ACN 112 320 251 NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY STATEMENT AND MANAGEMENT INFORMATION CIRCULAR AND PROXY FORM Date of Meeting 19 November 2012 Time of Meeting 12:00 pm Place of Meeting QV1 Conference Centre, Level 2 250 St Georges Terrace PERTH WA 6000 This Notice of Annual General Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting. The 2012 Annual Report may be viewed on the Company s website at www.azumahresources.com.au
AZUMAH RESOURCES LIMITED ACN 112 320 251 NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of Shareholders of Azumah Resources Limited (Company) will be held at QV1, Conference Centre, Level 2, 250 St Georges Terrace, Perth, Western Australia on 19 November 2012 at 12:00 pm (Meeting) for the purpose of transacting the following business in each case, as more particularly described in the Explanatory Statement accompanying this Notice. 2012 Financial Statements To receive the financial statements of the Company for the year ended 30 June 2012, consisting of the annual financial report, the Directors report and the auditor's report. Resolution 1 Adoption of Remuneration Report To consider and, if thought fit, to pass, with or without amendment, the following advisory only resolution: "That, for the purposes of Section 250R(2) of the Corporations Act, and for all other purposes, the Remuneration Report forming part of the Company s 2012 Annual Report be and is hereby adopted." Short Explanation: Section 250R of the Corporations Act requires a listed company to put to Shareholders at each AGM a resolution adopting the report on the remuneration of the Company s Directors, executives and senior managers included in the Company s Annual Report. The above resolution is being proposed to comply with this requirement. The vote on this Resolution is advisory and neither binds the Company s Directors nor the Company. A reasonable opportunity will be provided to Shareholders for discussion of the Remuneration Report at the AGM. Voting Prohibition: The Company will, in accordance with the Corporations Act, disregard any votes cast on Resolution 1 by a member of the key management personnel or a Closely Related Party of such a member. However, the Company will not disregard a vote if it is cast by such a person if: (a) the person is acting as proxy and the proxy form specifies how the proxy is to vote, and the vote is not cast on behalf of a person who is otherwise excluded from voting on this Resolution as described above; or (b) the person is the Chair voting an undirected proxy which expressly authorises the Chair to vote the proxy on a resolution connected with the remuneration of a member of the key management personnel. Resolution 2 Re-election of Geoff Jones as a Director To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That Geoff Jones, having retired as a Director of the Company in accordance with the Company s Constitution and, being eligible, having offered himself for re-election, be re-elected a Director of the Company." Short Explanation: Pursuant to the Company s Constitution, one-third of the Directors of the Company (other than the Managing Director) must retire at each AGM and, being eligible, may offer themselves for re-election the next AGM of the entity. Resolution 3 Re-election of William LeClair as a Director To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That William LeClair, having been appointed since the previous AGM, retires as a Director of the Company in accordance with the Company s Constitution and, being eligible, having offered himself for election, be elected a Director of the Company." Short Explanation: Pursuant to the Company s Constitution, a director appointed to fill a casual vacancy must retire at the next AGM of the entity and, if eligible, may offer himself for election. - 2 -
Resolution 4 Ratification of Allotment and Issue of Shares To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: That, for the purpose of Listing Rule 7.4 of the Listing Rules of the ASX and for all other purposes, the Company approves and ratifies the allotment and issue of 405,000 fully paid ordinary shares, issued on terms and conditions set out in the Explanatory Statement accompanying this Notice, to persons who are not related parties to the Company. Short Explanation: Approval is sought under Listing Rule 7.4 to allow the Company to ratify the allotment and issue of these securities. Please refer to the Explanatory Statement for details. Voting Exclusion: The Company will, in accordance with the Listing Rules of the ASX, disregard any votes cast on Resolution 4 by any person who participated in the issue and any Associate of that person. However, the Company will not disregard a vote cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides. Resolution 5 Ratification of Allotment and Issue of Shares To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: That, for the purpose of Listing Rule 7.4 of the Listing Rules of the ASX and for all other purposes, the Company approves and ratifies the allotment and issue of 1,188,739 fully paid ordinary shares, issued on terms and conditions set out in the Explanatory Statement accompanying this Notice, to persons who are not related parties to the Company. Short Explanation: Approval is sought under Listing Rule 7.4 to allow the Company to ratify the allotment and issue of these securities. Please refer to the Explanatory Statement for details. Voting Exclusion: The Company will, in accordance with the Listing Rules of the ASX, disregard any votes cast on Resolution 5 by any person who participated in the issue and any Associate of that person. However, the Company will not disregard a vote cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides. Resolution 6 Approve Increase in Level of Directors Remuneration To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That in accordance with clause 13.8 of the Company s Constitution and Listing Rule 10.17 of the Listing Rules of ASX, the maximum aggregate remuneration payable to Directors as Directors fees be increased from $200,000 to $500,000 for each financial year commencing 1 July 2012 and to be allocated between the Directors in such