CAPRICORN METALS LTD

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ACN 121 700 105

NOTICE OF ANNUAL GENERAL MEETING

TIME : 10.00am (WST) DATE : Wednesday, 24 November 2021 PLACE : Perth Convention and Exhibition Centre Meeting Room 7 21 Mounts Bay Road Perth Western Australia

The business of the Meeting affects your shareholding and your vote is important.

This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional advisers prior to voting.

The Directors have determined pursuant to Regulation 7.11.37 of the Corporations Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are registered Shareholders at 4.00 pm (WST) on Monday, 22 November 2021.

3450-7185-2822v2

Business of the Meeting (setting out the proposed Resolutions)	3
Explanatory Statement (explaining the proposed Resolutions)	7
Glossary	16
IMPORTANT INFORMATION

VENUE

The Annual General Meeting of the Shareholders to which this Notice of Meeting relates will be held at 10am (WST) on 24 November 2021 at:

Perth Convention and Exhibition Centre (Meeting Room 7) 21 Mounts Bay Road, Perth, Western Australia

YOUR VOTE IS IMPORTANT

The business of the Annual General Meeting affects your shareholding and your vote is important.

VOTING ELIGIBILITY

VOTING IN PERSON

To vote in person, attend the Annual General Meeting at the time, date and place set out above.

VOTING BY PROXY

To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.

In accordance with section 249L of the Corporations Act, Shareholders are advised that:

each Shareholder has a right to appoint a proxy;
the proxy need not be a Shareholder of the Company; and
a Shareholder who is entitled to cast 2 or more votes may appoint 2 proxies and may specify the proportion or number of votes each proxy is appointed to exercise. If the member appoints 2 proxies and the appointment does not specify the proportion or number of the member’s votes, then in accordance with section 249X(3) of the Corporations Act, each proxy may exercise one-half of the votes.

Shareholders and their proxies should be aware that:

if proxy holders vote, they must cast all directed proxies as directed; and
any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.

If the Chair is appointed, or taken to be appointed, as your proxy, you can direct the Chair to vote ‘for’ or ‘against’, or ‘abstain’ from voting on, the relevant Resolutions on the Proxy Form. If you do not direct the Chair how to vote you acknowledge that you are expressly authorising him or her to vote in favour of the relevant Resolution (including in circumstances where the subject matter of the Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel).

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BUSINESS OF THE MEETING

AGENDA

1. FINANCIAL STATEMENTS AND REPORTS

To receive and consider the annual financial report of the Company for the financial year ended 30 June 2021 together with the declaration of the directors, the director’s report, the Remuneration Report and the auditor’s report.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

To consider and, if thought fit, to pass, with or without amendment, the following resolution as a non-binding resolution :

“That, for the purposes of section 250R(2) of the Corporations Act and for all other purposes, approval is given for the adoption of the Remuneration Report as contained in the Company’s annual financial report for the financial year ended 30 June 2021.”

Note: the vote on this Resolution is advisory only and does not bind the Directors or the Company.

Voting Prohibition Statement:

The Company will disregard any votes cast in favour of this Resolution:

(a) by or on behalf of a member of the Key Management Personnel, details of whose remuneration are included in the Remuneration Report, or their Closely Related Parties, regardless of the capacity in which the votes are cast; or
(b) by a person who is a member of the Key Management Personnel at the date of the Annual General Meeting, or their Closely Related Parties, as a proxy.

However, votes will not be disregarded if they are cast by a person (the voter ) as a proxy for a person entitled to vote on this Resolution and either:

(c) the voter is appointed as a proxy by writing that specifies the way the proxy is to vote on this Resolution; or
(d) the voter is the Chair and the appointment of the Chair as proxy:
(i) does not specify the way the proxy is to vote on this Resolution; and
(ii) expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with the remuneration of a member of the Key Management Personnel.

3. RESOLUTION 2 – ELECTION OF DIRECTOR – MR BERNARD DE ARAUGO

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution:

“That, Mr Bernard De Araugo, having been appointed as a Director since the Company’s last annual general meeting and, being eligible, offering himself for election, be elected as a Director.”

4. RESOLUTION 3 – APPROVAL OF INCREASE TO NON-EXECUTIVE DIRECTORS’ REMUNERATION

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 10.17 and for all other purposes, Shareholders approve an aggregate increase of the maximum total aggregate amount of fees payable to Non-Executive Directors from $400,000 per annum to $600,000 per annum, on the terms and conditions set out in the Explanatory Statement.”

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Voting Exclusion:

The Company will disregard any votes cast in favour of this Resolution by or on behalf of:

(a) a Director of the entity; or
(b) an associate of that person or those persons.

