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SIRIUS RESOURCES NL ABN 46 009 150 083 NOTICE OF GENERAL MEETING AND EXPLANATORY STATEMENT For a General Meeting to be held on Friday 17 December 2010 at 11:30am (Western Standard Time) at The Chartered Secretaries Association, Ground Floor, 8 Victoria Avenue, Perth, Western Australia This is an important document. Please read it carefully in its entirety. If you are unable to attend the Meeting, please complete the proxy form enclosed and return it in accordance with the instructions set out on that form. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisors prior to voting.

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  • SIRIUS RESOURCES NL ABN 46 009 150 083

    NOTICE OF GENERAL MEETING AND

    EXPLANATORY STATEMENT

    For a General Meeting to be held on Friday 17 December 2010 at 11:30am (Western Standard Time) at

    The Chartered Secretaries Association, Ground Floor, 8 Victoria Avenue, Perth, Western Australia

    This is an important document. Please read it carefully in its entirety.

    If you are unable to attend the Meeting, please complete the proxy form enclosed and return it in accordance with the instructions set out on that form.

    If Shareholders are in doubt as to how they should vote, they should seek advice from

    their professional advisors prior to voting.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 2

    CONTENTS

    Notice of Meeting (setting out the proposed Resolutions) Explanatory Statement (explaining the proposed Resolutions) Glossary Annexure 1 – INDEPENDENT EXPERT REPORT Annexure 2 – TERMS AND CONDITIONS OF PERFORMANCE SHARES TO CREASY RELATED ENTITIES Annexure 3 – TRANSACTION TENEMENTS Annexure 4 - TERMS AND CONDITIONS OF OPTIONS ATTACHING TO SHARES FROM CAPITAL RAISING Annexure 5 - TERMS AND CONDITIONS OF OPTIONS TO RM CORPORATE FINANCE PTY LTD Proxy Form

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 3

    TIME AND PLACE OF GENERAL MEETING AND HOW TO VOTE Venue A General Meeting of Sirius Resources NL will be held at:

    Chartered Secretaries Association Commencing

    Ground Floor, 8 Victoria Avenue at 11:30am (Western Standard Time)

    Perth, Western Australia on Friday 17 December 2010

    How to Vote The business of the Meeting affects your shareholding and your vote is important. You may vote by attending the Meeting in person, by proxy or authorised representative.

    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 11:30am (Western Standard Time).

    Voting by Proxy To vote by proxy, please complete and sign the Proxy Form enclosed with this Notice. The Proxy Form (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 sent by facsimile transmission to the Company’s share registry, Computershare Investor Services Pty Limited, GPO Box 242, Melbourne, Victoria 3001 Australia, facsimile number Australian 1800 783 447 and outside Australia +61 (3) 9473 2555 or to the Company’s registered office at Level 2, 45 St George’s Terrace, Perth, Western Australia, 6000, facsimile number +61 (8) 9323 2033, at least 48 hours prior to the meeting, or adjourned meeting as the case may be, at which the individual named in the Proxy Form proposes to vote.

    Alternatively, you may register your proxy instructions electronically at the share registry website www.investorvote.com.au by 5:00pm (Western Standard Time) Wednesday 15 December 2010. Proxy forms received later than this time will be invalid.

    Your Proxy Form along with instructions for completing the Proxy Form is enclosed.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 4

    SIRIUS RESOURCES NL ABN 46 009 150 083

    NOTICE OF GENERAL MEETING

    Notice is hereby given that a General Meeting of the Shareholders of Sirius Resources NL will be held at The Chartered Secretaries Association, Ground Floor, 8 Victoria Avenue, Perth, Western Australia on Friday 17 December 2010 at 11:30am (Western Standard Time) for the purpose of transacting the following business. The attached Explanatory Statement is provided to supply Shareholders with information to enable Shareholders to make an informed decision regarding the Resolutions set out in this Notice. The Explanatory Statement is to be read in conjunction with this Notice. Words and expressions defined in the Explanatory Statement but not defined in the Notice have the same meaning as in the Explanatory Statement, and where not defined in the body of that document, are defined in the attached Glossary.

    AGENDA PLEASE NOTE

    Resolutions 1 to 4, 7 and 8 are conditional upon the passing of each other, so that each will not have effect unless and until the others are passed (Interdependent Resolutions). It is important to note that none of the Resolutions will take effect unless all of the Interdependent Resolutions are passed. Resolutions 5 and 6 are independent Resolutions whose outcome will not affect the Interdependent Resolutions. SPECIAL BUSINESS RESOLUTION 1 – CONSOLIDATION OF CAPITAL

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

    “That, subject to Resolutions 2, 3, 4, 7 and 8 being passed, for the purposes of Section 254H of the Corporations Act and for all other purposes, the issued capital of the Company be consolidated on the basis that every 20 Shares on issue be consolidated into 1 Share, and every 20 Options on issue be consolidated into 1 Option, and where this consolidation results in a fraction of a Share or Option being held by a Shareholder, the Directors be authorised to round that fraction up to the nearest whole Share or Option.”

    Short Explanation: Shareholder approval is sought under ASX Listing Rule 7.20 and Section 254H of the Corporations Act to consolidate the number of Shares and Options on issue resulting in a more appropriate capital structure for the Company. RESOLUTION 2 – APPROVAL TO ALLOT AND ISSUE SHARES AND OPTIONS TO RAISE FUNDS

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

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 5

    "That, subject to Resolutions 1, 3, 4, 7 and 8 being passed, for the purposes of Listing Rule 7.1 of the Listing Rules and for all other purposes, approval is given for the Company to allot and issue up to 55,000,000 Shares at an issue price of $0.20 (20 cents) with 1 free attaching unlisted Option to acquire Shares at an exercise price of $0.60 (60 cents) for every 2 Shares subscribed for, on a post-Consolidation basis, to raise up to $11,000,000 on the terms and conditions set out in the Explanatory Statement accompanying the Notice of General Meeting."

    Short Explanation: Shareholder approval is sought under ASX Listing Rule 7.1 to allow the Company to issue a number of securities (Shares and Options) that is more than 15% of its ordinary share capital on issue at the commencement of the previous 12 month period. The Company will disregard any votes cast on this Resolution by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in

    accordance with a direction on the proxy form to vote as the proxy decides. RESOLUTION 3 – APPROVAL TO ACQUIRE ASSETS FROM ENTITIES ASSOCIATED WITH CREASY To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

    "That, subject to Resolutions 1, 2, 4, 7 and 8 being passed, for the purposes of Chapter 2E of the Corporations Act, Listing Rule 10.1 of the Listing Rules and for all other purposes, approval is given for the Company to acquire the Creasy Assets from the Creasy Related Entities and complete the Fraser Range Restructuring Agreement and otherwise on the terms and conditions set out in the Explanatory Statement accompanying the Notice of General Meeting."

    Short Explanation: Shareholder approval is sought under ASX Listing Rule 10.1 to allow the Company to acquire the Creasy Assets from the Creasy Related Entities and to restructure the Fraser Range Joint Venture. Shareholder approval is required because the Creasy Assets are a substantial asset and the Creasy Related Entities are related parties of the Company as stated in the Explanatory Statement. Shareholder approval is also sought under Chapter 2E of the Corporations Act because the Company is giving a financial benefit to the Creasy Related Entities who are related parties of the Company. Stantons International Securities has prepared an Independent Expert Report which comments on the fairness and reasonableness of the transaction to those Shareholders that are not associated with the Creasy Related Entities. The Independent Expert Report concludes that the proposals the subject of Resolutions 3, 4, 6 and 7 are on balance, and based on preferred valuations, collectively fair and reasonable to the Non-Associated Shareholders. Shareholders are urged to carefully consider the Independent Expert Report. The Company will disregard any votes cast on this Resolution by Creasy, the Creasy Related Entities, Mr Stephen Lowe, a party to the transaction and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in

    accordance with a direction on the proxy form to vote as the proxy decides.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 6

    RESOLUTION 4 – APPROVAL TO ALLOT AND ISSUE SHARES TO ENTITIES ASSOCIATED WITH CREASY To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

    "That, subject to Resolutions 1, 2, 3, 7 and 8 being passed, for the purposes of Chapter 2E of the Corporations Act, item 7 in the table in section 611 of the Corporations Act, Listing Rule 10.1 and Listing Rule 10.11 and for all other purposes, approval is given for the Company to allot and issue up to 13,800,000 Shares, on a post-Consolidation basis, to the Creasy Related Entities (or their nominees) on the terms and conditions set out in the Explanatory Statement accompanying the Notice of General Meeting."

