NORTHWEST RESOURCES LIMITED AND EXPLANATORY MEMORANDUM
General Meeting information:
Date: Friday, 25 September 2015
Time: 9.00am
Location: The offices of DLA Piper, 1 Martin Place, Sydney, New
South Wales
Notice is hereby given that a General Meeting (EGM) of shareholders of Northwest Resources Limited (Northwest or the Company) will be held at the offices of DLA Piper, 1 Martin Place, Sydney, New South Wales on Friday, 25 September 2015 commencing at 9.00am for the purposes of transacting the following business referred to in this Notice of General Meeting.
The Explanatory Memorandum that accompanies and forms part of this Notice of General Meeting provides information in relation to the resolution to be considered.
This Notice of General Meeting and Explanatory Memorandum should be read in its entirety. If shareholders are in doubt as to how they should vote, they should seek advice from their accountant, solicitor or other professional adviser prior to voting.
The business of the EGM is as follows:
Resolution 1 - Disposal of the Company's main undertaking
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
"That, for the purposes of clause 17.4 of the Company's Constitution and for all other purposes, approval is given for the disposal by the Company of the assets comprising the Blue Spec Shear Gold-Antimony Project, being the Company's main undertaking, on the terms and conditions set out in the Explanatory Statement."
Resolution 2 - Re-Election of Mr. Peter Richard as a Director
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
"That Mr. Peter Richard, who being eligible offers himself for re-election as a Director, be elected as a Director."
Resolution 3 - Re-Election of Ms. Ginette Farcell as a Director
To consider and, if thought fit, to pass the following resolution as an ordinary resolution:
"That Ms. Ginette Farcell, who being eligible offers himself for re-election as a Director, be elected as a Director."
Voting Exclusion
The Company will disregard any votes cast on Resolution 1 by a person who might obtain a benefit, except a benefit solely in the capacity of a holder of Shares, if the resolution is passed and any associates of those persons. However, the Company need not disregard a vote if it cast by a person as a proxy for a person who is entitled to vote, 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, in accordance
with a direction on the Proxy Form to vote as the proxy decides.
Voting Entitlement
For the purposes of determining voting entitlements at the EGM, Shares will be taken to be held by the persons who are registered as holding the Shares at 7.00pm (AEST) on Wednesday, 23 September 2015 (the Entitlement Time). Accordingly, only those persons registered as holders of Shares at the Entitlement Time will be entitled to attend and vote at the EGM.
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Voting by Proxy
To vote by proxy, please complete and sign the enclosed Proxy Form and return by the time and in accordance with the instructions set out on the Proxy Form.
Sections 250BB and 250BC of the Corporations Act provide that:
• if proxy holders vote, they must cast all directed proxies as directed; and
• any directed proxies which are not voted will automatically default to the Chair, who must vote the proxies as directed.
Proxy vote if appointment specifies way to vote
Section 250BB(1) of the Corporations Act provides that an appointment of a proxy may specify the way the proxy is to vote on a particular resolution and, if it does:
• the proxy need not vote on a show of hands, but if the proxy does so, the proxy must vote that way
(i.e. as directed); and
• if the proxy has two or more appointments that specify different ways to vote on the resolution -
the proxy must not vote on a show of hands; and
• if the proxy is the Chair of the meeting at which the resolution is voted on - the proxy must vote on a poll, and must vote that way (i.e. as directed); and
• if the proxy is not the Chair - the proxy need not vote on the poll, but if the proxy does so, the proxy must vote that way (i.e. as directed).
Transfer of non-chair proxy to chair in certain circumstances
Section 250BC of the Corporations Act provides that, if:
• an appointment of a proxy specifies the way the proxy is to vote on a particular resolution at a meeting of the company's members; and
• the appointed proxy is not the Chair of the meeting; and
• at the meeting, a poll is duly demanded on the resolution; and
• either of the following applies:
• the proxy is not recorded as attending the meeting;
• the proxy does not vote on the resolution,
the Chair of the meeting is taken, before voting on the resolution closes, to have been appointed as the proxy for the purposes of voting on the resolution at the meeting.
By Order of the Board
2 September 2015
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EXPLANATORY MEMORANDUM
This Explanatory Memorandum has been prepared for the information of shareholders in connection with the General Meeting (EGM) of shareholders to be held at the offices of DLA Piper, 1 Martin Place, Sydney, New South Wales on Friday, 25 September 2015 commencing at 9.00am.
This Explanatory Memorandum should be read in conjunction with the accompanying Notice of General
Meeting.
