The following Notice of Annual General Meeting, Explanatory Memorandum and Proxy Form will be despatched to shareholders today, in relation to the meeting of Royal Resources Limited to be held on 26 November 2015 at 10.30am (ACDT Adelaide time).
If you are unable to attend the Annual General Meeting please complete and return the enclosed Proxy Form in accordance with the specified directions.
Notice is given that the Annual General Meeting of Shareholders of Royal Resources Limited ABN 34 108 102 432 (Company) will be held at Stables Two Room, The Junction, 470 Anzac Highway, Camden Park, South Australia on Thursday 26 November 2015 at 10.30am ACDT (Adelaide time) for the purpose of transacting the following business referred to in this Notice of Annual General Meeting.
To receive and consider the financial report of the Company for the year ended 30 June 2015, together with the Directors' Report and the Auditor's Report as set out in the Annual Report.
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Resolution 1 - Non Binding Resolution to adopt Remuneration Report
To consider and, if thought fit, pass the following resolution as a non-binding resolution:
'That the Remuneration Report for the year ended 30 June 2015 as set out in the 2015 Annual Report be adopted.'
Note: The vote on this Resolution is advisory only and does not bind the Directors or the Company. Shareholders are encouraged to read the Explanatory Memorandum for further details on the consequences of voting on this Resolution.
Voting exclusion statement: The Company will disregard any votes cast on Resolution 1 by or on behalf of a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or their Closely Related Parties.
However, the Company need not disregard a vote if:
-
it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed Resolution or the proxy is the Chair of the Meeting and the appointment of the Chair as proxy does not specify the way the proxy is to vote on the resolution and expressly authorises the Chair to exercise the proxy even if the resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel; and
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it is not cast on behalf of a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or their Closely Related Parties.
Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 1 unless:
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the appointment specifies the way the proxy is to vote on Resolution 1; or
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the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 1.
Shareholders may also choose to direct the Chair to vote against Resolution 1 or to abstain from voting.
If you are a Restricted Voter and purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.
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Resolution 2 - Re-election of Malcolm R J Randall as a Director
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
'That, Malcolm R J Randall, who retires in accordance with clause 13.2 of the Constitution and, being eligible for re-election, be re-elected as a Director.'
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Resolutions 3 - Grant of Incentive Options to a Director - Mr Gordon L Toll or his nominee(s)
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
'That, for the purposes of section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, the Directors are authorised to issue up to 10,000,000 Incentive Options for no consideration, with each Incentive Option having an exercise price of $0.02 and an expiry date of 26 November 2020, to Mr Gordon L Toll or his nominee(s), on the terms and conditions set out in the Explanatory Memorandum (including Annexure A to the Explanatory Memorandum).'
Voting exclusion statement: The Company will disregard any votes cast on this Resolution 3 by Mr Gordon L Toll or his nominee(s) and an Associate of that person.
However, the Company need not disregard a vote if:
-
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
-
the vote 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.
Further, the Company will disregard any votes cast on this Resolution 3 (in any capacity) by or on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution and it is not cast on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party.
Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 3 unless:
-
the appointment specifies the way the proxy is to vote on Resolution 3; or
-
the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 3.
Shareholders may also choose to direct the Chair to vote against Resolution 3 or to abstain from voting.
If you are a Restricted Voter and purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.
Please Note: If the Chair is a person referred to in the section 224 Corporations Act voting exclusion statement above, the Chair will only be able to cast a vote as proxy for a person who is entitled to vote if the Chair is appointed in writing and the Proxy Form specifies how the proxy is to vote on Resolution 3.
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Resolutions 4 - Grant of Incentive Options to a Director - Mr Frank DeMarte or his nominee(s)
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
'That, for the purposes of section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, the Directors are authorised to issue up to 5,000,000 Incentive Options for no consideration, with each Incentive Option having an exercise price of $0.02 and an expiry date of 26 November 2020, to Mr Frank DeMarte or his nominee(s), on the terms and conditions set out in the Explanatory Memorandum (including Annexure A to the Explanatory Memorandum).'
