NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

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1 THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION If you are in any doubt as to any aspect of the proposals referred to in this document or what action you should take, you are recommended to seek your own personal financial advice from a stockbroker, bank manager, solicitor, accountant, fund manager or other appropriate independent financial advisor. If you have sold or transferred all of your common shares in Caracal Energy Inc., please forward this document, together with the accompanying documents, as soon as possible either to the purchaser or transferee or to the person who arranged the sale or transfer so they can pass these documents to the person who now holds the shares. NOTICE OF SPECIAL MEETING OF SHAREHOLDERS to be held on June 6, 2014 and NOTICE OF ORIGINATING APPLICATION TO THE COURT OF QUEEN S BENCH OF ALBERTA and MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT with respect to a PLAN OF ARRANGEMENT involving CARACAL ENERGY INC. and GLENCORE INTERNATIONAL AG and CANADA INC. May 9, 2014

2 TABLE OF CONTENTS LETTER TO SHAREHOLDERS...iv NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 6, viii NOTICE OF ORIGINATING APPLICATION...xi MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT... 1 Introduction... 1 Forward-looking Information and Statements... 1 Information for U.S. Shareholders... 2 Currency... 3 SUMMARY INFORMATION... 5 GLOSSARY OF TERMS BACKGROUND TO THE ARRANGEMENT RECOMMENDATION OF THE BOARD OF DIRECTORS REASONS FOR THE ARRANGEMENT FAIRNESS OPINIONS THE ARRANGEMENT Summary of the Arrangement Arrangement Steps Interests of Directors and Caracal Executives in the Arrangement Sources of Funds for the Arrangement Stock Exchange Delisting Procedure for the Arrangement Becoming Effective Timing Expenses THE ARRANGEMENT AGREEMENT General Mutual Covenants Regarding the Arrangement Covenants of Glencore and Purchaser Covenants of Caracal Representations and Warranties to the Conduct of Business of the Parties Mutual Conditions Conditions to the Obligations of Purchaser Conditions to the Obligations of Caracal Covenants of Caracal Regarding Non-Solicitation; Right to Accept a Superior Proposal Termination Termination Fees Liquidated Damages Voting Agreements PRINCIPAL LEGAL MATTERS Court Approval and Completion of the Arrangement MI Regulatory Approvals CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS Currency Translation Shareholders Resident in Canada Shareholders Not Resident in Canada CERTAIN UNITED KINGDOM TAXATION CONSIDERATIONS Taxation of Chargeable Gains Transactions in Securities Anti-Avoidance Stamp Duty and Stamp Duty Reserve Tax CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS Tax Consequences to U.S. Holders Relating to the Arrangement Passive Foreign Investment Companies RISK FACTORS ii

3 Risks Relating to the Arrangement Risks Relating to Caracal PROCEDURES FOR THE SURRENDER OF COMMON SHARES AND RECEIPT OF CONSIDERATION Procedures for Shareholders Currency Election Cancellation of Rights of Securityholders LEGAL MATTERS RIGHTS OF DISSENT INFORMATION CONCERNING CARACAL General Documents Incorporated by Reference Business of Caracal Recent Developments Description of Share Capital Consolidated Capitalization of Caracal Price Range and Trading Volumes Prior Sales Securities Authorized for Issuance Under Equity Compensation Plans Principal Securityholders Indebtedness of Directors and Caracal Executives Ownership of Securities for Directors and Caracal Executives Interest of Informed Persons in Material Transactions Auditors, Transfer Agent and Registrar Additional Information INFORMATION CONCERNING THE PURCHASER PARTIES MATTERS TO BE CONSIDERED AT THE MEETING GENERAL PROXY MATTERS Solicitation of Proxies Appointment and Revocation of Proxies Advice to Beneficial Holders of Common Shares Proxy Voting Electronic Voting Instructions through the CREST Voting System General Voting Securities of Caracal and Principal Holders Thereof CONSENTS Consent of Stikeman Elliott LLP Consent of RBC Dominion Securities Inc Consent of Goldman Sachs & Co ADDENDA APPENDIX A ARRANGEMENT RESOLUTION APPENDIX B ARRANGEMENT AGREEMENT APPENDIX C PLAN OF ARRANGEMENT APPENDIX D INTERIM ORDER AND ORIGINATING APPLICATION APPENDIX E FAIRNESS OPINION OF GOLDMAN SACHS APPENDIX F FAIRNESS OPINION OF RBC CAPITAL MARKETS APPENDIX G SECTION 190 OF THE CANADA BUSINESS CORPORATIONS ACT iii

4 LETTER TO SHAREHOLDERS May 9, 2014 Dear Shareholders: You are invited to attend a special meeting (the Meeting ) of holders (the Shareholders ) of common shares ( Common Shares ) of Caracal Energy Inc. ( Caracal ) to be held in the Westwinds Room located at 2nd Floor, th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time). At the Meeting, the Shareholders will be asked to consider and, if deemed advisable, to pass a special resolution (the Arrangement Resolution ) approving a statutory plan of arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act involving Caracal and Canada Inc. ( Purchaser, a wholly-owned indirect subsidiary of Glencore International AG ( Glencore ) and, together with Purchaser, the Purchaser Parties ), to be carried out pursuant to an arrangement agreement dated April 14, 2014, as amended and restated April 24, 2014 among Caracal and the Purchaser Parties (the Arrangement Agreement ). Full details of the Arrangement are set out in the accompanying Notice of Special Meeting of Shareholders and Management Information Circular and Proxy Statement (the Circular ). Shareholders (other than dissenting holders of Common Shares) will receive, for each Common Share held, 5.50 pounds sterling, the lawful currency of the United Kingdom ( GBP ) in cash (the Consideration ). Under the Arrangement, all options to purchase Common Shares ( Caracal Options ) and warrants to purchase Common Shares ( Caracal Warrants ), whether vested or unvested, will be disposed of and surrendered to Caracal and the holders thereof will receive for each Caracal Option or Caracal Warrant, as the case may be, a cash payment representing the amount by which the product of the number Common Share underlying such Caracal Option or Caracal Warrant multiplied by the Consideration exceeds the aggregate exercise price payable under such Caracal Option or Caracal Warrant, as the case may be, less applicable withholdings. In addition, each deferred share unit, restricted share unit and performance share unit will be similarly disposed of and surrendered to Caracal and the holder will receive a cash payment equal to the number of Common Shares the holder of such unit is entitled to pursuant to such unit multiplied by the Consideration, less applicable withholdings. Upon completion of the Arrangement, Purchaser has covenanted to satisfy or cause Caracal (or any successor) to satisfy all of Caracal s obligations in respect of Caracal s convertible debentures with an aggregate principal amount of U.S.$173.6 million (the Caracal Debentures ). After completion of the Arrangement, holders of Caracal Debentures who exercise their conversion rights will receive from Purchaser GBP5.50 in cash for each Common Share which the holder would have otherwise received upon conversion in accordance with the terms of the indenture to be supplemented by the supplemental trust deed as described further in the Circular, governing the Caracal Debentures. For additional details about the Arrangement, see The Arrangement and The Arrangement Agreement in the Circular which accompanies this letter. The requisite approval for the Arrangement Resolution is at least 66 % of the votes cast on the Arrangement Resolution by the Shareholders, present in person or represented by proxy, at the Meeting, and a majority of the votes cast on the Arrangement Resolution by the Shareholders present in person or represented by proxy, at the Meeting after excluding the votes of those persons whose votes may not be included in determining minority iv

