20 May 2020

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Dear Shareholder ,

On behalf of Highfield Resources Limited, it is my pleasure to invite you to attend by audio webcast the Annual General Meeting (“AGM”) for the Company’s 2019 financial year.

The key AGM meeting details are:

Time: 9.30am Adelaide time (Australian Central Standard Time)
Date: Wednesday 27 May 2020
Web access: visit www.highfieldresources.com.au for information

The Notice of Meeting (“Notice”) sent to you on 27 April 2020, outlines the items for shareholders to consider for the meeting. Further explanatory notes about the resolutions are provided in the Explanatory Statement in the Notice of Meeting document (which can be also be found on our website at: (https://www.highfieldresources.com.au/wp-content/uploads/sites/2/2020/04/FINAL-AGMdocs-ASX-upload.pdf )

Participating in the AGM

This year’s AGM is a little different to previous years. As I am sure you can appreciate, we are unable to hold our AGM in person this year due to the COVID-19 pandemic and the restrictions on gatherings and social distancing measures the Government has implemented. Instead, we invite you to attend our AGM from wherever you are in the world via audio webcast. If you would like to join us please follow these steps:

Please follow the link https://services.choruscall.com.au/webcast/highfield-200527.html to register to join the Highfield Resources Limited AGM audio webcast.
You may submit any questions when you register via the link above or by emailing [email protected].
On the day and once in the audio webcast, you will be placed on hold with music until the conference call starts.
These details on how to attend the meeting will also be published on the Company’s website at https://www.highfieldresources.com.au/asx-releases/ .

AGM Questions

At this year’s AGM we will once again share with you the developments at Highfield and our plans for the future. Our audio webcast will include a function where you will be able to ask questions of the Board or the Company’s auditor about the business of the meeting or management of the Company.

If you would like to ask a question at the meeting you will need to let us know beforehand and no later than by 9.30am (Adelaide time) Monday 25 May 2020 as you will need a special passcode. If possible, we request that any questions you have be submitted prior to meeting, including any questions of the auditor on the financials statements of the Company, either when you register via the link above or via email to [email protected].

Please endeavour to have your questions submitted by no later than 9.30am (Adelaide time) Monday 25 May 2020.

Registered Office C/– HLB Mann Judd 169 Fullarton Road Dulwich, SA 5065 Australia

–––––––––––––––––– T. +61 8 8133 5098 F. +61 8 8431 3502

Head Office Avenida Carlos III, 13 - 1°B, 31002 Pamplona, Spain

Highfield Resources Limited ACN 153 918 257 ASX: HFR Issued Capital 329.5 million shares 24.66 million options

T. +34 948 050 577 F. +34 948 050 578

www.highfieldresources.com.au

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A copy of the Company’s 2019 Annual Report can be found at

https://www.highfieldresources.com.au/wp - content/uploads/sites/2/2020/03/HFRAnnualReport2019 27.pdf

Voting in Real Time at the Meeting

The Company initially allowed votes on the resolutions contained in the Notice of Meeting to be cast by proxy or ahead of the meeting only. Subsequent to the release of its Notice of Meeting , on 6 May 2020 the Government released the Corporations (Coronavirus Economic Response) Determination (No.1) 2020 (“ Determination ”). The Determination temporarily alters the provisions of the Corporations Act 2001 to allow for the holding of general meetings using technology.

A condition under the Determination is that shareholders must be entitled to vote in real time using the technology available to the Company. Therefore, the Company has considered it appropriate to amend the process for voting at the AGM to allow shareholders to also vote in real time at the AGM.

To facilitate this change and to ensure the Company complies with the Determination, the Company will be able to accept votes cast in real time (including by proxy voters) at the AGM. The Determination permits companies to amend existing notices of meeting to comply with the provisions of the Determination at least 7 days before the meeting is held.

To register for real time voting at the meeting, we ask that shareholders complete the Registration Form attached to this letter, carefully following all the instructions, and return via email to [email protected] or by post to Advanced Share Registry Limited PO BOX 1156 Nedlands WA 6909 .

If you do not receive a meeting instructions email, providing you with details on how to vote in real time at the meeting, from our share registry by 25 May 2020, please kindly contact their office on [email protected] or on (08) 9389 8033.

A weblink will also be included on the webcast to assist with the easy navigation of the online real time voting function.

Voting by Proxy Before the Meeting

It is still highly encouraged to vote on the resolutions contained in the Notice of Meeting via proxy. If you wish to vote by proxy please complete and lodge the Proxy Form as soon as possible and, in any event, by no later than 9.30am (Adelaide time) 25 May 2020 . You can lodge your proxy electronically by using the on line proxy voting facility. Instructions on all the ways you can vote by proxy are set out on your Proxy Form and the Notice of Meeting.

Updated Notice of Meeting

The attached revised Notice of Meeting contains updated information regarding the holding of the meeting. Other than the switch to online real time poll voting and updated information regarding voting, there are no substantive changes to the Notice of Meeting. Shareholders are still unable to physically attend the AGM.

Details on how to participate in the AGM will also be published on the Company’s website – www.highfieldresources.com.au.

On behalf of my fellow Directors, I look forward to welcoming you at the AGM, to share the Company’s achievements and future outlook with you.

Yours sincerely,

Richard Crookes

Chairman of the Board

www.highfieldresources.com.au

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Highfield Resources Limited Shareholders Meeting online polling lodgment

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Registered Name(s)
Registered Address
POSTCODE
Securityholder Reference Number (SRN) or
Holder Identification Number (HIN)
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*Please provide all information marked with * above.

If you wish to participate in the upcoming HFR shareholders Meeting Online Voting to be held on Wednesday 27 May 2020, please provide your email address.

By providing your email address, you will receive all meeting related instructions and online polling details via email.

Signature of shareholders/proxyholders

Shareholder 1/proxy holder (individual) Sole Director and Sole Company Secretary Contact Name	Joint Shareholder 2 Director Contact Number	Joint Shareholders 3

		Director/Company Secretary
		Date

Important Notes:

(1) Please ensure your email address is provided otherwise, you will not be able to participate in online polling.
(2) If you do not receive a meeting instructions email from us by 25 May 2020, please kindly contact our office on [email protected] or on 08 9389 8033.
(3) If you are lodging in the online poll as a proxy holder on behalf of a shareholder(s), please provide a copy of your photo ID together with this form. Please also ensure that a completed and signed proxy form is lodged 48 hours before the meeting.
(4) If you hold a Corporate holding under XYZ, please provide a copy of a completed and signed Corporate representative form with this form 48 hours before the meeting.
(5) The lodgment form and any supporting documents (if required) could be lodged by email to [email protected] or by post to Advanced Share Registry Limited PO BOX 1156 Nedlands WA 6909.

HIGHFIELD RESOURCES LIMITED ACN 153 918 257

__________

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

__________

Date of Meeting 27 May 2020

Time of Meeting

9.30 am (Adelaide time)

Place of Meeting

via webcast https://services.choruscall.com.au/webcast/highfield-200527.html

IMPACTS OF COVID-19 ON THE MEETING

At the date of this Notice, due to restrictions applicable in South Australia as a result of COVID-19, it will not be possible to convene the Meeting physically. While the COVID-19 situation remains volatile and uncertain, based on the best information available to the Board at the time of this Notice, the Company intends to decide the outcome of voting on the resolutions in the Notice by proxy voting, submitted ahead of the Meeting, and via online poll voting.

The Company strongly encourages all shareholders to lodge a directed proxy vote prior to the cut-off date for proxy voting as set out in the Notice. To lodge your proxy, please follow the directions on your personalised proxy form which will be enclosed with the copy of the Notice, delivered to you by email or post (depending on your communication preferences).

The Company is happy to answer questions prior to the close of proxy voting via email, such questions should be sent to the following email address [email protected].

If the situation in relation to COVID-19 were to change in a way that materially affects the position above, the Company will provide a further update ahead of the Meeting.

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 via webcast at 9.30 am (Adelaide time) on 27 May 2020.

