KRAKATOA RESOURCES LIMITED

ABN 39 155 231 575

NOTICE OF GENERAL MEETING

TIME : 10:00am WST DATE : Wednesday, 11 February 2015 PLACE : RSM Bird Cameron Level 7, 8 St Georges Terrace PERTH WA 6000

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

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (08) 9481 0389.

CONT ENTS

Notice of General Meeting (setting out the proposed resolutions)	4
Explanatory Statement (explaining the proposed resolutions)	6
Terms and Conditions of Options	10
Glossary	11
Proxy Form	12

TIME AND PLACE OF MEETING AND HOW TO VOTE

VENUE

The General Meeting of the Shareholders of Krakatoa Resources Limited which this Notice of General Meeting relates to will be held at 10:00am WST on Wednesday, 11 February 2015 at RSM Bird Cameron, Level 7, 8 St Georges Terrace, Perth 6000, Western Australia.

YOUR VOTE IS IMPORTANT

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

VOTING ELIGIBILITY

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 4:00pm (WST) on Monday, 9 February 2015.

VOTING IN PERSON

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

VOTING BY PROXY

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

In accordance with section 249L of the Corporations Act, members are advised that:

each member has a right to appoint a proxy;
the proxy need not be a member of the Company; and
a member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that changes to the Corporations Act made in 2011 mean that:

if proxy holders vote, they must cast all ‘directed’ proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes are set out below.

Proxy vote if appointment specifies way to vote

Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does :

the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (i.e. as directed); and
if the proxy has 2 or more appointments that specify different ways to vote on the resolution, the proxy must not vote on a show of hands; and
if the proxy is the chair of the meeting at which the resolution is voted on – the proxy must vote on a poll, and must vote that way (i.e. as directed); and
if the proxy is not the chair – the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).

Transfer of non-chair proxy to chair in certain circumstances

Section 250BC of the Corporations Act provides that, if:

an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and
the appointed proxy is not the chair of the meeting; and
at the meeting, a poll is duly demanded on the resolution; and
either of the following applies:
the proxy is not recorded as attending the meeting;
the proxy does not vote on the resolution,

the chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.

NOTIC E OF GENERAL MEETI NG

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

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders at 4:00pm WST on Monday, 9 February 2015.

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

AGENDA

1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE OF SHARES AND OPTIONS UNDER PLACEMENT – LISTING RULE 7.1

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

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 600,000 Shares and 2,505,000 Options on the terms and conditions set out in the Explanatory Statement.”

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

2. RESOLUTION 2 – RATIFICATION OF PRIOR ISSUE OF SHARES UNDER PLACEMENT – LISTING RULE 7.1A

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

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 4,410,000 Shares on the terms and conditions set out in the Explanatory Statement.”

3. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO BROKER

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

“That for the purpose of ASX Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 655,000 Options on the terms and conditions set out in the Explanatory Statement.”

4. RESOLUTION 4 – APPROVAL FOR THE ISSUE OF OPTIONS TO BROKER

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

“That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, approval is given for the Company to issue up to 1,850,000 Options to CPS Capital Group Pty Ltd (and/or its nominee(s)) on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a security holder, if this Resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

DATED: 7 JANUARY 2015

BY ORDER OF THE BOARD

DAVID PALUMBO COMPANY SECRETARY KRAKATOA RESOURCES LIMITED

EXPL ANATORY STAT EMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the resolutions in the Notice of Meeting.

1. RESOLUTIONS 1 AND 2 – RATIFICATION OF PRIOR ISSUE OF SHARES AND OPTIONS UNDER ASX LISTING RULE 7.1 AND 7.1A

1.1 Background

During November and December 2014, the Company issued a total of 5,010,000 Shares to private investors at an issue price of $0.10 per Share, together with one (1) free-attaching unlisted Option exercisable at $0.20 each on or before 30 June 2015 for every two (2) Shares subscribed for, to raise $501,000 ( Placement ).

The Company issued the securities pursuant to the Placement as follows:

(a) 600,000 Shares and 2,505,000 unlisted Options were issued pursuant to Company’s 15% annual placement capacity under ASX Listing Rule 7.1; and
(b) 4,410,000 Shares were issued without prior Shareholder approval pursuant to the Company’s 10% annual placement capacity under ASX Listing Rule 7.1A.

1.2 Resolution 1

Resolution 1 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of 600,000 Shares and 2,505,000 unlisted Options issued without Shareholder approval pursuant to the Company’s 15% annual placement capacity under ASX Listing Rule 7.1.

