CAZALY RESOURCES LIMITED — AGM Information 2010

Oct 28, 2010

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ACN 101 049 334

NOTICE OF ANNUAL GENERAL MEETING

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EXPLANATORY MEMORANDUM

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PROXY FORM

TIME : 11.00 am WST DATE : Monday 29 November 2010 PLACE : The Celtic Club 48 Ord Street WEST PERTH WA 6005

These documents should be read in their entirety. If Shareholders are in any doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional advisor.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

NOTICE OF MEETING

Notice is hereby given that the Annual General Meeting of the members of Cazaly Resources Limited ( “Cazaly” or the “Company” ) will be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia at 11.00am WST on 29 November 2010.

The Explanatory Memorandum that accompanies and forms part of this Notice of Meeting describes in more detail the matters to be considered and should be read in its entirety.

AGENDA

ORDINARY BUSINESS

To receive and consider the financial report of the Company for the year ended 30 June 2010 and the reports by Directors and auditors thereon.

To consider and, if thought fit, to pass, with or without modification, the following ordinary resolutions:-

1. Ordinary Resolution 1: Adoption of Remuneration Report (Non-binding)

“That, for the purposes of Section 250R(2) of the Corporations Act and for all other purposes, the Company adopts the Remuneration Report.”

Short Explanation: The Corporations Act provides that a resolution that the remuneration report be adopted must be put to vote at a listed company’s annual general meeting. The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

2. Ordinary Resolution 2: To re-elect a Director

“To re-elect as a director Mr Kent Hunter who retires by rotation in accordance with the Constitution and, being eligible for re-election, offers himself for re-election.”

SPECIAL BUSINESS

To consider and, if thought fit, to pass, with or without modification, the following ordinary resolutions:-

3. Ordinary Resolution 3: Ratification and Approval of Issue of Facility Options

“That for the purposes of Listing Rule 7.4 and for all other purposes, the Shareholders hereby ratify the allotment and issue by the Company of 1,600,000 Facility Options to the persons, on the date and on the terms and conditions set out in the Explanatory Memorandum that accompanies this Notice of Meeting.”

Voting exclusion

• For the purposes of Listing Rule 7.4, the Company will disregard any votes cast on the Resolution by any person who participated in the issue, as set out in the Explanatory Memorandum, or by any associate of a person who participated in the issue.

• 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 a person as chair of the Meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

NOTICE OF MEETING

4. Ordinary Resolution 4: Approval of Issue of Facility Options to Kingsreef Pty Ltd

“That for the purposes of ASX Listing Rule 10.11, and all other purposes, the Company is authorised to issue and allot 700,000 Facility Options to Kingsreef Pty Ltd, a related party of the Company, on the terms and conditions set out in the Explanatory Memorandum that forms part of this Notice of Meeting.”

Voting exclusion

• For the purposes of Listing Rule 10.11, the Company will disregard any votes cast on the Resolution by Kingsreef Pty Ltd, any person who might obtain a benefit except a benefit solely in the capacity of a Shareholder, if this Resolution is passed and any associate of Kingsreef Pty Ltd (or 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 a person as chair of the Meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

5.

Ordinary Resolution 5: Approval of Issue of Facility Options to Widerange Corporation Pty Ltd

“That for the purposes of ASX Listing Rule 10.11, and all other purposes, the Company is authorised to issue and allot up to 100,000 Facility Options to Widerange Corporation, a related party of the Company, on the terms and conditions set out in the Explanatory Memorandum that forms part of this Notice of Meeting”

Voting exclusion

• For the purposes of Listing Rule 10.11, the Company will disregard any votes cast on the Resolution by Widerange Corporation Pty Ltd, any person who might obtain a benefit except a benefit solely in the capacity of a Shareholder, if this Resolution is passed and any associate of Widerange Corporation Pty Ltd (or 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 a person as chair of the Meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

6. Ordinary Resolution 6: Approval of Employee Incentive Plan

“That, for the purposes of Exception 9 of Rule 7.2 of the ASX Listing Rules and for all other purposes, the Shareholders give approval for the Company to administer and issue securities under its Employee Incentive Plan (EIP) as an exception to Listing Rule 7.1 and on the terms and conditions set out in the Explanatory Memorandum”

Voting Exclusion

• The Company will disregard any votes cast on the resolution by any Director (except a Director who is ineligible to participate in the Employee Incentive Plan) and any of their associates.

• However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form or it is cast by a person as chair of the Meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

NOTICE OF MEETING

7. Ordinary Resolution 7: Approval of Potential Termination Benefits under the Employee Incentive Plan

“That approval be given for the purposes of Section 200B and 200E of the Corporations Act and for all other purposes, for the giving of termination benefits under the Employee Incentive Plan (EIP) by the Company to a person or their associates in connection with that person ceasing to hold a managerial or executive office in the Company or a related body corporate of the Company, as detailed in the Explanatory Memorandum that forms part of this Notice of Meeting”

Voting exclusion

• For the purposes of section 200E(2A) of the Corporations Act, the Company will disregard any votes cast on the Resolution by Shareholders who are also managerial or executive officers of the Company or their associates.

• However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form or it is cast by a person as chair of the Meeting as a proxy for a person who is entitled to vote, in accordance with the direction on the proxy form to vote as the proxy decides.

