NORWOOD SYSTEMS LIMITED — AGM Information 2011

Oct 27, 2011

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MONTERAY M I N I N G G R O U P LT D

MONTERAY MINING GROUP LTD A.C.N. 062 959 540

NOTICE OF ANNUAL GENERAL MEETING

The Annual General Meeting of the Company will be held at The Yangtze Room, Mezzanine Level, Christie Conference Centre, 3 Spring Street, Sydney, NSW on 29 November 2011 at 2:30pm (EST).

This Notice of Annual General Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.

Should you wish to discuss any matter please do not hesitate to contact the Company Secretary by telephone on (07) 5538 2558.

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the annual general meeting of Shareholders of Monteray Mining Group Ltd (Company) will be held at 2:30pm (EST) on 29 November 2011 at The Yangtze Room, Mezzanine Level, Christie Conference Centre, 3 Spring Street, Sydney, NSW (Meeting) .

The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form form part of this Notice.

The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders on 27 November 2011 at 5pm (EST).

Terms and abbreviations used in this Notice and the Explanatory Memorandum are defined in Section 10.

AGENDA

1. Financial, Directors’ and Auditor’s Reports

To receive the Financial Report, Directors’ Report and Auditor’s Report for the financial year ended 30 June 2011.

2. Resolution 1 – Remuneration Report

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

“That, the Remuneration Report be adopted by the Shareholders on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

In accordance with section 250R of the Corporations Act, a vote on this Resolution must not be cast (in any capacity) by, or on behalf of:

• a. a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report; or b. a Closely Related Party of such member.

However, a person described above may cast a vote on this Resolution if:

• a. the person does so as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 1; and b. the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above.

3. Resolution 2 – Re-Election of Mr Kevin Dart as a Director

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

“That, Mr Kevin Dart, who retires in accordance with clause 20.2 of the Constitution and, being eligible, offers himself for re-election, be re-elected as a Director.”

4. Resolution 3 – Ratification of Issue of Consultant Options

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

“That, in accordance with Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of 895,000 Consultant Options to Norwand Investments Pty Ltd and Ms Helen Moretti on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by Norwand Investments Pty Ltd and Ms Helen Moretti or any of their associates.

However, the Company need not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or

• b. it is cast by the Chairman as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2 | Monteray Mining Group LTD

ACN 062 959 540

5. Resolution 4 – Authority to Grant Options to Ventnor Capital Pty Ltd

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

“That, in accordance with Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the grant of 2,000,000 Ventnor Options to Ventnor Capital (or its nominee) on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by Ventnor Capital or any of its associates.

However, the Company will not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or b. it is cast by the Chairman 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.

Further a member of the Key Management Personnel and their Closely Related Parties who are appointed as a proxy will not vote on this resolution unless:

• c. The appointment specifies the way the proxy is to vote on this resolution; or

• d. The proxy is the Chairman and the appointment expressly authorises the Chairman to exercise the proxy even though this resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

6. Resolution 5 – Authority to Grant Incentive Options to Mr Kevin Dart

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

“That, in accordance with Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the grant of 1,000,000 Incentive Options to Mr Kevin Dart (or his nominee) on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by Mr Kevin Dart and any of his associates.

However, the Company will not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• b. it is cast by the Chairman 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.

Further a member of the Key Management Personnel and their Closely Related Parties who are appointed as a proxy will not vote on this resolution unless:

• c. The appointment specifies the way the proxy is to vote on this resolution; or

• d. The proxy is the Chairman and the appointment expressly authorises the Chairman to exercise the proxy even though this resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

7. Resolution 6 – Authority to Grant Incentive Options to Mr John Hannaford

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

“That, in accordance with Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the grant of 1,000,000 Incentive Options to Mr John Hannaford (or his nominee) on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by Mr John Hannaford and any of his associates.

However, the Company will not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• b. it is cast by the Chairman 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.

Further a member of the Key Management Personnel and their Closely Related Parties who are appointed as a proxy will not vote on this resolution unless:

• c. The appointment specifies the way the proxy is to vote on this resolution; or

• d. The proxy is the Chairman and the appointment expressly authorises the Chairman to exercise the proxy even though this resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

2011 Notice of Annual General Meeting | 3

8. Resolution 7 – Authority to Grant Incentive Options to Mr Sandy Barblett

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

“That, in accordance with Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve and authorise the grant of 1,000,000 Incentive Options to Mr Sandy Barblett (or his nominee) on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by Mr Sandy Barblett and any of his associates.

However, the Company will not disregard a vote if:

• a. it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or b. it is cast by the Chairman 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.

