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MATSA RESOURCES LIMITED AGM Information 2010

Oct 28, 2010

65296_rns_2010-10-28_f701049d-4452-404e-b26c-e7b98ad3875d.pdf

AGM Information

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MATSA RESOURCES LIMITED ACN 106 732 487

NOTICE OF ANNUAL GENERAL MEETING

PROXY FORM

AND

EXPLANATORY MEMORANDUM

DATE OF MEETING Tuesday, 30 November 2010

TIME OF MEETING 10.00am

PLACE OF MEETING Suite 11 139 Newcastle Street PERTH WA

These papers should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

MATSA RESOURCES LIMITED

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the 2010 Annual General Meeting of the Shareholders of Matsa Resources Limited (" Company ") will be held in the Company’s offices at Suite 11, 139 Newcastle Street, Perth, Western Australia on Tuesday, 30 November 2010 at 10.00am WST for the purpose of transacting the following business referred to in this Notice of Meeting.

An Explanatory Memorandum containing information in relation to each of the following Resolutions accompanies and forms 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 Annual General Meeting are those who are registered Shareholders at 7.00pm (Sydney time) on 26 November 2010.

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

AGENDA

BUSINESS

ANNUAL REPORT

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2010, together with the declaration of the directors’ report, the remuneration report and the auditors’ report.

RESOLUTION 1 – Remuneration Report

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 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the remuneration report as contained in the Company’s annual financial report for the year ended 30 June 2010. ”

Note: The vote on this Resolution is advisory only and does not bind the Directors or the Company.

RESOLUTION 2 – Re-Election of Director (Paul Poli)

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

" That, for the purpose of clause 11.4 of the Company's constitution, and for all other purposes, Mr Paul Poli, a Director, retires by rotation, and being eligible, is re-elected as a Director ."

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RESOLUTION 3 – Election of Director (Andrew David Chapman)

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

" That, for the purpose of clause 11.12 of the Company's constitution, and for all other purposes, Mr Andrew David Chapman, having been appointed by the Board as an additional Director on 17 December 2009 (and being eligible offers himself for election), be elected as a Director ."

RESOLUTION 4 – Election of Director (Franciscus Sibbel)

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

" That, for the purpose of clause 11.12 of the Company's constitution, and for all other purposes, Mr Franciscus (Frank) Sibbel, having been appointed by the Board as an additional Director on 25 October 2010 (and being eligible offers himself for election), be elected as a Director ."

RESOLUTION 5 – Ratification of Prior Issue of 400,000 Shares

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

"That, pursuant to and in accordance with Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment issue of 400,000 Shares on the terms and conditions set out in the Explanatory Memorandum."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who participated in the issue and any associates of 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 6 – Ratification of Prior Issue of 12,157,012 Shares

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

"That, pursuant to and in accordance with Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 12,157,012 Shares on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting."

Voting Exclusion: The Company will disregard any votes cast on this Resolution by any person who participated in the issue and any associates of 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.

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RESOLUTION 7 – Employee Share Option Plan

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

" That, pursuant to and in accordance with Listing Rule 7.2, Exception 9 and for all other purposes, approval is given for the Company to adopt an employee share option plan on the terms and conditions set out in the Explanatory Memorandum.. "

Voting Exclusion: The Company will disregard any votes cast on this Resolution by a Director of the Company (except one who is ineligible to participate in any employee incentive scheme in relation to the Company) and any associate of that person. However, the Company need not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Note: The voting exclusion is required to be included in this notice pursuant to Listing Rule 7.2 (Exception 9). The Directors of the Company in ineligible to participate in the Scheme pursuant to section 4.3 of the Scheme, as set out in Annexure A to this Notice. Therefore the Company will not exclude any votes cast on this Resolution by a Director of the Company.

RESOLUTION 8 - Issue of Director Options to Paul Poli

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 10.11, Section 208 of the Corporations Act 2001 (Cth), and for all other purposes, approval is given to allot and issue up to 2,750,000 Director Options to Paul Poli (or his nominees) on the terms and conditions which are described in section 6 of the Explanatory Memorandum.”

Voting Exclusion : The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on this Resolution by Mr Poli and any associate of Mr Poli. 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 the person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 9 - Issue of Director Options to Andrew David Chapman

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 10.11, Section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the approval is given to allot and issue up to a maximum of 750,000 Director Options to Andrew David Chapman (or his nominees) on the terms and conditions which are described in section 6 of the Explanatory Memorandum.”

Voting Exclusion : The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on this Resolution by Mr Chapman and any associate of Mr Chapman. 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 the person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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RESOLUTION 10 - Issue of Director Options to Franciscus Sibbel

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 10.11, Section 208 of the Corporations Act 2001 (Cth), and for all other purposes, the approval is given to allot and issue up to a maximum of 750,000 Director Options to Franciscus (Frank) Sibbel (or his nominees) on the terms and conditions which are described in section 6 of the Explanatory Memorandum.”

Voting Exclusion : The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on this Resolution by Mr Sibbel and any associate of Mr Sibbel. 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 the person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

RESOLUTION 11 – Removal of Auditor

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

“That, pursuant to S329 of the Corporations Act and for all other purposes, approval is given for the removal of Ord Nexia as the current auditor of the Company effective from the date of the Meeting."

RESOLUTION 12 – Appointment Of Auditor

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

“That, for the purpose of section 327B(1)(b) of the Corporations Act and for all other purposes, MGI Perth Audit Services Pty Ltd having been nominated by a Shareholder and having consented in writing to act in the capacity of auditor, be appointed as auditor of the Company.”

OTHER BUSINESS

To deal with any other business which may be lawfully brought forward in accordance with the Company's constitution and the Corporations Act.

BY ORDER OF THE BOARD

==> picture [158 x 43] intentionally omitted <==

Andrew Chapman Company Secretary

Dated 25 October 2010

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PROXIES

A Shareholder entitled to attend and vote at the above annual general meeting of Shareholders may appoint not more than two proxies. Where more than one proxy is appointed, each proxy may 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 a proxy must be in writing, executed by the appointor or his/her attorney duly authorised in writing or, if such appointor is a corporation, either under seal or under hand of an officer, or officers, or his/her attorney(s) duly authorised.
The instrument or proxy (and the power of attorney or other authority, if any, under which it is signed, or a certified copy of the same) must be lodged by person, post, courier or facsimile and reach the registered office of the Company at least 48 hours prior to the meeting. For the convenience of Shareholders a Proxy Form is enclosed.

ENTITLEMENT TO VOTE

For the purposes of regulation 7.11.37 of the Corporations Regulations, the Company determines that members holding ordinary shares at 10.00 am Western Standard Time on 28 November 2010 will be entitled to attend and vote at the Annual General Meeting.

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MATSA RESOURCES LIMITED ACN 106 732 487

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 (" Notice of Meeting ") of Matsa Resources Limited (" Company ").

The Directors recommend Shareholders read this Explanatory Memorandum (which forms part of the Notice of Meeting) in full before making any decision in relation to the Resolutions. If you have any questions regarding the matters set out in this Explanatory Memorandum or the Notice of Meeting, please contact your stockbroker or other professional adviser.

Terms used in this Notice of Meeting have defined meanings which are explained in the Glossary appearing at the end of this Explanatory Memorandum.

Financial Reports

Shareholders will be given an opportunity to ask questions of the Directors and the Company's Auditors in relation to the accounts of the Company at the Annual General Meeting.

RESOLUTION 1 – Adoption of Remuneration Report

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

By way of summary, the Remuneration Report:

(a) discusses the Company’s policy and the process for determining the remuneration of its executive officers and Directors;
(b) addresses the relationship between the remuneration of the Company’s executive officers and the performance of the Company; and
(c) sets out remuneration details for each Director and each of the executive officers of the Company named in the Remuneration Report for the financial year ended 30 June 2010.

Section 250R(2) of the Corporations Act requires companies to put a resolution to their members that the Remuneration Report be adopted. Pursuant to section 250R(3), the vote on this Resolution is advisory only and does not bind the Board or 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 Resolution 1.

