HIGHFIELD RESOURCES LIMITED ACN 153 918 257

__________

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

__________

Date of Meeting 30 October 2015

Time of Meeting 11.00 am (Adelaide time)

Place of Meeting Mayfair Hotel 45 King William Street Adelaide SA 5000

NOTICE OF ANNUAL GENERAL MEETING

HIGHFIELD RESOURCES LIMITED ACN 153 918 257

Notice is hereby given that the Annual General Meeting of shareholders of Highfield Resources Limited ( Company ) will be held at the Mayfair Hotel, 45 King William Street, Adelaide, South Australia at 11.00 am (Adelaide time) on 30 October 2015.

Ordinary Business

To consider the Financial Statements for the financial year ended 30 June 2015 and accompanying reports of the Directors and Auditor.

Resolution 1: Adoption of Remuneration Report

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

‘ That the Company adopt the Remuneration Report for the year ended 30 June 2015 as set out in the Company’s Annual Report for the year ended 30 June 2015. ’

Resolution 2: Re-election of Richard Crookes as Director

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

‘ That Mr Richard Crookes, having voluntarily retired in accordance with Listing Rule 14.4 and clause 12.11.1 of the Company’s Constitution and being eligible, and offering himself, for re-election, is re-elected as a Director with effect immediately following the conclusion of the Meeting. ’

Resolution 3: Re-election of Owen Hegarty as Director

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

‘ That Mr Owen Hegarty, having voluntarily retired in accordance with Listing Rule 14.4 and clause 12.11.1 of the Company’s Constitution and being eligible, and offering himself, for re-election, is reelected as a Director with effect immediately following the conclusion of the Meeting. ’

Resolution 4: Election of Pauline Carr as Director

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

‘ That Ms Pauline Carr, being a person who in accordance with clause 12 of the Company’s Constitution has at least 35 business days before the Meeting served on the Company a notice of nomination to be a Director, is elected as a Director with effect immediately following the conclusion of the Meeting. ’

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Resolution 5: Issue of Options to Richard Crookes

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

‘That for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 1,000,000 Options to Mr Richard Crookes (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 6: Issue of Options to Owen Hegarty

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

‘That for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 1,000,000 Options to Mr Owen Hegarty (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 7: Issue of Options to Anthony Hall

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

‘That for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 3,000,000 Options to Mr Anthony Hall (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 8: Issue of Options to Pedro Rodriguez

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

‘That for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 2,000,000 Options to Mr Pedro Rodriguez (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 9: Issue of Options to Derek Carter

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

‘That for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 1,000,000 Options to Mr Derek Carter (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

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Resolution 10: Issue of Options to Pauline Carr

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

‘Subject to the passing of Resolution 4, that for the purpose of Listing Rule 10.11 and for all other purposes, approval is given to the issue by the Company of 1,000,000 Options to Ms Pauline Carr (or her nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 11: Issue of Options to Donald Stephens

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

‘That for the purpose of Listing Rule 7.1 and for all other purposes, approval is given to the issue by the Company of 500,000 Options to Mr Donald Stephens (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 12: Issue of Options to Mike Norris

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

‘That for the purpose of Listing Rule 7.1 and for all other purposes, approval is given to the issue by the Company of 2,000,000 Options to Mr Mike Norris (or his nominee) on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 13: Subsequent Approval of the Issue of 30,855,000 Shares

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

‘ That for the purpose of Listing Rule 7.4 and for all other purposes, approval be and is hereby given to the issue by the Company of 30,855,000 ordinary shares on the terms and conditions described in the Explanatory Memorandum which is attached to and forms part of this Notice. ’

Resolution 14: Approval of Employee Share Option Plan

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

‘ That for the purpose of Listing Rule 7.2, Exception 9(b) and for all other purposes, the Company approves the issue of securities under the employee incentive option scheme for employees and certain contractors known as ‘Highfield Resources Limited Employee Share Option Plan’, the rules of which are annexed as Annexure B to the Explanatory Memorandum which is attached to and forms part of this Notice, as an exception to Listing Rule 7.1. ’

Resolution 15: Amendment to Constitution – Payment of Dividends

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

‘ That the Constitution of the Company be amended in the following manner:

(a) By including after rule 20.1:

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“20.1A Subject to this document, the Corporations Act 2001 and the terms of issue of shares, the Board may:
(1) resolve to pay any dividend it thinks appropriate; and
(2) fix the time and method for payment.

The Board may amend or revoke a resolution made under rule 20.1A at any time before the date fixed for payment.

20.1B The Board may set aside reserves out of the profits of the Company or out of other amounts available for distribution to members as permitted by law as the Board thinks proper which shall, at the discretion of the Board, be applicable for any purpose to which the profits of the Company or other amounts available for distribution to members may be properly applied and, pending any such application, may at the like discretion either be employed in the business of the Company or invested in such investments (other than shares in the Company) as the Board may from time to time think fit.”
(b) By deleting rules 20.11 and 20.12 and substituting:
“ 20.11 Authority to Capitalise
- 20.11 The Board may, subject to the Listing Rules and the Corporations Act 2001, resolve to capitalise profits, reserves or other amounts available for distribution to members. The capitalisation need not be accompanied by the issue of shares.”’

DATED 28 SEPTEMBER 2015

BY ORDER OF THE BOARD

HIGHFIELD RESOURCES LIMITED

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DONALD STEPHENS COMPANY SECRETARY

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NOTES :

1. Explanatory Memorandum

The Explanatory Memorandum accompanying this Notice of Annual General Meeting is incorporated in and comprises part of this Notice of Annual General Meeting and should be read in conjunction with this Notice of Annual General Meeting.

Shareholders are specifically referred to the Glossary in the Explanatory Memorandum which contains definitions of capitalised terms used in both this Notice of Annual General Meeting and the Explanatory Memorandum.

2. Voting Exclusion Statements

(a) Resolution 1

A vote on Resolution 1 must not be cast (in any capacity) by or on behalf of any of the following persons:

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

However, a person described above may cast a vote on Resolution 1 as a proxy if the vote is not cast on behalf of a person described above and either:

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

Resolutions 5 to 10

(i) For the purposes of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on any of Resolutions 5 to 10 if:
the person is either:
- a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
- a Closely Related Party of such a member; and
the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

the person is the chair of the meeting at which the Resolution is voted on; and

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the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.
(ii) For the purposes of the Listing Rules, the Company will disregard any votes cast on Resolutions 5 to 10 by a person (and their associates) who is to receive securities in relation to the Company if the relevant Resolution is passed.

However, subject always to paragraph 2(b)(i), the Company will not disregard a vote if:

  - it is cast by the person as proxy for a person who is entitled to vote, in accordance with 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.

(i) For the purposes of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolution 11 if:

 - the person is either:

    - a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or

    - a Closely Related Party of such a member; and

 - the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

the person is the chair of the meeting at which the Resolution is voted on; and
the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.
(ii) For the purposes of the Listing Rules, the Company will disregard any votes cast on Resolution 11 by Mr Donald Stephens (and his nominee) and persons who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed, and associates of those persons.

However, subject always to paragraph 2(c)(i), 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

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

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.

(d) Resolution 12

(i) For the purposes of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolution 12 if:
the person is either:
- a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
- a Closely Related Party of such a member; and
the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

the person is the chair of the meeting at which the Resolution is voted on; and
the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.
(ii) For the purposes of the Listing Rules, the Company will disregard any votes cast on Resolution 12 by Mr Mike Norris (and his nominee) and persons who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed, and associates of those persons.

However, subject always to paragraph 2(d)(i), 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.

(e) Resolution 13

The Company will disregard any votes cast on Resolution 13 by a person who participated in the issue and an associate of that person.

However, the Company will not disregard a vote if:

(i) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the proxy form; or
(ii) 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.

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(f) Resolution 14

(i) For the purposes of the Corporations Act, a person appointed as a proxy must not vote, on the basis of that appointment, on Resolution 14 if:
the person is either:
- a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity; or
- a Closely Related Party of such a member; and
the appointment does not specify the way the proxy is to vote on the Resolution.

However, the Company will not disregard a vote if:

the person is the chair of the meeting at which the Resolution is voted on; and
the appointment expressly authorises the chair to exercise the proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company or, if the Company is part of a consolidated entity, for the entity.
(ii) For the purposes of the Listing Rules, the Company will disregard any votes cast on Resolution 14 by any Director of the Company (except one who is ineligible to participate in the Highfield Resources Limited Employee Share Option Plan) and any associates of that Director of the Company.

However, subject always to paragraph 2(f)(i), the Company will not disregard a vote if:

it is cast by the person as proxy for a person who is entitled to vote, in accordance with 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. Proxies

A shareholder entitled to attend this Meeting and vote is entitled to appoint a proxy to attend and vote for the shareholder at the Meeting. A proxy need not be a shareholder. If the shareholder is entitled to cast two or more votes at the Meeting the shareholder may appoint two proxies and may specify the proportion or number of votes which each proxy is appointed to exercise. A form of proxy accompanies this Notice.

