CAULDRON ENERGY LIMITED — AGM Information 2013

Oct 22, 2013

ACN 102 912 783

NOTICE OF ANNUAL GENERAL MEETING

TIME: 11.00am (WST)

• DATE: 22 November 2013
• PLACE: 32 Harrogate Street WEST LEEDERVILLE WA 6007

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

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 9380 9555.

C O N T E N T S P A G E

Notice of Annual General Meeting (setting out the proposed resolutions)	4
Explanatory Statement (explaining the proposed resolutions)	6
Glossary	10
Schedule 1 – Terms and Conditions of Options	21
Schedule 2 – Terms and Conditions of Director Options	23
Proxy Form	Enclosed

T I M E A N D P L A C E O F M E E T I N G A N D H O W T O V O T E

VENUE

The annual general meeting of the Shareholders to which this Notice of Meeting relates will be held at 11.00am (WST) on Friday, 22 November 2013 at:

32 Harrogate Street West Leederville WA 6007

YOUR VOTE IS IMPORTANT

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

VOTING IN PERSON

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

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return to Advanced Share Registry Services by:

• (a) post to PO Box 1156, Nedlands WA 6909; or
• (b) facsimile on (+61 8) 9389 7871,

so that it is received not later than 11.00am (WST) on 20 November 2013.

Proxy Forms received later than this time will be invalid.

Proxy Voting: Sections 250BB and 250BC of the Corporations Act apply to voting by proxy. Shareholders and their proxies should be aware that:

• (a) if the proxy votes, they must cast all directed proxies as directed; and
• (b) any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes is set out below.

Proxy vote if appointment specifies way to vote

Section 250BB (1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does:

• (a) the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (i.e. as directed); and
• (b) if the proxy has 2 or more appointments that specify different ways to vote on the resolution the proxy must not vote on a show of hands; and
• (c) if the proxy is the chair of the meeting at which the resolution is voted on the proxy must vote on a poll, and must vote that way (i.e. as directed); and
• (d) if the proxy is not the chair the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).

Transfer of non chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

• (a) an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and
• (b) the appointed proxy is not the chair of the meeting; and
• (c) at the meeting, a poll is duly demanded on the resolution; and
• (d) either of the following applies:
• (i) the proxy is not recorded as attending the meeting; or
• (ii) the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the annual general meeting of Shareholders will be held at 11:00am (WST) on Friday, 22 November 2013 at 32 Harrogate Street, West Leederville, Western Australia.

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

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Annual General Meeting are those who are registered Shareholders at 5:00pm (Perth time) on 20 November 2013.

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

AGENDA

ORDINARY BUSINESS

FINANCIAL STATEMENTS AND REPORTS

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2013 together with the declaration of the directors, the directors' report, the remuneration report and the auditor's report.

RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution:

"That, for the purpose of Section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the Company's annual financial report for the financial year ended 30 June 2013."

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

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

• (a) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or
• (b) a Closely Related Party of such a member.

However, a person described above may vote on this Resolution if:

• (a) the person does so as a proxy appointed by writing that specifies how the proxy is to vote on the Resolution; and
• (b) the vote is not cast on behalf of a person described in sub paragraphs (a) or (b) above.

RESOLUTION 2 – RE-ELECTION OF DIRECTOR – BRETT SMITH

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

"That, for the purpose of clause 13.2 of the Constitution and for all other purposes, Mr Brett Smith, a Director, retires by rotation, and being eligible, is re-elected as a Director."

RESOLUTION 3 – CONVERSION OF CAPE LAMBERT CONVERTING LOAN TO SHARES

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

"That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue such number of Shares on conversion of the Cape Lambert Converting Loan to Cape Lambert (or its nominee) calculated in accordance with the terms of the Cape Lambert Converting Loan on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 4 – CONVERSION OF QIU CONVERTING LOAN TO SHARES

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

"That, for the purpose of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to issue such number of Shares on conversion of the Qiu Converting Loan to Mr Qiu, a Director (or his nominee) calculated in accordance with the terms of the Qiu Converting Loan on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Derong Qiu or any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 5 – PLACEMENT – OPTIONS TO EMPLOYEES AND CONSULTANTS

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

"That, for the purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue up to 5,000,000 Options on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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

• (a) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or
• (b) a Closely Related Party of such a member.

