GRATIFII LIMITED — Proxy Solicitation & Information Statement 2011

Mar 14, 2011

WARATAH GOLD LIMITED ACN 125 688 940 NOTICE OF GENERAL MEETING

TIME : 10.00 am (WST) DATE : 14 April 2011 PLACE : Level 1, 350 Hay Street Subiaco, WA 6008

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

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 6365 4532.

CONTEN TS PAGE

CONTENTS PAGE ......................................................................................................................... 2 TIME AND PLACE OF MEETING AND HOW TO VOTE ................................................................... 2 NOTICE OF GENERAL MEETING................................................................................................... 3 EXPLANATORY STATEMENT ......................................................................................................... 6 GLOSSARY ................................................................................................................................. 18 SCHEDULE 1 – TERMS AND CONDITIONS OF DIRECTOR OPTIONS ........................................... 20

TIME AND PLACE OF ME ETING AND HOW TO VOT E

VENUE

The general meeting of the Shareholders to which this Notice of Meeting relates will be held at 10.00 am (WST) on 14 April 2011 at:

Level 1, 350 Hay Street Subiaco, WA 6008

YOUR VOTE IS IMPORTANT

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

VOTING IN PERSON

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

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

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NOTICE OF GENERAL MEETI NG

Notice is given that the general meeting of Shareholders will be held at 10.00 am (WST) on 14 April 2011 at Level 1, 350 Hay Street Subiaco, WA 6008.

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

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders of the Company at 7.00pm (Sydney time) on 12 April 2011.

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

AGENDA

1. RESOLUTION 1 – CHANGE OF NAME

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

“That, pursuant to Section 157(1) of the Corporations Act and for all other purposes, the name of the Company be changed to “Waratah Resources Limited”.”

2. RESOLUTION 2 – DIVISION OF SHARE CAPITAL

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

“That, pursuant to and in accordance with Section 254H of the Corporations Act and Chapter 7 of the Listing Rules and for all other purposes, the issued capital of the Company be divided on the basis that:

• (a) every 1 Share be divided into 4 Shares; and

• (b) every 1 Option be divided into 4 Options with the exercise price amended in an inverse proportion to that ratio,

and where this Share Split results in a fraction of a Share or Option being held by a Shareholder or Optionholder (as the case may be), the Directors be authorised to round that fraction up to the nearest whole Share or Option.”

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3. RESOLUTION 3 – ISSUE OF DIRECTOR OPTIONS – MICHAEL YOUNG

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

“That, for the purposes of ASX Listing Rule 10.11 and for all other purposes, approval is given for the Directors to allot and issue 1,500,000 Director Options (on a pre-Share Split basis) to Michael Young (or his nominee) on the terms and conditions set out in the Explanatory Statement.”

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

4. RESOLUTION 4 – ADOPTION OF NEW CONSTITUTION

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

“That, in accordance with section 136(2) of the Corporations Act and for all other purposes, the Company adopts a new Constitution in the form tabled at the Meeting.”

Short Explanation : The Company is seeking to adopt a new Constitution to incorporate changes that have been made to the Corporations Act in the last few years.

5. RESOLUTION 5 – APPROVAL OF PERFORMANCE RIGHTS PLAN

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

“That, for the purpose of ASX Listing Rule 7.2 (Exception 9) and for all other purposes, approval is given for the Company to adopt a performance rights plan and to issue securities under that plan on the terms and conditions set out in the Explanatory Statement accompanying this Notice.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in the PR Plan in relation to the Company, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

6. RESOLUTION 6 – APPROVAL OF INCENTIVE OPTION PLAN

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

“That, for the purpose of ASX Listing Rule 7.2 (Exception 9) and for all other purposes, approval is given to adopt the Company’s Incentive Option Plan and to issue securities under that plan on the terms and conditions summarised in the Explanatory Statement.”

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Voting Exclusion : The Company will disregard any votes cast on this Resolution by a director of the Company (except one who is ineligible to participate in any employee incentive plan in relation to the Company) and any associate of that person. 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.

DATED: 14 MARCH 2011

BY ORDER OF THE BOARD

ROBERT ORR COMPANY SECRETARY

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EXPLANATORY STATEMEN T

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the General Meeting to be held at 10.00 am (WST) on 14 April 2011 at Level 1, 350 Hay Street Subiaco, WA 6008.