To record a valid vote, a shareholder will need to take the following steps:

3.1 cast the shareholder’s vote online by visiting www.advancedshare.com.au/investors.aspx and entering the shareholder’s Control Number, SRN/HIN and postcode, which are shown on the first page of the proxy form; or
3.2 complete and lodge the manual proxy form at the share registry of the Company, Advanced Share Registry Services:
(a) in person at the following address: Advanced Share Registry Services 110 Stirling Highway NEDLANDS WA 6009

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OR

(b) by post at the following address: Advanced Share Registry Services PO Box 1156 NEDLANDS WA 6009

(c) by facsimile on (08) 9262 3723 (within Australia) or +61 8 9262 3723 (outside Australia); or
3.3 for Intermediary Online subscribers only (custodians), cast the shareholder’s vote online by visiting www.advancedshare.com.au/investors.aspx,

so that it is received no later than 11.00 am (Adelaide time) on 28 October 2015.

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on each of Resolutions 1, 5 to 12 and 14 even though they are connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy you can direct the chair to vote for or against or abstain from voting on Resolutions 1, 5 to 12 and 14 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of each item of business.

4. ‘Snap Shot’ Time

The Company may specify a time, not more than 48 hours before the Meeting, at which a ‘snapshot’ of shareholders will be taken for the purposes of determining shareholder entitlements to vote at the Meeting. The Directors have determined that all shares of the Company that are quoted on ASX as at 7.00 pm (Adelaide time) on 28 October 2015 shall, for the purposes of determining voting entitlements at the Meeting, be taken to be held by the persons registered as holding the shares at that time.

5. Corporate Representative

Any corporate shareholder who has appointed a person to act as its corporate representative at the Meeting should provide that person with a certificate or letter executed in accordance with the Corporations Act authorising him or her to act as that company’s representative. The authority may be sent to the Company and/or registry in advance of the Meeting or handed in at the Meeting when registering as a corporate representative.

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EXPLANATORY MEMORANDUM

This Explanatory Memorandum forms part of a Notice convening the Annual General Meeting of shareholders of Highfield Resources Limited to be held on 30 October 2015. This Explanatory Memorandum is to assist shareholders in understanding the background to and the legal and other implications of the Notice and the reasons for the resolutions proposed. Both documents should be read in their entirety and in conjunction with each other.

Other than the information set out in this Explanatory Memorandum, the Directors believe that there is no other information that could reasonably be required by shareholders to consider Resolutions 1 to 15 (inclusive).

1. RESOLUTION 1: ADOPTION OF REMUNERATION REPORT

The Annual Report for the year ended 30 June 2015 contains a Remuneration Report which sets out the remuneration policy of the Company.

An electronic copy of the 2015 Annual Report is available to download or view on the Company’s website at www.highfieldresources.com.au The 2015 Annual Report has also been sent by post to those shareholders who have previously elected to receive a hard copy. In addition, the Company has also enabled online voting, details of which are explained on the proxy form.

Section 250R(2) of the Corporations Act requires that a resolution to adopt the Remuneration Report be put to the vote of the Company. Shareholders should note that the vote on Resolution 1 is advisory only and, subject to the matters outlined below, will not bind the Company or the Directors. However, the Board will take the outcome of the vote into consideration when reviewing the Company’s remuneration policy.

Section 250R(4) of the Corporations Act prohibits a vote on this resolution being cast (in any capacity) by or on behalf of any of the following persons:

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

However, under section 250R(5) of the Corporations Act a person described above may cast a vote on Resolution 1 as a proxy if the vote is not cast on behalf of a person described above and either:

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

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on Resolution 1 even though it is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy

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you can direct the chair to vote for or against or abstain from voting on Resolution 1 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of Resolution 1.

Resolution 1 is an ordinary resolution.

Please also note that under sections 250U and 250V of the Corporations Act, if at two consecutive annual general meetings of a listed company at least 25% of votes cast on a resolution that the remuneration report be adopted are against adoption of the report, at the second of these annual general meetings there must be put to the vote a resolution that another meeting be held within 90 days at which all directors (except the managing director) who were directors at the date the remuneration report was approved at the second annual general meeting must stand for re-election. So, in summary, shareholders will be entitled to vote in favour of holding a general meeting to re-elect the Board if the Remuneration Report receives ‘two strikes’. The Remuneration Report did not receive a ‘first strike’ at the Company’s 2014 annual general meeting.

2. RESOLUTION 2: RE-ELECTION OF RICHARD CROOKES AS DIRECTOR

Listing Rule 14.4 and clause 12.11.1 of the Constitution require that at each annual general meeting one-third of the Directors for the time being or, if their number is not three or a multiple of three, then the number nearest one-third must retire from office. Clause 12.13 of the Constitution provides that a Director retiring at an annual general meeting who is not disqualified by law from being reappointed is eligible for re-election. Accordingly, Mr Richard Crookes retires as a Director and, being eligible, offers himself for re-election.

A resume for Mr Crookes follows:

Mr Richard Crookes

Non-Executive Director, BSc (Geology), Grad Dip Applied Finance

Mr Crookes has over 25 years’ experience in the resources and investments industry. He is a geologist by training having worked as the Chief Geologist and Mining Manager of Ernest Henry Mining in Australia (now Xstrata). Prior to Mr Crookes joining EMR Capital as an Investment Director he was an Executive Director in Macquarie Bank’s Metals Energy Capital (MEC) Division where he managed all aspects of the Bank’s principal investments in mining and metals companies.

Mr Crookes has extensive experience in deal origination, evaluation, structuring, postacquisition management, client relationship management, marketing and execution of investment entry and exits for both private and public resources companies in Australia and overseas.

Resolution 2 is an ordinary resolution.

The Directors (other than Mr Crookes) recommend that shareholders vote in favour of Resolution 2.

The chair intends to vote undirected proxies in favour of Resolution 2.

3. RESOLUTION 3: RE-ELECTION OF OWEN HEGARTY AS DIRECTOR

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disqualified by law from being reappointed is eligible for re-election. Accordingly, Mr Owen Hegarty retires as a Director and, being eligible, offers himself for re-election.

A resume for Mr Hegarty follows:

Mr Owen Hegarty

Non-Executive Director, BEc (Hons), FAusIMM

Mr Hegarty has over 40 years’ experience in the global mining industry. He spent 25 years with Rio Tinto where he was Managing Director of Rio Tinto Asia and Managing Director of the Group’s Australian copper and gold business. He was the founder and CEO of Oxiana Ltd Group which grew from a small exploration company to a multi-billion dollar Asia Pacific focused base and precious metals producer, developer and explorer.

Mr Hegarty is the Chairman of special resources private equity firm, EMR Capital, the Company’s largest shareholder and cornerstone investor. In 2006, Mr Hegarty was awarded the AusIMM Institute Medal and in 2008 the G.J. Stokes Memorial Award for his achievements and leadership in the mining industry.

Mr Hegarty is a director of various listed and unlisted resources companies including Hong Kong listed G-Resources Group Ltd, Fortescue Metals Group Ltd, Tigers Realm Coal Limited and EMR Capital. He is also a Director of the AusIMM, and a member of a number of Government and industry advisory groups.

Resolution 3 is an ordinary resolution.

The Directors (other than Mr Hegarty) recommend that shareholders vote in favour of Resolution 3.

The chair intends to vote undirected proxies in favour of Resolution 3.

4. RESOLUTION 4: ELECTION OF PAULINE CARR AS DIRECTOR

Clause 12 of the Constitution provides that a person may be appointed as a Director at a general meeting if he or she has at least 35 business days before the meeting served on the Company a notice of nomination to be a Director. Ms Pauline Carr has served on the Company a notice of nomination to be a Director pursuant to clause 12 of the Constitution. Accordingly, Ms Carr stands for election as a Director.

A resume for Ms Carr follows:

Ms Pauline Carr

BEc, MBA, FAICD, FGIA

Ms Carr is an experienced executive with 30 years of management and commercial experience with both Australian and international companies in the resources sector. She held senior positions with leading gold companies Normandy Mining Limited and Newmont Asia Pacific and more recently has worked closely with iron ore and specialty metals companies.

In addition Ms Carr is also a qualified chartered secretary with over 20 years of compliance and governance experience with listed company boards. Her previous directorial experience spans commercial, government and not for profit organisations and her current directorships include Friendly Society Medical Association Limited (a public company trading as National Pharmacies) and the University of South Australia where she also chairs its Audit and Risk Management Committee. Ms Carr is also a member of the South Australian Mining and Petroleum Expert Group and the Minerals and Energy Advisory Council.

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Resolution 4 is an ordinary resolution.

The Directors recommend that shareholders vote in favour of Resolution 4.

The chair intends to vote undirected proxies in favour of Resolution 4.

5. RESOLUTIONS 5 TO 10: ISSUE OF OPTIONS TO DIRECTORS

5.1 General

The Company has agreed, subject to obtaining shareholder approval, to issue its Directors referred to below a total of 9,000,000 Options ( Related Party Options ) as an incentive based remuneration package. Resolutions 5 to 10 seek shareholder approval for the grant of the Related Party Options to the following Directors (or their nominees):

(a) Mr Richard Crookes: 1,000,000 Options;
(b) Mr Owen Hegarty: 1,000,000 Options;
(c) Mr Anthony Hall: 3,000,000 Options;
(d) Mr Pedro Rodriguez: 2,000,000 Options;
(e) Mr Derek Carter: 1,000,000 Options; and
(f) Ms Pauline Carr: 1,000,000 Options (subject to the passing of Resolution 4).

5.2 Chapter 2E of the Corporations Act

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.

The grant of Related Party Options constitutes giving a financial benefit and Messrs Crookes, Hegarty, Hall, Rodriguez and Carter are related parties of the Company by virtue of being Directors. Ms Carr is a related party of the Company by virtue of being a proposed Director.

