NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS AND EXPLANATORY

ABN 31 009 235 956 NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS AND EXPLANATORY STATEMENT AND PROXY FORM FOR A MEETING TO BE HELD ON WEDNESDAY 22 NOVEMBER 2006 10.30AM (WESTERN STANDARD TIME) AT THE WESTERN AUSTRALIA CLUB, 101 ST GEORGE’S TERRACE, PERTH, WESTERN AUSTRALIA CONTENTS SECTION 1 NOTICE OF MEETING (SETTING OUT THE PROPOSED RESOLUTIONS) EXPLANATORY STATEMENT TERMS AND CONDITIONS OF 2007 OPTIONS TERMS AND CONDITIONS OF 2010 OPTIONS PROXY FORM SECTION 2 APPENDIX A APPENDIX B THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION. YOU SHOULD READ THIS DOCUMENT. IF YOU ARE IN DOUBT AS TO THE ACTION YOU SHOULD TAKE IN REGARD TO THIS DOCUMENT OR THERE IS ANY MATTER YOU DO NOT UNDERSTAND YOU SHOULD CONTACT YOUR PROFESSIONAL ADVISERS FOR ADVICE. SECTION 1 NOTICE OF ANNUAL GENERAL MEETING AVIVA CORPORATION LIMITED ABN 31 009 235 956 THE EXPLANATORY STATEMENT SHOULD BE READ IN CONJUNCTION WITH THIS NOTICE OF MEETING NOTICE IS HEREBY GIVEN that the Annual General Meeting of Aviva Corporation Limited (“Company”) will be held at The Western Australia Club, 101 St George’s Terrace, Perth WA on Wednesday 22 November 2006 and commencing at 10.30 am (WST) to conduct the following business: BUSINESS OF THE MEETING The Explanatory Statement which accompanies and forms part of this Notice of Meeting describes the matters to be considered at the Annual General Meeting. ANNUAL REPORT TO RECEIVE THE FINANCIAL REPORT, DIRECTORS’ REPORT AND AUDITOR’S REPORT To consider and receive the financial report together with the directors’ report (including the remuneration report) and the auditor’s report for the period ended 30 June 2006. RESOLUTIONS RESOLUTION 1 ADOPTION OF REMUNERATION REPORT To consider and, if thought fit, to pass, with or without amendment, the following resolution as an advisory resolution: “That for the purpose of section 250R(2) of the Corporations Act and for all other purposes, the remuneration report for the period ended 30 June 2006 be adopted.” RESOLUTION 2 RATIFICATION OF FEBRUARY PLACEMENT (20,000,000 SHARES WITH 20,000,000 FREE ATTACHING 2007 OPTIONS) To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That for the purpose of Listing Rule 7.4 and for all other purposes Shareholders ratify the issue and allotment on 8 February 2006 of a total of 20,000,000 Shares at an issue price of 7.5 cents per Share, together with 20,000,000 free attaching 2007 Options exercisable at 10 cents per 2007 Option on or before 31 December 2007 and otherwise on the terms and conditions set out in the Explanatory Statement “. RESOLUTION 3 RE-ELECTION OF PETER GRATTAN FRENCH AS A DIRECTOR OF THE COMPANY To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That following his retirement in accordance with the Company’s constitution, Peter Grattan French be re-elected as a director of the Company.” RESOLUTION 4 ISSUE OF 3,000,000 2010 OPTIONS TO DIRECTOR – MR PETER FRENCH To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That, subject to Shareholders passing Resolution 3, and for the purposes of Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve the issue and allotment to Peter Grattan French, a director of the Company, or his nominee, of 3,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 and otherwise on the terms and conditions set out in the Explanatory Statement.” RESOLUTION 5 ISSUE OF 10,000,000 2010 OPTIONS TO THE CHIEF EXECUTIVE OFFICER – MR LINDSAY REED To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That for the purposes of Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve the issue and allotment to Lindsay George Reed, a director of the Company, or his nominee, of 10,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 and otherwise on the terms and conditions set out in the Explanatory Statement.” RESOLUTION 6 ISSUE OF 10,000,000 2010 OPTIONS TO DIRECTOR – MR ROBERT KIRTLAN To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That for the purposes of Listing Rule 10.11, Chapter 2E of the Corporations Act and for all other purposes, Shareholders approve the issue and allotment to Robert Edward Kirtlan, a director of the Company, or his nominee, of 10,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 and otherwise on the terms and conditions set out in the Explanatory Statement.” RESOLUTION 7 ISSUE OF 5,000,000 2010 OPTIONS TO THE CHIEF FINANCIAL OFFICER – MR STEPHEN JONES To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That for the purpose of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue and allotment to Stephen Craig Jones, chief financial officer of the Company, or his nominee, of 5,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 and otherwise on the terms and conditions set out in the Explanatory Statement.” RESOLUTION 8 ISSUE OF 2,000,000 2010 OPTIONS TO THE COMPANY SECRETARY – MR GREG CORNER To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: “That for the purpose of Listing Rule 7.1 and for all other purposes, Shareholders approve the issue and allotment to Gregory Alan Corner, company secretary of the Company, or his nominee, of 