METALS AUSTRALIA LTD — Proxy Solicitation & Information Statement 2006

Aug 7, 2006

Australian United Gold Limited ABN 38 008 982 474

Notice of General Meeting

Explanatory Statement

and

Proxy Form

AUSTRALIAN UNITED GOLD LIMITED ABN 38 008 982 474

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of members of Australian United Gold Limited (AUL or the Company) will be held on Thursday, 7 September 2006 commencing at 9.00am at The Celtic Club, 48 Ord Street, Western Australia.

The Explanatory Statement that accompanies and forms part of this Notice of General Meeting describes in more detail the matters to be considered.

AGENDA

SPECIAL BUSINESS

1. Resolution 1 - Proposed Grant of Options

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

"That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, the Company approves and authorises the issue, within three months of the date of this meeting, of 350,000,000 Options, such Options to each have an exercise price of 5 cents and to expire on 30 September 2009 and otherwise be issued on the terms and conditions set out in the Explanatory Statement accompanying this Notice of General Meeting."

The Company will disregard any votes cast on this resolution by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of an ordinary security holder, if the resolution is passed, and any associate of them. 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.

Resolution 2 - Change of name $2₁$

To consider and, if thought fit, to pass the following resolution as a special resolution:

"That pursuant to section 157(3) of the Corporations Act, the name of the Company be changed to "Metals Australia Ltd".

Voting Entitlements

For the purposes of determining voting entitlements at the general meeting, Shares will be taken to be held by persons who are registered as holding Shares at 9.00am on Tuesday 5 September 2006. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the general meeting.

Proxy and Voting Entitlement Instructions are included on the Proxy Form accompanying this Notice of General Meeting.

By order of the Board

Bruce R McCullagh Company Secretary 28 July 2006

EXPLANATORY STATEMENT

$\mathbf{1}$ INTRODUCTION

This Explanatory Statement has been prepared for the information of members of Australian United Gold Limited in connection with the business to be conducted at the general meeting of members to be held at The Celtic Club. 48 Ord Street, Western Australia on Thursday, 7 September 2006 at 9,00am.

This Explanatory Statement forms part of and should be read in conjunction with the accompanying Notice of General Meeting.

Shareholders should note that all the directors approved the proposal to put the resolutions to shareholders as outlined in the Notice of General Meeting and to prepare this Explanatory Statement.

RESOLUTION 1 - PROPOSED GRANT OF OPTIONS $2¹$

Australian Stock Exchange Limited ("ASX") Listing Rule Requirements

ASX Listing Rule 7.1 relevantly provides that the prior approval of the shareholders of AUL is required to an issue of equity securities if the securities will, when aggregated with the securities issued by AUL during the previous 12 months, exceed 15% of the number of fully paid ordinary shares on issue at the commencement of that 12 month period.

The number of securities to be issued by AUL under the proposed resolution will exceed this 15% allowance and accordingly shareholder approval is sought for the grant of Options under the resolution.

The information required by ASX Listing Rules 7.1 and 7.3 to be provided to shareholders is contained within this Explanatory Statement and the Notice of General Meeting.

Information on proposed grant

On 29 June 2006, the Company announced that it had entered into an agreement with RM Capital Pty Ltd to underwrite the exercising of the Company's options expiring on 30 June 2006, the amount underwritten being \$3.653,766.

This resolution proposes the grant of 350,000,000 Options to RM Capital Pty Ltd or its nominees. The issue is in part satisfaction of the underwriting fee payable to RM Capital Pty Ltd for underwriting the shortfall from the exercising of the Company's 30 June 2006 options. The total fee is \$155,000 of which \$5,000 was paid in cash and the balance is to be settled by the issue of the 350,000,000 Options.

If shareholder approval is not obtained for the issue of Options under this resolution, the balance of the fee of \$150,000 will be payable in cash.

Initially, the Options will be unlisted, however. RM Capital Pty Ltd has indicated its intention of transferring the Options to other parties to obtain a spread of optionholders sufficient to satisfy ASX Listing Rules requirements to apply for official quotation of the Options on the ASX.

