MAGNETITE MINES LIMITED. — AGM Information 2012

Oct 28, 2012

ROYAL RESOURCES LIMITED

ABN 34 108 102 432

NOTICE OF ANNUAL GENERAL MEETING EXPLANATORY MEMORANDUM

AND

PROXY FORM

Date of Meeting 27 November 2012

Time of Meeting 11.00 am WST

Place of Meeting The Function Room The Celtic Club 48 Ord Street, West Perth Western Australia

ROYAL RESOURCES LIMITED ABN 34 108 102 432

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the Annual General Meeting of the Shareholders of Royal Resources Limited ABN 34 108 102 432 (" Company ") will be held at The Function Room, The Celtic Club, 48 Ord Street, West Perth, Western Australia on 27 November 2012 at 11.00 am WST for the purpose of transacting the following business referred to in this Notice of Annual General Meeting.

An Explanatory Memorandum containing information in relation to each of the following Resolutions accompanies this Notice of Annual General Meeting.

Please note terms used in the Resolutions contained in this Notice of Annual General Meeting have the same meaning as set out in the Glossary of the Explanatory Memorandum accompanying this Notice.

AGENDA

BUSINESS

Financial Reports

To receive the Financial Statements of the Company for the year ended 30 June 2012, together with the Directors Report and the Auditor's Report as set out in the Annual Report.

Resolution 1 – Remuneration Report

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

" That the Remuneration Report as contained within the Annual Report for the year ended 30 June 2012 be adopted."

Note: The vote on this Resolution is advisory only and does not bind the Directors or the Company. Shareholders are encouraged to read the Explanatory Memorandum for further details on the consequences of voting on this Resolution.

The Company will disregard any votes cast on Resolution 1 by or on behalf of a Restricted Voter[1] . However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of a Restricted Voter. Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 1 unless (a) the appointment specifies the way the proxy is to vote on Resolution 1; or (b) the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 1. Shareholders may also choose to direct the Chair to vote against Resolution 1 or to abstain from voting.

Resolution 2 – Re-election of Mr Philip G Crabb as a Director

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

"That Mr Philip G Crabb, being a Director who retires by rotation in accordance with Rule 13.2 of the Company's Constitution and, being eligible for re-election, be re- elected as a Director."

1 “Restricted Voter” means Key Management Personnel and their Closely Related Parties as defined in the glossary. ROYAL RESOURCES LIMITED – NOTICE OF ANNUAL GENERAL MEETING 2012

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Resolution 3 – Approval to Grant Incentive Options to a Director – Mr Philip G Crabb or his nominee(s)

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

"That, for the purposes of section 208 of the Corporations Act and Listing Rule 10.11 and for all other purposes, the Company approves and authorises the Directors to grant and issue to Mr Philip G Crabb (or his nominee or nominees) 1,500,000 Incentive Options for no consideration, each with an exercise price equal to the greater of:

• a) a premium of 68% to the VWAP of the Shares on ASX on the 5 days on which sales of the Shares are recorded before the date of this Meeting (rounded up to the nearest cent); and

• b) 16 cents,

and an expiry date of 26 November 2017, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting (including Annexure A to the Explanatory Memorandum)."

The Company will disregard any votes cast on Resolution 3 by Mr Philip G Crabb and any associate of Mr Philip G Crabb. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed Resolution and it is not cast on behalf of Mr Philip G Crabb or an associate of Mr Philip G Crabb.

Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 3 unless:

• (a) the appointment specifies the way the proxy is to vote on Resolution 3; or

• (b) the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 3. Shareholders may also choose to direct the Chair to vote against Resolution 3 or to abstain from voting.

Resolution 4 – Approval to Grant Incentive Options to a Director – Mr Frank DeMarte or his nominee(s)

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

"That, for the purposes of section 208 of the Corporations Act and Listing Rule 10.11 and for all other purposes, the Company approves and authorises the Directors to grant and issue to Mr Frank DeMarte (or his nominee or nominees) 1,500,000 Incentive Options for no consideration, each with an exercise price equal to the greater of:

• a) a premium of 68% to the VWAP of the Shares on ASX on the 5 days on which sales of the Shares are recorded before the date of this Meeting (rounded up to the nearest cent); and

• b) 16 cents,

and an expiry date of 26 November 2017, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting (including Annexure A to the Explanatory Memorandum)."

The Company will disregard any votes cast on Resolution 4 by Mr Frank DeMarte and any associate of Mr Frank DeMarte. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed Resolution and it is not cast on behalf of Mr Frank DeMarte or an associate of Mr Frank DeMarte.

Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 4 unless:

• (a) the appointment specifies the way the proxy is to vote on Resolution 4; or

(b) the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 4. Shareholders may also choose to direct the Chair to vote against Resolution 4 or to abstain from voting.

ROYAL RESOURCES LIMITED – NOTICE OF ANNUAL GENERAL MEETING 2012

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Resolution 5 – Approval to Grant Incentive Options to a Director – Mr Malcolm J Randall or his nominee(s)

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

"That, for the purposes of section 208 of the Corporations Act and Listing Rule 10.11 and for all other purposes, the Company approves and authorises the Directors to grant and issue to Mr Malcolm J Randall (or his nominee or nominees) 1,500,000 Incentive Options for no consideration, each with an exercise price equal to the greater of:

• a) a premium of 68% to the VWAP of the Shares on ASX on the 5 days on which sales of the Shares are recorded before the date of this Meeting (rounded up to the nearest cent); and

• b) 16 cents,

and an expiry date of 26 November 2017, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting (including Annexure A to the Explanatory Memorandum)."

The Company will disregard any votes cast on Resolution 5 by Mr Malcolm J Randall and any associate of Mr Malcolm J Randall. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed Resolution and it is not cast on behalf of Mr Malcolm J Randall or an associate of Mr Malcolm J Randall.

Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 5 unless:

(a) the appointment specifies the way the proxy is to vote on Resolution 5; or

(b) the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 5. Shareholders may also choose to direct the Chair to vote against Resolution 5 or to abstain from voting.

Resolution 6 – Approval to Grant Incentive Options to a Director – Mr Marcus F Flis or his nominee(s)

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

"That, for the purposes of section 208 of the Corporations Act and Listing Rule 10.11 and for all other purposes, the Company approves and authorises the Directors to grant and issue to Mr Marcus F Flis (or his nominee or nominees) 2,000,000 Incentive Options for no consideration, each with an exercise price equal to the greater of:

• a) a premium of 68% to the VWAP of the Shares on ASX on the 5 days on which sales of the Shares are recorded before the date of this Meeting (rounded up to the nearest cent); and

• b) 16 cents,

and an expiry date of 26 November 2017, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Annual General Meeting (including Annexure A to the Explanatory Memorandum)."

The Company will disregard any votes cast on Resolution 6 by Mr Marcus F Flis and any associate of Mr Marcus F Flis. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed in writing that specifies how the proxy is to vote on the proposed Resolution and it is not cast on behalf of Mr Marcus F Flis or an associate of Mr Marcus F Flis.

Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 6 unless:

(a) the appointment specifies the way the proxy is to vote on Resolution 6; or

(b) the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 6. Shareholders may also choose to direct the Chair to vote against Resolution 6 or to abstain from voting.

ROYAL RESOURCES LIMITED – NOTICE OF ANNUAL GENERAL MEETING 2012

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Resolution 7 – Approval of Additional 10% Placement Capacity

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

"That, for the purpose of Listing Rule 7.1A, and for all other purposes, the Company approves the allotment and issue of Equity Securities up to 10% of the issued capital of the Company (at the time of the issue) calculated in accordance with Listing Rule 7.1A.2 on the terms and conditions set out in the Explanatory Memorandum."

The Company will disregard any votes cast on Resolution 7 by any person who may participate in the proposed issue the subject of Resolution 7 and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities if the resolution is passed, and any person associated with those persons. However, the Company need not disregard a vote if the vote 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 the vote 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.

Resolution 8 – Ratification of issue of Shares

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

“ That, for the purpose of Listing Rule 7.4 and for all other purposes, the Company ratify the allotment and issue a total of 29,700,000 Shares (at an issue price of $0.125 each) on 29 June 2012 to the parties on the terms and conditions set out in the Explanatory Memorandum. ”

The Company will disregard any votes cast on Resolution 8 by any person who participated in the issue the subject of Resolution 8 and any person associated with those persons. However, the Company need not disregard a vote if the vote 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 the vote 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.

OTHER BUSINESS

To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act.

By order of the Board

==> picture [89 x 48] intentionally omitted <==

Marcus Flis Managing Director

Dated: 15 October 2012

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PROXIES

• Votes at the Annual General Meeting may be given personally or by proxy, attorney or representative.

• A Shareholder entitled to attend and vote at the Annual General Meeting may appoint not more than two proxies to attend and vote at the Annual General Meeting. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the Shareholder's voting rights. If such appointment is not made then each proxy may exercise half of the Shareholder's voting rights.

• A proxy may, but need not be a Shareholder of the Company.

• The instrument appointing the proxy must be in writing, executed by the appointor or his attorney duly authorising in writing or, if such appointor is a corporation, either under seal or under hand of the officer, or his attorney duly authorised.

• The instrument of proxy (and the power of attorney or other authority, if any, under which it is signed) must be lodged by person, post, courier or facsimile and must reach the Registered Office of the Company as detailed below at least 48 hours prior to the Annual General Meeting. For the convenience of Shareholders a Proxy Form is enclosed.

• For you vote to be effective it must be received by 11.00 am (WST) Sunday 25 November 2012.

Lodge your vote:

By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555 For all enquiries call (within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

• If a proxy is not directed how to vote on an item of business, the proxy may generally vote, or abstain from voting, as they think fit. However, where a Restricted Voter is appointed as a proxy, the proxy may only vote on Resolutions 1 and 3 to 6 if the proxy is the Chair of the Meeting 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.

• Shareholders who return their proxy forms with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairman of the meeting as their proxy to vote on their behalf. If a proxy form is returned but the nominated proxy does not attend the meeting, the Chairman of the meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairman of the Meeting, the secretary or any Director that do not contain a direction how to vote will be used where possible to support each of the Resolutions proposed in this Notice of Meeting, provided they are entitled to cast votes as a proxy under the voting exclusion rules which apply to some of the proposed resolutions. These rules are explained in this Notice of Meeting.

Entitlement to vote

For the purposes of regulation 7.11.37 of the Corporations Regulations 2001, the Company determines that a person's entitlement to vote at the Annual General Meeting will be the entitlement of that person set out in the Register of Shareholders as at 11.00am Western Standard Time on 25 November 2012.

Corporations

A Shareholder that is a corporation may elect to appoint an individual as its representative and vote in person at the Annual General Meeting. The appointment must comply with the requirements of section 250D of the Corporations Act. Written proof of the representative’s appointment must be lodged with, or presented to the Company before the Annual General Meeting.

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ROYAL RESOURCES LIMITED ABN 34 108 102 432

EXPLANATORY MEMORANDUM

This Explanatory Memorandum is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of Annual General Meeting of the Company.

The Directors recommend Shareholders read this Explanatory Memorandum in full before making any decision in relation to the Resolutions.

Capitalised terms used in this Explanatory Memorandum are defined in the Glossary appearing at the end of this Explanatory Memorandum.

The following information should be noted in respect of the various matters contained in the accompanying Notice:

FINANCIAL REPORTS

The first item of the Notice of Annual General Meeting deals with the presentation of the consolidated annual financial report of the Company for the financial year ended 30 June 2012 together with the Directors' declaration and report in relation to that financial year and the auditor's report on those financial statements. Shareholders should consider these documents and raise any matters of interest with the Directors when this item is being considered.

No resolution is required to be moved in respect of this item.

Shareholders will be given a reasonable opportunity at the Annual General Meeting to ask questions and make comments on the accounts and on the business, operations and management of the Company.

The Chairman will also provide shareholders a reasonable opportunity to ask the Company's auditor questions relevant to:

• the conduct of the audit;

• the preparation and content of the independent audit report;

• the accounting policies adopted by the Company in relation to the preparation of accounts; and

• the independence of the auditor in relation to the conduct of the audit.

RESOLUTION 1 – REMUNERATION REPORT

Section 298 of the Corporations Act requires that the annual Directors’ Report contains a Remuneration Report prepared in accordance with section 300A of the Corporations Act.

Pursuant to section 250R(2) of the Corporations Act, a resolution adopting the Remuneration Report must be put to the vote at the Annual General Meeting.

Shareholders are advised that pursuant to section 250R(3) of the Corporations Act, this Resolution is advisory only and does not bind the Directors or the Company. The Remuneration Report is set out in the Company’s Annual Report and is also available on the Company’s website (www.royalresources.com.au).

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However, if at least 25% of the votes cast are against adoption of the Remuneration Report at the Annual General Meeting, and then again at the 2013 Annual General Meeting, the Company will be required to put a resolution to the 2013 Annual General Meeting, to approve calling a general meeting (spill resolution). If more than 50% of Shareholders vote in favour of the spill resolution, the Company must convene a general meeting (spill meeting) within 90 days of the 2013 Annual General Meeting. All of the Directors who were in office when the 2013 Directors’ Report was approved, other than the Managing Director, will (if desired) need to stand for re-election at the spill meeting.

Voting

Note that a voting exclusion applies to Resolution 1 in the terms set out in the Notice of Annual General Meeting. In particular, the Directors and other Restricted Voters may not vote on this Resolution and may not cast a vote as proxy, unless the appointment gives a direction on how to vote or the proxy is given to the Chair and expressly authorises the Chair to exercise your proxy even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. The Chair will use any such proxies to vote in favour of the Resolution.

Shareholders are urged to carefully read the proxy form and provide a direction to the proxy on how to vote on this Resolution.

