FAR LIMITED — AGM Information 2012

Apr 26, 2012

FAR LIMITED ABN 41 009 117 293

NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY STATEMENT

For the Annual General Meeting to be held at 10.00am on Thursday 31 May 2012 at the Theatrette, Level 2 Conference Centre, QV1 Building, 250 St Georges Terrace, Perth, Western Australia.

This is an important document. Please read it carefully.

If you are unable to attend the Annual General Meeting, please complete the form of proxy enclosed and return it in accordance with the instructions set out on that form.

TIME AND PLACE OF MEETING AND HOW TO VOTE

Venue

The Annual General Meeting of the shareholders of the Company will be held at 10.00am on Thursday 31 May 2012 at the Theatrette, Level 2 Conference Centre, QV1 Building, 250 St Georges Terrace, Perth, Western Australia.

How to Vote

You may vote by attending the meeting in person, by proxy or authorised representative.

Voting in Person

To vote in person, attend the meeting on the date and time and at the place set out above.

Voting by Proxy

To vote by proxy, please complete and sign the Proxy Form enclosed and either:

• send the Proxy Form by post to Advanced Share Registry, PO Box 1156, Nedlands, Western Australia 6909; or

• send the Proxy Form by facsimile to Advanced Share Registry on facsimile number (61 8) 9389 7871

so that it is received not later than 10.00am on 29 May 2012.

Proxy Forms received later than this time will be invalid.

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FAR LIMITED ABN 41 009 117 293 NOTICE OF ANNUAL GENERAL MEETING

Notice is given that the Annual General Meeting of shareholders of FAR Limited ("Company") will be held at 10.00am on Thursday 31 May 2012 at the Theatrette, Level 2 Conference Centre, QV1 Building, 250 St Georges Terrace, Perth, Western Australia.

AGENDA

ADOPTION OF FINANCIAL STATEMENTS

To receive the Annual Financial Report, including Directors’ declaration and accompanying reports of the Directors and auditors, for the financial year ending 31 December 2011.

RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT (NON-BINDING)

To consider and, if thought fit, to pass the following resolution as a non-binding resolution :

“That, for the purposes of Section 250R(2) of the Corporations Act and for all other purposes, the Company adopts the Remuneration Report as set out in the Annual Report for the year ended 31 December 2011.”

The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.

RESOLUTION 2 – RE-ELECTION OF MS C M NORMAN

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

“That Ms Catherine Margaret Norman, (who was appointed by the Board since the last Annual General Meeting), retires in accordance with the Company’s Constitution and, being eligible for re-election, be reappointed as a director of the Company with immediate effect.”

RESOLUTION 3 – RE-ELECTION OF MR N J LIMB

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

“That Mr Nicholas James Limb, (who was appointed by the Board since the last Annual General Meeting), retires in accordance with the Company’s Constitution and, being eligible for re-election, be re-appointed as a director of the Company with immediate effect.”

RESOLUTION 4 – RE-ELECTION OF MR C L CAVNESS

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

“That Mr Charles Lee Cavness, who retires by rotation in accordance with the Company’s Constitution and, being eligible for re-election, be re-appointed as a director of the Company with immediate effect.”

RESOLUTION 5 – RATIFICATION OF PREVIOUS PLACEMENT

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

"That for the purposes of ASX Listing Rule 7.4 and all other purposes, the shareholders of the Company hereby ratify and approve the allotment and issue of 280,000,000 fully paid ordinary shares in the capital of the Company on the terms and conditions set out in the Explanatory Statement accompanying this Notice.”

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RESOLUTION 6 – ISSUE OF OPTIONS – MS C M NORMAN

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

“That, for the purposes of ASX Listing Rule 10.11, Part 2E.1 of the Corporations Act and for all other purposes, approval is given for the issue of 20 million Options to Ms C M Norman (or her nominee) on the terms and conditions set out in the Explanatory Statement.”

DATED THIS 27[TH ] DAY OF APRIL 2012 BY ORDER OF THE BOARD

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COLIN HARPER COMPANY SECRETARY

NOTES:

1. A shareholder of the Company entitled to attend and vote is entitled to appoint not more than two proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified 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 of the votes. A proxy need not be a shareholder of the Company.

