Notice of Annual General Meeting 2011

Latrobe Magnesium Limited ABN 52 009 173 611

IMPORTANT INFORMATION

This document is important. Please read it carefully and if you require assistance, consult your legal or financial adviser.

NOTICE OF ANNUAL GENERAL MEETING

NOTICE is hereby given that the 2011 Annual General Meeting of Latrobe Magnesium Limited ("Company") will be held at the offices of Nexia Court & Co, Level 29 Tower Building, Australia Square, 264 George Street, Sydney on Wednesday 16 November 2011 at 11.00am.

1. ORDINARY BUSINESS:

Financial Statements and Reports

1.1. Financial Reports

To receive and consider the financial report of the Company for the financial year ended 30 June 2011 together with the Directors' Report, Directors' Declaration and the auditor's report.

1.2. Resolution 1: Adoption of Remuneration Report

To consider and, if thought fit, pass with or without amendment the following resolution as a non-binding resolution:

"That for the purposes of section 250R(2) of the Corporations Act and for all other purposes approval is given for the adoption of the remuneration report as in the Company's Annual Financial Report for the financial year ended 30 June 2011."

Note: The Remuneration Report is set out on pages 16 to 18 of the Directors' Report contained in the 2011 Annual Report. In accordance with section 250R(3) of the Corporations Act.

Voting Exclusion Statement

The Company will disregard any votes cast on this resolution by any of the key management personnel listed in the Remuneration Report and any associate of those persons.

However, the Company need not disregard the 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 proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.

1.3. Resolution 2: Re-election of K A Torpey as a Director

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

"That Kevin Torpey, having retired from office as a Director in accordance with Article 12.2 of the Company's constitution and being eligible, having offered himself for re-election, be re-elected as a Director of the Company."

1.4. Resolution 3: Election of J R Lee as a Director

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

"That John Lee, having retired from office as a Director in accordance with Article 12.4 of the Company's constitution and being eligible, having offered himself for re-election, be re-elected as a Director of the Company."

1.5 Resolution 4: Approve the issue of securities to sophisticated and professional investors

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

"That for the purposes of ASX Listing Rule 7.1 and for all other purposes, the Directors are authorised to issue up to 100,000,000 shares in the Company by way of placements to sophisticated and professional investors on the terms set out in the explanatory statement."

Voting Exclusion Statement

The Company will disregard any votes cast on this resolution by any person who may participate in the issue and any 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 the 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 proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides.

2. OTHER BUSINESS:

To transact any other business which, in accordance with the Company's Constitution and the Corporations Act, may be legally brought before an Annual General Meeting.

By Order of the Board of Directors

D L Hughes Secretary

Dated 12 October 2011

The notice of meeting is accompanied by an Explanatory Statement to shareholders which explains the purpose of the Meeting and the resolutions to be considered at the Meeting.

EXPLANATORY STATEMENT

This explanatory statement forms part of this Notice of Annual General Meeting and is intended to provide shareholders of Latrobe Magnesium Limited ("Company") with sufficient information to assess the merits of the Resolutions to be considered at this Annual General Meeting.

The Directors recommend that shareholders read this Explanatory Statement in its entirety before making any decision in relation to the Resolutions. Should shareholders be in doubt as to how to vote, they should seek advice from their accountant, solicitor or other professional advisor prior to voting.

Financial Statements and Reports

The Corporations Act requires that the Annual Report (which includes the Financial Report, Directors' Report and Auditor's Report) be laid before the Annual General Meeting. There is no requirement for shareholders to approve those reports.

Shareholders will be given an opportunity at the Annual General Meeting to ask questions and make comments on the Company's reports and accounts and on the business and operations of the Company generally for the year ended 30 June 2011.

In accordance with amendments to the Corporations Act the Company is no longer required to provide a hard copy of the Company's Annual Financial Report to shareholders unless a shareholder has specifically elected to receive a printed copy.

Shareholders may view the Company's Annual Financial Report on the website at www.latrobemagnesium.com

Resolution 1 – Adoption of Remuneration Report

The Remuneration Report of the Company for the financial year ended 30 June 2011 is set out in the Directors' Report contained in the 2011 Annual Report on pages 16 to 18.

Pursuant to section 250R(2) of the Corporations Act a resolution that the Remuneration Report be adopted must be put to 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.