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

1. RESOLUTION 1 – CHANGE OF NAME

The new name proposed to be adopted under Resolution 3 is “Waratah Resources Limited”. The Directors believe that this new name more accurately reflects the proposed future operations of the Company.

2. RESOLUTION 2 – DIVISION OF SHARE CAPITAL

Resolution 2 seeks Shareholder approval for the issued capital of the Company to be divided on the basis that 1 Share be divided into 4 Shares and 1 Option be divided into 4 Options. The effect of Resolution 2 will be to increase the Share Capital and Options on issue of the Company by a factor of 4 ( Share Split ).

2.1.

Legal Requirements

Pursuant to section 254H of the Corporations Act the Company may convert any or all of its shares into a larger or smaller number of shares by resolution passed at a general meeting. A conversion undertaken in this manner takes effect on the day the resolution is passed or a later date specified in the resolution.

Pursuant to Listing Rule 7.20, if an entity proposes to reorganise its capital, it must tell equity security holders in writing the following:

• (a) the effect of the proposal on the number of securities and the amount unpaid (if any) on the securities;

• (b) the proposed treatment of any fractional entitlements arising from the reorganisation; and

• (c) the proposed treatment of any convertible securities on issue.

Pursuant to Listing Rule 7.22.2, options subject to the sub-division must be subdivided in the same ratio as the ordinary capital and the exercise price must be amended in the inverse proportion to that ratio.

2.2. Fractional entitlements and taxation

Not all Shareholders and Optionholders will hold that number of Shares and Options which can be evenly multiplied by 4. Where a fractional entitlement occurs, the Directors will round that fraction up to the nearest whole Share or Option.

It is not considered that any taxation implications will exist for Shareholders or Optionholders arising from the Share Split. However, Shareholders and Optionholders are advised to seek their own tax advice on the effect of the Share Split and neither the Company, nor the Directors (or the Company‟s advisers),

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accept any responsibility for the individual taxation implications arising from the Share Split.

2.3. Holding statements and option certificates

From the date of the Share Split:

• (a) all holding statements for Shares will cease to have any effect, except as evidence of entitlement to a certain number of Shares on a post-Share Split basis; and

• (b) all certificates for unlisted Options (if any) will cease to have any effect, except as evidence of entitlement to a certain number of Options on a post-Share Split basis.

After the Share Split becomes effective, the Company will arrange for new holding statements for Shares and listed Options to be issued to holders of those securities and to the extent required new certificates for unlisted Options to be issued to Optionholders.

It is the responsibility of each Shareholder or Optionholder to check the number of Shares or Options held prior to disposal or exercise (as the case may be).

2.4. Effect on capital structure

The effect which the Share Split will have on the capital structure of the Company is set out below:

Shares

Shares
	Number
Shares currently on issue	40,333,434
Total Shares on issue post-Share Split	161,333,736

Options

Options
	Number
Options currently on issue1	4,400,000
Director Options issued pursuant to Resolution 32	1,500,000
Total Options on issue pre-Share Split	5,900,000
Total Options on issue post-Share Split	23,600,000

• 1 The effect of the Share Split on the Options currently on issue will be as follows:

• (a) 4,000,000 Options exercisable at 70 cents on or before 28 November 2013 will become 16,000,000 Options exercisable at 17.5 cents on or before 28 November 2013; and

• (b) 400,000 Options exercisable at 80 cents on or before 28 November 2013 will become 1,600,000 Options exercisable at 20 cents on or before 28 November 2013.

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2 The effect of the Share Split on the Director Options (subject to Resolution 3 being passed) will be as follows; 1,500,000 Options exercisable at 80 cents on or before that date which is 3 years from the issue date will become 6,000,000 Options exercisable at 20 cents on or before that date which is 3 years from the issue date.

2.5. Indicative Timetable

Set out in the table below is the expected timing for completion of the Share Split, subject to compliance with all regulatory requirements. These dates are indicative only and may be varied without prior notice.

