SANDFIRE RESOURCES LIMITED — AGM Information 2009

Oct 29, 2009

==> picture [383 x 54] intentionally omitted <==

==> picture [383 x 55] intentionally omitted <==

NOTICE OF THE 2009 ANNUAL GENERAL MEETING

TO BE HELD ON FRIDAY, 27 NOVEMBER 2009 AT 8.30AM (AWST)

AT THE CELTIC CLUB, 48 ORD STREET, WEST PERTH WA 6005

Please read the Notice carefully and if you are unable to attend the 2009 Annual General Meeting of Shareholders please complete and return the enclosed Proxy Form in accordance with the specified directions.

Sandfire Resources NL ABN 55 105 154 185

Registered Office 1 Ventnor Avenue West Perth, Western Australia 6005

Postal Address PO Box 1495 West Perth, Western Australia 6872 Telephone: +61-8 9226 5833 Facsimile: +61-8 9321 5844 Email: admin@sandfire.com.au Web: www.sandfire.com.au

NOTICE OF 2009 ANNUAL GENERAL MEETING ABN 55 105 154 185

TIME AND PLACE OF MEETING AND HOW TO VOTE VENUE

The 2009 Annual General Meeting of the shareholders of Sandfire Resources NL Limited will be held at: Celtic Club

48 Ord Street

West Perth, Western Australia, 6005 Commencing 8:30AM (AWST) on Friday, 27 November 2009

VOTING ENTITLEMENTS

For the purposes of the Corporations Act 2001, all securities of the Company that are quoted securities at 8:30AM (AWST) two days prior to the Meeting will be taken, for the purposes of the Meeting, to be held by the persons who held them at the time and such persons are eligible to vote at the Meeting.

HOW TO VOTE

The business of the Meeting affects your shareholding and your vote is important. Please take action by voting in person (or authorised representative) or by proxy.

VOTING IN PERSON

To vote in person, attend the Meeting on the date and at the place set out above. The Meeting will commence at 8:30AM (AWST).

PROXIES

A Proxy Form accompanies this Notice of Annual General Meeting. To be effective the Proxy Form must be completed and received at either the Company’s registered office or its share registry, Security Transfer Registrars, no later than 48 hours before commencement of the Meeting.

Registered Office	Share Registry
Company Secretary	Security Transfer Registrars
Sandfire Resources NL Limited	770 Canning Highway
1 Ventnor Avenue	Applecross WA 6153
West Perth, Western Australia 6005	PO Box 535
PO Box 1495	Applecross WA 6953
West Perth, Western Australia 6872
Or by facsimile on:	Or by facsimile on:
+61-8 9226 5844	+61-8 9315 2233
Or by electronic address:
admin@sandfire.com.au

If any shareholder wishes to lodge a proxy electronically, it will be necessary to scan an image of a signed proxy form and e-mail that image of the proxy form with the signature affixed to be received no later than 48 hours before commencement of the Meeting. This is needed to comply with the requirements of section 250A of the Corporations Act that a valid proxy be in writing and be signed by the shareholder appointing the proxy.

If you are entitled to attend and cast a vote at the Meeting you may appoint up to two proxies. A proxy may be an individual or a corporation but need not be a shareholder. If you appoint two proxies each proxy may exercise half of the shareholders votes if no proportion or number of votes is specified.

If you appoint a proxy but attend the Meeting yourself, the rights of the proxy to speak and vote on your behalf at the Meeting will be suspended while you are present.

CORPORATE REPRESENTATIVES

A corporation may appoint an individual as a representative to exercise its powers as shareholder or as a shareholder’s proxy. The representative should bring to the Meeting evidence of his or her appointment, including any authority under which it is signed, unless it was previously given to the Company’s share registry.

POWERS OF ATTORNEY

A person appearing as an Attorney for a shareholder should produce a properly executed original (or certified copy) of an appropriate Power of Attorney for admission to the Annual General Meeting.

pg. 1

NOTICE OF 2009 ANNUAL GENERAL MEETING ABN 55 105 154 185

NOTICE OF 2009 ANNUAL GENERAL MEETING

Notice is hereby given that the 2009 Annual General Meeting of shareholders of Sandfire Resources NL will be convened at 8:30am on Friday, 27 November 2009 at the Celtic Club, 48 Ord Street, West Perth 6005, Western Australia. An Explanatory Memorandum containing information in relation to the resolutions accompanies this Notice.

AGENDA

ORDINARY BUSINESS

Financial Statements

To receive, consider and discuss the Company’s financial statements and the reports of the Directors and Auditors for the year ended 30 June 2009.

To consider and if thought fit to pass the following resolution as an advisory resolution.

RESOLUTION 1 - ADOPTION OF REMUNERATION REPORT

“That the Remuneration Report forming part of the Company’s 2009 Annual Report be adopted.”

To consider and if thought fit to pass the following resolutions as ordinary resolutions.

RESOLUTION 2 – RE-ELECTION OF DIRECTOR – MILES KENNEDY

“That, in accordance with the Company’s constitution, Mr Kennedy retires by rotation and, being eligible, offers himself for re-election, is re-elected as a director of the Company.”

RESOLUTION 3 – RE-ELECTION OF DIRECTOR – W JOHN EVANS

“That, in accordance with the Company’s constitution, John Evans retires by rotation and, being eligible, offers himself for re-election, is re-elected as a director of the Company.”

RESOLUTION 4 – RATIFICATION OF ISSUE OF 200,000 OPTIONS TO PREMAR RESOURCES PTY LTD

“That, for the purposes of ASX Listing Rule 7.4 and for all other purposes, the Shareholders hereby ratify the allotment and issue by the Company of 200,000 options on the date and on terms and conditions set out in the Explanatory Memorandum that accompanies this Notice of Annual General Meeting.”