2,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 and otherwise on the terms and conditions set out in the Explanatory Statement.” VOTING EXCLUSION STATEMENT: RESOLUTION 2 In accordance with Listing Rule 7.5, the Company will disregard any votes cast on Resolution 2 by any person who participated in the February Placement and an associate of any person who participated in the February Placement. RESOLUTION 4 In accordance with section 224 of the Corporations Act and Listing Rule 10.13, the Company will disregard any votes cast on Resolution 4 by or on behalf of Peter Grattan French or his nominee and an associate of Peter Grattan French or his nominee. RESOLUTION 5 In accordance with section 224 of the Corporations Act and Listing Rule 10.13, the Company will disregard any votes cast on Resolution 5 by or on behalf of Lindsay George Reed or his nominee and an associate of Lindsay George Reed or his nominee. RESOLUTION 6 In accordance with section 224 of the Corporations Act and Listing Rule 10.13, the Company will disregard any votes cast on Resolution 6 by or on behalf of Robert Edward Kirtlan or his nominee and an associate of Robert Edward Kirtlan or his nominee. RESOLUTION 7 In accordance with Listing Rule 7.3, the Company will disregard any votes cast on Resolution 7 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 securities, if the resolution is passed, and an associate of those persons. RESOLUTION 8 In accordance with Listing Rule 7.3, the Company will disregard any votes cast on Resolution 8 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 securities, if the resolution is passed, and an associate of those persons. However, the Company need not disregard a vote cast on resolutions 2, 4, 5, 6, 7 and 8 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. DATED THIS THE 13TH DAY OF SEPTEMBER 2006. BY ORDER OF THE BOARD GREG CORNER COMPANY SECRETARY NOTES: A Proxy Form is enclosed with this Notice of Meeting. A member may appoint not more than 2 proxies to attend and act for the member at the meeting. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes each proxy may exercise, each proxy may exercise half of those votes. An appointment of a proxy or power of attorney is not effective for the meeting unless: (a) in the case of a proxy, the Proxy Form and, if it is executed by an attorney, the relevant power of attorney or a certified copy of it; and (a) in the case of an attorney, the power of attorney or a certified copy of it, is received by the Company ; • by mail to PO Box 859 South Perth WA 6951 or • by facsimile number (08) 9367 2355; or • at its registered office at Suite 4, Level 3, South Shore Centre 85 – 85 The Esplanade, South Perth WA 6151, at least 48 hours before the time for which the meeting was called or, if the meeting has been adjourned, before the resumption of the meeting. In accordance with regulation 7.11.37 of the Corporations Regulations 2001, the Company has determined that all securities of the Company registered as at 48 hours before the time appointed for the meeting will be taken for the purposes of the meeting, to be held by the persons who are registered holders at 5.00pm (WST) on Monday, 20 November 2006. Accordingly, transactions registered after that time will be disregarded in determining entitlements to attend and vote at the meeting. QUESTIONS FROM SHAREHOLDERS The chairman of the meeting will allow a reasonable opportunity for shareholders to ask questions or make comments on the management of the Company at the meeting. Mr Gavin Buckingham of Ernst & Young, as the auditor responsible for preparing the auditor’s report for the year ended 30 June 2006 (or his representative) will attend the meeting. The chairman of the meeting will allow a reasonable opportunity for the members as a whole to ask the auditor questions at the meeting about: • • • • the conduct of the audit; the preparation and content of the auditor’s report; the accounting policies adopted by the Company in relation to the preparation of the financial statements; and the independence of the auditor in relation to the conduct of the audit. To assist the board of directors and the auditor of the Company in responding to any questions you may have, please submit any questions you may have by fax or to the address below by no later than 5.00pm (WST) on Tuesday, 14 November 2006, By mail By fax In person PO Box 859, South Perth, Western Australia 6951 + 61 (08) 9367 2355 Registered Office – Suite 4, Level 3, South Shore Centre, 83-85 The Esplanade, South Perth, Western Australia 6151 As required by section 250PA of the Corporations Act, the Company will distribute a list setting out the questions directed to the auditor received in writing at least 5 business days prior to the meeting that the auditor considers relevant to the content of the auditor’s report or the conduct of the audit of the financial report for the year ended 30 June 2006. The chairman of the meeting will allow a reasonable opportunity for the auditor to respond to the questions set out on this list. OTHER Words which are defined in the Explanatory Statement have the same meaning when used in this Notice of Meeting