MATSA RESOURCES LIMITED — AGM Information 2012

Oct 28, 2012

MATSA RESOURCES LIMITED ACN 106 732 487

NOTICE OF ANNUAL GENERAL MEETING

PROXY FORM

AND

EXPLANATORY MEMORANDUM

DATE OF MEETING

Friday, 30 November 2012

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 2012 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 Friday, 30 November 2012 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 4.00pm (WST) on Wednesday, 28 November 2012.

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 2012, 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 a non-binding resolution :

“ That, for the purpose 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 2012. ”

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

Voting Prohibition Statement:

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

• (a) a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report; or

• (b) a Closely Related Party of such a member.

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

• (a) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on

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this Resolution; or

• (b) the voter is the Chair and the appointment of the Chair as proxy:

• (i) does not specify the way the proxy is to vote on this Resolution; and

• (ii) does not specify the way the proxy is to vote on this Resolution; and

• (c) expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

RESOLUTION 2 – Re-Election of Mr Frank Sibbel as a Director

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 11.3 of the Company's Constitution, and for all other purposes, Mr Frank Sibbel, a Director, retires by rotation, and being eligible, is re-elected as a Director ."

RESOLUTION 3 – Issue of Director Options to Mr Paul Poli

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

“That for the purposes of sections 195(4) and 208 of the Corporations Act 2001, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 2,750,000 Director Options to Mr Paul Poli (or his nominee/s) on the terms and conditions set out in the Explanatory Memorandum.”

In accordance with Listing Rule 14.11 the Company will disregard any votes cast on this Resolution by Mr Paul Poli (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (i) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution. However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

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RESOLUTION 4 – Issue of Director Options to Mr Frank Sibbel

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

“That, subject to the passing of Resolution 2, for the purposes of sections 195(4) and 208 of the Corporations Act 2001, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 1,500,000 Director Options to Mr Frank Sibbel (or his nominee/s) on the terms and conditions set out in the Explanatory Memorandum.”

In accordance with Listing Rule 14.11 the Company will disregard any votes cast on this Resolution by Mr Frank Sibbel (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (ii) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

(b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

RESOLUTION 5 – Issue of Director Options to Mr Andrew Chapman

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

“That for the purposes of sections 195(4) and 208 of the Corporations Act 2001, ASX Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue 1,250,000 Director Options to Mr Andrew Chapman (or his nominee/s), on the terms and conditions set out in the Explanatory Memorandum.”

In accordance with Listing Rule 14.11 the Company will disregard any votes cast on this Resolution by Mr Andrew Chapman (or his nominee) and any of his associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

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Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (i) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

RESOLUTION 6 – Adoption of Performance Rights Plan

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

“That, for the purpose of ASX Listing Rule 7.2 (Exception 9(b)) and for all other purposes, approval is given for the Company to establish and maintain a performance rights plan ( PRP ) on the terms and conditions summarised in the Explanatory Memorandum and the grant of Performance Rights from time to time under the PRP as an exception to Listing Rule 7.1.”

In accordance with Listing Rule 14.11 the Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in any employee incentive scheme in relation to the Company, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (i) a member of the Key Management Personnel; or

• (i) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (a) the proxy is the Chair; and

• (b) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

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RESOLUTION 7 – Issue of Performance Rights under PRP to Mr Paul Poli

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

“That, subject to passing Resolution 6, and for the purposes of section 208 of the Corporations Act, ASX Listing Rule 10.14 and for all other purposes, approval is given for the Company to allot and issue Performance Rights to Mr Paul Poli (or his nominee/s) on the terms and conditions set out in the Explanatory Memorandum.”

In accordance with Listing Rule 14.11 the Company will disregard any votes cast on this Resolution by any Director, other than any Directors who are ineligible to participate in any employee incentive scheme in relation to the Company, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form, or, it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

• (a) the proxy is either:

• (ii) a member of the Key Management Personnel; or

• (iii) a Closely Related Party of such a member; and

• (b) the appointment does not specify the way the proxy is to vote on this Resolution.

However, the above prohibition does not apply if:

• (c) the proxy is the Chair; and

• (d) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

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 42] intentionally omitted <==

Andrew Chapman Company Secretary

Dated 18 October 2012

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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.

New sections 250BB and 250BC of the Corporations Act came into effect on 1 August 2011 and apply to voting by proxy on or after that date. Shareholders and their proxies should be aware of these changes to the Corporations Act, as they will apply to this Annual General Meeting. Broadly, the changes mean that:

• if proxy holders vote, they must cast all directed proxies as directed; and

• any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes is set out below.

Proxy vote if appointment specifies way to vote

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

• the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way (i.e. as directed); and

• if the proxy has 2 or more appointments that specify different ways to vote on the resolution – the proxy must not vote on a show of hands; and

• if the proxy is the chair of the meeting at which the resolution is voted on – the proxy must vote on a poll, and must vote that way (i.e. as directed); and

• if the proxy is not the chair – the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).