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 4 by Premar Resources Pty Ltd and its associates. However, the Company will not disregard a vote if it is cast by Premar Resources Pty Ltd or its associates:

• as the proxy for a person who is entitled to vote, in accordance with directions on the proxy form; or

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

RESOLUTION 5 – ISSUE OF OPTIONS TO MR KARL SIMICH, MANAGING DIRECTOR

“That for the purposes of ASX Listing Rule 10.11, and for all other purposes, this meeting approves the issue of 600,000 options to subscribe for Shares in the Company to Mr K Simich, the managing director of the Company or his nominee, such options to be issued on the terms and conditions set out in Appendix A to the Explanatory Memorandum which accompanied the Notice of Annual General Meeting and hereby authorise the directors to execute such documents and do all such acts and things as shall be necessary or desirable in order to implement and give full effect to this Resolution.”

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 5 by Mr K Simich and his associates or any of their nominees.. However the Company will not disregard a vote if it is cast by Mr K Simich or his associates and any person who may participate in or who might obtain a benefit from the issue of securities referred to in this Resolution:

• as a proxy for a person who is entitled to vote in accordance with directions on the proxy form; or

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

pg. 2

NOTICE OF 2009 ANNUAL GENERAL MEETING ABN 55 105 154 185

RESOLUTION 6 – ISSUE OF OPTIONS TO MR W JOHN EVANS, EXECUTIVE EXPLORATION DIRECTOR

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, this meeting approves the issue of 330,000 options to subscribe for Shares in the Company to Mr WJ Evans, the executive exploration director of the Company or his nominee, such options to be issued on the terms and conditions set out in Appendix A to the Explanatory Memorandum which accompanied the Notice of Annual General Meeting and hereby authorise the directors to execute such documents and do all such acts and things as shall be necessary or desirable in order to implement and give full effect to this Resolution.”

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 6 by Mr WJ Evans and his associates or any of their nominees. However the Company will not disregard a vote if it is cast by Mr WJ Evans or his associates and any person who may participate in or who might obtain a benefit from the issue of securities referred to in this Resolution:

• as a proxy for a person who is entitled to vote in accordance with directions on the proxy form; or

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

RESOLUTION 7 – ISSUE OF OPTIONS TO MR MILES KENNEDY, NON-EXECUTIVE CHAIRMAN

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, this meeting approves the issue of 120,000 options to subscribe for Shares in the Company to Mr M Kennedy, the nonexecutive chairman of the Company or his nominee, such options to be issued on the terms and conditions set out in Appendix A to the Explanatory Memorandum which accompanied the Notice of Annual General Meeting and hereby authorise the directors to execute such documents and do all such acts and things as shall be necessary or desirable in order to implement and give full effect to this Resolution.”

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 7 by Mr MA Kennedy and his associates or any of their nominees.. However the Company will not disregard a vote if it is cast by Mr MA Kennedy or his associates and any person who may participate in or who might obtain a benefit from the issue of securities referred to in this Resolution:

• as a proxy for a person who is entitled to vote in accordance with directions on the proxy form; or

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

RESOLUTION 8 – ISSUE OF OPTIONS TO MR JOHN HUTTON, NON-EXECUTIVE DIRECTOR

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, this meeting approves the issue of 60,000 options to subscribe for Shares in the Company to Mr J Hutton, a non-executive director of the Company or his nominee, such options to be issued on the terms and conditions set out in Appendix A to the Explanatory Memorandum which accompanied the Notice of Annual General Meeting and hereby authorise the directors to execute such documents and do all such acts and things as shall be necessary or desirable in order to implement and give full effect to this Resolution.”

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 8 by Mr J Hutton and his associates or any of their nominees.. However the Company will not disregard a vote if it is cast by Mr J Hutton or his associates and any person who may participate in or who might obtain a benefit from the issue of securities referred to in this Resolution:

• as a proxy for a person who is entitled to vote in accordance with directions on the proxy form; or

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

RESOLUTION 9 – ISSUE OF OPTIONS TO MR JONGHUN JONG, NON-EXECUTIVE DIRECTOR

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, this meeting approves the issue of 60,000 options to subscribe for Shares in the Company to Mr Jonghun Jong, a nonexecutive director of the Company or his nominee, such options to be issued on the terms and conditions set out in Appendix A to the Explanatory Memorandum which accompanied the Notice of Annual General Meeting and hereby authorise the directors to execute such documents and do all such acts and things as shall be necessary or desirable in order to implement and give full effect to this Resolution.”

pg. 3

NOTICE OF 2009 ANNUAL GENERAL MEETING ABN 55 105 154 185

Voting Exclusion Statement

The Company will disregard any votes cast in relation to Resolution 9 by Mr J Jong and his associates or any of their nominees.. However the Company will not disregard a vote if it is cast by Mr J Jong or his associates and any person who may participate in or who might obtain a benefit from the issue of securities referred to in this Resolution:

• as a proxy for a person who is entitled to vote in accordance with directions on the proxy form; or

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

SPECIAL BUSINESS

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

RESOLUTION 10 – AMENDMENTS TO SANDFIRE RESOURCES NL INCENTIVE OPTION SCHEME

“That for the purposes of section 259B(2) of the Corporations Act 2001 (Cth) and Exception 9 (contained in ASX Listing Rule 7.2) to ASX Listing Rule 7.1, approval is hereby given to the Sandfire Resources NL Incentive Option Scheme (approved by shareholders in general meeting on 27 November 2007) being amended as provided by the Deed of Variation tabled and signed by the chairman for the purposes of identification.”

