PREDICTIVE DISCOVERY LIMITED — AGM Information 2012

Oct 18, 2012

ABN 11 127 171 877 Level 2, 9 Colin Street WEST PERTH WA 6005 PO Box 1710 West Perth WA 6872 p (08) 9216 1000 f (08) 9481 7939 w www.predictivediscovery.com

Predictive Discovery Limited ACN 127 171 877

NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY MEMORANDUM

A PROXY FORM IS ENCLOSED

The Annual General Meeting of Shareholders of Predictive Discovery Limited

will be held at 2pm (Melbourne time) on Monday 26 November 2012

at level 17, 530 Collins Street, Melbourne.

If you are unable to attend the Annual General Meeting of Shareholders you may complete and return the enclosed proxy form or vote online in accordance with the specified directions.

These papers should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional adviser without delay.

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ACTION REQUIRED BY SHAREHOLDERS

Step 1: Read the Notice and Explanatory Memorandum

The Explanatory Memorandum sets out details of the Resolutions to be voted on at the Annual General Meeting. This information is important. You should read this document carefully and if necessary seek independent advice on any aspects about which you are not certain.

Step 2: Vote on the Resolutions

Your vote is important. The Annual General Meeting is scheduled to be held at 2pm (Melbourne time) on Monday 26 November 2012 at level 17, 530 Collins Street, Melbourne.

If you cannot attend the Annual General Meeting in person and wish to vote on some or all of the Resolutions, you can lodge your completed proxy form by:

• mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;

• emailing it to Ian Hobson (Company Secretary) at ianhobson@bigpond.com;

• by facsimile to (08) 9481 7939; or

• hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth WA 6005,

by 5pm (Melbourne time) on 24 November 2012.

Please refer to the enclosed proxy form for more information about submitting proxy voting instructions.

Questions

If you have any questions about any matter contained in the Notice of Meeting or the attached Explanatory Memorandum, please contact Ian Hobson (Company Secretary) on +61 8 9388 8290.

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NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Annual General Meeting of the Shareholders of PREDICTIVE DISCOVERY LIMITED will be held at the following time and place:

Time: 2pm (Melbourne time)

Date: 26 November 2012

Place: Level 17 530 Collins Street Melbourne, Victoria 3000

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AGENDA

Information on each of the following resolutions is set out in the attached Explanatory Memorandum which forms part of this Notice.

1. Annual Financial Statements

To receive and consider the annual Financial Report, together with the Directors’ and Auditor’s Reports, for the year ending 30 June 2012.

2. Resolution 1 – Adoption of Remuneration Report (non-binding resolution)

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

“That the Remuneration Report (which is contained in the Company’s 2012 Annual Report) for the financial year ended 30 June 2012 be adopted.”

Note: This resolution is advisory only and does not bind the Directors or the Company.

3. Resolution 2 – Re-election of Director

ordinary resolution:

“That, Robert Danchin, who retires in accordance with Article 20.3 of the Company’s Constitution, be re-elected as a Director of the Company.”

4. Resolution 3 – Ratification of prior issues of 542,590 Shares

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

“That for the purposes of Listing Rule 7.4, and all other purposes, Shareholders ratify and approve the issue by the Company of 542,590 Shares to Somika SARL, on the terms and conditions set out in the Explanatory Memorandum.”

5. Resolution 4– Approval of additional 10% capacity to issue shares

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

“That for the purpose of ASX Listing Rule 7.1A and for all other purposes, Shareholders approve the Company having the additional capacity to issue equity securities up to 10% of the issued capital of the Company, calculated in accordance with the formula set out in ASX Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Statement.”

6. Resolution 5 – Issue of Options to Mr Paul Roberts

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Paul Roberts (or his nominee) of 1,700,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

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7. Resolution 6 – Issue of Options to Mr Phillip George Harman

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Phillip George Harman (or his nominee) of 900,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

8. Resolution 7 – Issue of Options to Dr Robert Danchin

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Dr Robert Danchin (or his nominee) of 600,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

9. Resolution 8 – Issue of Options to Dr Thomas Whiting

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Dr Thomas Whiting (or his nominee) of 600,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

10.Resolution 9 - Issue of Options to Mr Phil Henty

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Phil Henty (or his nominee) of 600,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

Voting prohibitions

Under the Corporations Act, the following persons are prohibited from voting on the respective Resolutions:

Resolution

Personsprohibited from voting

Resolution 1(Adoption of Remuneration Report)

A vote must not be cast (in any capacity) by or on behalf of the following persons: (a) a member of the key management personnel whose remuneration details are included in the Remuneration Report; or (b) a closely related party of such a member. However, a person described above may cast a vote on Resolution 1 if the vote is not cast on behalf of a person described paragraphs (a) and (b) above and the person: (c) does so as aproxyappointed bywritingthat

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		specifies how the proxy is to vote on the relevant resolution; or (d) the voter is the Chairman of the Meeting and the appointment of the Chairman as proxy: i. does not specify the way proxy is to vote on the resolution; and ii. expressly authorises the Chairman to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.
	Resolution 5(Issue of Options to Paul Roberts) Resolution 6(Issue of Options to Phillip George Harman) Resolution 7(Issue of Options to Robert Danchin) Resolution 8(Issue of Options to Thomas Whiting) Resolution 9(Issue of Options to Phil Henty)	A person appointed a proxy must not vote on the basis of that appointment, if: (a) the proxy is either a member of the Key Management Personnel; or i. a member of the Key Management Personnel; or ii. a closely related party of a member of the Key Management Personnel; and (b) the appointment does not specify the way the proxy is to vote on Resolution 5, 6, 7, 8 or 9 (as relevant). However, the above prohibition does not apply to a particular Resolution if: (c) the proxy is the Chairman of the Meeting; and (d) the appointment expressly authorises the Chairman to exercise the proxy in respect of that Resolution even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