5 approval of a business combination under Multilateral Instrument Protection of Minority Security Holders in Special Transaction. Completion of the Arrangement is also subject to customary closing conditions for a transaction of this nature, including court approval and Investment Canada Act approval and Competition Act approval. Goldman, Sachs & Co. ( Goldman Sachs ) has provided the board of directors of Caracal (the Board ) with an opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders. In addition, RBC Dominion Securities Inc., a member company of RBC Capital Markets ( RBC Capital Markets ), has provided the Board with an opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates. The Board, after consulting with its financial and legal advisors, and after careful consideration of, among other things, the fairness opinion of Goldman Sachs and the fairness opinion of RBC Capital Markets and the recommendation of a special committee of the Board, has unanimously determined that the Arrangement is in the best interests of Caracal and its Shareholders as a whole. Accordingly, the Board unanimously recommends that the Shareholders approve the Arrangement by voting in favour of the Arrangement Resolution at the Meeting. On April 14, 2014, all of the directors and senior officers of Caracal entered into voting and support agreements with the Purchaser pursuant to which they have agreed to vote the Common Shares owned by them in favour of the Arrangement Resolution. The accompanying Notice of Special Meeting of Shareholders and Circular describe the Arrangement and include certain additional information to assist you in considering how to vote in respect of the Arrangement Resolution. You are urged to read this information carefully and, if you require assistance, to consult your financial, legal, tax or other professional advisors. To be represented at the Meeting, you must either attend the Meeting in person or complete and sign the applicable enclosed form of proxy. If you are a registered Shareholder (i.e., you hold a physical share certificate representing your Common Shares in your name) and are unable to attend the Meeting in person, please exercise your right to vote by dating, signing and returning the accompanying form of proxy to Computershare Investor Services Inc., Caracal s transfer agent. To be valid, completed proxy forms must be dated, completed, signed and deposited with Caracal s transfer agent, Computershare Investor Services Inc., (a) by mail to Proxy Department, 135 West Beaver Creek Road, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5, or (b) by hand delivery to 100 University Avenue, 8 th Floor, Toronto, Ontario, M5J 2Y1. A registered Shareholder may also vote using the internet at or telephone at VOTE (8683). In order to be valid and acted upon at the Meeting, the form of proxy must be received not less than 48 hours (excluding Saturdays and holidays) before the date of the Meeting or any adjournment(s) or postponement(s) thereof or be deposited with the Chairman of the Meeting prior to its commencement. If you are unable to attend the Meeting, we encourage you to complete the enclosed form of proxy as soon as possible. If you are a non-registered holder of Common Shares and have received these materials from your broker or another intermediary, please complete and return the form of proxy or other authorization form provided to you by your broker or intermediary in accordance with the instructions provided. Failure to do so may result in your Common Shares not being eligible to be voted at the Meeting. See General Proxy Matters - Advice to Beneficial Holders of Common Shares in the Circular. Holders of depositary interests ( DI Holders ) will be invited to attend the Meeting by Computershare Company Nominees Limited in its capacity as issuer of the depositary interests and trustee of the underlying Common Shares. DI Holders should fill in the Form of Instruction which will be provided and return such Form of Instruction to Computershare Investor Services PLC (the DI Trustee ), The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, United Kingdom, no later than 10:30 a.m. (Calgary time) on June 3, 2014, or in the case of an adjourned or postponed Meeting, not less than 72 hours (excluding weekends and holidays) prior to the time appointed for the v