Voting Exclusion Statement

The company will disregard any votes cast on resolution 10 (Amendment to the Sandfire Resources NL Incentive Option Scheme) by the directors of the Company and their associates. However, the Company need not disregard a vote if:

1. it is cast by a director as proxy for a person who is entitled to vote in accordance with the directions on the proxy form; or

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

OTHER BUSINESS

To deal with any other business that may be brought forward in accordance with the Company’s Constitution and the Corporations Act 2001 (Cth).

By order of the Board of Directors

Jean Mathie Company Secretary

DATED this 28[th] day of October 2009

pg. 4

EXPLANATORY MEMORANDUM

This Explanatory Memorandum form part of the Notice of 2009 Annual General Meeting and has been prepared to assist shareholders in considering the business to be transacted at the annual general meeting of the Company to be held on Friday, 27 November at 8.30am.

Financial Statements

The Corporations Act 2001 required that Shareholders view the annual company and consolidated financial statements and reports of the directors and auditors every year. The provisions of the Corporations Act 2001 allow the default option for receiving annual reports to be via a company’s website. The Company has advised its shareholders of this change and allowed them to elect to continue receiving a printed copy of the annual report. Accordingly, a printed copy of the 2009 Annual Report has only been sent to those shareholders who have elected to receive one. Shareholders can access a copy of the 2009 Annual Report on the Company’s website www.sandfire.com.au or can request a printed copy (free of charge) by contacting the Company Secretary on (08) 9321 5887 or by email to admin@sandfire.com.au.

Shareholders will be given the opportunity to ask questions about and make comments on the reports and the Company’s management, business, operations, financial performance and business strategies. Shareholders will also be given a reasonable opportunity to ask a representative of the Company’s auditors, Somes & Cooke, questions relevant to the conduct of the audit, the preparation and content of the Auditors Report, the accounting policies adopted by the Company in relation to the preparation of the financial statements and the independence of the auditors in relation to the conduct of the audit.

RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

Section 298 of the Corporations Act requires that the Annual Director’s Report contain a Remuneration Report prepared in accordance with section 300A of the Corporations Act 2001. The Remuneration Report for the financial year ended 30 June 2009 is set out in the Directors’ Report of the 2009 Annual Report. Section 250R (2) of the Corporations Act 2001 requires companies to put a resolution to their members that the Remuneration Report be adopted. Pursuant to Sections 250R (3) of the Corporations Act 2001 shareholders should note that this resolution is an “advisory only” resolution which does not bind the directors or the Company. However, the directors will take the outcome of the vote into consideration when determining the future remuneration policies for directors and executives. There will be an opportunity for shareholders to comment on and ask questions about the Company’s Remuneration Report.

RESOLUTIONS 2 AND 3 – RE-ELECTION OF DIRECTORS

In accordance with ASX Listing Rule 14.4 and pursuant to the clause 73 of the Company’s Constitution, Mr Miles Kennedy and Mr W John Evans retire by rotation and being eligible offer themselves for re-election as directors of the Company. Details regarding Mr Kennedy and Mr Evans are set out in the Company’s 2009 Annual Report.

RESOLUTION 4 – RATIFICATION OF ISSUE OF 200,000 OPTIONS

On 30 September 2009 the Company announced it had issued 200,000 unlisted options to subscribe for ordinary fully paid shares in the Company at an exercise price of $3.00 per share; the options will vest on 30 September 2010 and will expire on 30 September 2012. The issue of options was made pursuant to the terms and conditions of an Introducer’s Fee Agreement between the Company and Premar Resources Pty Ltd dated 23 September 2009, whereby Premar Resources Pty Ltd will provide the Company with strategic business opportunities with third parties for the purpose of negotiating offtake agreements, joint venture funding, equity funding or other funding.

The terms of the options the subject of this Resolution 4 are set out in Annexure “A” hereto.

pg. 5

EXPLANATORY MEMORANDUM

RESOLUTIONS 5, 6, 7, 8, 9 – ISSUE OF DIRECTORS’ OPTIONS

Under Resolutions 5 to 9 inclusive, shareholders are asked to approve the issue of Directors’ Options, for no cash consideration, to the directors of the Company as follows.

Resolution		Officer	No. Of Director Options
Resolution	5	Karl Simich – Managing Director	600,000
Resolution	6	John Evans – Technical Director	330,000
Resolution	7	Miles Kennedy – Non-executive Chairman	120,000
Resolution	8	John Hutton – Non-executive Director	60,000
Resolution	9	Jonghun Jong – Non-executive Director	60,000

ASX Listing Rule 10.11

Listing Rule 10.11 provides, in essence, that a listed company may not issue securities to any of the following persons without the approval of ordinary shareholders:

• a) a related party; or

• b) a person whose relationship with the company or a related party is, in the opinion of ASX, such that approval should be obtained.

In the circumstances, the issue of options to Messrs Simich, Evans, Kennedy, Hutton and Jong, or their respective nominees, under Resolutions 5 to 9 inclusive, will constitute issues of securities of the Company requiring shareholder approval for the purposes of Listing Rule 10.11.

Number, Price and Allotment

The Company will issue the Directors’ Options described above to each director concerned, or their respective nominees, for no cash consideration and on the terms referred to below, within one month of the date of the Meeting.

If the proposed issue of Directors’ Options to each director, or their respective nominees, is approved by shareholders pursuant to the respective Resolutions, the aggregate number of options that will be issued under Resolutions 5 to 9 inclusive is 1,170,000 Directors’ Options.