unless the context requires otherwise. For assistance in considering this Notice of Meeting the following words are defined here: “2007 Option” “2010 Option” “ASX” “Central West Project” “Company” or “Aviva” “Corporations Act” “Directors” “Explanatory Statement” “February Placement” means an Option on the terms and conditions set out in Appendix A of the Explanatory Statement. means an Option on the terms and conditions set out in Appendix B of the Explanatory Statement. means Australian Stock Exchange Limited. means the Company’s project located approximately 8 kilometres south of Eneabba, Western Australia. means Aviva Corporation Limited ABN 31 009 235 956. means the Corporations Act 2001 (Commonwealth). means the directors of the Company. means the explanatory statement set out in section 2 of this Notice of Meeting. means the placement of 20,000,000 Shares at 7.5 cents per Share together with 20,000,000 free attaching 2007 Options having an exercise price of 10 cents per 2007 Option exercisable on or before 31 December 2007, by the Company on 8 February 2006, further details of which are set out in the Explanatory Statement. “Listing Rules” “Notice of Meeting” “ordinary resolution” “Option” “Proxy Form” “Share” “Shareholder” means the listing rules of ASX. means the notice of Annual General Meeting accompanying the Explanatory Statement. means a resolution passed by a simple majority of Shareholders on a show of hands or by a simple majority of votes given on a poll. means an option to acquire a Share in the Company. means the proxy form accompanying this Notice of Meeting. means a fully paid ordinary share in the capital of the Company. means the holder of a Share. SECTION 2 EXPLANATORY STATEMENT 1. INTRODUCTION This Explanatory Statement has been prepared for the information of Shareholders of Aviva in connection with the business to be conducted at the Annual General Meeting to be held at The Western Australia Club, 101 St George’s Terrace Perth, Western Australia on Wednesday 22 November 2006 commencing at 10.30 am WST. This Explanatory Statement should be read in conjunction with the accompanying Notice of Meeting. Words which are defined in the Notice of Meeting have the same meaning when used in this Explanatory Statement unless the context requires otherwise. This Explanatory Statement does not constitute a prospectus or other disclosure document for the purpose of the placements contemplated by the Resolutions. 2. RECEIPT OF ANNUAL REPORT – TO RECEIVE THE FINANCIAL REPORT, DIRECTORS’ REPORT AND AUDITOR’S REPORT Section 317 of the Corporations Act requires the directors of the Company to lay before the AGM the financial report, the directors’ report (including the remuneration report) and the auditor’s report for the last financial year that ended before the AGM. In accordance with section 250S of the Corporations Act, Shareholders will be provided with a reasonable opportunity to ask questions or make statements in relation to these reports but no formal resolution to adopt the reports will be put to shareholders at the meeting (save for Resolution 1 for the adoption of the remuneration report). 3. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT Sections 249L and 250R of the Corporations Act require that a resolution that the remuneration report be adopted must be put to the vote at the Company’s annual general meeting. The vote on this resolution is advisory only and does not bind the directors or the Company. The remuneration report is set out on pages 13 to 15 of the 2006 annual report circulated to members. In accordance with section 250SA of the Corporations Act, the chairman will allow members a reasonable opportunity to ask questions about, or make comments on, the remuneration report. 4. BACKGROUND TO RESOLUTION 2 The purpose of Resolution 2 is to ratify the previous issue of Shares and 2007 Options in the Company described in the Resolution. The Directors are restricted by Listing Rule 7.1 from issuing new securities in the Company which would dilute the interests of existing Shareholders, to a maximum of 15% of the issued capital of the Company in any 12 month period (“15% Limit”). There are exceptions which allow the Directors to issue new securities above that limit which include issues with Shareholder approval. Listing Rule 7.4 allows the Directors to seek approval of the Shareholders to an issue of securities after the issue has been made without approval under Listing Rule 7.1, provided the issue did not breach Listing Rule 7.1 and Shareholders subsequently approve the issue. The previous issue of Shares and 2007 Options described in Resolution 2 was made without Shareholder approval as those issues did not exceed the 15% Limit. The Directors now seek Shareholder approval of those issues pursuant to Listing Rule 7.4. 