GOLDEN RIM RESOURCES LIMITED ABN

Transcription

1 GOLDEN RIM RESOURCES LIMITED ABN NOTICE OF ANNUAL GENERAL MEETING AND EXPLANATORY MEMORANDUM TO SHAREHOLDERS Date of Meeting 22 November 2010 Time of Meeting am (WST) Place of Meeting Rydges Hotel Perth Corner of King Street and Hay Street Perth WA 6000 Australia A Proxy Form is enclosed Please read this Notice and Explanatory Memorandum carefully. If you are unable to attend the General Meeting please complete and return the enclosed Proxy Form in accordance with the specified directions.

2 GOLDEN RIM RESOURCES LIMITED ABN NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of Shareholders of Golden Rim Resources Limited ABN (Company) will be held at the Rydges Hotel Perth, Corner of King Street and Hay Street, Perth WA 6000, Australia on Monday, 22 November 2010 at 10.00am WST for the purpose of transacting the following business referred to in this Notice of Annual General Meeting. AGENDA ITEMS OF BUSINESS Financial Reports To receive and consider the financial statements of the Company for the year ended 30 June 2010, together with the Directors Report and the Auditor's Report as set out in the Annual Report. 1. Resolution 1 Non Binding Resolution to adopt Remuneration Report To consider and, if thought fit, pass the following as an ordinary resolution: "That the Remuneration Report as set out in the Annual Report for the year ended 30 June 2010 be adopted." Note: The vote on this resolution is advisory only and does not bind the Directors or the Company. 2. Resolution 2 Re-election of Mr Glenister Lamont as a Director To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, Mr Glenister Lamont, who retires in accordance with clause 13.2 of the Constitution and, being eligible for re-election, be re-elected as a Director." 3. Resolution 3 Election of Mr Nadir Alhammadi as a Director To consider and, if thought fit, to pass the following resolution as an ordinary resolution: That Mr Nadir Alhammadi, who ceases to hold office in accordance with clause 13.5 of the Company s Constitution and, being eligible, offers himself for election, be elected a Director of the Company. 4. Resolution 4 Ratification of issue of Shares to Sophisticated Investors 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, the Company ratify the allotment and issue of 40,000,000 Shares (at an issue price of $0.14 each) on 30 September 2010 to Sophisticated Investors on the terms and conditions set out in the Explanatory Memorandum. The Company will disregard any votes cast on Resolution 4 by any person who participated in the issue the subject of Resolution 4 and any person associated with those persons. However, the Company need not disregard a vote if the vote 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. 5. Resolution 5 Ratification of issue of G Class Options 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, the Company ratify the allotment and issue of 1,000,000 G Class Options (each having an exercise price of $0.21 and an expiry date of 10 July 2015) to consultants of the _2

3 Company on the terms and conditions set out in the Explanatory Memorandum (including Annexure A to the Explanatory Memorandum). The Company will disregard any votes cast on Resolution 5 by any person who participated in the issue and any person associated with those persons. However, the Company need not disregard a vote if the vote 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. 6. Resolution 6 Grant of Incentive Options to Mr Rick Crabb or his To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with section 208 of the Corporations Act and Listing Rule and for all other purposes, the Directors be and are hereby authorised to grant and issue up to 3,000,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Share are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015, to Rick Crabb or his nominee, on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)." The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on Resolution 6 by Rick Crabb and his and any associate of Rick Crabb and his. However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of Rick Crabb and his or an associate of Rick Crabb and his. 7. Resolution 7 Grant of Incentive Options to Mr Craig Mackay or his To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with section 208 of the Corporations Act and Listing Rule and for all other purposes, the Directors be and are hereby authorised to grant and issue up to 5,000,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Shares are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015, to Craig Mackay or his nominee, on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)." The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on Resolution 7 by Craig Mackay and his and any associate of Craig Mackay and his. However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of Craig Mackay and his or an associate of Craig Mackay and his. 8. Resolution 8 Grant of Incentive Options to Mr Gilbert Rodgers or his To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with section 208 of the Corporations Act and Listing Rule and for all other purposes, the Directors be and are hereby authorised to grant and issue up to 4,000,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Shares are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015, to Gilbert Rodgers or his nominee, on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)." The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on Resolution 8 by Gilbert Rodgers and his and any associate of Gilbert Rodgers and his. However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of Gilbert Rodgers and his or an associate of Gilbert Rodgers and his _2