The Remuneration Report is set out in the Directors' Report section of the Company's 2012 Annual Financial Report. The Remuneration Report:

• explains the Board’s policy for determining the nature and amount of remuneration of executive Directors;

• explains the relationship between the Board’s remuneration policy and the Company’s performance;

• sets out remuneration details for each Director and each senior executive of the Company; and

• details and explains any performance conditions applicable to the remuneration of executive Directors and senior executives of the Company.

A reasonable opportunity will be provided for discussion of the Remuneration Report at the Meeting.

The Board unanimously recommends that Shareholders vote in favour of adopting the Remuneration Report.

RESOLUTIONS 2 - RE-ELECTION OF PHILLIP G CRABB AS A DIRECTOR

Resolution 2 seeks approval for the re-election of Mr Philip G Crabb as a Director with effect from the end of the meeting.

Rule 13.2 of the Constitution provides that at each Annual General Meeting one-third of the Directors (other than alternate Directors and the Managing Director) or, if their number is not a multiple of three, then the number nearest to but not more than one-third of the Directors must retire from office.

Philip G Crabb retires in accordance with this requirement, and offers himself for re-election as a Director.

Mr Crabb is a fellow of the Australasian Institute of Mining and Metallurgy and a member of the Australian Institute of Company Directors. Mr Crabb has been actively engaged in mineral exploration and mining activities for the past 42 years in both publicly listed and private exploration companies. He has considerable experience in field activities, having been a drilling contractor, quarry manager and mining contractor. Mr Crabb also has extensive knowledge of the Australian mining industry and has many years of experience with management of Australian publicly listed companies.

Mr Crabb was first appointed to the board on 28 November 2005

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RESOLUTIONS 3 TO 6 – APPROVAL TO GRANT INCENTIVE OPTIONS TO DIRECTORS

The Company proposes to grant a total of 6,500,000 Incentive Options to Messrs Philip G Crabb, Frank DeMarte, Malcolm J Randall and Marcus F Flis (together the “ Participating Directors ”). The Incentive Options will have an exercise price which is equal to the greater of:

• a premium of 68% to the VWAP of the Shares on ASX on the 5 days on which sales of the Shares are recorded before the date of this Meeting (rounded up to the nearest cent); and

• 16 cents,

and have an expiry date of 26 November 2017.

The grant of the Incentive Options is designed to encourage the Participating Directors to have a greater involvement in the achievement of the Company’s objectives and to provide an incentive to strive to that end by participating in the future growth and prosperity of the Company through Share ownership. Under the Company’s current circumstances, the Directors consider that the incentives to each of the Participating Directors noted above represented by the grant of these Incentive Options, are a cost effective and efficient reward and incentive for the Company, as opposed to alternative forms of incentive, such as the payment of additional cash compensation to the Participating Directors.

The terms of the Incentive Options are set out in Annexure A to this Explanatory Memorandum.

The number of Incentive Options to be granted to each of the Participating Directors has been determined based upon a consideration of:

• the remuneration of the Participating Directors – the Directors wish to ensure that the remuneration offered is competitive with market standards and where appropriate, based upon performance hurdles. The Directors have considered the proposed number of Incentive Options to be granted will ensure that the Participating Directors’ overall remunerations is in line with market standards;

• length of service to the Company; and

• incentives to ensure continuity of service of the Participating Directors who have extensive knowledge of the Company and its assets.

In the event all of the Incentive Options are exercised, then based on an exercise price of $0.16, the following amounts are payable to the Company by the Participating Directors:

Participating Director	Amount to be paid
Philip G Crabb	$240,000
Frank DeMarte	$240,000
MalcolmJRandall	$240,000
MarcusF Flis	$320,000
**Total **	$1,040,000

The Company will therefore receive a total of $1,040,000 from the Participating Directors should all the Incentive Options be exercised at an exercise price of $0.16.

The actual amount the Company will receive from the Directors on exercise of the Incentive Options will depend on the actual exercise price of the Incentive Options which will be equal to the greater of a 68% premium to the VWAP of the Shares on the 5 days on which sales of the Shares were recorded before the date of the Meeting (rounded up to the nearest cent), and 16 cents.

Shareholders should note that for reasons mentioned above, it is proposed to grant Incentive Options to three non-executive Directors (Messrs Philip G Crabb, Frank DeMarte and Malcolm J Randall) notwithstanding Guideline 8.2 of the Revised ASX Corporate Governance Principles and Recommendations which provides that non-executive Directors should not receive Options.

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Related Party Transactions Generally

Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:

1. the giving of the financial benefits falls within one of the nominated exceptions to the provision; or

2. shareholder approval is obtained prior to the giving of the financial benefit and the benefit is given within 15 months after obtaining such approval.

For the purposes of Chapter 2E, the Participating Directors are considered to be related parties of the Company.

Resolutions 3 to 6 provide for the grant of Incentive Options to the Participating Directors of the Company which is a financial benefit which requires Shareholder approval.

INFORMATION REQUIREMENTS

For the purposes of Chapter 2E of the Corporations Act the following information is provided.

The related party to whom the proposed resolution would permit the financial benefit to be given:

Subject to Shareholder approval, the following number of Incentive Options will be granted to the following related parties (or their respective nominees):

Participating Director	Number of Options
Philip G Crabb	1,500,000
Frank DeMarte	1,500,000
Malcolm J Randall	1,500,000
MarcusFlis	2,000,000
Total	6,500,000

The nature of the financial benefit

The proposed financial benefit to be given is the grant of Incentive Options for no consideration to the Participating Directors as noted above, or their respective nominees. The terms and conditions of the Incentive Options to be granted to the Participating Directors (or their respective nominees) are set out in Annexure A to this Explanatory Memorandum.

Directors’ recommendation

All the Directors were available to make a recommendation. For the reasons noted above:

Messrs Frank DeMarte, Malcolm J Randall and Marcus F Flis (who have no interest in the outcome of Resolution 3) recommend that Shareholders vote in favour of Resolution 3. Mr Philip G Crabb declines to make a recommendation about Resolution 3 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him individually (or his nominee(s)).

Messrs Philip G Crabb, Malcolm J Randall and Marcus F Flis (who have no interest in the outcome of Resolution 4) recommend that Shareholders vote in favour of Resolution 4. Mr Frank DeMarte declines to make a recommendation about Resolution 4 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him individually (or his nominee(s)).

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Messrs Philip G Crabb, Frank DeMarte and Marcus F Flis (who have no interest in the outcome of Resolution 5) recommend that Shareholders vote in favour of Resolution 5. Mr Malcolm J Randall declines to make a recommendation about Resolution 5 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him individually (or his nominee(s)).

Messrs Philip G Crabb, Frank DeMarte and Malcolm J Randall (who have no interest in the outcome of Resolution 6) recommend that Shareholders vote in favour of Resolution 6. Mr Marcus F Flis declines to make a recommendation about Resolution 6 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him individually (or his nominee(s)).

Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors.

• (i) Proposed Resolutions 3, 4, 5, and 6 would have the effect of giving power to the Directors to grant a total of 6,500,000 Incentive Options on the terms and conditions as set out in Annexure A to this Explanatory Memorandum and as otherwise mentioned above.

