TALIUS GROUP LIMITED — Proxy Solicitation & Information Statement 2012

Jun 19, 2012

ADVANCE ENERGY LIMITED ACN 111 823 762

NOTICE OF GENERAL MEETING

A General Meeting of the Company will be held at Suite 2, 16 Ord Street West Perth, Western Australia on 20 July 2012 at 10.00am (WST)

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

Should you wish to discuss any matter please contact the Company Secretary on (08) 9429 2900.

CONTENTS PAGE

Business of the Meeting (setting out the proposed resolutions)	1
Explanatory Memorandum (explaining the proposed resolutions)	4
Definitions	17
Schedule 1	18
Proxy Form

IMPORTANT INFORMATION

TIME AND PLACE OF MEETING

Notice is given that the general meeting of Shareholders of Advance Energy Limited to which this Notice of Meeting relates will be held at Suite 2, 16 Ord Street West Perth, Western Australia on 20 July 2012 at 10.00am (WST).

YOUR VOTE IS IMPORTANT

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

VOTING ELIGIBILITY

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders of the Company at 10.00am (WST) on 18 July 2012.

VOTING IN PERSON

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

VOTING BY PROXY

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

The accompanying Explanatory Statement and the Proxy and voting instructions form part of this Notice of Meeting.

Dated 20 June 2012 By Order of the Board

Mr Alistair Jobling

Company Secretary

ADVANCE ENERGY LIMITED

A C N 1 1 1 8 2 3 7 6 2

NOTICE OF GENERAL MEETING

Notice is hereby given that the General Meeting of Shareholders of Advance Energy Limited ( Company ) will be held at Suite 2, 16 Ord St West Perth, WA on Wednesday 20 July 2012 at 10.00am (WST) ( Meeting ).

The Explanatory Memorandum to this Notice of General Meeting provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and Proxy Form are part of this Notice.

The Directors have determined pursuant to regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders of the Company on Monday 18 July 2012 at 10.00am (WST).

Terms and abbreviations used in this Notice and Explanatory Memorandum are defined in the ‘Definitions’ section of the Explanatory Memorandum.

AGENDA

1. Resolution 1 – Change to Scale of Activities

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

“That, subject to Resolutions 2 and 3 being passed, pursuant to and in accordance with Listing Rule 11.1.2 and for all other purposes, the Company be authorised to make a significant change in the scale of its activities on the terms and conditions in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person who (and any associates of such a person) who may participate in the issue of the Vendor Shares and a person (and any associates of such a person) who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed.

However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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.

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2. Resolution 2 – Issue of Vendor Shares to acquire Celiastad

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

"That, subject to Resolutions 1 and 3 being passed, in accordance with Listing Rule 7.1 of the Listing Rules and for all other purposes, approval is given for the Company to allot and issue 500,000,000 Shares ( Vendor Shares ) to the Celiastad Vendors (or their nominees) on the terms and conditions in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person who (and any associates of such a person) may participate in the issue of the Vendor Shares and a person (and any associates of such a person) who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed.

However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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 – Approval of Issue of Shares for Capital Raising

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

"That, subject to and conditional upon the passing of Resolutions 1 and 2, in accordance with Listing Rule 7.1 and for all other purposes, approval is given for the Company to allot and issue up to 600,000,000 Shares each at an issue price of not less than $0.005 (0.5 cents) and on the terms and conditions in the Explanatory Memorandum."

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person (and any associates of such a person) who may participate in the issue of the Shares and a person (and any associates of such a person) who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed.

However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

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• (b) 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 – Ratification of Prior Issues of Shares

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

• “That, pursuant to and in accordance with Listing Rule 7.4 and for all other purposes, Shareholders ratify the allotment and issue of 22,000,000 Shares each at an issue price of $0.004 to investors who have been identified by the Company as falling within one or more of the classes of exemptions specified in section 708 of the Corporations Act on the terms and conditions set out in the Explanatory Memorandum.”

Voting Exclusion

The Company will disregard any votes cast on this Resolution by a person (and any associates of such a person) who has participated in the issue.

However, the Company will not disregard a vote if:

• (a) it is cast by the person as proxy for a person who is entitled to vote, in accordance with directions on the Proxy Form; or

• (b) 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.

BY ORDER OF THE BOARD

Alistair Jobling Company Secretary Dated: 20 June 2012

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Advance Energy Limited ACN 111 823 762

EXPLANATORY MEMORANDUM

This Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at Suite 2, 16 Ord St West Perth, Western Australia on Wednesday 20 July 2012 at 10.00am (WST)

This Explanatory Memorandum should be read in conjunction with and forms part of the accompanying Notice. The purpose of this Explanatory Memorandum is to provide information to Shareholders in deciding whether or not to pass the Resolutions in the Notice.

