Post on 16-Aug-2020
PanAust Limited ABN 17 011 065 160 Level 2, 99 Melbourne Street • PO Box 3468 • South Brisbane Qld 4101 Phone +61 (0) 7 3117 2000 • Facsimile +61 (0) 7 3846 4899 info@panaust.com.au • www.panaust.com.au
ASX ANNOUNCEMENT
22 April 2009
Notice of Annual General Meeting
PanAust Limited forwards the Notice of Meeting, Explanatory Statement and Proxy Form for the Annual General Meeting of PanAust to be held on Friday 22 May 2009 commencing at 10am. The Annual General Meeting will be held at the Stamford Plaza Hotel at the corner of Margaret and Edward Streets, Brisbane. The Notice of Meeting, Explanatory Statement and Proxy Form are being dispatched to shareholders today.
For further information contact:
Paul Scarr Company Secretary & General Counsel PanAust Limited
Tel: +61 7 3117 2000 Email: info@panaust.com.au Website: www.panaust.com.au
ABN 17 011 065 160
NOTICE OF ANNUAL GENERAL MEETING OF SHAREHOLDERS
AND EXPLANATORY STATEMENT
To be held on Friday 22 May 2009
at 10.00am
The Ballroom, Stamford Plaza Hotel
Corner of Margaret Street and Edward Street
Brisbane Queensland 4000
2 Notice of Annual General Meeting
Notice of Annual General Meeting The Annual General Meeting of PanAust Limited ABN 17 011 065 160 (“the Company”) will be held in the Ballroom at the Stamford Plaza Hotel, corner of Edward and Margaret Streets, Brisbane, Queensland on Friday 22 May 2009 at 10.00am. Receipt of reports and financial statements
1. To receive and consider the Directors’ Report and the Financial Report of the Company for the financial year ended 31 December 2008 and the Auditor’s Report on the Financial Report.
Resolution 1 – Adoption of Remuneration Report (non‐binding resolution)
2. To consider and, if thought fit, pass the following resolution as an ordinary resolution:
THAT the Remuneration Report contained in the Directors’ Report of the Company for the financial year ended 31 December 2008 be adopted. Under the Corporations Act 2001, this resolution is advisory only and does not bind the Directors or the Company.
Resolution 2 – Election of Mr Garry Hounsell as a Director
3. To consider and, if thought fit, pass the following resolution as an ordinary resolution: THAT Mr Garry Hounsell, who was appointed as a Director of the Company on 1 July 2008 by the Board of Directors in accordance with the Company’s constitution and is eligible for election, be elected as a Director of the Company.
Resolution 3 – Election of Mr Geoffrey Billard as a Director
4. To consider and, if thought fit, pass the following resolution as an ordinary resolution: THAT Mr Geoffrey Billard, who was appointed as a Director of the Company on 1 July 2008 by the Board of Directors in accordance with the Company’s constitution and is eligible for election, be elected as a Director of the Company.
Resolution 4 – Re‐election of Mr Andrew Daley as a Director
5. To consider and, if thought fit, pass the following resolution as an ordinary resolution: THAT Mr Andrew Daley, who retires by rotation in accordance with the Company’s constitution and is eligible for election, be re‐elected as a Director of the Company.
Notice of Annual General Meeting 3
Resolution 5 – Approval of issue of securities to the Managing Director
6. To consider and, if thought fit, pass the following resolution as an ordinary resolution:
THAT, in accordance with rule 10.14 of the ASX Listing Rules of the Australian Securities Exchange Limited, the issue of:
(a) 17.2 million options under the Executives’ Option Plan;
or
(b) 8 million share rights under the Share Rights Plan,
to Mr Gary Stafford, the Managing Director of the Company, in accordance with the terms described in the Explanatory Statement, be approved.
Resolution 6 – Issue of Options to Goldman Sachs JBWere Capital Markets Limited
7. To consider and, if thought fit, pass the following resolution as an ordinary resolution:
THAT, in accordance with rule 7.1 of the ASX Listing Rules of the Australian Securities Exchange Limited, the issue of 75 million options to Goldman Sachs JBWere Capital Markets Limited on the terms and conditions described in the explanatory statement be approved. Note that these options will only be issued if the loan facility from Goldman Sachs JBWere Capital Markets Limited is not fully repaid prior to 1 August 2009. Refer to the Explanatory Statement for further details.