Further a member of the Key Management Personnel and their Closely Related Parties who are appointed as a proxy will not vote on this resolution unless:

• c. The appointment specifies the way the proxy is to vote on this resolution; or

• d. The proxy is the Chairman and the appointment expressly authorises the Chairman to exercise the proxy even though this resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

9. Resolution 8 – Section 195 Approval

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 195(4) of the Corporations Act and for all other purposes, Shareholders approve and authorise the Directors to complete the transaction as contemplated in this Notice.”

Dated 28 October 2011

BY ORDER OF THE BOARD

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Steven Cole
Company Secretary
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4 | Monteray Mining Group LTD

ACN 062 959 540

EXPLANATORY MEMORANDUM

1. Introduction

This Explanatory Memorandum has been prepared for the information of Shareholders of the Company in connection with the business to be conducted at the Meeting.

This Explanatory Memorandum should be read in conjunction with, and forms part of, the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions in the Notice.

This Explanatory Memorandum includes the following information to assist Shareholders in deciding how to vote on the Resolutions:

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Section 2: Action to be taken by Shareholders
Section 3: Financial, Directors’ and Auditor’s Reports
Section 4: Resolution 1 – Remuneration Report
Section 5: Resolution 2 – Re-Election of Mr Kevin Dart as a Director
Section 6: Resolution 3 – Ratification of Issue of Consultant Options
Section 7: Resolution 4 – Authority to Grant Options to Ventnor Capital Pty Ltd
Section 8: Resolution 5, 6 and 7 (inclusive) – Authority to Grant Incentive Options to Directors
Section 9: Resolution 8 – Section 195 Approval
Section 10: Definitions
Schedule 1: Terms and Conditions of Consultant Options, Ventnor Options and Incentive Options
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2. Action to be taken by Shareholders

Shareholders should read this Explanatory Memorandum carefully before deciding how to vote on the Resolutions.

2.1. Proxies

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a ‘proxy’) to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company in accordance with the instructions provided. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

2.2 Voting Prohibition by Proxy Holders.

In accordance with section 250R of the Corporations Act, a vote on Resolution 1 must not be cast (in any capacity) by, or on behalf of:

a. a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report; or

• b. a Closely Related Party of such member.

However, a person described above may cast a vote on Resolution 1 if:

• c. the person does so as a proxy appointed by writing that specifies how the proxy is to vote on Resolution 1; and

• d. the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above.

A person appointed as a proxy must not vote, on the basis of that appointment, on Resolutions 4 to 7 (inclusive) if:

• a. the proxy is either:

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

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

• b. the appointment does not specify the way the proxy is to vote on Resolutions 4 to 7 (inclusive).

However, the prohibition does not apply if:

• c. the proxy is the Chairman; and

• d. the appointment expressly authorises the Chairman to exercise the proxy even if the Resolutions 4 to 7 (inclusive) are connected directly or indirectly with remuneration of a member of the Key Management Personnel of the Company.

2011 Notice of Annual General Meeting | 5

3. Financial, Directors’ and Auditor’s Reports

Shareholders will be offered the opportunity to discuss the Annual Report, which includes the Financial Report, Director’s Report and Auditor’s Report for the financial year ended 30 June 2011.

There is no requirement for Shareholders to approve the Annual Financial Report.

Shareholders will be offered the following opportunities:

• a. to discuss the Financial Report, Directors’ Report and Auditor’s Report;

• b. to ask questions or make comment on the management of the Company;

• c. to ask the auditor questions about the conduct of the audit and the preparation and content of the Auditor’s Report.

Shareholders may also submit written questions to the Company’s auditor, PKF Australia Ltd (PKF) , if the question is relevant to the content of the Auditor’s Report, or the conduct of its audit of Annual Report.

Please send any written questions for PKF to Mr James Mooney, PKF, PO Box 5099, Melbourne VIC 3001. Relevant written questions for the auditor must be delivered by 22 November 2011.

4. Resolution 1 – Remuneration Report

Section 250R(2) of the Corporations Act provides that the Company is required to put the Remuneration Report to the vote of Shareholders. The Directors’ Report contains the Remuneration Report which sets out the remuneration policy for the Company and reports the remuneration arrangements in place for the executive Directors, specified executives and nonexecutive Directors.

The Board believes the Company’s remuneration policies and structures as outlined in the Remuneration Report are appropriate relative to the size of the Company, its business and strategic investment objectives and current and emerging market practices.

Section 250R(3) of the Corporations Act provides that Resolution 1 is advisory only and does not bind the Directors of itself, a failure of Shareholders to pass Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report.