However, a person (voter) described above may cast a vote on this Resolution as a proxy if the vote is not cast on behalf of a person described above and either:

• (a) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on the Resolution; or
• (b) the voter is the Chair and the appointment of the Chair as proxy:
• (i) does not specify the way the proxy is to vote on this Resolution; and
• (ii) expressly authorises the Chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, or if the Company is part of a consolidated entity, for the entity.

RESOLUTION 6 – APPROVAL TO ISSUE DIRECTOR OPTIONS

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

"That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 3,000,000 Director Options to Mr Derong Qiu (or his nominee) on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by Mr Derong Qiu or any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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

• (a) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or
• (b) a Closely Related Party of such a member.

However, a person (voter) described above may cast a vote on this Resolution as a proxy if the vote is not cast on behalf of a person described above and either:

• (a) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on the Resolution; or

• (b) the voter is the Chair and the appointment of the Chair as proxy:

• (i) does not specify the way the proxy is to vote on this Resolution; and

• (ii) expressly authorises the Chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, or if the Company is part of a consolidated entity, for the entity.

RESOLUTION 7 – APPROVAL OF 10% PLACEMENT CAPACITY - SHARES

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

"That, for the purpose of Listing Rule 7.1A and for all other purposes, approval is given for the issue of Shares totalling up to 10% of the Shares on issue, calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Statement."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who may participate in the issue of Equity Securities under this Resolution and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company will not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 8 – APPOINTMENT OF AUDITOR

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

"That, for the purpose of Section 327B of the Corporations Act and for all other purposes, BDO having been nominated by a Shareholder and having consented in writing to act in the capacity of auditor, be appointed as auditor of the Company."

DATED: 17 OCTOBER 2013

BY ORDER OF THE BOARD

CLAIRE TOLCON COMPANY SECRETARY

E X P L A N A T O R Y S T A T E M E N T

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting to be held at 11:00am (WST) on Friday, 22 November 2013 at 32 Harrogate Street, West Leederville, Western Australia.

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

1. FINANCIAL STATEMENTS AND REPORTS

In accordance with the Constitution, the business of the Annual General Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2013 together with the declaration of the directors, the directors' report, the remuneration report and the auditor's report.

The Company will not provide a hard copy of the Company's annual financial report to Shareholders unless specifically requested to do so. The Company's annual financial report on its website at www.cauldronenergy.com.au.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

The Corporations Act requires that at a listed company's annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the Directors or the Company.

Under changes to the Corporations Act which came into effect on 1 July 2011, if at least 25% of the votes cast on Resolution 1 are voted against adoption of the Remuneration Report in two consecutive annual general meetings, the Company will be required to put to Shareholders a resolution proposing the calling of a general meeting to consider the appointment of directors of the Company (Spill Resolution) at the second annual general meeting.

If more than 50% of Shareholders vote in favour of the Spill Resolution, the Company must convene the general meeting (Spill Meeting) within 90 days of the second annual general meeting.

All of the Directors who were in office when the directors' report (as included in the Company's annual financial report for the financial year ended immediately before the second annual general meeting) was approved, other than the managing director of the Company, will cease to hold office immediately before the end of the Spill Meeting but may stand for re-election at the Spill Meeting. Following the Spill Meeting those persons whose election or re-election as Directors is approved will be the Directors of the Company.

At the Company's 2012 annual general meeting, the votes cast against the remuneration report considered at that annual general meeting was less than 25%. Accordingly, the Spill Resolution is not relevant for this Annual General Meeting.

The remuneration report sets out the Company's remuneration arrangements for the Directors and senior management of the Company. The remuneration report is part of the Directors' report contained in the annual financial report of the Company for the financial year ending 30 June 2013.

A reasonable opportunity will be provided for discussion of the remuneration report at the Annual General Meeting.

Voting Exclusion and Proxy Restrictions

Note that a voting exclusion applies to Resolution 1 in the terms set out in the Notice of Meeting.

Pursuant to the Corporations Act, if you elect to appoint the Chair, or another member of Key Management Personnel whose remuneration details are included in the Remuneration Report or any Closely Related Party of that member as your proxy to vote on this Resolution 1, you must direct the proxy how they are to vote. Where you do not direct the Chair, or another member of Key Management Personnel whose remuneration details are included in the Remuneration Report or Closely Related Party of that member on how to vote on this Resolution 1, the proxy is prevented by the Corporations Act from exercising your vote and your vote will not be counted in relation to this Resolution 1.

