated balance sheets as at 30 June 2015;
f) Reviewed balance sheet of Caravel as at 31 December 2014;
g) Announcements made by Caravel to the ASX from 1 January 2014 to 22 July 2015;
h) The FIA between Caravel, Quadrio and FQM;
i) The independent Agricola Valuation Report of Agricola dated 9 July 2015;
j) The estimated annual minimum mineral expenditure commitments on the Tenements;
k) The cash flow forecasts of Caravel for the period 1 July 2015 to 30 June 2016;
l) Un-audited balance sheet of Quadrio as at 30 June 2015;
m) The Supplementary Deed – Convertible Note Agreement of July 2015;
n) Permission correspondence from Agricola allowing us to use, refer to and rely on the Agricola Valuation Report attached to the Notice.

CAR7433/ Caravel IER on the Proposals July 2015

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10.3 Our report includes Appendix A and our Financial Services Guide attached to this report. The Agricola Valuation Report is a separate attachment to the Notice.

Yours faithfully STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities)

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J P Van Dieren - FCA Director

CAR7433/ Caravel IER on the Proposals July 2015

APPENDIX A

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AUTHOR INDEPENDENCE AND INDEMNITY

This annexure forms part of and should be read in conjunction with the report of Stantons International Securities Pty Ltd dated 22 July 2015, relating to the Proposals as outlined in paragraph 1.8 of the report and Resolution 1 in the Notice of Meeting to Shareholders and the EM proposed to be distributed to the Caravel shareholders in July 2015 or early August 2015.

At the date of this report, Stantons International Securities Pty Ltd does not have any interest in the outcome of the proposals. There are no relationships with Caravel and FQM other than acting as an independent expert for the purposes of this report. Before accepting the engagement Stantons International considered all independence issues and concluded that there were no independence issues in accepting the assignment to prepare the Independent Experts Report. There are no existing relationships between Stantons International Securities Pty Ltd and the parties participating in the transaction detailed in this report which would affect our ability to provide an independent opinion. The fee to be received for the preparation of this report is based on the time spent at normal professional rates plus out of pocket expenses and is estimated at a maximum of $15,000. The fee is payable regardless of the outcome. With the exception of the fee, neither Stantons International Securities Pty Ltd nor John P Van Dieren have received, nor will, or may they receive, any pecuniary or other benefits, whether directly or indirectly, for or in connection with the making of this report.

Stantons International Securities Pty Ltd (or its parent entity, Stantons Audit and Consulting Pty Ltd and the authors of this report) does not hold any securities in Caravel or FQM. There are no pecuniary or other interests of Stantons International Securities Pty Ltd that could be reasonably argued as affecting its ability to give an unbiased and independent opinion in relation to the proposal. Stantons International Securities Pty Ltd and Mr J Van Dieren have consented to the inclusion of this report in the form and context in which it is included as an annexure to the Notice.

QUALIFICATIONS

We advise Stantons International Securities Pty Ltd is the holder of an Australian Financial Services Licence (no 448697) under the Corporations Act 2001 relating to advice and reporting on mergers, takeovers and acquisitions that involve securities. The directors of Stantons International Audit and Consulting Pty Ltd are the directors of Stantons International Securities Pty Ltd. Stantons International Securities Pty Ltd has extensive experience in providing advice pertaining to mergers, acquisitions and strategic for both listed and unlisted companies and businesses.

Mr John P Van Dieren, FCA, the person responsible for the preparation of this report, has extensive experience in the preparation of valuations for companies and in advising corporations on takeovers generally and in particular on the valuation and financial aspects thereof, including the fairness and reasonableness of the consideration offered.

The professionals employed in the research, analysis and evaluation leading to the formulation of opinions contained in this report, have qualifications and experience appropriate to the task they have performed.