Use of Funds Raised

No funds will be raised from the issue of the Directors’ Options under any of Resolutions 5 to 9 inclusive.

Other Information

The Directors’ Options will be exercisable in the manner and at the prices specified in Appendix “B”.

The primary purpose of the issue of Directors’ Options is not to raise capital, but to provide an incentive to the directors. Given this purpose, the Company does not believe that there are any significant opportunity costs or benefits forgone by the issue of the Directors’ Options.

The market price of the Company's shares during the term of the Directors’ Options would normally determine whether or not the Option Holder exercises the Directors’ Option. At the time any Directors’ Options are exercised and Shares issued pursuant to the exercise of any Directors’ Option, the Company's Shares may be trading on ASX at a price which is higher than the Exercise Price of the Directors’ Options. Where this is the case, the opportunity cost may be that the Company could have received greater consideration for the issue of the Shares than the applicable Exercise Price.

During the preceding 12 months ended 20 October 2009, the Company’s Share price has traded from a low of $0.05 per share to a high of $4.39 per Share. The closing price of the Company’s Shares on 27 October 2009, being the last business day on which any sales of Shares were recorded immediately preceding the date of the Notice of Meeting, was $3.70.

ASIC has indicated the Black-Scholes option price calculation method is an acceptable method for valuing options. This method is designed to value listed securities that are freely tradable and hence it is not entirely appropriate or reliable in the current circumstances where the Directors’ Options proposed to be issued pursuant to Resolutions 5

pg. 6

EXPLANATORY MEMORANDUM

to 9 inclusive will be unlisted but will vest and be exercisable in 3 tranches as specified below and in Appendix “B”. Nevertheless, a value for each of the Directors’ Options as at the date of this Notice of Meeting has been estimated to be approximately as set out below for each Directors’ Option by applying the Black-Scholes option pricing model as set out below.

Minimum Exercise Price of Directors’ Options (5-day VWAP up to and including 27
October 2009):
1st Tranche (1/3 of Directors’ Options)	$4.65
2nd Tranche (1/3 of Directors’ Options)	$5.43
3rd Tranche (1/3 of Directors’ Options)	$6.20
Share price used	$3.70
Expiry Date	27 November 2014
Total Directors’Options	1,170,000
Vesting Conditions:
27 November 2010 or there is a Vesting Event1(1stTranche -1/3rd)
27 November 2011 or there is a Vesting Event1(2ndTranche – a further 1/3rd)

• 27 November 2012 or there is a Vesting Event[1] (2[nd] Tranche – a further 1/3[rd] )

Risk free rate			5.53%
Volatility			70.00%
Tranche of Directors’ Options	Black-Scholes notional value for each Directors’ Option (to 3dp)	Black-Scholes total notional	value
1stTranche	$0.790	$308,226
2ndTranche	$1.100	$429,016
3rdTranche	$1.338	$521,706
Total	$1.076	$1,258,948

• Note[1] : A Vesting Event means the occurrence of any one of the following events:

• the service of a bidder’s statement or a like document on the Company; or

• the Relevant Person (as defined in Appendix “B”) ceases to be a director for any reason (including voluntary or involuntary resignation); or

• a merger by way of a scheme of arrangement under the Corporations Act 2001 (Cth) is approved by the Court under section 411(4)(b) of the Corporations Act 2001(Cth); or

• the date upon which a person or a group of associated persons become entitled, subsequent to the date of issue of the Directors’ Options to sufficient Shares to give it or them the ability in general meeting to replace all or allow a majority of Directors in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

The Company currently has the following issued capital.

Number of securities	Class of securities
98,698,465	Ordinary fully paid Shares
8,432,982	Ordinary contributing shares paid to $0.01
1,600,000	Unlisted options exercisable at $0.50 expiring 30/9/2011
491,430	Unlisted options exercisable at $0.35 expiring 7/2/2011
1,420,000	Unlisted options exercisable at $0.40 expiring 8/8/2011
5,880,000	Unlisted options expiring 12/7/2013 exercisable in 3 tranches at $0.60,
	$0.80 and $1.00
1,120,000	Unlisted options exercisable at $1.40 expiring 6/7/2012
200,000	Unlisted options exercisable at $3.00 expiring 30/9/2012

If the entire Directors’ Options issued pursuant to Resolutions 5 to 9, inclusive, are exercised, then the issue of Shares pursuant to the exercise of those Directors’ Options (up to an aggregate of 1,170,000 Shares) will dilute the holdings of the existing shareholders.

If:

• all existing options to acquire Shares are exercised;

• all 1,170,000 Directors’ Options are issued and exercised

pg. 7

EXPLANATORY MEMORANDUM

the total dilution effect of the issue and exercise of the Directors’ Options on the Company’s fully diluted Share capital would be approximately 0.99%

If all the Directors’ Options are issued and then exercised, the total amount payable to the Company on the exercise of all the Directors’ Options would be the sum of $6,349,217

Directors' Recommendation & Interests

At the date of this Notice of Meeting, each of the following directors of the Company had a relevant interest in the number of shares and options set out below.

	Shares	Contributing Shares	Options
Karl Simich	3,549,338	-	2,400,000
John Evans	132,000	-	2,280,000
Miles Kennedy	111,993	753,134	900,000
John Hutton	6,870,216	-	1,300,000
JonghunJong	-	-	-

All of the Directors were available to consider the proposed Resolutions.