Transfer of non-chair proxy to chair in certain circumstances

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

• an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the Company's members; and

• the appointed proxy is not the chair of the meeting; and

• at the meeting, a poll is duly demanded on the resolution; and

• either of the following applies:

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• the proxy is not recorded as attending the meeting;

• the proxy does not vote on the resolution,

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

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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

In accordance with the Constitution, the business of the Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2012 together with the declaration of the directors, the directors’ report, the Remuneration Report and the auditor’s report.

The Company will not provide a hard copy of the Company’s annual financial report to Shareholders unless specifically requested to do so. The Company’s annual financial report is available on its website at www.matsa.com.au.

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.

1. RESOLUTION 1 – Adoption of Remuneration Report

1.1 General

The Corporations Act requires that at a listed company’s annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the directors or the company.

The remuneration report sets out the company’s remuneration arrangements for the directors and senior management of the company. The remuneration report is part of the directors’ report contained in the annual financial report of the company for the financial year.

The chair of the meeting must allow a reasonable opportunity for its shareholders to ask questions about or make comments on the remuneration report at the annual general meeting.

1.2 Voting Consequences

Under changes to the Corporations Act which came into effect on 1 July 2011, a company is required to put to its shareholders a resolution proposing the calling of another meeting of shareholders to consider the appointment of directors of the company ( Spill

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Resolution ) if, at consecutive annual general meetings, at least 25% of the votes cast on a remuneration report resolution are voted against adoption of the remuneration report and at the first of those annual general meetings a Spill Resolution was note put to a vote. If required, the Spill Resolution must be put to a vote at the second of those annual general meetings.

If more than 50% of votes cast are in favour of the Spill Resolution, the company must convene a shareholder meeting ( Spill Meeting ) within 90 days of the second annual general meeting.

All of the directors of the company who were in office when the directors' report (as included in the company’s annual financial report for the previous financial year) was approved, other than the managing director of the company, will cease to hold office immediately before the end of the Spill Meeting but may stand for re-election at the Spill Meeting.

Following the Spill Meeting those persons whose election or re-election as directors of the company is approved will be the directors of the company.

1.3 Previous voting results

At the Company’s previous annual general meeting the votes cast against the remuneration report considered at that annual general meeting were less than 25%.

Accordingly, the Spill Resolution is not relevant for this Annual General Meeting.

1.4 Proxy Restrictions

Shareholders appointing a proxy for this Resolution should note the following:

If you appoint a member of the Key Management Personnel (other than the Chair) whose remuneration details are included in the Remuneration Report, or a Closely Related Party of such a member) as your proxy

You must direct the proxy how they are to vote on this Resolution. Undirected proxies granted to these persons will not be voted and will not be counted in calculating the required majority if a poll is called on this Resolution.

If you appoint the Chair as your proxy (where he/she is also a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or a Closely Related Party of such a member)

You do not need to direct your proxy how to vote on this Resolution. However, if you do not direct the Chair how to vote, you must tick the acknowledgement on the Proxy Form to expressly authorise the Chair to exercise his/her discretion in exercising your proxy even though this Resolution is connected directly or indirectly with the remuneration of Key Management Personnel .

If you appoint any other person as your proxy

You do not need to direct your proxy how to vote on this Resolution, and you do not need to tick any further acknowledgement on the Proxy Form.

2. RESOLUTION 2 – Re-Election of Mr Frank Sibbel as a Director

Clause 11.3 of the Company's Constitution requires that at each annual general meeting, one-third of the Directors for the time being, or, if their number is not a multiple of 3, then the number nearest one-third, must retire from office, provided always that no Director

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(except the Managing Director) shall hold office for a period in excess of 3 years, or the third annual general meeting following his or her appointment, whichever is the longer, without submitting himself or herself for re-election.

The Directors to retire at any annual general meeting are those who have been in office longest since their last election, but, as between persons who became Directors on the same day, those to retire must (unless they otherwise agree among themselves) be determined by drawing lots.

A retiring director under clause 11.3 of the Company’s constitution is eligible for re-election.

The Company currently has three directors and accordingly one must retire.

Mr Sibbel, the Director longest in office since his last election, retires by rotation at this Meeting. Mr Sibbel, being eligible, offers himself for re-election.

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

Mr Sibbel is a Mining Engineer who has over 40 years of extensive operational and management experience in overseeing large and small scale mining projects from development through to successful production. He was formerly the Operations Director of Tanami Gold NL until his resignation on 30 June 2008, and has worked as the Principal in his own established mining consultancy firm where he has undertaken numerous projects for both large and small mining companies.

3. RESOLUTIONS 3 TO 5 – Issue of Director Options to Related Parties

3.1 General

The Company has agreed, subject to obtaining Shareholder approval, to allot and issue a total of 5,500,000 Options ( Director Options ) to Mr Paul Poli, Mr Frank Sibbel and Mr Andrew Chapman (or their respective nominee/s) ( Related Parties ) on the terms and conditions set out below.

The issue of Director Options to Mr Frank Sibbel is subject to his re-election as director pursuant to Resolution 2.