proportion as the Board may determine. Short Explanation: The Company s Constitution and the Listing Rules require shareholder approval to increase the maximum Directors fees payable to non-executive Directors in each year. Voting Exclusion: The Company will, in accordance with the Listing Rules, disregard any votes cast on Resolution 6 by any of the Company s Directors and any of their Associates. However, subject to the voting prohibition below, the Company will not disregard a vote cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides. Voting Prohibition: The Company will, in accordance with the Corporations Act, disregard any votes cast on Resolution 6 by a member of the key management personnel or a Closely Related Party of such a member. However, the Company will not disregard a vote if it is cast by such a person if: (a) the person is acting as proxy and the proxy form specifies how the proxy is to vote, and the vote is not cast on behalf of a person who is otherwise excluded from voting on this Resolution as described above; or (b) the person is the Chair voting an undirected proxy which expressly authorises the Chair to vote the proxy on a resolution connected with the remuneration of a member of the key management. - 3 -
Resolution 7 Approval of Grant of Options to Mr William LeClair To consider and, if thought fit to pass, with or without amendment, the following resolution as an ordinary resolution: That, pursuant to and in accordance with Listing Rule 10.11 of the Listing Rules of the ASX and section 208 of the Corporations Act and for all other purposes, the Directors be and are hereby authorised to grant 1,000,000 Options with an exercise price being the greater of $0.26 or 133% of the VWAP of the fully paid ordinary shares of the Company on the five days prior to the date of Shareholder approval and expiring on 30 November 2014 and otherwise on the terms and conditions set out in Annexure A, to Mr William LeClair, or his nominees, for nil consideration. Short Explanation: Approval is sought under Listing Rule 10.11 to authorise the Company to issue these securities. Please refer to the Explanatory Statement for details. If approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1. Voting Exclusion: The Company will, in accordance with the Listing Rules, disregard any votes cast on Resolution 7 by Mr LeClair and any of his Associates. However, subject to the voting prohibition below, the Company will not disregard a vote cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides. Voting Prohibition: The Company will, in accordance with the Corporations Act, disregard any votes cast on Resolution 7 by a member of the key management personnel or a Closely Related Party of such a member. However, the Company will not disregard a vote if it is cast by such a person if: (a) the person is acting as proxy and the proxy form specifies how the proxy is to vote, and the vote is not cast on behalf of a person who is otherwise excluded from voting on this Resolution as described above; or (b) the person is the Chair voting an undirected proxy which expressly authorises the Chair to vote the proxy on a resolution connected with the remuneration of a member of the key management. Resolution 8 Approval of 10% Placement Facility To consider and, if thought fit, to pass, with or without amendment, the following resolution as a special resolution: That, pursuant to and in accordance with Listing Rule 7.1A and for 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 the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions in the Explanatory Statement. Short Explanation: Listing Rule 7.1A enables eligible entities to issue Equity Securities up to 10% of its issued share capital through placements over a 12 month period after the AGM. The 10% Placement Facility is in addition to the Company s 15% placement capacity under Listing Rule 7. Please refer to the Explanatory Statement for details. Voting Exclusion: The Company will, in accordance with the Listing Rules of the ASX, disregard any votes cast on Resolution 8 by any person who may participate in the issue, any person who might obtain a benefit if the Resolution is passed (except a benefit solely in the capacity of a holder of ordinary securities) and any Associate of those persons. However, the Company will not disregard a vote cast by a person as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or cast by the person chairing the meeting as a proxy for a person who is entitled to vote, in accordance with the directions on the proxy form to vote as the proxy decides. Resolution 9 Share Placement Facility To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: That, for the purposes of Listing Rule 7.1 of the Listing Rules of the ASX and for all other purposes, the Directors be authorised to issue and allot up to 80,000,000 Shares in the capital of the Company at an issue price of not less than 80% of the average market price of the Company s Shares (calculated over the 5 days on which sales of shares were recorded before the day on which the issue is made), with such Shares to be issued to such persons as the Directors in their absolute discretion may determine and otherwise upon the terms set out in the Notice and Explanatory Statement. Short Explanation: Approval is sought under Listing Rule 7.1 to allow the Company to allot and issue up to 80,000,000 Shares at an issue price of not less than 80% of the average market price of the Company s Shares. Any Shares issued in accordance with Resolution 9 will be issued and allotted within 3 months from the date of the AGM (or such later date as approved by ASX). Please refer to the Explanatory Statement for details. - 4 -
Voting Exclusion: The Company will, in accordance with the Listing Rules of the ASX disregard any votes cast on Resolution 9 by any person who may participate in the proposed issue and a person who might obtain a benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the resolution is passed, and any of their Associates. However, the Company will not disregard a vote if it is cast by a person as proxy for a person who is entitled to vote, in accordance with the directions on the proxy form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote, in accordance with a direction on the proxy form to vote as the proxy decides. Other Business To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act. - 5 -