RESOLUTION 2 – Re-Election of Director (Paul Poli)

Clause 11.3 of the Company's constitution provides that at each annual general meeting, one third of the Directors for the time being (or the number nearest one third) must retire from office, excluding any director appointed since the last annual general meeting in determining that one third. A retiring director under clause 11.3 of the Company’s constitution is eligible for re-election.

The Directors to retire at any annual general meeting must be those who have been in office longest since their last election. Accordingly, Mr Poli is the only director who will retire by rotation at this Meeting. Mr Poli, being eligible, offers himself for re-election.

The Board appointed Mr Paul Poli as a Director (and Executive Chairman) on 24 December 2008.

Mr Poli is a fellow of the Australian Society of Certified Practicing Accountants and was the founder and managing partner of an accounting firm since 1989. He is well versed in all aspects of accounting and taxation and has considerable experience in business through his role as a consultant to many varied clients and through his own involvement in ownership of businesses in Western Australia, the Northern Territory and South East Asia.

RESOLUTION 3 - Election of Director (Andrew David Chapman)

The Board appointed Mr Andrew Chapman as a Director on 17 December 2009.

Resolution 3 is an ordinary resolution and provides for confirmation of the appointment of Mr Andrew Chapman to the Board pursuant to clause 11.12 of the Company's constitution. Mr Chapman is also the Company Secretary of Matsa.

Mr Chapman is a chartered accountant with over 16 years experience with publicly listed companies where he has held positions as Company Secretary and Chief Financial Officer and has experience in the areas of corporate acquisitions, divestments and capital raisings. He has worked for a number of public companies in the mineral resources, oil and gas and technology sectors. He is currently the Company Secretary of Westgold Resources Limited.

Mr Chapman is an associate member of the Institute of Chartered Accountants (ICAA) and a Fellow of the Financial Services Institute of Australasia (Finsia).

RESOLUTION 4 - Election of Director (Franciscus Sibbel)

The Board appointed Mr Franciscus (Frank) Sibbel as a Director on 25 October 2010.

Resolution 4 is an ordinary resolution and provides for confirmation of the appointment of Mr Frank Sibbel to the Board pursuant to clause 11.12 of the Company's constitution. Mr Sibbel also provides consultancy services to Matsa.

Mr Sibbel is a mining engineer who has had a 40 year career in the Australian mining industry which includes experience across operations, project management and consultancy. He has successfully managed projects from development through to successful operations including open pit and underground mining and related processing facilities.

Mr Sibbel is a Fellow member of the Australasian Institute of Mining and Metallurgy.

RESOLUTIONS 5 AND 6 – Ratification of Prior Issues of Shares

Background

On 13 January 2010, the Company advised that it had issued 400,000 new Shares at an issue price of $0.30 per Share in lieu of fees for consulting and for reimbursement of fees and expenses paid in Cambodia and Thailand (" First Placement "). Shareholder ratification of the 400,000 Shares the subject of the First Placement is being sought pursuant to Resolution 4.

In addition, in the Company’s ASX announcement of 2 February 2010, it was stated that the Company intended to raise $4,423,000 via a placement of 11,700,000 new Shares at the following issue price:

5,000,000 Shares at $0.33 per Share
6,000,000 Shares at $0.398 per Share
770,000 Shares at $0.50 per Share

The placement of the new Shares was made to the Shandong Provincial Bureau of Geology and Mineral Resources and affiliated entities (SDGM) with the funds being used to further develop the iron ore and gold projects within the Norseman Gold Project and to commence negotiations in good faith to form a strategic project exploration and mine development partnership commencing with Matsa’s Norseman Project.

SDGM which was founded 50 years ago, is an active provincial state owned entity which has extensive technical expertise in mining and exploration and significant capital backing that is being applied to numerous Chinese investments worldwide.

The Company issued an additional 387,012 new Shares at an issue price of $0.40 per Share in lieu of consultancy services provided to the Company associated with the placement. That placement was made on 25 March 2010 following receipt of Foreign Investment Review Board (“FIRB”) approval (" Second Placement "). Shareholder ratification of the 12,157,012 Shares the subject of the Second Placement is being sought pursuant to Resolution 5.

Listing Rule 7.4

Listing Rule 7.1 provides that a company may not (without shareholder approval) issue equity securities representing more than 15% of its issued capital within any 12 month period.

Under Listing Rule 7.4, an issue of securities made without prior shareholder approval can be ratified (and treated as having been made with approval for the purposes of Listing Rule 7.1) if:

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

Accordingly, the Company seeks Shareholder ratification (pursuant to Listing Rule 7.4) of the issue of a total of 12,557,012 Shares the subject of Resolutions 4 and 5 in order to reinstate the Company’s capacity to issue up to 15% of its ordinary capital, if required, in the next 12 months without Shareholder approval.

Additional Information

For the purposes of Listing Rule 7.5, the following information is provided to Shareholders:

First Placement

(a) 400,000 Shares were issued.
(b) These Shares were issued at $0.30 each.
(c) These Shares are fully paid ordinary shares in the Company and rank pari passu with all other Shares on issue.
(d) The issue was made to a consultant of the Company who was not a related party of the Company at the time of the First Placement.
(e) The purpose of the issue was in lieu of fees for consulting and for reimbursement of fees and expenses paid in Cambodia and Thailand amounting to $120,000. No monies were raised from the First Placement.

Second Placement

(a) 12,157,012 Shares were issued.
(b) These Shares were issued at follows:
5,000,000 Shares at $0.33 per Share
6,000,000 Shares at $0.398 per Share
770,000 Shares at $0.50 per Share
387,012 Shares at $0.40 per Share
(c) These Shares are fully paid ordinary shares in the Company and rank pari passu with all other Shares on issue.
(d) The Shares were allotted to the Shandong Provincial Bureau of Geology and Mineral Resources and affiliated entities (SDGM) with an additional 387,012 Shares issued to a consultant who assisted with the placement. None of the allottees were related parties of the Company at the time of the Second Placement.
(e) The purpose of the issue was to raise funds to further develop the iron ore and gold projects within the Norseman Gold Project and to commence negotiations in good faith to form a strategic project exploration and mine development partnership commencing with Matsa’s Norseman Project and in lieu of consultants fees relating to the placement.

RESOLUTION 7 – Employee Share Option Plan

Resolution 7 seeks shareholder approval, for the purposes of Rule 7.2 (exception 9) of the Listing Rules of ASX Limited and for all other purposes, for the Matsa Resources Limited Employee Share Option Plan 2010 ( Replacement Plan ) and the issue of securities under that Plan. If shareholder approval for Resolution 7 is obtained, all options issued by the Company under the Replacement Plan ( Options ) will be excluded from the 15% limit imposed by ASX Listing Rule 7.1 for a period of 3 years from the date of the approval.

The Company previously approved an employee share option plan on 28 November 2007 ( Former Plan ). The Board has decided to replace the Former Plan with the Replacement Plan due to the expiry of the Former Plan on 28 November 2010, and the need to have an active plan as it forms an important component of remuneration of employees, particularly in

light of current market conditions. The Company has sought in the Replacement Plan to also clarify the operation of certain aspects of the Former Plan. A copy of the Replacement Plan is included in Annexure A to this Explanatory Statement.

The purpose of the Replacement Plan is to attract, motivate and retain key employees of the Company.

If the Replacement Plan is approved by shareholders, the Former Plan will be terminated. This will not affect any Options issued under the Former Plan which have not lapsed. These Options will continue to be held in accordance with the terms and conditions which already apply to them. The Board has discretion to deal with any issues that arise in relation to the transition from the Former Plan to the Replacement Plan.

Notwithstanding the approval of the Replacement Plan, this does not increase the capacity of the Company to issue options beyond the thresholds specified in the Corporations Act 2001. In particular, the total number of shares the subject of options issued under all plans must not exceed 5% of the then issued share capital of the Company on a fully diluted basis, subject to certain exceptions stated in the Corporations Act 2001.

The number of Options issued under the Former Plan since it was approved by shareholders on 28 November 2007 is 3,520,000 of which 520,000 have since been cancelled and of which 50,000 have been exercised.

The Directors of the Company believe that Resolution 7 is in the best interests of the Company and its shareholders and unanimously recommend that shareholders vote in favour of it.

The full terms and conditions of the Replacement Plan are set out in Annexure A of this Notice.