3.2 Related Party Transaction

For a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

• (i) obtain the approval of the public company’s members in the manner set out in sections 217 to 227 of the Corporations Act; and

• (ii) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act.

The grant of the Director Options constitutes giving a financial benefit and Mr Paul Poli, Mr Frank Sibbel and Mr Andrew Chapman are related parties of the Company by virtue of being Directors.

In addition, ASX Listing Rule 10.11 also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose

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

It is the view of the Company that the exceptions set out in sections 210 to 216 of the Corporations Act and ASX Listing Rule 10.12 do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the grant of Director Options to the Related Parties.

3.3 Shareholder Approval (Chapter 2E of the Corporations Act and Listing Rule 10.11)

Pursuant to and in accordance with the requirements of section 219 of the Corporations Act and ASX Listing Rule 10.13, the following information is provided in relation to the proposed grant of Director Options:

• (a) the related parties are Messrs Mr Paul Poli, Mr Frank Sibbel and Mr Andrew Chapman and they are related parties by virtue of being Directors;

• (b) the maximum number of Director Options (being the nature of the financial benefit being provided) to be granted to the Related Parties is:

• (i) 2,750,000 Director Options to Mr Paul Poli;

• (ii) 1,500,000 Director Options to Mr Frank Sibbel; and

• (iii) 1,250,000 Director Options to Mr Andrew Chapman;

• (c) the Director Options will be granted to the Related Parties no later than 1 month after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated the Director Options will be issued on one date;

• (d) the Director Options will be granted for nil cash consideration, accordingly no funds will be raised;

• (e) the terms and conditions of the Director Options are set out in Annexure A;

• (f) the value of the Director Options and the pricing methodology is set out in Annexure B;

• (g) the relevant interests of the Related Parties in securities of the Company are set out below:

out below:
Related Party	Shares	Options
Mr Paul Poli	10,550,000	3,750,0001
Mr Frank Sibbel	268,048	1,000,0002
Mr Andrew Chapman	Nil	750,0003

1. 1,000,000 unlisted Options exercisable at $0.273 on or before 26 November 2012. 2,750,000 unlisted Options exercisable at $0.45 each on or before 30 November 2013.

2. 250,000 Options exercisable at $0.40 each on or before 31 August 2013 and 750,000 Options exercisable at $0.45 each on or before 30 November 2013.

3. 750,000 Options exercisable at $0.45 each on or before 30 November 2013.

4. (h) the remuneration and emoluments (excluding share based payments) from the Company to the Related Parties for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out below:

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Related Party	Current Financial Year	Previous Financial Year
Mr Paul Poli	$658,750	$417,042
Mr Frank Sibbel	$200,000	$88,770
Mr Andrew Chapman	$100,000	$78,952

• (i) if the Director Options granted to the Related Parties are exercised, a total of 5,500,000 Shares would be allotted and issued. This will increase the number of Shares on issue from 132,421,781 to 137,921,781 (assuming that no other Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 3.99%, comprising 1.99% by Mr Paul Poli, 1.09% by Mr Frank Sibbel and 0.91% by Mr Andrew Chapman.

The market price for Shares during the term of the Director Options would normally determine whether or not the Director Options are exercised. If, at any time any of the Director Options are exercised and the Shares are trading on ASX at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company;

(j) the trading history of the Shares on ASX in the 12 months before the date of this Notice is set out below:

Notice is set out below:
	Price	Date
Highest	$0.53	2 October 2012
Lowest	$0.10	5 July 2012
Last	$0.355	18 October 2012

(k) the Board acknowledges the grant of Director Options to Mr Frank Sibbel and Mr Andrew Chapman is contrary to Recommendation 8.3 of The Corporate Governance Principles and Recommendations with 2010 Amendments (2[nd] Edition) as published by The ASX Corporate Governance Council. However, the Board considers the grant of Director Options to Mr Frank Sibbel and Mr Andrew Chapman reasonable in the circumstances for the reason set out in paragraph (m) below;

(l) the primary purpose of the grant of the Director Options to the Related Parties is to provide a performance linked incentive component in the remuneration package for the Related Parties to motivate and reward the performance of the Related Parties in their respective roles as Directors;

• (m) Mr Paul Poli declines to make a recommendation to Shareholders in relation to Resolution 3 due to his material personal interest in the outcome of the Resolution on the basis that he is to be granted Director Options in the Company should Resolution 3 be passed. However, in respect of Resolutions 4 and 5, Mr Poli recommends that Shareholders vote in favour of those Resolutions for the following reasons:

• (i) the grant of Director Options to the Related Parties will align the interests of the Related Parties with those of Shareholders;

• (ii) the grant of the Director Options is a reasonable and appropriate method to provide cost effective remuneration as the non-cash form of this benefit will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Related Parties; and

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• (iii) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Director Options upon the terms proposed;

• (n) Mr Frank Sibbel declines to make a recommendation to Shareholders in relation to Resolution 4 due to his material personal interest in the outcome of the Resolution on the basis that he is to be granted Director Options in the Company should Resolution 4 be passed. However, in respect of Resolutions 3 and 5, Mr Sibbel recommends that Shareholders vote in favour of those Resolutions for the reasons set out in paragraph (m) above;