Voting Exclusion Statements

In accordance with the ASX Listing Rules, the Company will disregard any votes on the respective Resolutions cast by or on behalf of the following persons:

Resolution	Persons excluded from voting
Resolution 3 (Ratification of prior issue of shares)	Somika SARL and any of its associates.
Resolution 4(Approval of additional 10%	Aperson,and anyassociate of such aperson,who:

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	capacity to issue shares)	(a) may participate in the issue of equity securities under this Resolution; or (b) obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed, and an associate of such a person. Important note:The persons eligible to participate in a proposed issue (if any) under Listing Rule 7.1A were not known by the Company at the date of the Notice of Meeting. Accordingly, no Shareholders are currently excluded from voting on Resolution 4.
	Resolution 5 (Issue of Options to Paul Roberts)	Mr Paul Roberts and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Paul Roberts or thosepersons.
	Resolution 6 (Issue of Options to Phillip George Harman)	Mr Phillip Harman and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr PhillipHarman or thosepersons.
	Resolution 7 (Issue of Options to Robert Danchin)	Dr Robert Danchin and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Dr Robert Danchin or thosepersons.
	Resolution 8 (Issue of Options to Thomas Whiting)	Dr Thomas Whiting and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Dr Thomas Whitingor thosepersons.
	Resolution 9 (Issue of Options to Phil Henty)	Mr Phil Henty and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Phil Hentyor thosepersons.

However, the Company need not disregard a vote on Resolution 3, 4, 5, 6, 7, 8, or 9 if it is cast by a person as a proxy for the 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.

Important information concerning proxy votes on Remuneration related Resolutions 1, and 5 to 9

The Corporations Act prohibits Key Management Personnel and their Closely Related Parties from voting on resolutions connected directly or indirectly with the remuneration of a member of Key Management Personnel. Accordingly, the Company’s Key Management Personnel and their Closely Related Parties, are prohibited from voting on Resolution 1 to adopt the Company’s Remuneration Report.

However, a member of Key Management Personnel, or a Closely Related Party of such a member, may cast a vote on Resolution 1 and Resolutions 5 to 9 if:

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• they do so as a proxy appointed in writing that specifies how the proxy is to vote on the proposed resolution; and

• the vote is not cast on behalf of a member of Key Management Personnel, or a Closely Related Party.

Undirected proxies held by Key Management Personnel or their Closely Related Parties will not be voted on Resolution 1.

If you appoint the Chairman as your proxy (whether intentionally or by default) you can direct the Chairman of the meeting to vote for, against or abstain from voting on Resolution 1 and Resolutions 5 to 9 by marking the appropriate box on the proxy form, under the heading ‘Voting on Business of the Annual General Meeting’.

If you appoint the Chairman as your proxy (whether intentionally or by default) and do not direct the Chairman how to vote in respect of Resolutions 1 and Resolutions 5 to 9, the express authorisation contained in your proxy form directs and authorises the Chairman to vote your proxy in favour of Resolution 1 and Resolutions 5 to 9. The express authorisation contained in your proxy form acknowledges that the Chairman may vote your proxy in favour of Resolution 1 and Resolutions 5 to 9, even though it is connected directly or indirectly with the remuneration of a member of the Key Management Personnel for the Company.

Explanatory Memorandum

Shareholders are referred to the Explanatory Memorandum accompanying and forming part of this Notice of Annual General Meeting. Terms defined in the Explanatory Memorandum and used in the Notice of Annual General Meeting have the same meaning as in the Explanatory Memorandum.

Determining who holds shares for the purpose of the Annual General Meeting

It has been determined that under Corporations Regulation 7.11.37, for the purposes of this Annual General Meeting, Shares will be taken to be held by the persons who are the registered holders at 7.00pm (Melbourne time) on 24 November 2012. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Annual General Meeting.

Proxies

Each Shareholder who is entitled to attend and vote has a right to appoint a proxy, and if a Shareholder is entitled to cast two or more votes that Shareholder may appoint 2 proxies. If a Shareholder appoints 2 proxies, the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints two proxies and the appointment does not specify the proportion or number of votes, each proxy may exercise one half of the Shareholder’s votes. A proxy need not be a Shareholder of the Company.

In accordance with section 250BA of the Corporations Act, Shareholders are advised that the proxy forms must be received by:

• mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;

• emailing it to Ian Hobson (Company Secretary) at ianhobson@bigpond.com;

• by facsimile to (08) 9481 7939; or

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• hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth WA 6005,

by no later than 7pm (Melbourne time) on 24 November 2012.

An instrument appointing a proxy must be in writing under the hand of the appointor or of the appointor’s attorney duly authorised in writing or, if the appointer is a body corporate, by a director jointly with either another director or company secretary or if the company has only a sole director by the sole director, or by the company’s duly authorised attorney.

Corporate Representatives

Any corporate Shareholder wishing to appoint a person to act as its representative at the Meeting may do so by providing that person with:

• a letter or certificate executed in accordance with section 250D of the Corporations Act authorising that person to act as the corporate Shareholder's representative at the Meeting; or

• a copy of the resolution appointing that person as the corporate Shareholder's representative at the Meeting, certified by a secretary or director of the corporate Shareholder.