    Short Explanation: Shareholder approval is sought under ASX Listing Rules 10.1 and 10.11 to allow the Company to issue Shares to the Creasy Related Entities (or their nominees) because the Shares are to be issued as part of the consideration for the acquisition of a substantial asset by the Company from the Creasy Related Entities who are related parties of the Company. Shareholder approval is also sought (i) under Chapter 2E because the Company is giving a financial benefit to the Creasy Related Entities as related parties of the Company; and (ii) under item 7 in the table of section 611 of the Corporations Act so that the Creasy Related Entities may acquire a relevant interest in Shares of the Company in excess of the permissible thresholds under the Corporations Act. Stantons International Securities has prepared an Independent Expert Report which comments on the fairness and reasonableness of the transaction to those Shareholders that are not associated with the Creasy Related Entities. The Independent Expert Report concludes that the proposals the subject of Resolutions 3, 4, 6 and 7 are on balance, and based on preferred valuations, collectively fair and reasonable to the Non-Associated Shareholders. Shareholders are urged to carefully consider the Independent Expert Report. The Company will disregard any votes cast on this Resolution by Creasy, the Creasy Related Entities, Mr Stephen Lowe, a party to the transaction, any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in

    accordance with a direction on the proxy form to vote as the proxy decides. RESOLUTION 5 – APPROVAL OF PERFORMANCE SHARES

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

    "That, subject to Resolutions 1, 2, 3, 4, 7 and 8 being passed, for the purposes of Section 246B(1) of the Corporations Act and clauses 4.1 and 4.3 of the Constitution of the Company and for all other purposes, the Company be authorised to create a new class of share on the terms and conditions in Annexure 2 (Performance Shares) and in the Explanatory Statement accompanying the Notice of General Meeting."

    Short Explanation: Shareholder approval is sought under Section 246B(1) to issue the Performance Shares as a new class of shares in accordance with the Company’s Constitution. The issue of the new class of shares may be considered to constitute a variation of the rights of the Company’s Shares pursuant to section 246C(5) of the Corporations Act and Shareholder approval is sought accordingly pursuant to section 246B(1) and clauses 4.1 and 4.3 of the Company’s Constitution. The Performance Shares will convert into ordinary Shares of the

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 7

    Company on a 1 for 1 basis if (i) an independently calculated JORC compliant Inferred Resource of greater than 500,000 ounces of gold is determined within the Creasy Tenement; or (ii) a change of control event in respect of the Company occurs. If neither of the above events occur within 5 years of the date of issue of the Performance Shares, then all of the Performance Shares will convert into a single ordinary Share to be issued to the Creasy Related Entities.

    The Company will disregard any votes cast on this Resolution by Creasy, the Creasy Related Entities, Mr Stephen Lowe, a party to the transaction, any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in

    accordance with a direction on the proxy form to vote as the proxy decides. RESOLUTION 6 – AUTHORITY TO ISSUE PERFORMANCE SHARES To consider and, if thought fit, to pass, with or without amendment, the following Resolution as an ordinary resolution:

    “That, subject to Resolutions 1, 2, 3, 4, 5, 7 and 8 being passed, for the purposes of Chapter 2E of the Corporations Act, item 7 in the table in section 611 of the Corporations Act, Listing Rule 10.1 and Listing Rule 10.11 and for all other purposes, Shareholders approve and authorise the Directors to allot and issue up to 2,200,000 Performance Shares, on a post-Consolidation basis, each convertible into one Share upon the achievement of certain performance criteria, to the Creasy Related Entities (or their nominees) in accordance with the terms and conditions in the Explanatory Statement accompanying the Notice of General Meeting.”

    Short Explanation: Shareholder approval is sought under ASX Listing Rules 10.1 and 10.11 to allow the Company to issue Performance Shares to the Creasy Related Entities (or their nominees because the Performance Shares are to be issued as part of the consideration for the acquisition of a substantial asset by the Company from the Creasy Related Entities who are related parties of the Company. Shareholder approval is also sought under (i) Chapter 2E because the Company is giving a financial benefit to the Creasy Related Entities as related parties of the Company; and (ii) under item 7 in the table of section 611 of the Corporations Act so that the Creasy Related Entities may acquire a relevant interest in Shares of the Company in excess of the permissible thresholds under the Corporations Act. If Shareholder approval is not obtained for Resolutions 5 or 6 and approval is obtained for the Interdependent Resolutions, the Transaction will proceed and the Creasy Related Entities will be entitled to receive the Royalty instead of the Performance Shares. Stantons International Securities has prepared an Independent Expert Report which comments on the fairness and reasonableness of the transaction to those Shareholders that are not associated with the Creasy Related Entities. The Independent Expert Report concludes that the proposals the subject of Resolutions 3, 4, 6 and 7 are on balance, and based on preferred valuations, collectively fair and reasonable to the Non-Associated Shareholders. Shareholders are urged to carefully consider the Independent Expert Report. The Company will disregard any votes cast on this Resolution by Creasy, the Creasy Related Entities, Mr Stephen Lowe, a party to the transaction, any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if:

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 8

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

    (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

    RESOLUTION 7 – APPROVAL FOR CREASY TO EXERCISE OPTIONS

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

    “That, subject to Resolutions 1, 2, 3, 4 and 8 being passed, for the purposes of item 7 in the table in section 611 of the Corporations Act and for all other purposes, approval is given to the Company to allot and issue up to 30,000,000 Shares, on a post-Consolidation basis, to Yandal Investments Pty Ltd (or its nominee) upon the exercise of 30,000,000 Options, on a post-Consolidation basis, in accordance with the terms and conditions accompanying the Notice of General Meeting.”

    Short Explanation: Shareholder approval is sought under item 7 in the table of section 611 of the Corporations Act so that Yandal may acquire a relevant interest in Shares of the Company in excess of the permissible thresholds under the Corporations Act. Stantons International Securities has prepared an Independent Expert Report which comments on the fairness and reasonableness of the transaction to those Shareholders that are not associated with Creasy or the Creasy Related Entities. The Independent Expert Report concludes that the proposals the subject of Resolutions 3, 4, 6 and 7 are on balance, and based on preferred valuations, collectively fair and reasonable to the Non-Associated Shareholders. Shareholders are urged to carefully consider the Independent Expert Report. The Company will disregard any votes cast on this Resolution by Creasy, the Creasy Related Entities, Mr Stephen Lowe, a party to the transaction, any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in

    accordance with a direction on the proxy form to vote as the proxy decides. RESOLUTION 8 – APPROVAL TO GRANT OPTIONS TO RM CORPORATE FINANCE PTY LTD To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

    "That, subject to Resolutions 1, 2, 3, 4 and 7 being passed, for the purposes of Listing Rule 7.1 of the ASX Listing Rules and for all other purposes, approval is given for the Company to grant to RM Corporate Finance Pty Ltd or its nominee up to 5,500,000 Options to acquire Shares, on a post-Consolidation basis, on the terms and conditions set out in the Explanatory Statement accompanying the Notice of General Meeting."

    Short Explanation: Under ASX Listing Rule 7.1, the Company may not issue or agree to issue equity securities in any 12 month period representing more than 15% of its ordinary share capital on issue at the commencement of that period without shareholder approval. Further, equity securities issued with prior shareholder approval are not included in the calculation under ASX Listing Rule 7.1. Please refer to the Explanatory Statement for details.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 9

    The Company will disregard any votes cast on this Resolution by a person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary shares, if this Resolution is passed and any Associate of those persons. However, the Company need not disregard a vote if: (a) it is cast by a person as proxy for a person who is entitled to vote, in accordance with the

    directions on the proxy form; or (b) it is cast by the person chairing the meeting as a 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

    Anna Neuling Company Secretary Dated: 11 November 2010 VOTING AND PROXIES 1. A Shareholder of the Company entitled to attend and vote is entitled to appoint not more than two

    proxies. Where more than one proxy is appointed, each proxy must be appointed to represent a specified proportion of the Shareholder's voting rights. If the Shareholder appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half of the votes. A proxy need not be a Shareholder of the Company.

    2. Where a voting exclusion applies, the Company need not disregard a vote if it is cast by the

    person who is entitled to vote in accordance with the directions on the proxy form or it is cast by the person chairing the Meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides.

    3. In accordance with Regulation 7.11.37 of the Corporations Regulations, the Directors have set a

    date to determine the identity of those entitled to attend and vote at the Meeting. The date is 5:00pm on Wednesday 15 December 2010 (Western Standard Time).

    4. A proxy form is attached. If required it should be completed, signed and returned to the

    Company's registered office in accordance with the instructions on that form.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 10

    SIRIUS RESOURCES NL ABN 46 009 150 083

    EXPLANATORY STATEMENT

    This Explanatory Statement has been prepared for the Shareholders in connection with the Meeting and is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the Notice.

    An Independent Expert's Report has been prepared by Stantons International Securities to comment on whether the proposals for the acquisition of the Creasy Assets and allotment and issue of Shares and Performance Shares to the Creasy Related Entities (Resolutions 3, 4 and 6) and the exercise of the Options acquired by Yandal from Apex (Resolution 7) are fair and reasonable to Non-Associated Shareholders. Shareholders should note that the Independent Expert has concluded that the interdependent proposals the subject of Resolutions 3, 4, 6 and 7 are on balance, and based on preferred valuations, collectively fair and reasonable to Non-Associated Shareholders.

