RIEDEL RESOURCES LIMITED — Proxy Solicitation & Information Statement 2011

Jun 13, 2011

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Riedel Resources Limited ACN 143 042 022

NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT

General Meeting to be held at The Celtic Club, 48 Ord Street, West Perth on 14 July 2011 commencing at 8.30am (WST).

This Notice of General Meeting and Explanatory Statement should be read in its entirety. If Shareholders are in doubt as to how to vote, they should seek advice from their accountant, solicitor or other professional adviser without delay.

NOTICE OF GENERAL MEETING

Notice is given that a General Meeting of Shareholders of Riedel Resources Limited (ACN 143 042 022) will be held at The Celtic Club, 48 Ord Street, West Perth on 14 July 2011 commencing at 8.30am (WST).

SPECIAL BUSINESS

1. Resolution 1 – Amendment and Approval of Performance Rights 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 the ASX Listing Rule 7.2 (Exception 9) and for all other purposes, approval is given for the Directors to amend the Company’s Performance Rights Plan and to administer and issue securities under the amended Performance Rights Plan as an exception to Listing Rule 7.1 in the manner set out in the Explanatory Statement.”

Voting Exclusion Statement

The Company will disregard any votes cast on Resolution 1 by a Director or any of their associates (except a Director who is ineligible to participate in any employee incentive scheme in relation to the Company).

However, the Company will not disregard a vote if it is cast by a Director or any of their associates as proxy for a person who is entitled to vote in accordance with the directions on the proxy form or if 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 Performance Rights to Jeffrey Moore under Performance Rights Plan

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

“That, subject to Resolution 1 being passed, for the purposes of section 208 of the Corporations Act, ASX Listing Rule 10.14 and for all other purposes, approval is given for the Directors to issue up to a total of 6,000,000 Performance Rights to Jeffrey Moore (or his nominee) pursuant to the Performance Rights Plan on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion Statement

In accordance with Listing Rule 10.15.5 and section 208 of the Corporations Act, the Company will disregard any votes cast on Resolution 2 by Jeffrey Moore or any of his associates.

However, the Company will not disregard a vote if it is cast by Jeffrey Moore or any of his associates as proxy for a person who is entitled to vote in accordance with the directions on the proxy form or if 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.

3. Resolution 3 – Issue of Performance Rights to Bruce Franzen under Performance Rights Plan

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

“That, subject to Resolution 1 being passed, for the purposes of section 208 of the Corporations Act, ASX Listing Rule 10.14 and for all other purposes, approval is given for the Directors to issue up to a total of 2,000,000 Performance Rights to Bruce Franzen (or his nominee) pursuant to the Performance Rights Plan on the terms and conditions set out in the Explanatory Statement.”

Voting Exclusion Statement

In accordance with Listing Rule 10.15.5 and section 208 of the Corporations Act, the Company will disregard any votes cast on Resolution 3 by Bruce Franzen or any of his associates.

However, the Company will not disregard a vote if it is cast by Bruce Franzen as proxy for a person who is entitled to vote in accordance with the directions on the proxy form or if 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.

4. Resolution 4 – Issue of Shares to Zen Magnolia Pty Ltd

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

“That, for the purposes of section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, approval be and is hereby given to the issue of 86,660 Shares to Zen Magnolia Pty Ltd (or its nominee) pursuant to the Advisory Mandate on the terms and conditions as outlined in the Explanatory Statement.”

Voting Exclusion Statement

In accordance with Listing Rule 10.13.6, the Company will disregard any votes cast on Resolution 4 by Zen Magnolia Pty Ltd or any of its associates.

However, the Company will not disregard a vote if it is cast by Zen Magnolia Pty Ltd or any of its associates as proxy for a person who is entitled to vote in accordance with the directions on the proxy form or if 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.

Explanatory Statement

The accompanying Explanatory Statement forms part of this Notice of General Meeting and should be read in conjunction with it.

Resolutions 2 and 3 (inclusive) are subject to and conditional on Resolution 1 being passed. Accordingly, the resolutions should be considered collectively as well as individually.

Shareholders are specifically referred to the Glossary in the Explanatory Statement which contains definitions of capitalized terms used in this notice of General Meeting and the Explanatory Statement.

Proxies

Please note that:

• (a) a Shareholder entitled to attend and vote at the General Meeting is entitled to appoint a proxy;

• (b) a proxy need not be a member of the Company;

• (c) a Shareholder may appoint a body corporate or an individual as its proxy;

• (d) a body corporate appointed as a Shareholder‟s proxy may appoint an individual as its representative to exercise any of the powers that the body may exercise as the Shareholder‟s proxy; and

• (e) Shareholders entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes.

The enclosed proxy form provides further details on appointing proxies and lodging proxy forms. If a Shareholder appoints a body corporate as its proxy and the body corporate wishes to appoint an individual as its representative, the body corporate should provide that person with a certificate or letter executed in accordance with the Corporations Act authorizing him or her to act as that company‟s representative. The authority may be sent to the Company or its share registry in advance of the General Meeting or handed in at the General Meeting when registering as a corporate representative.

Voting Entitlements

In accordance with Regulations 7.11.37 and 7.11.38 of the Corporations Regulations 2001, the Board has determined that a person‟s entitlement to vote at the General Meeting will be the entitlement of that person set out in the register of Shareholders as at 5.00pm (WST) on 12 July 2011. Accordingly, transactions registered after that time will be disregarded in determining Shareholder‟s entitlement to attend and vote at the General Meeting.

By Order of the Board of Directors

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………………………………………… Bruce Franzen Executive Director Riedel Resources Limited 7 June 2011

Explanatory Statement

This Explanatory Statement has been prepared for the information of Shareholders in relation to the business to be conducted at the Company‟s General Meeting.

The purpose of this Explanatory Statement is to provide Shareholders with all information known to the Company which is material to a decision on how to vote on the resolutions in the accompanying Notice of General Meeting.

This Explanatory Statement should be read in conjunction with the Notice of General Meeting. Capitalised terms in this Explanatory Statement are defined in the Glossary.

1. Resolution 1 – Amendment and Approval of Performance Rights Plan

1.1 Background

The Company has established a Performance Rights Plan, the terms of which were set out in the Prospectus dated 12 November 2010 (“ the Plan ”). As a consequence of suggestions made by the Company‟s advisers, the Company proposes to make changes to the Plan as set out in marked up form attached at Annexure A of this Notice of Meeting.

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.

Resolution 1 seeks Shareholder approval in accordance with Exception 9 of Listing Rule 7.2 of the ASX Listing Rules for the Directors to amend and adopt the amended Plan for the Company to issue securities under the amended Plan without prior Shareholder approval and in reliance on the exception to Listing Rule 7.1.