5. INFORMATION ON RESOLUTION 2 – RATIFICATION OF FEBRUARY PLACEMENT (20,000,000 SHARES WITH 20,000,000 FREE ATTACHING 2007 OPTIONS) On 8 February 2006, the Company placed a total of 20,000,000 Shares at 7.5 cents per Share together with 20,000,000 free attaching 2007 Options exercisable at 10 cents per 2007 Option on or before 31 December 2007, to sophisticated and professional investors in New York, Europe and Australia. The Shares were issued on the same terms and conditions as the Company’s existing Shares and the 2007 Options were issued on the Terms and Conditions of 2007 Options set out in Appendix A to this Explanatory Statement. This placement raised gross funds of $1,500,000 which are being used to further the Company’s activities at its Central West Project, and for working capital purposes. None of the allottees in the February Placement is a related party of the Company. LISTING RULE REQUIREMENTS As the February Placement was not made under an exception to Listing Rule 7.1 and was not previously approved by the Shareholders, the Directors now seek Shareholder approval and ratification of the February Placement pursuant to Listing Rule 7.4. INFORMATION REQUIRED BY LISTING RULE 7.5 In compliance with Listing Rule 7.5, Shareholders are advised as follows: (2) the number of securities allotted was 20,000,000 Shares and 20,000,000 free attaching 2007 Options; (3) the securities were issued at 7.5 cents per Share and the 2007 Options were issued as free attaching Options; (4) the Shares issued rank pari passu in all respects with the Company’s existing Shares and the 2007 Options were issued on the Terms and Conditions of 2007 Options set out in Appendix A to this Explanatory Statement. All Shares issued upon exercise of the 2007 Options will rank pari passu with the Company’s existing Shares; (5) the securities were allotted to persons in New York, Europe and Australia who were sophisticated or professional investors for the purposes of section 708(8) and 708(11) of the Corporations Act, or who were otherwise exempt investors under another exemption contained in section 708 of the Corporations Act; and (6) the funds raised by the issue are being used to further the Company’s activities at its Central West Coal Project, and for working capital purposes. 6. RESOLUTION 3 – RE-ELECTION OF PETER GRATTAN FRENCH Rule 13.2 of the Company’s constitution requires that at each annual general meeting of the Company, one third (or the number nearest to but not exceeding one third) of the directors and any director who has held office for 3 years or more, must retire from office. Rule 13.3 of the Company’s constitution provides that a retiring director is eligible for re-election without the necessity of giving any previous notice of his or her intention to submit himself or herself for re-election. Peter Grattan French was elected to the board of directors of the Company on 4 October 2001. Mr French commenced work in the finance industry in 1956. During the 35 years to 1991 Peter worked at the most senior level in the banking, finance and insurance industries in Australia and internationally, and retired as Group General Manager of Australian Guarantee Corporation Limited (AGC Ltd), Australia’s largest non banking financial institution. Since retiring from AGC Ltd, Peter has worked as a consultant specialising in change management to companies in the insurance, finance, property development and travel industries. Peter has acted as an advisor to the Australian, Thai, Malaysian, Singaporean and Indonesian governments on the framing of legislation relating to financial transactions through his private company Labarinth Enterprises Pty Ltd. The directors, with the exception of Mr French, unanimously recommend that you vote in favour of Mr French’s re-election. 7. INFORMATION ON RESOLUTIONS 4, 5 AND 6 ISSUE OF 2010 OPTIONS BACKGROUND Resolutions 4, 5 and 6 seek Shareholder approval to issue a total of 23,000,000 2010 Options for nil cash consideration, exercisable at 8 cents per 2010 Option on or before 31 December 2010 on the terms and conditions set out in Appendix B to this Explanatory Statement to Peter French, Lindsay Reed and Robert Kirtlan, who are all Directors of the Company. Shareholder should note that the issue of 2010 Options to Peter French the subject of Resolution 4 will be contingent on Shareholders passing Resolution 3 for the re-election of Mr French as a Director of the Company. SHAREHOLDER APPROVAL UNDER CHAPTER 2E OF THE CORPORATIONS ACT Resolutions 4, 5 and 6 seek Shareholder approval for issues of securities that fall under Chapter 2E of the Corporations Act. Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless an exception applies or shareholder approval is obtained. The financial benefit must be given to the related party within 15 months after shareholder approval is obtained. Section 228 of the Corporations Act defines “related party” widely and includes a director of a public company and specified members of the director’s family. Section 229 of the Corporations Act also defines “financial benefit” widely and for the purpose of Resolutions 4, 5 and 6 includes a public company issuing shares or options to a related party. Whether a financial benefit is given depends upon the economic and commercial substance of the transaction in addition to the legal form. REQUIREMENTS UNDER SECTION 219 OF THE CORPORATIONS ACT In accordance with section 219 of the Corporations Act, the following information is given to shareholders: • If Resolution 4 is passed it will permit the giving of a financial benefit to Mr Peter Grattan French or his nominee. Mr French is a NonExecutive Director of the Company and is the Chairman of the Company, and accordingly is considered a related party of the Company. If Resolution 5 is passed it will permit the giving of a financial benefit to Mr Lindsay George Reed or his nominee. Mr Reed is the Chief Executive Officer of the Company and is an Executive Director, and accordingly is considered a related party of the Company. If Resolution 6 is passed it will permit the giving of a financial benefit to Mr Robert Edward Kirtlan or his nominee. Mr Kirtlan is a NonExecutive Director of the Company, and accordingly is considered a related party of the Company. Mr Peter French, Mr Reed and Mr Kirtlan decline to make any recommendation in respect of Resolutions 4, 5 and 6 given their material personal interest in Resolutions 4, 5 and 6 respectively. The nature of the financial benefit to be given pursuant to Resolutions 4, 5 and 6 is the issue of: o 3,000,000 2010 Options for nil cash consideration with an exercise price of 8 cents per 2010 Option to Mr Peter Grattan French, or his nominee; and o 10,000,000 2010 Options for nil cash consideration with an exercise price of 8 cents per 2010 Option to Mr Lindsay George Reed, or his nominee; and o 10,000,000 2010 Options for nil cash consideration with an exercise price of 8 cents per 2010 Option to Mr Robert Edward Kirtlan, or his nominee. • If the Company’s Shares are trading on the ASX at a higher price than the exercise price of the 2010 Options at the time of exercise, the effect will be to give an immediate financial benefit to Messrs French, Reed and Kirtlan at the time the 2010 Options are exercised. If the 2010 Options are exercised the effect will be to dilute the interests of existing Shareholders. The table below sets out the impact of passing Resolutions 4, 5 and 6 on the number of Shares and Options on an undiluted and fully diluted basis: NUMBER OF SHARES 330,708,691 20,000,000 53,500,000 • • • • • Shares on issue at date of this Notice of Meeting (including those subject to ratification per Resolution 3) Add Shares to be issued under Resolution 3 Add Options on issue 2007 Options (including those subject to ratification per Resolution 3) TOTAL POTENTIAL ISSUED CAPITAL 2010 Options to be issued to under Resolution 4 2010 Options to be issued to under Resolution 5 2010 Options to be issued to under Resolution 6 NEW POTENTIAL ISSUED CAPITAL Potential dilution to issued capital • 404,208,691 3,000,000 10,000,000 10,000,000 427,208,691 5.69% If all the 2010 Options are exercised (relating to Resolutions 4, 5 and 6), a further 23,000,000 Shares will be on issue and $1,840,000 will be raised by the Company. The market price of the Company’s Shares during the period the 2010 Options are issued and unexercised may be one factor in determining whether or not Messrs French, Reed and Kirtlan will exercise the 2010 Options. The Company’s Shares may be trading on the ASX at a price which is higher than the exercise price of the 2010 Options. In these circumstances, if Messrs French, Reed and Kirtlan then sell the Shares arising from the exercise of the 2010 Options, they would realise an immediate profit. • • At the date of this Notice of Meeting the Company’s Share price was 6.3 cents. The Company’s lowest and highest share prices traded on the Australian Stock Exchange during the 12 months immediately preceding the date of this Notice of Meeting were: Lowest Highest 5.1 cents on 17 November 2005 8.7 cents on 13 February 2006 • It is not considered that, from an economic and commercial point of view, there are any costs or detriments, including opportunity costs or taxation consequences, for the Company or benefits foregone by the Company resulting from the issue of the 2010 Options pursuant to Resolutions 4, 5 and 6. • Apart from the information set out in this Explanatory Statement there is no other information that is known to the Company or any of its Directors that is reasonably required by Shareholders to decide whether or not it is in the Company’s interests to pass Resolutions 4, 5 and 6. VALUATION OF 2010 OPTIONS The 2010 Options to be issued have been valued using a binomial model, as recommended in the Accounting Standard AASB 2 “Share Based Payments” using input received from an independent source. The binomial model calculated the average value of the 2010 Options at 1.639 cents per 2010 Option, which presumes an aggregate benefit, over a period of three years, to Mr Peter Grattan French of $49,170, Mr Lindsay George Reed of $163,900 and Mr Robert Edward Kirtlan of $163,900. The binomial model calculation was prepared based on the following assumptions: • current Share price of 6.3 cents; • valuation date of 22 November 2006; • expiry date of 2010 Options of 31 December 2010; • interest rate of 6.75%; • volatility rate of 28.51%. DIRECTOR’S REMUNERATION The table below sets out details of Messrs French’s, Reed’s and Mr Kirtlan’s total annual remuneration package (including the value in the current financial year of 2010 Options to be