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1 Laconia Resources Limited ABN Notice of General Meeting Explanatory Statement and Proxy Form TIME 10.00am (WST) DATE Thursday, 20 August 2015 PLACE Adina Apartment Hotel Perth 33 Mounts Bay Road Perth WA 6000

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3 NOTICE OF GENERAL MEETING Notice is hereby given that a General Meeting of members of Laconia Resources Limited (Laconia or the Company) will be held on Thursday, 20 August 2015, commencing at 10.00am (WST) at Adina Apartment Hotel Perth, 33 Mounts Bay Road, Perth, Western Australia. The enclosed Explanatory Statement accompanies and forms part of this Notice of General Meeting. AGENDA Resolution 1: Disposal of Company s Main Undertaking To consider and, if thought fit, to pass the following resolution as an ordinary resolution: That, for the purposes of ASX Listing Rule 11.2 and for all other purposes, approval is given for the disposal by the Company of its Peruvian mineral interests on the terms and conditions set out in the Explanatory Statement. Voting Exclusion: The Company will disregard any votes cast on this Resolution by a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the Resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it cast by a person as a proxy for a 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. Resolution 2: Issue of Convertible Notes To consider and, if thought fit, to pass the following resolution as an ordinary resolution: That, for the purposes of ASX Listing Rule 7.1 and for all other purposes, the Directors be authorised to: (a) (b) issue up to 200,000 Convertible Notes (Notes) at a price of $1.00 per Note; and issue upon the conversion of up to 200,000 Notes with a face value of $200,000 such number of Shares to be determined at a conversion price of $0.001 per Share and otherwise on the terms and conditions set out in the Explanatory Statement accompanying this Notice of General Meeting. Voting Exclusion Statement: 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 an ordinary security holder, if the resolution is passed, and any associate of them. However, the Company need not disregard a vote if 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 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. Resolution 3: Approval for Related Party Participation in Issue of Convertible Notes P Fox To consider and, if thought fit, to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule and for all other purposes, approval is given for the Company to issue up to 30,000 Notes to Peter Fox (or his nominee) on the same basis as that determined in Resolution 2 as part of the proposed issue of Notes, the subject of Resolution 2. Voting Exclusion: The Company will disregard any votes cast on this Resolution by Peter Fox (and his nominee) and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a 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. Page 1

4 Resolution 4: Approval for Related Party Participation in Issue of Convertible Notes N Bassett To consider and, if thought fit, to pass the following resolution as an ordinary resolution: That for the purposes of ASX Listing Rule and for all other purposes, approval is given for the Company to issue up to 25,000 Notes to Neville Bassett (or his nominee) on the same basis as that determined in Resolution 2 as part of the proposed issue of Notes, the subject of Resolution 2. Voting Exclusion: The Company will disregard any votes cast on this Resolution by Neville Bassett (and his nominee) and any of their associates. However, the Company need not disregard a vote if it is cast by a person as a proxy for a 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. BY ORDER OF THE BOARD Neville Bassett Company Secretary 16 July 2015 Page 2

5 IMPORTANT INFORMATION TIME AND PLACE OF MEETING Notice is given that the General Meeting of the Shareholders to which this Notice relates will be held at 10.00am (WST) on Thursday, 20 August 2015 at: Adina Apartment Hotel Perth 33 Mounts Bay Road Perth WA 6000 YOUR VOTE IS IMPORTANT The business of the General Meeting affects your shareholding and your vote is important. VOTING ELIGIBILITY The Directors have determined pursuant to Regulation of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the General Meeting are those who are registered Shareholders at 4.00pm (WST) on 18 August VOTING IN PERSON To vote in person, attend the General Meeting at the time, date and place set out above. VOTING BY PROXY To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form. Sections 250BB and 250BC of the Corporations Act provide that: if proxy holders vote, they must cast all directed proxies as directed; and any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed. 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: 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 if the proxy has two or more appointments that specify different ways to vote on the resolution the proxy must not vote on a show of hands; and 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 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). Page 3

6 Transfer of non-chair proxy to chair in certain circumstances Section 250BC of the Corporations Act provides that, if: 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 the appointed proxy is not the Chair of the meeting; and at the meeting, a poll is duly demanded on the resolution; and either of the following applies: o o the proxy is not recorded as attending the meeting; the proxy does not vote on the resolution, 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. Page 4

