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PREDICTIVE DISCOVERY LIMITED Proxy Solicitation & Information Statement 2014

Feb 16, 2014

65537_rns_2014-02-16_828ffb02-250b-4d9c-b182-17a8186c2817.pdf

Proxy Solicitation & Information Statement

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ABN 11 127 171 877 Level 2, 9 Colin Street WEST PERTH WA 6005 PO Box 1710 West Perth WA 6872 p (08) 9216 1000 f (08) 9481 7939

w www.predictivediscovery.com

Predictive Discovery Limited ACN 127 171 877

NOTICE OF EXTRAORDINARY GENERAL MEETING AND EXPLANATORY MEMORANDUM

A PROXY FORM IS ENCLOSED

The Extraordinary General Meeting of Shareholders of Predictive Discovery Limited

will be held at 10am AEST on Thursday 20 March 2014

at Level 17, 530 Collins Street, Melbourne Victoria.

If you are unable to attend the Extraordinary General Meeting of Shareholders you may complete and return the enclosed proxy form or vote online in accordance with the specified directions.

These papers should be read in their entirety. If Shareholders are in doubt as to how they should vote, they should seek advice from their professional adviser without delay.

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ACTION REQUIRED BY SHAREHOLDERS

Step 1: Read the Notice and Explanatory Memorandum

The Explanatory Memorandum sets out details of the Resolutions to be voted on at the Meeting. This information is important. You should read this document carefully and if necessary seek independent advice on any aspects about which you are not certain.

Step 2: Vote on the Resolutions

Your vote is important. The Meeting is scheduled to be held at 10AM AEST on Thursday, 20 March 2014 at level 17, 530 Collins Street, Melbourne Victoria.

If you cannot attend the Meeting in person and wish to vote on some or all of the Resolutions, you can lodge your completed proxy form by:

mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;
emailing it to Ian Hobson (Company Secretary) at [email protected];
by facsimile to (08) 9481 7939; or
hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth WA 6005,

by 5pm (AEST) on 18 March 2014.

Please refer to the enclosed proxy form for more information about submitting proxy voting instructions.

Questions

If you have any questions about any matter contained in the Notice or the attached Explanatory Memorandum, please contact Ian Hobson (Company Secretary) on +61 8 9388 8290.

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NOTICE OF EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN THAT the Extraordinary General Meeting of the Shareholders of PREDICTIVE DISCOVERY LIMITED will be held at the following time and place:

Time: 10am (AEST)

Date: Thursday, 20 March 2014 Place: Level 17, 530 Collins Street Melbourne, Victoria 3000

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AGENDA

Information on each of the following resolutions is set out in the attached Explanatory Memorandum which forms part of this Notice.

Resolution 1 – Ratification of prior issue of 31,541,275 Shares

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

“That for the purposes of Listing Rule 7.4, and all other purposes, Shareholders ratify and approve the issue under Listing Rule 7.1 by the Company of 31,541,275 Shares to identified professional and sophisticated investors, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 2 – Ratification of prior issue of 29,746,225 Shares

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

“That for the purposes of Listing Rule 7.4, and all other purposes, Shareholders ratify and approve the issue under Listing Rule 7.1A by the Company of 29,746,225 Shares to identified professional and sophisticated investors, on the terms and conditions set out in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 3 – Issue of Shares to Mr Phillip George Harman

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

“That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue by the Company to Mr Phillip George Harman (or his nominee) of 1,250,000 Shares, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 4 - Issue of Shares to Mr Philip Henty

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

“That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue to Mr Phillip Henty (or his nominee) of 3,125,000 Shares, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting.”

Resolution 5 - Issue of Shares to Mr Paul Roberts

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

“That for the purposes of Listing Rule 10.11 and for all other purposes, Shareholders approve the issue to Mr Paul Roberts (or his nominee) of 937,500 Shares, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting accompanying this Notice of Meeting.”

Resolution 6 – Issue of Options to Mr Phillip Harman

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Phillip Harman (or his nominee) of 1,000,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

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Resolution 7 - Issue of Options to Mr Philip Henty

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Phillip Henty (or his nominee) of 1,000,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

Resolution 8 – Issue of Options to Mr Paul Roberts

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Paul Roberts (or his nominee) of 3,000,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

Resolution 9 – Issue of Options to Mr Timothy Markwell

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

“That for the purposes of ASX Listing Rule 10.11 and for all other purposes, the grant to Mr Timothy Markwell (or his nominee) of 1,000,000 Options, on the terms and conditions detailed in the Explanatory Memorandum accompanying this Notice of Meeting, is approved.”