	Event		Date
	General Meeting to approve transaction	14 April 2011
	Notification to ASX of results of General Meeting	14 April 2011
	Last day for trading in pre-reorganisation securities	15 April 2011
	Trading on a deferred settlement basis	18 April 2011
	Last day to register transfers on a pre-reorganisation basis	27 April 2011
	First day for Company to send notice to Shareholders of change of holdings as a result of reorganisation First day for Company to register securities on a post-reorganisation basis and for issue of holding statements	28 April 2011
	Despatch date Deferred settlement market ends Last day for securities to be entered into the holders‟ security holdings and for Company to send notice to each security holder	4 May 2011

3. RESOLUTION 3 – ISSUE OF DIRECTOR OPTIONS

3.1. General

The Company has agreed, subject to obtaining Shareholder approval, to allot and issue a total of 1,500,000 Options ( pre-Share Split ) ( Director Options ) to Mr Michael Young ( Related Party ) on the terms and conditions set out below.

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

(a) obtain the approval of the public company‟s members in the manner set out in Sections 217 to 227 of the Corporations Act; and

• (b) give the benefit within 15 months following such approval,

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

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

The grant of the Director Options to the Related Party requires the Company to obtain Shareholder approval as Mr Michael Young, is a Directors and therefore a related party of the Company.

The Board of Directors have resolved that the issue of the Director Options constitutes reasonable remuneration in accordance with Section 211 of the Corporations Act. Accordingly, shareholder approval is not sought for the grant of the Director Options to Mr Young under Chapter 2E of the Corporations Act. However, it is the view of the Directors that the exceptions set out in ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the purposes of ASX Listing Rule 10.11 for the grant of Director Options to Mr Young.

3.2. Shareholder Approval (ASX Listing Rule 10.11)

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

• (a) the related party is Mr Michael Young, who is a related party by virtue of being Director;

• (b) the maximum number of Director Options (being the nature of the financial benefit being provided) to be granted to Mr Young is 1,500,000 Director Options (on a pre-Share Split basis);

• (c) the Director Options will be granted to the Related Party on the date of the Meeting and (subject to Resolution 2) prior to the Share Split;

• (d) the Director Options will be granted for nil cash consideration, accordingly no funds will be raised; and

• (e) the terms and conditions of the Director Options are set out in Schedule 1.

The Director Options will be voluntarily escrowed for a period of 12 months from the date of issue.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to Mr Young as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Director Options to Mr Young will not be included in the 15% calculation of the Company‟s annual placement capacity pursuant to ASX Listing Rule 7.1.

4. RESOLUTION 4 – ADOPTION OF NEW CONSTITUTION

4.1. General

Resolution 4 seeks shareholder approval to adopt a new Constitution.

The Board is seeking to adopt a new Constitution to ensure that the latest amendments to the Corporations Act are appropriately incorporated.

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In response to these changes the Directors have undertaken a review of the existing Constitution. In doing, so the Directors have recommended a number of changes be made to the existing Constitution.

As these changes affect a number of provisions in the Company‟s Constitution the Directors propose to adopt a new Constitution ( Proposed Constitution ) rather than amending the existing Constitution.

The Proposed Constitution will take effect from the date the special resolution is passed.

Many of the proposed changes are administrative or minor in nature and the Directors believe they are not material nor will they have any significant impact on shareholders.

A summary of the proposed changes is set out below.

The Proposed Constitution is available for review on the Company‟s website (www.waratahgold.com.au) and during normal hours at the Company‟s registered office. A copy of the Proposed Constitution will can also be sent to shareholders upon request to the Company Secretary ((+61 8) 6365 4532)).

4.2. Proposed Changes – Constitution

The Proposed Constitution includes the following new clauses which the current Constitution does not provide for.

Postponement of General Meeting of Shareholders

The Proposed Constitution provides at clause 11.2 that the Directors may, subject to the Corporations Act and the ASX Listing Rules, postpone a meeting of Shareholders or change the place for a general meeting of shareholders by giving written notice to ASX. If a meeting of Shareholders is postponed for one month or more, the Company must give new notice of the postponed meeting.

Business at General Meeting

The Proposed Constitution expressly provides at clause 11.6 that subject to the Corporations Act, only matters that appear in a notice of meeting shall be dealt with at a general meeting or an annual general meeting, as the case may be.

