DRAIG RESOURCES LIMITED ACN NOTICE OF ANNUAL GENERAL MEETING

Transcription

1 DRAIG RESOURCES LIMITED ACN NOTICE OF ANNUAL GENERAL MEETING The Annual General Meeting of the Company will be held at the Meeting Room of KPMG, Level 38 Tower Three, International Towers Sydney, 300 Barangaroo Avenue Sydney NSW 2000 on 31 October 2016 at 11am AEST. The 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. Should you wish to discuss any matter please do not hesitate to contact the Company Secretary by telephone on (02) Shareholders are urged to attend or vote by lodging the proxy form attached to the Notice

2 DRAIG RESOURCES LIMITED A C N NOTICE OF ANNUAL GENERAL MEETING Notice is hereby given that the Annual General Meeting of Shareholders of Draig Resources Limited (Company) will be held at the Meeting Room of KPMG, Level 38 Tower Three, International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 on Monday 31 October 2016 at 11am (AEST) (Meeting). The Explanatory Memorandum to this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Memorandum and the Proxy Form part of this Notice. The Directors have determined pursuant to regulation of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered as Shareholders on 29 October 2016 at 11am (AEST). Terms and abbreviations used in this Notice and the Explanatory Memorandum are defined in Schedule 1. AGENDA Ordinary business 1. Financial Statements and Reports To receive and consider the Financial Report, Directors Report and Auditor s Report for the Company and the entities it controls (the Consolidated Group ) for the year ended 30 June Resolution 1 Remuneration Report To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: "That the Remuneration Report be adopted by Shareholders on the terms and conditions in the Explanatory Memorandum." Voting Exclusion In accordance with section 250R of the Corporations Act, a vote on this Resolution must not be cast by or on behalf of a member of the Key Management Personnel whose remuneration details are included in the Remuneration Report, or a Closely Related Party of such member. A vote may be cast by such person if the vote is not cast on behalf of a person who is excluded from voting on this Resolution, and: (a) the person is appointed as proxy by writing that specifies the way the proxy is to vote on the Resolution; or Page 1

3 (b) the person is the Chairman and the appointment of the Chairman as proxy does not specify the way the proxy is to vote on this Resolution, but expressly authorises the Chairman to exercise the proxy even if this Resolution is connected with the remuneration of a member of the Key Management Personnel. 3. Resolution 2 - Approval of 10% Placement Facility To consider and, if thought fit, to pass with or without amendment, as a special resolution the following: "That in accordance with Listing Rule 7.1A and for all other purposes, Shareholders approve the issue of Equity Securities of up to 10% of the issued capital of the Company, calculated in accordance with the formula prescribed in Listing Rule 7.1A.2 and on the terms and conditions in the Explanatory Memorandum." Voting Exclusion The Company will disregard any votes cast on this Resolution by a person (and any associates of such a person) who may participate in the 10% Placement Facility and a person who might obtain a benefit if this Resolution is passed, except a benefit solely in the capacity of a holder of Shares, and any associate of that person (or those persons). The Company will not disregard a vote if: (a) (b) it is 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 it is cast by the Chairman 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. 4. Resolution 3 Election of Director Mr Warren Staude To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That pursuant to clause 13.4 of the Constitution and for all other purposes, Mr Warren Staude, a Director, retires and being eligible, is elected as a Director." 5. Resolution 4 Election of Director Mr Guy Robertson To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That pursuant to clause 13.4 of the Constitution and for all other purposes, Mr Guy Robertson, a Director, retires and being eligible, is elected as a Director." Page 2

4 6. Resolution 5 Election of Director Mr Raymond Shorrocks To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That pursuant to clause 13.4 of the Constitution and for all other purposes, Mr Raymond Shorrocks, a Director, retires and being eligible, is elected as a Director." 7. Resolution 6 Ratification of issue of Advisor Options To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That pursuant to and in accordance with Listing Rule 7.4 and for all other purposes, Shareholders ratify the issue of up to 15,000,000 Options (Advisor Options) to the Advisor (or its nominees) on the terms and conditions set out in the Explanatory Memorandum. Voting Exclusion The Company will disregard any votes cast on this Resolution by the Advisor (or its nominees) and any of their associates. The Company will not disregard a vote if: (a) (b) it is 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 it is cast by the Chairman 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. Special business: Acquisition of Golden Spur Resources Pty Ltd 8. Resolution 7 Approval to change in scale of activities To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That, subject to each of the other Acquisition Resolutions being passed and pursuant to and in accordance with Listing Rule and for all other purposes, Shareholders approve the significant change in the scale of the Company's activities resulting from the Acquisition and the Capital Raising, on the terms and conditions set out in the Explanatory Memorandum." Refer to the voting exclusion statement that applies to each of the Acquisition Resolutions Page 3