However, this does not apply to a vote cast in favour of this Resolution by:

(c) a person as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with directions given to the proxy or attorney to vote on this Resolution in that way;
(d) the Chair as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or
(e) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on this Resolution; and
(ii) the holder votes on this Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:
(i) a member of the Key Management Personnel; or (ii) a Closely Related Party of such a member; and
(b) the appointment does not specify the way the proxy is to vote on the Resolution.

However, the above prohibition does not apply if:

(c) the proxy is the Chair; and
(d) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

5. RESOLUTION 4 – RATIFICATION OF PRIOR ISSUE UNDER ASX LISTING RULE 7.1

To consider and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“That, for the purposes of ASX Listing Rule 7.4 and all other purposes, Shareholders ratify the issue of 7,651,936 Shares issued on 28 July 2021 in connection with the Company’s acquisition of the Mt Gibson Gold Project, on the terms and conditions described in the Explanatory Statement.”

Voting Exclusion:

The Company will disregard any votes cast in favour of this Resolution by or on behalf of:

(a) a person who participated in the issue or is a counterparty to the agreement being approved; or

(b) an associate of that person or those persons.

However, this does not apply to a vote cast in favour of this Resolution by:

(c) a person as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with directions given to the proxy or attorney to vote on this Resolution in that way;

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(d) the Chair as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or
(e) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(iii) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on this Resolution; and
(iv) the holder votes on this Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

6. RESOLUTION 5 – APPROVAL OF ISSUE OF PERFORMANCE RIGHTS TO MR MARK CLARK

To consider, and, if thought fit, to pass, with or without amendment, the following resolution as an ordinary resolution :

“ That, for the purposes of ASX Listing Rule 10.14, sections 200B and 200E of the Corporations Act and for all other purposes, Shareholders authorise and approve the issue of 240,000 Performance Rights under the Performance Rights Plan by the Company to Mr Mark Clark, a director of the Company, or his nominee, on the terms and conditions described in the Explanatory Statement.”

Voting Exclusion:

The Company will disregard any votes cast in favour of this Resolution by or on behalf of:

(a) a person referred to in ASX Listing Rule 10.14.1, 10.14.2 or 10.14.3 who is eligible to participate in the employee incentive scheme in question; or
(b) an associate of that person or those persons.

However, this does not apply to a vote cast in favour of this Resolution by:

(c) a person as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with directions given to the proxy or attorney to vote on this Resolution in that way;
(d) the Chair as proxy or attorney for a person who is entitled to vote on this Resolution, in accordance with a direction given to the Chair to vote on the Resolution as the Chair decides; or
(e) a holder acting solely in a nominee, trustee, custodial or other fiduciary capacity on behalf of a beneficiary provided the following conditions are met:
(i) the beneficiary provides written confirmation to the holder that the beneficiary is not excluded from voting, and is not an associate of a person excluded from voting, on this Resolution; and
(ii) the holder votes on this Resolution in accordance with directions given by the beneficiary to the holder to vote in that way.

Voting Prohibition Statement:

A person appointed as a proxy must not vote, on the basis of that appointment, on this Resolution if:

(a) the proxy is either:
(i) a member of the Key Management Personnel; or
(ii) a Closely Related Party of such a member; and
(b) the appointment does not specify the way the proxy is to vote on the Resolution. However, the above prohibition does not apply if:
(c) the proxy is the Chair; and

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(d) the appointment expressly authorises the Chair to exercise the proxy even though this Resolution is connected directly or indirectly with remuneration of a member of the Key Management Personnel.

Dated: 20 October 2021 BY ORDER OF THE BOARD

KIM MASSEY COMPANY SECRETARY

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EXPLANATORY STATEMENT

This Explanatory Statement has been prepared to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions.

1. FINANCIAL STATEMENTS AND REPORTS

In accordance with the Constitution, the business of the Meeting will include receipt and consideration of the annual financial report of the Company for the financial year ended 30 June 2021 together with the declaration of the directors, the directors’ report, the Remuneration Report and the auditor’s report.

The Company will not provide a hard copy of the Company’s annual financial report to Shareholders unless specifically requested to do so. The Company’s annual financial report is available on its website at www.capmetals.com.au.

2. RESOLUTION 1 – ADOPTION OF REMUNERATION REPORT

2.1 General

The Corporations Act requires that at a listed company’s annual general meeting, a resolution that the remuneration report be adopted must be put to the shareholders. However, such a resolution is advisory only and does not bind the company or the directors of the company.

The remuneration report sets out the company’s remuneration arrangements for the directors and senior management of the company. The remuneration report is part of the directors’ report contained in the annual financial report of the company for a financial year.