Voting exclusion statement: The Company will disregard any votes cast on this Resolution 4 by Mr Frank DeMarte or his nominee(s) and an Associate of that person.
However, the Company need not disregard a vote if:
-
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
-
the vote 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.
Further, the Company will disregard any votes cast on this Resolution 4 (in any capacity) by or on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution and it is not cast on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party.
Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 4 unless:
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the appointment specifies the way the proxy is to vote on Resolution 4; or
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the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 4.
Shareholders may also choose to direct the Chair to vote against Resolution 4 or to abstain from voting.
If you are a Restricted Voter and purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.
Please Note: If the Chair is a person referred to in the section 224 Corporations Act voting exclusion statement above, the Chair will only be able to cast a vote as proxy for a person who is entitled to vote if the Chair is appointed in writing and the Proxy Form specifies how the proxy is to vote on Resolution 4.
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Resolution 5 - Grant of Incentive Options to a Director - Mr Malcolm R J Randall or his nominee(s)
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
'That, for the purposes of section 208 of the Corporations Act, Listing Rule 10.11 and for all other purposes, the Directors are authorised to issue up to 5,000,000 Incentive Options for no consideration, with each Incentive Option having an exercise price of $0.02 and an expiry date of 26 November 2020, to Mr Malcolm R J Randall or his nominee(s), on the terms and conditions set out in the Explanatory Memorandum (including Annexure A to the Explanatory Memorandum).'
Voting exclusion statement: The Company will disregard any votes cast on this Resolution 5 by Mr Malcolm R J Randall or his nominee(s) and an Associate of that person.
However, the Company need not disregard a vote if:
-
it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form; or
-
the vote 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.
Further, the Company will disregard any votes cast on this Resolution 5 (in any capacity) by or on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party. However, the Company need not disregard a vote if it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the resolution and it is not cast on behalf of a related party of the Company to whom the resolution would permit a financial benefit to be given or an Associate of such a related party.
Further, a Restricted Voter who is appointed as a proxy will not vote on Resolution 5 unless:
-
the appointment specifies the way the proxy is to vote on Resolution 5; or
-
the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. Shareholders should note that the Chair intends to vote any undirected proxies in favour of Resolution 5.
Shareholders may also choose to direct the Chair to vote against Resolution 5 or to abstain from voting.
If you are a Restricted Voter and purport to cast a vote other than as permitted above, that vote will be disregarded by the Company (as indicated above) and you may be liable for breaching the voting restrictions that apply to you under the Corporations Act.
Please Note: If the Chair is a person referred to in the section 224 Corporations Act voting exclusion statement above, the Chair will only be able to cast a vote as proxy for a person who is entitled to vote if the Chair is appointed in writing and the Proxy Form specifies how the proxy is to vote on Resolution 5.
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Resolution 6 - Ratification of issue of Shares to Mango Bay Enterprises Inc
To consider and, if thought fit to pass 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 of 39,350,000 Shares (at an issue price of $0.015 each) on 29 September 2015 to Mango Bay Enterprises Inc on the terms and conditions set out in the Explanatory Memorandum.'
Voting exclusion statement: The Company will disregard any votes cast on Resolution 6 by any person who participated in the issue the subject of Resolution 6 and any person who is an Associate of those persons. However, the Company need not disregard a vote if the vote is cast by:
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a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
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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.
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Resolution 7 - Approval of Additional 10% Placement Capacity
To consider and, if thought fit, to pass the following resolution as a special resolution:
'That, for the purpose of Listing Rule 7.1A and all other purposes, Shareholders approve the issue of Equity Securities up to 10% of the issued capital of the Company (at the time of the issue) calculated in accordance with in Listing Rule 7.1A.2 and on the terms and conditions set out in the Explanatory Memorandum.'
Voting exclusion statement: The Company will disregard any votes cast on Resolution 7 by any person who may participate in the proposed 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 person who is an Associate of those persons.
However, the Company need not disregard a vote if the vote is cast by:
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a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
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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.
