PRAIRIE LITHIUM LIMITED — Proxy Solicitation & Information Statement 2012

Jan 19, 2012

==> picture [68 x 87] intentionally omitted <==

20 January 2012

Company Announcements Office Australian Securities Exchange Level 4 Exchange Centre 20 Bridge Street Sydney NSW 2000

Notice of General Meeting

ZYL Limited (“ ZYL ” or the “ Company ”) ( ASX: ZYL ), gives notice that it will hold a General Meeting at 10.00 am (Perth time) on Monday, 20 February 2012 at The Melbourne Hotel, 942 Hay Street, Perth, Western Australia for the purpose of transacting the business set out in this Notice.

At the general meeting of the Company held on 30 September 2011, shareholders resolved to issue up to 8,750,000 Plan Shares to Dr Eric Lilford (or his nominee), up to 3,250,000 Plan Shares to Mr Bevan Tarratt (or his nominee) and up to 1,000,000 Plan Shares to Mr David Greenwood. In light of the Board changes announced on 12 December 2011 and the Company’s change in focus, the Board has resolved that it will no longer proceed with the issue of Plan Shares as approved by shareholders on 30 September 2011.

In this Notice, ZYL seeks shareholder approval for the issue of Plan Shares to Mr Ian Benning and Mr Phillipe Lalieu, who were recently appointed as directors of ZYL, and Mr Bevan Tarratt who became the Executive Chairman of the Company. The issue of Plan Shares is considered to be effective in providing long-term incentives to Directors, focusing on development of the Company’s flagship Mbila Project as well as aligning the outcomes with the interests of shareholders.

Contact:

Nicholas Ong, Company Secretary, ZYL LIMITED

T: +61 8 9486 4036

M: +61 (0) 424 598 561

• E: nicholas@zyllimited.com.au

About ZYL Limited

ZYL Limited is listed on the Australian Securities Exchange (ASX) and aims to become one of the world’s leading metallurgical coal producers. The mission of ZYL is to develop high-margin metallurgical coal deposits for domestic and export markets. Flagship projects are the Mbila and Kangwane projects in South Africa, located close to rail, port, power and water infrastructure.

==> picture [40 x 41] intentionally omitted <==

Corporate Office:

Level 8, 225 St Georges Terrace, Perth 6000,Western Australia Tel: +61 8 9486 4036 Email: info@zyllimited.com.au PO Box 7653, Cloisters Square, Perth 6850, Western Australia Fax: +61 8 9486 4799 Web: www.zyllimited.com.au

ZYL LIMITED ACN 008 720 223

NOTICE OF GENERAL MEETING

TIME : 10.00 am (WST) DATE : 20 February 2012 PLACE : The Melbourne Hotel 942 Hay Street, Perth, Western Australia

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the Company Secretary on (+61 8) 9486 4036.

CONTENTS PAGE

Business of the Meeting (setting out the proposed resolutions)	3
Explanatory Statement (explaining the proposed resolutions)	7
Glossary	23
Schedule 1 – Terms and Conditions of Employee Share Plan	25
Proxy Form	28
IMPORTANT INFORMATION

TIME AND PLACE OF MEETING

Notice is given that the general meeting of the Shareholders to which this Notice of Meeting relates will be held at 10.00 am (WST) on 20 February 2012 at:

The Melbourne Hotel 942 Hay Street, Perth, Western Australia

YOUR VOTE IS IMPORTANT

The business of the General Meeting affects your shareholding and your vote is important.

VOTING ELIGIBILITY

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders at 10.00 am (WST) (1.00pm Sydney time) on Saturday, 18 February 2012.

VOTING IN PERSON

To vote in person, attend the General Meeting at the time, date and place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

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

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

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

1

3108-01/697974_1

Further details on these changes is set out below.

Proxy vote if appointment specifies way to vote

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

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

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

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

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

Transfer of non-chair proxy to chair in certain circumstances

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

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

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

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

• either of the following applies:

• the proxy is not recorded as attending the meeting;

• the proxy does not vote on the resolution,

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

2

3108-01/697974_1

BUSINESS OF THE MEETING

AGENDA

1. RESOLUTION 1 – AMENDMENT TO EMPLOYEE SHARE PLAN

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

“That, for the purposes of ASX Listing Rule 7.2 (Exception 9) and for all other purposes, approval is given for the Directors to amend the Company’s Employee Share Plan in the manner set out in the Explanatory Statement.”

Voting Exclusion: The Company will disregard any votes cast on this Resolution by the Directors of the Company and any of their associates, other than any Director who is ineligible to participate in the Employee Share Plan, and any associates of those Directors. However, the Company need not disregard a vote if it is cast by a person as a proxy for a person who is entitled to vote in accordance with the directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

2. RESOLUTION 2 – ISSUE OF SHARES TO MR IAN BENNING UNDER THE EMPLOYEE SHARE PLAN

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

“That subject to the passing of Resolution 1 and, for the purposes of ASX Listing Rule 10.14, Section 208 of the Corporations Act 2001 and for all other purposes, approval is given for the Directors to issue and allot up to 6,000,000 Plan Shares to Mr Ian Benning or his nominee under the Amended Employee Share Plan on the terms and conditions set out in the Explanatory Statement”.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by all the Directors (except one who is ineligible to participate in the Employee Share Plan) and any of 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 directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

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

• (a) the proxy is either:

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

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

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

However, the above prohibition does not apply if:

3

3108-01/697974_1

• (c) the proxy is the Chair of the Meeting; and

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

3. RESOLUTION 3 – ISSUE OF SHARES TO MR PHILLIPE LALIEU UNDER THE EMPLOYEE SHARE PLAN

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

“That subject to the passing of Resolution 1 and, for the purposes of ASX Listing Rule 10.14, Section 208 of the Corporations Act 2001 and for all other purposes, approval is given for the Directors to issue and allot up to 6,000,000 Plan Shares to Mr Phillipe Lalieu or his nominee under the Amended Employee Share Plan on the terms and conditions set out in the Explanatory Statement”.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by all the Directors (except one who is ineligible to participate in the Employee Share Plan) and any of 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 directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

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

(a) the proxy is either:

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

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

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

However, the above prohibition does not apply if:

• (c) the proxy is the Chair of the Meeting; and

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

4. RESOLUTION 4 – ISSUE OF SHARES TO MR BEVAN TARRATT UNDER THE EMPLOYEE SHARE PLAN

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

“That subject to the passing of Resolution 1 and, for the purposes of ASX Listing Rule 10.14, Section 208 of the Corporations Act 2001 and for all other

4

3108-01/697974_1

purposes, approval is given for the Directors to issue and allot up to 9,000,000 Plan Shares to Mr Bevan Tarratt or his nominee under the Amended Employee Share Plan on the terms and conditions set out in the Explanatory Statement”.