The following is a summary of the key terms of the Replacement Plan:

(i) The Options are exercisable wholly or in part at any time before 5.00 pm AWST on the last day of the exercise period. Options not exercised by that date shall lapse.
(ii) Each Option shall entitle the option holder to acquire one fully paid ordinary Share upon payment of the sum of the exercise price specified in the offer accepted by the Participant. The exercise price will be an amount determined by the Board as the subscription price per Share prior to the offer of the Option in accordance with Rule 6 payable by a Participant on exercise of the Option
(iii) The Options are non-transferable unless to a nominee or otherwise approved by the Board.
(iv) Each Option may be exercised by notice in writing to the Company at any time before their date of expiry. Any notice of exercise of an Option received by the Company with payment in full of the exercise price will be deemed to be a notice of the exercise of that Option as at the date of receipt.
(v) Application will not be made to ASX for official quotation of the Options. Application will be made for official quotation of the Shares issued upon exercise of Options.
(vi) An Option will lapse immediately upon the first to occur of its expiry date or the holder acting fraudulently or dishonestly in relation to the Company.
(vii) An Option will lapse 1 month after voluntary resignation from employment or engagement by the party to whom an offer of Options was made (whether or not the Options are held by that person or a nominee).
(viii) An Option will lapse one year after the death, permanent disability or redundancy of the party to whom an offer of Options was made (whether or not the Options are held by that person or a nominee).
(ix) There are no participating rights or entitlements inherent in the Options and option holders will not be entitled to participate in new issues of securities offered to Shareholders during the currency of the Options. However, the Company will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 7 business days after the issue is announced so as to give option holders the opportunity to exercise their Options before the date for determining entitlements to participate in any issue.
(ix) Shares allotted pursuant to the exercise of Options will be allotted following receipt of all the relevant documents and payments and will rank equally with the issued Shares.
(x) In the event of a reconstruction (including consolidation, subdivision, reduction or return) of the issued capital of the Company, all rights of the option holder shall be reconstructed in accordance with the Listing Rules.
(xi) If, from time to time, before the expiry of the Options the Company makes a pro-rata issue of Shares to shareholders for no consideration, 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 date for calculating entitlements to the pro-rata issue.

RESOLUTIONS 8, 9 AND 10 – Issue of Director Options

The Company proposes to issue a total of 4,250,000 Director Options (each with an exercise price of $0.45 each and each exercisable on or before 30 November 2013) for nil consideration, to each of Messrs Paul Poli, Andrew Chapman and Frank Sibbel (" Participating Directors "), or their nominees. The terms of the Director Options are set out in Annexure B to this Explanatory Memorandum.

The Director Options will be issued as follows:

Director	Number of Director Options
Paul Poli, or his nominee(s)	2,750,000
Andrew Chapman, or his nominee(s)	750,000
Frank Sibbel, or his nominee(s)	750,000
Total	4,250,000

The issue of Director Options encourages 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 intended for the Participating Directors represented by the issue of these Director Options are a cost effective and efficient means for the Company to provide a reward and an incentive, as opposed to alternative forms of incentive, such as the payment of additional cash compensation.

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

the remuneration of the Directors;
the Directors' wish to ensure that the remuneration offered is competitive with market standards. The Directors have considered the proposed number of Director Options to be issued will ensure that the Participating Directors’ overall remunerations is in line with market standards; and
incentives to attract and ensure continuity of service of directors who have appropriate knowledge and expertise.

In the event the Director Options are exercised, the amounts that will need to be paid to the Company by the Participating Directors will be $1912,500 to exercise their respective Director Options. The Company would therefore receive a total of $1,912,500 from the Participating Directors in order for the Participating Directors to exercise their Director Options.

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:

the giving of the financial benefits falls within one of the nominated exceptions to the provision; or
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 of the Corporations Act, each of the Participating Directors is considered to be a related party of the Company.

Resolutions 8, 9 and 10 provide for the issue of Director Options to the Participating Directors which is a financial benefit which requires Shareholder approval.

Current Holdings

Set out below are details of each of the Participating Directors’ relevant interest in Shares of the Company as at the date of this Notice:

Director	Associate/Indirect Interest	Number of Shares
Paul Poli	Paul Poli & Sonya Poli as trustees for P Poli Superannuation Fund1 Paul Poli as trustee for P Poli Family Trust1	1,500,000 8,760,933
Andrew Chapman	Nil	Nil
Frank Sibbel	Anne Margaret Sibbel2	200,000

Notes:

Sonya Poli is Mr Poli's spouse. Mr Poli is a trustee and beneficiary of both the P Poli Superannuation Fund and the P Poli Family Trust.
Anne Margaret Sibbel is Mr Sibbel’s spouse.

Set out below are details of each of the Participating Directors’ relevant interest in unquoted Options of the Company as at the date of this Notice:

Director	Associate/Indirect Interest	Number of Options
Paul Poli	Paul Poli & Sonya Poli as trustees for P Poli Superannuation Fund1 Paul Poli as trustee for P Poli Family Trust1	40,000 ($0.35, 1 July 2011) 3,707,733 ($0.35, 1 July 2011) 4,000,000 ($0.50, 1 July 2012) 1,000,000 ($0.273, 26 November 2012)
Andrew Chapman	Nil	Nil
Frank Sibbel	Anne Margaret Sibbel	250,000 ($0.40, 31 August 2013)

Notes:

Sonya Poli is Mr Poli's spouse. Mr Poli is a trustee and beneficiary of both the P Poli Superannuation Fund and the P Poli Family Trust.
Anne Margaret Sibbel is Mr Sibbel’s spouse.

INFORMATION REQUIREMENTS

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

The related parties to whom the proposed resolutions would permit the financial benefit to be given:

Subject to Shareholder approval, the following maximum number of Director Options will be issued to the following related parties, or their respective nominees:

Director	Number of Director Options
Paul Poli, or his nominee(s)	2,750,000
Andrew Chapman, or his nominee(s)	750,000
Frank Sibbel, or his nominee(s)	750,000
Total	4,250,000

The nature of the financial benefit

The proposed financial benefit to be given is the issue of Director Options for nil consideration, to the Participating Directors as noted above.

Directors’ recommendation

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

Messrs Sibbel and Chapman (who have no interest in the outcome of Resolution 8) recommend that Shareholders vote in favour of Resolution 8. Mr Poli declines to make a recommendation about Resolution 8 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed issue of Director Options to him or his nominee(s).

Messrs Poli and Sibbel (who have no interest in the outcome of Resolution 9) recommend that Shareholders vote in favour of Resolution 9. Mr Chapman declines to make a recommendation about Resolution 9 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed issue of Director Options to him or his nominee(s).

Messrs Poli and Chapman (who have no interest in the outcome of Resolution 10) recommend that Shareholders vote in favour of Resolution 10. Mr Sibbel declines to make a recommendation about Resolution 10 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed issue of Director Options to him 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.

The proposed ordinary Resolutions 8, 9 and 10 would have the effect of giving power to the Directors to issue a total of 4,250,000 Director Options on the terms and conditions as set out in Annexure B to this Explanatory Memorandum and as otherwise mentioned above.

The Company currently has 119,010,963 quoted Shares and the following unquoted Options on issue:

Number	Exercise Price	Expiry Date
400,000	$0.50	5 December 2010
400,000	$1.00	5 December 2010
100,000 (employee)	$0.50	5 December 2010
100,000 (employee)	$1.00	5 December 2010
250,000 (employee)	$0.625	16 April 2011
250,000 (employee)	$0.75	16 April 2011
250,000 (employee)	$1.00	16 April 2011
7,800,000	$0.35	1 July 2011
9,000,000	$0.50	1 July 2012
2,000,000	$0.273	26 November 2012
1,200,000	$0.273	31 December 2012
2,300,000	$0.40	31 August 2013

If all Director Options issued as proposed above are exercised, and assuming no existing Options on issue have been exercised, the effect would be to dilute the share holding of existing Shareholders by 3.57%. The market price of the Company’s Shares during the period of the Director Options will normally determine whether or not the Participating Directors exercise the Director Options. At the time any Director Options are exercised and Shares are issued pursuant to the exercise of the Director Options, the Company’s Shares may be trading at a price which is higher than the exercise price of the Director Options.