Voting prohibitions

Under the Corporations Act, the following persons are prohibited from voting on the respective Resolutions:

Resolution

Personsprohibited from voting

Resolution 6(Issue of Options to Phillip
Harman)
Resolution 7(Issue of Options to Philip
Henty)
Resolution 8(Issue of Options to Paul
Roberts)
Resolution 9(Issue of Options to Timothy
Markwell)

A person appointed a proxy must not vote on the basis of
that appointment, if:
(a) the proxy is either a member of the Key
Management Personnel; or
i.
a member of the Key Management
Personnel; or
ii.
a closely related party of a member of
the Key Management Personnel; and
(b) the appointment does not specify the way the
proxy is to vote on Resolution 6, 7, 8 or 9 (as
relevant).
However, the above prohibition does not apply to a
particular Resolution if:
(c) the proxy is the Chairman of the Meeting; and
(d) the appointment expressly authorises the
Chairman to exercise the proxy in respect of that
Resolution even if the Resolution is connected
directly or indirectly with the remuneration of a
member of the Key Management Personnel.

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Voting Exclusion Statements

In accordance with the Listing Rules, the Company will disregard any votes on the respective Resolutions cast by or on behalf of the following persons:

Resolution	Persons excluded from voting
Resolution 1(Ratification of prior issue of 31,541,275 Shares)	Each person who participated in the issue the subject of Resolution 1 and any associate of those persons.
Resolution 2(Ratification of prior issue of 29,746,225 Shares)	Each person who participated in the issue the subject of Resolution 2 and any associate of those persons.
Resolution 3(Issue of Shares to Phillip Harman)	Mr Phillip Harman and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Phillip Harman or those persons.
Resolution 4(Issue of Shares to Phillip Henty)	Mr Philip Henty and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Phillip Henty or those persons.
Resolution 5(Issue of Shares to Paul Roberts)	Mr Paul Roberts and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Paul Roberts or those persons.
Resolution 6(Issue of Options to Phillip George Harman)	Mr Phillip Harman and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Phillip Harman or those persons.
Resolution 7(Issue of Options to Phillip Henty)	Mr Philip Henty and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Phillip Henty or those persons.
Resolution 8(Issue of Options to Paul Roberts)	Mr Paul Roberts and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Paul Roberts or those persons.
Resolution 9(Issue of Options to Timothy Markwell)	Mr Timothy Markwell and any person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the Resolution is passed, and associates of Mr Timothy Markwell or those persons.

However, the Company need not disregard a vote on any of the Resolutions if it is cast by a person as a proxy for the person who is entitled to vote on that Resolution, in accordance with the directions on the proxy form, or it is cast by the person chairing the meeting as proxy for a person who is entitled to vote on that Resolution, in accordance with a direction on the proxy form to vote as the proxy decides.

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Explanatory Memorandum

Shareholders are referred to the Explanatory Memorandum accompanying and forming part of this Notice. Terms defined in the Explanatory Memorandum and used in the Notice have the same meaning as in the Explanatory Memorandum.

Determining who holds shares for the purpose of the Meeting

It has been determined that under Corporations Regulation 7.11.37, for the purposes of this Meeting, Shares will be taken to be held by the persons who are the registered holders at 5pm (AEST) on 18 March 2014. Accordingly, share transfers registered after that time will be disregarded in determining entitlements to attend and vote at the Meeting.

Proxies

Each Shareholder who is entitled to attend and vote has a right to appoint a proxy, and if a Shareholder is entitled to cast two or more votes that Shareholder may appoint 2 proxies. If a Shareholder appoints 2 proxies, the Shareholder may specify the proportion or number of votes each proxy is appointed to exercise. If a Shareholder appoints two proxies and the appointment does not specify the proportion or number of votes, each proxy may exercise one half of the Shareholder’s votes. A proxy need not be a Shareholder of the Company.

Proxy forms must be received by:

mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;
emailing it to Ian Hobson (Company Secretary) at [email protected];
by facsimile to (08) 9481 7939; or
hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth WA 6005,

by no later than 5pm (AEST) on 18 March 2014.

An instrument appointing a proxy must be in writing under the hand of the appointor or of the appointor’s attorney duly authorised in writing or, if the appointer is a body corporate, by a Director jointly with either another Director or company secretary or if the company has only a sole Director by the sole Director, or by the company’s duly authorised attorney.