6 adjourned or postponed Meeting. The completion and return of the Form of Instruction will not preclude a DI Holder from attending the Meeting and voting in person. DI Holders who wish to attend and vote in person in respect of Common Shares which are represented by their depositary interests should notify the DI Trustee (in accordance with the instructions set out in the Form of Instruction) so that an appropriate Letter of Representation can be issued. CREST members who wish to give voting instructions by utilizing the CREST electronic voting instruction service may do so for the Meeting and any adjournment(s) or postponement(s) thereof by utilizing the procedures described in the CREST Manual, available at CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. See General Proxy Matters Electronic Voting Instructions through the CREST Voting System in the Circular. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Voting Instruction ) must be properly authenticated in accordance with Euroclear UK & Ireland Limited s ( Euroclear ) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Caracal s agent (ID number 3RA50) not less than 72 hours (excluding weekends and holidays) before the commencement of the Meeting or any adjournment or postponement thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Caracal s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Voting Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this regard, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. Caracal may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (United Kingdom). Shareholders of record at the close of business on May 7, 2014 are entitled to notice of the Meeting and to attend and vote thereat or at any adjournment(s) or postponement(s) thereof on the basis of one vote for each Common Share held. In order to receive the Consideration, registered Shareholders must complete and sign the Letter of Transmittal enclosed with the Circular and return it to Computershare Trust Company of Canada (or such other company as may be appointed as depositary, from time to time, the Depositary ), together with their share certificate(s) and any other documents or instruments reasonably required by the Depositary in accordance with the procedures set out in the Letter of Transmittal. If the Arrangement is completed, registered Shareholders will receive payment of the Consideration in U.S. dollars unless a currency election is made in the Letter of Transmittal. If the Arrangement is not completed, the share certificates will be returned. Holders of Common Shares in a nominee account in the system of CDS Clearing and Depositary Services Inc. ( CDS ) should follow the instructions provided to them by their intermediary to arrange for their intermediary to complete the necessary transmittal documents and to ensure payment of the Consideration if the Arrangement is completed. Non-registered Shareholders holding Common Shares in a nominee account in CDS will receive payment of the Consideration in U.S. dollars unless other arrangements are made with their intermediary to make a currency election on their behalf. Persons who hold Common Shares through depositary interests through CREST vi

7 will receive payment of the Consideration in GBP unless they make a currency election in CREST, as described in the Form of Instruction. On behalf of the Board, I would like to express our gratitude for the support our shareholders have demonstrated with respect to our decision to move forward with the proposed Arrangement with Glencore. We look forward to seeing you at the Meeting. Yours very truly, (signed) Gary Guidry Gary Guidry President and Chief Executive Officer Caracal Energy Inc. vii

8 CARACAL ENERGY INC. NOTICE OF SPECIAL MEETING OF SHAREHOLDERS TO BE HELD ON JUNE 6, 2014 NOTICE IS HEREBY GIVEN that, pursuant to an order (the Interim Order ) of the Court of Queen s Bench of Alberta dated May 8, 2014, a special meeting (the Meeting ) of the holders (the Shareholders ) of common shares ( Common Shares ) of Caracal Energy Inc. ( Caracal ) will be held in the Westwinds Room located at 2nd Floor, th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time) for the following purposes: (a) (b) to consider, pursuant to the Interim Order, and, if deemed advisable, to pass, with or without variation, a special resolution (the Arrangement Resolution ), the full text of which is set forth in Appendix A to the accompanying management information circular and proxy statement dated May 9, 2014 (the Circular ), to approve a statutory plan of arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act ( CBCA ), all as more particularly described in the Circular; and to transact such further or other business, as may properly be brought before the Meeting or any adjournment or postponement thereof. The full text of the arrangement agreement dated April 14, 2014, as amended and restated April 24, 2014, among Caracal, Glencore International AG and Canada Inc. (the Arrangement Agreement ), and the Interim Order are attached as Appendix B and Appendix D, respectively, to the Circular. This Notice of Special Meeting of Shareholders is accompanied by the Circular and form of proxy. The Circular contains additional information relating to matters to be dealt with at the Meeting. Caracal has set May 7, 2014 as the record date for the determination of the Shareholders entitled to receive notice of and to vote at the Meeting. If you are a registered Shareholder who is unable to attend the Meeting in person please complete and sign the enclosed form of proxy and deliver it to Computershare Investor Services Inc. (a) by mail to Proxy Department, 135 West Beaver Creek Road, P.O. Box 300, Richmond Hill, Ontario, L4B 4R5, or (b) by hand delivery to 100 University Avenue, 8 th Floor, Toronto, Ontario, M5J 2Y1. A registered Shareholder may also vote using the internet at or telephone at VOTE (8683). In order to be valid and acted upon at the Meeting, the form of proxy must be received not less than 48 hours (excluding Saturdays and holidays) before the date of the Meeting or any adjournment(s) or postponement(s) thereof or be deposited with the Chairman of the Meeting prior to its commencement. If you are not a registered Shareholder and receive these materials through your broker or through another intermediary, please complete and return the form of proxy in accordance with the instructions provided to you by your broker or by the other intermediary. Non-registered Shareholders who hold their Common Shares through a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary, should carefully follow the instructions of their intermediary to ensure that their Common Shares are voted at the Meeting in accordance with such Shareholder s instructions, to arrange for their intermediary to complete the necessary transmittal documents and to ensure that they receive payment for their Common Shares if the Arrangement is completed. Holders of depositary interests ( DI Holders ) will be invited to attend the Meeting by Computershare Company Nominees Limited in its capacity as issuer of the depositary interests and trustee of the underlying Common Shares. DI Holders should fill in the Form of Instruction which will be provided and return such Form of Instruction to Computershare Investor Services PLC (the DI Trustee ), The Pavilions, Bridgwater Road, Bristol, BS99 6ZY, United Kingdom, no later than 10:30 a.m. (Calgary time) on June 3, 2014, or in the case of an adjourned or postponed Meeting, not less than 72 hours (excluding weekends and holidays) prior to the time appointed for the adjourned or postponed Meeting. The completion and return of the Form of Instruction will not preclude a DI Holder from attending the Meeting and voting in person. DI Holders who wish to attend and vote in person in viii