1.2 Proposed amendments to the Plan

A summary of the key proposed amendments to the terms of the Plan are set out below, noting that a full marked up version of the amended Plan is attached at Annexure A to this Notice of Meeting (which indicates all of the proposed amendments to the Plan):

• (a) the Directors propose to amend:

• (i) the definition of “ Eligible Participants ” of the Plan to include the Directors of the Company (notwithstanding such amendment, the Directors (being related parties of the Company) will not be able to participate in any issue of Shares under the Plan without Shareholder approval);

• (ii) the maximum size of the offer from 10% to 15%;

• (iii) clause 4.1(c) to provide a period of one (1) year for a Performance Right to be exercised once vested;

• (iv) clause 5.1 to provide that the Plan is subject to compliance with the Corporations Act and the ASX Listing Rules; and

• (v) clause 6.2(b) to provide for “Total and Permanent Disability” and “Sever Financial Hardship” and the corresponding new definitions for those terms are inserted;

• (b) the Directors propose to delete:

• (i) clause 4.1(b) which provided that a Performance Right may only be exercised once the board had notified the participant that the vesting conditions had been granted;

• (ii) clause 4.5(a)(v) and (vi) and 4.5(b)(ii) which provided rights to the board in respect of the shares allotted under the plan where it is discovered that a participant had acted fraudulently, dishonestly or breached their obligations to the Company;

• (iii) clause 4.6 which provided a right of repayment by the Company where a Performance Right lapses;

• (iv) clause 6.1 which provided a right to waive the restrictions under rule 6.2;

• (v) clause 7.4 which provided for an arrangement to be entered into in the event that a company acquired control of the Company; and

• (vi) clause 10.3 that provided a right for the board of the Company to waive any terms or conditions of the Plan.

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

As at the date of this Notice of Meeting the Company has not issued any Shares under the Plan.

The full terms and conditions of the Plan may be obtained free of charge by contacting the Company. The proposed amendments to the original Plan are attached in mark up in Annexure A.

2. Resolutions 2 and 3 – Issue of Performance Rights to Directors Under Performance Rights Plan

2.1

Background

Resolutions 2 and 3 seek Shareholder approval for the issue of 6,000,000 Performance Rights to Jeffrey Moore and 2,000,000 Performance Rights to Bruce Franzen (each a “ Related Party ” and together, the “ Related Parties ”),

who are Directors of the Company, pursuant to the Plan and subject to the additional terms and conditions set out in Annexure B.

The Performance Rights will be issued to the Related Parties for no consideration.

The Performance Rights are to be issued for the purpose of aligning the interests of the Related Parties with the Company and to secure the ongoing commitment of the Related Parties to the continued growth of the Company.

ASX Listing Rule 10.14 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. Performance rights are securities for the purposes of the ASX Listing Rules.

The issue of the Performance Rights to the Related Parties requires the Company to obtain Shareholder approval as this constitutes giving a financial benefit and, as Directors, Jeffrey Moore and Bruce Franzen are related parties of the Company.

Accordingly, Shareholder approval is sought for the issue of Performance Rights to the Directors.

2.2 Sections 219 of the Corporations Act

In accordance with the requirements of section 219 of the Corporations Act, the following information is provided to enable Shareholders to assess the proposed issue of Performance Rights to the Directors:

• (a) the Related Parties are Jeffrey Moore and Bruce Franzen being Directors of the Company;

• (b) the nature of the financial benefit being provided to the Related Parties is the issue of 8,000,000 Performance Rights (comprised of 6,000,000 Performance Rights to Jeffrey Moore and 2,000,000 Performance Rights to Bruce Franzen) which will result in the issue of Shares subject to the terms and conditions of the Plan and the additional terms set out in Annexure B;

• (c) the maximum number of Performance Rights to be issued under Resolution 2 and 3 is 8,000,000 (comprised of 6,000,000 Performance Rights to Jeffrey Moore and 2,000,000 Performance Rights to Bruce Franzen);

• (d) subject to the achievement of the conditions set out in Annexure B, the Performance Rights will vest into Shares issued for no consideration;

• (e) in determining the number of Performance Rights 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. The number of Performance Rights to be issued to the

Related Parties was agreed to in each of the Related Party‟s services contract with the Company;

• (f) if the Performance Rights vest, the Shares issued will be fully paid ordinary shares in the capital of the Company and, subject to the restrictions on transfer contained in section 6 of the Plan (as set out in Annexure A) and the satisfaction of criteria set out in Annexure B above, the Shares will rank equally with all of the Shares of the Company currently on issue;

• (g) as at the date of this Notice, the annual remuneration (exclusive of superannuation) payable to the Related Parties is as follows:

Directors	Salary 2010-2011	Salary 2009-2010
Jeffrey Moore	$275,000	Nil
Bruce Franzen	$250,000	Nil

• (h) as at the date of this Notice, the Related Parties have notifiable interests in the securities of the Company as set out below:

Director	Shares	Unlisted Options
Jeffrey Moore	100,000	-
Bruce Franzen	600,100	2,000,000

• (i) if Shareholders approve the issue of the Performance Rights to the Related Parties and the Performance Rights vest into Shares, the effect will be to dilute the shareholding of existing Shareholders by approximately 12.1% on an undiluted basis (based on 58,208,100 Shares being currently on issue);

• (j) in the 12 months preceding the date of this Notice, the highest, lowest and last trading price of Shares on ASX are as set out below:

Highest	$0.195 on 1 February 2011
Lowest	$0.12 on 31 May 2011
Last	$0.125 on 7 June 2011

• (k) the value of the financial benefit provided to the Directors is $309,333 ($232,000 to Jeffrey Moore and $77,333 to Bruce Franzen). The Company has obtained a valuation of the Performance Rights proposed to be issued to Jeffrey Moore and Bruce Franzen. The Performance Rights have been valued using the Black & Scholes pricing model based upon the following assumptions:

• (i) Current price: $0.135 as at 26 May 2011, the date of the valuation;

• (ii) Expiry date of the Performance Rights being 3 years from the date of issue;

(iii) The exercise prices used in the valuations are as follows:

Holder	Number of Performance Rights	Exercise Price
Jeffrey Moore 2,000,000 27 cents 2,000,000 36 cents 2,000,000 45 cents
Bruce Franzen 666,667 27 cents 666,667 36 cents 666,666 45 cents

• (iv) Volatility: 75%; and

• (v) Risk free rate: 5.05%.

• (l) the primary purpose of the issue of the Performance Rights to the Related Parties is to provide cost effective remuneration to the Related Parties for their ongoing commitment and contribution to the Company in their respective roles as Directors. The Board does not consider that there are any significant opportunity costs or benefits foregone by the Company in issuing the Performance Rights upon the terms proposed;

• (m) Jeffrey Moore 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 Directors (other than Jeffrey Moore) recommend that Shareholders vote in favour of Resolution 2 as they are of the view that the issue of Performance Rights to Jeffrey Moore is an appropriate form of incentive to maximise returns to Shareholders. The 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; and

• (n) Bruce Franzen 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 Directors (other than Bruce Franzen) recommend that Shareholders vote in favour of Resolution 3 as they are of the view that the issue of Performance Rights to Bruce Franzen is an appropriate form of incentive to maximise returns to Shareholders. The 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.