The Company presently has 335,653,030 quoted Shares on issue, 34,742,988 quoted Options and 28,700,000 unquoted Options as follows:

Number of quoted Options	Exercise Price	Expiry Date
34,742,988	$0.12	31October 2013
Number of unquoted Options	Exercise Price	Expiry Date
1,500,000	$0.50	6April 2013
3,000,000	$0.30	30November 2013
1,600,000	$0.08	30April 2013
4,500,000	$0.55	26November 2014
1,125,000	$0.30	13May2013
150,000	$0.30	19 July2013
5,750,000	$0.28	29November 2015
1,780,000	$0.24	9 June 2014
6,750,000	$0.21	27 November 2016
2,545,000	$0.225	9July2015

(ii) If all Incentive Options granted as proposed above are exercised, and assuming the existing quoted and unquoted Options on issue are not exercised, the effect would be to dilute the shareholding of existing Shareholders by 1.9%. The market price of the Shares during the period of the Incentive Options will normally determine whether or not Incentive Option holders exercise the Incentive Options. At the time any Incentive Options are exercised and Shares are issued pursuant to the exercise of the Incentive Options, the Shares may be trading at a price which is higher than the exercise price of the Incentive Options.

The Incentive Options will not be quoted on ASX.

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• (iii) The Participating Directors’ base salaries per annum (including superannuation) and the total financial benefit to be received by them in this current period as a result of the grant of Incentive Options the subject of Resolutions 3, 4, 5, and 6 (showing the impact of using a volatility assumption of 76.1% to calculate the value of the Incentive Options) are as follows:

Director	Base salary/fee p.a. ($)	Value of Options ($)	Total Financial Benefit($)
Philip G Crabb	77,695	37,500	115,195
Frank DeMarte	81,700	37,500	119,200
MalcolmJRandall	65,398	37,500	102,898
Marcus Flis	400,680	50,000	450,680

• utilising a 76.5% volatility factor discussed in further detail below.

(iv) Valuation of Incentive Options

The Company’s advisers have valued the Incentive Options to be granted to the Participating Directors using the Black Scholes Option Pricing Model (“ BSModel ”), which is the most widely used and recognised model for pricing options. The acceptance of this model is due to its derivation being grounded in economic theory. The value of an option calculated by the BSModel is a function of a number of variables and is rounded to the nearest one hundredth of a cent. The valuation of the Incentive Options has been prepared using the following assumptions:

Variable	Input
Share price	7.5 cents (being the market value of a Share as at 12 October 2012)
VWAP Share price	8 cents (beingthe VWAP of the Shares (rounded up to the nearest whole number) on the 5 days on which sales of the Shares were recorded before the date of the Notice of Meeting,being 12 October 2012)
Exercise price	16 cents (being the greater of 16 cents and a 68% premium (rounded up to the nearest whole number) to the VWAP of the Shares on the 5 days on which sales of the Shares are recorded before the date of the date of Notice of Meeting, being 12 October 2012)
Risk Free Interest Rate	2.54% (estimated, based on the 5 year Australian treasury bond rate as at 12 October 2012)
Volatility	76.5% (determined utilising the daily closing Share price of the Company over the preceding 12 month period). The effect of the valuation in using volatility factors of 40%, 60% and 80% are set out below.
Expirydate	26 November 2017.

The valuation date is as at 12 October 2012, although the Incentive Options will not be granted until after Shareholders approve the grant of the Incentive Options at this Meeting.

The valuations reflected below do not necessarily represent the market value of the Incentive Options or the tax values for taxation purposes to the Incentive Option holder. The future value of the Incentive Options may be up or down on the values noted below as it will primarily depend on the future share price of a Share (for the next 5 years), and the time to expiry of the Incentive Options.

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A discount factor of 30% has been applied for lack of negotiability of the Incentive Options.

Based on the above assumptions, the Company's advisers have calculated an indicative value of one Incentive Option to be granted to the Participating Directors to be 2.5 cents (based on a volatility assumption of 76.5% to calculate the value of the Incentive Options). Accordingly, the total value of the 6,500,000 Incentive Options to be granted to the Participating Directors is $162,500.

Set out below is the valuation of an Option using volatility factors of 40%, 60% and 80%:

40% Volatility	60% Volatility	80% Volatility
1.2cents	2.6cents	3.8cents

Any change in the variables applied in the Black and Scholes calculation between the date of the valuation and the date the Incentive Options are granted would have an impact on their value.

• (v) Set out below are details of each of the Participating Directors’ relevant interest in the securities of the Company as at the date of this Notice:

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Notes:	1: Philip G Crabb is a sole director of Ragged Range Mining Pty Ltd and holds 48% of the shares in that company. June Crabb is Mr Crabb's wife. Mr Crabb is a director of	Ioma Pty Ltd and controls this company. Mr Crabb is a trustee for and a beneficiary of the Crabb Superannuation Fund.	2: Frank DeMarte is a director of Grandeur Holdings Pty Ltd and holds 50% of the shares in that company. Mr DeMarte is a trustee for and a beneficiary of the DeMarte	Family Trust and the DeMarte Family Superannuation Fund.	3: Renique Holdings Pty Ltd hold the Shares and options in the Company as trustee for the Randall Super Fund ofwhich Malcolm J Randall and his wife, Carol Randall are	beneficiaries.	4: Susan Flis is Mr Flis’s wife. Mr Flis is a trustee for and a beneficiary of the M & S Flis Super Fund and the Rowan Tree Fund.

Number of 27/11/16 options ($0.21)	-	-	1,250,000	-	-	-	1,750,000	-	-	-	1,000,000	-	-	-	2,000,000
Number of 29/11/15 options ($0.28)	-	-	1,000,000	-	-	-	1,500,000	-	-	-	750,000	-	-	-	1,750,000
Number of 31/10/13 options ($0.12)	-	1,490	680,384	1,188,428	195,833	45,833	329,104	138,325	6,471	-	198,197	-	33,333	38,100	333,333
Number of 26/11/14 options ($0.55)	-	-	750,000	-	-	-	1,250,000	-	-	-	500,000	-	-	-	1,500,000
Number of 30/11/13 options ($0.30)	750,000	-	-	-	-	-	750,000	-	-	-	500,000	-	-	-	-
Number of 6/04/13 options ($0.08)	-	-	-	-	-	-	-	-	-	-	-	-	1,000,000	-	-
Number of 6/04/13 options ($0.50)	-	-	-	-	-	-	-	-	-	-	-	-	-	1,500,000	-
Number of Shares	-	10,430	12,596,539	5,753,713	6,290,272	320,833	2,953,730	368,275	45,297	-	1,887,383	-	233,333	266,700	1,333,333
Director & Associates	Philip G Crabb (1)	June Crabb	Ioma Pty Ltd	Ragged Range Mining Pty Ltd	Crabb Superannuation Fund	Frank DeMarte (2)	The DeMarte Family Trust	The DeMarte Super Fund	Grandeur Holdings Pty Ltd	Malcolm J Randall(3)	Renique Holdings Pty Ltd	Marcus F Flis (4)	Susan Flis	M & S Flis Super Fund	Rowan Tree Fund A/C

vi) The following table gives details of the highest, lowest and latest closing price of the Shares trading on ASX over the past 12 months ending on 12 October 2012:

Security	Highest Price	Date of highest price	Lowest Price	Date of lowest price	Latest Price on 12 October 2012
Ordinaryshares	17.5cents	6 January2012	7.3cents	12 October 2012	7.5cents

Other Information

Under the Australian Equivalent of IFRS, the Company is required to expense the value of the Incentive Options in its statement of financial performance for the current financial year. Other than as disclosed in this Explanatory Memorandum, the Directors do not consider that from an economic and commercial point of view, there are any costs of detriments including opportunity costs or taxation consequences for the Company or benefits foregone by the Company in granting the Incentive Options pursuant to Resolutions 3 to 6.

