letter to the tex board

Hi all, interesting reading various "views" on the TEX forum today with the positive announcement. Tony D, welcome back into the sunshine!

FYI, the following is a formal request that I made to the Target Chairma & Board after consultation with many others - unfortunately I have not received a formal like response from the Chairman (however did get a VM from Laurence). The haphazard revenue from the P&L vs the internal management fees and salaries is unrealistic and unsustainable. The arrogance regarding the TEXO shares expiring is unforgivable. That is all I can say at this stage, but I look forward to being at the AGM next week. My email is available in previous posts for any that would like to discuss. My vote is NOT to extend our limited capital going into part-time director's pockets in exchange for poor return on funds, deplorable recognition of TEXO options and recognition of loyalty thro the Blaze attempted takeover and personal lack of loyalty in the take up of the rights issue. We are facing a "Company Breaker" in my view in the current scenario. "Success via luck despite our management" is a risky formula.

I (like many others I presume) received phone calls from Director(s) of the company prior to the rights issue recently encouraging us to take up the offer based on high potential rewards etc etc. Then we find that many of the these same Directors (including MD) have failed to take up their full entitlements. I am very disappointed in their personal commitment and look forward to this being rebalanced.

October 16, 2009

Mr Didier Murcia
Chairman & Director
Target Energy Limited
Level 2, 46 Ord Street
West Perth, WA 6005

Dear Mr Murcia:

I am writing to yourself and the board of Target Energy to formally request consideration for a proposal of prorata entitlement issue of one new Target option for each existing TEXO option due to expire 26th November 2009. As you and the board will no doubt be aware, FairStar Resources Limited recently presented a similar resolution at its AGM which was approved and an option reissue is currently being implemented.
There are various advantages to the reissue of these options.

1. The reissue of options will retain greater shareholder strength in the hands of existing shareholders. Part of the problem with capital raisings is that the foundations of the company are diluted and/or spread to new participants at a risk of unsettled support, as evidenced by the recent Blaze disruption in mid 2009.

2. The reissue of TEXO could be aligned with the options resulting from the current capital raising and therefore not complicating the capital structure of Target Energy Limited. For instance if the options were issued at a strike price of 10c and an administration charge of 0.1c per option then this would align with the current proposed options post-raising.

3. There are currently close to 65 million TEXO options that are due to expire in a months time. If these options are extended and later converted at 10c, then the company sets to raise $6.5M over time in a very cost effective capital injection. Given the number of formal capital raisings over the last couple of years in Target, this is a soft and effective enabler to accelerate funds for further expansion plans which will benefit all Target shareholders.

4. The conversion (rather than expiry) of TEXO options will provide a further significant dilution to Blaze’s holding in our company. Their current 5-6% holding still provides a further disruptive threat and potential cost to Target Energy. No doubt you would agree that we can’t afford to go through that again.

There are of course many views on the pros/cons of extending options further into the future. The view that I hold and share with many other Target share and option holders is that the unique financial environment of 2008-09 plus the collapse of the Catapult project and the hostile takeover attempt from Blaze has resulted in a radical change in Target’s immediate potential to convert TEXO options to shares and this risk could not be reasonably predicted or assessed by your investors.

I formally request that the Target Energy board and management consider a resolution at the upcoming AGM to gain the vote of the shareholders in reissuing a prorata entitlement of options to existing TEXO holders at 10c for a 0.1c cost of conversion. If desired, I am prepared to meet and present this view in person to you and your members.

Sincerely,