Voting Exclusion : The Company will disregard any votes cast on this Resolution by all the Directors (except one who is ineligible to participate in the Employee Share Plan) and any of 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 directions on the Proxy Form or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form to vote as the proxy decides.

Voting Prohibition Statement:

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

• (a) the proxy is either:

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

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

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

However, the above prohibition does not apply if:

• (c) the proxy is the Chair of the Meeting; and

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

5. RESOLUTION 5 – AMENDMENT TO THE TERMS OF PLAN SHARES PREVIOUSLY ISSUED TO IAN BENNING UNDER THE EMPLOYEE SHARE PLAN

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

“That, for the purpose of Section 208 of the Corporations Act and for all other purposes, approval is given for the vesting conditions attaching to the Plan Shares issued to Mr Ian Benning on 5 August 2011 to be amended as set out in the Explanatory Statement.”

Voting Exclusion : The Company will disregard any votes cast on this Resolution by Mr Ian Benning and any of his associates.

Voting Prohibition Statement:

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

• (a) the proxy is either:

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

5

3108-01/697974_1

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

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

However, the above prohibition does not apply if:

• (c) the proxy is the Chair of the Meeting; and

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

DATED: 18 JANUARY 2012

BY ORDER OF THE BOARD

MR NICHOLAS ONG COMPANY SECRETARY

6

3108-01/697974_1

EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions which are the subject of the business of the Meeting.

1. RESOLUTION 1 – AMENDMENT TO EMPLOYEE SHARE PLAN

1.1 Background

ASX Listing Rule 7.1 requires a listed company to obtain shareholder approval prior to the issue of shares, or securities convertible into shares, representing more than 15% of the issued capital of that company in any rolling 12 month period.

An exception to ASX Listing Rule 7.1 is set out in ASX Listing Rule 7.2 (Exception 9) which provides that issues under an employee incentive plan are exempt for a period of 3 years from the date on which shareholders approve the issue of securities under the plan as an exception to ASX Listing Rule 7.1.

The Company’s Employee Share Plan ( Plan ) was approved by Shareholders at the Company’s general meeting on 18 April 2011, allowing the Company to issue Shares under the Plan as an exception to ASX Listing Rule 7.1 in accordance with ASX Listing Rule 7.2 (Exception 9).

Resolution 1 seeks Shareholder approval for the Directors to amend the Plan as set out in Section 1.2 below.

1.2 Proposed amendments to the Plan

The Directors propose to amend the Plan as follows:

• (a) Insert the following definitions in section 1.1 of the Plan:

• “Rules means the rules of the Plan set out in this document.”

“ Trigger Event means:

• (a) the despatch of a notice of meeting to consider a scheme of arrangement between the Company and its creditors or members or any class thereof pursuant to section 411 of the Corporations Act;

• (b) following the announcement of a takeover bid or receipt by the Company of a bidder’s statement in respect of the Company in circumstances where:

• (i) the takeover bid is unconditional; and

• (ii) the bidder has a relevant interest in at least 50% of the issued Shares of the Company; or

• (c) the date upon which a person or a group of associated persons becomes entitled, to sufficient Shares to give it or them the ability, in general meeting, to replace all or allow a majority of the Board in circumstances where such ability was not already

7

3108-01/697974_1

held by a person associated with such person or group of associated persons.”

• (b) Insert the following as clause 8:

• “ 8. TRIGGER EVENT

• 8.1 Notwithstanding the Rules of the Plan, upon the occurrence of a Trigger Event, any unvested Shares will automatically vest from the date of the occurrence of such Trigger Event, so as to permit the holder to participate in any change of control arising from a Trigger Event.”

Of the 5,950,000 Plan Shares on issue, 5,500,000 remain unvested. If Resolution 1 is passed, the unvested Plan Shares, together with the Plan Shares to be issued pursuant to Resolutions 2 to 4, will automatically vest in the event of a Trigger Event.

1.3 Reasons for proposed amendments

The Plan is considered to be effective in providing long-term incentives to Directors and aligning outcomes with the interests of Shareholders. It is therefore crucial to provide certainty to the Directors and other participants of the Plan of their rights under the Plan and reward the Directors and other participants of the Plan for their efforts leading or contributing to a Trigger Event.

Pursuant to the Company’s announcement on 14 December 2011 (“Expressions of Interest to Acquire/Invest, Macquarie Engaged”) ( Announcement ), the Company advised that it had received two (2) expressions of interest to acquire or partner with the Company.

In the event an acquisition as contemplated by the Announcement occurs, the definition of “Trigger Event” for the purposes of the Plan will be satisfied.

Potentially, therefore, the unvested Shares will automatically vest.

1.4 Information required by ASX Listing Rule 7.2 (Exception 9)

Since 18 April 2011 (being the date on which the Plan was last approved by Shareholders), the Company has issued 5,950,000 Plan Shares in reliance on Listing Rule 7.2 (Exception 9).

The full terms and conditions of the Plan may be obtained free of charge by contacting the Company. A summary of the current terms and conditions of the Plan is set out in Schedule 1.

2. RESOLUTIONS 2 TO 4 – ISSUES OF SHARES TO DIRECTORS UNDER THE EMPLOYEE SHARE PLAN

2.1 Issue of Shares to Directors

The Company proposes to issue each of Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt ( Related Parties ) Plan Shares pursuant to the Company’s Amended Employee Share Plan.

The Plan Shares proposed to be issued to the Related Parties will be issued upon receipt of Shareholder approval pursuant to the Resolutions contained in this

8

3108-01/697974_1

Notice of Meeting, and will be subject to voluntary escrow restrictions until the relevant Related Party satisfies the relevant vesting conditions applicable to it. The vesting conditions are outlined in Section 2.1(a)) below. The Board considers it usual practice for the Related Parties’ remuneration to have a salary cash component and an equity component.

