Ann: Notice of Annual General Meeting/Proxy Form, page-6

At the risk of throwing a cat amongst the pigeons, I would like to provoke a discussion amongst fellow shareholders...and in particular fellow LTH's.

There is a famous quote from Ed Murrow along the lines of "A nation of sheep begets a government of wolves".  I strongly believe that.  I also believe that this can be transcribed to any governance versus 'vox populi' situation - and in the case of investors I would rephrase it to "A register of sheep begets a BoD of wolves".

Now, like with all generalisations, the relevance is largely based on the context.  So here is my context.

We have a BoD that seems to be highly admired by the register of investors, particularly by the LTH's which in our case currently make up a decent portion of the non-insider register.  Not a particular surprise as many of these LTH's have seen the BoD preside over a 400%+ increase in the value of their earliest stakes. And the BoD certainly seem to be aware of this love, and you could argue that they enjoy revelling in it....particularly in the way that that 'love' gets expressed in the London gatherings.  Nothing particularly wrong with that, other than the potential for a pied piper effect.  The risk of such an effect would, IMO, be derisked if the BoD (and critical below ground JV partner) made them selves more available to the wider register, in addition to the London LTH group.  They may hear a more diverse investor perspective.

On requesting a similar event somewhere on the east coast at some stage in the future (post 2V), the reply I received was along the lines of .....I am intimate with the register and London is where it is at, and in terms of Australia it is particularly weak on the east coast.  The implication being that there is no value in doing such presentations anywhere other than London.  I am not being critical of the London group, as their passion is clearly backed up by their wallets.  But I am a bit concerned that we are starting to see a relationship between enough shareholders, and the BoD, to create a bit of an echo chamber where both sides say what the other wants to hear. This is further reinforced when members of the BoD urge shareholders to channel communications through the London group. Wow!!

In the face of this, Resolutions 6 to 10 in the looming AGM strike me as being reflective of the BoD showing its nascent but emerging wolf tendencies.  I am not against them being awarded performance options....but the performance options threshold, at 6.1c strike price is too low.  They can throw as much Black Scholes at it as they want, but the 'pub test' tells me that it is far too low for three years out from now.  I would expect it to be set at 15c, or at least in the double digit area.  Let us not forget that it is us...the shareholders....that are giving up something to reward the BoD.  A reward that is looking likely to be richly deserved....but one that needs to be earned too.

It is not a big deal in the grand scheme of things (value wise) but it is in terms of symbolism and in terms of messaging and perhaps most importantly, in terms of the changing relationship between the BoD and the shareholders that they represent.

But more than anything else, occasionally, and only on those occasions where there are signs of the need, I believe shareholders need to prove that they are not sheep.  Upon much reflection, I have voted accordingly.


I remain committed to the investment as these 'above ground' topics pale into insignificance compared to the 'below ground' story that is being uncovered by our JV partner. I don't believe that we need to back slap everything to maintain our interest and commitment or to show ongoing support of the BoD.

All IMO and GLTA.