Ordinary Business

To consider the Financial Statements for the financial year ended 31 December 2019 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 a nonbinding ordinary resolution:

‘ That the Company adopt the Remuneration Report for the year ended 31 December 2019 as set out in the Company’s Annual Report for the year ended 31 December 2019. ’

Resolution 2: Re-election of Mr 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 clause 12.11.1 of the 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 Mr Jim Dietz as Director

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

‘ That Mr Jim Dietz, having voluntarily retired in accordance with clause 12.11.1 of the 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 4: Issue of Options to Non-Executive Director - Mr Richard Crookes

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

‘ Subject to the passing of Resolution 2, that for the purposes of section 195(4) of the Corporations Act, 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 set out in the Explanatory Memorandum. ’

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Resolution 5: Issue of Options to Non-Executive Director - Mr Jim Dietz

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

‘ Subject to the passing of Resolution 3, that for the purposes of section 195(4) of the Corporations Act, 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 Jim Dietz (or his nominee) on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 6: Issue of Options to Non-Executive Director - Mr Roger Davey

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

‘ That for the purposes of section 195(4) of the Corporations Act, 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 Roger Davey (or his nominee) on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 7: Issue of Options to Non-Executive Director - Mr Brian Jamieson

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

‘ That for the purposes of section 195(4) of the Corporations Act, 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 Brian Jamieson (or his nominee) on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 8: Issue of Options to Non-Executive Director - Mr Isaac Querub

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

‘ That for the purposes of section 195(4) of the Corporations Act, 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 Isaac Querub (or his nominee) on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 9: Issue of Options to Non-Executive Director – Ms Pauline Carr

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

‘ That for the purposes of section 195(4) of the Corporations Act, 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 set out in the Explanatory Memorandum. ’

Resolution 10: Approval of Employee Long Term Incentive 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 13(b) and for all other purposes, the Company approves the issue of securities under the employee incentive scheme known as ‘Highfield Resources Limited Employee Long Term Incentive Plan’, the rules of which are annexed as Annexure A to the Explanatory Memorandum, as an exception to Listing Rule 7.1. ’

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Resolution 11: Approval of 10% Placement Facility

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

‘ That pursuant to and in accordance with Listing Rule 7.1A and for all other purposes, shareholders approve the issue of Equity Securities up to 10% of the issued capital of the Company (at the time of the issue) calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 12: Amendment to Constitution

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

‘ That for the purpose of section 136(2) of the Corporations Act and for all other purposes, the Constitution be amended by deleting rule 8.11 and substituting in its place:

“8.11 The Company shall comply in all respects with the requirements of the Listing Rules with respect to restricted securities (as that term is defined in the Listing Rules). Without limiting the generality of the above:
(a) a holder of restricted securities must not dispose (as that term is defined in the Listing Rules) of, or agree or offer to dispose of, the securities during the escrow period applicable to those securities except as permitted by the Listing Rules or ASX;
(b) if the restricted securities are in the same class as quoted securities, the holder will be taken to have agreed in writing that the restricted securities are to be kept on the Company’s issuer sponsored subregister (as that term is defined in the Listing Rules) and are to have a holding lock (as that term is defined in the Listing Rules) applied for the duration of the escrow period applicable to those securities;
(c) the Company will refuse to acknowledge any disposal (including, without limitation, to register any transfer) of restricted securities during the escrow period applicable to those securities except as permitted by the Listing Rules or ASX;
(d) a holder of restricted securities will not be entitled to participate in any return of capital on those securities during the escrow period applicable to those securities except as permitted by the Listing Rules or ASX; and
(e) if a holder of restricted securities breaches a restriction deed or a provision of this document restricting a disposal of those securities, the holder will not be entitled to any dividend or distribution, or to exercise any voting rights, in respect of those securities for so long as the breach continues.” ’

Resolution 13: Adoption of Directors’ Share 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 13(b) and for all other purposes, shareholders approve the adoption of the Directors’ Share Plan, and for the issue of shares under the Directors’ Share Plan, on the terms and conditions set out in the Explanatory Memorandum, as an exception to Listing Rule 7.1. ’

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Resolution 14: Approval for Issue of Shares Under Directors’ Share Plan to Mr Richard Crookes

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

‘ Subject to the passing of Resolutions 2 and 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Mr Richard Crookes (or his nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 15: Approval for Issue of Shares Under Directors’ Share Plan to Mr Jim Dietz

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

‘ Subject to the passing of Resolutions 3 and 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Mr Jim Dietz (or his nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 16: Approval for Issue of Shares Under Directors’ Share Plan to Mr Roger Davey

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

‘ Subject to the passing of Resolution 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Mr Roger Davey (or his nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 17: Approval for Issue of Shares Under Directors’ Share Plan to Mr Brian Jamieson

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

‘ Subject to the passing of Resolution 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Mr Brian Jamieson (or his nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

Resolution 18: Approval for Issue of Shares Under Directors’ Share Plan to Mr Isaac Querub

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

‘ Subject to the passing of Resolution 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Mr Isaac Querub (or his nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

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Resolution 19: Approval for Issue of Shares Under Directors’ Share Plan to Ms 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 13, that for the purposes of section 195(4) of the Corporations Act, Listing Rule 10.14 and for all other purposes, the Company is authorised pursuant to the Directors’ Share Plan to issue shares in the Company to Ms Pauline Carr (or her nominee) in lieu of Director’s fees on the terms and conditions set out in the Explanatory Memorandum. ’

DATED 27 APRIL 2020

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 4, 5, 6, 7, 8 and 9

(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 4, 5, 6, 7, 8 or 9 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 in favour of Resolution 4, 5, 6, 7, 8 or 9 by or on behalf of :
in the case of Resolution 4, Mr Richard Crookes (or his nominee) and an associate of that person or those persons;
in the case of Resolution 5, Mr Jim Dietz (or his nominee) and an associate of that person or those persons;
in the case of Resolution 6, Mr Roger Davey (or his nominee) and an associate of that person or those persons;
in the case of Resolution 7, Mr Brian Jamieson (or his nominee) and an associate of that person or those persons;
in the case of Resolution 8, Mr Isaac Querub (or his nominee) and an associate of that person or those persons; and
in the case of Resolution 9, Ms Pauline Carr (or her nominee) and an associate of that person or those persons.

However, this does not apply to a vote cast in favour of a resolution by:

a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions given to the proxy or attorney to vote on the resolution in that way; or
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

(c) Resolution 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 Resolution 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

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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 in favour of Resolution 10 by or on behalf of a person (and their associates) who is eligible to participate in the Highfield Resources Limited Employee Long Term Incentive Plan.

However, this does not apply to a vote cast in favour of a resolution by:

a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions given to the proxy or attorney to vote on the resolution in that way; or
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

(d) Resolution 13

(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 13 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:

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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.
(iii) For the purposes of the Listing Rules, the Company will disregard any votes cast in favour of Resolution 13 by or on behalf of a person (and their associates) who is eligible to participate in the Directors’ Share Plan.

However, this does not apply to a vote cast in favour of a resolution by:

a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions given to the proxy or attorney to vote on the resolution in that way; or
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

(e) Resolutions 14, 15, 16, 17, 18 and 19

(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, 15, 16, 17, 18 or 19 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

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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 in favour of Resolution 14, 15, 16, 17, 18 or 19 by or on behalf of a person (and their associates) referred to in Listing Rule 10.14.1, 10.14.2 or 10.14.3 who is eligible to participate in the Directors’ Share Plan. The Company’s non-executive Directors being Messrs Richard Crookes, Jim Dietz, Roger Davey, Brian Jamieson and Isaac Querub, and Ms Pauline Carr, are currently eligible to participate in the Directors’ Share Plan.

However, this does not apply to a vote cast in favour of a resolution by:

a person as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with directions given to the proxy or attorney to vote on the resolution in that way; or
the chair of the meeting as proxy or attorney for a person who is entitled to vote on the resolution, in accordance with a direction given to the chair to vote on the resolution as the chair decides; or
a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on the resolution; and
the holder votes on the resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

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/investor-login or, if using a mobile device, by scanning the QR code on the shareholder’s proxy form and entering the shareholder’s registered postcode; or

3.2 complete and lodge a validly completed and signed paper proxy form at the share registry of the Company, Advanced Share Registry Services:
(a) in person at the following address: Advanced Share Registry 110 Stirling Highway NEDLANDS WA 6009

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OR

(b) by post at the following address: Advanced Share Registry PO Box 1156 NEDLANDS WA 6909

(c) by facsimile on (08) 6370 4203 (within Australia) or +61 8 6370 4203 (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 9.30 am (Adelaide time) on 25 May 2020.

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, 4 to 10, and 13 to 19 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, 4 to 10, and 13 to 19 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of each item of business. In exceptional circumstances, the chair may change his or her voting intention on any resolution, in which case an ASX announcement will be made.

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 25 May 2020 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.

36960: 1958218

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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 27 May 2020. 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 19 (inclusive).

1. RESOLUTION 1: ADOPTION OF REMUNERATION REPORT

The Annual Report for the year ended 31 December 2019 contains a Remuneration Report which sets out the remuneration policy of the Company.

An electronic copy of the Annual Report is available to download or view on the Company’s website at www.highfieldresources.com.au. The 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 you can direct the

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

Resolution 1 is an advisory resolution.

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

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 reelection. 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 last annual general meeting.

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

Clause 12.11.1 of the Constitution requires 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 Chairman and Acting Chief Executive Officer, BSc (Geology), Grad Dip Applied Finance

Mr Crookes has over 30 years’ experience in the resources and investments industries. He is a geologist by training having worked in the industry most recently as the Chief Geologist and Mining Manager of Ernest Henry Mining in Australia (now Glencore). Mr Crookes most recently spent six years with EMR Capital as an Investment Director and prior to that, 12 years as 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 as well as the origination of numerous project Finance transactions. Mr Crookes has extensive experience in funds management, deal origination, evaluation, structuring, and execution of investment entry and exits for both private and public resources companies in Australia and overseas. In the three years immediately before the end of the financial year, Mr Crookes held two other directorships of listed companies (Chairman Black Rock Mining Limited BKT:ASX, since October 2017; Executive Director Lithium Power International Ltd LPI:ASX, since October 2018).

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.