    The Directors recommend that Shareholders read this Explanatory Statement in full before making any decision in relation to the Resolutions. At the Meeting, Shareholders will be asked to pass Resolutions approving:

    (a) the Company’s Consolidation of capital (on a 20:1 basis);

    (b) the allotment and issue of up to 55,000,000 Shares and up to free-attaching 27,500,000 Options (on a post-Consolidation basis) to raise funds;

    (c) the acquisition of the Creasy Assets from the Creasy Related Entities;

    (d) the allotment and issue of 13,800,000 Shares (on a post-Consolidation basis) to Creasy Related Entities (or their nominees) as part consideration for the Creasy Assets;

    (e) the creation of the Performance Shares as a new share class (note that this is a special resolution);

    (f) the allotment and issue of up to 2,200,000 Performance Shares (on a post-Consolidation basis) to Creasy Related Entities (or their nominees) as part consideration for the Creasy Assets;

    (g) approval for the allotment and issue by the Company of up to 30,000,000 Shares to Yandal following the exercise of 30,000,000 Options (on a post-Consolidation basis); and

    (h) approval to allot and issue up to 5,500,000 Options (on a post-Consolidation basis) to RM Corporate Finance Pty Ltd (or its nominees).

    Resolutions 1 to 4, 7 and 8 are conditional upon the passing of each other, so that each will not have effect unless and until the others are passed (Interdependent Resolutions). It is important to note that none of the Resolutions will take effect unless all of the Interdependent Resolutions are passed. Resolutions 5 and 6 are independent Resolutions whose outcome will not affect the Interdependent Resolutions.

    This Explanatory Statement provides information that the Board believes to be material to Shareholders in deciding whether or not to pass these Resolutions. It explains the Resolutions and identifies the

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 11

    Directors reasons for putting them to the Shareholders. This Explanatory Statement should be read in conjunction with the accompanying Notice.

    Shareholders are invited to contact Dr Mark Bennett of Sirius Resources NL on +61 (8) 9240 8914 if they have any queries in respect to the matters set out in the Notice or Explanatory Statement.

    PART A – INFORMATION ABOUT THE CONSOLIDATION OF CAPITAL (RESOLUTION 1)

    1.1 General Details

    (a) Resolution 1 seeks Shareholder approval for a consolidation of the issued capital of the Company on a 20 for 1 basis. Where the number of Shares and/or Options is not evenly divisible any fractional entitlement that would otherwise result from the conversion will be rounded up to the nearest whole Share or Option (Consolidation).

    (b) The effect of the Consolidation (assuming completion of the Capital Raising and the Transaction) is as follows:

    Description Number

    Pre-Consolidation Shares 3,018,680,028

    Pre-Consolidation Performance Shares 44,000,000

    Pre-Consolidation Options 1,498,000,000

    Post-Consolidation Shares 150,934,001

    Post-Consolidation Performance Shares 2,200,000

    Post-Consolidation Options 74,900,000

    (c) The Company currently has Shares, partly paid Shares and Options on issue.

    (d) Section 254H of the Corporations Act 2001 provides that a company may, by resolution passed in general meeting, convert all or any of its shares into larger or smaller number of shares.

    (e) The Consolidation of capital, subject to Resolutions 2, 3, 4, 7 and 8 being passed, will take effect on the date of this Meeting and once the Company’s share registrar and transfer agent has made the appropriate entries on the Company’s share registry (Effective Date).

    1.2 Taxation

    It is not considered that there are any taxation consequences for Shareholders arising from the Consolidation. However, Shareholders are advised to seek their own taxation advice on the effect of the Consolidation and neither the Company nor any of its officers or advisers accept any responsibility for the taxation consequences of the Consolidation or any other consequences associated with an investment in Shares or Options.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 12

    1.3 Post Consolidation

    (a) As from the Effective Date of the Consolidation, all holding statements for Shares and/or Options will cease to have any effect, except as evidence of entitlement to a certain number of post-consolidation Shares and/or Options.

    (b) After the Consolidation of capital becomes effective, the Company will, in accordance with the Listing Rules, dispatch a notice to Shareholders advising them;

    (a) of the number of Shares and/or Options held by the holder prior to Consolidation; and

    (b) of the number of Shares and/or Options held by the holder post-Consolidation.

    The Company will also arrange for new holding statements to be issued to Shareholders.

    PART B – INFORMATION ABOUT THE CAPITAL RAISING (RESOLUTIONS 2 AND 8)

    2.1 Capital Raising Details

    (a) As part of the Transaction and to fund its increased exploration commitments, the Company proposes to carry out an equity capital raising of up to $11,000,000 at a price, subject to market conditions, of not less than $0.20 (20 cents) per Share (on a post-Consolidation basis).

    (b) The Company is proposing to offer for subscription up to 55,000,000 Shares at an issue price of $0.20 (0.20 cents) per Share with 1 free-attaching unlisted Option with an exercise price of $0.60 (60 cents) for every 2 Shares subscribed for, on a post-Consolidation basis, to raise up to $11,000,000 (Capital Raising). The Company has engaged RM Corporate Finance Pty Ltd (AFSL 315235) (RM Corporate Finance) as placement agent in respect of the Capital Raising. The offer by the Company will be made to investors that do not need disclosure under section 708 of the Corporations Act. On 25 October 2010 the Company announced it had received commitments for an equity raising of $11,000,000, which is subject to Shareholder approval.

    2.2 Use of Funds

    (a) The Company intends to use the funds raised from the Capital Raising broadly as follows:

    Use of funds Amount

    Exploration $9,300,000*

    Administration $800,000

    Costs of Capital Raising $900,000

    Total funds $11,000,000

    * Further Breakdown of use of $9,300,000 designated towards Exploration follows:

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 13

    Description Amount

    Fraser Range Project:

    Drilling $2,700,000

    Geochemical sampling $500,000

    Geophysical surveys $500,000

    Field costs $600,000

    Personnel $600,000

    Leasing $400,000

    Sub Total $5,300,000

    Other Existing Projects:

    Drilling $2,000,000

    Geophysical surveys $500,000

    Field costs $500,000

    Personnel $500,000

    Leasing $500,000

    Sub Total $4,000,000

    TOTAL $9,300,000

    (b) The costs of the offer includes a placement fee payable to RM Corporate Finance of 6% of the proceeds raised by RM Corporate Finance and the issue of up to 5,500,000 Options (on a post-Consolidation basis) to RM Corporate Finance on the terms and conditions contained in Annexure 5 and stamp duty payable in relation to the Transaction which is projected to be in the order of $150,000.

    (c) The funds available for working capital upon completion of the Transaction will be $10,100,000.

    (d) The actual use of funds may vary from the above estimates and the Board reserves the right to vary the use of funds dependent on circumstances and other opportunities.

    PART C – INFORMATION ABOUT THE FRASER RANGE RESTRUCTURING (RESOLUTIONS 3, 4, 5 AND 6)

    3 INTRODUCTION TO TRANSACTION

    3.1 Introduction

    On 21 October 2010 the Company announced that it had entered into the Transaction with the Creasy Related Entities with the purpose of restructuring their respective interests in various

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 14

    assets located in Western Australia known as the “Fraser Range Project”. The completion of the Transaction is subject to a number of conditions including Shareholder approval. By way of background to the Transaction:

    (a) The Company and Creasy are presently jointly entitled to the Base Metal Rights over the Fraser Range Tenements located in the Fraser Range region of Western Australia pursuant to the terms of a Sale Agreement and Split Commodity Agreement.

    (b) Creasy is the registered holder of the Fraser Range Tenements and entitled to all mineral rights over the Tenements except the Base Metal Rights pursuant to the terms of the Split Commodity Agreement (Other Mineral Rights).

    (c) The Company and Creasy are parties to the Fraser Range Joint Venture that governs the terms upon which they exercise their Base Metal Rights.

    (d) The Company and Creasy, in their own right, hold other tenement interests in the Fraser Range region including the Creasy Tenements and the Company Tenements.

    The key elements of the Transaction are: (a) Sirius Gold to acquire from Creasy the following:

    (i) a 70% interest in the Other Mineral Rights over the Fraser Range Tenements;

    (ii) a registered 70% interest in Fraser Range Tenements; and

    (iii) a registered 70% interest in the Creasy Tenements,

    (b) Creasy to acquire from Sirius a registered 30% interest in the Company Tenements.

    (c) The Split Commodity Agreement will be terminated.

    (d) The Fraser Range Joint Venture will be restructured to apply to all minerals (including the Other Mineral Rights) over the Fraser Range Tenements, the Creasy Tenements and the Company Tenements.

    (e) The Company will carry out a share capital consolidation as outlined in Resolution 1 of the Notice and this Explanatory Statement.

    (f) The Company to carry out an equity capital raising of up to $11,000,000. On 25 October 2010 the Company announced it had received commitments for a Capital Raising of $11,000,000, which is subject to Shareholder approval under Resolution 2 of this Notice.

    3.2 Conditions Precedent

    Completion of the Transaction is subject to the satisfaction of various conditions including completion of the Capital Raising (which will occur after Shareholder approval), ministerial approvals (where necessary) and shareholder approvals by the Company.