2. For the purposes of the Corporations Act, the Directors have set a snapshot date to determine the identity of those entitled to attend and vote at the Meeting. The snapshot date is 10:00am on 29 May 2012.

VOTING EXCLUSIONS

1. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

The Company will disregard any votes cast on Resolution 1 by or on behalf of a member of the Company's key management personnel, details of whose remuneration are included in the Remuneration Report (“KMP”); or a closely related party of a KMP whether the votes are cast as a shareholder, proxy or in any other capacity. Section 250R prohibits a vote being cast in any such circumstance.

However, the Company will not disregard a vote cast by a member of the KMP (“KMP member”) or a closely related party of a KMP member if the vote is cast as a proxy; the proxy is appointed by writing that specifies how the proxy is to vote on Resolution 1; and the vote is not cast on behalf of a KMP member or a closely related party of a KMP member.

KMP members are those persons having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any director (whether executive or otherwise) of the Company.

If you are a KMP member or a closely related party of a KMP member (or are acting on behalf of any such person) and purport to cast a vote that will be disregarded by the Company (as described above), you may commit an offence by breaching the voting restrictions that apply to you under the Corporations Act.

A closely related party of a KMP member means any of the following:

• a spouse or child of the KMP member;

• a child of the KMP member's spouse;

• a dependant of the KMP member or the KMP member's spouse;

• anyone else who is one of the KMP member's family and may be expected to influence the KMP member, or be influenced by the KMP member, in the KMP member's dealing with the Company;

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• a company the KMP member controls; or

• a person prescribed by regulations (as at the date of this Notice of Annual General Meeting, no such regulations have been prescribed).

The proxy form accompanying this Notice of Annual General Meeting contains instructions regarding how to complete the proxy form if a Shareholder wishes to appoint the Chairman as his or her proxy and to direct the Chairman to vote on the resolution to adopt the Remuneration Report. You should read those instructions carefully.

2. RESOLUTION 5 – RATIFICATION OF PREVIOUS PLACEMENT

The Company will disregard any votes cast on this resolution by any person who participated in the issue and any associate of any such person. 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 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.

3. RESOLUTION 6 – ISSUE OF OPTIONS – MS C M NORMAN

The Company will disregard any votes cast on this resolution by:

• Ms C M Norman and her nominee; and

• any associate of those persons.

However, the Company need not disregard a vote 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.

Additionally, section 224 of the Corporations Act prohibits Ms C M Norman and her nominee and any associate of those persons from voting on the resolution.

However, section 224 of the Corporations Act does not prohibit a vote being cast on the resolution if:

• (a) It is cast by a proxy appointed in writing that specifies how the proxy is to vote on the proposed resolution; and

• (b) It is not cast on behalf of Ms C M Norman or her nominee and any associate of those persons.

ENQUIRIES

Shareholders are invited to contact the Company Secretary, Colin Harper, on (61 8) 9380 6181 if they have any queries in respect of the matters set out in these documents.

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EXPLANATORY STATEMENT

1. GENERAL INFORMATION

This Explanatory Statement has been prepared for the shareholders of the Company in connection with the Annual General Meeting of the Company to be held on 31 May 2012.

The purpose of this Explanatory Statement 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 detailed in the Notice.

This Explanatory Statement is an important document and should be read carefully in full by all shareholders. If you have any questions regarding the matters set out in this Explanatory Statement or the preceding Notice, please contact the Company, your stockbroker or other professional adviser.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

Section 250R(2) of the Corporations Act requires the Company to put to the vote at the Annual General Meeting a resolution that the Remuneration Report be adopted. The Company is also required to inform Shareholders in the Notice of Annual General Meeting that a resolution to this effect will be put at the Annual General Meeting. The Remuneration Report is contained within the Directors' Report in the Company’s Annual Report for the year ended 31 December 2011. It sets out the remuneration policy for the Company and reports the remuneration arrangements in place for the Managing Director, specified executives and the non‐executive Directors.

Shareholders are advised that, pursuant to section 250R(3) of the Corporations Act, the vote on this Resolution is advisory only and does not bind the Directors or the Company. Accordingly, the Company will not be required to alter any arrangements detailed in the Remuneration Report, should the Remuneration Report not be adopted.