The chair of the meeting must allow a reasonable opportunity for shareholders to ask questions about or make comments on the remuneration report at the annual general meeting.

2.2 Voting consequences

A company is required to put to its shareholders a resolution proposing the calling of another meeting of shareholders to consider the appointment of directors of the company ( Spill Resolution ) if, at consecutive annual general meetings, at least 25% of the votes cast on a remuneration report resolution are voted against adoption of the remuneration report and at the first of those annual general meetings a Spill Resolution was not put to vote. If required, the Spill Resolution must be put to vote at the second of those annual general meetings.

If more than 50% of votes cast are in favour of the Spill Resolution, the company must convene a shareholder meeting ( Spill Meeting ) within 90 days of the second annual general meeting.

All of the directors of the company who were in office when the directors' report (as included in the company’s annual financial report for the most recent financial year) was approved, other than the managing director of the company, will cease to hold office immediately before the end of the Spill Meeting but may stand for re-election at the Spill Meeting.

Following the Spill Meeting those persons whose election or re-election as directors of the company is approved will be the directors of the company.

2.3 Previous voting results

At the Company’s previous annual general meeting the votes cast against the remuneration report considered at that annual general meeting were less than 25%. Accordingly, the Spill Resolution is not relevant for this Annual General Meeting.

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2.4 Board recommendation

Noting that each Director has a personal interest in their own remuneration from the Company as set out in the Remuneration Report, the Board recommends that Shareholders vote in favour of Resolution 1.

3. RESOLUTION 2 – ELECTION OF DIRECTOR – MR BERNARD DE ARAUGO

3.1 Background

The Constitution provides that, if a person is appointed as a Director by the Board, Shareholders must confirm the appointment at the Company’s next annual general meeting. If the appointment is not confirmed, the person ceases to be a Director at the conclusion of that annual general meeting.

Similarly, the ASX Listing Rules provide that a person appointed as a Director by the Board must not hold office (without re-election) past the Company’s next annual general meeting.

Mr Bernard De Araugo was appointed to the Board on 26 May 2021. Accordingly, in order for Mr De Araugo to remain as a Director after the Meeting, Shareholders are required to elect Mr De Araugo as a Director at that Meeting.

3.2 Qualifications and other material directorships

Mr De Araugo

Mr De Araugo is a qualified metallurgist with over 30 years’ experience in mining and processing, including senior management and technical roles at several gold mining operations in Australia and overseas. He has held senior leadership roles across a range of business disciplines including operations, commercial management and technical functions at Orica Mining Services and leading processing consumables supplier Donhad Pty Ltd where he was an executive director for over 12 years.

Mr De Araugo currently provides metallurgical consulting services to the processing services industry.

3.3 Board recommendation

The Board (with Mr De Araugo abstaining) supports the election of Mr De Araugo and recommends that Shareholders vote in favour of Resolution 2.

4. RESOLUTION 3 – APPROVAL OF INCREASE TO NON-EXECUTIVE DIRECTORS’ REMUNERATION

4.1 Background

ASX Listing Rule 10.17 provides that an entity must not increase the total aggregate amount of directors’ fees payable to all of its non-executive directors without the approval of its shareholders. Similarly, rule 11.9(a)(ii) of the Constitution requires that the maximum remuneration payable to the Non-Executive Directors be determined by the Shareholders in general meeting.

4.2 Proposed increase

It is proposed that the fee pool for Non-Executive Directors be increased from $400,000 to $600,000 per annum (an increase of $200,000).

The current maximum aggregate amount of remuneration payable to Non-Executive Directors (being an amount of $400,000) was set at the Company’s 2019 annual general meeting.

The proposed increase to the Non-Executive Director fee pool is sought to provide sufficient scope for possible Board expansion, succession planning and ongoing flexibility, and to

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allow for future adjustments to Non-Executive Director fees in light of future increased time commitments and workload.

The Board considers that an increase to the maximum aggregate fee pool is appropriate and will enable the Company to retain and attract appropriate candidates to the Board.

If Resolution 3 is not passed, the Board will lose the flexibility it is seeking to provide sufficient scope for possible Board expansion, succession planning and ongoing flexibility potentially impacting the Company’s ability to retain existing and/or attract new directors. Accordingly, if this resolution is not passed, the fee pool for Non-Executive Directors will remain at $400,000 and the Board will need to reassess this strategy.

If Resolution 3 is passed, then the fee pool for Non-Executive Directors be increased from $400,000 to $600,000 per annum.

4.3 Previous securities issued

In accordance with ASX Listing Rule 10.14, Shareholders have previously approved the issue of 10,000,000 options to Non-Executive Director Mr Mark Okeby in August 2019, under the Company’s then incentive option plan. At the time of issue, the options were exercisable at $0.12 each and had an expiry date of 30 August 2022.