issued to them assuming that Resolutions 4, 5 and 6 are passed): Mr French $ Nil $60,000 $ Nil $ Nil $3,904 $49,170 $113,074 Mr Reed $ 228,750 $ Nil $ Nil $ 20,588 $3,904 $ 163,900 $417,142 Mr Kirtlan $ Nil $ Nil $ 180,000 $ Nil $3,904 $ 163,900 $347,804 Director Salary Consulting fees - associate of PG French - associate of RE Kirtlan Superannuation benefits Other non-monetary benefits Attributed Directors and Officers insurance cover (refer Note 1 below) Value of 2010 Options (per binomial model) TOTAL (refer Note 2 below) NOTE 1 : DIRECTORS AND OFFICERS INSURANCE PREMIUM The value of this benefit in future years will be dependent on the level of insurance, premium the nature and extent of the Company’s operations and the number of Directors and Officers covered by the insurance policy. NOTE 2 : TOTAL REMUNERATION The Company will not be providing any loan funds to any party for the acquisition or exercise of the 2010 Options, nor will there arise any Fringe Benefits Tax liability on the issue or exercise of the 2010 Options. Any Income Tax liability arising from the exercise of the 2010 Options or the sale of Shares issued as a result of the exercise of the 2010 Options will be to the personal account of the recipient of the 2010 Options. CURRENT DIRECTOR’S INTERESTS The table below sets out details of Mr Peter Grattan French’s, Mr Lindsay George Reed’s and Mr Robert Edward Kirtlan’s existing interests in the Company prior to consideration of Resolutions 4, 5 and 6 above: OTHER INFORMATION Apart from the matters disclosed in this Explanatory Statement and Appendix B, the Company believes there is no other information that would be reasonably required by Shareholders in order to decide whether it is in the best interest of the Company to pass Resolutions 4, 5 and 6. LISTING RULE 10.11 Listing Rule 10.11 provides that a company must not issue or agree to issue securities to a related party without first obtaining the approval of members by ordinary resolution. As Resolutions 4, 5 and 6 relate to the issue of securities to a director of the Company, shareholder approval must be obtained. In accordance with Listing Rule 10.13, the following information is provided to shareholders: • The names of the persons to whom the 2010 Options are proposed to be issued are Peter Grattan French (or his nominee), Lindsay George Reed (or his nominee) and Robert Edward Kirtlan (or his nominee), who are all Directors of the Company. The total number of: o 2010 Options to be issued under Resolution 4 to Mr Peter Grattan French, or his nominee is 3,000,000; and o 2010 Options to be issued under Resolution 5 to Mr Lindsay George Reed, or his nominee is 10,000,000; and o 2010 Options to be issued under Resolution 6 to Mr Robert Edward Kirtlan, or his nominee is 10,000,000. • • The 2010 Options will be issued as soon as practicable after the AGM but in any event no later than 1 month after the date of the AGM. The 2010 Options will be granted for nil cash consideration and will be held and exercised subject to the Terms and Conditions of 2010 Options as set out in Appendix B. Each Share issued pursuant to the exercise of the 2010 Options will rank pari passu with all existing fully paid ordinary Shares of the Company. • No funds will be raised by the issue of the 2010 Options. The funds raised pursuant to any exercise of the 2010 Options will be used for the ongoing working capital purposes of the Company. • LISTING RULES As approval of Shareholders is being sought pursuant to Listing Rule 10.11, under Listing Rule 7.2 Exception 14, Shareholder approval under Listing Rule 7.1 is not required. 8. RESOLUTIONS 7 AND 8 – ISSUE OF 2010 OPTIONS TO MR. STEPHEN JONES AND MR. GREG CORNER The Company proposes to issue 7,000,000 2010 Options to key personnel as stipulated in Resolutions 7 and 8. The number of 2010 Options to be issued to Mr Jones and Mr Corner respectively has been determined by the Board based on a recommendation by the Company’s remuneration committee made in accordance with the Company’s remuneration policy and having regard to contributions of Mr Jones and Mr Corner to the Company. The Board also considers Mr Jones and Mr Corner have ongoing roles which are critical to the future success of the Company in achieving its objectives. The Company has been pursuing its Central West Project and the Board believes it is important to recognise the significant roles Mr Jones and Mr Corner will have in progressing the project in the future. The Board believes it is appropriate and in the best interests of the Company to provide an incentive for Mr Jones and Mr Corner to remain with the Company as it progresses towards the ultimate goal of commercial exploitation of the Central West Project. TERMS AND CONDITIONS OF 2010 OPTIONS The 2010 Options will be issued on the Terms and Conditions of 2010 Options as set out in Appendix B to this Explanatory Statement and are exercisable at 8 cents per 2010 Option at any time prior to 5.00pm WST on 31 December 2010. Neither Mr Stephen Jones nor Mr Greg Corner is a related party of the Company. ASX LISTING RULE REQUIREMENTS ASX Listing Rule 7.1 prohibits a listed company from