2.3 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 a performance rights plan 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 and 3 are passed, Performance Rights will be issued to Bruce Franzen and Jeffrey Moore as related parties of the Company by virtue of being Directors of the Company.

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

2.4 ASX Listing Rule 10.15A

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 10.15A:

• (a) Jeffrey Moore and Bruce Franzen are Directors of the Company;

• (b) the maximum number of Performance Rights to be issued to the Directors is 8,000,000 Shares (comprised of 6,000,000 Performance Rights to Jeffrey Moore and 2,000,000 Performance Rights to Bruce Franzen);

• (c) the Performance Rights will be issued for no consideration and have a zero exercise price;

• (d) other than as contemplated by Resolution 2 and 3, no other person has received Performance Rights under the Plan;

• (e) the only persons referred to in ASX Listing Rule 10.14 who are eligible to participate in the Plan as at the date of this Notice are Jeffrey Moore, Bruce Franzen, Andrew Childs, Wolfgang Zimmer, Ian Tchacos (being the Directors) and any full time or part time employees or consultants of the Company who the Board have declared to be eligible;

• (f) details of any Performance Rights issued under the Plan will be published in each annual report of the Company relating to a period in which the Shares have been issued, and approval for the issue of Performance Rights will be obtained under ASX Listing Rule 10.14;

• (g) any additional directors (or associates of directors) who become entitled to participate in the Plan after Resolutions 2 and 3 are approved, and who are not named in paragraph (e) of this Notice of Meeting, will not participate until approval is obtained under ASX Listing Rule 10.14; and

• (h) the Performance Rights referred to in paragraph (b) above will be issued under the Plan within 3 years of being granted.

The proposed amendments in mark up form to the original Plan are attached as Annexure A. A copy of the rules of the 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.

3. Resolution 4 – Approve Issue of Shares to Zen Magnolia Pty Ltd

3.1 Background

Resolution 4 seeks Shareholder approval pursuant to section 208 of the Corporations Act and Listing Rule 10.11 for the issue of 86,660 Shares to Zen Magnolia Pty Ltd (or nominee) pursuant to the Advisory Mandate as consideration for the provision of corporate advisory services in relation to the Company‟s admission to the ASX. .

3.2 Summary of Mandate

Zen Magnolia Pty Ltd (“ Zen Magnolia ”), an entity of which Mr Bruce Franzen is a director and shareholder, entered into an Advisory Mandate with AuDAX (being the entity acquired by the Company) pursuant to which Zen Magnolia was engaged to provide corporate advisory services to AuDAX in relation to the Company‟s Prospectus and the Company‟s proposed admission to the Official List (“ Advisory Mandate ”). The material terms of the Advisory Mandate include:

• (a) ( Term ): the initial term commenced on 23 March 2010 for a period of 3 months, a second term commenced on 23 June 2010 for a period of 3 months, third term commenced on 23 September 2010 for a further 3 months, fourth term commenced on 23 December 2010 for a further 3 months or until the Company‟s listing upon the ASX on 31 January 2011.

• (b) ( Fees ): ADXM agreed to pay Zen Magnolia ongoing corporate advisory fees of $16,000 per month, payable monthly in arrears. In addition, Zen Magnolia is entitled to receive a completion fee of 686,660 Riedel Shares upon the successful admission of the Company to the Official List, of which 600,000 were issued as disclosed in the Company‟s Prospectus dated 12 November 2010. Resolution 4 seeks approval for the issue of the remaining 86,660 Riedel Shares to which Zen Magnolia is entitled. Zen Magnolia will also be reimbursed for all reasonable expenses incurred in the provision of the services.

• (c) ( Termination ): either party was entitled to terminate the Advisory Mandate without cause on 7 days‟ prior notice. The Advisory Mandate was terminated upon the Company‟s admission to the Official List on 31 January 2011, at which time, an executive services agreement commenced to govern the provision of executive services by Mr Bruce Franzen to the Company.

• (d) ( Indemnity ): AuDAX indemnified Zen Magnolia from all material loss suffered or incurred directly or indirectly in connection with the services rendered to AuDAX under the Advisory Mandate.

3.3 Chapter 2E of the Corporations Act

Under Chapter 2E of the Corporations Act, a public company cannot give a “financial benefit” (including an issue of shares and options) to a “related party” of the Company, unless one of the exception set out in section 210 to 216 of the Corporations Act apply, or the holders of ordinary securities have approved the giving of the financial benefit to the related party in a general meeting.

Zen Magnolia Pty Ltd is a related party of the Company within section 228 of the Corporations Act, as it is controlled by Bruce Franzen, a Director of the Company.

The Directors consider that the Shares that are proposed to be issued to Zen Magnolia Pty Ltd under Resolution 4 may fall within the exception under section 210 of the Corporations Act, however, out of an abundance of caution, the Directors have determined to seek Shareholder approval under section 208 of the Corporations Act to permit the issue of the Shares on the terms in Resolution 4 to Zen Magnolia Pty Ltd as a related party of the Company for the reasons outlined in paragraph 3.2 above.

3.4 Section 219 of the Corporations Act

Pursuant to and in accordance with the requirements of section 219 of the Corporations Act, the following information is provided to enable Shareholders to assess the proposed issue of Shares to the Zen Magnolia Pty Ltd:

• (a) The related party to whom the proposed resolution would permit financial benefits is Zen Magnolia.

• (b) The nature of financial benefits is the issue of a total of 86,660 Shares to Zen Magnolia Pty Ltd. Applying the Share price of $0.125 per Share as at 7 June 2011, this benefit is valued at $10,832.50.

• (c) Bruce Franzen has an interest in the outcome of Resolution 4 being passed as he is a director and Shareholder of Zen Magnolia. Accordingly, Bruce Franzen declines to make a recommendation in respect of Resolution 4. The remaining Directors of the Company recommend the Shareholders approve this Resolution as being reasonable consideration for the services provided under the Advisory Mandate.

• (d) The Directors (other than Bruce Franzen) do not have any interest in the outcome of Resolution 4. Bruce Franzen is a director and shareholder of Zen Magnolia Pty Ltd, which will receive 86,660 Shares under Resolution 4.

• (e) As at the date of this Notice of Meeting, Bruce Franzen and his associates (including Zen Magnolia) hold 600,100 Shares which represents 1.03% of the issued capital of the Company. Bruce Franzen and his associates (including Zen Magnolia Pty Ltd) also hold 2,000,000 Unlisted Options in the Company.

