PHOSLOCK ENVIRONMENTAL TECHNOLOGIES LIMITED — Proxy Solicitation & Information Statement 2006

Nov 16, 2006

Notice of General Meeting and Explanatory Statement Phoslock Water Solutions Limited

ACN 099 555 290

Date: Tuesday 19th December, 2006

Time: 9:30 am

Place: 116 Rothschild Avenue, Rosebery, NSW 2018

In this document you will find:	Page No
A letter from the Chairman summarising the General Meeting's item of business	-2
A Notice of the General Meeting	-3
An Explanatory Statement containing an explanation of and information about the proposed resolution, shareholder approval and voting exclusion statement	l 5
A Proxy Form	Attached

Phoslock Water Solutions Limited

ACN 099 555 290

Dear Shareholder.

I am pleased to invite you to a General Meeting of Phoslock Water Solutions Limited (PWS) to be held on Tuesday 19^th December, 2006. The General Meeting will be held at 9.30 am (Sydney time) at the PWS Head Office located at 116 Rothschild Avenue, Rosebery, NSW 2018

This letter accompanies the Notice of Meeting, Explanatory Statement and Proxy Form. The Notice of Meeting (including the Explanatory Statement) sets out the item of business for the General Meeting. Please take time to carefully read the whole document. The purpose of the General Meeting is to seek shareholder approval to place up to 12,800,000 fully paid ordinary shares in the capital of the Company at an issue price of AU\$0.23 per share. The up to 12,800,000 shares to be allotted will be allocated to institutional, professional or sophisticated investors nominated by Shaw Corporate Finance Pty Limited, Bell Potter Securities Limited or Macquarie Equities Limited. The placement was announced to ASX on 13 November 2006.

Voting on item of business at the General Meeting

If you would like to vote on the item of business outlined in the Notice of Meeting, you may attend the General Meeting or appoint a proxy to vote for you at the General Meeting. If appointing a proxy, the enclosed Proxy Form should be completed and returned (see Proxy Form for details) as soon as possible and in any event by 9.30 am (Sydney time) on 18th December 2006.

If you have any queries in relation to the General Meeting, please contact Mr Brett Crowley (Managing Director) on (02) 9317 3390 or Mr Colin Upcroft (CFO & Company Secretary) on (07) 3890 7344

Yours sincerely,

Robert Schuitema Executive Chairman

Sydney, Australia 15 November, 2006

Phoslock Water Solutions Limited

ACN 099 555 290

Notice of General Meeting

NOTICE IS HEREBY GIVEN that a General Meeting of Shareholders of Phoslock Water Solutions Limited ACN 099 555 290 (PWS or the Company) will be held on 19^th December. 2006 at the Head Office of PWS, 116 Rothschild Avenue, Rosebery, NSW 2018, at 9.30 am (Sydney time).

The Explanatory Statement accompanying this Notice of General Meeting is incorporated in and comprises part of this Notice of General Meeting.

Business

Resolution - Approval of Issue of shares in accordance with ASX Listing Rule 7.1

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

"That for the purpose of ASX Listing Rule 7.1 and all other purposes, approval is given for the issuing of up to 12,800,000 fully paid ordinary shares in the capital of the Company at an issue price of AU\$0.23 per share as detailed in the Explanatory Statement accompanying the Notice of General Meeting convening this General Meeting."

By Order of the Board

Robert Schuitema Executive Chairman

Sydney, Australia

15 November, 2006

Voting and Proxies

1. Determination of Membership and Voting Entitlement

In accordance with regulation 7.11.37 of the Corporations Regulations 2001 (Cth), the shares of the Company that are quoted on Australian Stock Exchange Limited as at 7.00 pm (Sydney time) on 17^th December, 2006, will be taken for the purpose of the General Meeting, to be held by the persons who are registered as holding them at that time.

Accordingly, those persons will be recognised as members of the Company and the holders of shares and will be entitled to attend and vote at the General Meeting.

2. Votes of Members

On a show of hands, each member present in person or by proxy or in the case of a body corporate, by a representative at the General Meeting shall have one vote.