5 9. Resolution 8 Approval to issue Consideration Shares To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That, subject to each of the other Acquisition Resolutions being passed and pursuant to and in accordance with Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 60,000,000 Shares (Consideration Shares) to the Golden Spur Vendors (or their respective nominees) on the terms and conditions set out in the Explanatory Memorandum. Refer to the voting exclusion statement that applies to each of the Acquisition Resolutions 10. Resolution 9 Approval to issue Capital Raising Shares To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That, subject to each of the other Acquisition Resolutions being passed and pursuant to and in accordance with Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 60,000,000 Shares (Capital Raising Shares) at $0.02 each on the terms and conditions in the Explanatory Memorandum." Refer to the voting exclusion statement that applies to each of the Acquisition Resolutions 11. Resolution 10 Approval to issue Facilitator Shares To consider and, if thought fit, to pass with or without amendment, as an ordinary resolution the following: That, subject to each of the other Acquisition Resolutions being passed and pursuant to and in accordance with Listing Rule 7.1 and for all other purposes, Shareholders approve the issue of up to 15,000,000 Shares (Facilitator Shares) at $0.001 each to the Facilitator (or its nominees) on the terms and conditions set out in the Explanatory Memorandum. Voting Exclusion The Company will disregard any votes cast on this Resolution by the Facilitator (or its nominees) and any person who might obtain a benefit, except a benefit solely in the capacity as a holder of ordinary securities, if the Resolution is passed, and any associates of those persons. The Company will not disregard a vote if: (a) (b) it is 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 it is cast by the Chairman 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. Page 4

6 12. Voting exclusion statement for Acquisition Resolutions The Company will disregard any votes cast on the Acquisition Resolutions by or on behalf of: (a) (b) (c) (d) each of the Golden Spur Vendors (or their respective nominees); any person who may participate in the Capital Raising; any person who might obtain a benefit (except a benefit solely in the capacity of a holder of ordinary securities) if the Acquisition Resolutions are passed; and any associates of those persons described in the preceding paragraphs. However, the Company will not disregard a vote if: (a) (b) it is 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 it is cast by the Chairman 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. BY ORDER OF THE BOARD Guy Robertson Director Dated: 29 September 2016 Page 5

7 DRAIG RESOURCES LIMITED A C N EXPLANATORY MEMORANDUM 1. Introduction The Explanatory Memorandum has been prepared for the information of Shareholders in connection with the business to be conducted at the Meeting to be held at the Meeting Room of KPMG, Level 38 Tower Three, International Towers Sydney 300 Barangaroo Avenue Sydney NSW 2000 on Monday 31 October 2016 at 11am (AEST). The Explanatory Memorandum forms part of the Notice which should be read in its entirety. The Explanatory Memorandum contains the terms and conditions on which the Resolutions will be voted. The Explanatory Memorandum includes the following information to assist Shareholders in deciding how to vote on the Resolutions: Section 2 Action to be taken by Shareholders Ordinary Business Section 3 Section 4 Section 5 Section 6 Section 7 Section 8 Section 9 Annual Report Resolution 1 Remuneration Report Resolution 2 - Approval of 10% Placement Facility Resolution 3 Election of Director Mr Warren Staude Resolution 4 Election of Director Mr Guy Robertson Resolution 5 Election of Director Mr Raymond Shorrocks Resolution 6 Ratification of issue of Advisor Options Special Business Acquisition of Golden Spur Resources Pty Ltd Section 10 Section 11 Section 12 Section 13 Section 14 Schedule 1 Schedule 2 Acquisition of Golden Spur Resources Pty Ltd Resolution 7 - Approval to change in scale of activities Resolution 8 - Approval to issue Consideration Shares Resolution 9 Approval to issue Capital Raising Shares Resolution 10 Approval to issue Facilitator Shares Definitions Terms and conditions of Advisor Options Page 6

8 Annexure 1 Geological information A Proxy Form is located at the end of the Explanatory Memorandum. 2. Action to be taken by Shareholders Shareholders should read the Notice including the Explanatory Memorandum carefully before deciding how to vote on the Resolutions. 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 in accordance with the instructions thereon. Lodgement of a Proxy Form will not preclude a Shareholder from attending and voting at the Meeting in person. Please note that: (a) (b) (c) a member of the Company entitled to attend and vote at the Meeting is entitled to appoint a proxy; a proxy need not be a member of the Company; and a member of the Company entitled to cast two or more votes may appoint two proxies and may specify the proportion or number of votes each proxy is appointed to exercise, but where the proportion or number is not specified, each proxy may exercise half of the votes. The enclosed Proxy Form provides further details on appointing proxies and lodging Proxy Forms. The Chairman intends to exercise all available proxies in favour of all Resolutions. Ordinary business 3. Annual Report In accordance with section 317 of the Corporations Act, Shareholders will be offered the opportunity to discuss the Annual Report, including the Financial Report, the Directors' Report and the Auditor's Report for the financial year ended 30 June There is no requirement for Shareholders to approve the Annual Report. At the Meeting, Shareholders will be offered the opportunity to: (a) (b) (c) discuss the Annual Report which is available online at ask questions about, or comment on, the management of the Company; and ask the auditor questions about the conduct of the audit and the preparation and content of the Auditor's Report. In addition to taking questions at the Meeting, written questions to the Chairman about the management of the Company, or to the Company's auditor about: Page 7