Karl Simich declined to make a recommendation about the proposed Resolution 5 on the basis that he has a material personal interest in the outcome of that resolution. Messrs Evans, Kennedy, Hutton and Jong recommend that shareholders vote in favour of Resolution 5 as, having considered Karl Simich’s experience and responsibilities, and the Company’s current circumstances, they each consider the issue of the Directors’ Options to be a reasonable and proper method of providing an incentive to him to encourage the growth of the Company and maximize the value of each shareholder’s investment in the Company.

John Evans declined to make a recommendation about the proposed Resolution 6 on the basis that he has a material personal interest in the outcome of that resolution. Messrs Simich, Kennedy, Hutton and Jong recommend that shareholders vote in favour of Resolution 6 as, having considered John Evans’ experience and responsibilities, and the Company’s current circumstances, they each consider the issue of the Directors’ Options to be a reasonable and proper method of providing an incentive to him to encourage the growth of the Company and maximize the value of each shareholder’s investment in the Company.

Miles Kennedy declined to make a recommendation about the proposed Resolution 7 on the basis that he has a material personal interest in the outcome of that resolution. Messrs Simich, Evans, Hutton and Jong recommend that shareholders vote in favour of Resolution 7 as, having considered Miles Kennedy’s experience and responsibilities, and the Company’s current circumstances, they each consider the issue of the Directors’ Options to be a reasonable and proper method of providing an incentive to him to encourage the growth of the Company and maximize the value of each shareholder’s investment in the Company.

John Hutton declined to make a recommendation about the proposed Resolution 8 on the basis that he has a material personal interest in the outcome of that resolution. Messrs Simich, Evans, Kennedy and Jong recommend that shareholders vote in favour of Resolution 8 as, having considered John Hutton’s experience and responsibilities, and the Company’s current circumstances, they each consider the issue of the Directors’ Options to be a reasonable and proper method of providing an incentive to him to encourage the growth of the Company and maximize the value of each shareholder’s investment in the Company.

Jonghun Jong declined to make a recommendation about the proposed Resolution 9 on the basis that he has a material personal interest in the outcome of that resolution. Messrs Simich, Evans, Kennedy and Hutton recommend that shareholders vote in favour of Resolution 9 as, having considered Jonghun Jong’s experience and responsibilities, and the Company’s current circumstances, they each consider the issue of the Directors’ Options to be a reasonable and proper method of providing an incentive to him to encourage the growth of the Company and maximize the value of each shareholder’s investment in the Company.

Other than the information disclosed above or elsewhere in these Explanatory Notes, no director of the Company has an interest in the outcome of the proposed Resolutions 5 to 9 inclusive (other than as directors of, and holders of securities in, the Company) and neither the directors nor the Company are aware of any other information that is reasonably required by shareholders in order to decide whether or not it is in the Company’s interests to pass Resolutions 5 to 9 inclusive.

pg. 8

EXPLANATORY MEMORANDUM

RESOLUTION 10 – AMENDMENTS TO SANDFIRE RESOURCES NL INCENTIVE OPTION SCHEME

Sandfire Resources NL (the Company ) proposes to amend The Sandfire Resources NL Incentive Option Scheme ( ESOP ) which was approved by shareholders in general meeting on 27 November 2007. The primary purpose of the amendment is to allow the Company to acquire an interest in its own securities in connection with providing assistance to its employees in realising the value of securities issued to them under the ESOP.

The proposal arises in response to an approach to the Company by an employee who has no stock broker and insufficient funds to exercise options issued under the ESOP. A subsidiary object of the amendment is to give the Company (either directly or indirectly via an agent, independent trustee or a subsidiary acting as trustee) the flexibility to assist an employee deal with securities obtained under the ESOP by doing one or any combination of the following.

1. Providing the employee with financial assistance to acquire such securities, including funding the: a. conversion of options into shares or partly paid shares (as the case maybe); b. payment of any unpaid portion of a partly paid share issued on conversion of an option issued under the ESOP;

and such assistance may be provided with or without security (including taking security over securities issued to the employee under the ESOP or derived consequent upon exercise thereof) as the Board sees fit.

1. Acquiring options issued under the ESOP from the employee at a fair price (having regard to factors such as but not limited to the exercise price, the price at which the Company’s fully paid shares are trading, the costs to the Company of converting the options and selling the resultant shares and the risk of the exposure to the vagaries of the market between the dates when the Company purchases the options and either sells them or the shares derived on conversion thereof).

2. Selling options issued under the ESOP (or shares issued consequent on exercise of the same) as bare trustee for the employee (with the Company having the right to recover reasonable costs incurred in respect thereof).

Other amendments are directed at responding to foreshadowed changes to the Federal taxation legislation regarding employee share schemes.

Other amendments introduce flexibility to allow the Company to offer an eligible employee to acquire securities in the Company under the ESOP through an ESOP Trustee who will hold the securities on behalf of that employee subject to the ESOP rules. ESOP securities acquired by the ESOP Trustee will not be pooled with securities held for other employees.

Securities acquired by an ESOP Trustee by way of issue must not, when aggregated with shares issued or issuable on the exercise of options issued under any other employee share scheme, must not exceed any threshold imposed by law (including the ASX Listing Rules).

Multiple employee share schemes may exist under umbrella of the ESOP.

In respect of shares held in the ESOP for an Employee, that Employee:

1. may direct a ESOP Trustee to vote at general meetings of the Company other than voting which occurs by a show of hands;

2. is entitled to receive any dividends and franking credits paid.

Approval for the purposes of section 260C(4) is not being sought meaning that the Company will only provide financial assistance for a ESOP Trustee or employee to acquire securities under the ESOP (including securities acquired consequent on conversion of any acquired under the ESOP) where it may do so in terms of s260A(1)(a) (ie where the assistance does not materially prejudice the interests of the Company or its shareholders or the Company’s ability to pay its creditors). The financial assistance may include but will not necessarily be limited to the payment of the purchase price of the shares, payment of any brokerage applicable to dealing in the securities and so.