Further, under recent amendments to the Corporations Act, if 25% or more of the votes cast on Resolution 1 are against adoption of the Remuneration Report, then:

• a) if comments are made on the Remuneration Report at the Annual General Meeting, the Company's remuneration report for the financial period ending 31 December 2012 will be required to include an explanation of the Board's proposed action in response or, if no action is proposed, the Board's reasons for this; and

• b) if, at the Company's 2013 Annual General Meeting, 25% or more of the votes cast on the resolution for the adoption of the remuneration report for the financial year ending 31 December 2012 are against its adoption, the Company must put to its shareholders a resolution proposing that an extraordinary general meeting (“Spill Meeting”) be held within 90 days of the date of the 2013 Annual General Meeting. Where a Spill Resolution is carried (i.e. more than 50% of the votes cast on the Spill Resolution are in favour of the Spill Resolution), all of the Directors in office at the 2013 Annual General Meeting (other than the Managing Director) will cease to hold office immediately before the end of the Spill Meeting, unless they are re‐elected at the Spill Meeting.

The Company recommends that members who submit proxies should consider giving “how to vote” directions to their proxyholder on each resolution, including this Resolution 1. If you complete a proxy form that authorises the Chairman of the Annual General Meeting to vote on your behalf as a proxyholder, and you do not mark any of the boxes “for” or “against” or “abstain” so as to give the Chairman directions about how your vote should be cast in relation to Resolution 1, but you do tick the box to the left of the heading “Important for Resolution 1” on the proxy form, your proxy appointment will automatically direct the Chairman to vote in favour of the resolution to adopt the Remuneration Report and the Chairman will vote accordingly .

The Chairman intends to vote in favour of Resolution 1 where the Chairman is directed to do so by instructions in Step 2 on the Proxy Form or, in the absence of such a direction in Step 2, where the box to the left of the heading “Important for Resolution 1” on the proxy form is ticked.

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If you wish to appoint the Chairman of the Annual General Meeting as your proxyholder but you do not want to put the Chairman in the position to cast your votes in favour of Resolution 1, you should complete the appropriate box on the proxy form, directing the Chairman to vote against or abstain from voting on Resolution 1.

3. RESOLUTION 2 – RE-ELECTION OF MS C M NORMAN

Ms C M Norman was appointed as a Director of the company on 28 November 2011 by Directors’ resolution. The Company’s Constitution provides that a Director appointed by the other Directors must retire at the next following AGM. Accordingly, Ms C M Norman retires and being eligible for re-election, offers herself for re-election at the Meeting.

Ms C M Norman was appointed as a Director of the Company following the acquisition of Flow Energy Limited having served as Managing Director of Flow Energy Limited since 2006.

Ms C M Norman is a professional geophysicist who has 20 years’ experience in the minerals and oil and gas exploration industry, having held executive positions both in Australia and the UK and carried out operating assignments in Europe, Africa, Middle East and Australia.

4. RESOLUTION 3 – RE-ELECTION OF MR N J LIMB

Mr N J Limb was appointed as a Director of the Company on 28 November 2011 by Directors’ resolution. The Company’s Constitution provides that a Director appointed by the other Directors must retire at the next following AGM. Accordingly, Mr N J Limb retires and being eligible for reelection, offers himself for re-election at the Meeting.

Mr N J Limb was appointed as a Director of the Company following the acquisition of Flow Energy Limited and has served as a Director of Flow Energy Limited since 2004.

Mr N J Limb is a professional geophysicist and also has extensive experience as a stockbroker and merchant banker. He is currently Executive Chairman of Mineral Deposits Limited, an Australian listed company.

5. RESOLUTION 4 – RE-ELECTION OF MR C L CAVNESS

In accordance with ASX Listing Rule 14.4, no Director of the Company may hold office (without reelection) past the longer of 3 years and the third Annual General Meeting following their appointment. Further, in accordance with the Company’s Constitution, one third of the Directors must retire by rotation at every Annual General Meeting. Accordingly, Mr C L Cavness retires and being eligible for re-election, offers himself for re-election at the Meeting.

Mr C L Cavness is an Attorney at Law admitted to practice before the Supreme Courts of the States of Texas, Alaska, and Colorado. He has spent his entire career in the oil industry, and consequently has experience in the US, Latin America, Europe and the Middle East. Mr C L Cavness has been a Director of the Company since 1994.