3. RESOLUTION 2 – RE-ELECTION OF DIRECTOR – BRETT SMITH

Clause 13.2 of the Constitution requires that at the Company's annual general meeting in every year, one-third of the Directors for the time being, or, if their number is not a multiple of 3, then the number nearest one-third (rounded upwards in case of doubt), shall retire from office, provided always that no Director (except a Managing Director) shall hold office for a period in excess of 3 years, or until the third annual general meeting following his or her appointment, whichever is the longer, without submitting himself or herself for re-election.

The Directors to retire at an annual general meeting are those who have been longest in office since their last election, but, as between persons who became Directors on the same day, those to retire shall (unless they otherwise agree among themselves) be determined by drawing lots.

A Director who retires by rotation under clause 13.2 of the Constitution is eligible for re-election.

The Company currently has 3 Directors and accordingly one must retire.

Mr Brett Smith, the Director longest in office since his last election, retires by rotation and seeks reelection. A summary of Mr Smith is included in the 2013 Annual Report.

4. RESOLUTION 3 – CONVERSION OF CAPE LAMBERT CONVERTING LOAN INTO SHARES

4.1 Background

As announced to ASX on 10 July 2013, the Company entered into converting loan agreements with its two major shareholders, Cape Lambert and Director Mr Qiu (together, the Converting Loan Agreements). Pursuant to the terms of the Converting Loan Agreements, the Company received A\$655,685 from Cape Lambert and A\$844,315 from Mr Qiu which will be automatically converted into Shares, subject to receipt of Shareholder approval at this Meeting. The loans attract interest at 10% per annum and if Shareholder approval is not obtained for the conversion of the loans into Shares at the Meeting, they are repayable by the Company by 30 June 2014.

Subject to Shareholder approval, the number of Shares to be issued to Cape Lambert in satisfaction of the Cape Lambert Converting Loan is to be calculated according to the following formula:

No. Loan Conversion Shares = Loan Amt ÷ Conversion Price

Where:

Loan Amt means A\$680,116 (comprising \$655,685 plus interest accrued up to the date of issue of the Shares).

Conversion Price means 80% of the volume weighted average closing price of the Shares as quoted on ASX over the last ten (10) trading days immediately preceding the day Shareholders approve the conversion.

Following issue of the Shares to Cape Lambert the Company will be released from all obligations under the Cape Lambert Converting Loan. If approval is not granted by Shareholders, the Company will need to repay Cape Lambert A\$655,685 (plus accrued interest) by 30 June 2014.

Accordingly, the Company seeks Shareholder approval to issue Shares in satisfaction of the loan and interest owing by the Company to Cape Lambert pursuant to the Cape Lambert Converting Loan.

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

The effect of Resolution 3 will be to allow the Directors to issue the Shares on conversion of the Cape Lambert Converting Loan during the period of 3 months after the date of the Meeting (or a longer period if allowed by ASX) without using the Company's 15% annual placement capacity.

4.2 Technical information required by ASX Listing Rule 7.1

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

• (a) the maximum number of Shares to be issued is up to that number of Shares which, when multiplied by the deemed issue price per Share, equals A\$680,116 (being the amount of the Loan plus interest);
• (b) the Shares will be issued for nil cash consideration as they will be issued on conversion of the Cape Lambert Convertible Loan. The deemed issue price of the Shares will be equal to 80% of the volume weighted average closing price of the Share as quoted on ASX over the last 10 trading days immediately preceding the day of the Meeting;
• (c) the Shares will be issued to Cape Lambert (or its nominee) who is not a related party of the Company;
• (d) the Shares issued will be fully paid ordinary shares ranking pari passu with existing Shares on issue;
• (e) the Shares will be issued as soon as practicable following this Meeting upon conversion of the Cape Lambert Converting Loan and in any event, no later than 3 months after the date of the Meeting (or such other date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on one date; and
• (f) no funds will be raised from the issue of the Shares as they are being issued to Cape Lambert in consideration for the conversion of the Cape Lambert Converting Loan.