A Proxy Form is located at the end of the Explanatory Memorandum.

1. Action to be taken by Shareholders

Shareholders should read the Notice and Explanatory Memorandum carefully before deciding how to vote on the Resolution.

A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (" proxy ") to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company in accordance with the instructions thereon. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person.

2. Summary of the Acquisition

2.1 Background

The Company was incorporated on 16 November 2004 and was admitted to the official list of ASX on 2 June 2006 with the code AVD. The current principal activities of the Company are the exploration for oil and gas in the United States of America.

On 12 June 2012 the Company announced that it entered into a binding heads of agreement ( Acquisition Agreement ) with the Celiastad Vendors to acquire 100% of the issued share capital of Celiastad ( Acquisition ).

Celiastad owns 100% of the issued capital of Celiastad Holdings Ltd, a company incorporated in Cyprus. Celiastad Holdings Ltd has executed a Share Purchase Agreement to acquire 100% of the issued share capital of Epic Energy Ukraine Ltd ( Epic ), a company incorporated in Ukraine. The parties have yet to settle the Share Purchase Agreement but expect to do this when the respective Directors next meet in July 2012.

Epic has an interest in the Ortynytska gas project in Western Ukraine ( Ortynytska Project ). On 15 December 2011, Epic executed a joint activity agreement ( Joint Activity Agreement ) with ZakhidUkrGeologiya, the holder of a special permission licence for the exploration and development of the 19 km[2] Ortynytksa natural gas field which comprises the Ortynytska Project. ZakhidUkrGeologiya is a subsidiary of National Joint Stock Company (NJSC) Nadra Ukrainy.

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The key terms of the Joint Activity Agreement are as follows:

• (a) Advance, through Epic, shall fund all capital and operational commitments and expenses in respect to the Ortynytksa Project;

• (b) Advance, through Epic, shall receive 70% of net profits from production under the Ortynytksa Project until such time as it has recovered 100% of its invested funds; and

• (c) Advance, through Epic, shall receive 50% of net profits thereafter.

2.2 Ortynytska Project

Location

The Ortynytska Project is located in the Northern Carpathian Basin of Western Ukraine and is approximately 50km southwest of the city of L’viv. It is close to the European markets of Poland, Slovakia and Hungary and a comprehensive pipeline network. The North Carpathian Basin stretches in an arc from Ukraine through southern Poland and Slovakia through to the Czech Republic and Austria (see Figure 1).

Figure 1: Carpathian Basin and Location of Ortynytska Project

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Ortynytska
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The Ortynytska Prospect is immediately south of the Zaluzhany gas field which was discovered in 1969 and, at peak, had over 27 wells producing from 13 horizons. The Zaluzhany field produced over 134BCF of total recoverable reserve of 1TCF between 1975 and 1993 with average production of 1 MMCFD per well.

The Ortynytska Prospect is a Miocene gas play comprising thermogenic and microbial gas. The primary target is the Lower Dashava 15 (LD-15) sand which is located at approximately 3,500m and there are two deeper secondary (GA) sands at approximately 4,500m. The lead at LD-15 is a 3-way fault closure against a steeply dipping thrust and the GA leads are fault blocks set up by reverse faults (See Figure 2) .

Figure 2: Ortynytska License – Principal Gas-bearing Horizons

==> picture [359 x 239] intentionally omitted <==

Previous Activity

2D seismic was shot over the area in 1974, 1984 and 1988 with two wells being drilled on the prospect between 1990 and 1996. The first well, Ortynytska-1, was abandoned after reaching approximately 3,400m. It was subsequently determined that the well did not intercept the main Otrynytska feature.

A second well, Ortyntska-3, was drilled to 3,577m between 1993-4 reaching the primary LD-15 sand. The well experienced a number of technical difficulties but did encounter gas shows as predicted at the LD-15 sand. The operator was not able to overcome these difficulties with its limited budget and, consequently, plugged and abandoned the well in 1996.

Further interpretation of the seismic data including a review of the time velocity data have provided further clarity regarding the optimal drilling location and have reduced the risk in undertaking a re-entry and sidetrack workover.

Proposed Work Program

The Company proposes to undertake a re-entry of the Ortynytska-3 well, undertaking a sidetrack to intersect the optimum point of entry to the LD-15 sand. The Company will fund the construction of a drill pad to enable preparations for the re-entry to be undertaken.

It is anticipated that the re-entry could commence in the third quarter of calendar year 2012. The Company therefore plans to seek shareholder approval to raise up to $3,000,000 to fund the re-entry. The proposed issue price is yet to be finalized.

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2.3 Overview of the current operations of Advance

The Company currently retains a 50% working interest in the Mother Lode III project, an oil and gas exploration project located in the Permian Basin of the United States ( Mother Lode III Project ).