Breach of restriction agreement

The Proposed Constitution expressly provides at clause 21.8 that in the event of a breach of the ASX Listing Rules relating to „Restricted Securities‟ (as they are defined in the ASX Listing Rules) or of any escrow arrangement entered into by the Company under the ASX Listing Rules in relation to any Shares which are classified under the ASX Listing Rules or by ASX as Restricted Securities, the Shareholder holding the Shares in question shall cease to be entitled to be paid any dividends in respect of those Shares for so long as the breach subsists.

Directors’ access to information

The Proposed Constitution at clause 28 provides that where the Directors consider it appropriate, the Company may:

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• (a) give a former Director access to certain papers, including documents provided or available to the Directors and other papers referred to in those documents; and

• (b) bind itself in any contract with a Director or former Director to give the access.

This specific provision reflects the statutory right in s 198F of the Corporations Act authorising the Company to enter into contracts with Directors agreeing to provide continues access to Board papers.

Dividends

There have been recent changes to the dividend payment provisions of the Corporations Act which came into effect on 28 June 2010. A new section 254T has been included in the Corporations Act which introduces a three-tiered test that a company will need to satisfy before paying a dividend. This replaces the previous test that the company may only pay dividends from profits.

The new section 254T provides that a company must not a 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) the payment of the dividend is fair and reasonable to the company‟s shareholders as a whole; and

• (c) the payment of the dividend does not materially prejudice the company‟s ability to pay its creditors.

The existing constitution of the Company currently reflects the former profits test and restricts the dividends to be paid only out of the profits of the Company. The Proposed Constitution does not contain the profits test and enables the Company to pay dividends in accordance with the new position under the Corporations Act. The Directors consider it appropriate for the constitution of the Company to reflect the recently amended Corporations Act to allow more flexibility in the payment of dividends.

Partial takeover plebiscites

Pursuant s 648G of the Corporations Act, the Company has included in the Proposed Constitution a provision whereby a proportional takeover bid for shares in the Company may only proceed after the bid has been approved by a meeting of members held in accordance with the terms set out in the Corporations Act. This provision is made in clause 35 of the Proposed Constitution.

This clause will cease to have effect on the third anniversary of the date of the adoption of last renewal of the clause.

The effect of the proposed provision is that where offers have been made under an off market bid in respect of shares included in a class of shares in the Company, the registration of a transfer giving effect to a contract resulting from the acceptance of an offer made under the off market bid is prohibited unless and until a resolution to approve an off market bid is passed.

A copy of the Proposed Constitution is available on request.

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5. RESOLUTION 5 – APPROVAL OF PERFORMANCE RIGHTS PLAN

5.1 General

Resolution 5 seeks Shareholder approval to establish and maintain a performance rights PR Plan ( PR Plan ) to provide ongoing incentives to any full time or part time employee of the Company or any of its subsidiaries (including a director or company secretary of the Company or its subsidiaries who holds salaried employment with the Company or its subsidiaries on a full or part time basis), or a consultant, who is determined by the Board to be eligible to receive grants of Rights under the PR Plan ( Eligible Participants ) .

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

An exception to ASX Listing Rule 7.1, which is set out in ASX Listing Rule 7.2 (Exception 9), provides that issues under an employee incentive PR Plan are exempt for a period of 3 years from the date on which shareholders approve the issue of securities under the PR Plan as an exception to ASX Listing Rule 7.1.

Resolution 5 seeks Shareholder approval for the adoption of the PR Plan in accordance with Exception 9 of ASX Listing Rule 7.2.

If Resolution 5 is passed, the Company will be able to issue Shares under the PR Plan without impacting on the Company‟s ability to issue up to 15% of its total ordinary securities without shareholder approval in any 12 month period.

The objective of the PR Plan is to attract, motivate and retain key employees.

It is considered by the Directors that the adoption of the PR Plan and the future issue of Rights and Shares under the PR Plan will provide Eligible Participants with the opportunity to participate in the future growth of the Company.

In the case of an offer to a Director of Rights under the PR Plan, the acquisition of these securities will require Shareholder approval in accordance with ASX Listing Rule 10.14.

No Rights have yet been issued under the PR Plan.

