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NOTICE OF MEETING
FERRUM CRESCENT LIMITED
(Incorporated and registered in Australia and registered as an external company
in the Republic of
South Africa)
(Registration number A.C.N. 097 532 137)
(External company registration number 2011/116305/10)
Share code on the ASX: FCR
Share code on AIM: FCR
Share code on the JSE: FCR
Australian ISIN: AU000000WRL8
South African ISIN: AU000000FCR2
NOTICE OF GENERAL MEETING
Ferrum Crescent, the ASX, AIM and JSE quoted metals project developer, announces
that a formal notice (the “Notice”) and proxy form in respect of a general meeting
of shareholders of Ferrum Crescent to be held at 11.00 a.m. (Perth time) on 11
May 2017 at The Hovia Room, Metro Hotel Perth, 61 Canning Highway, South Perth,
Western Australia 6151, have today been released to the Australian Securities
Exchange and dispatched to shareholders.
The resolutions set out in the Notice seek shareholder approval for: (i) the
ratification of the 275,218,025 shares issued in connection with the Company’s
fundraising announced on 12 December 2016 and (ii) the adoption of a new equity
incentive plan, the Ferrum Crescent Limited Director and Employee Incentive Plan,
in place of the existing equity incentive arrangements and issue of securities
under the terms of such plan from time to time.
Copies of the Notice and the proxy form are available on the Company’s website
at www.ferrumcrescent.com and the full text of the Notice and accompanying
explanatory statement is also set out below.
7 April 2017
For further information on the Company, please visit www.ferrumcrescent.com or
contact:
Ferrum Crescent Limited
Justin Tooth, Executive Chairman
Grant Button, Director and Company Secretary T: +61 8 9474 2995
UK enquiries:
Laurence Read (UK representative) T: +44 7557 672 432
Strand Hanson Limited (Nominated Adviser)
Rory Murphy/Matthew Chandler T: +44 (0)20 7409 3494
Beaufort Securities Limited (Broker)
Elliot Hance T: +44 (0)20 7382 8300
Bravura Capital (Pty) Ltd (JSE Sponsor)
Doné Hattingh T: +27 11 459 5037
The information contained within this announcement is deemed by the Company to
constitute inside information as stipulated under the Market Abuse Regulation
(EU) No. 596/2014.
Ferrum Crescent Limited
ACN 097 532 137
NOTICE OF GENERAL MEETING
AND
EXPLANATORY STATEMENT
TO SHAREHOLDERS
FOR A GENERAL MEETING OF SHAREHOLDERS TO BE HELD ON Thursday 11 May 2017 at The
Hovia Room, Metro Hotel Perth, 61 Canning Highway, South Perth, Western Australia
6151 at 11:00 am (Perth time).
You are encouraged to attend the meeting but, if you cannot, you are requested
to complete and return the enclosed Proxy Form without delay (and no later than
48 hours before the meeting) to Computershare Investor Services Pty Limited at
GPO Box 242, Melbourne, Victoria 3001, Australia, or by facsimile on facsimile
number 1800 783 447 (within Australia) or +61 3 9473 2555 (outside Australia).
NOTICE IS HEREBY GIVEN that a General Meeting of the members of FERRUM CRESCENT
LIMITED (Ferrum or the Company) will be held on the date and at the location and
time specified below:
DATE: Thursday 11 May 2017
LOCATION: The Hovia Room, Metro Hotel Perth, 61 Canning Highway, South
Perth, Western Australia 6151
TIME: 11:00 am (Perth time)
BUSINESS: The business to be transacted at the General Meeting is the
proposal of the Resolutions set out below.
TIME AND PLACE OF MEETING AND HOW TO VOTE
VENUE
A General Meeting of Shareholders of Ferrum Crescent Limited will be held at The
Hovia Room, Metro Hotel Perth, 61 Canning Highway, South Perth, Western Australia
6151 on Thursday 11 May 2017 at 11:00 am (Perth time).
YOUR VOTE IS IMPORTANT
The business of the General Meeting affects your shareholding and your vote is
important.
VOTING IN PERSON
Shareholders may attend the General Meeting on the date and at the place set out
above and vote in person.
Holders of Depositary Interests (DI Holders) may attend the General Meeting but
will not be permitted to vote at the Meeting. For their votes to be counted, DI
Holders must submit their CREST Voting Instruction to the Company’s agent by the
required cut-off time set out below. Alternatively, DI Holders can vote using
the enclosed Form of Instruction as per the instructions set out below.
VOTING BY PROXY
Please note that:
a. a Shareholder entitled to attend and vote at the General Meeting is entitled
to appoint a proxy;
b. a proxy need not be a member of the Company;
c. a Shareholder may appoint a body corporate or an individual as its proxy;
d. a body corporate appointed as a Shareholder’s proxy may appoint an
individual as its representative to exercise any of the powers that the
body may exercise as the Shareholder’s proxy; and
e. a Shareholder 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 total votes.
Australia (Proxy Forms)
The enclosed Proxy Form provides further details on voting entitlement,
appointing proxies and lodging Proxy Forms. If a Shareholder appoints a body
corporate as its proxy and the body corporate wishes to appoint an individual as
its representative, the body corporate should provide that person with a
certificate or letter executed in accordance with the Corporations Act
authorising him or her to act as that company’s representative. The authority
may be sent to the Company or its share registry in advance of the General Meeting
or handed in at the General Meeting when registering as a corporate
representative.
To vote by proxy, please complete and sign the Proxy Form enclosed and either:
a. deliver the Proxy Form by post to Computershare Investor Services Pty
Limited, GPO Box 242, Melbourne Victoria 3001, Australia; or
b. fax the form to Computershare Investor Services Pty Limited on facsimile
number 1800 783 447 (within Australia) or +61 3 9473 2555 (outside
Australia),
so that it is received not later than 11:00 am (Perth time) on Tuesday 9 May
2017. Proxy forms received later than this time will be invalid.
South Africa (Proxy Forms)
The enclosed Proxy Form provides further details on voting entitlement,
appointing proxies and lodging Proxy Forms. If a Shareholder appoints a body
corporate as its proxy and the body corporate wishes to appoint an individual as
its representative, the body corporate should provide that person with a
certificate or letter executed in accordance with the Corporations Act
authorising him or her to act as that company’s representative. The authority
may be sent to the Company or its share registry in advance of the General Meeting
or handed in at the General Meeting when registering as a corporate
representative.
To vote by proxy, please complete and sign the Proxy Form enclosed and deliver
the proxy form to:
Computershare Investor Services (Proprietary) Ltd, Rosebank Towers, 15 Biermann
Avenue, Rosebank, 2196 South Africa (PO Box 61051, Marshalltown, 2107) to reach
them by no later than 5:00 am (SA time) on Tuesday 9 May 2017.
United Kingdom (CREST Voting Instruction)
Holders of Depositary Interests in CREST may transmit voting instructions by
utilising the CREST voting service in accordance with the procedures described
in the CREST Manual. CREST personal members or other CREST sponsored members,
and those CREST members who have appointed a voting service provider, should
refer to their CREST sponsor or voting service provider, who will be able to take
appropriate action on their behalf.
In order for instructions made using the CREST voting service to be valid, the
appropriate CREST message (a “CREST Voting Instruction”) must be properly
authenticated in accordance with Euroclear’s specifications and must contain the
information required for such instructions, as described in the CREST Manual
(available via www.euroclear.com/CREST).
To be effective, the CREST Voting Instruction must be transmitted so as to be
received by the Company’s agent (3RA50) no later than 4:00 pm (UK time) on Friday
5 May 2017. For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the CREST Voting Instruction by the
CREST applications host) from which the Company’s agent is able to retrieve the
CREST Voting Instruction by enquiry to CREST in the manner prescribed by CREST.
Holders of depositary interests in CREST and, where applicable, their CREST
sponsors or voting service providers should note that Euroclear does not make
available special procedures in CREST for any particular messages. Normal system
timings and limitations will therefore apply in relation to the transmission of
CREST Voting Instructions. It is the responsibility of the DI Holder concerned
to take (or, if the Depositary Interest holder is a CREST personal member or
sponsored member or has appointed a voting service provider, to procure that the
CREST sponsor or voting service provider takes) such action as shall be necessary
to ensure that a CREST Voting Instruction is transmitted by means of the CREST
voting service by any particular time. In this connection, DI Holders and, where
applicable, their CREST sponsors or voting service providers are referred, in
particular, to those sections of the CREST Manual concerning practical
limitations of the CREST system and timings.