The Directors consider that shareholder approval pursuant to Chapter 2E of the Corporations Act is not required because the grant of the Related Party Options is considered reasonable remuneration in the circumstances and was negotiated on an arm’s length basis.

5.3 Listing Rule 10.11

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

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with the entity or a related party is, in ASX’s opinion, such that approval should be obtained, unless an exception in Listing Rule 10.12 applies.

As the grant of the Related Party Options involves the issue of securities to related parties of the Company, shareholder approval pursuant to Listing Rule 10.11 is required unless an exception applies. It is the view of the Directors that the exceptions set out in Listing Rule 10.12 do not apply in the current circumstances.

5.4 Technical Information required by Listing Rule 10.13

Pursuant to and in accordance with Listing Rule 10.13, the following information is provided in relation to Resolutions 6 to 12:

(a) The Related Party Options will be granted to Messrs Crookes, Hegarty, Hall, Rodriguez and Carter and Ms Carr (subject to the passing of Resolution 4), or their nominees.
(b) The number of Related Party Options to be issued is as follows:
(i) Mr Crookes: 1,000,000 Options;
(ii) Mr Hegarty: 1,000,000 Options;
(iii) Mr Hall: 3,000,000 Options;
(iv) Mr Rodriguez: 2,000,000 Options;
(v) Mr Carter: 1,000,000 Options; and
(vi) Ms Carr: 1,000,000 Options (subject to the passing of Resolution 4).
(c) The Related Party Options will be granted no later than one month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that the issue will occur on the same date.
(d) The Related Party Options will be issued for nil cash consideration, accordingly no funds will be raised.
(e) The terms and conditions of the Related Party Options are set out in Annexure A to this Explanatory Memorandum.
(f) Approval pursuant to Listing Rule 7.1 is not required for the grant of the Related Party Options as approval is being obtained under Listing Rule 10.11. Accordingly, the grant of Related Party Options to Messrs Crookes, Hegarty, Hall, Rodriguez and Carter and Ms Carr (or their nominees) will not be included in the use of the Company’s 15% annual placement capacity pursuant to Listing Rule 7.1.

Each of Resolutions 5 to 10 is an ordinary resolution.

As the Directors have an interest in Resolutions 5 to 10, they do not wish to make a recommendation as to how shareholders ought to vote on Resolutions 5 to 10.

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on each of Resolutions 5 to 10 even though they are connected directly or indirectly with the remuneration of a member of the Key

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Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy you can direct the chair to vote for or against or abstain from voting on Resolutions 5 to 10 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of each of Resolutions 5 to 10.

6. RESOLUTION 11: ISSUE OF OPTIONS TO DONALD STEPHENS

6.1 General

In addition to the Options to be issued pursuant to Resolutions 5 to 10, the Company also proposes to issue Mr Donald Stephens (or his nominee), Company Secretary, with 500,000 Options as an incentive based remuneration package.

Listing Rule 7.1 provides, in summary, that a listed company may not issue equity securities in any 12 month period which exceeds 15% of the number of issued securities of the company held at the beginning of the 12 month period, except with the prior approval of shareholders of the company in general meeting, unless an exception in Listing Rule 7.2 applies. The effect of Resolution 11 will be to allow the Company to issue the Options to Mr Stephens (or his nominee) during the period of three months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

6.2 Technical information required by Listing Rule 7.3

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

(a) The maximum number of Options to be issued is 500,000.
(b) The Options will be issued to Mr Stephens (or his nominee), who is not a related party of the Company.
(c) The Options will be issued no later than three months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that the issue will occur on the same date.
(d) The Options will be issued for nil cash consideration, accordingly no funds will be raised.
(e) The terms and conditions of the Options are set out in Annexure A to this Explanatory Memorandum.

Resolution 11 is an ordinary resolution.

The Directors recommend that shareholders vote in favour of Resolution 11.

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on Resolution 11 even though it is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy you can direct the chair to vote for or against or abstain from voting on Resolution 11 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of Resolution 11.

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7. RESOLUTION 12: ISSUE OF OPTIONS TO MIKE NORRIS

7.1 General

In addition to the Options to be issued pursuant to Resolutions 5 to 11, the Company also proposes to issue Mr Mike Norris (or his nominee), Chief Financial Officer, with 2,000,000 Options as an incentive based remuneration package.

Listing Rule 7.1 provides, in summary, that a listed company may not issue equity securities in any 12 month period which exceeds 15% of the number of issued securities of the company held at the beginning of the 12 month period, except with the prior approval of shareholders of the company in general meeting, unless an exception in Listing Rule 7.2 applies. The effect of Resolution 12 will be to allow the Company to issue the Options to Mr Norris (or his nominee) during the period of three months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

7.2 Technical information required by Listing Rule 7.3

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

(a) The maximum number of Options to be issued is 2,000,000.
(b) The Options will be issued to Mr Norris (or his nominee), who is not a related party of the Company.
(c) The Options will be issued no later than three months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that the issue will occur on the same date.
(d) The Options will be issued for nil cash consideration, accordingly no funds will be raised.
(e) The terms and conditions of the Options are set out in Annexure A to this Explanatory Memorandum.

Resolution 12 is an ordinary resolution.

The Directors recommend that shareholders vote in favour of Resolution 12.

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on Resolution 12 even though it is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy you can direct the chair to vote for or against or abstain from voting on Resolution 12 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of Resolution 12.

8. RESOLUTION 13: SUBSEQUENT APPROVAL OF THE ISSUE OF 30,855,000 SHARES

On 11 May 2015, the Company announced a placement of 56,125,000 ordinary shares at an issue price of $1.80 per share to raise $101,025,000. The shares were issued on 15 May 2015, with 30,855,000 of the shares being issued without shareholder approval under Listing Rule 7.1

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( LR 7.1 Placement Shares ), and the remaining 25,270,000 of the shares being issued without shareholder approval under Listing Rule 7.1A.

The purpose of Resolution 13 is to obtain shareholder approval for the issue of the LR 7.1 Placement Shares for the purpose of Listing Rule 7.4 and all other purposes.

However, Listing Rule 7.4 provides that an issue of equity securities made without shareholder approval under Listing Rule 7.1 is treated as having been made with shareholder approval for the purpose of Listing Rule 7.1 if:

the issue did not breach Listing Rule 7.1; and
holders of ordinary securities subsequently approve it.

The issue of the LR 7.1 Placement Shares did not result in the Company breaching the 15% limit referred to in Listing Rule 7.1. The issue of the LR 7.1 Placement Shares does not therefore depend upon shareholders passing Resolution 13. The purpose of Resolution 13 is to obtain shareholder approval for the purpose of Listing Rule 7.4 and for all other purposes. If shareholders approve the issue of the LR 7.1 Placement Shares for the purpose of Listing Rule 7.4, the issue of the LR 7.1 Placement Shares will not count towards determining the number of equity securities which the Company can issue in any 12 month period. However, if shareholders do not approve the issue of the LR 7.1 Placement Shares for the purpose of Listing Rule 7.4, the issue of the LR 7.1 Placement Shares will count towards the number of equity securities which the Company can issue in any 12 month period.

For the purpose of Listing Rule 7.5 information regarding the LR 7.1 Placement Shares is provided as follows:

30,855,000 LR 7.1 Placement Shares have been issued.
The LR 7.1 Placement Shares were issued at an issue price of $1.80 each.
The terms and conditions of the LR 7.1 Placement Shares are the same as the terms and conditions of already issued fully paid ordinary shares in the Company.
The LR 7.1 Placement Shares were issued to professional and/or sophisticated investors as determined by the Board.
Funds raised from the issue of the LR 7.1 Placement Shares will be used to substantially fund the likely equity component of the pre-production capital expenditure of the Company’s flagship Muga Potash Project.

Resolution 13 is an ordinary resolution.

The Directors recommend that shareholders vote in favour of Resolution 13.

The chair intends to vote undirected proxies in favour of Resolution 13.

9. RESOLUTION 14: APPROVAL OF EMPLOYEE SHARE OPTION PLAN

The Directors have resolved to adopt the Plan under which employees and certain contractors may be offered the opportunity to receive Options in order to increase the range of potential

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incentives available to them and to strengthen links between the Company and its employees and contractors.

The Plan is designed to provide incentives to the employees and key contractors of the Company and to recognise their contribution to the Company’s success. Under the Company’s current circumstances the Directors consider that Options are a cost effective and efficient means of incentivising employees and key contractors. To enable the Company to secure employees and contractors who can assist the Company in achieving its objectives, it is necessary to provide remuneration and incentives to such persons. The Plan is designed to achieve this objective by encouraging continued improvement in performance over time and by encouraging those persons to acquire and retain significant shareholdings in the Company.

Under the Plan, the Board may offer to eligible persons the opportunity to receive such number of Options in the Company as the Board may decide and on terms set out in the rules of the Plan, a copy of which is contained in Annexure B to this Explanatory Memorandum. Options granted under the Plan will be offered to participants in the Plan on the basis of the Board’s view of the contribution of the eligible person to the Company.

Listing Rule 7.1 restricts the number of shares and options a listed entity can issue in any 12 month period without shareholder approval. Listing Rule 7.2 contains a number of exceptions to Listing Rule 7.1. In particular, Exception 9(b) of Listing Rule 7.2 provides that Listing Rule 7.1 does not apply to an issue under an employee incentive scheme if within three years before the date of issue, holders of ordinary securities have approved the issue of securities under the scheme as an exception to Listing Rule 7.1.

