PHOSLOCK ENVIRONMENTAL TECHNOLOGIES LIMITED — Proxy Solicitation & Information Statement 2008

Sep 2, 2008

Notice of General Meeting and

Explanatory Memorandum Phoslock Water Solutions Limited ACN 099 555 290

Date: Friday 3[rd] October, 2008 Time: 12:00 noon (EST)

Place: 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086

In this document you will find: A letter from the Chairman summarising the Meeting's items of business A Notice of the General Meeting Voting and Proxies An Explanatory Memorandum containing an explanation of and information about the proposed resolutions, shareholder approval and voting exclusion statements Definitions Section A Proxy Form	Page No 2-3 4-5 6-7 8-14 15 16-17

ACN 099 555 290

Phoslock Water Solutions Limited

Dear Shareholder,

I am pleased to invite you to a General Meeting ( Meeting ) of Phoslock Water Solutions Limited ( PWS ) to be held on Friday 3[rd] October, 2008. The Meeting will be held at 12.00 noon (EST) at the PWS Head Office at 3/81 Frenchs Forest Road, Frenchs Forest, NSW, 2086.

I enclose your Notice of Meeting, Explanatory Memorandum and Proxy Form.

The Notice of Meeting (including the Explanatory Memorandum) sets out the items of business for the Meeting. Please take time to carefully read the whole document. To help you understand what the document contains, here is a summary of the resolutions on which Shareholders are asked to vote on.

Resolution 1 – Placement of PWS Shares and PWS Options to Ludgate Environmental Fund Limited

PWS proposes to issue 5,000,000 PWS Shares and 1,250,000 PWS Options to UK based specialist environmental/cleantech funds manager, Ludgate Environmental Fund Limited ( LEF ) for cash consideration of $550,000. The options are being issued for Nil consideration. This proposed placement was announced to ASX on 21 August 2008.

LEF is a Jersey domiciled closed-ended investment company listed on the Alternative Investment Market of the London Stock Exchange (AIM) and was launched in August 2007. LEF’s stated objective is to deliver to investors a significant level of capital growth in the medium to longer term by building a diverse portfolio of investment holdings in environmental/cleantech companies.

The environmental/cleantech sector is characterised by products and services which optimise the use of natural resources while reducing environmental impact in ways which enhance economic value. Sectors which LEF focus on include: energy efficiency and alternative energy sources including renewable energy; water treatment and management; waste management and resource recovery; industrial process advances; and emission reduction technologies.

PWS is keen to broaden its share register by attracting specialist environmental/cleantech funds in regions such as UK, Europe and North America where PWS is undertaking more of its business.

Resolution 2 – Placement of 1,090,909 PWS Shares and 272,728 PWS Options to PWS Chairman and Managing Director

Dr David Garman (Chairman) and Mr Robert Schuitema (Managing Director) wish to demonstrate tangible support for the future of the PWS business by subscribing for 1,090,909 PWS Shares and 272,728 PWS Options for cash consideration of $120,000 on the same terms as LEF. The options are being issued for Nil consideration.

Resolution 3 – Placement of 590,909 PWS Shares and 147,728 PWS Options to PWS

Executives

Mr Colin Upcroft (CFO and Company Secretary), Mr Nigel Traill (General Manager Phoslock Europe) and Dr Sarah Groves (General Manager Technical) ( PWS Executives ) also wish to demonstrate tangible support for the future of the PWS business by subscribing for 590,909 PWS Shares and 147,728 PWS Options for cash consideration of $65,000 on the same terms as LEF and Dr David Garman and Mr Robert Schuitema. The options are being issued for Nil consideration.

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The placement to LEF, Dr David Garman, Mr Robert Schuitema and the PWS Executives, requiring approval under Resolutions 1, 2 and 3, will be on the same terms as the (approximately) 9.6 million PWS Shares and 2.4 million PWS Options placed to sophisticated investors in August, 2008. The PWS Shares will be issued at an issue price of 11 cents per PWS Share and the PWS Options will be issued with an exercise price of 11 cents per PWS Option.