However, the Corporations Act has been amended by the Corporations Amendment (Improving Accountability on Director and Executive Remuneration) Act (Director and Executive Remuneration Act) which received the Royal Assent on 27 June 2011 and came into effect on 1 July 2011.

The Director and Executive Remuneration Act introduced new sections 250U and 250Y, among others, into the Corporations Act, giving Shareholders the opportunity to remove the Board if the Remuneration Report receives a ‘no’ vote of 25% or more at two consecutive annual general meetings (Two Strikes Rule) .

Under the Two Strikes Rule, where a resolution on the Remuneration Report receives a ‘no’ vote of 25% or more at two consecutive annual general meetings, the Company will be required to put to Shareholders at the second annual general meeting a resolution on whether another meeting should be held (within 90 days) at which all Directors (other than the managing director) who were in office at the date of approval of the applicable Directors’ Report must stand for re-election.

In summary, if the Remuneration Report receives a ‘no’ vote of 25% or more at this Meeting, Shareholders should be aware that if there is a ‘no’ vote of 25% or more at the next annual general meeting the consequences are that it may result in the re-election of the Board.

The Chairman will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on the Remuneration Report.

The Chairman will cast all available proxies in favour of Resolution 1.

5. Resolution 2 – Re-Election of Mr Kevin Dart as a Director

Pursuant to clause 20.2 of the Constitution, at every annual general meeting, one third of the Directors must retire from office (other than the managing director). A retiring Director under this clause is eligible for re-election pursuant to clause 20.3 of the Constitution. The Directors to retire are those who have been the longest in office since their last election.

In accordance with the Constitution, Mr Dart will retire by rotation and seek re-election.

6 | Monteray Mining Group LTD

ACN 062 959 540

Mr Dart was appointed as a Director in 2005 and has been a director of numerous listed and unlisted public companies over the last twenty five years. Mr Dart has extensive experience and expertise in capital raisings, new listings, mergers and acquisitions, as well as cross border transactions in the United States, United Kingdom, Africa, Asia and India. He is a member of the Australian Institute of Company Directors.

The Board unanimously supports the re-election of Mr Dart.

6. Resolution 3 – Ratification of Issue of Consultant Options

6.1 General

On 11 March 2011, the Company issued 895,000 Options on the terms and conditions in Schedule 1 (Consultant Options) to Norwand Investments Pty Ltd and Ms Helen Moretti in consideration for the provision of consulting services to the Company.

Resolution 3 is an ordinary resolution.

6.2 Listing Rule 7.4

Listing Rule 7.1 provides that (subject to certain exceptions, none of which is relevant here) the prior approval of Shareholders is required for an issue of securities if the securities will, when aggregated with the securities issued by a Company during the previous 12 months, exceed 15% of the number of the securities on issue at the commencement of that 12 month period.

The 895,000 Consultant Options were issued within the Company’s 15% annual limit permitted under Listing Rule 7.1, without the need for Shareholder approval. The effect of Shareholders passing this Resolution 3 and ratifying the issue of the 895,000 Consultant Options will be to restore the Company’s ability to issue further securities to the maximum 15% limit during the next 12 months.

6.3 Specific information required by Listing Rule 7.5

Listing Rule 7.5 requires that the following information be provided to Shareholders for the purposes of obtaining Shareholder approval pursuant to Listing Rule 7.4:

• a. 895,000 Consultant Options were issued on 11 March 2011.

• b. The Consultant Options were issued for nil cash consideration.

• c. Each Consultant Option entitles the holder to subscribe for one (1) Share at an exercise price of $0.25 and has an expiry date of 31 August 2014. Upon exercise of the Consultant Options, the Shares issued will rank pari passu with the Company’s existing Shares on issue. Further terms and conditions of the Consultant Options are in Schedule 1.

• d. The Consultant Options were issued to the following parties:

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Name No. of Consultant Options
Norwand Investments Pty Ltd 500,000
Helen Moretti 395,000
Total 895,000
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• e. There were no funds raised from the issue of the Consultant Options as they were issued in consideration for the provision of consulting services to the Company.

• f. A voting exclusion statement is included in the Notice.

7. Resolution 4 – Authority to Grant Options to Ventnor Capital Pty Ltd

7.1 General

Resolution 4 seeks Shareholder approval in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act for the grant of 2,000,000 Options on the terms and conditions in Schedule 1 (Ventnor Options) to Ventnor Capital Pty Ltd (Ventnor Capital) or its nominee.