• (o) Mr Andrew Chapman declines to make a recommendation to Shareholders in relation to Resolution 5 due to his material personal interest in the outcome of the Resolution on the basis that he is to be granted Director Options in the Company should Resolution 5 be passed. However, in respect of Resolutions 3 and 4, Mr Chapman recommends that Shareholders vote in favour of those Resolutions for the reasons set out in paragraph (m) above;

• (p) in forming their recommendations, each Director considered the experience of each other Related Party, the current market price of Shares, the current market practices when determining the number of Director Options to be granted as well as the exercise price and expiry date of those Director Options; and

• (q) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolutions 3 to 5.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to the Related Parties as approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of Director Options to the Related Parties will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

4. RESOLUTION 6 – Adoption of Performance Rights Plan

4.1 General

On 18 October 2012, the Board adopted a performance rights plan ( PRP ) under which eligible participants may be granted Performance Rights to acquire Shares in the Company.

The intention of the PRP is to reward current Directors, executives and employees of the Company and to provide ongoing incentives as the Company progresses into production.

Resolution 6 seeks Shareholder approval under ASX Listing Rule 7.1 for the PRP.

A Performance Right typically does not have an exercise price and therefore allows a recipient, subject to satisfaction of the relevant vesting conditions and performance hurdles (as applicable), to benefit by their Performance Rights vesting into ordinary shares in the Company.

The objective of the PRP is to provide the Company with a remuneration mechanism, through the issue of securities in the capital of the Company, to motivate and reward the performance of Directors, executives and employees in achieving specified performance milestones within a specified performance period.

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The Board will ensure that the performance milestones attached to the securities issued pursuant to the PRP are aligned with the successful growth of the Company’s business activities.

The Directors, executives and employees of the Company have been, and will continue to be, instrumental in the growth of the Company. The Directors consider that the PRP is an appropriate method to:

• (a) reward Directors, executives and employees for their past performance;

• (b) provide long term incentives for participation in the Company’s future growth;

• (c) motivate Directors, executives and employees and generate loyalty; and

• (d) assist to retain the services of valuable Directors, executives and employees.

The PRP will be used as part of the remuneration planning for Directors, executives and employees.

The Corporate Governance Council Guidelines recommend that executive remuneration packages involve a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the company’ circumstances and goals.

4.2 ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

One of the exceptions to ASX Listing Rule 7.1 is Listing Rule 7.2 – Exception 9, which provides that ASX Listing Rule 7.1 does not apply to an issue under an employee incentive scheme if, within the 3 years before the date of issue, shareholders have approved the issue as an exception to ASX Listing Rule 7.1.

The effect of Resolution 6 will be to allow the Directors to grant Performance Rights pursuant to the PRP during the period of 3 years after the Meeting (or a longer period, if allowed by ASX), and to issue Shares to those Directors, executives and employees if they achieve the performance and vesting conditions of the Performance Rights, without using the Company’s 15% annual placement capacity.

In the case of a Director, no Performance Rights may be issued to the Director without separate Shareholder approval pursuant to ASX Listing Rule 10.14.

4.3 Information required by the ASX Listing Rules – Terms of the PRP

A summary of the terms of the PRP is provided in Annexure C to this Explanatory Memorandum. A copy of the PRP will be made available to any Shareholder on request.

No Performance Rights have been issued under the PRP as at the date of the Notice of Meeting.

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5. RESOLUTION 7 – Issue of Performance Rights under PRP to Mr Paul Poli

5.1 General

The Company has agreed, subject to obtaining Shareholder approval, to allot and issue a total of 1,000,000 Performance Rights to Mr Paul Poli (or his nominee/s) ( Related Party ) under the Matsa Resources Limited Performance Rights Plan ( PRP ) ( Related Party Performance Rights ).

A summary of the principal terms of the PRP is set out in Annexure C.

The purpose of the grant of Related Party Performance Rights to the Related Party is to provide retention incentive and to further motivate and reward the performance of the Related Party for performance in successfully executing the Company’s business plan and maximising value from the Company’s assets for the benefit of all Shareholders.

Resolution 7 is conditional on the approval of the PRP pursuant to Resolution 6.

5.2 Related Party Transaction

Chapter 2E of the Corporations Act requires that for a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must:

• (i) obtain the approval of the public company’s members in the manner set out in Sections 217 to 227 of the Corporations Act; and

• (ii) give the benefit within 15 months following such approval,

unless the giving of the financial benefit falls within an exception set out in Sections 210 to 216 of the Corporations Act.

In addition, ASX Listing Rule 10.14 also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities under an employee incentive scheme to a director of the entity, an associate of the director, or a person whose relationship with the entity, director or associate of the director is, in ASX’s opinion, such that approval should be obtained.

The issue of Related Party Performance Rights to the Related Party requires the Company to obtain Shareholder approval because this issue constitutes giving a financial benefit and as a Director, Mr Paul Poli is a related party of the Company.