A summary of the terms and conditions of the PR Plan is set out in Section 5.2. The full terms and conditions of the PR Plan may be obtained free of charge by contacting the Company Secretary.

5.2 Summary of the Performance Rights PR Plan

The material terms of the PR Plan can be summarised as follows:

• (a) Purpose of the PR Plan: The purpose of the PR Plan is to provide an incentive to Eligible Participants by enabling them to participate in the future growth of the Company and upon becoming shareholders, to participate in the Company‟s profits and development. Under the PR Plan Eligible Participants may be granted rights to Shares upon the satisfaction of specified performance criteria and specified periods of tenure ( Rights ). The

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provision of this incentive is expected to result in future benefits to the shareholders and Eligible Participants.

• (b) Offer of Rights: When an Eligible Participant satisfies specified criteria imposed by the Board (including performance criteria and specified periods of tenure) the Board may make a written offer ( Offer ) to the Eligible Participant of Rights. The Offer will specify the number of Rights being offered and the conditions that must be met by the Eligible Participant before the Rights will vest.

• (c) Number of Rights Offered: The number of Rights that will be offered to an Eligible Participant pursuant to an Offer is entirely within the discretion of the Directors. Each Right will, upon vesting, entitle the holder to one (1) share in the capital of the Company.

• (d) Vesting Conditions: The Rights will not vest unless the vesting conditions imposed by the Board have been satisfied.

• (e) Exercise Price: An Eligible Participant will not be required to make any payment in return for a grant of Rights nor for the issue or transfer of shares upon the vesting of Rights.

• (f) Lapse of Rights: Rights that have not vested will lapse on the seventh anniversary of the date of grant of the Rights or on the first to occur of certain specified events, including:

• (i) a failure to meet the Vesting Conditions;

• (ii) a purported transfer of the Rights without the Board‟s consent;

• (iii) the Eligible Participant ceasing his or her employment or employment relationship with the Company or its relevant subsidiary; or

• (iv) any other circumstances specified by the Board in the Offer.

• (g) Shares Allotted Upon Exercise of Rights: The Company will issue or transfer shares to the Eligible Participant as soon as practicable after the vesting of Rights. The shares allotted under the PR Plan will be of the same class and will rank equally with shares in the Company at the date of issue. The Company will seek listing of the new shares on ASX within the time required by ASX Listing Rules.

• (h) Transfer of Rights: A Right is not transferable without the consent of the Board.

• (i) Takeover, Scheme or Arrangement: In the event of a takeover bid under which the bidder acquires a relevant interest in at least 50.1% of the Company‟s shares, being declared unconditional, the Board may determine that that all or a specified number of the Rights vest. Unless the Board determines otherwise any Right which the Board determines does not vest will lapse.

In the event that a Court approves a proposed compromise or arrangement for the purpose of a scheme for the reconstruction of the Company or its amalgamation with any other company, or any person

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becomes bound or entitled to acquire shares in the Company under the Corporations Act, the Board may determine that all or a specified number of an Eligible Participant‟s Rights vest. Unless otherwise determined by the Board any Right which the Board determines does not vest will lapse.

(j) Bonus Issues, Rights Issues and Capital Reconstruction: In order to prevent a reduction of the number of shares to which the Rights relate in the event of bonus issues, rights issues or a capital reconstruction, there are provisions in the rules which provide a method of adjustment of the number of Rights to prevent such a reduction.

• (k) Participation in New Issues: There are no participating rights or entitlements inherent in the Rights and the holders will not be entitled to participate in new shares of capital offered to shareholders during the currency of the Rights. In addition holders of Rights will not be entitled to vote or receive dividends as a result of their holding of Rights.

6. RESOLUTION 6 - APPROVAL OF WGO EMPLOYEE INCENTIVE OPTION PLAN

6.1. General

To ensure that the Company has appropriate mechanisms to continue to attract and retain the services of directors and employees of a high calibre, the Company has established the “WGO Employee Incentive Option Plan” ( Plan ).

Resolution 6 seeks Shareholder approval under exception 9(b) of ASX Listing Rule 7.2 to allow the grant of Options under the Plan ( Incentive Options ), and the issue of Shares on exercise of the Incentive Options, as an exception to ASX Listing Rule 7.1.