On a poll, every member present in person or by attorney or by proxy or in the case of a body corporate, by a representative shall have one vote for each share held by him.

3. Proxies

Please note that:

• a member who is entitled to attend and vote at the General Meeting is entitled to appoint a proxy to attend and vote on behalf of the member; and
• where the member is entitled to cast two (2) or more votes, the member may appoint two (2) proxies and may specify the proportion or the number of votes each proxy is appointed to exercise.

If the member appoints two (2) proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, each proxy may exercise half of the votes (disregarding fractions).

A proxy need not be a member of the Company.

Any instrument of proxy deposited or received at the registered office of the Company in which the name of the appointee is not filled in shall be deemed to be given in favour of the Chairman of the General Meeting to which it relates.

Proxies given by corporate shareholders must be executed in accordance with their constitutions, or signed by a duly authorised officer or attorney.

A proxy may decide whether to vote on any motion, except where the proxy is required by law or the constitution of the Company to vote, or abstain from voting, in their capacity as proxy. If a proxy is directed how to vote on an item of business, the proxy may vote on that item only in accordance with the direction. If a proxy is not directed how to vote on an item of business, the proxy may vote as he or she thinks fit.

If a shareholder appoints the Chairperson of the General Meeting as the shareholder's proxy and does not specify how the Chairperson is to vote on an item of business, the Chairperson will vote, as proxy for that shareholder, in favour of that item.

To be effective the instrument appointing a proxy (and power of attorney or other authority, if any, under which it is signed or a certified copy of the power or authority) must be deposited not less than twenty four (24) hours prior to the General Meeting, that is, by 9.30 am (Sydney time) on 18 December, 2006 by mail to PO Box 319, Rosebery, Sydney, NSW 1445 or by delivery at the Company's registered office, being 116 Rothschild Avenue, Rosebery, Sydney, NSW, 2018 or be received by facsimile on (02) 9317 4437.

A form of proxy accompanies this Notice of General Meeting.

Explanatory Statement

This Explanatory Statement has been prepared for the information of shareholders in Phoslock Water Solutions Limited (Company) in connection with the business to be considered at the General Meeting of shareholders to be held at the Company's Head Office, 116 Rothschild Avenue, Rosebery, New South Wales, 2018 on Tuesday 19 December, 2006 at 9.30 am(Sydney time).

This Explanatory Statement comprises part of the accompanying Notice of General Meeting.

Full details of the business to be considered at this General Meeting are set out below.

BUSINESS

RESOLUTION - Approval of Issue of shares in accordance with ASX Listing Rule 7.1

This resolution is required under ASX Listing Rule 7.1 to approve the issue of up to 12,800,000 fully paid ordinary shares in the capital of the Company at an issue price of AU\$0.23 per share (Placement). The Placement was announced to ASX on 13 November 2006 and will raise approximately \$2.8 million (net of expenses). Shares issued under the Placement will rank equally with the other issued ordinary shares in the Company.

ASX Listing Rule 7.1 requires (subject to a number of exceptions) shareholder approval for the issue of securities of greater than 15% of the Company's capital in any 12 month period.

The Company, by making the Placement, will be issuing greater than 15% of the Company's capital in a 12 month period, and is seeking shareholder approval to comply with ASX Listing Rule 7.1.

The up to 12,800,000 shares to be allotted under the Placement will be allocated to institutional. professional or sophisticated investors nominated by Shaw Corporate Finance Pty Limited, Bell Potter Securities Limited or Macquarie Equities Limited (each a Placement Agent). The shares will be allotted by no later than 31 December 2006.

Each Placement Agent will be asked to give preference to investors who undertake to hold the shares for greater than 12 months.

The proceeds of the Placement will be used to finance working capital associated with increased production, inventory, shipping, storage and debtors.

The Directors recommend that shareholders vote in favour of this resolution.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on the resolution by any person who may participate in the Placement, and any person who might obtain a benefit (except a benefit solely in the capacity of a holder of ordinary shares) if the resolution is passed or any associate of those persons.

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
• the person chairing the General 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.