DECLARATION

This report has been prepared at the request of the Directors of Caravel in order to assist them to assess the merits of the proposed Proposals as outlined in Resolution 1 the EM to which this report relates. This report has been prepared for the benefit of Caravel’s shareholders and does not provide a general expression of Stantons International Securities Pty Ltd opinion as to the longer term value of Caravel, Quadrio and their assets. Stantons International Securities Pty Ltd does not imply, and it should not be construed, that is has carried out any form of audit on the accounting or other records of Caravel and Quadrio. Neither the whole nor any part of this report, nor any reference thereto may be included in or with or attached to any document, circular, resolution, letter or statement, without the prior written consent of Stantons International Securities Pty Ltd to the form and context in which it appears.

CAR7433/ Caravel IER on the Proposals July 2015

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DUE CARE AND DILEGENCE

This report has been prepared by Stantons International Securities Pty Ltd with due care and diligence. The report is to assist shareholders in determining the fairness and reasonableness of the proposals set out in Resolution 1 to the Notice and each individual shareholder may make up their own opinion as to whether to vote for or against Resolution 1.

DECLARATION AND INDEMNITY

Recognising that Stantons International Securities Pty Ltd may rely on information provided by Caravel and its officers (save whether it would not be reasonable to rely on the information having regard to Stantons International Securities experience and qualifications), Caravel has agreed:

(a) To make no claim by it or its officers against Stantons International Securities Pty Ltd (and Stantons International Audit and Consulting Pty Ltd) to recover any loss or damage which Caravel may suffer as a result of reasonable reliance by Stantons International Securities Pty Ltd on the information provided by Caravel; and
(b) To indemnify Stantons International Securities Pty Ltd (and Stantons International Audit and Consulting Pty Ltd) against any claim arising (wholly or in part) from Caravel or any of its officers providing Stantons International Securities Pty Ltd any false or misleading information or in the failure of Caravel or its officers in providing material information, except where the claim has arisen as a result of wilful misconduct or negligence by Stantons International Securities Pty Ltd.

A draft of this report was presented to Caravel directors for a review of factual information contained in the report. Comments received relating to factual matters were taken into account, however the valuation methodologies and conclusions did not alter.

CAR7433/ Caravel IER on the Proposals July 2015

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FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities) Dated 22 July 2015

Stantons International Securities ABN 42 128 908 289 and Financial Services Licence 448697 (“SIS” or “we” or “us” or “ours” as appropriate) has been engaged to issue general financial product advice in the form of a report to be provided to you.

2. Financial Services Guide

In the above circumstances we are required to issue to you, as a retail client a Financial Services Guide (“FSG”). This FSG is designed to help retail clients make a decision as to their use of the general financial product advice and to ensure that we comply with our obligations as financial services licensees.

This FSG includes information about:

who we are and how we can be contacted;
the services we are authorised to provide under our Australian Financial Services Licence, Licence No: 418019;
remuneration that we and/or our staff and any associated receive in connection with the general financial product advice;
any relevant associations or relationships we have; and
our complaints handling procedures and how you may access them.

3. Financial services we are licensed to provide

We hold an Australian Financial Services Licence which authorises us to provide financial product advice in relation to:

Securities (such as shares, options and notes)

We provide financial product advice by virtue of an engagement to issue a report in connection with a financial product of another person. Our report will include a description of the circumstances of our engagement and identify the person who has engaged us. You will not have engaged us directly but will be provided with a copy of the report as a retail client because of your connection to the matters in respect of which we have been engaged to report.

Any report we provide is provided on our own behalf as a financial services licensee authorised to provide the financial product advice contained in the report.

4. General Financial Product Advice

In our report we provide general financial product advice, not personal financial product advice, because it has been prepared without taking into account your personal objectives, financial situation or needs. You should consider the appropriateness of this general advice having regard to your own objectives, financial situation and needs before you act on the advice. Where the advice relates to the acquisition or possible acquisition of a financial product, you should also obtain a product disclosure statement relating to the product and consider that statement before making any decision about whether to acquire the product.