9 (d) (e) (f) (g) the preparation and content of the Auditor's Report; the conduct of the audit; accounting policies adopted by the Company in relation to the preparation of the financial statements; and the independence of the auditor in relation to the conduct of the audit, may be submitted no later than 5 business days before the Meeting to the Company Secretary at the Company's registered office. 4. Resolution 1 Remuneration Report In accordance with subsection 250R(2) of the Corporations Act, the Company must put the Remuneration Report to the vote of Shareholders. The Directors' Report contains the Remuneration Report which sets out the remuneration policy for the Company and the remuneration arrangements in place for the executive Directors, specified executives and non-executive Directors. In accordance with subsection 250R(3) of the Corporations Act, Resolution 1 is advisory only and does not bind the Directors. If Resolution 1 is not passed, the Directors will not be required to alter any of the arrangements in the Remuneration Report. Part 2G.2, Division 9 of the Corporations Act provides Shareholders with the opportunity to remove the whole Board except the managing director if the Remuneration Report receives a 'no' vote of 25% or more (Strike) at two consecutive annual general meetings. Where a resolution on the Remuneration Report receives a Strike at two consecutive annual general meetings, the Company will be required to put to Shareholders at the second annual general meeting a resolution on whether another meeting should be held (within 90 days) at which all Directors (other than the managing director) who were in office at the date of approval of the applicable Directors' Report must stand for re-election. The Company's Remuneration Report received a Strike at the 2015 annual general meeting, with 65.75% of the votes cast being against the relevant resolution. None of the Directors in office as at 30 June 2015 are now Directors of the Company and as a result no Spill Resolution is included in this Notice of Meeting. If the Remuneration Report receives a Strike at this Meeting (2016 annual general meeting), Shareholders should be aware that if a second Strike is received at the 2017 annual general meeting, this may result in the re-election of the Board. The Chairman will allow a reasonable opportunity for Shareholders as a whole to ask about, or make comments on the Remuneration Report. Resolution 1 is an ordinary resolution. The Chairman intends to exercise all available proxies in favour of Resolution 1. If the Chairman is appointed as your proxy and you have not specified the way the Chairman is to vote on Resolution 1, by signing and returning the Proxy Form, you are considered to have provided the Chairman with an express authorisation for the Page 8

10 Chairman to vote the proxy in accordance with the Chairman's intention, even though the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel of the Company. 5. Resolution 2 - Approval of 10% Placement Facility 5.1 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 annual general meeting (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. Based on the ASX closing price on 9 September 2016, the Company has a market capitalisation of approximately $3.95 million. 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. The 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 5.2(c) below). 5.2 Listing Rule 7.1A (a) 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 annual general meeting. (b) 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 one quoted classes of Equity Securities, Shares. (c) Formula for calculating 10% Placement Facility Listing Rule 7.1A.2 provides that eligible entities which have obtained shareholder approval at an annual general meeting may issue or agree to issue during the 12 month period after the date of the annual general meeting, a number of Equity Securities calculated in accordance with the following formula: (A x D) E A is the number of shares on issue 12 months before the date of issue or agreement: (A) plus the number of fully paid shares issued in the 12 months under an exception in Listing Rule 7.2; Page 9

11 (B) (C) (D) 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 Shareholder approval 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. D is 10% 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 Shareholder approval 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 the Notice, the Company has on issue 106,833,837 Shares and has capacity to issue: (i) 16,025,076 Equity Securities under Listing Rule 7.1; and (ii) subject to Shareholder approval being obtained under Resolution 2 10,683,384 Equity Securities under Listing Rule 7.1A, (subject to any previous issues of Equity Securities pursuant to these Listing Rules). 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 5.2(c)). (e) 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 on which trades in that class were recorded immediately before: (i) (ii) 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 (i) above, the date on which the Equity Securities are issued. (f) 10% Placement Period Page 10

12 Shareholder approval of the 10% Placement Facility under Listing Rule 7.1A is valid from the date of the annual general meeting at which the approval is obtained and expires on the earlier to occur of: (i) (ii) the date that is 12 months after the date of the annual general meeting at which the approval is obtained; or the date of Shareholder approval of a transaction under Listing Rules (a significant change to the nature or scale of activities) or 11.2 (disposal of main undertaking), 5.3 Listing Rule 7.1A (10% Placement Period). It is noted that Shareholder approval is being sought at this Meeting pursuant to Listing Rule (Resolution 7), however as this approval is being sought at the same Meeting, the approval pursuant to this Resolution 2 will remain valid. The effect of Resolution 2 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 Specific information required by Listing Rule 7.3A In accordance with Listing Rule 7.3A, information is provided 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 on which trades in that class were recorded immediately before: (i) (ii) 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 (i) above, the date on which the Equity Securities are issued. (b) If this Resolution 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 (in the case of Options, only if the Options are converted into Shares). There is a risk that: (i) (ii) 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. Page 11