Resolution - Disposal of the Company's main undertaking
1. Background
The resolution seeks shareholder approval for the disposal by the Company of the assets comprising the Blue Spec Shear Gold-Antimony Project (Project), being the main undertaking of the Company (Disposal).
On 17 August 2015, the Company announced that it had entered into an agreement to sell the Project to Beatons Creek Gold Pty Ltd (Beatons Creek Gold), a subsidiary of Novo Resources Corp (Novo), a Canadian TSX Venture Exchange listed exploration company, for a purchase price comprising $350,000 in cash and $300,000 in Novo shares.
The assets comprising the Project include:
mining leases and prospecting licences located in the Nullagine goldfield;
mining information relating to the tenements;
plant and equipment located on the tenements; and
concentrate samples.
As previously announced, following the difficult decision to defer completion of the Company's feasibility study into the Project in October 2013, the Board has been diligently seeking a development partner or purchaser for the Project. The Disposal is the culmination of an 18 month process to secure the best possible return for shareholders in respect of the Project. The Directors consider the Disposal represents the best outcome achievable in view of the current market and commodity conditions.
2. Key terms
The key terms of the Disposal are as follows: Completion of the sale is conditional on:
Australian Foreign Investment Review Board approval;
Canadian TSX Venture Exchange approval;
Northwest shareholder approval; and
obtaining other third party consents and ministerial approval as may be required. The purchase price for the Project is:
A$250,000 payable on completion;
A$100,000 payable two months after completion; and
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the issue of 485,394 fully paid ordinary shares in Novo to the Company on completion
(Consideration Shares).
The Consideration Shares will be escrowed under Canadian securities law for a period of 4 months following completion.
The sale agreement is governed by Western Australian law.
3. Consideration Shares
The number of Consideration Shares was calculated at a 5% discount to the 5 day volume weighted average share price of Novo shares on the TSX Venture Exchange of Toronto immediately price to the date of signing the sale agreement on 17 August 2015, being C$0.618 per share.
The 12 month high-low share price range for Novo shares is C$0.25 and C$1.50.
4. Shareholder approval requirements
Clause 17.4 of the Company's Constitution provides that the Company must obtain shareholders' approval by ordinary resolution at a general meeting if any significant change, either directly or indirectly to the nature or scale of its activities involves the Company disposing of its main undertaking.
Following the sale of the Company's Camel Creek Gold Project in 2014, the Project is the
Company's main undertaking and accordingly the Disposal requires shareholder approval.
The proposed resolution seeks shareholder approval for the Disposal to Beaton's Creek Gold or alternatively, the disposal on equivalent, or terms no less favourable than the purchase price outlined in paragraph 2, to another non-related party in the event the sale to Beaton's Creek Gold does not complete for any reason.
Section 249H of the Corporations Act provides that 21 days' notice of the general meeting must be given to shareholders.
5. Indicative timetable
Subject to Corporations Act requirements, the Company anticipates completion of the Disposal will be in accordance with the following timetable:
Event Date | |
Announcement of Disposal | 17 August 2015 |
General Meeting to approve Disposal | 25 September 2015 |
Completion of Disposal | 2 October 2015 |
6. Financial effect of disposal
The impact of the Disposal on the Company's balance sheet is set out in the pro forma consolidated balance sheet contained in the Schedule.
There will be no impact on the capital structure of the Company, or on the composition of the
Board, as a result of the Disposal.
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7. Reasons for disposal
The Directors believe that following an assessment of the advantages and disadvantages disclosed below the Disposal is in the best interests of the Company.
Advantages
The Directors believe that the following non-exhaustive list of advantages may be relevant to a shareholder's decision on how to vote on the proposed Disposal:
the Disposal allows the Company to meet its current liabilities;
the Disposal reduces costs (both direct tenement costs and corporate overheads) and provides the Company time to consider alternative strategies to add value to shareholders; and
the Disposal will provide capital to the Company with no dilutionary impact on shareholders, in a current market environment where it is difficult to secure capital.
Disadvantages
The Directors believe that the following non-exhaustive list of disadvantages may be relevant to a shareholder's decision on how to vote on the proposed Disposal:
the Company will not be able to participate in or derive any future potential benefit from exploration or development of the Project, if any;
the Disposal involves the Company selling its principal exploration asset, which may not be consistent with the investment objectives of all shareholders; and
there is a risk that the Company may not be able to locate, fund and complete the acquisition of other suitable investment opportunities within a reasonable time.
In the event shareholder approval is not obtained and completion of the Disposal is unable to occur the Company intends to continue to seek a development partner or purchaser for the Project and will incur further holding costs relating to the Project.
