agm resolutions - my take

Hi all

Here are what I see as the key points from the AGM proposals

Resolution 6
Can issue 10% of new equity at no more than 25% discount. Doesn't impact 15% placement capacity
Lasts for 12 months and needs 75% shareholder approval

Resolution 7
To raise max $20m within 3 months of the AGM.
Mo more than a 20% discount
Doesn't impact 15% placement capacity
Brokers will be appointed


Given the example used in resolution 6 includes the shares to be issued under resolution 7, it would be reasonable to conclude that shares issued under resolution 7 would happen first.
Also, seems likely given they have 3 months post AGM to do any raising under resolution 7.


Resolution 10
Loan share plan. Doesn't count towards 15% placement capacity
54m in total. 37.5 used now and the rest kept for the future if they bring in other people to the board.
Shares can either be issued to the staff or bought on market and transferred to the staff member.
Shares will be granted with a 5 day vwap of the grant date. Note there is no discount to vwap like the other resolutions.
The loan is interest free.
But once the shares are granted they vest in 1/3 increments when 3 things occur, a JORC of over 500m - note this is an upgrade to indicated rather than the current inferred, $15m in funding for a feasibility study, and then when they get access to the rail.
These need to happen by dec 2014 or else the shares are forfeited.


Note that if/when the directors sell their loan shares, they need to pay back the loan first.

Resolutions 12-17 is to allocate 37.5m shares to the directors

Note that the company intends to offer the loan to the directors as soon as possible after the meeting. But in reality, given the company needs to lend the directors money, this can't happen until after a cap raising is done, as the company doesn't have the funds to do so currently.
Based on the 31c example, that's $11.5m the company would need to lend.

That's my reading of it.

But when you think about it, the company has to do a raising at a discount to vwap to raise the funds so that they can lend it to the directors so they can buy shares at vwap....

In principe I don't have a problem with the loan share plan, as its a good way to reward management and the company raises funds in the process, rather than issuing cheap options.
In addition, by loading up the directors with shares, it further supports the many comments here about a takeover being the main game.

Good stuff EIO. The AGM resolutions give them the flexibility they need to take this thing forward, and with large management equity stakes, ensures that director interests are aligned with us and dilution will be kept to a minimum.