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3. RESOLUTION 3: RE-ELECTION OF MR JIM DIETZ AS DIRECTOR

Clause 12.11.1 of the Constitution requires 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 Jim Dietz retires as a Director and, being eligible, offers himself for re-election.

A resume for Mr Dietz follows:

Mr Jim Dietz

Independent Non-Executive Director, B.Eng (Chem), M.Eng (Chem)

Mr Dietz has over 42 years’ experience in the fertiliser, chemical and petroleum industries, primarily in senior operational roles. From 2000 until 2010, he was Chief Operating Officer of Potash Corporation of Saskatchewan ( PotashCorp ), the world’s largest fertiliser company. Prior to that position, Mr Dietz held a variety of other senior management roles, including President of Nitrogen, during his 17 year career with PotashCorp. During that time, Mr Dietz was responsible for global operations as well as Safety, Health, and Environment performance and Procurement. Mr Dietz also represented PotashCorp on the Board of Directors of Arab Potash Company. Mr Dietz is a Chemical Engineer and holds both a Masters and Bachelors designation from the Ohio State University. In the three years immediately before the end of the financial year, Mr Dietz held no other directorships of listed companies.

Resolution 3 is an ordinary resolution.

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

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

4. RESOLUTIONS 4, 5, 6, 7, 8 AND 9: ISSUE OF OPTIONS TO NON-EXECUTIVE DIRECTORS

4.1 General

The Company has agreed, subject to obtaining shareholder approval, to issue options to its current non-executive Directors as part of their incentive based remuneration package. Resolutions 4 to 9 seek shareholder approval for the grant of options to the following current non-executive Directors (or their nominees):

(a) Mr Richard Crookes: 1,000,000 options (subject to the passing of Resolution 2);
(b) Mr Jim Dietz: 1,000,000 options (subject to the passing of Resolution 3);
(c) Mr Roger Davey: 1,000,000 options;
(d) Mr Brian Jamieson: 1,000,000 options;
(e) Mr Isaac Querub: 1,000,000 options; and
(f) Ms Pauline Carr: 1,000,000 options,

( Related Party Options ).

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4.2 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, Dietz, Davey, Jamieson and Querub, and Ms Carr, are related parties of the Company by virtue of being Directors.

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.

4.3 Listing Rule 10.11

Listing Rule 10.11 provides that unless one of the exceptions in Listing Rule 10.12 applies, a listed company must not issue or agree to issue equity securities to:

(a) a related party;
(b) a person who is, or was at any time in the six months before the issue or agreement, a substantial (30%+) holder in the company;
(c) a person who is, or was at any time in the six months before the issue or agreement, a substantial (10%+) holder in the company and who has nominated a director to the board of the company pursuant to a relevant agreement which gives them a right or expectation to do so;
(d) an associate of a person referred to in Listing Rules 10.11.1 to 10.11.3; or
(e) a person whose relationship with the company or a person referred to in Listing Rules 10.11.1 to 10.11.4 is such that, in ASX’s opinion, the issue or agreement should be approved by its shareholders,

unless it obtains the approval of its shareholders.

The issue of the Related Party Options falls within Listing Rule 10.11.1 and does not fall within any of the exceptions in Listing Rule 10.12. It therefore requires the approval of the Company’s shareholders under Listing Rule 10.11.

Resolution 4, 5, 6, 7, 8 and 9 seek the required shareholder approval to the issue of the Related Party Options under and for the purposes of Listing Rule 10.11.

If any of Resolutions 4, 5, 6, 7, 8 and 9 is passed, the Company will be able to proceed with the issue of the Related Party Options the subject of that Resolution.

If any of Resolutions 4, 5, 6, 7, 8 and 9 is not passed, the Company will not be able to proceed with the issue of the Related Party Options the subject of that Resolution and

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may need to consider other ways to remunerate the relevant Director as part of their incentive based remuneration package.

4.4 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 4 to 9:

(a) The Related Party Options will be issued to Messrs Crookes (subject to the passing of Resolution 2), Dietz (subject to the passing of Resolution 3), Davey, Jamieson and Querub, and Ms Carr, or their respective nominees.
(b) Each of Messrs Crookes, Dietz, Davey, Jamieson and Querub, and Ms Carr, is a director of the Company and therefore a related party under Listing Rule 10.11.1.
(c) The number of Related Party Options to be issued is as follows:
(i) Mr Crookes: 1,000,000 options (subject to the passing of Resolution 2);
(ii) Mr Dietz: 1,000,000 options (subject to the passing of Resolution 3);
(iii) Mr Davey: 1,000,000 options;
(iv) Mr Jamieson: 1,000,000 options;
(v) Mr Querub: 1,000,000 options; and
(vi) Ms Carr: 1,000,000 options.
(d) The terms and conditions of the Related Party Options are set out in Annexure A.
(e) 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).
(f) The Related Party Options will not be issued for cash consideration.
(g) The Related Party Options will be issued to Directors as part of their incentive based remuneration package, and accordingly no funds will be raised by the issue.
(h) Details of each Director’s current total remuneration package is as follows:
(i) Mr Crookes: non-executive director fee of $129,000 per annum;
(ii) Mr Dietz: non-executive director fee of $69,000 per annum;
(iii) Mr Davey: non-executive director fee of $69,000 per annum;
(iv) Mr Jamieson: non-executive director fee of $69,000 per annum;
(v) Mr Querub: non-executive director fee of $60,000 per annum; and
(vi) Ms Carr: non-executive director fee of $96,000 per annum.

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(i) The Related Party Options are not issued under an agreement.

Each of Resolutions 4 to 9 is an ordinary resolution.

As the Directors have an interest in Resolutions 4 to 9, they do not wish to make a recommendation as to how shareholders ought to vote on Resolutions 4 to 9.

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 Resolutions 4 to 9 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 4 to 9 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of each of Resolutions 4 to 9.

The passing of Resolution 4 is conditional upon, and subject to, the passing of Resolution 2. Accordingly, if you intend to vote in favour of Resolution 4, you should also vote in favour of Resolution 2.

The passing of Resolution 5 is conditional upon, and subject to, the passing of Resolution 3. Accordingly, if you intend to vote in favour of Resolution 5, you should also vote in favour of Resolution 3.

5. RESOLUTION 10: APPROVAL OF EMPLOYEE LONG TERM INCENTIVE PLAN

By ordinary resolution passed at the Annual General Meeting of the Company held on 30 November 2017, the Company approved the issue of securities pursuant to a long term incentive plan, known as the Highfield Resources Limited Employee Long Term Incentive Plan ( Plan ), under which employees, consultants, officers and Directors may be offered the opportunity to receive options, performance rights or deferred share awards ( Awards ) in order to increase the range of potential incentives available to them, and to strengthen links between the Company and its employees, consultants, officers and Directors.

The Plan is designed to provide incentives to the employees, consultants, officers and Directors of the Company and to recognise their contribution to the Company’s success. Under the Company’s current circumstances the Directors consider that Awards are a cost effective and efficient means of incentivising employees, consultants, officers and Directors. To enable the Company to secure employees, consultants, officers and Directors 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 Awards in the Company as the Board may decide and on terms set out in the rules of the Plan. Awards 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.

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of equity securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary shares it had on issue at the start of that period.

Listing Rule 7.2 contains a number of exceptions to Listing Rule 7.1. In particular, Exception 13(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

Page 17

securities have approved the issue of securities under the scheme as an exception to Listing Rule 7.1.

The purpose of Resolution 10 is to seek approval of the issue of securities under the Plan for the purpose of Exception 13(b) of Listing Rule 7.2 and for all other purposes.

If Resolution 10 is passed, the Company may issue Awards under the Plan without using up any of the Company’s 15% limit on issuing equity securities without shareholder approval set out in Listing Rule 7.1.

If Resolution 10 is not passed, the Company may still issue Awards under the Plan but it will reduce, to that extent, the Company’s capacity to issue equity securities without shareholder approval under Listing Rule 7.1 for 12 months following the issue.

In accordance with the requirements of Exception 13(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 previously approved the issue of securities under the Plan for the purpose of Exception 13(b) of Listing Rule 7.2 at the Annual General Meeting of the Company held on 30 November 2017, and 20,655,126 Awards have been issued under the Plan since this date;
(c) a maximum number of 7,000,000 Awards are proposed to be issued under the Plan following approval; and
(d) a voting exclusion statement has been included for the purpose of Resolution 10.

Resolution 10 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 10 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 10 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of Resolution 10.

6. RESOLUTION 11: APPROVAL OF 10% PLACEMENT FACILITY

6.1 General

Broadly speaking, and subject to a number of exceptions, Listing Rule 7.1 limits the amount of Equity Securities that a listed company can issue without the approval of its shareholders over any 12 month period to 15% of the fully paid ordinary securities it had on issue at the start of that period.

Under Listing Rule 7.1A, however, an eligible entity can seek approval from its members, by way of a special resolution passed at its annual general meeting, to increase this 15% limit by an extra 10% to 25% ( 10% Placement Facility ).

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An ‘eligible entity’ means an entity which is not included in the S&P/ASX 300 Index and which has a market capitalisation of $300 million or less. The Company is an eligible entity for these purposes.