United Kingdom (Form of Instruction)
Alternatively, DI Holders can vote by completing, signing and returning the
enclosed Form of Instruction to the Company’s agent (3RA50) no later than 4:00
pm (UK time) on Friday 5 May 2017.
CUSTODIAN VOTING
For Intermediary Online subscribers only (custodians), please visit
www.intermediaryonline.com to submit your voting intentions.
Ferrum Crescent Limited
ACN 097 532 137
NOTICE OF GENERAL MEETING
Notice is given that a General Meeting of Shareholders of Ferrum Crescent Limited
will be held at 11:00 am (Perth time) on Thursday 11 May 2017 at The Hovia Room,
Metro Hotel Perth, 61 Canning Highway, South Perth, Western Australia 6151.
The Explanatory Statement to this Notice of Meeting provides additional
information on the matters to be considered at the General Meeting and a glossary
of defined terms not defined in full in this Notice. The Explanatory Statement
and the enclosed Proxy Form, or Form of Instruction if you are a DI Holder, form
part of this Notice of Meeting. Terms and abbreviations used in this Notice of
Meeting and Explanatory Statement are defined in the Glossary.
The Directors have determined, pursuant to Regulations 7.11.37 and 7.11.38 of
the Corporations Regulations, that the persons eligible to vote at the General
Meeting are those who are registered Shareholders of the Company at 5:00 pm
(Perth time) on 9 May 2017. Accordingly, transactions registered after that time
will be disregarded in determining entitlements to attend and vote at the General
Meeting.
AGENDA
RESOLUTIONS
1. Ratification of prior issue of Shares
To consider and, if thought fit, to pass, with or without amendment, the
following as an Ordinary Resolution:
“That, pursuant to and in accordance with ASX Listing Rule 7.4 and for all
other purposes, Shareholders ratify the issue of 275,218,025 Shares at an
issue price of 0.2 pence per Share on the terms and conditions set out in
the Explanatory Statement”.
Voting Exclusion: The Company will disregard any votes cast on this
Resolution by a person who participated in the issue and any associates of
those persons. However, the Company need not disregard a vote if it is cast
by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 1.
2. Approval of the Director and Employee Incentive Plan
To consider and, if thought fit, to pass, with or without amendment, the
following as an Ordinary Resolution:
“That, for the purposes of ASX Listing Rule 7.2 (Exception 9(b)) and for
all other purposes, Shareholders approve the Ferrum Crescent Limited
Director and Employee Incentive Plan (the Incentive Plan), the terms of
which are summarised in the Explanatory Statement, and authorise the issue
of securities under the Incentive Plan from time to time (including the
grant of Awards and issue of Shares pursuant to the terms of those Awards)”.
Voting Prohibition and Exclusion: The Company will disregard any votes cast
on this Resolution by, or on behalf of, the Directors and any associate of
the Directors. However, the Company need not disregard a vote on this
Resolution if it is cast by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
Further, a vote on this Resolution must not be cast by a person appointed
as a proxy if:
- the proxy is either:
o a member of Key Management Personnel; or
o a Closely Related Party of a member of Key Management Personnel;
and
- the appointment does not specify the way the proxy is to vote on this
Resolution.
However, the Company need not disregard a vote on this Resolution if it is
cast by the Chairman (who may be a member of Key Management Personnel) as
proxy for a person who is entitled to vote and the proxy appointment
expressly authorises the Chairman to exercise the proxy even though the
Resolution is connected, directly or indirectly, with the remuneration of
a member of Key Management Personnel.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 2.
3. Grant of Performance Rights to Justin Tooth under the Incentive Plan
To consider and, if thought fit, to pass, with or without amendment, the
following as an Ordinary Resolution:
“That, subject to the passing of Resolution 2, for the purposes of Chapter
2E of the Corporations Act, ASX Listing Rule 10.14 and for all other
purposes, Shareholders approve and authorise the grant of up to 28,000,000
Performance Rights to Mr Justin Tooth, the Company’s Executive Chairman (or
his nominee) under the Incentive Plan and the issue of Shares on the vesting
of those Performance Rights, on the terms and conditions set out in the
Explanatory Statement”.
Voting Prohibition and Exclusion: The Company will disregard any votes cast
on this Resolution by, or on behalf of, the Directors and any associate of
the Directors. However, the Company will not disregard a vote on this
Resolution if it is cast by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
Further, a vote on this Resolution must not be cast by a person appointed
as a proxy if:
- the proxy is either:
o a member of Key Management Personnel; or
o a Closely Related Party of a member of Key Management Personnel;
and
- the appointment does not specify the way the proxy is to vote on this
Resolution.
However, the Company need not disregard a vote on this Resolution if it is
cast by the Chairman (who may be a member of Key Management Personnel) as
proxy for a person who is entitled to vote and the proxy appointment
expressly authorises the Chairman to exercise the proxy even though the
Resolution is connected, directly or indirectly, with the remuneration of
a member of Key Management Personnel.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 3.
4. Grant of Performance Rights to Evan Kirby under the Incentive Plan
To consider and, if thought fit, with or without amendment, to pass the
following resolution as an Ordinary Resolution:
“That, subject to the passing of Resolution 2, for the purposes of Chapter
2E of the Corporations Act, ASX Listing Rule 10.14 and for all other
purposes, Shareholders approve and authorise the grant of up to 5,600,000
Performance Rights to Dr Evan Kirby (or his nominee) and the issue of Shares
on the valid exercise of those Performance Rights in accordance with the
terms of the Performance Rights and otherwise on the terms and conditions
set out in the Explanatory Statement”.
Voting Prohibition and Exclusion: The Company will disregard any votes cast
on this Resolution by, or on behalf of, the Directors and any associate of
the Directors. However, the Company will not disregard a vote on this
Resolution if it is cast by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
Further, a vote on this Resolution must not be cast by a person appointed
as a proxy if:
- the proxy is either:
o a member of Key Management Personnel; or
o a Closely Related Party of a member of Key Management Personnel;
and
- the appointment does not specify the way the proxy is to vote on this
Resolution.
However, the Company need not disregard a vote on this Resolution if it is
cast by the Chairman (who may be a member of Key Management Personnel) as
proxy for a person who is entitled to vote and the proxy appointment
expressly authorises the Chairman to exercise the proxy even though the
Resolution is connected, directly or indirectly, with the remuneration of
a member of Key Management Personnel.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 4.
5. Grant of Performance Rights to Laurence Read under the Incentive Plan
To consider and, if thought fit, with or without amendment, to pass the
following resolution as an Ordinary Resolution:
“That, subject to the passing of Resolution 2, for the purposes of Chapter
2E of the Corporations Act, ASX Listing Rule 10.14 and for all other
purposes, Shareholders approve and authorise the grant of up to 5,600,000
Performance Rights to Mr Laurence Read (or his nominee) and the issue of
Shares on the valid exercise of those Performance Rights in accordance with
the terms of the Performance Rights and otherwise on the terms and
conditions set out in the Explanatory Statement”.
Voting Prohibition and Exclusion: The Company will disregard any votes cast
on this Resolution by, or on behalf of, the Directors and any associate of
the Directors. However, the Company will not disregard a vote on this
Resolution if it is cast by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
Further, a vote on this Resolution must not be cast by a person appointed
as a proxy if:
- the proxy is either:
o a member of Key Management Personnel; or
o a Closely Related Party of a member of Key Management Personnel;
and
- the appointment does not specify the way the proxy is to vote on this
Resolution.
However, the Company need not disregard a vote on this Resolution if it is
cast by the Chairman (who may be a member of Key Management Personnel) as
proxy for a person who is entitled to vote and the proxy appointment
expressly authorises the Chairman to exercise the proxy even though the
Resolution is connected, directly or indirectly, with the remuneration of
a member of Key Management Personnel.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 5.