The Company is proposing to grant the Ventnor Options in consideration for corporate services and assistance provided by Ventnor Capital to the Company.

The Board does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in granting the Ventnor Options upon the terms proposed. If the Ventnor Options are not granted, the Company could remunerate Ventnor Capital with a cash payment. However, the Board considers it preferable for the remuneration of Ventnor Capital be equity in the Company so as to maintain the Company’s cash reserves.

Resolution 4 is an ordinary resolution.

2011 Notice of Annual General Meeting | 7

• 7.2 Listing Rule 10.11 and section 208 of the Corporations Act

• Pursuant to Listing Rule 10.11, a ‘related party’ of a listed company is precluded from participating in any issue of securities in the company without the prior approval of shareholders. Pursuant to section 208 of the Corporations Act, a listed company must obtain Shareholder approval before giving a financial benefit to a related party.

Ventnor Capital is associated with Mr John Hannaford, a Director. Therefore, Ventnor Capital is considered to be a related party of the Company.

Furthermore, Shareholder approval of the grant of the Ventnor Options under Listing Rule 10.11 means that the grant of the Ventnor Options will not reduce the Company’s 15% placement capacity and Shareholder approval is not required under Listing Rule 7.1.

• 7.3 Specific information required by Listing Rule 10.13 and section 219 of the Corporations Act Listing Rule 10.13 and section 219 of the Corporations Act require that the following information be provided to Shareholders for the purposes of obtaining Shareholder approval pursuant to Listing Rule 10.11 and Chapter 2E of the Corporations Act:

• a. The Ventnor Options will be granted to Ventnor Capital (or its nominee).

• b. The maximum number of Options the Company can grant to Ventnor (or its nominee) under Resolution 4 is 2,000,000 Options.

• c. The Company will grant the Ventnor Options no later than one (1) month after the date of the Meeting (or such longer period of time as ASX may in its discretion allow).

• d. Ventnor Capital is an associate of Mr John Hannaford, a Director.

• e. Each Ventnor Option will be granted for nil cash consideration.

• f. Each Ventnor Option entitles the holder to subscribe for one (1) Share at an exercise price of $0.25 and has an expiry date that is 4 years from the date of grant. Upon exercise of the Ventnor Options, the Shares issued will rank pari passu with the Company’s existing Shares on issue. Further terms and conditions of the Ventnor Options are in Schedule 1.

• g. Mr Hannaford has an interest in Resolution 4 and therefore believes it inappropriate to make a recommendation. The other Directors each recommend the grant of the Ventnor Options to Ventnor Capital (or its nominee) as it would enable the Company to provide cost effective consideration to Ventnor Capital for the corporate services and assistance provided to the Company.

• h. A voting exclusion statement is included in the Notice for each of resolution 5 to 7 (inclusive).

• i. No funds will be raised by the grant of the Ventnor Options as they are being granted for nil cash consideration.

• j. On the basis of the assumptions below, the Company has determined the technical value of one Ventnor Option approximates $0.06. This valuation imputes a total value of $120,000 to the Ventnor Options. The value may go up or down after that date as it will depend on the future price of a Share. Black-Scholes methodology has been used, together with the following assumptions:

  • (i) interest rate set at the Australian Government 5 year bond rate of 5.6%;

  • (ii) the date of valuation is for the purposes of settling the current market value of a Share is $0.135;

  • (iii) at this date the Share price was $0.135 which is the price used in the valuation;

  • (iv) the estimated volatility used in the valuation is 75%;

  • (v) for the purposes of the valuation, the Company is not expected to pay a dividend during the life of the Ventnor Options; and

  • (vi) the Ventnor Options will be exercisable upon grant.

• k. The current relevant interests in security holdings of Mr Hannaford and Ventnor Capital are specified as follows.

Name	Shares	Options
Ventnor Capital	Nil	Nil
Mr Hannaford	3,502,131	1,000,000

• l. If the Shareholders approve the issue of the Ventnor Options, the exercise of those Ventnor Options will result in a dilution of all other Shareholders’ holdings in the Company if:

• (i) 5.8% based on issued Shares as at the date of this Notice;

• (ii) 4.8% on a fully diluted basis (including the Options to be issued pursuant to Resolutions 4 to 7 (inclusive)).

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

• n. As at the date of this Notice the Share price of the Shares are trading on ASX lower than the exercise price of the Ventnor Options.

8 | Monteray Mining Group LTD

ACN 062 959 540

o. Historical Share price information for the last three months is as follows:

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Price Date
Highest $0.165 4/8/2011
Lowest $0.10 15-21/9/2011
Last $0.135 14/10/2011
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• p. Other than the information above and otherwise in this Explanatory Memorandum, the Company believes that there is no other information that would be reasonably required by Shareholders to pass Resolution 4.