Specifically, the Company proposes to issue, subject to the receipt of Shareholder approval, up to 6,000,000 Plan Shares to Mr Ian Benning (or his nominee), up to 6,000,000 Plan Shares to Mr Phillipe Lalieu (or his nominee) and up to 9,000,000 Plan Shares to Mr Bevan Tarratt, who are Directors of the Company, pursuant to the Amended Plan with vesting conditions as detailed below:

• (a) a total of up to 21,000,000 Plan Shares to be issued as follows:

• (i) up to 6,000,000 Plan Shares to be issued to Mr Ian Benning (or his nominee) immediately upon receipt of the Shareholder approval the subject of Resolution 2, which will be subject to voluntary escrow, until the following vesting conditions are satisfied:

  • (A) 800,000 Plan Shares upon an announcement to ASX of receipt of approval under Section 11 of the Minerals and Petroleum Resources Development Act (South Africa) in relation to the acquisition of the Mbila Project;

  • (B) 950,000 Plan Shares upon an announcement to ASX of the completion of the acquisition of at least a 44% interest in the Mbila Project;

  • (C) 950,000 Plan Shares upon an announcement to ASX of the completion of the definitive feasibility study at the Mbila Project;

  • (D) 600,000 Plan Shares upon an announcement to ASX of the completion of a successful capital raising to fund the construction and commissioning of a mining operation of at least 750kt per annum production via debt or equity capital markets. If completed via the equity capital markets, then the raising is to be completed at an issue price of not less than 80% of the VWAP. If completed via debt markets, then the raising is to be completed on commercial rates and terms and conditions;

  • (E) 600,000 Plan Shares upon the Company successfully obtaining all necessary regulatory approvals to allow for the development and exploration of anthracite from the Mbila Project;

  • (F) 300,000 Plan Shares upon the Company announcing to the ASX that it has been able to secure a lease agreement with Spoornet for the designated railway siding;

9

3108-01/697974_1

• (G) 600,000 Plan Shares upon the Company announcing to the ASX that it has entered into binding agreements for the supply of an accumulative 500kt per annum of anthracite from the Mbila Project;

• (H) 300,000 Plan Shares upon achievement of a market capitalisation for the Company in excess of $150 million for 5 consecutive trading days;

• (I) 300,000 Plan Shares upon the Company successfully executing all necessary agreements with the Community for commercial mining to occur on their land in respect of the Mbila Project;

• (J) 300,000 Plan Shares upon the Company announcing to ASX that it has entered into a contract for the construction of a mine capable of at least 750kt per annum production in the Mbila Project area; and

• (K) 300,000 Plan Shares upon commencement of the construction of a mine capable of at least 750kt per annum production in the Mbila Project area,

• (ii) up to 6,000,000 Plan Shares to be issued to Mr Phillipe Lalieu (or his nominee) immediately upon receipt of the Shareholder approval the subject of Resolution 3, which will be subject to voluntary escrow, until the following vesting conditions are satisfied:

• (A) 800,000 Plan Shares upon an announcement to ASX of receipt of approval under Section 11 of the Minerals and Petroleum Resources Development Act (South Africa) in relation to the acquisition of the Mbila Project;

• (B) 950,000 Plan Shares upon an announcement to ASX of the completion of the acquisition of at least a 44% interest in the Mbila Project;

• (C) 950,000 Plan Shares upon an announcement to ASX of the completion of the definitive feasibility study at the Mbila Project;

• (D) 600,000 Plan Shares upon an announcement to ASX of the completion of a successful capital raising to fund the construction and commissioning of a mining operation of at least 750kt per annum production via debt or equity capital markets. If completed via the equity capital markets, then the raising is to be completed at an issue price of not less than 80% of the VWAP. If completed via debt markets, then completed on commercial rates and terms and conditions;

• (E) 600,000 Plan Shares upon the Company successfully obtaining all necessary regulatory approvals to allow for the development and exploration of anthracite from the Mbila Project;

10

3108-01/697974_1

• (F) 300,000 Plan Shares upon the Company announcing to the ASX that it has been able to secure a lease agreement with Spoornet for the designated railway siding;

• (G) 600,000 Plan Shares upon the Company announcing to the ASX that it has entered into binding agreements for the supply of an accumulative 500kt per annum of anthracite from the Mbila Project;

• (H) 300,000 Plan Shares upon achievement of a market capitalisation for the Company in excess of $150 million for 5 consecutive trading days;

• (I) 300,000 Plan Shares upon the Company successfully executing all necessary agreements with the Community for commercial mining to occur on their land in respect of the Mbila Project;

• (J) 300,000 Plan Shares upon the Company announcing to ASX that it has entered into a contract for the construction of a mine capable of at least 750kt per annum production in the Mbila Project area; and

• (K) 300,000 Plan Shares upon commencement of the construction of a mine capable of at least 750kt per annum production in the Mbila Project area,

• (iii) up to 9,000,000 Plan Shares to be issued to Mr Bevan Tarratt (or his nominee) immediately upon receipt of the Shareholder approval the subject of Resolution 4, which will be subject to voluntary escrow, until the following vesting conditions are satisfied:

• (A) 1,200,000 Plan Shares upon an announcement to ASX of receipt of approval under Section 11 of the Minerals and Petroleum Resources Development Act (South Africa) in relation to the acquisition of the Mbila Project;

• (B) 1,425,000 Plan Shares upon an announcement to ASX of the completion of the acquisition of at least a 44% interest in the Mbila Project;

• (C) 1,425,000 Plan Shares upon an announcement to ASX of the completion of the definitive feasibility study at the Mbila Project;

• (D) 900,000 Plan Shares upon an announcement to ASX of the completion of a successful capital raising to fund the construction and commissioning of a mining operation of at least 750kt per annum production via debt or equity capital markets. If completed via the equity capital markets, then the raising is to be completed at an issue price of not less than 80% of the VWAP. If completed via debt markets, then the raising

11

3108-01/697974_1

is to be completed on commercial rates and terms and conditions;

• (E) 900,000 Plan Shares upon the Company successfully obtaining all necessary regulatory approvals to allow for the development and exploration of anthracite from the Mbila Project;

• (F) 450,000 Plan Shares upon the Company announcing to the ASX that it has been able to secure a lease agreement with Spoornet for the designated railway siding;

• (G) 900,000 Plan Shares upon the Company announcing to the ASX that it has entered into binding agreements for the supply of an accumulative 500kt per annum of anthracite from the Mbila Project;

• (H) 450,000 Plan Shares upon achievement of a market capitalisation for the Company in excess of $150 million for 5 consecutive trading days;

• (I) 450,000 Plan Shares upon the Company successfully executing all necessary agreements with the Community for commercial mining to occur on their land in respect of the Mbila Project;

• (J) 450,000 Plan Shares upon the Company announcing to ASX that it has entered into a contract for the construction of a mine capable of at least 750kt per annum production in the Mbila Project area; and

• (K) 450,000 Plan Shares upon commencement of the construction of a mine capable of at least 750kt per annum production in the Mbila Project area;

• (b) the vesting conditions must be satisfied within 3 years from the date of the General Meeting; and

• (c) if, any of the vesting conditions applicable to each Related Party are not satisfied within the time period specified in Section 2.1(b) above, then the Company will buy-back the Plan Shares which relate to the relevant vesting condition which is not satisfied from the relevant Related Party in accordance with the buy-back provisions in the Amended Plan which are summarised in paragraph (h) in Schedule 1.

