KINGSTON RESOURCES LIMITED — AGM Information 2013

Sep 30, 2013

KINGSTON RESOURCES LIMITED ACN 009 148 529

NOTICE OF ANNUAL GENERAL MEETING

Notice is hereby given that the Annual General Meeting of Kingston Resources Limited ACN 009 148 529 ( Company ) will be held at 11.00am (WST) on 4 November 2013 at 25-27 Jewell Parade, North Fremantle, Western Australia.

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Annual Accounts

To receive and consider the annual Financial Report of the Company, the Directors’ Report and the Independent Audit Report for the financial year ended 30 June 2013.

Resolution 1 – Non-binding resolution for the adoption of Remuneration Report

To consider and, if thought fit, to pass the following resolution as a non-binding resolution :

“That, for the purpose of section 250R(2) of the Corporations Act and for all other purposes, the Company approves the adoption of the Remuneration Report as set out in the Company’s Annual Report for the financial year ended 30 June 2013.”

Note: in accordance with the Corporations Act, this Resolution is advisory only and does not bind the Directors of the Company.

Resolution 2 – Re-election of Mr Mathew Whyte as a Director

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, Mr Mathew Whyte, being a Director of the Company who retires in accordance with Rule 7.3(a) of the Company’s Constitution and, being eligible and offering himself for re–election in accordance with the Company’s Constitution, be reelected as a Director.”

Resolution 3 – Approval for issue of Director Options to Mr Jonathan Davies

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of sections 195(4) and 208 of the Corporations Act, Listing Rule 10.11 and all other purposes, approval be given for the Company to issue to Mr Jonathan Davies or his nominees up to 2,000,000 unlisted Director Options exercisable on or before 30 June 2016 at an exercise price equal to the higher of $0.048 (being 50% of the closing price of Shares traded ASX at the date of this Notice) and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting, in accordance with the terms and conditions as set out in the Explanatory Statement.”

Resolution 4 – Approval for issue of Director Options to Mr Mathew Whyte

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, subject to Resolutions 2 being approved, for the purposes of sections 195(4) and 208 of the Corporations Act, Listing Rule 10.11 and all other purposes, approval be given for the Company to issue to Mr Mathew Whyte or his nominees up to 2,000,000 unlisted Director Options exercisable on or before 30 June 2016 at an exercise price equal to the higher of $0.048

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(being 50% of the closing price of Shares traded ASX at the date of this Notice) and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting, in accordance with the terms and conditions as set out in the Explanatory Statement.”

Resolution 5 – Approval for issue of Director Options to Mr Michal Safrata

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of sections 195(4) and 208 of the Corporations Act, Listing Rule 10.11 and all other purposes, approval be given for the Company to issue to Mr Michal Safrata or his nominees up to 1,000,000 unlisted Director Options exercisable on or before 30 June 2016 at an exercise price equal to the higher of $0.048 (being 50% of the closing price of Shares traded ASX at the date of this Notice) and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting, in accordance with the terms and conditions as set out in the Explanatory Statement.”

Resolution 6 – Approval for issue of Director Options to Mr Yafeng Cai

To consider and, if thought fit, to pass the following resolution as an ordinary resolution :

“That, for the purposes of sections 195(4) and 208 of the Corporations Act, Listing Rule 10.11 and all other purposes, approval be given for the Company to issue to Mr Yafeng Cai or his nominees up to 1,000,000 unlisted Director Options exercisable on or before 30 June 2016 at an exercise price equal to the higher of $0.048 (being 50% of the closing price of Shares traded ASX at the date of this Notice) and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting, in accordance with the terms and conditions as set out in the Explanatory Statement.”

Voting Exclusion Statement

For the purposes of section 224 the Corporations Act and Listing Rule 14.11, a vote may not be cast, and the Company will disregard any votes cast, (in any capacity) on:

• Resolution 1 by a member of Key Management Personnel and any Closely Related Parties of a member of Key Management Personnel, whose remuneration is disclosed in the Remuneration Report;

• Resolution 3 by Mr Jonathan Davies and his Associates;

• Resolution 4 by Mr Mathew Whyte and his Associates;

• Resolution 5 by Mr Michal Safrata and his Associates; and

• Resolution 6 by Mr Yafeng Cai and his Associates.