To consider and, if thought fit, to pass, with or without modification, the following special resolution:-

8. Special Resolution 8: Proposed Amendment to Constitution

“That pursuant to section 136 of the Corporations Act 2001 (Cth), the constitution of the Company be amended by inserting the clauses relating to dividends in the form set out in the Explanatory Memorandum”

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

NOTICE OF MEETING

PROXIES

1. A member entitled to attend and vote at a meeting of the Company is entitled to appoint any person as his or her proxy to attend and vote for the member at the meeting. If a member is entitled to cast two or more votes at a meeting of the Company the member may appoint not more than two proxies to attend and vote instead of the member. If two proxies are appointed, and a member does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half the votes. A proxy need not be a member of the Company. The appointment of the proxy may specify the proportion or number of votes that the proxy may exercise.

2. A body corporate, which is a member, may appoint an individual (by valid Power of Attorney in the name of the individual) as a representative to exercise all or any of the powers the body corporate may exercise at the meeting. The appointment may be a standing one and must be either lodged with the Company prior to the Meeting, or be presented at the Meeting before registering on the attendance register for the Meeting.

3. Forms to appoint proxies, and the Power of Attorney (if any) under which they are appointed, must be lodged at the registered office of the Company, at Level 2, 38 Richardson Street, West Perth, WA, 6005, or by facsimile (1 8) 9322 6398 not less than 48 hours before the time of the Meeting or resumption of an adjourned meeting at which the person named in the instrument proposes to vote.

4. An instrument appointing a proxy:

5. a) shall be in writing under the hand of the appointor or of his attorney, or if the appointor is a corporation, either under seal or under the hand of a duly authorised officer or attorney;

6. b) may specify the manner in which the proxy is to vote in respect of a particular resolution and, where an instrument of proxy so provides, the proxy is not entitled to vote on the resolution except as specified in the instrument;

7. c) shall be deemed to confer authority to demand or join in demanding a poll; and

8. d) shall be in such form as the Directors determine and which complies with Section 250A of the Corporations Act 2001 and the Listing Rules;

VOTING EXCLUSION

Where a voting exclusion applies, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the proxy form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote in accordance with a direction on the proxy form to vote as the proxy decides.

ATTENDANCE AND VOTING ELIGIBILITY

For the purpose of regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the Directors have determined that Shares held at 11.00am WST on 27 November 2010 will be taken, for the purposes of this Annual General Meeting, to be held by the persons who held them at that time.

BY ORDER OF THE BOARD

Nathan McMahon Managing Director Cazaly Resources Limited Dated: 26 October 2010

ENQUIRIES

All enquiries in relation to the contents of the Notice of Meeting or Explanatory Memorandum should be directed to the Company’s Joint Managing Directors, Mr Clive Jones and Mr Nathan McMahon, or Company Secretary, Ms Lisa Wynne (telephone +618 9322 6283)

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

INTRODUCTION

This Explanatory Memorandum has been has been prepared for the information of Shareholders of Cazaly Resources Limited (“Cazaly” or the “Company”) in connection with Resolutions 1 to 8, to be considered at the Annual General Meeting to be held at the Celtic Club, 48 Ord Street, West Perth at 11.00am WST, 29 November 2010.

If you have any questions regarding the matters set out in this Explanatory Memorandum or the preceding Notice, please contact the Company, your stockbroker or other professional advisor.

GENERAL INFORMATION

This Explanatory Memorandum has been prepared to assist Shareholders to understand the business to be put to Shareholders at the forthcoming Annual General Meeting to be held on 29 November 2010.

The purpose of this Explanatory Memorandum is to provide Shareholders with information that the Board believes to be material to Shareholders in deciding whether or not to approve the above resolutions in the Notice (of which this Explanatory Memorandum forms a part).

AGENDA

1. ACCOUNTS AND REPORTS

As required under section 317 of the Corporations Act, the Annual Report will be laid before the Annual General Meeting.

Shareholders will be given the opportunity to ask questions and make comments about the reports or the Company generally, but there will be no formal resolution submitted to the Annual General Meeting.

2. RESOLUTION 1 – REMUNERATION REPORT

In accordance with Section 250R(2) of the Corporations Act, the Company must put a resolution to its members that the Remuneration Report be adopted at the Annual General Meeting. The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

The Remuneration Report includes all of the information required by Section 300A of the Corporations Act, including:

• board policy for determining, or in relation to, the nature and amount (or value, as appropriate) of remuneration of Directors, secretaries and senior managers of the Company;

• discussion of the relationship between such policy and the Company’s performance; and

• the prescribed details in relation to the remuneration of each Director and certain executives.

A reasonable opportunity will be provided for discussion of the Remuneration Report at the Annual General Meeting.

Directors' Recommendation

The Directors recommend the adoption of the Remuneration Report.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

3. RESOLUTION 2: TO RE-ELECT A DIRECTOR

Mr Kent Hunter retires by rotation and, being eligible, offers himself for re-election as a Director of the Company.

Details regarding Mr Kent Hunter are set out in the Annual Report available at www.cazalyresources.com.au.

Directors' Recommendation

The Directors recommend the re-election of Mr Kent Hunter.

SPECIAL BUSINESS

4. RESOLUTION 3 – RATIFICATION AND APPROVAL OF ISSUE OF FACILITY OPTIONS

On 29 September 2010, the Company announced it had entered into a Bridging Facility (“Facility”) with a range of institutions, sophisticated investors, professional investors and Related Parties to provide a loan amount of a minimum of A$2 million and maximum of A$4 million. The Facilities have been arranged as a short-term finance for the purpose of allowing for:

• completion of the Parker Range Bankable Feasibility Study;

• Parker Range environmental, mining and other permitting activities; and

• general working capital requirements.

