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TORRENS ENERGY LIMITED
ACN 118 065 704
NOTICE OF GENERAL MEETING
TIME:
10.30am (WST)
DATE:
24 March 2014
PLACE:
Level 31, Allendale Square
77, St George’s Terrace
PERTH WA 6000
This Notice of Meeting should be read in its entirety. If Shareholders are in doubt as to how they should
vote, they should seek advice from their professional advisers prior to voting.
Should you wish to discuss the matters in this Notice of Meeting please do not hesitate to contact the
Company Secretary on +61 8 9268 4250.
CONTENTS
Business of the Meeting (setting out the proposed Resolutions)
3
Explanatory Statement (explaining the proposed Resolutions)
9
Glossary
43
Schedule 1 – Terms of Options
45
Schedule 2 – Statements of Financial Position
47
Schedule 3 – Phoenix Oil and Gas Limited Assets
48
Schedule 4 – Takeover Offer Conditions
50
Proxy Form
IMPORTANT INFORMATIO N
Time and place of Meeting
Notice is given that the Meeting will be held at 10.30am (WST) on 24 March 2014 at:
Level 31, Allendale Square
77, St George’s Terrace
PERTH WA 6000
Your vote is important
The business of the Meeting affects your Shareholding and your vote is important.
Voting eligibility
The Directors have determined pursuant to Regulation 7.11.37 of the Corporations
Regulations 2001 (Cth) that the persons eligible to vote at the Meeting are those who are
registered Shareholders at 10.30am on 22 March 2014.
Voting in person
To vote in person, attend the Meeting at the time, date and place set out above.
Voting by proxy
To vote by proxy, please complete and sign the enclosed Proxy Form and return by the
time and in accordance with the instructions set out on the Proxy Form.
In accordance with section 249L of the Corporations Act, Shareholders are advised that:



each Shareholder has a right to appoint a proxy;
the proxy need not be a Shareholder of the Company; and
a Shareholder who is entitled to cast 2 or more votes may appoint 2
proxies and may specify the proportion or number of votes each proxy is
appointed to exercise. If the member appoints 2 proxies and the appointment
1
does not specify the proportion or number of the member’s votes, then in
accordance with section 249X(3) of the Corporations Act, each proxy may
exercise one-half of the votes.
Shareholders and their proxies should be aware that changes to the Corporations Act
made in 2011 mean 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.
Further details on these changes are set out below.
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 (ie as directed); and

if the proxy has 2 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 (ie 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 (ie 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; or

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.
2
BUSINESS OF THE MEETING
AGENDA
1.
RESOLUTION 1 – APPROVAL FOR CHANGE IN NATURE AND SCALE OF ACTIVITIES
To consider and, if thought fit, to pass, with or without amendment, the following
resolution as an ordinary resolution:
“That, subject to the passing of all of the Transaction Resolutions (as
defined in the Explanatory Statement accompanying this Notice), for
the purpose of Listing Rule 11.1.2 and for all other purposes, approval is
given for the Company to make a significant change in the nature and
scale of its activities as described in the Explanatory Statement
accompanying this Notice.”
Voting Exclusion: The Company will disregard any votes cast on this Resolution by any
person who might obtain a benefit, except a benefit solely in the capacity of a holder of
ordinary securities, if this Resolution is passed, and any of their associates. However, the
Company need not disregard a vote if it is 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.
2.
RESOLUTION 2 – CONSOLIDATION OF CAPITAL
defined in the Explanatory Statement accompanying this Notice) and in
accordance with Section 254H of the Corporations Act and for all other
purposes, the issued capital of the Company be consolidated with
immediate effect on the basis that:
(a)
every 5.55 Shares be consolidated into one (1) Share; and
(b)
all Options on issue be adjusted in accordance with ASX
Listing Rule 7.22,
and where this consolidation results in a fraction of a security being held
by a security holder, the Directors be authorised to round that fraction
up to the nearest whole Share or Option.”
3.
RESOLUTION 3 – CHANGE OF COMPANY NAME
To consider and, if thought fit, to pass the following resolution as a special
resolution:
“That, subject to the passing of all of the Transaction Resolutions and the
successful completion of the Takeover Offer, for the purpose of section
157(1)(a) of the Corporations Act and for all other purposes, approval is
given for the name of the Company to be changed to High Peak Royalties
Limited.”
3
4.
RESOLUTION 4 – PLACEMENT OF SECURITIES UNDER PROSPECTUS
defined in the Explanatory Statement accompanying this Notice), for the
purpose of ASX Listing Rule 7.1 and for all other purposes, approval is given
for the Company to issue, on a post-Consolidation basis (as per Resolution
2):
(a)
up to 16,000,000 Shares, but no less than 8,000,000 Shares, at an
issue price of $0.25 per Share;
(b)
up to an additional 8,000,000 Shares at an issue price of $0.25
per Share, in the event of oversubscription; and
(c)
two (2) attaching Options, each exercisable at $0.35 per Option
before the third anniversary of the date of issue of the relevant
Option, for every five (5) Shares issued,
under the Prospectus and otherwise on the terms and conditions set out in
the Explanatory Statement.”
person who may participate in the proposed issue and a person who might obtain a
benefit, except a benefit solely in the capacity of a holder of ordinary securities, if the
Resolution is passed and any associates of those persons. However, the Company need
not disregard a vote if it is 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.
5.
RESOLUTION 5 – PARTICIPATION OF ANTHONY WOOLES IN PLACEMENT UNDER
PROSPECTUS
purposes of ASX Listing Rule 10.11 and for all other purposes, approval is
given for the Company to issue, on a post Consolidation basis (as per
Resolution 2), up to 8,000,000 Shares to Mr Anthony Wooles (or his
nominees) at an issue price of $0.25 per Share, and two (2) attaching
Options, each exercisable at $0.35 per Option before the third anniversary
of the date of issue of the relevant Option, for every five (5) Shares so
issued, under the Prospectus and otherwise on the terms and conditions set
out in the Explanatory Statement.”
Voting Exclusion Statement: The Company will disregard any votes cast on this Resolution
by Mr Anthony Wooles (and his nominee) and any of their associates. However, the
Company need not disregard a vote if it is 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.
4
6.
RESOLUTION 6 –
OPTIONHOLDERS
PLACEMENT
OF
OPTIONS
TO
UNRELATED
PHOENIX
defined in the Explanatory Statement accompanying this Notice) and
successful completion of the takeover bid by the Company for all of the
shares in Phoenix Oil & Gas Limited, for the purposes of ASX Listing Rule 7.1
and for all other purposes, approval is given for the Company to issue up to
360,000 Options, each exercisable at $0.35 per Option before the third
anniversary of the date of issue of the relevant Option, to Phoenix
Optionholders that are not related parties of the Company, as
consideration for the transfer of their Phoenix Options to the Company, on
the terms and conditions set out in the Explanatory Statement.”
7.
RESOLUTION 7 – ISSUE OF OPTIONS TO ANDREW CARROLL
shares in Phoenix Oil & Gas Limited, for the purposes of ASX Listing Rule
10.11 and for all other purposes, approval is given for the Company to issue
up to 240,000 Options to Mr Andrew Carroll (or his nominee), each
exercisable at $0.35 per Option before the third anniversary of the date of
issue of the relevant Option, on a post-Consolidation basis and otherwise
on the terms and conditions set out in the Explanatory Statement.”
by Andrew Carroll (or his nominee) and any of their associates. However, the Company
need not disregard a vote if it is 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.
8.
RESOLUTION 8 – ISSUE OF OPTIONS TO GEOFFREY KING
up to 80,000 Options to Geoffrey King (or his nominee), each exercisable at
5
$0.35 per Option before the third anniversary of the date of issue of the
relevant Option, on a post-Consolidation basis and otherwise on the terms
and conditions set out in the Explanatory Statement.”
by Geoffrey King (or his nominee) and any of their associates. However, the Company
9.
RESOLUTION 9 – ISSUE OF OPTIONS TO NIGEL HARTLEY
80,000 Options to Nigel Hartley (or his nominee), each exercisable at $0.35
per Option before the third anniversary of the date of issue of the relevant
Option, on a post-Consolidation basis and otherwise on the terms and
conditions set out in the Explanatory Statement.”
by Nigel Hartley (or his nominee) and any of their associates. However, the Company
10.
RESOLUTION 10 – ISSUE OF BROKER OPTIONS TO ARGONAUT
2,710,757 Options to Argonaut (or its nominee) on the terms and conditions
set out in the Explanatory Statement.”
6
11.
RESOLUTION 11 – PLACEMENT OF SECURITIES TO AGL IN RELATION TO TAKEOVER
OFFER
13,916,950 Shares to AGL (or its nominee) on a post Consolidation basis
and otherwise on the terms and conditions set out in the Explanatory
Statement.”
12.
RESOLUTION 12 – ELECTION OF DIRECTOR – GEOFFREY KING
defined in the Explanatory Statement accompanying this Notice), the
Company acquiring a relevant interest in at least 90% of Phoenix Shares on
issue under the Takeover Offer and the Takeover Offer becoming
unconditional or completing, for the purpose of clause 11.11 of the
Constitution and for all other purposes, Geoffrey King, being eligible and
having consented to act, be elected as a director of the Company on
and from the date of successful completion of the Takeover Offer.”
13.
RESOLUTION 13 – ELECTION OF DIRECTOR – ANDREW CARROLL
Constitution and for all other purposes, Andrew Carroll, being eligible and
7
14.
RESOLUTION 14 – ELECTION OF DIRECTOR – NIGEL HARTLEY
Constitution and for all other purposes, Nigel Hartley, being eligible and
15.
RESOLUTION 15 – ELECTION OF DIRECTOR – JOHN THEOBALD
“That, subject to the passing of all of the Transaction Resolutions
(as
Constitution and for all other purposes, John Theobald, being eligible and
16.
RESOLUTION 16 – REPLACEMENT OF CONSTITUTION
To consider and, if thought fit, to pass the following resolution as a special
resolution:
purposes of section 136(2) of the Corporations Act and for all other
purposes, approval is given for the Company to repeal its existing
Constitution and adopt a new constitution in its place in the form as signed
by the chairman of the Meeting for identification purposes, with effect
from the date the takeover bid by the Company for all of the shares in
Phoenix Oil & Gas Limited becomes unconditional.”
Dated: 12 February 2014
By order of the Board
Rob Hodby
Company Secretary
8
EXPLANATORY STATEMENT
This Explanatory Statement has been prepared to provide information which the
Directors believe to be material to Shareholders in deciding whether or not to pass the
Resolutions.
1.
1.1
GENERAL
Overview
On 20 December 2013, the Company announced its intention to merge with
unlisted Australian public company Phoenix Oil and Gas Limited (ACN 134 665
366) (Phoenix), which holds an attractive portfolio of oil & gas royalty interests
across Australia (Merger).
The Merger is proposed to be effected by means of an all scrip off market
takeover offer by the Company to acquire all of Phoenix’s fully paid ordinary
shares (Phoenix Shares) on the basis of one (1) Share for every one (1) Phoenix
Share held (on a post-Consolidation basis, as defined below) (Takeover Offer).