2.2 Previous Issue of Plan Shares

At the general meeting of the Company held on 30 September 2011 Shareholders resolved to issue up to 8,750,000 Plan Shares to Dr Eric Lilford (or his nominee), up to 3,250,000 Plan Shares to Mr Bevan Tarratt (or his nominee) and up to 1,000,000 Plan Shares to Mr David Greenwood.

The Board has resolved that it will no longer proceed with the issue of the Plan Shares to Dr Eric Lilford, Mr Bevan Tarratt and Mr David Greenwood (or their

12

3108-01/697974_1

nominees). As a result, there has been no previous issue of Plan Shares to Directors under Listing Rule 10.14.

2.3 Related Party Transaction

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

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

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

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

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

The grant of Plan Shares to Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt under the Amended Plan requires the Company to obtain Shareholder approval because this constitutes giving a financial benefit and, as Directors, Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt are related parties of the Company.

It is the view of the Directors that the exceptions set out in Sections 210 to 216 of the Corporations Act do not apply in the current circumstances. Accordingly, Shareholder approval is sought for the issue the Plan Shares to Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt.

2.4 Technical Information Required by Sections 217 to 227 of the Corporations Act

Pursuant to and in accordance with the requirements of Sections 217 to 227 of the Corporations Act, the following information is provided in relation to the proposed grant of Plan Shares pursuant to Resolutions 2 to 4:

• (a) the related parties are Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt ( Related Parties ) and they are related parties by virtue of being Directors of the Company;

• (b) the maximum number of Plan Shares (being the nature of the financial benefit being provided) to be granted to each Related Party is:

Related Party	Number of Plan Shares	Total Value of Plan Shares1
Mr Ian Benning	6,000,000	$1,260,000
Mr Phillipe Lalieu	6,000,000	$1,260,000
Mr Bevan Tarratt	9,000,000	$1,890,000

13

3108-01/697974_1

1 This is based on the value of the Shares set out in Section 2.4(c) below.

• (c) based on the closing trading price on the day before the date of this notice of $0.21, the Plan Shares have a value of $4,410,000 (assuming all Performance Milestones are met). The value of the Plan Shares attributed to each individual Related Party is set out above at Section 2.4(b). However, this value may fluctuate up or down as the Share price changes over time;

• (d) the Plan Shares to be issued will be fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;

• (e) in determining the number of Plan Shares to be issued to the Related Parties, consideration was given to the respective relevant experience and role of the Related Parties, their overall remuneration terms, and the terms of share packages granted to Directors of similar companies;

• (f) the Plan Shares will otherwise be issued on the terms and conditions set out in the Amended Plan which have been summarised in Schedule 1

• (g) the Plan Shares will be issued as part of the remuneration for Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt in addition to the cash salary component of their remuneration and so will be issued for a nil issue price and accordingly, no funds will be raised;

• (h) as at the date of this Notice, each Related Party has a relevant interest in the following Company securities:

Related Party	Number of Shares	Number of Options
Mr Ian Benning	3,000,000	Nil
Mr Phillipe Lalieu	Nil	Nil
Mr Bevan Tarratt1	4,769,444	3,000,0002

1 These Share and Options are held indirectly through the Joe Dirt Super Pty Ltd .

2 100,000 Options exercisable at $0.03 each on or before 30 September 2012 and 2,000,000 Options exercisable at $0.05 each on or before 30 September 2012.

(i) the remuneration and emoluments paid (or to be paid) by the Company to each of the Related Parties for the last financial year and current financial year (inclusive of superannuation) is as follows;

Related Party	Financial Year ended 30 June 2011	Financial Year ended 30 June 2012
Mr Ian Benning	Nil	$36,000
Mr Phillipe Lalieu	Nil	$60,000
Mr Bevan Tarratt	Nil	$36,000

14

3108-01/697974_1

• (j) if Shareholders approve the issue of the Plan Shares to the Related Parties, the effect will be to dilute the shareholding of existing Shareholders by approximately 4.3% on an undiluted basis, comprising 1.23% by Mr Ian Benning, 1.23% by Mr Phillipe Lalieu and 1.84% by Mr Bevan Tarratt (based on 488,535,899 Shares being currently on issue);

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

	Price	Date
Highest	$0.26	25 July 2011
Lowest	$0.08	21 January 2011
Last	$0.21	17 January 2012

(l) the primary purpose of the grant of the Plan Shares to Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt, is to provide a market linked incentive package for the future performance and cost effective consideration for their ongoing commitment and contribution to the Company in their respective roles as Directors.

The Board (other than each individual Director when considering that individual Directors’ experience) considered the extensive experience and reputation of each Director within the mining and resources industry, the current market price of Shares and current market practices when determining the number Shares to be issued to each Director. In addition, the Board considers the issue of the Plan Shares to each individual Director to be reasonable, given the necessity to attract the highest calibre of professionals to the Company whilst maintaining the Company’s cash reserves. If the Plan Shares are not issued, the Company could remunerate the Directors for additional amounts. However, the Board considers it reasonable for the remuneration each of the Directors to have a cash component and an equity component to further align the Related Parties’ interests with Shareholders and maintain a strong cash position for the Company.

As outlined above, there are alternate options available in respect of the grant of the Shares in respect of remunerating the executive Directors. Accordingly, Shareholders should consider the above matters carefully before deciding how to vote on these Resolutions. The Board does not consider that there are any significant opportunity costs to Company or benefits foregone by the Company in issuing the Plan Shares to the Related Parties upon the terms proposed; and

• (m) the Board acknowledges the grant of Plan Shares to the Related Parties, who are non-executive Directors, is contrary to Recommendation 8.2 of the ASX Corporate Governance Principles and Recommendations. However, the Board considers the grant of Plan Shares to the Related Parties reasonable in the circumstances for the reasons set out in Section 2.4(l) above.