• (f) The Company currently has 58,208,100 Shares on issue. If Zen Magnolia receive all the Shares under Resolution 4, and no other Shares were issued by the Company (including Shares referred to in this Explanatory Statement), Bruce Franzen and his associates would hold a relevant interest in 1.17% of the issued capital of the Company.

• (g) if Shareholders approve the issue of 86,660 Shares to Zen Magnolia Pty Ltd, the effect will be to dilute the shareholding of existing Shareholders by approximately 0.15% on an undiluted basis (based on 58,208,100 Shares being currently on issue);

Other than as set out in this Explanatory Statement, there is no further information which the Shareholders would reasonably require in order to decide whether or not it is in the Company‟s best interests to pass resolutions 4.

3.5 ASX Listing Rule 10.11

Listing Rule 10.11 provides that a company must not issue equity securities to a “related party” without the approval of holders of ordinary securities, or to a person whose relationship with the company or a related party of the company is, in ASX‟s opinion, such that approval should be obtained. Further, Listing Rule 7.2 (Exception 14) states that approval pursuant to Listing Rule 7.1 is not required if shareholder approval is obtained under Listing Rule 10.11.

Zen Magnolia is a related party of the Company as it is an entity controlled by Bruce Franzen. The Directors have determined to seek Shareholder approval under Listing Rule 10.11 to permit the issue of Shares to Zen Magnolia as a related party of the Company on the terms in Resolution 4.

The issue of the Shares under Resolution 4 will not affect the capacity of the Company to issue securities in the next 12 months under Listing Rule 7.1, as those Shares (once issued) will be excluded from the calculations under Listing Rule 7.1.

3.6 ASX Listing Rule 10.13

Listing Rule 10.13 required the following information to be provided to the Shareholders in relation to Resolution 4 to satisfy Listing Rule 10.11:

• (a) The name of the allottee of the securities is Zen Magnolia (or nominee).

• (b) The maximum number of securities to be allotted and issued is 86,660 Shares.

• (c) The Shares will be issued as soon as possible after the General Meeting and in any event, no later than 1 month after the General Meeting (or such later date to the extent permitted by any ASX waiver of the Listing Rules).

• (d) Zen Magnolia is controlled by Bruce Franzen, who is also a Director of the Company.

• (e) There is no issue price for the Shares .

• (f) The Shares issued under Resolution 4 are ordinary fully paid shares which rank equally with existing Shares on issue.

• (g) The Shares will not be issued for cash consideration. Rather, the consideration for the Shares pursuant to Resolution 4 is the corporate advisory services that Zen Magnolia provided to AuDAX and the Company for the purpose of the Company being admitted to the ASX pursuant to the Advisory Mandate.

• (h) No funds will be raised from the issue of the Shares under Resolution 4.

Pursuant to ASX Listing Rule 7.2, if ASX Listing Rule 10.11 Shareholder approval is being sought, approval under ASX Listing Rule 7.1 is not required.

Glossary

In this Explanatory Statement, the following terms have the following meaning unless the context otherwise requires:

Advisory Mandate means the mandate between Zen Magnolia Pty Ltd and AuDAX (being an entity acquired by the Company) for the provision of corporate advisory services. Annexure annexure to this Explanatory Statement. ASIC Australian Securities and Investments Commission. ASX means ASX Limited (ACN 008 624 691) operating as the Australian Securities Exchange. ASX Listing Rules means the Listing Rules of the ASX. AuDAX means AuDAX Minerals Pty Ltd (139 771 672). Board board of Directors. Chairman Mr Ian Tchacos. Company Riedel Resources Limited ACN 143 042 022. Constitution constitution of the Company. Corporations Act Corporations Act 2001 (Cth). Director director of the Company. Explanatory Statement means the explanatory statement accompanying this Notice. Group Company means the Company, a subsidiary of the Company, and any other entity declared by the Board to be a member of the group for the purpose of the Plan. Notice or Notice of Meeting means this notice of meeting including the Explanatory Statement, Proxy Form and Annexure A. Performance Right means an entitlement to a Share subject to satisfaction of any conditions and the corresponding obligation of the Company to provide the Share, as set out in the Performance Rights Plan. Performance Rights Plan or Plan means the plan adopted by the Company for the granting of Performance Rights, as set out in Annexure A of this Notice of Meeting together with the marked-up proposed amendments pursuant to Resolution 1. Proxy Form means the proxy form accompanying the Notice. Share fully paid ordinary share in the capital of the Company. Shareholder shareholder of the Company. Unlisted Options an option to acquire Share in the Company exercisable at 30 cents on or before 30 June 2014. WST Western Standard Time in Australia.

ACN 143 042 022

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PROXY FORM

Shareholder Details

Name: ……………………………………………………………………………………………………………………………………………….

Address: …………………………………………………………………………………………………………………………………………….

Contact Telephone No: …………………………………………………………………………………………………………………………….

Contact Name (if different from above): …………………………………………………………………………………………………………..

Appointment of Proxy

I/We being a shareholder/s of Riedel Resources Limited and entitled to attend and vote hereby appoint the following proxy/proxies to attend and act on my/our behalf and to vote in accordance with my/our following directions at the General Meeting of Riedel Resources Limited to be held at The Celtic Club, 48 Ord Street, West Perth on 14 July 2011 at 8.30am (WST) and at any adjournment of that meeting.

OR

The Chairman

of the meeting

(mark with an „X‟)

IMPORTANT:

If the Chairman of the meeting is your proxy, or if appointed your proxy by default and you do not wish to direct him/her how to vote on any of these resolutions, you must mark this box with an “X”. By marking this box, you acknowledge that the Chairman of the meeting may exercise your proxy on those resolutions (for which you have not given a direction) even if he/she has an interest in the outcome of the resolution and that votes cast by him/her, 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 on any of these resolutions, the Chairman of the meeting will not cast your votes on the resolutions (for which you have not given a direction) on a show of hands or on a poll. The Chairman of the meeting intends to vote undirected proxies in favour of each resolution.

If the person you are appointing as your proxy is someone other than the Chairman of the meeting: Write the name of that person in the box below.

You must specify the % of your votes that you % authorise your proxy to exercise if: (a) you have only appointed 1 proxy and do not want him/her to exercise all of your votes; or (b) if you have appointed 2 proxies under this % proxy form.

If you hold 2 or more Shares in #full company name#, you may appoint a second proxy: Write the name of your second proxy in the box below.

If you do not name a proxy or your named proxy fails to attend the meeting, the Chairman of the meeting will be appointed as your proxy to attend and act on your behalf and to vote in accordance with the following directions at the General Meeting of Riedel Resources Limited to be held at The Celtic Club, 48 Ord Street, West Perth on 30 June 2011 at 8.30am (WST) and at any adjournment of that meeting.