CAR7433/ Caravel IER on the Proposals July 2015

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5. Benefits that we may receive

We charge fees for providing reports. These fees will be agreed with, and paid by, the person who engages us to provide the report. Fees will be agreed on either a fixed fee or time cost basis.

Except for the fees referred to above, neither SIS, nor any of its directors, employees or related entities, receive any pecuniary benefit or other benefit, directly or indirectly, for or in connection with the provision of the report.

6. Remuneration or other benefits received by our employees

SIS has no employees and Stantons International Audit and Consulting Pty Ltd charges a fee to SIS. All Stantons International Audit and Consulting Pty Ltd employees receive a salary. Stantons International Audit and Consulting Pty Ltd employees are eligible for bonuses based on overall productivity but not directly in connection with any engagement for the provision of a report.

7. Referrals

We do not pay commissions or provide any other benefits to any person for referring customers to us in connection with the reports that we are licensed to provide.

8. Associations and relationships

SIS is ultimately a wholly owned subsidiary of Stantons International Audit and Consulting Pty Ltd a professional advisory and accounting practice. Stantons International Audit and Consulting Pty Ltd also trades as Stantons International that provides audit, corporate services, internal audit, probity, management consulting, accounting and IT audits.

From time to time, SIS and Stantons International Audit and Consulting Pty Ltd and/or their related entities may provide professional services, including audit, accounting and financial advisory services, to financial product issuers in the ordinary course of its business.

9. Complaints resolution

9.1 Internal complaints resolution process

As the holder of an Australian Financial Services Licence, we are required to have a system for handling complaints from persons to whom we provide financial product advice. All complaints must be in writing, addressed to:

The Complaints Officer Stantons International Securities Level 2 1 Walker Avenue WEST PERTH WA 6005

When we receive a written complaint we will record the complaint, acknowledge receipt of the complaints within 15 days and investigate the issues raised. As soon as practical, and not more than 45 days after receiving the written complaint, we will advise the complainant in writing of our determination.

9.2 Referral to External Dispute Resolution Scheme

A complainant not satisfied with the outcome of the above process, or our determination, has the right to refer the matter to the Financial Ombudsman Service Limited (“FOSL”). FOSL is an independent company that has been established to provide free advice and assistance to consumers to help in resolving complaints relating to the financial services industry.

CAR7433/ Caravel IER on the Proposals July 2015

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Further details about FOSL are available at the FOSL website www.fos.org.au or by contacting them directly via the details set out below.

Financial Ombudsman Service Limited PO Box 3 MELBOURNE VIC 8007

Toll Free: 1300 78 08 08 Facsimile: (03) 9613 6399

Contact details

You may contact us using the details set out above.

Telephone 08 9481 3188 Fax 08 9321 1204 Email [email protected]

CAR7433/ Caravel IER on the Proposals July 2015

ANNEXURE B Option Terms

(a) Entitlement

The Options entitle the holder to subscribe for one (1) unissued Share upon the exercise of each Option.

Exercise Price

The exercise price of each Option is A$0.013.

Each Option expires on 31 January 2017.

(d) Exercise Period

The Options are exercisable at any time on or prior to the Expiry Date.

(e) Notice of Exercise

The Options may be exercised by notice in writing to the Company and payment of the Exercise Price for each Option being exercised. Any notice of exercise of an Option received by the Company will be deemed to be a notice of the exercise of that Option as at the date of receipt.

(f) Shares issued on exercise

Shares issued on exercise of the Options rank equally with the Shares of the Company.

(g) Quotation of Shares on exercise

Application will be made by the Company to ASX for official quotation of Shares issued upon the exercise of the Options.

(h) Timing of issue of Shares

After an Option is validly exercised, the Company must as soon as possible:

(i) issue the Share; and
(ii) do all such acts matters and things to obtain:
(A) the grant of quotation for the Share on ASX no later than five days from the date of exercise of the Option; and
(B) receipt of cleared funds equal to the sum payable on the exercise of the Options.