15

3108-01/697974_1

2.5 Directors’ Recommendation

• (a) The Directors (other than as set out below) recommend that Shareholders vote in favour of Resolutions 2 to 4 for the following reasons:

• (i) the benefit set out in Sections 2.4(l) and 2.4(l) above the proposed issue of Shares to the Related Parties will have on the Company;

• (ii) the issue of the Shares to the Related Parties is an appropriate form of incentive to maximise returns to Shareholders; and

• (iii) the terms of the proposed issue of Shares to the Related Parties are reasonable to the Company.

• (b) Mr Ian Benning declines to make a recommendation to Shareholders in relation to Resolution 2 due to his material personal interest in the outcome of the Resolution. The independent Directors recommend that Shareholders vote in favour of Resolution 2. The independent Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 2.

• (c) Mr Phillipe Lalieu declines to make a recommendation to Shareholders in relation to Resolution 3 due to his material personal interest in the outcome of the Resolution. The independent Directors recommend that Shareholders vote in favour of Resolution 3. The independent Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 3.

• (d) Mr Bevan Tarratt declines to make a recommendation to Shareholders in relation to Resolution 4 due to his material personal interest in the outcome of the Resolution. The independent Directors recommend that Shareholders vote in favour of Resolution 4. The independent Directors are not aware of any other information that would be reasonably required by Shareholders to allow them to make a decision whether it is in the best interests of the Company to pass Resolution 4.

2.6 ASX Listing Rule 10.14

ASX Listing Rule 10.14 provides that a company must not permit any of the following persons to acquire securities under an employee incentive scheme without the approval of holders of ordinary securities of the acquisition:

• (a) a director of the company;

• (b) an associate of a director; or

• (c) a person whose relationship with the company or a person referred to in (a) or (b) above is, in ASX’s opinion, such that approval should be obtained.

If Resolutions 2 to 4 are passed, Plan Shares will be issued to the Directors of the Company.

16

3108-01/697974_1

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Shares as approval is being obtained under ASX Listing Rule 10.14 and Exception 9(b) of ASX Listing Rule 7.2. The issue of Shares to the Related Parties will not be included in the 15% calculation for the purposes of ASX Listing Rule 7.1.

2.7

Technical Information Required by ASX Listing Rule 10.15

A notice of meeting to obtain approval under ASX Listing Rule 10.14 must comply with either ASX Listing Rule 10.15 or 10.15A. The information required to be provided for the purposes of approval under ASX Listing Rule 10.14 is set out below, in accordance with ASX Listing Rule 10.15:

• (a) Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt are Directors of the Company;

• (b) the maximum number of Plan Shares to be issued to the Directors is up to 21,000,000 (which comprises up to 6,000,000 Plan Shares to Mr Ian Benning, up to 6,000,000 Plan Shares to Mr Phillipe Lalieu and up to 9,000,000 Plan Shares to Mr Bevan Tarratt), on the terms set out in Section 2.1 above;

• (c) the Plan Shares will be issued as part of the remuneration for Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt in addition to the cash salary component of their remuneration and so will be issued for a nil issue price and accordingly, no funds will be raised;

• (d) no person referred to in ASX Listing Rule 10.14 has received Plan Shares under the Plan (since last approval) or the Amended Plan;

• (e) the only persons referred to in ASX Listing Rule 10.14 who are eligible to participate in the Plan or the Amended Plan as at the date of this Notice are Dr Eric Lilford, Mr David Greenwood, Mr Ian Benning, Mr Phillipe Lalieu and Mr Bevan Tarratt;

• (f) no loan has or will be provided to the Related Parties in relation to the subsequent exercise of the Plan Shares; and

• (g) the Plan Shares will be issued to Mr Ian Benning, Mr Phillipe Lalieu, Mr Bevan Tarratt (or their respective nominees) no later than 12 months after the date of the General Meeting.

A summary of the terms and conditions of the Amended Plan is contained in Schedule 1 to this Notice of Meeting. A copy of the rules of the Amended Plan which sets out the full terms and conditions of the Plan will be sent free to any Shareholder upon request, or may be inspected at the Company’s registered office during normal business hours.

2.8

ASX Listing Rule 10.18

Pursuant to Listing Rule 10.18, the Company confirms that no officer of the Company will be entitled to termination benefits (or any increase in them) if a change occurs in the shareholding or control of the Company

17

3108-01/697974_1

3. RESOLUTION 5 – AMENDMENT TO THE TERMS OF PLAN SHARES PREVIOUSLY ISSUED TO IAN BENNING UNDER THE EMPLOYEE SHARE PLAN

3.1 Background

On 5 August 2011 the Company issued to Mr Ian Benning 3,000,000 Plan Shares with the following vesting conditions:

• (a) 200,000 shares automatically vest upon achieving a market capitalisation of ZYL in excess of $200 million for 5 consecutive trading days;

• (b) 100,000 shares automatically vest upon announcing a total measured resource at Kangwane of not less than 40Mt with similar specifications to those already identified;

• (c) 200,000 shares automatically vest upon announcing the completion of the acquisition of at least a 50.1% interest in the Manzolwandle Project area;

• (d) 200,000 shares will automatically vest upon announcing the completion of the acquisition of at least a 50.1% interest in the Southern Anthracite Project area;

• (e) 200,000 shares will automatically vest upon announcing the completion of the BFS at the Kangwane Project;

• (f) 300,000 shares will automatically vest upon ZYL and its joint venture partners obtaining all necessary regulatory approvals (environmental, water use, land access, mining permit, etc) to allow for the development and exploitation of anthracite from the Kangwane Project;

• (g) 200,000 shares will automatically vest upon announcing that ZYL has been able to secure a logistics solution to enable access to export entitlement;

• (h) 200,000 shares will automatically vest upon the share price of ZYL sustaining above 50 cents per share for a consecutive 5 day period.

• (i) 300,000 shares will automatically vest upon achieving a successful dual listing of ZYL on the Johannesburg Stock Exchange and demonstrating a market capitalisation of at least ZAR1.5 billion for 5 consecutive days;

• (j) 500,000 shares will automatically vest upon announcing the completion of the BFS at the Southern Anthracite Project;

• (k) 400,000 shares will automatically vest upon announcing of a resource upgrade at the Kangwane Project to 150Mt; and

• (l) 200,000 shares will automatically vest upon the execution of coal offtake agreements at Kangwane totalling a minimum of 1Mtpa, excluding that for the power utility.