A reasonable opportunity will be provided for discussion on the Remuneration Report at the Annual General Meeting.

The provisions of the Corporations Act dealing with the non-binding vote on the Remuneration Report have recently been amended. The Corporations Act still provides that Resolution 1 need only be an advisory vote of shareholders and does not bind the Directors. However, in addition, the Corporations Act now provides that if the Company's Remuneration Report resolution receives a "no" vote of 25 per cent or more of votes cast at the Meeting, the Company's subsequent Remuneration Report must explain the Board's proposed action in response or, if the Board does not propose any action, the Board's reason for not making any changes. The Board will take the outcome of the vote, even if it receives a less than a 25% "no" vote, into consideration when considering the remuneration policy.

In addition, the Corporations Act amendments now set out a 'two-strikes' re-election process. Under the 'twostrikes' re-election process, if the Company's Remuneration Report receives a "no" vote of 25% or more of all votes cast at two consecutive annual general meetings, (that is, 'two-strikes'), a resolution (the 'spill resolution') must be put to the second annual general meeting, requiring shareholders to vote on whether the Company must hold another general meeting (known as the 'spill meeting') to consider the appointment of all of the Directors who stand for re-appointment (other than the Managing Director). If the spill resolution is approved by a simple majority of 50% or more of the eligible votes cast, the 'spill meeting' must be held within 90 days of that second annual general meeting (unless none of the Directors, other than the Managing Director, stand for re-appointment). Further information will be provided on the 'spill resolution' and 'spill meeting' for any annual general meeting at which the Company may face a 'second strike'.

The remuneration levels for Directors, Officers and Senior Managers are competitively set to attract and retain appropriate Directors and key management personnel.

Resolution 2 – Re-election of K A Torpey as a Director

Kevin Torpey retires in accordance with Article 12.2 of the Company's constitution which provides that at each Annual General Meeting one third of the Directors must retire from office. The Directors to retire are those that have been longest in office since their last election or appointment. Being eligible Mr Torpey offers himself for re-election.

Resolutions 3 – Election of J R Lee as a Director

John Lee retires in accordance of Article 12.4 of the Company's constitution which provides that a Director appointed to fill a casual vacancy or as an addition to the existing Directors will hold office only until the next following general meeting and is then eligible for re-election.

Resolution 4 – Approve the issue of shares to sophisticated and professional investors

Resolution 4 seeks shareholders' approval for the purposes of ASX Listing Rule 7.1 and for all other purposes to authorise the directors to issue, by way of placements, up to 100,000,000 shares to sophisticated, eligible and/or professional investors (being persons to whom a disclosure document is not required to be provided by virtue of s708(8), s708(10) or s708(11) of the Act), at an issue price of not less than eighty percent (80%) of the average market price of the shares calculated over the last 5 days on which sales in the shares were recorded before the day on which the issue is to be made.

Listing Rule 7.1 prohibits a company from issuing or agreeing to issue equity securities in any 12 month period which amounts to more than 15% of the its ordinary securities without the approval of holders of its ordinary securities.

Further, equity securities issued with approval of holders of a company's ordinary securities in accordance with Listing Rule 7.1 are not then required to be included in the 15% limit imposed by Listing Rule 7.1.

The Company therefore seeks shareholder approval to issue up to a maximum of 100,000,000 shares to sophisticated and professional investors pursuant to ASX Listing Rule 7.1.

The following information is provided in accordance with Listing Rule 7.3:

• (a) The (maximum) number of shares the Company will issue to sophisticated, eligible and/or professional investors is 100,000,000 shares.
• (b) The shares will be issued within three months of the date of this Annual General Meeting.
• (c) The issue price(s) for the shares will be not less than eighty percent (80%) of the average market price of the shares calculated over the last 5 days on which sales in the shares were recorded before the day on which the issue is to be made.
• (d) The name of the allottees of the shares are not known at this time, the shares will be issued to sophisticated, eligible and/or professional investors (being persons to whom a disclosure document is not required to be provided by virtue of s708(8), s708(10) or s708(11) of the Act), none of whom will be related parties.
• (e) The shares will be issued on the same terms as, and rank pari passu with the existing issued shares of the Company and will be quoted on the Australian Securities Exchange.
• (f) The purpose of the proposed issue is to raise funds to meet the following Company objectives:
• fund the further development and studies in relation to the Latrobe Magnesium Project;
• provision of additional working capital; and
• acquisition of resource based investment opportunities.
• (g) The Company anticipates issuing the shares progressively as and when investors desiring to invest in the Company are located (but in any event within three months of the date of this annual general meeting).
• (h) A voting exclusion statement has been included for the purpose of Resolution 4.
• (i) The maximum number of shares proposed to be issued under this approval represents 14.4% of the Company's current total issued capital.