However, a person may cast a vote and the Company need not disregard a vote if it is cast by:

• in respect of Resolution 1:

• the person acting as proxy and the Proxy Form specifies how the proxy is to vote, and the vote is not cast on behalf of a person who is otherwise excluded from voting on Resolution 1 as outlined in the table above; or

• the person is the person chairing the Meeting voting an undirected proxy which expressly authorises the person chairing the Meeting to vote on a Resolution in connection with the remuneration of a member of the Key Management; and

• in respect of Resolutions 3 to 6 (inclusive):

• the person as a proxy for a person who is entitled to vote, in accordance with a direction on the Proxy Form; or

• 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.

Voting entitlement

The Directors have determined pursuant to Regulation 7.11.37 and 7.11.38 of the Corporations Regulations that the persons eligible to vote at the Meeting are those who are registered Shareholders at 11am (WST) on Saturday, 2 November 2013 .

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Transactions registered after that time will be disregarded in determining a person’s entitlement to attend and vote at the Meeting.

Questions and comments

The chairperson of the Meeting will allow a reasonable opportunity for Shareholders at the meeting to ask questions about or make comments on the management of the Company.

Explanatory Statement

The Explanatory Statement accompanying this Notice provides additional information on matters to be considered at the Meeting. The Explanatory Statement and the Proxy Form both form part of this Notice.

Terms and abbreviations used in this Notice and Explanatory Statement are defined in the Glossary.

By order of the Board

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Mathew Whyte

Director and Company Secretary 1 October 2013

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Ex lanator Statement p y

This Explanatory Statement has been prepared for the information of the Shareholders in connection with the business to be conducted at the Annual General Meeting ( Meeting ) to be held at 11am (WST) on Monday, 4 November 2013 at 25-27 Jewell Parade, North Fremantle, Western Australia.

The purpose of this Explanatory Statement is to provide information which the Directors believe to be material to Shareholders in deciding whether or not to pass the Resolutions in this Notice. This Explanatory Statement should be read in conjunction with the accompanying Notice of Annual General Meeting.

1. Annual Accounts

In accordance with the Company’s Constitution, the business of the Meeting will include receipt and consideration of the Financial Report, Directors' Report and Auditor's Report for the year ended 30 June 2013. The Shareholders are not required to approve these reports.

The chairperson of the Meeting will allow a reasonable opportunity for Shareholders to ask questions or make comments about the Financial Report, Directors' Report and Auditor's Report. Copies of these reports can be found on the Company website www.kingstonresources.com.au or by contacting the Company on (+61) 8 9355 2565.

In accordance with section 250T of the Corporations Act, the chairperson of the Meeting will also provide Shareholders a reasonable opportunity to ask the Auditor questions relevant to:

• the conduct of the audit;

• the preparation and content of the independent Audit report;

• the accounting policies adopted by the Company in relation to the preparation of accounts; and

• the independence of the Auditor in relation to the conduct of the audit.

2. Resolution 1 – Non-binding resolution for the adoption of Remuneration Report

Pursuant to sections 249L(2) and 250R(2) of the Corporations Act, the Company is required to put a resolution to the Shareholders that the Remuneration Report be adopted. Section 250R(3) of the Corporations Act specifies that the vote on this Resolution is advisory only and does not bind the Directors or the Company. Accordingly, a failure of Shareholders to approve Resolution 1 will not require the Directors to alter any of the arrangements in the Remuneration Report. However, the Board will take the outcome of the vote into consideration when considering the remuneration policy.

The Remuneration Report is contained in the Directors’ Report which sets out the remuneration policy for the Company and reports on the remuneration arrangements in place for the Directors and senior management of the Company. Under section 250SA of the Corporations Act, the chairperson of the Meeting must give Shareholders a reasonable opportunity to ask questions about, or make comment on, the Remuneration Report.

Importantly, pursuant to Division 9 of Part 2G.2 of the Corporations Act, if a remuneration report receives a “no” vote of 25% or more at two consecutive annual general meetings of the Company, a resolution must be put to the Shareholders at the second annual general meeting as to whether a further general meeting should be held within ninety (90) days at which all Directors (other than the Managing Director) in office at the date of the second approved remuneration report must stand for re-election ( Spill Resolution ).

At the previous annual general meeting of the Company held on 29 January 2013, the remuneration report for the financial year ended 30 June 2012 did not receive a “no” vote of 25% or more. Accordingly, if the current Remuneration Report receives a “no” vote of 25% or more, the Company will not be required to put a Spill Resolution to the Shareholders at this Meeting.

