DIATREME RESOURCES LIMITED — Proxy Solicitation & Information Statement 2012

Jul 26, 2012

Diatreme Resources Limited

ABN 33 061 267 061

Notice of a General Meeting of Shareholders

to be held at the office of the Company, Level 2, 87 Wickham Terrace, Spring Hill, Qld, 30 August 2012 at 10:30am

The details of the resolutions contained in the Explanatory Memorandum accompanying this Notice of General Meeting should be read together with and form part of this Notice of General Meeting.

Business

RESOLUTIONS:

1. RATIFICATION OF PRIOR ISSUE OF SHARES

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

“That for the purposes of Listing Rule 7.4 and for all other purposes, the issue of 8,432,432 ordinary shares to the investors on the terms described in the Explanatory Memorandum, be ratified.”

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 1 by:

• any person who participated in the issue; and

• any of their associates

However, the Company need not disregard a vote on the Resolution if:

• it is cast by a person as 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.

2. RATIFICATION OF PRIOR ISSUE OF SHARES

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

“That for the purposes of Listing Rule 7.4 and for all other purposes, the issue of 5,405,405 ordinary shares to Mr Chenfei Zhuang on the terms described in the Explanatory Memorandum, be ratified.”

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 2 by:

• Mr Chenfei Zhuang; and

• any of his associates

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However, the Company need not disregard a vote on the Resolution if:

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

• it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

3. APPROVAL OF PROPOSED ISSUE OF PLACEMENT SHARES.

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

“That for the purposes of Listing Rule 10.11 and for all other purposes, the proposed issue of up to 15,891,892 Placement shares to Mr Andrew Tsang, a Director, or to his nominee(s) for the purposes and on the terms described in the Explanatory Memorandum, be approved.”

Voting Exclusion Statement:

The Company will disregard any votes cast on Resolution 3 by:

• Andrew Tsang, a director of the Company; and

• an associate of Andrew Tsang

However, the Company need not disregard a vote on Resolution 3 if:

• it is cast by a person as 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 a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

By Order of the Board of Directors,

Leni Stanley Company Secretary

Dated 27/07/2012

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Voting and Proxies

1. Voting

Diatreme Resources Limited (“DRX”) has determined in accordance with Regulation 7.11.37 of the Corporations Regulations 2001 that for the purposes of voting at the Meeting securities will be taken to be held by those persons recorded on the Company's share register as at 7:00pm (Sydney time) on 28 August 2012. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

If you have any queries on how to cast your votes then telephone Ms Leni Stanley on 07 3221 6022 or Mr Tuan Do on 07 3832 5666 during business hours.

2. Proxies

(a) Any member entitled to attend and vote is entitled to appoint not more than two proxies to attend and vote in his or her stead.

(b) If a shareholder appoints more than one proxy, the appointment of the proxy may specify the proportion or number of that shareholder's votes that each proxy may exercise. If the appointment does not specify the proportion or the number of the shareholder's votes each proxy may exercise, each proxy may exercise one half of the votes.

(c) Where a shareholder appoints more than one proxy neither proxy is entitled to vote on a show of hands.

(d) A proxy need not be a shareholder of DRX.

(e) To be effective, DRX must receive the completed Proxy Form and, if the form is signed by the shareholder's attorney, the authority under which the Proxy Form is signed (or a certified copy of the authority) by no later than 48 hours before the commencement of the meeting. Proxy Forms and other documentation may be lodged at the registered office of the Company or as follows:

By posting, delivery or Diatreme Resources Limited Share Registry facsimile: C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Facsimile: (02) 9287 0309 By delivery: Level 15, 324 Queen Street Brisbane Qld 4000

(f) Proxies given by corporate shareholders must be executed in accordance with their constitutions, or under the hand of a duly authorised officer or attorney.

(g) If a proxy is not directed how to vote on an item of business, the proxy may vote, or abstain from voting as he or she thinks fit.

(h) If a shareholder appoints the Chairman of the meeting as the shareholder's proxy and does not specify how the Chairman is to vote on an item of business, the Chairman will vote, as proxy for that shareholder for that item.

NOTE: APPOINTMENT OF PROXY FORM IS ENCLOSED

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Diatreme Resources Limited

ABN 33 061 267 061

EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the information of shareholders in relation to the business to be conducted at the general meeting of Diatreme Resources Limited (“DRX”) to be held at the registered office of the Company, Level 2, 87 Wickham Terrace, Spring Hill, Qld, 30 August 2012 at 10:30am.

Since the Annual General Meeting of shareholders held on 24 May 2012, the Company engaged Octa Phillip to act as lead manager in organising a placement of shares to sophisticated and professional investors. This action resulted in the successful negotiation of placements totalling 29,729,730 fully paid ordinary shares at $0.037 (3.7 cents) each to raise $1.1million.