Resolution 11 seeks shareholder approval by way of special resolution for the Company to have the additional 10% capacity provided for in Listing Rule 7.1A to issue Equity Securities without shareholder approval. The exact number of Equity Securities which may be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to section 6.2(c)).

If Resolution 11 is passed, the Company will be able to issue Equity Securities up to the combined 25% limit in Listing Rules 7.1 and 7.1A without any further shareholder approval.

If Resolution 11 is not passed, the Company will not be able to access the 10% Placement Facility and will remain subject to the 15% limit on issuing Equity Securities without shareholder approval set out in Listing Rule 7.1.

6.2 Description of Listing Rule 7.1A

(a) Shareholder approval

The ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a special resolution at an annual general meeting.

(b) Equity Securities

Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company.

The Company, as at the date of the Notice, has on issue the following classes of Equity Securities:

ordinary shares quoted on ASX
options not quoted on ASX
(c)

Formula for calculating 10% Placement Facility

Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an annual general meeting may, during the period of the approval, issue or agree to issue, during the 10% Placement Period (refer to section 6.2(f)), a number of Equity Securities calculated in accordance with the following formula:

(A x D) – E

Where:

A is the number of fully paid ordinary securities on issue at the commencement of the relevant period:
plus the number of fully paid ordinary securities issued in the relevant period under an exception in Listing Rule 7.2 other than exception 9, 16 or 17;

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plus the number of fully paid ordinary securities issued in the relevant period on the conversion of convertible securities within Listing Rule 7.2 exception 9 where:
the convertible securities were issued or agreed to be issued before the commencement of the relevant period; or
the issue of, or agreement to issue, the convertible securities was approved, or taken under the Listing Rules to have been approved, under Listing Rule 7.1 or Listing Rule 7.4;
plus the number of fully paid ordinary securities issued in the relevant period under an agreement to issue securities within Listing Rule 7.2 exception 16 where:
the agreement was entered into before the commencement of the relevant period; or
the agreement or issue was approved, or taken under the Listing Rules to have been approved, under Listing Rule 7.1 or Listing Rule 7.4;
plus the number of any other fully paid ordinary securities issued in the relevant period with approval under Listing Rule 7.1 or Listing Rule 7.4;
plus the number of partly paid ordinary securities that became fully paid in the relevant period;
less the number of fully paid ordinary securities cancelled in the relevant period.

( Note that A has the same meaning in Listing Rule 7.1 when calculating an entity’s 15% placement capacity. )

is 10%

E is the number of Equity Securities issued or agreed to be issued under Listing Rule 7.1A.2 in the relevant period where the issue or agreement has not been subsequently approved by the holders of its ordinary securities under Listing Rule 7.4.

( Note that relevant period has the same meaning in Listing Rule 7.1, namely:

if the entity has been admitted to the official list for 12 months or more, the 12 month period immediately preceding the date of the issue or agreement; or
if the entity has been admitted to the official list for less than 12 months, the period from the date the entity was admitted to the official list to the date immediately preceding the date of the issue or agreement. )

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(d) Listing Rule 7.1 and Listing Rule 7.1A

The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity’s 15% placement capacity under Listing Rule 7.l.

At the date of this Notice, the Company has on issue 329,525,003 quoted ordinary shares and therefore has a capacity to issue:

(i) 49,428,750 Equity Securities under Listing Rule 7.1; and
(ii) subject to shareholder approval being obtained under Resolution 12, 32,952,500 Equity Securities under Listing Rule 7.1A.

The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at the date of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to section 6.2(c)).

(e) Minimum Issue Price

The Equity Securities issued under Listing Rule 7.1A.2 must be issued for a cash consideration per security which is not less than 75% of the VWAP of Equity Securities in the same class calculated over the 15 Trading Days on which trades in that class were recorded immediately before:

(i) the date on which the price at which the Equity Securities are to be issued is agreed by the entity and the recipient of the Equity Securities; or
(ii) if the Equity Securities are not issued within 10 Trading Days of the date referred to in section 6.2(e)(i), the date on which the Equity Securities are issued.

(f) 10% Placement Period

Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires on the first to occur of:

(i) the date that is 12 months after the date of the annual general meeting at which the approval is obtained;
(ii) the time and date of the entity’s next annual general meeting; and
(iii) the time and date of the approval by shareholders of a transaction under Listing Rule 11.1.2 (a significant change to the nature or scale of activities) or Listing Rule 11.2 (disposal of main undertaking),

( 10% Placement Period ).

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6.3 Listing Rule 7.1A

The effect of Resolution 11 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the 10% Placement Period in addition to using the Company’s 15% placement capacity under Listing Rule 7.1.

Resolution 11 is a special resolution and therefore requires approval of at least 75% of the votes cast by shareholders entitled to vote (in person, by proxy, by attorney or, in the case of a corporate shareholder, by a corporate representative) on the Resolution.

6.4 Specific information required by Listing Rule 7.3A

Pursuant to and in accordance with Listing Rule 7.3A, information is provided in relation to the approval of the 10% Placement Facility as follows to the extent that such information is not disclosed elsewhere in this Explanatory Memorandum:

(a) The Company may seek to issue the Equity Securities for cash consideration. In such circumstances, the Company intends to use the funds raised towards an acquisition of new assets or investments (including expense associated with such acquisition) and/or general working capital.
(b) There is a risk that:
(i) the market price for the Company’s Equity Securities in the same class may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and
(ii) the Equity Securities may be issued at a price that is at a discount to the market price for the Company’s Equity Securities in the same class on the issue date,

which may have an effect on the amount of funds raised by the issue of the Equity Securities.

The table below shows the risk of voting dilution of existing shareholders on the basis of the current market price of shares and the current number of ordinary shares for variable ‘A’ calculated in accordance with the formula in Listing Rule 7.1A.2 as at the date of this Notice.

The table also shows:

(i) two examples where variable ‘A’ has increased, by 50% and 100%. Variable ‘A’ is based on the number of ordinary shares the Company has on issue. The number of ordinary shares on issue may increase as a result of issues of ordinary shares that do not require shareholder approval (for example, a pro rata entitlements issue) or future specific placements under Listing Rule 7.1 that are approved at a future shareholders’ meeting; and
(i) two examples of where the issue price of ordinary shares has decreased by 50% and increased by 100% as against the current market price.

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Variable ‘A’ in formula in Listing Rule 7.1A.2			Issue Price
		$0.1375 50% decrease in issue price	$0.275 issue price	$0.55 100% increase in issue price
Current Variable ‘A’ 329,525,003 shares	10% voting dilution	32,952,500 shares	32,952,500 shares	32,952,500 shares
	Funds raised	$4,530,969	$9,061,938	$[insert]
50% increase in current Variable ‘A’ 494,287,504 shares	10% voting dilution	49,428,750 shares	49,428,750 shares	49,428,750 shares
	Funds raised	$6,796,453	$13,592,906	$27,185,813
100% increase in current Variable ‘A’ 659,050,006 shares	10% voting dilution	65,905,000 shares	65,905,000 shares	65,905,000 shares
	Funds raised	$9,061,938	$18,123,875	$36,247,750

The table has been prepared on the following assumptions:

The Company issues the maximum number of Equity Securities available under the 10% Placement Facility.
No current options are exercised into shares before the date of the issue of the Equity Securities.
The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%.
The table does not show an example of dilution that may be caused to a particular shareholder by reason of placements pursuant to the 10% Placement Facility, based on that shareholder’s holding at the date of the Meeting.
The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A and no other issues of Equity Securities.
The issue of Equity Securities under the 10% Placement Facility consists only of shares.
The issue price is $0.275, being the closing price of the shares on ASX on 16 April 2020.
(c) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of Equity Securities and the number of Equity Securities allotted to each will be determined on a case-by-case basis having regard to factors including, but not limited to, the following:

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(i) the methods of raising funds that are available to the Company including, but not limited to, rights issue or other issue in which the existing security holders can participate;
(ii) the effect of the issue of the Equity Securities on the control of the Company;
(iii) the financial situation and solvency of the Company; and
(iv) advice from corporate, financial and broking advisers (if applicable).

The allottees under the 10% Placement Facility have not been determined as at the date of this Notice but may include existing substantial shareholders (subject to shareholder approval, if required) and/or new shareholders who are not related parties or associates of a related party of the Company.

(d) The Company previously obtained shareholder approval under Listing Rule 7.1A at its 2019 Annual General Meeting, and has not issued or agreed to issue any Equity Securities under Listing Rule 7.1A.2 in the 12 months preceding the date of this Meeting.
(e) At the time of dispatching this Notice, the Company is not proposing to make an issue of Equity Securities under Listing Rule 7.1A.2.

Resolution 11 is a special resolution .

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

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

7. RESOLUTION 12: AMENDMENT TO CONSTITUTION

Resolution 12 seeks approval to amend the Company’s Constitution to reflect recent amendments made to Listing Rule 15.12 effective from 1 December 2019.

These changes give effect to ASX’s new two-tier escrow regime where only significant holders of restricted securities (related parties, promoters, substantial holders, vendors of classified assets, and their associates) will be required to execute a formal restriction deed, as currently. For less significant holdings, companies will instead be able to provide holders with a ‘restriction notice’, in reliance upon a prescribed provision in their constitution by which the company’s shareholders agree not to dispose of restricted securities during the escrow period, and agree to the application of a holding lock for that period.