4 9. Resolution 9 Grant of Incentive Options to Glenister Lamont or his To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with section 208 of the Corporations Act and Listing Rule and for all other purposes, the Directors be and are hereby authorised to grant and issue up to 1,500,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Shares are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015, to Glenister Lamont or his nominee, on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)." The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on Resolution 9 by Glenister Lamont and his and any associate of Glenister Lamont and his. However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of Glenister Lamont and his or an associate of Glenister Lamont and his. 10. Resolution 10 Grant of Incentive Options to Mr Nadir Alhammadi To consider and, if thought fit, to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with section 208 of the Corporations Act and Listing Rule and for all other purposes, the Directors be and are hereby authorised to grant and issue up to 1,500,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Shares are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015, to Nadir Alhammadi or his nominee, on the terms and conditions set out in the Explanatory Memorandum (including Annexure B to the Explanatory Memorandum)." The Company will in accordance with section 224 of the Corporations Act disregard any votes cast on Resolution 10 by Nadir Alhammadi and his and any associate of Nadir Alhammadi and his. However, the Company need not disregard a vote if: (a) it is cast by a person as a proxy appointed by writing that specifies how the proxy is to vote on the proposed resolution; and (b) it is not cast on behalf of Nadir Alhammadi and his or an associate of Nadir Alhammadi and his. 11. Resolution 11 Employee Share Option Plan To consider and, if thought fit to pass the following resolution as an ordinary resolution: "That, pursuant to and in accordance with Listing Rule 7.2, Exception 9 and for all other purposes, the Company approves the issue of securities under the new employee incentive option scheme for employees and directors known as Golden Rim Resources Limited Employee Share Option Plan, the rules of which are annexed as Annexure C to the Explanatory Memorandum, as an exception to Listing Rule 7.1." The Company will disregard any votes cast on Resolution 11 by a director of the Company and any person associated with those persons. 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 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. 12. Resolution 12 Appointment of Deloitte Touche Tohmatsu as Auditors of the Company To consider and, if thought fit to pass the following resolution as an ordinary resolution: "That for the purposes of section 327B of the Corporations Act and for all other purposes, Deloitte Touche Tohmatsu, having been nominated by a shareholder and consented in writing to act, be appointed auditor of the Company, subject to ASIC consenting to the resignation of Stantons International Pty Ltd." _2

5 OTHER BUSINESS To deal with any other business which may be brought forward in accordance with the Constitution and the Corporations Act. For the purposes of Resolutions 1 12, the following definitions apply: By order of the Board Ms Hayley Butcher Company Secretary Dated: 15 October 2010 "Annual Report" means the annual report of the Company for the year ended 30 June 2010; "ASX" means ASX Limited ABN and, where the context permits, the Australian Securities Exchange operated by ASX Limited; "Company" means Golden Rim Resources Limited ABN ; "Constitution" means the Company's constitution, as amended from time to time; "Corporations Act" means Corporations Act 2001 (Cth); "Explanatory Memorandum" means the explanatory memorandum accompanying this Notice; "Directors" means the Directors of the Company; "Incentive Option" means an option to acquire a Share the terms of which are set out in Annexure B; Listing Rules means the Listing Rules of the ASX; "Notice" means this Notice of Annual General Meeting; "Resolution" means a resolution contained in this Notice; and "Shares" means fully paid ordinary shares in the capital of the Company _2

6 How to vote Shareholders can vote by either: 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 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 attendance recorded. Attorneys should bring with them an original or certified copy of the power of attorney under which they have been authorised to attend and vote at the meeting. 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. The representative should bring to the meeting evidence of his or her appointment, including any authority under which it is signed. Voting by proxy 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. 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). A proxy need not be a shareholder. The proxy can be either an individual or a body corporate. If a proxy is not directed how to vote on an item of business, the proxy may vote, or abstain from voting, as they think fit. 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. 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. Shareholders who return their proxy forms with a direction how to vote but do not nominate the identity of their proxy will be taken to have appointed the Chairman 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 Chairman of the meeting will act in place of the nominated proxy and vote in accordance with any instructions. Proxy appointments in favour of the Chairman 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. To be effective, proxies must be lodged 48 hours prior to the commencement of the Annual General Meeting. Proxies lodged after this time will be invalid. Proxies may be lodged using any of the following methods: - by returning a completed proxy form in person or by post to: Golden Rim Resources Limited Level 2 10 Outram Street West Perth WA 6005 Australia - by faxing a completed proxy form to The proxy form must be signed by the shareholder or the shareholder's attorney. Proxies given by corporations must be executed in accordance with the Corporations Act. Where the appointment of a proxy is signed by the appointer's attorney, a certified copy of the power of attorney, or the power itself, must be received by the Company at the above address, or by facsimile48 hours prior to the commencement of the Annual General Meeting. If facsimile transmission is used, the power of attorney must be certified. Shareholders who are entitled to vote In accordance with Regulations and of the Corporations Regulations 2001, 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 48 hours prior to the Annual General Meeting _2