The Takeover Offer will be subject to a number of defeating conditions, including
a minimum acceptance level of 90% of all Phoenix Shares on issue as at the
close of the Takeover Offer, the Company obtaining necessary shareholder
approvals for the Merger (including under Chapter 11 of the ASX Listing Rules), a
consolidation of the Company’s securities on a 1:5.55 basis (Consolidation),
securing at least $4 million under a full form prospectus capital raising (Capital
Raising) and ASX conditional approval being obtained for the securities of the
Company to be re-admitted to trading following re-compliance with Chapters 1
and 2 of the ASX Listing Rules.
If the conditions to the Takeover Offer are not satisfied or waived before the end
of the offer period under the Takeover Offer, including if any of the Transaction
Resolutions is not passed, the Merger will not proceed. See further Section 1.11.
The full conditions of the Takeover Offer are set out in Schedule 4.
The full conditions of the Takeover Offer are also set out in the Bidder’s Statement
issued by the Company in connection with the Takeover Offer and lodged with
ASIC on or about 17 February 2014.
This Notice of Meeting sets out the Resolutions necessary to complete the
Merger and associated transactions. Each of the Resolutions is conditional upon
the approval by Shareholders of each of the Transaction Resolutions. If any of
the Transaction Resolutions is not approved by Shareholders, all of the
Resolutions will fail and the Merger will not be completed. A summary of the
Resolutions is as follows:
(a)
as the Company is currently an upstream geothermal resource explorer,
the Merger with Phoenix, if successfully completed, will represent a
significant change in the nature and scale of the Company’s operations
to a natural resources royalties company, for which Shareholder
approval is required under ASX Listing Rule 11.1.2 (Resolution 1);
(b)
the Company will need to re-comply with Chapters 1 and 2 of the ASX
Listing Rules and, to achieve this, must:
(i)
undertake a 1:5.55 Consolidation of its Shares and Options, for
which Shareholder approval is being sought under Resolution 2.
9
If approved, the Consolidation will take effect following the
Meeting in accordance with the ASX timetable; and
(ii)
complete the Capital Raising, with:
(A)
16 million Shares offered at an issue price of $0.25 each
to raise up to $4 million, with a minimum subscription
level of $2 million;
(B)
an additional 8 million Shares offered at an issue price
of $0.25 each, in the event of oversubscriptions, to raise
up to an additional $ 2 million; and
(C)
two (2) attaching Options to be granted for every five
(5) Shares issued under the Capital Raising, exercisable
at $0.35 each prior to the third anniversary of the issue
date of the relevant Option and otherwise on the terms
set out in Schedule 1,
in each case on a post-Consolidation basis. Shareholder
approval for the Capital Raising is being sought under
Resolution 4;
(c)
the Company’s Chairman, Anthony Wooles, has conditionally agreed to
subscribe for, or procure subscriptions for, $2 million worth of Shares and
attaching Options under the Capital Raising, subject to obtaining
Shareholder approval, which is being sought under Resolution 5;
(d)
subject to agreement with individual Phoenix Optionholders, and
Shareholder approval under Resolutions 6, 7, 8 and 9, the Company
intends that, as consideration for the transfer of their respective Phoenix
Options to the Company, Phoenix Optionholders will be issued with
Options exercisable at $0.35 (on a post-Consolidation basis) each prior
to the third anniversary of the issue date of the relevant Option (and
otherwise on the same terms as the Options to be issued under the
Prospectus, as set out in Schedule 1). The existence of third party
Phoenix Optionholders may, after completion of the Merger, result in
third parties acquiring a minority interest in Phoenix. In those
circumstances (assuming the Company has acquired 90% of the
Phoenix Shares on issue), the Company currently intends to compulsorily
acquire the outstanding Phoenix Options in accordance with the
Corporations Act. If the Company does not acquire 90% of the Phoenix
Shares on issue under the Takeover Offer, Phoenix will not be a whollyowned subsidiary of the Company, which may impact on the conduct
of the operations of Phoenix (although this impact will depend upon the
Company’s ultimate level of ownership of Phoenix);
(e)
the Company has entered into a mandate agreement with Argonaut
under which the Company has appointed Argonaut as its financial and
corporate advisor in relation to the Takeover Offer and lead manager in
relation to the Capital Raising (Mandate). Under the terms of the
Mandate, Argonaut has the right to subscribe for that number of
Options that equals 1.5% of the Company’s issued Shares after
completion of the Takeover Offer and Capital Raising (Broker Options).
Resolution 10 seeks Shareholder approval of the issue of the Broker
Options to Argonaut;
(f)
AGL has an existing right to subscribe for up to 9.99% of new issues of
10
Torrens securities (Top Up Right), including the Takeover Offer, the
Capital Raising, the issue of Options to Phoenix Optionholders, the issue
of the Broker Options. AGL has not indicated, as at the date of this
Notice, whether it intends to exercise its Top Up Right in respect of any of
these new issues. If AGL exercises its Top Up Right in respect of the
Capital Raising, Torrens will issue AGL (or its nominee) with Shares and
attaching Options as a priority under the Capital Raising (Resolution 4). If
AGL exercises its Top Up Right in respect of the Takeover Offer as
detailed in this Notice, the Company intends to issue Shares to AGL (or
its nominee) in accordance with Resolution 111;
(g)
on successful completion of the Merger, the Company has agreed,
subject to Shareholder approval, to appoint 4 directors nominated by
Phoenix to the Board (Resolutions 12-15), and to replace its existing
Constitution (Resolution 16); and
(h)
the Company intends to change its name to High Peak Royalties Limited
on completion of the Merger, with Shareholder approval being sought
for this change under Resolution 3.
The Company does not require Shareholder approval for the issue of Shares
under the Takeover Offer.
Once the Merger is completed, the merged group (Merged Group) will be a
leading ASX listed petroleum royalties company and will focus on delivering
strong Shareholder value by utilising the knowledge and expertise of its strong
Board and management team to expand its royalty portfolio across the natural
resources sector.
1.2
Merged Group Board
Upon completion of the Merger, Torrens’ Directors David Eiszele and Winton
Willesee will resign from the Board, while fellow Torrens Directors Anthony Wooles
and Howard McLaughlin will remain on the Board and will be joined by the four
nominees of Phoenix. Steven Larkin, the current CEO of Phoenix, will become
CEO of the Merged Group.
The qualifications and biographies of the Merged Group’s Board are set out in
Section 11 of this Explanatory Statement.
1.3
Company’s Existing Activities
The Company listed on the ASX on 30 March 2007 as an upstream geothermal
resource explorer, focused on discovery, delineating and testing the viability of
geothermal resources. The Company currently holds a number of Geothermal
Exploration Licences over its projects located in South Australia. In recent times,
the Company has been investigating new opportunities in the oil and gas sector.
1.4
Overview of Phoenix Oil and Gas Limited
Phoenix is an unlisted Australian public company headquartered in Sydney.
Phoenix was founded in December 2008 with the acquisition of its first royalty
interests and has since successfully expanded its portfolio to include royalties
over 18 oil & gas projects.
If AGL exercises its Top Up Right in respect of Options issued to Liberty, Phoenix Optionholders and Argonaut
(Resolution 3 and Resolutions 6 to 10), the Company intends to issue any Options under its ASX Listing Rule 7.1
placement capacity rather than seeking Shareholder approval in this Notice.
1
11
Phoenix’s royalty portfolio covers production, development and exploration
projects and importantly features high quality project operators, including some
of the world’s leading oil & gas companies.
In July 2012, Phoenix attracted well regarded London Stock Exchange listed
international royalty group Anglo Pacific as a strategic 10% shareholder.
Production Royalties
Phoenix has royalties covering three producing projects:
(a)
Longtom Gas Condensate Field (VIC L29), Gippsland Basin, offshore
Victoria
(b)
Peat Gas Field (PL 101), Bowen Basin, in south-east Queensland
(c)
Tintaburra Oil Field (ATP 299P), Cooper/Eromanga Basin, south-west
Queensland
Phoenix also expects another project (Surprise Oil Field) over which it has a
royalty to commence production within the next six months.
Development Royalties
Phoenix holds royalties covering two large highly prospective CSG development
permits majority owned and operated by QGC/BG and which have the
potential to generate sizeable long term earnings with development of
QGC/BG’s Gladstone LNG Project:
(a)
PL 171, Surat Basin, south-east Queensland
(a)
ATP 574, Surat Basin, south-east Queensland
Exploration Royalties
Phoenix also holds a strategic suite of royalties covering prospective areas for oil
or gas including:
(a)
Browse Basin, offshore Western Australia;
(b)
Gippsland Basin (Bass Strait), offshore Victoria;
(c)
Amadeus Basin, Northern Territory; and
(d)
Seychelles, Indian Ocean.
Exploration Permits
In addition, Phoenix has two exploration permits (one under application) in the
Amadeus Basin in the Northern Territory which it is discussions to divest in
exchange for royalty interests to further expand its royalty portfolio.
A summary of Phoenix’s royalty interests is set out in Schedule 3 of this
Explanatory
Statement
and
further
information
is
available
at
www.phoenixoilandgas.com.au.
12
1.5
Effect on Capital Structure
On the basis the Company completes the Merger and associated transactions
on the terms set out above, the Company’s capital structure will be as follows
(assuming 100% acceptance of the Takeover Offer, all Phoenix Optionholders
accept the Company’s offer for their Phoenix Options, AGL fully exercises its Topup Right in respect of the Takeover Offer, Phoenix Optionholder Options and
Broker Options, all of the Shares and Options the subject of the Resolutions being
issued and no other Shares or Options are issued by the Company).
Shares
Options
Current Issued Capital
96,616,357
2,150,0001
Post Consolidation Issued Capital
17,408,353
387,3871
125,391,862
-
24,000,000
9,600,0003
Phoenix Optionholders (Resolutions 6, 7, 8 and 9)
-
760,0003
Broker Options to Argonaut (Resolution 10)4
-
2,502,0033
13,916,950
-
AGL Top Up Right (Phoenix Optionholders)5
-
84,3513
AGL Top-Up Right (Broker Options)5
-
300,8613
Total Post Merger & Capital Raising
180,717,165
13,843,356
Takeover Offer
Capital Raising (Resolutions 4 and 5)2
AGL Top Up Right (Takeover Offer) (Resolution 11)
Notes:
1.6
1.
Unlisted options exercisable at $0.15 each expiring 30 June 2015 (being $0.833 each post
Consolidation).
2.
This capital table assumes maximum subscription under the Capital Raising (being $6 million worth of
Shares and attaching Options, including $2 million in oversubscriptions).
3.
Exercisable at $0.35 each prior to the third anniversary of its date of issue (issued post Consolidation).
The Company will apply for quotation of these Options on the ASX. The full terms and conditions of
these Options are set out in Schedule 1.
4.
This table assumes that AGL does not take up Shares pursuant to the AGL Top-Up Right. If AGL does
take up Shares under the Top-Up Right, the number of Options to be issued to Argonaut will also
increase. Refer to Section 9 for further details of the issue of Options to Argonaut. Under Resolution
10, the Company is seeking Shareholder approval for the maximum number of Options which may
be issued to Argonaut, being 2,710,757, if AGL exercises its Top-Up Right in respect of all Shares to
which it is entitled.