The operator of the Mother Lode III Project, Endeavour Energy Partners Inc, drilled an initial well on the project in September 2010 which has been producing since initial drilling. The Company elected not to participate in the drilling of this well. Consequently, Endeavour Energy Partners Inc and other funding contributors are entitled to recover the dry hole and completion costs of the well plus an amount equivalent to 300% of those costs before the Company resumes its interest in the well. The Company retains its 50% interest in the rest of the lease comprising the Mother Lode III Project and is entitled to participate in all future wells.

Since selling its producing assets in December 2010, the Company has been seeking to acquire additional oil and gas exploration projects both within the US and in other geographical markets. The Managing Director of Advance undertook a field visit to Ukraine in November 2011 to evaluate a number of opportunities. The Celiastad Vendors have since resolved a number of the licensing issues and the project is now drill and investment ready.

2.4 Material terms of the Acquisition Agreement

Pursuant to the Acquisition Agreement, the Company will, subject to satisfaction of the conditions precedent, acquire from the Celiastad Vendors 100% of the issued share capital of Celiastad in consideration for the issue of 500,000,000 Shares to be distributed on a pro-rata basis amongst the Celiastad Vendors as set out in Schedule 1.

The Company has also agreed to reimburse the Celiastad Vendors USD$900,000 in exploration costs incurred by Celiastad from any future profit derived from the Ortynytska Project once it has recovered 100% of the cost of re-entering the Ortynytska-3 well and bringing it into production ( Payback ). Once Payback has occurred, 50% of the Company’s net profits from the Ortynytska Project will be paid to the Celiastad Vendors to reimburse the exploration costs and 50% of its net profits will be retained by the Company.

Conditions Precedent

Completion of the Acquisition is subject to a number of conditions precedent, including:

• (a) the Company completing financial and legal due diligence on Celiastad and the Company being satisfied with the outcome of those due diligence investigations;

• (b) each party obtaining all shareholder and regulatory approvals necessary for the Acquisition; and

• (c) Advance and the Celiastad Vendors entering into a formal share sale agreement to fully document the terms of the Acquisition.

These conditions precedent must be satisfied or waived on or before 15 September 2012. If any of the conditions precedent are not satisfied or waived by 15 September 2012, the Acquisition will not proceed.

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2.5 Rationale of the Acquisition

The Acquisition is complementary to the Company’s existing business of acquiring, exploring, developing and producing oil and gas projects and is consistent with the Company's objectives to consider new investment opportunities to improve Shareholder value. The rationale for the Acquisition includes:

• (a) Re-entry of an existing well that encountered gas shows as anticipated and was only not completed due to technical difficulties that can now be overcome;

• (b) Ukraine is a favourable oil and gas regime, particularly for gas production, with subsoil rents of less than US$1/MCF;

• (c) High gas prices (>$11/MCF) as a result of an import agreement with Russia and high demand in Ukraine and Europe;

• (d) The project will utilise the skills and experience of Advance’s commercial manager, Mr Steve Fast, who is fluent in Russian and has over 11 years operating in former Soviet Union countries; and

• (e) ISIS Petroleum Consultants has prepared a report on behalf of the vendors which provides confidence that the proposed operation can be successfully undertaken and that, if successful, there may be sufficient resources to constitute a commercially viable field.

The Company retains its working interest in the Mother Lode III Project but, in light of the over-supply of gas in the US and depressed gas prices, the Company has been seeking to acquire complementary projects in more attractive jurisdictions and geographical markets.

2.6 Impact of the Acquisition and Capital Raising on the Company’s capital structure

At the date of this Notice, there are currently 340,398,150 Shares on issue. Assuming Resolutions 1, 2, 3 and 4 are passed, the pro forma capital structure of the Company, upon completion of the Acquisition and Capital Raising is as follows:

Shares	Number
Current Shares on issue	340,398,150
Shares to be issued pursuant to the Acquisition Agreement (Resolution 2)	500,000,000
Shares to be issued pursuant to the Capital Raising (Resolution 3)	600,000,000
Shares that may be issued before the date of the meeting under the Company’s 15% capacity (Resolution 4)	22,000,000
Shares to be issued in satisfaction of Listed Convertible Note interest1	33,029,616
Total	1,495,427,766
Other Securities
Current Options on issue2	202,931,768

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Listed Convertible Notes	6,675,500
Converting Performance Shares (Unlisted)	9

1 The Company will issue Shares at 80% of volume weighted average sales price of the Shares sold on ASX during the 5 trading days before 30 June 2012 to satisfy $158,543 in interest payable to Listed Convertible Note holders. Based on the most recent share sale price of $0.006, these shares would be issued at $0.0048

2 Options exercisable at $0.03 on or before 31 August 2012

2.7 Proforma Statement of Financial Position

The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.