The new changes apply to companies admitted to the official list of ASX, or that issue restricted securities, on or after 1 December 2019. Companies listed on ASX which issued restricted securities prior to that date must continue to comply with the provisions of Listing Rule 15.12 as previously in force. Subject to those transitional provisions, under the new Listing Rule 15.12, for as long as the Company has any restricted securities on issue, its constitution must include the required provisions, as set out in Resolution 12.

As the Company is listed, the new provisions would apply in the event that the Company subsequently undertakes a transaction requiring re-compliance with Chapters 1 and 2 of the Listing Rules under Listing Rule 11.1.3 involving the issue of restricted securities (in the context of a significant change to the Company’s nature or scale of activities), or issues restricted securities to a party referred to in Listing Rule 10.1 for the acquisition of a substantial classified asset from that party.

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The purpose of this proposed amendment is therefore to ensure that the Constitution reflects the requirements of ASX’s modified escrow regime, as outlined 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 12 is a special resolution .

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

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

8. RESOLUTION 13: ADOPTION OF DIRECTORS’ SHARE PLAN

8.1 Background

The purpose of Resolution 13 is to seek approval of the issue of securities under the Directors’ Share Plan for the purpose of Exception 13(b) of Listing Rule 7.2 and for all other purposes.

The purpose of the Directors’ Share Plan is to give Directors of the Company an opportunity to subscribe for shares in lieu of salary or Directors’ fees, allowing the Company to retain cash reserves.

Any future issues of shares under the Directors’ Share Plan to a person referred to in Listing Rule 10.14 will require additional shareholder approval under Listing Rule 10.14 at the relevant time. For this reason, the Company is also seeking approval under Resolutions 14 to 19 for the issue of shares to Directors pursuant to the Directors’ Share Plan.

If Resolution 13 is passed, the Company may issue shares under the Directors’ Share Plan without using up any of the Company’s 15% limit on issuing equity securities without shareholder approval set out in Listing Rule 7.1.

If Resolution 13 is not passed, the Company will not issue any shares under the Directors’ Share Plan and it will not be necessary to vote on Resolutions 14 to 19.

8.2 Terms and conditions of Directors’ Share Plan

A summary of the terms and conditions of the Directors’ Share Plan is set out below:

(a) Participants in the Directors’ Share Plan

The Board may offer shares to a Director of the Company or any subsidiary, including Non-Executive Directors ( Eligible Participant ).

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Subject to shareholder approval, the Board may offer to Eligible Participants the opportunity to subscribe for shares in lieu of Directors’ fees owing by the Company to the Eligible Participant and upon such additional terms and conditions as the Board determines (including, without limitation, that an Eligible Participant continues to be a Director of the Company at the relevant time).

An Eligible Participant will not be required to make any payment in return for the shares as they will be issued in satisfaction of Directors’ fees owing by the Company at the time of issue of the shares, calculated on a quarterly basis.

(b) Limitations of Offers

If the Company makes an offer of shares where:

(i) the total number of shares the subject of that offer, exceeds the limit set out in ASIC Class Order 14/1000; or
(ii) the offer does not otherwise comply with the terms and conditions set out in ASIC Class Order 14/1000

the Company must comply with Chapter 6D of the Corporations Act at the time of that offer.

(c)

Issue of Shares

Shares issued under the Directors’ Share Plan will rank equally in all respects with the then issued class of fully paid ordinary shares of the Company.

The Company will issue shares under the Directors’ Share Plan on a quarterly basis, being 30 September, 31 December, 31 March and 30 June each year ( Quarter ).

The issue of shares under the Directors’ Share Plan will be deemed to satisfy the relevant fees or salary owing by the Company to the Eligible Participant.

Shares issued to an Eligible Participant under the Directors’ Share Plan will have no restrictions on their transfer.

(d) Deemed issue price of Shares

The shares issued pursuant to the Directors’ Share Plan will be issued for nil cash consideration as they will be issued in satisfaction of fees and salary owing by the Company to the Eligible Participant. The shares will be deemed to have an issue price as determined by the Board at the time of issue of the shares but such deemed issue price will be no less than the VWAP of shares sold on ASX during the three months prior to the expiration of the relevant Quarter.

(e)

Shareholder Approval

All shares issued pursuant to the Directors’ Share Plan will be subject to prior shareholder approval under the Listing Rules and the Corporations Act (if required).

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(f) Amendments

Subject to the Listing Rules, the Board may at any time by resolution amend all or any of the provisions of the Directors’ Share Plan, or the terms or conditions of any shares issued under the Directors’ Share Plan, provided that as soon as reasonably practicable after making any amendment, the Board gives notice in writing of that amendment to any Eligible Participant affected by the amendment.

(g) Non-residents of Australia

The Board may adopt additional rules of the Directors’ Share Plan applicable in any jurisdiction outside Australia under which rights offered under the Directors’ Share Plan may be subject to additional or modified terms, having regard to any securities, exchange control or taxation laws or regulations or similar factors which may apply to the Eligible Participant or to the Company in relation to the rights. Any additional rule must conform to the basic principles of the Directors’ Share Plan.

8.3 Shareholder Approval under Resolution 13

In accordance with the requirements of Exception 13(b) of Listing Rule 7.2 the following information is provided:

(a) a summary of the rules of the Directors’ Share Plan is set out in section 8.2 and a full copy of the Plan is available for inspection at the Company’s registered office until the date of the Meeting;
(b) no shares have previously been issued under the Directors’ Share Plan as this is the first time the Directors’ Share Plan is being approved;
(c) a maximum number of 700,000 shares are proposed to be issued under the Directors’ Share Plan following approval; and
(d) a voting exclusion statement has been included for the purpose of Resolution 13.

Resolution 13 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 13 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 13 by marking the appropriate box on the proxy form.

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

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RESOLUTIONS 14 TO 19 – APPROVAL FOR ISSUES OF SHARES UNDER DIRECTORS’ SHARE PLAN TO MESSRS RICHARD CROOKES, JIM DIETZ, ROGER DAVEY, BRIAN JAMIESON AND ISAAC QUERUB, AND MS PAULINE CARR

9.1 General

In order to conserve Company funds Messrs Richard Crookes, Jim Dietz, Roger Davey, Brian Jamieson and Isaac Querub, and Ms Pauline Carr, ( Participating Directors ) have agreed to participate in the Directors’ Share Plan in respect of part of the Directors’ fees which the Company has agreed to pay the Participating Directors for the 12 month period commencing on 1 July 2020 and ending on 30 June 2021. Under the terms of the Directors’ Share Plan, Participating Directors have elected to receive part of their Directors’ fees as shares ( Director Shares ) in lieu of cash in order to retain the cash reserves of the Company.

Resolutions 14 to 19 seek shareholder approval for the Company to issue the Participating Directors shares over the 12 month period from 1 July 2020 to 30 June 2021 in lieu of up to 25% of their Directors’ fees.

The Director Shares will be deemed to have an issue price as determined by the Board at the time of issue of the Director Shares but such deemed issue price will be no less than the VWAP of shares sold on ASX during the three months prior to the expiration of each quarter of each year. The proposed commencement date of the Directors’ Share Plan is 1 July 2020.

9.2 Chapter 2E of the Corporations Act

Chapter 2E of the Corporations Act requires that 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 issue of Director Shares constitutes giving a financial benefit as the Participating Directors are related parties of the Company by virtue of being Directors.

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

9.3 Listing Rule 10.14

Listing Rule 10.14 provides that a listed company must not permit any of the following persons to acquire equity securities under an employee incentive scheme:

(a) a director of the company; or
(b) an associate of a director of the company; or

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(c) a person whose relationship with the company or a person referred to in Listing Rule 10.14.1 or 10.14.2 is such that, in ASX’s opinion, the acquisition should be approved by its shareholders,

unless it obtains the approval of its shareholders.

The issue of the Director Shares falls within Listing Rule 10.14.1 and therefore requires the approval of the Company’s shareholders under Listing Rule 10.14.

Resolutions 14, 15, 16, 17, 18 and 19 seek the required shareholder approval to the issue of the Director Shares under and for the purposes of Listing Rule 10.14.

If any of resolution Resolutions 14, 15, 16, 17, 18 and 19 is passed, the Company will be able to proceed with the issue of the Director Shares the subject of that Resolution.

If any of resolution Resolutions 14, 15, 16, 17, 18 and 19 is not passed, the Company will not be able to proceed with the issue of the Director Shares the subject of that Resolution and will have to pay the whole of the Director’s fee payable to the relevant Participating Director in cash.