The placements to LEF, Dr David Garman, Mr Robert Schuitema and the PWS Executives will raise $735,000 (before expenses). These funds will be used to support the development of the PWS business in key markets in North America, UK, Europe and Australia along with the aquaculture market.

Resolution 4 – Issue of PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema, in satisfaction of Converting Note interest payment

PWS proposes to issue 39,781 PWS Shares to Sail Ahead Pty Ltd, an associate of Mr Robert Schuitema in satisfaction of the interest payment due to be paid by PWS in respect of 10 PWS Converting Notes held by Sail Ahead Pty Ltd.

The PWS Converting Notes held by that associate of Mr Robert Schuitema have a total face value of $100,000 and were issued with Shareholder approval. The PWS Converting Note Terms were set out in the Notice of General Meeting and Explanatory Memorandum in relation to the General Meeting of PWS held on 11 April, 2008.

Voting on items of business at the Meeting

If you would like to vote on items of business outlined in the Notice of Meeting, you may attend the Meeting or appoint a proxy to vote for you at the 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 no later than 12.00 noon (EST) on Thursday 2[nd] October, 2008. If you have any queries in relation to the Meeting, please contact Mr Colin Upcroft (CFO & Company Secretary) on (02) 9453 0455.

Yours sincerely,

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Dr David Garman Chairman

Sydney, Australia 2 September, 2008

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Notice of General Meeting

NOTICE IS HEREBY GIVEN that the General Meeting of Shareholders of Phoslock Water Solutions Limited (ACN 099 555 290) ( 'PWS' or 'Company' ) will be held on Friday 3[rd] October, 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086, at 12.00 noon (EST).

The Explanatory Memorandum accompanying this Notice of Meeting is incorporated in and forms part of this Notice of Meeting.

Business

Resolution 1 - Placement of 5,000,000 PWS Shares and 1,250,000 PWS Options to Ludgate Environmental Fund Limited (LEF)

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

“That for the purposes of ASX Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of 5,000,000 PWS Shares and 1,250,000 PWS Options to Ludgate Environmental Fund Limited on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 2 - Placement of 1,090,909 PWS Shares and 272,728 PWS Options to PWS Chairman and Managing Director

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 1,090,909 PWS Shares and 272,728 PWS Options to Dr David Garman and Mr Robert Schuitema on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 3 – Placement of 590,909 PWS Shares and 147,728 PWS Options to PWS Executives

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

“That for the purposes of ASX Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of 590,909 PWS Shares and 147,728 PWS Options to PWS Executives on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

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Resolution 4 – Issue of PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema, in satisfaction of Converting Note interest payment

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, Shareholders approve the issue of 39,781 PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema in satisfaction of the interest payment due to be paid by PWS in respect of 10 PWS Converting Notes held by that party, on the terms set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

By Order of the Board

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Mr Colin Upcroft Company Secretary

Sydney, Australia

2 September, 2008

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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 ASX as at 7.00pm (EST) on Wednesday 1[st] October, 2008, will be taken for the purpose of the Meeting to be held by the persons who are registered as holding them at that time. Transactions registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Accordingly, those persons will be recognised as members of the Company and the holder of

shares and will be entitled to attend and vote at the 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 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 or her.

3. Proxies

Please note that:

• a member who is entitled to attend and vote at the 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 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 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 Chairman of the Meeting as the Shareholder's proxy and does not specify how the Chairman is to vote on an item of business, the Chairman will vote, as proxy for that Shareholder, in favour of that item.

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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 other authority) must be deposited not less than twenty four (24) hours prior to the Meeting, that is, by 12.00 noon (EST) on Thursday, 2[nd] October, 2008 by either:

(i) mail to PO Box 105, Frenchs Forest, Sydney, NSW 1640; or by

(ii) delivery at the Company's Registered Office, being 3/81 Frenchs Forest Road, Frenchs Forest, Sydney, NSW, 2086; or be

(iii) received by facsimile on (02) 9453 2693.