Voting by proxies

Shareholders are encouraged to direct their proxy as to how to vote on all resolutions, by marking the appropriate box on the proxy form, under the heading ‘Voting on Business of the Annual General Meeting’.

Recent changes to the law have impacted on the way proxies vote at company meetings. Broadly, these changes include that:

• if a proxy holder votes, they must cast all directed proxies as directed; and

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

The Chairman will vote all undirected proxies in favour of all Resolutions.

Key Dates

Event	Date
Determination of voting eligibility	7.00pm (Melbourne time) on 24 November 2012
Deadline for lodgement of proxy forms	7.00 pm (Melbourne time) on 24 November 2012
Annual General Meeting	2 pm (Melbourne time) on 26 November 2012
Dated 18 October 2012

By Order of the Board

Ian Hobson Company Secretary

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EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of Annual General Meeting of the Company.

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

The Directors of the Company recommend Shareholders read this Explanatory Memorandum in full before making any decision in relation to the Resolutions. If you have any questions regarding the matters set out in this Explanatory Memorandum or the preceding Notice, please contact your accountant, solicitor or other professional adviser.

Agenda Item 1 – Annual Financial Statements

The Corporations Act requires that the Financial Report, Directors’ Report and the Auditor’s Report ( Annual Financial Statements ) be tabled at the Annual General Meeting.

No vote will be taken on the Annual Financial Statements. However, Shareholders will be given the opportunity to ask questions about, or make comments on the Annual Financial Statements.

As a Shareholder, you are entitled to submit a written question to the Company’s auditor, Nexia ASR ( Auditor ), prior to the Annual General Meeting provided that the question relates to:

• the content of the Auditor’s Report; or

• the conduct of the audit in relation to the Financial Report.

All written questions must be received by the Company no later than 5pm (Melbourne time) on 21 November 2012.

All questions must be sent to the Company’s registered office at Level 2, 9 Colin Street, West Perth WA 6005, and may not be sent to the auditor directly. The Company will then forward all questions to the Auditor.

The Auditor will be present at the Meeting and Shareholders will have the opportunity to ask the Auditor questions in relation to the conduct of the audit, the Auditor’s Report, the Company’s accounting policies, and the independence of the Auditor.

Agenda Item 2 - Resolution 1 – Adoption of Remuneration Report

Section 298 of the Corporations Act requires the annual Directors’ Report to contain a Remuneration Report prepared in accordance with section 300A of the Corporations Act.

By way of summary, the Remuneration Report:

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• discusses the Company’s policy and the process for determining remuneration of its executive officers and employees;

• addresses the relationship between the remuneration of the Company’s executive officers and the performance of the Company; and

• sets out remuneration details for each Director and each of the executive officers of the Company named in the Remuneration Report for the financial year ended 30 June 2012.

In accordance with section 250R(2) of the Corporations Act, the Company is required to put a resolution to its members that the Remuneration Report as disclosed in the 2012 Annual Report be adopted. Pursuant to section 250R(3) of the Corporations Act, Shareholders should note that Resolution 1 is advisory only and does not bind the Directors or the Company.

A reasonable opportunity will be provided for discussion of the Remuneration Report at the Annual General Meeting.

Recent changes to the Corporations Act, provide that if 25% or more of votes that are cast are voted against the adoption of the Remuneration Report at two consecutive Annual General Meetings, Shareholders will be required to vote at the second of those Annual General Meetings on a resolution (a “spill resolution”) that another meeting be held within 90 days at which all of the Company’s Directors (other than the managing director) who were in office at the date of the approval of the applicable Directors’ Report must stand for re-election.

If you intend to appoint a member of the Company’s Key Management Personnel (including any Director of the Company or the Chairman) or their Closely Related Parties as your proxy, please refer to the important information contained in the Notice of Meeting under the heading “Important information concerning proxy votes on Resolution 1”.

Voting Exclusion

A voting exclusion statement for Resolution 1 is included in the Notice of Meeting.

Agenda Item 3 – Resolution 2 – Re-election of Director

Article 20.3 of the Company's Constitution requires that at least one Director must retire from office at each Annual General Meeting. Accordingly, Robert Danchin retires by rotation in accordance with the Company's Constitution and, being eligible, seeks re-election.

Mr Danchin has over 40 years of experience in the exploration industry. He has a detailed understanding of the global mineral exploration business, and is a recognised and respected figure in the African mineral exploration community.

Mr Danchin formerly served as Chief Executive Officer of the Exploration and Acquisition Division at Anglo-American PLC, where he was an active supporter of the development of the PredictoreTM technology. He is currently a Non-Executive Director of Cluff Gold plc and Mineral Deposits Limited, both of which have recently brought gold mines into production in West Africa. Mr Danchin was also formerly Non-Executive Chairman of Gravity Diamonds Ltd and was a member of Gravity’s Audit Committee. He was also a Non-Executive Director of Ridge Mining Plc and Gold Mines of Algeria Plc.(GMA).

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Mr Danchin is a geologist and chemist and was a member of the Australian CSIRO Mining Resources Sector Advisory Council and a member of the AMIRA Board. He holds a diploma in Business Administration from the University of South Africa.

Directors’ Recommendation

The Directors, other than Robert Danchin, recommend Shareholders vote in favour of Resolution 2.