9 respect of Common Shares which are represented by their depositary interests should notify the DI Trustee (in accordance with the instructions set out in the Form of Instruction) so that an appropriate Letter of Representation can be issued. CREST members who wish to give voting instructions by utilizing the CREST electronic voting instruction service may do so for the Meeting and any adjournment(s) or postponement(s) thereof by utilizing the procedures described in the CREST Manual, available at CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment made by means of CREST to be valid, the appropriate CREST message (a CREST Voting Instruction ) must be properly authenticated in accordance with Euroclear UK & Ireland Limited s ( Euroclear ) specifications and must contain the information required for such instructions, as described in the CREST Manual. The message must be transmitted so as to be received by Caracal s agent (ID number 3RA50) not less than 72 hours (excluding weekends and holidays) before the commencement of the Meeting or any adjournment or postponement thereof. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which Caracal s agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Voting Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this regard, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. Caracal may treat as invalid a CREST Voting Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001 (United Kingdom). Shareholders of record at the close of business on May 7, 2014 are entitled to notice of the Meeting and to attend and vote thereat or at any adjournment(s) or postponement(s) thereof on the basis of one vote for each Common Share held. Pursuant to and in accordance with the Plan of Arrangement, the Interim Order and the provisions of section 190 of the CBCA (as modified or supplemented by the Interim Order, the Plan of Arrangement and any other order of the Court of Queen s Bench of Alberta) registered Shareholders have a right to dissent in respect of the Arrangement Resolution and, if the Arrangement Resolution is passed and the Arrangement is implemented, to be paid the fair value of their Common Shares in accordance with the provisions of section 190 of the CBCA, as modified by the Interim Order. A registered Shareholder s right to dissent is more particularly described in the accompanying Circular. The dissent procedures require that a registered Shareholder who wishes to dissent must send to Caracal a written objection to the Arrangement Resolution, which written objection must be received by Caracal, c/o Stikeman Elliott LLP, Suite 4300, Bankers Hall West Tower, rd Street S.W., Calgary AB, T2P 5C5, Attention: Geoffrey D. Holub and Keith R. Chatwin, not later than 5:00 p.m. (Calgary time) on June 4, 2014 (or 5:00 p.m. (Calgary time) on the day that is two business days immediately preceding the date that any adjourned or postponed Meeting is reconvened or held, as the case may be). Failure to strictly comply with the requirements set forth in section 190 of the CBCA, as modified by the Interim Order, may result in the loss of any right of dissent. Persons who do not hold Common Shares in their own name or who are DI Holders ( Beneficial Holders ) with interests registered in the name of a broker, investment dealer, bank, trust company, custodian, nominee or other intermediary who wish to dissent should be aware that only registered holders of Common Shares are entitled to dissent. Accordingly, a Beneficial Holder desiring to exercise the right of dissent must make arrangements for the Common Shares beneficially owned by such ix

10 holder to be registered in the Beneficial Holders name prior to the time the written objection to the Arrangement Resolution is required to be received by Caracal or, alternatively, make arrangements for the registered Shareholder of such Common Shares to dissent on the Beneficial Holder s behalf. It is strongly suggested that any Shareholders wishing to dissent seek independent legal advice, as the failure to comply strictly with the provisions in section 190 of the CBCA, as modified by the Interim Order, may prejudice such Shareholder s right to dissent. In order to receive the payment for their Common Shares, registered Shareholders must complete and sign the Letter of Transmittal enclosed with the Circular and return it to Computershare Trust Company of Canada (or such other company as may be appointed as depositary, from time to time, the Depositary ), together with their share certificate(s) and any other documents or instruments reasonably required by the Depositary in accordance with the procedures set out in the Letter of Transmittal. If the Arrangement is completed, registered Shareholders will receive payment for their Common Shares in U.S. dollars unless a currency election is made in the Letter of Transmittal. If the Arrangement is not completed, the share certificates will be returned. Holders of Common Shares in a nominee account in the system of CDS Clearing and Depositary Services Inc. ( CDS ) should follow the instructions provided to them by their intermediary to arrange for their intermediary to complete the necessary transmittal documents and to ensure payment for their Common Shares if the Arrangement is completed. Non-registered Shareholders holding Common Shares in a nominee account in CDS will receive payment for their Common Shares in U.S. dollars unless other arrangements are made with their intermediary to make a currency election on their behalf. Persons who hold Common Shares through depositary interests through CREST will receive payment for their Common Shares in pounds sterling unless they make a currency election in CREST, as described in the Form of Instruction. Dated at the City of Calgary, in the Province of Alberta, this 9 th day of May, BY ORDER OF THE BOARD OF DIRECTORS OF CARACAL ENERGY INC. (Signed) Gary Guidry Gary Guidry President and Chief Executive Officer Caracal Energy Inc. x

11 IN THE COURT OF QUEEN S BENCH OF ALBERTA JUDICIAL CENTRE OF CALGARY IN THE MATTER OF SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED AND IN THE MATTER OF A PROPOSED ARRANGEMENT INVOLVING CARACAL ENERGY INC., GLENCORE INTERNATIONAL AG, CANADA INC. AND THE COMMON SHAREHOLDERS OF CARACAL ENERGY INC. NOTICE OF ORIGINATING APPLICATION NOTICE IS HEREBY GIVEN that an originating application (the Application ) has been filed with the Court of Queen s Bench of Alberta, Judicial Centre of Calgary (the Court ) on behalf of Caracal Energy Inc. ( Caracal ) with respect to a proposed arrangement (the Arrangement ) under section 192 of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the CBCA ), involving Caracal, Canada Inc. ( Purchaser ), a wholly-owned indirect subsidiary of Glencore International AG ( Glencore ) and the holders of common shares of Caracal (the Shareholders ). The Arrangement is described in greater detail in the management information circular and proxy statement of Caracal dated May 9, 2014 (the Circular ) accompanying this Notice of Originating Application. At the hearing of the Application, Caracal intends to seek: (a) (b) (c) (d) an order approving the Arrangement pursuant to the provisions of section 192 of the CBCA; a declaration that the terms and conditions of the Arrangement, and the procedures relating thereto, are fair, substantively and procedurally, to the persons affected, including the Shareholders; a declaration that the Arrangement will, upon the filing of the Articles of Arrangement with the Director appointed under section 260 of the CBCA and the issuance of the Certificate of Arrangement pursuant to the provisions of sections 192 of the CBCA, be effective under the CBCA in accordance with its terms; and such other and further orders, declarations and directions as the Court may deem just. AND NOTICE IS FURTHER GIVEN that the said Application was directed to be heard before a Justice of the Court at the Calgary Courts Centre, th Street S.W., Calgary, Alberta, on the 6 th day of June, 2014 at 1:30 p.m. (Calgary time), or as soon thereafter as counsel may be heard. Any Shareholder or any other interested party desiring to support or oppose the Application may appear at the time of hearing in person or by counsel for that purpose. Any Shareholder or any other interested party desiring to appear and make submissions at the application for the final order is required to file with the Court, and serve upon Caracal on or before 5:00 p.m. (Calgary time) on May 30, 2014, a notice of intention to appear, including an address for service in the Province of Alberta, indicating whether such Shareholder or other interested party intends to support or oppose the application or make submissions thereat, together with a summary of the position such Shareholder or other interested party intends to advocate before the Court and any evidence or materials which are to be presented to the Court by such Shareholder or other interested party. Service on Caracal shall be effected by delivery to the solicitors for Caracal at the address below. If any Shareholder or any other interested party does not attend, either in person or by counsel, at that time, the Court may approve the Arrangement as presented, subject to such terms and conditions as the Court shall deem fit, without any further notice. AND NOTICE IS FURTHER GIVEN that no further notice of the Application will be given by Caracal and that, in the event the hearing of the Application is adjourned or postponed, only those persons who have appeared before the Court for the application at the hearing, or who have filed a notice of intention to appear as described above, shall be served with notice of the adjourned or postponed date. xi