It is the view of the Directors that the exceptions set out in Sections 210 to 216 of the Corporations Act do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the issue of Related Party Performance Rights to the Related Party.

5.3 Summary of the material terms of the Performance Rights

It is proposed that the Related Party be granted one class of Performance Rights, as set out below, for nil consideration.

Each Related Party Performance Right will vest as one Share subject to the satisfaction of certain performance criteria ( Vesting Conditions ). In the event that the Vesting Conditions are not met, the Related Party Performance Rights will not vest and as a result, no new Shares will be issued. There is nil consideration payable upon the vesting of a Related Party Performance Right.

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The Board proposes that the Vesting Conditions set out below apply to this grant of Related Party Performance Rights.

Vesting Conditions

The Related Party Performance Rights will vest subject to the Company achieving the following share pricing targets:

• (a) Share Pricing Target 1: 50% (or 500,000) of the Related Party Performance Rights will vest when Volume Weighted Average Price ( VWAP ) of the Company’s Shares as traded on ASX over 5 consecutive days is equal to or exceeds $0.60; and

• (b) Share Pricing Target 2: The remaining 50% (or 500,000) of the Related Party Performance Rights will vest when VWAP of the Company’s Shares as traded on ASX over 5 consecutive days is equal to or exceeds $0.75,

( Vesting Conditions ).

The Related Party Performance Rights shall expire at 5.00 pm (WST) on 30 November 2015 ( Expiry Date ). Any Related Party Performance Right not vested before the Expiry Date shall automatically lapse on the Expiry Date and the holder shall have no entitlement to Shares pursuant to those Related Party Performance Rights.

Subject to the good leaver provisions as set out in the PRP, the Related Party must remain a full time or part time employee or Director of the Company throughout the vesting period for the Related Party Performance Rights to vest, although Related Party Performance Rights will also vest upon the happening of any of the following events, subject to the more detailed conditions specified in Annexure C:

• (a) a bona fide takeover bid for the Company’s issued Shares is declared unconditional and the bidder has acquired a relevant interest in at least 50.1% of the Company’s issued Shares;

• (b) a court approves under Section 411(4)(b) of the Corporations Act a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (c) in any other case, a person obtains voting power in the Company which the Board (which for the avoidance of doubt will comprise those directors immediately prior to the person acquiring that voting power) determines, acting in good faith and in accordance with their fiduciary duties, is sufficient to control the composition of the Board; or

• (d) the Company passes a resolution for voluntary winding up or an order is made for the compulsory winding up of the Company.

In the event that the Board, in its absolute discretion, determines that any Related Party Performance Right does not vest, or no determination is made, the Related Party Performance Right will lapse.

A full summary of the terms and conditions attaching to the Related Party Performance Rights is set out in Annexure C.

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5.4 Technical information required by Chapter 2E of the Corporations Act and ASX Listing Rule 10.14

Pursuant to and in accordance with the requirements of Sections 219 of the Corporations Act and ASX Listing Rule 10.15, the following information is provided in relation to the proposed issue of Related Party Performance Rights:

• (a) the related party is Mr Paul Poli and he is a related party by virtue of being a Director;

• (b) the maximum number of Related Party Performance Rights (being the nature of the financial benefit being provided) to be issued to the Related Party (or his nominee/s) is 1,000,000 Related Party Performance Rights;

• (c) the fair value of the Related Party Performance Rights is based on the share price at the date the rights have been accepted by the Related Party is set out below:

Related Party
Mr Paul Poli	$91,2501

1. Assumes a 75% discount to the Share price of $0.365 at date of acceptance of offer of Related Party Performance Rights. The Directors (other than Mr Paul Poli) have determined that the fair value of the Related Party Performance Rights will be at a 75% discount to the Share price, taking into consideration the Company's trading history of the Shares on ASX in the 12 months before the date of this Notice, the current Share price, equity markets in general and that historically the Company has not previously achieved the Share prices set as the Vesting Conditions.

2. (d) the trading history of the Shares on ASX in the 12 months before the date of this Notice is set out in Section 3.3(j) of this Notice of Meeting;

3. (e) the Related Party Performance Rights will be granted for nil cash consideration and no consideration will be payable upon the vesting of the Related Party Performance Rights on the achievement of the Vesting Conditions. Accordingly, no loans will be made in relation to, and no funds will be raised from the issue or vesting of the Related Party Performance Rights;

4. (f) as the PRP is a new plan being approved under Resolution 6, no Performance Rights have previously been issued under the PRP;

5. (g) as at the date of this Notice of Meeting, Mr Paul Poli is the only related party of the Company who is entitled to participate in the PRP;

6. (h) any additional persons referred to in ASX Listing Rule 10.14 who become entitled to participate in the PRP after Resolution 6 is approved and who were not named in the Notice of Meeting will not participate in the PRP until approval is obtained under ASX Listing Rule 10.14;

7. (i) the relevant interest of the Related Party are set out in Section 3.3(g) of this Notice of Meeting;

8. (j) the remuneration and emoluments (excluding share based payments) from the Company to the Related Party for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out in Section 3.3(h) of this Notice of Meeting;