7 EXPLANATORY STATEMENT 1. INTRODUCTION This Explanatory Statement has been prepared for the information of members of Laconia Resources Limited ( the Company ) in connection with the business to be conducted at the General Meeting of members to be held at Adina Apartment Hotel Perth, 33 Mounts Bay Road, Perth, Western Australia on Thursday, 20 August 2015 at 10.00am (WST). This Explanatory Statement forms part of and should be read in conjunction with the accompanying Notice. 2. DISPOSAL OF COMPANY S MAIN UNDERTAKING (Resolution 1) 2.1 Background Resolution 1 seeks shareholder approval for the disposal by the Company of its Peruvian mineral interests, being the main undertaking of the Company (Disposal). On 30 June 2015, the Company announced to ASX that it had entered into a binding letter agreement with Andes Exploration of Peru Numero Dos Sac (Andes) and Sallka Uno Y Dos Sac (Sallka) (Agreement) in respect to the Disposal. The Peruvian tenement portfolio comprises: Patacancha N o 1; Patacancha N o 2; Patacancha N o 3; and Patacancha N o 4. As previously announced in March 2015, Laconia terminated its option agreement to acquire an 80% ownership interest in Andes and Sallka (Option Agreement), companies holding 11 licences in Ayacucho, Peru. The Andes and Sallka licences are contiguous to the Patacancha tenement package. As a result of the termination of the Option Agreement there has been numerous claims made by Andes and Sallka pursuant to the Option Agreement. The proposed Disposal will satisfy all potential claims and will allow the Company to focus on reinvigorating the Company. The Company has undertaken a review of its entire tenement portfolio, both in Peru and Australia, and is also currently assessing new project opportunities that the Board believes will add shareholder value. The Company has limited cash resources to undertake any meaningful exploration programmes and, on review, limited opportunity to raise new capital without a change of focus. The Directors have therefore resolved that it is in the best interests of the Company to exit from Peru. As part of the ongoing review process the Company is looking at potential new mineral exploration project opportunities, as well as possible investment opportunities outside of the Company s existing principal activity of mineral exploration. Dependant on the nature and scale of any investment, the Company may be required, pursuant to ASX Listing Rules, to obtain shareholder approval to any transaction and to re-comply with the admission requirements set out in Chapters 1 and 2 of the ASX Listing Rules. Page 5

8 Funds raised pursuant to Resolutions 2, 3 and 4 will be used for working capital. Future funding requirements of the Company will be dependent on the requirements of future opportunities pursued by the Company, as described above. Based on the Company s current position, the Directors consider that the proposed Disposal is in the best interests of the Company and will allow it to seek new opportunities to add Shareholder value. A summary of the key terms of the Agreement are set out in Section 2.3 below. 2.2 ASX Requirements ASX Listing Rule 11.2 provides that where a company proposes to make a significant change in the nature or scale of its activities which involves the disposal of its main undertaking, it must first obtain the approval of its shareholders. Shareholders should be aware that following the proposed disposal of the Company s main undertaking, ASX may require the Company to seek shareholder approval pursuant to ASX Listing Rule and/or re-comply which Chapters 1 and 2 of the Listing Rules pursuant to ASX Listing Rule with respect of any future transaction the Company may enter into. A disposal by a listed entity of its main undertaking can also raise issues under Listing Rule 12.1 and 12.2, which oblige a listed entity to satisfy ASX on an ongoing basis that the level of its operations is sufficient, and its financial condition adequate, to warrant its continued listing and continued quotation of its securities. ASX Guidance Note 12 states, the disposal by a listed entity of its main undertaking may be a precursor to the entity embarking on a new business venture, either immediately or once a suitable business has been identified and acquired. In the latter case, notwithstanding Listing Rule 12.3, ASX will, in the absence of any other reason to suspend the quotation of the entity s securities, generally continue the quotation of its securities for up to six months to allow it time to identify, and make an announcement of its intention to acquire, a suitable new business. If an entity is not able to make an announcement of its intention to acquire a new business, within six months of completing the disposal of its main undertaking, ASX will generally exercise its discretion under Listing Rule 12.3 to suspend the quotation of its securities at the end of that six month period. The suspension will continue until the entity makes an announcement acceptable to ASX about its future activities. 2.3 Key Terms The key terms of the Disposal are as follows: (i) Completion of the Disposal is subject to and conditional on: (a) (b) the Company obtaining shareholder approval for the Disposal pursuant to ASX Listing Rule 11.2; and completion of formal agreements. (ii) The consideration for the Disposal will comprise: (a) (b) (c) The sum of US$250,000 to be satisfied by the release of all claims by Andes and Sallka under the option agreement; A net smelter royalty of 1.2% and A right for Andes and Sallka to buy-back the 1.2% net smelter royalty for a total amount of US$5 million. Page 6