In accordance with the terms of the Facility, the Company issued at no cost, 100,000 Facility Options for every $100,000 drawn down. The Company has drawn down A$2,400,000 million to date and has issued 1,600,000 Facility Options. The remaining 800,000 Facility Options to be issued are subject to Shareholder approval and are the subject of Resolution 4 and Resolution 5 to this Notice of Meeting. The terms of the Facility Options are outlined in Annexure A to this Notice of Meeting.

Under Resolution 3, the Company seeks from Shareholders ratification of the issue of the equity securities being the 1,600,000 Facility Options issued under the Facility. This is so as to limit the restrictive effect of ASX Listing Rule 7.1 on any further issues of equity securities in the next 12 months, and restore the Company's ability to issue equity securities within that 15% annual limit, to the extent of the 1,600,000 equity securities.

ASX Listing Rule 7.4

ASX Listing Rule 7.1 prohibits a listed company from issuing, or agreeing to issue, equity securities (which include shares) that exceed 15% of the total number of ordinary securities on issue in any 12 month period, unless approval is obtained from the holders of the company’s ordinary securities.

ASX Listing Rule 7.4 provides that the approval of holders of the company’s ordinary shares may be obtained after the issue of equity securities. The effect of such ratification is to restore the company’s discretionary power to issue further Shares up to 15% of the number of ordinary shares on issue at the beginning of the relevant 12 month period without obtaining shareholder approval.

The approval of Resolutions 3 will enable the Company at any time during the next 12 months to issue equity securities up to the 15% threshold set out in ASX Listing Rule 7.1 without the Facility Options described below the subject of Resolution 3 counting towards that 15% threshold.

The outcome of Resolution 3 will have no effect on the issue of the Facility Options under the Facility as they have already been issued. However, if Resolution 3 is not approved by Shareholders, it will restrict the ability of the Company to issue securities without Shareholder approval until the Company's 15% capacity is replenished, in accordance with Listing Rule 7.1.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

ASX Listing Rule disclosure requirements

In accordance with Listing Rule 7.5, Shareholders are advised of the following details in respect of the issue of Facility Options:

• (a) Number of securities allotted

• 1,600,000 Facility Options were issued on 18 October 2010

• (b) Price at which the securities were issued

• The Facility Options were issued at no cost and on the basis of 100,000 Facility Options for every $100,000 drawn down under the Facility.

• (c) Terms of the securities

The terms of the Facility Options are set out in Annexure A to this Notice.

• (d) Names of the allottees or the basis on which allottees were determined Facility Options were issued to clients of a range of institutions, sophisticated investors and professional investors.

• (e) Use (or intended use) of the funds raised

• The Facility Options were issued at no cost however the funds raised under the Facility will be used for the completion of the Parker Range Bankable Feasibility Study, Parker Range environmental, mining and other permitting activities and for general working capital requirements

Directors' Recommendation

The Directors recommend Shareholders vote in favour of Resolution 3, as it allows the Company to ratify the above issue of securities and retain the flexibility to issue further securities representing up to 15% of the Company's total number of ordinary shares on issue during the next 12 months without Shareholder approval.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

5. RESOLUTION 4 – APPROVAL OF ISSUE OF FACILITY OPTIONS TO MR NATHAN MCMAHON

Resolution 4 seeks the approval of Shareholders for the issue of 700,000 Facility Options to Kingsreef Pty Ltd, an entity controlled by Mr Nathan McMahon.

Kingsreef Pty Ltd provided $700,000 to the Company by way of short-term finance under the Facility discussed above in Resolution 3 of this Explanatory Memorandum. Kingsreef Pty Ltd is an entity controlled by Mr Nathan McMahon, who is a Director and therefore a related party of the Company. Therefore Shareholder approval of the grant of the Facility Options the subject of Resolution 4 is sought for the purposes of ASX Listing Rule 10.11, which provides that, subject to certain exceptions (none of which are relevant here), a company must not issue or grant securities to a related party without shareholder approval.

ASX Listing Rule 10.11

ASX Listing Rule 10.11 provides that, subject to certain exemptions (none of which are relevant here), a company must not issue options to a related party without shareholder approval. Resolution 4 seeks this approval.

ASX Listing Rule disclosure requirements

In accordance with the requirements of ASX Listing Rule 10.13, the following information is provided to Shareholders to allow them to assess the proposed grant of Facility Options:

• (a) The name of the person Kingsreef Pty Ltd.

• (b) The maximum number of securities to be issued 700,000 Facility Options.

• (c) The date by which the entity will issue the securities The Facility Options will be issued within 1 month of the date of this Meeting.

• (d) If the person is not a director, a statement of the relationship between the person and the director that requires approval to be obtained

Mr McMahon is a related party of Kingsreef Pty Ltd.

• (e) The issue price of the securities and a statement of the terms of the issue The Facility Options were issued at no cost and on the basis of 100,000 Facility Options for every $100,000 drawn down under the Facility. The terms of the Facility Options are outlined in Annexure A to this Notice.

• (f) The intended use of the funds raised

• The Facility Options were issued at no cost however the funds raised under the Facility will be used for the completion of the Parker Range Bankable Feasibility Study, Parker Range environmental, mining and other permitting activities and for general working capital requirements.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that prior approval of Shareholders is required for an issue of equity securities if the equity securities will, when aggregated with the equity securities issued by a company during the previous 12 months, exceed 15% of the number of ordinary shares on issue at the commencement of that 12 month period.

