How and why we are voting at the AGM

Whilst you may think your vote at an AGM is just a drop in the ocean,every drop counts – and even more so when we are talking about junior resourcecompanies.

I have spoken with @Slider (he advises he will be back on HC soon) and there are a few resolutions at this year’s AGM that we think are important, and therefore we thought we would share how and why we are voting.

Resolution 1 – Adoption of Remuneration Report

We acknowledge that last year we voted against the board remuneration.

But thisyear we are voting IN FAVOUR (being “FOR” on thevoting form) of the adoption of the board remuneration.

Whilst wethink that the board collectively could have done some things better over thelast 12 months, we do not have the same board as we started the yearwith and we feel that the board and management is being re-set under theleadership and direction of our recently appointed Chair, Jeremy Kirkwood.

Stability is very important at the moment as we begin to approach and engage with strategic partners.

A vote against the board remuneration and a second strike could mean the board is spilled and the only board member that we would be left with is Bryan Granzien. From some of the posts on HotCopper, we suspect that there will be a number of shareholders who hold strong views about whether or not that would be a good thing.

But regardless of your views on BG, think about the message that a board spill would send to our potential strategic partners. They would be highly unlikely to invest multi millions of dollars with Hawson if there was any instability in the board.

The board remuneration vote is therefore much less about the performance of the board over the last 12 months, and much more about a vote for Jeremy Kirkwood and allowing him as Chair to re-set the direction of Hawsons and allow him time to formulate and implement his plans.

Therefore, despite what you may think about the board’s performance over the last 12 to 18 months, we would encourage you to vote IN FAVOUR (FOR)the of the adoption of the remuneration of the board.

Please keep in mind that whilst many resolutions require 50%, the adoption of the remuneration report requires 75% to pass. Therefore, there is a higher hurdle for it to pass, so it should not be played with to send a message given where HIO is at (from our perspective).

Resolution 9 - Spill Resolution

For those not aware about the two strikes rule, if there are two votes against the remuneration of the board, it can cause a “spill” of the board such that all non-executive Directors cease to be Directors and would need to be voted back in at the Spill Meeting.

We do not want this to occur as it would show potential investors that there is instability at the board level (which increases risk and could make strategic partners wary).Some may also say that we do not want the only Director to be BG during the period until other Directors are voted back in. It could also cause significant delays at a crucial time in the advancement of the project.

So, how do we avoid this?

Whilst we will be voting in favour of (FOR) of all other resolutions, we would encourage you to vote AGAINST Resolution 9.

This would ensure that in the event that the board remuneration is notpassed, there is at least stability in the board.

Resolution 3 – Re-election of Paul Cholakos

This is another resolution that we feel very strongly about to vote INFAVOUR of (being“FOR” on the voting form).

Our reason is that Paul Cholakos is the only constant for Hawsons. He has been there since the early days of Carpentaria Exploration Limited before it became Hawsons Iron Limited.

Therefore, he is the only one with the knowledge of what has been tried before, what has and has not worked and why.

It would be a significant blow to Hawsons to lose that knowledge – and that he is the only Director with an engineering background and has been involved in a number of resource projects so his input in the next stages willbe significant and beneficial.

Resolutions 4, 5, 6 and 8 – Ratification and Approval of Additional Placement

For resolutions 4, 5, and 6, it is simply a matter of approving what has been done, and re-setting the ability of Hawsons to raise capital by share placement. Resolution 8 increases the capacity of the board to issue further shares, up to 25% of the issued capital.

Given the current noises being made in recent announcements, it seems that the Board are very focused on bringing on a strategic partner. Therefore, I do not suspect that they will require this. However, it is important to give the board the flexibility to do so, if they think it is in the best interests of shareholders. For resolutions 4, 5, 6, and 8, we will be vote IN FAVOUR of (being “FOR” on the voting form).

Resolution 7 – Approval of options to Jeremy Kirkwood

This is about approving 5,000,000 options for a recently appointed Director who is now Chair.

All you need to know is that the options are split into four tranches with different performance hurdles. The first hurdle is the completion of a bankable feasibility study and if that is completed, Jeremy Kirkwood will be awarded 1,250,000 options with an exercise price of 65 cents. Therefore, if he can’t get the share price above 65 cents, they are not worth anything to him.

The options are very commercial (issued on the same basis to Tony McGrady following his appointment as director at last year’s AGM) and provide a great incentive and if achieved, we will all benefit.

Therefore, we would encourage you to vote IN FAVOUR of (being “FOR” on the voting form) for Resolution7 – approval of options for Jeremy Kirkwood.

Should anyone have any questions, I will do my best to respond – but I do have a number of competing priorities over coming weeks, so apologies if I do not respond on a timely basis.