legal advice over letter to shareholders, page-8

C4 as you are no longer a s holder here is what maangement have to say

Cat fight is on

AREAS OF CONCERN
NIKOLAENKO APPEARS TO BE SEEKING CONTROL
Mr. Nikolaenko claims his companies are not seeking to take control of the Company. However,
your Board is very concerned by claims attributed to Mr. Nikolaenko that he may control in
excess of the takeover threshold of twenty percent (20%) of the voting shares in the Company. A
German investment newsletter has recently claimed, following a lengthy interview with Mr
Nikolaenko, that it believes Mr. Nikolaenko may control more than 40% of the voting shares in
the Company. The Company has written to the lawyers acting for Mr Nikolaenko seeking to
obtain confirmation as to the position in relation to this claim. This claim, yet to be confirmed or
denied by Mr Nikolaenko or his lawyers as representing the true legal position, is consistent with
claims made by Mr. Nikolaenko in conversations with current members of the Board in the lead
up to the calling of the shareholders meeting, during which Mr. Nikolaenko threatened to exert
"control" and claimed to control more than 20% of the Company’s shares.
West Australian
Metals Ltd
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INDEPENDENCE OF NIKOLAENKO NOMINEES
Mr. Nikolaenko claims his nominees to the Board are "completely independent" and that there is
no relationship between his companies and the nominees.
Your Board is aware of the following facts:
Mr. Gary Stokes
Mr. Stokes is the Chief Executive of Magna Mining NL (formerly Reefton Mining NL). Mr.
Nikolaenko resigned from the Magna Mining NL board a few weeks ago. Mr. Stokes works from
Mr. Nikolaenko's offices and Magna Mining NL shares phone and fax numbers with Mr.
Nikolaenko's private companies.
Mr. David Sanders
Mr. Sanders is a practice executive of the law firm which acts for the Requisitioning Parties and
has written on behalf of the Requisitioning Parties. Mr Nikolaenko controls the Requisitioning
Parties and holds his relevant interest in the Company through the Requisitioning Parties.
Your Board is aware of every director's responsibility to act in the interests of all shareholders.
However, the Board believes that Mr. Nikolaenko claiming that the nominees to the Board are
"completely independent" is clearly misleading.
SHARE PRICE
Mr. Nikolaenko appears to be suggesting that your Board is failing to "properly manage and
promote" the Company, by virtue of its $60 million market capitalisation. Mr. Nikolaenko goes
on to estimate the “in ground” value of Marenica at $300 million.
It is not usual for a Board to disparage an optimistic valuation of its major asset. However, Mr.
Nikolaenko appears to be suggesting that your Company is not being properly promoted by virtue
of the difference between his assessment and that of the market.
Your Board is deeply concerned that Mr. Nikolaenko is creating an expectation that the
Company's share price could be 5 times its current value based on currently available exploration
information, and believes that this assertion is misleading.
First, Mr. Nikolaenko appears to be combining the Company's JORC compliant inferred resource
of 15 million pounds U308 with the company's target (not a resource) for the Priority Area of 17-
27 million pounds. The ASX Listing Rules do not even allow valuations on “in-ground values”
as they can be misleading. Nor does the ASX allow these different categories to be added
together, for obvious reasons.
Secondly, or perhaps in the alternative, it appears to assume a grossly inflated valuation per
pound for uranium inferred resource. The market is simply not prepared to pay such a valuation.
Thirdly, it takes no account of the fact that the Company is yet to complete a feasibility study, a
necessary pre-requisite to the assumption of economic viability implicit in Mr. Nikolaenko's
valuation.
None of this is to say that your Board is not working hard and diligently towards establishing the
true value of the project or that shareholders should not remain optimistic about Marenica's
prospects. Your Board believes that its JORC compliant resources will increase (a new statement
is due out shortly, which is consistent with the Company's previous ASX announcement aiming
for an end of July 2008 release) and that the uranium spot price will recover.
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However, your Board is determined to manage the project and its promotion in a professional
manner with the advice received from its advisers, ensuring that at all times it complies with
JORC standards, and ASX resource reporting requirements.
Promoters are relatively easy to find - economic ore bodies are not!
Real shareholder wealth is generated through technical success, driven by a knowledgeable,
experienced and dedicated exploration team.
MARENICA LICENCE RIGHTS
When your Company signed its original agreement with Jaco Smith, it acquired a right to 80% of
the shares of Marenica Minerals (Proprietary) Limited, a Namibian company that was set up
under the agreement to hold the Marenica exploration rights. This right was subject to the
Company spending Namibian $1,500,000, which it completed over twelve months ago. These
rights are not disputed by Smith or Nikolaenko. The company has legal advice confirming the
existence of these rights.
The Board believes it is grossly misleading and damaging to suggest that these rights and the
Company's interests are not "secure".
The Board also believes it is misleading for Nikolaenko to suggest that he "has been
endeavouring to bring the parties together". Mr. Nikolaenko has been actively negotiating on
behalf of Mr. Smith for him to gain effective veto rights over the management of the project. This
has been resisted by the Board and as a result, Mr. Nikolaenko threatened to seek the appointment
of a new Chief Executive Officer. When the Board declined Mr. Nikolaenko's request for Gary
Stokes to be appointed, Mr. Nikolaenko demanded the appointment of Messrs Judge and Sanders
as directors within 48 hours. When your Board requested the time to assess and interview his
nominees, the Requisitioning Parties requisitioned the shareholders meeting.
KEEPING SHAREHOLDERS ADEQUATELY INFORMED
The Board learned of the Requisitioning Parties letter to shareholders dated 21 July 2008, on
Friday, 25 July 2008.
The Board understands that, at the date of this letter, not all shareholders have received a copy of
that, or this letter.
In an endeavour to ensure that all shareholders of WME are fully informed, and have had an
opportunity to consider the manner in which they wish to vote at the meeting of shareholders
requisitioned by the Requisitioning Parties, the Board intends to apply to the Court seeking a
short postponement of that meeting. The Board anticipates the Court will hear that application on
Wednesday, 30 July 2008, or Thursday, 31 July 2008. The Board will inform shareholders, after
that time, of the outcome of that application.
RECOMMENDATION
Your Board recommends that shareholders:
(i) vote against the resolution to remove Terence Shanahan; and
(ii) vote against the resolutions to appoint the three persons nominated by the Requisitioning
Parties (Messrs Stokes, Judge and Sanders),
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for the reasons set out in the Explanatory Memorandum accompanying the Notice of Meeting
dispatched to all of the Company's shareholders on 3 July 2008.