5.
If AGL exercises its Top-up Right in respect of the issue of Options to Argonaut or Phoenix
Optionholders, the Company currently intends to issue these Options out of its 15% annual placement
capacity.
Pro Forma Statement of Financial Position
Set out in Schedule 2 is an unaudited statement of financial position of the
Company as at 31 December 2013, together with a pro forma statement of
financial position of the Merged Group following completion of the Merger and
associated transactions as set out above.
13
1.7
Indicative timetable
An indicative timetable for completion of the Merger and associated
transactions is set out below:
Event
Date
Execution of Binding Agreement and Announcement of
Merger
20 Dec 2013
Lodgement of Bidder’s Statement
17 Feb 2014
Prospectus lodged with ASIC
17 Feb 2014
Torrens Bidder's Statement and Phoenix Target’s
Statement sent to Phoenix Shareholders
20 Feb 2014
Dispatch Notice of Meeting seeking approval for Merger
20 Feb 2014
Meeting to approve Merger and Change in Nature and
Scale of Activities and associated transactions
24 Mar 2014
Suspension of Torrens Shares from trading on ASX at the
opening of trading
24 Mar 2014
Takeover Offer closes and Capital Raising under the
Prospectus closes
1 Apr 2014
First day for Company to send notice to each holder of
the change in their details of holdings as a result of
Consolidation
2 April 2014
Completion of Merger and issue of Shares under Capital
Raising
7 Apr 2014
Last day for the Company to send notice to each holder
of the change in their details of holdings as a result of
Consolidation
8 Apr 2014
Anticipated date the suspension of trading is lifted and
securities commence trading again on ASX
14 Apr 2014
Please note this timetable is indicative only and the Board reserves the right to
amend the timetable as required. A detailed timetable in relation to the
Consolidation is provided in Section 1.1 of this Explanatory Statement.
1.8
Advantages of the Takeover Offer
The Directors are of the view that the following non-exhaustive list of advantages
may be relevant to a Shareholder’s decision on how to vote on the Transaction
Resolutions:
(a)
the Takeover Offer represents an attractive investment opportunity for
the Company to change its business focus to natural resource royalties;
(b)
the Takeover Offer will provide the Company an attractive portfolio of
oil and gas royalties covering some of Australia’s leading oil and gas
basins;
(c)
the Takeover Offer provides the Company attractive oil and
gas commodity price and project exposure without the typical capital
and operating expenditure risks borne by project owners;
(d)
the Takeover Offer will enable the Company to operate a scalable
business model with low, relatively fixed overheads and significant
operational leverage;
14
1.9
(e)
the Takeover Offer will expand and complement the existing Board and
management expertise of the Company;
(f)
the Takeover Offer is considered to provide the Company an attractive
current value proposition and strong future upside as key royalties
achieve key milestones and as production draws nearer; and
(g)
the Takeover Offer represents an attractive opportunity for the
Company to replicate the success of other international listed royalty
companies by becoming the leading ASX listed royalty company with
strong growth prospects.
Disadvantages of the Takeover Offer
The Directors are of the view that the following non-exhaustive list of
disadvantages may be relevant to a Shareholder’s decision on how to vote on
the Transaction Resolutions:
1.10
(a)
the Company will be changing the nature and scale of its activities to
include natural resource royalties, which may not be consistent with the
objectives of all Shareholders;
(b)
the acquisition of Phoenix will result in the issue of significant Shares and
Options to Phoenix Shareholders and further Shares and Options are
proposed to be issued pursuant to Resolutions 4 to 11, which if
completed, will have a dilutionary effect on the holdings of
Shareholders;
(c)
future outlays of funds from the Company will be required for the
operations of Phoenix; and
(d)
there are additional risk factors associated with the change in nature of
the Company’s activities resulting from the Merger with Phoenix. Some
of the key risks are summarised in Section 1.10 below.
Risk Factors
Shareholders should be aware there are risks associated with the Merger and
associated transactions. Based on the information available, a non-exhaustive
list of risk factors that the Company will be subject to should the Merger be
successful is set out below.
(a)
Risks Relating to the Merger
(i)
Dilution Risk
Existing Shareholders will be substantially diluted as a result of
the issue of Shares under the Takeover Offer, Capital Raising
and associated transactions. The Company will also issue a
substantial number of Options which, if exercised, will further
dilute existing Shareholders.
(ii)
Sale of Shares
If the Transaction is successfully completed, the Company will
have issued a significant number of new Shares to Phoenix
Shareholders pursuant to the Takeover Offer and new Options
to Phoenix Optionholders (amongst other parties). Some of the
15
Phoenix Shareholders, Phoenix Optionholders and others that
receive Shares and Options pursuant to the Transaction may
not intend to continue to hold their Shares and/or Options and
may wish to sell them on ASX (subject to any applicable escrow
period). There is a risk that an increase in the amount of people
wanting to sell Shares and Options may adversely impact on
the market price of the Company’s securities.
There can be no assurance that there will be, or continue to be,
an active market for Shares or that the price of Shares will
increase. Similarly, there can be no assurance that there will be
an active market for the new Options to be issued pursuant to
the Capital Raising and to Phoenix Optionholders, Argonaut
and (if applicable) AGL (once quoted) or that the price of new
Options will increase.
The expected capital structure of the Company
completion of the Transaction is set out in Section 1.1.
(iii)
after
Re-Quotation of Shares on ASX
The Transaction constitutes a significant change in the nature
and scale of the Company’s activities and the Company needs
to re-comply with Chapters 1 and 2 of the ASX Listing Rules as if
it were seeking admission to the official list of ASX. There is a risk
that the Company may not be able to meet the requirements
of the ASX for re-quotation of its Shares on the ASX. Should the
Company not successfully re-comply with those requirements,
there is a risk that existing Shareholders may be prevented from
trading their Shares in the future until such time as it does recomply with Chapters 1 and 2 of the ASX Listing Rules.
(iv)
Acquisition of Less than 90% of Phoenix Shares
It is possible that the Company could acquire a relevant interest
in less than 90% of all Phoenix Shares on issue under the
Takeover Offer (in the event that the Company waives, with the
prior written consent of Phoenix, the 90% minimum acceptance
condition to the Takeover Offer). The existence of third party
minority interests in Phoenix Shares may have an impact on the
operations of Phoenix, although this impact will depend upon
the ultimate level of the Company’s ownership in Phoenix.
(v)
Additional Requirements for Capital
The capital requirements of the Merged Group depend on
numerous factors. Depending on the ability of the Merged
Group to generate income from its operations, the Merged
Group may require further financing in addition to amounts
raised under the Capital Raising. Any additional equity
financing will dilute Shareholders, and debt financing, if
available, may involve restriction on financing and operating
activities. If the Merged Group is unable to obtain additional
financing as needed, it may be required to reduce the scope
of its operations and scale back its exploration programme (as
the case may be).
16
(b)
Risks relating to Phoenix’s operations
(i)
Contractual Risk
(A)
Counterparty Risk
Phoenix’s main assets comprise royalty interests in
various petroleum permits that are created by
contract. The value of Phoenix’s interests in those
permits is dependent on:
(I)
the holders of the underlying tenements
commencing and/or continuing production on
a commercial basis; and
(II)
the counterparties to those royalty contracts
paying royalties to Phoenix in accordance with
their contractual obligations and remaining
solvent,
neither of which are within the control of
Phoenix. A delay or reduction in anticipated
royalty revenue may adversely affect the
value of that royalty interest.
Any cessation of or delay in production and/or
failure of a counterparty to pay royalties as
and when due, or otherwise comply with their
contractual obligations (such as ensuring that
any transferee of a petroleum permit
discharges its obligation to pay its share of any
royalty to Phoenix), could also have a
significant adverse impact on Phoenix’s
revenue
and
ultimately
the
financial
performance of the Merged Group and the
value of the Company’s securities.
As at the date of this Notice of Meeting, the
Company has no reason to believe that
production under any of the petroleum permits
in which it has a royalty interest will be
commenced or continued other than on a
commercial basis or that any of the
counterparties it has contracted with will not
meet and satisfy their obligations under
relevant royalty contracts.
However, the
manner in which the properties over which
Phoenix has royalty interests are exploited is
determined by the relevant owners and
operators, with no input required from Phoenix.
The interests of the owners and operators and
Phoenix in relation to the development of the
relevant properties are also not always
aligned.
In the event that any of Phoenix’s
counterparties become insolvent, it may be
difficult for Phoenix to enforce its rights under
17
the relevant agreements. In most cases,
Phoenix’s right to payment must be enforced
by a claim in contract without the protection
of any security interest in property over which
Phoenix may take control. As such, if any of
Phoenix’s counterparties cease to
be
financially viable, this may negatively impact
the value of Phoenix’s royalty interests and the
ongoing financial performance of the Merged
Group.
(B)
Chain of Title Risk
While Phoenix seeks to confirm the existence, validity,
enforceability and geographic extent of the royalties it
acquires, there can be no assurance that disputes over
these and other matters will not arise. Disputes could
also arise challenging, among other things, the
existence or geographic extent of the royalty, third
party claims to the same royalty asset or to the
property on which Phoenix has a royalty, rights of the
operator or third parties in or to the royalty, methods for
calculating the royalty, the obligation of an operator to
make royalty payments and defects in the royalty
agreement itself. Further even in those jurisdictions
where there is a right to record or register royalties in a
Titles Register, such registrations may not necessarily
provide any protection to the royalty holder.
The defence of a dispute or claim of this nature may be
protracted and costly and, if successful, could result in
the loss of or a reduction in Phoenix’s interest in the
royalties that it has acquired. There is no assurance that
Phoenix will have a right of claim against the grantor of
the relevant royalty in these circumstances or that any
such right, if available under the relevant royalty
agreement, can be successfully enforced. Such
circumstances may negatively impact the value of
Phoenix’s assets and its ongoing financial performance.
(C)
Royalty Risk
Phoenix’s royalty interests allow the holder of the
underlying permit to deduct certain agreed operating
costs, taxes and expenses from the royalty otherwise
payable to Phoenix. Phoenix has no control over the
incurrence of these costs and is unable to predict the
magnitude of such costs. An increase in the costs
incurred by the operators of the relevant permits is likely
to result in a reduction in the royalty revenue received
by Phoenix. It is also possible that these costs may
exceed the amount of royalty revenue otherwise
payable to Phoenix. As such, cost pressures on permit
holders may adversely affect the overall revenue
generated by Phoenix’s royalty interests and in turn,
have a material and adverse effect on the profitability
of the Merged Group.
18
(ii)
Petroleum Permit Title Risks
(A)
Royalties
The various petroleum permits in which Phoenix holds a
royalty interest are not generally owned or operated by
Phoenix.
Should any operator of a permit fail to comply with the
conditions laid down by the government or under any
applicable laws in respect of the permit, this could
result in loss of title to the permit, and Phoenix could
lose its royalty interest in the relevant permit. While
Phoenix may have some avenues of recourse under
contract or in law, any loss of title to the relevant permit
will likely result in economic loss to Phoenix and could
adversely affect the assets, operations and financial
performance of the Merged Group.