The Participating Directors’ fees/salary per annum (including superannuation) and the total financial benefit to be received by them in this current period as a result of the issue of the Director Options the subject of Resolutions 7, 8 and 9 are as follows:

Director	Fees/salary p.a. ($)	Value of Director Options ($)	Total Financial Benefit ($)
Paul Poli	239,192	407,000	646,192
Andrew Chapman	89,800	111,000	200,800
Frank Sibbel	57,051	111,000	168,051

The indicative option valuation of 14.8 cents is a theoretical valuation of each Director Option using the Black and Scholes Option Pricing Model.

Valuation of Director Options

The Company's advisers have valued the Director Options to be issued to the Participating Directors using the Black & Scholes Option Valuation methodology. The value of an option calculated by the Black & Scholes Model is a function of a number of variables. The valuation of the Director Options has been prepared using the following assumptions:

Variable	Input
Share price	37.5 cents
Exercise price	45 cents
Risk Free Interest Rate	4.89%
Volatility	78.27%
Expiry Date	30 November 2013

The Company’s advisers have calculated the value of each Director Option based on the following assumptions:

The date of the issue of the Director Options will be the date that Shareholders approve the issues. For the purposes of the valuation, the Company's advisers have used the 22 October 2010 closing price of Shares. The Director Options will need to be formally valued following Shareholder approval.
The closing price of Shares as at 22 October 2010 was 37.5 cents.
The risk free interest rate for a Commonwealth Bond expiring in November 2013 is deemed to be approximately 4.89%.
No dividends are payable before the expiry date of 30 November 2013.
The exercise price of the Director Options is $0.45 per Option.
The Director Options have no vesting conditions and will not be transferable.
A volatility factor of 78.27%. Taking into account the Company's announcements during the last twelve months, the life of the Director Options (approximately 36 months), the general volatilities applying to the small cap mineral companies and the 22 October 2010 Share price, the Company advisers considered this volatility factor not to be unreasonable.
A 20% discount is applied for the Director Options not being quoted on ASX and therefore not being freely tradeable.

Based on the assumptions and discount, it is considered that the estimated value of the Director Options to be issued to the Participating Directors is 14.8 cents per Director Option.

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

The following table gives details of the highest, lowest and latest closing prices of the Company’s Shares trading on ASX over the past 12 months ending on 22 October 2010:

Highest Price (cents) / Date	Lowest Price (cents) / Date	Latest Price / Date
44 cents 2 February 2010	20.5 cents 28 October 2009	37.5 cents 22 October 2010

Other Information

Under the Australian Equivalent of IFRS, the Company is required to expense the value of the Director 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 or detriments including opportunity costs or taxation consequences for the Company or benefits foregone by the Company in issuing the Director Options pursuant to Resolutions 8. 9 and 10.

Neither the Directors not 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 shareholder approval 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 issue of Director Options to the Participating Directors.

Additional Information

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

(a) the Director Options will be issued to the Participating Directors, or their nominees, as noted above;
(b) the maximum number of Director Options to be issued is 4,250,000;
(c) the Director Options will be allotted and issued on one date which will be no later than 1 month after the date of this Meeting, unless otherwise extended by way of ASX issuing a waiver to the Listing Rules;
(d) the Director Options will be issued for nil consideration;
(e) the funds raised by the issue of the Director Options will be used for working capital purposes; and
(f) the terms and conditions of the Director Options are set out in Annexure B to this Explanatory Memorandum.

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

RESOLUTION 11 and 12 – Removal of Current Auditor and Appointment of New Auditor

Following the merger on 1 October 2010 between Ord Nexia, the Company’s current auditors, and MGI Perth Audit Services Pty Ltd (" MGI "), the Company seeks to:

(a) remove Ord Nexia as the Company’s auditor; and
(b) appoint MGI as auditor to the Company.

Under the Corporations Act 2001 the appointment of a new auditor is subject to approval at an annual general meeting. The Company seeks approval at this meeting for MGI to be appointed auditor.

Resolution 11 seeks Shareholder approval for the removal of Ord Nexia as the Company’s auditor.

Resolution 12 seeks Shareholder approval for the appointment of MGI as auditor for the Company.

In accordance with Section 328B(1) of the Corporations Act, the Company has obtained a nomination from a Shareholder for MGI to be appointed as auditor for the Company. A copy of this nomination is attached as Annexure C.

In accordance with Section 328A(1) of the Corporations Act, MGI has provided the Directors with written notification of its consent to act as auditor for the Company subject to Shareholder approval of Resolution 11.

If Resolution 11 is passed, the appointment of MGI as auditor for the Company will take effect at the close of this Annual General Meeting.

GLOSSARY

Annual Report means the Company's annual report including the reports of the Directors and the auditor and the financial statements of the Company for the year ended 30 June 2009, which can be downloaded from the Company's website at www.matsa.com.au.

ASX means ASX Limited trading as the Australian Securities Exchange.

Board means the board of Directors.

Company means Matsa Resources Limited ACN 106 732 487.

Corporations Act means Corporations Act 2001 (Cth).

Director means a director of the Company.

Director Option means an Option the terms and conditions of which are set out in Annexure A to this Explanatory Memorandum.

Explanatory Memorandum means this explanatory memorandum which accompanies and forms part of the Notice of Meeting.

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

Meeting means the annual general meeting of the Company the subject of the Notice of Meeting.

Notice of Meeting means the Notice of Annual General Meeting which accompanies this Explanatory Memorandum.

Option means an option to acquire a Share.

Remuneration Report means the remuneration report appearing in the Annual Report.

Resolution means a resolution proposed pursuant to the Notice of Meeting.

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

Shareholder means a holder of a Share.

VWAP means volume weighted average price.

WST means Western Standard Time in Perth, Western Australia.

ANNEXURE A

RULES OF MATSA RESOURCES LIMITED EMPLOYEE SHARE OPTION PLAN

Contents

1.	Introduction .............................................................................................................. 1
2.	Objectives ................................................................................................................. 1
3.	Definitions and interpretation ................................................................................. 1
4.	The Plan .................................................................................................................... 4
5.	Eligibility to participate ............................................................................................ 4
6.	Offer of Options ........................................................................................................ 4
7.	Acceptance of Offer of Options .............................................................................. 5
8.	Grant of Options ....................................................................................................... 5
9.	Terms of Options ...................................................................................................... 6
10.	Conditions of exercise of Options .......................................................................... 8
11.	Cessation of employment of Participant ................................................................ 8
12.	Dividends and voting rights .................................................................................... 9
13.	Maximum number of Options .................................................................................. 9
14.	Taxation ................................................................................................................... 10
15.	Listing Rules ........................................................................................................... 10
16.	Administration of the Plan ..................................................................................... 10
17.	Restriction on exercise of Options ....................................................................... 11
18.	Termination, suspension and amendment of the Plan ....................................... 12
19.	Costs, charges and duties ..................................................................................... 12
20.	Terms of employment not affected ....................................................................... 12
21.	Notices .................................................................................................................... 12
22.	Miscellaneous ......................................................................................................... 12
23.	Governing law ......................................................................................................... 13
24.	Severance ............................................................................................................... 13

1. Introduction

1.1 This document sets out the Rules of the “Matsa Resources Limited Employee Share Option Plan” ( Plan ).
1.2 There are legal and tax consequences associated with participation in the Plan. Eligible Participants should ensure that they understand these consequences before accepting an invitation to participate in the Plan.

2. Objectives

2.1

The objectives of the Plan are to:

(a) establish a method by which Eligible Participants can participate in the future growth and profitability of the Company;
(b) provide an incentive and reward for Eligible Participants for their contributions to the Company; and
(c) attract and retain a high standard of managerial and technical personnel for the benefit of the Company.

3. Definitions and interpretation

3.1 Definitions

In these Rules:

Application means an application for Options in the form set out in such form as the Board may from time to time determine, by which an Offer may be accepted.

Application Date means the date on which an Application is lodged with the Company by an Eligible Participant or his or her nominee in accordance with the requirements of these Rules.

ASIC means the Australian Securities and Investments Commission

ASX means ASX Limited ACN 008 624 691 or the Australian Securities Exchange as the context requires.

Board means the board of Directors of the Company from time to time.