General Business
8. To transact any other business that may be brought forward in conformity with the Company's Constitution.
By order of the Board
P. M. Scarr Company Secretary Brisbane 22 April 2009
4 Notice of Annual General Meeting
NOTES
Voting exclusion
The Company will, in accordance with rule 14.11 of the Listing Rules of the Australian Securities Exchange Limited, disregard any votes cast:
• in respect of Resolution 5, by Mr Gary Stafford and any associates of Mr Gary Stafford; and
• in respect of Resolution 6, by Goldman Sachs JBWere Capital Markets Limited and any of its associates.
However, the Company will not disregard any votes cast on any resolution if:
• it is cast by a person excluded from voting 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. Voting
The Company has determined that the shareholders who are on the Company’s share register at 7.00pm on 20 May 2009 will be taken, for the purposes of the Annual General Meeting, to be entitled to attend and vote at the meeting. Proxies
1. A Member who is entitled to vote at the meeting may appoint:
(a) one proxy if the Member is only entitled to one vote; or
(b) one or two proxies if the Member is entitled to more than one vote.
2. Where the Member appoints two proxies, the appointment may specify the proportion or number of votes that each proxy may exercise. If the appointment does not specify a proportion or number, each proxy may exercise half of the votes in which case any fraction of votes will be disregarded.
3. If you require an additional proxy form, the Company will supply it on request.
4. A proxy need not be a Member of the Company.
5. The proxy form and the power of attorney or other authority (if any) under which it is signed (or a certified copy) must be received by the Company, no later than 10.00am 20 May 2009, at:
(a) the Company's share registry office, Computershare Investor Services Pty Limited, Level 19, 307 Queen Street, Brisbane Queensland 4000 Australia; or
Notice of Annual General Meeting 5
(b) at Computershare Investor Services Pty Limited GPO Box 242, Melbourne, Victoria 3001 Australia; or
(c) by fax on: 1800 783 447 (within Australia); or +61 3 9473 2555 (outside Australia), or
(d) online through www.investorvote.com.au
Proxy Form A proxy form is enclosed with this Notice of Meeting. The Proxy Form is an integral part of this Notice and both documents should be read together.
6 Explanatory Statement
EXPLANATORY STATEMENT Introduction
This Explanatory Statement has been prepared for the shareholders of PanAust Limited (the “Company”) for the Annual General Meeting to be held on Friday 22 May 2009 at 10.00am.
1. Resolution 1 – Adoption of the Remuneration Report
Companies listed on the Australian Securities Exchange (“ASX”) are required to put to their shareholders a resolution to adopt the Remuneration Report. The Corporations Act 2001 provides that the resolution is advisory only.
The Remuneration Report forms part of the Directors’ Report. It is contained in the annual report (pages 12 to 25) which is available on the Company’s website. The Remuneration Report contains all of the information required by the Corporations Act 2001. It details the remuneration principles and policies adopted by the Board, the function of the Remuneration Committee (comprising independent Non‐Executive Directors) and the remuneration arrangements for the year.
In 2008, Non‐Executive Directors were paid a base fee for serving as a Director and an additional fee for membership of a Board Committee. The fees are detailed on page 17 of the Remuneration Report. In setting the fees, regard is had to relevant external surveys, including the Ernst & Young Executive and Board Remuneration Report. The aggregate amount paid to Directors in 2008 was within the aggregate A$800,000 fee amount approved at the last Annual General Meeting of the Company.
The Remuneration Report also details remuneration paid to the Managing Director and other senior executives (who receive fixed remuneration, short‐term incentives and long‐term incentives, including share based remuneration). The Company has disclosed the remuneration details of all senior executives, notwithstanding that the Corporations Act 2001 only requires disclosure with respect to the five highest paid executives.
As is the case with Non‐Executive Directors, remuneration for the Managing Director and other senior executives is reviewed by the Remuneration Committee by reference to relevant comparative market data, including a remuneration report by McDonald & Company (Australasia) Pty Ltd which is based on data received from approximately 150 organisations in the mining sector.
The Remuneration Report contains details of options issued under the Executives’ Option Plan and share rights issued under the Share Rights’ Plan to the Managing Director and other senior executives since the last reporting period. All such options and share rights are subject to performance conditions which require the application of a Total Shareholder Return test over a performance period. The options and share rights only vest if the Company performs in the top 50% of the relevant peer group. The Company must perform in the top 25% of the relevant peer group for 100% of the options or share rights to vest. Further details are provided in the discussion on Resolution 5.