Shareholders have not previously approved the issue of securities under the Plan for the purposes of Exception 9(b) of Listing Rule 7.2. The purpose of Resolution 14 is to seek approval of the issue of securities under the Plan for the purposes of Exception 9(b) of Listing Rule 7.2 and for all other purposes.

In accordance with the requirements of Exception 9(b) of Listing Rule 7.2 the following information is provided:

(a) a copy of the rules of the Plan is contained in Annexure B to this Explanatory Memorandum;
(b) shareholders have not previously approved the issue of securities under the Plan for the purposes of Exception 9(b) of Listing Rule 7.2, and no Options have been issued under the Plan; and
(c) a voting exclusion statement has been included for the purpose of Resolution 14.

Resolution 14 is an ordinary resolution.

As the Directors are excluded from voting on this resolution they do not wish to make a recommendation as to how shareholders ought to vote in respect of the resolution.

Please note that if the chair of the meeting is your proxy (or becomes your proxy by default), you expressly authorise the chair to exercise your proxy on Resolution 14 even though it is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company, which includes the chair. If you appoint the chair as your proxy you can direct the chair to vote for or against or abstain from voting on Resolution 14 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of Resolution 14.

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10. RESOLUTION 15: AMENDMENT TO CONSTITUTION – PAYMENT OF DIVIDENDS

Resolution 15 seeks approval to the proposed amendment to the Company’s Constitution to more fully reflect amendments to the Corporations Act made on 28 June 2010, which govern the circumstances in which companies may pay dividends. Previously, a company could only pay dividends out of profits (commonly known as the ‘profits test’). Section 254T of the Corporations Act now operates to prohibit the payment of dividends unless the following three new tests are satisfied:

assets exceed liabilities immediately before the dividend is declared and the excess covers the dividend; and
the payment is fair and reasonable to shareholders as a whole; and
the payment does not materially prejudice the company’s ability to pay its creditors

The purpose of this proposed amendment is to more fully align the Constitution with the new provisions of the Corporations Act, and to confirm the ability of the Company to take advantage of the flexibility to pay future dividends out of amounts other than profits under the solvency based regime referred to above.

Section 136(2) of the Corporations Act provides that a company may modify its constitution, or a provision of its constitution, by special resolution.

Resolution 15 is a special resolution .

The Directors recommend that shareholders vote in favour of Resolution 15.

The chair intends to vote undirected proxies in favour of Resolution 15.

11. GLOSSARY

In this Explanatory Memorandum and Notice of Annual General Meeting the following expressions have the following meanings unless stated otherwise or unless the context otherwise requires:

ASIC means the Australian Securities and Investments Commission;

ASX means ASX Limited ACN 008 624 691;

Board means the board of directors of the Company;

Closely Related Party of a member of the Key Management Personnel for an entity means:

(a) a spouse or child of the member;
(b) a child of the member’s spouse;
(c) a dependant of the member or of the member’s spouse;
(d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealings with the entity;
(e) a company the member controls; or
(f) a person prescribed as such by the Corporations Regulations 2001 (Cth);

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Company means Highfield Resources Limited ACN 153 918 257;

Constitution means the existing constitution of the Company;

Corporations Act means Corporations Act 2001 (Cth);

Director means a director of the Company;

Key Management Personnel has the same meaning as in the accounting standards as defined in section 9 of the Corporations Act (so the term broadly includes 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);

Listing Rules means the listing rules of ASX;

Meeting means the meeting of shareholders convened by the Notice;

Notice means the notice of meeting to which this Explanatory Memorandum is attached;

Option means an option to acquire a fully paid ordinary share in the capital of the Company; and

Plan means the Highfield Resources Limited Employee Share Option Plan.

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ANNEXURE A

Each option entitles the holder to one ordinary share in the Company.
Subject to paragraph 3, the options held by the optionholder are exercisable in whole or in part at any time during the period commencing on the date of grant and expiring on 30 June 2019 ( Exercise Period ). Options not exercised before the expiry of the Exercise Period will lapse.
The options will vest on the earlier of:
(a) 30 June 2016; and
(b) the occurrence of a Change of Control Event.

For the purpose of the above, Change of Control Event means either:

a change of control of the Company within the meaning of section 50AA of the Corporations Act 2001 (Cth);
when a Court sanctions a compromise or arrangement for the purposes of or in connection with a scheme for the amalgamation of the Company with any other company or companies under Part 5.1 of the Corporations Act 2001 (Cth); or
when the Company passes a resolution for voluntary winding up or if an order is made for the compulsory winding up of the Company.

The Board may in its absolute discretion waive satisfaction of the vesting condition either unconditionally or subject to compliance with any other exercise restriction that is less onerous than that previously fixed.

The optionholder must notify the Company at least five business days before exercising any options. Options are exercisable by notice in writing to the Board delivered to the registered office of the Company and payment of the exercise price of $2.00 per option in cleared funds.
The Company will not apply for official quotation on ASX of the options. The Company will make application for official quotation on ASX of new shares allotted on exercise of the options. Those shares will participate equally in all respects with existing issued ordinary shares, and in particular new shares allotted on exercise of the options will qualify for dividends declared after the date of their allotment.
Options can only be transferred with Board approval, except that if at any time before expiry of the Exercise Period the optionholder dies, the legal personal representative of the deceased optionholder may:
(a) elect to be registered as the new holder of the options;
(b) whether or not he becomes so registered, exercise those options in accordance with the terms and conditions on which they were granted; and
(c) if the deceased has already exercised options, pay the exercise price in respect of those options.
An optionholder may only participate in new issues of securities to holders of ordinary shares in the Company if the option has been exercised and shares allotted in respect of the option before the record date for determining entitlements to the issue. The Company must give

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prior notice to the optionholder of any new issue before the record date for determining entitlements to the issue in accordance with the ASX Listing Rules.

If there is a bonus issue to the holders of ordinary shares in the capital of the Company, the number of ordinary shares over which the option is exercisable will be increased by the number of ordinary shares which the holder of the option would have received if the option had been exercised before the record date for the bonus issue.
If the Company makes a rights issue (other than a bonus issue), the exercise price of options on issue will be reduced according to the following formula:

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Where:

A = the new exercise price of the option;
O = the old exercise price of the option;
E = the number of underlying ordinary shares into which one option is exercisable;
P = the average closing sale price per ordinary share (weighted by reference to volume) recorded on the stockmarket of ASX during the five trading days immediately preceding the ex rights date or ex entitlements date (excluding special crossings and overnight sales and exchange traded option exercises);
S = the subscription price for a security under the pro rata issue;
D = the dividend due but not yet paid on existing underlying securities (except those to be issued under the pro rata issue); and
N = the number of securities with rights or entitlements that must be held to receive a right to one new security.

If, during the currency of the options the issued capital of the Company is reorganised, those options will be reorganised to the extent necessary to comply with ASX Listing Rules.

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ANNEXURE B

HIGHFIELD RESOURCES LIMITED EMPLOYEE SHARE OPTION PLAN

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In these Terms, unless the contrary intention appears:

Applicable Law means any one or more or all, as the context requires of:

(a) Corporations Act and the Corporations Regulations 2001 (Cth);
(b) Listing Rules;
(c) the constitution of the Company;
(d) any practice note, policy statement, class order, declaration, guideline, policy or procedure pursuant to the provisions of which either ASIC or ASX is authorised or entitled to regulate, implement or enforce, either directly or indirectly, the provisions of any of the foregoing statutes, regulations or rules or any conduct of any duly authorised person, pursuant to any of the abovementioned statutes, regulations or rules.

ASIC means the Australian Securities and Investments Commission.

Associate has the same meaning as is ascribed to that term in sections 12 to 16 (inclusive) of the Corporations Act.

ASX means the ASX Limited ACN 008 624 691 .

Auditor means the registered auditor of the Company as appointed from time to time.

Bid Period, in relation to an off-market bid or a market bid in respect of Shares, means the period referred to in the definition of that expression in section 9 of the Corporations Act, provided that where a bid is publicly announced prior to the service of a bidder’s statement on the Company, the bid period shall be deemed to have commenced at the time of that announcement.

Business Day means a day on which the stock market of ASX is open for trading in securities.

Certificate means the certificate for the Options issued by the Company to a Participant.

Change of Control Event means, if an entity does not have Control of the Company, the event pursuant to which that entity acquires Control of the Company.

Company means Highfield Resources Limited ACN 153 918 257.

Company Secretary means the secretary of the Company (or his delegate) as appointed from time to time.

Control has the meaning ascribed to that term in section 50AA of the Corporations Act.

Corporations Act means the Corporations Act 2001 (Cth).

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Directors means the directors for the time being of the Company.

Eligible Employee , Eligible Associate , Eligible Contractor , Eligible Person have the meanings ascribed to those terms in clause 12.

Exercise means an exercise effected under clause 6.

Exercise Date means the date upon which an Option is Exercised in accordance with clause 6.1.

Exercise Notice means a notice given under clause 6.1.

Exercise Period means in relation to a particular grant of Options, the period beginning on the date determined in accordance with the provisions of clause 5.3 and ending on the date of the fifth anniversary of the Issue Date of those Options or as otherwise determined by the Directors at the Relevant Date.

Exercise Price means the price at which an Option may be Exercised in accordance with clause 3.2(b), as varied in accordance with these Terms.

Issue Date means the date upon which Options are issued to an Eligible Person pursuant to this Plan.

Listing Rules means the official listing rules of ASX, as varied from time to time.