5. RESOLUTION 4 – CONVERSION OF QIU CONVERTING LOAN INTO SHARES

5.1 General

A summary of the Qiu Converting Loan is contained in section 4.1.

Pursuant to Resolution 4 the Company is seeking Shareholder approval for the allotment and issue of Shares on conversion of the Qiu Converting Loan. If Shareholder approval is not obtained, the Company will be required to repay A\$844,315 plus interest to Mr Qiu on or before 30 June 2014.

Subject to Shareholder approval, the number of Shares to be issued to Mr Qiu in satisfaction of the Qiu Converting Loan is to be calculated according to the following formula:

No. Loan Conversion Shares = Loan Amt ÷ Conversion Price

Where:

Loan Amt means A\$875,774 (comprising the loan amount of A\$844,315 plus interest accrued up to the date of issue of the Shares).

Conversion Price means 80% of the volume weighted average closing price of the Shares as quoted on ASX over the last ten (10) trading days immediately preceding the day Shareholders approve the conversion.

Following issue of the Shares to Mr Qiu the Company will be released from all obligations under the Qiu Converting Loan. If approval is not granted by Shareholders, the Company will need to repay Qiu \$655,685 (plus accrued interest) by 30 June 2014.

5.2 ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose relationship with the entity or a related party is, in ASX's opinion, such that approval should be obtained unless an exception in ASX Listing Rule 10.12 applies.

Mr Qiu is a Director and is therefore a related party of the Company.

As the conversion of the Qiu Converting Loan involves the issue of Shares to a related party of the Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances.

5.3 Technical Information required by ASX Listing Rule 10.13

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to Resolution 4:

• (a) the Shares will be issued to Mr Qiu (or his nominee) who is a Director of the Company;

• (b) the maximum number of Shares to be issued is up to that number of Shares which, when multiplied by the deemed issue price, equals A\$680,116 (being the amount of the Loan plus interest);

• (c) the Shares will be issued for nil cash consideration as they will be issued on conversion of the Qiu Convertible Loan. The deemed issue price of the Shares will be equal to 80% of the volume weighted average closing price of the Share as quoted on ASX over the last 10 trading days immediately preceding the day of the Meeting;

• (d) the Shares will be issued on conversion of the Qiu Converting Loan and in any event no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;
• (e) the Shares issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company's existing Shares; and
• (f) no funds will be raised from the issue of the Shares as they are being issued to Qiu in consideration for the conversion of the Qiu Loan.

Approval pursuant to ASX Listing Rule 7.1 is not required for the conversion of the Qiu Converting Loan as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Shares to Mr Qiu (or his nominee) will not be included in the use of the Company's 15% annual placement capacity pursuant to ASX Listing Rule 7.1.

6. RESOLUTION 5 – PLACEMENT – OPTIONS TO EMPLOYEES AND CONSULTANTS

6.1 General

The Company proposes to issue up to 5,000,000 Options to employees and consultants of the Company as a reward and incentive to promote motivation, company ownership and loyalties (Option Placement). The Options proposed to be issued under the Option Placement will vest on the achievement of project related milestones by the Company.

The Company is committed to renumerating its senior executives in a manner that is market competitive and consistent with best practice as well as supporting the interests of Shareholders. Accordingly, the Company considers it appropriate to issue employees and consultants Options to align the interests of the employees and consultants with those of Shareholders and increase Company performance.

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

The effect of Resolution 5 will be to allow the Directors to issue the Options the subject of the Option Placement to the employees and consultants during the period of 3 months after the date of the Meeting (or a longer period if allowed by ASX) without using the Company's 15% annual placement capacity.

None of the persons receiving the Options the subject of the Options Placement will be a related party of the Company.

6.2 Technical information required by ASX Listing Rule 7.1

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

• (a) a maximum of 5,000,000 Options will be issued;
• (b) the Options will be issued for nil cash consideration;
• (c) the recipients of the Options are not yet known. However the Options will be issued to consultants and employees of the Company, none of whom will be a related party of the Company;
• (d) the Options will be issued on the terms set out in Schedule 1;
• (e) the Options will be issued no later than 3 months after the date of the Meeting (or such other date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on one date; and
• (f) no funds will be raised from the issue of the Options as they are being issued to employees and consultants of the Company in consideration for their services to the Company and to promote motivation, company ownership and loyalty.