The grant of Incentive Options will only fall within exception 9(b) of ASX Listing Rule 7.2 if the Incentive Options are issued under an employee incentive option plan approved by shareholders within three years before the date of issue.

If Resolution 6 is passed, the Company will have the ability to issue Incentive Options to eligible participants under the Plan over a period of three years without impacting on the Company‟s 15% placement capacity under ASX Listing Rule 7.1.

The Directors and employees of the Company have been, and will continue to be, instrumental in the growth of the Company. The Directors consider that the Plan is an appropriate method to:

• (a) reward Directors and employees for their past performance;

• (b) provide long term incentives for participation in the Company‟s future growth;

• (c) motivate Directors and generate loyalty from senior employees; and

• (d) assist to retain the services of valuable Directors and employees.

The Plan will be used as part of the remuneration planning for executive Directors and employees. The Corporate Governance Council Guidelines recommend that executive remuneration packages involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the company‟ circumstances and goals. The Plan will also be used as part of the remuneration planning for non-executive Directors. Although this is not in accordance with the recommendations contained in the Corporate Governance

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Council Guidelines, the Company considers that it is appropriate for non-executive Directors to participate in the Plan given the size of the Company.

In the case of an offer to a Director of any Incentive Options under the Plan, the acquisition of these securities will require Shareholder approval in accordance with ASX Listing Rule 10.14.

No Incentive Options have yet been issued under the Plan.

The key terms of the Plan are summarised in Section 6.2 below. A full copy of the Plan is available for inspection at the Company‟s registered office until the date of the Meeting.

6.2. Employee Incentive Option Plan

The Board is seeking to adopt an Employee Incentive Option Plan to allow eligible participants to be granted Incentive Options to acquire Shares in the Company, the principle terms of which are summarised below.

• (a) Eligibility and Grant of Incentive Options : The Board may grant Incentive Options to any full or part time employee or Director of the Company or an associated body corporate. Incentive Options may be granted by the Board at any time.

• (b) Consideration : Each Incentive Option issued under the Plan will be issued for nil cash consideration.

• (c) Conversion: Each Incentive Option is exercisable into one Share in the Company ranking equally in all respect with the existing issued Shares in the Company.

• (d) Exercise Price and Expiry Date : The exercise price and expiry date for Incentive Options granted under the Plan will be determined by the Board prior to the grant of the Incentive Options.

• (e) Exercise Restrictions : The Incentive Options granted under the Plan may be subject to conditions on exercise as may be fixed by the Directors prior to grant of the Incentive Options ( Exercise Conditions ). Any restrictions imposed by the Directors must be set out in the offer for the Incentive Options.

• (f) Lapsing of Incentive Options : An unexercised Incentive Option will lapse:

• (i) on its Expiry Date;

• (ii) if any Exercise Condition is unable to be met; and

• (iii) subject to certain exceptions, on the eligible participant ceasing employment with the Company.

• (g) Share Restriction Period : Shares issued on the exercise of Incentive Options may be subject to a restriction that they may not be transferred or otherwise dealt with until a Restriction Period has expired, as specified in the offer for the Incentive Options.

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• (h) Disposal of Options: Incentive Options will not be transferable and will not be quoted on the ASX, unless the offer provides otherwise or the Board in its absolute discretion approves.

• (i) Trigger Events : The Company may permit Incentive Options to be exercised in certain circumstances where there is a change in control of the Company (including by takeover) or entry into a scheme of arrangement.

• (j) Participation in Rights Issues and Bonus Issues:

• (i) There are no participating rights or entitlements inherent in the Incentive Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Incentive Options.

• (ii) The Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least six (6) Business Days after the issue is announced. This will give Option holders the opportunity to exercise their Incentive Options prior to the date for determining entitlements to participate in any such issue.

• (iii) If the Company makes a pro rata issue of securities (except a bonus issue) to the holders of Shares (other than an issue in lieu or in satisfaction of dividends or by way of dividend reinvestment) the Option Exercise Price shall be reduced according to the formula specified in the Listing Rules.

• (iv) In the event of a bonus issue of Shares being made pro-rata to Shareholders, (other than an issue in lieu of dividends), the number of Shares issued on exercise of each Option will include the number of bonus Shares that would have been issued if the Option had been exercised prior to the record date for the bonus issue. No adjustment will be made to the exercise price per Share of the Option.