Loan Period means in respect of each loan the period determined under clause 13.

Loan Share means a Plan Share acquired with a Loan which has not been repaid in full in respect of that Plan Share.

Loans means loans made pursuant to clause 13 and includes any fees or other charges accrued on that loan or any part thereof.

Offer means an Offer of Options by the Directors to an Eligible Person pursuant to this Plan.

Option means an option over Plan Shares granted pursuant to the Plan.

Option Price means the amount payable for an Option as referred to in clause 3.2(a).

Participant means an Eligible Employee, Eligible Associate or Eligible Person to whom Options have been issued pursuant to the Plan.

Performance Conditions means one or more conditions (if any), as determined by the Directors under clause 5.2 and notified to a Participant in the Offer, which must be satisfied or waived by the Directors before an Option may be Exercised.

Permitted Nominee has the meaning given to it by clause 4.3.

Plan means the Employee Share Option Plan for the Company established in accordance with these Terms.

Plan Share means a Share in the capital of the Company issued upon Exercise of an Option or in respect of which an Option has been granted.

Related Body Corporate has the same meaning as is ascribed to that term in section 50 of the Corporations Act.

Relevant Date means the date on which the Directors resolve to offer an Option or

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such other date as the Directors determine.

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

Share Registry means the share registry of the Company from time to time.

Terms means these general terms and conditions, as varied from time to time.

1.2 Interpretation

In these Terms, unless the context requires otherwise:

(a) a reference to a word includes the singular and the plural of the word and vice versa;
(b) a reference to a gender includes any gender;
(c) if a word or phrase is defined, then other parts of speech and grammatical forms of that word or phrase have a corresponding meaning;
(d) a term which refers to a natural person includes a company, a partnership, an association, a corporation, a body corporate, a joint venture or a governmental agency;
(e) headings are included for convenience only and do not affect interpretation;
(f) a reference to a document includes a reference to that document as amended, novated, supplemented, varied or replaced;
(g) a reference to a thing includes a part of that thing and includes but is not limited to a right;
(h) the terms ‘included’, ‘including’ and similar expressions when introducing a list of items do not exclude a reference to other items of the same class or genus;
(i) a reference to a part, clause, party, annexure, exhibit or schedule is a reference to an item of that type in these Terms and includes a reference to the provisions or terms of that part, clause, annexure, exhibit or schedule;
(j) a reference to these Terms includes each annexure, exhibit and a schedule to these Terms;
(k) a reference to a party to this document includes the party’s successors and permitted assigns and includes any person to whom these Terms are novated;
(l) a reference to a statute or statutory provision includes but is not limited to:
(i) a statute or statutory provision which amends, extends, consolidates or replaces the statute or statutory provision;
(ii) a statute or statutory provision which has been amended, extended, consolidated or replaced by the statute or statutory provision; and
(iii) subordinate legislation made under the statute or statutory provision including but not limited to an order, regulation, or instrument;

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(m) a reference to a document is a reference to a document of any kind including but not limited to an agreement in writing, a certificate, a notice, or an instrument;
(n) reference to ‘$’, ‘A$’, ‘Australian Dollars’ or ‘dollars’ is a reference to the lawful tender for the time being and from time to time of the Commonwealth of Australia;
(o) a provision of these Terms is not to be construed against the Company solely on the ground that the Company is responsible for the preparation of these Terms or a particular provision;
(p) a reference to an asset includes all property or title of any nature including but not limited to a business, a right, a revenue and a benefit, whether beneficial, legal or otherwise;
(q) a reference to liquidation includes appointment of an administrator, compromise, arrangement, merger, amalgamation, reconstruction, winding up, dissolution, assignment for the benefit of creditors, scheme composition or arrangement of creditors, insolvency, bankruptcy or any similar procedure or if applicable changes in the constitution of a partnership or the death of a person; and
(r) a reference to a body which is not a party to these Terms which ceases to exist or whose power or function is transferred to another body, is a reference to the body which replaces or substantially succeeds to the power or function of the first body.
1.3

Business Day and Day

(a) If these Terms require that the day on which a thing must be done is a day which is not a Business Day, then that thing must be done on or by the next Business Day.
(b) If an event occurs on a day which is not a Business Day, or occurs later than 5.00 pm local time at the place that the event occurs, then the event is deemed to have occurred on the next Business Day in the place that the event occurs.
(c) A reference to a day is a reference to a time period which begins at midnight and ends 24 hours later.
(d) A reference to a period of time unless specifically written otherwise, includes the first day of that period.

2. DIRECTORS’ AUTHORITY

2.1 The Directors will establish and administer the Plan in accordance with these Terms and, subject to any Applicable Law, will have the absolute discretion and power to:
(a) determine appropriate procedures for administration of the Plan;
(b) resolve conclusively all questions of fact or interpretation arising in connection with the Plan or these Terms;
(c) delegate to any one or more persons for such period and subject to such conditions as they may determine, the exercise of their powers or discretions, or of any of them, under these Terms; and

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(d) alter, modify, add to or repeal any of these Terms, even where such alteration, modification, addition or repeal:
- (i) will or may adversely affect, whether materially or otherwise, any existing right or entitlement of a Participant or otherwise disadvantage an existing Participant; and
- (ii) occurs either during or after the expiry of the Exercise Period and irrespective of whether or not the Options, or the Plan Share or Plan Shares that have been issued to a Participant pursuant to the Exercise of an Option, have or would have otherwise fully vested in that Participant.
2.2 The Company undertakes to each Participant that the powers and rights available to the Directors under clause 2.1(d) will not be exercised in a capricious, malicious or unreasonable manner.
2.3 Subject to these Terms, the Directors may from time to time in their absolute discretion determine those Eligible Persons to whom an offer to participate in the Plan will be made and the terms of such an offer.

3. OPTIONS, OPTION PRICE AND EXERCISE PRICE

3.1 Subject to these Terms, the Directors may determine from time to time to grant Options upon such terms and to such Eligible Persons as they see fit.
3.2 Unless otherwise determined by the Directors:
(a) the Option Price will be nil;
(b) the Exercise Price will be the amount determined by the Directors on the Relevant Date and specified in an Offer; and
(c) the Directors will notify the Participants in writing of the Exercise Price of an Option at the time of making an Offer.

4. OFFER OF OPTIONS

4.1 Subject to these Terms, the Company (acting through the Directors) may make an Offer at such times and on such terms as the Directors consider appropriate. Each Offer must state:
(a) that the Eligible Person to whom it is addressed may accept the whole or any lesser number of Options offered. The Offer may stipulate a minimum number of Options and any multiple of such minimum or any other number which may be accepted;
(b) the period within which the Offer may be accepted and the Exercise Period;
(c) the method of calculation of the Exercise Price; and (d) any other matters which the Directors may determine or is required under any Applicable Law.
4.2 Upon receipt of an Offer of Options, an Eligible Person may, within the period specified in the Offer:
(a) accept the whole or any lesser number of Options offered by notice in writing to the Directors; or

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(b) nominate a nominee in whose favour the Eligible Person wishes to renounce the Offer by notice in writing to the Directors. The Directors may, in their absolute discretion, resolve not to allow such renunciation of an Offer in favour of a nominee without giving any reason for such decision.
4.3 Upon:
(a) receipt of the acceptance referred to in paragraph 4.2(a); or
(b) the Directors resolving to allow a renunciation of an Offer in favour of a nominee ( Permitted Nominee ) and the Permitted Nominee accepting the whole or any lesser number of Options offered by notice in writing to the Directors,

the Eligible Person or the Permitted Nominee, as the case may be, will be taken to have agreed to be bound by these Terms and will be issued Options subject to these Terms.

4.4 Certificates for Options will be dispatched within 10 Business Days after their Issue Date.
4.5 If Options are issued to a Permitted Nominee of an Eligible Person, the Eligible Person must, without limiting any provision in these Terms, ensure that the Permitted Nominee complies with these Terms.

5. VESTING AND ENTITLEMENT

5.1 At the time of making an Offer of Options, the Directors may impose such vesting conditions (if any) as they consider appropriate.
5.2 At the time of making an Offer of Options, the Directors may impose such Performance Conditions (if any) as they consider appropriate.
5.3 No Option can be Exercised until:
(a) it has vested under the vesting conditions (if any) applicable to the Option in accordance with clause 5.1 or the vesting conditions have been waived by the Directors; and
(b) the Performance Conditions (if any) applicable to the Option in accordance with clause 5.2 have been satisfied or waived by the Directors.
5.4 Once an Option is able to be exercised in accordance with clause 5.3, it:
(a) may be Exercised during the Exercise Period; and
(b) entitles the Participant to subscribe for and be allotted one Plan Share at the Exercise Price.
5.5 Notwithstanding these Terms, while the Shares are listed on the ASX, the Company must allot and issue Plan Shares upon Exercise of an Option in accordance with the Applicable Laws.
5.6 Plan Shares issued upon the Exercise of Options will rank equally with all existing Shares in the capital of the Company from their respective issue date.