Voting directions to your proxy - Please mark only one of the boxes with an “X” for each resolution to indicate your directions.

Special Business		For	Against	Abstain
Resolution 1.	Amendments and Approval of Performance Rights Plan
Resolution 2.	Issue of Performance Rights to Jeffrey Moore Under
	Performance Rights Plan
Resolution 3.	Issue of Performance Rights to Bruce Franzen Under
	Performance Rights Plan
Resolution 4.	Issue of Shares to Zen Magnolia Pty Ltd
1If you mark the “Abstain” box with an “x” for a particular resolution, you are directing your proxy not to vote on your behalf on a
show of hands or on a poll.
PLEASE SIGN HERE This sectionmust be signed in accordance with the instructions overleaf to enable your directions to be
implemented
Individual or Shareholder 1 Shareholder 2			Shareholder 3
Sole Director and	Director		Director/Company Secretary
Sole Company Secretary

How to complete this Proxy Form

1 Your Name and Address

Please print your name and address as it appears on your holding statement and the Company‟s share register. If Shares are jointly held, please ensure the name and address of each joint shareholder is indicated. Shareholders should advise the Company of any changes. Shareholders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.

2 Appointment of a Proxy

If you wish to appoint the Chairman of the Meeting as your proxy, mark the box. If the person you wish to appoint as your proxy is someone other than the Chairman of the Meeting please write the name of that person. If you leave this section blank, or your named proxy does not attend the meeting, the Chairman of the Meeting will be your proxy. A proxy need not be a shareholder of the Company.

3 Votes on Resolutions

You may direct your proxy how to vote by placing a mark in one of the boxes opposite each Resolution. All your shareholding will be voted in accordance with such a direction unless you indicate only a portion of voting rights are to be voted on any Resolution by inserting the percentage or number of shares you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given Resolution, your proxy may vote as he or she chooses. If you mark more than one box on a Resolution your vote on that Resolution will be invalid.

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Appointment of a Second Proxy

You are entitled to appoint up to two persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second proxy please write the name of that person.

To appoint a second proxy you must state (in the appropriate box) the percentage of your voting rights which are the subject of the relevant proxy. If the Proxy Form does not specify a percentage, each proxy may exercise half your votes. Fractions of votes will be disregarded.

5 Signing Instructions

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

Individual: where the holding is in one name, the holder must sign. Joint Holding: where the holding is in more than one name, all of the shareholders should sign.

Power of Attorney: to sign under Power of Attorney, you must have already lodged this document with the company‟s share registry. If you have not previously lodged this document for notation, 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, this form must be signed by that person. If the company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director can also sign alone. Otherwise this form must be signed by a Director jointly with either another Director or a Company Secretary. Please indicate the office held by signing in the appropriate place.

If a representative of the corporation is to attend the meeting a “Certificate of Appointment of Corporate Representative” should be produced prior to admission.

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Lodgment of a Proxy

This Proxy Form (and any Power of Attorney under which it is signed) must be received at the address given below not later than 48 hours before the commencement of the meeting. ie. no later than 8.30am (WST) on 12 July 2011. Any Proxy Form received after that time will not be valid for the scheduled meeting.

This Proxy Form (and any Power of Attorney and/or second Proxy Form) may be sent or delivered to the Company’s registered office at PO Box 1559, West Perth, Western Australia, 6872 or sent by facsimile to the registered office on +61 8 9486 7375.

Annexure A

RIEDEL RESOURCES LIMITED ACN 143 042 022

PERFORMANCE RIGHTS PLAN

THIS AGREEMENT is made the day of

~~20102~~ 011

RIEDEL RESOURCES LIMITED PERFORMANCE RIGHTS PLAN RULES

1. DEFINITIONS AND INTERPRETATION

1.1 Definitions

In this Agreement:

ASX means the ASX Limited (ACN 008 624 691).

ASX Listing Rules means the official Listing Rules of the ASX as they apply to the Company from time to time.

Board means the board of directors of the Company or committee appointed by the Board for the purposes of the Plan.

Company means Riedel Resources Limited (ACN 143 042 022).

Corporations Act means the Corporations Act 2001 (Cth).

Eligible Participant means any full time or part time employee, director or consultant of a Group Company who is declared by the Board to be eligible to receive grants of Performance Rights under the Plan.

Expiry Date means the date on which a Performance Right lapses (if it has not already otherwise lapsed in accordance with the Plan) as advised by the Company under rule 2.3.

Group Company means the Company, its Subsidiaries and any other entity declared by the Board to be a member of the group for the purposes of the Plan.

Holding Lock has the meaning given to that term in the ASX Listing Rules.

Offer means an offer made by the Company to an Eligible Participant to participate in the Plan.

Participant means a person who holds Performance Rights from time to time.

Performance Right means an entitlement to a Share subject to satisfaction of ~~achievement criteria~~ any Vesting Conditions and the corresponding obligation of the Company to provide the Share, pursuant to a binding contract made by the Company and an Eligible Participant in the manner set out in these rules.

Plan means the Riedel Resources Limited Performance Rights Plan as set out in these rules, subject to any amendments or additions made under rule 9.

Severe Financial Hardship means the Eligible Participant is unable to provide themselves, their family or other dependents with basic necessities such as food, accommodation and clothing, including as a result of family tragedy, financial misfortune, serious illness, impacts of natural disaster and other serious or difficult circumstances.

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

Subsidiary has the meaning given in section 9 of the Corporations Act.

Takeover Bid means a takeover bid (as defined in the Corporations Act) to acquire the Company’s Shares.

Total and Permanent Disability means that the Eligible Participant has, in the opinion of the Board, after considering such medical and other evidence as it sees fit, become incapacitated to such an extent as to render the Eligible Participant unlikely ever to engage in any occupation with the Company or its Associated Bodies Corporate for which he or she is reasonably qualified by education, training or experience.

Vesting Conditions means one or more conditions which must be satisfied or circumstances which must exist before the Performance Rights vest, as determined by the Board.

1.2 Interpretations

In this Plan unless the context otherwise requires:

• (a) headings are for convenience only and do not affect its interpretation;

• (b) any reference in the Plan to any enactment of the ASX Listing Rules includes a reference to that enactment or those ASX Listing Rules as from time to time amended, consolidated, re-enacted or replaced;

• (c) any words denoting the singular include the plural and words denoting the plural include the singular;

• (d)

• any words denoting one gender include the other gender;

• (e) where any word or phrase is given a definite meaning in this Plan, any part of speech or other grammatical form of that word or phrase has a corresponding meaning.

2. GRANT OF PERFORMANCE RIGHTS

2.1 Grant

• (a) Subject to rule 2.2, the Board may, from time to time, at its absolute discretion and only where an Eligible Participant continues to satisfy any relevant conditions imposed by the Board (which may include without limitation that an Eligible Participant continues to be an employee of a Group Company at the relevant time) grant Performance Rights to Eligible Participants with effect from the date determined by the Board, upon the terms set out in the Plan and upon such additional terms and Vesting Conditions as the Board determines.