An operator may seek a restructuring of a royalty
where required to ensure compliance with the
conditions of the underlying permit. This may require
Phoenix to renegotiate the terms of its royalty, including
the early divestment of part of its interest in a royalty.
In addition, Phoenix holds royalty interests in a number
of jurisdictions where there is a risk that third parties
could challenge, or claim an interest in, the petroleum
permits. If such claims are successful, this could
adversely affect Phoenix’s royalty interests and
ultimately have a significant adverse impact on the
financial performance of the Merged Group and the
value of the Company’s securities.
(B)
Exploration Permits
Interests in exploration permits in Australia are governed
by the respective State or Territory legislation and are
evidenced by the grant of the permit. Each permit is for
a specific term and carries with it annual expenditure
and reporting commitments, as well as other conditions
requiring compliance. Consequently, Phoenix could
lose title to, or its interest in, its Exploration Permits if the
conditions are not met or if insufficient funds are
available to meet expenditure commitments.
It is also possible that, in relation to permits which
Phoenix has an interest in or will in the future acquire
such an interest, there may be areas over which
legitimate common law native title rights of Aboriginal
Australians exist. If native title rights do exist, the ability
of Phoenix to gain access to permits (through obtaining
consent of any relevant landowner), or to progress from
the exploration phase to the development and
extraction phases of operations may be adversely
affected. The Board will closely monitor the potential
effect of native title claims involving tenements in
which Phoenix has or may have an interest.
19
(C)
Unitisation risk
The Longtom Gas Condensate Field (VIC L29) in the
Gippsland Basin in offshore Victoria is one of three
producing projects over which Phoenix has royalties. As
the Longtom field spans multiple tenements (some of
which Phoenix does not have a royalty interest), the
Longtom field may be subject to unitisation
In the case of exploration projects involving multiple
permit holders (such as the Longtom project), the
permit holders may be required to share production in
accordance with the requirements of the relevant
regulatory authorities. Phoenix, as a holder of a royalty
interest in some, but not all, of the tenements
comprising the Longtom project, may be subject to the
terms and conditions of the unitisation agreement
between the permit holders. This may adversely impact
the value of Phoenix’s interest in the Longtom project
unless Phoenix is able to take part in unitisation
negotiations so as to ensure the volume of production
over which it has a royalty interest is not materially
diminished.
(iii)
Exploration Permit Risks
Oil and gas exploration permits are subject to periodic review
and renewal.
In particular, there is no guarantee that
applications for future exploration permits or production permits
will be approved and/or registered, or granted by the relevant
regulatory authority, nor that the conditions upon which such
applications may be approved or granted will be favourable to
the applicant.
Government authorities’ review, renewal and transfer
conditions may include increased expenditure and work
commitments or compulsory relinquishment of areas of the
exploration permits in, or in respect of which, Phoenix has an
interest. The imposition of new conditions or the inability of the
permit holder (whether this be Phoenix or a third party permit
holder, in the case of a permit over which Phoenix has a royalty
interest only) to meet such conditions may adversely affect the
operations of Phoenix and/or the value of Phoenix’s Royalty
Interests (as the case may be) and consequently, the financial
position and/or performance of the Merged Group.
(iv)
Oil and gas price fluctuations and currency volatility
The demand for, and price of, oil and natural gas is highly
dependent on a variety of factors, including international
supply and demand, the level of consumer product demand,
weather conditions, the price and availability of alternative
fuels, actions taken by governments and international cartels,
and global economic and political developments.
International oil and gas prices have fluctuated widely in recent
years and may continue to fluctuate significantly in the future.
Fluctuations in oil and gas prices may have a material adverse
20
effect on Phoenix’s business, financial condition and results of
operations. In particular any fall in oil price will reduce any
revenue that may derive from the Royalties. Phoenix is currently
unhedged against, and thus fully exposed to, changes in
commodity prices.
Oil is principally sold throughout the world in US dollars. As a
result, any significant increase in the Australian dollar against
the US dollar will decrease the amount of Australian dollars
received by Phoenix through its oil and gas assets and could
have a materially adverse effect on the financial position
and/or performance of the Merged Group.
(v)
Oil and Gas Exploration
By its nature, the businesses of oil and gas exploration contain
elements of significant risk with no guarantee of success.
Ultimate and continuous exploration success is dependent on
many factors such as:
(A)
access to adequate capital;
(B)
the design and construction of efficient exploration
programs and expenditure budgets;
(C)
securing and maintaining title to interests;
(D)
obtaining consents and approvals necessary for the
conduct of oil and gas exploration; and
(E)
access to competent exploration and operational
management and prudent financial administration,
including the availability and reliability of appropriately
skilled and experienced employees, contractors and
consultants.
Industry exploration risks include fire, explosions, unanticipated
reservoir problems which may affect field production
performance, industrial disputes, unexpected shortages or
increases in the costs of consumables, spare parts, plant and
equipment, mechanical failure or breakdown, blow outs, pipe
failures and environmental hazards such as accidental spills or
leakage of liquids, gas leaks, ruptures, discharges of toxic gases
or geological uncertainty (such as lack of sufficient sub-surface
data from correlative well logs and/or formation core analyses.
The occurrence of any of these risks could result in legal
proceedings against the Merged Group and substantial losses
to the Merged Group due to injury or loss of life, damage to or
destruction of property, natural resources or equipment,
pollution or other environmental damage, clean-up
responsibilities, regulatory investigation, and penalties or
suspension of operations. Damage occurring to third parties as
a result of such risks may give rise to claims against the Merged
Group.
Drilling activities carry risk as such activities may be curtailed,
delayed or cancelled as a result of weather conditions,
mechanical difficulties, shortages or delays in the delivery of drill
21
rigs or other equipment. In addition, drilling and operations
include reservoir risk such as the presence of shale laminations
in the otherwise homogeneous sandstone porosity.
There is no assurance that any exploration on current or future
interests will result in the discovery of an economic deposit of oil
or gas. Even if an apparently viable deposit is identified, there is
no guarantee that it can be economically developed.
(vi)
Environmental Risks
The operations and proposed activities of Phoenix are subject
to State and Federal laws and regulation concerning the
environment. As with most exploration projects and extraction
operations, any exploration activities that Phoenix conducts
(and any third parties’ activities in which Phoenix has an
interest) are expected to have an impact on the environment,
particularly if advanced exploration or mine development
proceeds.
Non-compliance with applicable environmental laws and
regulations could result in pecuniary penalties, criminal
sanctions as well as ‘cease work’ orders. The failure of third
parties permit holders to comply with such laws and regulations
could have an adverse impact on the value of Phoenix’s
Royalties, to the extent Phoenix has a royalty interest in the
relevant permits.
It is Phoenix’s intention to conduct its activities to the highest
standard of environmental obligation, including compliance
with all environmental laws. However, Phoenix will not be in a
position to ensure that third parties comply with such
obligations. Phoenix’s present exploration activities are limited
and in their early stages. Therefore, the Directors do not
anticipate Phoenix’s activities and operations to cause
significant environmental damage.
1.11
What if the Takeover Offer does not succeed?
If the conditions to the Takeover Offer are not satisfied or waived before the end
of the Takeover Offer period, including if the Transaction Resolutions are not
passed, the Merger with Phoenix will not proceed, and the Company will apply
to the ASX to have its suspension lifted and quotation of its securities reinstated
as soon as possible.
If the Takeover Offer does not proceed, the Company will continue in its current
form, including the maintenance of its geothermal tenements at a pace
appropriate for the sector as a whole as part of a long term geothermal strategy
to unlock the value of these assets. The Company will also likely investigate new
opportunities in the oil and gas sector.
1.12
Conditionality of Resolutions
Each of the Resolutions in this Notice of Meeting is conditional upon the
approval by Shareholders of each of the Transaction Resolutions. Should any of
the Transaction Resolutions not be approved, the Company will not proceed
with the Takeover Offer or the Merger with Phoenix. The Company would then
immediately request that ASX remove the suspension order and allow the
22
Company to resume trading on the ASX in its current form.
1.13
Intentions of the Company
The Company reserves its right to declare the Takeover Offer free from the 90%
minimum acceptance condition (and any other condition) to the Takeover
Offer, provided that Phoenix’s consent is required for a waiver of:
(a)
the 90% minimum acceptance condition;
(b)
the condition requiring the Company to raise a minimum of $4,000,000
under the Capital Raising;
(c)
the condition requiring that the Transaction Resolutions are passed; or
(d)
the condition requiring the receipt of written approval from ASX that it
will readmit the Company’s securities to trading on the ASX, subject to
such conditions as may be imposed by the ASX.
However, the Company has not decided at this stage whether it will free the
Takeover Offer from the 90% minimum acceptance condition (or any other
condition) to the Takeover Offer.
1.14
Directors’ Recommendation
No Director currently has any interest in Phoenix Shares or Phoenix Options. The
Directors recommend that Shareholders vote in favour of each of the Resolutions
(including the Transaction Resolutions) and consider the Takeover Offer to be
beneficial to Shareholders because of the advantages set out in Section 1.8.
2.
2.1
RESOLUTION 1 – APPROVAL FOR CHANGE IN NATURE AND SCALE OF ACTIVITIES
General
Resolution 1 seeks approval from Shareholders for a change in the nature and
scale of the activities of the Company to expand the focus of the Company’s
current activities into natural resources royalties by effecting the Merger with
Phoenix by way of the Takeover Offer.
As outlined in Section 1.1 of this Explanatory Statement, the Company has
agreed to make an off-market takeover bid for all of the Phoenix Shares on issue,
subject to various conditions.
A description of Phoenix and its operating business is outlined in Section 1.4
above.
2.2
ASX Listing Rule 11.1
ASX Listing Rule 11.1 provides that where an entity proposes to make a significant
change, either directly or indirectly, to the nature and scale of its activities, it
must provide full details to ASX as soon as practicable and comply with the
following:
(a)
provide to ASX information regarding the change and its effect on
future potential earnings, and any information that ASX asks for;
(b)
if ASX requires, obtain the approval of holders of its shares and any
requirements of ASX in relation to the notice of meeting; and
23
(c)
if ASX requires, meet the requirements of Chapters 1 and 2 of the ASX
Listing Rules as if the entity were applying for admission to the official list
of ASX.
ASX has indicated to the Company that the change in the nature and scale of
the Company’s activities as a result of the Takeover Offer requires the Company
in accordance with ASX Listing Rule 11.1.2 to obtain Shareholder approval and
comply with any requirements of ASX in relation to the Notice of Meeting.
ASX has also indicated that this change in the nature and scale of the
Company’s activities will require the Company to re-comply with the admission
requirements set out in Chapters 1 and 2 of the ASX Listing Rules in accordance
with ASX Listing Rule 11.1.3.
3.
RESOLUTION 2 – CONSOLIDATION OF CAPITAL
3.1
Background
The Directors are seeking Shareholder approval to consolidate the number of
Shares on issue on a 1:5.55 basis and otherwise on the terms and conditions set
out in this Section 3, and to adjust the terms and conditions of all Options on
issue in light of the Consolidation in accordance with ASX Listing Rule 7.22.1. The
Consolidation is required to ensure the capital of the Company is appropriate for
the Company to re-comply with the requirements of Chapters 1 and 2 of the
ASX Listing Rules.