Explanatory Statement 7
The basis for eligibility for short term incentives is also detailed in the Remuneration Report. This includes details of the proportion of the short term incentive linked to each performance parameter, including production targets, cost control, and safety and environmental outcomes.
Recommendation: The Directors unanimously recommend that shareholders vote in favour of Resolution 1.
2. Resolution 2 – Re‐election of Mr Garry Hounsell as a director
On 1 July 2008, the Board appointed Mr Garry Hounsell as a Director of the Company. This appointment was made in accordance with clause 53.1 of the constitution of the Company. Mr Hounsell was also appointed as Chairman of the Board of Directors. Mr Hounsell succeeded Mr Robert Bryan who retired as Chairman on 30 June 2008. Mr Hounsell is Chairman of the Remuneration Committee and the Nominations Committee. He is also a member of the Audit Committee.
Under clause 53.2 of the constitution of the Company, any Director appointed by the Board to fill a casual vacancy must stand for election at the next Annual General Meeting. Accordingly, Mr Hounsell seeks election at this Annual General Meeting.
Mr Hounsell is an accountant with significant experience as a director of large listed public companies. He is a Fellow of the Institute of Chartered Accountants in Australia and a Fellow of the Australian Institute of Company Directors. Prior to accepting positions as a public company director, Mr Hounsell was a senior partner of Ernst & Young and Country Managing Partner of Arthur Andersen. He was the ‘signing partner’ for the audit of BHP Billiton Limited from 2000 to 2002. From 2005 to 2007, he was an executive of Investec Bank (Australia) Limited. Mr Hounsell is an external Board Member of Freehills, a leading Australian law firm.
Mr Hounsell is also a Director of Qantas Airways Limited (Chairman of Qantas Audit Committee), Orica Limited, Nufarm Limited (Chairman of Nufarm Audit Committee), and Mitchell Communications Group Limited (Deputy Chairman).
Recommendation: Mr Hounsell has an interest in the resolution and therefore does not make a recommendation. The other directors unanimously support the election of Mr Garry Hounsell as a director and recommend that shareholders vote in favour of Resolution 2. 3. Resolution 3 – Re‐election of Mr Geoffrey Billard as a director
On 1 July 2008, the Board also appointed Mr Geoffrey Billard as a Non‐Executive Director of the Board. This appointment was also made in accordance with clause 53.1 of the constitution. As indicated above, any Director appointed by the Board to fill a casual vacancy must stand for election at the next Annual General Meeting. Since being appointed to the Board, Mr Billard has served as a founding member of the Sustainability Committee.
8 Explanatory Statement
Mr Billard is an economist who has achieved wide career experience in the mining industry. This included some 20 years with CRA (now Rio Tinto) at Bougainville Copper, Argyle Diamonds and as Managing Director (Group Financial Services) before taking up senior executive positions with Pasminco and MIM in operational, marketing, finance, new project development and technology roles.
Mr Billard previously served as a Director of Bougainville Copper Limited and Metal Manufactures Limited (both listed public companies). Since 1998, Mr Billard has operated his own consulting business providing specialist advisory services on strategic projects for both corporate and government clients. In this capacity, he has previously assisted PanAust in forming and implementing corporate strategy and organisational change.
Recommendation: Mr Billard has an interest in the resolution and therefore does not make a recommendation. The other directors unanimously support the election of Mr Geoffrey Billard as a director and recommend that shareholders vote in favour of Resolution 3.
4. Resolution 4 – Re‐election of Mr Andrew Daley as a director
Mr Andrew Daley was appointed as a Non‐Executive Director of the Company on 3 August 2004. In accordance with clause 55.2 of the constitution, Mr Daley retires by rotation and seeks re‐election. Mr Daley was a founding member of the Audit Committee and continues to serve in that capacity. In addition, Mr Daley served as Chairman of the Finance Committee when that committee was established to provide supervision of the arrangement of project finance arrangements for the Phu Kham Copper Gold Operations.
Mr Daley is a Chartered Engineer (UK) with significant experience in the mining and financing sector. He is a Fellow of AusIMM and a member of IOM3. Mr Daley commenced his career on the Zambian copper belt with Anglo American and subsequently worked with Rio Tinto and Conoco Minerals in Africa prior to relocating to Australia with Fluor Australia in early 1981. Since late 1983, Mr Daley has primarily worked in the resource finance sector, initially with National Australia Bank, then Chase Manhattan and, more recently, as a director of Barclays Capital mining team in London and Sydney.