DEFINITIONS For the purpose of Resolutions 1-9 and the Explanatory Statement accompanying this Notice, the following definitions apply: "10% Placement Facility" has the meaning given in Section 8.1; "10% Placement Period" has the meaning given in Section 8.2; "AGM" means an annual general meeting; "Annual Report" means the Directors report, the annual financial report and auditors report in respect of the financial year ended 30 June 2012; "Associate" has the same meaning as defined in section 11 and section 13 to 17 of the Corporations Act; "ASX" means ASX Limited ABN 98 008 624 691 and, where the context permits, the Australian Securities Exchange operated by ASX Limited; "Board" means the board of Directors; "Closely Related Party" has the same meaning as defined in section 9 of the Corporations Act; "Company" means Azumah Resources Limited ABN 72 112 320 251; "Constitution" means the Company's constitution, as amended from time to time; "Corporations Act" means Corporations Act 2001 (Cth); "Director" means a director of the Company; "Equity Securities" has the same meaning as in the Listing Rules; "Explanatory Statement" means the explanatory statement accompanying this Notice; "Listing Rules" means the Listing Rules of the ASX; "Meeting" has the meaning in the introductory paragraph of the Notice; "Notice" means this Notice of annual general meeting; "Option" means an option to acquire a Share in the Company; "Performance Rights" means a right to acquire a Share in the Company; "Project Finance" means the raising of funds, either debt, equity, non-conventional facilities or a combination thereof, to the value of the capital cost of construction, as estimated by the feasibility study, to finance the acquisition and construction of the plant, equipment and infrastructure required to establish the Company s first gold production operation; "Proxy Form" means the proxy form attached to this Notice; "Remuneration Report" means the remuneration report of the Company outlined in the Annual Report; "Resolution" means a resolution contained in this Notice; "Share" means a fully paid ordinary share in the capital of the Company; "Shareholder" means the holder of a Share; "Trading Day" means a day determined by ASX to be a trading day in accordance with the Listing Rules; "TSX" means the Toronto Stock Exchange; and "WST" means Australian Western Standard Time. Capitalised terms referred to in this Notice are defined in the Explanatory Statement. Shareholders are referred to the Explanatory Statement and Management Information Circular for more information with respect to these matters to be considered at the Meeting. - 6 -
PROXIES A Proxy Form is attached to the Notice. This is to be used by Shareholders if they wish to appoint a representative (a proxy ) to vote in their place. All Shareholders are invited and encouraged to attend the Meeting or, if they are unable to attend in person, sign and return the Proxy Form to the Company. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person. If you are a registered Shareholder of the Company and are unable to attend the Meeting in person, please date and execute the accompanying Proxy Form and return it in accordance with its instructions and in accordance with the following: 1. in respect of Shareholders registered on the Company s Australian share register, prior to 12:00 pm. WST on 17 November 2012 by: (iii) facsimile to the Company at (08) 9481 4417 (International +61 8 9481 4477) or to Security Transfer Registrars Pty Ltd at (08) 9315 2233 (International: +61 8 9315 2233); or delivery to the registered office of the Company at Ground Floor, 20 Kings Park Road, West Perth, Western Australia 6005 or Security Transfer Registrars Pty Ltd, 770 Canning Highway, Applecross Western Australia 6153; or mail to the Company at PO Box 1153, West Perth, Western Australia 6872 or Security Transfer Registrars Pty Ltd, PO Box 535, Applecross, Western Australia 6953. 2. in respect of Shareholders registered on the Company s Canadian register, not later than 48 hours prior to the Meeting, or any adjournment thereof (excluding Saturdays, Sundays and public holidays) by mail to Equity Financial Trust Company, at 200 University Avenue, Suite 400, Toronto, Ontario M5H 4H1 or by facsimile at +416 361 0470. If you are a beneficial Shareholder and receive these materials through your broker or through another intermediary, please complete and return the form of proxy or voting instruction form in accordance with the instructions provided to you by your broker or by the other intermediary. ENTITLEMENT TO VOTE For the purposes of regulation 7.11.37 of the Corporations Regulations 2001, the Company determines that members holding ordinary Shares at 5:00 pm Perth time on 18 November 2012 will be entitled to attend and vote at the AGM. CORPORATIONS A corporation may elect to appoint a representative in accordance with the Corporations Act, in which case the Company will require written proof of the representative's appointment, which must be lodged with, or presented to the Company, before the Meeting. REVOCATION OF PROXIES A Shareholder executing and delivering a proxy has the power to revoke it in accordance with the provisions of the Corporations Act, which provides that every proxy may be revoked by an instrument in writing executed by the Shareholder or by his or her attorney authorised in writing and delivered either to the registered office of the Company at any time up to and including the last business day preceding the day of the Meeting, or any adjournment thereof at which the proxy is to be used, or to the Chairman of the Meeting on the day of the Meeting or any adjournment thereof, or in any other manner permitted by law. VOTING OF PROXIES The Proxy Form accompanying this Explanatory Statement and Management Information Circular confers discretionary authority upon the proxy with respect to any amendments or variations to the matters identified in the Notice of Meeting and any other matters that may properly come before the Meeting. At the time of printing this Management Information Circular, management knows of no such amendment, variation or other matter. Shareholders must mark the boxes directing its proxy how to vote. If no voting instructions are indicated on the appointment of proxy form, the proxy will be voted as recommended by management or as the proxyholder sees fit (in the latter case, if management is not appointed as proxy). - 7 -