Approval pursuant to ASX Listing Rule 7.1 is not required (under Exception 14 to ASX Listing Rule 7.1) in order to issue the Facility Options to Kingsreef Pty Ltd as approval is being obtained under ASX Listing Rule 10.11. Shareholders should note that the issue of securities to Kingsreef Pty Ltd will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

Directors’ Recommendation

The Board, other than Mr McMahon, recommends that Shareholders vote in favour of Resolution 4.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

6. RESOLUTION 5 – APPROVAL OF ISSUE OF FACILITY OPTIONS TO MR CLIVE JONES

Resolution 5 seeks the approval of Shareholders for the issue of 100,000 Facility Options to Widerange Corporation Pty Ltd, an entity controlled by Mr Clive Jones.

Widerange Corporation Pty Ltd provided $100,000 to the Company by way of short-term finance under the Facility discussed above in Resolution 3 of this Explanatory Memorandum. Widerange Corporation Pty Ltd is an entity controlled by Mr Clive Jones, who is a Director and therefore a related party of the Company. Therefore Shareholder approval of the grant of the Facility Options the subject of Resolution 5 is sought for the purposes of ASX Listing Rule 10.11, which provides that, subject to certain exceptions (none of which are relevant here), a company must not issue or grant securities to a related party without shareholder approval.

ASX Listing Rule 10.11

ASX Listing Rule 10.11 provides that, subject to certain exemptions (none of which are relevant here), a company must not issue options to a related party without shareholder approval. Resolution 5 seeks this approval.

ASX Listing Rule disclosure requirements

In accordance with the requirements of ASX Listing Rule 10.13, the following information is provided to Shareholders to allow them to assess the proposed grant of Facility Options:

• (g) The name of the person Widerange Corporation Pty Ltd.

• (h) The maximum number of securities to be issued 100,000 Facility Options.

• (i) The date by which the entity will issue the securities The Facility Options will be issued within 1 month of the date of this Meeting.

• (j) If the person is not a director, a statement of the relationship between the person and the director that requires approval to be obtained

Mr Jones is a related party of Widerange Pty Ltd.

• (k) The issue price of the securities and a statement of the terms of the issue The Facility Options were issued at no cost and on the basis of 100,000 Facility Options for every $100,000 drawn down under the Facility. The terms of the Facility Options are outlined in Annexure A to this Notice.

• (l) The intended use of the funds raised

• The Facility Options were issued at no cost however the funds raised under the Facility will be used for the completion of the Parker Range Bankable Feasibility Study, Parker Range environmental, mining and other permitting activities and for general working capital requirements.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that prior approval of Shareholders is required for an issue of equity securities if the equity securities will, when aggregated with the equity securities issued by a company during the previous 12 months, exceed 15% of the number of ordinary shares on issue at the commencement of that 12 month period.

Approval pursuant to ASX Listing Rule 7.1 is not required (under Exception 14 to ASX Listing Rule 7.1) in order to issue the Facility Options to Widerange Corporation Pty Ltd as approval is being obtained under ASX Listing Rule 10.11. Shareholders should note that the issue of securities to Widerange Corporation Pty Ltd will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

Directors’ Recommendation

The Board, other than Mr Jones, recommend that Shareholders vote in favour of Resolution 5.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

7. RESOLUTION 6 – APPROVAL OF EMPLOYEE INCENTIVE PLAN

At the General Meeting held on 18 June 2010, members approved the issue of Options (“Plan Options”) under the Cazaly Resources Limited Employee Share Option Plan (“ESOP”). The Company now proposes to adopt a new Employee Incentive Plan (“EIP”) to replace the previously approved ESOP. The Board believes that the future success of the Company will depend in large on the skills and motivation of the people employed in the business and the ownership of shares in the Company by its employees.

The reason for the adoption of the proposed EIP is that taxation legislation changes made in Australia in mid-2009 have resulted in the taxation of options at values in excess of the intrinsic value, or the amount that an employee could realise by exercising the option and divesting the underlying Share. This new taxation treatment has therefore significantly reduced the effectiveness of options as an incentive for employees. Accordingly, the new EIP is structured so that the Board may award Performance Rights which ultimately can vest into Shares, as well as Options (together “Incentives”) should circumstances permit. In contrast to an Option, a Performance Right does not have an exercise price and therefore allows an employee to benefit by exercising their Performance Rights upon satisfaction of their vesting conditions without needing to provide any cash consideration.

The EIP is substantially in the same form as the ESOP and is aimed specifically at driving long term performance for Shareholders, a culture of employee share ownership in the business and retention of executives and employees. Accordingly, the EIP will form an important part of a comprehensive remuneration strategy for the Company’s employees, aligning their interest with those of Shareholders by linking their rewards to the long term success of the Company and its financial performance. Non-Executive Directors are not eligible to participate in the EIP.

Requirement for Shareholder approval

The Board is seeking Shareholder approval for the EIP in accordance with the ASX Corporate Governance Council’s Best Practice Recommendations. In addition approval is also sought under ASX Listing Rule 7.2 (Exception 9(b)) which will exempt the issue of Incentives under the EIP from the 15% annual limit on the issue of new securities without prior Shareholder approval (under ASX Listing Rule 7.1) for a period of three years from the date of the passing of Resolution 8. In the absence of such approval, the issue can still occur but is counted as part of the 15% annual limit which would otherwise apply during a 12 month period.

Key Features of the Proposed Employee Incentive Plan (EIP)

The EIP is targeted at Cazaly’s employees including Executive Directors (as determine by the Board from time to time). There are currently approximately 12 employees who will participate in the EIP and this number is expected to grow if the Company’s primary asset, the Parker Range Iron Ore Project, is developed.