13 (c) (d) The below table 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 the Notice. The table also shows: (i) two examples where variable "A" has increased, by 50% and 100%. Variable "A" is based on the number of ordinary securities the Company has on issue. The number of ordinary securities on issue may increase as a result of issues of ordinary securities that do not require Shareholder approval (for example, a pro rata entitlements issue or scrip issued under a takeover offer) or future specific placements under Listing Rule 7.1 that are approved at a future Shareholders' meeting; and (ii) two examples of where the issue price of ordinary securities has decreased by 50% and increased by 100% as against the current market price ($0.037 as at 9 September 2016). Dilution Variable 'A' in Listing Rule 7.1A.2 $ % decrease in Issue Price $0.037 Issue Price $ % increase in Issue Price Current Variable A 106,833,837 Shares 50% increase in current Variable A 160,250,756 Shares 100% increase in current Variable A 213,667,674 Shares 10% Voting Dilution Funds raised 10% Voting Dilution Funds raised 10% Voting Dilution Funds raised 10,683,384 Shares 10,683,384 Shares 10,683,384 Shares $197,643 $395,285 $790,570 16,025,076 Shares 16,025,076 Shares 16,025,076 Shares $296,464 $592,928 $1,185,856 21,366,767 Shares 21,366,767 Shares 21,366,767 Shares $395,285 $790,570 $1,581,141 The above table has been prepared on the following assumptions: (i) (ii) (iii) The Company issues the maximum number of Equity Securities available under the 10% Placement Facility. No convertible securities (including any issued under the 10% Placement Facility) are exercised or converted into Shares before the date of the issue of the Equity Securities. The 10% voting dilution reflects the aggregate percentage dilution against the issued share capital at the time of issue. This is why the voting dilution is shown in each example as 10%. Page 12

14 (iv) (v) (vi) The table does not show an example of dilution that may be caused to a particular Shareholder by reason of placements under the 10% Placement Facility, based on that Shareholder's holding at the date of the Meeting. The table shows only the effect of issues of Equity Securities under Listing Rule 7.1A, not under the 15% placement capacity under Listing Rule 7.1. The issue of Equity Securities under the 10% Placement Facility consists only of Shares. If the issue of Equity Securities includes Options, it is assumed that those Options are exercised into Shares for the purpose of calculating the voting dilution effect on existing Shareholders. (vii) The issue price is $0.037, being the closing price of the Shares on ASX on 9 September (e) (f) The Company will only issue the Equity Securities during the 10% Placement Period. The Company may seek to issue the Equity Securities for the following purposes: (i) (ii) non cash consideration including for joint ventures, licensing or collaboration agreements or the acquisition of new projects (although the Company presently has no proposal to do so). In such circumstances the Company will provide a valuation of the non cash consideration as required by Listing Rule 7.1A.3; or cash consideration. In such circumstances, the Company intends to use the funds raised towards advancing specific Company projects including for joint ventures, licensing or collaboration agreements or the acquisition of new projects and/or general working capital. (g) (h) The Company will comply with the disclosure obligations under Listing Rules 7.1A.4 and A upon issue of any Equity Securities. The Company's allocation policy is dependent on the prevailing market conditions at the time of any proposed issue pursuant to the 10% Placement Facility. The identity of the allottees of Equity Securities will be determined on a case-by-case basis having regard to the factors including but not limited to the following: (i) (ii) (iii) the methods of raising funds that are available to the Company, including but not limited to, rights issue or other issue in which existing security holders can participate; the effect of the issue of the Equity Securities on the control of the Company; the financial situation and solvency of the Company; and (iv) advice from corporate, financial and broking advisers (if applicable). (i) The allottees under the 10% Placement Facility have not been determined as at the date of the Notice but may include existing substantial Shareholders and/or new Shareholders who are not a related party or an associate of a related party of the Company. Page 13