Neither the Directors nor the Company are aware of other information that would be reasonably required by Shareholders to make a decision in relation to the financial benefits contemplated by the proposed Resolutions.

Listing Rule 10.11

Listing Rule 10.11 requires the approval of Shareholders by ordinary resolution to any issue by a listed company of securities to a related party. Accordingly, Listing Rule 10.11 requires Shareholders to approve the grant of Incentive Options to the Participating Directors.

For the purposes of Listing Rule 10.13, the following information is provided to Shareholders:

• (a) the Incentive Options will be issued to Messrs Philip G Crabb, Frank DeMarte, Malcolm J Randall and Marcus F Flis, who are all Directors, or their respective nominees, as noted above;

• (b) the maximum number of Incentive Options to be issued to the Directors, or their respective nominees, is 6,500,000 (the table below sets out the number of Incentive Options to be granted to each of the Directors or his nominee);

Participating Director	Number of Incentive Options
Philip G Crabb	1,500,000
Frank DeMarte	1,500,000
Malcolm J Randall	1,500,000
MarcusF Flis	2,000,000
Total	6,500,000

• (c) the Incentive Options will be issued on one date which will be no later than 1 month after the date of this Annual General Meeting or on such other date as approved by ASX;

• (d) the Incentive Options will be issued for no consideration;

• (e) no funds will be raised by the issue of the Incentive Options; and

• (f) the terms and conditions of the Incentive Options are set out in Annexure A to this Explanatory Memorandum.

If approval is given for the issue of the Incentive Options under Listing Rule 10.11, approval is not required under Listing Rule 7.1.

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Voting

Note that a voting exclusion applies to Resolutions 3 to 6 in the terms set out in the Notice of Meeting. In particular, the Directors and other Restricted Voters may not vote on these Resolutions and may not cast a vote as proxy, unless the appointment gives a direction on how to vote or the proxy is given to the Chair and expressly authorises the Chair to exercise your proxy even if the Resolutions are connected directly or indirectly with the remuneration of a member of the Key Management Personnel. The Chair will use any such proxies to vote in favour of the Resolutions.

Shareholders are urged to carefully read the proxy form and provide a direction to the proxy on how to vote on these Resolutions.

RESOLUTION 7 – APPROVAL OF ADDITIONAL 10% PLACEMENT CAPACITY

Background

Listing Rule 7.1A enables eligible entities to issue Equity Securities up to 10% of its issued share capital over a 12 month period after the annual general meeting at which a resolution for the purposes of Listing Rule 7.1A is passed by special resolution ( Additional 10% Placement Capacity ). The Additional 10% Placement Capacity is in addition to the Company's 15% placement capacity under Listing Rule 7.1.

An entity will be eligible to seek approval under Listing Rule 7.1A if: (a) the entity has a market capitalisation of $300 million or less; and (b) the entity that is not included in the S&PASX 300 Index. The Company is an eligible entity for the purposes of Listing Rule 7.1A.

The number of Equity Securities to be issued under the Additional 10% Placement Capacity will be determined in accordance with the formula set out in Listing Rule 7.1A.2.

The Company is putting Resolution 7 to Shareholders to seek approval to issue additional Equity Securities under the Additional 10% Placement Capacity. It is anticipated that funds raised by the issue of Equity Securities under the Additional 10% Placement Capacity would be applied towards progressing studies and resource definition for the Razorback Iron Project, together with general working capital.

Listing Rule 7.1A

The effect of Resolution 7 will be to permit the Company to issue the Equity Securities under Listing Rule 7.1A during the Additional Placement Period (as defined below) without using the Company’s 15% placement capacity under Listing Rule 7.1.

Equity Securities issued under the Additional 10% Placement Capacity must be in the same class as an existing quoted class of Equity Securities of the Company. As at the date of this Notice the Company has Shares and Listed Options on issue.

Based on the number of Shares on issue at the date of this Notice, the Company will have 335,653,030 Shares on issue and therefore, subject to Shareholder approval being sought under Resolution 7, 33,565,303 Equity Securities will be permitted to be issued in accordance with Listing Rule 7.1A. Shareholders should note that the calculation of the number of Equity Securities permitted to be issued under the Additional 10% Placement Capacity is a moving calculation and will be based the formula set out in Listing Rule 7.1A at the time of issue of the Equity Securities. The table below demonstrates various examples as to the number of Equity Securities that may be issued under the Additional 10% Placement Capacity.

Resolution 7 is a special resolution, requiring approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative) in order to be passed.

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Specific information required by Listing Rule 7.3A

The following information in relation to the Shares to be issued is provided to Shareholders for the purposes of Listing Rule 7.3A:

• (a) The Equity Securities will be issued at an issue price of not less than 75% of the volume weighted average price for the Company's Equity Securities over the 15 Trading Days immediately before:

• (i) the date on which the price at which the Equity Securities are to be issued is agreed; or

• (ii) if the Equity Securities are not issued within 5 Trading Days of the date in paragraph (i) above, the date on which the Equity Securities are issued.

• (b) If Resolution 7 is approved by Shareholders and the Company issues Equity Securities under the Additional 10% Placement Capacity, the existing Shareholders' economic and voting interests in the Company will be diluted. There is also a risk that:

• (i) the market price for the Company's Equity Securities 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 on the issue date or the Equity Securities are issued as part of consideration for the acquisition of a new asset,

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

The table below shows the dilution of existing Shareholders of the issue of the maximum number of Equity Securities under the Additional 10% Placement Capacity using different variables for the number of ordinary securities for variable “A” (as defined in Listing Rule 7.1A) and the market price of Shares. It is noted that variable “A” is based on the number of ordinary securities the Company has on issue at the time of the proposed issue of Equity Securities.

The table shows:

• (i) examples of where variable “A” is at its current level (being 335,653,030 Shares), and where variable “A” has increased by 50% and by 100%;

• (ii) examples of where the issue price of ordinary securities is the current market price as at close of trade on 12 October 2012, being $0.075, ( current market price ), where the issue price is halved, and where it is doubled; and

• (iii) the dilutionary effect will always be 10% if the maximum number of Equity Securities that may be issued under the Additional 10% Placement Capacity are issued.