6. EXERCISE OF OPTIONS

6.1 An Option is Exercised by:

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(a) the Participant lodging with the Company an Exercise Notice;
(b) the receipt by the Company of a payment by or on behalf of a Participant and in immediately available funds, of the Exercise Price for each of the Options the subject of such Exercise Notice; and
(c) the Participant lodging with the Company the Certificate for those Options, for cancellation by the Company.
6.2 Subject to clause 6.1, within 15 Business Days after the later of the following:
(a) receipt by the Company of an Exercise Notice given in accordance with these terms and conditions and payment of the Exercise Price for each Option being exercised if the Company is not in possession of excluded information (as defined in section 708A(7) of the Corporations Act); and
(b) the date the Company ceases to be in possession of excluded information in respect to the Company (if any) following the receipt of the Exercise Notice and payment of the Exercise Price for each Option being exercised by the Company,

the Company will

  - (c) allot and issue the Plan Shares pursuant to the exercise of the Options;

  - (d) give ASX a notice that complies with section 708A(5)(e) of the Corporations Act or lodge a prospectus with ASIC that qualifies the Plan Shares for resale under section 708A(11) of the Corporations Act; and

  - (e) apply for official quotation on ASX of the Plan Shares issued pursuant to the exercise of the Options.

6.3 Subject to the provisions of clause 6.4, Exercise of some only of the Options held by a Participant does not prevent Exercise of any remaining vested unExercised Options.
6.4 Options may not be Exercised in parcels of less than 1,000. Holders of less than 1,000 Options may Exercise those Options in full but not in part.
6.5 Notwithstanding any other provision of this clause 6 or clause 5 but subject to the written consent of the Directors, all Options may be Exercised:
- (a) during a Bid Period;
- (b) at any time after a Change of Control Event has occurred; or
- (c) if, on an application under section 411 of the Corporations Act, a court orders a meeting to be held concerning a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company.
LAPSE OF OPTIONS
7.1 Subject to clause 5.3, if the Participant is a Director or the Permitted Nominee of a Director, an Option may be Exercised by that Participant at any time prior to the first to occur of:
- (a) the expiry of the Exercise Period;
- (b) the expiry of 30 days after the person ceases to be a Director; and

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(c) a determination by the other Directors that that Director has acted fraudulently, dishonestly or in breach of that Director’s obligations to the Company and that the Option is to be forfeited.

If such a Participant fails, for any reason, to Exercise all the Options registered in his name prior to such occurrence, those Options that the Participant would have been entitled to Exercise and that have not been Exercised, and any right or entitlement of a Participant to have those Options vested in that Participant, will lapse and be of no further force or effect.

7.2 If a resolution of a general meeting of the Company to remove a person as a Director is passed, that person or the Permitted Nominee of that person who is a Participant may only Exercise a proportion of the Options that are registered in that Participant’s name as is equal to the proportion that the period from the Issue Date of those Options to the date of passage of the resolution bears to the Exercise Period and the balance of those Options will be wholly and unconditionally forfeited, lapse and be of no further force or effect upon and from the date of passage of the resolution.

7.3 Unless otherwise determined by the Directors and subject to clause 5.3, if a Participant is an employee or the Permitted Nominee of an employee, an Option may be Exercised by that Participant at any time prior to the first to occur of:
(a) the expiry of the Exercise Period;
(b) the expiry of 30 days after termination of the employee’s employment where such termination has either been voluntary on the employee’s part or otherwise has occurred without cause; and
(c) termination of the employee’s employment with cause.

If such a Participant fails, for any reason, to Exercise all the Options registered in his or her name prior to such occurrence, those Options that the Participant would have been entitled to Exercise and that have not been Exercised, and any right or entitlement of a Participant to have those Options vested in that Participant, will lapse and be of no further force or effect.

8. TRANSFER

Except with the consent of Directors, Options may not be transferred and will not be quoted on or by the ASX. The Directors may in their discretion allow the transfer of Options to an Associate or Related Body Corporate of a Participant.

9. QUOTATION OF PLAN SHARES

The Company will apply to the ASX for official quotation of Plan Shares issued on the Exercise of Options, if the Company is, at the time of issue of those Plan Shares, admitted to the official list of the ASX.

10. PARTICIPATION IN FUTURE ISSUES

10.1 New Issues

Participants may only participate in new issues of securities to holders of Shares if an Option has been exercised and Plan Shares allotted in respect of the Option before the record date for determining entitlements to the issue. The Company must give at least nine Business Days’ notice (or such greater period of notice (if any) as may be required by the Listing Rules) to Participants of any new issue before the record date for determining entitlements to the issue in accordance with the Listing Rules.

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10.2 Bonus Issues

If there is a bonus share issue ( Bonus Issue ) to the holder of Shares, the number of Plan Shares over which an Option is exercisable will be increased by the number of Shares which the Participant would have received if the Option had been exercised before the record date for the Bonus Issue ( Bonus Shares ). Upon issue the bonus Shares will rank pari passu in all respects with the other shares of the Company on issue at the date of issue of the bonus Shares.

10.3 Pro Rata Issue

If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares, the Exercise Price of an Option will be reduced according to the following formula:

A = O - E [P - (S+D)]

N + 1

A = the new exercise price of the Option.
O = the old exercise price of the Option.
E = the number of Plan Shares into which one Option is exercisable.
P = the value of a Share at the time the pro rata rights issue is made as determined by an accountant independent of the Company, but if the Shares are quoted on the ASX, the average closing sale price per Share (weighted by reference to volume) recorded on the stock market of ASX during the 5 trading days ending on the day immediately before the ex rights date or ex entitlements date (excluding special crossings, overnight sales and exchange traded option exercises).
S = the subscription price for a Share under the pro rata issue.
D = the dividend due but not yet paid on existing Shares which will not be payable in respect of new Shares issued under the pro rata issue.
N = the number of Shares with rights or entitlements that must be held to receive a right to 1 new Share.

10.4 Reorganisation of Capital

If, prior to the expiry or lapse of any Options, there is a reorganisation of the issued capital of the Company, those Options will be reorganised to the extent necessary to comply with the Listing Rules.

10.5 Aggregation

If Options are Exercised simultaneously then the Participant may aggregate the number of Plan Shares or fractions of Plan Shares to which the Participant is entitled to subscribe for under those Options. Fractions in the aggregate number only will be disregarded in determining the total entitlement to subscribe.

10.6 Advice

In accordance with the Listing Rules, the Company must give notice to each Participant of any adjustment to the number of Shares for which the Participant is entitled to subscribe or to the Exercise Price pursuant to the provisions of clauses 10.2, 10.3 or 10.4.

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11. MAXIMUM NUMBER

11.1 The Company shall not offer or issue Options to any Eligible Person in accordance with this Plan if the total number of shares the subject of Options, when aggregated with:
(a) the number of shares in the same class which would be issued were each outstanding offer or invitation or option to acquire unissued shares in the Company, being an offer or invitation made or option acquired pursuant to this Plan or any other employee share scheme extended only to employees (including salaried executive directors) of the Company and its Related Bodies Corporate, to be accepted or exercised (as the case may be); and
(b) the number of shares in the same class issued during the previous three years pursuant to the Plan or any other employee share scheme extended only to employees (including salaried executive directors) of the Company and its Related Bodies Corporate,

(disregarding any offer or invitation made, or option acquired or share issued following the making of an offer or invitation, to a person situated at the time of receipt of the offer or invitation outside Australia or any offer or invitation which, pursuant to Chapter 6D of the Corporations Act, does not need disclosure to investors), would exceed 5% of the total number of issued shares in that class of the Company as at the time of the proposed offer or issue.

12. ELIGIBLE PERSONS

12.1 Eligible Employee means:

(a) a person who is engaged in the full time or part time employment of the Company or a Related Body Corporate of the Company and includes any Director holding a salaried employment or office in the Company or a Related Body Corporate of the Company;
(b) a person within the meaning of a ‘casual employee’ as defined in ASIC Class Order [CO 14/1000] as varied or replaced from time to time and, as at the date of this Plan, a person who is, or might reasonably be expected to be, engaged to work the number of hours that are the pro-rata equivalent of 40% or more of a comparable full-time position with the Company or a Related Body Corporate of the Company, or such other criteria as may be imposed by ASIC Class Order [CO 14/1000] or otherwise from time to time; and
(c) any person acquiring and holding any Plan Share or Options for the benefit of any such employee (other than any employee who is a Director), provided that the Plan Share and Options are acquired and held on such terms and conditions as have been previously approved by the Directors, including, without limitation, any trustee of a trust established by the Company to hold Plan Shares or Options for the benefit of such employees.

12.2 Eligible Associate means:

(a) any Director, including non-executive Director or officer, of the Company; and
(b) any person or entity acquiring and holding any Plan Share for the benefit of any Eligible Employee who is a Director or officer of the Company at the time of such acquisition or any person referred to in clause 12.2(a), and

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provided that the Plan Share is acquired and held on such terms and conditions as have been previously approved by the Directors.

12.3
An Eligible Employee may also be an Eligible Associate.
12.4 Eligible Contractor means an individual or company within the meaning of a ‘contractor’ as defined in ASIC Class Order [CO 14/1000] as varied or replaced from time to time and, as at the date of this Plan:
(a) an individual with whom the Company or a Related Body Corporate of the Company has entered into a contract for the provision of services under which that individual performs work for the Company or a Related Body Corporate of the Company; or
(b) a company with whom the Company or a Related Body Corporate of the Company has entered into a contract for the provision of services under which an individual, who is a director of the company or their spouse, performs work for the Company or a Related Body Corporate of the Company,

where the individual who performs the work under or in relation to the contract is, or might reasonably be expected to be, engaged to work the number of hours that are the pro-rata equivalent of 40% or more of a comparable full-time position with the Company or a Related Body Corporate of the Company,

or such other criteria as may be imposed by ASIC Class Order [CO 14/1000] or otherwise from time to time.