9.4 Technical Information Required Listing Rule 10.15

Pursuant to and in accordance with the requirements of Listing Rule 10.15, the following information is provided in relation to the proposed issue of Director Shares to the Participating Directors:

(a) The Director Shares will be issued under the Directors’ Share Plan to Messrs Crookes (subject to the passing of Resolution 2), Dietz (subject to the passing of Resolution 3), Davey, Jamieson and Querub, and Ms Carr, or their respective nominees.
(b) Each of Messrs Crookes, Dietz, Davey, Jamieson and Querub, and Ms Carr, is a director of the Company and therefore falls within Listing Rule 10.14.1.
(c) The Director Shares are fully paid ordinary shares in the Company and, subject to a maximum number of 700,000 shares being issued under the Directors’ Share Plan, the number of Director Shares to be issued to each Participating Director will be calculated in accordance with the following formula:

Number of shares issued each quarter to each Participating Director = A / B

Where:

A = 25% of each Participating Director’s fee for the quarter
B = the deemed issue price for the quarter, being not less than the VWAP of shares sold on ASX during the three months prior to the expiration of the relevant quarter
(d) Details of each Director’s current total remuneration package is as follows:
(i) Mr Crookes: non-executive director fee of $129,000 per annum;
(ii) Mr Dietz: non-executive director fee of $69,000 per annum;
(iii) Mr Davey: non-executive director fee of $69,000 per annum;
(iv) Mr Jamieson: non-executive director fee of $69,000 per annum;

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(v) Mr Querub: non-executive director fee of $60,000 per annum; and
(vi) Ms Carr: non-executive director fee of $96,000 per annum.
(e) No Director Shares have previously been issued under the Directors’ Share Plan as it is being put up for approval for the first time at the Meeting (see Resolution 13).
(f) The Director Shares are fully paid ordinary shares in the Company.
(g) The Company will issue Director Shares under the Directors’ Share Plan on a quarterly basis, and in any case not later than three years after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules).
(h) The Director Shares will be issued for nil cash consideration as they will be issued in satisfaction of Directors’ fees agreed to be paid by the Company to the Participating Directors at quarterly intervals. The Director Shares will be deemed to have an issue price as determined by the Board at the time of issue of the Director Shares but such deemed issue price will be no less than the VWAP of shares sold on ASX during the three months prior to the expiration of each quarter of each year.
(i) A summary of the rules of the Directors’ Share Plan is set out in section 8.2 and a full copy of the Plan is available for inspection at the Company’s registered office until the date of the Meeting.
(j) No loan will be made to any Participating Director in relation to the acquisition of Director Shares.
(k) Details of any shares issued under the Directors’ Share Plan will be published in the annual report of the Company relating to the period in which they were issued, along with a statement that approval for the issue was obtained under Listing Rule 10.14.

Any additional persons covered by Listing Rule 10.14 who become entitled to participate in an issue of share under the Directors’ Share Plan after the resolution is approved and who are not named in this Notice will not participate until approval is obtained under Listing Rule 10.14.

Each of Resolutions 14 to 19 is an ordinary resolution.

As the Directors have an interest in Resolutions 14 to 19, they do not wish to make a recommendation as to how shareholders ought to vote on Resolutions 14 to 19.

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 Resolutions 14 to 19 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 14 to 19 by marking the appropriate box on the proxy form.

The chair intends to vote undirected proxies in favour of each of Resolutions 14 to 19.

The passing of Resolution 14 is conditional upon, and subject to, the passing of Resolutions 2 and 13. Accordingly, if you intend to vote in favour of Resolution 14, you should also vote in favour of Resolutions 2 and 13.

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The passing of Resolution 15 is conditional upon, and subject to, the passing of Resolutions 3 and 13. Accordingly, if you intend to vote in favour of Resolution 15, you should also vote in favour of Resolutions 3 and 13.

The passing of each of Resolutions 16 to 19 is conditional upon, and subject to, the passing of Resolution 13. Accordingly, if you intend to vote in favour of any of Resolutions 16 to 19, you should also vote in favour of Resolution 13.

10. 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:

10% Placement Facility has the meaning given in section 6.1;

10% Placement Period has the meaning given in section 6.2(f);

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);

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;

Equity Securities has the same meaning as in the Listing Rules;

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;

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Trading Day means a day determined by ASX to be a trading day in accordance with the Listing Rules; and

VWAP means volume weighted average market price.

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ANNEXURE A

(OPTIONS TO NON-EXECUTIVE DIRECTORS)

Each option entitles the holder to one ordinary share in the Company.
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 2023 ( Exercise Period ). Options not exercised before the expiry of the Exercise Period will lapse.
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 $0.81 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 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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==> picture [48 x 10] intentionally omitted <==

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;

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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 LONG TERM INCENTIVE PLAN

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Employee Long Term Incentive Plan Rules

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1	Introduction	1
2	Definitions and Interpretation	1
3	Awards that may be made under the Plan	3
4	Offers of Awards	4
5	Dilution limit	5
6	Vesting and Exercise of Awards	6
7	Allotment of Shares on exercise or vesting of Awards	6
8	Share buy-back or transfer	7
9	Restricted Awards	7
10	Hedging unvested Awards	8
11	Adjustments	8
12	Power of attorney	9
13	Powers of the Board	9
14	Commencement, suspension, termination and amendment of Plan	10
15	General provisions	10

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Employee Long Term Incentive Plan

1 Introduction

Purpose of plan

1.1 The Company has established this Plan to encourage Employees to share in the ownership of the Company and to promote the long-term success of the Company as a goal shared by all Employees.

Advice

1.2 There are legal and tax consequences associated with participation in the Plan. Employees should ensure that they understand these consequences before accepting an invitation to participate in the Plan.
1.3 Any advice given by or on behalf of the Company is general advice only, and Employees should consider obtaining their own financial product advice from an independent person who is licensed by ASIC to give such advice.

2 Definitions and Interpretation

Definitions

2.1 In these Rules unless the contrary intention appears, terms defined in the Corporations Act or Listing Rules have the same meaning in these Rules, and:

Application means a written acceptance of an Offer for, or an application for, Awards in a form approved by or acceptable to the Board.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited or the securities market which it operates, as the context requires.

Award means:

(a) an Option,
(b) a Performance Right,
(c) a Deferred Share Award,
(d) as applicable.

Board means the Board of Directors of the Company.

Company means Highfield Resources Limited (ABN 51 153 918 257).

Corporations Act means the Corporations Act 2001 (Cth).

Deferred Share Award means a Share issued under clause 3.4.

Employee means a person or entity within the meaning of "eligible participant" as defined in ASIC Class Order [Co 14/1000] as varied from time to time of the Company or of any related body corporate of the Company.

exercise means exercise of an Award in accordance with its terms, and includes automatic exercise in accordance with these Rules.

Exercise Price means the price payable (if any) per Share to exercise an Award.

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Expiry Date means the date on which an Award lapses, being the date specified in an Offer as the Expiry Date, or fixed by a method of calculation set out in an Offer.

issue of a Share includes the transfer of an existing Share in accordance with clause 7.3.

Issue Price means the price (if any) to be paid for the issue of a Share as stated in the Offer.

Liability means any liability, whether actual or contingent, present or future, quantified or unquantified.

Listed means the Company being and remaining admitted to the official list of the ASX.

Listing Rules means the Listing Rules of ASX and any other rules of the ASX which are applicable while the Company is Listed each as amended or replaced from time to time, except to the extent of any waiver granted by the ASX.

Market Price means the weighted average sale price of Shares on the ASX over the five trading days immediately preceding the day the Offer is made, or another pricing method determined by the Company.

Offer means an offer or issue of Awards made to an Employee under clause 4. Where Awards are issued without the need for acceptance, an Offer includes the document setting out the terms of the Award.

Option means an option to acquire Shares issued under clause 3.2.

Participant means an Employee to whom Awards are issued.

Performance Right means a right to acquire a Share issued under clause 3.3.

Plan means this Employee Incentive Plan.

Restricted Award means an Award or a Share issued on exercise of an Award in respect of which a restriction on sale or disposal applies under this Plan.

Restriction Period means the period during which Awards, or Shares issued on exercise of Awards, must not be sold or disposed of, being the period specified in these Rules in respect of Deferred Share Awards and as specified in the Offer in respect of other Awards.

Rules means these rules as amended from time to time.

Security Interest means a right, interest, power or arrangement in relation to any property which provides security for, or protects against default by a person in, the payment or satisfaction of a debt, obligation or Liability, including a mortgage, charge, bill of sale, pledge, deposit, lien, encumbrance or hypothecation and a security interest as defined in sections 12(1) and 12(2) of the Personal Property Securities Act 2009 (Cth).

Share means a fully paid ordinary share of the Company.

Tax Act means the Income Tax Assessment Act 1936, the Income Tax Assessment Act 1997 , or any legislation amending or replacing the provisions of those Acts relating to the issue and exercise of Awards.

Vesting Conditions means any conditions described in the Offer that must be satisfied before an Award can be exercised or before an Award (or Share issued under an Award) is no longer subject to forfeiture.

Vesting Date means the date on which an Award is exercisable or is no longer subject to forfeiture following satisfaction of any Vesting Conditions.