6. RESOLUTION 5 – RATIFICATION OF PREVIOUS PLACEMENT

On 29 March 2012, the Company announced the placement of 280,000,000 Shares ("Placement Shares") at an issue price of $0.043 per share ("Placement"). The Placement Shares were placed to clients of Hartleys Limited, and other sophisticated investors, raising $12,040,000 before costs.

ASX Listing Rule 7.1 provides, in summary, that subject to certain exceptions a listed company may not issue equity securities in any 12 month period which, in total, would exceed 15% of the number of issued securities of the company at the beginning of the 12 month period, except with the prior approval of shareholders. Under ASX Listing Rule 7.1, the prior approval of Shareholders was not required to issue the Placement Shares because those securities, when aggregated with securities issued by the Company during the previous 12 months (other than securities issued with Shareholder approval or under another exception to listing rule 7.1), did not exceed 15% of the number of securities on issue at the commencement of that 12 month period.

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ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1. It provides that where a company in general meeting ratifies a previous issue of securities (and provided that the previous issue did not breach ASX Listing Rule 7.1) those securities will be deemed to have been made with Shareholder approval for the purpose of ASX Listing Rule 7.1.

Ratification is now sought for the issue of the Placement Shares, pursuant to ASX Listing Rule 7.4 in order to reinstate the Company's capacity to issue securities within the 15% of its issued capital limit without the need to first obtain Shareholders’ approval to enable the Company to consider additional funding opportunities over the next 12 months should they arise, consistent with the provisions of ASX Listing Rule 7.1 and the Corporations Act. In the last 12 months, the Company has made other issues of securities, totalling approximately 27 million shares, without Shareholders’ approval and accordingly if resolution 5 is approved, the Company’s ability to issue a full 15% of its issued capital without Shareholders’ approval will be reduced by this amount.

The Directors recommend the ratification of the issue of the securities and recommend that Shareholders vote in favour of Resolution 5.

ASX Listing Rule 7.5 sets out a number of matters which must be included in a notice of meeting seeking an approval under ASX Listing Rule 7.4. For the purposes of ASX Listing Rule 7.5, the following information is provided in relation to the Placement and this Resolution 5:

• (a) 280,000,000 Shares were issued and allotted;

• (b) the Shares were issued at an issue price of $0.043 per Share;

• (c) the Shares rank equally with existing Shares on issue;

• (d) the Shares were issued to international and domestic institutional clients of Hartleys Limited, and other sophisticated investors, who subscribed under the Placement;

• (e) the funds raised under the Placement will be used to fund offshore oil and gas exploration in East Africa off the Kenya coast; and

• (f) a voting exclusion statement is included in the Notice.

7. RESOLUTION 6 – ISSUE OF OPTIONS TO MS C M NORMAN

7.1 Background

Resolution 6 seeks Shareholder approval for the issue of 20 million Options to Ms C M Norman, a Director of the Company, or her nominee. Each Option will be exercisable on the terms and conditions set out in Section 7.4 of the Explanatory Statement.

Shareholder approval for the issue of Options to Ms C M Norman is required by ASX Listing Rule 10.11 and Section 208 of the Corporations Act because she is a “related party” of the Company as defined for the purposes of the Listing Rules and the Corporations Act.

7.2 ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires the Company to obtain Shareholder approval by ordinary resolution prior to the issue of securities (including an Option) to a related party of the Company.

Ms C M Norman is a related party of the Company because she is a Director of the Company.

Accordingly, Shareholder approval for the issue of Options to Ms C M Norman or her nominee pursuant to Resolution 6 is required by ASX Listing Rule 10.11.

Approval pursuant to ASX Listing Rule 7.1 is not required to issue the Options to the Directors as approval is being obtained under ASX Listing Rule 10.11. Shareholders should note that the issue of

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Options to the Directors will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to the issue of Options pursuant to Resolution 6:

• (a) the maximum number of Options to be issued by the Company is 20 million Options to Ms C M Norman (or her nominee);

• (b) the Options will be issued for nil cash consideration as they are being issued to Ms C M Norman (or her nominee) in order to provide a material additional incentive for her ongoing commitment and dedication to the continued growth of the Company. The Board considers the issue of Options to be reasonable in the circumstances, to assist the Company in attracting and retaining the highest calibre of professionals to the Company, whilst maintaining the Company’s cash reserves;

• (c) the Options will be issued not more than one month after the date of the Annual General Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated that allotment will occur on one date;

• (d) the Options will be issued on the terms and conditions set out in Section 7.4 of this Explanatory Statement; and

• (e) no funds will be raised by the issue of the Options (although funds will be raised to the extent that the Options are eventually exercised).