(i) Participation in new issues

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

However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least ten Business Days after the issue is announced. This will give Optionholders the opportunity to exercise their Options prior to the date for determining entitlements to participate in any such issue.

(j)

Adjustment for bonus issues of Shares

If the Company makes a bonus issue of Shares or other securities to existing Shareholders (other than an issue in lieu or in satisfaction, of dividends or by way of dividend reinvestment):

(i) the number of Shares which must be issued on the exercise of an Option will be increased by the number of Shares which the Optionholder would have received if the Optionholder had exercised the Option before the record date for the bonus issue; and
(ii) no change will be made to the Exercise Price.

(k)

Adjustment for rights issue

If the Company makes an issue of Shares pro rata to existing Shareholders (other than an issue in lieu of in satisfaction of dividends or by way of dividend reinvestment) the Exercise Price of an Option will be reduced according to the following formula:

– New exercise price = O – E [P (S+D)]

N+1

the old Exercise Price of the Option.
E = the number of underlying Shares into which one Option is exercisable.
P = average market price per Share weighted by reference to volume of the underlying Shares during the five trading days ending on the day before the ex rights date or ex entitlements date.
S = the subscription price of a Share under the pro rata issue.
D = the dividend due but not yet paid on the existing underlying Shares (except those to be issued under the pro rata issue).
N - the number of Shares with rights or entitlements that must be held to receive a right to one new Share.

(l) Adjustments for reorganisation

If there is any reconstruction of the issued share capital of the Company, the rights of the Optionholder may be varied to comply with the Listing Rules which apply to the reconstruction at the time of the reconstruction.

(m) No quotation of Options

Application for quotation of the Options will not be made by the Company.

(n) Options not transferable

The Options are not transferable.

(o) Lodgement Instructions

Cheques shall be in Australian currency made payable to the Company and crossed "Not Negotiable". The application for Shares on exercise of the Options with the appropriate remittance should be lodged at the Company's share registry.

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ACN: 120 069 089

REGISTERED OFFICE:

LEVEL 3 18 RICHARDSON STREET WEST PERTH WA 6005

SHARE REGISTRY:

Security Transfer Registrars Pty Ltd

All Correspondence to: PO BOX 535, APPLECROSS WA 6953 AUSTRALIA

«HOLDER_NAME» «ADDRESS_LINE_1» «ADDRESS_LINE_2» «ADDRESS_LINE_3» «ADDRESS_LINE_4» «ADDRESS_LINE_5»

770 Canning Highway, APPLECROSS WA 6153 AUSTRALIA T: +61 8 9315 2333 F: +61 8 9315 2233 E: [email protected] W: www.securitytransfer.com.au

Code: CVV

Holder Number: «HOLDER_NUMB

PROXY FORM

THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCK BROKER OR LICENSED PROFESSIONAL ADVISOR.

VOTE Lodge your proxy vote securely at www.securitytransfer.com.au

Log into the Investor Centre using your holding details.
ONLINE 2. Click on "Proxy Voting" and provide your Online Proxy ID to access the voting area.

«ONLINE PRX

SECTION A: Appointment of Proxy

I/We, the above named, being registered holders of the Company and entitled to attend and vote, hereby appoint:

The meeting chairperson OR

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or failing the person named, or if no person is named, the Chairperson 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 the Company to be held at 10:00am WST on Thursday, 27 August 2015 at Level 3, 18 Richardson Street, West Perth WA and at any adjournment of that meeting.

SECTION B: Voting Directions

Please mark "X" in the box to indicate your voting directions to your Proxy. The Chairperson of the Meeting intends to vote undirected proxies in FAVOUR of all the resolutions. In exceptional circumstances, the Chairperson of the Meeting may change his/her voting intention on any resolution, in which case an ASX announcement will be made.