12.5 Eligible Persons means Eligible Employees, Eligible Contractors and Eligible Associates.

13. LOANS

13.1 Subject to the terms of the Plan, the Directors may from time to time determine that the Company makes loans to Eligible Employees in connection with Plan Shares to be issued pursuant to the Exercise of Options under the Plan.
13.2
No Loans shall be made to persons other than Eligible Employees.
13.3 Loans may be made for the Exercise Price payable upon Exercise of Options issued under the Plan and on such terms and conditions as the Directors see fit.
13.4 A Participant who accepts a Loan in respect of some or all of the Plan Shares pursuant to clause 13.1, will upon and by such acceptance, irrevocably authorise the Company to apply the Loan on behalf of the Participant by way of payment of the Exercise Price of the Plan Shares in respect of which the Loan was accepted and the payment of any duties payable by the Participant in respect of the Loan.
13.5 The Loan Period is the period commencing when the Loan is made and ending on the first to occur of the following dates:
(a) the Participant ceasing to be employed by the Company or a Related Body Corporate of the Company;
(b) the Company agreeing to sell the Loan Shares as requested by an Eligible Employee in accordance with clause 15.2; or
(c) the Loan being repaid in full.

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13.6 A Participant may repay all or part of a Loan at any time before the expiration of the Loan Period.
13.7 Unless otherwise determined by the Directors and subject to clause 13.8, the Company will apply and each Participant will, by virtue of their acceptance of the Loan, be deemed to have irrevocably directed the Company to so apply all dividends paid in cash on the Plan Shares towards repayment of the Loan.
13.8 The amount of the dividend applied pursuant to clause 13.7 shall not exceed the after tax value of the dividends computed on the assumption that the Participant is assessable to tax at the highest personal marginal rate of income tax in Australia applicable to Australian residents (including for this purpose the Medicare Levy but not the Medicare Surcharge) on the whole of the dividend and after allowing for any franking rebate to which the Participant is entitled in relation to the dividend.
13.9 Without restricting the discretion of the Directors, but subject to the requirements of ASIC Class Order [CO 14/1000] or other applicable requirements from time to time, Loans may be made on terms and conditions which provide that:
(a) no interest be payable in respect of the Loan;
(b) where the Exercise Price paid pursuant to the Exercise of Options has been financed in whole or in part by the provision of a Loan by the Company to a Participant, that Participant will encumber in favour of, and lodge with, the Company or its nominee as security for repayment of the Loans all its right title and interest in the Plan Shares that have been issued to the Participant as a result of such Exercise; or
(c) the total amount of principal repayable under the Loan be limited to the proceeds of the sale of Plan Shares acquired with the Loan less any costs of sales.

14. RIGHTS ATTACHING TO LOAN SHARES

14.1 Subject to clauses 13.7 and 13.8, a Participant is entitled to all dividends declared or paid on the Loan Shares held by the Participant.
14.2 A Participant is entitled to any bonus Shares which accrue to Loan Shares held by the Participant in accordance with clause 10.2.
14.3 Upon allotment of the bonus Shares to the Participant, any bonus Shares which accrue to Loan Shares are deemed, for the purposes of the Plan, to be Loan Shares until such time as the Loans in respect of the Loan Shares to which the bonus Shares accrued had been repaid in full.

15. RESTRICTION ON TRANSFER OF LOAN SHARES

15.1 Other than as provided by these Terms:
(a) a Participant must not sell, encumber or otherwise deal with a Loan Share prior to the repayment of the Loan used to acquire that Loan Share; and
(b) the Company must not register or permit the Share Registry to register a transfer of a Loan Share until the Loan used to acquire that Loan Share has been repaid and for that purpose the Company may do such things and enter into such arrangements with the Share Registry or otherwise as it considers necessary to enforce such restrictions on the transfer of a Loan Share and Participants will be bound by such arrangements.

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15.2 A Participant who holds a Loan Share may request the Company in writing to sell that Loan Share on behalf of the Participant and apply the proceeds in accordance with clause 15.5.
15.3 For the purpose of the sale of the Loan Shares pursuant to clause 15.2, the Participant will be deemed to have irrevocably appointed, as a result of that Participant’s request pursuant to clause 15.2, the Company Secretary as that Participant’s agent and attorney to sign all documents and do all acts necessary to sell the Loan Shares and account for the proceeds in accordance with clause 15.5 and shall indemnify the Company Secretary and the Company in respect of all costs, damages or losses arising from the sale of the Loan Shares.
15.4 The Company and the Company Secretary will have complete discretion in respect of the sale of the Loan Shares under this clause 15 and will not be liable to the Participant in respect of the timing of or price obtained on or any other circumstances relating to such sale.
15.5 Upon the Company selling the Loan Shares in accordance with a request made by a Participant in accordance with clause 15.2:
(a) the proceeds of the sale will be applied in the following order:
- (i) in payment of any costs and expenses of the sale incurred by the Company;
- (ii) in reduction of the outstanding amount of the Loan; and
- (iii) the balance (if any) in payment to the Participant; and
(b) subject to the terms of a Loan as determined in accordance with the provisions of clause 13.9(c) if applicable, the Participant shall be liable to the Company for any shortfall between the proceeds of such sale and the outstanding amount of the Loan.

16. LOAN NOT REPAID

16.1 If the Participant has not repaid the outstanding amount of a Loan at the end of the Loan Period, the Company may, at its discretion, on behalf of the Participant, sell the Loan Shares and apply the proceeds in accordance with clause 16.4.
16.2 For the purpose of the sale of the Loan Shares pursuant to clause 16.1, the Participant will be deemed to have irrevocably appointed, as a result of that Participant’s acceptance of the issue of the Loan Shares, the Company Secretary as that Participant’s agent and attorney to sign all documents and do all acts necessary to sell the Loan Shares and account for the proceeds in accordance with clause 16.4 and shall indemnify the Company Secretary and the Company in respect of all costs, damages or losses arising from the sale of the Loan Shares.
16.3 The Company and the Company Secretary will have complete discretion in respect of the sale of the Loan Shares under clause 16.1 and will not be liable to the Participant in respect of the timing of or price obtained on or any other circumstances relating to such sale.
16.4 If the Company sells the Loan Shares in accordance with clause 16.1:
(a) the proceeds of the sale will be applied in the following order:

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(i) in payment of any costs and expenses of the sale incurred by the Company; and
(ii) in reduction of the outstanding amount of the Loan; and
(iii) the balance (if any) in payment to the Participant; and
(b) subject to the terms of a Loan as determined in accordance with the provisions of clause 13.9(c) if applicable, the Participant shall be liable to the Company for any shortfall between the proceeds of such sale and the outstanding amount of the Loan.

17. ATTORNEY

For the avoidance of doubt the Participant, in consideration of the grant of the Loan and by virtue of that Participant’s acceptance of any or all Loan Shares, will be deemed to have irrevocably appointed the person who from time to time occupies the position of Company Secretary, that Participant’s attorney to complete and execute any documents including share transfers and to do all acts or things in his or her name on his or her behalf which may be convenient or necessary for the purpose of giving effect to the provisions of clauses 15 and 16 of this Plan and the Participant covenants that the Participant shall ratify and confirm any act or thing done pursuant to this power and shall indemnify the attorney (or their delegate) and the Company in respect thereof.

18. NOTICES

Notices must be given by the Company to the Participant in the manner prescribed by the constitution of the Company for the giving of notices to members of the Company and the relevant provisions of the constitution of the Company apply with all necessary modifications to notices to any Participant.

19. RIGHT TO ACCOUNTS

Participants will be sent all reports and accounts required to be laid before members of the Company in general meeting and all notices of general meetings of members but, unless otherwise entitled, will not have any right to attend or vote at those meetings.

20. OVERRIDING RESTRICTIONS ON GRANT AND EXERCISE

20.1 Notwithstanding any other provision of these Terms, all rights and entitlements attaching to an Option or of a Participant under this Plan will be changed or amended to the extent necessary to comply with the Listing Rules that apply to a reorganisation of the capital of the Company, at the time that that reorganisation becomes effective.
20.2 No Option may be Exercised if to do so would contravene the Applicable Law.
20.3 Without limitation to the provisions of this clause 20:
(a) the Option terms and conditions must allow the rights of a Participant to comply with the Listing Rules applying to a reorganisation of capital of the Company at the time of the reorganisation; and
(b) subject to the provisions of clause 20.3(a), any reorganisation of capital of the Company must not be done in a manner or with the effect that will prejudice the rights or interests, or the value of the rights or interests, of Participants in the Options they hold, immediately prior to the time of any such reorganisation.

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21. RIGHT OF PARTICIPANTS

21.1 Nothing in these Terms:
(a) confers on a Participant the right to receive any Shares;
(b) confers on a Participant who is a Director the right to continue as a Director;
(c) confers on a Participant the right to continue as an employee of the Company or a Related Body Corporate of the Company;
(d) affects any rights which the Company, or a Related Body Corporate of the Company, may have to terminate the appointment of a Participant who is a Director or terminate the employment of an employee; or
(e) may be used to increase damages in any action brought against the Company or a Related Body Corporate in respect of any such termination.

22. TERMINATION AND SUSPENSION OF THE PLAN

The Directors may resolve at any time to terminate or suspend the operation of the Plan.

23. GOVERNING LAW

The Plan is governed by and shall be construed and take effect in accordance with the laws of South Australia.