Corporate Representatives

Any corporate Shareholder wishing to appoint a person to act as its representative at the Meeting may do so by providing that person with:

a letter or certificate executed in accordance with section 250D of the Corporations Act authorising that person to act as the corporate Shareholder's representative at the Meeting; or
a copy of the resolution appointing that person as the corporate Shareholder's representative at the Meeting, certified by a secretary or Director of the corporate Shareholder.

Voting by proxies

Shareholders are encouraged to direct their proxy as to how to vote on all resolutions, by marking the appropriate box on the proxy form under the heading ‘Voting on Business of the Meeting’.

Recent changes to the law have impacted on the way proxies vote at company meetings. Broadly, these changes include that:

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

The Chairman will vote all undirected proxies in favour of all Resolutions.

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Key Dates

Event	Date
Determination of voting eligibility	5pm (AEST) on 18 March 2014
Deadline for lodgement of proxy forms	5pm (AEST) on 18 March 2014
General Meeting	10am (AEST) on 20 March 2014

Dated: 14 February 2014

By Order of the Board

==> picture [121 x 39] intentionally omitted <==

Ian Hobson Company Secretary

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EXPLANATORY MEMORANDUM

Introduction

This Explanatory Memorandum is intended to provide Shareholders with sufficient information to assess the merits of the Resolutions contained in the accompanying Notice.

This Explanatory Memorandum forms part of and should be read in conjunction with the Notice.

The Directors of the Company recommend Shareholders read this Explanatory Memorandum in full before making any decision in relation to the Resolutions. If you have any questions regarding the matters set out in this Explanatory Memorandum or the preceding Notice, please contact your accountant, solicitor or other professional adviser.

Background

On 29 January 2014, Predictive announced a placement under which it proposed to issue 66,600,000 Shares at an issue price of 1.6 cents each to raise $1.065 million before costs (Placement).

Resolutions 1 and 2 seek the ratification of the issue of 61,287,500 of the Shares, under the Company’s capacity under Listing Rule 7.1 and 7.1A.

The remaining 5,312,500 Shares are intended to be issued subject to shareholders approving resolutions 3 to 5 in the relevant tranches specified in those resolutions to raise to raise $85,000 before costs.

The placement will be made to identified professional and sophisticated investors (as set out in more detail below) or directors of the Company.

Funds raised by the Placement will be used for exploration and general working capital purposes. It will enable the Company to continue exploration at its Burkina Faso and Cote D’Ivoire permits, and in particular the Bongou Prospect in Eastern Burkina Faso.

Resolutions 1 and 2 – Ratification of prior issue of 61,287,500 Shares

Shareholder approval of prior issue of 61,287,500 Shares

In summary

Listing Rule 7.1 provides that a company must not, subject to certain exceptions, issue or agree to issue more equity securities in any 12 month period than the amount which is equal to 15% of its fully paid ordinary securities on issue at the start of that 12 month period ( 15% share issue capacity ); and
Listing Rule 7.1A provides that certain eligible companies may seek shareholder approval at its AGM to issue up to a further 10% of its fully paid ordinary securities on issue at the start of the 12 month period commencing on the date of the AGM ( 10% share issue capacity ). The Company is an eligible company and sought and received shareholder approval to the 10% share issue capacity at its AGM on 18 November 2013. The shareholder approval is valid until the earlier of 12 months from the date of the AGM (that is, until 18 November 2014) or, if the Company undertakes a significant transaction requiring shareholder approval under Listing Rule 11.1.2 or 11.2, the date shareholders approve that transaction.

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Listing Rule 7.4 provides that an issue of securities made without approval under Listing Rule 7.1 or 7.1A will be treated as having been made with shareholder approval for the purposes of those Listing Rules if shareholders subsequently ratify it and the issue did not breach Listing Rule 7.1.

31,541,275 of the 61,287,500 Shares that have already been issued were issued under the 15% share issue capacity, while the remaining 29,746,225 Shares were issue under the 10% share issue capacity.

However, without Shareholder approval pursuant to Listing Rule 7.4, the relevant issues will be counted towards the Company's 15% share issue capacity and 10% share issue capacity respectively and will therefore reduce the Company’s capacity to issue Shares in the future without obtaining Shareholder approval.

Accordingly, approval is sought from Shareholders to allow the Company to refresh its 15% share issue capacity (Resolution 1) and 10% share issue capacity (Resolution 2) and maximise its ability to issue further Shares up to the 15% share issue capacity and separate further 10% share issue capacity limit without obtaining Shareholder approval.