(together the Benning Plan Shares ).

18

3108-01/697974_1

At the time when the Benning Plan Shares were issued to Mr Ian Benning, he was an unrelated employee of the Company. 200,000 of the Benning Plan Shares referred to in paragraph (c) above are now freely tradable following the completion of the acquisition of at least a 50.1% interest in the Southern Anthracite Project area.

On 31 October 2011, Mr Ian Benning was appointed as a Director of the Company. Accordingly, the Company proposes to amend the vesting conditions so that they are consistent with those Plan Shares being issued to him under Resolution 2 ( Proposed Amendment ).

Specifically, the Company proposes to amend the vesting conditions of the Benning Plan Shares to be as follows:

• (a) the Benning Plan Shares will be subject to voluntary escrow, until the following vesting conditions are satisfied:

• (i) 400,000 Plan Shares upon an announcement to ASX of receipt of approval under Section 11 of the Minerals and Petroleum Resources Development Act (South Africa) in relation to the acquisition of the Mbila Project;

• (ii) 400,000 Benning Plan Shares upon an announcement to ASX of the completion of the acquisition of at least a 44% interest in the Mbila Project;

• (iii) 350,000 Benning Plan Shares upon an announcement to ASX of the completion of the definitive feasibility study at the Mbila Project;

• (iv) 300,000 Benning Plan Shares upon announcement to ASX of the completion of a successful capital raising to fund the construction and commissioning of a mining operation of at least 750kt per annum production via debt or equity capital markets. If completed via the equity capital markets, then the raising is to be completed at an issue price of not less than 80% of the VWAP. If completed via debt markets, then the raising is to be completed on commercial rates and terms and conditions;

• (v) 300,000 Plan Shares upon the Company successfully obtaining all necessary regulatory approvals to allow for the development and exploration of anthracite from the Mbila Project;

• (vi) 150,000 Plan Shares upon the Company announcing to the ASX that it has been able to secure a lease agreement with Spoornet for the designated railway siding;

• (vii) 200,000 Plan Shares upon the Company announcing to the ASX that it has entered into binding agreements for the supply of accumulative 500kt per annum of anthracite from the Mbila Project;

• (viii) 250,000 Plan Shares upon achievement of a market capitalisation for the Company in excess of $150 million for 5 consecutive trading days;

19

3108-01/697974_1

• (ix) 150,000 Plan Shares upon the Company successfully executing all necessary agreements with the Community for commercial mining to occur on their land in respect of the Mbila Project;

• (x) 150,000 Plan Shares upon the Company announcing to ASX that it has entered into a contract for the construction of a mine capable of at least 750kt per annum production in the Mbila Project area; and

• (xi) 150,000 Plan Shares upon commencement of the construction of a mine capable of at least 750kt per annum production in the Mbila Project area.

Section 208 of the Corporations Act requires shareholder approval to be obtained for a public company to give a “financial benefit” to a related party.

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

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

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

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

Under Section 229(2) of the Corporations Act giving a “financial benefit” includes:

• (a) giving a financial benefit indirectly, for example, through one or more interposed entities;

• (b) giving a financial benefit by making an informal agreement, oral agreement or an agreement that has no binding force; and

• (c) giving a financial benefit that does not involve paying money (for example, by conferring a financial advantage).

Section 229(3) provides examples of giving a financial benefit. These include:

• (a) giving or providing finance or property;

• (d) buying, selling or leasing an asset;

• (e) supplying or receiving services;

• (f) issuing securities or granting options; and

• (g) taking up or releasing an obligation.

The term “financial benefit” is to be interpreted broadly. Therefore the payment of money is not an essential component of giving of a financial benefit; the conferring of a financial advantage alone will suffice.

20

3108-01/697974_1

Accordingly, the Proposed Amendment confers an indirect financial benefit on Mr Ian Benning (as set out below at Section 3.2(i)). For this reason, the Board is seeking Shareholder approval in regards to the Proposed Amendment.

Prior to seeking Shareholder approval in regards to Resolution 5 to implement the Proposed Amendment, the Board resolved to amend the terms of the Benning Plan Shares to reflect the proposed vesting conditions outlined above. The resolution was made on the basis that the amendment to the vesting conditions of the Benning Plan Shares would align his incentives with the Company’s overall strategy.

The effect of Resolution 5 will be to allow the Proposed Amendment to the vesting conditions of the Benning Plan Shares.

3.2 Shareholder approval (Chapter 2E of the Corporations Act)

Pursuant to and in accordance with the requirements of Section 219 of the Corporations Act, the following information is provided in relation to the Proposed Amendment:

• (a) the related party is Mr Ian Benning and he is a related party by virtue of being a Director of the Company;

• (b) the maximum number of Benning Plan Shares subject to the Proposed Amendment (being the nature of the financial benefit being provided) is 3,000,000 Plan Shares;

• (c) the Benning Plan Shares have already been granted to Mr Ian Benning. However, the Proposed Amendment will be made to the Benning Plan Shares immediately upon the passing of Resolution 5;

• (d) Mr Ian Benning will not be providing any consideration for the Proposed Amendment, accordingly no funds will be raised;

• (e) the terms and conditions of the Plan are set out in Schedule 1;

• (f) the relevant interests of Mr Ian Benning in securities of the Company are set out above at Section 2.4(h) above;

• (g) the remuneration and emoluments from the Company to Mr Ian Benning for the previous financial year and the proposed remuneration and emoluments for the current financial year are set out above at Section 2.4(i) above;

• (h) the effect of the Proposed Amendment would be to amend the vesting conditions of the Benning Plan Shares. There will be no further increase in the number of Plan Shares on issue. Amending the vesting conditions of the Benning Plan Shares will not result in an increase in the number of Shares allotted and issued by the Company. There will be no effect on the shareholding of existing Shareholders;

• (i) based on the trading price on the day before the date of this notice of $0.21 per Share, the Benning Plan Shares have a value of $630,000 (assuming all vesting conditions are met) ( Current Value ). Based on the trading price on the day before the issue of the Benning Plan Shares of

21

3108-01/697974_1

$0.17 per Share, the Benning Plan Shares had an initial value of $510,000 (assuming all vesting conditions are met) ( Initial Value ).