By Order of the Board of Directors Dennis Wilkins Company Secretary Date: 24 September 2012-8 -
AZUMAH RESOURCES LIMITED ABN 72 112 320 251 EXPLANATORY STATEMENT AND MANAGEMENT INFORMATION CIRCULAR This Explanatory Statement and Management Information Circular is furnished in connection with the solicitation proxies by the Company for use at the AGM of Shareholders to be held on 19 November 2012 at 12:00 pm WST and any adjournment thereof, at the place and for the purpose set forth in the accompanying Notice attached hereto. EXPLANATORY STATEMENT This Explanatory Statement is intended to provide Shareholders with sufficient information to assess the merits of the matters set forth in the Notice for approval at the Meeting. The Directors recommend that Shareholders read this Explanatory Statement in full before making any decision regarding the matter set forth in the Notice. Financial and Other Reports As required by section 317 of the Corporations Act, the financial statements for the year ended 30 June 2012 and the accompanying Directors report, Directors declaration and auditor s report will be laid before the Meeting. Neither the Corporations Act, nor the Company s Constitution requires a vote on the reports. However, the Shareholders will have an opportunity to ask questions about the report at the AGM. Resolution 1 Remuneration Report 1.1 General As required by the Corporations Act, the Board is presenting the Remuneration Report to Shareholders for consideration and adoption by a non binding vote. The Remuneration Report contains: information about the Board s policy for determining the nature and amount of remuneration of the Directors and senior executives of the Company; a description of the relationship between the Company s remuneration policy and the Company s performance; a summary of performance conditions for each of the Directors and senior executives, including a summary of why they were chosen and how performance is measured against them; and remuneration details for each Director and for each of the Company s specified executives. The Remuneration Report, which is part of the 2012 Annual Report, has been sent to Shareholders who have made an election to receive the Annual Report. Copies of the 2012 Annual Report are available by contacting the Company s share register or visiting the Company s web site www.azumahresources.com.au. 1.2 Voting on the Remuneration Report In accordance with the Corporations Act, a vote on Resolution 1 must not be cast (in any capacity) by or on behalf of either the following persons: (a) (b) a member of the key management personnel, details of whose remuneration are included in the Remuneration Report; or a Closely Related Party of such a member. However, a person described above may cast a vote on Resolution 1 as a proxy if the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above and either: (c) (d) the person does so as a proxy appointed in writing that directs how the proxy is to vote on Resolution 1; or the person is the Chairman and the appointment of the Chairman as proxy: does not specify the way the proxy is to vote on Resolution 1; and expressly authorises the Chairman to exercise the proxy even if Resolution 1 is connected directly or indirectly with the remuneration of the key management personnel. - 9 -
Resolution 2 Re-election of Geoff Jones as a Director 2.1 General Mr Geoff Jones was appointed as a Non-Executive Director on 20 October 2009. In accordance with ASX Listing Rule 14.4, no director of the Company may hold office (without re-election) past the third AGM following the director s appointment or 3 years, whichever period is longer. The Company s Constitution also requires that one third of the Company s directors must retire at each AGM. Accordingly, Mr Geoff Jones will retire by rotation and, being eligible, offers himself for re-election. Resolution 2 is an ordinary resolution, requiring it to be passed by a simple majority of votes cast by the Shareholders entitled to vote on it. 2.2 Director s Biography Mr Jones is an engineer with over 25 years hands-on experience in the evaluation, design, development, commissioning and operation of major resource projects in Australia and overseas, especially in Central and West Africa, including Ghana. He was Group Project Engineer for ASX-listed Resolute Limited with responsibility for the successful development of its Obotan Gold Project in Ghana, Golden Pride Gold Project in Tanzania, as well as the Chalice and Bullabulling Gold Projects in Western Australia. For all of these projects, his involvement ranged from feasibility study preparation through to development, commissioning and operations. 2.3 Directors Recommendation All the Directors except Mr Jones recommend that Shareholders vote in favour of Resolution 2. Resolution 3 Re-election of William LeClair as a Director 3.1 General Mr William (Bill) LeClair was appointed as a Non-Executive Director on 14 May 2012. The Company s Constitution requires that any director appointed during the year to fill a casual vacancy automatically retires at the next AGM, but is eligible for re-election at that meeting. Resolution 3 is an ordinary resolution, requiring it to be passed by a simple majority of votes cast by the Shareholders entitled to vote on it. 3.2 Director s Biography Mr LeClair has many years of financial and mining experience and an extensive background in North American markets as a past director of several TSX listed companies. He was President and CEO of TSX-listed Crew Gold Corporation, prior to it being taken over in 2010. Crew Gold employed up to 3,000 staff in operating mines and exploration projects in multiple jurisdictions, including West Africa where it operated the 250,000-ounce per year LEFA gold mine in Guinea. 