Specific disclosure required in accordance with Listing Rule 7.5

Listing Rule 7.5 requires the following information to be provided to Shareholders :

Number of Shares	61,287,500 Shares.
issued
Issue price of each	$0.016.
Share
Terms of the issue	The Shares are fully paid ordinary shares and are on the same terms
	as existing fully paid ordinary shares in the Company.
Allottees	The allottees are each professional and sophisticated investors who
	are not related parties of the Company and who do not require a
	disclosure document to be issued in respect of the issue of Shares,
	including those who are clients of stock brokers and existing
	shareholders.
Use or intended use of the funds raised	Funds raised by the Placement will be used for exploration and general working capital purposes. It will enable the Company to continue exploration at its Burkina Faso and Cote D’Ivoire permits, and in particular the Bongou Prospect in Eastern Burkina Faso.

Voting Exclusion

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

Directors’ Recommendation

The Directors recommend Shareholders vote in favour of Resolutions 1 and 2.

Resolutions 3 to 5 – Issue of Shares to Directors

As noted in the Background above, as part of the Placement the Company proposes to issue a total of 5,312,500 Shares to Mr Phillip Harman, Mr Phillip Henty and Mr Paul Roberts ( Director Shares ). Each of Mr Phillip Harman, Mr Philip Henty and Mr Paul Roberts are directors of the Company.

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Requirement to obtain Shareholder approval

Listing Rule 10.11 requires the Company to obtain Shareholder approval in order to grant Shares to a Director. Approval under Listing Rule 7.1 is not required in order to issue the Director Shares as approval is being sought under Listing Rule 10.11.

Accordingly, each tranche of Director Shares is subject to shareholder approval and will be at the same issue price as the other shares forming part of the Placement (that is, an issue price of $0.016 per Share) to raise a total of $85,000 before costs.

Resolutions 3, 4 and 5 seek separate Shareholder approval for the grant of the Director Shares to the relevant Directors.

Specific disclosure required in accordance with Listing Rule 10.13

Listing Rule 10.13 requires the following information to be provided to Shareholders in respect of Resolutions 3 to 5 :

Name of Director, number of Shares to be issued to each of them and amount raised before costs	Mr Phillip Harman 1,250,000 Shares $20,000
	Mr Philip Henty 3,125,000 Shares $50,000
	Mr Paul Roberts 937,500 Shares $15,000
Issue price of each Share	$0.016
Terms of the issue	The Shares are fully paid ordinary shares and are on the same terms as existing fully paid ordinary shares in the Company.
Use or intended use of the funds raised	Funds raised by the Placement will be used for exploration and general working capital purposes. It will enable the Company to continue exploration at its Burkina Faso and Cote D’Ivoire permits, and in particular the Bongou Prospect in Eastern Burkina Faso.
Date of issue	It is anticipated that the Company will issue and allot the Shares on one date on or around 21 March 2014, but in any event within one month of the date of receipt of the Shareholder approval (or such later date as permitted by ASX waiver or modification of the Listing Rules).

Voting Exclusions

Voting exclusion statements for each of the Resolution are in the Notice.

Directors’ recommendations

(a) Each Director abstains from providing a recommendation in respect of the resolution which proposes an issue of Director Shares to him. This is because of the potential for there to be a perceived interest that he may have in the outcome of that resolution.
(b) Each remaining Director recommends shareholders approve the issue of Director Shares to the named Director.

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Resolutions 6 to 9 – Issue of Options to Directors

Resolutions 6, 7, 8 and 9 seek Shareholder approval for the grant of Options to each of Mr Phillip Harman, Mr Philip Henty, Mr Paul Roberts and Mr Timothy Markwell on the terms and conditions set out in Annexure A to this Notice (together the Director Options ).

These Director Options are being granted in consideration for the work and commitment required as a Director of the Company and to reflect the view that current remuneration is not commensurate with the work required.

The Director Options will be on the terms detailed below.

The initiative to award options rather than to increase cash remuneration entitlements is designed to save cash at a time when preserving cash resources are important for the Company’s ongoing development.

Based on the valuation set out in Annexure B , the value of the Director Options to be issued equates to $54,534 and thus in the view of the Directors represents reasonable remuneration for their ongoing services.

In coming to this decision, each Director has individually considered his own personal circumstances before accepting the Company’s offer and did not participate in any discussion concerning the number of Director Options to be issued to him.

Requirement to obtain Shareholder approval

Shareholders are being asked to consider the issue of the Director Options for the purposes of ASX Listing Rule 10.11 and for all other purposes.

ASX Listing Rule 10.11 requires the Company to obtain Shareholder approval in order to grant Options to a related party (unless an exception applies).