The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.	The Acquisition and Capital Raising will have the following impact on the Company’s Balance Sheet.
Consolidated Balance Sheet as at 31 May 2012and Proforma Balance Sheet post Transaction
	31/12/2011 (Audited)	Movements Since 31 December, 2011	Notes	Pro-Forma Pre Acquisition and Placement 31 May 2012	Acquisition and Placement Adjustments	Notes	Pro-Forma Post Acquisition & Placement
	$	$		$	$		$
Current assets
Cash and cash equivalents	144,532	9,706	1,2,3,4,6	154,238	2,800,913	9,10	2,955,151
Trade & other receivables	42,600			42,600			42,600
Total Current Assets	187,132			196,838			2,997,751
Non-Current Assets
Property, Plant and equipment	5,844			5,844			5,844
Oil and Gas Exploration	609,981			609,981			609,981
Other Financial Assets	0				2,000,000	8	2,000,000
Total Non-Current Assets	615,825			615,825			2,615,825
Total Assets	802,957			812,663			5,613,576
Current Liabilities
Trade and otherpayables	420,440	(60,000)	4	360,440			360,440
Interest BearingLiabilities	281,785	(98,000)	2	183,785			183,785
Total Current Liabilities	702,225			544,225			544,225
Non-Current Liabilities
Interest BearingLiabilities	6,675,500			6,675,500			6,675,500
Total Non-Current Liabilities	6,675,500			6,675,500			6,675,500
Total Liabilities	7,377,725			7,219,725			7,219,725
Net Assets	(6,574,768)			(6,407,062)			(1,606,149)
Equity
Contributed equity	16,109,747	478,237	3,5,6,7	16,587,984	4,800,913	8,9,10	21,388,897
Reserves	(714,262)			(714,262)			(714,262)
Accumulated losses	(21,970,253)	(310,531)	1,5,7	(22,280,784)			(22,280,784)
Total Equity	(6,574,768)			(6,407,062)			(1,606,149)

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Notes:	Description	# shares	Price	$	Comments
1	Cost of Operations since 31 Dec			152,000	Net decrease in cash held at 31 March 2012
2	RepayBorrowings			98,000	Asper Appendix 5B
3	Share Placement & 15%			219,706	SPP and 15% Placement(Feb 12)
4	Receipt of SPP applications in 2011			60,000	Received inpriorQuarter
5	Issue of shares for interest- MarQtr	49,540,938	0.0032	158,531	Equity and retained earnings
6	29 MayPlacement	25,000,000	0.004	100,000	Approved by shareholders at AGM
7	Issue of shares for interest- JunQtr	33,029,792	0.0048	158,543	Equity and retained earnings
8	Issue of shares to Vendor	500,000,000	0.004	2,000,000
9	Placement of Offer Shares	600,000,000	0.005	3,000,000
10	Costs of Offer			199,087	Estimated

2.8 Use of funds and budget

The Company’s has current cash reserves of $100,000 as at the date of this Notice. The Company intends to apply funds raised pursuant to the Capital Raising (assuming a Capital Raising of up to A$3,000,000) as follows:

Use	Amount (A$)
Well Preparation incl well log analysis	75,000
Re-entry of Ortynytska-3 well	2,500,000
Mother Lode III Project expenditure	75,000
Working capital and administration expenses	400,000
Total	3,050,000

2.9 Risk factors

Shareholders should be aware that the Company will be subject to a number of risks if the Acquisition is completed.

If the Acquisition is completed, some of the material risk factors include:

• (a) ( exploration and development ): by its nature, the exploration and development of an oil and gas project is a high risk undertaking with no assurance of success. The Company intends to raise funds to undertake a reentry of a single well and, if unsuccessful, the value of Shares is likely to be adversely affected;

• (b) ( Ukraine legal environment ):- Ukraine’s legal system is less developed than more established countries and potential risks include political difficulties, a high degree of discretion held by various government agencies and officials, conflicts of interest and a lack of guidance on the implementation of applicable rules and regulation;

• (c) ( Reliability of technical information and project data ):- the Company has obtained and relied on available information about the license and historical exploration. Some of this information may be dated, incomplete or in a format/ language that is sub-optimal for the purpose of assessing or planning operations.