12 AND NOTICE IS FURTHER GIVEN that the Court, by the Interim Order, has given directions as to the calling and holding of a special meeting of Shareholders for the purpose of Shareholders voting upon a special resolution to approve the Arrangement and, in particular, has directed that Shareholders shall have the right to dissent with respect to the Arrangement in accordance with the provisions of section 190 of the CBCA, as modified by such Interim Order. AND NOTICE IS FURTHER GIVEN that a copy of the said Application and other documents in the proceedings will be furnished to any Shareholder or other interested party requesting the same by the under-mentioned solicitors for Caracal upon written request delivered to such solicitors as follows: Stikeman Elliott LLP Suite 4300, Bankers Hall West Tower rd Street S.W. Calgary, Alberta T2P 5C5 Attention: Geoffrey D. Holub and Keith R. Chatwin Facsimile No.: DATED at the City of Calgary, in the Province of Alberta, this 9 th day of May, BY ORDER OF THE BOARD OF DIRECTORS OF CARACAL ENERGY INC. (Signed) Gary Guidry Gary Guidry President and Chief Executive Officer Caracal Energy Inc. xii

13 MANAGEMENT INFORMATION CIRCULAR AND PROXY STATEMENT Introduction This Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of Caracal Energy Inc. for use at the Meeting and any adjournments or postponements thereof. No person has been authorized to give any information or make any representation in connection with the Arrangement or any other matters to be considered at the Meeting other than those contained in this Circular and, if given or made, any such information or representation must not be relied upon as having been authorized and should not be relied upon in making a decision as to how to vote on the Arrangement Resolution. This Circular does not constitute an offer to sell or a solicitation of an offer to purchase any securities or the solicitation of a proxy by any person in any jurisdiction in which such an offer or solicitation is not authorized or in which the person making such offer or solicitation is not qualified to do so or to any person to whom it is unlawful to make such an offer or solicitation of an offer or a proxy solicitation. Neither the delivery of this Circular nor any distribution of the securities referred to in this Circular will, under any circumstances, create an implication that there has been no change in the information set forth herein since the date as of which such information is given in this Circular. The information concerning Glencore contained in the Summary Information The Purchaser Parties and Information Concerning The Purchaser Parties sections of this Circular has been provided by Glencore. Although Caracal has no knowledge that would indicate that any of such information is untrue or incomplete, save as required by applicable Law or regulation, Caracal does not assume any responsibility for the accuracy or completeness of such information or the failure by Glencore to disclose events which may have occurred or may affect the completeness or accuracy of such information but which are unknown to Caracal. All summaries of, and references to, the Arrangement in this Circular are qualified in their entirety by reference to the complete text of the Plan of Arrangement, a copy of which is attached as Appendix C to this Circular. You are urged to carefully read the full text of the Plan of Arrangement. This Circular and the accompanying Notice of Meeting, Notice of Originating Application and form of proxy are being sent to both registered and non-registered Shareholders. If you are a non-registered Shareholder, and Caracal or its agent has sent these materials directly to you, your name and address and information about your holdings of Common Shares have been obtained in accordance with applicable securities regulatory requirements from the intermediary holding such Common Shares on your behalf. All capitalized terms used in this Circular but not otherwise defined herein have the meanings set forth under Glossary of Terms. Information contained in this Circular is given as of May 9, 2014, unless otherwise specifically stated. Details of the Arrangement are set forth under the heading The Arrangement. For details of the matters to be considered by the Shareholders, see Matters to be Considered at the Meeting. Forward-looking Information and Statements This Circular contains forward-looking statements and forward-looking information within the meaning of applicable securities Laws and which are based on the expectations, estimates and projections of management of Caracal as of the date hereof unless otherwise stated. The use of any of the words expect, anticipate, continue, estimate, objective, ongoing, may, will, project, should, believe, plans, intends and similar expressions are intended to identify forward-looking statements or information. More particularly and without limitation, this Circular contains forward-looking statements and information concerning: the anticipated benefits of the Arrangement to the parties and their respective securityholders; the timing and anticipated receipt of required regulatory, court and Shareholder approvals of the Arrangement; the ability of Caracal and the Purchaser Parties to satisfy the other conditions to, and to complete, the Arrangement; and the anticipated timing for the completion of the Arrangement and delisting of the Common Shares from the Official List and from trading on the LSE. 1