In compliance with the information requirements of ASX Listing Rule 7.3, members are advised of the following particulars in relation to the proposed issue of Options:

Maximum number of Options to be issued: $(a)$

350,000,000

$(b)$ Date by which AUL will issue options:

No later than three months after the date of the meeting. Allotment of all the Options will occur on the same date.

$(c)$ Price at which options to be issued:

Deemed consideration of \$150,000 for all 350,000,000 Options in satisfaction of underwriting fee.

$(d)$ Names of the allottees:

RM Capital Pty Ltd or its nominees.

$(e)$ Terms of issue:

The Options will be issued on the terms and conditions as outlined in Appendix "A".

$(f)$ Intended use of funds raised:

No funds will be raised from the issue of the Options. However, if all the Options are duly exercised at 5 cents each before 30 September 2009, they will raise \$17,500,000 for the Company.

It is proposed that a disclosure document be issued to facilitate the issue of the Options. Directors and their associates are not entitled to participate in the issue of Options.

Effect of grant on capital structure

On completion of the issue of Options contemplated by this Notice of General Meeting the capital structure of the Company will change as follows:

CURRENT

Shares

Number	Description
669,608,765	fully paid ordinary shares

ON COMPLETION OF OPTION ISSUE

Shares
Number	Description
669,608,765	fully paid ordinary shares
Options
Number	Exercise Price	Expiry date
350,000,000	\$0.05	30 September 2009

RESOLUTION 2 - CHANGE OF NAME $\overline{\mathbf{3}}$ .

The Directors have resolved to seek approval to change the name of the Company to "Metals Australia Ltd". The Directors consider that as the Company is now focussed on a number of base metals and not just gold, the proposed new name more accurately reflects the activities of the Company.

This resolution seeks shareholder approval to this change of name.

$\Delta$ DEFINITIONS

ASX	means Australian Stock Exchange Limited.
ASX Listing Rules	means the official listing rules of ASX.
AUL or the Company	means Australian United Gold Limited ABN 38 008 982 474.
Director	means a director of the Company.
Option	means an option to acquire a Share on the terms and conditions as outlined in Appendix "A".
Share	means a fully paid ordinary share in the capital of the Company and Shares has a corresponding meaning.

APPENDIX "A"

Terms and Conditions of Options

The Options granted will entitle the holder to subscribe for and be allotted Shares as follows:

• $(a)$ A certificate will be issued for the Options.
• $(b)$ The Options shall expire on 30^th September 2009 ("Expiry Date")
• Subject to condition (n) the Option is a right in favour of the option holder to subscribe for one fully paid $(c)$ ordinary share in the capital of the Company ("Share")
• Shares allotted to option holders on exercise of Options shall, be issued at a price of 5 cents each $(d)$ ("Exercise Price").
• $(e)$ The Exercise Price of Shares the subject of the Options shall be payable in full on exercise of the Options.
• Options shall be exercisable by the delivery to the registered office of the Company of a notice in writing $(f)$ stating the intention of the option holder to:
• $(i)$ exercise all or a specified number of Options; and
• $(ii)$ pay the subscription monies in full for the exercise of each Option.
• The notice must be accompanied by an Option certificate and a cheque made payable to the Company for $(q)$ the subscription monies for the Shares. An exercise of only some Options shall not effect the rights of the option holder to the balance of the Options held by him.
• $(h)$ The Company shall allot the resultant Shares and deliver the share certificate or holding statement within five business days of the exercise of the Option.
• $(i)$ The Options shall be freely transferable.
• Shares allotted pursuant to an exercise of Options shall rank, from the date of the allotment, equally with $(i)$ existing ordinary fully paid Shares of the Company in all respects.
• $(k)$ The Company shall in accordance with the Listing Rules make application to have Shares allotted pursuant to an exercise of Options listed for official quotation.
• In case of any entitlements issue (other than bonus issue) the Exercise Price of an Option may be reduced $(1)$ according to the following formula:

$$
O' = O \t\t\t\t-\frac{E[P - (S + D)]}{N + 1}
$$

$\overline{O}$ = the new Exercise Price of the Option.