3.3 Directors Recommendation All the Directors except Mr LeClair recommend that Shareholders vote in favour of Resolution 3. Resolution 4 Ratification of Allotment and Issue of Shares 4.1 General Resolution 4 of the Notice proposes the ratification of the allotment and issue of 405,000 Shares on 24 February 2012. ASX Listing Rule 7.4 permits the ratification of previous issues of shares made without prior shareholder approval provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such a ratification is to restore a company s maximum discretionary power to issue further shares up to 15% of the issued capital of the company without requiring shareholder approval. Resolution 4 is required to be approved in accordance with ASX Listing Rule 7.4 to ratify previous issues of Shares. The Company confirms that the issue and allotment of the Shares the subject of Resolution 4 did not breach ASX Listing Rule 7.1. - 10 -
4.2 Listing Rules Notice Requirements Listing Rule 7.5 contains certain requirements as to the contents of a notice sent to Shareholders for the purposes of Listing Rule 7.4 and the following information is included in this Explanatory Statement for that purpose: (a) (b) (c) (d) (e) (f) 405,000 Shares were allotted and issued by the Company; The issue price per share was C$0.40; The shares rank equally with the existing shares; The shares were allotted to clients of Casimir Capital Ltd and RBC Dominion Securities Inc; The shares were issued pursuant to a short form prospectus in Canada to raise funds to accelerate exploration of the Company s Wa Gold Project, to complete the feasibility study, to advance permitting other preconstruction expenditures relating to the Wa Gold Project and for general corporate and working capital purposes; and A voting exclusion statement is included in the Notice. 4.3 Directors Recommendation The Directors of the Company believe that Resolution 4 is in the best interests of the Company and unanimously recommend that Shareholders vote in favour of this Resolution. Resolution 5 Ratification of Allotment and Issue of Shares 5.1 General Resolution 5 of the Notice proposes the ratification of the allotment and issue of 1,188,739 Shares on 2 March 2012. ASX Listing Rule 7.4 permits the ratification of previous issues of shares made without prior shareholder approval provided the issue did not breach the 15% threshold set by Listing Rule 7.1. The effect of such a ratification is to restore a company s maximum discretionary power to issue further shares up to 15% of the issued capital of the company without requiring shareholder approval. Resolution 5 is required to be approved in accordance with ASX Listing Rule 7.4 to ratify previous issues of Shares. The Company confirms that the issue and allotment of the Shares the subject of Resolution 5 did not breach ASX Listing Rule 7.1. 5.2 Listing Rules Notice Requirements Listing Rule 7.5 contains certain requirements as to the contents of a notice sent to Shareholders for the purposes of Listing Rule 7.4 and the following information is included in this Explanatory Statement for that purpose: (a) 1,188,739 Shares were allotted and issued by the Company; (b) The issue price per share was $0.33; (c) (d) (e) (f) The shares rank equally with the existing shares; The shares were allotted to HSBC Custody Nominees (Australia) Limited; The shares were issued to provide funds for additional working capital purposes; and A voting exclusion statement is included in the Notice. 5.3 Directors Recommendation The Directors of the Company believe that Resolution 5 is in the best interests of the Company and unanimously recommend that Shareholders vote in favour of this Resolution. Resolution 6 Approve Increase in Level of Directors Remuneration 6.1 General Listing Rule 10.17 and clause 13.8 of the Company s Constitution provide that the maximum aggregate amount of the remuneration payable as Directors fees to non-executive Directors is to be determined by Shareholders in a general meeting by ordinary resolution. Executive Directors receive salary and other remuneration in accordance with the terms of their employment agreements, but do not receive Directors fees. The remuneration paid by the Company to the executive Directors is not included in the maximum aggregate amount of Directors fees for the purpose of this Resolution. - 11 -
This Resolution seeks Shareholder approval to increase the maximum Directors fees payable to non-executive Directors in each financial year from 1 July 2012 from $200,000 to $500,000 in aggregate to provide the Board with flexibility to appoint further non-executive independent Directors to enhance the capability of the Board and deal with the various interests of the Company now and in the future. The last determination of maximum Directors fees was in 2005, when the maximum was set at $200,000. The Directors do not intend to necessarily utilise the entire maximum sum of $500,000 in the first instance. By having an increase in the maximum amount that can be paid to Directors, the Directors have the flexibility to seek new independent non-executive Directors to appoint to the Board as and when appropriate. 6.2 Voting on the Resolution In accordance with section 250BD of the Corporations Act, a vote on Resolution 6 must not be cast (in any capacity) by or on behalf of either the following persons: (a) (b) a member of the key management personnel; or a Closely Related Party of such a member. However, a person described above may cast a vote on Resolution 6 as a proxy if the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above and either: (c) (d) the person does so as a proxy appointed in writing that directs how the proxy is to vote on Resolution 6; or the person is the Chairman and the appointment of the Chairman as proxy: does not specify the way the proxy is to vote on Resolution 6; and expressly authorises the Chairman to exercise the proxy even if Resolution 6 is connected directly or indirectly with the remuneration of the key management personnel. 