A form of proxy accompanies this Notice of General Meeting.

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Explanatory Memorandum

This Explanatory Memorandum has been prepared for the information of Shareholders in the Company in connection with the business to be considered at the Meeting to be held on Friday 3[rd] October, 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086 at 12.00 noon (EST).

The Explanatory Memorandum is incorporated in and forms part of the accompanying Notice of Meeting.

Details of the business to be considered at this Meeting are set out below.

Resolution 1 – Placement of 5,000,000 PWS Shares and 1,250,000 PWS Options to LEF

Resolution 1 seeks Shareholder approval for the placement of 5,000,000 PWS Shares and 1,250,000 PWS Options ( Placement ) to LEF at an issue price of 11 cents per PWS Share and an exercise price of 11 cents per PWS Option. The options are being issued for Nil consideration. The proposed Placement was announced to ASX on 21 August 2008 and will raise $550,000 (before expenses). Shareholder approval of the Placement is required under ASX Listing Rule 7.1.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 (subject to a number of exceptions) provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

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.

ASX Listing Rule 7.3 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 7.1. For the purposes of ASX Listing Rule 7.1, the following information is provided in relation to Resolution 1:

1. The maximum number of securities to be granted by PWS to LEF under Resolution 1 is 5,000,000 PWS Shares and 1,250,000 PWS Options.

2. Under the subscription agreement with LEF, LEF is obliged to pay the Company $550,000 for the PWS Shares and PWS Options within 5 business days of the Placement being approved by Shareholders at a General Meeting. Should Shareholders not approve the placement before 17 October, 2008, LEF may cancel its obligation to subscribe for 5,000,000 PWS Shares and 1,250,000 PWS Options.

3. It is anticipated that the PWS Shares and PWS Options will be issued within 3 business days of cleared funds being received by PWS from LEF but in any event, subject to funds being received from LEF, the PWS Shares and PWS Options will be issued no later than 3 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rule).

4. The terms of the PWS Shares and PWS Options are:

5. PWS Shares will be issued at 11 cents per PWS Share.

6. The terms of the PWS Options are set out in the Option Terms section of this Explanatory Memorandum set out on the following page.

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1. PWS intends to use the funds to support the development of the PWS business in key markets in North America, UK, Europe and Australia along with the aquaculture market.

Option Terms

The PWS Options will be issued on the following terms:

• Each PWS Option will have an exercise price of 11 cents and must be exercised on or before 5.00 pm (EST) on 31 July, 2009.

• The options are being issued for Nil consideration.

• Each PWS Option entitles the holder to subscribe for one PWS Share in the Company at the exercise price.

• All PWS Shares allotted upon exercise of the PWS Options rank equally in all respects with PWS Shares previously issued.

• There are no participating rights or entitlements inherent in the PWS Options and the holder will not participate in new issues of securities offered to Shareholders during the currency of the PWS Options without first exercising the PWS Options.

• If the Company reorganises its share capital in any way (including consolidation, subdivision, reduction, cancellation or return) while the PWS Options are on issue, in respect of those PWS Options, the issue price and/or the number of PWS Shares issued on exercise of the PWS Options will be adjusted by the Company to the extent necessary to comply with the applicable ASX Listing Rules governing reorganisations in force at the time of the reorganisation.

• If there is a pro rata issue (except a bonus issue) to the holders of the underlying securities, the exercise price of the option may be reduced in accordance with the formula defined in ASX Listing Rule 6.22.2.

• If there is a bonus issue to the holders of the underlying securities, the number of shares over which the option is exercisable will be increased by the number of shares which the option holder would have received if the option had been exercised before the record date for such bonus issue.