6. Grant of Performance Rights to Grant Button under the Incentive Plan
To consider and, if thought fit, with or without amendment, to pass the
following resolution as an Ordinary Resolution:
“That, subject to the passing of Resolution 2, for the purposes of Chapter
2E of the Corporations Act, ASX Listing Rule 10.14 and for all other
purposes, Shareholders approve and authorise the grant of up to 10,000,000
Performance Rights to Mr Grant Button (or his nominee) and the issue of
Shares on the valid exercise of those Performance Rights in accordance with
the terms of the Performance Rights and otherwise on the terms and
conditions set out in the Explanatory Statement”.
Voting Prohibition and Exclusion: The Company will disregard any votes cast
on this Resolution by, or on behalf of, the Directors and any associate of
the Directors. However, the Company will not disregard a vote on this
Resolution if it is cast by:
- a person identified as proxy for a person who is entitled to vote on
the Resolution and the vote is cast in accordance with the directions
on the proxy form; or
- the person chairing the meeting as proxy for a person who is entitled
to vote on the Resolution and the vote is cast in accordance with the
directions on the proxy form to vote as the proxy decides.
Further, a vote on this Resolution must not be cast by a person appointed
as a proxy if:
- the proxy is either:
o a member of Key Management Personnel; or
o a Closely Related Party of a member of Key Management Personnel;
and
- the appointment does not specify the way the proxy is to vote on this
Resolution.
However, the Company need not disregard a vote on this Resolution if it is
cast by the Chairman (who may be a member of Key Management Personnel) as
proxy for a person who is entitled to vote and the proxy appointment
expressly authorises the Chairman to exercise the proxy even though the
Resolution is connected, directly or indirectly, with the remuneration of
a member of Key Management Personnel.
The Chairman intends to exercise all undirected proxies IN FAVOUR of
Resolution 6.
BY ORDER OF THE BOARD
Grant Button
Director/Company Secretary
DATED 28 March 2017
Ferrum Crescent Limited
ACN 097 532 137
EXPLANATORY STATEMENT TO SHAREHOLDERS
INTRODUCTION
This Explanatory Statement has been prepared for the information of Shareholders
of the Company in connection with Resolutions to be considered at the General
Meeting to be held at The Hovia Room, Metro Hotel Perth, 61 Canning Highway,
South Perth, Western Australia 6151 at 11:00 am (Perth time) on Thursday 11 May
2017.
This Explanatory Statement should be read in conjunction with the accompanying
Notice of Meeting.
The purpose of this Explanatory Statement is to provide information which the
Directors believe to be material to Shareholders in deciding whether or not to
pass the Resolutions set out in the Notice of Meeting.
1. RESOLUTION 1 – RATIFICATION OF PRIOR ISSUE OF SHARES
1.1 Background
On 12 December 2016, the Company announced that it had conditionally raised
approximately GBP550,000 before expenses through the issue of 275,218,025 Shares,
each at an issue price of 0.2 pence per Share (the Placement Shares), placed via
Beaufort Securities Limited.
The Placement Shares were issued on 22 December 2016, pursuant to the Company’s
15% placement capacity under ASX Listing Rule 7.1. Resolution 1 seeks Shareholder
ratification, pursuant to ASX Listing Rule 7.4, of the issue of the Placement
Shares.
ASX Listing Rule 7.4 provides that, where a company in a general meeting ratifies
previous issues of securities made pursuant to ASX Listing Rules 7.1 and/or 7.1A,
the issue of those securities will be deemed to have been made with shareholder
approval for the purpose of ASX Listing Rule 7.1.
The effect of Shareholders passing Resolution 1 and ratifying the issue of the
Placement Shares will be to replenish the Company’s 15% placement capacity to
the extent of the Placement Shares.
Resolution 1 is an Ordinary Resolution.
1.2 Technical Information required by ASX Listing Rule 7.4
In accordance with ASX Listing Rule 7.5, the following information is provided
in relation to the issue of the Placement Shares:
(a) 275,218,025 Shares were issued.
(b) The Placement Shares were issued at a price of 0.2 pence per Share.
(c) The Placement Shares are all fully-paid ordinary shares issued on the same
terms and conditions as the Company’s existing Shares.
(d) The Placement Shares were issued to professional and sophisticated
investors. None of the subscribers are related parties or associates of the
Company.
(e) The Company intends to use the proceeds from the issue of the Placement
Shares for the Group’s general working capital purposes and expenditure on
its two principal metals projects, as follows:
(i) Moonlight iron ore project, South Africa – satisfying licence
obligations and progressing development pathways; and
(ii) Toral lead-zinc project, Spain – continuing field work, phase 1 drill
programme and petrographic studies of mineralisation.
(f) A voting exclusion statement for Resolution 1 is included in the Notice of
Meeting.
The Board unanimously recommends that Shareholders vote IN FAVOUR of Resolution
1.
The Chairman intends to exercise all undirected proxies IN FAVOUR of Resolution
1.
2. RESOLUTION 2 – APPROVAL OF THE INCENTIVE PLAN
2.1 Background
As the Company’s existing incentive plans, the Employee Share Plan (ESP) and the
Employee Option Plan (EOP) were approved by Shareholders in 2013 for a period of
three years, the Company is no longer able to issue securities under the ESP or
EOP as an exception to ASX Listing Rule 7.1. Accordingly, and in light of the
recent acquisition and developments within the Company, the Board has decided to
take this opportunity to adopt a new equity incentive plan, the Ferrum Crescent
Limited Director and Employee Incentive Plan (the Incentive Plan), in place of
the ESP and EOP.
The Incentive Plan aims to:
- reward employees, contractors and directors of the Group for their past
performance;
- provide a long-term incentive for directors, employees and contractors to
participate in the Group’s future growth by providing them with an
opportunity to receive an ownership interest in the Company; and
- align the interests of the Group’s employees and Shareholders by connecting
the remuneration of employees to the long-term success of the Company.
The Board considers that the implementation of the Incentive Plan will assist in
the retention and motivation of employees, contractors and directors of the Group
and will form an important part of the comprehensive remuneration strategy for
the Group’s employees and directors.
The Corporate Governance Council Guidelines recommend that executive remuneration
packages include an appropriate balance of fixed and performance-based
remuneration reflecting short and long-term objectives appropriate to the
company’s circumstances, aims and risk appetite.
A summary of the terms and conditions of the Incentive Plan is set out in Schedule
1 of this Explanatory Statement. A copy of the Incentive Plan may be obtained by
contacting the Company Secretary by telephone on +61 8 9474 2995.
2.2 Approval for the purposes of the ASX Listing Rules
As noted above, ASX Listing Rule 7.1 broadly provides, subject to certain
exceptions, that a company may not issue, or agree to issue, equity securities
in any 12-month period that exceed 15% of the number of securities that the
company has on issue, except with the prior approval of shareholders of the
company in a general meeting of the terms and conditions of the proposed issue.
ASX Listing Rule 7.2 (Exception 9(b)) provides that ASX Listing Rule 7.1 does
not apply to an issue of securities under an employee incentive scheme if, within
three years before the date of issue, shareholders have approved the issue of
securities under the employee incentive scheme as an exception to ASX Listing
Rule 7.1.
Accordingly, although the Company is not required to obtain shareholder approval
for the introduction of the Incentive Plan, if the Incentive Plan is approved by
Shareholders, securities issued within three years of the date of approval will
fall within an exception to ASX Listing Rule 7.1. Additional Shareholder approval
will be required before any Director or related party of the Company can
participate in the Incentive Plan.
2.3 Technical information required by ASX Listing Rule 7.2
In accordance with ASX Listing Rule 7.2 (Exception 9(b)), the following
information is provided to Shareholders in respect of the Incentive Plan:
- a summary of the terms of the Incentive Plan is set out in Schedule 1 of
this Explanatory Statement;
- no securities have previously been issued under the Incentive Plan; and
- a voting exclusion statement is included in the Notice.
2.4 Directors’ Recommendation
All of the Directors are eligible to participate in the Incentive Plan and
therefore have an interest in Resolution 2. Accordingly, all of the Directors
refrain from making any recommendation as to how Shareholders should vote on
Resolution 2.
The Chairman intends to exercise all undirected proxies IN FAVOUR of Resolution
2.