As a result of the Current Value exceeding the Initial Value, Mr Benning will incur a financial benefit of $120,000 as a result of the Proposed Amendments. In addition, there may be perceived benefits which are unable to be valued. These benefits may include the possibility that the attaching milestones may be achieved more easily or within a shorter timeframe.

All of the Benning Plan Shares held by Mr Benning were issued in his capacity as an unrelated employee. The issue of the Benning Plan Shares was not associated in any way with his remuneration or did not arise in connection with benefits granted in connection with their services as Director to the Company;

• (j) Mr Ian Benning declines to make a recommendation to Shareholders in relation to Resolution 5 due to his material personal interest in the outcome of the Resolution 5;

• (k) Mr Bevan Tarratt recommends that Shareholders vote in favour of Resolution 5 for the following reasons:

• (i) it is not considered that there are any significant opportunity costs to the Company or benefits foregone by the Company in implementing the Proposed Amendment;

• (ii) it is the Company’s interest to align its incentive plans with the overall strategy for its projects.

• (l) Mr Eric Lilford recommends that Shareholders vote in favour of Resolution 5 for the reasons set out in Section 3.2(k);

• (m) Mr David Greenwood recommends that Shareholders vote in favour of Resolution 5 for the reasons set out in Section 3.2(k);

• (n) Mr Phillipe Lalieu recommends that Shareholders vote in favour of Resolution 5 for the reasons set out in Section 3.2(k); and

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

22

3108-01/697974_1

GLOSSARY

$ means Australian dollars.

Amended Plan or Amended Employee Share Plan means the Company’s Employee Share Plan as amended pursuant to Resolution 1.

ASIC means the Australian Securities and Investments Commission.

ASX means ASX Limited.

ASX Listing Rules means the Listing Rules of ASX.

Benning Plan Shares means the 3,000,000 Plan Shares issued to Mr Ian Benning in his capacity as unrelated employee as set out in Section 3.1 of the Explanatory Statement.

Board means the current board of directors of the Company.

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

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

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

• (b) a child of the member’s spouse;

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

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

• (e) a company the member controls; or

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

Company means ZYL Limited (ACN 008 720 223).

Constitution means the Company’s constitution.

Corporations Act means the Corporations Act 2001 (Cth).

Directors means the current directors of the Company.

Explanatory Statement means the explanatory statement accompanying the Notice.

General Meeting or Meeting means the meeting convened by the Notice.

Key Management Personnel has the same meaning as in the accounting standards and broadly includes those persons 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.

kt means kilo tonnes.

23

3108-01/697974_1

Mbila Project means the Mbila Anthracite Project in which the Company recently acquired an interest, as described in the Company’s ASX announcement entitled “ High Grade Metallurgical Coal Acquisition” dated 20 September 2011.

Notice or Notice of Meeting or Notice of General Meeting means this notice of general meeting including the Explanatory Statement and the Proxy Form.

Option means an option to acquire a Share.

Optionholder means a holder of an Option.

Plan or Employee Share Plan means the Company’s Employee Share Plan approved by its Shareholders at its general meeting on 18 April 2011.

Plan Share means a Share issued under the Plan or Amended Plan as the context requires.

Proposed Amendment means the amendments to the terms of the Benning Plan Shares as set out in Section 3.1 of the Explanatory Statement.

Proxy Form means the proxy form accompanying the Notice.

Relate Parties has the meaning given to it in Section 2.1 of the Explanatory Statement.

Resolutions means the resolutions set out in the Notice of Meeting, or any one of them, as the context requires.

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

Shareholder means a holder of a Share.

Spoornet means Spoornet, a division of Transnet Freight Rail, a South African rail transport company.

Trigger Event has the meaning as set out in Section 1.2(a) of the Explanatory Statement.

VWAP means volume weighted average share price as traded on ASX on a period of 5 trading days prior to the issue of Shares.

WST means Western Standard Time as observed in Perth, Western Australia.

24

3108-01/697974_1

SCHEDULE 1 – TERMS AND CONDITIONS OF EMPLOYEE SHARE PLAN

The full terms and conditions of the Employee Share Plan may be obtained free of charge by contacting the Company. A summary of the terms and conditions of the Employee Share Plan (as amended pursuant to Resolution 1) is set out below.

(a) Grant of Shares

The Directors, at their discretion, may issue Shares ( Plan Shares ) to Participants (or to a nominee as the Participant directs) at any time, having regard to relevant considerations such as the Participant’s past and potential contribution to the Company, and their period of employment with the Company.

(b) Participants

Full-time employees, part-time employees and Directors of the Company, or of a related body corporate, who hold a salaried employment or office in the company or in a related body corporate, are eligible to participate in the Employee Share Plan ( Participants ). However, in the event that Directors of the Company are invited to participate in the Plan, the Company will seek Shareholder approval for that participation in accordance with Listing Rule 10.14.

(c) Issue Price of Plan Shares

Plan Shares may be issued at an issue price to be determined by the Board, which may be a nominal or nil issue price if so determined by the Board.

(d)

Maximum Number of Plan Shares

The Company must take reasonable steps to ensure that the number of Plan Shares offered by the Company under the Employee Share Plan when aggregated with:

• (i) the number of Plan Shares issued during the previous 5 years under the employee Share Plan (or any other employee share plan extended only to Eligible Employees); and

• (ii) the number of Shares that would be issued if each outstanding offer for Shares (including options to acquire unissued Shares) under any employee incentive Plan of the Company were to be exercised or accepted,

does not exceed 5% of the total number of issued Shares at the time of an offer of Plan Shares (but disregarding any offer of Shares or option to acquire Shares that can be disregarded in accordance with the ASIC Class Order 03/184.

(e) Term of Plan Shares

The Plan Shares will be issued on the same terms as the fully paid, ordinary shares of the Company and will rank equally with all of the Company’s then existing Shares.

25

3108-01/697974_1

(f) Restrictions on transfer of Plan Shares

The Board may impose conditions in an offer of Plan Shares that must be satisfied (unless waived by the Board in its absolute discretion) before the Plan Shares to which the condition applies can be sold, transferred, assigned, charged or otherwise encumbered ( Restriction Conditions ).

Subject to the exceptions identified below, a Participant may not sell, transfer, assign, mortgage, charge or otherwise encumber a Plan Share until any applicable Restriction Conditions are satisfied or waived by the Board in its absolute discretion.