Business Day has the meaning given to it in the Listing Rules.

Change of Control Event means a person, or a group of associated persons, becoming entitled to sufficient Shares to give that person or persons the ability, in general meeting, to replace all or a majority of the Board.

Class Order means ASIC Class Order 03/184 or any subsequent class order made or approved by ASIC in substitution of Class Order 03/184.

Company means Matsa Resources Limited ACN 106 732 487.

Constitution means the constitution of the Company, as amended from time to time.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

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Eligible Participant means a person who is a full time or part-time employee or consultant of the Company or a Related Body Corporate of the Company, other than any such person who has given notice of resignation, or who has been given notice of termination, of his or her employment, or removed from his or her position.

Exercise Condition means a condition relating to an Option which must be satisfied or waived before the Option may be exercised.

Exercise Period means the period from the end of the Restricted Period to the Expiry Date.

Exercise Price means an amount determined by the Board as the subscription price per Share prior to the offer of the Option in accordance with Rule 6 payable by a Participant on exercise of the Option.

Expiry Date means 5.00pm Western Standard Time in Australia on the day specified in an Offer as determined by the Board in its absolute discretion.

Group Company means the Company and any Related Body Corporate of the Company.

Holder means the registered holder of Options.

Issue Date means the date on which the Company issues the Option.

Listing Rules means the Listing Rules of ASX, and any other rules of ASX which are applicable to the Company while the Company is admitted to the official list of ASX, each as amended from time to time, except to the extent of any express waiver by ASX.

Nominal Consideration means consideration of not more than 1 cent per Option.

Offer means the offer of Options made in accordance with Rule 6 and on the terms set out in these Rules.

Participant means an Eligible Participant to whom Options have been validly granted under the Plan.

Option means a right to subscribe for or otherwise acquire a Share on the terms set out in these Rules.

Option Exercise Notice means a notice for the exercise of Options in accordance with the Rules in the form set out in such form as the Board may from time to time prescribe.

Permanent Disablement means:

(a) the illness or incapacity of the Eligible Participant necessitating the permanent withdrawal of the Eligible Participant from the work force, as accepted to the satisfaction of the Board; or
(b) any other circumstances which the Board considers should be treated as Permanent Disablement for the purposes of the Plan.

Plan means the Matsa Resources Limited Employee Share Option Plan established in accordance with these Rules.

Related Body Corporate has the same meaning as given to that term in the Corporations Act.

Remuneration Committee means the Remuneration Committee of the Board.

Restricted Period has the meaning given to that term in Rule 10.1.

Rules means the rules of the Plan as set out in this document as amended from time to time.

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Share means a fully paid ordinary share in the Company.

Shareholder means a holder of a Share.

Takeover Period in relation to a takeover bid in respect of Shares, means the offer period as defined in section 624 of the Corporations Act.

3.2 Interpretation

In these Rules:

(a) headings are for convenience only and do not affect the interpretation of the Plan; and

unless expressed to the contrary;

(b) any reference in the Plan to any enactment includes a reference to that enactment as from time to time amended, consolidated, re-enacted or replaced and to all regulations or instruments issued under it;
(c) any words denoting the singular include the plural and words denoting the plural include the singular;
(d) any words denoting one gender include the other gender;
(e) where any word or phrase is given a definite meaning in the Plan, any part of the speech or other grammatical form of that word or phrase has a corresponding meaning;
(f) a reference to a power, right or discretion being exercisable by the Board is taken to be a reference to that power, right or discretion being exercisable by a delegate of the Board;
(g) a reference to an application to participate in the Plan includes any process implemented by the Board to provide for deemed applications; and
(h) a reference to:
(i) a person includes a firm, unincorporated association, corporation and a government or statutory body or authority;
(ii) a person includes its legal personal representatives, successors and assigns;
(iii) a statute, ordinance, code or other law includes regulations and other statutory instruments under it and consolidations, amendments, reenactments or replacements of any of them;
(iv) a right includes a benefit, remedy, discretion, authority or power;
(v) an obligation includes a warranty or representation and a reference to a failure to observe or perform an obligation includes a breach of warranty or representative;
(vi) $ or dollars is a reference to the lawful currency of Australia;
(vii) this or any other document includes the document as varied or replaced and notwithstanding any change in the identity of the parties; and
(viii) any thing (including, without limitation, any amount) is a reference to the whole or any part of it and a reference to a group of things or persons is a reference to any one or more of them.

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(i) Unless the context otherwise requires any word or phrase used in these Rules which is not defined above, but which is defined in the Listing Rules has the same meaning as defined in the Listing Rules.
(j) A reference to the Listing Rules has effect only if the Company is admitted to the official list of ASX, and is otherwise to be disregarded (save where any term is defined by reference to the meaning given to it in the Listing Rules).

4.

The Plan

4.1 There shall be set aside for the purposes of the Plan such number of Options as the Board may from time to time determine.
4.2 The Board will administer the Plan.
4.3 For so long as the Company is admitted to the official list of ASX, Options may not be offered to a Director or his or her associates except where approval is given by the shareholders of the Company in general meeting in accordance with the requirements of the Listing Rules.
4.4 Participation in the Plan is subject to the Rules.

5.

Eligibility to participate

5.1 The Board may in its absolute discretion determine criteria to apply to an Eligible Participant for participation in the Plan including, without limitation, a minimum period of service.
5.2 Subject to Rule 4.4 in respect of the participation of Directors, Eligible Participants are eligible to participate in the Plan.
5.3 Eligibility to participate in the Plan does not confer a right to participate in the Plan. Participation in the Plan will be solely determined by the Board in accordance with these Rules.
5.4 Options may be granted to Eligible Participants or their nominees as approved by the Board from time to time.

6.

Offer of Options

6.1 The Company may from time to time make Offers in writing to Eligible Participants inviting them to accept an offer of Options under the Plan.

6.2 No Offer may be made if to do so would contravene the Constitution, the Corporations Act, the Listing Rules or any other applicable law.
6.3
Each Offer must be in writing and must:
(a) specify the name of the Eligible Participant to whom the Offer is made;
(b) specify the total number of Options (and the number of Shares to which the Options relate) being offered;
(c) specify such terms and conditions of the issue of the Options the subject of the Offer, as determined by the Board, including;
(i) the Expiry Date;
(ii) the Exercise Price; and

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  - (iii) the Restricted Period;

(d) specify the time and date by which the Offer must be accepted;
(e) specify any other matters required to be specified in the Offer by the Corporations Act, the Listing Rules and/or application instruments issued by the Australian Securities and Investments Commission; and
(f) have attached an Application and copy of these Rules.
6.4 If the Company is admitted to the official list of ASX, the Offer must include an undertaking by the Company to provide to a Participant, within a reasonable period of being so requested, the current market price (as defined in the Listing Rules) of the Shares.
6.5 Options must be offered under the Plan for no more than Nominal Consideration.

7.

Acceptance of Offer of Options

7.1 Upon receipt of an Offer of Options, an Eligible Participant may, within the period specified in the Offer:
(a) accept the whole or any lesser number of Options offered by submitting an Acceptance Form; or
(b) nominate a nominee in whose favour the Eligible Participant wishes to renounce the Offer.
7.2 Upon:
(a) receipt of the completed Acceptance Form; or
(b) the Board resolving to allow the renunciation to a nominee for the Eligible Participant and the nominee accepting the whole or any lesser amount of Options offered by notice in writing to the Board,

then the Eligible Participant, or the nominee, as the case may be, will be taken to have agreed to be bound by:

(c) these Rules;
(d) the terms of the Offer; and
(e) the Constitution in respect of any Shares acquired on the exercise of Options.

8.

Grant of Options

8.1 Upon acceptance of a duly signed and completed Acceptance Form, the Company may grant the Options applied for to the applicant (such person then being known as the Holder ) on the terms determined by the Board under Rule 6.
8.2 The Company will issue a certificate or holding statement to each Holder in respect of Options granted to them.
8.3 The Offer will lapse if not accepted within the time required under the terms of the Offer.