Mr Daley is currently a Director of Kentor Gold Limited, Uranex NL and a Director and Chairman of Dragon Mining Ltd, all of which are listed on the ASX. Mr Daley is also a Director and Chairman of Minerva Resources plc, an exploration company listed on the AIM in London.
Recommendation: Mr Daley has an interest in the resolution and therefore does not make a recommendation. The other directors unanimously support the re‐ election of Mr Andrew Daley as a director and recommend that shareholders vote in favour of Resolution 4.
Explanatory Statement 9
5. Resolution 5 – Issue of securities to the Managing Director
5.1 Background and reasons for the proposal
The Remuneration Committee has completed a review of the Managing Director’s remuneration. It considered external advice, including a report on executive remuneration in the mining industry prepared by McDonald and Company Australasia Pty Ltd (referred to above in relation to Resolution 1). Following this review, the Directors (other than Mr Stafford) resolved to offer to Mr Gary Stafford, the Managing Director, either:
(a) 17.2 million new options (“new options”) in accordance with the PanAust Executives’
Option Plan (the “EOP”); or
(b) 8 million new share rights under the PanAust Share Rights Plan (the “SRP”), (collectively referred to as “new securities”).
The offer is consistent with the value of long‐term incentives issued to chief executive officers of companies of a comparable size. As stated in the Remuneration Report, the objective of offering options or share rights is to reward the Managing Director in a manner which aligns the long term incentive with the creation of shareholder wealth. Accordingly, the vesting of the new securities is subject to the performance of the Company as measured against the performance of the S&P/ASX 300 Metals and Mining Index excluding the Company. Further details are provided below.
The Australian Taxation Office now takes the view that an executive option or share right is acquired when approval is given by shareholders. This interpretation can have dramatic tax consequences if there is a fluctuation in the share price between the date of determination of the exercise price and the date of shareholder approval. So as to enable the Managing Director to make a fully informed decision as to the tax consequences of his decision, the Board wishes to provide the Managing Director with the maximum time available to make an election as to which new securities to accept. Accordingly, if the shareholders approve the resolution, Mr Stafford will have until 4:30pm on the date of the Annual General Meeting to make an election.
5.2 Shareholder approval and the proposal
The listing rules of the ASX require the Company to obtain the approval of shareholders to the issue of options and/or share rights to a director under an employee incentive scheme. Accordingly, approval is sought under listing rule 10.14 for the issue to Mr Gary Stafford, the Managing Director of the new securities.
10 Explanatory Statement
The theoretical value of the new securities for accounting purposes and the terms of the new securities are as follows:
No of Securities under each
alternative
Exercise Price per security
*Estimated Value
Expiry Date
(a)
17,200,000 new options
A$0.30 A$1 million 31 December 2013
(b)
8,000,000 new share rights
Nil A$1 million 31 December 2018
* The value was calculated by an independent actuary in a manner broadly consistent with the method described by AASB 2 (Share‐based Payments). The valuation assumed a share price of A$0.30 which is the same as the closing share price of the Company on 9 April 2009. Please note that the realised value of the new options and new share rights to the Managing Director may be less or more than this and will be dependent upon the performance of the Company.
A summary of the principal terms of issue of the new securities is as follows:
(a) Subject to satisfaction of the performance conditions, the vesting date for the new securities is 31 December 2011 (the “Vesting Date”). The expiry date of the new options is 31 December 2013. The expiry date of the new share rights is 31 December 2018. For taxation reasons, it is typical for the expiry date of options to fall within a five year period of the date of issue and for the expiry date of share rights to fall within a ten year period.
(b) There is no issue price for the new securities. No loan is proposed in relation to the acquisition of the new securities by the Managing Director. If the resolution is passed, it is proposed that new securities will be issued by 31 May 2009 and, in any event, within twelve months after the annual general meeting.
(c) The exercise price for the new options of A$0.30 represents a 11% premium to the volume weighted average price of shares traded over the twenty trading days commencing on 13 March 2009 and ending on 9 April 2009 and is the same as the closing price on 9 April 2009. Upon payment of the exercise price, each new option converts into a fully paid ordinary share in the Company. There is no exercise price for the share rights. Each new share right converts into a fully paid ordinary share in the Company.
(d) Whether or not the new securities vest (and how many vest) depends upon whether or not the performance conditions have been met. The performance conditions are the same for new options and new share rights. In this case, the performance conditions are based upon the Total Shareholder Return (“TSR”) of the Company as measured against the the S&P/ASX 300 Metals and Mining Index (the “Index”) over a performance period. The performance period commenced on 1 January 2009 and ends on each of 4 testing dates. The share price at the commencement of the performance period was A$0.085.