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Resolution 8 - Proposed issue of Shares
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
'That, for the purpose of Listing Rule 7.1 and all other purposes, Shareholders approve the issue of up to 50,000,000 Shares at an issue price of not less than 80% of the volume weighted average market price of the Company's Shares on the ASX, calculated over the last five days on which sales of the Shares are recorded before the date on which the issue is made (or if there is a prospectus, product disclosure statement or offer information statement relating to the issue, over the last five days on which sales in the Shares are recorded before the date of the prospectus, product disclosure statement or offer information statement is signed) as is more particularly described in the Explanatory Memorandum'.
Voting exclusion statement: The Company will disregard any votes cast on Resolution 8 by any person who may participate in the proposed 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 person who is an Associate of those persons. However, the Company need not disregard a vote if the vote is cast by:
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a person as proxy for a person who is entitled to vote, in accordance with the directions on the Proxy Form; or
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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.
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Resolution 9 - Change of Company name
To consider and, if thought fit, to pass the following resolution as a special resolution:
'That, for the purpose of section 157(1) of the Corporations Act and for all other purposes, the Company's name be changed from Royal Resources Limited to Magnetite Mines Limited and that, for the purpose of section 136(2) of the Corporations Act and for all other purposes, all references to 'Royal Resources Limited' in the Company's constitution be replaced with references to 'Magnetite Mines Limited'.'
OTHER BUSINESS
To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act.
Details of the definitions and abbreviations used in this Notice are set out in the Glossary to the Explanatory Memorandum.
By order of the Board
`Frank DeMarte
Director and Company Secretary Dated: 15 October 2015
How to vote
Shareholders can vote by either:
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attending the Meeting and voting in person or by attorney or, in the case of corporate Shareholders, by appointing a corporate representative to attend and vote; or
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appointing a proxy to attend and vote on their behalf using the Proxy Form accompanying this Notice of Meeting and by submitting their proxy appointment and voting instructions in person, by post, or by facsimile.
Voting in person (or by attorney)
Shareholders, or their attorneys, who plan to attend the Meeting are asked to arrive at the venue 15 minutes prior to the time designated for the Meeting, if possible, so that their holding may be checked against the Company's share register and their attendance recorded. To be effective a certified copy of the Power of Attorney, or the original Power of Attorney, must be received by the Company in the same manner, and by the same time as outlined for proxy forms below.
Voting by a Corporation
A Shareholder that is a corporation may appoint an individual to act as its representative and vote in person at the Meeting. The appointment must comply with the requirements of section 250D of the Corporations Act.
Written proof of the representative's appointment (including any authority under which it is signed) must be lodged with, or presented to the Company before the 2015 Annual General Meeting.
Voting by proxy
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A Shareholder entitled to attend and vote is entitled to appoint not more than two proxies. Each proxy will have the right to vote on a poll and also to speak at the Meeting.
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The appointment of the proxy may specify the proportion or the number of votes that the proxy may exercise. Where more than one proxy is appointed and the appointment does not specify the proportion or number of the Shareholder's votes each proxy may exercise, the votes will be divided equally among the proxies (i.e. where there are two proxies, each proxy may exercise half of the votes).
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A proxy need not be a Shareholder.
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The proxy can be either an individual or a body corporate.
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If a proxy is not directed how to vote on an item of business, the proxy may generally vote, or abstain from voting, as they think fit. However, where a Restricted Voter is appointed as a proxy, the proxy may only vote on Resolutions 1, 3, 4 and 5 if the proxy is the Chair of the Meeting and the appointment expressly authorises the Chair to exercise the proxy even if the Resolution is
connected directly or indirectly with the remuneration of a member of the Key Management Personnel.
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Should any resolution, other than those specified in this Notice, be proposed at the Meeting, a proxy may vote on that resolution as they think fit.
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If a proxy is instructed to abstain from voting on an item of business, they are directed not to vote on the Shareholder's behalf on the poll and the Shares that are the subject of the proxy appointment will not be counted in calculating the required majority.
