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ENCOUNTER RESOURCES LIMITED Proxy Solicitation & Information Statement 2012

Feb 20, 2012

64856_rns_2012-02-20_db6570e2-5716-4d30-960b-f0dfe95d1954.pdf

Proxy Solicitation & Information Statement

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NOTICE�OF�GENERAL�MEETING�

&�

EXPLANATORY�STATEMENT�

To�be�held�

At�10.00am,�Friday,�23�March�2012�

at�

The�Offices�of�Encounter�Resources�Limited� Level�7,�600�Murray�Street� West�Perth�WA�6005�

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Level 7, 600 Murray Street West Perth WA 6005 PO Box 273 West Perth WA 6872 P 08 9486 9455 F 08 6210 1578 www.enrl.com.au

20[th] �February�2012�

Dear�Fellow�Encounter�Shareholder,�

Please�find�enclosed�the�Notice�of�General�Meeting�for�the�Shareholders’�Meeting�to�be�held�at�the�offices�of�Encounter� Resources�Limited,�Level�7,�600�Murray�Street,�West�Perth,�WA�6005�at�10.00am�on�Friday,�23�March�2012.���

The�purpose�of�the�meeting�is�to�seek�shareholder�approval�in�accordance�with�the�Corporations�Act�2001�and�the�Listing� Rules�of�the�ASX�to�a�number�of�resolutions,�which�are�set�out�in�the�attached�Notice�of�Meeting�paper.���

Your�Directors�seek�your�support�and�look�forward�to�your�attendance�at�the�meeting.�

Yours�sincerely�

Paul�Chapman� Chairman�

ENCOUNTER�RESOURCES�LIMITED� ABN�47�109�815�796�

NOTICE�OF�GENERAL�MEETING�

Notice�is�hereby�given�that�a�General�Meeting�of�Encounter�Resources�Limited�will�be�convened�at�10.00am�on�Friday,�23� March�2012�at�the�offices�of�Encounter�Resources�Limited,�Level�7,�600�Murray�Street,�Western�Australia.�

AGENDA�

ORDINARY�BUSINESS�

1.� Ratification�of�Prior�Issue�of�Equity�Securities�–�Share�Placement�

To�consider,�and�if�thought�fit,�to�pass,�with�or�without�modification,�the�following�ordinary�resolution:�

“That,�for�the�purposes�of�Listing�Rule�7.4�and�for�all�other�purposes,�Shareholders�approve�and�ratify�the�prior�issue�of� 13,675,000�ordinary�fully�paid�shares�pursuant�to�the�Placement�completed�on�15�February�2012�on�the�terms�and� conditions�set�out�in�the�Explanatory�Statement�accompanying�this�Notice.”�

The�issue�was�in�accordance�with�the�terms�and�conditions�set�out�in�the�Explanatory�Statement�accompanying�this� Notice�of�Meeting.�

Voting�Exclusion�Statement�

The�Company�will�disregard�any�votes�cast�on�Agenda�Item�1�by�any�person�who�participated�in�the�issue,�and�any� associate�of�that�person�(or�those�persons).�

Before�a�voting�exclusion�applies,�the�Company�need�not�disregard�a�vote�if:�

  • (a)� it�is�cast�by�a�person�as�proxy�for�a�person�who�is�entitled�to�vote,�in�accordance�with�the�directions�on� the�proxy�form;�or�

  • (b)� it�is�cast�by�the�person�chairing�the�meeting�as�proxy�for�a�person�who�is�entitled�to�vote,�in�accordance� with�a�direction�on�the�proxy�form�to�vote�as�the�proxy�decides.�

  • �2.�

Participation�in�the�Placement�by�Directors�–�Resolutions�(a),�(b)�and�(c)��

To�consider,�and�if�thought�fit,�to�pass,�with�or�without�modification,�the�following�ordinary�resolution:�

“That,�for�the�purposes�of�Sections�208�and�195(4)�of�the�Corporations�Act,�Listing�Rule�10.11�and�for�all�other� purposes,�Shareholders�approve�the�allotment�and�issue�of�1,175,000�shares�to�Directors�of�the�Company�(or�their� nominees)�as�set�out�in�resolutions�(a),�(b)�and�(c),�raising�up�to�$470,000�under�the�Placement,�on�the�terms�and� conditions�set�out�in�the�Explanatory�Statement�accompanying�this�Notice.”�

Director Numberofshares
(a) PaulChapman 675,000
(b) WillRobinson 250,000
(c) PeterBewick 250,000

Voting�Exclusion�Statement�

The�Company�will�disregard�any�votes�cast�on�Agenda�Item�2�resolutions�(a),�(b)�and�(c),�by�Mr�Paul�Chapman,�Mr� Will�Robinson�and�Mr�Bewick�respectively,�and�any�associate�of�that�person�(or�those�persons).�

Before�a�voting�exclusion�applies,�the�Company�need�not�disregard�a�vote�if:�

  • (a)� it�is�cast�by�a�person�as�proxy�for�a�person�who�is�entitled�to�vote,�in�accordance�with�the�directions�on� the�proxy�form;�or�

  • (b)� it�is�cast�by�the�person�chairing�the�meeting�as�proxy�for�a�person�who�is�entitled�to�vote,�in�accordance� with�a�direction�on�the�proxy�form�to�vote�as�the�proxy�decides.�

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ENCOUNTER�RESOURCES�LIMITED�

ABN�47�109�815�796�

NOTICE�OF�GENERAL�MEETING�

GENERAL�NOTES�

  • 1.� The�Explanatory�Statement�to�Shareholders�attached�to�this�Notice�of�General�Meeting�is�hereby�incorporated�into� and�forms�part�of�this�Notice�of�General�Meeting.�

  • 2.� The�Directors�have�determined�in�accordance�with�Regulation�7.11.37�of�the�Corporations�Regulations�that,�for�the� purposes�of�voting�at�the�meeting,�shares�will�be�taken�to�be�held�by�the�registered�holders�at�5.00pm�on�Wednesday� 21�March�2012.�

BY�ORDER�OF�THE�BOARD�

Kevin�Hart� COMPANY�SECRETARY�

Dated�this�20[th] �day�of�February�2012�

3

ENCOUNTER�RESOURCES�LIMITED� ABN�47�109�815�796�

EXPLANATORY�STATEMENT�

The�purpose�of�the�Explanatory�Statement�is�to�provide�shareholders�with�information�concerning�the�Agenda�Items�in�the� Notice�of�General�Meeting.�

Information�relating�to�Agenda�Items�1�and�2�

On�7�February�2012�the�Company�announced�the�placement�of�up�to�14,900,000�ordinary�fully�paid�shares�to�raise� approximately�$6�million,�before�costs.�The�placement�is�to�be�completed�in�two�parts,�the�first�tranche�of�13,675,000�shares� being�issued�on�15�February�2012,�pursuant�to�the�Company’s�15%�placement�facility�under�Listing�Rule�7.1�and�is�the�subject� of�shareholder�ratification�in�Agenda�Item�1.�The�remainder�of�the�placement,�being�1,175,000�shares,�is�to�be�issued�to� Directors�of�the�Company,�subject�to�shareholder�approval�being�sought�under�the�resolutions�attaching�to�Agenda�Item�2.�

1� Ratification�of�a�Prior�Issue�of�Equity�Securities�–�Share�Placement�

Listing�Rule�7.1�provides�that�without�Shareholder�approval,�a�company�must�not�issue�or�agree�to�issue�new�equity� securities�constituting�more�than�15%�of�its�total�issued�capital�within�a�12�month�period�(excluding�any�issue�of� equity�securities�approved�by�Shareholders�and�other�various�permitted�exceptions�which�are�not�relevant�for�current� purposes).��

Listing�Rule�7.4�allows�an�issue�of�securities�made�without�the�approval�of�Shareholders�to�be�ratified�by�shareholders,� in�order�to�refresh�the�15%�capacity�under�Listing�Rule�7.1,�provided�at�the�time�the�issue�was�made,�the�issue�was� made�within�the�Company’s�existing�15%�capacity�under�Listing�Rule�7.1.��

Shareholder�approval�is�therefore�now�sought�pursuant�to�Listing�Rule�7.4�to�ratify�the�issue�of�Placement�Shares�so� that�the�Company�refreshes�its�capacity�to�issue�up�to�15%�of�its�issued�ordinary�capital,�if�required,�in�the�next�12� months�without�first�requiring�Shareholder�approval�for�those�future�issues.�

Listing�Rule�7.5�requires�that�the�following�information�be�provided�to�Shareholders�for�the�purpose�of�obtaining� Shareholder�approval�pursuant�to�Listing�Rule�7.4:�

  • (a)� the�total�number�of�equity�securities�issued�was�13,675,000�ordinary�fully�paid�shares;��

  • (b) the�Shares�were�issued�at�a�placement�price�of�40�cents�each;�

  • (c) the�Shares�issued�rank�equally�with�an�existing�class�of�securities�on�issue;�

  • (d) the�Shares�were�issued�to�professional�and�sophisticated�investors,�who�are�clients�of�Investorfirst� Securities�Limited�and�others,�none�of�whom�are�related�parties�of�the�Company;��

  • (e) the�funds�raised�from�the�Placement�are�to�be�used�to�fund�the�escalating�exploration�drill�programs�at�the� Yeneena�Copper�discovery�and�provide�working�capital.�

2.� Participation�in�the�Placement�by�Directors�–�Resolutions�(a),�(b)�and�(c)��

Agenda�Item�2�relates�to�the�proposed�participation�by�Directors�of�the�Company�(or�their�nominees)�in�a�Placement�of� shares�on�exactly�the�same�terms�and�conditions�to�the�placement�made�to�the�unrelated�parties�the�subject�of�Agenda� Item�1.�

Chapter�2E�of�the�Corporations�Act�

Under�Chapter�2E�of�the�Corporations�Act,�a�public�company�cannot�give�a�“financial�benefit”�to�a�“related�party”�unless� one�of�the�exceptions�to�Section�208�apply�or�Shareholders�have�in�general�meeting�approved�the�giving�of�that� financial�benefit�to�the�related�party.�A�“financial�benefit”�is�defined�in�the�Corporations�Act�in�broad�terms�and�includes� a�public�company�issuing�securities.�For�the�purposes�of�this�meeting,�a�“related�party”�includes�a�director�of�the� Company.��Accordingly,�the�proposed�issue�of�shares�to�a�Director�involves�the�provision�of�a�financial�benefit�to�a� related�party�of�the�Company.�

Section�210�of�the�Corporations�Act�provides�that�an�entity�does�not�need�to�obtain�Shareholder�approval�to�give�a� financial�benefit�to�a�related�party�if�the�giving�of�the�financial�benefit�would�be�reasonable�in�the�circumstances�if�the� related�party�and�the�entity�are�dealing�at�arm’s�length�(or�terms�less�favourable�than�arm’s�length).��

Notwithstanding�that�the�Related�Parties�will�be�subscribing�for�shares�under�the�Placement�on�the�same�terms�as�all� other�placement�investors,�the�Board�is�of�the�view�that�it�is�prudent�to�seek�Shareholder�approval�under�Section�208� of�the�Corporations�Act.��

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ENCOUNTER�RESOURCES�LIMITED�

ABN�47�109�815�796�

EXPLANATORY�STATEMENT�

  • 2.� Participation�in�Placement�by�Directors�–�Resolutions�(a),�(b)�and�(c)�(Continued)�

In�accordance�with�the�requirements�of�Sections�217�to�227�of�the�Corporations�Act,�the�following�information�is� provided�to�allow�Shareholders�to�assess�the�proposed�issue�of�shares�to�the�Related�Parties:�

  • (a) the�related�parties�to�whom�the�financial�benefit�will�be�given�are�Mr�Paul�Chapman,�Mr�Will�Robinson�and�Mr� Peter�Bewick�(or�their�respective�nominees);�

  • (b) the�number�of�shares�proposed�to�be�issued�is�1,175,000�ordinary�fully�paid�shares�at�40�cents�per�share,�which� would�represent�1%�of�the�expanded�issued�capital�on�an�undiluted�basis�after�the�Placement.�

The�number�of�shares�to�be�issued�to,�and�the�total�subscription�funds�payable�by�the�Directors,�if�the� resolutions�the�subject�of�Agenda�Item�2�are�approved�by�Shareholders,�is�as�follows:�

Director Numberofshares SubscriptionFunds($)
(a) PaulChapman(ornominee) 675,000 $270,000
(b) WillRobinson(ornominee) 250,000 $100,000
(c) PeterBewick(ornominee) 250,000 $100,000
  • (c) it�may�be�perceived�that�a�financial�benefit�is�being�given�to�the�Directors�referred�to�above�due�to�the�fact�that� the�issue�price�of�the�shares�are�less�than�the�prevailing�market�price�(based�on�the�price�of�shares�at�the�date�of� this�Notice),�although�the�proposed�issue�to�Directors�is�on�identical�terms�to�those�made�to�other�independent� third�parties;��

The�issue�price�per�Share�to�be�issued�under�Agenda�2�is�40�cents�per�Share.��The�value�of�the�Shares,�based�on� the�market�price�of�Shares�prior�to�the�date�of�the�placement�announcement�to�the�ASX�calculated�according�to� the�5�day�volume�weighted�average�price�of�shares�is�equal�to�45.4�cents�per�Share.��

In�the�last�12�months,�the�highest�price�for�ordinary�fully�paid�shares�in�the�company�trading�on�ASX�was�$1.15� which�occurred�on�4�April�2011.��The�lowest�price�was�40�cents�which�occurred�on�31�January�2012.��On�16� February�2012�the�closing�price�was�46�cents.�

  • (d)� Dr�Jon�Hronsky�who�is�not�participating�in�the�Placement�recommends�that�Shareholders�vote�in�favour�of�the� resolution,�as�he�believes�the�increased�shareholding�of�the�Directors�and�related�parties�will�provide�further� incentive�to�enhance�the�future�value�of�the�Company’s�shares�for�all�Shareholders.��The�Placement�will�also�add� up�to�$470,000�to�the�Company’s�working�capital.�

Mr�Chapman�does�not�wish�to�make�a�recommendation�to�Shareholders�in�respect�of�resolution�(a)�to�Agenda� Item�2�because�he�has�a�material�interest�in�the�outcome�of�the�resolution.�However�he�recommends�that� Shareholders�vote�in�favour�of�resolutions�2(b)�and�2(c)�as�he�believes�the�increased�shareholding�of�the� Directors�will�provide�further�incentive�to�enhance�the�future�value�of�the�Company�for�all�Shareholders.�

Mr�Robinson�does�not�wish�to�make�a�recommendation�to�Shareholders�in�respect�of�resolution�(b)�to�Agenda� Item�2�because�he�has�a�material�interest�in�the�outcome�of�the�resolution.�However�he�recommends�that� Shareholders�vote�in�favour�of�resolutions�2(a)�and�2(c)�as�he�believes�the�increased�shareholding�of�the� Directors�will�provide�further�incentive�to�enhance�the�future�value�of�the�Company�for�all�Shareholders.�

Mr�Bewick�does�not�wish�to�make�a�recommendation�to�Shareholders�in�respect�of�resolution�(c)�to�Agenda�Item� 2�because�he�has�a�material�interest�in�the�outcome�of�the�resolution.�However�he�recommends�that� Shareholders�vote�in�favour�of�resolutions�2(a)�and�2(b)�as�he�believes�the�increased�shareholding�of�the� Directors�will�provide�further�incentive�to�enhance�the�future�value�of�the�Company�for�all�Shareholders.�

5

ENCOUNTER�RESOURCES�LIMITED� ABN�47�109�815�796�

EXPLANATORY�STATEMENT�

2.� Participation�in�Placement�by�Directors�–�Resolutions�(a),�(b)�and�(c)�(Continued)�

Remuneration�of�the�Directors�

The�total�annual�remuneration�paid�to�the�Directors�for�the�last�financial�year�is�as�follows:�

YearEnded30June2011 Salariesand
Fees
Superannuation Valueof
options
granted
Total
PaulChapman $52,000 $4,608 Nil $56,608
WillRobinson $250,275 $22,525 Nil $272,800
PeterBewick $231,000 $20,790 $1,509,449 $1,761,239

Securities�held�by�the�Directors�

As�at�the�date�of�this�Notice,�the�Directors�have�interests�in�the�securities�of�the�Company�as�set�out�below:�

Shares Options
PaulChapman 4,747,400 Nil
WillRobinson 21,846,900 Nil
PeterBewick 4,725,000 400,000unlistedoptionsexercisableat$0.55eachonor
before30November2012
400,000unlistedoptionsexercisableat$0.70centseachonor
before30November2012
3,500,000unlistedoptionsexercisableat$1.35eachonor
before22November2014

Section�195�Corporations�Act�

Section�195(1)�of�the�Corporations�Act�provides�a�general�restriction�on�a�director�who�has�a�material�personal�interest� in�a�resolution�being�considered�at�a�director’s�meeting�of�the�company�being�present�during�any�discussion�on�the� resolution�or�voting�on�the�resolution�at�the�director’s�meeting.�

Section�195(4)�of�the�Corporations�Act�provides�that�where�there�are�insufficient�directors�to�form�a�quorum�at�a� director’s�meeting�because�of�Section�195(1),�the�directors�can�call�a�general�meeting�of�shareholders�to�consider�the� matter.�

The�Directors�are�unable�to�form�a�quorum�to�consider�any�matters�relating�to�the�issue�of�Shares�under�Agenda�Item� 2,�as�three�out�of�the�four�Directors�has�a�material�interest�in�the�outcome�of�the�resolutions�that�are�the�subject�of� Agenda�Item�2.�Therefore,�the�Directors�are�seeking�approval�under�Section�195(4)�to�deal�with�the�matter.

6

ENCOUNTER�RESOURCES�LIMITED�

ABN�47�109�815�796�

EXPLANATORY�STATEMENT�

  • 2.� Participation�in�Placement�by�Directors�–�Resolutions�(a),�(b)�and�(c)�(Continued)�

ASX�Listing�Rule�10.11�

ASX�Listing�Rule�10.11�requires�a�listed�company�to�obtain�shareholder�approval�by�ordinary�resolution�prior�to�the�issue� of�securities�to�a�related�party�of�the�Company�(which�includes�a�Director).��

If�the�resolutions�(a),�(b)�and�(c)�that�are�the�subject�of�Agenda�Item�2�are�passed,�the�Related�Parties�may�be�issued� shares�under�the�Placement.��Accordingly,�approval�for�the�issue�of�securities�to�the�Related�Parties�of�the�Company�is� required�pursuant�to�ASX�Listing�Rule�10.11.��

Separate�approval�pursuant�to�ASX�Listing�Rule�7.1�is�not�required�in�order�to�issue�shares�to�the�Directors�as�approval�is� being�obtained�under�ASX�Listing�Rule�10.11.�

ASX�Listing�Rule�10.13�sets�out�a�number�of�matters�which�must�be�included�in�a�notice�of�meeting�proposing�an� approval�under�ASX�Listing�Rule�10.11.��For�the�purposes�of�ASX�Listing�Rule�10.13,�the�following�information�is�provided� in�relation�to�Agenda�Item�2:�

  • (a) the�number�of�shares�to�be�issued�to�Related�Parties�is�as�follows:�
PaulChapman 675,000ordinaryfullypaidshares
WillRobinson 250,000ordinaryfullypaidshares
PeterBewick 250,000ordinaryfullypaidshares;
  • (b) the�shares�will�be�issued�no�later�than�one�(1)�month�after�the�date�of�the�General�Meeting�(or�such�later�date�as� permitted�by�any�ASX�waiver�or�modification�of�the�ASX�Listing�Rules)�and�it�is�anticipated�that�allotment�will� occur�on�the�same�date;�

  • (c) ordinary�shares�will�be�issued�at�a�price�of�40�cents�per�share�and�will�rank�equally�with�existing�issued�ordinary� shares�from�the�date�of�issue;�

  • (d) the�funds�raised�from�the�Placement�are�to�be�used�to�fund�the�escalating�exploration�drill�programs�at�the� Company’s�Yeneena�Copper�Project�and�provide�working�capital.���

There�is�no�other�information�known�to�the�Directors�that�is�reasonably�required�by�Shareholders�to�make�a�decision� whether�or�not�it�is�in�the�Company’s�interest�to�pass�the�resolutions�the�subject�of�Agenda�Item�2.�

7