9. (k) if the Related Party Performance Rights granted to the Related Party vest, a total of 1,000,000 Shares would be allotted and issued. This will increase the number of Shares on issue from 132,421,781 to 133,421,781 (assuming that no other

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Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by 0.75%;

• (l) the terms and conditions of the Related Party Performance Rights are summarised above at Section 5.3. The full summary of the terms and conditions of the Related Party Performance Rights are set out in Annexure C. The Shares to be issued upon the vesting of the Performance Rights shall rank pari passu with existing Shares;

• (m) the Related Party Performance Rights will be granted to Mr Paul Poli no later than 12 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rules) and it is anticipated the Related Party Performance Rights will be issued on one date;

• (n) the primary purpose of the grant of the Related Party Performance Rights to the Related Party is to provide a performance linked incentive component in the remuneration package for the Related Party to motivate and reward the performance of the Related Party in his role as an executive director;

• (o) the Board believes that the grant of Related Party Performance Rights provides cost effective consideration to Mr Paul Poli. Given this purpose, the Board does not consider that there are any opportunity costs to the Company or benefits foregone by the Company in granting the Related Party Performance Rights upon the terms proposed;

• (p) Mr Frank Sibbel, who does not have a material personal interest in the outcome of Resolution 7, recommends Shareholders vote in favour of Resolution 7 for the following reasons:

• (i) the grant of Related Party Performance Rights to the Related Party, in particular, the Vesting Conditions of the Related Party Performance Rights, will align the interests of the Related Party with those of Shareholders;

• (ii) the grant of the Related Party Performance Rights is a reasonable and appropriate method to provide cost effective remuneration as the noncash form of this benefit will allow the Company to spend a greater proportion of its cash reserves on its operations than it would if alternative cash forms of remuneration were given to the Related Party; and

• (iii) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Performance Rights upon the terms proposed;

• (q) Mr Andrew Chapman, who does not have a material personal interest in the outcome of Resolution 7, recommends that Shareholders vote in favour of Resolution 7 for the reasons set out in paragraph (p) above;

• (r) Mr Paul Poli declines to make a recommendation to Shareholders in relation to Resolution 7 due to his material personal interest in the outcome of the Resolution;

• (s) in forming their recommendations, Mr Frank Sibbel and Mr Andrew Chapman considered the experience of the Related Party, the existing and proposed contribution of the Related Party to the Company and the current market practices; and

• (t) the Board is not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 7.

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GLOSSARY

$ means Australian dollars.

Annual General Meeting or Meeting means the annual general meeting of the Company the subject of the Notice of Meeting.

ASX means ASX Limited.

Board means the current board of Directors of the Company.

Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday, Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a business day.

Chair means the chair of the Meeting.

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

• (a) a spouse or child of the member;

• (b) a child of the member’s spouse;

• (c) a dependent of the member or the member’s spouse;

• (d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealing with the entity;

• (e) a company the member controls; or

• (f) a person prescribed by the Corporations Regulations 2001 (Cth).

Company means Matsa Resources Limited ACN 106 732 487.

Constitution means the Company’s constitution.

Corporations Act means Corporations Act 2001 (Cth).

Director Option means an Option granted pursuant to Resolution 3, 4 or 5 of this Notice of Meeting with the terms and conditions set out in Annexure A.

Directors means the current directors of the Company.

Eligible Participant means any full time or part time employee or Director of the Company or a subsidiary of the Company, who is declared by the Board to be eligible to receive grants of Performance Rights under the PRP.

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

Key Management Personnel has the same meaning as in the accounting standards issued by the Australian Accounting Standards Board and means those persons having authority and responsibility for planning, directing and controlling the activities of the Company, or if the Company is part of a consolidated entity, of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the Company, or if the Company is part of a consolidated entity, of an entity within the consolidated group.

Listing Rules means the Listing Rules of ASX.

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Notice of Meeting means this notice of annual general meeting including the Explanatory Memorandum and the Proxy Form.

Option means an option to acquire a Share.

Optionholder means a holder of an Option or Director Option as the context requires.

PRP means the employee incentive scheme titled Matsa Resources Limited Performance Rights Plan to be adopted pursuant to Resolution 6 with the terms and conditions summarised in Annexure C.

Proxy Form means the proxy form accompanying the Notice of Meeting.

Related Party Performance Right means a performance right granted pursuant to Resolution 7 with the terms and conditions set out in Annexure C.

Remuneration Report means the remuneration report appearing in the Director’s report section of the Company’s annual financial report for the year ended 30 June 2012.

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.

Vesting Conditions means one or more of the conditions which must be satisfied or circumstances which must exist before the Related Party Performance Rights vest, as set out in Section 5.3 of this Notice of Meeting.

VWAP means volume weighted average price.

WST means Western Standard Time in Perth, Western Australia.