Section 254H of the Corporations Act provides that a company may, by a
resolution passed in a general meeting of shareholders, convert all or any of its
shares into a larger or smaller number of shares.
If Resolution 2 is passed, the total number of Shares and Options on issue will be
reduced in accordance with the table set out in Section 1.1. Further, the
exercise price of the Options on issue as at the time the Consolidation becomes
effective will increased by a multiple of 5.55.
As from the effective date of this Resolution (being the date on which the
Company advises the ASX that this Resolution has been approved by
Shareholders, assuming it is approved), all holding statements for Shares and
Options will cease to have any effect, except as evidence of entitlement to a
certain number of post-Consolidation Shares and Options. After the
Consolidation becomes effective, the Company will arrange for new holding
statements to be issued to Shareholders and Optionholders.
3.2
Fractional entitlements and taxation
Not all Shareholders and Optionholders will hold that number of Shares and
Options which can be evenly divided by 5.55. Where a fractional entitlement
occurs, the Company will round that fraction up to the nearest whole Share or
Option.
It is not considered that any taxation consequences will exist for Shareholders or
Optionholders arising from the Consolidation. However, Shareholders and
Optionholders are advised to seek their own tax advice on the effect of the
Consolidation. Neither the Company nor any member of the Board (or the
Company’s advisers) accepts any responsibility for the individual taxation
consequences arising from the Consolidation.
24
3.3
Timetable for the Consolidation
The proposed timetable for the Consolidation of the Company’s securities will be
as follows:
Event
Date
Despatch Notice of Meeting
20 Feb 2014
General Meeting to approve Consolidation
24 Mar 2014
Last day for pre-Consolidation trading1
25 Mar 2014
Post-Consolidation trading starts on a deferred settlement
basis1
26 Mar 2014
Last day for Company to register transfers on a preConsolidation basis1
1 Apr 2014
First day for Company to send notice to each holder of the
change in their details of holdings
2 Apr 2014
First day for the Company to register Securities on a postConsolidation basis and first day for issue of holding
statements
2 Apr 2014
Change of details of holdings date. Deferred settlement
market ends1
8 Apr 2014
Last day for Securities to be entered into holders’ Security
holdings.
8 Apr 2014
Last day for the Company to send notice to each holder of
the change in their details of holdings.
8 Apr 2014
Notes:
4.
1.
Assuming all of the Transaction Resolutions are approved by Shareholders, the
Company’s Shares will be suspended from trading from the date of the Meeting.
2.
This timetable is a proposed indicative timetable and the Board reserves the right to
vary these dates in accordance with the ASX Listing Rules.
RESOLUTION 3 – CHANGE OF COMPANY NAME
Section 157(1)(a) of the Corporations Act provides that a company may
change its name if the company passes a special resolution adopting a new
name.
Resolution 3 seeks the approval of Shareholders for the Company to change its
name to High Peak Royalties Limited. The Board proposes this change of name
on the basis that it more accurately reflects the proposed operations of the
Company upon the successful completion of the Takeover Offer.
If Resolution 3 is passed the change of name will take effect after the successful
completion of the Takeover Offer and when ASIC alters the details of the
Company’s registration.
The proposed name has been reserved by the Company and if Resolution 3 is
passed, the Company will lodge a copy of the special resolution with ASIC on
successful completion of the Takeover Offer in order to effect the change.
25
5.
RESOLUTION 4 – PLACEMENT OF SECURITIES UNDER PROSPECTUS
5.1
General
Resolution 4 seeks Shareholder approval for the issue of:
(a)
up to 16,000,000 Shares, but no less than 8,000,000 Shares, at an issue
price of $0.25 each to raise no less than $2,000,000 and up to $4,000,000;
(b)
an additional 8,000,000 Shares offered at an issue price of $0.25 each, in
the event of oversubscription; and
(c)
two (2) attaching Options to be granted for every five (5) Shares issued
under the Capital Raising, exercisable at $0.35 each prior to the third
anniversary of the issue date of the relevant Option and otherwise on
the terms set out in Schedule 1,
in each case on a post-Consolidation basis, under the Prospectus (Capital
Raising).
It is a defeating condition of the Takeover Offer that the Company must secure
at least $4 million under the Capital Raising. This condition may be waived by the
Company with Phoenix’s consent. However, the minimum subscription under the
Capital Raising is set at $2,000,000, which (as set out above) will require Phoenix’s
approval.
Further details in relation to the Capital Raising are set out in Section 1.1. Details
of the effect of the Capital Raising on the capital structure of the Company are
set out at Section 1.1.
ASX Listing Rule 7.1 provides that a company must not, subject to specified
exceptions, issue or agree to issue more equity securities during any 12 month
period than that amount which represents 15% of the number of fully paid
ordinary securities on issue at the commencement of that 12 month period.
The effect of Resolution 4 will be to allow the Directors to issue the Shares and
Options under the Capital Raising during the period of 3 months after the
General Meeting (or a longer period, if allowed by ASX), without using the
Company’s annual 15% placement capacity.
5.2
Technical information required by ASX Listing Rule 7.1
Pursuant to and in accordance with ASX Listing Rule 7.3, the following
information is provided in relation to the Capital Raising:
(a)
the maximum number of Shares to be issued is 24,000,000 and the
maximum number of Options to be issued is 9,600,000;
(b)
the Shares will be issued, after the Consolidation, at $0.25 each and the
Options will be attaching Options on the basis of 2 Options for every 5
Shares issued under the Capital Raising;
(c)
the Shares and Options will be issued no later than 3 months after the
date of the Meeting (or such later date to the extent permitted by any
ASX waiver or modification of the ASX Listing Rules) and it is intended
that issue will occur on the same date;
(d)
the Company will issue the Shares and Options to investors who
26
subscribe for securities under the Prospectus. None of these subscribers
will be related parties of the Company other than Mr Anthony Wooles
for which Shareholder approval is being sought for this participation in
the Capital Raising under Resolution 5;
(e)
the Shares issued will be fully paid ordinary shares in the capital of the
Company and will, upon issue, rank equally with all other Shares then on
issue. The Shares will be issued on the same terms and conditions as all
other Shares then on issue;
(f)
the Options will be issued on the terms set out in Schedule 1; and
(g)
the Company intends to use the funds raised from the Capital Raising
(together with its existing cash holdings of $2,533,500) as follows:
Use of Funds
Minimum
Subscription
($2,000,000)
Full Subscription
($4,000,000)
Oversubscription
($6,000,000)
Exploration
$425,000
$425,000
$425,000
TEY Exploration Expenditure
$150,000
$150,000
$150,000
Repayment of Debt under
RMB Facility
$820,000
$820,000
$820,000
Payment
to
Liberty
Petroleum Corporation Inc
$113,636
$113,636
$113,636
Milestone
Payment
Steven Larkins
$180,000
$180,000
$180,000
$218,088
$308,088
$368,088
-
$1,750,000
$3,250,000
$497,749
$622,563
$750,088
General Working Capital
$1,909,027
$1,944,213
$2,256,688
TOTAL
$4,533,500
$6,533,500
$8,533,500
Phoenix
Expenditure
to
Phoenix Merger Costs
Prospective
Acquisitions3
Royalty
Expenses of the Capital
Raising and Prospectus
Notes:
1.
The above table is a statement of current intentions as of the date of this Notice of
Meeting. As with any budget, intervening events (including exploration success or failure)
and new circumstances have the potential to affect the ultimate way funds will be
applied. The Board reserves the right to alter the way funds are applied on this basis.
2.
The table above assumes that AGL does not exercise its Top-up Right in respect of the
Takeover Offer, the Phoenix Optionholder Options or the Broker Options. If AGL exercises
its Top-up Right in respect of the Takeover Offer, the Company will raise up to an
additional $3,479,238 which the Company intends to use for prospective royalty
acquisitions and working capital.
3.
Pursuant to a Royalty Sale and Purchase Agreement between Phoenix and Liberty
Petroleum Corporation (Liberty) dated 16 November 2012 in respect of the sale to Phoenix
of certain overriding royalty interest in petroleum permits WA-314-P and WA-315-P, a
contingent bonus payment of US$100,000 is payable by Phoenix to Liberty upon a
successful takeover of Phoenix by a company listed on the ASX.
27
Full and further details on the use of funds are set out in Section 7.4 of the
Prospectus.
6.
6.1
RESOLUTION 5 – PARTICIPATION OF ANTHONY WOOLES IN CAPITAL RAISING
General
As disclosed above at Section 1.1, the Company is seeking Shareholder
approval for the issue of up to 8,000,000 Shares and 3,200,000 attaching Options
to Mr Anthony Wooles (or his nominees) arising from his proposed participation in
the Capital Raising the subject of Resolution 4 (on the same terms as other
investors except that Mr Anthony Wooles (or his personal nominee) will be
entitled to receive from Argonaut a fee of 3% of the value of the Shares that Mr
Wooles (or his personal nominee) subscribes for under the Capital Raising)
(Participation).
Mr Wooles has agreed to subscribe for, or procure subscriptions for, $2 million
worth of Shares and attaching Options under the Capital Raising, subject to
satisfaction of the following conditions:
6.2
(a)
obtaining Shareholder approval for the Transaction Resolutions;
(b)
the Company making the Takeover Offer and Prospectus Offer;
(c)
as at the end of the offer period under the Takeover Offer, the
Company having a relevant interest in 90% of all Phoenix Shares on
issue; and
(d)
the Company having effected the Consolidation.
Chapter 2E of the Corporations Act
For a public company, or an entity that the public company controls, to give a
financial benefit to a related party of the public company, the public company
or entity must:
(a)
obtain the approval of the public company’s members in the manner
set out in sections 217 to 227 of the Corporations Act; and
(b)
give the benefit within 15 months following such approval,
unless the giving of the financial benefit falls within an exception set out in
sections 210 to 216 of the Corporations Act.
The Participation will result in the issue of Shares and Options which constitutes
giving a financial benefit (and also gives rise to a payment by Argonaut to Mr
Anthony Wooles (or his nominee) of a fee of 3% of the value of the Shares that
Mr Wooles (or his personal nominee) subscribes for under the Capital Raising)
and Mr Anthony Wooles is a related party of the Company by virtue of being a
Director.
The Directors (other than Mr Anthony Wooles who has a material personal
interest in the Resolution) consider that Shareholder approval pursuant to
Chapter 2E of the Corporations Act is not required in respect of the Participation
because the Shares and Options will be issued to Mr Anthony Wooles on the
same terms as Shares and Options issued to non-related party participants in the
Capital Raising, or in respect of the 3% capital raising fee indirectly paid by
Argonaut as this fee reflects market rates, and as such the giving of the financial
benefit is on arm’s length terms.
28
6.3
ASX Listing Rule 10.11 also requires shareholder approval to be obtained where
an entity issues, or agrees to issue, securities to a related party, or a person
whose relationship with the entity or a related party is, in ASX’s opinion, such that
approval should be obtained unless an exception in ASX Listing Rule 10.12
applies.
As Participation involves the issue of Shares and Options to a related party of the
Company, Shareholder approval pursuant to ASX Listing Rule 10.11 is required
unless an exception applies. It is the view of the Directors that the exceptions set
out in ASX Listing Rule 10.12 do not apply in the current circumstances.
