2nd May 2006 07:01
Albidon Limited02 May 2006 ALBIDON LIMITED ARBN 107 288 755 __________________________________________________________________ NOTICE OF ANNUAL GENERAL MEETING EXPLANATORY MEMORANDUM ____________________________________________________________________ Date of Meeting 31 May 2006 Time of Meeting 11:30 am Place of Meeting Ground Floor 8 Colin Street West Perth Western Australia ALBIDON LIMITED ARBN 107 288 755 NOTICE IS HEREBY GIVEN that the Annual General Meeting of the shareholders ofAlbidon Limited ("Company") will be held at Ground Floor, 8 Colin Street, WestPerth, Western Australia on Wednesday 31 May 2005 at 11:30 am Western AustralianStandard Time, for the purpose of transacting the following business referred toin this Notice of Annual General Meeting. An Explanatory Memorandum containing information in relation to the followingResolutions accompanies this Notice of Meeting. AGENDA 1. To receive and consider the consolidated financial statements of the Company and the reports of the directors and auditor for the year ended 31 December 2005. 2. Resolution 1 - Re-election of Mr Michael Brook as a Director To consider and, if thought fit, to pass, with or without amendment the following resolution as an ordinary resolution: "That Mr Michael Brook, who retires by rotation in accordance with article 11.2 of the Company's Articles of Association and who offers himself for re-election, be elected a director of the Company." 3. Resolution 2 - Re-election of Mr Christopher De Guingand as a Director To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That Mr Christopher De Guingand, who retires by rotation in accordance with article 11.2 of the Company's Articles of Association and who offers himself for re-election, be elected a director of the Company." 4. Resolution 3 - Grant of Director Options to Managing Director To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That, for the purposes of Listing Rule 10.11 of the Listing Rules of theAustralian Stock Exchange Limited and for all relevant purposes, approval isgiven for the Company to grant 1,200,000 Director Options to Mr Dale ClarkRogers on the terms and conditions set out in the Explanatory Memorandumaccompanying this Notice." Voting Exclusion - The Company will disregard any votes cast on this Resolutionby Dale Rogers and any person associated with Dale Rogers. However, the Companyneed not disregard a vote if it is cast by a person as proxy for a person who isentitled to vote, in accordance with the directions on the proxy form or it iscast by the person chairing the meeting as proxy for a person who is entitled tovote, in accordance with a direction on the proxy form to vote as the proxydecides. 5. Resolution 4 - Issue of Shares to Managing Director To consider and if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution: "That, for the purposes of Listing Rule 10.11 of the Listing Rules of theAustralian Stock Exchange Limited and for all relevant purposes, approval isgiven for the Company to issue to Mr Dale Clark Rogers up to 400,000 shares atan issue price of 75 cents each ." Voting Exclusion - The Company will disregard any votes cast on this Resolutionby Dale Rogers and any person associated with Dale Rogers. However, the Companyneed not disregard a vote if it is cast by a person as proxy for a person who isentitled to vote, in accordance with the directions on the proxy form or it iscast by the person chairing the meeting as proxy for a person who is entitled tovote, in accordance with a direction on the proxy form to vote as the proxydecides. 6. Other business To deal with any other business which may be brought forward in accordance with the Company's Articles of Association and any relevant legislation. BY ORDER OF THE BOARD Nicholas DayCompany Secretary Proxies Registered Shareholders for the Company only can vote at the meeting eitherpersonally or by proxy, attorney or representative. A Shareholder entitled toattend and vote at the above meeting may appoint not more than two proxies toattend and vote at this meeting. Where more than one proxy is appointed, eachproxy must be appointed to represent a specified proportion of the Shareholder'svoting rights. A proxy may but need not be a shareholder of the Company. Theinstrument appointing of a proxy must be in writing, executed by the appointoror his/her attorney duly authorised in writing or, if such appointer is acorporation, either under seal or under hand of an officer or his/her attorneyduly authorised. The instrument of proxy (and the power of attorney or otherauthority, if any, under which it is signed) must be lodged by person, post,courier or facsimile and reach the Registered office of the Company not laterthan 11:30 am Western Australian Standard Time on 29 May 2006. For theconvenience of shareholders a Proxy Form is enclosed with notices sent toShareholders. A shareholder that is a corporation may elect to appoint a representative inaccordance with the Articles of Association in which case the Company willrequire written proof of the representative's appointment which must be lodgedwith, or presented to the Company not