6.3 Directors Recommendation As the non-executive Directors have an interest in the outcome of this Resolution, the Board makes no recommendation as to how Shareholders should vote in relation to Resolution 6. Resolution 7 Approval of Grant of Options to Mr William LeClair 7.1 General The Company proposes to grant a total of 1,000,000 Options to Mr William LeClair, or his nominees, for nil consideration as follows: Name Number of Options Exercise Price Expiry Date Vesting William LeClair 1,000,000 the greater of $0.26 or the 133% of the VWAP of the fully paid ordinary shares 5 days prior to Shareholder approval 30 November 2014 After Project Finance has been obtained The full terms of the Options are set out in Annexure A to this Explanatory Statement. Directors of public companies face considerable ongoing responsibilities and challenges in their roles within the Company. The grant of these Options will provide a long term incentive for outstanding performance and promote opportunities for Share ownership in the Company. The Options will be granted as soon as possible following the Meeting and will vest if Project Finance is obtained by the Company. Project Finance is defined as the raising of funds, either debt, equity or non-conventional facilities or a combination thereof, to the value of the capital cost of construction, as estimated by the feasibility study, to finance the acquisition and construction of the plant, equipment and infrastructure required to establish the Company s first gold production operation. Assuming the Options were issued on the date of this Notice, the exercise price would be $0.26. On that basis, in the event all the Options are exercised, the Director or his nominees will need to pay a total of $260,000 to the Company. - 12 -
Resolution 7 is required to be approved in accordance with ASX Listing Rule 10.11 to issue securities to a Director, being a related party of the Company. If approval is given under Listing Rule 10.11, approval is not required under Listing Rule 7.1. 7.2 Chapter 2E of the Corporations Act Related Party Transactions The issue of Options to Mr LeClair constitutes a grant of a financial benefit to a related party for the purposes of Chapter 2E of the Corporations Act. Chapter 2E of the Corporations Act - Related Party Benefits Chapter 2E of the Corporations Act prohibits the Company from giving a financial benefit to a related party of the Company unless either: a) the giving of the financial benefit falls within one of the nominated exceptions to the relevant provisions of the Corporations Act; or b) prior Shareholder approval is obtained to the giving of the financial benefit. For the purposes of Chapter 2E, Mr LeClair is a related party of the Company by virtue of section 228(2) of the Corporations Act and the granting of Options would constitute the giving of a financial benefit. As none of the exceptions set out in the Corporations Act apply, the grant of Options to Mr LeClair requires Shareholder approval. Information for Shareholders in respect of Chapter 2E For the purpose of obtaining Shareholder approval, and in accordance with the requirements of Chapter 2E of the Corporations Act, and in particular section 219, the following information is provided to Shareholders to allow them to assess whether or not to approve the grant of the Options to a Director under Resolution 7. Identity of the related party The related party of the Company to which a financial benefit may be given under Resolution 7 is Mr William LeClair, a Director. Nature of, reasons for and basis for the financial benefit The financial benefits to be provided to Mr LeClair under Resolution 7 are Options. A copy of the terms and conditions of the Options is annexed as Annexure A. Mr LeClair will not be required to make any payment for the grant of the Options. The maximum number of Options that could vest, and hence be exercised by Mr LeClair under Resolution 7, are set out in Table 1. The Options form part of Mr LeClair s incentive for continuing and future efforts. Options are considered to be the appropriate incentive at the Company s current size and stage of development, being an exploration company with limited cash reserves. If Mr LeClair is to derive any value from the Options, the Company must achieve the specified performance hurdle, being obtaining Project Finance. As the Company has not yet achieved the performance hurdle the Options represent an incentive to Mr LeClair to achieve this significant milestone in the Company s development, which would result in an increase in Shareholder value. The Company reviewed the practices of other exploration companies of a similar size and stage of development as well as the Options already on issue to Directors to determine the number of Options required to be issued to attract and retain senior directors. Based on that review, the Board determined the number of Options proposed in Resolution 7 to be appropriate. Directors recommendations to members and reasons Mr Stone, Mr Atkins and Mr Jones (who have no interest in the outcome of Resolution 7) recommend that Shareholders vote in favour of Resolution 7 as they believe the granting of these Options to Mr William LeClair will align his rewards with the long-term creation of value for Shareholders. Mr William LeClair has a material personal interest in the outcome of Resolution 7 and has abstained from any deliberation and voting or making a recommendation in relation to Resolution 7. Directors interests in the outcome of the Resolutions If Resolution 7 is passed, Mr William LeClair will become entitled to the Options as set out in Table 1 together with the rights and entitlements associated with being a holder of such Options. None of the other Directors (other than Mr William LeClair) have a relevant interest in the outcome of Resolution 7. - 13 -