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Variable ‘A’	Number of Shares issued and funds raised under the Additional 10% Placement Capacity and dilution effect		Dilution
		$0.0375 Issue Price at half the current market price	$0.075 Issue Price at current market price	$0.15 Issue Price at double the current market price
Current Variable A 335,653,030 Shares	Shares issued	33,565,303	33,565,303	33,565,303
	Funds raised	$1,258,698.86	$2,517,397.73	$5,034,795.45
	Dilution	10%	10%	10%
50% increase in current Variable A 503,479,545 Shares	Shares issued	50,347,954	50,347,954	50,347,954
	Funds raised	$1,888,048.28	$3,776,096.55	$7,552,193.10
	Dilution	10%	10%	10%
100% increase in current variable A 671,306,060 Shares	Shares issued	67,130,606	67,130,606	67,130,606
	Funds raised	$2,517,397.73	$5,034,795.45	$10,069,590.90
	Dilution	10%	10%	10%

Note: this table assumes:

• (i) No Options are exercised before the date of the issue of the Equity Securities;

• (ii) The issue of Equity Securities under the Additional 10% Placement Capacity consists only of Shares. If the issue of Equity Securities includes quoted Options, for the purposes of the above table, it is assumed that those quoted Options are exercised.

• (c) Approval of the Additional 10% Placement Capacity will be valid from the date of the Annual General Meeting and will expire on the earlier of:

• (i) the date that is 12 months after the date of the Annual General Meeting; and

• (ii) the date of the approval by Shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking),

( Additional Placement Period ).

• (d) The Company may seek to issue the Equity Securities for the following purposes:

• (i) cash consideration: If Equity Securities are issued for cash consideration, the Company intends to use the funds towards progressing studies and resource definition for the Razorback Iron Project and for general working capital purposes or

• (ii) non-cash consideration: If Equity Securities are not issued for cash consideration, the Company may issue such securities to acquire access to strategic tenements or assets required by the Company. If Equity Securities are issued for non-cash consideration, the Company will comply with the minimum issue price limitation under Listing Rule 7.1A.3 in relation to such issue and will release the valuation of the non-cash consideration to the market.

The Company will comply with the disclosure obligations under Listing Rules 7.1A.4 and 3.10.5A upon issue of any Equity Securities.

• (e) The Company’s allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the Additional 10% Placement Capacity. The identity of the allottees of Equity Securities will be determined on a case-by-case basis having regard to the factors including but not limited to the following:

• (i) the ability of the Company to raise funds at the time of the proposed issue of Equity Securities and whether the raising of any funds under such placement could be carried out by means of an entitlements offer, or a placement and an entitlements offer;

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• (ii) the dilutionary effect of the proposed of the issue of the Equity Securities on existing Shareholders at the time of proposed issued of Equity Securities;

• (iii) the financial situation and solvency of the Company; and

• (iv) advice from its professional advisers, including corporate, financial and broking advisers (if applicable).

The allottees under the Additional 10% Placement Capacity have not been determined as at the date of this Notice but will not include not related parties (or their associates) of the Company.

• (f) The Company has not previously obtained Shareholder approval under Listing Rule 7.1A.

• (g) A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not determined its allocation policy for the issue of Equity Securities under the Additional 10% Placement Capacity. The Company has not approached, and has not yet determined to approach, any particular existing security holders or an identifiable class of existing security holders to participate in an offer under the Additional 10% Placement Capacity, and therefore no Shareholder will be excluded from voting on Resolution 7.

Directors’ Recommendation

The Board recommends Shareholders vote in favour of Resolution 7.

RESOLUTION 8 – RATIFICATION OF ISSUE OF SHARES

On 29 June 2012 a total of 29,700,000 Shares at an issue price of $0.125 per Share were issued to clients of Lodestone Equities Ltd, to raise A$3.71 million (before costs) which the Company believes will provide a strengthened shareholder base supportive of the Company’s growth and development potential.

Listing Rule 7.4 permits the ratification of previous issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold, Listing Rule 7.1. The effect of such ratification is to restore a Company's maximum discretionary power to issue further shares up to 15% of the issued capital of the company without requiring Shareholder approval.

Pursuant to Resolution 8, the Directors are seeking ratification under Listing Rule 7.4 of the issue of a total of 29,700,000 Shares that was made on 29 June 2012 in order to restore the right of the Company to issue further shares within the 15% limit during the next 12 months.

The following information in relation to the Shares is provided to shareholders for the purposes of Listing Rule 7.5:

(a) 29,700,000 Shares were allotted and issued;

(b) the Shares were issued at an issue price of $0.125 each;

(c) the Shares issued were fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue;

(d) the Shares were issued to clients of Lodestone Equities Ltd, all of which are unrelated parties of the Company; and

(e) funds raised from the issue are being used for the Company’s drilling and other exploration expenditure, cost of the issue and working capital.

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ROYAL RESOURCES LIMITED

ABN 34 108 102 432

GLOSSARY

The following terms have the following meanings in the Notice and this Explanatory Memorandum:

" 2013 Annual General Meeting " means the annual general meeting of the Company to be held in respect of the financial year ended 30 June 2013;

" Accounting Standards " has the meaning given to that term in the Corporations Act;

" Additional 10% Placement Capacity " has the meaning set out on page 16;

" Additional Placement Period " has the meaning set out on page 18;

" Annual General Meeting " means the annual general meeting the subject of the Notice;

" Annual Report " means the annual report of the Company for the year ended 30 June 2012;

" ASX " means ASX Limited ABN 98 008 624 691 and, where the context permits, the Australian Securities Exchange operated by ASX Limited;

" Board " means the board of Directors;

" Business Day " means any day that ASX declares is not a business day;

" Closely Related Party " has the meaning given to that term in the Corporations Act;

" Company " means Royal Resources Limited ABN 34 108 102 432;

" Constitution " means the 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;

" Explanatory Memorandum " means this Explanatory Memorandum accompanying the Notice;

" Incentive Option " means an option to acquire a Share, the terms of which are set out in Annexure A of this Explanatory Memorandum;

" Key Management Personnel " has the meaning given to that term in the Accounting Standards;

" Listing Rules " means the Listing Rules of the ASX;

" Meeting " means the Annual General Meeting the subject of this Notice;

" Notice " means the notice of Annual General Meeting accompanying this Explanatory Memorandum;

" Option " means an option to acquire a Share;

" Participating Directors " means Messrs Philip G Crabb, Frank DeMarte, Marcus F Flis and Malcolm J Randall;

" Resolution " means a resolution proposed pursuant to the Notice;

" Restricted Voter " means Key Management Personnel and their Closely Related Parties;

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• " Share " means a fully paid ordinary share in the capital of the Company;

• " Shareholder " means a holder of Shares;

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

• " VWAP " means volume weighted average price; and

• " WST " means Australian Western Standard Time.