• (b) Unless the Board otherwise determines, an Eligible Participant will not be required to make any payment in return for a grant of Performance Rights.

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2.2 Limitation of ~~offers~~ Offers

The Company shall not make an ~~offer~~ Offer to grant Performance Rights to an Eligible Participant where the number of Shares to be issued on exercise of the Performance Rights the subject of the ~~offerO~~ ffer aggregated with the total number of Shares to be issued on exercise of all outstanding Performance Rights does not exceeds ~~101~~ 5% of the undiluted number of Shares on issue in the Company as at the date of the purported ~~offerO~~ ffer.

2.3 Information to be provided to Eligible Participants

The Board will advise each Eligible Participant of the following minimum information regarding the Performance Rights:

• (a) the number of Performance Rights being offered (each entitling its holder to one Share upon vesting of that Performance Right);

• (b) any applicable Vesting Conditions;

• (c) the period or periods during which any vested Performance Rights may be exercised;

• (d) the dates and times when the Performance Rights laps ~~e;~~ ( Expiry Date );

• (e) any amount that will be payable upon ~~vestinge~~ xercise of a Performance Right; and

• (f) any other relevant conditions to be attached to the Performance Rights or the Shares.

3. TRANSFER OF PERFORMANCE RIGHTS

• (a) A Performance Right granted under the Plan is only transferable:

• (i) with the consent of the Board; or

• (ii) by force of law upon death to the Participant’s legal personal representative or upon bankruptcy to the Participant’s trustee in bankruptcy.

• (b) Where the Participant purports to transfer a Performance Right other than in accordance with rule 3(a) the Performance Right immediately lapses.

4. VESTING AND EXERCISE OF PERFORMANCE RIGHTS

4.1 Vesting pre-conditions

• (a) Subject to ~~rulesr~~ ule 7 ~~and 10.31.1,~~ a Performance Right granted under the Plan will not vest unless the Vesting Conditions (if any) advised to the Participant by the Board pursuant to rule 2.3 have been satisfied and the Board has notified the Participant.

• ~~(b) A vested Performance Right may only be exercised by a Participant once the Board has notified the Participant that the Vesting Conditions attached to the Performance Right have been satisfied.~~

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• ~~(c)(~~ b) The exercise of any vested Performance Right granted under the Plan will be effected in the form and manner determined by the Board, and, if an amount is payable on ~~vestinge~~ xercise of the Performance Right, will be accompanied by payment of that amount, unless the manner of payment of the amoun ~~t is~~ payable on vesting the Performance Right is otherwise provided for by the Board.

• (c) Unless the Board decides otherwise, any vested Performance Right that has not been exercised, or otherwise lapsed, within one (1) year of becoming vested, shall automatically lapse.

• (d) The delivery of a Share on the exercise of a Performance Right will constitute satisfaction of the condition precedent to performance of the Company’s obligation to provide a Share to the Participant under that Performance Right pursuant to rule 5.1.

4.2 Lapse of a Performance Right

A Performance Right will lapse upon the earlier to occur of:

• (a) failure to meet the Performance Right’s Vesting Conditions;

• ~~(b) the date specified by the Board in the information provided to the Eligible Participant for the purposes of rule 2.3(d);~~

• (b) the Expiry Date;

• (c) the Performance Right lapsing in accordance with rule 3(b);

• (d) the Performance Right lapsing in accordance with a provision of this rule 4; or

• (e) the ~~7~~ 5 year anniversary of the date of grant of the Performance Rights.

4.3 Ceasing to satisfy relevant conditions – vested Performance Rights

If, for any reason, a Participant ceases to be an Eligible Participant or otherwise ceases to satisfy any other relevant condition imposed by the Board after a Performance Right has vested but before a Performance Right has been exercised, the Participant may exercise those vested Performance Rights within the 6 month period ~~following cessation of employmenta~~ fter ceasing to be an Eligible Participant or ceasing to satisfy any other relevant conditions (as appropriate) or such other period (longer or shorter) as the Board determines, after which they lapse. The period is subject to, and cannot exceed, the one (1) year period set under clause 4.1(c)).

4.4 When employment ceases

~~If a Vesting Condition attached by the Board to a Performance Right requires a Participant to remain an employee of a Group Company, then the Participant will be treated as having ceased to be an employee of a Group Company at such time the Participant’s employer ceases to be a Group Company. A~~ An Eligible Participant who is granted an approved leave of absence and who exercises their right to return to work under any applicable award, enterprise agreement, other agreement, statute or regulation before the exercise of a Performance Right under the Plan will be treated for those purposes as not having ceased to be such an employee.

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4.5 Fraudulent or dishonest actions

• (a) Where, in the opinion of the Board, a Participant:

• (i) acts fraudulently or dishonestly; or

• (ii) is in breach of his or her obligations to any Group Company,

• (iii) then the Board may:

• (iv) deem any unvested Performance Rights of the Participant to have lapsed ~~; and/or~~

• ~~(v) deem all or any Shares allotted under the Plan and held by the Participant to be forfeited – in which event the Participant is deemed to have agreed to sell his shares to the Company pursuant to an Employee Share Scheme Buy-Back (as defined in the Corporations Act) for no consideration or be deemed to have appointed any officer of the Company as his or her agent to sell the Shares on market; and/or~~

• ~~(vi) where any Shares allotted under the Plan have been sold by the Participant, require the Participant to pay all or part of the net proceeds of that sale to the Company.~~

• (v) deem any vested but unexercised Performance Rights of the Participant to have lapsed.

• (b) Where, in the opinion of the Board, a Participant’s Performance Rights vest as a result of the fraud, dishonesty, or breach of obligations of another person and, in the opinion of the Board, the Performance Rights would not otherwise have vested, the Board may determine that the Performance Rights have not vested and, subject to applicable laws:

• (i) where Shares have not been issued or transferred upon the exercise of a vested Performance Right, that the Performance Rights have not vested and reset the Vesting Conditions applicable to the Performance Rights; or

• ~~(ii) where Performance Rights have vested and have been exercised by the Participant, that the Shares are forfeited by the Participant (as described in rule 4.5(a)(iv)) and may, at the discretion of the Board, reissue any number of Performance Rights to the Participant, subject to new Vesting Conditions in place of the forfeited Shares; or~~

• ~~(iii)(~~ ii) ~~any~~ take such other ~~treatmenta~~ ction as is necessary in relation to Performance Right ~~s or Shares~~ to ensure no unfair benefit is obtained by a Participant as a result of such actions of another person.