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Shareholders who return their Proxy Forms with a direction how to vote, but who do not nominate the identity of their proxy, will be taken to have appointed the Chair of the Meeting as their proxy to vote on their behalf. If a Proxy Form is returned but the nominated proxy does not attend the Meeting, the Chair of the Meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chair of the Meeting, the secretary or any Director that do not contain a direction how to vote will be used, where possible, to support each of the Resolutions proposed in this Notice, provided they are entitled to cast votes as a proxy under the voting exclusion rules which apply to some of the proposed Resolutions. These rules are explained in this Notice.
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To be effective, proxies must be lodged by 10.30am ACDT (Adelaide time) on 24 November 2015. Proxies lodged after this time will be invalid.
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Proxies may be lodged using any of the following methods:
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By mail:
Computershare Investor Services Pty Limited
GPO Box 242 Melbourne Victoria 3001 Australia
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By Facsimile:
(within Australia) 1800 783 447
(outside Australia) +61 3 9473 2555
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For all enquiries call:
(within Australia) 1300 850 505
(outside Australia) +61 3 9415 4000
Shareholders who are entitled to vote
In accordance with paragraphs 7.11.37 and 7.11.38 of the Corporations Regulations, the Board has determined that a person's entitlement to vote at the Annual General Meeting will be the entitlement of that person set out in the Register of Shareholders as at 6.30pm ACDT (Adelaide time) on 24 November 2015.
ROYAL RESOURCES LIMITED
ABN 34 108 102 432
EXPLANATORY MEMORANDUM
This Explanatory Memorandum is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice of Annual General Meeting of the Company.
Certain abbreviations and other defined terms are used throughout this Explanatory Memorandum. Defined terms are generally identifiable by the use of an upper case first letter. Details of the definitions and abbreviations are set out in the Glossary to the Explanatory Memorandum.
FINANCIAL REPORTS
The first item of the Notice deals with the presentation of the consolidated annual financial report of the Company for the financial year ended 30 June 2015, together with the Directors' declaration and report in relation to that financial year and the Auditor's Report on the financial report. Shareholders should consider these documents and raise any matters of interest with the Directors when this item is being considered.
No resolution is required to be moved in respect of this item.
Shareholders will be given a reasonable opportunity at the Annual General Meeting to ask questions and make comments on the accounts and on the management of the Company.
The Chair will also give Shareholders a reasonable opportunity to ask the Auditor or the Auditor's representative questions relevant to:
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the conduct of the audit;
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the preparation and content of the independent audit report;
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the accounting policies adopted by the Company in relation to the preparation of the financial statements; and
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the independence of the Auditor in relation to the conduct of the audit.
The Chair will also allow a reasonable opportunity for the Auditor or their representative to answer any written questions submitted to the Auditor under section 250PA of the Corporations Act.
RESOLUTION 1 - ADOPTION OF REMUNERATION REPORT
Section 250R(2) of the Corporations Act requires the Company to put to its Shareholders a resolution that the Remuneration Report as disclosed in the Company's 2015 Annual Report be adopted. The Remuneration Report is set out in the Company's 2015 Annual Report and is also available on the Company's website (www.royalresources.com.au).
The vote on Resolution 1 is advisory only and does not bind the Directors or the Company.
However, if at least 25% of the votes cast are against adoption of the Remuneration Report at two consecutive annual general meetings, the Company will be required to put a resolution to the second Annual General Meeting (Spill Resolution), to approve calling a general meeting (Spill Meeting). If more than 50% of Shareholders vote in favour of the Spill Resolution, the Company must then convene a Spill Meeting within 90 days of the second Annual General Meeting. All of the Directors who were in office when the applicable Directors' Report was approved, other than any Managing Director, will need to stand for re-election at the Spill Meeting if they wish to continue as Directors.
The Remuneration Report for the financial year ended 30 June 2015 did not receive a vote of more than 25% against its adoption at the Company's last general meeting held on 28 November 2014. Accordingly, if at least 25% of the votes cast on Resolution 1 are against adoption of the Remuneration Report it will not result in the Company putting a Spill Resolution to Shareholders.
The Remuneration Report explains the Board policies in relation to the nature and level of remuneration paid to Directors, sets out remuneration details for each Director and any service agreements and sets out the details of any equity based compensation.