8. Resolutions 5, 6 and 7 (inclusive) – Authority to Grant Options to Directors

8.1 General

Resolutions 5 to 7 (inclusive) seek Shareholder approval in accordance with Listing Rule 10.11 and Chapter 2E of the Corporations Act for the grant of Options (Incentive Options) to each of Mr Kevin Dart, Mr Sandy Barblett and Mr John Hannaford (or their nominees) as follows:

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Director No. of Incentive Options
Mr Kevin Dart 1,000,000
Mr Sandy Barblett 1,000,000
Mr John Hannaford 1,000,000
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The purpose of the grant of the Incentive Options to the Directors is for the Company to retain Directors of high calibre and to provide cost effective remuneration to the Directors for their ongoing commitment and contribution to the Company in their role as a Director.

The Board does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Incentive Options upon the terms proposed. If the Incentive Options are not granted, the Company could remunerate the Directors for additional amounts of cash. However, the Board considers it reasonable for the remuneration of the Directors to have a cash component and an equity component to further align the Directors’ interests with Shareholders and maintain a strong cash position for the Company.

The Company acknowledges that the grant of the Incentive Options to non-executive Directors is contrary to recommendation 8.2 of the Corporate Governance Principles and Recommendations. However, the Board considers the grant of Incentive Options in Resolutions 5 to 7 (inclusive) to be reasonable in the circumstances given the Company’s size, stage of development, and the need to attract and retain Directors of high calibre, whilst still maintaining a cash reserve.

• 8.2 Listing Rule 10.11 and section 208 of the Corporations Act

Pursuant to Listing Rule 10.11, a related party of a listed company is precluded from participating in any issue of securities in the company without the prior approval of Shareholders. Pursuant to section 208 of the Corporations Act, a listed company must obtain Shareholder approval before giving a financial benefit to a related party.

Each of Messrs Dart, Barblett and Hannaford are regarded as related parties of the Company by reason of their position as Directors.

Furthermore, Shareholder approval of the grant of the Incentive Options under Listing Rule 10.11 means that the grant of the Incentive Options will not reduce the Company’s 15% placement capacity and Shareholder approval is not required under Listing Rule 7.1.

The Chairman will cast all available proxies in favour of Resolutions 5 to 7 (inclusive).

• 8.3. Specific information required by Listing Rule 10.13 and section 219 of the Corporations Act Listing Rule 10.13 and section 219 of the Corporations Act require that the following information be provided to Shareholders for the purposes of obtaining Shareholder approval pursuant to Listing Rule 10.11 and Chapter 2E of the Corporations Act:

• a. The related parties to whom the Incentive Options will be granted to are Messrs Dart, Barblett and Hannaford (or their nominees).

• b. The maximum number of Incentive Options to be granted is as follows:

2011 Notice of Annual General Meeting | 9

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Director No. of Incentive Options
Mr Kevin Dart 1,000,000
Mr Sandy Barblett 1,000,000
Mr John Hannaford 1,000,000
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• c. The Company will grant the Incentive Options no later than one (1) month after the date of the Meeting (or such longer period of time as ASX may in its discretion allow).

• d. Each Incentive Option will be granted for nil cash consideration.

• e. Each Incentive Option entitles the holder to subscribe for one (1) Share at an exercise price of $0.25 and expiry date that is 5 years from the date of grant. Upon exercise of the Incentive Options, the Shares issued will rank pari passu with the Company’s existing Shares on issue. Further terms and conditions of the Incentive Options are in Schedule 1.

• f. Mr Dart has an interest in Resolution 5 and therefore believes it inappropriate to make a recommendation. The other Directors each recommend the grant of the 1,000,000 Incentive Options to Mr Dart as it aligns the interests of the Company and Mr Dart to maximise Shareholder value.

• g. Mr Barblett has an interest in Resolution 6 and therefore believes it inappropriate to make a recommendation. The other Directors each recommend the grant of the 1,000,000 Incentive Options to Mr Barblett as it aligns the interests of the Company and Mr Barblett to maximise Shareholder value.

• h. Mr Hannaford has an interest in Resolution 7 and therefore believes it inappropriate to make a recommendation. The other Directors each recommend the grant of the 1,000,000 Incentive Options to Mr Hannaford as it aligns the interests of the Company and Mr Hannaford to maximise Shareholder value.

• i. A voting exclusion statement is included for each of Resolutions 5 to 7 (inclusive) in the Notice.