Agenda Item 4 - Resolution 3 – Ratification of prior issue of 524,590 Shares

Acquisition consideration for the Bangaba Gold Project

On 1 March 2011 the Company announced the acquisition of the Bangaba Gold Project in Burkina Faso. The terms of that acquisition and the benefits to the Company are set out in that announcement.

On 1 March 2012, 524,590 Shares were allotted to the vendor of the Bangaga Gold Project, Somika SARL, as part consideration for the acquisition. The placement of 524,590 Shares to Somika SARL was at an issue price of $0.1906, being consideration of $100,000( Placement ).

Shareholder approval

Subject to certain exceptions, Listing Rule 7.1 provides that a company may not issue more than 15% of its issued capital in any 12 month period without shareholder approval. Listing Rule 7.4 provides that an issue of securities made without approval under Listing Rule 7.1 will be treated as having been made with shareholder approval for the purposes of Listing Rule 7.1 if shareholders subsequently ratify it and the issue did not breach Listing Rule 7.1.

The issue of 524,590 Shares described above has been completed and were issued within the 15% limit permitted by Listing Rule 7.1. However, without Shareholder approval pursuant to Listing Rule 7.4, the issues will be counted towards the Company's 15% capacity and will therefore reduce the Company’s capacity to issue Shares in the future without obtaining Shareholder approval.

Accordingly, approval is sought from Shareholders to allow the Company to refresh its 15% capacity and maximise its ability to issue further Shares up to the 15% limit without obtaining Shareholder approval.

Specific disclosure required in accordance with Listing Rule 7.5

Listing Rule 7.5 requires the following information to be provided to Shareholders :

Acquisition consideration for the Bangaba Gold Project

Number of Shares	524,590 Shares.
allotted
Issue price of each	Part consideration for the acquisition of the Bangaba Gold Project
Share	pursuant to an agreement summarised in an announced to ASX on 1
	March 2011.
Terms of the issue	The shares are fully paid ordinary shares and are on the same terms
	as existing fully paid ordinary shares in the Company.

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Allottee	Somika SARL, the vendor of the Bangaba Gold Project.
Use or intended	The Shares issued were consideration for the acquisition of the
use of the funds	Bangaba Gold Project.
raised

Voting Exclusion

A voting exclusion statement for Resolution 3 is included in the Notice of Meeting.

Directors’ Recommendation

The Directors recommend Shareholders vote in favour of Resolution 3.

Agenda Item 5 - Resolution 4 – Approval of additional 10% capacity to issue shares

Listing Rule 7.1

ASX Listing Rule 7.1 allows the Company to issue equity securities up to 15% of its issued share capital, in any 12 month period, without obtaining Shareholder approval ( 15% Share Issue Capacity ).

Listing Rule 7.1A

In accordance with new Listing Rule 7.1A, Eligible Entities may seek shareholder approval at an annual general meeting to issue a further 10% of their issued share capital in addition to the 15% Share Issue Capacity ( 10% Share Issue Capacity ).

For the purposes of Listing Rule 7.1A, the Company is an Eligible Entity.

Any issue of securities under ASX Listing Rule 7.1A must be:

• in the same class as an existing quoted class of the Company’s equity securities;

• issued at a maximum of 25% discount to the current market price; and

• calculated in accordance with the formula prescribed by ASX Listing Rule 7.1A.2.

Effect of Resolution 4

In Resolution 4, the Company seeks Shareholder approval to have the ability to issue securities under the 10% Share Issue Capacity.

The effect of Resolution 4 will be to provide the Company with greater flexibility to issue securities above the 15% Share Issue Capacity, without obtaining Shareholder approval.

Technical information required by ASX Listing Rule 7.3A

In accordance with ASX Listing Rule 7.3A, the Company provides the following information for the purpose of obtaining shareholder approval under Resolution 4.

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1. Minimum price at which equity securities may be issued

• The minimum price at which shares may be issued under the 10% Share Issue Capacity is 75% of the volume weighted average price of equity securities in the same class calculated over the 15 ASX trading days on which trades in that class were recorded immediately before:

• (a) the date on which the price of the securities to be issued is agreed; or

• (b) if they are not issued within 5 ASX trading days of the date in paragraph (a), the ASX trading day prior to the date on which the securities are issued.

2. Date on which If shareholder approval of Resolution 4 is obtained, shares may be Company may issue issued under the 10% Share Issue Capacity during the period equity securities commencing on the date of the Annual General Meeting and ending on the first to occur of the following:

• (a) 12 months after the date of the Annual General Meeting; and

• (b) the date of Shareholder approval for any transaction under ASX Listing Rules 11.1.2 (significant change to the nature or scale of the Company’s activities) or 11.2 (disposal of the Company’s main undertaking).

3. Purposes for which equity securities may be issued, including whether the Company may issue them for non-cash consideration

• (a) Shares may be issued under the 10% Share Issue Capacity for the following purposes:

  • (i) non-cash consideration for the acquisition of the new resources assets and other investments. If this occurs, the Company will provide a valuation of the non-cash consideration in accordance with ASX Listing Rule 7.1A.3; or

  • (ii) cash consideration. If this occurs, the Company intends to use the funds raised to continue exploration and feasibility studies on the Company’s current assets, to acquire new assets or investments or for working capital purposes. It is most likely envisaged the requirement for funds from any potential placement would be used towards the funding of drilling program and exploration programs at the company's eastern Burkina Faso on the Bangaba permit and Bonsiega permit groups.

• (b) The Company will comply with its disclosure obligations under ASX Listing Rules 7.1A.4 and 3.10.5A in relation to any issue of securities under the 10% Share Issue Capacity.

