XSTATE RESOURCES LIMITED — Proxy Solicitation & Information Statement 2011

Nov 20, 2011

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XState Resources Limited

XState Resources Limited ABN 96 009 217 154 Registered Office Postal address 41 Stirling Highway PO Box 985 Nedlands WA 6009 Nedlands WA 6909 Tel: +61 8 9423 3200 Website Fax: +61 8 9389 8327 www.xstate.com.au

21 November 2011

ASX Limited

Electronic lodgement

NOTICE OF GENERAL MEETING

XState Resources Limited advises that it has today despatched the attached notice of General Meeting to its shareholders.

For and on behalf of the Board.

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XSTATE RESOURCES LIMITED

ABN 96 009 217 154

NOTICE OF GENERAL MEETING

PROXY FORM

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AND

EXPLANATORY MEMORANDUM

Date of Meeting 21 December 2011

Time of Meeting 10.30 am (WST)

Place of Meeting 208 Bagot Road, Subiaco, Perth, Western Australia

XSTATE RESOURCES LIMITED

NOTICE OF GENERAL MEETING

Notice is hereby given that a General Meeting of the Shareholders of XState Resources Limited will be held at 10.30 am (WST) on 21 December 2011 at 208 Bagot Road, Subiaco, Perth, Western Australia.

An Explanatory Memorandum containing information in relation to the resolution to be put to the meeting accompanies this Notice.

In order to determine voting entitlements, the register of Shareholders will be closed at 8.00pm (Sydney time) on 18 December 2011.

AGENDA

To consider and, if thought fit, to pass the following resolution.

ORDINARY BUSINESS

ORDINARY RESOLUTION 1: RATIFICATION OF PREVIOUS ISSUE OF SHARES

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

“That, for the purpose of Listing Rule 7.4 of the ASX Listing Rules and for all other purposes, the Company ratifies the issue and allotment of 11,630,488 Shares issued on the terms and conditions outlined in the Explanatory Statement.”

ASX Voting Exclusion: The Company will disregard any votes cast on Resolution 1 by any person who participated in the issue and any associates of those persons. However, the Company need not disregard a vote if cast by a person as proxy for a person who is entitled to vote, in accordance with the directions of the proxy form or 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

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D M McARTHUR

Company Secretary

Dated: 21 November 2011

XSTATE RESOURCES LIMITED

EXPLANATORY MEMORANDUM

This Explanatory Memorandum is intended to provide shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of General Meeting (“ Notice ”) of the Company.

The Directors of the Company (“ Directors ”) recommend shareholders read this Explanatory Memorandum in full before making any decision in relation to the resolutions.

The following information should be noted in respect of the various matters contained in the accompanying Notice:

ORDINARY RESOLUTION 1: Ratification of Previous Issue of Shares

Background

On 8 November 2011 the Company advised that it had placed 11,630,488 shares at 6.3 cents per share to raise $ 732,720 before costs (Placement). The placement was made pursuant to the Company’s 15% placement capacity.

Resolution 1 seeks Shareholder ratification for the issue of the placement shares.

ASX Listing Rule Requirements

ASX Listing Rule 7.1 provides that a company must not, subject to specified exceptions, issue or agree to issue more equity securities during any 12 month period than that amount which represents 15% of the number of fully paid ordinary securities on issue at the commencement of that 12 month period.

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

By ratifying this placement, the Company will retain the flexibility to issue equity securities in the future up to the 15% annual placement capacity set out in ASX Listing Rule 7.1 without the requirement to obtain prior Shareholder approval.

In accordance with the requirements of Listing Rule 7.5, the following information is provided to Shareholders to allow them to assess the ratification of the issue of the Shares the subject of this Resolution 1:

• (a) the number of Shares which the Company issued was 11,630,488;

• (b) the price for the issue was 6.3 cents per share;

• (c) the Shares issued were fully paid ordinary Shares in the capital of the Company and rank pari passu with the Company’s existing Shares;

• (d) the Shares were issued to investors through a licensed Australian Financial Services provider in accordance with the provisions of Section 708 of the Corporations Act; and

• (e) the funds raised from the Placement will be used for:

• the Company’s share of the costs of testing the Sidi Dhaher well; and

• providing general working capital.

PROXY FORM

APPOINTMENT OF PROXY XSTATE RESOURCES LIMITED

GENERAL MEETING

I/We

of

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

Appoint

Name of proxy

OR the Chair of the General Meeting as your proxy

or failing the person so named or, if no person is named, the Chair of the General Meeting, or the Chair’s nominee, to vote in accordance with the following directions, or, if no directions have been given, as the proxy sees fit, at the General Meeting to be held at 10.30am (WST) on 21 December 2011 at 208 Bagot Road, Subiaco, Perth, Western Australia, and at any adjournment thereof.

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

Voting on Business of the General Meeting

FOR AGAINST ABSTAIN

Resolution 1- Ratification of Previous 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

%

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

Contact Name: _____ Contact Ph (daytime): ____

XSTATE RESOURCES LIMITED

Instructions for Completing ‘Appointment of Proxy’ Form

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

2. (a) if proxy holders vote, they must cast all directed proxies as directed; and

3. (b) any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

Further details on these changes is set out below.

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

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

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

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

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

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

7. ( Transfer of non-chair proxy to chair in certain circumstances ): Section 250BC of the Corporations Act provides that, if:

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

9. (b) the appointed proxy is not the chair of the meeting; and

10. (c) at the meeting, a poll is duly demanded on the resolution; and

11. (d) either of the following applies:

12. (i) the proxy is not recorded as attending the meeting; (ii) the proxy does not vote on the resolution,

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

5. ( Signing Instructions ):

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

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

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

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

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

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

• (a) post to PO Box 985, Nedlands WA 6009; or

• (b) facsimile to the Company on facsimile number (+61 8) 9389 8327; or

• (c) email to the Company at davidm@broadwaymgt.com.au

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

Proxy forms received later than this time will be invalid.