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Under sections 250R(4) and (5) of the Corporations Act, Key Management Personnel and their Closely Related Parties may not vote on Resolution 1 and may not cast a vote as proxy, unless the proxy appointment gives a direction on how to vote or the proxy is given to the chairperson of the Meeting and expressly authorises the chairperson to exercise the proxy. The chairperson of the Meeting will use any such proxies to vote in favour of Resolution 1.

3. Resolution 2 – Re-election of Mr Mathew Whyte as a Director

Rule 7.3(d) of the Company’s Constitution and Listing Rule 14.4 require that at every annual general meeting of the Company, one of the Directors for the time being must retire from office and are then eligible for re-election. The Directors to retire are those who have been in office for the longest period since their last election, or if the Directors have been in office for an equal length of time, those Directors determined by agreement between the Directors.

Mr Mathew Whyte, who was appointed as a non-executive Director on 5 September 2011 and re-elected on 30 November 2011, retires in accordance with clause 7.3(a) of the Company’s Constitution, and being eligible, offers himself for re-election as a Director. Mr Whyte is also the Company Secretary.

Mr Whyte is a CPA and a fellow of the Institute of Company Secretaries. He has over 20 years commercial experience in the financial management, direction and corporate governance of ASX listed companies. He has held senior executive roles on a number of Australian listed entities with operations in Australia and overseas in the mining, mining services, power infrastructure and biotech industries.

Mr Whyte is also the Company Secretary of Oroya Mining Limited (ASX Code: ORO).

The Directors, excluding Mr Whyte, unanimously recommend the approval of Resolution 2 and the re-election of Mr Whyte.

4. Resolutions 3 to 6 – Approval for issue of options to Directors

Resolutions 4 to 8 seek Shareholder approval under section 208 of the Corporations Act and Listing Rule 10.11 for the issue of up to 6,000,000 Director Options to the Directors (or their respective nominees).

Notably, the issue of Director Options to Mr Mathew Whyte under Resolution 4 is subject to the passing of his reelection as a Director under Resolution 2.

The purpose of the Director Options is to provide remuneration to the Directions that assists in preserving the limited cash reserves of the Company as well as aligning the interest of the Directors with the performance of the Company. The benefit of the Director Options would be received upon the trading price of Shares exceeding the exercise price of the Director Options, thereby warranting their exercise.

The Board considers that the issue of the Director Options under Resolutions 3 to 6 is reasonable in the circumstances, having regard to the Company’s size, stage of development and the need to attract and retain directors of a high calibre.

Section 195(4) of the Corporations Act

Section 195(1) of the Corporations Act provides that a director who has a material personal interest in a matter being considered at a directors’ meeting must not be present while the matter is being considered or vote on the matter. However, section 195(4) provides that where there are insufficient directors to form a quorum at a directors’ 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 Director under Resolutions 3 to 6 as each of the Directors has a material personal interest in the outcome of those Resolutions. Therefore the Company is seeking approval under section 195(4) of the Corporations Act to deal with the matter at the Meeting.

Reasons approval is required

Section 208 of the Corporations Act states that a public company cannot give a “financial benefit” (including an issue of shares and options) to a related party of the Company unless one of the exceptions set out in section 210 to 216 of the Corporations Act apply, or the holders of ordinary securities have approved the giving of the financial benefit to the related party at a general meeting.

Further, Listing Rule 10.11 provides that a Company must not issue or agree to issue any equity securities, or other securities with rights to conversion to equity, to a related party without shareholder approval.

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Accordingly, Shareholder approval for the issue of the Director Options under Resolutions 3 to 6 is required under section 208 of the Corporations Act and Listing Rule 10.11 as the Directors are “related parties” of the Company.

In addition, if Shareholder approval for the issue of Director Options is obtained under Listing Rule 10.11, the Director Options will not be included in the Company’s 15% security issuing capacity under Listing Rule 7.1.

Valuation of Director Options

The Board has obtained an independent valuation of the Director Options the subject of Resolutions 3 to 6 from Stantons International Securities dated 23 September 2013 ( Valuation ), which applied the Black-Scholes option pricing model ( B-S Model ).

The B-S Model is based on a number of assumptions, including an assumption that the Director Options being valued can be exercised at any time after their grant and on or before the expiry date.

The Valuation was based on the following assumptions and variables:

• The majority of the Director Options will be exercised towards the end of the their term.

• The Director Options expire on 30 June 2016, having a term of approximately 30 months, and they can be exercised at any time after the issue date but prior to their expiry date.

• The Director Options will deemed to be granted a general meeting on or around 30 November 2013.