$\circ$ the old Exercise Price of the Option. $=$

• $\overline{E}$ the number of underlying securities into which one Option is $=$ exercisable

• P the average market price per share (weighted by reference to volume) of the underlying $=$ securities during the 5 trading days ending on the day before the ex rights date or ex entitlement date.

• S. the subscription price for a security under the pro rata issue. $\equiv$

• D. $=$ the dividend due but not yet paid on the existing underlying securities (except those to be issued under the pro rata issue).
• N $=$ the number of securities with rights or entitlements that must be held to receive a right to one new security.

In the case of a bonus issue the number of Shares over which the Option is exercisable may be increased by the number of Shares which the option holder would have received if the Option had been exercised before the record date for the bonus issue. The Company shall notify the ASX of the adjustments in accordance with the Listing Rules.

• In the event of any reconstruction (including consolidation, subdivisions, reduction or return) of the $(m)$ authorised or issued capital of the Company, the number of the Options or the exercise price of the Options or both shall be reconstructed (as appropriate) in accordance with the Listing Rules.
• The Options will not give any right to participate in dividends until Shares are allotted pursuant to the $(n)$ exercise of the relevant Options.
• $(0)$ The Options do not give any right to participate in new issues unless the option holder exercises the Option.

The Secretary Australian United Gold Limited 1^st Floor 8 Parliament Place West Perth WA 6872

I/We (full name)

Of (address)

being a member(s) of Australian United Gold Limited, hereby appoint as my/our proxy

Of (address)

or, failing him/her the Chairperson of the Meeting to attend and vote for me/us at the general meeting of the Company to be held at 9.00 am on Thursday 7 September 2006 and at an adjournment thereof in respect of % of my/our shares or, failing any number being specified, ALL of my/our shares in the Company.

Should you so desire to direct the proxy how to vote, then please tick the appropriate box below:

RESOLUTIONS
	FOR	AGAINST	ABSTAIN
1. Grant of Options	П	$\mathbf{H}$
2. Change of Name	П	IJ

If no directions are given the proxy may vote as the proxy thinks fit or may abstain subject to the below.

INSTRUCTIONS AS TO VOTING AS TO RESOLUTION 1

If the Chair 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 to resolution 1, please place a mark in the box.

By marking this box, you acknowledge that the Chair of the meeting may
exercise your proxy even if he has an interest in the outcome of
resolution 1 and that votes cast by the Chair of the meeting other than as
proxy holder will be disregarded because of that interest.

If you do not mark the box, and you have not directed your proxy how to vote, the Chair will not cast your votes on resolution 1 and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

If the member is an individual or joint holder:

	Usual Signature
day of	2006.
Director/Secretary	Sole Director and Sole Secretary
day of	2006.
	If the member is a Company: Signed in accordance with the Constitution of the company in

NOTES

• $\mathbf{1}$ . A member entitled to attend and vote is entitled to appoint a proxy. A member that is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise.
• $2.$ Where more than one proxy is appointed and that appointment does not specify the proportion or number of the member's votes, each proxy may exercise half of the votes.
• $\overline{3}$ . A proxy need not be a member of the Company.
• $\overline{4}$ . A proxy is not entitled to vote unless the instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed is either deposited at the registered office of the Company (1^st Floor, 8 Parliament Place, West Perth, Western Australia, 6872) or sent by facsimile to that office on Fax: 08 94817835 to be received not less than 48 hours prior to the time of the meeting.
• $5₁$ If the member is a company it must execute under its Common Seal or otherwise in accordance with its Constitution and s.127 of the Corporations Act.
• 1. The Chairman intends to vote all undirected proxies in favour of the resolutions.
• $\overline{7}$ . 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; $(a)$ and
• if the proxy has 2 or more appointments that specify different ways to vote on the resolutions, the $(b)$ proxy must not vote on a show of hands; and
• $(c)$ if the proxy is Chairperson, the proxy must vote on a poll and must vote that way, and
• $(d)$ if the proxy is not the Chairperson, 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 anyway that the proxy sees fit.