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

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

By ratifying the issue of the Shares and Options the subject of Resolution 1, the Company will retain the flexibility to issue equity securities in the future of up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

1.3 Resolution 2

Resolution 2 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of 4,410,000 Shares issued without Shareholder approval pursuant to the Company’s 10% annual placement capacity under ASX Listing Rule 7.1A which was approved by Shareholders at the Company’s previous annual general meetings held on 22 November 2013 and 27 November 2014.

ASX Listing Rule 7.1A provides that in addition to issues permitted without prior shareholder approval under ASX Listing Rule 7.1, an entity that is eligible and obtains shareholder approval under ASX Listing Rule 7.1A may issue or agree to issue during the period the approval is valid a number of equity securities which represents 10% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period as adjusted in accordance with the formula in ASX Listing Rule 7.1.

ASX Listing Rule 7.4 sets out an exception to ASX Listing Rule 7.1A. It provides that where a company in general meeting ratifies the previous issue of securities made pursuant to ASX Listing Rule 7.1A those securities will from that date be included in variable “A” in the formula in ASX Listing Rules 7.1 and 7.1A.2 for the purpose of calculating the annual placement capacity of the Company under both ASX Listing Rules 7.1 and 7.1A.

By ratifying the issue the subject of Resolution 2, the base figure (i.e. variable ‘A’) in which the Company’s 15% and 10% annual placement capacities are calculated will be a higher number, which in turn will allow a proportionately higher number of securities to be issued without prior Shareholder approval.

1.4 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to Resolutions 1 and 2:

(a) 5,010,000 Shares and 2,505,000 unlisted Options were issue on the following basis:
(i) 600,000 Shares and 2,505,000 unlisted Options were issued pursuant to ASX Listing Rule 7.1; and
(ii) 4,410,000 Shares were issued pursuant to ASX Listing Rule 7.1A;
(b) the issue price per Share was $0.10 and the issue price of the unlisted Options was nil as they were issued free attaching with the Shares on a 1:2 basis;
(c) the Shares and unlisted Options were issued to clients of CPS Capital Group Pty Ltd. None of these subscribers are related parties of the Company;
(d) the unlisted Options were issued on the terms and conditions set out in Annexure ‘A’;
(e) the Shares issued were all fully paid ordinary shares in the capital of the Company and rank equally with the existing Shares on issue; and
(f) funds raised from the issue were applied towards rent payable on the Company’s exploration tenements, payments to creditors in connection with an exploration program previously completed on the Company’s BCS Tenement, payments to other administrative creditors and for general working capital purposes.

1.5 Directors’ Recommendation

None of the Directors has a material personal interest in the subject matter of Resolutions 1 and 2. The Board believes that the ratification of the issue of Shares and Options the subject of Resolutions 1 and 2 is beneficial for the Company. The Board recommends Shareholders vote in favour of Resolutions 1 and 2 as it

provides the Company with the flexibility to issue further securities representing up to 15% of the Company’s share capital during the next 12 months without prior Shareholder approval.

2. RESOLUTION 3 – RATIFICATION OF PRIOR ISSUE OF OPTIONS TO BROKER

2.1 Background

In November 2014, the Company issued a total of 655,000 unlisted Options exercisable at $0.20 each on or before 30 June 2015 to CPS Capital Group Pty Ltd (and its nominees) as consideration for brokerage services associated with the Placement.

The Company issued the 655,000 unlisted Options without prior Shareholder approval pursuant to its 15% annual placement capacity under ASX Listing Rule 7.1.

Resolution 3 seeks Shareholder ratification pursuant to ASX Listing Rule 7.4 for the issue of those Options.

A summary of ASX Listing Rules 7.1 and 7.4 is set out in section 1.2 of this Explanatory Statement.

By ratifying this issue, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

2.2 Technical information required by ASX Listing Rule 7.4

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to Resolution 3:

(a) 655,000 unlisted Options were issued;
(b) the unlisted Options were issued for nil cash consideration as they were issued in satisfaction of brokerage services associated with the Placement;
(c) the unlisted Options were issued to CPS Capital Group Pty Ltd (and its nominees). None of these parties are related parties of the Company;
(d) the unlisted Options were issued on the terms and conditions set out in Annexure ‘A’; and
(e) no funds were raised from this issue as the unlisted Options were issued in satisfaction of brokerage services associated with the Placement.

2.3 Directors’ Recommendation

None of the Directors has a material personal interest in the subject matter of Resolution 3. The Board believes that the ratification of the issue of Options the subject of Resolution 3 is beneficial for the Company. The Board recommends Shareholders vote in favour of Resolution 3 as it provides the Company with the flexibility to issue further securities representing up to 15% of the Company’s share capital during the next 12 months without prior Shareholder approval.