• (d) ( resource exploration ): resource estimations are expressions of judgment which are imprecise;

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• (e) ( Drilling contract risks ):- Advance will need to engage the services of third parties to undertake its proposed operations. There may be demand for limited equipment that could result in delays and the failure of a contractor to perform its contractual obligations would have a materially adverse impact on the Company;

• (f) ( commodity price volatility ): an adverse fall in the prices of gas may adversely affect the development of the Ortynytska Project. In particular, gas prices in Ukraine could be affected if the Government were to obtain a reduction in the price of gas imported from Russia;

• (g) ( operating risks in Ukraine ): changes to Ukraine’s minerals exploration and development or investment policies and legislation or a shift in political attitude may adversely affect the Company’s operations and profitability;

• (h) ( environmental risks ): the Company will be subject to environmental laws and regulations in connection with operations it may pursue in the oil and gas industry in Ukraine. Further, the Company may require approval from the relevant authorities before it can undertake activities that are likely to impact the environment. Failure to obtain such approvals will prevent the Company from undertaking its desired activities;

• (i) ( general economic and political risks ): changes in the general economic and political climate in Ukraine, Australia and on a global basis could impact on economic growth, commodity prices, interest rate and the taxation and tariff laws which may affect the value and viability of any activity that may be conducted by the Company; and

• (j) ( funding ): the successful realisation of the Company’s plans will be dependent upon obtaining the necessary funding. At present, the Company has less than $100,000 in cash and will need to raise additional funds for both operations as well as for working capital.

2.10 Directors’ Recommendations

The Directors consider that the Acquisition represents an opportunity for the Company to develop gas production in a favourable environment within a relatively short time frame.

The re-entry of the Ortynytska-3 well could commence in the first quarter of FY2013 and a successful re-entry would give Advance 70% of cash flows until Payback is achieved and 50% thereafter. There are additional resources and, if the proposed operation is successful, there will be opportunities to expand production and resources.

For the above reasons, the Directors consider that the transactions the subject of the Resolutions are in the best interests of the Company and recommend that Shareholders vote in favour of all Resolutions. The current Directors have agreed to put the Resolutions to Shareholders and have approved the information contained in this Explanatory Memorandum.

Each of the current Directors intends to vote their Shares in favour of each of the Resolutions.

2.11 Future of the Company if Resolutions 1, 2 and/or 3 are not passed

If any of Resolutions 1, 2 or 3 are not passed and the Acquisition is not completed, the Company will have difficulty meeting the conditions of Listing Rules 12.1 and 12.2

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which require listed companies to have a sufficient level of activity and an adequate financial condition to remain quoted on ASX. In the event that Resolutions 1 to 3 are not passed, ASX may suspend the quotation of the Company’s securities.

2.12 Forward looking statements

The forward looking statements in this Notice of Meeting are based on the Company’s current expectations about future events. They are, however, subject to known and unknown risks, uncertainties and assumptions, many of which are outside the control of the Company and its Directors that could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied by the forward looking statements in this Notice of Meeting. These risks include but are not limited to, the risks outlined in Section 2.9. Forward looking statements include those containing words such as ‘anticipate’, ‘estimates’, ‘should’, ‘will’, ‘expects’, ‘plans’ or similar expressions.

3. Resolution 1 – Change to Scale of Activities

3.1 Background

Resolution 1 seeks approval from Shareholders for a change to the scale of the activities of the Company.

Pursuant to the Acquisition Agreement, the acquisition of Celiastad by the Company is subject to a condition precedent to obtain Shareholder Approval.

Resolution 1 is an ordinary resolution and is subject to the approval of Resolutions 2 and 3.

3.2 Listing Rule 11.1 Requirements

Chapter 11 of the Listing Rules requires Shareholders to approve any significant change in the nature or scale of a company's activities. The completion of the Acquisition by the Company will have the effect of increasing the scale of the Company's activities .

Resolution 1 seeks Shareholder approval to allow the Company to complete the Acquisition thereby increasing the scale of its activities (not its nature).

Where a Company seeks to change the scale of its activities, it must:

• (a) under Listing Rule 11.1.1, notify ASX of the proposed change;

• (b) under Listing Rule 11.1.2, obtain shareholder approval to undertake the change; and

• (c) under Listing Rule 11.1.3, meet the requirements of chapters 1 and 2 of the Listing Rules as if the Company was applying for admission to the official list of ASX, if required by ASX. The ASX has confirmed that the Company does not need to re-comply with the requirements of chapters 1 and 2 of the Listing Rules.

The Acquisition Agreement is conditional on satisfaction of the events listed in Section 2.4 and, even if Resolutions 1, 2 and 3 are approved, the Acquisition may still not proceed. Sections 2.4, 2.6 and 2.9 contain information on the Acquisition and the likely affect that the Acquisition will have on the Company if it proceeds.

A voting exclusion statement is included in the notice.

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4. Resolution 2 – Issue of Vendor Shares to acquire Celiastad

4.1 General

In accordance with the terms and conditions of the Acquisition Agreement, the Company will acquire 100% interest in Celiastad in consideration for the issue of 500,000,000 Shares to the Celiastad Vendors on a pro-rata basis as set out in Schedule 1.

Material terms of the Acquisition Agreement are set out in section 2.4 of the Explanatory Memorandum.

Resolution 2 seeks Shareholder approval for the authority to issue to the Celiastad Vendors (or their nominees) the 500,000,000 Vendor Shares.