• The closing price of Shares on ASX as at 23 September 2013 was $0.09 and based on such, the exercise price may be around $0.117. Closing prices for Shares of $0.0342, $0.12, $0.15, $0.20 and $0.30 have been used for the Valuation. However, using these closing prices, the possible exercise price of the Director Options may be the higher of $0.045 and $0.156, $0.195, $0.26 or $0.39.

• A risk-free interest rate of 2.83% based on Australian Government bonds of 3 years.

• The Director Options vest immediately upon grant and will be unlisted. A discount rate of 20% may be applied to reflect the unlisted status of the Director Options, thought it was not applied for the Valuation.

• No dividends will be declared or paid during the term of the Director Options.

• The 4 month low trading price of Shares was $0.063 on 24 June 2013 and the 4 month high was $0.15 on 22 August 2013.

• A volatility factor of 50% has been used.

Applying the above assumptions and variables, the Valuation provides the following example individual and total values for the Director Options:

Fixed Floor Price	Exercise Price	Value of Individual Director Option	Total Value of Director Options (6,000,000)
$0.048	$0.048	$0.01068	$64,080

VWAP Share Price on Date of Meeting	Exercise Price (30% above 5 Trading Day VWAP)	Value of Individual Director Option	Total Value of Director Options (6,000,000)

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$0.12	$0.156	$0.02992	$209,440
$0.15	$0.195	$0.0374	$261,800
$0.20	$0.26	$0.04986	$349,020
$0.30	$0.39	$0.07479	$523,530

Any change in the variables applied in the B-S Model between the date of the valuation and the date the Director Options are granted would have an impact on their value.

Applying the closing price of $0.09 for Shares traded on ASX on 23 September 2013 and an exercise price for a Director Option of $0.117, the value of a Director Option is estimated to be $0.02778.

Chapter 2E of the Corporations Act

Section 219 of the Corporations Act requires that the following information be provided to Shareholders for the purposes of obtaining approval for Resolutions 3 to 6:

• The nature of the financial benefit being provided by the Company to the Directors (or their respective nominees) is the proposed issue of up to 6,000,000 Director Options.

• The value of the Director Options is outlined above.

• The current remuneration for each of the Directors is as follows:

Director	Cash Remuneration (per annum including superannuation)	Non-cash Remuneration
Mr Jonathan Davies	$18,000	Nil
Mr Mathew Whyte	$18,0001	Nil
Mr Michal Safrata	$18,000	Nil
Mr YafengCai	$18,000	Nil

Note:

1. Mr Whyte is also entitled to a fee of $720 plus GST per day for his services as Company Secretary pursuant to a Consultancy Agreement with the Company.

Notably, the Directors’ voluntarily suspended payments of their remuneration from 13 December 2012 to 15 April 2013 in order to assist the Company obtain reinstatement to admission on ASX.

The current relevant interests in securities held by each of the Directors are as follows:

Director	Shares held directly	Options held directly	Shares held indirectly	Options held indirectly
Mr Jonathan Davies	Nil	Nil	Nil	Nil
Mr Mathew Whyte	Nil	Nil	Nil	Nil
Mr Michal Safrata	Nil	Nil	Nil	Nil
Mr YafengCai	Nil	Nil	Nil	Nil

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• If all of the Director Options under Resolutions 3 to 6 are exercised, assuming that no other Shares are issued by the Company, the shareholding of existing Shareholders would, based on the current issued share capital of the Company (being 82,355,828 Shares at the date of this Notice), be diluted by approximately 7.285%.

• The trading price of Shares during the term of the Director Options will normally determine whether or not the Director Options are exercised. At the time any Director Options are exercised and Shares are issued pursuant to that exercise, the Company's Shares may be trading on the ASX at a price which is higher than the exercise price of the Director Options.

• As the date of this Notice, the trading price of Shares on ASX is $0.096. The Company’s securities were suspended from trading on 11 October 2012 pending its re-compliance with Chapters 1 & 2 of Listing Rules. The Company’s securities were re-admitted to official quotation on ASX on 16 April 2013. Accordingly the Company’s securities have only traded for approximately 4.5 months. During that period up to the date of this Notice:

• the highest trading price of Shares on ASX was $0.15 on 22 August 2013; and

• the lowest trading price of Shares on ASX was $0.063 on 24 June 2013.

• As the date of this Notice, the Company had 25,702,500 Options on issue, exercisable at $0.20 each on or before 31 December 2015.