Completion of the placements is by way of three separate allotments. Each allotment group is detailed under individual resolutions 1 to 3 below.

Funds raised are to be used in the continued development of the Cyclone Zircon Project in the Eucla Basin and for working capital.

The meeting seeks shareholder ratification of prior issues of shares as well as shareholder approval to issue shares to Mr Andrew Tsang, a Director, or to his indirect interests or related parties.

Under ASX Listing Rule 7.4 an issue of securities made with approval under ASX Listing Rule 7.1 is treated as having been made with the approval for the purpose of Listing Rule 7.1 if shareholder approval is subsequently obtained. Under ASX Listing Rule 7.1 an entity must not issue, or agree to issue, more than 15% of its capital within a 12 month period without the approval of its shareholders.

By obtaining shareholder approval for the issue of the shares under resolutions 1 and 2, the Company will be assisted in retaining its ability to issue up to 15% of its capital within a 12 month period, thus enabling it to take advantage of any capital raising opportunities in the near future.

RESOLUTION 1 - RATIFICATION OF PRIOR ISSUE OF SHARES

Under resolution 1 the Company seeks ratification for the purposes of ASX Listing Rule 7.4 of the prior issue of 8,432,432 fully paid ordinary shares at an issue price of $0.037 per share, raising $312,000 (before costs) to the allottees listed in the following table. The shares were issued by the Company without disclosure under part 6D.2 of the Corporations Act 2001 (Cth) to professional and sophisticated investors who are clients of Octa Phillip, the Company’s corporate advisors.

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Allottees	No of shares allotted
Butler Gibpat	500,000
Mr Haridason Damodaran & Mrs Sharon Villanueva	500,000
Mr Nicholas Cook	300,000
Bruce Birnie P/L	1,000,000
Mr Andrew James Kors	200,000
Assurance Capital PtyLtd	400,000
Tromso P/L	400,000
Mildura EquityChambers	300,000
Mr Kevin Andrew Fell	405,405
Telegraph News PtyLtd	400,000
Leet Investments PtyLtd	500,000
VaggInvestment Management	1,000,000
RK & DF Consulting	300,000
De Silva Super Nominees PtyLtd	200,000
Westglade P/L	400,000
Don Anton Prasanna Wickramatunge	150,000
PhillipBrokerage Pte Ltd	486,486
PhillipSecurities	190,541
Loftus GroupLtd	800,000
TOTAL SHARES ALLOTTED	8,432,432

All Directors recommend that you vote in favour of Resolution 1.

RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE OF SHARES

Under resolution 2 the Company seeks ratification for the purposes of ASX Listing Rule 7.4 of the issue prior to the general meeting of 5,405,405 fully paid ordinary shares at an issue price of $0.037 per share, raising $200,000 (before costs) to Mr Chenfei Zhuang.

At this time, the shares under this resolution are yet to be allotted. Allotment is expected to occur in August 2012 prior to the date of general meeting. These shares will be issued by the Company without disclosure under part 6D.2 of the Corporations Act 2001 (Cth).

Funds raised will be applied as set out above.

All Directors recommend that you vote in favour of Resolution 2.

RESOLUTION 3 – APPROVAL OF PROPOSED ISSUE OF PLACEMENT SHARES

This resolution seeks shareholder approval under Listing Rule 10.11 to issue up to 15,891,892 fully paid ordinary shares at $0.037 each to Mr Andrew Tsang, a Director, and/or to his nominee(s), raising a total of up to $588,000. These funds will be applied as set out above.

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The shares will be issued on the same terms as the Company’s existing fully paid ordinary shares. The shares will be issued as soon as practicable after the Meeting, but in any event, no later than one (1) month after the date of the Meeting.

If approval is given by shareholders under Listing Rule 10.11, then approval is not required under Listing Rule 7.1.

Mr Tsang was appointed a non-executive director of the Company on 23 January 2009. He has supported the Company over the past three years, both through his services as a Director and in his strong support financially through a number of fund raising exercises. His investment in the Company is deemed long term and he has exhibited his intention to support the Company over time by maintaining his level of shareholding and, subject to Australian law, increasing that shareholding when circumstances permit.

Mr Tsang, including his associates, is currently the Company’s largest shareholder with approximately 21.26% of the ordinary shares on issue as at the date of this notice. Following approval and issue of all the shares the subject of Resolutions 1, 2 and 3, Mr Tsang, including his associates, would hold approximately 24.22% of the ordinary shares on issue. This increase in holdings falls within the “3% creep rule” under the Corporations Act 2001.

All Directors (excluding Mr Tsang) recommend that you vote in favour of Resolution 3.