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ROYAL RESOURCES LIMITED ABN 34 108 102 432

ANNEXURE A

TERMS AND CONDITIONS OF INCENTIVE OPTIONS TO BE GRANTED TO PARTICIPATING DIRECTORS

The terms and conditions of the Options are:

1. Each Option will be issued for no consideration.

2. Each Option has an exercise price which is the higher of a premium of 68% to the volume weighted average price of the Shares (rounded to the nearest cent) on Australian Securities Exchange (“ ASX ”) on the 5 days on which sale of Shares were recorded prior to the date of the 2012 Annual General Meeting, and 16 cents (" Exercise Price ").

3. Each Option entitles the option holder (" Option holder ") to subscribe for and be allotted one fully paid ordinary share (" Share ") in the capital of Royal Resources Limited (“ ROY ”) at the Exercise Price for the Option.

4. The Options are exercisable at any time on or prior to 5.00 pm Western Standard Time on 26 November 2017 (" Expiry Date ") by completing a notice in writing (" Notice ") stating the intention of the Option holder to exercise all or a specified number of Options held by him and delivering it to the registered office of ROY accompanied by an Option Certificate and a cheque made payable to the Company for the subscription monies for the Shares. The Notice must be received by the Company before the Expiry Date. An Option not exercised before the Expiry Date will lapse. An exercise of only some Options shall not affect the rights of the Option holder to the balance of the Options held by him.

5. The Options are not assignable or transferable without the prior written consent of the board of directors of ROY and will not be listed on the ASX.

6. All Shares issued upon exercise of the Options will rank pari passu in all respects with ROY’s then issued Shares. ROY will apply for official quotation by ASX of all Shares issued upon exercise of the Options.

7. There are no participating rights or entitlements inherent in the Options and the Option holder will not be entitled to participate in new issues of capital offered to shareholders during the currency of the Options unless the Options are first exercised in accordance with these terms and conditions. However, ROY must give the Option holder , in accordance with Listing Rules of ASX, notice of any new issue of securities before the record date for determining entitlements to the new issue

8. In the event of any reorganisation (including consolidation, sub-division, reduction or return) of the issued capital of ROY prior to the Expiry Date, the rights of the Option holder will be changed to the extent necessary to comply with the ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

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1. If there is a pro rata issue (except a bonus issue) to ROY shareholders, the exercise price of an Option will be reduced according to the following formula:

2. O[n] = O - E [(P-(S + D)] N + 1

Where:

• O[n] = the new exercise price of the Option;

• O = the old exercise price of the Option;

• E = the number of underlying securities into which one Option is exercisable;

• P = the average market price of Shares (weighted by reference to volume) sold in the ordinary course of trading on ASX during the five trading days ending on the day before the ex rights date or the ex entitlements date;

• S = the subscription price for new Shares issued under the pro rata issue;

• D = any dividends due but not yet paid on the existing Shares (except those to be issued under the pro rata issue); and

• N = the number of Shares with rights or entitlements that must be held to receive a right to one new Share.

• If there is a bonus issue to ROY shareholders, the number of Shares over which an Option is exercisable will be increased by the number of Shares which the Option holder would have received if the Option had been exercised before the record date for the bonus issue.

• Shares allotted and issued pursuant to the exercise of the Options will be allotted and issued on the above terms and conditions not more than 14 days after the receipt of a properly executed Option Exercise Form and the exercise price in respect of the Option.

ROYAL RESOURCES LIMITED – NOTICE OF ANNUAL GENERAL MEETING 2012

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ROYAL RESOURCES LIMITED – NOTICE OF ANNUAL GENERAL MEETING 2012

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Lodge your vote:

ABN: 34 108 102 432

By Mail:

Computershare Investor Services Pty Limited GPO Box 242 Melbourne Victoria 3001 Australia

T 000001 000 ROY MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Alternatively you can fax your form to (within Australia) 1800 783 447 (outside Australia) +61 3 9473 2555

For intermediary Online subscribers only (custodians) www.intermediaryonline.com

For all enquiries call:

(within Australia) 1300 850 505 (outside Australia) +61 3 9415 4000

Proxy Form

 For your vote to be effective it must be received by 11:00am (WST) Sunday 25 November 2012

How to Vote on Items of Business

All your securities will be voted in accordance with your directions.

Appointment of Proxy

Voting 100% of your holding: Direct your proxy how to vote by marking one of the boxes opposite each item of business. If you do not mark a box your proxy may vote as they choose. If you mark more than one box on an item your vote will be invalid on that item.

Voting a portion of your holding: Indicate a portion of your voting rights by inserting the percentage of securities you wish to vote in the For, Against or Abstain box or boxes. The sum of the votes cast must not exceed your voting entitlement or 100%.

Appointing a second proxy: You are entitled to appoint up to two proxies to attend the meeting and vote on a poll. If you appoint two proxies you must specify the percentage of votes or number of securities for each proxy, otherwise each proxy may exercise half of the votes. When appointing a second proxy write both names and the percentage of votes or number of securities for each in Step 1 overleaf.

A proxy need not be a securityholder of the Company.

Completion of a proxy form will not prevent individual shareholders from attending the Annual General Meeting in person if they wish. Where a shareholder completes and lodges a valid proxy form and attends the Annual General Meeting in person, then the proxy's authority to speak and vote for that shareholder is suspended while the shareholder is present at the Annual General Meeting.

Should any resolution, other than those specified in this Notice, be proposed at the meeting, a proxy may vote on that resolution as they think fit.

Signing Instructions

Individual: Where the holding is in one name, the securityholder must sign.

Joint Holding: Where the holding is in more than one name, all of the securityholders should sign.

Power of Attorney: If you have not already lodged the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

Companies: Where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please sign in the appropriate place to indicate the office held. Delete titles as applicable.

Attending the Meeting

Bring this form to assist registration. If a representative of a corporate securityholder or proxy is to attend the meeting you will need to provide the appropriate “Certificate of Appointment of Corporate Representative” prior to admission. The appointment must comply with section 250D of the Corporations Act. A form of the certificate may be obtained from Computershare or online at www.investorcentre.com under the information tab, "Downloadable forms".

Comments & Questions: If you have any comments or questions for the company, please write them on a separate sheet of paper and return with this form.

 Turn over to complete the form

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
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View the annual report 24 hours a day, 7 days a week:

www.royalresources.com.au

Your secure access information is:

To review and update your securityholding:

SRN/HIN: I9999999999

www.investorcentre.com

 PLEASE NOTE: For security reasons it is important that you keep your SRN/HIN confidential.