14 In respect of the forward-looking statements and information concerning the anticipated benefits of the Arrangement and the anticipated timing for completion of the Arrangement, Caracal has provided such information in reliance on certain assumptions that it believes are reasonable at this time, including assumptions as to the ability of the Parties to receive, in a timely manner and on satisfactory terms, the necessary regulatory, court, Shareholder, and other third party approvals, including but not limited to the receipt of applicable foreign investment and competition approvals required in Canada; the ability of the Parties to satisfy, in a timely manner, the other conditions to the closing of the Arrangement; and other expectations and assumptions concerning the Arrangement. The anticipated dates provided may change for a number of reasons, such as the inability to secure the necessary Shareholder, regulatory, court or other third party approvals in the time assumed or the need for additional time to satisfy the other conditions to the completion of the Arrangement. Accordingly, Shareholders should not place undue reliance on the forward-looking statements and information contained in this Circular. Although the management of Caracal considers these assumptions to be reasonable based on information currently available, they may prove to be incorrect. See Forward-Looking Statements in the Caracal AIF, the Caracal Annual MD&A and the Caracal Interim MD&A. Since forward-looking statements and information address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results could differ materially from those currently anticipated due to a number of factors and risks. Risks and uncertainties inherent in the nature of the Arrangement include the failure of Caracal and the Purchaser Parties to obtain the necessary Shareholder, regulatory, court and other third party approvals, including those noted above, or to otherwise satisfy the conditions to the completion of the Arrangement, in a timely manner, or at all. Failure to obtain such approvals, or the failure of the Parties to otherwise satisfy the conditions to or complete the Arrangement, may result in the Arrangement not being completed on the proposed terms, or at all. In addition, if the Arrangement is not completed, and Caracal continues as an independent entity, there are risks that the announcement of the Arrangement and the dedication of substantial resources of Caracal to the completion of Arrangement could have an impact on Caracal s current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners) and could have a material adverse effect on the current and future operations, financial condition and prospects of Caracal. Furthermore, the failure of Caracal to comply with the terms of the Arrangement Agreement may, in certain circumstances, result in Caracal being required to pay a fee to the Purchaser Parties, the result of which could have a material adverse effect on Caracal s financial position and results of operations and its ability to fund growth prospects and current operations. Shareholders are cautioned that the foregoing list of factors is not exhaustive. Additional information on other factors that could affect the operations or financial results of the parties are included in reports on file with applicable securities regulatory authorities. The forward-looking statements and information contained in this Circular are made as of the date hereof and Caracal undertakes no obligation to update publicly or revise any forward-looking statements or information, whether as a result of new information, future events or otherwise, unless so required by applicable securities Laws and readers should also carefully consider the matters discussed under Risk Factors. Information for U.S. Shareholders Caracal is a corporation organized under the Laws of Canada. The solicitation of proxies and the transaction contemplated in this Circular involve securities of a Canadian issuer and are being effected in accordance with Canadian corporate and securities Laws. The solicitation of proxies for the Meeting is not subject to the requirements applicable to proxy statements under the U.S. Exchange Act. Accordingly, this Circular has been prepared solely in accordance with disclosure requirements applicable in Canada. Shareholders in the United States should be aware that such requirements are different from those of the United States applicable to proxy statements under the U.S. Exchange Act. Specifically, information contained herein has been prepared in accordance with Canadian disclosure standards, which are not comparable in all respects to U.S. disclosure standards. Shareholders should also be aware that requirements under Canadian Laws may differ from requirements under U.S. corporate and securities Laws relating to U.S. corporations. The enforcement by Shareholders of civil liabilities under the U.S. federal or state securities Laws may be affected adversely by the fact that Caracal is organized under the Laws of Canada, that the majority of the executive officers 2

15 and directors of Caracal are residents of countries other than the United States, that the experts named in this Circular are residents of countries other than the United States, and that a large portion of the assets of Caracal and such persons are, or will be, located outside the United States. In addition, the courts of Canada may not enforce judgments of U.S. courts obtained in actions against such persons predicated upon civil liabilities under the federal and state securities legislation in the United States and all rules, regulations and orders promulgated thereunder. This transaction has not been approved or disapproved by the SEC or any other securities regulatory authority, nor has any securities regulatory authority passed upon the fairness or the merits of this transaction or upon the accuracy or adequacy of the information contained in this Circular. Shareholders in the United States are advised to consult their independent tax advisors regarding the U.S. federal, state, local and foreign tax consequences to them of participating in the Arrangement and should carefully read the information under Certain United States Federal Income Tax Considerations. Currency Unless otherwise indicated, all references in this Circular to: sterling, pounds sterling, GBP or are to the lawful currency of the United Kingdom; $, U.S. dollars, US$ or U.S.$ are to the lawful currency of the United States; and Canadian dollars, CAD or C$ are to the lawful currency of Canada. The basis of translation of foreign currency for the purpose of inclusion of the financial information is set out in the Caracal Annual Financial Statements. Information derived from this financial information set out elsewhere in this Circular has been translated on the same basis. The price of the Common Shares is quoted on the LSE in pounds sterling. The following table sets forth, for the periods indicated, the high, low, average and period end noon (Eastern Standard Time (North America)) spot rates of exchange for one pound sterling, expressed in Canadian dollars, published by the Bank of Canada. Three months ended March 31 Year ended December (C$) Highest noon rate during the period Lowest noon rate during the period Average noon spot rate for the period Noon rate at the end of the period As of the date hereof, the noon (Eastern Standard Time (North America)) buying rate for one pound sterling, expressed in Canadian dollars, as published by the Bank of Canada was C$ The following table sets forth, for the periods indicated, the high, low, average and period end closing spot rates of exchange for one pound sterling, expressed in U.S. dollars, as listed on Bloomberg. 3

16 Three months ended March 31 Year ended December (US$) Highest closing spot rate during the period Lowest closing spot rate during the period Average closing noon spot rate for the period Closing spot rate at the end of the period As of the date hereof, the closing spot rate of exchange for one pound sterling, expressed in U.S. dollars, as listed on Bloomberg was U.S.$ The following table sets forth, for the periods indicated, the high, low, average and period end noon (Eastern Standard Time (North America)) spot rates of exchange for one U.S. dollar, expressed in Canadian dollars, published by the Bank of Canada. Three months ended March 31 Year ended December (US$) Highest rate during the period Lowest rate during the period Average noon spot rate for the period Rate at the end of the period As of the date hereof, the noon (Eastern Standard Time (North America)) buying rate for one U.S. dollar, expressed in Canadian dollars, as published by the Bank of Canada was C$ Caracal prepares its financial statements in U.S. dollars. Unless otherwise indicated, the financial information contained in this Circular has been expressed in U.S. dollars. 4