    3.3 Expert Report

    An Independent Technical Valuation Summary Report has been prepared by CJ Stephens Consulting Pty Ltd which contains information about each of the Creasy Assets being acquired by the Company together with information about the Fraser Range Tenements and Company Tenements including the geology and mineralisation of the Fraser Range Tenements and Company Tenements as well as previous exploration and development (including previous expenditure) on each of the Fraser Range Tenements and Company Tenements. The

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 15

    Independent Technical Valuation Summary Report forms part of the Independent Expert Report annexed as Annexure 1.

    3.4 Tenement Details

    Details of the Fraser Range Tenements, the Creasy Tenements and the Company Tenements the subject of the Transaction are set out in Annexure 3.

    3.5 Overview of Creasy Assets and Exploration Strategy

    The acquisition of the Creasy Assets and the associated restructuring of the existing Fraser Range Joint Venture will position Sirius with approximately 2,300 km2 of gold prospective ground covering over 100 strike kilometres of the southerly strike continuation of the Tropicana belt of Western Australia – one of Australia’s most significant emerging gold belts which hosts the 5Moz Tropicana gold deposit. Furthermore, the Creasy Assets have numerous drill-ready targets in the form of gold geochemical anomalies which have never been drilled. The most advanced of these, the Brookman prospect, is a 10 km long gold geochemical anomaly and coincident geophysical anomaly situated on a major shear zone.

    The creation of a new gold-focussed exploration joint venture with Creasy will be achieved through the purchase of a 70% interest in the Creasy Assets (comprising four large Exploration Licences currently owned by Creasy), the restructuring of the Fraser Range Joint Venture to an all commodities joint venture, and the inclusion of several 100% Sirius owned tenements and applications into a new single joint venture in which Sirius has a 70% interest and Creasy has a 30% interest, whereby Creasy is free carried until the completion of any bankable feasibility study.

    The new joint venture will cover an area of approximately 2,300 km2 and over approximately 100 kilometres of strike of an unexplored part of the Fraser Range province – host to the 5 million ounce Tropicana gold deposit. This belt is considered by some to be Australia’s last and potentially richest unexplored gold province.

    Broad-spaced geochemical sampling over several years on the Tenements by Creasy has defined a number of gold anomalies and one of these, Brookman, has been sufficiently infill sampled to define a cohesive 10km long gold anomaly associated with a major shear zone. An induced polarisation (IP) geophysical survey completed over this prospect, undertaken to define potential zones of disseminated sulphides, has also defined a number of chargeable zones coinciding with the gold geochemical anomaly. The identification of chargeability anomalies in the IP survey is considered encouraging as it is consistent with (but not necessarily diagnostic of) the presence of disseminated sulphides.

    The Brookman anomaly has never been drilled but recent reconnaissance drilling by Sipa Resources at its nearby Heraclitus gold prospect has intersected encouraging supergene and bedrock gold mineralisation within gently east dipping shear zones beneath a geochemical anomaly of lesser size and magnitude than at Brookman. Sipa’s Heraclitus prospect is located approximately 1km west of the strike of the Brookman gold anomaly, and some of Sipa’s drillholes abut the Tenement boundary.

    At Brookman, heritage surveys and Mines Department approvals are already in place, enabling drilling to commence without impairment or delay. A major reconnaissance drilling program is planned to commence as soon as practicable after completion of the Transaction.

    In addition to the Brookman prospect, there are several additional gold anomalies that have been defined in reconnaissance geochemical sampling and that are at various stages of infill sampling follow up. A number of these are also associated with major regional shear zones but have yet to be infilled to the extent that the Brookman anomaly has been. It is anticipated that these will provide a continuing pipeline of additional prospects for drill testing.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 16

    A key aspect of this project is that it is situated close to established infrastructure. The Tenements straddle the Eyre Highway, and the Brookman prospect itself is only a 30 minute drive from the highway along established tracks. This is in stark contrast to many competing exploration plays in the Tropicana belt.

    The key components of the proposed 2011 gold exploration program on the Creasy Assets are as follows:

    (a) Major RAB drilling program at Brookman to define “sweet spots” – namely ~60,000m RAB drilling.

    (b) RC drilling of “sweet spots” to define nature and extent of any supergene mineralisation and upper parts of subjacent gold mineralised structures – up to 5,000m RC drilling.

    (c) Diamond drilling of primary mineralised structures if warranted.

    (d) In parallel with this, infill geochemical sampling and reconnaissance drilling of other gold anomalies, comprising up to 10,000 samples.

    The joint venture also contains at least 3 base metal targets for follow up, including the oxide nickel-copper-cobalt mineralisation recently intersected at the Gnama South prospect, a strong nickel-chrome geochemical anomaly associated with a dome-like feature in the aeromagnetic data, and an extensive zone of elevated nickel, copper and chrome values in the south of the area. Exploration will also be undertaken on these targets, comprising:

    (a) Infill geochemical sampling and geological mapping of the two nickel soil anomalies.

    (b) Follow up RC drilling of the oxide nickel-copper-cobalt mineralisation at Gnama South.

    Concurrently with these programs, the Company will proceed to the drilling stage at some of its other exploration projects, where there are drill-ready targets defined by geochemical and geophysical surveys undertaken during 2010. These targets span a range of locations, commodities and deposit styles, as follows:

    (a) Volcanogenic massive sulphide (VMS) targets at Youanmi comprising coincident geochemical and electromagnetic (EM) anomalies located on a known copper and/or zinc mineralised trend.

    (b) Magmatic nickel-copper sulphide targets at Youanmi defined by strong EM conductors and soil anomalies located at the interpreted contact of a layered igneous intrusion.

    (c) Komatiitic nickel sulphide targets at Polar Bear comprising numerous EM anomalies concealed beneath a salt lake associated with an ultramafic rock unit known to host nickel sulphide mineralisation.

    (d) Komatiitic nickel sulphide targets at Lawlers comprising EM conductors associated with an ultramafic rock unit known to host producing nickel mines nearby.

    (e) Gold mineralisation targets at Polar Bear comprising gold-arsenic anomalies in reconnaissance drilling.

    The above targets will be tested by the appropriate drilling technique and target definition work (ie, geological mapping, geophysics and geochemical sampling) will be ongoing.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 17

    4 TRANSACTION DETAILS

    4.1 Overview

    By the Transaction the Company will acquire a 70% interest in the Other Mineral Rights on the Fraser Range Tenements and a 70% interest in the Fraser Range Tenements and the Creasy Tenements and Creasy will acquire a 30% interest in the Company Tenements.

    After the Transaction is completed, The Fraser Range Project will consist of the Fraser Range Tenements, the Creasy Tenements and the Company Tenements. Each of the tenements is currently 100% owned by either the relevant Creasy Related Entity, the Company or Sirius Gold. Upon completion of the Transaction, the Company through its wholly owned subsidiary, Sirius Gold, will have a registered 70% interest in the Fraser Range Tenements and the Creasy Tenements, whilst the relevant Creasy Related Entities will have a registered 30% interest in the Fraser Range Tenements and the Company Tenements.

    4.2 Consideration payable for the Creasy Assets

    The consideration payable by the Company to the Creasy Related Entities to acquire the Creasy Assets is: (a) $2,760,000 to be satisfied by the issue by the Company to the Creasy Related Entities (or

    their nominees), on a post-Consolidation basis, of 13,800,000 Shares at an issue price of $0.20 (20 cents) per Share and 2,200,000 unlisted Performance Shares;

    (b) the transfer of a 30% interest in the Company Tenements to the Creasy Related Entities; and

    (c) in the event shareholder approval is not obtained to the allotment and issue of the Performance Shares to the Creasy Related Entities (pursuant to Resolution 6), the Company will grant the Royalty to the Creasy Related Entities (or their nominees) upon completion of the Transaction.

    The proposed Performance Shares will be a new class of shares in the Company, the creation and issue of which requires Shareholder approval. Full terms of the proposed Performance Shares are set out in Annexure 2 of this Notice. Please refer to sections 11 and 12 of this Explanatory Statement for further information relating to the creation and issue of the Performance Shares.

    4.3 Termination of Split Commodity Agreement

    The Company, Sirius Gold and the relevant Creasy Related Entities will terminate the Split Commodity Agreement and, with effect from its termination, neither of the parties shall have any further obligations, or claims against the other, in relation to the Split Commodity Agreement.

    4.4 Restructure and Restatement of the Fraser Range Joint Venture

    In consideration of the sale and purchase of the Creasy Assets, the Fraser Range Joint Venture will be restructured and restated to:

    (a) apply to the Fraser Range Tenements, the Creasy Tenements and the Company Tenements;

    (b) become an ‘all minerals’ joint venture arrangement; and

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 18

    (c) govern the terms upon which Sirius Gold and the Creasy Related Entities will exercise their rights to explore and mine all minerals on the Fraser Range Tenements, the Creasy Tenements and the Company Tenements,

    (hereafter referred to as the Restructured Joint Venture). 4.5 Sirius Share Capital Consolidation

    Sirius will carry out a Consolidation to bring its issued share capital in line with the expected market capitalisation of the Company.