4. Details of the (a) The Company’s allocation policy will depend on the prevailing Company’s allocation market conditions at the time of any proposed issue under the policy for issues 10% Share Issue Capacity. under approval

• (b) The identity of allottees under the 10% Share Issue Capacity will be determined on a case-by-case basis having regard to factors which may include:

  • (i) the methods of raising funds which are available to the Company including the time and market exposure associated

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with the various methods of raising capital applicable at the time of the raising;

  - (ii) the effect of any such issue on the control of the Company;

  - (iii) the financial situation of the Company; and

  - (iv) advice from corporate, financial and broking advisers.

• (c) As at the date of this Notice, the allottees under the 10% Share Issue Capacity have not been determined. They may, however, include substantial Shareholders and/or new Shareholders who are not related parties or associates of a related party of the Company.

5. Previous approvals The Company has not previously sought or obtained Shareholder under Listing Rule approval under ASX Listing Rule 7.1A. 7.1A

6. Risk of economic and If Resolution 4 is approved by Shareholders and securities are issued voting dilution under the 10% Share Issue Capacity:

• (a) the interests of Shareholders who do not receive securities under the 10% Share Issue Capacity will have their voting power diluted by the reduction in the percentage of shares held by the Shareholder as a proportion of the shares on issue.

• (b) the value of the interests of Shareholders who do not receive securities under the 10% Share Issue Capacity may be diluted if shares are issued at a price which represents a discount to their value before the issue is made.

• (c) Shareholders should note that there is a risk that:

  • (i) the market price for the shares at the time they are issued under the 10% Share Issue Capacity may be materially higher or lower than on the date of the Annual General Meeting; and

  • (ii) shares may be issued under the 10% Share Issue Capacity at a price that is at a discount to the market price for those shares on the date of their issue.

• (c) As the ASX Listing Rules require, the tables below show the potential dilution of Shareholders of the Company in various hypothetical scenarios.

Hypothetical example:

By way of example only, the theoretical impact of issuing the full amount of the 10% Share Issue Capacity at a range of prices is demonstrated below.

The number of new shares issued if the full 10% capacity is used is 13,681,751.

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Premium/discount to market value	Issue price	Amount raised
10% premium	$0.066	$902,995.59
no premium/ discount	$0.06	$820,905.08
10% discount	$0.054	$738,814.57
This table assumes that: • the issued capital prior to the issue under the 10% Share Issue Capacity is the current issued capital - 136,817,513 Shares • the market value of a share on the date of issue is the same as the closing ASX price on 5 October 2012 of $0.06 • that shares are issued for cash and there is no other impact of the fundraising other than to increase cash reserves; and • no other securities are issued prior to the issue under the 10% Share Issue Capacity. For example a shareholder holding a 20% interest in a company who does not participate in an issue of 10% of the capital at a 10% discount, will: • have his voting power diluted by 9.09% which equates to a change of voting power of 1.82% to 18.18% • have the value of the shareholding reduced by 0.909% which equates to a reduction in value of $14,734.64 • assuming that the there are no other effects of the capital raising on the value of the company.
Effect of change in capital structure and market price The 10% Share Issue Capacity is calculated at the time of issue of securities and so may be effected by any changes in capital structure prior to the new issue occurring. By way of example, the impact of changes in the capital structure on the amount which can be raised and the number of shares which maybe issued under 10% Share Issue Capacityis shown below
% Increase in Share Capital prior to issue	Increased share capital prior to new issue	Hypothetical market value
50% increase	205,226,270	$0.03
50% increase	205,226,270	$0.06
100% increase	273,635,026	$0.03
100% increase	273,635,026	$0.06
Note that the percentage dilution of voting power and economic interest as a result of the issue of additional shares under the 10%Share Issue Capacity is dependent on the number of shares issued and the issue price for the issue of those shares under the 10% Share Issue Capacity. This is demonstrated in the hypothetical example above.

Voting Exclusion statement

A voting exclusion statement for Resolution 4 is included in the Notice of Meeting.

At the date of the Notice of Meeting:

• the Company had not approached any existing Shareholder or class of security holders in relation to the proposed 10% Share Issue; and

• in accordance with Listing Rule 14.11.1, the persons eligible to participate in a proposed issue (if any) under Listing Rule 7.1A were not known by the Company.

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Accordingly, no Shareholders are currently excluded from voting on Resolution 5.

Directors’ recommendation

The Directors recommend that Shareholders vote in favour of Resolution 5.

Agenda Items 6 - 10 - Resolutions 5 to 9 – Issue of Options to Directors

Resolutions 5, 6, 7, 8 and 9 seek Shareholder approval for the grant of Options to each of Mr Paul Roberts, Mr Phillip Harman, Dr Robert Danchin, Dr Thomas Whiting and Mr Phil Henty on the terms and conditions set out in Annexure A to this Notice (together the Director Options ).

These Director Options are being granted in consideration for each Director agreeing to forgo his individual entitlement to director fees or, in the case of Mr Paul Roberts, a reduction in his annual salary of $70,000 for the period beginning August 2012 to 31 December 2012. The Board will reassess these arrangements following that period.

Save for the proposed exercise price and expiry date of the Director Options (which are 1.4 times the share price on the grant date and 30 November 2015 respectively), the Director Options will be on the same terms as the options issued to shareholders who participated in the recent rights issue.