Any other information that is reasonably required by members to make a decision and that is known to the Company or any of its officers. (a) The proposed Resolution would have the effect of giving power to the Directors to grant 1,000,000 Options to Mr LeClair or his nominees; (b) The exercise of the Options is subject to the terms and conditions as set out in Annexure A to this Explanatory Statement and as otherwise mentioned above; (c) The Directors, in conjunction with the Company's advisers have provided an indicative value to the options by reference to the Black-Scholes valuation method, based upon the assumptions outlined in Table 3. The valuation cannot be finalised until the grant date of the Options; (d) The total value of the Options to be issued is outlined in Table 1. If Options granted to Mr LeClair or his nominees are exercised, the effect would be to dilute the Shareholdings of the existing Shareholders; (e) As at the date of this Notice, the issued capital of the Company comprised 333,714,096 Shares. If all Options granted as proposed above are exercised, assuming all existing Options on issue have been exercised and assuming no other Share issues proceed, the effect would be to dilute the Shareholding of existing Shareholders as per the following table: - 14 - Existing Securities Shares, Options and Performance Rights 346,714,096 Resolution 7 Options to be granted 1,000,000 New Total 347,714,096 Dilutionary Effect 0.29% (f) Mr LeClair s current interest in securities of the Company are detailed in Table 2. (g) The market price of the Company's Shares during the term of the Options will normally determine whether or not the Option holder exercises the Options. At the time any Options are exercised and Shares are issued pursuant to the exercise of the Options, the Company's Shares may be trading at a price which is higher than the exercise price of the Options; (h) The Options will not be quoted on ASX and as such have no actual market value. The fully paid ordinary Shares of the Company have been traded on ASX since January 2006. In the twelve months prior to the date of this notice the Shares have traded in the range of $0.11 to $0.515. The most recent closing price prior to the date of this Notice was $0.125. The Options are capable of being converted to Shares by payment of the exercise price; (j) Mr LeClair currently receives director fees of $60,000 plus superannuation; Under the Australian equivalent of IFRS, the Company is required to expense the value of the Options in its statement of financial performance for the current financial year. Other than as disclosed in this Explanatory Statement, the Directors do not consider that from an economic and commercial point of view, there are any costs or detriments, including opportunity costs or taxation consequences for the Company or benefits foregone by the Company in granting the Options to Directors or their nominee pursuant to Resolution 7; and (k) Neither the Directors nor the Company are aware of any other information that would be reasonably required by Shareholders to make a decision in relation to the financial benefits contemplated by this Resolution. 7.3 Listing Rule Notice Requirements Listing Rule 10.13 contains certain requirements as to the contents of a notice sent to Shareholders for the purposes of Listing Rule 10.11 and the following information is included in this Explanatory Statement for that purpose: (a) the Options will be granted to Mr LeClair, or his nominees, as noted above; (b) the maximum number of Options to be granted pursuant to Resolution 7 is 1,000,000; (c) (d) (e) (f) the Options will be allotted and granted on a date which will be no later than 1 month after the date of the AGM; the exercise price and other terms and conditions of the Options are set out in Annexure A to this Explanatory Statement; the Options will be granted for no consideration and accordingly no funds will be raised by the grant of the Options; and a voting exclusion statement is included in this Notice.
Table 1 - Details of options to be issued to Related Parties Name Relationship Number of options William LeClair Director 1,000,000 the greater of $0.26 or 133% of the VWAP of the fully paid ordinary Shares 5 days prior to Shareholder approval Exercise price Expiry date Vesting 30 November 2014 Once Project Finance has been obtained Value as determined by Black-Scholes valuation $26,239 Table 2 - Details of current holdings of securities in the Company Director Share Holding Option Holding William LeClair Nil Nil Table 3 - Option Valuation details Details Input Share price $.125 Exercise Price $0.26* Risk Free Rate (RBA Cash Rate) 2.71% Volatility (Annualised) 70% Start Date 19 November 2012 Expiry Date 30 November 2014 Value per Option $0.0262 * Based on the greater of $0.26 and the 5 day VWAP of the fully paid ordinary shares 5 days prior to the date of this Notice. 7.4 Voting on the Resolution In accordance with the Corporations Act, a vote on Resolution 7 must not be cast (in any capacity) by or on behalf of either the following persons: (e) (f) a member of the key management personnel; or a Closely Related Party of such a member. However, a person described above may cast a vote on Resolution 7 as a proxy if the vote is not cast on behalf of a person described in subparagraphs (a) or (b) above and either: (g) (h) the person does so as a proxy appointed in writing that directs how the proxy is to vote on Resolution 7; or the person is the Chairman and the appointment of the Chairman as proxy: (iii) (iv) does not specify the way the proxy is to vote on Resolution 7; and expressly authorises the Chairman to exercise the proxy even if Resolution 7 is connected directly or indirectly with the remuneration of the key management personnel. Resolution 8 Approval of 10% Placement Facility 8.1 General Listing Rule 7.1A enables eligible entities to issue Equity Securities up to 10% of its issued share capital through placements over a 12 month period after the AGM (10% Placement Facility). The 10% Placement Facility is in addition to the Company s 15% placement capacity under Listing Rule 7.1. An eligible entity for the purposes of Listing Rule 7.1A is an entity that is not included in the S&P/ASX 300 Index and has a market capitalisation of $300 million or less. The Company is an eligible entity. The Company is now seeking Shareholder approval by way of a special resolution to have the ability to issue Equity Securities under the 10% Placement Facility. - 15 -