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9. Terms of Options

9.1 The terms of Options granted under the Plan shall be as determined by the Board from time to time in accordance with this Rule 9.
9.2 The Exercise Price of an Option shall be the price determined by the Board in its absolute discretion prior to or on grant of the Options.
9.3 Subject to Rule 11.4, the Exercise Period of an Option shall be the period determined by the Board in its absolute discretion prior to or on grant of the Option. If no period is determined by the Board then the Exercise Period shall be the period from the date of grant of the Option to the Expiry Date.
9.4 Unless otherwise determined by the Board when it resolves to grant the Option, each Option is granted on the terms set out in this Rule 9.4 and the Rules generally.

Exercise of Options

(a) Each Option entitles the Holder to subscribe for one Share on exercise of the Option.
(b) Subject to paragraph (e), a Holder may not exercise Options before expiry of the Restricted Period.
(c) Subject to paragraph (e), a Holder may only exercise Options during the Exercise Period.
(d) On expiry of the Exercise Period an Option not exercised shall automatically lapse.
(e) Notwithstanding paragraph (b), Options may be exercised:
(i) during a Takeover Period;
(ii) at any time after a Change of Control Event has occurred;
(iii) at any time after the announcement of a proposed capital reconstruction referred to in paragraph (n);
(iv) in the Board's absolute discretion, following the occurrence and announcement by the Company of an event that in the opinion of the Board is likely to lead to the Company being removed from the official list of ASX; or
(v) in the Board's absolute discretion, within 12 months, in the event of the death or Permanent Disablement of an Eligible Participant, in respect of Options held by or on behalf of that Eligible Participant.
(f) If, in the reasonable opinion of the Board, an Eligible Participant acts fraudulently or dishonestly in any material respect or is in material breach of his or her obligations to any Group Company, then, notwithstanding any other provision in these Rules, the Board may deem any unexercised Options held by or on behalf of the Eligible Participant to have lapsed.

Notice of exercise

(g) Options may only be exercised by notice in writing to the Company which is signed by the Holder and delivered to the registered office of the Company. The notice must specify the number of Options being exercised (which must be no less than 500 and then in multiples of 100) and must be accompanied by:

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(i) the Exercise Price (if any) for the number of Options specified in the notice; and
(ii) the certificate or holding statement for those Options, for cancellation by the Company.

The notice only becomes effective when the Company has received the full amount of the Exercise Price (if any) for the number of Options specified in the notice in cleared funds.

Issue of certificates

(h) Subject to paragraphs (b) to (g) above, within 10 Business Days of the notice referred to in paragraph (g) above becoming effective, the Board must:
(i) acquire or allot and issue the number of Shares specified in the notice to the Holder;
(ii) cancel the certificate or holding statement for the Options being exercised; and
(iii) if applicable, issue a new certificate or holding statement for any remaining unexercised Options covered by the certificate or holding statement accompanying the notice.

Allotment of Shares

(i) All Shares allotted upon the exercise of Options will be credited as fully paid and will be of the same class and rank equally in all respects with other Shares, and, in particular, entitle their holders to participate fully in:
(i) dividends declared by the Company after the date of allotment; and
(ii) all issues of securities offered to holders of Shares where entitlements to participate in those issues are determined by reference to a record date after the date of allotment of Shares allotted upon the exercise of Options.

Quotation on ASX

(j) If existing Shares are officially quoted by ASX, the Company must apply for official quotation by ASX of all Shares allotted pursuant to the exercise of Options not later than 10 Business Days after the date of allotment.
(k) The Company will not apply to have the Options granted under the Plan quoted on ASX or any other stock exchange.

New issues

(l) Holders will only be permitted to participate in a pro rata issue of Shares to the holders of Shares on the prior exercise of Options. The Company must notify the Holder of the proposed issue at least 7 Business Days before the record date to determine entitlements to the pro rata issue.

Bonus issues

(m) If from time to time prior to the expiry of any Options the Company makes an issue of any class of shares to the holders of Shares on a pro rata basis by way of capitalisation of profits or reserves (other than an issue in lieu of dividends) (a Bonus Issue ) then upon exercise of a Option, each Holder is entitled to have issued (in addition to the Shares which would otherwise be issued upon such exercise) the number of shares of the class which would have been issued to the

7

Holder under the Bonus Issue ( Bonus Shares ) if on the date on which entitlements to participate in the Bonus Issue were calculated the Holder had been registered as the holder of the number of Shares of which the Holder would have been registered as holder if immediately prior to that date the Option had been exercised and the Shares the subject of such exercise had been duly allotted and issued. The Bonus Shares must be paid up by the Company out of profits or reserves (as the case may be) in the same manner as was applied in relation to the Bonus Issue and upon issue rank equally in all respects with the other shares of that class on issue at the date of issue of the Bonus Shares.

Reorganisation of capital

(n) In the event of a reorganisation (including a consolidation, subdivision, reduction or return) of the issued capital of the Company, the number of Options to which each Holder is entitled or the Exercise Price (if any) or both will be changed in the manner required by the Listing Rules and, in any case, in a manner which will not result in any benefits being conferred on holders of Options which are not conferred on Shareholders.
(o) The Company must give notice to each Holder of any adjustment to the number of Shares for which the Holder is entitled to subscribe for or to the Exercise Price (if any) pursuant to the provisions of paragraph (n).

Restrictions

(p) A Participant must not sell, transfer, mortgage, pledge, charge, grant security over or otherwise dispose of any Options, or agree to do any of those things, until they are exercised or expire.
(q) An Offer may specify a restriction period for Shares issued on the exercise of Options.

10. Conditions of exercise of Options

10.1 Options may not be exercised during the period determined by the Board, if any, from, and including, the date of issue of an Option ( Restricted Period ).
10.2 If a takeover bid is made to acquire the whole or any part of the issued Shares, or a scheme of arrangement, selective reduction or other transaction is initiated which has an effect similar to a full takeover bid of the issued Shares ( Bid ), and the Bid is accepted by the holder of at least 50% of the Shares on issue, then each Holder will be able to exercise all or any part of his or her Options, notwithstanding that the applicable Restricted Period has not expired.

11. Cessation of employment of Participant

11.1 Subject to Rules 11.3 and 11.4, Options will automatically lapse and be forfeited if during the Restricted Period the Participant to whom the Options were first granted:
(a) voluntarily resigns from employment with a Group Company otherwise than to take up employment with another Group Company;
(b) is dismissed from employment or is removed from his or her position with a Group Company for any one or more of the following reasons:
- (i) wilful misconduct bringing disrepute on a Group Company;
- (ii) repeated disobedience, after prior written warning;

8

  - (iii) incompetence in the performance of any duties for which the Eligible Participant was employed, after prior written warning;

  - (iv) fraud or any other dishonesty in respect of the property or affairs of a Group Company; or

  - (v) any other reason, based on which the Board believe is fair and reasonable to warrant the lapsing and forfeiture of the Options.

11.2 The Board may in its absolute discretion determine that the Options granted to a Participant (or a nominee thereof) who voluntarily resigns from employment with a Group Company (other than to take up employment with another Group Company) at any time after an Option has become exercisable, may be exercised by the Participant within:
(a) 1 month after such resignation; or
(b) such longer periods as the Board determines,

and any Options the subject of this clause not exercised within the 1 month or longer period determined by the Board, will automatically lapse and be forfeited.

11.3 The Board may in its absolute discretion determine that the Options granted to a Participant who voluntarily resigns from employment with a Group Company (other than to take up employment with another Group Company) may be exercised by the Participant within 10 Business Days after such resignation.
11.4 Options will not lapse and be forfeited if the Participant ceases employment or is removed from his or her position with a Group Company in the following circumstances:
(a) death of the Participant;
(b) total permanent disability of the Participant, such that the Participant is incapable of performing his or her duties due to a form of illness, injury or other disablement, as determined by the Board;
(c) permanent retirement from full-time employment; and
(d) any other reason, based on which the Board believe is fair and reasonable to warrant the Eligible Participant maintaining his/her right to exercise the Options.
11.5 Should a Participant, in the opinion of the Board, satisfy the requirements of Rule 11.4 the Participant will have a period of one (1) year to exercise the Option from the date the Company receives notice or determines the existence of the specified event (as the case may be) and acknowledges in writing that such event satisfies the requirements of Rule 11.4.