• The Directors do not consider that there are any opportunity costs to the Company or benefits foregone by the Company in granting the Director Options.

• As the issue price of the Director Options is nil, funds will not be raised from the issue of the Director Options. Further, as the exercise price of the Director Options will depend upon the VWAP of the Company’s Shares in the 5 Trading Days prior to exercise and whether that VWAP exceeds $0.048 per Share ( Floor Price ), the total funds that will be raised on exercise cannot be definitively calculated at this time. However, set out in the table below are some examples of the total exercise prices payable in if all the Director Options are exercised, having regard to the possible trading prices of Shares used in respect of the Valuation above:

Floor Price	Exercise Price	Total Exercise Price (6,000,000 Director Options)
$0.048	$0.048	$288,000
VWAP Share Price on Date of Meeting	Exercise Price (30% Premium to VWAP)	Total Exercise Price (6,000,000 Director Options)
$0.12	$0.156	$1,092,000
$0.15	$0.195	$1,365,000
$0.20	$0.26	$1,820,000
$0.30	$0.39	$2,730,000

• Mr Jonathan Davies declines to make any recommendation on how Shareholders should vote in respect of Resolution 3 as he holds a material personal interest in the outcome of that Resolution. The other Directors who do not have any material personal interest in the outcome of that Resolution recommend its approval.

• Mr Mathew Whyte declines to make any recommendation on how Shareholders should vote in respect of Resolution 4 as he holds a material personal interest in the outcome of that Resolution. The other Directors who do not have any material personal interest in the outcome of that Resolution recommend its approval.

• Mr Michal Safrata declines to make any recommendation on how Shareholders should vote in respect of Resolution 5 as he holds a material personal interest in the outcome of that Resolution. The other Directors who do not have any material personal interest in the outcome of that Resolution recommend its approval.

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• Mr Yafeng Cai declines to make any recommendation on how Shareholders should vote in respect of Resolution 6 as he holds a material personal interest in the outcome of that Resolution. The other Directors who do not have any material personal interest in the outcome of that Resolution recommend its approval.

• Other than as set out in this Explanatory Statement, the Directors do not consider there is any further information which the Shareholders would reasonably require in order to decide whether or not it is in the Company’s best interests to pass Resolutions 3 to 6.

Listing Rule 10.13 information

Listing Rule 10.13 requires that the following information be provided to Shareholders for the purposes of obtaining approval for Resolutions 3 to 6:

• A maximum of 6,000,000 Director Options will be offered to the Directors (or their respective nominees) as follows:

• Mr Jonathan Davies (or his nominees) – 2,000,000 Director Options;

• Mr Mathew Whyte (or his nominees) – 2,000,000 Director Options;

• Mr Michal Safrata (or his nominees) – 1,000,000 Director Options; and

• Mr Yafeng Cai (or his nominees) – 1,000,000 Director Options.

• The Director Options will be issued as soon as possible following the Meeting, and in any event within 1 month of the Meeting (or such later date to the extent permitted by any ASX waiver of the Listing Rules).

• Each Director Option will have an issue price of nil. However, each Director Option will have an exercise price equal to the higher of $0.048 (being 50% of the closing price of Shares traded ASX on the date of this Notice) and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting and an expiry date of 30 June 2016. All Shares issued on exercise of a Director Option will rank equally with all other Shares on issue at that time. The full terms and conditions of the Director Options are set out in Schedule 2 to this Explanatory Statement.

• As the issue price of the Director Options is nil, the Company will not raise any funds from issuing the Director Options. If the Director Options are exercised, the funds raised by the Company will be applied to the working capital requirements of the Company at that time.

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Schedule 1 - Definitions

In this Explanatory Statement, Notice and Proxy Form:

Annual General Meeting or Meeting means the Annual General Meeting of the Company convened by this Notice.

Associate has the meaning ascribed to that term in Division 2 of Part 1 of the Corporations Act.

ASX means ASX Limited (ACN 008 624 691) trading as the Australian Securities Exchange.

Auditor means the auditor of the Company.

Board means the board of Directors of the Company.

Chairman means the chairman of the Annual General Meeting.

Closely Related Party has same meaning as the definition of that term in section 9 of the Corporations Act, being, in relation to a member of Key Management Personnel:

• a spouse or child of the member;

• a child of the member’s spouse;

• a dependent of the member or the member’s spouse;

• 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;

• a company the member controls; or

• a person prescribed by the Corporations Regulations.

Company means Kingston Resources Limited (ACN 009 148 529).