8. The Company's intentions post Completion
Subject to the approval of the resolution, following completion of the Disposal and the release of the Consideration Shares from escrow, the Company proposes to sell the Consideration Shares to third parties. The process for such sale will be discussed with Novo with the aim to agree an efficient and orderly sale process having regard to the intent to use the sale proceeds for working capital purposes.
9. Directors' recommendation
The Directors do not have any material interest in the outcome of the resolution other than as a result of their interest, if any, arising solely in the capacity as shareholders.
The Board has approved the proposal to put the resolution to shareholders.
Each of the Directors intends to vote all of their Shares in favour of the resolution.
Based on the information available, all of the Directors consider that the proposed Disposal is in the best interests of the Company and recommend that the shareholders vote in favour of the resolution.
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Resolution 2 - Re-Election of Mr. Peter Richard as a Director
At this meeting, by rotation Mr. Richard, the Company's independent non-executive Chairman, resigns and being eligible seeks re-election as a director.
Mr. Richard was appointed to the Board in 2008. Mr. Richard is stockbroker with over 35 years' experience in Australian capital markets. During a long career in the stock markets, Mr. Richard was a director of Jacksons Ltd, then the largest underwriter of mining and exploration floats in Australia. Mr. Richard currently provides consulting services to emerging mining and technology companies. He has previously been a director of a number of listed Australia public companies in the resources sector.
The Directors, other than Mr. Richard, recommend that shareholders vote in favour of this resolution. Mr. Richard, because of his interest, makes no recommendation in relation to this resolution.
Resolution 3 - Re-Election of Ms. Ginette Farcell as a Director
At this meeting, as a result of Ms. Farcell's casual appointment to the Board in 2014, Ms. Farcell, resigns and being eligible seeks re-election as a director.
Ms. Farcell currently holds a senior management role with the Australian School of Business at the University of New South Wales, and previously, held positions at Sydney University, UTS and UWS. Ms. Farcell's extensive management, administrative and financial experience has led to designing and implementing comprehensive best practice programs in business ethics, corporate governance and corporate social responsibility.
The Directors, other than Ms. Farcell, recommend that shareholders vote in favour of this resolution. Ms. Farcell, because of her interest, makes no recommendation in relation to this resolution.
Glossary
Board means the board of directors of the Company.
Company or Northwest means Northwest Resources Limited (ACN 107 337 379).
Constitution means the Company's constitution.
Corporations Act means the Corporations Act 2001 (Cth).
Explanatory Statement means the explanatory statement accompanying the Notice.
General Meeting means the meeting convened by the Notice.
Notice of General Meeting means this notice of meeting including the Explanatory Statement and the
Proxy Form.
Proxy Form means the proxy form accompanying the Notice of General Meeting.
Share means one fully paid ordinary share in the capital of the Company.
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Schedule - Pro Forma Consolidated Balance Sheet
CURRENT ASSETS
Un-Audited
30 June 2015
Cash 1 9,570
Marketable Securities 2
Other Current Assets 508,140
517,710
NON-CURRENT ASSETS
Plant & Equipment 3 1,137,628
Exploration Expenditure 4 11,223,498
12,361,126
TOTAL ASSETS 12,878,836
CURRENT LIABILITIES
Trade & Other Payables | 635,114 |
Loans | 72,806 |
Employee Benefits & Provisions | 284,176 |
992,096 |
NET ASSETS 11,886,740
EQUITY
Issued Capital 34,101,912
Accumulated Losses -22,215,172
TOTAL EQUITY 11,886,740
Pro-Forma Adjustments
1. Cash adjustment of $368,692 following shareholders' approval of the Disposal and payment of deferred cash consideration and contractual reimbursements.
2. Adjustment for issue of Consideration Shares valued at issue price and using a C$:A$ currency conversion rate of 1:1.03.
3. Disposal of Plant and Equipment included in sale.
4. Adjustment to Exploration Expenditure being the carrying value of the Project.
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All Correspondence to:
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By Phone: (within Australia) 1300 737 760
(outside Australia) +61 2 9290 9600
YOUR VOTE IS IMPORTANT
For your vote to be effective it must be recorded before 9:00am (AEST) on Wednesday, 23 September 2015
TO VOTE BY COMPLETING THE PROXY FORMSTEP 1 APPOINTMENT OF PROXY
Indicate who you want to appoint as your Proxy.
If you wish to appoint the Chair of the Meeting as your proxy, mark the box. If you wish to appoint someone other than the Chair of the Meeting as your proxy please write the full name of that individual or body corporate. If you leave this section blank, or your named proxy does not attend the meeting, the Chair of the Meeting will be your proxy. A proxy need not be a security holder of the company. Do not write the name of the issuer company or the registered securityholder in the space.