RESOLUTION For Against Abstain Approval of the disposal of a 50.1% interest in the Issue of Tranche 2 Shares and Options to Director
1. 1. Calingiri Copper-Molybdenum Project Peter Alexander Approval of issue of Shares under Convertible Loan Issue of Tranche 2 Shares and Options to Director
1. 1. Agreement James Harris
1. Ratification of previous issue of Shares 9. Issue of Options to corporate advisor Ratification of previous issue of Tranche 1 Shares to
1. Exempt Investors Issue of Tranche 2 Shares and Options to Exempt
1. Investors Issue of Tranche 2 Shares and Options to Executive
1. Director and CEO Marcel Hilmer

For Against Abstain

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If no directions are given my proxy may vote as the proxy thinks fit or may abstain. * If you mark the Abstain box for a particular item, you are directing your Proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

SECTION C: Signature of Security Holder(s)

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Security Holder Security Holder 2 Sole Director & Sole Company Secretary Director

Security Holder 3

Director/Company Secretary

Proxies must be received by Security Transfer Registrars Pty Ltd no later than 10:00am WST on Tuesday 25 August 2015 . + CVVPX1270815 1 1 CVV CVVPX1270815

My/Our contact details in case of enquiries are:

Name:

Number:

( )

1. NAME AND ADDRESS

This is the name and address on the Share Register of the Company. If this information is incorrect, please make corrections on this form. Shareholders sponsored by a broker should advise their broker of any changes. Please note that you cannot change ownership of your shares using this form.

2. APPOINTMENT OF A PROXY

If the person you wish to appoint as your Proxy is someone other than the Chairperson of the Meeting please write the name of that person in Section A. If you leave this section blank, or your named Proxy does not attend the meeting, the Chairperson of the Meeting will be your Proxy. A Proxy need not be a shareholder of the Company.

3. DIRECTING YOUR PROXY HOW TO VOTE

To direct the Proxy how to vote place an "X" in the appropriate box against each item in Section B. Where more than one Proxy is to be appointed and the proxies are to vote differently, then two separate forms must be used to indicate voting intentions.

4. APPOINTMENT OF A SECOND PROXY

You are entitled to appoint up to two (2) persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy form may be obtained by contacting the Company's share registry or you may photocopy this form.

5. SIGNING INSTRUCTIONS

Individual: where the holding is in one name, the Shareholder must sign. Joint Holding: where the holding is in more than one name, all of the Shareholders must sign.

Power of Attorney: to sign under Power of Attorney you must have already lodged this document with the Company's share registry. If you have not previously lodged this document for notation, 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 may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be lodged with the Company before the meeting or at the registration desk on the day of the meeting. A form of the certificate may be obtained from the Company's share registry.

6. LODGEMENT OF PROXY

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than the date and time stated on the form overleaf. Any Proxy form received after that time will not be valid for the scheduled meeting.

To appoint a second Proxy you must:

a) On each of the Proxy forms, state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each Proxy may exercise, each Proxy may exercise half of your votes; and
b) Return both forms in the same envelope.

The proxy form does not need to be returned to the share registry if the votes have been lodged online.

Security Transfer Registrars Pty Ltd Online www.securitytransfer.com.au

Postal Address PO BOX 535 Applecross WA 6953 AUSTRALIA Street Address Alexandrea House Suite 1, 770 Canning Highway Applecross WA 6153 AUSTRALIA Telephone +61 8 9315 2333 Facsimile +61 8 9315 2233 Email [email protected]

PRIVACY STATEMENT

Personal information is collected on this form by Security Transfer Registrars Pty Ltd as the registrar for securities issuers for the purpose of maintaining registers of security holders, facilitating distribution payments and other corporate actions and communications. Your personal details may be disclosed to related bodies corporate, to external service providers such as mail and print providers, or as otherwise required or permitted by law. If you would like details of your personal information held by Security Transfer Registrars Pty Ltd or you would like to correct information that is inaccurate please contact them on the address on this form.