24. SHAREHOLDER APPROVAL

Clauses 13 to 17 only come into effect on the passing of an appropriate shareholders’ resolution to authorise the granting of financial assistance to a Participant.

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Appointment of proxy

HIGHFIELD RESOURCES LIMITED

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

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All Registry communication to: Advanced Share Registry Ltd 110 Stirling Highway Nedlands WA 6009 PO Box 1156 Nedlands WA 6909 Telephone: (08) 9389 8033 Facsimile: (08) 9262 3723 Website: www.advancedshare.com.au www.highfieldresources.com.au

You can now vote online at  www.advancedshare.com.au/investors.aspx

I/We being a member(s) of HIGHFIELD RESOURCES LIMITED ACN 153 918 257 and entitled to attend and vote hereby appoint.

A the Chairman of the Meeting (mark box)

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 securityholder) you are appointing as your proxy

==> picture [188 x 34] intentionally omitted <==

Or failing the person/body corporate named, or if no person/body corporate 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 instructions (or if no directions have been given, as the proxy sees fit) at the Annual General Meeting of the Company to be held at 11:00am (Adelaide Time), 30 October 2015 and at any adjournment of that meeting. Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available on request from the share registry. Proxies will only be valid and accepted by the Company if they are signed and received at the Company’s registered office no later than 48 hours before the meeting.

Important for Resolution 1 and 9 – 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 and 9 as set out below and in the Notice of Meeting. If you do not mark this box, and you have not directed your proxy how to vote on Resolution 1 and 9, the Chairman of the Meeting will not cast your votes on Resolution 1 and 9 and your votes will not be counted in computing the required majority if a poll is called on this resolution. 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 of the Meeting intends to vote all available proxies in favour of Resolution 1 and 9 of business.

I/We direct the Chairman of the Meeting to vote in accordance with the Chairman’s voting intentions on Resolution 1 and 9 (except where I/we have indicated a different voting intention below) and acknowledge that the Chairman of the Meeting may exercise my proxy even though resolution 1 is connected directly or indirectly with the remuneration of a member of key management personnel.

If you appoint the Chairman of the Meeting as your proxy you acknowledge that in acting as your proxy the Chairman may exercise your undirected proxy votes (if you do not specify below how your proxy is to vote) even if he or she has an interest in the outcome of the resolution which carries a voting exclusion providing that votes cast by him or her other than as a proxyholder will be disregarded because of that interest. The Chairman intends to vote undirected proxies IN FAVOUR of each resolution.

Should you desire to direct your proxy how to vote on any resolution please insert  in the appropriate box below.

Resolution	For	Against	Abstain	Resolution	For	Against	Abstain
1. Adoption of Remuneration Report				9. Issue Options to Derek Carter			
2. Re-election of Richard Crookes				10. Issue Options to Pauline Carr			
3. Re-election of Owen Hegarty				11. Issue Options to Donald Stephens			
4. Election of Pauline Carr				12. Issue of Options to Mike Norris			
5. Issue Options to Richard Crookes				13. Subsequent Approval of Issue of Shares			
6. Issue Options to Owen Hegarty				14. Approval of Employee Share Option Plan			
7. Issue Options to Anthony Hall				15. Amendment to Constitution			
8. Issue Options to Pedro Rodriguez			

*If you mark the Abstain box for a particular Resolution, 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

B PLEASE SIGN HERE This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented

Securityholder 1(individual) Sole Director and Sole Company Secretary Contact Name	Joint Securityholder 2(individual) Director/Company Secretary (Delete one)	Joint Securityholder 3(individual)	Joint Securityholder 3(individual)

			Director / /
	Contact Daytime Telephone or Email		Date

Proxy Instructions

Generally

A shareholder entitled to attend and vote at the Annual General Meeting convened by the Notice is entitled to appoint not more than 2 proxies to vote on the shareholder’s behalf. A proxy need not be a shareholder. The proxy appointment may be a standing appointment for all annual general meetings until it is revoked. Additional proxy forms are available from the Company.

If a representative of a shareholder or proxy is to attend the meeting the appropriate “Certificate of Appointment of Corporate Representative” must be produced prior to admission. A form of the certificate may be obtained from the Company’s share registry by calling +61 8 9389 8033.

Appointing Two Proxies

A shareholder entitled to cast 2 or more votes may appoint 2 proxies. Where 2 proxies are appointed, if the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise one half of your votes. Fractions of votes will be disregarded.

Signing Instructions

Individuals: The shareholder must sign personally. Joint Holding: If the holding is in more than 1 name, all of the shareholders must sign.

Company: 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) 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 sign in the appropriate place to indicate the office held.

Power of Attorney: The attorney must sign and the power of attorney must be deposited at the Company’s registered office for inspection and return, when the proxy is lodged.

Lodgement of a Proxy

Proxy forms (and the power of attorney, if any, under which the proxy form is signed) must be lodged at, or sent by facsimile transmission to, the offices of the Company so that it is received no later than 11:00am (Adelaide time), 28 October 2015.

Documents may be lodged:

IN PERSON Share Registry – Advanced Share Registry, 110 Stirling Highway Nedlands WA 6009, Australia Registered Office

BY MAIL Share Registry – Advanced Share Registry, PO Box 1156, Nedlands WA 6909, Australia BY FAX +61 8 9262 3723

Your Address

This is your address as it appears on the Company’s share register. If this information is incorrect, please make the correction on the form and sign it. Security holders sponsored by a broker (in which case your reference number overleaf will commence with an “X”) should advise your broker of any changes. You cannot change ownership of your shares using this form.

AI assistant

HIGHFIELD RESOURCES LIMITED — AGM Information 2015

65048_rns_2015-09-27_76ea6c1c-1524-43d2-aa9b-31c4ff51dcc1.pdf

HIGHFIELD RESOURCES LIMITED ACN 153 918 257

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

NOTICE OF ANNUAL GENERAL MEETING

HIGHFIELD RESOURCES LIMITED ACN 153 918 257

Ordinary Business

Resolution 1: Adoption of Remuneration Report

Resolution 2: Re-election of Richard Crookes as Director

Resolution 3: Re-election of Owen Hegarty as Director

Resolution 4: Election of Pauline Carr as Director

Resolution 5: Issue of Options to Richard Crookes

Resolution 6: Issue of Options to Owen Hegarty

Resolution 7: Issue of Options to Anthony Hall

Resolution 8: Issue of Options to Pedro Rodriguez

Resolution 9: Issue of Options to Derek Carter

Resolution 10: Issue of Options to Pauline Carr

Resolution 11: Issue of Options to Donald Stephens

Resolution 12: Issue of Options to Mike Norris

Resolution 13: Subsequent Approval of the Issue of 30,855,000 Shares

Resolution 14: Approval of Employee Share Option Plan

Resolution 15: Amendment to Constitution – Payment of Dividends

DATED 28 SEPTEMBER 2015

BY ORDER OF THE BOARD

HIGHFIELD RESOURCES LIMITED

DONALD STEPHENS COMPANY SECRETARY

1. Explanatory Memorandum

2. Voting Exclusion Statements

Resolutions 5 to 10

(d) Resolution 12

(e) Resolution 13

(f) Resolution 14

3. Proxies

OR

4. ‘Snap Shot’ Time

5. Corporate Representative

EXPLANATORY MEMORANDUM

1. RESOLUTION 1: ADOPTION OF REMUNERATION REPORT

2. RESOLUTION 2: RE-ELECTION OF RICHARD CROOKES AS DIRECTOR

Mr Richard Crookes

Non-Executive Director, BSc (Geology), Grad Dip Applied Finance

3. RESOLUTION 3: RE-ELECTION OF OWEN HEGARTY AS DIRECTOR

Mr Owen Hegarty

Non-Executive Director, BEc (Hons), FAusIMM

4. RESOLUTION 4: ELECTION OF PAULINE CARR AS DIRECTOR

Ms Pauline Carr

BEc, MBA, FAICD, FGIA

5. RESOLUTIONS 5 TO 10: ISSUE OF OPTIONS TO DIRECTORS

5.1 General

5.2 Chapter 2E of the Corporations Act

5.3 Listing Rule 10.11

6. RESOLUTION 11: ISSUE OF OPTIONS TO DONALD STEPHENS

6.1 General

6.2 Technical information required by Listing Rule 7.3

7. RESOLUTION 12: ISSUE OF OPTIONS TO MIKE NORRIS

7.2 Technical information required by Listing Rule 7.3

8. RESOLUTION 13: SUBSEQUENT APPROVAL OF THE ISSUE OF 30,855,000 SHARES

9. RESOLUTION 14: APPROVAL OF EMPLOYEE SHARE OPTION PLAN

10. RESOLUTION 15: AMENDMENT TO CONSTITUTION – PAYMENT OF DIVIDENDS

11. GLOSSARY

ANNEXURE A

ANNEXURE B

HIGHFIELD RESOURCES LIMITED EMPLOYEE SHARE OPTION PLAN

1. DEFINITIONS AND INTERPRETATION

1.2 Interpretation

Business Day and Day

2. DIRECTORS’ AUTHORITY

3. OPTIONS, OPTION PRICE AND EXERCISE PRICE

4.

OFFER OF OPTIONS

5. VESTING AND ENTITLEMENT

6. EXERCISE OF OPTIONS

8.

TRANSFER

9.

QUOTATION OF PLAN SHARES

10. PARTICIPATION IN FUTURE ISSUES

HIGHFIELD RESOURCES LIMITED AGM Information 2015