4.4 Board recommendation

Given the interest of each Non-Executive Director in Resolution 3, the Board does not consider it appropriate to make a recommendation to Shareholders regarding this Resolution. Executive Chairman Mr Mark Clark recommends that Shareholders vote in favour of Resolution 3

5. RESOLUTION 4 – RATIFICATION OF PRIOR ISSUE UNDER ASX LISTING RULE 7.1

5.1 Background

On 28 July 2021, the Company announced that it had executed and completed binding agreements ( Acquisition Agreements ) to acquire 100% of the Mt Gibson Gold Project ( MGGP ) located approximately 280 km northeast of Perth in the Murchison, Mid-West region of Western Australia.

The total consideration payable by the Company under the Acquisition Agreements comprised:

$25.6 million cash payments; plus
$14 million, which was satisfied through the issue of 7,651,936 Shares ( Consideration Shares ).

The Consideration Shares were issued under the Company’s existing placement capacity under ASX Listing Rule 7.1. Accordingly, Shareholder approval for the share issue was not required.

5.2 ASX Listing Rule 7.1

Broadly speaking, and subject to a number of exceptions, ASX Listing Rule 7.1 limits the amount of Equity Securities that a listed company can issue without the prior approval of its shareholders over any 12 month period to 15% of the fully paid ordinary securities it had on issue at the start of that period.

The issue of the Consideration Shares did not fit within any of these exceptions and so were issued within the Company’s 15% limit under ASX Listing Rule 7.1. ASX Listing Rule 7.4 allows the shareholders of a listed company to approve an issue of Equity Securities after it has been made or agreed to be made, provided the Company complied with ASX Listing Rule 7.1 at the time of issuing the relevant Equity Securities. If they do, the

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issue is taken to have been approved under ASX Listing Rule 7.1 and so does not reduce the Company’s capacity to issue further Equity Securities without Shareholder approval under that rule.

The Company wishes to retain as much flexibility as possible to issue additional Equity Securities into the future without having to obtain Shareholder approval for such issues under ASX Listing Rule 7.1. To this end, Resolution 4 seeks Shareholder approval for the issue of the Consideration Shares under and for the purposes of ASX Listing Rule 7.4 and for all other purposes.

If Resolution 4 is approved, the Consideration Shares will be treated as if they were issued with the prior approval of Shareholders for the purposes of calculating the Company’s 15% limit in ASX Listing Rule 7.1, effectively increasing the number of Equity Securities it can issue without Shareholder approval over the 12 month period following their issue.

If Resolution 4 is not approved by the requisite majority, the Consideration Shares will count towards the number of Equity Securities the Company can issue without Shareholder approval pursuant to the 15% limit in ASX Listing Rule 7.1, effectively decreasing the number of Equity Securities the Company can issue without Shareholder approval over the 12 month period following their issue.

5.3 Technical information required by ASX Listing Rule 7.5

Pursuant to and in accordance with ASX Listing Rule 7.5, the following information is provided in relation to the ratification of the issue of the Consideration Shares:

i) the Consideration Shares were issued to Avenger Projects Ltd ( Avenger );
ii) the Consideration Shares comprise 7,651,936 Shares. The Consideration Shares are fully paid ordinary shares in the capital of the Company issued on the same terms and conditions as the Company’s existing Shares;
iii) the Consideration Shares were issued on 28 July 2021;
iv) the Consideration Shares were issued as partial consideration (equivalent in value to $14 million) for the Company’s acquisition of MGGP, further details of which are contained in the Company’s ASX announcements released on 28 July 2021;
v) the key commercial terms of the Acquisition Agreements were:

Topic	Summary
Outline	Pursuant to the Acquisition Agreement with Avenger, the
	Company acquired all of the issued shares of Crimson Metals Pty
	Ltd (Crimson).
	Crimson is the holder of applications for exploration and
	prospecting licenses over the majority of the MGGP area
	pursuant to its priority rights under section 100 of the_Mining Act_
	1978(WA).
	Pursuant to the Acquisition Agreement with Extension Hill Pty Ltd
	(Extension Hill), the Company, via its 100% owned subsidiary
	(Metrovex Pty Ltd), acquired 100% of the sale assets (being
	various mining tenements, associated information, infrastructure
	& improvements) owned by Extension Hill.
Royalty	Assumption of a third-party royalty of A$10 per ounce of gold
assumption	produced in excess of 20,000 ounces, from certain tenements
	only.
Consideration	As noted above, the total consideration paid by the Company
	pursuant to the Acquisition Agreements was:

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• $25.6 million cash payments; plus

• $14 million which was satisfied through the issue of the Consideration Shares. Royalty Grant to Avenger of 1.0% net smelter royalty on all minerals produced from the MGGP including gold production in excess of 90,000 ounces.