Voting Exclusion Statement In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 1 by LEF and its 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 direction on the proxy form; or it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors recommend Shareholders vote in favour of Resolution 1.

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Resolution 2 – Placement of 1,090,909 PWS Shares and 272,728 PWS Options to PWS Chairman and Managing Director

Resolution 2 seeks Shareholder approval for the placement of 1,090,909 PWS Shares and 272,728 PWS Options to:

• Dr David Garman – PWS Chairman: subscribing for 181,818 PWS Shares and 45,455 PWS Options for $20,000; and

• Mr Robert Schuitema – PWS Managing Director: subscribing for 909,091 PWS Shares and 227,273 PWS Options for $100,000.

The options are being issued for Nil consideration.

Shareholder approval of this placement is required under ASX Listing Rule 10.11.

ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires that the Company must obtain Shareholder approval before the Company can issue equity securities to a Director of the Company or an associate of a Director of the Company.

Accordingly, approval for the issue of 1,090,909 PWS Shares and 272,728 PWS Options to Dr David Garman and Mr Robert Schuitema is required under ASX Listing Rule 10.11.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 2:

1. The PWS Shares and PWS Options are to be issued to the following PWS Directors:

2. Dr David Garman – PWS Chairman

3. Mr Robert Schuitema – PWS Managing Director

4. The maximum number of securities to be granted by the Company under Resolution 2 is the issue of 1,090,909 PWS Shares and 272,728 PWS Options.

5. Subject to receipt of the subscription moneys, it is anticipated that the PWS Shares and PWS Options will be issued to Dr David Garman and Mr Robert Schuitema within 5 business days of the Meeting but in any event, will be issued 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 Rule).

7. The terms of the PWS Shares and PWS Options are:

8. PWS Shares will be issued at 11 cents per PWS Share.

9. The terms of the PWS Options are set out in the Option Terms section of this Explanatory Memorandum at page 9.

10. Dr David Garman and Mr Robert Schuitema will pay the Company $120,000 within 5 business days of Shareholders approving the issue of the PWS Shares and PWS Options at the Meeting.

11. PWS intends to use the funds to support the development of the PWS business in key markets in North America, UK, Europe and Australia along with the aquaculture market.

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ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

ASX Listing Rule 7.2, exception 14, however, provides an exception to this rule where shareholders have given their approval under ASX Listing Rule 10.11. If approval of the Shareholders is given under ASX Listing Rule 10.11 then approval is not separately required under ASX Listing Rule 7.1.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 2 by Dr David Garman and Mr Robert Schuitema and their 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 direction on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors (other than Dr David Garman and Mr Robert Schuitema) recommend Shareholders vote in favour of Resolution 2.

Resolution 3 – Placement of 590,909 PWS Shares and 147,728 PWS Options to PWS Executives

Resolution 3 seeks Shareholder approval for the issue of 590,909 PWS Shares and 147,728 PWS Options to PWS Executives at an issue price of 11 cents per PWS Share and an exercise price of 11 cents per PWS Option. The options are being issued for Nil consideration.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 (subject to a number of exceptions) provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

While the issue of these securities to the PWS Executives may not require the approval of Shareholders, the Company has nevertheless decided to seek Shareholder approval for the proposed issue. By Shareholders approving this proposed issue to PWS Executives, the securities issued to them will not be included in 15% limit for the purposes of ASX Listing Rule 7.1. This will allow the Company some flexibility in relation to future issues of its securities.

ASX Listing Rule 7.3 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 7.1. For the purposes of ASX Listing Rule 7.1, the following information is provided in relation to Resolution 3:

1. The PWS Shares and PWS Options are to be issued to the following PWS Executives:

2. Mr Colin Upcroft – CFO & Company Secretary - 181,818 PWS Shares and 45,455 PWS Options for $20,000

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• Mr Nigel Traill – General Manager Phoslock Europe - 363,636 PWS Shares and 90,909 PWS Options for $40,000

• Dr Sarah Groves – General Manager Technical - 45,455 PWS Options and 11,364 PWS Options for $5,000

• The maximum number of securities to be granted by PWS to the PWS Executives under Resolution 3 is 590,909 PWS Shares and 147,728 PWS Options.