The Chair will give Shareholders a reasonable opportunity to ask questions about, or make comments on, the Remuneration Report.
Voting
Note that a voting exclusion applies to Resolution 1 in the terms set out in the Notice of Meeting. In particular, the Directors and other Restricted Voters may not vote on this Resolution and may not cast a vote as proxy, unless the appointment gives a direction on how to vote or the proxy is given to the Chair and expressly authorises the Chair to exercise your proxy, even if the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel. The Chair intends to use any such proxies to vote in favour of Resolution 1.
Shareholders are urged to carefully read the Proxy Form and provide a direction to the proxy on how to vote on this Resolution.
RESOLUTION 2 - RE-ELECTION OF MALCOLM R J RANDALL AS A DIRECTOR
Pursuant to Clause 13.2 of the Company's Constitution, Malcolm R J Randall, being a Director, retires by way of rotation and, being eligible, offers himself for re-election as a Director.
Mr Randall holds a Bachelor of Applied Chemistry Degree and is a member of the Australian Institute of Company Directors. He has extensive experience in corporate, management and marketing in the resource sector, including more than 27 years with the Rio Tinto group of companies. His experience has covered a diverse range of mineral activities including iron ore, base metals, uranium, mineral sands and coal.
Mr Randall was first appointed to the board on 4 October 2006.
As Mr Randall is standing for re-election, the Company advises the following:
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the Board considers that Mr Randall, if elected, will continue to qualify as an independent director;
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the Board supports the nomination of Mr Randall to be re-elected; and
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the term of Mr Randall will, in accordance with article 13.2 of the Company's Constitution, not exceed 3 years.
RESOLUTIONS 3, 4 and 5 - GRANT OF INCENTIVE OPTIONS TO DIRECTORS - MR GORDON TOLL, MR FRANK DEMARTE AND MR MALCOLM R J RANDALL OR THEIR NOMINEE(S)
The Company proposes to grant a total of 20,000,000 Incentive Options (each with an exercise price of A$0.02 and an expiry date of 26 November 2020) to Mr Gordon L Toll, Mr Frank DeMarte and Mr Malcolm R J Randall (Participating Directors), or their nominees.
Related Party Transactions Generally
Chapter 2E of the Corporations Act prohibits a public company from giving a financial benefit to a related party of the public company unless either:
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the giving of the financial benefits falls within one of the nominated exceptions to the provision; or
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Shareholder approval is obtained prior to the giving of the financial benefit and the benefit is given within 15 months after obtaining such approval.
For the purposes of Chapter 2E of the Corporations Act, each of the Participating Directors is a related party of the Company.
Resolutions 3, 4 and 5 relate to the proposed grant of Incentive Options to the Participating Directors, which is a financial benefit that requires Shareholder approval for the purposes of section 208 of the Corporations Act.
Information Requirements - Chapter 2E of the Corporations Act
For the purposes of Chapter 2E of the Corporations Act, the following information is provided.
The related parties to whom the proposed Resolutions would permit the financial benefit to be given and the nature of the financial benefit
Subject to Shareholder approval, the Incentive Options will be issued as set out in the table below.
The proposed financial benefit to be given is the grant of Incentive Options for no consideration to the Participating Directors.
The table below also sets out the amounts that will need to be paid to the Company by the Participating Directors if the Incentive Options are exercised.
|
Director
|
Number of Incentive Options
|
Amount to be paid (A$)
|
|
Mr Gordon L Toll, or his nominee(s)
|
10,000,000
|
$200,000.00
|
|
Mr Frank DeMarte, or his nominee(s)
|
5,000,000
|
$100,000.00
|
|
Mr Malcolm R J Randall, or his nominee(s)
|
5,000,000
|
$100,000.00
|
|
Total
|
20,000,000
|
$400,000.00
|
The details of the financial benefit including reasons for giving the type and quantity of the benefit
The terms of the Incentive Options are set out in Annexure A to this Explanatory Memorandum.