later than 11:30am Western AustralianStandard Time on 29 May 2006. CHESS Depositary Interests Holders of CHESS Depositary Interests ("CDI") are invited to attend the meetingbut are not entitled to vote at the meeting. In order to have votes cast at theMeeting on their behalf, CDI holders must complete, sign and return the CDINotice of Direction enclosed with the Notice sent to them to ComputershareInvestor Services Pty Limited, Level 2, 45 St Georges Terrace, Perth, WA 6000,Australia or GPO Box D182, Perth WA 6840, Australia so that CDI holders candirect CHESS Depositary Nominees Pty Ltd ("CDN") to vote the underlying shareson their behalf. The CDI Notice of Direction needs to be received at the addressshown on the form by not later than 11:30am Western Australian Standard Time on29 May 2006. CREST Depositary Interests Holders of CREST Depositary Interests ("CRDI") are invited to attend the meetingbut are not entitled to vote at the meeting. In order to have votes cast at theMeeting on their behalf, CRDI holders must complete, sign and return theinstruction form enclosed with the Notice sent to them to Computershare InvestorServices PLC, PO BOX 82, The Pavilions, Bridgewater Road, Bristol BS99 7NH sothat CRDI holders can direct Computershare Company Nominees Limited ("CCN") tovote the underlying shares on their behalf. The Instruction Form needs to bereceived at the address shown on the form by not later than 11:30am WesternAustralian Standard Time (being 4:30 am London Time) on 29 May 2006. ALBIDON LIMITED ARBN 107 288 755 1. EXPLANATORY MEMORANDUM This Explanatory Memorandum has been prepared for the Shareholders of AlbidonLimited ("Albidon" or "Company") in connection with the business to be conductedat the Annual General Meeting of the Company to be held at Ground Floor, 8 ColinStreet, West Perth, Western Australia on Wednesday, 31 May 2006 commencing at11:30am (WST). This Explanatory Memorandum should be read in conjunction with the accompanyingNotice of Annual General Meeting. The Directors recommend that Shareholders read this Explanatory Memorandumbefore determining whether or not to support the Resolutions. 2 THE RESOLUTIONS 2.1 RESOLUTION 1 - RE-ELECTION OF MR MICHAEL BROOK AS A DIRECTOR Resolution 1 seeks approval for the re-election of Mr Michael Brook as aDirector with effect from the end of the meeting. Article 11.2 of the Company's Articles of Association provides that at eachAnnual General Meeting one-third of the Directors (or if their number is not amultiple of three, then such number as is appropriate to ensure that no Directorother than alternate Directors and the Managing Director holds office for morethan three years) shall retire from office. Mr Brook retires from office in accordance with this requirement and submitshimself for re-election. Mr Brook has served as a non-executive Director of theCompany and will continue to do so up to the date of the Meeting. On hisre-election to the Board under Resolution 1, he will continue as a non-executiveDirector. Directors' Recommendation Mr Brook declined to make a recommendation about the proposed resolution becausehe has an interest in its outcome. Richard Potts, Dale Rogers, Donal Windrim,Alasdair Cooke, Christopher de Guingand and Craig Burton recommend that Mr Brookbe re-elected to the Board. 2.2 RESOLUTION 2 - RE-ELECTION OF MR CHRISTOPHER DE GUINGAND AS A DIRECTOR Resolution 2 seeks approval for the re-election of Mr Christopher De Guingand asa Director with effect from the end of the meeting. Mr De Guingand retires from office in accordance with Article 11.2 of theCompany's Articles of Association (outlined in section 2.1 above) and submitshimself for re-election. Mr De Guingand has served as a non-executive Directorof the Company and will continue to do so up to the date of the Meeting. Witheffect from his re-election to the Board under Resolution 2, he will continue asa non-executive Director. Directors' Recommendation Mr De Guingand declined to make a recommendation about the proposed resolutionbecause he has an interest in its outcome. Richard Potts, Dale Rogers, DonalWindrim, Craig Burton, Alasdair Cooke and Mike Brook recommend that Mr DeGuingand be re-elected to the Board. 2.3 RESOLUTION 3 - GRANT OF DIRECTOR OPTIONS TO MANAGING DIRECTOR The Board proposes to grant 1,200,000 Director Options to the Managing Director,Mr Dale Rogers. The Director Options are exercisable at AUD$0.75 on or before 1December 2008 and are otherwise issued on the terms set out in Appendix A tothis Explanatory Memorandum. This Resolution seeks shareholder approval for thegrant of these Director Options. The Listing Rules set out a number ofregulatory requirements which must be satisfied in relation to this resolution.These are summarised below. Listing Rule 10.11 Listing Rule 10.11 requires a listed company to obtain shareholder approval byordinary resolution prior to the issue of securities (including the grant ofoptions) to a related party of the Company. If this Resolution is passed theDirector Options will be granted to Mr Rogers, who is a related party of theCompany by virtue of him being a Director. Accordingly, approval