15 Further, if the Company is successful in acquiring new assets or investments, it is possible that the allottees under the 10% Placement Facility will be the vendors of the new assets or investments. (j) (k) (l) The Company did not seek Shareholder approval under Listing Rule 7.1A at the 2015 annual general meeting. A voting exclusion statement is included in the Notice. At the date of the Notice, the Company has not approached any particular existing Shareholder or security holder or an identifiable class of existing security holder to participate in the issue of the Equity Securities. No existing Shareholder's votes will therefore be excluded under the voting exclusion in the Notice. 5.5 Board recommendations The Board recommends that Shareholders vote in favour of Resolution 2. Resolution 2 is a special resolution. The Resolution will be carried if 75% or more of the votes cast by eligible Shareholders are in favour of the Resolution. The Chairman intends to exercise all available proxies in favour of Resolution Resolutions 3, 4 and 5 Election of Directors Messrs Staude, Robertson and Shorrocks 6.1 General Clause 13.4 of the Constitution allows the Directors to appoint at any time a person to be a Director as an addition to the existing Directors, but only where 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 general meeting and is then eligible for re-election. Mr Warren Staude was appointed as a Director on 28 July 2016 and accordingly retires and seeks election at this Meeting. Messrs Guy Robertson and Mr Raymond Shorrocks were each appointed as Directors on 31 December Due to an administrative oversight, Messrs Robertson and Shorrocks did not retire and seek election at the general meeting of the Company held on 24 February To address this oversight, each of Messrs Robertson and Shorrocks will retire and seek election at this Meeting. Information on the qualifications, skills and experience of Messrs Staude, Robertson and Shorrocks is set out below. 6.2 Mr Warren Staude Mr Warren Staude is a qualified geologist and mineral economist and has over 45 years professional experience in the mining industry, specialising in resource investment, evaluation and management. Mr Staude has held a number of positions as Director and Chairman of ASX listed resource companies. Page 14

16 Mr Staude holds a B.Sc in geology from Sydney University and an M.Sc in mineral economics from Macquarie University. Mr Staude is a Director of Black Bull Resources Inc (TSX-V). 6.3 Mr Guy Robertson Mr Guy Robertson is a chartered accountant with extensive experience in all aspects of the operation and management of ASX listed companies. Mr Robertson has held senior positions in a number of companies in the Jardine Matheson Group in Australia and Hong Kong, in the areas of insurance, property and retail. Mr Robertson has over 10 years experience as a Director and Company Secretary of ASX listed exploration companies. Mr Robertson is a Director of Metal Bank Limited and Estrella Resources Limited. 6.4 Mr Raymond Shorrocks Mr Raymond Shorrocks has over 20 years experience in corporate finance and has advised a diverse range of mining companies. Mr Shorrocks has been instrumental in managing and structuring equity capital raisings as well as having advised extensively in the area of mergers and acquisitions. Mr Shorrocks is a Director of Galilee Energy Limited, Pryme Energy Limited and Estrella Resources Limited. 6.5 Board recommendation The Board (excluding Mr Warren Staude, to whom the Resolution relates), recommends that Shareholders vote in favour of Resolution 3. The Board (excluding Mr Guy Robertson, to whom the Resolution relates), recommends that Shareholders vote in favour of Resolution 4. The Board (excluding Mr Raymond Shorrocks, to whom the Resolution relates), recommends that Shareholders vote in favour of Resolution 5. Resolutions 3, 4 and 5 are ordinary resolutions. The Chairman intends to exercise all available proxies in favour of Resolutions 3, 4 and Resolution 6 Ratification of issue of Advisor Options 7.1 General At the Company s general meeting held on 24 February 2016, it obtained Shareholder approval for the issue of 10,000,000 Options to an advisor of the Company. As these Options were not issued within 3 months of the previous meeting in accordance with the requirements of Listing Rules and 14.7, the previous Shareholder approval has lapsed. Consequently, on 22 August 2016, the Company issued 15,000,000 Options to the same advisor in satisfaction of its obligation to issue such Options (Advisor Options). The Advisor Options are exercisable at $0.05 each on or before 31 August The issue of the Advisor Options was undertaken in accordance with Listing Rule 7.1. Resolution 6 therefore seeks ratification of the issue of the 15,000,000 Advisor Options. Page 15

17 7.2 Listing Rules 7.1 and 7.4 A summary of Listing Rule 7.1 is contained in Section 10.2 above. Listing Rule 7.4 provides that an issue by a company of equity securities made without approval under Listing Rule 7.1 is treated as having been made with approval for the purposes of Listing Rule 7.1 if the issue did not breach Listing Rule 7.1 and the company s members subsequently approve it. While the outcome of Resolution 6 will have no effect on the issue of the Advisor Options in question, Shareholder approval will restore the Company s ability to issue further equity securities under Listing Rule 7.1 in the next 12 months from the date of issue, to the extent of the 15,000,000 Advisor Options. 7.3 Technical information required by Listing Rule 7.5 Pursuant to and in accordance with Listing Rule 7.5, the following information is provided in relation to the issue of the Advisor Options: (a) (b) (c) (d) (e) (f) 15,000,000 Advisor Options were issued; the Advisor Options were issued in consideration for the Advisor s services to the Company and will therefore be issued at an issue price of nil; the Advisor Options are exercisable at $0.05 each and have and an expiry date of 31 August The terms and conditions of the Advisor Options are in Schedule 2; the Advisor Options were issued to the Advisor or its nominees, none of whom are a related party of the Company; no funds were raised from the issue of the Advisor Options; and a voting exclusion statement is included in the Notice. 7.4 Board recommendation The Board recommends that Shareholders vote in favour of Resolution 6. Resolution 6 is an ordinary resolution. The Chairman intends to exercise all available proxies in favour of Resolution 6. Special business: Acquisition of Golden Spur Resources Pty Ltd 8. Acquisition of Golden Spur Resources Pty Ltd 8.1 Conditional Acquisition Resolutions The Acquisition Resolutions (Resolutions 7 to 10, inclusive) are inter-conditional, meaning that each of them will only take effect if all of them are approved by the requisite majority of Shareholders votes at the Meeting. If any of the Acquisition Resolutions are not approved at the Meeting, none of the Acquisition Resolutions will Page 16