Information provided for the purpose of obtaining Shareholder approval

In accordance with ASX Listing Rule 10.13, the following information is provided to Shareholders for the purpose of obtaining Shareholder approval to Resolutions 6 – 9:

(a) A total of 6,000,000 Director Options will be granted to the Directors as follows:

Director	Number of Options
Mr PhillipHarman	1,000,000
Mr PhilipHenty	1,000,000
Mr Paul Roberts	3,000,000
Mr TimothyMarkwell	1,000,000

(b) The Director Options will be granted no later than 1 month after the date of the AGM (or such later date as permitted by ASX waiver or modification of the ASX Listing Rules) and it is anticipated that the Director Options will be issued on the same date.

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(c) Each Director Option will entitle the holder to subscribe and be allotted one Share at an exercise price of 1.4 times the share price on the day of issue (which is expected to be immediately following the AGM) and are exercisable on or before 31 March 2017.
(d) The full terms of the Options are set out in Annexure A .
(e) No funds will be raised from the grant of Director Options. Any funds raised from the exercise of the Director Options will be used for general working capital purposes.
(f) The Director Options are not transferable.
(g) The Director Options will not entitle the holder to any dividends declared or issued by the Company.
(h) As at the date of this Notice of Meeting to which this Explanatory Memorandum relates, Mr Harman, Mr Henty, Mr Roberts and Mr Markwell held the following interests in securities of the Company:

Director	Number of Shares		Number of Options
Mr PhillipHarman	4,719,311		1,095,469
Mr PhilipHenty	10,929,688		1,826,563
Mr Paul Roberts	4,228,393		1,825,000
Mr TimothyMarkwell	Nil		Nil

(i) The total remuneration and emoluments from the Company to Mr Harman, Mr Henty, Mr Roberts and Mr Markwell for the previous financial year ending 30 June 2013 and the proposed remuneration and emoluments for the current financial year ending 30 June 2014 (excluding the value of the Director Options the subject of Resolutions 6 to 9) are set out below:

Director	Financial Year ended 30 June 2013	Financial Year ended 30 June 2014

Mr PhillipHarman	$50,001	$50,000
Mr PhilipHenty	$35,000	$35,000
Mr Paul Roberts	$185,384	$180,000
Mr Timothy Markwell (appointed 11th September 2013)	N/A	$28,095

(j) The value of the Directors Options and the pricing methodology is set out in Annexure B .
(k) If the Director Options proposed to be granted are exercised, a total of 6,000,000 Shares would be allotted and issued. This will increase the number of Shares on issue from 362,177,714 to 368,177,714 (assuming that no other Options are exercised and no other Shares are issued) with the effect that the shareholding of existing Shareholders would be diluted by an aggregate of 1.6%.
(l) If, at any time any of the Director Options are exercised and the Shares are trading at a price that is higher than the exercise price of the Director Options, there may be a perceived cost to the Company.
(m) There are no significant opportunity costs to the Company or benefits foregone by the Company in issuing the Director Options on the terms proposed. Mr Harman, Mr Henty, Mr Roberts and Mr Markwell must each contribute their own money to the Company to fund the exercise price of the Director Options.

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(n) The trading history of the Shares on ASX in the 12 months before the date of the Notice of Meeting to which this Explanatory Memorandum relates is set out below:

	Price	Date
Highest	A$0.055	20 February2013
Lowest	A$0.015	7 January2014
Last	A$0.016	4 February2014

(o) Australian International Financial Reporting Standards require the Director Options to be expensed which is guided by AASB 2 – Share Based Payments . In accordance with AASB 2, these Director Options will be expensed in the financial year ended 30 June 2014. Expensing the Director Options will have the effect of increasing both the expenses and contributed equity of the Company. Whilst there will be a reduction in profit, there will be no impact on the net assets or the cash position or financial resources of the Company as a result of expensing the Director Options. There are no tax implications for the Company in issuing these Director Options.

(p) The primary purpose of the grant of the Director Options to Mr Harman, Mr Henty, Mr Roberts and Mr Markwell is not to raise capital, but to form part of their remuneration package and to save cash resources for the Company.
(q) The Company acknowledges that the grant of the Director Options to non-executive Directors is contrary to Recommendation 8.2 of the ASX Corporate Governance Principles and Recommendations. However, the Director Options are proposed to form part of the Directors’ respective remuneration packages in lieu of cash payments.
(r) A Voting Exclusion Statement in respect of each of Resolutions 6, 7, 8 and 9 is included in the Notice of Meeting.