issuing or agreeing to issue equity securities (which includes shares and options) equal to an amount of more than 15% of the company’s ordinary capital in any 12 month period (15% Limit). However, a listed company may issue equity securities above the 15% Limit as an exception to Listing Rule 7.1 where it receives shareholder approval for the issue. Shareholder approval of Resolutions 7 and 8 is sought for the purpose of Listing Rule 7.1. INFORMATION REQUIRED BY LISTING RULE 7.3 In compliance with Listing Rule 7.3, the following information is provided to shareholders: (1) the maximum number of securities to be issued under Resolutions 7 and 8 is as follows: (a) 5,000,000 2010 Options to Mr Stephen Craig Jones (or his nominee); and (b) 2,000,000 2010 Options to Mr Gregory Alan Corner (or his nominee); (2) the 2010 Options will be issued and allotted as soon as practicable after the date of the Annual General Meeting but in any event no later than 3 months from the date of the Annual General Meeting. It is anticipated that the 2010 Options will be issued to Mr Jones and Mr Corner in a single issue rather than progressively; (3) the 2010 Options will be issued for nil cash consideration; (4) the 2010 Options will be issued and allotted to Mr Stephen Jones (or his nominee) and Mr Gregory Corner (as his nominee); (5) the 2010 Options will be issued on the Terms and Conditions of 2010 Options described in Appendix B to this Explanatory Statement. Any Shares issued upon exercise of the 2010 Options will rank pari passu with the Company’s existing issued Shares; and (6) no funds will be raised by the issue of the 2010 Options. However, funds raised (if any) from the exercise of the 2010 Options will be used for the ongoing working capital purposes of the Company. APPENDIX A TERMS AND CONDITIONS OF 2007 OPTIONS The material terms and conditions of the 2007 Options are as follows: (a) each 2007 Option entitles the holder, when exercised, to one (1) Share; (b) a holding statement will be issued for the 2007 Options; (c) it is not currently intended that the Company will make an application to ASX for official quotation of the 2007 Options; (d) the exercise price of the 2007 Options is $0.10 each and they are exercisable on or before 31 December 2007; (e) the 2007 Options are transferable subject to the Corporations Act, ASX Listing Rules, the Company constitution and any other applicable law; (f) the 2007 Options are exercisable by delivering to the registered office of the Company a notice in writing stating the intention of the 2007 Option holder to exercise a specified number of 2007 Options, accompanied by the holding statement. The exercise of only a portion of the 2007 Options held does not affect the holder’s right to exercise the balance of any 2007 Options remaining; (g) all Shares issued upon exercise of the 2007 Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for official quotation by ASX of all Shares issued upon exercise of the 2007 Options within the timeframe prescribed by the ASX Listing Rules; (h) there are no participating rights or entitlements inherent in the 2007 Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the 2007 Options. However, the Company will ensure that, for the purpose of determining entitlements to any issue, 2007 Option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give the 2007 Option holders the opportunity to exercise the 2007 Options prior to the date for determining entitlements to participate in any such issue; (i) in the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry date of the 2007 Options, all rights of the Option holder will be varied in accordance with the ASX Listing Rules; (j) in the event of a pro rata issue or bonus issue of securities by the Company, the exercise price and the number of underlying securities over which the 2007 Options may be exercised (as applicable) will be varied in accordance with ASX Listing Rule 6.22; (k) if the Company is subject to a takeover bid which is, or becomes, unconditional and where the bidder or any associate of the bidder has or obtains in aggregate a relevant interest in 45% or more of the voting shares of the Company, the holder can exercise the 2007 Options but only after the takeover bid becomes unconditional and before the end of the offer period and before the Company ceases to be on the official list of ASX; and (l) Shares issued pursuant to the exercise of 2007 Options will be issued not more than 10 days after the receipt of a properly executed notice of exercise of a 2007 Option and payment by bank cheque of the applications moneys in respect of the 2007 Options. APPENDIX B TERMS AND CONDITIONS OF 2010 OPTIONS The material terms and conditions of the 2010 Options are as follows: (a) each 2010 Option entitles the holder, when exercised, to one (1) Share; (b) a holding statement will be issued for the 2010 Options; (c) it is not currently intended that the Company will make an application to ASX for official quotation of the 2010 Options; (d) the exercise price of the 2010 Options is $0.08 each and they are exercisable on or before 31 December 2010; (e) the 2010 Options are transferable