The initiative to forgo existing cash remuneration entitlements is designed to equate to a cash saving for the Company of approximately $93,750 at a time when preserving cash resources are important for the Company’s ongoing development. Based on the valuation set out in Annexure B , the value of the Director Options to be issued equates to $67,236 and thus in the view of the Directors represents reasonable remuneration for their ongoing services.

In coming to this decision, each Director has individually considered his own personal circumstances before accepting the Company’s offer and did not participate in any discussion concerning the number of Director Options to be issued to him.

As the proposal effectively replaces existing agreed remuneration, the Directors consider it to be

Requirement to obtain Shareholder approval

Shareholders are being asked to consider the issue of the Director Options for the purposes of ASX Listing Rule 10.11 and for all other purposes.

ASX Listing Rule 10.11 requires the Company to obtain Shareholder approval in order to grant Options to a related party (unless an exception applies).

Information provided for the purpose of obtaining Shareholder approval

In accordance with ASX Listing Rule 10.13, the following information is provided to Shareholders for the purpose of obtaining Shareholder approval to Resolutions 5 – 9:

• (a) A total of 4,400,000 Director Options will be granted to the Directors as follows:

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Director	Number of Options
Mr Paul Roberts	1,700,000
Mr PhillipHarman	900,000
Dr Robert Danchin	600,000
Dr Thomas Whiting	600,000
Mr Phil Henty	600,000

• (b) The Director Options will be granted no later than 1 month after the date of the AGM (or such later date as permitted by ASX waiver or modification of the ASX Listing Rules) and it is anticipated that the Director Options will be issued on the same date.

• (c) Each Director Option will be granted in consideration for each Director agreeing to forgo his existing contractual entitlement to directors fees or, in the case of Paul Roberts, a reduction in his annual salary by $70,000 for a period of 5 months ending on 31 December 2012.

• (d) Each Director Option will entitle the holder to subscribe and be allotted one Share at an exercise price of 1.4 times the share price on the day of issue (which is expected to be immediately following the AGM) and are exercisable on or before 30 November 2015.

• (e) The full terms of the Options are set out in Annexure A .

• (f) No funds will be raised from the grant of Director Options although in issuing the Director Options the Company will save some $93,750 is cash through the forgone salary entitlements. Any funds raised from the exercise of the Director Options will be used for general working capital purposes.

• (g)

• The Director Options are not transferable.

• (h) The Director Options will not entitle the holder to any dividends declared or issued by the Company.

• (i) As at the date of this Notice of Meeting to which this Explanatory Memorandum relates, Mr Roberts, Mr Harman, Dr Danchin, Dr Whiting and Mr Henty held the following interests in securities of the Company:

Director	Number of Shares		Number of Options
Mr Paul Roberts	3,570,500		1,825,000
Mr PhillipHarman	2,345,626		1,095,469
Dr Robert Danchin	Nil		600,000
Dr Thomas Whiting	1,265,626		705,469
Mr Phil Henty	8,429,688		1,226,563

• (j) The total remuneration and emoluments from the Company to Mr Roberts, Mr Harman, Dr Danchin, Dr Whiting and Mr Henty for the previous financial year ending 30 June 2012 and the

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proposed remuneration and emoluments for the current financial year ending 30 June 2013 (excluding the value of the Director Options the subject of Resolutions 5 to 9) are set out below:

Director	Financial Year ended 30 June 2012
Mr Paul Roberts	$248,846
Mr PhillipHarman	$50,001
Dr Robert Danchin	$35,000
Dr Thomas Whiting	$35,000
Mr Phil Henty	$35,000

• (k) The value of the Directors Options and the pricing methodology is set out in Annexure B .

• (l) If the Director Options proposed to be granted are exercised, a total of 4,400,000 Shares would be allotted and issued. This will increase the number of Shares on issue from 136,817,513 to 141,217,513 (assuming that no other Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 3.1%.

• (m) If, at any time any of the Director Options are exercised and the Shares are trading at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company.

• (n) There are no significant opportunity costs to the Company or benefits foregone by the Company in issuing the Director Options on the terms proposed. Mr Roberts, Mr Harman, Dr Danchin, Dr Whiting and Mr Henty must each contribute their own money to the Company to fund the exercise price of the Director Options.

• (o) The trading history of the Shares on ASX in the 12 months before the date of the Notice of Meeting to which this Explanatory Memorandum relates is set out below:

	Price	Date
Highest	A$0.215	20 March 2012
Lowest	A$0.051	11 October 2012
Last	A$0.055	18 October 2012

• (p) Australian International Financial Reporting Standards require the Director Options to be expensed which is guided by AASB 2 – Share Based Payments . In accordance with AASB 2, these Director Options will be expensed in the financial year ended 30 June 2013. Expensing the Director Options will have the effect of increasing both the expenses and contributed equity of the Company. Whilst there will be a reduction in profit, there will be no impact on the net assets or the cash position or financial resources of the Company as a result of expensing the Director Options. There are no tax implications for the Company in issuing these Director Options.

• (q) The primary purpose of the grant of the Director Options Mr Roberts, Mr Harman, Dr Danchin,

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Dr Whiting and Mr Henty is not to raise capital, but to form part of their remuneration package and to save cash resources for the Company.

• (r) The Company acknowledges that the grant of the Director Options to non-executive Directors is contrary to Recommendation 8.2 of the ASX Corporate Governance Principles and Recommendations. However, the Director Options are proposed to form part of the Directors’ respective remuneration packages in lieu of cash payments.