9 The parties intend to enter into a formal agreement and any ancillary documents required to give effect to the Disposal as soon as practicable. 2.4 Indicative Timetable Subject to ASX Listing Rule and Corporations Act requirements, the Company anticipates completion of the Disposal will be in accordance with the following timetable: Event Date ASX announcement of Disposal 30 June 2015 General Meeting to approve Disposal 20 August 2015 Completion of Disposal 27 August Financial effect of the Disposal on the Company The impact of the Disposal on the Company s financial position will be: 1. The release of Laconia from all claims, demands and actions arising directly or indirectly from the Option Agreement, any of the documents associated with the Option Agreement and any other business or legal relationship arising in Peru; 2. Termination of the Option agreement and all associated agreements between the parties; and 3. Release from any future expenditure commitments on the Peruvian tenements. The Company currently has cash of approximately $25,000. No additional funds will be raised from the Disposal, the consideration being as described in Section 2.3(ii)(a). The Company will retain its Australian tenements. There will be no impact on the capital structure of the Company. 2.6 Reasons for the Disposal The Directors believe that following an assessment of the advantages and disadvantages disclosed below the Disposal is in the best interests of the Company. Advantages The Directors believe that the following non-exhaustive list of advantages may be relevant to a Shareholder s decision on how to vote on the proposed Disposal: (a) (b) (c) (d) The Disposal allows the Company to reduce costs (both direct tenement costs and corporate overheads) on its Peruvian operations and releases the Company from any future expenditure commitments on the Peruvian tenements; The consideration from the Disposal will release Laconia from all claims, demands and actions arising directly or indirectly from the Option Agreement, any of the documents associated with the Option Agreement and any other business or legal relationship arising in Peru; The Disposal the release from obligations outlined in (b) will make it more attractive for the Company to seek fresh equity capital and will enable the Company to consider alternative asset acquisitions that the Directors believe will add value to Shareholders; and The Disposal extinguishes current and future obligations of the Company on its Peruvian assets with no dilutionary impact on shareholders, in a current market environment where it is difficult to secure capital. Page 7

10 Disadvantages The Directors believe that the following non-exhaustive list of disadvantages may be relevant to a Shareholder s decision on how to vote on the proposed Disposal: (a) (b) (c) (d) The Company will not be able to participate in or derive any future potential benefit from exploration on the Peruvian tenement portfolio, if any. The company retains a royalty interest as described in 2.2(ii)(b) above; The Disposal involves the Company selling its main undertaking, which may not be consistent with the investment objectives of all Shareholders. The Company retains its Australian mineral tenements; There is a risk that the Company may not be able to locate and complete the acquisition of other suitable investment opportunities within a reasonable time; and In the event that the Company is not able to secure a new investment opportunity there is the risk that the Company s securities will be suspended from quotation in the circumstances outlined in 2.2 above. There will be no Board or management changes as a result of the Disposal. The Company does not currently have any senior management or full-time employees. 2.7 Director Recommendations The Directors do not have any material interest in the outcome of Resolution 1 other than as a result of their interest, if any, arising solely in the capacity as security holders. The Board has approved the proposal to put Resolution 1 to Shareholders. Each of the Directors intends to vote all of their Shares in favour of the Resolution. Based on the information available, all of the Directors consider that the proposed Disposal is in the best interests of the Company and recommend that the Shareholders vote in favour of the Resolution. 3. ISSUE OF CONVERTIBLE NOTES (Resolution 2) Resolution 2 of the Notice seeks Shareholder approval for: (a) the issue of up to 200,000 Convertible Notes (Notes) at a price of $1.00 per Note (Note Issue); and (b) the issue upon the conversion of up to 200,000 Notes with a face value of $200,000 such number of Shares to be determined at a conversion price of $0.001 per Share.. On 12 May 2015 the Company announced that it had reached agreement for the issue of unsecured convertible notes (Notes) with a face value of $150,000. Subsequently, the Company agreed to issue 200,000 Notes. The Notes will be issued pursuant to a Loan Note Deed Poll dated 7 May The issue of the Notes and the conversion of the Notes to Shares is conditional on Shareholder approval. The principle terms of the Notes are as detailed in (c) below. The number of Shares that may be issued by the Company upon the conversion of Notes may exceed the 15% threshold requiring shareholder approval. To retain the Company s 15% equity security placement capability, shareholder approval is being sought for the issue of Shares on conversion of Page 8