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Interpretation

2.2 In these Rules, unless expressed to the contrary:
(a) terms defined in the Corporations Act have the same meaning in these Rules;
(b) words importing:
- (i) the singular include the plural and vice versa;
- (ii) any gender includes the other genders;
(c) if a word or phrase is defined cognate words and phrases have corresponding definitions;
(d) a reference to:
- (i) a person includes a firm, unincorporated association, corporation and a government or statutory body or authority;
- (ii) a person includes its legal personal representatives, successors and assigns;
- (iii) a statute, ordinance, code or other law includes regulations and other statutory instruments under it and consolidations, amendments, re-enactments or replacements of any of them;
- (iv) a right includes a benefit, remedy, discretion, authority or power;
- (v) "$" or "dollars" is a reference to the lawful currency of Australia;
- (vi) this or any other document includes the document as varied or replaced and notwithstanding any change in the identity of the parties; and
- (vii) any thing (including, without limitation, any amount) is a reference to the whole or any part of it and a reference to a group of things or persons is a reference to any one or more of them.

Headings

2.3 Headings are for convenience only and do not affect the interpretation of these Rules.

Tax treatment of Plan

2.4 This Plan is a plan to which Subdivision 83A-C of the Tax Act applies (subject to the conditions in that Act).

3 Awards that may be made under the Plan

3.1 The Company may, at the discretion of the Board, offer and issue Awards to Employees of the kind set out in this clause 3.

Options

3.2 The Company may offer or issue Options, which are rights to be issued a Share upon payment of the Exercise Price and satisfaction of specified Vesting Conditions. These terms apply unless the Offer specifies otherwise:
(a) Options are Restricted Awards until they are exercised or expire.

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(b) An Offer may specify a Restriction Period for Shares issued on the exercise of Options.
(c) Options are subject to adjustment under clause 11.

Performance Rights

3.3 The Company may offer or issue Performance Rights, which are rights to be issued a Share for nil Exercise Price upon the satisfaction of specified Vesting Conditions. These terms apply unless the Offer specifies otherwise:
(a) Performance Rights are Restricted Awards until they are exercised or expire.
(b) An Offer may specify a Restriction Period for Shares issued on the exercise of Performance Rights.
(c) Performance Rights are subject to adjustment under clause 11.

Deferred Share Awards

3.4 The Company may offer or issue Deferred Share Awards, which are Shares issued to Employees:
(a) who elect to receive Shares in lieu of any wages, salary, director's fees, or other remuneration; or
(b) by the Company in its discretion, in addition to their wages, salary and remuneration, or in lieu of any discretionary cash bonus or other incentive payment.
3.5 Unless a different Restriction Period is specified in an Offer, the Restriction Period for Deferred Share Awards will expire on the earlier of:
(a) when a Participant ceases to be an Employee;
(b) when the Board, in its discretion, agrees to end the Restriction Period; and
(c) 10 years from the date of issue of the Shares.

4 Offers of Awards

4.1 Subject to clause 5, the Company may make an Offer to any Employee.

Form of Offer

4.2 Each Offer must be in writing (which includes email), include an Application if acceptance is required, and specify the following to the extent applicable:
(a) the name and address of the Employee to whom the Offer is made;
(b) the type of Awards being offered;
(c) the number of Awards being offered;
(d) any Vesting Conditions for the Awards;
(e) the Issue Price and/or Exercise Price for the Awards, or the manner in which the Issue Price and/or Exercise Price is to be determined;
(f) the Expiry Date (if any);

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(g) any Restriction Period;
(h) any other terms or conditions that the Board decides to include; and
(i) any other matters required to be specified in the Offer by either the Corporations Act or the Listing Rules.
4.3 If required by applicable laws or the conditions to applicable ASIC relief, the Offer must include an undertaking by the Company to provide to a Participant, if a request is made before the Award is Exercised and within a reasonable period of being so requested, the current market price of the Shares.

Compliance with laws

4.4 No Offer will be made to the extent that any such Offer would contravene the Company's Constitution, the Listing Rules, the Corporations Act or any other applicable law.

Acceptance

4.5 If acceptance of an Offer is required, it may be accepted:
(a) by an Employee completing and returning the Application, as required by the Offer, by not later than the date specified in the Offer; and
(b) if required, by the Employee making or directing payment of the total amount payable for the Awards (if any) accepted under the Offer, in the manner specified in the Offer.
4.6 An Offer which requires acceptance lapses if it is not accepted by the Employee to whom the Offer is made as required under clause 4.5.

5 Dilution limit

5.1 An Offer of Awards must not be made if the total of the following:
(a) the number of Shares which are the subject of the Offer of Awards;
(b) the total number of Shares which are the subject of any outstanding Offers of Awards;
(c) the total number of Shares issued during the previous three years under this Plan or any other employee share scheme extended only to Employees of the Company (adjusted if necessary in each case for capital reorganisations), but not including existing Shares transferred to a Participant after having been acquired for that purpose; and
(d) the total number of Shares which would be issued under all outstanding Awards that have been granted but which have not yet been exercised, terminated or expired, assuming all such Awards were exercised and ignoring any Vesting Conditions,

but disregarding any Offer made, or Award offered or issued, or Share issued by way of or as a result of:

(a) an offer to a person situated outside Australia at the time of receipt of the offer;
(b) an offer that was an excluded offer or invitation as defined in the Corporations Law as in force before the commencement of Schedule 1 to the Corporate Law Economic Reform Program Act 1999;
(c) an offer that did not need disclosure to investors because of section 708 of the Corporations Act;

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(d) an offer that did not require the giving of a Product Disclosure Statement because of section 1012D of the Corporations Act; or
(e) of offer made under a disclosure document or Product Disclosure Statement as defined in the Corporations Act,

would exceed 5% of the number of Shares on issue at the time of the Offer.

6 Vesting and Exercise of Awards

Vesting

6.1 The Awards held by a Participant will vest in and become exercisable by that Participant upon the satisfaction of any Vesting Conditions specified in the Offer and in accordance with these Rules.
6.2 Vesting Conditions may be waived at the absolute discretion of the Board (unless such waiver is excluded by the terms of the Award).

Automatic Exercise

6.3 Unless clause 6.4 applies, the vesting of an Award on the satisfaction of any Vesting Conditions will not automatically trigger the exercise of the Award.
6.4 The terms of an Award which has a nil Exercise Price may provide for the Award to be exercised automatically upon vesting. Further, and whether or not the terms of the Award provide for it, the Board may in its discretion waive any requirement that an issued Award which has a nil Exercise Price be exercised by the Participant. In either case the Company will treat the Award as having been validly exercised on the Vesting Date.

Exercise of Awards

6.5 A Participant is, subject to this clause 6, entitled to exercise an Award on or after the Vesting Date. Any exercise must be for a minimum number or multiple of Shares (if any) specified in the terms of the Offer.
6.6 Awards may be exercised by the Participant delivering to the Company a notice stating the number of Awards to be exercised together with the Issue Price (if any) for the Shares to be issued.

7 Allotment of Shares on exercise or vesting of Awards

Rights attaching to Shares

7.1 The Shares issued under this Plan will upon allotment:
(a) be credited as fully paid;
(b) rank equally for dividends and other entitlements where the record date is on or after the date of allotment, but will carry no right to receive any dividend or entitlement where the record date is before the date of allotment; and
(c) be subject to any restrictions imposed under these Rules, and
(d) otherwise rank equally with the existing issued Shares at the time of allotment.

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Quotation

7.2 If the Company is Listed, then as soon as practicable after the date of the allotment of Shares, the Company will, unless the Board otherwise resolves, apply for official quotation of such Shares on the ASX.

New or existing Shares

7.3 The Company may, in its discretion, either issue new Shares or cause existing Shares to be acquired for transfer to the Participant, or a combination of both alternatives, to satisfy the Company's obligations under these Rules.
7.4 If the Company determines to cause the transfer of Shares to a Participant, the Shares may be acquired in such manner as the Company considers appropriate, including from a trustee appointed under clause 7.5.

Trustee

7.5 The Company may appoint a trustee on terms and conditions which it considers appropriate to acquire and hold Shares, options, or other securities of the Company either on behalf of Participants or for the purposes of this Plan.

8 Share buy-back or transfer

When Shares are bought back or transferred

8.1 Shares held by a Participant will be bought back and cancelled if the relevant Vesting Conditions have not been satisfied by the last date for their satisfaction (if applicable) or have otherwise failed to be satisfied.

Buy back price

8.2 The Board may determine any amount that the Company should pay to the Participant in respect of a buy back.

How Shares are bought back

8.3 A Participant and the Company must do whatever is necessary or desirable to effect a buyback or transfer of Shares when required under clause 8. Each Participant irrevocably appoints the Company and each of its Directors and secretaries from time to time severally as its attorney to sign any document necessary or desirable, and carry out any act, on that Participant's behalf for the purposes of this clause 8.
8.4 If it is impractical to buy back Shares to which this clause 8 applies, or if the Board in its discretion otherwise determines, the Company may instead of buying back the relevant Shares direct that they be transferred to a person nominated by the Company.

9 Restricted Awards

Restrictions

9.1 A Participant must not sell, transfer, mortgage, pledge, charge, grant security over or otherwise dispose of any Restricted Awards, or agree to do any of those things, during the Restriction Period.

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9.2 The Company may implement any procedures it considers appropriate to ensure that Restricted Awards are not disposed of during the Restriction Period, including applying a holding lock in respect of Shares.
9.3 Without limiting its discretions under these Rules, the Board may at any time in its discretion waive or shorten the Restriction Period applicable to an Award.