6.4
Technical Information required by ASX Listing Rule 10.13
information is provided in relation to the Participation:
(a)
the Shares and Options will be issued to Mr Anthony Wooles (or his
nominee);
(b)
the maximum number of Shares and Options to be issued is 8,000,000
and 3,200,000 respectively;
(c)
if issued, the Shares and Options will be issued no later than 1 month
after the date of the Meeting (or such later date to the extent permitted
by any ASX waiver or modification of the ASX Listing Rules) and it is
intended that issue of the Shares and Options will occur on the same
date;
(d)
the issue price will be $0.25 per Share and the Options will be issued as
attaching Options on the basis of 2 Options for every 5 Shares issued,
being the same as all other Shares and Options issued under the Capital
Raising;
(e)
other Shares then on issue;
(f)
the Options will be issued on the terms set out in Schedule 1; and
(g)
the funds raised will form part of the funds raised under the Capital
Raising and so will be used for the same purposes as all other funds
raised under the Capital Raising as set out in section 5.2(g) of this
Explanatory Statement.
Approval pursuant to ASX Listing Rule 7.1 is not required for the Participation as
approval is being obtained under ASX Listing Rule 10.11. Accordingly, the issue of
up to 8,000,000 Shares and 3,200,000 attaching Options to Mr Anthony Wooles
(or his nominees) will not be included in the use of the Company’s 15% annual
placement capacity pursuant to ASX Listing Rule 7.1. The Company is still seeking
Shareholder approval for the Capital Raising under ASX Listing Rule 7.1 under
Resolution 4.
29
7.
7.1
RESOLUTION 6 –
OPTIONHOLDERS
PLACEMENT
OF
OPTIONS
TO
UNRELATED
PHOENIX
General
The Company is proposing to undertake the Takeover Offer, the details of which
are disclosed above at Section 1.1 of this Explanatory Statement.
Phoenix currently has on issue 7,600,000 unlisted Phoenix Options exercisable at
$0.50 on or before 29 March 2015. 3,600,000 of these Options are held by
unrelated parties of the Company. The remaining 4,000,000 are held between
Geoffrey King, Andrew Carroll and Nigel Hartley or their controlled entities
(related parties of the Company by virtue of being proposed directors of the
Company). The Company needs to deal with these Phoenix Options to ensure
that no Phoenix Shares may be issued to the holders of Phoenix Options after
successful completion of the Takeover Offer.
In consideration for the transfer of their respective Phoenix Options to the
Company, the Company is offering to issue Phoenix Optionholders with one (1)
Option in the Company, exercisable at $0.35 each on a post-Consolidation basis
prior to the third anniversary of the issue date of the Option, for every ten (10)
Phoenix Options transferred (Phoenix Option Offer). These Options will be on the
same terms as the Options offered under the Capital Raising. As such, the
Company will apply for quotation of the Options if re-admitted to the official list
of the ASX.
A summary of ASX Listing Rule 7.1 is set out in Section 5.1 above.
Resolution 6 seeks Shareholder approval under ASX Listing Rule 7.1 for the issue of
up to 360,000 Options to holders of Phoenix Options who are not related parties.
Resolutions 7, 8 and 9 seek Shareholder approval for the issue of 400,000 Options
to Geoffrey King, Andrew Carroll and Nigel Hartley (or their respective
nominees).
The effect of Resolution 6 will be to allow the Company to issue 360,000 Options
during the period of 3 months after the Meeting (or a longer period, if allowed
by ASX), without using the Company’s 15% annual placement capacity (as
discussed in Section 5.1) (Unrelated Party Options).
7.2
information is provided in relation to the Options:
(a)
the maximum number of Options to be issued is 360,000;
(b)
the Options will be issued no later than 3 months after the date of the
Meeting (or such later date to the extent permitted by any ASX waiver
or modification of the ASX Listing Rules) and it is intended that issue of
the Options will occur on the same date;
(c)
the Options will be issued as consideration for the transfer to the
Company of all of the Phoenix Options that are held by Phoenix
Optionholders that are not related parties of the Company. No cash
consideration will be payable for the issue of the Options;
(d)
the Options will be issued to Phoenix Optionholders that are not related
parties of the Company;
30
8.
8.1
(e)
the Options will be issued on the terms and conditions set out in
Schedule 1; and
(f)
no funds will be raised from the issue of the Unrelated Party Options,
which are being issued as consideration for the transfer to the Company
of those Phoenix Options referred to in paragraph (c) above.
RESOLUTIONS 7, 8 AND 9 – ISSUE OF OPTIONS TO RELATED PARTIES
General
As disclosed above at Section 7.1, the Company is proposing to issue 400,000
Options to Geoffrey King, Andrew Carroll and Nigel Hartley (or their respective
nominees) as consideration for the transfer to the Company of an aggregate of
4,000,000 Phoenix Options held by those foregoing parties and their associates or
controlled entities (Related Party Options).
Resolutions 7, 8 and 9 seek Shareholder approval under ASX Listing Rule 10.11 for
the issue the Related Party Options.
8.2
Chapter 2E of the Corporations Act
For a public company, or an entity that the public company controls, to give a
financial benefit to a related party of the public company, the public company
or entity must:
(a)
obtain the approval of the public company’s members in the manner
set out in sections 217 to 227 of the Corporations Act; and
(b)
give the benefit within 15 months following such approval,
unless the giving of the financial benefit falls within an exception set out in
sections 210 to 216 of the Corporations Act.
The issue of the Related Party Options will result in the issue of Options which
constitutes giving a financial benefit and Messrs Geoffrey King, Andrew Carroll
and Nigel Hartley are related parties of the Company by virtue of the fact that
they are proposed directors of the Company (Related Parties).
The current Directors (who do not have a material personal interest in Resolutions
7, 8 or 9) consider that Shareholder approval pursuant to Chapter 2E of the
Corporations Act is not required because the Related Party Options will be
issued to the Related Parties on the same terms as Options issued to Phoenix
Optionholders that are not related parties of the Company (see Resolution 6).
Also, the Directors consider that the terms of issue were negotiated on an arm’s
length basis.
8.3
ASX Listing Rule 10.11 also requires shareholder approval to be obtained where
an entity issues, or agrees to issue, securities to a related party, or a person
whose relationship with the entity or a related party is, in ASX’s opinion, such that
approval should be obtained unless an exception in ASX Listing Rule 10.12
applies.
As the issue of the Related Party Options involves the issue of securities to related
parties, Shareholder approval pursuant to ASX Listing Rule 10.11 is required unless
31
an exception applies. It is the view of the Directors that the exceptions set out in
ASX Listing Rule 10.12 do not apply in the current circumstances.
8.4
Technical Information required by ASX Listing Rule 10.13
information is provided in relation to the Resolutions 7, 8 and 9:
(a)
the Options will be issued to the Related Parties (or their nominees) on
the following basis:
(i)
240,000 Options to Andrew Carroll (or his nominee);
(ii)
80,000 Options to Geoffrey King (or his nominee); and
(iii)
80,000 Options to Nigel Hartley (or his nominee);
(b)
the maximum number of Options to be issued is 400,000;
(c)
the Options will be issued no later than 1 month after the date of the
(d)
the Options will be issued as consideration for the transfer to the
Company of all of the Phoenix Options held by the Related Parties and
their respective associates and controlled entities;
(e)
Schedule 1; and
(f)
no funds will be raised from the issue of the Related Party Options, which
are being issued in consideration for the transfer to the Company of
those Phoenix Options referred to in paragraph (d) above.
Approval pursuant to ASX Listing Rule 7.1 is not required for the issue of the
Related Party Options as approval is being obtained under ASX Listing Rule
10.11. Accordingly, the issue of Related Party Options (or their nominees) will not
be included in the use of the Company’s 15% annual placement capacity
pursuant to ASX Listing Rule 7.1.
8.5
Related Party Options subject to Escrow
The Related Party Options will be restricted securities under the terms of the ASX
Listing Rules and may be subject to escrow for 24 months from their date of
quotation on the ASX. If escrowed, each holder of the Related Party Options will
be required to enter into a Restricted Securities Agreement on issue of the
options.
9.
9.1
RESOLUTION 10 – ISSUE OF BROKER OPTIONS TO ARGONAUT
General
Resolution 10 seeks Shareholder approval under ASX Listing Rule 7.1 for the issue
of up to 2,710,757 Options exercisable at $0.35 each prior to the third anniversary
of the date of issue of the relevant Option (Broker Options) to Argonaut
Securities Pty Limited (or their nominee) as per the mandate agreement
executed between the Company and Argonaut summarised below (Mandate).
32
Under the Mandate, the Company has appointed Argonaut as its financial and
corporate advisor in relation to the Takeover Offer and lead manager in relation
to the Capital Raising and has agreed to pay it the following fees:
(a)
a corporate advisory fee of $10,000 per calendar month effective from
8 November 2013 for the duration of Argonaut’s engagement;
(b)
in the event of the successful completion of the Takeover Offer,
$400,000 as a success fee; and
(c)
a fee of 6% of the total amount raised under the Capital Raising from
investors. From this fee Argonaut is required to pay Mr Wooles a fee of
3% of the total amount subscribed for under the Capital Raising by Mr
Wooles (or his personal nominee).
Argonaut also has a right to subscribe for that number of Options that equals
1.5% of the Company’s issued Shares after completion of the Transaction,
namely the Broker Options. As the Broker Options will have the same terms as
Options under the Capital Raising, the Company will apply for quotation of the
Broker Options if re-admitted to the official list of the ASX.
A summary of ASX Listing Rule 7.1 is set out in Section 5.1 above.
The effect of Resolution 10 will be to allow the Company to issue the Broker
Options to Argonaut during the period of 3 months after the Meeting (or a
longer period, if allowed by ASX), without using the Company’s 15% annual
placement capacity.
9.2
information is provided in relation to the Placement:
9.3
(a)
the maximum number of Options to be issued is 2,710,757;
(b)
the Options will be issued no later than 3 months after the date of the
(c)
the Options will be issued in return for the services by Argonaut under
the Mandate and a cash payment by Argonaut of $0.0001 per Option
as per the terms of the Mandate;
(d)
the Options will be issued to Argonaut Securities Pty Limited (or its
nominee), who is not a related party of the Company;
(e)
Schedule 1; and
(f)
the funds raised from the issue of the Options will be used to satisfy
working capital expenditure of the Company.
Broker Options subject to Escrow
The Broker Options will be restricted securities under the terms of the ASX Listing
Rules and will thus be subject to escrow for 24 months from their date of
33
quotation on the ASX. The holder of the Broker Options will be required to enter
into a Restricted Securities Agreement on issue of those Options.
10.
RESOLUTION 11 – PLACEMENT OF SECURITIES TO AGL IN RELATION TO TAKEOVER
10.1
Top Up Right
In 2008, the Company and AGL entered into a subscription agreement under
which AGL acquired a 9.99% interest in the Company and formed a strategic
alliance with the Company (Subscription Agreement).
Under the Subscription Agreement, the Company has granted AGL the right to
participate in 9.99% of any new issue of the Company’s securities on the same
terms as other participants (Top-up Right).
The Company obtained a waiver of ASX Listing Rule 6.18 to permit the Company
to grant the Top-up Right.