7 GOLDEN RIM RESOURCES LIMITED ABN 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 Golden Rim Resources Limited (Company). Details of the definitions and abbreviations used throughout this Explanatory Memorandum are set out in the Glossary. FINANCIAL REPORTS The first item of the Notice of Annual General Meeting deals with the presentation of the consolidated annual financial report of the Company for the financial year ended 30 June 2010 together with the Directors' declaration and report in relation to that financial year and the auditor's report on those financial statements. 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 business, operations and management of the Company. The Chairman will also provide shareholders a reasonable opportunity to ask the auditor questions relevant to: the conduct of the audit; the preparation and content of the independent audit report; the accounting policies adopted by the Company in relation to the preparation of accounts; and the independence of the auditor in relation to the conduct of the audit. RESOLUTION 1 ADOPTION OF REMUNERATION REPORT In accordance with section 250R(2) of the Corporations Act the Company is required to present to its shareholders the Remuneration Report as disclosed in the Company's 2010 Annual Report. The vote on the Resolution is advisory only and does not bind the Directors or the Company. The Remuneration Report is set out in the Company s Annual Report and is also available on the Company s website ( 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 share based compensation. RESOLUTION 2 RE-ELECTION OF MR GLENISTER LAMONT AS A DIRECTOR Pursuant to clause 13.2 of the Company's Constitution, Mr Glenister Lamont, being a Director, retires by way of rotation and, being eligible, offers himself for re-election as a Director. Glenister Lamont has an Honours degree in Mining Engineering and a Masters of Business Administration from IMD, Switzerland. Mr Lamont is a Fellow of the Financial Services Institute of Australasia, a Fellow of the Australian Institute of Company Directors and a Member of the Australian Institute of Mining and Metallurgy. Mr Lamont has worked as an engineer and manager in gold, base metal and _2 7

8 coal mines. Previously, as General Manager for Ashton Mining, he led strategic planning and commercial implementation of business development. Before that, as an Executive Director at UBS, he undertook financial, technical and strategic evaluation of companies and participated in many corporate transactions. Mr Lamont is a professional nonexecutive director and consultant on investor relations. He currently is a Board member of Strategic Energy Resources Ltd. Mr Lamont has been a director of Golden Rim since 17 July RESOLUTION 3 - ELECTION OF MR NADIR ALHAMMADI AS A DIRECTOR Resolution 3 seeks approval for the election of Mr Nadir Alhammadi as a Director with effect from the end of the Meeting. Clause 13.5 of the Constitution provides that the Directors may at any time appoint a person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors, but so that the total number of Directors does not at any time exceed the maximum number specified by the Constitution. Any Director so appointed holds office only until the next following annual general meeting and is then eligible for election but shall not be taken into account in determining the Directors who are to retire by rotation (if any) at that meeting. Mr Nadir Alhammadi retires from office in accordance with the requirements of clause 13.5 of the Constitution and submits himself for election. Mr Alhammadi is a United Arab Emirates Citizen and is currently the managing director of Abu Dhabi Aviation Co, a public company listed on the Abu Dhabi Securities Exchange. He graduated from Embry Riddle Aeronautical University in Florida, USA in 1990 and holds a Bachelor of Science Degree in Aviation Electronics (Avionics). Mr Alhammadi was awarded a Post Graduate in Engineering Business Management from Warwick University, London in 2002 and participated in The Advanced Management Programme held at INSEAD in Fontainebleau, France in March In 2007, Nadir was appointed Deputy Chief Executive Officer of Presidential Flight. Prior to this, Nadir participated in establishing the company GAMAERO (a joint venture between Gamco & Aerospatiale), formed to support the A320 and A340 fleet. Nadir served as executive director at GAMAERO. In addition to his directorship at PAL Technology Services LLC, Mr Alhammadi is a Board member of Abu Dhabi Aviation Co, Royal Jet and Maximus Air Cargo. RESOLUTION 4 RATIFICATION OF ISSUE OF SHARES TO SOPHISTICATED INVESTORS The issue is for 40,000,000 shares at a discounted price of $0.14 per share, to raise up to $5.6 million. The issue was made to selected institutional investors which the Company believes will provide a strengthened shareholder base supportive of the Company s growth and development potential. Listing Rule 7.4 permits the ratification of pervious issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold not be Listing Rule 7.1. The effect of such 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. Pursuant to Resolution 4, the Directors are seeking ratification under Listing Rule 7.4 of the issue of 40,000,000 Shares that was made on 30 September 2010 in order to restore the right of the Company to issue further shares within the 15% limit during the next 12 months. The following information in relation to the Shares is provided to shareholders for the purposes of Listing Rule 7.5: (a) (b) (c) (d) 40,000,000 Shares were allotted and issued; the Shares were issued at an issue price of $0.14 each; the Shares issued were fully paid ordinary shares in the capital of the Company and rank equally in all respects with the existing fully paid ordinary shares on issue; the Shares were issued to Sophisticated Investors who are not related parties of the Company; and _2 8