for the grantof the Director Options to Mr Rogers is required pursuant to Listing Rule 10.11.Approval pursuant to Listing Rule 7.1 is not required in order to grant theDirector Options to Mr Rogers as approval is being obtained under Listing Rule10.11. Shareholders should note that the grant of the Director Options to MrRogers with approval under Listing Rule 10.11 will not be included in the 15%calculation for the purposes of Listing Rule 7.1. Listing Rule 10.13 sets out a number of matters which must be included in anotice of meeting proposing an approval under Listing Rule 10.11. For thepurposes of Listing Rule 10.13, the following information is provided toshareholders: (a) the number of Director Options to be granted by the Company is 1,200,000; (b) the Director Options will be granted to Mr Rogers; (c) the Director Options will be granted for nil consideration and therefore no funds will be raised from the grant of the Director Options; (d) the Director Options will be granted within one month of the date of the meeting or at such later time approved by ASX by way of waiver to the Listing Rules; (e) the purpose of the grant of the Director Options is to give Mr Rogers an incentive to provide dedicated and ongoing commitment to the Company and to preserve the Company's cash funds; and (f) the Director Options are exercisable at AUD$0.75 each on or before 1 December 2008 (provided that unless the Company agrees otherwise the unvested Director Options will lapse after Mr Rogers ceases to be an employee of the Company) and otherwise on the terms and conditions set out in Appendix A of this Explanatory Memorandum; and (g) The Director Options are only exercisable and vest upon and subject to the following milestones being achieved: 1. 200,000 to vest immediately on issue; 2. 200,000 to vest on completion of the Munali Feasibility Study; 3. 200,000 to vest on completion of debt and equity financing for the Munali Project; 4. 200,000 to vest on the commencement of commercial mining at the Munali Project; 5. 200,000 to vest on the first $US50 million of sales or the market capitalisation of the Company reaching AUD$150 million; and 6. 200,000 to vest on three years of service or the next $US100 million of sales or the market capitalisation of the Company reaching AUD$200 million. Recommendation All Directors (excluding Mr Rogers) recommend that shareholders vote in favourof the Resolution as they are of the view that the grant of the Director Optionsto Mr Rogers preserves the cash resources of the Company during its forthcomingproject development phase, and at the same time provides an added incentive tocreate shareholder wealth. The Company is pleased at the commitment to thefuture of Albidon represented by the agreement of Mr Rogers to convert fees tooptions. Mr Rogers declined to make a recommendation in relation to theResolution due to the fact that he has a material personal interest in itsoutcome. If shareholders approve the grant of Director Options to Mr Rogers, and all ofthe Director Options are exercised, the effect will be to dilute theshareholding of existing shareholders by approximately 1.325% on an undilutedbasis and based on the number of Shares on issue as at the date of this Notice.The market price for Shares during the term of the Director Options wouldnormally determine whether or not Mr Rogers exercises the Director Options. If,at the time any of the Director Options are exercised, the Shares are trading onASX or AIM at a price that is higher than the exercise price of the DirectorOptions, there may be a perceived cost to the Company. In the 6 months beforethe date of this Notice, the highest, lowest and last trading price of Shares onASX are as set out below: Date Price (cents)Highest 19 April 2006 103Lowest 24 November 2005 63Last 26 April 2006 96 (a) The value of the Director Options has been calculated internally by the Company using the Black & Scholes pricing model and is set out below; and (b) The existing direct holdings of Mr Rogers in the Company are as follows: Shares OptionsMr Rogers 50,000 0 (c) Under IFRS, the Company is required to expense the value of the Director Options in its statement of financial performance for the current financial year. Other than as set out in this Notice and Explanatory Memorandum the Company considers that from an economic and commercial point of view there are not any costs or detriments, including opportunity costs or taxation consequences, for the Company or benefits foregone by the Company resulting from the grant of the Director Options pursuant to Resolution 3. Valuation of Director Options The Director Options have been valued using the Black & Scholes pricing modeland based upon the following assumptions: (a) the Director Options expire 1 December 2008 and are all exercisable at 75 cents per Share; (b) the market trading price of the Shares at the time the Company agreed to issue the Director Options, being 1 December, was 65 cents; (c) a common volatility factor of 50% (volatility in the share price over the past 3 months); (a) an interest rate of 5.13% (3yr Government bond rate); (b) the valuation