Approval for the purposes of section 259B(2) is sought and, if granted, will permit the Company to acquire an interest in and to take security over its own securities to the extent that this is provided for in the ESOP (as amended) or that the ESOP has this effect.

pg. 9

EXPLANATORY MEMORANDUM

Approval for the purposes of Exception 9 will authorise the Company to issue shares under the ESOP without affecting the Company‘s capacity to place up to 15% of its issued capital without shareholder approval.

Copies of the Deed of Variation referred to in the proposed resolution will be made available for inspection by members of the Company at its registered office at any time during business hours during the 28 days prior to the meeting.

GLOSSARY

In the Notice of Annual General Meeting and these Explanatory Notes, unless the context otherwise requires, the following expressions have the following meanings;

“ASX” means Australian Stock Exchange Limited.

“AWST” means Australian Western Standard Time.

“ ASX Listing Rules” means the listing rules of the ASX.

“the Company” means Sandfire Resources NL (ABN 55 105 154 185).

“Corporations Act 2001” means Corporations Act 2001 (Cth).

“Explanatory Notes” means these explanatory notes.

“Meeting” or “Annual General Meeting” means the 2009 Annual General Meeting of shareholders convened by this Notice.

“Notice” or “Notice of Meeting” or “Notice of Annual General Meeting” means the Notice of the 2009 Annual General Meeting of which these Explanatory Notes form part.

“Resolution” means as resolution referred to in the Notice of Annual General Meeting.

“Share” means fully paid ordinary voting Share issued in the capital of the Company.

pg. 10

EXPLANATORY MEMORANDUM

ANNEXURE “A”

TERMS OPTIONS EXPIRING 30 SEPTEMBER 2012

EXERCISABLE AT $3.00 EACH

1. Each Option entitles the holder to one ordinary Share in the capital of the Company, deemed fully paid.

2. The Options are exercisable at any time after 12 months from the date of issue of the Options and prior to 5:00 pm on 30 September 2012 by completing an Option Exercise Form and delivering it together with the payment for the number of Shares in respect of which the Options are exercised to the registered office of the Company.

3. The exercise price of the Options is Three dollars (AUD3.00) per Option.

4. All Shares issued upon exercise of Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for Official Quotation by ASX of all Shares issued upon exercise of Options.

5. In the event of any reconstruction or reorganisation of capital (including consolidation, sub-division, reduction or return) of the issued capital of the Company prior to the Expiry Date, rights of the holders of the Options, the number of Options and/or the exercise price of the Options shall be changed to the extent necessary to comply with the Listing Rules applying to the reorganisation of capital at the time of the reorganisation.

6. Within 5 Business Days of receipt of a properly executed Notice and application monies in respect of the exercise of Options, the Company shall issue the resultant Shares and deliver notification of shareholdings.

7. The Company shall make application to ASX for quotation of Shares (issued pursuant to an exercise of Options) within 7 days of the date of issue.

8. Shares issued pursuant to an exercise of Options shall rank, from the date of issue, pari passu with the then existing Shares in all respects.

9. Options shall be non-transferable by the Holder.

10. Options shall not be quoted on ASX.

11. Holders may only participate in new issues of securities to holders of Shares if an Option has been exercised and Shares issued in respect of the Option before the record date for determining entitlements to the issue. The Company shall give notice to Holders (as required under the Listing Rules) of any new issue before the record date for determining entitlements to the issue.

12. If there is a bonus issue to the holders of Shares (Bonus Issue), the number of Shares over which an Option is exercisable will be increased by the number of Shares which a Holder would have received if the Option had been exercised before the record date for the Bonus Issue (Bonus Shares). The Bonus Shares shall be paid up by the Company out of the profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue shall rank pari passu in all respects with the Shares on issue at the date of issue of the Bonus Shares.

13. If there is a pro rata issue (other than a Bonus Issue) to the holders of Shares during the currency of, and prior to the exercise of, any Options, the exercise price of the Options shall be adjusted in the manner provided for in the Listing Rules.

If, prior to the expiry of any Options, there is a reorganisation of the issued capital of the Company (including, but not limited to, a consolidation, sub-division, cancellation, reduction or return of capital), the rights of Holders shall be changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

pg. 11

EXPLANATORY MEMORANDUM

APPENDIX B

TERMS OF DIRECTORS’ OPTIONS NOVEMBER 2009

The Directors’ Options are issued upon and subject to the following terms and conditions.

• c) Definitions:

• (i) ASX means ASX Limited (ABN 98 008 624 691).

• (ii) Company means Sandfire Resources NL (ABN 55 105 154 185).

• (iii) Exercise Price means the exercise price of each Director’s Option, being:

Tranche 1 Directors’ Options : exercisable at a 20 percent premium to the 5-day VWAP up to and including 27 November 2009.

Tranche 2 Directors’ Options : exercisable at a 40 percent premium to the 5-day VWAP up to and including 27 November 2009.

Tranche 3 Directors’ Options : exercisable at a 60 percent premium to the 5-day VWAP up to and including 27 November 2009.

• (iv) Exercise Notice means the form prescribed by the Company from time to time for the purpose of exercising Directors’ Options.

• (v) Expiry Date means the expiry date of each of the Directors’ Options, being 27 November 2014.

• (vi) Listing Rules means the Listing Rules of the ASX (including the ASTC Settlement Rules, ASX Market Rules and the ACH Clearing Rules).