The EIP allows the Board to grant Incentives to eligible participants. The vesting terms for Incentives to be offered under the EIP will be decided by the Board from time to time. Where appropriate, and where employees (i.e. senior management) can exercise significant influence over the business, the Board will establish policies on vesting of Incentives using performance hurdles linked over the long term to encourage employees to focus on performance over the long term.

The number of Incentives to be issued under the EIP will be decided by the Board from time to time. However the applicable ASIC Class Order limits the maximum number of securities which may be issued to employees under incentive plans in a 5 year period to 5% of the issued share capital of the Company (calculated at the date of the offer under the EIP), subject to a range of exclusions, including securities issued under a disclosure document, to certain senior executives or issues of securities outside of Australia.

Performance Rights issued under the EIP will not require the employee to pay any amount to the Company upon vesting. However, the Board may grant Options under the EIP. If it chooses to do so, the Board has discretion to determine the exercise price, the expiry date and vesting conditions of the Options.

Incentives automatically vest in the event that a takeover bid is made for Cazaly, or where there is a change in control of more than 50% of Cazaly. The Incentives carry no dividend or voting rights.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

ASX Listing Rule 7.1

ASX Listing Rule 7.1 prohibits a listed company from issuing, or agreeing to issue, equity securities (which include shares) that exceed 15% of the total number of ordinary securities on issue in any 12 month period, unless approval is obtained from the holders of the company’s ordinary securities. However certain issues are exempt from the restrictions of ASX Listing Rule 7.1 and will not be counted as reducing the number of equity securities which the company can issue without shareholder approval under the limit imposed by ASX Listing Rule 7.1.

Exempt issues include an issue of securities to persons participating in an employee incentive plan where shareholders have approved the issue of securities under the plan as an exemption from ASX Listing Rule 7.1. Shareholder approval must be given in a general meeting held not more than 3 years before the date of the issue of such securities. In order to take advantage of the exemption from ASX Listing Rule 7.1 and allow the Company flexibility to issue securities, Shareholders are requested to approve the issue of Incentives as an exemption from ASX Listing Rule 7.1. This approval will be effective for a period of 3 years from the date of the Meeting.

As at the date of the Meeting, no Incentives will have been issued under the proposed EIP.

If Resolution 6 is passed the Company will cease to issue Options under the existing ESOP. The total number of Options issued under the existing ESOP since it was approved was Nil.

A summary of the terms of the proposed EIP are set out in Annexure B to this Notice of Meeting. A copy of the full terms of the EIP can be obtained by either contacting the Company Secretary on +6189322 6283 or by email admin@cazalyresoruces.com.au.

Directors' Recommendation

The Board recommends Shareholders vote in favour of Resolution 6.

8. RESOLUTION 7 – APPROVAL OF POTENTIAL TERMINATION BENEFITS UNDER THE PROPOSED EMPLOYEE INCENTIVE PLAN

The Corporations Act restricts the benefits which can be given to certain persons (those who hold a managerial or executive office, as defined in the Corporations Act) on leaving their employment with the Company or a related body corporate (“the Group ” ). Under section 200B of the Corporations Act, a company may only give a person a benefit in connection with their ceasing to hold a managerial or executive office in the company or its related bodies corporate if it is approved by shareholders or an exemption applies. The provisions of the Corporations Act relating to termination benefits were amended in 2009 to significantly reduce the maximum termination benefits that can be given without prior shareholder approval and to expand the scope of the provisions. The new, lower termination benefits cap applies to all Directors (including executive Directors) and, since November 2009, to all key management personnel of the Group (that is, to all persons whose remuneration is required to be disclosed in the Company’s Remuneration Report), including those who are not Directors. Additionally, persons subject to the restrictions remain subject to them for at least three years after they cease to be managerial or executive officer.

Resolution 6 to this Notice of Meeting seeks Shareholder approval for the implementation of a new Cazaly Employee Incentive Plan (“EIP”). Under the newly proposed EIP (the subject of Resolution 6), circumstances in which the early vesting of Options or Performance Rights are permitted, include termination of the employee’s employment or office with the Company due to redundancy or in other circumstances where the Board exercises its discretion to do so as well as change of control events. The term “benefit” under section 200B of the Corporations Act has a wide operation and relevantly includes, in the context of Resolution 8, the early vesting of Incentives granted under the EIP.

Resolution 7, therefore seeks approval to any “termination benefit” that may be provided to an employee under the proposed EIP,the subject of Resolution 6 (subject to any restrictions imposed by ASX Listing Rules), who from, time to time, holds a managerial or executive office (as defined in the Corporations Act) in the Group.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

Specifically, Shareholder approval is being sought to give the Board (or the Boards’ delegate) the capacity to exercise certain discretions under the EIP, including the discretion to determine to vest some or all of the unvested Incentives or Options (as relevant) of any relevant participant who is affected by the new termination benefits laws when they leave employment with the Group. Approval is being sought in respect of any current or future participant who holds:

• a) a managerial or executive office in the Group at the time of their leaving or at any time in the three years prior to their leaving; and

• b) Incentives granted under the proposed EIP at the time of their leaving

Non-Executive Directors are not entitled to participate in the EIP and so the approval will not apply to them. The Company is seeking approval to assist the Group to meet its existing obligations to executive Directors and employees of the group, and to provide the Group with the flexibility to continue to remunerate employees fairly and responsibly.