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ANNEXURE A

TERMS AND CONDITIONS OF DIRECTOR OPTIONS

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

1. Nil consideration will be payable per Option for the issue of the Options.

2. The Options shall expire at 5.00pm WST on the date that is three (3) years from the date of issue ( Expiry Date ).

3. Subject to condition 15, the amount payable upon exercise of each Option will be the higher of:

4. (i) the 5 day VWAP prior to the date of grant; and

5. (ii) the closing price of the Company’s Shares on the date of grant,

( Exercise Price ).

1. 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 ) by paying the full amount of the Exercise Price.

2. Options may be exercised at any time from the date of issue until the Expiry Date.

3. Options not exercised on or before the Expiry Date will automatically lapse.

4. The Exercise Price of shall be payable in full on exercise of the Options.

5. 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:

6. (a) payment for the Exercise Price for each Options being exercised; and

7. (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) on or before the Expiry Date.

1. Subject to condition 7, within 10 Business Days after the notice referred to in condition 8 becoming effective, the Company must:

2. (a) allot and issue the number of Shares specified in the notice to the holder;

3. (b) cancel the Certificate for the Options being exercised; and

4. (c) if applicable, issue a new certificate for any remaining Options covered by the certificate accompanying the notice.

5. The Company will not apply for the Options to be quoted on ASX.

7. The Options are transferable.

8. Shares allotted pursuant to an exercise of the Options shall rank, from the date of allotment, pari passu with existing Shares of the Company in all respects.

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1. The Company shall, in accordance with the Listing Rules, make application to have Shares allotted pursuant to an exercise of Options quoted on ASX.

2. 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. However, the Company must give notice as required under the Listing Rules to Optionholders of any new issue of capital before the record date for determining entitlements to the issue in accordance with the Listing Rules.

3. 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 and Corporations Act at the time of the reorganisation.

4. The Options will not give any right to participate in dividends until Shares are allotted pursuant to the exercise of the relevant Options.

5. If at any time prior to the Expiry Date the Optionholder dies, the deceased holder's legal personal representative may:

6. (a) elect to be registered as the new Optionholder of the deceased Optionholder's Options;

7. (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

8. (c) if the deceased Optionholder has already given a notice of exercise of his Options, pay the Exercise Price in respect of those Options.

9. There is no right to change the Exercise Price of an Option or the number of underlying Shares over which the Option can be exercised.

10. In these terms and conditions:

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

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

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

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ANNEXURE B

VALUATION OF DIRECTOR OPTIONS

The Director Options to be issued to Mr Paul Poli, Mr Frank Sibbel and Mr Andrew Chapman pursuant to Resolutions 3, 4 and 5 have been independently valued.

Using the Black & Scholes option model and based on the assumptions set out below, the Director Options were ascribed the following value:

Options were ascribed the following value:
Assumptions:
Valuation date	12 October 2012
Market price of Shares	$0.365
Conversion price	$0.495
Expiry date (length of time from issue)	3 years from date of issue
Risk free interest rate	2.44%
Volatility (discount)	75%
Indicative value per Related Party Incentive Options	$0.1547
Total Value of Related Party Incentive Options
- Mr Paul Poli	$425,425
- Mr Frank Sibbel	$232,050
- Mr Andrew Chapman	$193,375

Note: The valuation noted above is not necessarily the market price that the Director Options could be traded at and is not automatically the market price for taxation purposes.

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ANNEXURE C

SUMMARY OF THE PERFORMANCE RIGHTS PLAN

The full terms of the PRP may be inspected at the registered office of the Company during normal business hours. A summary of the terms of the PRP is set out below.

• (a) Subject to any necessary approvals from the Company’s shareholders or as required by law or by the Listing Rules, the Board may, from time to time, at its absolute discretion grant Performance Rights to Eligible Participants with effect from the date determined by the Board, upon the terms set out in the PRP and upon such additional terms and vesting conditions as the Board determines.

• (b) Each Performance Right will, subject to vesting, entitle the holder on exercise to one fully paid ordinary share in the capital of the Company ( Share ).

• (c) A Performance Right granted under the PRP will not vest unless the Vesting Conditions (if any) advised to the Participant by the Board have been satisfied and the Board has notified the Participant.

• (d) The Board will advise each Eligible Participant of the following minimum information regarding the Performance Rights:

• (i) the maximum number of Performance Rights that the Eligible Participant may apply for, or the formula for determining the maximum number of Performance Rights that may be applied for;

• (ii) the maximum number of Shares that the Participant is entitled to be issued on the exercise of each Performance Right or the formula for determining the maximum number of Shares;

• (iii) any applicable Vesting Conditions;

• (iv) the dates and times when the Performance Rights lapse ( Expiry Date );

• (v) any amount (if any) that will be payable upon exercise of a Performance Right ( Exercise Price ); and

• (vi) any other relevant conditions to be attached to the Performance Rights or the Shares to be issued on the exercise of the Performance Rights.

• (e) Performance Rights are only transferrable with the prior written consent of the Board of the Company or by force of law upon death to the Participant’s legal personal representative or upon bankruptcy to the Participant’s trustee in bankruptcy.