3. RESOLUTION 3 – GRANT OF PERFORMANCE RIGHTS TO JUSTIN TOOTH UNDER INCENTIVE
PLAN
3.1 Details of the proposed grant to Justin Tooth
Subject to obtaining Shareholder approval in respect of Resolution 2 and this
Resolution 3, the Company proposes to grant Performance Rights to Justin Tooth
(or his nominee) in accordance with the terms of the Incentive Plan.
As set out above, the Incentive Plan will be used as part of the remuneration
planning for directors, employees and contractors of the Group. For further
information in respect of the Incentive Plan, please refer to section 2.1 above
and to Schedule 1 of this Explanatory Statement.
Having regard to the significant role that Mr Tooth has in respect of the
development of the Company, the Board considers that the grant of Performance
Rights to Mr Tooth under the Incentive Plan is an appropriate form of long-term
incentive-based remuneration.
3.2 Approval for the purposes of the ASX Listing Rules and Corporations Act
Resolution 3 seeks Shareholder approval for the grant of Performance Rights (and
the subsequent issue of Shares on vesting of those Performance Rights) to Justin
Tooth for the purposes of:
(a) ASX Listing Rule 10.14, which broadly provides that Shareholder approval
is required before a director, or an associate of a director, may acquire
securities under an employee incentive scheme; and
(b) Chapter 2E of the Corporations Act, which prohibits a public company from
giving a financial benefit to a related party of a public company unless
the giving of the financial benefit falls within one of the nominated
exceptions or shareholder approval is obtained prior to the giving of the
financial benefit.
Shareholder approval under ASX Listing Rule 7.1 is not required for the issue of
securities that have been approved under ASX Listing Rule 10.14. Accordingly,
provided that both Resolutions 2 and this Resolution 3 are approved by
Shareholders, the grant of Performance Rights to Justin Tooth (and any subsequent
acquisition of Shares upon vesting of those Performance Rights) will not be
included in the calculation of the Company’s 15% annual placement capacity for
the purposes of ASX Listing Rule 7.1.
3.3 Information required by ASX Listing Rules
For the purpose of the approval sought under ASX Listing Rule 10.14, and in
accordance with the requirements of ASX Listing Rule 10.15, the following
information is provided in relation to the proposed grant of Performance Rights
to Justin Tooth:
(a) The Performance Rights are proposed to be issued to Justin Tooth, Executive
Chairman of the Company.
(b) The maximum number of Performance Rights that may be granted to Justin
Tooth pursuant to Resolution 3 is 28,000,000 Performance Rights.
(c) The Performance Rights will be granted under the Incentive Plan, on the
general terms and conditions set out in Schedule 1 of this Explanatory
Statement, and on the specific terms and conditions set out in Schedule 2
of this Explanatory Statement. The performance hurdles attaching to the
Performance Rights along with the applicable performance hurdle
satisfaction date and vesting date are set out in Schedule 2 and in the
table in section 3.4(c) below.
(d) No price is payable for the grant of the Performance Rights, or on vesting
of the Performance Rights, as the Performance Rights are issued as an
incentive and reward following satisfaction of specified performance
hurdles by a prescribed date.
(e) No securities have previously been issued under the Incentive Plan nor has
the Incentive Plan been previously adopted by Shareholders.
(f) The Directors, in addition to employees and contractors of the Company, are
entitled to participate in the Incentive Plan.
(g) A voting exclusion statement is included in the Notice.
(h) No loans are being provided by the Company for the acquisition of securities
under the Incentive Plan.
(i) It is anticipated that the Performance Rights will be granted to Justin
Tooth no later than 12 months after the date of the Meeting (or such later
date as permitted by an ASX waiver or modification of the ASX Listing Rules)
in one tranche. The Company contemplates that Shares issued upon vesting
of the Performance Rights may be issued in more than one tranche, following
vesting of the Performance Rights.
3.4 Information required by the Corporations Act
Chapter 2E of the Corporations Act prohibits a public company from giving a
financial benefit to a related party of a public company unless the benefit falls
within one of the various exceptions to the general prohibition. A “related
party” for the purposes of the Corporations Act is defined broadly and includes
a director of the Company. “Financial Benefit” has a wide meaning and includes
the issue of securities by a public company.
The proposed offer of Performance Rights to Mr Tooth will form part of Mr Tooth’s
remuneration package. Given the circumstances of the Company, the Non-Executive
Directors consider that the proposed grant of Performance Rights would constitute
reasonable remuneration and, accordingly, may fall within an exception to the
related party provisions in Chapter 2E of the Corporations Act. In reaching this
conclusion, the Board has had regard to a variety of factors including market
practice and the remuneration offered to persons in comparable positions at
similar companies. Notwithstanding this conclusion, the Board has resolved that
the Company should also seek shareholder approval pursuant to Chapter 2E of the
Corporations Act as a matter of good corporate governance.
Pursuant to, and in accordance with the requirements of Chapter 2E, and in
particular section 219 of the Corporations Act, the following information is
provided for the purposes of obtaining Shareholder approval for Resolution 3:
(a) The related party to whom a financial benefit will be given is Justin Tooth
(or his nominee), who is the Executive Chairman of the Company.
(b) The nature of the financial benefit proposed to be given to Justin Tooth
is the grant of 28,000,000 Performance Rights.
(c) The Performance Rights will be granted under the Incentive Plan, on the
general terms and conditions set out in Schedule 1 of this Explanatory
Statement, and the specific terms and conditions set out in Schedule 2 of
this Explanatory Statement. The performance hurdles attaching to the
Performance Rights along with the applicable performance hurdle
satisfaction date and vesting date are set out in the table below:
Performance
Number of
Hurdle
Tranche Performanc Performance Hurdle Vesting Date
Satisfaction
e Rights
Date
A 3 years after
AIM Price is 0.35
3,500,000 1 year satisfaction of
pence or more
performance hurdle
B 3 years after
AIM Price is 0.5
3,500,000 18 months satisfaction of
pence or more
hurdle
C 2 years after
AIM Price is 0.75
3,500,000 2 years satisfaction of
pence or more
performance hurdle
D 2 years after
AIM Price is 1.1
3,500,000 3 years satisfaction of
pence or more
performance hurdle
E 18 months after
AIM Price is 1.5
3,500,000 3 years satisfaction of
pence or more
performance hurdle
F 1 year after
AIM Price is 2.0
3,500,000 3.5 years satisfaction of
pence or more
performance hurdle
G First commercial
production at any
6 months after
project controlled
7,000,000 5 years satisfaction of
by the Company at
performance hurdle
the time of first
production
Where:
AIM Price means the volume-weighted average price of Ferrum Shares on AIM
over 10 consecutive trading days;
Performance Hurdle Satisfaction Date means the date by which the relevant
performance hurdle must be satisfied; and
Vesting Date means the date on which a participant under the Incentive Plan
becomes entitled to be issued the number of Shares in respect of which an
Award has vested in accordance with Rule 7 of the Incentive Plan.
(d) The Performance Rights will be granted for no cash consideration and,
accordingly, no funds will be raised from the grant of the Performance
Rights or from the issue of Shares upon vesting of the Performance Rights.
(e) Mr Tooth is the proposed recipient of Performance Rights and has an interest
in the outcome of the Resolution. No other directors have any interest in
the outcome of this Resolution.
(f) Director’s remuneration package:
Director 2015/2016 Financial 2016/2017 Financial
Year Year
Justin Tooth $46,8581 $186,3062
1. Justin Tooth was appointed Non-Executive Chairman on 16 December 2015
and Executive Chairman on 31 March 2016.
2. Justin Tooth and the Company entered into an Executive Employment
contract on 7 January 2017 under which Justin is paid GBP125,000 per
annum from 1 October 2016 onwards.
(g) The securities currently held by Justin Tooth and those that may be issued
subject to Shareholder approval at this meeting are set out in the table
below:
Performance Rights (subject
Existing to shareholder approval under
Director Shares Options Resolutions 2 and 3)
Justin Tooth 326,650 Nil 28,000,000
(h) The dilution effect on Shareholders, if all Performance Rights the subject
of Resolution 3 vest (and the Performance Rights proposed to be granted to
the Non-Executive Directors under Resolutions 4 to 6 are exercised), and
no other options are exercised and no Shares are issued, will be 2.24% as
set out below.