11 Notes so as to allow the issue of further securities in the future, without the necessity for Shareholder approval. In compliance with the information requirements of ASX Listing Rule 7.3 members are advised of the following particulars in relation to the issue of the Notes and of Shares on conversion of Notes: (a) (b) (c) the amount of funds raised by the Notes is $200,000. A Note will convert into the number of Shares calculated by dividing that part of the amount provided as an advance pursuant to the Note, the face value, by the Conversion Price as described in (c) below. The maximum number of Shares that will be issued if full conversion of the Notes occurs will be 200,000,000. the Notes will issued to sophisticated and professional investors as defined in section 708 of the Corporations Act. The principle terms of the Notes are as follows: Face Value: Redemption Date: Coupon Rate: Conversion Price: Conversion Period: Security: ASX: $1.00 each 24 months from date of issue 12% per annum $0.001 per Note Convertible, in whole or in part, by the Noteholder at any time from the date of issue and prior to the Redemption Date. Unsecured The company will not apply to ASX for quotation of the Notes. Upon conversion of a Note the Company will apply for quotation of the Shares issued pursuant to the conversion. (d) (e) (f) the terms and conditions of the Shares issued upon conversion of Notes will be the same as the Shares in the Company already on issue and will from the date of issue rank equally in all respects with the then existing Shares. Funds raised of $200,000 will be used for working capital. The issue of Notes will occur on one date, no later than three months after the date of this Meeting. Allotment of Shares will occur progressively upon the conversion of Notes. Assuming full conversion of the Notes occurs and no other new issues occur prior to Note conversion, the capital structure of the Company will be: Shares currently on issue 530,633,165 New Shares assuming full conversion of Notes 200,000, ,633, APPROVAL FOR RELATED PARTY PARTICIPATION IN ISSUE OF CONVERTIBLE NOTES (Resolutions 3 and 4) As disclosed in Resolution 2, the Company proposes the issue of up to 200,000 Notes. Peter Fox and Neville Bassett, directors of the Company, each wish to subscribe for Notes on the same terms as the Note Issue described in Section 3. Page 9

12 Resolutions 3 and 4 seek Shareholder approval for the issue of up to 55,000 Notes to Peter Fox and Neville Bassett (or their respective nominees) arising from their respective participation in the Note Issue (Participation). Under Chapter 2E of the Corporations Act for a public company, or an entity that the public company controls, to give a financial benefit to a related party of the public company, the public company or entity must: (i) (ii) obtain the approval of the public company s members in the manner set out in sections 217 to 227 of the Corporations Act; and give the benefit within 15 months following such approval, unless the giving of the financial benefit falls within an exception set out in sections 210 to 216 of the Corporations Act. The Participation will result in the issue of Notes which constitutes giving a financial benefit and Peter Fox and Neville Basset are each a related party of the Company by virtue of being a Director. The Directors (other than Peter Fox in respect of Resolution 3 due to his material personal interest in that Resolution and Neville Bassett in respect of Resolution 4 due to his material personal interest in that Resolution) consider that Shareholder approval pursuant to Chapter 2E of the Corporations Act is not required in respect of the Participation because the Notes will be issued to Peter Fox and Neville Bassett (or their respective nominees) on the same terms as Notes issued to non-related party participants in the Placement and as such the giving of the financial benefit is on arm s length terms. In addition, the terms of the Notes and the Loan Note Deed Poll were agreed and entered into before Peter Fox and Neville Bassett were appointed directors of the Company. ASX Listing Rule also requires shareholder approval to be obtained where an entity issues, or agrees to issue, securities to a related party, or a person whose relationship with the entity or a related party is, in ASX s opinion, such that approval should be obtained unless an exception in ASX Listing Rule applies. As the Participation involves the issue of Notes to a replated party of the Company, Shareholder approval pursuant to ASX Listing Rule is required unless an exception applies. It is the view of the Directors that the exceptions set out in ASX Listing Rule do not apply in the current circumstances. Pursuant to and in accordance with ASX Listing Rule 10.13, the following information is provided in relation to the Participation: (i) the Notes will be issued to: A. Peter Fox (or his nominee) under Resolution 3; and B. Neville Bassett (or his nominee) under Resolution 4; (ii) the maximum number of Notes to be issued is; A. 30,000 Notes under Resolution 3; and B. 25,000 Notes under Resolution 4; (iii) the maximum number of Shares to be issued if full conversion of the Notes occurs is: A. 30,000,000 Shares under Resolution 3; and B. 25,000,000 Shares under Resolution 4; Page 10