As a result of the Top-up Right, AGL has the right to subscribe for 9.99% of the
total number of:
(a)
Shares and attaching Options offered under the Capital Raising under
Resolution 4;
(b)
Shares offered to Phoenix Shareholders under the Takeover Offer;
(c)
Options offered to Phoenix Optionholders under Resolutions 6 to 9; and
(d)
Broker Options offered to Argonaut under Resolution 10.
AGL has not indicated, as at the date of this Notice, whether it intends to
exercise its Top-up Right in respect of any of the above new issues.
If AGL exercises its Top-up Right in respect of the Capital Raising (Resolution 4),
Torrens will issue AGL (or its nominee) with Shares and attaching Options as a
priority under the Capital Raising.
If AGL exercises its Top-up Right in respect of the Takeover Offer, the Company
will issue Shares to AGL (or its nominee) as detailed below.
If AGL exercises its Top-Up Right in respect of Options issued to Phoenix
Optionholders and Argonaut (Resolutions 6 to 10), the Company intends to issue
any Options under its ASX Listing Rule 7.1 placement capacity rather than
seeking Shareholder approval in this Notice.
10.2
Takeover Offer
Resolution 11 seeks Shareholder approval for the Company to issue Shares to
AGL in satisfaction of the Top-up Right in respect of the Takeover Offer. This will
comprise a total of up to 13,916,950 Shares.
The issue price of the Shares is governed by the Subscription Agreement, which
provides that, where the Company issues new Shares for non cash consideration
(as is the case with the Takeover Offer Shares), the subscription price to be paid
by AGL under the Top-up Right is:
(a)
if the new Shares are issued on an ASX trading day, the closing price of
Shares on the date the new Shares are issued; or
34
(b)
if the new Shares are issued on a day that is not an ASX trading day, the
closing price of Shares quoted on ASX on the previous trading day.
The Shares issued in relation to the Takeover Offer will be issued while the
Company’s Shares are still in suspension pending re-admission to official
quotation on the ASX. Whilst that day will be an ASX trading day, there will be no
closing price for the Shares as they will be suspended from trading. Accordingly,
the price at which AGL may acquire Shares under its Top-up Right in respect of
the Takeover Offer Shares is unable to be ascertained on the terms of the
Subscription Agreement.
Given the above, the Company has decided to offer AGL the ability to exercise
its Top-up Right in respect of the Takeover Offer at the same price as the issue of
Shares under the Capital Raising (being $0.25 per Share on a post-Consolidation
basis).
The Company is in discussions with AGL in respect of the application of the Topup Right. Negotiations may result in a different application of the Top-up Right to
the Takeover Offer, in which case the issue price of the Shares may not be $0.25
per Share. It is possible that Shares will be issued at an issue price equal to the
closing price of Shares on the ASX on the last trading day prior to the suspension
of Shares (which is expected to be the trading day immediately prior to the date
of the Meeting), adjusted for the Consolidation (that is, the issue price is
multiplied by 5.55, being the ratio of the Consolidation).
10.3
A summary of ASX Listing Rule 7.1 is set out in section 5.1 above.
The effect of Resolution 11 will be to allow the Company to issue up to 13,916,950
Shares to AGL upon exercise of the Top-up Right in respect of the Takeover Offer
during the period of 3 months after the Meeting (or a longer period, if allowed
by ASX), without using the Company’s 15% annual placement capacity.
Refer to Section 1.1 above for further details in relation to the effect on the
capital structure of the Company if AGL should elect to exercise the Top-up
Right in respect of the Takeover Offer (see in particular notes 4 and 5 of the
capital structure table set out in Section 1.1).
10.4
information is provided in relation to the AGL Placement:
(a)
the maximum number of Shares to be issued is 13,916,950;
(b)
the Shares will be issued at an issue price of $0.25 per Share on a postConsolidation basis. However, given the uncertainty of the application
of the Top-up Right, this Notice also seeks approval for an alternative
issue price equal to the closing price of Shares on the ASX on the trading
day prior to the suspension of Shares, multiplied by 5.55 (being the ratio
of the Consolidation);
(c)
the Shares will be issued no later than 3 months after the date of the
or modification of the ASX Listing Rules) and it is intended that issue will
occur on the same date;
35
11.
(d)
the Shares will be issued to AGL (or its nominee) who is not a related
party of Company;
(e)
other Shares then on issue; and
(f)
the funds raised will be used for the same purposes as all other funds
raised under the Capital Raising, as set out in Section 5.2(g).
RESOLUTIONS 12, 13, 14 AND 15 – ELECTION OF DIRECTORS
Resolutions 12, 13, 14 and 15 seeks approval for the election, subject to the
Company acquiring a relevant interest in at least 90% of Phoenix Shares on issue
under the Takeover Offer and the Takeover Offer becoming unconditional or
completing, of Messrs Geoffrey King, Andrew Carroll, Nigel Hartley and John
Theobald as Directors, with effect on and from the date of successful
completion of the Takeover Offer, in accordance with clause 11.11 of the
Constitution and Section 201E of the Corporations Act.
Clause 11.11 of the Constitution provides that Shareholders at a general meeting
may elect a person as a Director in addition to the existing Directors. Under
clause 11.12 of the Constitution any Director appointed under clause 11.11 shall
hold office until the next annual general meeting of the Company and is then
eligible for re-election.
The qualifications and experience of the proposed Directors are set out below.
Geoffrey King - Non-Executive Chairman
BA, LLB
Mr King is a lawyer with over 37 years international oil & gas experience. Mr King
began his career with the Australian government and then Esso Australia as Area
Legal Counsel based in Sale, Victoria, responsible for the Bass Strait development
legal group. Mr King then served Ampolex as General Counsel and a member of
the Executive Committee where he was intimately involved in the rapid
expansion of the Ampolex from a small explorer to a mid-cap producer.
Mr King operates his own specialist energy law firm and advises private
international clients and is retained by the PNG Government to advise on large
scale oil and gas and mining development which includes Exxon’s Gas-toAustralia Project and the PNG LNG project, and most recently the Greater
Stanley Project.
Mr King is currently non-executive Chairman of Cue Energy Resources and a
director of Vermilion Oil and Gas Australia. He previously served as a director of
Singapore Petroleum Company for nine years.
Andrew Carroll - Non-Executive Director
BA, MA
Mr Carroll is an engineer and co-founder of Phoenix. He has 30 years of
international oil & gas experience having originally trained with BP and then
having held a wide range of board, senior management and consultancy roles
with a number of oil and gas companies including Dome Petroleum / Amoco
36
Canada, Ampolex and InterOil.
Mr Carroll is currently a Director of Mosman Oil and Gas Limited and Australian
Petroleum Portfolio and provides consultancy services through his company,
Australasian Energy.
Mr Carroll has been a member of the Society of Petroleum Engineers for over 30
years.
Nigel Hartley - Non-Executive Director
BSc FCA (England and Wales)
Mr Hartley has had over 25 years in the resources industry including 20 with Oil
Search. He was CFO for Oil Search for 12 years and has been responsible for
raising debt funds for a number of oil and gas projects, including most recently
the PNG LNG Project.
Mr Hartley is currently a director of Roc Oil Company Limited and was a director
of Austin Exploration Limited until his resignation in June 2013.
In addition Mr Hartley was a director of Papuan Oil Search Ltd and a number of
Oil Search operating subsidiaries.
John Theobald - Non-Executive Director
BSc, BA, CEng, FIMMM, FGS, MIoD
Mr Theobald is a Chartered Engineer and holds a Bachelor of Science degree
with honours in geology. He has over 30 years experience in the resources sector
encompassing senior operations, business development, investment and
corporate roles.
Mr Theobald previously served as CEO of London Stock Exchange listed royalty
group Anglo Pacific plc where he was instrumental in the successful acquisition
of a wide range of royalty interests and strategic investments including Anglo
Pacific’s strategic investment in Phoenix in July 2012.
He has also worked in the junior and mid-tier resource sector most recently as
Chairman of First Coal Corporation in Canada which was successfully sold to
Xstrata, and for major companies such as Anglo American Corporation of South
Africa Limited (now Anglo American plc), Iscor Ltd (now split between Kumba
Iron Ore Ltd, Exxaro Resources Ltd and ArcelorMittal SA) and SCR-Sibelco NV.
Mr Theobald is a Fellow of the Institute of Materials, Minerals and Mining, Fellow
of the Geological Society of London and a Member of the Institute of Directors.
In accordance with Resolution 12, Geoffrey King seeks appointment as a
director of the Company, effective from the date of successful completion of
the Takeover Offer, subject to the Company acquiring a relevant interest in at
least 90% of Phoenix Shares on issue under the Takeover Offer and the Takeover
Offer becoming unconditional or completing.
In accordance with Resolution 13, Andrew Carroll, seeks appointment as a
37
In accordance with Resolution 14, Nigel Hartley seeks appointment as a director
of the Company, effective from the date of successful completion of the
Takeover Offer, subject to the Company acquiring a relevant interest in at least
90% of Phoenix Shares on issue under the Takeover Offer and the Takeover Offer
becoming unconditional or completing.
In accordance with Resolution 15, John Theobald seeks appointment as a
12.
RESOLUTION 16 – REPLACEMENT OF CONSTITUTION
12.1
General
A company may modify or repeal its constitution or a provision of its constitution
by special resolution of Shareholders.
Resolution 16 is a special resolution which will enable the Company to repeal its
existing Constitution and adopt a new constitution (Proposed Constitution) which
is of the type required for a listed public company limited by shares updated to
ensure it reflects the current provisions of the Corporations Act and ASX Listing
Rules.
This will incorporate amendments to the Corporations Act and ASX Listing Rules
since the current Constitution was adopted in 2007.
The Directors believe that it is preferable in the circumstances to replace the
existing Constitution with the Proposed Constitution rather than to amend a
multitude of specific provisions.
The Proposed Constitution is broadly consistent with the provisions of the existing
Constitution. Many of the proposed changes are administrative or minor in
nature including but not limited to:

updating the name of the Company to that adopted at this Meeting;

updating references to bodies or legislation which have been renamed
(eg references to the Australian Settlement and Transfer Corporations
Pty Ltd, ASTC Settlement Rules and ASTC Transfer); and

expressly providing for statutory rights by mirroring these rights in
provisions of the Proposed Constitution.
The Directors believe these amendments are not material nor will they have any
significant impact on Shareholders. It is not practicable to list all of the changes
to the Constitution in detail in this Explanatory Statement, however, a summary
of the proposed material changes is set out below.
A copy of the Proposed Constitution is available for review by Shareholders at
the Company’s website www2.torrensenergy.com and at the office of the
Company. A copy of the Proposed Constitution can also be sent to Shareholders
upon request to the Company Secretary (+61 407 770 183). Shareholders are
invited to contact the Company if they have any queries or concerns.
38
12.2
Summary of material proposed changes
A summary of material proposes changes by the Proposed Constitution are as
follows:
Preference Shares (clause 2.2)
Clause 2.2 set out the terms upon which the Board may issue preference shares
or convert Shares to preference shares in the Company without the need for
Shareholder approval.