Shares (ASX:FCR)
Shares currently on issue 2,147,825,266
Resolution 3 – Performance
Rights to be granted to Justin
Tooth 28,000,000
Resolutions 4 to 6 –
Performance Rights to be
granted to the Non-Executive
Directors 21,200,000
Expanded Capital if all
Performance Rights proposed in
this Notice to be granted to
all Directors vest or are
exercised (as applicable) 2,197,025,266
Dilutionary effect 2.24%
(i) In the 12 months before the date of this Notice, the highest, lowest and
latest trading price (as at 14 March 2017) of the Shares on ASX are as set
out below:
Shares (ASX:FCR)
Highest (16 May 2016) 0.007
Lowest (22 April 2016 and 9 May 0.002
2016)
Latest (14 March 2017) 0.003
(j) The value of the financial benefit to be provided to Justin Tooth under
each of Tranches A – G is set out in the table below.
Tranche A B C D E F G Total
# of 3,500, 3,500, 3,500, 3,500, 3,500, 3,500, 7,000,0 28,000,0
Rights 000 000 000 000 000 000 00 00
Valuati 0.1090 0.1012 0.0921 0.0998 0.0846 0.0843
0.1700p
on per p p p p p p N/A
right 0.27c
0.17c 0.16c 0.15c 0.16c 0.14c 0.13c
GBP3,8 GBP3,5 GBP3,2 GBP3,4 GBP2,9 GBP2,9 GBP11,9 GBP31,88
Valuati 15 42 24 93 61 51 00 6
on of
Tranche AUD6,1 AUD5,6 AUD5,1 AUD5,6 AUD4,7 AUD4,7 AUD19,1 AUD51,25
32 94 82 15 60 44 29 5
Note: These values have been calculated by BDO in GBP and converted to AUD by
the Company using the rate of GBP1 = AUD1.607458607, being the inverse of the
AUD/GBP foreign exchange rate published by the Reserve Bank of Australia on 8
March 2017.
These values have been calculated by BDO using an up and in single barrier
share option pricing model for the Tranches A – F Performance Rights and a
binomial pricing model (validated by the Black Scholes option pricing model)
for the Tranche G Performance Rights.
The up and in single barrier share pricing model takes into consideration
that market based rights can vest at any time during the period from grant
date to the Performance Hurdle Satisfaction Date of each respective tranche,
provided the 10-day VWAP of the AIM Price exceeds the determined barrier
price. The model incorporates a trinomial valuation.
BDO made the following assumptions under the models:
- the Performance Rights under Tranches A-F have market-based vesting
conditions attached;
- for Performance Rights under Tranche G (which don’t have market
vesting conditions attached), the exercise of the Performance Right
does not affect the value of the underlying asset;
- a grant date of 8 March 2017, which was also adopted as the valuation
date;
- it used the 10 day VWAP of Shares on AIM as at the valuation date,
0.17 pence, which was input into the pricing model;
- as there is no consideration required for exercising the Performance
Rights, a nil exercise price was used in the option pricing model;
- the performance period represents the period over which the
Performance Rights will be assessed for vesting, from the grant date
until the Performance Hurdle Satisfaction Date based on the
Performance Rights’ respective performance hurdles;
- the performance hurdle of each tranche is to be measured over the
respective performance period of each tranche;
- for Performance Rights under Tranche G, it used a share price
volatility of 150% based on the historical volatility of Ferrum’s AIM
listed share price;
- for Performance Rights under Tranche A-F, it used a 10-day VWAP
volatility of 100% based on the historical volatility of the 10-day
VWAP of Ferrum’s AIM listed share price;1
- the risk free rate of interest used is the United Kingdom Government
Bond Rate that most closely corresponds to the vesting period of each
tranche of Performance Rights as at the valuation date:
o for Performance Rights under Tranches A-C, E and F, a rate of
0.314% was used, being the four year United Kingdom Government
Bond closing rate as at the valuation date; and
o for Performance Rights under Tranches D and G, a rate of 0.589%
was used, being the five year United Kingdom Government Bond
closing rate as at the valuation date.
- a dividend yield of 0%; and
- the performance hurdle for each tranche is identical to the hurdle
outlined in section 3.4(c) above.
(k) Directors’ recommendation and basis of recommendation:
Justin Tooth has a material personal interest in Resolution 3 and abstains
from making a recommendation in respect of Resolution 3. The Non-Executive
Directors have carefully considered the proposed grant of Performance Rights
to Mr Tooth, as well as his remuneration package generally. The Non-
Executive Directors consider the grant to be an important component of Mr
Tooth’s remuneration package and all recommend that Shareholders vote in
favour of Resolution 3.
1
The Performance Rights under Tranches A-F are subject to a market-based performance hurdle which is not based on realising a certain share
price but rather, a 10-day VWAP of the Ferrum AIM listed share price. Accordingly, the metric of volatility employed in the option pricing model is
the historical volatility of the 10-day VWAP of Ferrum’s AIM listed share price and not the close-close share price volatility metric that was used
for Performance Rights under Tranche G.
The Chairman intends to exercise all undirected proxies IN FAVOUR of Resolution
3.
3.5 Other information
There are no material opportunity costs to the Company, no taxation consequences
to the Company and no material benefits foregone by the Company in granting the
Performance Rights to Mr Tooth.
The Directors are not aware of any information, other than the information set
out in this Explanatory Statement that would reasonably be required by
Shareholders in order to decide whether or not it is in the Company’s interests
to pass Resolution 3.
4. RESOLUTIONS 4 TO 6 – GRANT OF PERFORMANCE RIGHTS TO THE NON-EXECUTIVE
DIRECTORS UNDER THE INCENTIVE PLAN
4.1 Details of the proposed grant to the Non-Executive Directors
Subject to obtaining Shareholder approval in respect of Resolution 2 and
Resolutions 4 to 6, the Company proposes to grant Performance Rights to each of
Evan Kirby, Laurence Read and Grant Button (the Non-Executive Directors) (or
their nominees) in accordance with the terms of the Incentive Plan.
The grant of Performance Rights will form part of the remuneration planning for
Non-Executive Directors. The Board acknowledges that this is not in accordance
with Recommendation 8.2 of the Corporate Governance Principles and
Recommendations (3rd edition) as published by the ASX Corporate Governance
Council. However, the Board considers that it is reasonable in the circumstances
for the Non-Executive Directors to be offered the Performance Rights as part of
their remuneration, given the primary purpose of the grant of the Performance
Rights to the Non-Executive Directors is to motivate and reward their performance
in their respective roles as Non-Executive Directors.
4.2 Approval for the purposes of the ASX Listing Rules and Corporations Act
Resolutions 4 to 6 seek Shareholder approval for the grant of Performance Rights
(and the subsequent issue of Shares on the valid exercise of those Performance
Rights) to the Non-Executive Directors for the purposes of:
(a) ASX Listing Rule 10.14, which broadly provides that Shareholder approval
is required before a director, or an associate of a director, may acquire
securities under an employee incentive scheme; and
(b) Chapter 2E of the Corporations Act, which prohibits a public company from
giving a financial benefit to a related party of a public company unless
the giving of the financial benefit falls within one of the nominated
exceptions, or shareholder approval is obtained prior to the giving of the
financial benefit.
Shareholder approval under ASX Listing Rule 7.1 is not required for issues that
have been approved under ASX Listing Rule 10.14. Accordingly, provided
Resolutions 2 and 4 to 6 are approved by Shareholders, the grant of Performance
Rights to the Non-Executive Directors (and any subsequent acquisition of Shares
on the valid exercise of those Performance Rights) will not be included in the
calculation of the Company’s 15% annual placement capacity for the purposes of
ASX Listing Rule 7.1.
4.3 Information required by ASX Listing Rules
For the purpose of the approval sought under ASX Listing Rule 10.14, and in
accordance with the requirements of ASX Listing Rule 10.15, the following
information is provided in relation to the proposed grant of Performance Rights
to the Non-Executive Directors:
(a) The Performance Rights are proposed to be issued to the Non-Executive
Directors, Evan Kirby, Laurence Read and Grant Button, each a Director and,
as such, a related party of the Company.