• Subject to receipt of the subscription moneys, it is anticipated that the PWS Shares and PWS Options will be issued to the PWS Executives within 5 business days of the Meeting but in any event, will be issued no later than 3 months after the date of the Meeting (or such later date as permitted by any ASX waiver or modification of the ASX Listing Rule).

• The terms of the PWS Shares and PWS Options are:

• PWS Shares will be issued at 11 cents per PWS Share.

• The terms of the PWS Options are set out in the Option Terms section of this Explanatory Memorandum at page 9.

• PWS intends to use the funds to support the development of the PWS business in key markets in North America, UK, Europe and Australia along with the aquaculture market.

Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 3 by the PWS Executives and their 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 direction on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors recommend Shareholders vote in favour of Resolution 3.

Resolution 4 – Issue of PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema, in satisfaction of Converting Note interest payment

Resolution 4 seeks Shareholder approval for the issue of 39,781 PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema in satisfaction of the 18 August, 2008 interest payment due in respect of 10 PWS Converting Notes (having an aggregate face value of $100,000) held by that party.

Shareholder approval of this issue is required under ASX Listing Rule 10.11.

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ASX Listing Rule 10.11

ASX Listing Rule 10.11 requires that the Company must obtain Shareholder approval before the Company can issue equity securities to a Director of the Company or an associate of a Director of the Company.

On 11 February 2008, the Company placed 100 PWS Converting Notes, each with a face value of $10,000, to either sophisticated or professional investors for the purposes of section 708(8) or 708(11) respectively of the Corporations Act 2001 (Cth).

Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema, the Managing Director of the Company, participated in this placement (which Shareholders approved at a General Meeting held on 11 April, 2008) by purchasing 10 PWS Converting Notes issued by the Company.

Accordingly, approval for the issue of PWS Shares to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema in satisfaction of the interest due on the 10 PWS Converting Notes is required under ASX Listing Rule 10.11.

ASX Listing Rule 10.13 sets out a number of matters which must be included in a notice of meeting proposing an approval under ASX Listing Rule 10.11. For the purposes of ASX Listing Rule 10.13, the following information is provided in relation to Resolution 4:

1. Interest on PWS Converting Notes is calculated in accordance with the Converting Note Deed. The PWS Converting Note Terms were set out in the Notice of General Meeting and Explanatory Memorandum in relation to the General Meeting of PWS held on 11 April, 2008.

2. Interest payable on the 10 PWS Converting Notes for the period 18 February, 2008 to 18 August, 2008 was $5,967.21. In accordance with the terms of the Converting Note Deed, the interest payment of $5,967.21 can be satisfied by the issue of PWS Shares at 25 cents per fully paid PWS Share or volume weighted average price (VWAP) for PWS Shares for 10 business days preceding the interest payment date, subject to a minimum of 15 cents per share. The VWAP for the 10 business days preceding the interest payment date of 18 August, 2008 was 12.80 cents. Pursuant to the terms of the Converting Note Deed, the interest payment is satisfied by the issue of 39,781 PWS Shares at 15 cents per share.

3. The PWS Shares will be issued to Sail Ahead Pty Ltd, a party associated with Mr Robert Schuitema within 1 month of the date of this Meeting. Sail Ahead Pty Ltd is the holder of the 10 PWS Converting Notes.

4. Satisfaction of future interest payments through the issue of PWS Shares to Sail Ahead Pty Ltd will also require Shareholder approval.

ASX Listing Rule 7.1

ASX Listing Rule 7.1 provides that a company may not issue securities representing more than 15% of its issued capital over any 12 month period, without the approval of its shareholders.