Resolution 2 is an ordinary resolution and is subject to the approval of Resolutions 1 and 3.

4.2 Listing Rule 7.1

Listing Rule 7.1 requires Shareholder approval for the issue of the Vendor Shares. Listing Rule 7.1 provides, subject to certain exceptions, that Shareholder approval is required for any issue of securities by a listed company, where the securities proposed to be issued represent more than 15% of the Company’s securities then on issue.

The issue of the Vendor Shares represents more than 15% of the Company's securities on issue for the purposes of Listing Rule 7.1. The Company is seeking Shareholder approval of the issue of the Vendor Shares so that the Company does not exceed its 15% capacity under Listing Rule 7.1. Accordingly, Shareholder approval is sought in accordance with Listing Rule 7.3.

4.3 Technical information required by Listing Rule 7.3

For the purposes of the Shareholder approval of the issue of the Vendor Shares and the requirements of Listing Rule 7.3, information is provided as follows:

• (a) the maximum number of Shares to be issued to the Celiastad Vendors is 500,000,000 Shares;

• (b) in accordance with the terms of the Acquisition Agreement it is intended that the Company will issue the Vendors Shares no later than 3 months after the date of the Meeting (or such longer period of time as permitted by an ASX waiver or modification of the Listing Rules) and it is intended that allotment will occur on the same date;

• (c) the Vendor Shares issued will be fully paid ordinary shares in the capital of the Company on the same terms as the Company’s excising Shares on issue;

• (d) the Vendor Shares will be issued in consideration of the Acquisition and as such no funds will be raised;

• (e) the Vendor Shares will be issued to the Celiastad Vendors (or their nominees) in the proportion set out in Schedule 1.

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4.4 Interests and recommendations of Directors

The existing Directors do not have an interest in Resolution 2. For the reasons outlined in Sections 2.5 and 2.10, the Directors therefore recommend that Shareholders vote in favour of Resolution 2.

5. Resolution 3 – Approval of Issue of Shares for Capital Raising

5.1 General

Resolution 3 seeks Shareholder approval for the issue of up to 600,000,000 Shares at an issue price of not less than $0.005 (0.5 cents) to raise up to $3,000,000 (before costs).

The terms of the Capital Raising are yet to be finalised. The Company will apply for official quotation of the Capital Raising shares on the ASX in accordance with the Listing Rules.

5.2 Listing Rule 7.1

Listing Rule 7.1 requires Shareholder approval for the Capital Raising. A summary of Listing Rule 7.1 is set out in Section 4.2 above.

Pursuant to Resolution 3, Shares will be issued to non-related parties as part of the Capital Raising and for this reason, approval for the issue of Shares to non-related parties is required pursuant to Listing Rule 7.1.

The shares to be issued pursuant to the Capital Raising represents more than 15% of the Company's securities on issue for the purposes of Listing Rule 7.1. The Company is seeking Shareholder approval of the Capital Raising so that the Company does not exceed its 15% capacity under Listing Rule 7.1. Accordingly, Shareholder approval is sought in accordance with Listing Rule 7.3.

The minimum price at which Shares may be issued under Resolution 3 is $0.005 (0.5 cents).

5.3 Technical information required by Listing Rule 7.3

For the purposes of the Shareholder approval of the issue of Shares under the Capital Raising and the requirements of Listing Rule 7.3, information is provided as follows:

• (a) the maximum number of Shares to be issued pursuant to Resolution 3 is 600,000,000 Shares;

• (b) the Shares issued pursuant to Resolution 3 will be issued no later than 3 months after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the Listing Rules) and it is intended that allotment will occur on the same date;

• (c) the Shares will each have an issue price of not less than $0.005 (0.5 cents);

• (d) the Shares will be issued under a prospectus to the general public and to sophisticated investor clients of various brokers. These parties will not be related parties of the Company;

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• (e) the Shares will be fully paid ordinary shares in the capital of the Company and will rank equally with the existing Shares on issue; and

• (f) the Company intends to use the funds raised from the Capital Raising to undertake exploration activities on the Ortynytska Project and for working capital purposes.

5.4 Interests and recommendations of Directors

The existing Directors do not have an interest in Resolution 3. For the reasons outlined in Sections 2.5 and 2.10 above, the Directors therefore recommend that Shareholders vote in favour of Resolution 3.

6. Resolution 4 – Ratification of Prior Issue of Shares

6.1 General

The Company intends to issue before the date of the Meeting up to 22,000,000 Shares at an issue price of 0.4 cents per Share to raise an additional $88,000.

Resolution 4 seeks Shareholder ratification pursuant to Listing Rule 7.4 for the issue of up to 22,000,000 Shares.