The Company has a pre-emptive right over any proposed thirdparty sale of the royalty. Warranties and The Acquisition Agreements with both Extension Hill and Avenger assumptions contain a number of warranties given by the parties to each other which are typical for the nature of the transaction.

Further details are contained in the Company’s ASX announcements released on 28 July 2021; and

vi) a voting exclusion statement is included in the Notice for Resolution 4.

5.4 Board recommendation

The Board recommends that Shareholders vote in favour of Resolution 4.

6. RESOLUTION 5 – APPROVAL OF ISSUE OF PERFORMANCE RIGHTS TO MR MARK CLARK

6.1 Background

Resolution 5 seeks Shareholder approval of the issue of 240,000 Performance Rights to Mr Mark Clark under the Company’s Performance Rights Plan.

The Board is responsible for administering the Performance Rights Plan and the terms and conditions of the specific grants to participants under the Performance Rights Plan. The Performance Rights Plan was last approved by Shareholders at the Company’s 2020 annual general meeting. A summary of the material terms of the Performance Rights Plan is set out in Schedule 1.

As an executive of the Company, Mr Clark is entitled to participate in the Company’s incentive plans. The Board believes balancing remuneration between fixed remuneration and incentive-based remuneration is an important component of attracting and retaining the best available executive talent. The Board is also cognisant of general Shareholder opinion that equity-based rewards for staff should be linked to the achievement by the Company of performance conditions.

Accordingly, the Board has determined to offer 240,000 Performance Rights to Mr Clark, which will be subject to the terms of the Performance Rights Plan and the vesting conditions described in section 6.2 below.

6.2 Vesting conditions

The Performance Rights are subject to vesting conditions that are tied to the total shareholder return ( TSR ) of the Company relative to the TSR of the comparator group of companies set out in the table below ( Peer Group ) over a defined period of time ( Measurement Period ).

	Peer Group
Regis Resources Limited	Dacian Gold Limited	Bellevue Gold Limited
Silver Lake Resources Ltd	St Barbara Limited	Red 5 Limited

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Westgold Resources Limited	Pantoro Limited	Aurelia Metals Limited
Calidus Resources Limited	Wiluna Mining Corporation	Alkane Resources Limited
Ora Banda Mining Ltd	Gascoyne Resources Ltd	Ramelius Resources Limited
Gold Road Resources	De Grey Mining Limited
Limited

The peer group is comparable ASX companies. This provides a broad and representative comparative peer group for Australian investors. The peer group will be adjusted if members are delisted (for reasons other than financial failure) or a company mergers with or is acquired by another company in the peer group - in which case the resulting company remains in the peer group and the acquired company is removed. The Board has the discretion to adjust the peer group in other circumstances.

TSR is a method of calculating the return shareholders would earn if they held a notional number of shares over a period of time. TSR measures the growth in a company’s share price together with the value of dividends during the period, assuming that all of those dividends are re-invested into new shares.

The Measurement Period for:

50% of the Performance Rights is the 12 month period commencing on 4 October 2021 (being the date the Remuneration, Nomination and Diversity Committee of the Board recommended the award of Performance Rights to Mr Clark) and ending on 4 October 2022 ( Tranche 1 Performance Rights ); and
the other 50% of the Performance Rights is the 24 month period commencing on 4 October 2021 and ending on 4 October 2023 ( Tranche 2 Performance Rights ).

TSR is calculated by reference to the volume weighted average price of Capricorn shares traded on ASX during the 20 trading days before and including the first trading day of the Measurement Period and the 20 trading days up to and including the last trading day of the Measurement Period.

The proportion of each tranche of the Performance Rights that vest, if any, will be determined as follows:


Relative TSR for Measurement Period Proportion of Performance Rights that will vest
Below the 50th percentile 0%
At the 50th percentile 50%
Between the 50th and 75th percentile Pro-rata between 50% and 100%
At and above the 75th percentile 100%

6.3 Other terms

Subject to the terms of the Performance Rights Plan, upon the satisfaction of the applicable vesting condition, each Performance Right entitles the holder to one Share. The holder is not required to pay any exercise price to the Company on the vesting or exercise of a Performance Right.

The expiry date of the:

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Tranche 1 Performance Rights is 31 December 2022; and
Tranche 2 Performance Rights is 31 December 2023.

Performance Rights that do not vest because of either failure to achieve the vesting conditions or have not vested by the expiry date will lapse (subject to the terms of the Performance Rights Plan).