    Please refer to Part A of this Explanatory Statement for further information relating to the Consolidation. 4.6 Sirius Capital Raising

    After the Consolidation, as part of Transaction, and to fund its increased exploration commitments under the Restructured Joint Venture, the Company will complete the Capital Raising. On 25 October 2010 the Company announced it had received commitments for a Capital Raising of $11,000,000, which is subject to Shareholder approval under Resolution 2 of this Notice.

    Please refer to Part B of this Explanatory Statement for further information relating to the Capital Raising. 4.7 Transaction documents

    (a) Restructuring Agreement

    The Company has entered into the Fraser Range Joint Venture Restructuring Agreement with the relevant Creasy Related Entities for the Fraser Range Project. The Fraser Range Joint Venture Restructuring Agreement contains the following material terms:

    (i) Sirius Gold acquires from the Creasy Related Entities:

    (a) a 70% interest in the Other Minerals Rights over the Fraser Range Tenements;

    (b) a registered 70% interest in the Fraser Range Tenements; and

    (c) a 70% interest in the Creasy Tenements;

    (ii) The Creasy Related Entities acquire from the Company a 30% interest in the Company Tenements;

    (iii) The Fraser Range Split Commodity Agreement is terminated;

    (iv) The Fraser Range Joint Venture is restructured to apply to all minerals over:

    (a) the Fraser Range Tenements;

    (b) the Creasy Tenements; and

    (c) the Company Tenements;

    (v) The Creasy Related Entities receive the consideration more particularly described in paragraph 4.2;

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 19

    (vi) The Creasy Related Entities entering into a 12 month escrow/restriction agreement with the Company in relation to the Shares and Performance Shares to be issued;

    (vii) The Company is required to carry out a share capital consolidation (as provided by Resolution 1) and equity capital raising (as provided by Resolutions 2 and 8);

    (viii) Sirius is to reimburse the Creasy Related Entities the amount of $73,909.09 (less the GST proportion of this amount) for incurred prepaid expenses in relation to tenement E28/1630; and

    (ix) The Company, Sirius Gold and the Creasy Related Entities enter into a Supplemental Deed Fraser Range Joint Venture Agreement pursuant to which the terms of the existing Fraser Range Joint Venture are amended, supplemented and restated as outlined below.

    (b) Supplemental Deed Fraser Range Project Joint Venture Agreement

    The Supplemental Deed Fraser Range Joint Venture Agreement to be entered into by Sirius Gold and the Creasy Related Entities contains the following material terms:

    (i) The percentage interest of the Company is 70% and for the Creasy Related Entities is 30% in the Fraser Range Tenements, the Creasy Tenements and the Company Tenements;

    (ii) Applies to all minerals (including the Other Mineral Rights) over the Fraser Range Tenements, the Creasy Tenements and the Company Tenements;

    (iii) The Company will sole fund (with the Creasy Related Entities being free carried) all exploration costs until a decision has been made to mine following the completion of a positive feasibility study. Outside the mining area the Company will continue to sole fund all exploration costs;

    (iv) Upon a decision to mine being made, the Creasy Related Entities may elect whether to participate in the mining project, sell its interest in the mining project or convert its interest to a 1% net smelter royalty;

    (v) Any decision in relation to the mining project does not affect the interest of the Creasy Related Entities in the joint venture outside the area of the mining project;

    (vi) The Company will manage the joint venture;

    (vii) A management committee will be established with each joint venture party entitled to appoint 2 members. One member representative of a joint venture party shall cast votes for that joint venture party, which voting power will be in accordance with the percentage interest of that party. All decisions of the management committee will be decided by a simple majority vote other than the following matters requiring unanimous consent – the sale of joint venture property, expansion of exploration outside the joint venture property, decisions to borrow money indebtedness and decisions to settle any claim by or against the joint venture parties in excess of $500,000. While being free carried, the Creasy Related Entities do not have any voting power except for those matters requiring a unanimous resolution; and

    (viii) Otherwise there are provisions in the joint venture agreement which are usual for agreements of this type including termination and pre-emptive rights.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 20

    PART D – INFORMATION ABOUT ACQUISITION BY CREASY OF ADDITIONAL OPTIONS OVER SHARES (RESOLUTION 7)

    5.1 Apex Options

    On or about 31 August 2009 the Company issued 600,000,000 Options to Apex as part consideration for the acquisition of a number of assets owned by Apex Minerals NL. On or about 10 August 2010, Yandal entered into the Apex Sale Agreement pursuant to which it would acquire the 600,000,000 Options from Apex. (For more information refer to Sirius ASX announcement dated 29 September 2010).

    The 600,000,000 Options are valid until 30 August 2014 and are exercisable at $0.03 (3 cents) each on a pre-Consolidation basis. Following the Consolidation the 600,000,000 Options would be consolidated into 30,000,000 Options and be exercisable at $0.60 (60 cents) each.

    5.2 Resolution 7

    Resolution 7 seeks Shareholder approval for the allotment and issue by the Company of up to 30,000,000 Shares, on a post-Consolidation basis, to Yandal following the exercise by Yandal of 30,000,000 Options, on a post-Consolidation basis.

    PART E – ADDITIONAL INFORMATION (RESOLUTIONS 1 - 8)

    6 PROPOSED TIMETABLES

    6.1 Transaction Timetable The following timetable sets out the key dates of the Transaction:

    General Meeting of Shareholders 17 December 2010

    Consolidation of Capital 17 December 2010

    Completion of Fraser Range Restructuring and Issue of Shares and Performance Shares to Creasy Related Entities

    22 December 2010

    Issue of Shares and Options under Capital Raising

    22 December 2010

    Completion of Transaction 22 December 2010

    These dates are indicative only and may change without notice.

    6.2 Consolidation Timetable (Listing Rule Appendix 7A)

    The following timetable is provided in accordance with Listing Rule 7.40 and Appendix 7A:

    Notify ASX of approval by Shareholders of Consolidation of Capital

    17 December 2010 (Business Day 0)

    Last Day Trading on post-Consolidation basis 20 December 2010 (Business Day 1)

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 21

    Ex Date 21 December 2010 (Business Day 2)

    Last day to enter transfers on pre-Consolidation basis

    29 December 2010 (Business Day 6)

    Dispatch of new Holding Statements 5 January 2011 (Business Day 11)

    These dates are indicative only and may change without notice.

    7 EFFECT OF THE FRASER RANGE RESTRUCTURE CAPITAL RAISING AND CONSOLIDATION ON THE COMPANY

    7.1 Pro forma capital structure

    The pro-forma capital structure of the Company by reason of the Transaction, Consolidation and the Resolutions under the Notice and this Explanatory Statement is as follows:

    Securities Assuming Capital Raising

    of $11,000,000 Current Shares on issue (pre-Consolidation) 1,642,680,028

    Current Options on issue (pre-Consolidation) including options to be issued subsequent to approval at AGM 838,000,000

    Shares on issue (post-Consolidation) 82,134,001

    Options on issue (post-Consolidation) including Options to be issued subsequent to approval at AGM 41,900,000

    Shares issued under Capital Raising (post-Consolidation basis) 55,000,000

    Options issued under Capital Raising (post-Consolidation basis) 27,500,000

    Shares issued to Creasy Related Entities (post-Consolidation basis) 13,800,000

    Performance Shares issued to Creasy (post- Consolidation basis) 2,200,000

    Options issued to RM Corporate Finance Pty Ltd (post-Consolidation basis) 5,500,000

    Total Securities on Issue 228,034,001

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 22

    7.2 Pro forma balance sheet

    The pro-forma balance sheet of the Company by reason of the Transaction, Consolidation and the Resolutions under this Notice is set out below.

    Pro-Forma Balance Sheet at 30 September 2010

    Sirius (as adjusted) 30 September

    2010

    $000’s

    Sirius Consolidated Pro-forma A

    30 September 2010

    $000’s

    Current Assets Cash 956 10,912 Receivables 210 278 1,166 11,190 Non Current Assets

    Property, plant and equipment 87

    87

    Capitalised exploration costs 10,693

    13,475

    Bonds 35 35 10,815 13,597 Total Assets 11,981 24,787 Current Liabilities Trade and other payables 303 303 Provisions 27 27 Total Current Liabilities 330 330 Net Assets 11,651 24,457 Equity Issued capital 117,561 130,683 Reserves 2,986 3,502 Accumulated losses (108,896) (109,728) Net Equity 11,651 24,457

    7.3 Assumptions and Adjustments

    The above unaudited Balance Sheet of Sirius as at 30 September 2010 has been adjusted after allowing for administration costs for the month of October 2010 estimated at $75,000 along with an unaudited pro-forma consolidated Balance Sheet assuming the following: (a) The issue of 55,000,000 Shares at $0.20 (20 cents) per share on a post-Consolidation

    basis to raise $11,000,000 before cash Capital Raising costs estimated at $660,000; (b) The issue of 5,500,000 Options to RM Corporate Finance on a post-Consolidation basis

    with an ascribed fair value of $212,036 and expensed against share equity as a Capital Raising cost;

    (c) The issue of 13,800,000 Shares to Creasy Related Entities on a post-Consolidation basis

    at a deemed total cost of $2,760,000; (d) The reimbursement to the Creasy Related Entities of prepaid contractor costs of $67,190;

    (e) The issue of 2,200,000 Performance Shares on a post-Consolidation basis to the Creasy Related Entities with an ascribed value of $22,000;

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 23

    (f) The issue of 2,200,000 Director and consultant Options on a post-Consolidation basis at

    an ascribed value of $304,000; and (g) The payment of an estimated $317,000 indirect costs (including stamp duty) relating to

    the Transaction.