6.2 Listing Rule 7.4

The 22,000,000 Shares will be issued within the 15% annual limit permitted under Listing Rule 7.1, without the need for Shareholder approval.

Listing Rule 7.4 provides that where a company in an Meeting ratifies the previous issue of securities made pursuant to Listing Rule 7.1 (and provided that the previous issue did not breach Listing Rule 7.1) those securities will be deemed to have been made with shareholder approval for the purpose of Listing Rule 7.1.

The effect of Shareholders passing Resolution 4 by ratifying the issue of the Shares will be to restore the Company’s ability to issue further securities, to the extent of 22,000,000 Shares, during the next 12 months.

Resolution 4 is an ordinary resolution.

6.3 Technical information required by Listing Rule 7.4

Pursuant to and in accordance with Listing Rule 7.5, information is provided as follows:

• (a) Up to 22,000,000 Shares may be allotted prior to the date of the Meeting;

• (b) The issue price of the Shares which may be allotted is 0.4 cents per Share;

• (c) the Shares issued will all be fully paid ordinary shares in the capital of the Company and rank equally in all respects with the Company’s existing Shares on issue issued;

• (d) the Shares will be allotted and issued by way of a placement to investors falling within one or more of the classes of exemptions specified in Section 708 of the Corporations Act. None of the subscribers are related parties of the Company and no subscriber holds an interest of 20% or greater in the capital of the Company as a result of the issue of the Shares; and

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• (e) the Company plans to use the funds raised from this capital raising for working capital purposes.

• (f) a voting exclusion statement is included in the Notice.

6.4 Interests and Recommendations of Directors

None of the Directors have an interest in the outcome of Resolution 4. Each of the Directors approved the proposal to put the Resolution 4 to Shareholders and each of the Directors recommends that Shareholders vote in favour of the Resolution 4.

7. ENQUIRIES

Shareholders are requested to contact Company Secretary on (08) 9429 2900 if they have any queries in respect of the matters set out in these documents.

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Definitions

In this Notice:

$ means Australian dollars.

Acquisition means the acquisition by the Company of all of the issued capital of Celiastad in accordance with the terms of the Acquisition Agreement.

Acquisition Agreement has the meaning given in Section 2.1.

ASX means ASX Limited and where the context permits the Australian Securities Exchange operated by ASX Limited.

Board means the Company's current board of Directors.

Capital Raising means the proposed issue of Shares referred to in Resolution 3.

Celiastad means Celiastad Pty Ltd (ACN 158 828 838).

Celiastad Share means an ordinary fully paid share in the issued capital of Celiastad.

Celiastad Vendors mean the holders of Celiastad Shares being those entities listed in Schedule 1.

Company or Advance means Advance Energy Limited (ACN 111 823 762).

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Director means a director of the Company and Directors means all of them.

Explanatory Memorandum means this explanatory memorandum accompanying the Notice.

Joint Activity Agreement has the meaning given in Section 2.1.

Listing Rules means the listing rules of ASX.

Meeting or Meeting has the meaning given in the introductory paragraph of the Notice.

Mother Lode III Project has the meaning given in Section 2.3.

Notice or Notice of Meeting or Notice of General Meeting means the Notice of General Meeting to which the Explanatory Memorandum is attached.

Ortynytska Project has the meaning given in Section 2.1.

Payback has the meaning given in Section 2.4.

Proxy Form means the proxy form attached to the Notice.

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

Schedule means a schedule to this Notice.

Section means a section of this Notice.

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

Shareholder means a shareholder of the Company.

Vendor Shares has the meaning given in Resolution 2.

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

In this Notice, words importing the singular include the plural and vice versa.

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SCHEDULE 1 – CELIASTAD VENDORS AND VENDOR SHARES

Celiastad Vendor (or nominee)	CELIASTAD Shares	Shares
Michael Thomas Musk & Anne Catherine Musk	44,006	22,002,919
Mr Nathan James Bray	44,006	22,002,919
AH Super PtyLtd	31,433	15,716,371
GEBA PtyLtd	31,433	15,716,371
Mr Dale Allan Bryan & Mrs TracyTzu-Lei Bryan	31,433	15,716,371
Sacco Developments Australia PtyLtd	31,433	15,716,371
SMC Capital PtyLtd	31,433	15,716,371
Suburban Holdings PtyLtd	31,433	15,716,371
Quintero GroupLtd	30,866	15,433,476
Feint Holdings PtyLtd	26,456	13,227,840
Mr David James Young& Mrs Roberta Maria Young	26,456	13,227,840
Revolve Projects PtyLtd	26,456	13,227,848
Florella Holdings PtyLtd	15,716	7,858,185
Mr Darren Blumenthal	15,716	7,858,185
Mr Nigel Marris Simpson	15,716	7,858,185
Mr Benjamin W Crossing	12,573	6,286,548
Abbie Stuart Durtanovich	9,430	4,714,911
Australian Trade Access PtyLtd	9,430	4,714,911
Detroit Capital	9,430	4,714,911
Jacqueline Heather Clarke	9,430	4,714,911
Hillman Hillman and Hoo PtyLtd	6,286	3,143,274
Ms Patricia Self	6,286	3,143,274
Bjorn Johnsson	3,143	1,571,637,
Mr Alexander McHenry& Mrs Kath McHenry	24,000	12,000,000
Gold Wells PtyLtd	42,000	21,000,000
Emerald Nominees PtyLtd	80,000	40,000,000
David Sheridan	20,000	10,000,000
Portinfer Capital Ltd	66,000	33,000,000
NellyPietje Bakker	8,000	4,000,000
Sea Blue PtyLtd	4,000	2,000,000
All Power PtyLtd	6,000	3,000,000
Confadent Limited	50,000	25,000,000
Bogart GroupLimited	50,000	25,000,000
Melbor PtyLtd	100,000	50,000,000
Nordwand Investments PtyLtd	50,000	25,000,000
TOTAL	1,000,000	500,000,000