Constitution means the constitution of the Company.

Corporations Act means the Corporations Act 2001 (Cth).

Corporations Regulations means the Corporations Regulations 2001 (Cth).

Director means a director of the Company.

Director Option means an Option on the terms and conditions specified in Schedule 2 to this Explanatory Statement.

Directors’ Report means the annual directors’ report prepared under chapter 2M of the Corporations Act for the Company and its controlled entities.

Explanatory Statement means the explanatory statement to the Notice.

Financial Report means the 2013 annual financial report prepared under chapter 2M of the Corporations Act for the Company and its controlled entities.

Key Management Personnel means those persons details of whose remuneration are included in the Remuneration Report having authority and responsibility for planning, directing and controlling the activities of the Company, directly or indirectly, including any Director (whether executive or otherwise), as defined in the Corporations Act.

Listing Rules means the Listing Rules of ASX from time to time.

Notice means this Notice of Annual General Meeting of the Company.

Option means an option to be issued a Share.

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Proxy Form means the proxy form enclosed with the Notice.

Resolution means a resolution contained in this Notice.

Remuneration Report means the remuneration report of the Company contained in the Directors' Report.

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

Shareholder means a registered holder of a Share.

Trading Day means an ASX trading day as defined in Listing Rule 19.12.

VWAP means the volume weighted average price of a security traded on ASX.

WST means Australian Western Standard Time.

In this Notice, words importing the singular include the plural and visa versa, and words importing gender include the other gender.

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Schedule 2 - Terms and Conditions of Director Options

Unless otherwise indicated, capitalised terms in this Schedule 2 have the meanings given to them in Schedule 1 to the Explanatory Statement.

1. Each Director Option entitles the holder to subscribe for one (1) Share.

2. Each Director Option has an exercise price equal to the higher of $0.048 and 30% above the VWAP calculated in the 5 Trading Days prior to the Meeting ( Exercise Price ).

3. Each Director Option may be exercised at any time before 5.00pm (WST) on 30 June 2016 ( Expiry Date ). Any Director Option not exercised by the Expiry Date will automatically expire.

4. Subject to the holder of a Director Option ( Option Holder ) complying with any applicable provisions of the Corporations Act, the Director Options are transferable.

5. The Company will not apply to ASX for official quotation of the Director Options but will apply for official quotation of the Shares issued on the exercise of the Director Options.

6. The Option Holder is not entitled to participate in any new issue to existing Shareholders unless they have exercised their Director Options before the eligibility date for determining entitlements to the new issue of securities and participate as a result of holding Shares. The Company must give the Option Holder notice of the proposed terms of the issue or offer in accordance with the Listing Rules.

7. If the Company makes a bonus issue of Shares or other securities to Shareholders (except an issue in lieu of dividends or by way of dividend reinvestment) and a Share has not been issued in respect of a Director Option before the record date for determining entitlements to the issue, then the number of underlying Shares over which the Director Option is exercisable is increased by the number of Shares which the Option Holder would have received if the Option Holder had exercised the Director Option before the record date for determining entitlements to the issue.

8. If there is a reorganisation (including consolidation, sub-division, reduction or return) of the share capital of the Company, then the rights of the Option Holder (including the number of Director Options to which the Option Holder is entitled to and the Exercise Price) is changed to the extent necessary to comply with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.

9. Any calculations or adjustments which are required to be made will be made by the Company’s Board of Directors and will, in the absence of manifest error, be final and conclusive and binding on the Company and the Option Holder.

10. The Company will, within a reasonable period, give to the Option Holder notice of any change to the Exercise Price of any Director Options held by the Option Holder or the number of Shares which the Option Holder is entitled to subscribe for on exercise of a Director Option.

11. To exercise a Director Option, the Option Holder must give the Company or its share registry, at the same time:

12. (a) a written exercise notice (in the form approved by the Board of the Company from time to time) specifying the number of Director Options being exercised and Shares to be issued ( Exercise Notice ); and

13. (b) payment of the Exercise Price for the Director Options the subject of the exercise notice, by way of bank cheque or by other means of payment approved by the Company.

14. Within ten (10) days after receiving an Exercise Notice for exercise of Director Options and payment by the Option Holder of the Exercise Price, the Company will issue the Option Holder the number of Shares specified in the Exercise Notice.

15. Subject to the Company’s Constitution, all Shares issued on the exercise of Director Options will rank in all respects (including rights relating to dividends) pari passu with the existing Shares at the date of issue.

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