Appointment of a Second Proxy
You are entitled to appoint up to two proxies to attend the meeting and vote. If you wish to appoint a second proxy, an additional Proxy Form may be obtained by contacting the company's securities registry or you may copy this form.
To appoint a second proxy you must:
(a) complete two Proxy Forms. On each Proxy Form state the percentage of your voting rights or the number of securities applicable to that form. If the appointments do not specify the percentage or number of votes that each proxy may exercise, each proxy may exercise half your votes. Fractions of votes will be disregarded.
(b) return both forms together in the same envelope.
STEP 2 VOTING DIRECTIONS TO YOUR PROXY
STEP 3 SIGN THE FORM
The form must be signed as follows:
Individual: This form is to be signed by the securityholder.
Joint Holding: where the holding is in more than one name, all the securityholders should sign.
Power of Attorney: to sign under a Power of Attorney, you must have already lodged it with the registry. Alternatively, attach a certified photocopy of the Power of Attorney to this form when you return it.
Companies: this form must be signed by a Director jointly with either another Director or a Company Secretary. Where the company has a Sole Director who is also the Sole Company Secretary, this form should be signed by that person. Please indicate the office held by signing in the appropriate place.
STEP 4 LODGEMENT
Proxy forms (and any Power of Attorney under which it is signed) must be received no later
than 48 hours before the commencement of the meeting, therefore by 9:00am (AEST) on Wednesday, 23 September 2015. Any Proxy Form received after that time will not be valid for the scheduled meeting.
Proxy forms may be lodged using the following methods:
To direct your proxy how to vote, mark one of the boxes opposite each item of business. All your securities will be voted in accordance with such a direction unless you indicate only a portion of securities are to be voted on any item by inserting the percentage or number that you wish to vote in the appropriate box or boxes. If you do not mark any of the boxes on a given item, your proxy may vote as he or she chooses. If you mark more than one box on an item for all your securities your vote on that item will be invalid.
By Mail
In Person
Boardroom Pty Limited
GPO Box 3993,
Sydney NSW 2001 Australia
Level 12, 225 George Street, Sydney NSW 2000 Australia
Proxy which is a Body Corporate
Where a body corporate is appointed as your proxy, the representative of that body corporate attending the meeting must have provided an "Appointment of Corporate Representative" prior to admission. An Appointment of Corporate Representative form can be obtained from the company's securities registry.
Attending the Meeting
If you wish to attend the meeting please bring this form with you to assist registration.
Northwest Resources LimitedABN 95 107 337 379
Your Address
This is your address as it appears on the company's share
register. If this is incorrect, please mark the box with an "X" and make the correction in the space to the left. Securityholders sponsored by a broker should advise their broker of any changes. Please note, you cannot change ownership of your securities using this form.
PROXY FORMSTEP 1 APPOINT A PROXY
I/We being a member/s of Northwest Resources Limited (Company) and entitled to attend and vote hereby appoint:
the Chair of the Meeting (mark box)
OR if you are NOT appointing the Chair of the Meeting as your proxy, please write the name of the person or body corporate (excluding the registered shareholder) you are appointing as your proxy below
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chair of the Meeting as my/our proxy at the General Meeting of the Company to be held at the at the offices of DLA Piper, 1 Martin Place, Sydney, New South Wales on Friday, 25 September 2015 commencing at 9.00am (AEST) and at any adjournment of that meeting, to act on my/our behalf and to vote in accordance with the following directions or if no directions have been given, as the proxy sees fit.
The Chairman of the Meeting intends to vote undirected proxies in favour of this resolution.
STEP 2 VOTING DIRECTIONS
* If you mark the Abstain box for a particular item, you are directing your proxy not to vote on your behalf on a show of hands or on a poll and your vote will not
be counted in calculating the required majority if a poll is called.
Resolution 1 Disposal of the Company's main undertaking Resolution 2 Re-election of Mr. Peter Richard as a Director Resolution 3 Re-election of Ms. Ginette Farcell as a Director
STEP 3 SIGNATURE OF SHAREHOLDERS
This form must be signed to enable your directions to be implemented.
For Against Abstain* For Against Abstain* For Against Abstain*
Individual or Securityholder 1
Sole Director and Sole Company Secretary
Securityholder 2
Director
Securityholder 3
Director / Company Secretary
Contact Name…………………………………………….... Contact Daytime Telephone………………………................................ Date / / 2015
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