-oOo-

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LODGE YOUR VOTE

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ABN 33 061 267 061

By mail:  Diatreme Resources Limited  [By fax:][ +61 2 9287 0309] C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



All enquiries to: Telephone: 1300 554 474

Overseas: +61 2 8280 7454

X99999999999

X99999999999

SHAREHOLDER VOTING FORM

I/We being a member(s) of Diatreme Resources Limited and entitled to attend and vote hereby appoint:

STEP 1

the Chairman of the Meeting (mark box)

APPOINT A PROXY

OR if you are NOT appointing the Chairman of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered shareholder) you are appointing as your proxy

or failing the person/body corporate named, or if no person/body corporate is named, the Chairman of the Meeting, as my/our proxy and to vote for me/us on my/our behalf at the General Meeting of the Company to be held at 10:30am on Thursday, 30 August 2012, at Level 2, 87 Wickham Terrace, Spring Hill, Qld and at any adjournment or postponement of the meeting.

The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

Proxies will only be valid and accepted by the Company if they are signed and received no later than 48 hours before the meeting. Please read the voting instructions overleaf before marking any boxes with an X

VOTING DIRECTIONS

STEP 2

Resolution 1

“That for the purposes of Listing Rule 7.4 and for all other purposes, the issue of 8,432,432 ordinary shares to the investors on the terms described in the Explanatory Memorandum, be ratified.”

Resolution 2

“That for the purposes of Listing Rule 7.4 and for all other purposes, the issue of 5,405,405 ordinary shares to Mr Chenfei Zhuang on the terms described in the Explanatory Memorandum, be ratified.”

Resolution 3

“That for the purposes of Listing Rule 10.11 and for all other purposes, the proposed issue of up to 15,891,892 Placement shares to Mr Andrew Tsang, a Director, or to his nominee(s) for the purposes and on the terms described in the Explanatory Memorandum, be approved.”

For Against Abstain *

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 * If you mark the Abstain box for a particular Item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

STEP 3 SIGNATURE OF SHAREHOLDERS – THIS MUST BE COMPLETED

Shareholder 1 (Individual)

Sole Director and Sole Company Secretary

Joint Shareholder 2 (Individual) Joint Shareholder 3 (Individual) Director/Company Secretary (Delete one) Director

This form should be signed by the shareholder. If a joint holding, either shareholder may sign. If signed by the shareholder’s attorney, the power of attorney must have been previously noted by the registry or a certified copy attached to this form. If executed by a company, the form must be executed in accordance with the company’s constitution and the Corporations Act 2001 (Cth).

DRX PRX201

HOW TO COMPLETE THIS PROXY FORM

Your Name and Address

This is your name and address as it appears on the company’s share register. If this information is incorrect, please make the correction on the form. Shareholders sponsored by a broker should advise their broker of any changes. Please note: you cannot change ownership of your shares using this form.

Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box in Step 1. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person in Step 1. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the company. A proxy may be an individual or a body corporate.

Votes on Items of Business – Proxy Appointment

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each item of business. All your shares will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any item by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on the items of business, your proxy may vote as he or she chooses. If you mark more than one box on an item your vote on that item will be invalid.

Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by telephoning the company’s share registry or you may copy this form and return them both together.

To appoint a second proxy you must:

• (a) on each of the first Proxy Form and the second Proxy Form state the percentage of your voting rights or number of shares applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.

• (b) return both forms together.

Signing Instructions

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

Individual: where the holding is in one name, the holder must sign.

Joint Holding: where the holding is in more than one name, either shareholder may sign.

Power of Attorney: to sign under Power of Attorney, you must lodge the Power of Attorney with the registry. If you have not previously lodged this document for notation, please attach a certified photocopy of the Power of Attorney to this form when you return it.

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

Corporate Representatives

If a representative of the corporation is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” should be produced prior to admission in accordance with the Notice of Meeting. A form of the certificate may be obtained from the company’s share registry.

Lodgement of a Proxy Form

This Proxy Form (and any Power of Attorney under which it is signed) must be received at an address given below by 10:30am on Tuesday, 28 August 2012, being not later than 48 hours before the commencement of the meeting. Any Proxy Form received after that time will not be valid for the scheduled meeting.

Proxy Forms may be lodged using the reply paid envelope or:

 by mail:

Diatreme Resources Limited C/- Link Market Services Limited Locked Bag A14 Sydney South NSW 1235 Australia



by fax:

+61 2 9287 0309



by hand:

delivering it to Link Market Services Limited, Level 15, 324 Queen Street, Brisbane Qld 4000

If you would like to attend and vote at the General Meeting, please bring this form with you. This will assist in registering your attendance.