6.4 ASX Listing Rule 10.14

Resolution 5 seeks Shareholder approval under ASX Listing Rule 10.14 of the issue of 240,000 Performance Rights to Mr Mark Clark under the Performance Rights Plan ( PR Issue ).

ASX Listing Rule 10.14 provides that, subject to certain exceptions, a company must not permit any of the following persons to acquire equity securities under an employee incentive scheme:

a director of the company (10.14.1);
an associate of a director of the company (10.14.2); or
a person whose relationship with the company or a person referred to in ASX Listing Rules 10.14.1 or 10.14.2 is such that, in ASX’s opinion, the acquisition should be approved by its shareholders (10.14.3),

unless it obtains the approval of its shareholders.

The PR Issue falls within ASX Listing Rule 10.14.1 and therefore requires Shareholder approval under ASX Listing Rule 10.14.

Resolution 5 seeks the required Shareholder approval to the PR Issue under for the purposes of ASX Listing Rule 10.14.

Shareholders should note that, if Resolution 5 is passed, the Company will be able to proceed with the PR Issue, approval will not required under ASX Listing Rule 7.1, and the PR Issue will be excluded from the calculation of the number of equity securities the Company can issue without Shareholder approval under ASX Listing Rule 7.1.

If Shareholders do not pass Resolution 5, the Company will not be able to proceed with the PR Issue.

For the purposes of ASX Listing Rule 10.15, the following information is provided in relation to the issue of 240,000 Performance Rights pursuant to Resolution 5:

(a) The name of the person

The recipient of the Performance Rights will be Mr Mark Clark, or his nominee.

(b) Category the person falls within and why

The issue of the Performance Rights falls within ASX Listing Rule 10.14.1 because Mr Mark Clark is a director of the Company.

(c) The number and class of securities proposed to be issued to the person under the scheme for which approval is being sought

The maximum number of securities that may be issued to Mr Clark, or his nominee, is 240,000 Performance Rights.

(d) Details of Mr Clark’s current remuneration package

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Mr Clark’s current remuneration package comprises:

Fixed remuneration of $350,000 per annum (plus superannuation benefits).

(e) The number of securities previously issued to Mr Clark under the scheme and the average acquisition price (if any) paid by Mr Clark for those securities

Mr Clark has not previously received performance rights pursuant to the Performance Rights Plan.

Mr Clark received 8,000,000 options exercisable at $0.60 per share under the Company’s Incentive Option Plan and as approved by shareholders in August 2019.

(f) Summary of the material terms of the securities, an explanation of why that type of security is being used and the value the Company attributes to that security and its basis

A summary of the material terms of the Performance Rights is set out in sections 6.1 to 6.3 above, with a summary of the material terms of the Performance Rights Plan being set out in Schedule 1.

The Board has determined to issue Performance Rights because the Board considers that the Performance Rights will assist in:

attracting, motivating and retaining Mr Clark;
delivering rewards to Mr Clark for individual and Company performance;
allowing Mr Clark the opportunity to increase his shareholding in the Company; and
aligning the interest of Mr Clark with those of Shareholders.

The Company attributes a value of $530,400 to the Performance Rights on the basis of multiplying the number of Performance Rights by the 5 day volume weighted average price of the Company’s shares ($2.21) up to and including 5 October 2021. No discount has been applied to account for any probability of the vesting conditions having been achieved.

(g) The date or dates on or by which the Company will issue the securities

If Shareholders pass Resolution 5, the Performance Rights will be issued to Mr Clark or his nominee as soon as practicable after the date of the Meeting and in any event within 3 years of the Meeting. It is anticipated that all Performance Rights will be issued on the same date.

(h) The price at which the Company will issue the securities to Mr Clark under the scheme

No price will be paid for the Performance Rights upon their issue, nor for the Shares provided upon the exercise of any Performance Right.

(i)
The material terms of the scheme

A summary of the material terms of the Performance Rights Plan is set out in Schedule 1.

(j) A summary of the material terms of any loan that will be made in relation to the acquisition

There are no loans being made in relation to the acquisition of the Performance Rights.

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(k) Disclosure statement

Details of any securities issued under the Performance Rights Plan will be published in the annual report of the Company relating to a period in which they were issued, along with a statement that approval for the issue was obtained under ASX Listing Rule 10.14.

Any additional persons covered by ASX Listing Rule 10.14 who become entitled to participate in the Performance Rights Plan after Resolution 5 is approved and who were not named in the Notice will not participate until approval is obtained under that rule.

(l) A voting exclusion statement

A voting exclusion statement for Resolution 5 is included in the Notice.