13 (iv) (v) (vi) (vii) the Notes will be issued no later than 1 month after the date of the Meeting (or such later date to the extent permitted by any ASX waiver or modification of the ASX Listing Rules); the issue price per Note will be $1.00, being the same as all other Notes issued under the Note Issue; the Notes will be issued on the same terms and conditions as the Note Issue described in Section 3; and The funds raised from the directors will form part of the pool of funds received from the issue of the Notes the subject of Resolution 2, and will therefore be directed in accordance with the directors intentions relating thereto as described in Section 3. Approval pursuant to ASX Listing Rule 7.1 is not required for the Participation as approval is being obtained under ASX Listing Rule Accordingly, the issue of Notes to Peter Fox and Neville Bassett (or their respective nominees) will not be included in the use of the Company s 15% annual placement capacity pursuant to ASX Listing Rule DEFINITIONS $ means Australian dollars. ASX means ASX Limited ABN ASX Listing Rules means the official listing rules of ASX. Board means the current board of directors of the company. Constitution means the Company s Constitution. Corporations Act means the Corporations Act 2001 (Cth). Directors means the current directors of the company. Explanatory Statement means this Explanatory Statement. General Meeting or Meeting means the meeting convened by the Notice. Laconia or the Company means Laconia Resources Limited ABN Notes means convertible notes to be issued on the terms and conditions outlined in Section 3 of this Explanatory Statement. Notice or Notice of Meeting or Notice of General Meeting means this Notice of General Meeting including the Explanatory Statement and the Proxy Form. Share means a fully paid ordinary share in the capital of the company. Shareholder means the holder of a fully paid ordinary share in the capital of the company. Page 11

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15 PROXY FORM The Secretary Laconia Resources Limited PO Box 7315 Perth WA 6850 Fax: (08) I/We (full name) of being a member(s) of Laconia Resources Limited, hereby appoint as my/our proxy of or, failing him/her the Chairperson of the Meeting to attend and vote for me/us at the General Meeting of the company to be held at 10.00am (WST) on Thursday 20 August 2015 and at an adjournment thereof in respect of % of my/our shares or, failing any number being specified, ALL of my/our shares in the company. RESOLUTION FOR AGAINST ABSTAIN 1 Disposal of Company s main undertaking 2 Issue of Convertible Notes 3 Approval for Related Party Participation in Issue of Convertible Notes P Fox 4 Approval for Related Party Participation in Issue of Convertible Notes N Bassett Where permitted, the Chairperson intends to vote all undirected proxies in favour of all resolutions. If the member is an individual or joint holder: Usual Signature Usual Signature If the member is a company: Signed in accordance with the Constitution of the company in the presence of: Director/Sole Director Director/Secretary Sole Director and Sole Secretary Dated this day of 2015.

16 INSTRUCTIONS FOR COMPLETING PROXY FORM 1. A member entitled to attend and vote is entitled to appoint not more than two proxies. 2. Where more than one proxy is appointed and that appointment does not specify the proportion or number of the member s votes, each proxy may exercise half of the votes. 3. A proxy need not be a member of the company. 4. A proxy is not entitled to vote unless the instrument appointing a proxy and the power of attorney or other authority (if any) under which it is signed is either deposited at the registered office of the Company (refer below) or sent by facsimile to that office on fax to be received not less than 48 hours prior to the time of the Meeting. 5. Signing Instructions Individual: where the holding is one name, the Shareholder must sign. Joint Holding: where the holding is in more than one name, all of the Shareholders must sign. Companies: where the company has a Sole Director who is also the Sole Company Secretary, this form must be signed by that person. If the Company (pursuant to section 204A of the Corporations Act 2001) does not have a Company Secretary, a Sole Director may sign alone. Otherwise this form must be signed by a Director jointly with either another Director or Company Secretary. Please indicate the office held in the appropriate place. If a representative of the corporation is to attend the meeting the appropriate Certificate of Appointment of Corporate Representative should be lodged with the company before the meeting or at the registration desk on the day of the meeting. LODGING YOUR PROXY FORM To be valid, your proxy form (and any Power of Attorney under which it is signed) must be received at the address given below no later than 10.00am (WST) on Thursday, 18 August Any proxy form received after that time will not be valid for the scheduled meeting. In person: By mail: Laconia Resources Limited Level St George s Terrace Perth WA 6000 Laconia Resources Limited PO Box 7315 Perth WA 6850 By fax: (08)