• (s) A Voting Exclusion Statement in respect of each of Resolutions 5, 6, 7, 8 and 9 is included in the Notice of Meeting.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to Mr Roberts, Mr Harman, Dr Danchin, Dr Whiting and Mr Henty as approval is being sought under ASX Listing Rule 10.11. Accordingly, the issue of the Director Options, if approved by Shareholders, will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

Directors’ recommendation

• (a) Each Director abstains from providing a recommendation in respect of the resolution that proposes an issue of Director Options to him. This is because of the potential for there be a perceived interest that he may have in the outcome of that resolution.

• (b) For the reasons set out above (including that the proposed resolutions deliver cash savings to the Company and represent a modification of existing remuneration already due and owing to Directors), each remaining Director recommends shareholder approve the issue of Director Options to the named Director.

Additional Information

Shareholders should contact the Company Secretary on +61 8 9388 8290 if they have any queries in respect of the matters set out in these documents.

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GLOSSARY

• $ means Australian dollars, unless otherwise stated.

AGM or Meeting means the annual general meeting convened by the Notice.

ASX means ASX Limited.

Board means the Company’s Board of Directors.

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 who may be expected to influence the member or be influenced by the member in the member’s dealings with the Company;

• e) a company the member controls; or

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

Company means Predictive Discovery Limited (ACN 127 171 877).

Corporations Act means the Corporations Act 2001 (Cth) .

Director means a director of the Company from time to time.

Eligible Entities means in relation to ASX Listing Rule 7.1A, companies that are outside the S&P/ASX 300 Index, that also have a market capitalization of $300 million or less.

Explanatory Memorandum means this Explanatory Memorandum attached to the Notice of Meeting.

Listing Rules means the Official Listing Rules of ASX.

Key Management Personnel has the same meaning as in the accounting standards. Broadly speaking this includes those persons with the authority and responsibility for planning, directing and controlling the activities of the Company (whether directly or indirectly), and includes any Directors of the Company.

Notice , Notice of Meeting or Notice of Annual General Meeting means the notice of meeting which forms part of this Explanatory Memorandum.

Option means an option which, if vested and exercised, will entitle the holder to subscribe for a Share.

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

S&P means Standard and Poor’s Financial Services LLC

Shareholder means a holder of Shares.

Share means a fully paid ordinary share in the Company.

WST means Western Standard Time, Australia.

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ANNEXURE A – TERMS AND CONDITIONS OF DIRECTORS OPTIONS

The terms and conditions of the Director Options are as follows:

1. Each Director Option entitles the holder to subscribe for one Share upon exercise of the Option and payment of the Exercise Price (defined below).

2. Each Director Option is exercisable at 1.4 times the price of Shares on the date of the grant of the Director Option ( Exercise Price ), payable in full on exercise of the Director Option.

3. The Director Options automatically expire at 5.00 pm AWST on 30 November 2015 ( Expiry Date ).

4. The Director Options will not be quoted on ASX.

5. The Company must give the holder of each Director Option a certificate or holding statement stating:

6. a. the number of Director Options issued to each holder;

7. b. the Exercise Price of the Director Options; and

8. c. the date of issue of the Director Options.

9. Holders may exercise the Director Options at any time up to the Expiry Date. Any Director Option not exercised, automatically expires on the Expiry Date.

10. Director Options may only be exercised during the hours of 8.30am to 5.00pm AWST (Business Hours) by the delivery to the registered office of the Company or the Share Registry of a notice in writing stating the intention of the holder to:

11. a. exercise all or a specified number of the Director Options; and

12. b. pay the Exercise Price in full for the exercise of each such Director Option.

13. A notice in writing received outside of Business Hours will be deemed received at the next opening of Business Hours.

14. The exercise notice must be accompanied by the certificate or holding statement for the options being exercised and a cheque made payable to the Company for the Exercise Price for the Director Options being exercised.

15. The Director Options will be deemed to have been exercised on the date the exercise notice is received or deemed to be received by the Company or the Share Registry.

16. The Company will allot the Shares to which a holder is entitled following exercise of Director Options and deliver a holding statement with respect to such Shares within the timeframe required by the Listing Rules.

17. The exercise of only some Director Options will not affect the rights of the holder to the balance of the Director Options held by them.

18. If the holder of the Director Options exercises less than the total number of Director Options registered in the holder’s name:

19. a. the holder of the Director Options must surrender its option certificate, if one has been issued by the Company; and

20. b. the Company must cancel the certificate and issue the holder of the Director Options a new certificate or holding statement stating the remaining number of Director Options held by the holder and stating the information set out above.

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1. Director Options will not confer an entitlement to receive dividends declared and paid by the Company, nor an entitlement to vote at general meetings of the Company unless the holder of the Director Options has exercised the Director Options before the record date for determining these entitlements and participates as a result of holding Shares.

2. All Shares issued on exercise of an Director Option will:

3. a. rank equally in all respects (including, without limitation, rights relating to dividends) with other issued Shares;

4. b. be issued credited as fully paid;

5. c. be duly authorised and issued by all necessary corporate action; and

6. d. be allotted and issued free from all liens, charges and encumbrances whether known about or not, including statutory and other pre-emption rights and any transfer restrictions.

7. The Company will apply to ASX Limited for official quotation of the Shares issued upon exercise of Director Options within the time period required by the Listing Rules.

8. The Director Options are not transferable.

9. A holder of Director Options does not have the right to participate in bonus issues or new issues of securities offered to Shareholders until Shares are allotted to the holder pursuant to the exercise of the Director Options.