~~4.6 Refund of monies paid on lapse of a Performance Right~~

~~Where a Performance Right lapses, the Company will repay the Participant the price paid for the grant of the Performance Right, if any, and the Participant will have no further entitlement or claim against the Company in respect of the Performance Right.~~

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5. ISSUE OF SHARES

5.1 Exercise of Performance Rights

~~TheS~~ ubject to compliance with the Corporations Act, the ASX Listing Rules and this Plan, the Company must issue to or procure the transfer to the Participant or his or her personal representative (as the case may be) the number of Shares in respect of which vested Performance Rights are exercised, within ~~a reasonable time after a1~~ 0 business days of the Performance ~~Right isR~~ ights being exercise ~~d.~~ (provided any payment due on exercise of the Performance Rights has been duly made).

5.2

Share ranking

All Shares allotted under the Plan will rank equally in all respects with the Shares of the same class for the time being on issue except as regards any rights attaching to such Shares by reference to a record date prior to the date of their allotment.

5.3 Listing of Shares on ASX

If Shares of the same class as those allotted under the Plan are listed on the ASX the Company will apply to the ASX within ~~a reasonable time after they are~~ 10 business days of Shares being allotted for those Shares to be listed on ASX.

6. RESTRICTION ON DISPOSAL OF SHARES

~~6.1 Request for waiver~~

~~Shares issued or transferred on exercise of Performance Rights are subject to the restrictions under rule 6.2, unless the Participant requests that the Company waives those restrictions under rule 6.2 and that request is approved by the Company.~~

~~6.26~~ .1 Restriction

~~Subject to rule 6.1, any~~ Any Share acquired by a Participant on the exercise of a Performance Right must not be disposed of or dealt with in any way by that Participant until the earlier of:

(a) the time when an event occurs so that the Eligible Participant to whom the Offer was originally made is not employed by any of:

• (i) any Group Company; and

• (ii) the company which employed the Eligible Participant at the time the Participant acquired the Performance Right, whether or not that company is still a Group Company;

(b) the Board, in its sole and absolute discretion, approving that the restriction on disposal in this rule 6. ~~16.21 be released; and~~ be released where the Eligible Participant to whom the Offer was originally made suffers:

(i) Total and Permanent Disability; or

(ii) Severe Financial Hardship;

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(c) an event set out in Section 7 occurs; and

~~(c)(~~ d) the ~~seven~~ five year anniversary of the date of grant of the Performance Rights.

~~6.36~~ .2 Enforcing the disposal restriction

The Company may make such arrangements as it considers necessary to enforce the restriction on disposal of Shares under rule ~~6.216~~ .1 and the Participant must agree to such arrangements.

~~6.46~~ .3 Holding Locks

Without limiting rule 6. ~~26.32,~~ and subject to the ASX Listing Rules, the Company may procure that a Holding Lock be put on those Shares while the Shares are subject to the restriction on disposal under rule ~~6.216~~ .1.

~~6.56~~ .4 Removing the restriction

~~As soon as reasonably practicable after~~ Within 10 business days of the Company becoming aware that the restriction on disposal of ~~a S~~ hares under rule ~~6.216~~ .1 no longer applies, the Company must procure that any restriction on dealing with that Share pursuant to these rules no longer applies.

~~6.66~~ .5 Removing Holding Locks

Without limiting rule 6. ~~46.54,~~ when the Company becomes aware that a Share is no longer subject to the restriction on disposal in rule 6. ~~16.21,~~ the Company must, ~~as soon as reasonably practicable~~ within 10 business days, procure that any Holding Lock on that Share is removed.

7. TAKEOVER, SCHEME OF ARRANGEMENT, WINDING-UP AND CHANGE OF CONTROL

7.1 Takeovers

In the event ~~of~~ a bona fide Takeover Bid ~~, the Board may, in its absolute discretion, determine that all or a specified number of a Participant’s~~ is declared unconditional, unvested Performance Rights immediately vest ~~. Any Performance Right which the Board determines does not vest will automatically lapse, unless the Board determines otherwise.~~

~~(a) If the Board makes a determination under rule 7.1(a) the Board must notify the Participant of the determination in writing.~~

7.2

Compromise or arrangement

The Board may, in its absolute discretion, determine that all or a specified number of a Participant’s Performance Rights vest where:

• (a) a Court orders a meeting to be held in relation to a proposed compromise or arrangement for the purposes of or in connection with a scheme for the reconstruction of the Company or its amalgamation with any other company or companies;

• (b) any person becomes bound or entitled to acquire Shares in the Company under:

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(i) section 414 of the Corporations Act; or

• (ii) Chapter 6A of the Corporations Act;

• (c)

• the Company passes a resolution for voluntary winding up; or

• (d) an order is made for the compulsory winding up of the Company.

If no determination is made or if the Board determines that some or all of a Participant’s Performance Rights do not vest, those Performance Rights will automatically lapse.

7.3 Change of control

In the event a person or a group of associated persons becomes entitled, subsequent to the date of grant of Performance Rights to a Participant, to ~~sufficient Shares to give it or them the ability, in general meetingc~~ ontrol of the Compan ~~y, to replace a majority~~ (as defined in Section 50AA of the ~~Board in circumstancesC~~ orporations Act), where such ~~abilityc~~ ontrol was not already held by a person associated with such person or group of associated persons, the ~~Board may, in its absolute discretion, determine that all or a specified number of the P~~ articipant’s unvested Performance Rights ~~vest. Any Performance Right which the Board determines does not vest will a~~ utomatically ~~lapse, unless the Board determines otherwise~~ vest.

~~(a) If the Board makes a determination under rule 7.3(a) the Board must notify the Participant of the determination in writing.~~

~~7.4 Acquisitions of shares in Acquiring Company~~

~~If a company (~~ ~~Acquiring Company ) obtains control of the Company as a result of:~~

~~(a) a Takeover Bid; or~~

~~(b) a proposed scheme of arrangement between the Company and its shareholders,~~

~~and both the Company and the Acquiring Company agree, a Participant may, in respect of any vested Performance Rights that are exercised, be provided with shares of the Acquiring Company or its parent in lieu of Shares, on substantially the same terms and subject to substantially the same conditions as the Shares, but with appropriate adjustments to the number and kind of shares subject to the Performance Rights, as well as to any amount payable on vesting of the Performance Rights.~~

8. BONUS ISSUES, RIGHTS ISSUES, RECONSTRUCTION

8.1 Adjustment for bonus issues

If Shares are issued pro rata to the Company’s shareholders generally by way of bonus issue (other than an issue in lieu of dividends or by way of dividend reinvestment) involving capitalisation ~~oro~~ f reserves or distributable profits, the number of Performance Rights to which each Participant is entitled, or any amount payable on ~~vestinge~~ xercise of the Performance Rights, or both as appropriate, will be adjusted in the manner determined by the Board to ensure

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that no advantage or disadvantage accrues to the Participant as a result of the bonus issue.