    7.4 Directors’ recommendation

    The Proposed Transaction will expand the Company’s portfolio of exploration tenements in the highly prospective Fraser Range region and deliver over 100 strike kilometres of what is considered to be highly prospective ground in the Tropicana belt. Much of the initial reconnaissance work has been done, and this has highlighted numerous gold anomalies which have never been drilled. The acquisition of the new ground and the rights to all minerals (not just base metals) on the existing Fraser Range Base Metals Joint Venture will enable the Company to advance rapidly to the prospect testing stage. The funds raised will allow the Company to conduct exploration and evaluation of this expanded tenement area.

    The funds raised will also enable the Company to pursue a vigorous exploration program on its existing projects, where there are now numerous prospects at the drill-ready stage requiring drill testing.

    The capital consolidation will, in the opinion of the Directors, also improve the capital structure and appeal of the company to a broader range of investors in Australia and overseas.

    Shareholders should be aware that the Company will be subject to a number of risks if the Transaction is completed. Given that the Company is a mineral resource exploration company, a number of the risk factors are not new to the Company.

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

    (a) Exploration and development – by its nature, the exploration and development of a resource project is a high risk undertaking with no assurance of the economic exploitation of mineral resources.

    (b) Resource estimation – resource estimations are expressions of judgment which are imprecise.

    (c) Commodity price volatility – an adverse fall in the prices of commodities including gold, nickel, copper and zinc may adversely affect the development of the Company’s exploration assets.

    (d) Future capital needs – there is no assurance that future funding will be available to the Company to further develop the Company’s assets. Depending on further exploration success, significant further development funding may be required.

    (e) Other factors – there are other risk factors including environmental laws and regulations, reliance on key personnel and title.

    Other than Mr Stephen Lowe (who abstains from making a recommendation), the current Directors (Dr Mark Bennett, Professor Jeffrey Foster, and Mr Terry Grammer) are independent of the Creasy Related Entities, the vendors of the Transaction. These independent Directors consider that the Transaction is in the best interests of the Company and recommend that Shareholders vote in favour of all Resolutions. The independent Directors have agreed to put the Resolutions to Shareholders and, separately, have approved the information contained in the Notice and this Explanatory Statement.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 24

    Mr Stephen Lowe is Business Manager to Creasy. As such, he abstains from making any recommendation to Shareholders.

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

    7.5 Conditionality of Resolutions

    Resolutions 1, 2, 3, 4, 7 and 8 are conditional upon the passing of each other, so that each will not have effect unless and until the other is passed (Interdependent Resolutions). Resolution 5 will not be effective if Resolutions 1, 2, 3, 4, 7 and 8 are not passed. Resolution 6 will not be effective if Resolutions 1, 2, 3, 4, 5, 7 and 8 are not passed. If Resolutions 5 and 6 are not passed, this will not affect the outcome of the other Resolutions.

    It is important to note that none of the Resolutions will take effect unless all of the Interdependent Resolutions are passed.

    7.6 Plans for the Company if the Resolutions are not passed

    If the Interdependent Resolutions are not passed and the Transaction is not completed, the Company will continue to focus on the exploration of its existing projects. However, the Company’s ability to continue exploring its existing targets and meet its expenditure commitments would be severely restricted due to limited funding, especially as many of the Company’s targets have reached a stage where intensive drilling is required.

    PART F – RESOLUTIONS AND REGULATORY REQUIREMENTS

    8 RESOLUTION 1 – CONSOLIDATION OF CAPITAL

    8.1 ASX Listing Rule 7.20

    ASX Listing Rule 7.20 states that if an entity proposes to reorganise its capital, it must inform equity security holders in writing of each of the following:

    (a) The effect of the proposal on the number of securities of the Company and the amount unpaid, if any, on the securities.

    (b) The proposed treatment of any fractional entitlements arising from the reorganisation, and

    (c) The proposed treatment of any convertible securities on issue. Following approval of Resolution 1, the number of Shares on issue will be reduced from 1,642,680,028 to approximately 82,134,001, the number of Options on issue will be reduced from 838,000,000 to approximately 41,900,000 and the number of partly paid Shares will be reduced from 866 to approximately 43. The precise number of post-Consolidation Shares and Options on issue will depend on the effect of rounding on each shareholder’s individual holding. Fractional holdings will be rounded up.

    8.2 Corporations Act 254H

    Section 254H of the Corporations Act 2001 provides that a company may, by resolution passed in general meeting, convert all or any of its shares into larger or smaller number of shares.

    The Consolidation of capital, subject to Resolution 1 being passed, will take effect on the date of the Meeting and once the Company’s share registrar and transfer agent has made the appropriate entries on the Company’s share registry (Effective Date).

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 25

    As from the Effective Date of the Consolidation, all holding statements for Shares and Options will cease to have any effect, except as evidence of entitlement to a certain number of post-Consolidation Shares and Options.

    After the Consolidation of capital becomes effective, the Company will, in accordance with the Listing Rules, dispatch a notice to Shareholders advising them;

    (a) of the number of Shares and/or Options held by the holder prior to Consolidation; and

    (b) of the number of Shares and/or Options held by the holder post-Consolidation.

    The Company will also arrange for new holding statements to be issued to Shareholders.

    8.3 Impact on the Company if Shareholders do not approve the consolidation of capital

    Resolution 1 is one of the Interdependent Resolutions and it relates to the consolidation of the Company’s securities. If Shareholders do not approve Resolution 1 the Transaction will not proceed. The impact on the Company if the Transaction does not proceed is set out in section 7.6 above

    9 RESOLUTION 2 – APPROVAL TO ALLOT AND ISSUE SHARES AND OPTIONS TO RAISE

    FUNDS

    9.1 ASX Listing Rule 7.1

    Listing Rule 7.1 provides, subject to certain exceptions, a listed company must not issue equity securities where the number of equity securities proposed to be issued represents more than 15% of the company’s shares then on issue without the approval of shareholders.

    The issue of Shares and Options under the Capital Raising will exceed the Company's 15% capacity under Listing Rule 7.1. The purpose of Resolution 2 is to seek Shareholder approval to issue Shares and Options on a post-Consolidation basis under the Capital Raising up to the maximum subscription of $11,000,000. On 25 October 2010 the Company announced it had received commitments for a Capital Raising of $11,000,000, which is subject to Shareholder approval under Resolution 2 of this Notice.

    Listing Rule 7.3 sets out the matters which must be included in the notice of meeting convened to seek Shareholder approval under Listing Rule 7.1. For the purposes of Listing Rule 7.3, the following information is provided to Shareholders in relation to Resolution 2.

    (a) The maximum number of Shares to be issued by the Company is 55,000,000 (post-Consolidation basis). The maximum number of free-attaching Options to be issued by the Company is 27,500,000 (post-Consolidation basis).

    (b) The Shares and Options will be allotted and issued no later than three months after the date of this Meeting (unless a later date is permitted by ASX waiver).

    (c) The Shares will be issued for an issue price of $0.20 (20 cents) each, the Options will be free-attaching (issued for nil consideration), with an exercise price of $0.60 (60 cents) each.

    (d) The allottees of the Shares and Options will be institutions, sophisticated and professional investors who are clients of RM Corporate Finance. These allottees will be persons who do not need disclosure by prospectus under section 708 of the Corporations Act. The Shares and Options will not be issued to related parties of the Company.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 26

    (e) The Shares to be issued will be fully paid ordinary Shares of the Company that rank equally with the Company's current issued Shares on a post-Consolidation basis.

    (f) The terms and conditions of the Options are set out in Annexure 4. The Shares to be

    issued on exercise of the Options will be fully paid ordinary Shares that rank equally with the Company's current issued Shares on a post-Consolidation basis.

    (g) The Company will raise up to a maximum of $11,000,000 from the issue of the Shares and Options. The intended use of these funds is set out in part B section 2.2 of this Explanatory Statement.

    (h) It is intended that the Shares will be allotted on one date.

    (i) A Voting Exclusion Statement is included in the Notice.

    9.2 Impact on the Company if Shareholders do not approve the allotment and issue of Shares to raise funds

    Resolution 2 is one of the Interdependent Resolutions and relates to the approval to allot and issue shares to raise funds. If Shareholders do not approve Resolution 2 the Transaction will not proceed. The impact on the Company if the Transaction does not proceed is set out in section 7.6 above.