AI assistant

CARAVEL MINERALS LIMITED — Proxy Solicitation & Information Statement 2015

64732_rns_2015-07-26_9012dd62-5996-4446-b4b6-837a36ee051f.pdf

NOTICE OF GENERAL MEETING

CARAVEL MINERALS LIMITED ABN 41 120 069 089

NOTICE OF GENERAL MEETING

AGENDA

1. Resolution 1 – Approval of the disposal of a 50.1% interest in the Calingiri Copper-Molybdenum Project

Voting Exclusion

2. Resolution 2 – Approval of issue of Shares under Convertible Loan Agreement

Voting Exclusion

3. Resolution 3 – Ratification of previous issue of Shares

Voting Exclusion

4. Resolution 4 – Ratification of previous issue of Tranche 1 Shares to Exempt Investors

Voting Exclusion

5. Resolution 5 – Issue of Tranche 2 Shares and Options to Exempt Investors

6. Resolution 6 – Issue of Tranche 2 Shares and Options to Executive Director and CEO – Marcel Hilmer

7. Resolution 7 – Issue of Tranche 2 Shares and Options to Director – Peter Alexander

8. Resolution 8 – Issue of Tranche 2 Shares and Options to Director – James Harris

9. Resolution 9 – Issue of Options to corporate advisor

OTHER BUSINESS

RESOLUTIONS 1 AND 2 ARE INTERDEPENDENT

CARAVEL MINERALS LIMITED ABN 41 120 069 089

EXPLANATORY MEMORANDUM

Introduction

Action to be taken by Shareholders

PART A

1. Background to Resolutions 1 and 2

1.1 Farm-in and Joint Venture Agreement

(b) Conditions precedent

(c) Formation of a joint venture

(d) Subsequent disposals by Quadrio under the FIA JV

(e) Granting of and disposals under the Mining Mortgage

1.2 Supplementary Deed – Convertible Loan Agreement

1.3 Mining Mortgage

PART B

1. Resolution 1 – Approval of the disposal of a 50.1% interest in the Calingiri Copper-Molybdenum Project

2. Resolution 2 – Approval of issue of Shares under Convertible Loan Agreement

3. Resolution 3 – Ratification of previous issue of Shares

4. Resolution 4 – Ratification of previous issue of Tranche 1 Shares to Exempt Investors

5. Resolution 5 – Issue of Tranche 2 Shares and Options to Exempt Investors

6. Resolutions 6, 7 and 8 – Issue of Shares and Options to Directors

Approvals required

Listing Rule 10.11

Shares

Options

Listing Rules 7.1 and 7.2 and 15% restriction

7. Resolution 9 – Issue of Options to Corporate advisor

ANNEXURE A Independent Expert’s Report (Resolution 1)

1. Introduction

Tenements means:

3.3 Withdrawal during Earning Period

3.4 Effect of failure to spend

7.9 Option to acquire

9.2 Exercise of option

9.3 Expert valuation

End of edited extract from the FIA

( the Proposals ).

Corporate History and Nature of Businesses

Caravel

Future Directions of Caravel

5.

Value of the Tenements (the subject of the FIA with FQM)

6. Conclusion as to Fairness

7. Reasonableness of the Proposals

Advantages

Disadvantages

Other Factors

9. Shareholder Decision

10. Sources of Information

Yours faithfully STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities)

J P Van Dieren - FCA Director

AUTHOR INDEPENDENCE AND INDEMNITY

QUALIFICATIONS

DECLARATION

DUE CARE AND DILEGENCE

DECLARATION AND INDEMNITY

FINANCIAL SERVICES GUIDE FOR STANTONS INTERNATIONAL SECURITIES PTY LTD (Trading as Stantons International Securities) Dated 22 July 2015

2. Financial Services Guide

3.

CARAVEL MINERALS LIMITED Proxy Solicitation & Information Statement 2015