12. Dividends and voting rights

Holders of Options have no rights to vote at meetings of the Company or receive dividends until Shares are allotted or acquired on the exercise of Options pursuant to the Rules.

13. Maximum number of Options

13.1 The Board must not offer or grant Options to any Eligible Participant under the Plan if, immediately following the grant of the Options the subject of the Offer, the total number of Shares to which the Options to be granted under the Offer relate, when aggregated with:
(a) the total number of Shares which are the subject of any outstanding Offers of Options;

9

(b) the number of Shares which would be issued if each outstanding Option or other outstanding rights or options or other outstanding entitlements to Shares issued under any other employee or director share or option scheme operated by the Company were to be exercised, ignoring any Vesting Conditions; and
(c) the number of Shares issued during the previous five (5) years pursuant to the Plan or any other employee or director share or option plan operated by the Company,

would exceed five per cent (5%) of the total number of issued Shares in the Company as at the time of the Offer.

13.2 For the purposes of Rule 13, any Shares or Options or options offered in the following circumstances may be disregarded:
(a) an offer made to a person situated outside Australia at the time of receipt of the Offer;
(b) an offer that did not need disclosure to investors because of section 708 of the Corporations Act;
(c) an offer made pursuant to a disclosure document (as defined in the Corporations Act); or
(d) an offer that was an excluded offer or invitation within the meaning of the Corporations Act as in force before the commencement of Schedule 1 of the Corporate Law Economic Reform Program Act 1999 (Cth).

14. Taxation

Neither the Company nor its directors, officers, employees, representatives or agents take any responsibility or assume any liability for the taxation liabilities of Participants that arise in respect of the issue or exercise of Options.

15. Listing Rules

The terms and conditions of the Plan must at all times comply with the Listing Rules. If there is any inconsistency between the terms and conditions of the Plan and the Listing Rules then the Listing Rules will prevail.

16. Administration of the Plan

16.1 Board powers

The Plan will be administered by the Board who shall have the power and absolute discretion to:

(a) determine the appropriate procedures from time to time for the administration of the Plan, including the form of application and other forms and notices to be issued under the Plan, subject to the Rules;
(b) subject to Rules 6.2, 15, 16.2 and 18, amend, modify or waive any or all of the Rules (including this Rule), or any restriction or other condition relating to any Options allocated under the Plan;
(c) resolve conclusively all questions of fact or interpretation concerning the Plan and the applicable Rules and any dispute of any kind that arises under the Plan, including as to the interpretation or application of the Plan or any restrictions or

10

other conditions relating to any Options allocated under the Plan, and the decision of the Board is final and binding on the Company and the Participants;

(d) delegate to any one or more persons for such period and on such conditions as the Board may determine the exercise of any of the Board’s powers or discretions under the Plan; and
(e) waive any breach of a provision of the Plan.

16.2

Limitation on amendments

Subject to the applicable Rules, without the consent of the Participant, no amendment may be made to any restriction or other condition relating to any Options allocated under the Plan, which reduces the rights of Participants to those Options, other than an amendment made primarily to:

(a) comply with present or future State or Commonwealth legislation;
(b) correct any manifest error; or
(c) take into consideration possible adverse tax implications in respect of the Plan arising from, among other things:
(i) adverse rulings from the Commissioner of Taxation;
(ii) changes to Australian tax legislation (including an official announcement by the Commonwealth of Australia); or
(iii) changes in the interpretation of Australian tax legislation by a court or tribunal of competent jurisdiction.

16.3 Board's discretion

The Board has absolute and unfettered discretion:

(a) to act or refrain from acting under the applicable Rules or concerning the Plan or any Options allocated under the Plan; and
(b) in exercising any power or discretion concerning the Plan or any Options allocated under the Plan,

except that while the Company is listed on the official list of the ASX, the Board may only exercise its powers in accordance with the Listing Rules of the ASX.

16.4 Indemnification

The Company must indemnify, and keep indemnified, to the full extent permitted by law, each person who is or has been a director or alternate director of the Company against al proceedings, actions, claims, demands, losses, liabilities, damages, costs and expenses which may be made, brought against, suffered or incurred by the person arising directly or indirectly out of or in connection with the operation of the Plan.

17. Restriction on exercise of Options

No Option given under this Plan may be exercised unless the underlying Shares pertaining to that Option have been listed on ASX or an approved foreign exchange (as defined in the Class Order) for a period of 12 months immediately before the date of the Offer without suspension for more than a total of two trading days during that period.

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18. Termination, suspension and amendment of the Plan

Subject to any applicable Listing Rules or laws, the Plan will take effect when the Board decides and may be suspended, terminated or amended at any time by resolution of the Board.

19. Costs, charges and duties

The Company:

(a) is not responsible for any costs, charges or duties which are or may become payable on the transfer, allotment and issue of Options under the Plan or any other dealing with the Options; and
(b) may make any withholding or payment which it is required by law to make in connection with the Plan or the Options.

20. Terms of employment not affected

20.1 The rights and obligations of a Participant under the terms of his or her office, employment or contract with a Group Company are not affected by his or her participation in the Plan.
20.2 The applicable Rules do not form part of, and will not be incorporated into, any contract of a Participant (whether or not they are an employee of a Group Company).
20.3 No Participant has any right to compensation or damages as a result of the termination of his or her office, employment or other contract with a Group Company for any reason, so far as those rights arise or may arise from the Participant ceasing to have rights under the Plan as a result of the termination.
20.4 The Company makes no representation or guarantee as to the ongoing value of Options which a Participant acquires under the Plan. No Participant has any right to compensation or damages as a result of any decrease in value of Options which the Participant acquires under the Plan.

21. Notices

21.1 A notice or other communication under or concerning the Plan is validly given:
(a) by the Company to a Participant, if delivered personally to the addressee or sent by prepaid post to his or her last known residential address, or sent to him or her by facsimile or email at his or her place of work or posted on an electronic noticeboard maintained by the Company and accessible by the Participant; and
(b) by a Participant to the Company if delivered or sent by prepaid post addressed to, as appropriate, the company secretary of the Company at the Company's registered office (or any other address the Board specifies).
21.2 A notice or other communication sent by post will be treated as received 48 hours after it was posted.

22. Miscellaneous

22.1 No broker’s fees or commissions are payable by an Eligible Participant for the grant of Options pursuant to this Plan.

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22.2 Participants granted Options under this Plan are bound by these Rules and the Constitution.
22.3 No Participant or Holder has or is to be regarded for any purpose as having any interest in Shares the subject of an Option until that Option is exercised and the Shares are allotted.
22.4 The Company will establish and maintain a register of Participants.
22.5 Neither the adoption of the Plan by the Board nor any provisions of these Rules will be construed as creating any limitation on the power of the Board to adopt such additional remuneration arrangements as it may deem desirable, including without limitation, the granting of share options and bonuses otherwise than under the Plan, and any such arrangements may be either generally applicable or applicable only in specific cases.
22.6 All Options lapse on liquidation of the Company.

23. Governing law

The Plan and these Rules are governed by the laws of Western Australia and the Commonwealth of Australia.

24. Severance

If any provision in the Rules is void, voidable by any party or illegal, it shall be read down so as to be valid and enforceable or, if it cannot be so read down, the provision (or where possible, the offending words) shall be severed from the Rules without thereby affecting the validity, legality or enforceability of the remaining provisions (or parts of those provisions) of the Rules which shall continue in full force and effect.

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ANNEXURE B

TERMS AND CONDITIONS OF DIRECTOR OPTIONS

The following are the terms and conditions of the Director Options:

Nil consideration will be payable per Option for the issue of the Options.
The Options shall expire at 5.00pm WST on 30 November 2013 (" Expiry Date ").
Subject to these terms and conditions each Option will entitle the holder to subscribe for one fully paid ordinary share (" Share ") in Matsa Resources Limited ACN 106 732 487 (" Company ") at an exercise price of $0.45 each at the date of issue (" Exercise Price ").
Options may be exercised at any time from the date of issue until the Expiry Date.
Options not exercised on or before the Expiry Date will automatically lapse.
The Exercise Price of Shares the subject of Options shall be payable in full on exercise of the Options.
Options may only be exercised by the delivery to the registered office of the Company of a notice in writing. The notice must specify the number of Options being exercised and must be accompanied by:
(a) payment for the Exercise Price for each Share to be issued on exercise of the Options specified in the notice; and
(b) the certificate for those Options, for cancellation by the Company.