8.2 Adjustment for reorganisation

In the event of any reorganisation (including consolidation ~~,~~ or subdivision ~~, reduction or return)~~ ,) of the issued capital of the Company, the number of Performance Rights to which each Participant is entitled, or any amount payable on ~~vesting~~ exercise of the Performance Rights, or both as appropriate, will be adjusted in the manner determined by the Board to ensure that no advantage or disadvantage accrues to the Participant as a result of such corporate actions.

8.3 No other participation

Subject to rules 8.1 and 8.2, during the currency of any Performance Rights and prior to ~~vestinge~~ xercise, Participants are not entitled to participate in any new issue of securities of the Company as a result of their holding Performance Rights. In addition, Participants are not entitled to vote nor to receive dividends as a result of their holding Performance Rights.

9. AMENDMENTS

9.1 Power to amend Plan

Subject to rule 9.2 and the ASX Listing Rules, the Board may at any time by resolution amend or add to all or any of the provisions of the Plan, or the terms or conditions of any Performance Right granted under the Plan.

9.2 Restrictions on amendments

Without the consent of the Participant, no amendment may be made to the terms of any granted Performance Right which reduced the rights of the Participant in respect of that Performance Right, other than an amendment introduced primarily:

• (a) for the purpose of complying with or conforming to present or future State or Commonwealth legislation governing or regulating the maintenance or operation of the Plan or like plans;

• (b) to correct any manifest error or mistake; or

• (c) to take into consideration possible adverse tax implications in respect of the Plan arising from, amongst others, adverse rulings from the Commissioner of Taxation, changes to tax legislation (including an official announcement by the Commonwealth of Australia) and/or changes in the interpretation of tax legislation by a court of competent jurisdiction.

9.3 Notice of amendment

As soon as reasonably practicable after making any amendment under rule 9.1, the Board will give notice in writing of that amendment to any Participant affected by the amendment.

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10. MISCELLANEOUS

10.1 Rights and obligations of Participant

The rights and obligations of Eligible Participant under the terms of their office, employment or contract with a Group Company are not affected by their participating in the Plan. These rules will not form part of and are not incorporated into any contract of any Eligible Participant (whether or not they are an employee of a Group Company). No Eligible Participant will have any rights to compensation or damages in consequence of the termination of their office, employment or other contract with a Group Company for any reason whatsoever insofar as those rights arise or may arise their ceasing to have rights under the Plan as a result of such termination.

10.2 Power of the Board

• (a) The Plan is administered by the Board which has power to:

• (i) determine appropriate procedures for administration of the Plan consistent with these rules; and

• (ii) delegate to any one or more persons for such period and on such conditions as it may determine the exercise of any of its powers or discretions arising under the Plan.

• (b) Except as otherwise expressly provided in this Plan, the Board has absolute and unfettered discretion to act or refrain from acting under or in connection with the Plan or any Performance Rights under the Plan and in the exercise of any power or discretion under the Plan.

~~10.3 Waiver of terms and conditions~~

~~Notwithstanding any other provisions of the Plan, the Board may at any time waive in whole or in part any terms or conditions (including any Vesting Conditions) in relation to any Performance Rights granted to any Participant.~~

~~10.41~~ 0.3 Dispute or disagreement

In the event of any dispute or disagreement as to the interpretation of the Plan, or as to any question or right arising from or related to the Plan or to any Performance Rights granted under it, the decision of the Board is final and binding.

~~10.51~~ 0.4 Non-residents of Australia

• (a) The Board may adopt additional rules of the Plan applicable in any jurisdiction outside Australia under which rights offered under the Plan may be subject to additional or modified terms, having regard to any securities, exchange control or taxation laws or regulations or similar factors which may apply to the Participant or to any Group Company in relation to the rights. Any additional rule must conform to the basic principles of the Plan.

• (b) When a Performance Right is granted under the Plan to a person who is not a resident of Australia the provisions of the Plan apply subject to such alterations or additions as the Board determines having regard to any securities, exchange control or taxation laws or regulation or similar

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factors which may apply to the Participant or to any Group Company in relation to the Performance Right.

~~10.61~~ 0.5 Communication

• (a) Any notice or other communication under or in connection with the Plan may be given by personal delivery or by sending the same by post or facsimile, in the case of a company to its registered office, and in the case of an individual to the individual’s last notified address, or, where a Participant is a director or employee of a Group Company, either to the Participant’s last known address or to the address of the place of business at which the Participant performs the whole or substantially the whole of the duties of the Participant’s office of employment.

• (b) Where a notice or other communication is given by post, it is deemed to have been received 48 hours after it was put into the post properly addressed and stamped. Where a notice or other communication is given by facsimile, it is deemed to have been received on completion of transmission.

~~10.71~~ 0.6 Laws governing Plan

This Plan and any Performance Rights issued under it are governed by the laws of Western Australia and the Commonwealth of Australia.

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Annexure B

Further Terms and Conditions of the Performance Rights Plan for the Purpose of Resolutions 2 and 3

• (a) A total of 8,000,000 Performance Rights to be issued as follows:

• (i) 2,000,000 Performance Rights issued to Jeffrey Moore upon the Company‟s Share price being equal to or greater than 27 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Performance Rights in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1;

• (ii) 2,000,000 Performance Rights issued to Jeffrey Moore upon the Company‟s Share price being equal to or greater than 36 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Performance Rights in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1;

• (iii) 2,000,000 Performance Rights issued to Jeffrey Moore upon the Company‟s Share price being equal to or greater than 45 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Shares in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1;

• (iv) 666,667 Performance Rights issued to Bruce Franzen upon the Company‟s Share price being equal to or greater than 27 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Performance Rights in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1;

• (v) 666,667 Performance Rights issued to Bruce Franzen upon the Company‟s Share price being equal to or greater than 36 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Performance Rights in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1; and

• (vi) 666,666 Performance Rights issued to Bruce Franzen upon the Company‟s Share price being equal to or greater than 45 cents for 20 consecutive trading days on the ASX within 3 years of the issue of the Performance Rights in accordance with the terms of the Plan and subject to Shareholder approval of Resolution 1.

• (b) The Performance Rights will be issued subject to the terms and conditions of the Plan (as proposed to be amended by Resolution 1). Subject to Shareholders approving Resolution 1, the Related Party must not sell or transfer any Share acquired on exercise of a Performance Right until the earlier of:

• (i) the Board, in its sole discretion, approving the restriction of disposal be released where the relevant Related Party suffers total and permanent disability or severe financial hardship (the definitions of which are set out in Resolution 1);

• (ii) the expiry of the relevant Related Party‟s employment with the Company or any Group Company;

• (iii) there is a takeover, scheme of arrangement, winding up or change of control of the Company; or

• (iv) the five year anniversary of the date of grant of the Performance Rights.