• j. No funds will be raised by the grant of the Incentive Options as they are being granted for nil cash consideration.

• k. On the basis of the assumptions below, the Company has determined the technical value of one Incentive Option approximates $0.06. This valuation imputes a total value of $180,000 to the Incentive Options. The value may go up or down after that date as it will depend on the future price of a Share. Black-Scholes methodology has been used, together with the following assumptions:

• (i) interest rate set at the Australian Government 5 year bond rate of 5.6%;

• (ii) the date of valuation is for the purposes of settling the current market value of a Share is $0.135;

• (iii) at this date the Share price was $0.135 which is the price used in the valuation;

• (iv) the estimated volatility used in the valuation is 75%;

• (v) for the purposes of the valuation, the Company is not expected to pay a dividend during the life of the Incentive Options; and

• (vi) the Incentive Options will be exercisable upon grant.

• l. The current relevant interests in security holdings of Messrs Dart, Barblett and Hannaford are specified as follows:

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Director Shares Options
Mr Kevin Dart 10,306,576 7,500,000
-
Mr Sandy Barblett 197,500
Mr John Hannaford 3,502,131 1,000,000
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• m. The remuneration and emoluments from the Company to the Directors for both the current financial year and previous financial year are set out below:

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Current Financial Year [ 1] Previous Financial Year
Director Salary and Fees Options Salary and Fees Options
$ $ $ $
Mr Kevin Dart 6,812 - 27,250 -
Mr John Hannaford 6,812 - 14,568 -
- -
Mr Sandy Barblett 6,912 14,568
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(1) Financial year to date (1 July 2011 – 30 September 2011).

• n. If the Shareholders approve the issue of the Incentive Options, the exercise of those Incentive Options will result in a dilution of all other Shareholders’ holdings in the Company if:

• (i) 8.7% based on issued Shares as at the date of this Notice;

• (ii) 7.2% on a fully diluted basis (including the Options to be issued pursuant to Resolutions 4 to 7 (inclusive)).

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

10 | Monteray Mining Group LTD

ACN 062 959 540

As at the date of this Notice the Share price of the Shares are trading on ASX lower than the exercise price of the Incentive Options.

• p. Historical share price information for the last three months is as follows:

==> picture [403 x 65] intentionally omitted <==

----- Start of picture text -----

Price Date
Highest $0.165 4/8/2011
Lowest $0.10 15-21/9/2011
Last $0.135 14/10/2011
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• q. Other than the information above and otherwise in this Explanatory Memorandum, the Company believes that there is no other information that would be reasonably required by Shareholders to pass Resolutions 5 to 7 (inclusive).

9. Resolution 8 – Section 195 Approval

Section 195 of the Corporations Act essentially provides that a director of a public company may not vote or be present during meetings of directors when matters in which that director holds a “material personal interest” are being considered.

The Directors may have a material personal interest in the outcome of Resolutions 5 to 7 (inclusive). In the absence of this Resolution 8, the Directors may not be able to form a quorum at directors meetings necessary to carry out the terms of Resolutions 5 to 7 (inclusive).

The Directors have accordingly exercised their right under section 195(4) of the Corporations Act to put the issue to Shareholders to resolve.

10. Definitions

In this Explanatory Memorandum and Notice:

Annual Report means the 2011 Annual Financial Report of the Company and its controlled entities (if any) a copy of which was lodged with ASX.

ASX means ASX Limited ACN 008 624 691 and, where the context permits, the Australian Securities Exchange operated by ASX Limited.

Auditor’s Report means the auditor’s report on the Financial Report.

Board means the board of Directors.

Closely Related Party means:

• a. a spouse or child of the member; or

• b. has the meaning given in section 9 of the Corporations Act.

Company means Monteray Mining Group Ltd ACN 062 959 540.

Constitution means the constitution of the Company.

Consultant Options has the meaning given in Section 6.1.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company.

Director and Executive Remuneration Act has the meaning given in Section 4.

Directors’ Report means the annual directors’ report prepared under Chapter 2M of the Corporations Act for the Company and its controlled entities (if any).

Dollar or $ means Australian dollar.

EST means Eastern Standard Time, being the time in Sydney, NSW.

Explanatory Memorandum means the explanatory memorandum attached to this Notice.

2011 Notice of Annual General Meeting | 11

Financial Report means the annual financial report prepared under Chapter 2M of the Corporations Act of the Company and its controlled entities (if any).

Incentive Options has the meaning given in Section 8.1.

Key Management Personnel means a person having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise) of the Company.