6.5 Termination benefits

Under section 200B of the Corporations Act, a company may only give a person a benefit in connection with their ceasing to hold a managerial or executive office in the company or a related body corporate if it is approved by Shareholders in accordance with section 200E or an exemption applies. This applies to Mr Clark.

The term ‘benefit’ has a wide operation and could capture the automatic or accelerated vesting of Performance Rights under the rules of the Performance Rights Plan.

This resolution will therefore also approve, under section 200E of the Corporations Act, any ‘termination benefit’ that may be provided to Mr Clark under the Performance Rights Plan in relation to the Performance rights contemplated by Resolution 5 in addition to any other termination benefits that may be provided to Mr Clarke under the Corporations Act. This may include the early vesting of those Performance Rights (and the receipt of Shares upon exercise of those Performance Rights) if Mr Clark ceases employment with the Company due to death, disability, bona fide redundancy or other reason with the approval of the Board.

The value of such benefits cannot presently be ascertained but matters, events and circumstances that will, or are likely to, affect the calculation of that value include the number of Performance Rights held by Mr Clark prior to cessation of employment, the number that vest and the price of a share.

6.6 Board recommendation

The Board (other than Mr Clark given his interest in the Resolution) recommends that Shareholders vote in favour of Resolution 5.

7. ENQUIRIES

Shareholders may contact the Company Secretary on +61 8 9212 4600 if they have any queries in respect of the matters set out in these documents.

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GLOSSARY

$ means Australian dollars.

Annual General Meeting or Meeting means the meeting convened by the Notice.

ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX Limited, as the context requires.

ASX Listing Rules means the official ASX Listing Rules of ASX.

Board means the current board of Directors of the Company.

Chair means the chair of the Meeting.

Closely Related Party of a member of the Key Management Personnel means:

(a) a spouse or child of the member;
(b) a child of the member’s spouse;
(c) a dependent of the member or the member’s spouse;
(d) anyone else who is one of the member’s family and may be expected to influence the member, or be influenced by the member, in the member’s dealing with the entity;
(e) a company the member controls; or
(f) a person prescribed by the Corporations Regulations 2001 (Cth) for the purposes of the definition of ‘closely related party’ in the Corporations Act.

Company means Capricorn Metals Ltd (ACN 121 700 105).

Constitution means the Company’s constitution, as amended from time to time.

Corporations Act means the Corporations Act 2001 (Cth), as amended from time to time.

Directors means the current directors of the Company.

Equity Securities has the meaning given to that term in the ASX Listing Rules, and includes Shares.

Explanatory Statement means this explanatory statement.

Key Management Personnel has the same meaning as in the accounting standards issued by the Australian Accounting Standards Board and means those persons having authority and responsibility for planning, directing and controlling the activities of the Company, or if the Company is part of a consolidated entity, of the consolidated entity, directly or indirectly, including any director (whether executive or otherwise) of the Company, or if the Company is part of a consolidated entity, of an entity within the consolidated group.

Notice or Notice of Annual General Meeting means the notice of meeting which accompanies this Explanatory Statement.

Performance Right means a right, granted pursuant to the Performance Rights Plan, to be provided a Share.

Performance Rights Plan means the plan established by the Company in relation to the potential offer of Performance Rights to executives of the Company.

Proxy Form means the proxy form accompanying the Notice.

Remuneration Report means the remuneration report set out in the Director’s report section of the Company’s annual financial report for the year ended 30 June 2021.

Resolutions means the resolutions set out in the Notice, or any one of them, as the context requires.

Share means a fully paid ordinary share in the capital of the Company.

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Shareholder means a registered holder of a Share.

WST means Western Standard Time as observed in Perth, Western Australia.

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SCHEDULE 1 – SUMMARY OF THE MATERIAL TERMS OF THE PERFORMANCE RIGHTS PLAN

The material terms of the Performance Rights Plan are summarised below.

Unless otherwise defined, capitalised terms in this Schedule 1 have the meaning given to them in the Performance Rights Plan.