3. RESOLUTION 4 – APPROVAL FOR THE ISSUE OF OPTIONS TO BROKER

3.1 Background

As noted in section 1.1 above, in November and December 2014 the Company undertook a capital raising via the Placement. As an incentive to promote strong interest and participation in the Placement, the Company agreed to pay fees to CPS Capital Group Pty Ltd who provided services to the Company as part of the Placement, with such fees including an issue of Options.

Resolution 4 seeks Shareholder approval for the issue of up to 1,850,000 unlisted Options exercisable at $0.20 each on or before 30 June 2015 as consideration for brokerage services associated with the Placement.

A summary of ASX Listing Rule 7.1 is set out in section 1.2 of this Explanatory Statement.

The effect of Resolution 4 will be to allow the Company to issue the unlisted Options to CPS Capital Group Pty Ltd (or its nominees) during the period of 3 months after the Meeting (or a longer period, if allowed by ASX), without using the Company’s 15% annual placement capacity.

If Resolution 4 is not passed, the unlisted Options will be issued as soon as capacity is available under the Company's 15% annual placement capacity.

3.2 Technical information required by Listing Rule 7.1

Pursuant to and in accordance with ASX Listing Rule 7.3 the following information is provided in relation to Resolution 4:

(a) the maximum number of unlisted Options to be issued is 1,850,000;
(b) the Company proposes to issue the unlisted Options as soon as possible after the date of the Meeting and in any event, no later than three months after the date of the Meeting (or such later date to the extent permitted by ASX waiver or modification of the ASX Listing Rules) and it is intended that issue of Options will occur on the same date;
(c) the unlisted Options will be issued for nil cash consideration as they are being issued as consideration for brokerage services associated with the Placement;
(d) the unlisted Options will be issued on the terms and conditions set out in Annexure ‘A’;
(e) the unlisted Options will be issued to CPS Capital Group Pty Ltd (or its nominees). None of these parties are related parties of the Company; and
(f) no funds will be raised from the issue of the unlisted Options as they are being issued in consideration for brokerage services to the associated with the Placement.

ANNEXUR E “ A” - T ER MS AND CONDI TIONS OF OPTIONS

The Options are issued on the following terms and conditions:

(a) Each Option entitles the holder to acquire one fully paid Ordinary Share in the Company.
(b) The Options may be exercised at any time on or before 5.00pm (WST) on 30 June 2015. Each Option may be exercised by forwarding to the Company at its principal office the exercise notice, duly completed, together with payment of the sum of 20 cents ($0.20) per Option exercised. The Options will lapse at 5.00pm (WST) on 30 June 2015.
(c) The Options may be transferred by an instrument (duly stamped where necessary) in the form commonly used for transfer of Options at any time until 5.00pm (WST) on 30 June 2015, being the date the Options expire. This right is subject to any restrictions on the transfer of a Option that may be imposed by ASX.
(d) Optionholders can only participate in new issues of securities provided they have first exercised their Options in which case the Optionholders shall be afforded the period of at least nine (9) business days prior to and inclusive of the record date (to determine entitlements to the issue) to exercise the Options.
(e) Ordinary Shares issued on the exercise of Options will be issued not more than fourteen (14) days after receipt of a properly executed exercise notice and application moneys. Ordinary Shares allotted pursuant to the exercise of a Option will rank equally with the then issued ordinary shares of the Company in all respects. If the Company is listed on ASX it will, pursuant to the exercise of an Option, apply to ASX for Quotation of the Ordinary Shares issued as a result of the exercise, in accordance with the Corporations Act and the Listing Rules.
(f) In the event of any reconstruction (including consolidation, sub-division, reduction or return) of the issued capital of the Company, all rights of the Optionholder will be changed to the extent necessary to comply with the Listing Rules applying to the reconstruction of capital at the time of the reconstruction.
(g) If there is a bonus issue to Shareholders, the number of Ordinary Shares over which the Option is exercisable may 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.
(h) In the event that a pro rata issue (except a bonus issue) is made to the holders of the underlying securities in the Company, the exercise price of the Options may be reduced in accordance with Listing Rule 6.22.

GLOSSARY

In this Notice of Meeting, the following terms have the following meaning unless the context otherwise requires:

$ means Australian dollars.

ASIC means Australian Securities and Investments Commission.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

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

Board means the current board of directors of the Company.

Chair means the chair of the Meeting.

Company or means Krakatoa Resources Limited (ABN 39 155 231 575).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors mean the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

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

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

Option means an option to acquire a Share.