Listing Rules means the listing rules of ASX.

Meeting has the meaning given in the introductory paragraph of this Notice.

Notice means this notice of Meeting.

Option means an option which entitles the holder to subscribe for one Share.

PKF has the meaning given in Section 3.

Proxy Form means the proxy form attached to this Notice.

Remuneration Report means the remuneration report of the Company contained in the Directors’ Report.

Resolution means a resolution contained in this Notice.

Schedule means a schedule to the Notice.

Section means a section of the Explanatory Memorandum.

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

Shareholder means a shareholder of the Company.

Two Strikes Rule has the meaning given in Section 4.

Ventnor Capital means Ventnor Capital Pty Ltd ACN 111 543 741.

Ventnor Options has the meaning given in Section 7.1.

In this Explanatory Memorandum and the Notice, words importing the singular include the plural and vice versa.

12 | Monteray Mining Group LTD

ACN 062 959 540

Schedule 1

Schedule 1 - Terms of the Consultant Options, Ventnor Options and Incentive Options

The following terms and conditions apply to each of the Consultant Options, Ventnor Options and Incentive Options:

1. Each option entitles the option holder to subscribe for one Share. Shares issued on exercise of the options will rank equally in all respects with the then existing issued Shares. From the date of issue, Shares are subject to the provisions of the Constitution.

2. The options are issued at nil each and exercisable at 25 cents each.

3. The options will be exercisable from the date of grant up to the Expiry Date.

4. Expiry date for:

• a. Consultant Options is 31 August 2014;

• b. Ventnor Options is 4 years from the grant date;

• c. Incentive Options is 5 years from the grant date.

5. The options are exercisable wholly or in part by execution and lodgement with the Company of a notice of exercise of option and payment of the exercise price during the period from granting up to expiry.

6. The notice of exercise of option must set out the number of options which the option holder wishes to exercise.

7. The options may not be transferred at any time during their term.

8. The options will not be listed on ASX during their term.

9. A certificate will be issued for the options and a copy of the terms and conditions will be forwarded to the option holder. On the reverse side of the terms and conditions there will be endorsed a notice that is to be completed when exercising the options. If there is more than one option on a certificate and prior to the expiry date those options are exercised in part, the Company will issue another certificate for the balance of the options held and not yet exercised.

10. An option holder does not have the right to participate in new issues of securities offered to members of the Company prior to the exercise of the options.

11. In the event of any reconstruction of the issued capital of the Company the number of options or exercise price of the options or both are to be reconstructed (as appropriate) in a manner which does not result in any benefits being conferred on option holders which are not conferred on shareholders of the Company and (subject to the provisions with respect to rounding of entitlements as sanctioned by the meeting of Shareholders of the Company approving the reconstruction of capital) in all other respects the terms for the exercise of options remain unchanged. The options will be treated in the manner set out in Listing Rule 7.22 as is appropriate to the type of reconstruction proposed.

12. The Company is entitled to treat the registered holder of an option as the absolute holder of that option and is not bound to recognise any equitable or other claim to, or interest in, that option on the part of any person other than the registered holder, except as ordered by a Court of competent jurisdiction or as required by statute.

2011 Notice of Annual General Meeting | 13

PROXY FORM

The Company Secretary Monteray Mining Group Ltd

By delivery:

By post:

By facsimile:

Level 18, 50 Cavill Avenue, PO Box 40 (07) 5526 8922 Surfers Paradise Qld 4217 Surfers Paradise Qld 4217

I/We[1]

of

being a Shareholder/Shareholders of the Company and entitled to

votes in the Company, hereby appoint[2]

or failing such appointment the Chairman of the Meeting as my/our proxy to vote for me/us on my/our behalf at the Meeting of the Company to be held at the Yangtze Room, Mezzanine Level, Christie Conference Centre, 3 Spring Street Sydney, NSW on 29 November 2011 at 2:30pm (EST) and at any adjournment thereof in the manner indicated below or, in the absence of indication, as he thinks fit, except for Resolutions 1, 4, 5, 6 & 7. If 2 proxies are appointed, the proportion or number of votes that this proxy is authorised to exercise is * [ ]% of the Shareholder’s votes*/ [ ] of the Shareholder’s votes. (An additional Proxy Form will be supplied by the Company, on request).