ascribed to the Director Options may not necessarily represent the market price of the Director Options at the date of the valuation; and (c) the valuation date for the Director Options is 1 December 2005. Based on the above, the Director Options have been valued at 22 cents each.This equates to a total value of $264,000 for the Director Options proposed tobe granted to Mr Rogers. The above valuation is based on the Share price at the date the agreement wasreached with Mr Rogers, being 1 December 2005, as that is reflective on thevalue negotiated between the parties. The Company's Share price has sinceincreased with the latest price available on the 26 of April being 96 cents.Based on that price the value of the Director Options under Black & Scholesmodel is 35.7 cents each at a volatility factor of 35% and 49.6 cents each at avolatility factor of 70%. This valuation is based on the assumptions aboveexcept that the interest rate has been increased to 5.25% in line with currentbond rates. Potential Effect of Resolution 3 on Capital Structure The potential effect that Resolution 3 could have on the capital structure ofthe Company is summarised below: Event Shares OptionsCurrent 89,368,000 9,100,000Post Issue of Director Options to Mr Rogers 89,368,000 10,300,000 2.4 Resolution 4 - Issue of Shares to Managing Director Listing Rule 10.11 Listing Rule 10.11 requires a listed company to obtain shareholder approval byordinary resolution prior to the issue of securities to a related party of theCompany. If this Resolution is passed the Shares will be issued to Mr Rogers,who is a related party of the Company by virtue of him being a Director.Accordingly, approval for the issue of the Shares to Mr Rogers is requiredpursuant to Listing Rule 10.11. Approval pursuant to Listing Rule 7.1 is notrequired in order to issue the Shares to Mr Rogers as approval is being obtainedunder Listing Rule 10.11. Shareholders should note that the issue of the Sharesto Mr Rogers with approval under Listing Rule 10.11 will not be included in the15% calculation for the purposes of Listing Rule 7.1. Listing Rule 10.13 sets out a number of matters which must be included in anotice of meeting proposing an approval under Listing Rule 10.11. For thepurposes of Listing Rule 10.13, the following information is provided toshareholders: (a) the number of Shares to be issued by the Company is 400,000; (b) the Shares will be issued to Mr Rogers; (c) the Shares will be issued for consideration of AUD 75 cents per share; (d) the Shares will be issued within one month of the date of the meeting or at such time as approved by ASX by way of waiver from the Listing Rules; (e) the funds raised from the issue of the Shares will be applied towards development of the Company's current Bankable Feasibility Study; and (f) the shares will be fully paid ordinary shares, which will, from the date of their allotment, rank pari passu in all respects with all other fully paid ordinary shares in the Company on issue. Recommendation All Directors (excluding Mr Rogers) recommend that shareholders vote in favourof the Resolution as they are of the view that the grant of the Shares to MrRogers adds to and preserves the cash resources of the Company during itsforthcoming project development phase, and at the same time provides an addedincentive to create shareholder wealth. In connection with Mr Rogers'appointment as Managing Director it was agreed the Company would give him theopportunity, if he desired, to subscribe for 400,000 Shares. The Company'sshare price on the date of Mr Rogers' appointment (1 December 2005) was 65cents. The Remuneration Committee subsequently approved this share subscriptionat a price of 75 cents each (the share price was then 82.5 cents) subject to MrRogers' commitment that he would personally subscribe for the shares andapproval of shareholders being obtained at the Annual General Meeting. MrRogers has confirmed he will personally subscribe for the shares if shareholdersapproval is obtained. This share subscription represents a substantial financialcommitment by Mr Rogers in the Company which is considered to be in theinterests of the Company. Mr Rogers declined to make a recommendation inrelation to the Resolution due to the fact that he has a material personalinterest in its outcome. If shareholders approve the issue of Shares to Mr Rogers, the effect will be todilute the shareholding of existing shareholders by approximately 0.45 % on anundiluted basis and based on the number of Shares on issue as at the date ofthis Notice. The potential effect that Resolution 4 could have on the capitalstructure of the Company is summarised in the below: Event Shares OptionsCurrent 89,368,000 9,100,000Post Issue of Shares to Director 89,768,000 9,100,000 GLOSSARY OF TERMS In this Explanatory Memorandum the following expressions have the followingmeanings: "Albidon" or "Company" means Albidon Limited. "Board" means the board of Directors. "Directors" means the directors of Albidon from time to time. "Explanatory Memorandum" means this Explanatory Memorandum. "Meeting" means the general meeting of shareholders of Albidon