(a) Eligibility and Grant of Performance Rights: The Board may grant Performance Rights to any full or part time employee or Director of the Company or an associated body corporate, a casual employee or contractor of a Group Company to the extent permitted by ASIC Class Order 14/1000, or a prospective participant, being a person to whom the Offer is made but who can only accept the Offer if an arrangement has been entered into that will result in the person becoming an Eligible Participant under one of the aforementioned categories ( Eligible Participant ). Performance Rights may be granted by the Board at any time.
(b) Consideration: Each Performance Right issued under the Plan will be issued for nil cash consideration.
(c) Conversion: Each Performance Right is exercisable into one Share in the Company ranking equally in all respect with the existing issued Shares in the Company.
(d) Exercise Price and Expiry Date: The exercise price (if any) and expiry date for Performance Rights granted under the Plan will be determined by the Board prior to the grant of the Performance Rights.
(e) Exercise Restrictions: The Performance Rights granted under the Plan may be subject to conditions on exercise as may be fixed by the Directors prior to grant of the Performance Rights ( Vesting Conditions ). Any restrictions imposed by the Directors must be set out in the offer for the Performance Rights.
(f) Renounceability: Eligible Participants may renounce their offer in favour of a nominee (the Eligible Participants and their nominees are each Participants ).
(g) Lapsing of Performance Rights : Subject to the terms of the offer made to a Participant, an unexercised Performance Right will lapse:
(i) on the Participant ceasing to be an Eligible Participant and:
- (A) any Vesting Conditions have not been met by the date the Participant ceases to be an Eligible Participant ( Ceasing Date ), unless the Board exercises its discretion to vest the Performance Rights or resolves to allow unvested Performance Rights to remain unvested after the Ceasing Date; or
- (B) where any Vesting Conditions have been met by the Ceasing Date, the Participant does not exercise the Performance Right within a period of (1) month after the Ceasing Date (or a further date as determined by the Board after the Ceasing Date);
(ii) if any Vesting Condition is not satisfied or is unable to be met;
(iii) if a Participant engages in hedging or unauthorised dealing of the Performance Right; (iv) if the Board deems that a Performance Right lapses due to fraud, dishonesty or other improper behaviour;
(v) if the Company undergoes a change of control or a winding up resolution or order is made, and the Performance Right does not vest; or
(vi) the expiry date has passed.
(h) Share Restriction Period : Shares issued on the exercise of Performance Rights may be subject to a restriction that they may not be transferred, disposed of or otherwise dealt with until a restriction period has expired.

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(i) Disposal of Performance Rights: Performance Rights will not be transferable (except in certain special circumstances with the Board’s consent or by force of law) and will not be quoted on the ASX.
(j) Trigger Events : The Company may permit Performance Rights to be exercised in certain circumstances where there is a change in control of the Company (including by takeover) or entry into a scheme of arrangement.
(k) Participation: There are no participating rights or entitlements inherent in the Performance Rights and holders will not be entitled to participate in new issues of capital offered to Shareholders during the currency of the Performance Rights without exercising those Performance Rights.
(l) Bonus issue : If Shares are issued pro rata to Shareholders generally by way of bonus issue (other than an issue in lieu of dividends or by way of dividend reinvestment) involving capitalisation or reserves or distributable profits, the number of Performance Rights to which each Participant is entitled, will be adjusted in the manner determined by the Board to ensure that no advantage accrues to the Participant as a result of the bonus issue.
(m) Reorganisation : In the event of any reorganisation (including consolidation, subdivision, reduction or return) of the issued capital of the Company, the rights of a Participant are to be changed in the manner determined by the Board to ensure that no advantage or disadvantage accrues to the Participant as a result of such corporate action, subject always to the rights of the Participant being changed to the extent necessary to comply with the ASX Listing Rules applying to a reorganisation of capital at the time of the reorganisation.
(n) Change in exercise price : A Performance Right does not confer a right to a change in exercise price (if any) or a change in the number of underlying Shares over which the Performance Right can be exercised.
(o) Limitations on Offers : When making an offer of Performance Rights, the Company must have reasonable grounds to believe that the number of Shares to be received on exercise of Performance Rights offered under an offer when aggregated with:
(i) the number of Shares that would be issued if each outstanding offer for Shares, units of Shares or options to acquire Shares under the Plan or any other employee incentive plan of the Company were to be exercised or accepted; and
(ii) the number of Shares issued during the previous 3 years from the exercise of Performance Rights issued under the Plan (or any other employee incentive plan of the Company covered by ASIC Class Order 14/1000),

does not exceed 5% of the total number of Shares on issue at the time of the offer (but disregarding any offer of Shares or options to acquire Shares that can be disregarded in accordance with ASIC Class Order 14/1000).

(p) Amendment : The Board may, at any time, amend or add to all or any of the provisions of the Performance Rights Plan, an offer made under the plan or the terms or conditions of any Performance Rights. The Board cannot make an adjustment or variation to the terms of a Performance Right without the Participant’s consent if such adjustment or variation would have a materially prejudicial effect on the Participant, other than certain adjustments introduced primarily to comply with applicable laws or regulations (including the ASX Listing Rules), to correct any manifest error or mistake, or to take into account possible adverse tax implications.

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CAPRICORN METALS LTD — AGM Information 2021

64670_rns_2021-10-21_2b88ea27-4b58-4645-8077-1dc38f2c05ef.pdf