17 SUMMARY INFORMATION The following is a summary of certain information contained elsewhere in this Circular, including the Appendices hereto, and is provided for convenience only and is qualified in its entirety by reference to the more detailed information contained or referred to elsewhere in this Circular or in the Appendices hereto. All capitalized terms used in this summary have the meanings set forth under Glossary of Terms. The Meeting The Meeting will be held in the Westwinds Room located at 2nd Floor, th Avenue S.W., Calgary, Alberta, Canada, on June 6, 2014 at 10:30 a.m. (Calgary time) for the purposes set forth in the accompanying Notice of Meeting. The business of the Meeting will be for the Shareholders to consider and, if deemed advisable, to pass, with or without variation, the Arrangement Resolution. The full text of the Arrangement Resolution is set forth as Appendix A to this Circular. See The Arrangement and Matters to be Considered at the Meeting. The Record Date The Record Date for determining Shareholders entitled to receive notice of and to vote at the Meeting is May 7, See General Proxy Matters for additional information. Summary of the Arrangement Caracal entered into the Original Arrangement Agreement on April 14, 2014 and into the Arrangement Agreement on April 24, A copy of the Arrangement Agreement is attached as Appendix B to this Circular. The Arrangement Agreement provides for the implementation of the Plan of Arrangement pursuant to which, among other things, Shareholders (other than Dissenting Shareholders) will receive the Consideration, being GBP5.50 in cash, for each Common Share held. Under the Arrangement, all Caracal Options and Caracal Warrants, whether vested or unvested, will be disposed of and surrendered to Caracal and the holders thereof will receive for each Caracal Option or Caracal Warrant, as the case may be, a cash payment representing the amount by which the product of the number of Common Shares underlying such Caracal Option or Caracal Warrant multiplied by the Consideration exceeds the aggregate exercise price payable under such Caracal Option or Caracal Warrant, as the case may be, less applicable withholdings. In addition, each deferred share unit, restricted share unit and performance share unit will be similarly disposed of and surrendered to Caracal and the holder will receive a cash payment equal to the number of Common Shares the holder of such unit is entitled to pursuant to such unit multiplied by the Consideration, less applicable withholdings. Upon completion of the Arrangement, all of the rights and obligations relating to the Caracal Debentures will continue to be an obligation of the successor entity of Caracal, Amalco, as an indirect wholly-owned Subsidiary of Glencore. The Arrangement will constitute a Reorganisation Event under the terms of the Caracal Debenture Indenture. As a result, Amalco will enter into a supplemental trust deed with the Caracal Debenture Trustee providing that holders of Caracal Debentures who exercise their conversion rights following the Effective Date will receive an Amalco Redeemable Preferred Share for each Common Share which the holder would have otherwise received upon conversion, which will immediately be purchased by the Purchaser for GBP5.50 in accordance with the terms of the Caracal Debenture Indenture. A Potential Change of Control Notice as such term is defined in the Caracal Debenture Indenture will be sent to holders of Caracal Debentures concurrently with the filing of this Circular. If the Required Approval is obtained and the Arrangement is completed as contemplated by the Arrangement Agreement, Amalco will become an indirect wholly-owned Subsidiary of Glencore. See The Arrangement. Caracal Caracal is a corporation incorporated under the CBCA. Founded in 2009, Caracal is an independent oil and gas exploration, appraisal and development group of companies which, together with Glencore Xstrata and SHT, has exclusive rights to explore and develop oil and gas reserves and resources over an area of approximately 26,103 5

18 square kilometres (6.4 million acres) in southern Chad. This area comprises three contractual zones, the rights of which were originally granted to Caracal in 2011 pursuant to production sharing contracts that it entered into with the Government of Chad. Caracal is a reporting issuer or the equivalent in each of the provinces of Canada other than the Province of Québec. The Common Shares are admitted to the Official List and to trading on the main market of the LSE for premium listed shares under the symbol CRCL and the Caracal Debentures are admitted to trading on the LuxSE. Caracal s head and registered offices are located at Suite 2100, th Avenue S.W., Calgary, Alberta, T2P 3E7. Caracal s fiscal year-end is December 31. See Information Concerning Caracal. The Purchaser Parties Glencore is a wholly-owned subsidiary of Glencore Xstrata, which is one of the world s largest global diversified natural resource companies. As a leading integrated producer and marketer of commodities with a well-balanced portfolio of diverse industrial assets, Glencore Xstrata is strongly positioned to capture value at every stage of the supply chain, from sourcing materials deep underground to delivering products to an international customer base. The Glencore Xstrata group s industrial and marketing activities are supported by a global network of more than 90 offices located in over 50 countries and its diversified operations comprise over 150 mining and metallurgical sites, offshore oil production assets, farms and agricultural facilities. The Glencore Xstrata group employs approximately 190,000 people, including contractors. The shares of Glencore Xstrata are listed on the LSE under the symbol GLEN, on the Stock Exchange of Hong Kong Limited under the symbol 805 and on the Johannesburg Stock Exchange under the symbol GLN. Glencore Xstrata has been admitted as a constituent stock of the FTSE 100 Index. Purchaser is a corporation incorporated on November 6, 2013 under the CBCA and is an indirect wholly-owned Subsidiary of Glencore. The registered office of Purchaser is located at 100 King Street West, Suite 6900, Toronto, ON, M5X 1E3. See Information Concerning the Purchaser Parties. Fairness Opinions The Board retained Goldman Sachs and RBC Capital Markets as its financial advisors to provide advice and assistance in evaluating the Arrangement, including opining on the fairness of the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement from a financial point of view to such Shareholders. In connection with this mandate, Goldman Sachs has prepared the Goldman Sachs Fairness Opinion and RBC Capital Markets has prepared the RBC Capital Markets Fairness Opinion. The Goldman Sachs Fairness Opinion states that, in the opinion of Goldman Sachs, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders. The RBC Capital Markets Fairness Opinion states that, in the opinion of RBC Capital Markets, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates. The full text of the Goldman Sachs Fairness Opinion and the RBC Capital Markets Fairness Opinion, is attached as Appendix E and Appendix F, respectively, to this Circular and should be read carefully and in its entirety. The summaries of the Fairness Opinions in this Circular are qualified in their entirety by reference to the full text of the Fairness Opinions. The Fairness Opinions are not a recommendation as to how any Shareholder should vote with respect to the Arrangement or any other matter. See Fairness Opinions. Recommendation of the Board The Board, after consulting with its financial and legal advisors, and after careful consideration of, among other things, the Goldman Sachs Fairness Opinion and the RBC Capital Markets Fairness Opinion and the recommendation of the Special Committee, has unanimously determined that the Arrangement is in the best 6