• (f) The Company shall notify the Eligible Participant when the relevant vesting requirements have been satisfied and the Eligible Participant may then exercise their right to accept the vesting of the Performance Rights and be issued the Shares, following which the Company will issue the Shares and deliver notification of the Shareholding to the Eligible Participant.

• (g) Unless the Board decides otherwise, any vested Performance Right that has not been exercised within 6 months of becoming vested shall automatically lapse.

• (h) Where a Participant ceases to be an Eligible Participant, any unvested Performance Rights lapse (subject to certain good leaver exceptions).

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• (i) If Shares of the same class as those allotted under the Plan are quoted on the ASX, the Company will, subject to the ASX Listing Rules, apply to the ASX within 10 business days of Shares being allotted for those Shares to be quoted on ASX.

• (j) Shares resulting from the vesting of the Performance Rights shall, from the date of issue, rank pari passu with all other Shares on issue.

• (k) Any Share acquired by a Participant on the exercise of a Performance Right must not be disposed of, or dealt with in any way, by that Participant until the earlier of:

• (i) when the Eligible Participant to whom the Offer was originally made ceases to be an Eligible Participant;

• (ii) the Board approving that the restriction on disposal be released in certain “good leaver” situations;

• (iii) a change in control in the Company occurs, or the Company passes a resolution for voluntary winding up or an order is made for the compulsory winding up of the Company; and

• (iv) the 7 year anniversary of the date of grant of the Performance Rights.

• (l) In the event of a Change in Control of the Company (as defined in the Plan) or the Company passes a resolution for voluntary winding up or an order is made for the compulsory winding up of the Company, the Board may, in its absolute discretion, determine that all or a specified number of a Participant’s unvested Performance Rights vest. Any Performance Right which the Board determines does not vest will automatically lapse, unless the Board determines otherwise.

• (m) There are no participating rights or entitlements inherent in the Performance Rights and Participants will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Performance Rights.

• (n) A Performance Right does not confer the right to a change in Exercise Price or a change in the number of underlying Shares over which the Performance Right can be exercised.

• (o) If, at any time, the issued capital of the Company is reconstructed, all rights of a Participant are to be changed in a manner consistent with the Corporations Act and the ASX Listing Rules at the time of the reconstruction.

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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: reception@matsa.com.au

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 the person so named, or if no person is named, then the Chairman of the Annual General Meeting, or the Chairman s nominee, as my/our proxy to to vote in accordance with the following directions or, if no directions are given, and subject to the relevant laws, as the proxy sees fit at the Annual General Meeting of the Company to be held on 30 November 2012 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.

The Chairman of the Annual General Meeting intends to vote all undirected proxies in favour of all Resolutions in which the Chairman is entitled to vote.

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

below:	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 Mr Frank Sibbel as a Director
Resolution 3	Issue of Director Options to Mr Paul Poli
Resolution 4	Issue of Director Options to Mr Frank Sibbel
Resolution 5	Issue of Director Options to Mr Andrew Chapman
Resolution 6	Adoption of Performance Rights Plan
Resolution 7	Issue of Performance Rights under PRP to Mr Paul Poli

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

Important for Resolutions 1, 3, 4, 5, 6 and 7

If you have not directed your proxy how to vote as your proxy in respect of Resolutions 1, 3, 4, 5, 6, and 7 and the Chair is, or may by default be, appointed your proxy, you must mark the box below.

==> picture [36 x 34] intentionally omitted <==

I/we direct the Chair to vote in accordance with his/her voting intentions (as set out above) on Resolutions 1, 3, 4, 5, 6 and 7 (except where I/we have indicated a different voting intention above) and expressly authorise that the Chair may exercise my/our proxy even though Resolutions 1, 3, 4, 5, 6 and 7 are connected directly or indirectly with the remuneration of a member of the Key Management Personnel and acknowledge that the Chair may exercise my/our proxy even if the Chair has an interest in the outcome of Resolutions 3, 4, 5, 6 and 7 and that votes cast by the Chair for Resolutions 3, 4, 5, 6 and 7, other than as proxy holder, will be disregarded because of that interest.

If the Chair is, or may by default be, appointed your proxy and you do not mark this box and you have not directed the Chair how to vote, the Chair will not cast your votes on Resolutions 1, 3, 4, 5, 6 and 7 and your votes will not be counted in calculating the required majority if a poll is called on Resolutions 1, 3, 4, 5, 6 and 7.

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 name Contact Daytime Telephone

INSTRUCTIONS FOR APPOINTMENT OF PROXY

• (a) 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.

• (b) 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.

• (c) 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.

• (d) 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.

• (e) Completion of a Proxy Form will not prevent individual members from attending the Annual General Meeting in person if they wish. Where a member 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 member is suspended while the member is present at the Annual General Meeting.

• (f) 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.

• (g) 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.

• (h) To vote by proxy, please complete and sign the enclosed Proxy Form and return by:

• post to Matsa Resources Limited, PO Box 376, Northbridge, WA 6865; or

• facsimile to the Company on facsimile number +61 8 9227 0370; or

• email to the Company at reception@matsa.com.au

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

Proxy Forms received later than this time will be invalid.