The exact number of Equity Securities to be issued under the 10% Placement Facility will be determined in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to Section 8.2(c) below). As previously disclosed to ASX, the Company continues to advance the exploration of the Company s Wa Gold Project, complete additional technical studies and advance permitting and other pre-construction activities relating to the development of the Wa Gold Project. The Company may use the 10% Placement Facility to advance these goals. The Directors of the Company believe that Resolution 8 is in the best interests of the Company and unanimously recommend that Shareholders vote in favour of this Resolution. 8.2 Description of Listing Rule 7.1A (a) (b) (c) Shareholder approval The ability to issue Equity Securities under the 10% Placement Facility is subject to shareholder approval by way of a special resolution at an AGM. Equity Securities Any Equity Securities issued under the 10% Placement Facility must be in the same class as an existing quoted class of Equity Securities of the Company. The Company, as at the date of the Notice, has on issue 7 classes of Equity Securities, being listed Shares, four classes of unlisted Options and two classes of unlisted Performance Rights. Formula for calculating 10% Placement Facility Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an AGM may issue or agree to issue, during the 12 month period after the date of the AGM, a number of Equity Securities calculated in accordance with the following formula: A (A x D) E is the number of shares on issue 12 months before the date of issue or agreement: (iii) (iv) D is 10%; plus the number of fully paid shares issued in the 12 months under an exception in Listing Rule 7.2; plus the number of partly paid shares that became fully paid in the 12 months; plus the number of fully paid shares issued in the 12 months with approval of holders of shares under Listing Rule 7.1 and 7.4. This does not include an issue of fully paid shares under the entity s 15% placement capacity without shareholder approval; less the number of fully paid shares cancelled in the 12 months. Note that A has the same meaning in Listing Rule 7.1 when calculating an entity s 15% placement capacity. E is the number of Equity Securities issued or agreed to be issued under Listing Rule 7.1A.2 in the 12 months before the date of the issue or agreement to issue that are not issued with the approval of shareholders under Listing Rule 7.1 or 7.4. (d) Listing Rule 7.1 and Listing Rule 7.1A The ability of an entity to issue Equity Securities under Listing Rule 7.1A is in addition to the entity s 15% placement capacity under Listing Rule 7.1. At the date of this Notice, the Company has on issue 333,714,096 Shares. Assuming Resolutions 4 and 5 are passed, the Company has a capacity to issue: 50,057,114 Equity Securities under Listing Rule 7.1; and subject to Shareholder approval being sought under Resolution 8, 33,371,409 Equity Securities under Listing Rule 7.1A. The actual number of Equity Securities that the Company will have capacity to issue under Listing Rule 7.1A will be calculated at the date of issue of the Equity Securities in accordance with the formula prescribed in Listing Rule 7.1A.2 (refer to Section 8.2(c) above). - 16 -
(e) (f) Minimum Issue Price The issue price of Equity Securities issued under Listing Rule 7.1A must be not less than 75% of the VWAP of Equity Securities in the same class calculated over the 15 Trading Days immediately before: the date on which the price at which the Equity Securities are to be issued is agreed; or if the Equity Securities are not issued within 5 Trading Days of the date in paragraph above, the date on which the Equity Securities are issued. 10% Placement Period Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the AGM at which the approval is obtained and expires on the earlier to occur of: the date that is 12 months after the date of the AGM at which the approval is obtained; or the date of the approval by shareholders of a transaction under Listing Rules 11.1.2 (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking), or such longer period if allowed by ASX (10% Placement Period). 8.3 Listing Rule 7.1A The effect of Resolution 8 will be to allow the Directors to issue the Equity Securities under Listing Rule 7.1A during the 10% Placement Period without using the Company s 15% placement capacity under Listing Rule 7.1. Resolution 8 is a special resolution and therefore requires approval of 75% of the votes cast by Shareholders present and eligible to vote (in person, by proxy, by attorney or, in the case of a corporate Shareholder, by a corporate representative). 8.4 Specific information required by Listing Rule 7.3A Pursuant to and in accordance with Listing Rule 7.3A, information is provided in relation to the approval of the 10% Placement Facility as follows: (a) The Equity Securities will be issued at an issue price of not less than 75% of the VWAP for the Company s Equity Securities over the 15 Trading Days immediately before: the date on which the price at which the Equity Securities are to be issued is agreed; or if the Equity Securities are not issued within 5 Trading Days of the date in paragraph above, the date on which the Equity Securities are issued. (b) If Resolution 8 is approved by Shareholders and the Company issues Equity Securities under the 10% Placement Facility, the existing Shareholders voting power in the Company will be diluted as shown in the below table. There is a risk that: the market price for the Company s Equity Securities may be significantly lower on the date of the issue of the Equity Securities than on the date of the Meeting; and the Equity Securities may be issued at a price that is at a discount to the market price for the Company s Equity Securities on the issue date or the Equity Securities are issued as part of consideration for the acquisition of a new asset, which may have an effect on the amount of funds raised by the issue of the Equity Securities. The table below shows the dilution of existing Shareholders on the basis of the current market price of Shares and the current number of ordinary securities for variable A calculated in accordance with the formula in Listing Rule 7.1A.2 as at the date of this Notice. - 17 -