Important – If the Chairman of the Meeting is your proxy or is appointed your proxy by default

By marking the box below, you are directing the Chairman of the Meeting to vote in accordance with the Chairman’s voting intentions as set out below and in the Notice. If you do not mark the box below, and you have not directed the Chairman of the Meeting how to vote on Resolutions 1, 4, 5, 6 & 7, the Chairman of the Meeting will not cast your votes on Resolutions 1, 4, 5, 6 & 7 and your votes on Resolutions 1, 4, 5, 6 & 7 will not be counted in computing the required majority if a poll is called on these Resolutions. If you appoint the Chairman of the Meeting as your proxy you can direct the Chairman how to vote by either marking the boxes in Step 2 below (for example if you wish to vote against or abstain from voting) or by marking the box below (in which case the Chairman of the Meeting will vote in favour of Resolutions 1, 4, 5, 6 & 7).

The Chairman of the Meeting intends to vote all available proxies in favour of Resolutions 1, 4, 5, 6 & 7.

I/We (except where I/We have indicated a different voting intention below):

• a. Direct the Chairman of the Meeting to vote in accordance with the Chairman’s voting intentions on Resolutions 1, 4, 5, 6 & 7. To vote in favour of these Resolution;

• b. Authorise, in respect of Resolutions 1, 4, 5, 6 & 7 the Chairman of the Meeting to vote as described even through Resolution 1, 4, 5, 6 & 7 is connected directly or indirectly with the remuneration of a member of Key Management Personnel for the company, and

• c. Acknowledge that the Chairman of the Meeting may exercise My/Our proxy in respect of resolution 1, 4, 5, 6 & 7 as he sees fit even if the Chairman has an interest in the outcome of Resolutions 1, 4, 5, 6 & 7 and that votes cast by him, other than as proxy holder, would be disregarded because of that interest.

14 | Monteray Mining Group LTD

ACN 062 959 540

Instructions as to Voting on Resolutions Important:

The Chairman of the meeting intends to vote undirected proxies in favour of all of the Resolutions. The proxy is to vote for or against the Resolutions referred to in the Notice as follows

For Against Abstain

Resolution	1	Remuneration Report
Resolution	2	Re-Election of Kevin Dart as a Director
Resolution	3	Ratifcation of Prior Issue of Options
Resolution	4	Authority to Grant Options to Ventnor Capital Pty Ltd
Resolution	5	Authority to Grant Incentive Options to Mr Kevin Dart
Resolution	6	Authority to Grant Incentive Options to Mr John Hannaford
Resolution	7	Authority to Grant Incentive Options to Mr Sandy Barblett
Resolution	8	Section 195 Approval

Authorised signature/s This section must be signed in accordance with the instructions overleaf to enable your voting instructions to be implemented.

instructions to be implemented.
Individual or Shareholder 1	Shareholder 2	Shareholder 3
Sole Director and Sole Company Secretary	Director	Director/Company Secretary
Contact Name	Contact Daytime Telephone	Date

1Insert Name & Address of Shareholder 2Insert Name and Address of Proxy

3Omit if not Applicable

2011 Notice of Annual General Meeting | 15

PROXY NOTES:

A Shareholder entitled to attend and vote at the Meeting may appoint a natural person as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting. If the Shareholder is entitled to cast 2 or more votes at the Meeting the Shareholder may appoint not more than 2 proxies. Where the Shareholder appoints more than one proxy the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If such proportion or number of votes is not specified each proxy may exercise half of the Shareholder’s votes. A proxy may, but need not be, a Shareholder of the Company.

If a Shareholder appoints a body corporate as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting, the representative of the body corporate to attend the Meeting must produce the Certificate of Appointment of Representative prior to admission. A form of the certificate may be obtained from the Company’s share registry.

You must sign this form as follows in the spaces provided:

Joint Holding: where the holding is in more than one name all of the holders must sign. Power of Attorney: if signed under a Power of Attorney, you must have already lodged it with the Registry, or alternatively, attach a certified photocopy of the Power of Attorney to this Proxy Form when you return it.

Companies: a Director can sign jointly with another Director or a Company Secretary. A sole Director who is also a sole Company Secretary can also sign. Please indicate the office held by signing in the appropriate space.

If a representative of the corporation is to attend the Meeting the appropriate ‘Certificate of Appointment of Representative’ should be produced prior to admission. A form of the certificate may be obtained from the Company’s Share Registry.

Proxy Forms (and the power of attorney or other authority, if any, under which the Proxy Form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the Proxy Form (and the power of attorney or other authority) must be deposited at or received by facsimile transmission at the office of the Company (07) 5526 8922 if faxed from within Australia or +61 7 5526 8922 if faxed from outside Australia not less than 48 hours prior to the time of commencement of the Meeting (EST).

16 | Monteray Mining Group LTD

ACN 062 959 540