• (vii) Market Price means the volume weighted average price of all Shares traded on ASX for the five (5) consecutive trading days up to and including the Resolution Date, determined by dividing the aggregate sale price for all Shares traded in that five (5) day period by the total number of the Shares traded.

• (viii) Option Holder means the person or persons registered as the holder of one or more Directors’ Options from time to time.

• (ix) Relevant Persons means:

• a. where the Option Holder is a Director of the Company, that person; and

b. where the Option Holder acquired the Directors’ Option as the nominee of a Director ofthe Company or as a result of a transfer of a Directors’ Option, the Director who nominated the Option Holder or the Director who transferred the Directors’ Option, as applicable.

• (x) Resolution Date means the date on which the resolutions authorising the issue of the Directors’ Options, being Resolutions 5 to 9 inclusive, in the Company’s Notice of Meeting dated XX October 2009, are passed by the shareholders.

• (xi) Share means a fully paid ordinary share in the capital of the Company.

• (xii) Takeover Announcement means the announcement or making of a Takeover Bid for the Company.

• (xiii) Takeover Bid means a takeover bid or offer within the meaning of those terms under the Corporations Act.

• d) The Directors’ Options cannot be exercised before the following dates (referred to as ‘Vesting Conditions’):

• Tranche 1 Directors’ Options : 27 November 2010 being 12 months after the Resolution Date;

• Tranche 2 Directors’ Options : 27 November 2011 being 24 months after the Resolution Date;

pg. 12

EXPLANATORY MEMORANDUM

• Tranche 3 Directors’ Options : 27 November 2012 being 36 months after the Resolution Date;

except where either of the following events occurs before the relevant Vesting Condition is satisfied:

• the service of a bidder’s statement or a like document on the Company; or

• the Relevant Person ceases to be a Director for any reason (including voluntary or involuntary resignation); or

• if a merger by way of a scheme of arrangement under the Corporations Act 2001 (Cth) is approved by the Court under section 411(4)(b) of the Corporations Act 2001 (Cth); or

• the date upon which a person or a group of associated persons become entitled, subsequent to the date of issue of the Directors’ Options to sufficient Shares to give it or them the ability in general meeting to replace all or allow a majority of Directors in circumstances where such ability was not already held by a person associated with such person or group of associated persons.

in which event the Vesting Conditions no longer have application such that the exercise restrictions cease to apply from that time and the Directors’ Options become exercisable on and from the date of occurrence of that event.

• e) Each Directors’ Option is transferable but unlisted.

• f) No monies will be payable for the grant of the Directors’ Options.

• g) A holding statement will be issued for the Directors’ Options.

• h)

• Subject to these Terms and Conditions, each Directors’ Option carries the right to subscribe for one Share.

• i) Subject to d) above, Directors’ Options may be exercised by delivering to the Company’s registered office or the Company’s share registry an Exercise Notice at any time prior to the Expiry Date.

• j) The Exercise Notice must state the number of Directors’ Options to be exercised and be accompanied by the relevant holding statement(s) and a cheque (in Australian currency) made payable to the Company for an amount being the result of the applicable Exercise Price multiplied by the number of Directors’ Options being exercised.

• k) The Directors’ Options may be exercised in whole or in part, and if exercised in part, multiples of 1,000 must be exercised on each occasion.

• l) Following receipt of a properly executed Exercise Notice and cleared application monies in respect of the exercise of any Directors’ Options, the Company will issue the resultant Shares and deliver notification of shareholdings.

• m) The Company will make application to have the Shares (issued pursuant to an exercise of Directors’ Options) listed for quotation by ASX within 7 days of the date of issue.

• n) Shares issued pursuant to an exercise of Directors’ Options shall rank, from the date of issue, pari passu with existing Shares in all respects.

• o) Directors’ Options carry no right to participate in pro rata issues of securities to shareholders unless the Directors’ Options are exercised before the record date for determining entitlements to the relevant pro rata issue.

• p) Each Option Holder will be notified by the Company of any proposed pro rata issue of securities to shareholders in accordance with ASX Listing Rules.

• q) Subject to the Corporations Act 2001 (Cth) and Listing Rules, Directors’ Options do not confer the right to a change in Exercise Price.

• r) In the event of a reorganisation (including reconstruction, consolidation, subdivision, reduction, or return) of the capital of the Company, the terms of the Directors’ Options will be changed to the extent necessary to comply with the requirements of the ASX Listing Rules (in force at the time of the reorganisation).

pg. 13

==> picture [37 x 37] intentionally omitted <==

PROXY FORM

THIS DOCUMENT IS IMPORTANT. IF YOU ARE IN DOUBT AS TO HOW TO DEAL WITH IT, PLEASE CONTACT YOUR STOCK BROKER OR LICENSED PROFESSIONAL ADVISOR.

==> picture [37 x 37] intentionally omitted <==

SANDFIRE RESOURCES NL

REGISTERED OFFICE:

ABN: 55 105 154 185

1 Ventnor Avenue West Perth WA 6005

==> picture [261 x 76] intentionally omitted <==

SHARE REGISTRY: Security Transfer Registrars Pty Ltd All Correspondence to: PO BOX 535, APPLECROSS WA 6953 AUSTRALIA 770 Canning Highway, APPLECROSS WA 6153 AUSTRALIA T: +61 8 9315 2333 F: +61 8 9315 2233 E: registrar@securitytransfer.com.au W: www.securitytransfer.com.au

Code: SFR Holder Number:

SECTION A: Appointment of Proxy

I/We, the above named, being registered holders of the Company and entitled to attend and vote hereby appoint:

OR

The meeting Chairperson The name of the person you are appointing (mark with an "X") (if this person is someone other than the Chairperson of the meeting). or failing the person named, or if no person is named, the Chairperson of the Meeting, as my/our Proxy to act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, as the Proxy sees fit) at the Annual General Meeting of the Company to be held at 8.30am on Friday 27 November 2009 at The Celtic Club, 48 Ord Street, West Perth WA 6005 and at any adjournment of that meeting.