ASX Listing Rule 7.2, exception 14, however, provides an exception to this rule where shareholders have given their approval under ASX Listing Rule 10.11. If approval of the Shareholders is given under ASX Listing Rule 10.11 then it is not separately required under ASX Listing Rule 7.1.

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Voting Exclusion Statement

In accordance with the ASX Listing Rules, the Company will disregard any votes cast on Resolution 4 by Mr Robert Schuitema and 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 direction on the proxy form; or

• it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

Recommendation

The Directors (other than Mr Robert Schuitema) recommend Shareholders vote in favour of Resolution 4.

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DEFINITIONS

Unless the context requires otherwise, the following words shall have the following meanings in this Notice of Meeting and Explanatory Memorandum:

• (1) ASX means ASX Limited.

• (2) ASX Listing Rule means a listing rule of ASX as amended or waived.

• (3) Converting Note Deed means the deed entered into between PWS and various noteholders for the issue of PWS Converting Notes, dated 18 February 2008.

• (4) Directors means the directors of PWS.

• (5) Meeting means the General Meeting of Shareholders convened by this Notice of Meeting.

• (6) Notice of Meeting means this document which comprises the Notice of Meeting to be held on 3 October 2008 at the Head Office of PWS, 3/81 Frenchs Forest Road, French Forest, NSW 2086 at 12.00 noon (EST).

• (7) PWS or Company means Phoslock Water Solutions Limited ACN 099 555 290.

• (8) PWS Converting Note means a converting note issued by PWS in accordance with the Converting Note Deed.

• (9) PWS Executives means Mr Colin Upcroft, Mr Nigel Traill and Ms Sarah Groves.

• (10) PWS Options means the right but not the obligation to subscribe for fully paid shares in the capital of PWS at 11 cents per fully paid share on or before 5.00pm (EST) on 31 July, 2009.

• (11) PWS Shares means fully paid ordinary shares in the capital of PWS quoted on ASX under the code “PHK”.

• (12) Shareholder means a shareholder in PWS.

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Shareholder Proxy Form

Phoslock Water Solutions Limited, 3/81 Frenchs Forest Road, Frenchs Forest, Sydney, NSW, 2086.

I/We ................................................................................................................................................................................ of..................................................................................................................................................................................... appoint............................................................................................................................................................................ of..................................................................................................................................................................................... or in his/her absence...................................................................................................................................................... of.....................................................................................................................................................................................

or, if no person is named above or if this proxy form contains conflicting directions, the Chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the General Meeting of the Company to be held on 3 October, 2008 and at any adjournment of that meeting. The Chairman of the 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: Placement of Shares and Options to LEF Item 2: Placement of Shares and Options to PWS Directors Item 3: Placement of Shares and Options to PWS Executives Item 4: Issue of Shares to Sail Ahead Pty Ltd

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 meeting and any adjournment of the meeting.

If the chairman of the meeting is appointed as your proxy or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of the resolutions, please place a mark in this box.

[Note: ][By marking this box, you acknowledge that the Chairman of the meeting may ] exercise your proxy even if he has an interest in the outcome of the resolutions and that votes cast by him for those resolutions 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 resolutions and your votes will not be counted in calculating the required majority if a poll is call on the resolution.

Individual or Shareholder 1

Individual/Sole Director and Sole Company Secretary

Shareholder 2 Shareholder 3 Director Director/Company Secretary

Date:

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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 meeting. If you leave the appointment section of this Proxy Form blank or your named proxy is unable to attend, the Chairman of the 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 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, i.e. Director and Director, or Company Secretary and Director, or the Sole Director and Sole Company Secretary.

Lodgement 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 PO Box 105, Frenchs Forest, NSW 1640 or 3/81 Frenchs Forest Road, Frenchs Forest, NSW 2086 (the address detailed on page 4 of this Notice); or

• sending them by fax to the Company's registered office on (02) 9453 2693

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