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ADVANCE ENERGY LIMITED

ACN 111 823 762

P R O X Y F O R M GENERAL MEETING The Company Secretary Advance Energy Limited

By delivery: By post: By facsimile: Advance Energy Limited Advance Energy Limited 08 9429 2900 Suite 2, 16 Ord Street PO Box 1779 WEST PERTH WA 6005 WEST PERTH WA 6872 I/We_______________

of _________________

being a Shareholder/Shareholders of the Company and entitled to _________

votes in the Company, hereby appoint _____________ OR the Chair of the Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, and subject to the relevant laws as the proxy sees fit, at the Meeting of the Company to be held at Suite 2, 16 Ord St West Perth, WA on 20 July 2012 at 10.00am (WST). If 2 proxies are appointed, the proportion or number of votes of this proxy is authorised to exercise is * [ ]% of the Shareholder’s votes*/ [ ] of the Shareholder’s votes. (An additional Proxy Form will be supplied by the Company, on request).

OR

Voting on Business of the Meeting

For Against Abstain

Resolution 1 Approve Change of Scale Resolution 2 Issue of Vendor Shares to Acquire Celiastad Resolution 3 Approve Issue of Shares for Capital Raising Resolution 4 Ratification of Prior Issue of Shares

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

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

Authorised signature/s This section must be signed in accordance with the instructions overleaf to enable your voting instructions to be implemented.

Individual or Shareholder 1 Shareholder 2 Shareholder 3 Sole Director and Sole Company Director Director/Company Secretary Secretary ____ ____ _____ Contact Name Contact Daytime Telephone Date

1Insert name and address of Shareholder 2 Insert name and address of proxy *Omit if not applicable

Instructions for Completing ‘Proxy’ Form

A Shareholder entitled to attend and vote at the Meeting may appoint a natural person as the Shareholder's proxy to attend and vote for the Shareholder at that Meeting. If the Shareholder is entitled to cast 2 or more votes at the Meeting the Shareholder may appoint not more than 2 proxies. Where the Shareholder appoints more than one proxy the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If such proportion or number of votes is not specified each proxy may exercise half of the Shareholder's votes. A proxy may, but need not be, a Shareholder of the Company.

If a Shareholder appoints a body corporate as the Shareholder’s proxy to attend and vote for the Shareholder at that Meeting, the representative of the body corporate to attend the Meeting must produce the 'Certificate of Appointment of Representative' prior to admission. A form of the certificate may be obtained from the Company’s share registry.

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

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

Individual: Where the holding is in one name, the member must Joint Holding: Where the holding is in more than one name all of the holders must sign. Power of Attorney: if signed under a power of attorney, you must have already lodged it with the registry, or alternatively, attach a certified photocopy of the power of attorney to this Proxy Form when you return it. Companies: a director can sign jointly with another director or a company secretary. A sole director who is also a sole company secretary can also sign. Please indicate the office held by signing in the appropriate space.

If a representative of the corporation is to attend the Meeting the appropriate "Certificate of Appointment of Representative" should be produced prior to admission. A form of the certificate may be obtained from the Company’s share registry.

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

Proxy Forms (and the power of attorney or other authority, if any, under which the Proxy Form is signed) or a copy or facsimile which appears on its face to be an authentic copy of the Proxy Form (and the power of attorney or other authority) must be deposited at or received by facsimile transmission at the Company's office (Suite 2, 16 Ord Street, West Perth, WA 6005 or Facsimile number 9486 1011 if faxed within Australia or +61 8 9486 1011 if faxed from outside Australia) not later than 48 hours prior to the time of commencement of the Meeting being 10.00am (WST) on 20 July 2012.

Proxy forms received later than this time will be invalid.