Approval pursuant to ASX Listing Rule 7.1 is not required in order to issue the Director Options to Mr Harman, Mr Henty, Mr Roberts and Mr Markwell as approval is being sought under ASX Listing Rule 10.11. Accordingly, the issue of the Director Options, if approved by Shareholders, will not be included in the 15% calculation of the Company’s annual placement capacity pursuant to ASX Listing Rule 7.1.

Directors’ recommendation

(a) Each Director abstains from providing a recommendation in respect of the resolution that proposes an issue of Director Options to him. This is because of the potential for there be a perceived interest that he may have in the outcome of that resolution.
(b) For the reasons set out above (including that the proposed resolutions deliver potential cash savings to the Company), each remaining Director recommends shareholder approve the issue of Director Options to the named Director.

Additional Information

Shareholders should contact the Company Secretary on +61 8 9388 8290 if they have any queries.

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GLOSSARY

$ means Australian dollars, unless otherwise stated.

AEST means Australian Eastern Standard Time.

AGM or Meeting means the annual general meeting convened by the Notice.

ASX means ASX Limited.

Board means the Company’s Board of Directors.

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 who may be expected to influence the member or be influenced by the member in the member’s dealings with the Company;
e) a company the member controls; or
f) a person prescribed by the Corporations Regulations 2001 (Cth) .

Company means Predictive Discovery Limited (ACN 127 171 877).

Corporations Act means the Corporations Act 2001 (Cth) .

Director means a director of the Company from time to time.

Eligible Entities means in relation to ASX Listing Rule 7.1A, companies that are outside the S&P/ASX 300 Index, that also have a market capitalization of $300 million or less.

Explanatory Memorandum means this Explanatory Memorandum attached to the Notice of Meeting.

Extraordinary General Meeting or Meeting means the general meeting convened by the Notice.

Listing Rules means the Official Listing Rules of ASX.

Key Management Personnel has the same meaning as in the accounting standards. Broadly speaking this includes those persons with the authority and responsibility for planning, directing and controlling the activities of the Company (whether directly or indirectly), and includes any Directors of the Company.

Notice , Notice of Meeting or Notice of Annual General Meeting means the notice of meeting which forms part of this Explanatory Memorandum.

Option means an option which, if vested and exercised, will entitle the holder to subscribe for a Share.

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

S&P means Standard and Poor’s Financial Services LLC

Shareholder means a holder of Shares.

Share means a fully paid ordinary share in the Company.

WST means Western Standard Time, Australia.

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ANNEXURE A – TERMS AND CONDITIONS OF DIRECTOR OPTIONS

The terms and conditions of the Director Options are as follows:

Each Director Option entitles the holder to subscribe for one Share upon exercise of the Option and payment of the Exercise Price (defined below).
Each Director Option is exercisable at 1.4 times the price of Shares on the date of the grant of the Director Option ( Exercise Price ), payable in full on exercise of the Director Option.
The Director Options automatically expire at 5.00 pm WST on 31 March 2017 ( Expiry Date ).
The Director Options will not be quoted on ASX.
The Company must give the holder of each Director Option a certificate or holding statement stating:
a. the number of Director Options issued to each holder;
b. the Exercise Price of the Director Options; and
c. the date of issue of the Director Options.
Holders may exercise the Director Options at any time up to the Expiry Date. Any Director Option not exercised, automatically expires on the Expiry Date.
Director Options may only be exercised during the hours of 8.30am to 5.00pm WST (Business Hours) by the delivery to the registered office of the Company or the Share Registry of a notice in writing stating the intention of the holder to:
a. exercise all or a specified number of the Director Options; and
b. pay the Exercise Price in full for the exercise of each such Director Option.
A notice in writing received outside of Business Hours will be deemed received at the next opening of Business Hours.
The exercise notice must be accompanied by the certificate or holding statement for the options being exercised and a cheque made payable to the Company for the Exercise Price for the Director Options being exercised.
The Director Options will be deemed to have been exercised on the date the exercise notice is received or deemed to be received by the Company or the Share Registry.
The Company will allot the Shares to which a holder is entitled following exercise of Director Options and deliver a holding statement with respect to such Shares within the timeframe required by the Listing Rules.
The exercise of only some Director Options will not affect the rights of the holder to the balance of the Director Options held by them.
If the holder of the Director Options exercises less than the total number of Director Options registered in the holder’s name:
a. the holder of the Director Options must surrender its option certificate, if one has been issued by the Company; and
b. the Company must cancel the certificate and issue the holder of the Director Options a new certificate or holding statement stating the remaining number of Director Options held by the holder and stating the information set out above.