The grant of Incentive Options encourages Mr Gordon L Toll and Mr Frank DeMarte, as executive Directors to have a greater involvement in the achievement of the Company's objectives and to provide an incentive to strive to that end by participating in the future growth and prosperity of the Company through Share ownership. Under the Company's current circumstances, the Directors consider (in each case in the absence of the relevant Participating Director) that the incentives intended for Mr Gordon L Toll and Mr Frank DeMarte represented by the grant of these Incentive Options are a cost effective and efficient means for the Company to provide a reward and an incentive, as opposed to alternative forms of incentive, such as the payment of additional cash compensation.
Under the Company's current circumstances, the Directors consider that the grant of Incentive Options to Mr Malcolm R J Randall represents a cost effective way for the Company to remunerate Mr Malcolm R J Randall, as opposed to cash remuneration and it is designed to attract and retain suitably qualified non-executive directors.
Shareholders should note that for the reasons noted above, it is proposed to grant Incentive Options to Mr Malcolm R J Randall notwithstanding the guidelines contained in Box 8.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations which states that non-executive Directors should not receive options or normally participate in schemes designed for the remuneration of executives. However, the Board considers the grant of Incentive Options to Mr Malcolm R J Randall is reasonable in the circumstances, given the necessity to attract the highest calibre of professionals to the Company, while maintaining the Company's cash reserves.
The number of Incentive Options to be granted to each of the Participating Directors has been determined based upon a consideration of:
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the remuneration of the Directors;
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the extensive experience and reputation of the Participating Directors within the resources industry;
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the current price of Shares;
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the Directors' wish to ensure that the remuneration offered is competitive with market standards or/and practice. The Directors have considered the proposed number of Incentive Options to be granted and will ensure that the Participating Directors' overall remuneration is in line with market practice;
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attracting and retaining suitably qualified non-executive directors; and
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incentives to attract and ensure continuity of service of Directors who have appropriate knowledge and expertise, while maintaining the Company's cash reserves. The Company does not consider that there are any significant opportunity costs to the Company or benefits foregone by the Company in issuing the Incentive Options upon the terms proposed.
Participating Directors current holdings
Set out below are details of each of the Participating Directors' relevant interest in Shares and Options of the Company as at the date of this Notice:
|
Director
|
Number of Shares
|
Number of Options
|
|
Mr Gordon L Toll, or his nominee
|
78,476,509
|
Nil
|
|
Mr Frank DeMarte, or his nominee
|
3,813,135
|
6,250,000
|
|
Mr Malcolm R J Randall, or his nominee
|
2,012,383
|
4,750,000
|
|
Total
|
84,302,027
|
11,000,000
|
Dilution effect of grant of Incentive Options on existing members' interests
If passed, Resolutions 3, 4 and 5 will give the Directors power to grant a total of 20,000,000 Incentive Options on the terms and conditions as set out in Annexure A to this Explanatory Memorandum and as otherwise mentioned above.
The Company currently has 393,329,539 (listed Shares and the following unlisted Options on issue:
|
Security
|
Number
|
Exercise Price / Performance Hurdle
|
Expiry Date
|
|
Option
|
5,750,000
|
$0.28
|
29 November 2015
|
|
Option
|
500,000
|
$0.075
|
25 March 2016
|
|
Option
|
2,700,000
|
$0.049
|
1 July 2016
|
|
Option
|
6,750,000
|
$0.21
|
27 November 2016
|
|
Option
|
6,500,000
|
$0.16
|
27 November 2017
|
|
Option
|
1,450,000
|
$0.07
|
1 July 2017
|
|
Option
|
1,450,000
|
$0.10
|
31 October 2018
|
|
Option
|
5,300,000
|
$0.02
|
7 October 2018
|
|
Total
|
30,400,000
|
If all Incentive Options granted as proposed above are exercised, and assuming all existing Options on issue have been exercised, the effect would be to dilute the shareholding of existing Shareholders by 7.7%. The market price of the Company's Shares during the period of the Incentive Options will normally determine whether or not the Participating Directors exercise the Incentive Options. At the time any Incentive Options are exercised