Bonus issues

9.4 If the Company makes a pro rata bonus issue to holders of Restricted Awards, the Shares issued to Participants under the pro rata bonus issue will be subject to the balance of the Restriction Period that applied to the Restricted Awards.

Takeovers etc

9.5 If a takeover bid is made to acquire all of the issued Shares of the Company, or a scheme of arrangement, selective capital reduction or other transaction is initiated which has an effect similar to a full takeover bid for Shares in the Company, then Participants are entitled to accept the takeover bid or participate in the other transaction in respect of all or part of their Awards notwithstanding that the Restriction Period in respect of such Awards has not expired. The Board may, in its discretion, waive unsatisfied Vesting Conditions in relation to some or all Awards in the event of a such a takeover or other transaction.

Personal representatives

9.6 If a Participant dies before the end of the Restriction Period, then the legal personal representative of that deceased Participant will have the same rights and benefits and be subject to the same obligations in respect of those Shares as the deceased Participant would have had or been subject to had they survived until the end of the Restriction Period.

10 Hedging unvested Awards

10.1 Participants must not enter into transactions or arrangements, including by way of derivatives or similar financial products, which limit the economic risk of holding unvested Awards as restricted in the Company's securities trading policy.

11 Adjustments

11.1 This clause 11 applies to Options, Performance Rights, and other Awards where the Participant may be entitled to acquire Shares in the future on exercise of the Award.

New issues of shares

11.2 A Participant is not entitled to participate in a new issue of Shares or other securities made by the Company to holders of its Shares without exercising the Awards before the record date for the relevant issue.

Bonus issues

11.3 If, prior to the exercise of an Award, the Company makes a pro-rata bonus issue to the holders of its Shares, and the Award is not exercised prior to the record date in respect of that bonus issue, the Award will, when exercised, entitle the holder to one Share plus the number of bonus shares which would have been issued to the holder if the Award had been exercised prior to the record date.

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Other reorganisations of capital

11.4 If, prior to the exercise of an Award, the Company undergoes a reorganisation of capital (other than by way of a bonus issue or issue for cash) the terms of the Awards of the Participant will be changed to the extent necessary to comply with the Listing Rules as they apply at the relevant time.

General

11.5 Unless otherwise permitted by the Listing Rules, the number of Shares which the Participant is entitled to receive on exercise of an Award will only be adjusted in accordance with this clause 11.
11.6 The Company must give notice to Participants of any adjustment to the number of Shares which the Participant is entitled to receive on exercise of an Award in accordance with the Listing Rules.

12 Power of attorney

12.1 In consideration of the issue of the Awards, each Participant irrevocably appoints each director and the secretary for the time being of the Company severally as his or her attorney, to do all acts and things and to complete and execute any documents, including share transfers, in his or her name and on his or her behalf that may be convenient or necessary for the purpose of giving effect to the provisions of these Rules or the terms of an Award.
12.2 The Participant (or after his or her death, his or her legal personal representative) will be deemed to ratify and confirm any act or thing done under this power and must indemnify the attorney in respect of doing so.

13 Powers of the Board

13.1 The Plan will be administered by the Board, or a committee of the Board, which will have an absolute discretion to:
(a) determine appropriate procedures for administration of the Plan consistent with these Rules;
(b) resolve conclusively all questions of fact or interpretation arising in connection with the Plan or these Rules;
(c) delegate to any one or more persons, for such period and on such conditions as they may determine, the exercise of any of their powers or discretions under the Plan or these Rules;
(d) formulate special terms and conditions (subject to the Listing Rules), in addition to those set out in these Rules to apply to Participants employed and/or resident in and/or who are citizens of countries other than Australia. Each of these special terms and conditions will be restricted in their application to those Participants employed and/or resident in and/or who are citizens of other jurisdictions; and
(e) amend these Rules, provided that such amendments do not materially prejudice the rights of existing Participants.
13.2 While the Company is Listed, the Board may only exercise its powers in accordance with the Listing Rules.

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14 Commencement, suspension, termination and amendment of Plan

14.1 Subject to the passing of any necessary resolution approving the establishment of the Plan and the issue of the Awards, the Plan will take effect when the Board decides.
14.2 The Plan may be suspended, terminated or amended at any time by the Board, subject to any resolution of the Company required by the Listing Rules.

15 General provisions

Participants bound

15.1 Participants issued Awards under this Plan are bound by these Rules and by the Constitution of the Company.

Notices

15.2 Any notice required to be given by the Company to a Participant or any correspondence to be made between the Company and a Participant may be given or made by the Board or its delegate on behalf of the Company.
15.3 Any notice to be given by the Company may be given by email, and any reference to the Company giving or providing information or documents in writing includes doing so by email.

Effect on employee entitlements

15.4 Participation in the Plan does not affect an Employee's terms of employment or appointment with the Company. In particular, participation in the Plan does not detract from any right the Company may have to terminate the employment or appointment of an Employee.
15.5 Participation in the Plan, or the issuing of any Awards, does not form part of the Employee's remuneration for the purposes of determining payments in lieu of notice of termination of employment, severance payments, leave entitlements, or any other compensation payable to an Employee upon the termination of employment.

Governing law

15.6 These Rules are governed by and are to be construed in accordance with the laws of South Australia, Australia.

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AI assistant

HIGHFIELD RESOURCES LIMITED — AGM Information 2020

65048_rns_2020-05-19_35ad2640-71e7-4507-818c-6820276dd2b3.pdf

Dear Shareholder ,

Participating in the AGM

AGM Questions

Voting in Real Time at the Meeting

Voting by Proxy Before the Meeting

Updated Notice of Meeting

Highfield Resources Limited Shareholders Meeting online polling lodgment

Signature of shareholders/proxyholders

Important Notes:

HIGHFIELD RESOURCES LIMITED ACN 153 918 257

NOTICE OF ANNUAL GENERAL MEETING

EXPLANATORY MEMORANDUM

PROXY FORM

__________

Time of Meeting

Place of Meeting

IMPACTS OF COVID-19 ON THE MEETING

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 Mr Richard Crookes as Director

Resolution 3: Re-election of Mr Jim Dietz as Director

Resolution 4: Issue of Options to Non-Executive Director - Mr Richard Crookes

Resolution 5: Issue of Options to Non-Executive Director - Mr Jim Dietz

Resolution 6: Issue of Options to Non-Executive Director - Mr Roger Davey

Resolution 7: Issue of Options to Non-Executive Director - Mr Brian Jamieson

Resolution 8: Issue of Options to Non-Executive Director - Mr Isaac Querub

Resolution 9: Issue of Options to Non-Executive Director – Ms Pauline Carr

Resolution 10: Approval of Employee Long Term Incentive Plan

Resolution 11: Approval of 10% Placement Facility

Resolution 12: Amendment to Constitution

Resolution 13: Adoption of Directors’ Share Plan

Resolution 14: Approval for Issue of Shares Under Directors’ Share Plan to Mr Richard Crookes

Resolution 15: Approval for Issue of Shares Under Directors’ Share Plan to Mr Jim Dietz

Resolution 16: Approval for Issue of Shares Under Directors’ Share Plan to Mr Roger Davey

Resolution 17: Approval for Issue of Shares Under Directors’ Share Plan to Mr Brian Jamieson

Resolution 18: Approval for Issue of Shares Under Directors’ Share Plan to Mr Isaac Querub

Resolution 19: Approval for Issue of Shares Under Directors’ Share Plan to Ms Pauline Carr

DATED 27 APRIL 2020

BY ORDER OF THE BOARD HIGHFIELD RESOURCES LIMITED

DONALD STEPHENS COMPANY SECRETARY

1. Explanatory Memorandum

2. Voting Exclusion Statements

Resolutions 4, 5, 6, 7, 8 and 9

(c) Resolution 10

(d) Resolution 13

(e) Resolutions 14, 15, 16, 17, 18 and 19

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 MR RICHARD CROOKES AS DIRECTOR

Mr Richard Crookes

3. RESOLUTION 3: RE-ELECTION OF MR JIM DIETZ AS DIRECTOR

Mr Jim Dietz

4. RESOLUTIONS 4, 5, 6, 7, 8 AND 9: ISSUE OF OPTIONS TO NON-EXECUTIVE DIRECTORS

4.1 General

( Related Party Options ).

4.2 Chapter 2E of the Corporations Act

4.3 Listing Rule 10.11

4.4 Technical Information required by Listing Rule 10.13

5. RESOLUTION 10: APPROVAL OF EMPLOYEE LONG TERM INCENTIVE PLAN

6. RESOLUTION 11: APPROVAL OF 10% PLACEMENT FACILITY

6.2 Description of Listing Rule 7.1A

(a) Shareholder approval

(b) Equity Securities

Formula for calculating 10% Placement Facility

(A x D) – E

(d) Listing Rule 7.1 and Listing Rule 7.1A

(e) Minimum Issue Price

(f) 10% Placement Period

( 10% Placement Period ).

6.3 Listing Rule 7.1A

6.4 Specific information required by Listing Rule 7.3A

HIGHFIELD RESOURCES LIMITED AGM Information 2020