Explanatory Statement 11
If the TSR Ranking of the Company is:
• equal to or less than the 50th percentile, the number of new securities that vest is nil;
• equal to the 51st percentile, the number of new securities that vest is 50% of the total;
• equal to or greater than the 75th percentile, the number of new securities that vest is 100% of the total; and
• greater than the 51st percentile, but less than the 75th percentile, the number of new securities that vest increases on a straight line basis between 50% and 100% of the total.
Testing of TSR occurs on each of the following testing dates: 31 March 2011, 30 June 2011, 30 September 2011 and 31 December 2011 (“Testing Dates”). If performance conditions are met on a Testing Date, the relevant number of new securities will vest on the Vesting Date. If the performance conditions have not been satisfied with respect to all of the new securities on a Testing Date, then the number of remaining new securities will be carried forward for re‐testing on the next Testing Date. Subject to the re‐testing regime detailed above, if the Company does not perform in the top 50% of the companies comprising the Index during the performance period, then all of the new securities will lapse. If the Company performs in the top 25% of the companies comprising the Index, then all of the new securities will vest. A summary of the EOP and SRP is set out in Schedule 1. A copy of the EOP and the SRP can be obtained from the Company Secretary upon request.
5.3 Effect of the proposal
On the basis of the total shareholding in the Company as at 15 April 2009, Mr Stafford holds approximately 0.92% of the total issued ordinary shares in the Company. If all of the options currently held by Mr Stafford were exercised, he would hold approximately 1.24% of the issued shares in the Company (on a fully diluted basis). If the new securities were issued and Mr Stafford satisfied the performance conditions, his holding would increase to 1.64% (if he elected to accept the new share rights) or 2.10% (if he elected to accept the new options). Accordingly, the issue of the new securities could have a small dilutionary impact upon other shareholders. However, this impact must be balanced against providing an appropriate long term incentive to the Managing Director. It should be noted that, as indicated in the valuation table on page 10, the actuarial valuation of the new options being offered to Mr Stafford is the same as the acutuarial valuation of the new share rights being offered to Mr Stafford. 5.4 Use of funds raised
There is no issue price for the new options and share rights. The funds raised by the exercise of the new options will be used by the Company for working capital. The new share rights do not have an exercise price and therefore would not generate any funds.
12 Explanatory Statement
5.5 Issue of securities since last approval
Mr Gary Stafford is the only director of the Company who is eligible to participate under the EOP. At the general meeting of the Company on 23 May 2008, shareholders approved the issue of options to Mr Stafford under the EOP. These are the only securities issued to a director under an employee incentive scheme since that date. Details of those options are set out in the table below:
Date of Issue
Issue Price
No of Options Exercise Price
Expiry Date
4 June 2008
Nil 4.4 million A$0.90
29 February 2012
5.6 Voting exclusion
In accordance with listing rule 14.11.1, the Company will disregard any votes cast by Mr Stafford and his associates in respect of the resolution.
5.7 Recommendation
Mr Stafford has an interest in the resolution and therefore does not make a recommendation. The other directors unanimously recommend the issue of the new options to Mr Stafford for the reasons set out in section 5.1 and recommend that you vote in favour of Resolution 5. None of the directors (other than Mr Stafford) have an interest in the outcome of the resolution.
6. Resolution 6 – Issue of 75 million options to Goldman Sachs JBWere Capital Markets Limited (“GSJBW”)
6.1 Background
The Company has previously announced that GSJBW agreed to extend the date for repayment of its fully subordinated bridge facilities to 31 March 2010 (the “GSJBW Facility”). As at 31 March 2009, the total amount outstanding under the fully drawn GSJBW Facility was approximately US$80.3 million (including capitalised interest). The Company has a commercial incentive to repay the GSJBW Facility prior to 1 August 2009. On and from that date, the interest rate increases from 12% to 15% and the maximum redemption fee (linked to the market capitalisation of the Company) increases to US$10 million. For further details of the terms and conditions of the GSJBW Facility, shareholders can refer to the explanatory statement for the Extraordinary General Meeting of the Company held on 15 April 2009.