9 (e) funds raised from the issue are being used for the Company s drilling and other exploration expenditure, cost of the issue and working capital. RESOLUTION 5 RATIFICATION OF ISSUE OF G CLASS OPTIONS On 11 July 2010, the Company issued 500,000 Options to each of Messrs Konate and Bal, who are engaged as consultant to the Company. The Options are designed to provide the consultants with an incentive. Listing Rule 7.4 permits the ratification of pervious issues of securities made without prior shareholder approval, provided the issue did not breach the 15% threshold not be Listing Rule 7.1. The effect of such 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. Pursuant to Resolution 5, the Directors are seeking ratification under Listing Rule 7.4 of the issue of 1,000,000 Options that was made on 11 July 2010 in order to restore the right of the Company to issue further shares within the 15% limit during the next 12 months. The following information in relation to the Options is provided to shareholders for the purposes of Listing Rule 7.5: (a) 1,000,000 Options were allotted and issued; (b) the Options were issued for no consideration; (c) the terms of the Options are set out in Annexure A; (d) the Options were granted to consultants of the Company, Messrs Konate and Bal, who are unrelated parties of the Company; and (e) no funds were raised from the issue of the Options. RESOLUTIONS 6 to 10 GRANT OF INCENTIVE OPTIONS TO DIRECTORS The Company proposes to grant a total of 15,000,000 Incentive Options for no consideration, each Incentive Option having an exercise price equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Shares are recorded before 22 November 2010 (rounded up to the nearest cent) with an expiry date of 21 November 2015 to Messrs Crabb, Mackay, Rodgers, Lamont and Alhammadi (Participating Directors), or their nominees. The terms of the Incentive Options are set out in Annexure B to this Explanatory Memorandum. The Options will be issued as follows: Director Number of Incentive Options Rick Crabb, or his 3,000,000 Craig Mackay, or his 5,000,000 Gilbert Rodgers, or his 4,000,000 Glenister Lamont, or his 1,500,000 Nadir Alhammadi, or his 1,500,000 Total 15,000,000 The grant of Incentive Options encourages the Participating 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 the absence of the Participating Directors) that the incentives intended for the Participating Directors 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. In accordance with the Company s Remuneration Policy, the granting of the Incentive Options to non-executive directors is not linked to individual performance. Shareholders should note that for the reasons noted above, it is proposed to grant Incentive Options to Messrs Crabb, Lamont and Alhammadi notwithstanding the guidelines contained in Box 8.2 of the ASX Corporate Governance Council's Corporate Governance Principles and Recommendations (Principles) _2 9

10 which states that non-executive directors should not receive options. The number of Incentive Options to be granted to each of the Participating Directors has been determined based upon a consideration of: the remuneration of the Directors; ensuring that the remuneration offered to directors is competitive with market standards. The Directors have considered the proposed number of Incentive Options to be granted will ensure that the Participating Directors overall remunerations is in line with market standards; and incentives to attract and ensure continuity of service of directors who have appropriate knowledge and expertise. Set out below, is an example of the exercise price of the Incentive Options, based on the current prices of the Shares. The actual deemed exercise price will be determined upon close of trade on 22 November Example: In the period of 20 days on which sales of the Shares are recorded on ASX before 9 October 2010, the volume weighted average price of the Shares is cents. A premium of 45% is applied and rounded up to the nearest cent. This results in an exercise price of 25 cents per Option. Based on the above example, in the event the Incentive Options are exercised, the following amounts will need to be paid to the Company by the Participating Directors: Director Amount to be paid Rick Crabb, or his $750,000 Craig Mackay, or his $1,250,000 Gilbert Rodgers, or his $1,000,000 Glenister Lamont, or his $375,000 Nadir Alhammadi, or his $375,000 Total $3,750,000 The Company will therefore receive $3,750,000 from the Participating Directors should all the Incentive Options be exercised. 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: 1. the giving of the financial benefits falls within one of the nominated exceptions to the provision; or 2. 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 considered to be a related party of the Company. Resolutions 6 to 10 provide for the grant of Incentive Options to the Participating Directors which is a financial benefit which requires shareholder approval. Current Holdings Set out below are details of each of the Participating Directors relevant interest in Shares of the Company as at the date of this Notice: Director Rick Crabb, or his (1) Number of Shares 18,253,516 0 Craig Mackay, or his 3,519,384 (2) Gilbert Rodgers, or his 949,529 (3) Glenister Lamont, or his 288,461 (4) Nadir Alhammadi, or his Total 23,010,890 Notes: (1) Mr Crabb s interest in Shares is held directly and jointly with Carol Crabb, a related party of Mr Crabb, and indirectly in the name of Westessa Holdings Pty Ltd, of which Mr Crabb is a related party. (2) Mr Mackay s interest in the Shares is held in the names of Earth Science Solutions _2 10