    10 RESOLUTIONS 3 AND 4 – APPROVAL TO ACQUIRE ASSETS FROM ENTITIES RELATED

    TO CREASY AND TO ALLOT AND ISSUE SHARES TO THOSE ENTITIES (OR THEIR NOMINEES)

    10.1 ASX Listing Rule 10.1

    Listing Rule 10.1 provides that Shareholder approval is required before a listed company may acquire a substantial asset from various persons in a position of influence. This includes acquiring a substantial asset from a related party or a substantial shareholder.

    The Company is proposing to acquire the Creasy Assets from companies which are controlled by Creasy. Under the terms and conditions of the Restructuring Agreement: (i) the Company will acquire a 70% interest in the Creasy Tenements and a 70% interest in the Other Mineral Rights; (ii) Creasy will acquire a 30% interest in the Company Tenements and receive the consideration more particularly described in paragraph 4.2; and (iii) the Company, Sirius Gold and the Creasy Related Entities will restructure the Fraser Range Joint Venture to explore and exploit the assets the subject of the Fraser Range Joint Venture.

    The material terms of the Transaction are set out in Part C and include the Company issuing 13,800,000 Shares (on a post-Consolidation basis) and 2,200,000 Performance Shares (on a post-Consolidation basis) to the Creasy Related Entities. The acquisition of the Creasy Assets and the issue of 13,800,000 Shares and 2,200,000 Performance Shares to Creasy under the Restructuring Agreement is a substantial asset for the purposes of Listing Rule 10.1.

    Creasy via Yandal (a company controlled by Creasy) currently holds 28.65% of the Shares in the capital of the Company and as such, is a related party and so, Shareholder approval under Listing Rule 10.1 is required to permit the Company to acquire the Creasy Assets under the terms and conditions of the Restructuring Agreement.

    The purpose of Resolution 3 is to seek Shareholder approval to acquire the Creasy Assets from the Creasy Related Entities. The purpose of Resolution 4 is to seek Shareholder approval to issue 13,800,000 Shares to the Creasy Related Entities or their nominees in accordance with the Restructuring Agreement.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 27

    Information regarding the Transaction and the terms of the acquisition of the Creasy Assets are set out in Part C above. Information about the effect of the Transaction on the Company is set out in Part E above. This information includes a pro forma balance sheet and capital structure.

    The independent Directors of the Company have commissioned the Independent Expert to prepare a report on whether the Transaction (including the issue of the relevant Shares and Performance Shares to the Creasy Related Entities) together with the interdependent proposal the subject of Resolution 7 are, on balance and based on preferred valuations, collectively fair and reasonable to the Shareholders not associated with the Resolutions. The Independent Expert’s Report is attached to this Explanatory Statement at Annexure 1.

    The Independent Expert concludes that the acquisition of the Creasy Assets and the issue of the Shares and the Performance Shares to the Creasy Related Entities under the Restructuring Agreement together with the interdependent proposal the subject of Resolution 7 are, on balance and based on preferred valuations, collectively fair and reasonable to Shareholders not associated with the Transaction. Additionally, the Independent Expert concludes the acquisition of the Creasy Assets and the issue of the Shares and Performance Shares to the Creasy Related Entities is, on balance, fair and reasonable. Shareholders are urged to read the Independent Expert's Report.

    10.2 ASX Listing Rule 10.11

    Listing Rule 10.11 provides that an entity must not issue securities to a related party without the approval of shareholders. The Creasy Related Entities are related parties of the Company and so, Shareholder approval is required to issue the Shares and Performance Shares to the Creasy Related Entities under Resolutions 4 and 6 respectively. Approval pursuant to Listing Rule 7.1 is not required to grant the Shares or Performance Shares to the Creasy Related Entities as approval is being obtained under Listing Rule 10.11. Shareholders should note that the issue of the Shares and Performance Shares to the Creasy Related Entities will not be included in the 15% calculation for the purposes of Listing Rule 7.1.

    The purpose of Resolution 4 is to seek Shareholder approval to issue 13,800,000 Shares on a post-Consolidation basis, to the Creasy Related Entities (or their nominees).

    The Creasy Related Entities will enter into a 12 months escrow/restriction agreement with the Company in relation to the Shares to be issued.

    Listing Rule 10.13 sets out the matters which must be included in the notice of meeting convened to seek Shareholder approval under Listing Rule 10.11. The following information is provided to Shareholders in relation to Resolution 4:

    (a) The Shares will be allotted and issued to the Creasy Related Entities (or their nominees) on a post-Consolidation basis.

    (b) The maximum number of Shares to be issued to the Creasy Related Entities (or their nominees) pursuant to Resolution 4 is 13,800,000. The Shares will be issued to the Creasy Related Entities in the following proportions FraserX Pty Ltd up to 3,450,000 Shares and Lake Rivers Gold Pty Ltd up to 10,350,000 Shares.

    (c) The Company will issue the Shares to the Creasy Related Entities (or their nominees) upon completion of the Transaction which will be no later than 1 month after the date of this Meeting (unless a later date is permitted by ASX waiver).

    (d) Creasy is not a Director of the Company. Creasy is a substantial shareholder who by his controlled company (Yandal) holds 28.65% of the Shares of the Company. An entity that controls a public company is a related party of the public company (in this case, Yandal). Directors of an entity that controls a public company are a related party (in this case,

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 28

    Creasy). Entities controlled by certain related parties such as Creasy are also related parties (in this case, all other Creasy Related Entities). Thereby all Creasy Related Entities as recipients of the Shares are related parties.

    (e) The Shares are issued at a deemed issue price of $0.20 (20 cents) each (on a post-Consolidation basis). The Shares to be issued will be fully paid ordinary Shares of the Company that rank equally with the Company’s current issued Shares on a post-Consolidation basis.

    (f) There will be no funds raised from the issue of the Shares. The Shares are issued as part consideration for the acquisition of the Creasy Assets.

    (h) A Voting Exclusion Statement is included in the Notice.

    10.3 Corporations Act requirements – Chapter 2E

    Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless it falls within a specified exception or prior shareholder approval is obtained to the giving of the financial benefit to the related party.

    For the purposes of Chapter 2E, Creasy and each of the Creasy Related Entities is a related party of the Company. The Company is proposing to acquire the Creasy Assets on the terms set out in the Restructuring Agreement and to issue 13,800,000 Shares to the Creasy Related Entities which is a financial benefit requiring Shareholder approval.

    The following information is provided to Shareholders for the purposes of Chapter 2E:

    (a) The related party to whom a financial benefit is to be given under Resolutions 3 and 4 are the Creasy Related Entities (or their nominees).

    (b) The nature of the financial benefit given to the Creasy Related Entities is the Creasy Assets being incorporated into the Fraser Range Joint Venture, the Company acquiring a 70% interest in the Creasy Assets and the Other Mineral Rights, Creasy or the Creasy Related Entities acquiring a 30% interest in the Company Tenements and the issue of 13,800,000 Shares and 2,200,000 Performance Shares, on a post-Consolidation, basis to the Creasy Related Entities (or, if the issue of the Performance Shares is not approved, the grant of the Royalty to the Creasy Related Entities). Information regarding the Transaction and the material terms of the Fraser Range Joint Venture are set out in Part C above.

    (c) The Directors (excluding Stephen Lowe) recommend that Shareholders not associated with the Creasy Related Entities vote in favour of Resolutions 3 and 4. The reasons for the Director’s recommendations are set out at section 7.4. Further, the independent Directors consider the financial benefits to be given to the Creasy Related Entities are being given on reasonable arms length terms and therefore no Shareholder approval under Chapter 2E is necessary. Nevertheless, in the interests of transparency the independent Directors have resolved to seek Shareholder approval under Chapter 2E.

    Mr Stephen Lowe declines to make a recommendation to Shareholders on the basis that he also acts as Business Manager to Creasy.

    (d) Set out below is other information that might reasonably be required by Shareholders to decide on Resolutions 3 and 4 and that is known to the Company or the Directors.

    (i) Trading history

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 29

    The following table gives details of the highest, lowest and the latest closing price of the Company's Shares trading on the ASX over the last 12 months.

    Date Closing Price

    Highest Price 9 November 2010 0.016

    Lowest Price 1 April 2010 0.006

    Latest Price 10 November 2010 0.014

    (ii) Valuation of consideration to be paid by the Company for the Creasy Assets

    The Independent Expert has valued the 13,800,000 Shares to be issued to the Creasy Related Entities by reference to the Capital Raising subscription price of $0.20 (20 cents) per Share as the preferred valuation methodology providing a total value of $2,760,000. Shareholders are referred to sections 5, 6 and 7 of the Independent Expert's Report.

    (iii) Relevant interest and dilution

    Creasy and his Associates currently have a relevant interest in 28.65% in the Company’s Shares. Information about the change in Creasy’s relevant interest and the dilutionary impact of issuing Shares to Creasy Related Entities is provided in section 10.4(b).

    (iv) Other information

    The Directors are not aware of any other information that is reasonably required by Shareholders to allow them to make a decision as to whether it is in the best interests of the Company to pass Resolutions 3 and 4.