• (k) Reorganisation : The terms upon which Incentive Options will be granted will not prevent the Incentive Options being re-organised as required by the Listing Rules on the re-organisation of the capital of the Company.

• (l) Limitations on Offers : The Company must take reasonable steps to ensure that the number of Shares to be received on exercise of Incentive Options offered under an offer when aggregated with:

• (i) the number of Shares that would be issued if each outstanding offer for Shares, units of Shares or options to acquire Shares under the Plan or any other employee share scheme of the Company were to be exercised or accepted; and

• (ii) the number of Shares issued during the previous 5 years from the exercise of Incentive Options issued under the Plan (or any other employee share plan of the Company extended only to Eligible Participants),

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does not exceed 5% of the total number of Shares on issue at the time of an offer (but disregarding any offer of Shares or option to acquire Shares that can be disregarded in accordance with ASIC Class Order 03/184.

7. ENQUIRIES

Shareholders are requested to contact Robert Orr on (+ 61 8) 6365 4532 if they have any queries in respect of the matters set out in these documents.

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GLOSSARY

$ means Australian dollars.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Board means the current board of directors of the Company.

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

Company means Waratah Gold Limited (ACN 125 688 940).

Constitution means the Company‟s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Director Option means an Option granted pursuant to Resolution 3 with the terms and conditions set out in Schedule 1.

Eligible Participant has the meaning given to it in Section 5.1.

Explanatory Statement means the explanatory statement accompanying the Notice of Meeting.

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

Incentive Options has the meaning given to it in Section 6.2.

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

Offer has the meaning given to it in Section 5.2.

Plan has the meaning given to it in Section 6.1.

PR Plan has the meaning given to it in Section 5.1.

Proposed Constitution has the meaning given to it in Section 4.

Proxy Form means the proxy form accompanying the Notice.

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

Rights has the meaning given to it in Section 5.2.

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

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Share Split has the meaning given to it in Section 2.

Shareholder means a holder of a Share.

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

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SCHEDULE 1 – TERMS AND CONDITIONS OF DIRECTOR OPTIONS

The Director Options entitle the holder to subscribe for Shares on the following terms and conditions:

• (a) Each Director Option gives the Optionholder the right to subscribe for one Share.

• (b) The Director Options will expire at 5.00pm (WST) on that date which is 3 years from their date of issue ( Expiry Date ). Any Director Option not exercised before the Expiry Date will automatically lapse on the Expiry Date.

• (c) The amount payable upon exercise of each Director Option will be $0.80 ( Exercise Price ) (pre-Share Split).

• (d) The Director Options held by each Optionholder may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• (e) An Optionholder may exercise their Director Options by lodging with the Company, before the Expiry Date:

• (i) a written notice of exercise of Director Options specifying the number of Director Options being exercised; and

• (ii) a cheque or electronic funds transfer for the Exercise Price for the number of Director Options being exercised;

( Exercise Notice ).

• (f) An Exercise Notice is only effective when the Company has received the full amount of the Exercise Price in cleared funds.

• (g) Within 10 Business Days of receipt of the Exercise Notice accompanied by the Exercise Price, the Company will allot the number of Shares required under these terms and conditions in respect of the number of Director Options specified in the Exercise Notice.

• (h) The Director Options are not transferable.

• (i) All Shares allotted upon the exercise of Director Options will upon allotment rank pari passu in all respects with other Shares.

• (j) The Company will not apply for quotation of the Director Options on ASX. However, The Company will apply for quotation of all Shares allotted pursuant to the exercise of Director Options on ASX within 10 Business Days after the date of allotment of those Shares.

• (k) If at any time the issued capital of the Company is reconstructed, all rights of an Optionholder are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

• (l) There are no participating rights or entitlements inherent in the Director Options and Optionholders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Director Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 Business Days after the issue is announced. This will give

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Optionholders the opportunity to exercise their Director Options prior to the date for determining entitlements to participate in any such issue.

• (m) A Director Option does not confer the right to a change in exercise price or a change in the number of underlying securities over which the Director Option can be exercised.

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