7.3 Section 208 of the Corporations Act

Pursuant to Chapter 2E of the Corporations Act, a public company cannot give a “financial benefit” to a “related party” unless one of the exceptions to that section apply or shareholders have in general meeting approved the giving of that financial benefit to the related party.

In the current circumstances, the issue of the Options to Ms C M Norman or her nominee constitutes a “financial benefit” as defined in the Corporations Act. Further, Ms C M Norman is a “related party” of the Company as defined under the Corporations Act because she is a Director of the Company. Accordingly, the proposed issue of Options to Ms C M Norman or her nominee will constitute the provision of a financial benefit to a related party of the Company.

It is the view of the Directors that the exceptions under the Corporations Act to the provision of financial benefits to related parties may not apply in the current circumstances and so the Directors have determined to seek Shareholder approval under section 208 of the Corporations Act to permit the issue of the Options to Ms C M Norman.

The following information is provided pursuant to sections 217 to 227 of the Corporations Act in relation to Resolution 6:

• (a) the related party to whom the Options will be issued is Ms C M Norman. As mentioned in the resolutions, the Options may be issued to a nominee of the named related party;

• (b) the maximum number of Options (being the nature of the financial benefit to be provided) to be issued is 20 million to Ms C M Norman (or her nominee);

• (c) the Options will be issued for nil cash consideration and accordingly, no funds will be raised from the issue of the Options, although funds may be raised in the future to the extent the Options are exercised;

• (d) the terms and conditions of the Options to be issued pursuant to Resolution 6 are set out in Section 7.4 of this Explanatory Statement;

• (e) Ms C M Norman has a material personal interest in the outcome of Resolution 6 and accordingly does not wish to provide a recommendation in respect of the Resolution. The

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other Directors, who do not have a material personal interest in the outcome of Resolution 6, recommend that Shareholders approve Resolution 6 as they are of the view that the issue of Options to Ms C M Norman is appropriate recognition of her efforts to date, and assists the Company in retaining Ms C M Norman’s services and dedication whilst maintaining the Company’s cash reserves. The Directors (other than Ms C M Norman) considered Ms C M Norman’s experience, the current market price of the Shares and current market practice when determining the terms of the Options and the number of Options to be issued to Ms C M Norman;

• (f) if Shareholders approve the issue of Options to Ms C M Norman, and all Options are ultimately exercised the effect will be to dilute the shareholding of existing Shareholders by approximately 1% on an undiluted basis and based on the number of Shares on issue (as at the date of this Notice) assuming that no other Options are exercised;

• (g) the primary purpose of the issue of Options is to allow the Company to provide cost effective incentive for the ongoing dedication and efforts of Ms C M Norman and for recognition of her efforts to date. The Directors (other than Ms C M Norman) do not consider there are any significant opportunity costs to the Company or benefits forgone by the Company in issuing the Options to Ms C M Norman upon the terms proposed.

• (h) the current security holdings (direct and indirect) of Ms C M Norman in the Company are as follows:

lows:
	Shares	Options
Ms C M Norman	574,417	nil

• (i) based on current contractual arrangements, Ms C M Norman’s annual emolument for the year ended 31 December 2012 is expected to be:

ded 31 December 2012 is expected to be:
	Remuneration
Ms C M Norman	$410,000

• (j) in the 12 months before the date of this Notice, the highest, lowest and last trading price of Shares on the ASX are as set out below:

	Date	Price
Highest	29June 2011	12.5 cents
Lowest	5 October 2011, 28 November 2011 and 29 November 2011	2.4 cents
Last TradingPrice	24 April 2012	4.4 cents

• (k) ASIC policy in relation to documents lodged under Section 218 relating to the giving of financial benefits to related parties of public companies requires explanatory information regarding the value of the Options proposed to be issued in accordance with Australian Accounting Standard Board AASB accounting standard AASB 2 Share Based Payments. The value of the Options has been calculated using the Black-Scholes valuation method and is set out in Section 7.5.

• (l) the Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 6.