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Director Options will not confer an entitlement to receive dividends declared and paid by the Company, nor an entitlement to vote at general meetings of the Company unless the holder of the Director Options has exercised the Director Options before the record date for determining these entitlements and participates as a result of holding Shares.
All Shares issued on exercise of an Director Option will:
a. rank equally in all respects (including, without limitation, rights relating to dividends) with other issued Shares;
b. be issued credited as fully paid;
c. be duly authorised and issued by all necessary corporate action; and
d. be allotted and issued free from all liens, charges and encumbrances whether known about or not, including statutory and other pre-emption rights and any transfer restrictions.
The Company will apply to ASX Limited for official quotation of the Shares issued upon exercise of Director Options within the time period required by the Listing Rules.
The Director Options are not transferable.
A holder of Director Options does not have the right to participate in bonus issues or new issues of securities offered to Shareholders until Shares are allotted to the holder pursuant to the exercise of the Director Options.
In the event of a reorganisation (including, without limitation, consolidation, sub-division, reduction or return) of the capital of the Company, the rights of the holders of Director Options (including, without limitation, the number of Director Options to which the Optionholder is entitled to and the Exercise Price) will be changed (as appropriate) in accordance with the Listing Rules applying to a reorganisation of capital at the time of the reorganisation.
If the Company makes a pro-rata issue (other than a bonus issue) to existing Shareholders and no Share has been issued in respect of the Director Option before the record date for determining entitlements to the issue, the Exercise Price of each Director Option will be reduced in the manner permitted by the Listing Rules applying at the time of the pro-rata issue.
If the Company makes a bonus issue to existing Shareholders and no Share has been issued in respect of that Option before the record date for determining entitlements to the issue, then the number of Shares over which that Director Option is exercisable will be increased in the manner permitted by the Listing Rules applying at the time of the bonus issue.
The Company is entitled to treat the registered holder of a Director Option as the absolute holder of that Director Option and is not bound to recognise any equitable or other claim to, or interest in, that Director Option on the part of any person other than the registered holder, except as ordered by a court of competent jurisdiction or as required by statute.

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ANNEXURE B – VALUATION OF DIRECTOR OPTIONS

The Director Options to be issued to each of Mr Harman, Mr Henty, Mr Roberts and Mr Markwell pursuant to Resolutions 6 to 9 have been valued using a binomial pricing model and based on the following assumptions:

(c) the Director Options are granted on 20 March 2014, being the proposed date of the Company’s General Meeting;
(d) an underlying share price at the grant date of $0.016, being the closing share price of the Company’s Shares on the last trading day prior to conducting this valuation being the 4[th] February 2014;
(e) an exercise price of $0.0224, being 1.4 times the share price on the grant date in accordance with the terms of the Director Options set out in Annexure A;
(f) have a maximum life of 3.03 years, in accordance with the terms set out in Annexure A;
(g) an expected future volatility rate of the Company’ Shares of 100%;
(h) a risk free rate of 3.025%;
(i) the underlying shares do not pay a dividend, as the Company is not expected to pay a dividend over the life of the Director Options.

The valuation date of the Director Options is 5 February 2014.

Based on above, the Director Options have been valued at $0.0091 each.

The total value of the Director Options to be issued pursuant to Resolutions 6 to 9 is set out below:

Director	Number of Options	Valueper Option	Value
Mr Harman	1,000,000	$0.0091	$9,089
Mr Henty	1,000,000	$0.0091	$9,089
Mr Roberts	3,000,000	$0.0091	$27,267
Mr Markwell	1,000,000	$0.0091	$9,089
Total	6,000,000		$54,534

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PREDICTIVE DISCOVERY LIMITED

ACN 127 171 877

PROXY FORM

APPOINTMENT OF PROXY

NAME:………………………………………………………………………………………………………………………………..

ADDRESS:………………………………………………………………………....................................................

EXTRAORDINARY GENERAL MEETING

I/We being a member(s) of Predictive Discovery Limited (Company) and entitled to attend and vote at the Extraordinary General Meeting of the Company to be held at 10am (AEST), on 20 March 2014 at level 17, 530 Collins Street, Melbourne, hereby appoint:

the Chairman OR if you are NOT appointing the Chairman of the Meeting as your of the proxy, please write the name of the person or body corporate you Meeting are appointing as your proxy (do not insert your own name). I/we (mark box) appoint the Chairman of the Meeting as an alternate proxy to the person named.