Shareholder Proxy Form

$1.11111111111111111111111111111111111$

Phostock Water Solutions Limited ACN 099 555 290, 116 Rothschild Avenue, Rosebery, Sydney, NSW, 2018.

$\frac{1}{2}$
$of$
appoint
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or in his/her absence
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or, if no person is named above or if this proxy form contains conflicting directions, the Chairman of the General Meeting, as my/our proxy to vote for me/us on my/our behalf at the General Meeting of the Company to be held at 9.30 am on 19 December, 2006 and at any adjournment of that meeting. The Chairman of the General Meeting intends voting in favour of the item of business in relation to undirected proxies.

Note: If appointing a second proxy please state the number of shares OR the percentage of voting rights applicable to this Proxy Form.

		Number of shares	OR	℅
I/We direct my/our proxy to vote in respect of the resolutions to be considered as indicated with an "X" below, and to
vote or abstain in respect of any procedural resolution as my/our proxy thinks fit.

	FOR	AGAINST	ABSTAIN
Item 1: Approval of issue of shares

If no direction is given above, I/we authorise my/our proxy to vote or abstain as my/our proxy thinks fit in respect of the resolution to be considered by the General Meeting and any adjournment of the General Meeting.

If the Chairman of the General Meeting ís appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of the resolution, please place a mark in this box.

Note: By marking this box, you acknowledge that the Chairman of the General Meeting may exercise your proxy even if he has an interest in the outcome of the resolution and that votes cast by him for that resolution other than as proxy holder will be disregarded because of that interest.

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

Shareholder 2

Director

Shareholder 3

Individual/Sole Director and Sole Company Secretary

Date: . . . . . . . . . . . . . . . . . . .

Director/Company Secretary

Instructions for completing this proxy form

Appointment of proxy

Insert the name of your proxy if your proxy is someone other than the Chairman of the General Meeting. If you leave the appointment section of this Proxy Form blank or your named proxy is unable to attend, the Chairman of the General Meeting for the time being will be your proxy to vote your shares. Your proxy need not be a shareholder of the Company.

You may appoint one or two proxies to attend and vote at the General Meeting on your behalf. If you appoint two proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not specify a proportion or number, each proxy may exercise one-half of the votes in which case any fraction of votes will be disregarded. Where a shareholder appoints more than one proxy, neither proxy is entitled to vote on a show of hands. If you require an additional proxy form, the Company will supply it on request.

Voting directions to your proxy

You may direct your proxy how to vote on the item of business by placing an "X" in one of the three boxes opposite the item. Your proxy may decide whether to vote on the item, except where proxies are required by law or the constitution of the Company to vote or abstain in their capacity as proxies. If your proxy votes on an item, all of your shares will be voted in accordance with your direction unless you indicate a proportion of voting rights on the item by inserting the number of shares or percentage you wish to vote in the appropriate box. If you do not mark any of the boxes on a given item and your proxy is entitled to vote, your proxy may decide how to vote on that item. If you mark more than one box, your vote may be invalid.

If not directing your proxy

If the Chairman of the General Meeting is your proxy and you do not direct him how to vote on the item of business please mark the box to confirm that the Chairman should vote on your behalf. If you do not mark the box, the Chairman will not be able to vote on your behalf. The Chairman intends to vote undirected proxies in favour of the item of business.

Signature(s)

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

• Individual Holding: The Shareholder must sign in the box.
• Joint Holding: If shares are held in joint names, all Shareholders must sign in the boxes.
• Attorney: If you are signing as an Attorney, the Power of Attorney must have already been lodged with the Company or, alternatively, a certified copy of it must accompany this proxy form.
• Companies: Only duly authorised officer/s can sign on behalf of a company. Please sign in the boxes provided which state the office held by the signatory, ie Director and Director, or Company Secretary and Director, or the Sole Director and Sole Company Secretary.

Lodgment of Proxy

The proxy form and the power of attorney or other authority (if any) under which it is signed (or a certified copy) must be received by the Company at least 24 hours before the time for holding the General Meeting. Documents may be sent to the Company by:

• posting or delivering them to the address detailed on page 4 of this Notice; or
• sending them by fax to the Company's registered office on (02) 9317 4437