Where any applicable Restriction Conditions in relation to Plan Shares have not been satisfied and:

• (i) the Participant dies;

• (ii) the Eligible Employee to whom the offer was originally made ceases to be employed as a result of:

• (A) bona fide retirement from the workforce (unless the retirement happens within six (6) months of the date of the issue of the Plan Shares);

• (B) bona fide redundancy; or

• (C) total and permanent disability,

the Board may elect to:

• (iii) allow the Participant to retain the Plan Shares;

• (iv) waive any of the Restriction Conditions; and/or

• (v) permit the Participant (or their personal legal representative) to sell, transfer, assign, mortgage, charge or otherwise encumber the Participant’s Plan Shares.

(g)

Trigger event

Notwithstanding the Rules of the Plan, upon the occurrence of a Trigger Event, any unvested Shares will automatically vest from the date of the occurrence of such Trigger Event, so as to permit the holder to participate in any change of control arising from a Trigger Event.

Trigger Event means:

• (A) the despatch of a notice of meeting to consider a scheme of arrangement between the company and its creditors or members or any class thereof pursuant to section 411 of the Corporations Act;

• (B) following the announcement of a takeover bid or receipt by the company of a bidder’s statement in respect of the company in circumstances where:

• (A) the Takeover Bid is unconditional; and

26

3108-01/697974_1

• (B) the bidder has a relevant interest in at least 50% of the issued shares of the company; or

• (C) the date upon which a person or a group of associated persons becomes entitled, to sufficient shares to give it or them the ability, in general meeting, to replace all or allow a majority of the board in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

(h)

Buy back of Plan Shares

Subject to the exemptions identified in sub-clause (f) above, where a Restriction Condition in relation to Plan Shares is not satisfied by the due date, or becomes incapable of satisfaction in the opinion of the Board, the Company must, unless the Restriction Condition is waived by the Board:

• (i) where the Plan Shares were issued for no cash consideration, subject to the Corporations Act and the ASX Listing Rules, buy back the relevant Plan Shares within 12 months of the date the Restriction Condition was not satisfied (or became incapable of satisfaction) under Part 2J.1 of the Corporations Act at a price equal to $0.0001 per Share; or

• (ii) where the Shares were issued for cash consideration, subject to the Corporations Act and the ASX Listing Rules, use its best endeavours to buy back the relevant Plan Shares within 12 months of the date the Restriction Condition was not satisfied (or became incapable of satisfaction) under Part 2J.1 of the Corporations Act at a price equal to the cash consideration paid by the Participant for the Plan Shares.

(i)

Quotation of Plan Shares

The Company will make application for official quotation of all Plan Shares as soon as practicable after their Issue Date.

(j)

Powers of the Board of Directors

The Employee Share Plan is administered by the Directors of the Company, who have the power to:

• (i) determine appropriate procedures for administration of the Employee Share Plan consistent with its terms;

• (ii) resolve conclusively all questions of fact or interpretation in connection with the Employee Share Plan;

• (iii) delegate the exercise of any of its powers or discretions arising under the Employee Share Plan to any one or more persons for such period and on such conditions as the Board may determine; and

• (iv) suspend or terminate the Employee Share Plan by giving written advice to Eligible Employees.

27

3108-01/697974_1

PROXY FORM

APPOINTMENT OF PROXY ZYL LIMITED ACN 008 720 223

ANNUAL GENERAL MEETING

I/We of

==> picture [425 x 19] intentionally omitted <==

==> picture [424 x 19] intentionally omitted <==

being a member of ZYL Limited entitled to attend and vote at the General Meeting, hereby

Appoint

==> picture [425 x 18] intentionally omitted <==

Name of proxy

OR the Chair of the General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the General Meeting to be held at 10.00 am (WST), on 20 February 2012 at The Melbourne Hotel, 945 Hay Street, Perth Western Australia, and at any adjournment thereof.

==> picture [24 x 15] intentionally omitted <==

If the Chair of the General 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 Resolution 2 to 5 please place a mark in this box.

By marking this box, you acknowledge that the Chair of the General Meeting may exercise your proxy even if he has an interest in the outcome of Resolutions 2 to 5 and that votes cast by the Chair of the General Meeting for Resolutions 2 to 5 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 Chair will not cast your votes on Resolutions 2 to 5 and your votes will not be counted in calculating the required majority if a poll is called on Resolutions 2 to 5.

If no directions are given, the Chair will vote in favour of all the Resolutions in which the Chair is entitled to vote undirected proxies.

OR

Voting on Business of the General Meeting FOR AGAINST ABSTAIN Resolution 1 – Amendment to Employee Share Plan Resolution 2 – Issue of Shares to Mr Ian Benning Resolution 3 – Issue of Shares to Mr Phillipe Lalieu Resolution 4 – Issue of Shares to Mr Bevan Tarratt Resolution 5 – Amendment to the Terms of Plan Shares Previously Issued to Ian Benning Under The Employee Share Plan

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

If two proxies are being appointed, the proportion of voting rights this proxy represents is

%

Signature of Member(s): Date: ____ Individual or Member 1 Member 2 Member 3 Sole Director/Company Secretary Director Director/Company Secretary

Contact Name: _____ Contact Ph (daytime): _________

28

3108-01/697974_1

ZYL LIMITED ACN 008 720 223

Instructions for Completing ‘Appointment of Proxy’ Form

1.

( Appointing a Proxy ): A member entitled to attend and vote at an Annual General Meeting is entitled to appoint not more than two proxies to attend and vote on a poll on their behalf. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.

( Direction to Vote ): A member may direct a proxy how to vote by marking one of the boxes opposite each item of business. Where a box is not marked the proxy may vote as they choose. Where more than one box is marked on an item the vote will be invalid on that item.

3. ( Signing Instructions ):

• ( Individual ): Where the holding is in one name, the member must sign.

• ( Joint Holding ): Where the holding is in more than one name, all of the members should sign.

• ( Power of Attorney ): If you have not already provided the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.

• ( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held.

• ( Attending the Meeting ): Completion of a Proxy Form will not prevent individual members from attending the Annual General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the Annual General Meeting in person, then the proxy’s authority to speak and vote for that member is suspended while the member is present at the Annual General Meeting.

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

• (a) post to ZYL Limited, PO Box 255, West Perth 6872; or

• (b) facsimile to the Company on facsimile number +61 8 9486 4799,

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

Proxy forms received later than this time will be invalid.

29

3108-01/697974_1