As a condition of securing the extension of the GSJBW Facility, the Company agreed to convene the Extraordinary General Meeting of the Company held on 15 April 2009 to consider a resolution to approve the issue of 75 million options to GSJBW with an exercise price of A$0.105 each (the “first tranche options”). This resolution was passed
Explanatory Statement 13
at the Extraordinary General Meeting of the Company and the first tranche options have been issued to GSJBW.
Under the terms and conditions of the GSJBW Facility, if the Company does not repay all of the GSJBW Facility prior to 1 August 2009, then a further tranche of 75 million options (the “second tranche options”) must be issued at an exercise price determined by reference to the market price immediately prior to the date of issue plus a premium of 10% (refer to section 6.3(a) of this explanatory statement for further details). The issue of this second tranche of 75 million options is the subject of this resolution. As previously advised, the Company has engaged Rothschild Australia Limited to manage the process to refinance the GSJBW Facility. The Company is confident that this process will be completed prior to 1 August 2009.
6.2 Why is shareholder approval required?
Under Listing Rule 7.1 (the “15% rule”), a Company cannot issue more than 15% of its total issued securities in any twelve month period without first obtaining shareholder approval. This is subject to some exceptions. Under Listing Rule 7.1.5, an agreement to issue securities which is subject to shareholder approval prior to the issue being made is not treated as an agreement to issue securities for the purposes of the 15% rule. Any subsequent issue of the securities must only be made with shareholder approval. This was the Listing Rule relied upon by the Company at the time of the share placement completed in January 2009. Accordingly, it is necessary for the Company to seek shareholder approval prior to issuing the second tranche options. Under Listing Rule 7.3, shareholders can only approve the issue of securities within three months of the date of approval. Given that the obligation to issue the second tranche options only arises if the GSJBW Facility is not repaid prior to 1 August 2009, it was not possible to consider the potential issue of the second tranche options at the Extraordinary General Meeting on 15 April 2009. 6.3 What are the terms of the options proposed to be issued to GSJBW?
The terms of the options are as follows:
(a) The exercise price of each option is 10% above the greater of the closing price of PanAust shares on 31 July 2009 and the five day volume weighted average price over the five trading days prior to 3 August 2009 (with allowances made for trading halts and suspensions).
(b) The exercise period commences on the date of issue and expires at the same time as the exercise period for the first tranche options; namely 14 April 2012. Upon exercise and payment of the exercise price, the Company will issue one fully paid ordinary share for each option.
14 Explanatory Statement
(c) As indicated above, the Company agreed to enter into an option deed as part of the consideration for the extension of the GSJBW Facility. Accordingly, there is no issue price for the new options.
(d) The second tranche options will only be issued if the GSJBW Facility is not repaid prior to 1 August 2009. Under the arrangements with GSJBW, the Company is obliged to put this resolution to shareholders at the Annual General Meeting. This is to ensure that the second tranche options can be immediately issued in the event that the GSJBW Facility is not repaid prior to 1 August 2009.
(e) If the Company makes a pro rata issue or a bonus issue, there will be an adjustment to the exercise price of the options or the number of options on issue in accordance with the formula provided in the ASX Listing Rules. Similarly, if there is a reconstruction of the issued capital of the Company, there is an adjustment to the number of options, the exercise price of the options or the number of shares issued so as to comply with the ASX Listing Rules.
(f) The holder of the options is only permitted to participate in new issues of securities if it has exercised its options prior to the new issue.
(g) Prior to 31 March 2010 and the date on which the GSJBW Facility is repaid in full (“Transfer Restriction Date”), the options can only be transferred to an affiliate of GSJBW. After the Transfer Restriction Date, an option holder may transfer the options without restrictions provided that if the options are still held by GSJBW or an affiliate they must give at least five business days’ prior notice to the Company of any proposed transfer and consult in good faith with the Company in relation to such proposed transfer.
(h) After the options are exercised, then GSJBW or an affiliate (for a period of time after becoming the holder of shares) must give five business days’ prior notice to the Company of any proposed transfer and consult in good faith with the Company in relation to such proposed transfer.
6.4 Effect of the proposal
If the 75 million options are issued to GSJBW and are exercised, then GSJBW will acquire an additional 3.85% interest in the Company on a fully diluted basis. Accordingly, shareholders should note that if the options are approved, it will have a small dilutionary effect on existing shareholders’ interests. However, that impact must be balanced against the consequences arising under the GSJBW Facility if the Company fails to approve the issue of the 75 million options.