Optionholder means a holder of an Option.

Proxy Form means the proxy form accompanying the Notice.

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

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

Shareholder means a registered holder of a Share.

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

PROXY FORM

KRAKATOA RESOURCES LIMITED ABN 39 155 231 575

GENERAL MEETING

I/We of

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being a member of Krakatoa Resources Limited entitled to attend and vote at the General Meeting, hereby appoint:

Name:

OR the Chair of the General Meeting as my/our proxy,

or failing the person so named or, if no person is named, the Chair of the General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws, as the proxy sees fit, at the General Meeting to be held at the RSM Bird Cameron, Level 7, 8 St Georges Terrace, Perth, Western Australia at 10.00am WST on Wednesday, 11 February 2015, and at any adjournment thereof.

The Chair intends to vote undirected proxies in favour of all Resolutions. In exceptional circumstances the Chair may change his/her voting intention on any Resolution. In the event this occurs an ASX announcement will be made immediately disclosing the reasons for the change.

Voting on Business of the General Meeting

Voting on business of the Meeting FOR	AGAINST	AGAINST	AGAINST
Resolution 1 Ratification of prior issue of Shares and Options under
Placement – ASX Listing Rule 7.1
Resolution 2 Ratification of prior issue of Shares under Placement – ASX
Listing Rule 7.1A
Resolution 3 Ratification of Prior Issue of Options to Broker
Resolution 4 Approval for the Issue of Options to Broker
Please note: If you mark the abstain box for a particular Resolution, you are directing your proxy		not to vote on tha
Resolution on a show of hands or on a poll and your votes will not to be counted in computing	the required majority on
poll.
If two proxies are being appointed, the proportion of voting rights this proxy represents is____%
Signature of Member(s):
Individual or Member 1 Member 2 Member 3

Sole Director/Company Secretary Director Director/Company Secretary
Date: ____
Contact Name: ______Contact Ph (daytime): _________
E-mail Address: _______ Consent for contact by e-mail
in relation to this Proxy Form:	YES		NO

Please note : If you mark the abstain box for a particular Resolution, you are directing your proxy not to vote on that Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll.

Instruc tions for Com p letin g Prox y F orm

( Appointing a proxy ): A Shareholder entitled to attend and cast a vote at the Meeting is entitled to appoint a proxy to attend and vote on their behalf at the Meeting. If a Shareholder is entitled to cast 2 or more votes at the Meeting, the Shareholder may appoint a second proxy to attend and vote on their behalf at the Meeting. However, where both proxies attend the Meeting, voting may only be exercised on a poll. The appointment of a second proxy must be done on a separate copy of the Proxy Form. A Shareholder who appoints 2 proxies may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints 2 proxies and the appointments do not specify the proportion or number of the Shareholder’s votes each proxy is appointed to exercise, each proxy may exercise one-half of the votes. Any fractions of votes resulting from the application of these principles will be disregarded. A duly appointed proxy need not be a Shareholder.
( Direction to vote ): A Shareholder may direct a proxy how to vote by marking one of the boxes opposite each item of business. The direction may specify the proportion or number of votes that the proxy may exercise by writing the percentage or number of Shares next to the box marked for the relevant item of business. Where a box is not marked the proxy may vote as they choose subject to the relevant laws. Where more than one box is marked on an item the vote will be invalid on that item.

3. ( Signing instructions ):

( Individual ): Where the holding is in one name, the Shareholder must sign.
( Joint holding ): Where the holding is in more than one name, all of the Shareholders should sign.
( Power of attorney ): If you have not already provided the power of attorney with the registry, please attach a certified photocopy of the power of attorney to this Proxy Form when you return it.
( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held. In addition, if a representative of a company is appointed pursuant to Section 250D of the Corporations Act to attend the Meeting, the documentation evidencing such appointment should be produced prior to admission to the Meeting. A form of a certificate evidencing the appointment may be obtained from the Company.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual Shareholders from attending the Meeting in person if they wish. Where a Shareholder completes and lodges a valid Proxy Form and attends the Meeting in person, then the proxy’s authority to speak and vote for that Shareholder is suspended while the Shareholder is present at the Meeting.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

(a) post to Krakatoa Resources Limited, GPO Box 2517, Perth, Western Australia 6831; or

(b) facsimile to the Company on facsimile number +61 8 9463 6103;

so that it is received not less than 48 hours prior to commencement of the Meeting.

Proxy Forms received later than this time will be invalid.

AI assistant

KRAKATOA RESOURCES LIMITED — Proxy Solicitation & Information Statement 2015

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