11 Pty Ltd and Warrego Investments Pty Ltd, related parties of Mr Mackay. Mr Mackay also has an interest in the Shares held by Sharyn Mackay, a related party of Mr Mackay. (3) Mr Rodger s interest in the Shares is held directly and indirectly in the name of Silkform Pty Ltd of which Mr Rodgers is a related party. (4) Mr Lamont s interest in Shares is held in the name of Logmaor Pty Ltd of which Mr Lamont is a related party. Set out below are details of each of the Participating Directors relevant interest in Options of the Company as at the date of this Notice: Director Rick Crabb, or his (1) Number of Options 4,000,000 0 Craig Mackay, or his 8,000,000 (2) Gilbert Rodgers, or his 7,500,000 (3) Glenister Lamont, or his 2,000,000 (4) Nadir Alhammadi, or his Total 21,500,000 Notes: (1) Mr Crabb s interest in Options is held directly and jointly with Carol Crabb, a related party of Mr Crabb. (2) Mr Mackay s interest in Options is held in the names of Earth Science Solutions Pty Ltd, of which Mr Mackay is a related party. (3) Mr Rodgers interest in Options is held directly and indirectly in the names of Sophie Rodgers and Chris Rodgers, who are related parties of Mr Rodgers. (4) Mr Lamont s interest in the Options is held indirectly in the name of Alexcal Pty Ltd, a related party of Mr Lamont. INFORMATION REQUIREMENTS 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: Subject to shareholder approval, the following maximum number of Incentive Options will be granted to the following related parties, or their respective nominees: Director Number of Incentive Options Rick Crabb, or his 3,000,000 Craig Mackay, or his 5,000,000 Gilbert Rodgers, or his 4,000,000 Glenister Lamont, or his 1,500,000 Nadir Alhammadi, or his 1,500,000 Total 15,000,000 The nature of the financial benefit The proposed financial benefit to be given is the grant of Incentive Options for no consideration to the Participating Directors as noted above. Directors recommendation All the Directors were available to make a recommendation. For the reasons noted above: Messrs Mackay, Rodgers, Lamont and Alhammadi (who have no interest in the outcome of Resolution 6) recommend that shareholders vote in favour of Resolution 5. Mr Crabb declines to make a recommendation about Resolution 6 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him or his. Messrs Crabb, Rodgers, Lamont and Alhammadi (who have no interest in the outcome of Resolution 7) recommend that shareholders vote in favour of Resolution 7. Mr Mackay declines to make a recommendation about Resolution 7 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him or his _2 11

12 Messrs Crabb, Mackay, Lamont and Alhammadi (who have no interest in the outcome of Resolution 8) recommend that shareholders vote in favour of Resolution 8. Mr Rodgers declines to make a recommendation about Resolution 8 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him or his. Messrs Crabb, Mackay, Rodgers and Alhammadi (who have no interest in the outcome of Resolution 9) recommend that shareholders vote in favour of Resolution 9. Mr Lamont declines to make a recommendation about Resolution 9 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him or his. Messrs Crabb, Mackay, Rodgers and Lamont (who have no interest in the outcome of Resolution 10) recommend that shareholders vote in favour of Resolution 10. Mr Alhammadi declines to make a recommendation about Resolution 10 as he has a material personal interest in the outcome of that particular Resolution as it relates to the proposed grant of Incentive Options to him or his. Other information that is reasonably required by members to make a decision and that is known to the Company or any of its Directors. The proposed ordinary Resolutions 6 to 10 would have the effect of giving power to the Directors to grant a total of 15,000,000 Incentive Options on the terms and conditions as set out in Annexure B to this Explanatory Memorandum and as otherwise mentioned above. The Company currently has 315,463,761 listed Shares and the following unlisted Options on issue: Number Exercise Expiry Date Price 4,500,000 $ /12/10 12,150,000 $ /12/11 600,000 $0.21 5/10/14 7,000,000 $ /11/14 1,000,000 $ /07/15 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 share holding of existing shareholders by 3.9%. 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 and Shares are issued pursuant to the exercise of the Incentive Options, the Company s Shares may be trading at a price which is higher than the exercise price of the Incentive Options. The Participating Directors fees per annum (including superannuation) and the total financial benefit to be received by them in this current period as a result of the grant of the Incentive Options the subject of Resolutions 6 to 10 are as follows: Director Fees p.a. ($) Value of Incentive Options ($) Total Financial Benefit ($) Rick Crabb 75, , ,400 Craig 250, , ,000 Mackay Gilbert 200, , ,200 Rodgers Glenister 55, , ,200 Lamont Nadir Alhammadi 50, , ,200 The indicative option valuation of cents is a theoretical valuation of each option using the Black and Scholes Option Pricing Model, as set out below. Valuation of Incentive Options The Company's advisers have valued the Incentive Options to be granted to the Participating Directors using the Black & Scholes Model. The value of an option calculated by the Black & Scholes Model is a function of a number of variables. The valuation of the Incentive Options has been prepared using the following assumptions: _2 12