If the shareholders do not approve the issue of the options to GSJBW, then that constitutes an event of default under the GSJBW Facility. An event of default under the GSJBW Facility would have the following consequences:
(a) Default interest would accrue under the GSJBW Facility. This would represent
an extra 2% above the applicable interest rate (a total interest rate of 14% up to 31 July 2009 and 17% thereafter).
Explanatory Statement 15
(b) The total amount outstanding under the GSJBW Facility would, at GSJBW’s election, become due and payable, subject to the terms of subordination with the banks that provided the project financing for the development of the Phu Kham Copper Gold Operations (the “Senior Project Banks”).
(c) The Company would be obliged to raise capital within three months (by 22 August 2009) to repay the total amount outstanding under the GSJBW Facility. The total amount outstanding under the GSJBW Facility would comprise principal, interest (including the elevated rate of default interest), the redemption fee and other fees, charges and expenses usual for a debt facility.
(d) If the Company were unsuccessful in raising capital to pay GSJBW the total amount outstanding under paragraph (c) within the three month period, then default interest would continue to accrue. The proceeds of any future capital raising by the Company would have to be applied in priority to repay the total amount outstanding. Whilst the debt is subordinated to the interests of the Senior Project Banks, GSJBW would be limited in the enforcement action that it could take without the consent of the Senior Project Banks.
6.5 Use of funds raised
There is no issue price for the new options. Should the options be issued and exercised, the funds raised by the exercise of the options would be used by the Company for working capital. 6.6 Voting exclusion
In accordance with Listing Rule 14.11, Goldman Sachs JBWere Capital Markets Limited and any of its associates are excluded from voting on this resolution. 6.7 Recommendation: The Directors unanimously recommend that shareholders vote
in favour of Resolution 6.
16 Explanatory Statement
SCHEDULE 1
Summary of the Executives' Option Plan (the “EOP”) and the Share Rights Plan (the “SRP”) 1. The Board may invite a person who is an executive in permanent full time or permanent part
time employment with the Company or an associated company (the “Group”) or on a fixed term contract with the Group to participate. A contractor or an employee of a contractor may also be invited to participate. Participation is voluntary. Participation in the EOP and SRP does not confer any right upon the participant to future issues of options or share rights. A participant may nominate an associate (such as a personal superannuation fund) to hold the securities.
2. The Board has the discretion to determine: (a) the number of options and share rights to be issued under the EOP and SRP; (b) the exercise price (in the case of options under the EOP); and (c) the other terms of issue of the options and share rights. The Board has the discretion to impose performance hurdles which must be satisfied before the options or share rights can be exercised. Options and share rights may not be transferred.
3. Where the employment of a participant is terminated for any reason (other than retirement, retrenchment or death), any unexercised options which have outstanding performance conditions and any unvested share rights will immediately lapse. Any unexercised options which have vested and any vested share rights are not affected.
4. Where the employment of a participant within the Group is terminated by reason of retirement, retrenchment or death, any options and share rights which have not vested will immediately lapse unless the Board exercises its discretion to the contrary. Any unexercised options and share rights which have vested are not affected. A participant will not be taken to have retired until they reach the age of 60 or such other age as the Board may approve in a particular case.
5. Holders of options and share rights are not permitted to participate in new issues without first
exercising their options or share rights. However, adjustments are made to the number of shares over which the options and share rights exist and/or the exercise price (if any) to take into account pro rata bonus and cash issues. If there is a pro rata cash issue, the exercise price (if any) is changed in accordance with the formula contained in ASX Listing Rule 6.22 so that the holder obtains the benefit of the bonus element. If there is a pro rata bonus issue of securities, then upon exercise of the option or share right, the holder will also receive the number of shares that would have been issued if the option or share right had been exercised prior to the books closing date for the bonus issue. In any reconstruction, the number of options and share rights and the exercise price (if any) will be similarly reconstructed in accordance with the ASX Listing Rules.
6. Upon a change in the control of the Company (for example, a takeover) or a demerger, all unvested options and share rights will immediately vest and become exercisable. Immediately prior to the change in control or demerger, the Board must make appropriate arrangements to ensure that the holders of options and share rights are able to exercise the option or share right on or prior to the relevant event. A change in control is triggered where an entity acquires the right to 50% or more of the votes to appoint or remove a director or has 50% or more of the votes exerciseable by all directors or has a right to 50% or more of the profits or distributions of the Company.