    10.4 Corporations Act – section 611 item 7

    Information about the prohibition on acquisition of relevant interests in voting shares above the takeover threshold of 20% is set out in section 13.1.

    The purpose of Resolution 4 is to seek Shareholder approval to the acquisition of Shares by the Creasy Related Entities (or their nominees) pursuant to item 7 in the table in section 611. By passing Resolution 4, the Creasy Related Entities (which includes Creasy) will not be prohibited from acquiring an increased relevant interest in Shares in excess of the takeover threshold in the Corporations Act.

    The following paragraphs set out information required to be provided to Shareholders under item 7 in the table in section 611 of the Corporations Act and ASIC Regulatory Guide 74.

    (a) Identity of the person proposing to make the acquisition and their Associates

    Under the Transaction, 13,800,000 Shares are to be issued on a post-Consolidation basis as part consideration to the Creasy Related Entities (or their nominees) as set out in sections 10.1 and 10.2.

    By reason of section 11 of the Corporations Act where a primary person is a body corporate, the Associate reference includes a reference to a director or secretary of the body corporate, a related body corporate and a director or secretary of a related body corporate.

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 30

    The Creasy Related Entities are Creasy, Ponton Minerals Pty Ltd, Fraserx Pty Ltd, Zanthus Resources Pty Ltd, Free CI Pty Ltd and Lake Rivers Gold Pty Ltd.

    The Creasy Related Entities have advised the Company that the following persons and entities are Associates:

    Creasy

    Free CI Pty Ltd ABN 14 147 090 542

    Ponton Minerals Pty Ltd ABN 31 108 313 024

    Fraserx Pty Ltd ABN 11 099 488 114

    Zanthus Resources Pty Ltd ABN 23 077 454 963

    Kingx Pty Ltd ABN 22 133 537 274

    Youanmi Metals Pty Ltd ABN 96 123 452 200

    Australian Gold Resources Pty Ltd ABN 68 006 712 956

    Australian Indian Resources Pty Ltd ABN 66 063 881 970

    BalX Pty Ltd ABN 52 132 234 907

    Bestbet Pty Ltd ABN 42 080 211 301

    Bogada Gold Ltd ABN 30 103 540 558

    Bookaburna Minerals Pty Ltd ABN 90 108 313 337

    Buddadoo Metals Pty Ltd ABN 36 123 476 764

    Colchis Resources Pty Ltd ABN 18 009 182 816

    Croydon Gold Pty Ltd ABN 99 079 086 623

    Dunstan Holdings Pty Ltd ABN 95 008 686 691

    Fortescue Resources Pty Ltd ACN 091 453 468

    Great Southern Gold Pty Ltd ABN 76 123 821 545

    Huntingfield Pty Ltd ABN 17 008 703 222

    IronX Pty Ltd ABN 92 084 350 765

    Jurien Industrial Minerals Ltd ABN 72 104 114 141

    Kitchener Resources Pty Ltd ABN 70 077 222 229

    Lake Rivers Gold Pty Ltd ABN 25 122 986 681

    Ligniteoil Pty Ltd ABN 55 098 946 475

    Linger and Die Pty Ltd ABN 63 121 720 714

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 31

    Motwil Pty Ltd ABN 71 076 409 884

    Mt Stewart Resources Pty Ltd ABN 910 083 678 040

    Muccan Minerals Pty Ltd ABN 13 099 488 123

    PlatX Ltd ABN 70 104 114 132

    Red Dust Prospecting Pty Ltd ACN 112 696 787

    Ruby Plains Resources Pty Ltd ABN 62 103 888 651

    Runnell Holdings Pty Ltd ABN 12 115 392 419

    TantalumX Pty Ltd ABN 19 079 959 050

    Telupac Holdings Pty Ltd ABN 72 082 612 351

    West Coal Pty Ltd ABN 84 123 086 975

    Windimurra Resources Pty Ltd ABN 86 076 409 946

    WitX Pty Ltd ABN 55 097 710 702

    Yandal Investments Pty Ltd ABN 89 070 684 810

    Yanyarex Pty Ltd ACN 119 865 413

    Creasy has a relevant interest in the 13,800,000 Shares to be issued to the Creasy Related Entities (or their nominees) by reason of sections 608(1) (the power to exercise or control the right to vote or dispose of the securities) and section 608(3) (a person has a relevant interest in securities held by a body corporate in which that person's voting power is above 20% or a person controls a body corporate) of the Corporations Act.

    (b) Increase in voting power in the Company resulting from the acquisition

    As at the date of this Notice, Yandal and Creasy and their Associates have a relevant interest in 28.65% of Shares in the Company and have 28.65% voting power in the Company. Creasy has greater than 20% voting power in Yandal and by section 608(3) of the Corporations Act is deemed to have the same relevant interest in the Company as Yandal.

    If Resolution 4 is passed, the Creasy Related Entities will be issued with 13,800,000 Shares in the Company on a post-Consolidation basis upon completion of the Transaction.

    Before the Transaction can be completed the Company is required to successfully undertake the Capital Raising. Assuming the maximum subscription is reached, the Company will have issued a further 55,000,000 Shares on a post-Consolidation basis to investors before it issues the Shares the subject of Resolution 4 to the Creasy Related Entities. One of the consequences of the Capital Raising is that it will reduce the relevant interest of the Creasy Related Entities in the Company to 17.16% (if $11,000,000 is raised under the Capital Raising).

    Therefore, the maximum relevant interest of the Creasy Related Entities in Shares in the Company at the time of completion of the Transaction will be 17.16% (if $11,000,000 is raised under the Capital Raising).

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 32

    If Resolution 4 is passed and the Transaction is completed then:

    (i) The Creasy Related Entities may acquire a relevant interest in a maximum of 37,328,993 Shares (being their existing holding of 23,528,993 plus 13,800,000 issued under Resolution 4).

    (ii) The maximum extent of the increase in voting power in the Company of the Creasy Related Entities and their Associates that will result from the acquisition of the Shares is 7.57% on a undiluted basis as set out in Table A below and based on the relevant assumptions including a Capital Raising of $11,000,000 (being from voting power of 17.16% on completion of the Capital Raising to 24.73%).

    (iii) The voting power that the Creasy Related Entities and their Associates will have as a result of the acquisition of the Shares is 24.73% (on an undiluted basis and assuming a Capital Raising of $11,000,000).

    The effect of the acquisition of the Shares by the Creasy Related Entities under the Transaction is summarised in the following Table A.

    TABLE A

    Assuming $11,000,000 is raised under the Capital Raising

    Post consolidation Shareholders (other than the vendors of the Transactions)

    Creasy Related Entities

    Total

    CURRENT

    Existing shares 58,605,008 23,528,993 82,134,001

    % undiluted shareholding 71.35% 28.65% 100%

    Options 11,900,000 30,000,000 41,900,000

    Total diluted shares 70,505,008 53,528,993 124,034,001

    % fully diluted shareholding 56.84% 43.16% 100%

    CAPITAL RAISING (MAXIMUM)

    Existing shares 55,000,000 55,000,000

    % undiluted shareholding 100% 100%

    Options 33,000,000 33,000,000

    Total diluted shares 88,000,000 88,000,000

    % fully diluted shareholding 100% 100%

  • Sirius Resources NL Notice of General Meeting and Explanatory Statement 33

    COMPLETION TRANSACTION

    Shares 13,800,000 13,800,000

    % undiluted shareholding 100% 100%

    Performance Shares 2,200,000 2,200,000

    Total diluted shares 16,000,000 16,000,000

    % fully diluted shareholding 100% 100%

    TOTAL

    Shares

    % undiluted shareholding

    113,605,008

    75,27%

    37,328,993

    24.73%

    150,934,001

    100%

    Performance Shares

    % undiluted shareholding

    2,200,000

    100%

    2,200,000

    100%

    Options

    % undiluted shareholding

    44,900,000

    59,95%

    30,000,000

    40.05%

    74,900,000

    100%

    Total diluted shares 158,505,008, 69,528,993 228,034,001

    % fully diluted shareholding 69.51% 30.49% 100%

    (c) Intentions of Creasy Related Entities regarding the future of the Company

    Creasy Related Entities have informed the Company that, as at the date of this Explanatory Statement and on the basis of facts and information available to them, if Shareholders approve Resolution 4 (so that, subject to satisfying any other conditions, the Transactions proceed), they:

    (i) have no intention to change the existing business of the Company other than the scale of its activities will change following the completion of the Transaction so that it will have acquired interests as set out in sections 3 and 4 above;

    (ii) have no current intention to inject further capital into the Company;

    (iii) do not propose that any property be transferred between the Company and it or any person associated with it;

    (iv) have no current intention to otherwise redeploy the fixed assets of the Company; and

    (v) have no current intention to change the Company's existing financial or dividend policies.

    (d) The terms of the proposed acquisition and the Transaction

    The Shares are to be issued as part consideration payable by the Company to the Creasy Related Entities to acquire the Creasy Assets. Information regarding t