13 Variable Input Share price 15.5 cents Exercise price 25 cents Risk Free Interest Rate 4.50% Volatility 100% Time (years to expiry) 5 years The Company s advisers have calculated the value of each option based on the following assumptions: 1. They have based the underlying value of each share in the Company on the Australian Securities Exchange closing price of 15.5 cents on 8 October; 2. The exercise price is the volume weighted average price in the period of 20 trading days leading up to and including 8 October 2010 increased by a premium of 45% and rounded up to the nearest cent; 3. Risk free rate of return 4.50% (estimated, based on Reserve Bank of Australia official cash rate as at 11 October 2011); 4. They used a volatility of the share price of 100%, as determined from the daily movements in share price over the last 12 months, adjusted for abnormal trading. Over the past 3 and 6 months the closing Share price has traded between a low of 8.0 cents and a high of 18.5 cents implying a volatility of 131%. Over the past 12 months, the closing Share price has traded between a low of 8.0 cents and a high of 20.0 cents implying a volatility of 150%. The Company has had periods over the past year where the Share price will regularly move up to 4 cents per day on above daily volumes due to market speculation about the Shares. As the Company is, in the main, a gold explorer, the Company s advisers stated it is not uncommon to have such companies volatilities at between 50% and 100% in relatively short periods of time. The global financial crisis has also had a major impact of the share price of speculative stocks, in particular gold sticks due to movement of Share price in the past 6 and 12 months do not give a true indication of the volatility of the Share price. Based on these factors, the volatility factor has been set at 100%, a slight discount to the 3 month volatility of the share price. Based on the assumptions, it is considered that the estimated average value of the Incentive Options to be granted to the Participating Directors is cents per Incentive Option. Any change in the variables applied in the Black & Scholes calculation between the date of the valuation and the date the Incentive Options are granted would have an impact on their value. The following table gives details of the highest, lowest and latest closing prices of the Company s Shares trading on ASX over the past 12 months ending on 13 October 2010: Highest Price (cents) / Date Lowest Price (cents) / Date Latest Price / Date 20 cents 8.0 cents 15.0 cents 27 Oct Aug Oct 2010 Other Information Under the Australian Equivalent of IFRS, the Company is required to expense the value of the Incentive Options in its statement of financial performance for the current financial year. Other than as disclosed in this Explanatory Memorandum, 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 Incentive Options pursuant to Resolutions 6 to 10. Neither the Directors not the Company are aware of other information that would be reasonably required by shareholders to make a decision in relation to the financial benefits contemplated by the proposed resolutions. Listing Rule Listing Rule requires shareholder approval by ordinary resolution to any issue by a listed company of securities to a related party. Accordingly, Listing Rule requires shareholders to approve the grant of Incentive Options to the Participating Directors _2 13

14 Additional Information The following information in relation to the Incentive Options to be granted pursuant to Resolutions 6 to 10 is provided to shareholders for the purposes of Listing Rule 10.13: (a) (b) (c) (d) (e) (f) the Incentive Options will be granted to the Participating Directors, or their nominees, as noted above; the maximum number of Incentive Options to be granted is 15,000,000; the Incentive Options will be allotted and granted on a date which will be no later than 1 month after the date of this Meeting, unless otherwise extended by way of ASX granting a waiver to the Listing Rules; the Incentive Options will be granted for no consideration; no funds will be raised by the grant of the Incentive Options; and the terms and conditions of the Incentive Options are set out in Annexure B to this Explanatory Memorandum. If approval is given for the grant of the Incentive Options under Listing Rule 10.11, approval is not required under Listing Rule 7.1. RESOLUTION 11 EMPLOYEE SHARE OPTION PLAN The Directors considered that it was desirable to replace the Company's Existing Plan with a new option plan under which employees may be offered the opportunity to subscribe for Options to acquire Shares in the Company in order to increase the range of potential incentives available to them and to strengthen links between the Company and its employees. Accordingly, the Directors adopted the Golden Rim Resources Limited Employee Share Option Plan (Plan) on 15 October 2010 and terminated the Existing Plan. The Plan is designed to provide incentives to the employees of the Company and to recognise their contribution to the Company's success. Under the Company's current circumstances the Directors consider that the incentives to employees are a cost effective and efficient incentive for the Company as opposed to alternative forms of incentives such as cash bonuses or increased remuneration. To enable the Company to secure employees and Directors who can assist the Company in achieving its objectives, it is necessary to provide remuneration and incentives to such personnel. The Plan is designed to achieve this objective, by encouraging continued improvement in performance over time and by encouraging personnel to acquire and retain significant shareholdings in the Company. Shareholder approval is required if any issue of Employee Options pursuant to the Plan is to fall within the exception to the calculation of the 15% limit imposed by Listing Rule 7.1 on the number of securities which may be issued without shareholder approval. Accordingly, shareholder approval is sought for the purposes of Listing Rule 7.2 Exception 9(b) which provides that Listing Rule 7.1 does not apply to an issue of securities under an employee incentive scheme that has been approved by the holders of ordinary securities within three years of the date of issue. Prior shareholder approval will be required before any Director or related party of the Company can participate in the Plan. Under the Plan, the Board may offer to Eligible Persons the opportunity to subscribe for such number of Employee Options in the Company as the Board may decide and on the terms set out in the rules of the Plan, a copy of which is contained in Annexure C of this Explanatory Memorandum. Employee Options granted under the Plan will be offered to participants in the Plan on the basis of the Board s view of the contribution of the Eligible Person to the Company. In accordance with the requirements of Listing Rule 7.2 Exception 9(b) the following information is provided: (a) (b) (c) a copy of the rules of the Plan is attached as Annexure C to this Explanatory Memorandum; this is the first approval sought under Listing Rule 7.2 Exception 9 with respect to the Plan; and a voting exclusion statement has been included for the purposes of Resolution _2 14