7. ISSUE OF OPTIONS – MR QIU

7.1 General

The Company has agreed, subject to obtaining Shareholder approval, to allot and issue a total of 3,000,000 Options (Director Options) to Mr Qiu (or his nominee) as reasonable remuneration for overseas marketing services performed on behalf of the Company.

For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

• (i) obtain the approval of the public company's members in the manner set out in Sections 217 to 227 of the Corporations Act; and
• (ii) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in Sections 210 to 216 of the Corporations Act.

The grant of the Director Options constitutes giving a financial benefit and Mr Qiu is a related party of the Company by virtue of being a Director.

The Directors (other than Mr Qiu who has a material personal interest in the Resolution) consider that Shareholder approval pursuant to Chapter 2E of the Corporations Act is not required in respect of the grant of Director Options because the reasonable remuneration exception in Section 211 of the Corporations Act applies.

ASX Listing Rule 10.11 requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose relationship with the entity or a related party is, in ASX's opinion, such that approval should be obtained unless an exception in ASX Listing Rule 10.12 applies.

It is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the grant of Director Options to the Related Parties.

7.2 Technical Information required by ASX Listing Rule 10.13

Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the issue of Director Options to Mr Qiu:

• (i) the Director Options will be allotted and issued to Mr Qiu (or his nominee), a Director;
• (ii) the maximum number of Director Options to be issued is 3,000,000;
• (iii) the Director Options will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules) and it is intended that allotment will occur on the same date;
• (iv) the Director Options will be issued for nil cash consideration;
• (v) the Director Options will be issued on the terms set out in Schedule 2; and
• (vi) no funds will be raised from the issue of the Director Options as they are being issued as part of Mr Qiu's reasonable remuneration for overseas marketing services performed on behalf of the Company.

Approval pursuant to ASX Listing Rule 7.1 is not required for the issue of Director Options as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Director Options to Mr Qiu (or his nominee) will not be included in the use of the Company's 15% annual placement capacity pursuant to ASX Listing Rule 7.1.

8. RESOLUTION 7 - APPPROVAL OF 10% PLACEMENT CAPACITY – SHARES

8.1 General

ASX Listing Rule 7.1A provides that an Eligible Entity (as defined by the Listing Rules) may seek shareholder approval at its annual general meeting to allow it to issue Equity Securities up to 10% of its issued capital over a period up to 12 months after the annual general meeting (10% Placement Capacity).

An Eligible Entity is one that, as at the date of the relevant annual general meeting:

• (a) is not included in the S&P/ASX 300 Index; and
• (b) has a maximum market capitalisation (excluding restricted securities and securities quoted on a deferred settlement basis) of \$300,000,000.

The Company is an Eligible Entity as it is not included in the S&P/ASX 300 Index and has a current market capitalisation of approximately \$24million.

If Shareholders approve Resolution 7, the number of Equity Securities the Company may issue under the 10% Placement Capacity will be determined in accordance with the formula prescribed in ASX Listing Rule 7.1A.2 (as set out in Section 8.2 below).

The effect of Resolution 7 will be to allow the Directors to issue Equity Securities up to 10% of the Company's fully paid ordinary securities on issue under the 10% Placement Capacity during the period up to 12 months after the Meeting, without subsequent Shareholder approval and without using the Company's 15% annual placement capacity granted under Listing Rule 7.1.

Resolution 7 is a special resolution. Accordingly, at least 75% of votes cast by Shareholders present and eligible to vote at the Meeting must be in favour of Resolution 7 for it to be passed.

8.2 ASX Listing Rule 7.1A

ASX Listing Rule 7.1A came into effect on 1 August 2012 and enables an Eligible Entity to seek shareholder approval at its annual general meeting to issue Equity Securities in addition to those under the Eligible Entity's 15% annual placement capacity.

Any Equity Securities issued must be in the same class as an existing class of quoted Equity Securities. The Company currently one class of Equity Securities on issue, being fully paid ordinary shares.