916CR_0_Sample_Proxy/000001/000001

MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Proxy Form

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I9999999999
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Change of address. If incorrect, mark this box and make the correction in the space to the left. Securityholders sponsored by a broker (reference number commences with ’ X ’) should advise your broker of any changes. I 9999999999

I ND

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Please mark

to indicate your directions

Appoint a Proxy to Vote on Your Behalf

XX

I/We being a member/s of Royal Resources Limited hereby appoint

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the Chairman of the Meeting

OR

 PLEASE NOTE: Leave this box blank if you have selected the Chairman of the Meeting. Do not insert your own name(s).

or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to act generally at the Meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to the extent permitted by law, as the proxy sees fit) at the Annual General Meeting of Royal Resources Limited to be held at the Celtic Club, 48 Ord Street, West Perth, Western Australia on Tuesday, 27 November 2012 at 11:00am (WST) and at any adjournment or postponement of that Meeting.

Chairman authorised to exercise undirected proxies on remuneration related resolutions: Where I/we have appointed the Chairman of the Meeting as my/our proxy (or the Chairman becomes my/our proxy by default), I/we expressly authorise the Chairman to exercise my/our proxy on Items 1, 3, 4, 5 and 6 (except where I/we have indicated a different voting intention below) even though Items 1, 3, 4, 5 and 6 are connected directly or indirectly with the remuneration of a member of key management personnel, which includes the Chairman. Important Note: For Item 3, this express authority is also subject to you marking the box in the section below.

If the Chairman of the Meeting is (or becomes) your proxy you can direct the Chairman to vote for or against or abstain from voting on Items 1, 3, 4, 5 and 6 by marking the appropriate box in step 2 below.

Important for Item 3: If the Chairman of the Meeting is your proxy and you have not directed the Chairman how to vote on Item 3 below, please mark the box in this section. If you do not mark this box and you have not otherwise directed your proxy how to vote on Item 3, the Chairman of the Meeting will not cast your votes on Item 3 and your votes will not be counted in computing the required majority if a poll is called on this item. The Chairman of the Meeting intends to vote undirected proxies in favour of Item 3 of business.

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I/We acknowledge that the Chairman of the Meeting may exercise my/our proxy even if the Chairman has an interest in the outcome of Item 3 and that votes cast by the Chairman, other than as proxy holder, would be disregarded because of that interest.

STEP 2 Items of Business	STEP 2 Items of Business		PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.	PLEASE NOTE:If you mark theAbstainbox for an item, you are directing your proxy not to vote on your behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
		For		Against	Abstain				For	Against	Abstain
Resolution 1	Remuneration						Resolution 5	Approval to Grant
Resolution 2	Report Re-election of Mr							Incentive Options to a Director - Mr Malcolm J Randall or
Resolution 3	Philip G Crabb as a Director Approval to Grant						Resolution 6	his nominee(s) Approval to Grant Incentive Options to
	Incentive Options to							a Director - Mr
	a Director - Mr Philip							Marcus F Flis or his
Resolution 4	G Crabb or his nominee(s) Approval to Grant						Resoulution 7	nominee(s) Approval of Additional 10%
	Incentive Options to a Director - Mr Frank DeMarte or his						Resolution 8	Placement Capacity Ratification of Issue
	nominee(s)							of Shares

The Chairman of the Meeting intends to vote all available proxies in favour of each item of business.

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SIGN
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Signature of Securityholder(s) This section must be completed.

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Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
Contact
Contact Daytime / /
Name Telephone Date
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R O Y

1 5 7 4 8 1 A

ABN: 34 108 102 432

T 000001 000 ROY MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

I9999999999

I 9999999999 I ND

[For your security keep your SRN/HIN confidential.]

GO ONLINE TODAY TO REDUCE YOUR ENVIRONMENTAL IMPACT AND RECEIVE YOUR SHAREHOLDER COMMUNICATIONS FASTER AND MORE SECURELY

Dear Shareholder,

Our records show that you have not provided your email address for the above shareholding.

Our company is committed to both its shareholders and the wider community. To that end, we are asking all our shareholders to provide an email address to receive their communications online. This ensures we are providing you with the information you need in the fastest, most cost effective manner possible, while also significantly reducing our environmental impact.

Shareholder communications available online include Annual Report, Voting Forms, Notice of Meeting, Issuer Sponsored Holding Statements, Payment Advices and other company related information. You can view, download or print your shareholding information as you choose.

WHY GO ONLINE?

Receiving shareholder communications electronically, instead of by post, means:

Faster access to important shareholder and company information

• Reduced environmental impact

• Secure access to your shareholder documents online, reducing clutter in your home or office

• Convenient access to all your documents, 24/7

PROVIDE YOUR DETAILS ONLINE 

1. Go online to www.investorcentre.com

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1. Select ’Communication Options’ or ’Bank Instructions Update’ from the ’Update My Details’ menu

2. For your security you will be required to register, which simply means entering your Securityholder Reference Number

3. (SRN) or Holder Identification Number (HIN) and choosing a User ID and a password. It’s fast, convenient and free!

4. Enter the relevant information - email address or bank instructions - and click ’Submit’.

OR

PROVIDE YOUR DETAILS BY POST  My email address is: @

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By providing my email address above I am electing to receive all my shareholder communications via email rather than by post. This includes notifications by email (where offered) of Annual Reports, Voting Forms, Notice of Meeting, Issuer Sponsored Holding Statements, Payment Advices and replaces any prior election I may have made. I acknowledge and agree that I have read and understood Computershare’s Terms and Conditions of Use which I can obtain from the Computershare website (www.computershare.com.au/investor), or alternatively by calling the Computershare Helpdesk on 1300 850 505 (within Australia) or +61 3 9415 4000 (if outside Australia).

If you do not wish to receive shareholder communications electronically you do not need to take any action. You can change your election at any time by accessing www.investorcentre.com/au or by calling the Computershare Helpdesk on 1300 850 505.

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ROY

916CR_0_Sample_Proxy/000001/000002

ABN: 34 108 102 432

T 000001 000 ROY MR SAM SAMPLE FLAT 123 123 SAMPLE STREET THE SAMPLE HILL SAMPLE ESTATE SAMPLEVILLE VIC 3030

Dear Securityholder,

We have been trying to contact you in connection with your securityholding in Royal Resources Limited. Unfortunately, our correspondence has been returned to us marked “Unknown at the current address”. For security reasons we have flagged this against your securityholding which will exclude you from future mailings, other than notices of meeting.

Please note if you have previously elected to receive a hard copy Annual Report (including the financial report, directors’ report and auditor’s report) the dispatch of that report to you has been suspended but will be resumed on receipt of instructions from you to do so.

We value you as a securityholder and request that you supply your current address so that we can keep you informed about our Company. Where the correspondence has been returned to us in error we request that you advise us of this so that we may correct our records.

You are requested to include the following;

• Securityholder Reference Number (SRN);

• ASX trading code;

• Name of company in which security is held;

Old address; and

New address.

Please ensure that the notification is signed by all holders and forwarded to our Share Registry at:

Computershare Investor Services Pty Limited GPO Box 2975 Melbourne Victoria 3001 Australia

Note: If your holding is sponsored within the CHESS environment you need to advise your sponsoring participant (in most cases this would be your broker) of your change of address so that your records with CHESS are also updated.

Yours sincerely

Tony Heslop

Company Secretary

916CR_0_Sample_Proxy/000001/000003/i