If all relevant Shareholder approval is obtained under Resolution 6 and this Resolution 7, and the Board exercises its discretion to vest some or all of an affected participant’s unvested Options (or to provide that the participant’s Incentives do not lapse but will continue and be vested in the ordinary course), the value of the benefit will be disregarded when calculating the relevant participants cap for the purposes of subsection 200F(2)(b) or subsection 200G(1)(c) of the Corporation s Act.

Section 200E of the Corporations Act

Section 200E requires certain information to be provided to shareholders in approving a termination benefit. Whilst the value of the proposed termination benefits cannot current be ascertained, the manner in which the value of the proposed termination benefits is calculated, and the matters, events and circumstances that will, or are likely to, affect the calculation of the value are as follows:

a) Details of the termination benefits

The proposed EIP, if approved by Shareholders under Resolution 6, contains provisions setting out the treatment of unvested Incentives in situations such as where an employee leaves the Company (in certain circumstances) or where there is a change in control of the Company. For example, under the rules of the EIP, where a participant resigns from his or her employment with the Company before his or her Incentives have vested, the Board may exercise its discretion to determine that some or all of the Incentives will vest, and the basis on which vesting may occur (which may include, without limitation, timing and conditions). Similarly, if a “change of control” occurs, the Board may determine that some or all of a participant’s unvested Incentives will vest, and the basis on which vesting may occur (which may include, without limitation, timing and conditions).

The exercise of these discretions will constitute a “benefit” for the purposes of the Corporations Act’s termination benefits provisions.

b) Value of the termination benefits

The value of the termination benefits that the Board may give under the proposed EIP cannot be determined in advance. This is because the proposed EIP is subject to approval under Resolution 6 and if approved by Shareholders, various matters will, or are likely to affect that value. Specifically, if the EIP is approved by Shareholders under Resolution 6, the value of a particular benefit will depend on the Company’s share price at the time of vesting and the number of Incentives or Options (as relevant) that the Board decided to vest. Some of the factors that may affect the value of the termination benefits are as follows:

• the participant’s length of service and the proportion of any relevant performance periods that have expired at the time they leave employment;

• the participant’s total fixed remuneration at the time grants are made under the relevant Employee Incentive Scheme and at the time they leave employment; and

• the number of unvested Incentives or Options that the participant holds at the time they leave employment.

Directors Recommendations

The Board, other than Mr McMahon and Mr Jones, recommends that Shareholders vote in favour of Resolution 7. As possible recipients of termination benefits under the proposed EIS, it is not appropriate for Mr McMahon and Mr Jones to make a recommendation.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

EXPLANATORY MEMORANDUM

9. RESOLUTION 8 – PROPOSED AMENDMENT TO CONSTITUTION

Shareholder approval is sought for the amendment of the Constitution. If the special resolution seeking this approval is passed, the amendments will be effective immediately following the Annual General Meeting.

New laws in respect of dividends

In June 2010, the Corporations Act 2001 was amended to allow companies to pay dividends out of capital and assets, as well as out of profits. Prior to the amendment a company could only pay dividends out of profits. The “profits test” for dividends has been replaced by a new three-tiered “net assets test” which provides that a company must not pay a dividend unless:

• a) the company’s assets exceed its liabilities immediately before the dividend is declared and the excess is sufficient for the payment of the dividend;

• b) it is fair and reasonable to the company’s shareholders as a whole; and

• c) it does not materially prejudice the company’s ability to pay its creditors (for example, if the company would become insolvent as a result of paying the dividend).

The new laws are said to enhance flexibility by allowing a company to pay dividends to shareholders out of its capital as opposed to only its profits.

Amendment to Constitution

As the Constitution currently only allows dividends to be paid out of profits, the Boards proposes that the following amendments be made to the Constitution to provide future flexibility to the Board to pay dividends in the circumstances permitted by law.

• a) replacing clause 17.1 with the following:

“17.1 Subject to the rights of persons (if any) entitled of shares with special rights to dividend, the Directors may declare a final dividend out of the funds available for distribution under the Corporations Act and may authorize the payment or crediting by the Company to members of such a dividend.”

• b) replacing clause 17.2 with the following:

“17.2 The Directors may authorize the payment or crediting by the Company to the Members of such interim dividends as appear to the Directors to be justified by the funds of the Company available for distribution under the Corporations Act.”

• c) replacing clause 17.4 with the following:

“17.4 The Directors may, before declaring any dividend, set aside out of the funds of the Company available for distribution under the Corporations Act, such sums as they think proper as reserves to be applied, at the discretion of the Directors, for any purpose for which the funds of the Company may be properly applied”.

• d) replacing clause 17.6 with the following:

“17.6 The Directors may carry forward so much of the funds of the Company available for distribution under the Corporations Act remaining as they consider ought not to be distributed as dividends without transferring those funds to a reserve.”

Requirement for Shareholder approval

Under section 136 of the Corporations Act, a Company must have member approval by a special resolution to modify or repeal its constitution. Accordingly, Resolution 9 seeks member approval to adopt the proposed amendments to the Constitution.

Directors' Recommendation

The Directors recommend Shareholders vote in favour of Resolution 8.

Enquiries - All enquiries in relation to the contents of the Notice of Meeting or Explanatory Memorandum should be directed to the Company’s Joint Managing Directors, Mr Clive Jones and Mr Nathan McMahon or Company Secretary, Ms Lisa Wynne (telephone: +61 8 9322 6283).