7.4 Option Terms

The terms of issue of the Options are as follows:

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• (a) each Option is exercisable on or before 30 June 2015;

• (b) the Options held by the holder can be exercised in whole or in part, and if exercised in part multiples of 5,000 must be exercised on each occasion;

• (c) the exercise price for each Option will be 150% of the volume weighted average market price of the Company’s ordinary shares during the 5 days prior to and including the date of the Annual General Meeting (being 31 May 2012), rounded up to the nearest half cent, and will be payable in cash. The actual exercise price of the Options will be announced once known, following the date of the Annual General Meeting.

For illustrative purposes, the exercise price of the Options where the volume weighted average price was equal to the highest, lowest and last trading price of the securities as listed in section 7.3 (j) above would be as follows:

(j) above would be as follows:
	Volume Weighted Average Price	Exercise Price
Highest	12.5 cents	19.0 cents
Lowest	2.4 cents	4.0 cents
Last	4.4 cents	7.0 cents

• (d) each Option is exerciseable into one ordinary fully paid share in the Company which shall rank pari passu with existing shares;

• (e) the optionholder cannot participate in any new pro-rata issue of securities of the Company without exercising the Options;

• (f) the optionholder will be permitted to participate in any new pro-rata issue of securities of the Company on prior exercise of the Options in which case the optionholder will be afforded the period of at least 7 Business Days prior to and inclusive of the record date to determine entitlements to the issue to exercise the Options;

• (g) the Options do not confer on the holder any right to participate in dividends until Shares are allotted pursuant to the exercise of the Options;

• (h) the Options are non-transferable;

• (i) in the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules (if applicable) and in any case in a manner which will not result in any benefits being conferred on optionholders which are not conferred on Shareholders and for such purpose the Company may vary the number, exercise price or other terms of the Options in such manner as may be necessary to comply with the listing rules;

• (j) the number of Shares to be issued pursuant to the exercise of Options will be adjusted for bonus issues made prior to exercise of the Options so that, upon exercise of the Options the number of Shares received by the optionholder will include the number of bonus Shares that would have been issued if the Options had been exercised prior to the record date for the bonus issues. The exercise price of the Options shall not change as a result of any such bonus issues; and

• (k) in the event of termination of employment, the optionholder will have 30 days in which to exercise the Options. Any Options not exercised in this period will be cancelled.

7.5 Valuation of Options

The Options have been valued as at 5 April 2012 using the Black-Scholes valuation method.

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The valuations have been based upon the following inputs and assumptions:

• (a) a spot share price of 4.5 cents;

• (b) an option exercise price of 7 cents;

• (c) a risk free rate of 4.25% per annum;

• (d) a volatility factor of 100%;

• (e) an expiry date of 30 June 2015; and

• (f) all other terms and conditions as outlined in Section 7.4 of this Explanatory Statement.

Based on the above, the Options to be issued pursuant to Resolution 6 have been valued at 2.6 cents each under the Black-Scholes valuation method.

GLOSSARY

ASIC means Australian Securities and Investments Commission.

ASX means ASX Ltd as operator of the Australian Securities Exchange Limited.

ASX Listing Rules or Listing Rules means the Listing Rules of the ASX.

Board means the Board of Directors of the Company.

Company means FAR Limited.

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Explanatory Statement means the explanatory statement to the Notice.

Meeting means the meeting convened by the Notice.

Notice means the notice of meeting accompanying the Explanatory Statement.

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Lodge your vote:  By Mail:

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Advanced Share Registry Ltd PO Box 1156, Nedlands Western Australia 6909

Alternatively you can fax your form to Facsimile: +61 (0) 8 9389 7871 www.advancedshare.com.au

For all enquiries call:

Telephone: +61 (0) 8 9389 8033 Email: admin@advancedshare.com.au

Proxy Form

 Instructions

1. Every shareholder has the right to appoint some other person or company of their choice, who need not be a shareholder, to attend and act on their behalf at the meeting. If you wish to appoint a person or company other than the Chairman, please insert the name of your proxy holder(s) in the space provided (see reverse).

2. If the securities are registered in the name of more than one owner (for example, joint ownership, trustees, executors, etc), then all those registered should sign this proxy. If you are voting on behalf of a corporation or another individual you may be required to provide documentation evidencing your power to sign this proxy with signing capacity stated.