19 interests of Caracal and its Shareholders as a whole. Accordingly, the Board unanimously recommends that the Shareholders approve the Arrangement by voting in favour of the Arrangement Resolution at the Meeting. See Recommendation of the Board. Reasons for the Arrangement In unanimously determining that the Arrangement is in the best interests of Caracal and its Shareholders as a whole, and recommending to Shareholders that they approve the Arrangement, the Board considered and relied upon a number of factors, including, among others, the following: the Board carefully reviewed the terms of the Arrangement and a nearly finalized draft of the Original Arrangement Agreement and, after consultation with RBC Capital Markets, and its legal counsel, Stikeman Elliott LLP, determined that the Arrangement was a Superior Proposal (as defined in the TransGlobe Agreement, which was then in effect) as compared to the TransGlobe Arrangement; the value of the Consideration payable under the Arrangement to the Shareholders, which represents a premium of approximately 61% to the closing price of the Common Shares on the LSE on April 11, 2014 and a premium of approximately 54% to the 30 trading day volume weighted average price of the Common Shares on the LSE up to and including April 11, 2014 (being the last trading day preceding the date that Caracal and the Purchaser Parties issued a joint press release announcing the Arrangement); the Consideration to be paid to Shareholders pursuant to the Arrangement will be cash, which provides Shareholders with certainty of value and immediate liquidity; the Board s assessment of the current and anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of Caracal should it continue as a stand-alone entity; the Board s assessment of the anticipated future opportunities and risks associated with the business, operations, assets, financial performance and condition of the combined entity of Caracal and TransGlobe had the TransGlobe Arrangement been completed; the Board s assessment of the current and anticipated future state of the credit, debt and equity markets that could be available to Caracal to provide Caracal with the full amount of funding it may require to finance its business and operations, including the risk that such funding may not be obtained in a reasonable time or in full or on terms satisfactory to Caracal, as well as the Board s assessment of current and anticipated market conditions, including commodity prices for oil, natural gas and natural gas liquids; the Goldman Sachs Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration to be paid to Shareholders (other than the Purchaser Parties and their affiliates) under the Arrangement was fair from a financial point of view to such Shareholders; the RBC Capital Markets Fairness Opinion to the effect that, as of April 14, 2014 and based upon and subject to the assumptions, limitations and qualifications contained therein, the Consideration under the Arrangement was fair from a financial point of view to the Shareholders, other than the Purchaser Parties and their affiliates; Shareholders will have an opportunity to vote on the Arrangement, which must receive the Required Approval in order for Caracal to seek the Final Order and implement the Arrangement; the Arrangement is subject to a determination of the Court that the Arrangement is fair and reasonable, both procedurally and substantively, to Shareholders; the terms and conditions of the Arrangement Agreement, including the fact that Caracal s and the Purchaser Parties representations, warranties and covenants and the conditions to completion of 7

20 the Arrangement are, in the judgment of the Board, after consultation with its legal advisors, reasonable; the likelihood that the transaction will receive the Regulatory Approvals under applicable Laws and on terms and conditions satisfactory to Caracal and the Purchaser Parties, including the advice of its legal and other advisors in connection with such Regulatory Approvals; the Purchaser Parties obligation to complete the Arrangement is subject to a limited number of conditions, which the Board believes are reasonable under the circumstances; the Arrangement is not subject to a financing condition; the Board s belief that the Arrangement is likely to be completed in accordance with its terms and within a reasonable time, with closing of the Arrangement currently expected in the second quarter of 2014; the ability of the Board, in certain circumstances, to consider, accept and enter into a definitive agreement with respect to a Superior Proposal, provided that Caracal pays to Glencore the Termination Fee; the view of the Board that the Termination Fee would not preclude a third party from making a potential unsolicited Superior Proposal in respect of Caracal; the appropriateness of the Termination Fee and right to match as an inducement to the Purchaser Parties to enter into the Arrangement Agreement; the ability of Caracal to terminate the Arrangement Agreement and receive the Reverse Termination Fee in certain limited circumstances; registered Shareholders may, upon compliance with certain conditions and in certain circumstances, exercise Dissent Rights and, if ultimately successful, receive fair value for their Common Shares as determined by the Court; Glencore s commitment, creditworthiness, record of completing acquisition transactions and anticipated ability to complete the transactions contemplated by the Arrangement; the Arrangement Agreement is the result of arm s-length negotiations between Caracal and the Purchaser Parties; the fact that, in the Board s view, the terms of the Arrangement Agreement treat stakeholders of Caracal equitably and fairly; and the Arrangement is expected to benefit Caracal, its employees and other stakeholders. The Board also considered a number of potential risks and potential negative factors relating to the Arrangement, including the following: the risks to Caracal if the Arrangement is not completed, including the costs to Caracal in pursuing the Arrangement, the diversion of management s attention away from conducting Caracal s business in the ordinary course, the potential crystallization of certain interest costs and expenses associated with the Caracal Debentures and the potential impact on Caracal s current business relationships (including with future and prospective employees, customers, distributors, suppliers and partners); the fact that, following the Arrangement, Caracal will no longer exist as an independent company and Shareholders will forego any future increase in value that might result from future growth and the potential achievement of Caracal s long-term plans; the conditions to the Purchaser Parties obligation to complete the Arrangement and the right of the Purchaser Parties to terminate the Arrangement Agreement under certain limited circumstances; 8