The exact number of Equity Securities that the Company may issue under an approval under Listing Rule 7.1A will be calculated according to the following formula:

(A x D) – E

Where:

• A is the number of Shares on issue 12 months before the date of issue or agreement:
• (A) plus the number of Shares issued in the previous 12 months under an exception in ASX Listing Rule 7.2;
• (B) plus the number of partly paid shares that became fully paid in the previous 12 months;
• (C) plus the number of Shares issued in the previous 12 months with approval of holders of Shares under this rule; and
• (D) less the number of Shares cancelled in the previous 12 months.
• D is 10%.
• E is the number of Equity Securities issued or agreed to be issued under ASX Listing Rule 7.1A.2 in the 12 months before the date of issue or agreement to issue that are not issued with the approval of holders of Ordinary Securities under ASX Listing Rule 7.1 or 7.4.

8.3 Technical information required by ASX Listing Rule 7.1A

Pursuant to and in accordance with ASX Listing Rule 7.3A, the information below is provided in relation to this Resolution 7:

(a) Minimum Price

The minimum price at which the Equity Securities may be issued is 75% of the volume weighted average price of Equity Securities in that class, calculated over the 15 ASX trading days on which trades in that class were recorded immediately before:

• (i) the date on which the price at which the Equity Securities are to be issued is agreed; or
• (ii) if the Equity Securities are not issued within 5 ASX trading days of the date in Section 8.3(a)(i), the date on which the Equity Securities are issued.

(b) Date of Issue

The Equity Securities may be issued under the 10% Placement Capacity commencing on the date of the Meeting and expiring on the first to occur of the following:

• (i) 12 months after the date of this Meeting; and
• (ii) the date of approval by Shareholders of any transaction under ASX Listing Rules 11.1.2 (a significant change to the nature or scale of the Company's activities) or 11.2 (disposal of the Company's main undertaking).

or such longer period if allowed by ASX (10% Placement Capacity Period).

(c) Risk of voting dilution

Any issue of Equity Securities under the 10% Placement Capacity will dilute the interests of Shareholders who do not receive any Shares under the issue.

If Resolution 7 is approved by Shareholders and the Company issues the maximum number of Equity Securities available under the 10% Placement Capacity, the economic and voting dilution of existing Shares would be as shown in the table below.

The table below shows the dilution of existing Shareholders calculated in accordance with the formula outlined in ASX Listing Rule 7.1A(2), on the basis of the current market price of Shares and the current number of Equity Securities on issue as at the date of this Notice.

The table also shows the voting dilution impact where the number of Shares on issue (Variable A in the formula) changes and the economic dilution where there are changes in the issue price of Shares issued under the 10% Placement Capacity.

	Dilution
Number of Shares on Issue	Issue Price	\$0.08	\$0.15	\$0.30
	(per Share)	50% decrease in Issue Price	Issue Price	100% increase in Issue Price
159,622,605 (Current)	Shares issued	15,962,261 Shares	15,962,261 Shares	15,962,261 Shares
	Funds raised	\$1,197,170	\$2,394,339	\$4,788,678
239,433,908 (50% increase)	Shares issued	23,943,391 Shares	23,943,391 Shares	23,943,391 Shares
	Funds raised	\$1,795,754	\$3,591,509	\$7,183,017
319,245,210 (100% increase)	Shares issued	31,924,521 Shares	31,924,521 Shares	31,924,521 Shares
	Funds raised	\$2,394,339	\$4,788,678	\$9,577,356

*The number of Shares on issue (Variable A in the formula) could increase as a result of the issue of Shares that do not require Shareholder approval (such as under a pro-rata rights issue or scrip issued under a takeover offer) or that are issued with Shareholder approval under Listing Rule 7.1.

The table above uses the following assumptions:

• 1. The current shares on issue are the Shares on issue as at 15 October 2013.
• 1. The issue price set out above is the closing price of the Shares on the ASX on 15 October 2013.
• 1. The Company issues the maximum possible number of Equity Securities under the 10% Placement Capacity.
• 1. The Company has not issued any Equity Securities in the 12 months prior to the Meeting that were not issued under an exception in ASX Listing Rule 7.2 or with approval under ASX Listing Rule 7.1.
• 1. The calculations above do not show the dilution that any one particular Shareholder will be subject to. All Shareholders should consider the dilution caused to their own shareholding depending on their specific circumstances.
• 1. This table does not set out any dilution pursuant to approvals under ASX Listing Rule 7.1.