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

ANNEXURE A

Terms and Conditions of Facility Options

The Facility Options will entitle the holders to subscribe for fully paid ordinary shares in the Company on the following terms:

1. Each Facility Option entitles the holder to acquire one fully paid ordinary share in the Company.

2. The Facility Option may be exercised at any time until 18 October 2012. Each Option may be exercised by forwarding to the Company at its registered office the exercise notice, duly completed together with payment of the sum of fifty three cents (53c) per Option exercised. The Facility Options will lapse at 5.00pm WST on 18 October 2012.

3. The Facility Options are not transferrable.

4. Facility Option holders shall be permitted to participate in new issues of securities on the prior exercise of Facility Options in which case the Option holders shall be afforded the period of at least nine (9) business days prior to and inclusive of the record date (to determine entitlements to the issue) to exercise the Facility Option.

5. Shares issued on the exercise of Facility Options will be issued not more than fourteen (14) days after receipt of a properly executed exercise notice and application moneys. Shares allotted pursuant to the exercise of an Option will rank equally with the then issued ordinary shares of the Company in all respects. Official Quotation of the shares will be sought.

6. In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company, all rights of the option holder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital at the time of the reconstruction.

7. If there is a bonus issue to shareholders, the number of shares over which the Option is exercisable may be increased by the number of shares which the holder of the Facility Option would have received if the Facility Option had been exercised before the record date for the bonus issue.

8. In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the Company, the exercise price of the Facility Option may be reduced in accordance with Listing Rule 6.22.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

ANNEXURE B

Terms and Conditions of the Cazaly Employee Incentive Plan (“EIP”)

As an incentive to employees of Cazaly, the Company has adopted a plan called the Cazaly Employee Incentive Plan ("EIP").

The purpose of the EIP is to give employees, executive directors, executive officers and consultants of the Company an opportunity, in the form of Incentives, to subscribe for ordinary shares in the Company. The Directors consider the EIP will enable the Company to retain and attract skilled and experienced employees, board members and executive officers and provide them with the motivation to make the Company more successful.

The key features of the Cazaly EIP are set out below.

Eligible persons

Full and part time employees (and their Associates) of any Cazaly group company (wherever they reside) will be eligible to be issued Incentives. However, there may be some further regulatory requirements for executive directors or employees residing outside Australia.

Upon receipt of such an Offer, the Eligible Person may nominate an associate acceptable to the Board to be issued with the Incentives.

Terms of Incentives

There is no consideration payable upon grant or exercise of a Performance Right.

There is no issue price for Options and the exercise price of Options will be determined by the Board in its absolute discretion.

Shares issued on exercise of Incentives will rank equally with other ordinary shares of the Company.

Incentives may not be transferred without the approval of the Board. Quotation of Incentives on the Australian Stock Exchange (“ASX”) will not be sought. However, in the event that the Company is listed on ASX, it will apply to ASX for official quotation of Shares issued on the exercise of Incentives.

Restrictions on Issues

The number of Incentives granted under the EIP will be decided by the Board from time to time. However, the applicable ASIC Class Order sets out that the Board may not offer Incentives under the Scheme if the total number of shares which would be issued were each Incentive accepted, together with the number of shares in the same class or Incentives to acquire such shares issued pursuant to all employee or executive share schemes during the previous five years, exceeds 5% of the total number of issued shares in that class as at the date of the offer.

Incentives may only be issued or exercised within the limitations imposed by the Corporations Act and the ASX Listing Rules.

The Directors will not be able to participate in the EIP without Shareholder approval being first obtained in a general meeting of Shareholders.

Vesting

The Board has the discretion at the time of the grant of an Incentive under the EIP to determine what (if any) vesting conditions need to be satisfied before the Incentives become capable of exercise.

Vesting on change of control

Incentives that remain subject to a vesting condition immediately vest and may be exercised by the Participant in the event that a takeover bid is made for the Company, or another corporate transaction is pursued (such as a scheme of arrangement , selective capital return etc) which results in the bidder acquiring voting power of more than 50% of the Company.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

The Board also has a general discretion to allow Incentives to immediately vest if the then Board determines, acting in good faith and consistent with its fiduciary duties, that a person has obtained voting power which is sufficient to control the composition of the Board.

Qualifying Incentives will lapse on their expiry date.

Vesting in other circumstances

The Board may permit a participant to exercise or transfer of Incentives in other limited situations, such as where a resolution is passed approving the disposal of Cazaly's main undertaking or on a winding up of Cazaly.

Expiry Date

The Board may set out in an invitation to participate in the EIP the date and times when any Incentives lapse. The expiry date will be no later than 7 years after the date of grant.

Cessation of Employment

Treatment of Incentives on Cessation of Employment

Cause		Unvested Incentives	Vested Incentives
Termination for cause (eg. dishonesty or material breach)	fraud,	Immediately lapse	~~Expires 30 days after cessation of~~ employment or longer period allowed by the Board
Termination for Death		~~Immediately~~ ~~lapse~~ ~~unless~~ Board determines otherwise	Expire at Expiry Date
Termination for ill health		~~Immediately~~ ~~lapse~~ ~~unless~~ Board determines otherwise	Expire at Expiry Date
~~Termination by consent~~ (eg resignation)		~~Immediately~~ ~~lapse~~ ~~unless~~ Board determines otherwise	~~Expires 30 days after cessation of~~ employment or longer period allowed bythe Board
~~Redundancy, constructive dismissal,~~ retirement, other termination by Company not dealt with above		~~Vest automatically. Expire 30 days~~ after cessation of employment or longer period allowed by Board	~~Expires 30 days after cessation of~~ employment or longer period allowed by the Board

Participation in Future Issues

The holders of Incentives will only participate in new issues, including bonus issues, if they have exercised the Incentives at that time and provided such exercise is permitted by the terms of the Incentives.