18 take effect and the Acquisition Agreement and other matters contemplated by the Acquisition Resolutions will not be completed. 8.2 Existing activities of the Company The Company is a mineral explorer, with a current focus on coal exploration in Mongolia. The Company has an interest in two exploration licences which are held under a joint venture arrangement. The Company currently intends on maintaining these exploration licences following completion of the Acquisition. As previously announced, the Company has been identifying and evaluating new investment opportunities. This has resulted in the Acquisition. The Company will continue to investigate and review complementary acquisitions following completion of the Acquisition. 8.3 Change in the scale of the Company's activities As announced on 22 August 2016, the Company has entered into a conditional binding term sheet with Golden Spur Resources Pty Ltd (Golden Spur) and the Golden Spur Vendors to acquire 100% of the issued share capital of Golden Spur (Acquisition). Golden Spur is the legal and beneficial owner of the Bellveue Gold Project in Western Australia, which is comprised of 3 mining leases and 1 exploration licence. As the Acquisition comprises a significant change in the scale of the Company's activities, Resolution 7 seeks Shareholder approval for a change in the scale of the activities of the Company. The Company proposes to, subject to the receipt of Shareholders' approval of the Acquisition Resolutions and the terms of the Acquisition Agreement: (a) (b) (c) proceed to completion of the Acquisition, pursuant to which the Company will issue 60,000,000 Shares to the Golden Spur Vendors (or their respective nominees) in consideration for 100% of the issued shares of Golden Spur (Resolution 8); raise up to $1,200,000 by an issue of up to 60,000,000 Shares at $0.02 each pursuant to a placement to sophisticated and professional investors (Resolution 9); and issue 15,000,000 Shares to the Facilitator in payment of its fees in connection with the Acquisition (Resolution 10). Other information considered material to Shareholders' decision on whether to pass the Acquisition Resolutions is set out in this Explanatory Memorandum, and Shareholders are advised to read this information carefully. 8.4 Key terms of the Acquisition The key terms of the Acquisition are as follows: (a) Conditions Precedent Completion of the Acquisition remains subject to Shareholders providing the necessary approvals for the Acquisition, as being sought at this Meeting. Page 17

19 (b) Consideration In exchange for the Company acquiring Golden Spur, the Company will issue 60,000,000 Shares to the Golden Spur Vendors. Approval for the issue of the Consideration Shares is the subject of Resolution 8. (c) Royalty The Company has agreed to pay the Golden Spur Vendors a royalty on the following terms: (i) (ii) (iii) $25 per ounce royalty from all future gold sales from the Bellveue Gold Project; a maximum aggregate royalty amount of $2,500,000; and royalty payments to be made quarterly. (d) Repayment of loans The Golden Spur Vendors have advanced loans to Golden Spur by way of shareholder loans. At completion of the Acquisition, the Company will repay these loans to a maximum of $821,000 in full and final satisfaction of these loans. (e) Director appointment 8.5 Bellveue Gold Project Golden Spur is entitled to appoint one nominee as a Director from completion of the Acquisition. As at the date of this Notice, the nominee has not been identified. Detailed information regarding the Bellevue Gold Project is contained in the Information Memorandum prepared by Geonomics Australia Pty Ltd, which is annexed to this Notice. The Bellevue Gold Project is comprised of M36/24, M36/25, M36/299 and E36/535. Golden Spur has notified the Company that plaints have been lodged in respect of M36/24 and M36/25. Golden Spur has confirmed to the Company that it has met its minimum expenditure commitment and is of the view that the plaints have no merit. If the plaints are not withdrawn, the Company intends on defending the plaints following completion of the Acquisition. 8.6 Pro forma balance sheet Set out below is the consolidated balance sheet (statement of financial position) as at 30 June 2016 of the Company (Balance Sheet A ), Golden Spur and a pro-forma consolidated balance sheet ( Balance Sheet C ) assuming the following: (a) the issue of 60,000,000 Capital Raising Shares at an issue price of $0.02 each to raise $1,200,000; Page 18