Shareholders should note that there is a risk that:

• (i) the market price for the Company's Shares may be significantly lower on the issue date than on the date of the Meeting; and
• (ii) the Shares may be issued at a price that is at a discount to the market price for those Shares on the date of issue.

(d) Purpose of Issue under 10% Placement Capacity

The Company may issue Equity Securities under the 10% Placement Capacity for the following purposes:

• (i) as cash consideration in which case the Company intends to use funds raised for the acquisition of new resources, assets and investments (including expenses associated with such an acquisition), continued exploration expenditure on the Company's current assets and general working capital; or
• (ii) as non-cash consideration for the acquisition of new resources assets and investments in such circumstances the Company will provide a valuation of the non-cash consideration as required by listing Rule 7.1A.3.

(e) Allocation under the 10% Placement Capacity

The allottees of the Equity Securities to be issued under the 10% Placement Capacity have not yet been determined. However, the allottees of Equity Securities could consist of current Shareholders or new investors (or both), none of whom will be related parties of the Company.

The Company will determine the allottees at the time of the issue under the 10% Placement Capacity, having regard to the following factors:

(i) the purpose of the issue;

• (ii) alternative methods for raising funds available to the Company at that time, including, but not limited to, an entitlement issue or other offer where existing Shareholders may participate;
• (iii) the effect of the issue of the Equity Securities on the control of the Company;
• (iv) the circumstances of the Company, including, but not limited to, the financial position and solvency of the Company;
• (v) prevailing market conditions; and
• (vi) advice from corporate, financial and broking advisers (if applicable).

(i) Previous Approval under ASX Listing Rule 7.1A

The Company obtained approval under ASX Listing Rule 7.1A at its 2012 Annual General Meeting (Previous Approval).

However, the Company did not issue any Equity Securities pursuant to the Previous Approval. During the 12 month period preceding the date of the Meeting, being 22 November 2012, the Company has not issued any Equity Securities under any other purpose.

8.4 Voting Exclusion

A voting exclusion statement is included in this Notice. As at the date of this Notice, the Company has not invited any existing Shareholder to participate in an issue of Equity Securities under ASX Listing Rule 7.1A. Therefore, no existing Shareholders will be excluded from voting on Resolution 7.

9. RESOLUTION 8 – APPOINTMENT OF AUDITOR

In accordance with Section 329(5) of the Corporations Act, Bentleys has, by notice in writing given to ASIC, applied for consent to the resignation as auditor to the Company with effect from the close of this Annual General Meeting.

ASIC has consented to the resignation of Bentleys as auditor to the Company.

Resolution 8 seeks Shareholder approval for the appointment of BDO as auditor for the Company.

In accordance with Section 328B(1) of the Corporations Act, the Company has obtained a nomination from a Shareholder for BDO to be appointed as auditor for the Company. A copy of this nomination is attached as Annexure A.

In accordance with Section 328A(1) of the Corporations Act, BDO has provided the Directors with written notification of its consent to act as auditor for the Company subject to Shareholder approval of Resolution 8 and ASIC consenting to the resignation of Bentleys.

If Resolution 8 is passed, the appointment of BDO as auditor for the Company will take effect at the close of this Annual General Meeting.

10. ENQUIRIES

Shareholders are requested to contact Claire Tolcon on (+ 61 8) 9380 9555 if they have any queries in respect of the matters set out in these documents.

G L O S S A R Y

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

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

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

Cape Lambert means Cape Lambert Resources Limited (ACN 095 047 920).

Cape Lambert Converting Loan means the converting loan provided by Cape Lambert to the Company as summarised in section 4.1 of the Explanatory Statement.

Closely Related Party of a member of the Key Management Personnel means a spouse or child of the member; a child of the member's spouse; a dependent of the member or the member's spouse; anyone else who is one of the member's family and may be expected to influence the member, or be influenced by the member, in the member's dealing with the entity; a company the member controls; or a person prescribed by the Corporations Regulations 2001 (Cth).

Company means Cauldron Energy Limited (ACN 102 912 783).

Constitution means the Company's current constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors mean the current directors of the Company.

Director Option means an option to acquire a Share on the terms set out in Schedule 2.

Equity Securities includes a Share, a right to a Share or Option, an Option, a convertible security and any security that ASX decides to classify as an Equity Security.