NOTES

These notes form part of the Notice of Annual General Meeting and should be read in conjunction with the accompanying explanatory statement.

Determination of Membership and Voting Entitlement

For the purpose of determining a person's entitlement to vote at the Annual General Meeting, a person will be recognised as a member of the Company and the holder of Shares if that person is registered as a holder of those Shares at 7.00pm Sydney time on 14 November 2011, being the second day prior to the Annual General Meeting.

Votes of Members

On a show of hands, each member present in person or by proxy (or, in the case of a body corporate, by a representative) at the Annual General Meeting shall have one vote.

On a poll, every member present in person or by attorney or by proxy (or, in the case of a body corporate, by a representative) shall have one vote for each Share held provided that all shares are fully paid.

Proxies

A member who is entitled to vote at the Meeting has a right to appoint a proxy and should use the proxy form accompanying this Notice. The proxy need not be a member of the Company.

A member who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If a member appoints 2 proxies and the appointment does not specify the proportion or number of the member's votes each proxy may exercise, section 249X of the Corporations Act will take effect so that each proxy may exercise half of the votes (ignoring fractions).

A proxy's authority to speak and vote for a member at the meeting is suspended if the member is present at the meeting.

The proxy form must be signed and dated by the member or the member's attorney. Joint members must each sign.

Proxy forms and the original or a certified copy of the power of attorney (if the proxy form is signed by an attorney) must be received at:

Suite 601 Level 6 20 Barrack Street SYDNEY NSW 2000; or

On fax number (02) 9262 5666

Not less than 48 hours before the person named in the instrument purports to vote pursuant to it.

Bodies Corporate

A body corporate may appoint an individual as its representative to exercise any of the powers the body may exercise at Meetings of a company's shareholders. The appointment may be a standing one. Unless the appointment states otherwise, the representative may exercise all of the powers that the appointing body could exercise at a meeting or in voting on a resolution.

PROXY FORM

Address of proxy ....................................................................................................................................................................

Or in his or her absence (or if left blank), the chairman of the meeting as my/our proxy to attend, vote and otherwise act on my/our behalf at the Annual General Meeting of the Company to he held on 16 November 2011 and at any adjournment of that meeting.

If you wish to appoint the proxy in respect of only a specified number of your shares you must insert that number in the appropriate space below. In the absence of any such specification, the proxy will be taken to have been appointed in respect of all of your shares.

My/our proxy is authorised to exercise the voting rights in respect of................. of my/our shares.

If 2 Proxies are being appointed, the proportion of voting rights that this proxy is authorised to exercise is .....% (The company will supply an additional proxy form on request.)

PROXY INSTRUCTIONS

If you wish to instruct your proxy how to vote, insert X in the appropriate column against each item of business set out below. I/We instruct my/our proxy to vote as follows:

FOR AGAINST ABSTAIN

RESOLUTIONS 1. Adoption of Remuneration Report 2. Re-election of K A Torpey 3. Election of J R Lee 4. Approve the issue of shares to sophisticated and professional investors

Unless otherwise directed, the proxy holder may vote as he/she thinks fit, or abstain from voting. The Chairman intends to vote all undirected proxies that he receives in favour of each Resolutions to be determined at the meeting.

If the Chairman of the meeting is appointed as your proxy, or may be appointed by default and you do not wish to direct your proxy how to vote as your proxy in respect of a resolution, please place a mark in this box:

By marking this box, you acknowledge that the Chairman of the meeting may exercise your proxy even if he has an interest in the outcome of the resolution/s and that votes cast by the Chairman of the meeting for those resolutions other than as proxy holder will be disregarded because of that interest.

If you do not mark this box, and you have not directed your proxy how to vote, the Chairman will not cast your votes on the resolution and your votes will not be counted in calculating the required majority if a poll is called on the resolution.

Contact Name: ________________________________ Contact Phone (daytime):___________________________