SECTION B: Voting Directions to your Proxy

Please mark "X" in the box to indicate your voting directions to your Proxy.

Resolution

1. Adoption of Remuneration Report

2. Re-election of Director - Miles Kennedy

3.Re-election of Director - W John Evans

1. Ratification of Issue of 200,000 Options to Premar Resources Pty Ltd

2. Issue of Options to Mr Karl Simich, Managing Director 6. Issue of Options to Mr W John Evans, Executive Exploration Director

3. Issue of Options to Mr Miles Kennedy, Non-Executive Chairman

4. Issue of Options to Mr John Hutton, Non-Executive Director

5. Issue of Options to Mr Jonghun Jong, Non-Executive Director

10. Amendments to Sandfire Resources NL Incentive Option Scheme

For Against Abstain*

==> picture [111 x 229] intentionally omitted <==

If no directions are given my proxy may vote as the proxy thinks fit or may abstain.

• If you mark the Abstain box for a particular item, you are directing your Proxy not to vote on your behalf on a show of hands or on a poll and your votes will not be counted in computing the required majority on a poll.

If you wish to appoint the Chairperson as your proxy and you do not wish to direct the Chairperson how to vote, please mark "X" in the box.

By marking this box, you acknowledge that the Chairperson may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him/her other than as a proxy holder will be disregarded because of that interest. If you do not mark this box, and you have not directed your proxy how to vote, the Chair will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution. The Chairperson of the Meeting intends to vote undirected proxies in favour of the resolution.

SECTION C: Please Sign Below

This section must be signed in accordance with the instructions overleaf to enable your directions to be implemented.

Individual or Security Holder Sole Director and Sole Company Secretary

Security Holder 2 Security Holder 3

Director / Company Secretary

Director

==> picture [37 x 37] intentionally omitted <==

3881403029

Reference Number:

SFR

1

1

My/Our contact details in case of enquiries are:

NAME

==> picture [37 x 37] intentionally omitted <==

==> picture [37 x 37] intentionally omitted <==

TELEPHONE NUMBER ( )

NOTES

1. Name and Address

This is the name and address on the Share Register of Sandfire Resources NL. If this information is incorrect, please make corrections on this form. Shareholders sponsored by a broker should advise their broker of any changes. Please note that you cannot change ownership of your shares using this form.

2. Appointment of a Proxy

If you wish to appoint the Chairperson of the Meeting as your Proxy please mark "X" in the box in Section A. Please also refer to Section B of this proxy form and ensure you mark the box in that section if you wish to appoint the Chairperson as your Proxy.

If the person you wish to appoint as your Proxy is someone other than the Chairperson of the Meeting please write the name of that person in Section A. If you leave this section blank, or your named Proxy does not attend the meeting, the Chairperson of the Meeting will be your Proxy. A Proxy need not be a Shareholder of Sandfire Resources NL.

3. Directing your Proxy how to vote

To direct the Proxy how to vote place an "X" in the appropriate box against each item in Section B. Where more than one Proxy is to be appointed and the proxies are to vote differently, then two separate forms must be used to indicate voting intentions.

4. Appointment of a Second Proxy

You are entitled to appoint up to two (2) persons as proxies to attend the meeting and vote on a poll. If you wish to appoint a second Proxy, an additional Proxy form may be obtained by telephoning the Company's share registry +61 8 9315 2333 or you may photocopy this form.

To appoint a second Proxy you must:

• (a) On each of the Proxy forms, state the percentage of your voting rights or number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each Proxy may exercise, each Proxy may exercise half of your votes; and

• (b) Return both forms in the same envelope.

5. Signing Instructions Individual: where the holding is in one name, the Shareholder must sign.

Joint Holding: where the holding is in more than one name, all of the Shareholders must 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 may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place.

If a representative of the corporation is to attend the meeting the appropriate "Certificate of Appointment of Corporate Representative" should be lodged with the Company before the meeting or at the registration desk on the day of the meeting. A form of the certificate may be obtained from the Company's share registry.

6. Lodgement of Proxy

Proxy forms (and any Power of Attorney under which it is signed) must be received by Security Transfer Registrars Pty Ltd no later than 8.30am on Wednesday 25 November 2009, being 48 hours before the time for holding the meeting. Any Proxy form received after that time will not be valid for the scheduled meeting.

Security Transfer Registrars Pty Ltd PO BOX 535 Applecross, Western Australia 6953

Street Address: Alexandrea House, Suite 1 770 Canning Highway Applecross, Western Australia 6153

Telephone +61 8 9315 2333 Facsimile +61 8 9315 2233 Email registrar@securitytransfer.com.au

PRIVACY STATEMENT

Personal information is collected on this form by Security Transfer Registrars Pty Ltd as the registrar for securities issuers for the purpose of maintaining registers of securityholders, facilitating distribution payments and other corporate actions and communications. Your personal details may be disclosed to related bodies corporate, to external service providers such as mail and print providers, or as otherwise required or permitted by law. If you would like details of your personal information held by Security Transfer Registrars Pty Ltd or you would like to correct information that is inaccurate please contact them on the address on this form.

==> picture [37 x 37] intentionally omitted <==

==> picture [37 x 37] intentionally omitted <==

6841403028