10. In the event of a reorganisation (including, without limitation, consolidation, sub-division, reduction or return) of the capital of the Company, the rights of the holders of Director Options (including, without limitation, the number of Director Options to which the Optionholder is entitled to and the Exercise Price) will be changed (as appropriate) in accordance with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

11. If the Company makes a pro-rata issue (other than a bonus issue) to existing Shareholders and no Share has been issued in respect of the Director Option before the record date for determining entitlements to the issue, the Exercise Price of each Director Option will be reduced in the manner permitted by the Listing Rules applying at the time of the pro-rata issue.

12. If the Company makes a bonus issue to existing Shareholders and no Share has been issued in respect of that Option before the record date for determining entitlements to the issue, then the number of Shares over which that Director Option is exercisable will be increased in the manner permitted by the Listing Rules applying at the time of the bonus issue.

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

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ANNEXURE B – VALUATION OF DIRECTOR OPTIONS

The Director Options to be issued to each of Mr Roberts, Mr Harman, Dr Danchin, Dr Whiting and Mr Henty pursuant to Resolutions 5 to 9 have been valued using a binomial pricing model and based on the following assumptions:

• (a) the Director Options are granted on 26 November 2012, being the proposed date of the Company’s AGM;

• (b) an underlying share price at the grant date of 26 November 2012 of $0.06, being the closing share price of the Company’s Shares on the last trading day prior to conducting this valuation;

• (c) an exercise price of $0.084, being 1.4 times the share price on the grant date in accordance with the terms of the Director Options set out in Annexure A;

• (d) have a maximum life of 3 years (36 months), in accordance with the terms set out in Annexure A;

• (e) an expected future volatility rate of the Company’ Shares of 50%;

• (f) a risk free rate of 3.595%;

• (g) the underlying shares do not pay a dividend, as the Company is not expected to pay a dividend over the life of the Director Options.

The valuation date of the Director Options is 9 October 2012.

Based on above, the Director Options have been valued at $0.0157 each.

The total value of the Director Options to be issued pursuant to Resolutions 5 to 9 is set out below:

Director	Number of Options	Valueper Option	Value
Mr Roberts	1,700,000	$0.0157	$24,751
Mr Harman	900,000	$0.0157	$14,162
Dr Danchin	600,000	$0.0157	$9,441
Dr Whiting	600,000	$0.0157	$9,441
Mr Henty	600,000	$0.0157	$9,441
Total	4,400,000		$67,236

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PROXY FORM

APPOINTMENT OF PROXY PREDICTIVE DISCOVERY LIMITED ACN 127 171 877

ANNUAL GENERAL MEETING

I/We being a member(s) of Predictive Discovery Limited (Company) and entitled to attend and vote at the Annual General Meeting of the Company to be held at 2pm (Melbourne time), on 26 November 2012 at Level 17, 530 Collins Street, Melbourne, hereby appoint:

the Chairman OR if you are NOT appointing the Chairman of the Meeting of the as your proxy, please write the name of the person or Meeting body corporate you are appointing as your proxy (do not (mark box) insert your own name). I/we appoint the Chairman of the Meeting as an alternate proxy to the person named.

If no person/body corporate is named, the Chairman of the Meeting is appointed as my/our proxy and to vote for me/us on my/our behalf at the Meeting and at any adjournment or postponement of the meeting.

I acknowledge that Resolution 1 and Resolutions 5 to 9 relate to the remuneration of key management personnel, and that the Chairman intends to vote any undirected proxies in favour of these Resolutions. I/ we expressly authorise the Chairman of the Meeting to exercise my/our proxy even though such Resolutions are connected directly or indirectly with the remuneration of a member of the key management personnel.

The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

Voting on Business of the Annual General Meeting Resolution 1 – Adoption of Remuneration Report Resolution 2 – Re-election of Director Resolution 3 – Ratification of prior issue of 524,590 Shares Resolution 4 – Approval of 10% capacity to issue securities Resolution 5 – Issue of Director Options to Mr Paul Roberts Resolution 6 – Issue of Director Options to Mr Phillip Harman Resolution 7 – Issue of Director Options to Dr Robert Danchin Resolution 8 – Issue of Director Options to Dr Thomas Whiting Resolution 9 – Issue of Director Options to Mr Phillip Henty

FOR AGAINST ABSTAIN

Please note : If you mark the abstain box for the Resolution, you are directing your proxy not to vote on the 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 Sole Director/Company Secretary Director Contact Name: _____ Contact Ph (daytime): ____	% _____ Member 3
	Director/Company Secretary _____

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Predictive Discovery Limited ACN 127 171 877

Instructions for Completing ‘Appointment of Proxy’ Form

1.

• ( Appointing a Proxy ): A member entitled to attend and vote at the General Meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. If a member appoints only one proxy, that proxy may vote on a show of hands. 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. If a box is not marked the proxy may vote as they choose. If more than one box is marked on an item the vote will be invalid on that item.

• ( 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 General Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the General Meeting in person, then:

• the proxy’s authority to speak for that member is suspended while the member is present at the General Meeting; and

• the proxy’s authority to vote for the member on any resolution is not suspended while the member is present but is revoked by the member voting in person on that resolution.

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

• mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;

• emailing it to Ian Hobson (Company Secretary), at info@predictivediscovery.com;

• by facsimile to (08) 9481 7939; or

• hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth, WA 6005.

• so that it is received not later than 2pm (Melbourne time) on 24 November 2012.

Proxy forms received later than this time will be invalid.

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