If no person/body corporate is named, the Chairman of the Meeting is appointed as my/our proxy and to vote for me/us on my/our behalf at the Meeting and at any adjournment or postponement of the meeting.

The Chairman of the Meeting intends to vote undirected proxies in favour of all items of business.

Important for Resolutions 3 and 6: If the Chairman of the Meeting is your proxy and you have not directed the Chairman how to vote on Resolutions 3 and 6 below, please mark the box in this section. If you do not mark this box and you have not otherwise directed your proxy how to vote on Resolutions 3 and 6, the Chairman of the Meeting will not cast your votes on Resolutions 3 and 6 and your votes will not be counted in computing the required majority if a poll is called on these Resolutions. The Chairman intends to vote undirected proxies in favour of Resolutions 3 and 6.

 I /we acknowledge that the Chairman of the Meeting may exercise my/our proxy even if the Chairman has an interest in the outcome of Resolutions 3 and 6 and that votes cast by the Chairman, other than as proxy holder, would be disregarded because of that interest.

Voting on Business of the Meeting

FOR AGAINST ABSTAIN

Resolution 1 – Ratification of prior issue of 31,541,275 Shares Resolution 2 – Ratification of prior issue of 29,746,225 Shares Resolution 3 – Issue of Shares to Mr Phillip Harman Resolution 4 – Issue of Shares to Mr Philip Henty Resolution 5 – Issue of Shares to Mr Paul Roberts Resolution 6 – Issue of Options to Mr Phillip Harman Resolution 7 – Issue of Options to Mr Philip Henty Resolution 8 – Issue of Options to Mr Paul Roberts Resolution 9 – Issue of Options to Mr Timothy Markwell

Please note : If you mark the abstain box for the Resolution, you are directing your proxy not to vote on the Resolution on a show of hands or on a poll and your votes will not to be counted in computing the required majority on a poll.

If two proxies are being appointed, the proportion of voting rights this proxy represents is Signature of Member(s) Date: _____ Individual or Member 1 Member 2 Sole Director/Company Secretary Director	% _____ Member 3

	Director/Company Secretary

Contact Name: _____ Contact Ph (daytime): _________

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Predictive Discovery Limited ACN 127 171 877

Instructions for Completing ‘Appointment of Proxy’ Form

( Appointing a Proxy ): A member entitled to attend and vote at the Extraordinary General Meeting is entitled to appoint not more than two proxies to attend and vote on their behalf. If a member appoints only one proxy, that proxy may vote on a show of hands. The appointment of a second proxy must be done on a separate copy of the Proxy Form. Where more than one proxy is appointed, such proxy must be allocated a proportion of the member’s voting rights. If a member appoints two proxies and the appointment does not specify this proportion, each proxy may exercise half the votes. A duly appointed proxy need not be a member of the Company.
( Direction to Vote ): A member may direct a proxy how to vote by marking one of the boxes opposite each item of business. If a box is not marked the proxy may vote as they choose. If more than one box is marked on an item the vote will be invalid on that item.
( Signing Instructions ):
( Individual ): Where the holding is in one name, the member must sign.
( Joint Holding ): Where the holding is in more than one name, all of the members should sign.
( Power of Attorney ): If you have not already provided the Power of Attorney with the registry, please attach a certified photocopy of the Power of Attorney to this form when you return it.
( Companies ): Where the company has a sole director who is also the sole company secretary, that person must sign. Where the company (pursuant to Section 204A of the Corporations Act) does not have a company secretary, a sole director can also sign alone. Otherwise, a director jointly with either another director or a company secretary must sign. Please sign in the appropriate place to indicate the office held.
( Attending the Meeting ): Completion of a Proxy Form will not prevent individual members from attending the Meeting in person if they wish. Where a member completes and lodges a valid Proxy Form and attends the Meeting in person, then:
the proxy’s authority to speak for that member is suspended while the member is present at the Meeting; and
the proxy’s authority to vote for the member on any resolution is not suspended while the member is present but is revoked by the member voting in person on that resolution.
( Return of Proxy Form ): To vote by proxy, please complete and sign the enclosed Proxy Form and return by:
mailing it to Predictive Discovery Limited, at PO Box 1710 West Perth WA 6872;
emailing it to Ian Hobson (Company Secretary), at [email protected];
by facsimile to (08) 9481 7939; or
hand delivering it to Predictive Discovery Limited, at Level 2, 9 Colin Street, West Perth, WA 6005.
so that it is received not later than 5pm (AEST) on 18 March 2014.

Proxy forms received later than this time will be invalid.

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