subject to the Corporations Act, ASX Listing Rules, the Company constitution and any other applicable laws; (f) the 2010 Options are exercisable by delivering to the registered office of the Company a notice in writing stating the intention of the 2010 Option holder to exercise a specified number of 2010 Options, accompanied by the holding statement. The exercise of only a portion of the 2010 Options held does not affect the holder’s right to exercise the balance of any 2010 Options remaining; (g) all Shares issued upon exercise of the 2010 Options will rank pari passu in all respects with the Company’s then issued Shares. The Company will apply for official quotation by ASX of all Shares issued upon exercise of the 2010 Options within the timeframe prescribed by the ASX Listing Rules; (h) there are no participating rights or entitlements inherent in the 2010 Options and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the 2010 Options. However, the Company will ensure that, for the purpose of determining entitlements to any issue, 2010 Option holders will be notified of the proposed issue at least seven (7) business days before the record date of any proposed issue. This will give the 2010 Option holders the opportunity to exercise the 2010 Options prior to the date for determining entitlements to participate in any such issue; (i) in the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company prior to the expiry date of the 2010 Options, all rights of the Option holder will be varied in accordance with the ASX Listing Rules; (j) in the event of a pro rata issue or bonus issue of securities by the Company, the exercise price and the number of underlying securities over which the 2010 Options may be exercised (as applicable) will be varied in accordance with ASX Listing Rule 6.22; (k) if the Company is subject to a takeover bid which is, or becomes, unconditional and where the bidder or any associate of the bidder has or obtains in aggregate a relevant interest in 45% or more of the voting shares of the Company, the holder can exercise the 2010 Options but only after the takeover bid becomes unconditional and before the end of the offer period and before the Company ceases to be on the official list of ASX; and (l) Shares issued pursuant to the exercise of 2010 Options will be issued not more than 10 days after the receipt of a properly executed notice of exercise of a 2010 Option and payment by bank cheque of the applications moneys in respect of the 2010 Options. PROXY FORM ANNUAL GENERAL MEETING OF SHAREHOLDERS Please return this Proxy Form to the Company’s registered office Suite 4, Level 2 South Shore Centre, 83-85 The Esplanade South Perth or by mail to PO Box 859 South Perth, Western Australia 6951 or by facsimile on +618 9367 2355 I/We _______________________________________________________of _____________________________________________________________ being (a) member(s) of Aviva Corporation Limited hereby appoint ___________________________________________________________________ or failing him (or in the absence of a nomination as foresaid) the chairman of the meeting as my/our proxy to attend and on a poll, vote instead of me/us at the Annual General Meeting of the Company to be held at The Western Australia Club, 101 St George’s Terrace, Perth, Western Australia, on Wednesday 22 November 2006 and commencing at 10.30 am (WST) or at any adjournment thereof in respect of: • the whole of my/our shares •__________________________________ of my/our shares* * Please delete whichever is not required. If no deletion is made and the number of shares is not inserted and only one proxy is appointed, it will be assumed that the proxy is for all the shares registered in the name of the member. The chairman has indicated that he will vote in favour of the resolutions in respect of undirected proxies. Business 1. 2. Adoption of Remuneration Report Approval of February placement (20,000,000 Shares with 20,000,000 free attaching Options) Re-election of director – Peter French Approval of Issue of 3,000,000 2010 Options to Peter French Approval of Issue of 10,000,000 2010 Options to Lindsay Reed Approval of Issue of 10,000,000 2010 Options to Robert Kirtlan Approval of Issue of 5,000,000 2010 Options to Stephen Jones Approval of Issue of 2,000,000 2010 Options to Greg Corner For Against Abstain 3. 4. 5. 6. 7. 8. If you do not wish to direct your proxy how to vote, please place a mark in the box. By marking this box, you acknowledge that the chairman may exercise your proxy even if he has an interest in the outcome of the resolution and votes cast by him other than as proxy holder will be disregarded because of that interest. ✁ IF THE MEMBER IS A COMPANY, THEN IT SHALL EXECUTE IN ACCORDANCE WITH SECTION 127 OF THE CORPORATIONS ACT 2001. EXECUTED by ) ) ACN/ABN in accordance with section 127 of the Corporations Act ) ) ) Director/Company Secretary Director Name of Director/Company Secretary Name of Director (BLOCK LETTERS) OR Signature (Insert capacity in which duly authorised officer is signing for a member which is acompany) IF THE MEMBER IS AN INDIVIDUAL OR JOINT HOLDERS: Signature Signature