15 RESOLUTION 12 APPOINTMENT OF DELOITTE TOUCHE TOHMATSU AS AUDITORS OF THE COMPANY The Directors have resolved to appoint Deloitte Touche Tohmatsu as the new auditors of the Company. The Company has received: (a) (b) (c) a nomination under section 328B of the Corporations Act, from Gilbert Rodgers for Deloitte Touche Tohmatsu to be appointed as the Company's auditor, a copy of which is annexed as Annexure D to this Explanatory Memorandum; a consent to act as auditors of the Company duly executed by Deloitte Touche Tohmatsu, registered company auditors; and a written resignation from Stantons International Pty Ltd, the Company's existing auditors. The Board has resolved to appoint Deloitte Touche Tohmatsu as auditors of the Company with effect from the date of the Meeting, subject to receiving ASIC's approval to the resignation of Stantons International Pty Ltd. GLOSSARY "ASX" means ASX Limited ABN and, where the context permits, the Australian Securities Exchange operated by ASX Limited. "Board" means the board of Directors of the Company. "Company" means Golden Rim Resources Limited ABN "Constitution" means the constitution of the Company. "Corporations Act" means the Corporations Act 2001 (Cth). "Director" means a director of the Company. "Existing Plan" means the plan called "Alcaston Mining NL Employee Option Plan" which was adopted by the Board on 5 June "Incentive Option" means an option to acquire a Share, the terms of which are set out in Annexure B. "Listing Rules" means the Listing Rules of the ASX. "Meeting" means the annual general meeting the subject of the Notice. "Notice" means the notice of annual general meeting which accompanies this Explanatory Memorandum. "Option" means an option to acquire a Share. "Plan" means the Golden Rim Resources Limited Employee Share Option Plan. "Resolution" means a resolution proposed pursuant to the Notice. "Share" means a fully paid ordinary share in the capital of the Company _2 15

16 ANNEXURE A TERMS AND CONDITIONS OF G CLASS OPTIONS Golden Rim Resources Limited ABN Terms & Conditions of Class G Options Expiring 10 JULY 2015 (a) (b) (c) The Options shall expire on 10 July 2015 ("Expiry Date"). Each Option shall confer the right to subscribe for one fully paid ordinary share ("Share"), ranking pari passu with existing issued fully paid ordinary shares, in the capital of the Company. The Options may be exercised in whole or in part. If the Options are exercised in part each notice of exercise must be for not less than 1,000 Shares and in multiples of 1,000 Shares. (d) The exercise price for each Option shall be $0.21. (e) (f) (g) (h) (j) (k) The Options may be transferred at any time in whole or part. A certificate will be issued for the Options. On the reverse side of the certificate there will be endorsed a statement of the rights of the optionholder and a notice that is to be completed when exercising the Options. If there is more than one Option comprised in this certificate and prior to the Expiry Date those Options are exercised in part, the Company will issue another certificate for the balance of the Options held and not yet exercised. The optionholder will not be permitted to participate in any new pro rata entitlement issues of securities of the Company. In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules of the Australian Securities Exchange. The Options will not give any right to participate in dividends until Shares are allotted pursuant to the exercise of the relevant Options. There is no right to change the exercise price of Options nor the number of underlying Shares over which the Options can be exercised, if the Company completes a bonus or entitlements issue. Notwithstanding clause (b) above, all Options may be exercised by the optionholder: (a) (b) (c) in the event a takeover bid (as defined in the Corporations Act 2001) to acquire any Shares becomes or is declared to be unconditional, irrespective of whether the takeover bid extends to Shares issued and allotted after the date of the takeover bid or not; or at any time after the occurrence of an event which results in a shareholder, or group of associated shareholders, being entitled to sufficient Shares to give it or them the ability, and that ability is successfully exercised, in a general meeting, to replace all or a majority of the board of directors of the Company; or if a merger by way of scheme of arrangement under the Corporations Act 2001 has been approved by the Court under section 411(4)(b) of the Corporations Act (l) Application will not be made for official quotation of the Options on the Australian Securities Exchange _2 16