000001 000 PNA
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By Mail:Computershare Investor Services Pty LimitedGPO Box 242 MelbourneVictoria 3001 Australia
Alternatively you can fax your form to(within Australia) 1800 783 447(outside Australia) +61 3 9473 2555
For all enquiries call:(within Australia) 1300 552 270(outside Australia) +61 3 9415 4000
Proxy Form
For your vote to be effective it must be received by 10.00am Wednesday 20 May 2009
How to Vote on Items of BusinessAll your securities will be voted in accordance with your directions.
Appointment of ProxyVoting 100% of your holding: Direct your proxy how to vote bymarking one of the boxes opposite each item of business. If you donot mark a box your proxy may vote as they choose. If you markmore than one box on an item your vote will be invalid on that item.
Voting a portion of your holding: Indicate a portion of yourvoting rights by inserting the percentage or number of securitiesyou wish to vote in the For, Against or Abstain box or boxes. Thesum of the votes cast must not exceed your voting entitlement or100%.
Appointing a second proxy: You are entitled to appoint up to twoproxies to attend the meeting and vote on a poll. If you appoint twoproxies you must specify the percentage of votes or number ofsecurities for each proxy, otherwise each proxy may exercise half ofthe votes. When appointing a second proxy write both names andthe percentage of votes or number of securities for each in Step 1overleaf.
Signing Instructions for Postal FormsIndividual: Where the holding is in one name, the securityholdermust sign.Joint Holding: Where the holding is in more than one name, all ofthe securityholders should sign.Power of Attorney: If you have not already lodged the Power ofAttorney with the registry, please attach a certified photocopy of thePower of Attorney to this form when you return it.Companies: Where the company has a Sole Director who is alsothe Sole Company Secretary, this form must be signed by thatperson. If the company (pursuant to section 204A of the CorporationsAct 2001) does not have a Company Secretary, a Sole Director canalso sign alone. Otherwise this form must be signed by a Directorjointly with either another Director or a Company Secretary. Pleasesign in the appropriate place to indicate the office held.
Attending the MeetingBring this form to assist registration. If a representative of a corporatesecurityholder or proxy is to attend the meeting you will need toprovide the appropriate “Certificate of Appointment of CorporateRepresentative” prior to admission. A form of the certificate may beobtained from Computershare or online at www.computershare.com.
Comments & Questions: If you have any comments or questionsfor the company, please write them on a separate sheet of paper andreturn with this form.
GO ONLINE TO VOTE,or turn over to complete the form
A proxy need not be a securityholder of the Company.
Control Number: 999999
SRN/HIN: I9999999999
www.investorvote.com.auVote online or view the annual report, 24 hours a day, 7 days a week:
Cast your proxy vote
Access the annual report
Review and update your securityholding
Your secure access information is:
PLEASE NOTE: For security reasons it is important that you keep yourSRN/HIN confidential.
999999_SAMPLE_0_0_PROXY/000001/000001/i
Change of address. If incorrect,
mark this box and make the
correction in the space to the left.
Securityholders sponsored by a
broker (reference number
commences with ‘X’) should advise
your broker of any changes.
Proxy Form Please mark to indicate your directions
Appoint a Proxy to Vote on Your Behalf
I/We being a member/s of PanAust Limited hereby appoint
the ChairmanOR
PLEASE NOTE: Leave this box blank ifyou have selected the Chairman of theMeeting. Do not insert your own name(s).
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxyto act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, asthe proxy sees fit) at the Annual General Meeting of PanAust Limited to be held at The Ballroom, Stamford Plaza Hotel, Corner of MargaretStreet and Edward Street, Brisbane Queensland on Friday, 22 May 2009 at 10.00am and at any adjournment of that meeting.
Items of Business PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on yourbehalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
Signature of Securityholder(s) This section must be completed.
Individual or Securityholder 1 Securityholder 2 Securityholder 3
Sole Director and Sole Company Secretary Director Director/Company Secretary
ContactName
ContactDaytimeTelephone Date
The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.
of the meeting
*I9999999999*
I 9999999999 I ND
P N A 2 2 0 5 0 9 A
MR SAM SAMPLEFLAT 123123 SAMPLE STREETTHE SAMPLE HILLSAMPLE ESTATESAMPLEVILLE VIC 3030
/ /
XX
1 Adoption of Remuneration Report
2 Election of Mr Garry Hounsell as a Director
3 Election of Mr Geoffrey Billard as a Director
4 Re-election of Mr Andrew Daley as a Director
5 Approval of issue of securities to the Managing Director
6 Issue of Options to Goldman Sachs JBWere Capital Markets Limited