convened by thisNotice. "Notice" or "Notice of Meeting" means the notice of annual general meeting thataccompanies this Explanatory Memorandum. "Resolution" means a resolution referred to in the Notice of Meeting. "Share" means a fully paid ordinary share in the capital of Albidon. "Shareholder" means the holder of a Share. "WST" means Western Australian Standard Time. Appendix A - Terms of Managing Director Options The material terms and conditions of the options are as follows: (i) Each option entitles the holder to subscribe for one Share in Albidon Limited. (ii) Application will not be made for Official Quotation of the options. (iii) The options are issued in accordance with the vesting terms in (v) below and are exercisable on or before 5pm (Australian WST) on 1 December 2008 ("Expiry Date") by completing an option exercise form and delivering it to Albidon's registered office with the exercise monies. (iv) The option exercise price is AUD$0.75 per Share. (v) Options vest as follows: 1. 200,000 to vest immediately on issue; 2. 200,000 to vest on completion of the Munali Feasibility Study; 3. 200,000 to vest on completion of debt and equity financing for the Munali Project; 4. 200,000 to vest on the commencement of commercial mining at the Munali Project; 5. 200,000 to vest on the first $US50 million of sales or the market capitalisation of the Company reaching AUD$150 million; and 6. 200,000 to vest on three years of service or the next $US100 million of sales or the market capitalisation of the Company reaching AUD$200 million. (vi) The options are not transferable, without prior approval of the Board. (vii) Unvested options will lapse if Dale Rogers terminates services provided to the Company. (viii)All Shares issued upon exercise of the options will rank equally in all respects with Albidon then issued Shares. If applicable, Albidon will apply for quotation of the Shares on a Stock Exchange within 3 business days of all Shares issued upon exercise of the options. (ix) There are no participating rights or entitlements inherent in the options and holders will not be entitled to participate in new issues of capital offered to shareholders during the currency of the options. However, Albidon will ensure that for the purposes of determining entitlements to any such issue, the record date will be at least 9 business days after the issue is announced. This will give option holders the opportunity to exercise their options prior to the date for determining entitlements to participate in any such issue. (x) There will be no change to the exercise price of the options or the number of Shares over which the options are exercisable in the event of Albidon making a pro-rata issue of Shares or other securities to the holders of Shares in Albidon (other than a Bonus Issue as defined in paragraph (xi) below). (xi) If there is a bonus issue ("Bonus Issue") to the holders of Shares in Albidon, the number of Shares over which the options are exercisable will be increased by the number of Shares which the holder would have received if the options had been exercised before the record date for the Bonus Issue (" Bonus Shares"). The Bonus Shares must be paid up by Albidon out of profits or reserves (as the case may be) in the same manner as was applied in the Bonus Issue and upon issue rank equally in all respects with the other shares of the class on issue as at the date of issue of the Bonus Shares. (xii) In the event of a reconstruction (including consolidation, subdivision, return, reduction or pro rata cancellation) of the issued capital of Albidon prior to the Expiry Date, the number of options to which each holder is entitled or the exercise price of the options or both shall be reconstructed (as appropriate) in accordance with the requirements of the Listing Rules which apply at that time. (xiii)The Company will at least 20 Business Days before the Expiry Date of the options send notices to the option holders stating the name of the option holder, the number of options held and the number of Shares to be issued on exercise of the options, the exercise price, the due date for payment and the consequences of non-payment. (xiv) All Options will vest and may be exercised: (i) within two months after a Change of Control Event has occurred; or(ii) during a Bid Period. For the purposes of this clause: "Bid Period" in relation to a takeover bid in respect of shares in the Company,means the period referred to in the definition of that expression in section 9of the Corporations Act provided that where a takeover bid is publicly announcedprior to the service of a bidder's statement on the Company in relation to thattakeover bid, the Bid Period shall be deemed to have commenced at the time ofthat announcement; and "Change of Control Event" means a shareholder, or a group of associatedshareholders, becoming entitled to sufficient shares in the Company to give itor them the ability, and that ability is successfully exercised, in generalmeeting, to replace all or a majority of the Board; This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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