(b) The maximum number of Performance Rights that may be granted to each Non-
Executive Director pursuant to Resolutions 4 to 6 are as follows:
Non-
Execut
Tranch Tranch Tranch Tranch Tranch Tranch Tranch
ive Total
e A e B e C e D e E e F e G
Direct
or
Evan 700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,
Kirby 0 0 0 0 0 0 000 000
Lauren
700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,
ce
0 0 0 0 0 0 000 000
Read
Grant 1,250, 1,250, 1,250, 1,250, 1,250, 1,250, 2,500, 10,000
Button 000 000 000 000 000 000 000 ,000
2,650, 2,650, 2,650, 2,650, 2,650, 2,650, 5,300, 21,200
Total
000 000 000 000 000 000 000 ,000
(c) The Performance Rights will be granted under the Incentive Plan, on the
general terms and conditions set out in Schedule 1 of this Explanatory
Statement, and the specific terms and conditions set out in Schedule 2 of
this Explanatory Statement. The performance hurdles attaching to the
Performance Rights along with the applicable performance hurdle
satisfaction date and vesting date are set out in the table in section
4.4(c) below.
(d) No price is payable for the grant of the Performance Rights, or on the
valid exercise of the Performance Rights, as the Performance Rights are
issued as an incentive and reward following satisfaction of prescribed
performance hurdles by a prescribed date.
(e) No securities have previously been issued under the Incentive Plan nor has
the Incentive Plan been previously adopted by Shareholders.
(f) The Directors, together with employees and contractors of the Company, are
entitled to participate in the Incentive Plan.
(g) A voting exclusion statement is included in the Notice.
(h) No loans are being provided by the Company for the acquisition of securities
under the Incentive Plan.
(i) It is anticipated that the Performance Rights will be granted to the Non-
Executive Directors no later than 12 months after the date of the Meeting
(or such later date as permitted by an ASX waiver or modification of the
ASX Listing Rules) in one tranche. The Company contemplates that Shares
issued on the valid exercise of the Performance Rights may be issued in
more than one tranche following vesting of the Performance Rights.
4.4 Information required by the Corporations Act
Pursuant to, and in accordance with the requirements of Chapter 2E, and in
particular with section 219, of the Corporations Act, the following information
is provided for the purposes of obtaining Shareholder approval for Resolutions
4 to 6:
(a) The related parties to whom a financial benefit will be given are Evan
Kirby, Laurence Read and Grant Button (or their nominees), each of whom is
a Non-Executive Director of the Company.
(b) The nature of the financial benefit proposed to be given to each Non-
Executive Director is the grant of Performance Rights up to the maximum
number set out in the table below:
Non-
Execut
Tranch Tranch Tranch Tranch Tranch Tranch Tranch
ive Total
e A e B e C e D e E e F e G
Direct
or
Evan 700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,
Kirby 0 0 0 0 0 0 000 000
Lauren
700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,
ce
0 0 0 0 0 0 000 000
Read
Grant 1,250, 1,250, 1,250, 1,250, 1,250, 1,250, 2,500, 10,000
Button 000 000 000 000 000 000 000 ,000
2,650, 2,650, 2,650, 2,650, 2,650, 2,650, 5,300, 21,200
Total
000 000 000 000 000 000 000 ,000
(c) The Performance Rights will be granted under the Incentive Plan, on the
general terms and conditions set out in Schedule 1 of this Explanatory
Statement, and the specific terms and conditions set out in Schedule 2 of
this Explanatory Statement. The performance hurdles attaching to the
Performance Rights along with the applicable performance hurdle
satisfaction date and vesting date are set out in the table below:
Performance
Number of
Tranc Hurdle
Performanc Performance Hurdle Vesting Date
he Satisfactio
e Rights
n Date
A 3 years after
AIM Price is 0.35 pence
2,650,000 1 year hurdle
or more
satisfaction
B 3 years after
AIM Price is 0.5 pence
2,650,000 18 months hurdle
or more
satisfaction
C 2 years after
AIM Price is 0.75 pence
2,650,000 2 years hurdle
or more
satisfaction
D 2 years after
AIM Price is 1.1 pence
2,650,000 3 years hurdle
or more
satisfaction
E 18 months after
AIM Price is 1.5 pence
2,650,000 3 years hurdle
or more
satisfaction
F 1 year after
AIM Price is 2.0 pence
2,650,000 3.5 years hurdle
or more
satisfaction
G First commercial
production at any 6 months after
5,300,000 project controlled by 5 years hurdle
the Company at the time satisfaction
of first production
Where:
AIM Price means the volume-weighted average price of Ferrum Shares on AIM
over 10 consecutive trading days;
Performance Hurdle Satisfaction Date means the date by which the relevant
performance hurdle must be satisfied; and
Vesting Date means the date on which the relevant participant becomes
entitled to be issued a Share in accordance with Rule 7 of the Incentive
Plan.
(d) The Performance Rights will be granted for no cash consideration and,
accordingly, no funds will be raised from the grant of the Performance
Rights or from the issue of Shares upon vesting of the Performance Rights.
(e) Each Non-Executive Director is a proposed recipient of the Performance
Rights and has an interest in the outcome of the Resolution relevant to
him.
(f) Non-Executive Directors’ fees:
2015/2016 Financial 2016/2017 Financial
Non-Executive Director
Year Year
Evan Kirby $7,5001 $30,000
Laurence Read $02 $03
Grant Button $36,850 $60,0004
1. Evan Kirby joined the Board as a Non-Executive Director on 31 March 2016.
2. Laurence Read was appointed as a Non-Executive Director of the Company
on 25 January 2017, and so was not paid a fee in the 2015/2016 financial
year. Mr Read was paid a consultancy fee of GBP52,500 for the 2015/2016
financial year.
3. While he is not being paid a Non-Executive Director fee, Laurence Read
will be paid a consultancy fee of GBP52,500 for the 2016/2017 financial
year.
4. Grant Button was appointed Company Secretary on 31 March 2016, at which
time his fee was increased from $30,000 per annum to $60,000 per annum.
(g) The securities currently held by the Non-Executive Directors and those that
may be issued subject to Shareholder approvals at this meeting are set out
in the table below:
Performance Rights (subject to
shareholder approval under
Existing Existing
Director Resolutions 2 and 4 to 6), to be
Shares Options
issued in the tranches set out in
sections 4.3(b) and 4.4(b) above
Evan
10,900 Nil 5,600,000
Kirby
Laurence
Nil Nil 5,600,000
Read
Grant
5,356,300 Nil 10,000,000
Button
(h) The dilution effect on Shareholders, if all Performance Rights the subject
of Resolutions 4 to 6 are exercised (and the Performance Rights proposed
to be granted to Mr Tooth under Resolution 3 vest, but no other Performance
Rights are exercised) and no other Shares are issued, will be 2.24% as set
out below.
Shares (ASX:FCR)
Shares currently on issue 2,147,825,266
Resolution 3 – Performance Rights
28,000,000
to be granted to J Tooth
Resolutions 4 to 6 – Performance
Rights to be granted to the Non- 21,200,000
Executive Directors
Expanded Capital if all
Performance Rights proposed in
this Notice to be granted to all 2,197,025,266
Directors vest or are exercised
(as applicable)
Dilutionary effect 2.24%
(i) In the 12 months before the date of this Notice, the highest, lowest and
latest trading price (as at 14 March 2017) of the Shares on ASX are as set
out below:
Shares (ASX:FCR)
Highest (16 May 2016) 0.007
Lowest (22 April 2016 and 9
0.002
May 2016)
Latest (14 March 2017) 0.003
(j) The value of the financial benefit to be provided to the Non-Executive
Directors is set out in the table below. These figures have been calculated
based on BDO’s valuation of the Performance Rights which are proposed to
be issued to Mr Tooth. This is on the basis that, because the tranches of
Performance Rights that are to be issued to the Non-Executive Directors are
on the same terms as the tranches of Performance Rights to be issued to Mr
Tooth, the valuation methodology used in respect of Mr Tooth can also be
used for the Non-Executive Directors. Accordingly, the ‘Valuation per right’
figure in the table below is identical for Mr Tooth and the Non-Executive
Directors.
As discussed above, BDO used an up and in single barrier share option
pricing model for Performance Rights under Tranches A - F, and a binomial
pricing model (validated by the Black Scholes option pricing model) for
Tranche G Rights.
The up and in single barrier share pricing model takes into consideration
that market based rights can vest at any time during the period from grant
date to the performance hurdle satisfaction date of each respective tranche,
provided the 10-day VWAP of the AIM Price exceeds the determined barrier
price. The model incorporates a trinomial valuation.