3. This proxy should be signed in the exact manner as the name appears on the proxy.

4. If a shareholder appoints two proxies, each proxy may be appointed to represent a specific proportion of the shareholder’s voting rights. If such appointment is not made then each proxy may exercise half of the shareholder’s voting rights. Fractions shall be disregarded.

5. To be effective, shareholders must deliver their proxies prior to 10.00am (Perth time) on 29 May 2012 by mail to Advanced Share Registry, PO Box 1156, Nedlands, WA 6909 or by facsimile at: (61 8) 9389 7871.

6. For the purposes of Regulation 7.11.37 of the Corporations Regulations the Company determines that shareholders holding shares at 10.00am (Perth time) on Tuesday, 29 May 2012 will be entitled to attend and vote at the Meeting.

7. The Chairman intends to vote in favour of all resolutions set out in the Notice of Meeting.

8. This proxy should be read in conjunction with the accompanying Notice of Meeting and Explanatory Statement.

9. The shares represented by this proxy will be voted or withheld from voting in accordance with the instructions of the shareholder on any poll that may be called for, and if the shareholder has specified a choice in respect of any matter to be acted upon, the shares will be voted accordingly.

10. 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.

Turn over to complete the form 

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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ‘x’) should advise their broker of any changes.

Please mark  to indicate your directions

 Proxy Form

•  PLEASE NOTE: This proxy is solicited on behalf of the management of FAR Limited ABN 41 009 117 293 (the "Company") for use at the meeting of the shareholders of the Company to be held at the Theatrette, Level 2 Conference Centre, QV1 Building, 250 St Georges Terrace, Perth, WA, on 31 May 2012 at 10.00am (Perth time) or any adjournment thereof (the "Meeting").

STEP 1 Appoint a Proxy to Vote on Your Behalf

I/We being a member/s of FAR Limited hereby appoint

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•  PLEASE NOTE: If you leave the section blank, the Chairman of the Meeting will be your proxy.

the Chairman OR of the Meeting

or failing the individual(s) or body corporate(s) named, or if no individual(s) or body corporate(s) is named, the Chairman of the Meeting, as my/our proxy to act generally at the Meeting on my/our behalf and to vote in accordance with the following directions at the Meeting and at any adjournment of that meeting.

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Important for Resolution 1 :

If the Chairman of the Meeting is your proxy or is appointed as your proxy by default, by marking this box you are directing the Chairman of the Meeting to vote in accordance with the Chairman’s voting intentions on Resolution 1 as set out below even though Resolution 1 is connected with the Remuneration Report and the Chair may otherwise be ineligible to vote on Resolution 1 (although you may elect to give the Chairman different instructions as to how to vote by marking a box in step 2 below). If you do not mark this box and have not directed your proxy how to vote on Resolution 1 the Chairman of the Meeting will not cast your vote on Resolution 1 and your votes will not be counted in calculating the required majority if a poll is called on this Item. If you appoint the Chairman of the Meeting as your proxy, you can direct the Chairman how to vote by either marking the boxes in Step 2 below (for example if you wish to vote against or abstain from voting) or by marking this box (in which case the Chairman of the Meeting will vote in favour of Resolution 1)

The Chairman intends to vote all available proxies in favour of Resolution 1.

STEP 2

Items of Business

•  * PLEASE NOTE: 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 your votes will not be counted in computing the required majority on that item.

If you wish to direct how your proxy is to vote, please tick the appropriate boxes below:

If ih t dit h i t t l tik th it b
you ws o rec ow your proxy s o voe, pease c e approprae oxes below:	For	Against	Abstain
Resolution 1:Adoption of Remuneration Report	□	□	□
Resolution 2:Re-election of Ms C M Norman	□	□	□
Resolution 3:Re-election of Mr N J Limb	□	□	□
Resolution 4:Re-election of Mr C L Cavness	□	□	□
Resolution 5:Ratification of Previous Placement	□	□	□
Resolution 6:Issue of Options to Ms C M Norman	□	□	□

The Chairman of the Meeting intends to vote undirected proxies in favour of each resolution.

SIGN

Signing by member

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

Individual or Member 1 Member 2 (if joint holding) Member 3 (if joint holding)

/ /

Sole Director and Sole Secretary

[Director/Company ] Director Secretary

Date