The notice is only effective (and only becomes effective) when the Company has received value for the full amount of the Exercise Price (for example, if the Exercise Price is paid by cheque, by clearance of that cheque) by the Expiry Date.

Subject to condition 6, within 10 Business Days after the notice referred to in condition 7 becoming effective, the Company must:
(a) allot and issue the number of Shares specified in the notice to the holder;
(b) cancel the Certificate for the Options being exercised; and
(c) if applicable, issue a new certificate for any remaining Options covered by the certificate accompanying the notice.
The Company will not apply for the Options to be quoted on ASX.
Subject to condition 18, the Options are not transferable.
Shares allotted pursuant to an exercise of Options shall rank, from the date of allotment, pari passu with existing Shares of the Company in all respects.
The Company shall, in accordance with the Listing Rules, make application to have Shares allotted pursuant to an exercise of Options quoted on ASX.
The Company must give notice as required under the Listing Rules to Option holders of any new issue before the record date for determining entitlements to the issue in accordance with the Listing Rules.

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If, prior to the expiry of any Options, there is a reorganisation of the issued capital of the Company, Options will be reorganised in accordance with the Listing Rules.
The Options will not give any right to participate in dividends until Shares are allotted pursuant to the exercise of the relevant Options.
There are no participating rights or entitlements inherent in the Options to participate in any new issues of capital which may be made or offered by the Company to its shareholders from time to time prior to the expiry date unless and until the Options are exercised.
If at any time prior to the Expiry Date theDirector ceases his position with the Company the Option holder will, subject to condition 4 having been met, have three months from the Director ceasing to hold their position with the Company to exercise the Options unless otherwise determined by the Board.
If at any time prior to the Expiry Date the Option holder dies, the deceased holder's legal personal representative may:
(a) elect to be registered as the new Option holder of the deceased Option holder's Options;
(b) whether or not he or she becomes so registered, exercise those Options as if he or she were the holder of them in accordance with those terms and conditions; and
(c) if the deceased Option holder has already given a notice of exercise of his Options, pay the Exercise Price in respect of those Options.
There is no right to change the Exercise Price of an Option nor the number of underlying Shares over which the Option can be exercised, if the Company completes a bonus issue.
There is no right to change the Exercise Price of an Option nor the number of underlying Shares over which the Option can be exercised, if the Company completes a pro rata issue.
In these terms and conditions:

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

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

" Listing Rules " means the Official Listing Rules of ASX as they apply to the Company.

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ANNEXURE C – NOMINATION OF AUDITOR

Matsa Resources Limited Suite 11 139 Newcastle Street PERTH WA 6000

Dear Sirs,

I, Oliver Nikolovski, being a member of Matsa Resources Limited (Company), nominate MGI Perth Audit Services Pty Ltd of Level 7, The Quadrant, 1 William Street,, Perth WA 6000 in accordance with Section 328B(1) of the Corporations Act 2001 (Cth) (Act) to fill the office of auditor of the Company.

Please distribute copies of this notice of this nomination as required by Section 328B(3) of the Act.

Signed and dated 25 October 2010:

==> picture [148 x 52] intentionally omitted <==

Oliver Nikolovski

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MATSA RESOURCES LIMITED ACN 106 732 487

PROXY FORM

The Company Secretary Matsa Resources Limited PO Box 376 Northbridge WA 6865 Facsimile: (08) 9227 0370 Email: [email protected]

I/We (name of shareholder) ........................................................................................................................................ of (address) ................................................................................................................................................................ being a member/members of Matsa Resources Limited HEREBY APPOINT (name) ....................................................................................................................................................................... of (address) ................................................................................................................................................................ and/or failing him (name) ........................................................................................................................................... of (address) ................................................................................................................................................................

or failing that person then the Chairman of the Annual General Meeting as my/our proxy to act generally for me/us and to vote in accordance with the following directions or, if no directions are given, as the proxy sees fit at the Annual General Meeting of the Company to be held on 30 November 2010 at 10.00am WST at the Company’s offices at Suite 11, 139 Newcastle Street, Perth, Western Australia and at any adjournment of the meeting.

Important: If the Chairman of the Meeting is appointed as your proxy, or may be appointed by default, and you do not wish to □ direct your proxy how to vote as your proxy in respect of Resolution 8, please place a mark in this box. By marking this box, you acknowledge that the Chairman of the Meeting may exercise your proxy even if he has an interest in the outcome of Resolution 8 and that the votes cast by him for Resolution 8 other than as proxy holder, would be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chairman of the Meeting will not cast your votes on Resolution 8 and your votes will not be counted in calculating the required majority if a poll is called on Resolution 8. The Chairman of the Meeting intends to vote all undirected proxies in favour of all Resolutions.

Should you so desire to direct the proxy how to vote, you should place a cross in the appropriate box(es) below:

I/We direct my/our Proxy to vote in the following manner:

			For	Against	Abstain
Resolution	1	Remuneration Report	�	�	�
Resolution	2	Re-Election of Director (Paul Poli)	�	�	�
Resolution	3	Election of Director (Andrew David Chapman)	�	�	�
Resolution	4	Election of Director (Frank Sibbel)	�	�	�
Resolution	5	Ratification of Prior Issue of 400,000 Shares	�	�	�
Resolution	6	Ratification of Prior Issue of 12,157,012 Shares	�	�	�
Resolution	7	Employee Share Option Plan	�	�	�
Resolution	8	Issue of Director Options to Paul Poli	�	�	�
Resolution	9	Issue of Director Options to Andrew David Chapman	�	�	�
Resolution	10	Issue of Director Options to Franciscus Sibbel	�	�	�
Resolution	11	Removal of Auditor	�	�	�
Resolution	12	Appointment of Auditor	�	�	�

If no directions are given my proxy may vote as the proxy thinks fit or may abstain.

This Proxy is appointed to represent _____% of my voting right, or if two proxies are appointed Proxy 1 represents _____% and Proxy 2 represents _____% of my/our total votes. My/our total voting right is __________ shares.

IF THE SHAREHOLDER IS AN INDIVIDUAL OR JOINT HOLDER:

Signature: ________

Signature: _____

IF THE SHAREHOLDER IS A COMPANY:

Affix common seal (if required by Constitution)

Director/Sole Director and Secretary Director/Secretary

Dated:

In addition to signing the Proxy Form above please provide the information below in case we need to contact you.

_______ Contact Daytime Telephone

Contact name

INSTRUCTIONS FOR APPOINTMENT OF PROXY

A Shareholder entitled to attend and to cast two or more votes is entitled to appoint no more than two proxies to attend and vote at this Annual General Meeting as the Shareholder’s proxy. A proxy need not be a Shareholder of the Company.
Where more than one proxy is appointed, each proxy must be appointed to represent a specific 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. Fractions shall be disregarded. Where more than one proxy is to be appointed or where voting intentions cannot be adequately expressed using this form an additional form of proxy is available from the Company, or alternatively you may copy this form.
The proxy form must be signed personally by the Shareholder or his attorney, duly authorised in writing. If a proxy is given by a corporation, the proxy must be executed in accordance with its constitution or its duly authorised attorney. In the case of joint Shareholders, this proxy must be signed by each of the joint Shareholders, personally or by a duly authorised attorney.
If a proxy is executed by an attorney of a Shareholder, then the original of the relevant power of attorney or a certified copy of the relevant power of attorney, if it has not already been noted by the Company, must accompany the proxy form.
To be effective, forms to appoint proxies must be received by the Company no later than 48 hours before the time appointed for the holding of this Annual General Meeting by post, facsimile or email to the address stipulated in this proxy form. If the proxy form specifies a way in which the proxy is to vote on any of the Resolutions stated above, then the following applies:
the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way; and
if the proxy has two 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 Chairman, the proxy must vote on a poll and must vote that way; and
if the proxy is not the Chairman, the proxy need not vote on a poll, but if the proxy does so, the proxy must vote that way.
If a proxy is also a Shareholder, the proxy can cast any votes the proxy holds as a Shareholder in any way that the proxy sees fit.