Tranche A B C D E F G Total
Evan Kirby
# of 700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,00
Rights 0 0 0 0 0 0 000 0
Valuati 0.1090 0.1012 0.0921 0.0998 0.0846 0.0843 0.1700
on per p p p p p p p N/A
right 0.17c 0.16c 0.15c 0.16c 0.14c 0.13c 0.27c
GBP238
Valuati GBP763 GBP708 GBP645 GBP699 GPB6,377
GBP592 GBP590 0
on of AUD1,2 AUD1,1 AUD1,0 AUD1,1 AUD10,25
Tranche AUD952 AUD948 AUD3,8
26 38 37 24 1
26
Laurence Read
# of 700,00 700,00 700,00 700,00 700,00 700,00 1,400, 5,600,00
Rights 0 0 0 0 0 0 000 0
Valuati 0.1090 0.1012 0.0921 0.0998 0.0846 0.0843 0.1700
on per p p p p p p p N/A
right 0.17c 0.16c 0.15c 0.16c 0.14c 0.13c 0.27c
GBP238
Valuati GBP763 GBP708 GBP645 GBP699 GBP6,377
GBP592 GBP590 0
on of AUD1,2 AUD1,1 AUD1,0 AUD1,1 AUD10,25
Tranche AUD952 AUD948 AUD3,8
26 38 37 24 1
26
Grant Button
# of 1,250, 1,250, 1,250, 1,250, 1,250, 1,250, 2,500,
10,000
Rights 000 000 000 000 000 000 000
Valuati 0.1090 0.1012 0.0921 0.0998 0.0846 0.0843 0.1700
on per p p p p p p p N/A
right 0.17c 0.16c 0.15c 0.16c 0.14c 0.13c 0.27c
GBP1,3 GBP1,2 GBP1,1 GBP1,2 GBP1,0 GBP1,0 GBP4,2 GBP11,38
Valuati 62 65 51 47 58 54 50 7
on of
Tranche AUD2,1 AUD2,0 AUD1,8 AUD2,0 AUD1,7 AUD1,6 AUD6,8 AUD18,30
89 33 50 05 01 94 32 4
Note: These values have been calculated by BDO in GBP and converted to AUD
by the Company using the rate of GBP1 = AUD1.607458607, being the inverse of
the AUD/GBP foreign exchange rate published by the Reserve Bank of Australia
on 8 March 2017.
BDO made the following assumptions under the models:
- the Performance Rights under Tranches A-F have market-based vesting
conditions attached;
- for Performance Rights under Tranche G (which don’t have market
vesting conditions attached), the exercise of the Performance Right
does not affect the value of the underlying asset;
- a grant date of 8 March 2017, which was also adopted as the valuation
date;
- it used the 10 day VWAP of the Shares on AIM as at the valuation date,
0.17 pence, which was input into the pricing model;
- as there is no consideration required for exercising the Performance
Rights, a nil exercise price was used in the option pricing model;
- the performance period represents the period over which the
Performance Rights will be assessed for vesting, from the grant date
until the Performance Hurdle Satisfaction Date based on the
Performance Rights’ respective performance hurdles;
- the performance hurdle of each tranche is to be measured over the
respective performance period of each tranche;
- for Performance Rights under Tranche G, it used a share price
volatility of 150% based on the historical volatility of Ferrum’s AIM
listed share price;
- for Performance Rights under Tranches A-F, it used a 10-day VWAP
volatility of 100% based on the historical volatility of the 10-day
VWAP of Ferrum’s AIM listed share price;2
- the risk free rate of interest used is the United Kingdom Government
Bond Rate that most closely corresponds to the vesting period of each
tranche of Performance Rights as at the valuation date:
o for Performance Rights under Tranches A-C, E and F, a rate of
0.314% was used, being the four year United Kingdom Government
Bond closing rate as at the valuation date; and
o for Performance Rights under Tranches D and G, a rate of 0.589%
was used, being the five year United Kingdom Government Bond
closing rate as at the valuation date;
- a dividend yield of 0%; and
- the performance hurdle for each tranche is identical to the hurdle
outlined in section 4.4(c) above.
(k) Directors’ recommendation and basis of recommendation
2
The Performance Rights under Tranches A-F are subject to a market-based performance hurdle which is not based on realising a certain share
price but rather, a 10-day VWAP of the Ferrum AIM listed share price. Accordingly, the metric of volatility employed in the option pricing model is
the historical volatility of the 10-day VWAP of Ferrum’s AIM listed share price and not the close-close share price volatility metric that was used
for Performance Rights under Tranche G.
The Non-Executive Directors each have a material personal interest in their
respective Resolution because it relates to the grant of Performance Rights
to them. As a consequence, and given the potential perceived interest in
relation to the other Resolutions in respect of the grant of Performance
Rights, the Non-Executive Directors abstain from making a recommendation
to Shareholders in relation to Resolutions 4 to 6. Mr Tooth recommends that
Shareholders vote in favour of Resolutions 4 to 6.
The Chairman intends to exercise all undirected proxies IN FAVOUR of Resolutions
4 to 6.
4.5 Other information
There are no material opportunity costs to the Company, no taxation consequences
to the Company and no material benefits foregone by the Company in granting the
Performance Rights to the Non-Executive Directors.
The Directors are not aware of any information, other than the information set
out in this Explanatory Statement, that would reasonably be required by
Shareholders in order to decide whether or not it is in the Company’s interests
to pass Resolutions 4 to 6.
GLOSSARY
In the Notice and this Explanatory Statement:
$ or AUD means Australian dollars.
AIM means the AIM Board of the London Stock
Exchange.
AIM Price has the meaning given in section 3.4(c) of the
Explanatory Statement.
ASX means Australian Securities Exchange.
ASX Listing Rules means the official listing rules of ASX.
Award means a right to acquire Shares under the
Incentive Plan, and includes an Option and a
Performance Right.
Board means the current board of directors of the
Company.
cents or c means Australian cents.
Chairman means the person appointed to chair the Meeting
of the Company convened by this Notice.
Closely Related Party has the meaning given in section 9 of the
Corporations Act.
Company or Ferrum means Ferrum Crescent Limited ACN 097 532 137.
Corporations Act means the Corporations Act 2001 (Cth).
Corporations Regulations means the Corporations Regulations 2001 (Cth).
DI Holders means holders of depositary interests in the
Company.
Directors means the directors of the Company, being, at
the date of this Notice, Messrs Justin Tooth,
Grant Button, Evan Kirby and Laurence Read.
EOP means the Company’s Employee Option Plan.
ESP means the Company’s Employee Share Plan.
Explanatory Statement means the explanatory statement accompanying
the Notice of Meeting.
GBP means Great British pounds
General Meeting or Meeting means the General Meeting of Shareholders to
be held at the Hovia Room, Metro Hotel Perth,
61 Canning Highway, South Perth, Western
Australia on Thursday 11 May 2017 at 11:00 am
(Perth time).
Group means the Company and a related body corporate
of the Company as defined in section 50 of the
Corporations Act and any company in respect of
which the Company has voting power of not less
than 20%.
Form of Instruction means, for DI Holders, the form of instruction
enclosed with this Notice.
Incentive Plan means the Ferrum Crescent Ltd Director and
Employee Incentive Plan, a summary of which is
set out in Schedule 1.
Key Management Personnel means a person having authority and
responsibility for planning, directing and
controlling the activities of the Company,
directly or indirectly, including any Director
(whether executive or otherwise) of the
Company.
Non-Executive Director has the meaning given in section 4.1 of the
Explanatory Statement.
Notice of Meeting or Notice means this notice of General Meeting including
the Explanatory Statement.
Option means an option to acquire a Share on the terms
and conditions set out in the Incentive Plan,
a summary of which is set out in Schedule 1.
Ordinary Resolution means a Resolution to be passed by a simple
majority of Shareholders entitled to vote on
the Resolution (in person, by proxy, by
attorney or, in the case of a corporate
Shareholder, by a corporate representative).
pence or p means Great British pence.
Performance Hurdle has the meaning given in section 3.4(c) of the
Satisfaction Date Explanatory Statement.