Explanatory Statement means the explanatory statement accompanying the Notice.

Key Management Personnel has the same meaning as in the accounting standards and broadly includes those persons having authority and responsibility for planning, directing and controlling activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company.

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

Option means an option to acquire a share on the terms set out in Schedule 1.

Proxy Form means the proxy form accompanying the Notice.

Qiu Converting Loan means the converting loan provided by Qiu to the Company as summarised in sections 4.1 and 5.1 of the Explanatory Statement.

Remuneration Report means the remuneration report set out in the Director's Report section of the Company's annual financial report for the year ended 30 June 2013.

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

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

Shareholder means a holder of a Share.

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

SCHEDULE 1 – TERMS AND CONDITIONS OF OPTIONS

The Options will be issued on the following terms and conditions:

• (a) Each Option gives the Optionholder the right to subscribe for one Share.
• (b) The Options will vest in the holder, if the holder remains an employee of, or consultant to, the Company and if the following conditions are met:
• (i) one half shall vest on the Company achieving a JORC resource at the Company's Yanrey Project in Western Australia containing more than 30 million lbs of Uranium;
• (ii) one quarter shall vest on the progression of the Bennet well resource area to pre-feasibility; and
• (iii) one quarter shall vest on the commencement of drilling by the Company at the Rio Colorado project in Argentina,

(together, the Milestones).

• (c) Other than by operation of a Change of Control Event, any Options which have not vested as at the date the holder ceases to be employed or engaged by the Company, shall automatically lapse unless otherwise determined by the Board. Any Options which have vested prior to the date of termination shall not lapse.
• (d) The Options will expire at 5.00pm (WST) on 30 June 2015 (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
• (e) The amount payable upon exercise of each Option is 20 cents (Exercise Price).
• (f) If there is a Change of Control Event prior to 30 June 2015 the Options shall automatically vest. "Change of Control Event" means the occurrence of:
• (i) the offeror under a takeover offer in respect of all the shares in the Company (Shares) announces that it has achieved acceptances in respect of 50.1% or more of the Shares; and
• (ii) that takeover bid has become unconditional; or
• (iii) the announcement by the Company that shareholders of the Company have at a court convened meeting of shareholders voted in favour, by the necessary majority, of a proposed scheme of arrangement under which all Shares are to be either:
  • A. cancelled; or
  • B. transferred to a third party; and
  • C. the court, by order, approves the proposed scheme of arrangement.
• (g) Other than by operation of a Change of Control Event, any Options which have not vested as at the date the holder ceases to be engaged by the Company or by the Expiry Date, shall automatically lapse. Any Options which have vested prior to the date of termination shall not lapse.

• (h) Subject to the vesting conditions referred to in (b) above, the Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (i) Subject to the vesting conditions referred to in (b) above, an Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:

• (i) a written notice of exercise of Options specifying the number of Options being exercised; and
• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

(Exercise Notice).

• (j) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
• (k) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
• (l) The Options are not transferable.
• (m) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.
• (n) The Company will not apply for quotation of the Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 Business Days after the date of allotment of those Shares.
• (o) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
• (p) There are no participating rights or entitlements inherent in the Options and Optionholders 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 7 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.
• (q) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.

SCHEDULE 2 – DIRECTOR OPTIONS

The Director Options will be issued on the following terms:

• (a) Each Option gives the Optionholder the right to subscribe for one Share.
• (b) The Options will expire at 5.00pm (WST) on 30 September 2015 (Expiry Date). Any Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.
• (c) The amount payable upon exercise of each Option is 20 cents (Exercise Price).
• (d) The Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.
• (e) The Optionholder may exercise their Options by lodging with the Company, before the Expiry Date:
• (i) a written notice of exercise of Options specifying the number of Options being exercised; and
• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Options being exercised;

(Exercise Notice).

• (f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.
• (g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Options specified in the Exercise Notice.
• (h) The Options are not transferable.
• (i) All Shares allotted upon the exercise of Options will upon allotment rank pari passu in all respects with other Shares.
• (j) The Company will not apply for quotation of the Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Options on ASX within 10 Business Days after the date of allotment of those Shares.
• (k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.
• (l) There are no participating rights or entitlements inherent in the Options and Optionholders 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 7 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.
• (m) An Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Option can be exercised.