20 (b) the acquisition of 100% of the shares on issue in Golden Spur by way of an issue of 60,000,000 Consideration Shares for a total fair value of $1,500,000; and (c) the repayment of Golden Spur loans of $821,000. Draig Golden Spur Acquisition Capital Raising Consolidated Current Assets Cash assets 1,961,056 99, ,000 1,128,000 2,367,932 Trade and other receivables 55,069 42,605 97,674 Total Current Assets 2,016, , ,000 1,128,000 2,465,606 Non-Current Assets Deferred exploration expenditure - 1,398,291 1,500,000 2,898,291 Total Non-Current Assets 1,398,291 1,500,000 2,898,291 Total Assets 2,016,125 1,540, ,000 1,128,000 5,363,897 Current Liabilities Trade and other payables 44,138 94, ,987 Borrowings - 821, ,000 Total Current Liabilities 44, , , ,987 Non-Current Liabilities Deferred debt obligation 1,000,000 1,000,000 Total Non-Current Liabilities 0 1,000, ,000,000 Total Liabilities 44,138 1,915, , ,138,987 Net Assets (Liabilities) 1,971, ,077 1,500,000 1,128,000 4,224,910 Equity Issued Capital 25,721, ,500,000 1,128,000 28,349,556 Reserves 2,477-2,477 Accumulated Losses -23,752, ,084-24,127,124 Total Equity (Deficiency) 1,971, ,077 1,500,000 1,128,000 4,224, Pro forma capital structure The pro forma capital structure of the Company following completion of the Acquisition and the Capital Raising is set out below: Page 19

21 Shares Options Current issued capital 1 106,833,837 18,300,000 2 Consideration Shares (Resolution 8) Capital Raising Shares (Resolution 9) Facilitator Shares (Resolution 10) 60,000,000 Nil 60,000,000 Nil 15,000,000 Nil TOTAL 241,833,837 18,300,000 Notes: 1. Assumes no further Securities are issued prior to completion of the Acquisition, other than as set out in the table. 2. Comprised of: 1,650,000 unquoted Options exercisable at $0.05 each on or before 26 November 2017; 1,650,000 unquoted Options exercisable at $0.075 each on or before 26 November 2017; and 15,000,000 unquoted Options exercisable at $0.05 each on or before 31 August The above table is a statement of current intentions as at the date of this Notice and is subject to change. 8.8 Voting Power of Golden Spur Vendors The Golden Spur Vendors currently do not have any voting power in the Company and are not considered associates of each other, or related parties of the Company. The Golden Spur Vendors will have the following voting power in the Company on completion of the Acquisition, assuming all the Capital Raising Shares and Vendor Shares are issued: Vendor No. of Consideration Shares Voting Power Briant Nominees Pty Ltd 12,000, % Lantech Developments Pty Ltd 12,000, % Stevsand Investments Pty Ltd 12,000, % Whistling Kite Equity Limited 12,000, % Jason and Lisa Peterson 12,000, % TOTAL 60,000, % 8.9 Use of funds The Company intends to use the funds raised under the Capital Raising, together with the Company's existing cash reserves post-acquisition, in the 12 months following the completion of the Acquisition as follows: Page 20

22 Funds available Amount % Existing cash reserves of the Company 1 $1,961, % Funds raised from the Capital Raising 2 $1,200, % Funds raised from issue of Facilitator Shares $15, % Allocation of funds Amount ($) % Repayment of Golden Spur Vendor loans $821, % Expenses of the Acquisition (including Capital Raising fees) $72, % Expenditure on existing projects $500, % Expenditure on Bellveue Gold Project $500, % General working capital, including corporate and administrative costs 3 $1,283, % Total $3,176, % Notes: 1. These funds represent existing cash held by the Company at or around the date of this Notice. The Company expects to incur costs within the ordinary course of its business, which will diminish this amount prior to completion of the Acquisition. 2. Assumes the Capital Raising is fully subscribed. 3. General working capital will be utilised by the Company to pay for the corporate and administration costs of the Company generally and cost overruns in forecast expenditures (if any). The above table is a statement of current intentions as at the date of this Notice. Shareholders should note that, as with any budget, the allocation of funds set out in the above table may change depending on a number of factors, including the outcome of operational and development activities, regulatory developments and market and general economic conditions. In light of this, the Board reserves the right to alter the way the funds are applied. The use of further equity funding or Share placements will be considered by the Board where it is appropriate to accelerate a specific project. It is possible that future acquisitions that may be contemplated may exceed the current or projected financial resources of the Company and it is expected that these acquisitions would be funded by project finance and/or equity issues (subject to any required Shareholder approvals). Page 21