Performance Right means a right to acquire a Share on the general
terms and conditions set out in the Incentive
Plan (a summary of the Incentive Plan is set
out in Schedule 1, and a summary of the
specific terms and conditions of the
Performance Rights is contained in Schedule 2).
Placement Shares has the meaning given in section 1.1 of the
Explanatory Statement.
Proxy Form means, for Shareholders, the proxy form
enclosed with this Notice.
Resolution means a resolution set out in this Notice of
Meeting.
Share means an ordinary share in the Company.
Shareholder means a holder of Shares in the Company.
Vesting Date has the meaning given by section 3.4(c) of the
Explanatory Statement.
Schedule 1 – Summary of terms of the Incentive Plan
The terms and conditions of the Incentive Plan are summarised below:
1. Board
The Board, or a duly appointed committee of the Board, is responsible for
the operation of the Incentive Plan.
2. Participants
Directors, full-time, part-time and casual employees, and contractors of
the Group are all eligible to participate in the Incentive Plan.
3. Eligibility
The Board has an absolute discretion to determine the eligibility of
participants. Some of the factors the Board will have regard to in
determining eligibility include:
(a) the seniority of the participant and the position that the participant
occupies within the Group;
(b) the length of service of the participant with the Group;
(c) the record of employment of the participant with the Group;
(d) the potential contribution of the participant to the growth and
profitability of the Group;
(e) the extent (if any) of the existing participation of the participant
in the Incentive Plan; and
(f) any other matters the Board considers relevant.
4. Invitations and Awards
The Board may, in its absolute discretion, invite eligible participants to
participate in the Incentive Plan. An invitation may be made on such terms
and conditions as the Board decides from time to time, including as to the
terms of the Award offered and whether the Award comprises Performance
Rights and/or Options.
5. Number of Performance Rights and/or Options
(a) The Board has a discretion to determine the number of Performance
Rights and/or Options granted to participants under an Award, however
in accordance with applicable law, the Board will ensure that the
number of Performance Rights and/or Options offered to eligible
participants over a three-year period does not exceed 5% of the
Company’s issued capital.
(b) Further, in determining the number of Performance Rights and/or
Options to be granted to participants, the Board will have regard to:
(i) current market practice; and
(ii) the overall cost to the Company of grants under the Incentive
Plan.
6. No payment on grant or vesting
Unless the Board determines otherwise, no payment is required for the grant,
on the vesting, or the issue, transfer or allocation of shares following
vesting of a Performance Right or Option.
7. Vesting conditions
Vesting of an Award may be conditional on the participant satisfying the
pre-determined vesting conditions determined by the Board within the vesting
period. The vesting period applicable to the Performance Rights or Options
is the period determined by the Board.
8. Vesting of Award
The Award will only vest if the participant meets any specified vesting
conditions within the vesting period. If the terms of grant require the
Award to be exercised, the participant must exercise the Award in order for
vesting to occur. Any Award which has not vested within the vesting period
will lapse.
9. Entitlements under Awards
Prior to vesting and exercise (if required) of an Award, and the issue of
Shares to the participant in accordance with the rules of the Incentive
Plan, a participant is not entitled to exercise any votes in respect of the
shares to which the Award relates, nor is the holder entitled to participate
in any dividend or any new issue of securities by the Company in respect
of that Award.
10. Issue, transfer or allocation of shares on vesting of Award
The Shares to be provided on vesting and exercise (if required) of the
Award may be issued by the Company or acquired on market by the Company (or
any trustee of the Incentive Plan) and transferred or allocated to the
holder of the Performance Right. Any Shares issued under the Incentive Plan
will rank equally with those traded on the ASX at the time of issue. The
Board may impose restrictions on the transferability of a Share issued,
transferred or allocated to a participant following vesting of a Performance
Right, which shall be set out in the terms of invitation.
11. Cessation of eligibility
(a) Where a participant ceases to be eligible to participate in the
Incentive Plan, the Board may determine that some or all of the
participant’s Award lapses, vests, is exercisable for a prescribed
period (if applicable), or is no longer subject to some or all
applicable restrictions.
(b) The Board may specify in an invitation how a participant’s Award will
be treated in the event that the participant ceases to be eligible to
participate in the Incentive Plan which may vary depending upon the
circumstances in which the participant ceases to be eligible.
12. Change of control
(a) On a change of control event (which includes a takeover, merger or
any person acquiring a relevant interest in more than 50% of the
issued share capital in the Company and other similar events) the
Board may, in its discretion, determine the manner in which any or
all of a participant’s Awards may be dealt with including in a manner
that allows the participant to participate in and/or benefit from any
transaction arising from or in connection with the change of control
event.
(b) The Board may specify in an invitation how a participant’s Award will
be treated on a change of control event which may vary depending upon
the circumstances of the change of control event.
13. Capital reorganisation
In the event of any capital reorganisation prior to vesting and exercise
(if required) of an Award, the Award may be adjusted having regard to the
ASX Listing Rules.
14. Clawback provision
The Board may determine that any unvested Award and vested but unexercised
Award (if exercise is required) will lapse if, in the Board’s opinion,
among other things:
(a) the participant has acted fraudulently or dishonestly, engaged in
gross misconduct, breached his or her duties or obligations (including
where the participant’s Award vests as a result of such conduct and
the Board forms the opinion that the Award would not have otherwise
vested); or
(b) there is a material misstatement or omission in the financial
statements of a group company.
Schedule 2 – Summary of terms of the Performance Rights
The key terms and conditions of the Performance Rights to be granted to Justin
Tooth, Evan Kirby, Laurence Read and Grant Button under the Incentive Plan are
summarised below:
1. No payment on grant or vesting
No payment is required for the grant or on the vesting (or the issue of
shares following vesting) of a Performance Right.
2. Vesting of Performance Rights
Performance Rights will vest on the Vesting Date set out in the table below,
subject to satisfaction of the performance hurdles. If the terms of grant
require the Performance Rights to be exercised, the participant must
exercise the Performance Rights in order for vesting to occur.
The performance hurdles attaching to the tranches of Performance Rights,
along with the applicable Performance Hurdle Satisfaction Date and Vesting
Date, are set out in the table below:
Performance
Tranche of
Hurdle
Performanc Performance Hurdle Vesting Date
Satisfaction
e Rights
Date
3 years after
AIM Price is 0.35 pence
A 1 year hurdle
or more
satisfaction
3 years after
AIM Price is 0.5 pence
B 18 months hurdle
or more
satisfaction
2 years after
AIM Price is 0.75 pence
C 2 years hurdle
or more
satisfaction
2 years after
AIM Price is 1.1 pence
D 3 years hurdle
or more
satisfaction
18 months
AIM Price is 1.5 pence
E 3 years after hurdle
or more
satisfaction
1 year after
AIM Price is 2.0 pence
F 3.5 years hurdle
or more
satisfaction
First commercial
production at any 6 months
G project controlled by 5 years after hurdle
the Company at the time satisfaction
of first production
3. Performance Hurdle Satisfaction Date
If the performance hurdle in respect of any Performance Rights has not been
satisfied by the relevant Performance Hurdle Satisfaction Date, those
Performance Rights will lapse.
4. Entitlements under Performance Rights
The Performance Rights do not entitle the holder to exercise any votes in
respect of the shares to which the Performance Rights relate, nor is the
holder entitled to participate in any dividend or any new issue of
securities by the Company in respect of that Performance Right.
5. Issue of shares on vesting of Performance Rights
All shares to be issued on vesting and exercise (if required) of the
Performance Rights will rank equally with those traded on the ASX at the
time of issue.
6. No transfer of Performance Rights
The Performance Rights may not be transferred.
7. Cessation of eligibility
Where a participant ceases to be eligible to participate in the Incentive
Plan, the Board may determine that some or all of the participant’s Award
lapses, vests, is exercisable for a prescribed period (if applicable), or
is no longer subject to some or all applicable restrictions.
8. Change of control
On a change of control event (which includes a takeover, merger, any person
acquiring a relevant interest in more than 50% of the issued share capital
in the Company and other similar events), the Board may, in its discretion,
determine the manner in which any or all of a participant’s securities will
be dealt with.
9. Capital reorganisation
In the event of any capital reorganisation, Performance Rights may be
adjusted having regard to the ASX Listing Rules.
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