17 ANNEXURE B TERMS AND CONDITIONS OF DIRECTORS' INCENTIVE OPTIONS Golden Rim Resources Limited ABN Terms & Conditions of Class H H Options Expiring 21 November 2015 (a) (b) (c) (d) (e) (f) (g) (h) (j) (k) (l) The Options shall expire on 21 November 2015 (Expiry Date). Each Option shall confer the right to subscribe for one fully paid ordinary share (Share), ranking pari passu with existing issued fully paid ordinary shares, in the capital of the Company. Subject to clause (l) below, the Options shall be exercisable by notice in writing to the Company received at any time on or before the Expiry Date. The fully paid ordinary shares will be allotted not more than 15 days after (but not including) the exercise date. The Options may be exercised in whole or in part. If the Options are exercised in part each notice of exercise must be for not less than 1,000 shares and in multiples of 1,000 shares. The exercise price for each Option shall be equal to 145% of the volume weighted average of the Shares on the ASX over the last 20 days on which sales of the Share are recorded before 22 November 2010 (rounded up to the nearest cent). The Options may be transferred at any time in whole or part. A certificate will be issued for the Options. On the reverse side of the certificate there will be endorsed a statement of the rights of the optionholder and a notice that is to be completed when exercising the Options. If there is more than one Option comprised in this certificate and prior to the Expiry Date those Options are exercised in part, the Company will issue another certificate for the balance of the Options held and not yet exercised. The optionholder will not be permitted to participate in any new pro rata entitlement issues of securities of the Company. In the event of a reorganisation of the issued capital of the Company, the Options will be reorganised in accordance with the Listing Rules of the Australian Securities Exchange Limited. The Options will not give any right to participate in dividends until shares are allotted pursuant to the exercise of the relevant Options. There is no right to change the exercise price of Options nor the number of underlying fully paid ordinary shares over which the Options can be exercised, if the Company completes a bonus or entitlements issue. Notwithstanding clause (c) above, all Options may be exercised by the optionholder: (a) (b) (c) in the event a takeover bid (as defined in the Corporations Act 2001) to acquire any Shares becomes or is declared to be unconditional, irrespective of whether the takeover bid extends to Shares issued and allotted after the date of the takeover bid or not; or at any time after the occurrence of an event which results in a shareholder, or group of associated shareholders, being entitled to sufficient Shares to give it or them the ability, and that ability is successfully exercised, in a general meeting, to replace all or a majority of the board of directors of the Company; or if a merger by way of scheme of arrangement under the Corporations Act 2001 has been approved by the Court under section 411(4)(b) of the Corporations Act (m) Application will not be made for official quotation of the Options on the Australian Securities Exchange _2 17

18 ANNEXURE C GOLDEN RIM RESOURCES LIMITED EMPLOYEE SHARE OPTION PLAN GOLDEN RIM RESOURCES LIMITED ACN RULES OF EMPLOYEE SHARE OPTION PLAN Blakiston & Crabb Solicitors 1202 Hay Street WEST PERTH WA 6005 Tel: (08) Fax: (08) Ref: AMM.MC.GMR/ _2 18

19 RULES OF EMPLOYEE SHARE OPTION PLAN GOLDEN RIM RESOURCES LIMITED ACN RULES OF EMPLOYEE SHARE OPTION PLAN (adopted by the Board on [14] October 2010) 1. NAME OF PLAN 1.1 This Plan shall be called the Golden Rim Resources Limited Employee Share Option Plan. 2. ESTABLISHMENT AND TERMINATION OF THE PLAN 2.1 The Board may establish and administer the Plan in accordance with the terms and conditions set out in these Rules and otherwise as it determines from time to time in its absolute discretion. 2.2 The Board may terminate the Plan, or suspend its operation for any period it considers desirable, at any time that it considers appropriate. 2.3 The Board may not issue any further Options under this Plan after the Plan has been terminated. However, these Rules will continue to apply to Options on issue at the date of such termination until the last of those Options lapses or is exercised. 3. PURPOSE OF PLAN 3.1 The purpose of this Plan is to: (iii) (iv) recognise the ongoing ability of the employees of the Company and their expected efforts and contribution in the long term to the performance and success of the Company; provide an incentive to the employees of the Company to remain in their employment in the long term; attract persons of experience and ability to employment with the Company and foster and promote loyalty between the Company and its employees; and provide employees of the Company with the opportunity to acquire Options, and ultimately Shares, in the Company, in accordance with these Rules. 4. OPERATION OF THE PLAN 4.1 The Plan operates according to these Rules which bind the Company and each Participant _2 19

20 4.2 The number of Shares to be received on exercise of the Options the subject of an Offer when aggregated with: the number of Shares which would be issued were each outstanding offer or Option, being an offer made or Option acquired pursuant to the Plan or any other employee share scheme extended only to employees or Directors of the Company, exercised; and the number of Shares issued during the previous 5 years pursuant to the Plan or any other employee share scheme extended only to employees or Directors of the Company, but disregarding any offer made, or Option acquired or Share issued by way of or as a result of: (iii) an offer to a person situated at the time of receipt of the Offer outside Australia; or (iv) an offer that did not need disclosure to investors because of section 708 of the Corporations Act; or (v) an offer made under a disclosure document, 5. ELIGIBILITY must not exceed 5% of the total number of issued Shares as at the time of the Offer. 5.1 Subject to these Rules, the Board may from time to time determine that any Eligible Person is entitled to participate in the Plan and the extent of that participation. Prior to making that determination, the Board must consider: (iii) (iv) (v) (vi) the seniority of the relevant Eligible Person and the position the Eligible Person occupies within the Company; the length of service of the Eligible Person with the Company; the record of employment of the Eligible Person with the Company; the potential contribution of the Eligible Person to the growth of the Company; the extent (if any) of the existing participation of the Eligible Person (or any Permitted Nominee in relation to that Eligible Person) in the Plan; and any other matters which the Board considers relevant. 5.2 The Board may exercise its powers in relation to the participation of any Eligible Person on any number of occasions _2 20