23 8.10 Key Dates Event Key Dates Execution of Acquisition Agreement 21 August 2016 Announcement of Acquisition 22 August 2016 Shareholder Meeting 31 October 2016 Completion of Acquisition 3 November 2016 Issue of Capital Raising Shares 4 November Board intentions if the Acquisition Resolutions are passed If the Acquisition Resolutions are passed and the Acquisition completes, it is the Board s intention to focus on the following activities: (a) (b) (c) commence exploration activities and desktop reviews of the Bellevue Gold Project; maintain the Company s existing projects and continue review of options to extract value; and continue to investigate complementary acquisitions Plans for the Company if the Acquisition Resolutions are not passed If the Acquisition Resolutions are not passed and the Acquisition is not completed, the Company will continue to look for potential projects in order to continue to take the Company forward Advantages of the Acquisition The Directors are of the view that the following non-exhaustive list of advantages may be relevant to a Shareholder s decision on how to vote on each Acquisition Resolution: (a) (b) (c) (d) the Directors believe that the Bellevue Gold Project will provide a significant opportunity to apply modern exploration techniques to a historically significant Western Australian gold mine that is considered to be underexplored; the Acquisition represents a significant opportunity for the Company to increase the scale of its activities which should increase the number and size of the investor pool that may invest in the Company s Shares; the Acquisition provides an opportunity for the Company to diversify its interests to include gold; and the Acquisition provides the Company with the opportunity to increase the value of the Company; and Page 22

24 8.14 Disadvantages of the Acquisition The Directors are of the view that the following non-exhaustive list of disadvantages may be relevant to a Shareholder s decision on how to vote on each Acquisition Resolution: (a) (b) (c) upon completion of the Acquisition, the Company will have a substantial area of focus on gold exploration in Western Australia, which may not be consistent with the objectives of all Shareholders; the Bellevue Gold Project may not turn out to be commercially viable and thus losses may be incurred. In general terms, investments in listed exploration companies should be considered highly speculative; and the Acquisition and the Capital Raising will result in the issue of Shares to the Golden Spur Vendors and new investors, which will have a dilutionary effect on the holdings of Shareholders Risks associated with the Acquisition Shareholders should be aware that if the Acquisition is approved and completed, the Company will be changing the scale of its activities and may be subject to additional or increased risks. The risks and uncertainties described below are not intended to be exhaustive. There may be additional risks and uncertainties that the Company is unaware of or that the Company currently considers to be immaterial, which may affect the Company. (a) Specific risks relating to the Company (i) Additional requirements for capital It is considered that the funds raised by the Capital Raising will be sufficient to meet the immediate objectives of the Company following completion of the Acquisition. However, the Company will require additional capital to fund further exploration or development of its existing or new projects, including the Bellevue Gold Project. The Company may seek to raise further funds through equity or debt financing, joint ventures, production sharing arrangements or other means. Failure to obtain sufficient financing for the Company's activities and future projects may result in the delay and indefinite postponement of exploration, development or production on the projects or even loss of a property interest. There can be no assurance that additional finance will be available when needed or, if available, the terms of the financing might not be favourable to the Company and might involve substantial dilution to Shareholders. (ii) Exploration and development Mineral exploration and project development are high risk undertakings. Page 23

25 There can be no assurance that exploration of the Bellevue Gold Project (or any of the Company s existing or future projects) will result in the discovery of an economic ore deposit. Even if an apparently viable deposit is identified, there is no guarantee that it can be economically exploited. Until the Company is able to realise value from its mineral projects, it is likely to incur ongoing operating losses. (iii) Drilling and exploration programmes There are operational risks associated with the Company s planned drilling and exploration programs for the Bellevue Gold Project. The planned surface sampling, drilling and exploration programs may be affected by a range of factors, including (but not limited to): geological and ground access conditions; unanticipated operational and technical difficulties encountered in sampling and drilling activities; adverse weather conditions, environmental accidents, and unexpected shortages or increases in the costs of consumables, spare parts, and labour; mechanical failure of operating plant and equipment; prevention of access by reason of political or civil unrest, outbreak of hostilities, outbreak of disease, inability to obtain regulatory consents or approvals; terms imposed by government on development of mining projects including conditions such as equity participation, royalty rates and taxes; and risks of default or non-performance by third parties providing essential services. No assurance can be given that planned and future exploration will be successful or that a commercial mining operation will eventuate at the Bellveue Gold Project, or any of the Company s existing mineral projects. (iv) Native Title and Aboriginal Heritage The Bellevue Gold Project is located within areas that are the subject of claims or applications for native title determination. The Native Title Act 1993 (Cth) and related State native title legislation and aboriginal heritage legislation may affect the Company s ability to obtain access to certain of its exploration areas or to obtain mining production titles. Settling any such claims will incur costs to the Company. The degree to which this may impact on the Company s activities will depend on a number of factors, including the status of particular tenements and their locations. At this stage, the Company is not able to quantify the impact, if any, of such matters on its operations. (v) Title The Bellevue Gold Project tenements are regulated by Western Australian state mining legislation. There is no guarantee that applications will be granted as applied for. Various conditions may also be imposed as a condition of grant. (vi) Environment The Bellevue Gold Project is subject to State and Federal laws and regulations regarding environmental matters and the Company will require approvals from and compliance with all relevant authorities. Page 24