If there is a bonus issue to shareholders, the number of shares over which the Incentives is exercisable may be increased by the number of Shares which the holder of the Incentives would have received if the Incentive had been exercised before the record date for the bonus issue.

In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the Company, the exercise price of Options may be reduced in accordance with Listing Rule 6.22.

Capital Reconstruction

In the event of any reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the Incentive holder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital, at the time of the reconstruction.

Board Discretion

Under the terms of the EIP, the Board has absolute discretion to determine the exercise price, the expiry date and vesting conditions of any grants made under the EIP, without the requirement for further Shareholder approval.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

9. GLOSSARY OF TERMS

In this Explanatory Memorandum the following terms, abbreviations and acronyms have the following meaning:

“ACN”	Australian Company Number
“Annual Report”	The Company's report including the reports of the Directors and
	auditor of the Company and the financial statements of the
	Company for the year ended 30 June 2010.
“ASIC”	Australian Securities and Investments Commission.
“ASX”	ASX Limited (ACN 008 624 691)
“ASX Listing Rules”or“Listing Rules”	The Official Listing Rules of ASX as amended from time to time.
“Board”	Means the board of Directors of the Company.
“Cazaly”or“Company”	Cazaly Resources Limited (ABN: 23 101 049 334).
“Constitution”	Means the Company’s constitution.
“Corporations Act”	Corporations Act 2001 (Cth).
“Director”	A director of Cazaly.
“EIP”	Means the Cazaly Resources ltd Employee Incentive Plan
	summarised in Annexure B to this Notice.
“ESOP”	Means the Cazaly Resources Ltd Employee Share Option Plan
	summarised in Annexure C to the Notice of General Meeting
	dated 12 May 2010.
“Facility”	Means the A$2 - $4 million Bridging Facility announced 29
	September 2010.
“Facility Options”	Means the Options issued or to be issued under the Facility on
	the terms and conditions set out in Annexure A to this Notice.
“Group”	Cazaly or the Company and it’s subsidiaries
“Incentives”	Means Performance Rights and Options.
“Meeting”or“Annual General Meeting”	The annual general meeting of the Company to be held on 29
	November 2010.
“Notice of Meeting”or“Notice”	The notice convening the Annual General Meeting, which
	accompanies this Explanatory Memorandum.
“Option”	Means a call option to subscribe for a share in the Company
“Performance Right”	Means an entitlement to one Share, subject to vesting and
	satisfaction of any performance conditions, granted in
	accordance with the EIP.
“Related Party”	Has the meaning set out in the ASX Listing Rules.

Cazaly Resources Limited Notice of Annual General Meeting ABN 23 101 049 334

“Remuneration Report” The remuneration report appearing in the Annual Report. “Resolutions” Resolutions in the Notice of Meeting. “Share” A fully paid ordinary share in the capital of the Company. “Shareholder” or “member” The registered holder of a Share. “WST” Australian Western Standard Time.

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PROXY FORM

APPOINTMENT OF PROXY CAZALY RESOURCES LTD ABN 23 101 049 334

I/We

Appoint

being a shareholder of Cazaly Resources Ltd entitled to attend and vote at the Annual General Meeting, hereby Name of proxy

or failing the person so named or, if no person is named, the Chairman of the General Meeting, as my/our proxy to act generally for me/us and to vote in accordance with the following directions or, if no directions have been given, as the proxy sees fit at the Annual General Meeting to be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia at 11.00am WST on 29 November 2010 and at any adjournment thereof. If no directions are given, the Chairman will vote in favour of all of the resolutions.

FOR AGAINST ABSTAIN

Resolution 1 Adoption of Remuneration Report (non-binding) Resolution 2 Re-election of Kent Hunter Resolution 3 Ratification and Approval of Issue of Facility Options Resolution 4 Approval of Issue of Facility Options Resolution 5 Approval of Issue of Facility Options Resolution 6 Approval of Employee Incentive Plan Resolution 7 Approval of Termination Benefits under the EIP Resolution 8 Proposed Amendment to Constitution

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

Signed this day of 2010

By:

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

Individuals and joint holders

CAZALY RESOURCES LIMITED ABN 23 101 049 334

Instructions for Completing "Appointment of Proxy’ Form

1. A shareholder entitled to attend and vote at a meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. Where more than one proxy is appointed, such proxy must be allocated a proportion of the shareholder’s voting rights. If the shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. Where more than one proxy is to be appointed or voting intentions cannot be adequately expressed using this form an additional form of proxy is available from the Company or you may copy this form.

2. A duly appointed proxy need not be a shareholder of the Company. In the case of joint holders, all must sign.

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

4. Directors of the company;

5. a Director and a company secretary of the company; or

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

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

1. Completion of a proxy form will not prevent individual shareholders from attending the meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the meeting in person, then the proxy’s authority to speak and vote for that shareholder is suspended while the shareholder is present at the meeting.

2. Where a proxy form or form of appointment of corporate representative is lodged and is executed under power of attorney, the power of attorney must be lodged in like manner as this proxy.

4. To vote by proxy, please complete and sign the proxy form enclosed and either:

5. (a) send the proxy form by post to Cazaly Resources Ltd, Level 2, 38 Richardson Street, West Perth, Western Australia 6005; or

6. (b) send the proxy form by facsimile to the Company on facsimile number (08) 9322 6398,

so that it is received not later than 11.00 am WST on 27 November 2010.

Proxy forms received later than this time will be invalid.