Under clause 2.2 a summary of the terms of the preference shares is as follows:
(a)
the preference share may have the right to convert into a Share;
(b)
the preference share may include a right to receive dividends at a rate
determined by the Board and may rank in priority over Shares for
payment of dividends;
(c)
the right to participate equally with Shares in the distribution of profits
available for dividends;
(d)
the right to payment in the event of winding up or on a reduction of
capital may rank in priority to Shares;
(e)
there is no right to vote at Shareholder meetings unless:
(i)
there are any dividends in arrears under the preference shares;
(ii)
the resolution relates to a reduction the share capital of the
Company, a buy-back, the winding up the Company or a
proposal to dispose of the whole of the property and business of
the Company;
(iii)
the resolution affects the rights attaching to preference shares;
or
(iv)
the meeting is held during the winding up of the Company.
Please refer to clause 2.2 of the Proposed Constitution for the full terms of the
preference shares.
Number of Directors (clause 10.1(a))
Clause 10.1(a) sets the number of Directors at a minimum of 3 and maximum of
7. Under the current constitution this is set at a minimum of 3 and maximum of 20.
Remuneration of Non-executive Directors (clause 10.7)
Clause 10.7 sets the maximum total aggregate fixed sum per annum to be paid
to non-executive directors at $450,000, which may be amended by the
Company at a Shareholder meeting.
The maximum total aggregate fixed sum per annum to be paid to nonexecutive Directors is currently set at $250,000 as per a Shareholder approval at
the Company’s 2009 annual general meeting.
39
Circular Resolutions of Directors (clause 13.1)
Clause 13.1(a) allows the Board to approve a written Board resolution if a
majority of the Directors entitled to vote sign the written resolution (assuming
there is quorum of 2).
Under the current Constitution a circular resolution of the Board must be signed
by all Directors entitled to vote.
Dividends (clause 16)
Section 254T of the Corporations Act was amended effective 28 June 2010.
There is now a three-tiered test that a company will need to satisfy before
paying a dividend replacing the previous test that dividends may only be paid
out of profits.
The amended requirements provide that a company must not a pay a dividend
unless:
(a)
the company’s assets exceed its liabilities immediately before the
dividend is declared and the excess is sufficient for the payment of the
dividend;
(b)
the payment of the dividend is fair and reasonable to the company’s
shareholders as a whole; and
(c)
the payment of the dividend does not materially prejudice the
company’s ability to pay its creditors.
The existing Constitution reflects the former profits test and restricts the dividends
to be paid only out of the profits of the Company. The Proposed Constitution is
updated to reflect the new requirements of the Corporations Act. The Directors
consider it appropriate to update the Constitution for this amendment to allow
more flexibility in the payment of dividends in the future should the Company be
in a position to pay dividends.
Small Shareholdings (clause 21)
Clause 21 of the Constitution outlines how the Company can manage
Shareholdings which represent an “unmarketable parcel” of Shares, being a
Shareholding that is less than $500 based on the closing price of the Company’s
Shares on ASX as at the relevant time.
The Proposed Constitution is in line with the requirements for dealing with
“unmarketable parcels” outlined in the Corporations Act such that where the
Company elects to undertake a sale of unmarketable parcels, the Company is
only required to give one notice to holders of an unmarketable parcel to elect
to retain their shareholding before the unmarketable parcel can be dealt with
by the Company, saving time and administrative costs incurred by otherwise
having to send out additional notices.
Clause 21 of the Proposed Constitution continues to outline in detail the process
that the Company must follow for dealing with unmarketable parcels.
40
Proportional Takeover Provisions (clause 22)
A proportional takeover bid is a takeover bid where the offer made to each
shareholder is only for a proportion of that shareholder’s shares.
Pursuant to section 648G of the Corporations Act, the Company has included in
the Proposed Constitution a provision whereby a proportional takeover bid for
Shares may only proceed after the bid has been approved by a meeting of
Shareholders held in accordance with the terms set out in the Corporations Act.
This clause of the Proposed Constitution will cease to have effect on the third
anniversary of the date of the adoption or last renewal (as applicable) of the
clause.
Information required by section 648G of the Corporations Act
Effect of proposed proportional takeover provisions
Where offers have been made under a proportional off-market bid in respect of
a class of securities in a company, the registration of a transfer giving effect to a
contract resulting from the acceptance of an offer made under such a
proportional off-market bid is prohibited unless and until a resolution to approve
the proportional off-market bid is passed.
Reasons for proportional takeover provisions
A proportional takeover bid may result in control of the Company changing
without Shareholders having the opportunity to dispose of all their Shares. By
making a partial bid, a bidder can obtain practical control of the Company by
acquiring less than a majority interest. Shareholders are exposed to the risk of
being left as a minority in the Company and the risk of the bidder being able to
acquire control of the Company without payment of an adequate control
premium. These amended provisions allow Shareholders to decide whether a
proportional takeover bid is acceptable in principle, and assist in ensuring that
any partial bid is appropriately priced.
Knowledge of any acquisition proposals
As at the date of this Notice of Meeting, no Director is aware of any proposal by
any person to acquire, or to increase the extent of, a substantial interest in the
Company.
Potential advantages and disadvantages of proportional takeover provisions
The Directors consider that the proportional takeover provisions have no
potential advantages or disadvantages for them and that they remain free to
make a recommendation on whether an offer under a proportional takeover
bid should be accepted.
The potential advantages
Shareholders include:
of
the
proportional
takeover
provisions
for
(a)
the right to decide by majority vote whether an offer under a
proportional takeover bid should proceed;
(b)
assisting in preventing Shareholders from being locked in as a minority;
41
(c)
increasing the bargaining power of Shareholders which may assist in
ensuring that any proportional takeover bid is adequately priced; and
(d)
each individual Shareholder may better assess the likely outcome of the
proportional takeover bid by knowing the view of the majority of
Shareholders which may assist in deciding whether to accept or reject
an offer under the takeover bid.
The potential disadvantages of the proportional takeover provisions for
Shareholders include:
(a)
proportional takeover bids may be discouraged;
(b)
lost opportunity to sell a portion of their Shares at a premium; and
(c)
the likelihood of a proportional takeover bid succeeding may be
reduced.
Recommendation of the Directors
The Directors do not believe the potential disadvantages outweigh the potential
advantages of adopting the proportional takeover provisions and as a result
consider that the proportional takeover provision in the Proposed Constitution is
in the interest of Shareholders.
42
GLOSSARY
$ means Australian dollars.
AGL means AGL Energy Limited (ACN 115 061 375).
Argonaut means the Argonaut Group including Argonaut Capital Pty Ltd (ACN 099 761
547) and Argonaut Securities Pty Limited (ACN 108 330 650).
ASIC means the Australian Securities & Investments Commission.
ASX means ASX Limited (ACN 008 624 691) or the financial market operated by ASX
Limited, as the context requires.
ASX Listing Rules means the Listing Rules of ASX.
Bidder Statement means the Bidder Statement issued by the Company in connection
with the Takeover Offer and lodged with ASIC on or about 17 February 2014.
Board means the board of directors of the Company as constituted from time to time.
Broker Options means the Options contemplated under Resolution 10.
Business Day means Monday to Friday inclusive, except New Year’s Day, Good Friday,
Easter Monday, Christmas Day, Boxing Day, and any other day that ASX declares is not a
business day.
Capital Raising has the meaning given in Section 1.1.
Chair means the chair of the Meeting.
Company means Torrens Energy Limited (ACN 118 065 704).
Constitution means the Company’s constitution.
Consolidation means the consolidation of the issued securities of the Company on a 1 for
5.55 basis as contemplated in Resolution 2.
Corporations Act means the Corporations Act 2001 (Cth).
Directors means the current directors of the Company.
Explanatory Statement means the explanatory statement accompanying the Notice.
General Meeting or Meeting means the meeting convened by the Notice.
Merged Group means the Company and its subsidiaries after completion of the Takeover
Offer, including without limitation Phoenix.
Merger means the merger of the Company and Phoenix to be effected on completion
of the Transaction.
Notice or Notice of Meeting means this notice of meeting including the Explanatory
Statement and the Proxy Form.
Option means an option to acquire a Share.
Optionholder means a holder of an Option.
43
Phoenix means Phoenix Oil & Gas Limited (ACN 134 665 366).
Phoenix Option means an option to acquire a Phoenix Share.
Phoenix Optionholder Options means the Options contemplated under Resolutions 6 to 9
(inclusive).
Phoenix Optionholders means holders of Phoenix Options.
Phoenix Share means a fully paid ordinary share in the capital of Phoenix.
Phoenix Shareholders means holders of Phoenix Shares.
Proposed Directors means Messrs Geoffrey King, Andrew Carroll, Nigel Hartley and John
Theobald.
Prospectus means the prospectus prepared by the Company under section 710 of the
Corporations Act and lodged with ASIC on or about 17 February 2014 for the purpose of
re-complying with Chapters 1 and 2 of the ASX Listing Rules and in connection with,
amongst other things, the offer of Shares and attaching Options contemplated in
Resolution 4.
Prospectus Offer means an offer by TEY of 16,000,000 TEY Shares at $0.25 per TEY Share
(on a post-Consolidation basis) and 2 Attaching TEY Options for every 5 TEY Shares
subscribed for, made pursuant to the Prospectus.
Proxy Form means the proxy form accompanying the Notice.
Resolutions means the resolutions set out in the Notice, or any one of them, as the
context requires.
Share means a fully paid ordinary share in the capital of the Company.
Shareholder means a registered holder of a Share.
Shareholding means a holding of one or more Shares.
Takeover Offer means the off-market takeover offer by the Company to acquire all of
the shares in the issued capital of Phoenix pursuant to the Bidder’s Statement.
Transaction means collectively, the Takeover Offer, the approval of all Transaction
Resolutions at the General Meeting, the Capital Raising, the offer of Options to Phoenix
Optionholders contemplated under Resolutions 6 to 9, and the Consolidation.
Transaction Resolutions means all of the Resolutions the subject of this Notice other than
Resolutions 3, 10, 11 and 16.
WST means Western Standard Time as observed in Perth, Western Australia.
44
SCHEDULE 1 – TERMS OF OPTIONS
The terms and conditions of the Options being offered under the Prospectus are as
follows:
(a)
Entitlement
Each Option entitles the holder to subscribe for one Share upon exercise of the
Option.
(b)
Exercise Price
Subject to paragraph (j), the amount payable upon exercise of each Option will
be $0.35 (Exercise Price).
(c)
Expiry Date
Each Option will expire at 5.00pm (WST) on the day immediately prior to the third
anniversary of its issue date (Expiry Date). An Option not exercised before
5.00pm (WST) on the Expiry Date will automatically lapse at that time.
(d)
Exercise Period
The Options are exercisable at any time prior to 5.00pm (WST) on the Expiry Date
(Exercise Period).
(e)
Notice of Exercise
Subject to paragraph (f), the Options may be exercised during the Exercise
Period by notice in writing to the Company in the manner specified on the
Option certificate (Notice of Exercise) and payment of the Exercise Price for
each Option being exercised in Australian currency by electronic funds transfer
or other means of payment acceptable to the Company.
(f)
Restrictions on Exercise
The holder of an Option may not exercise less than 5,000 Options at any one
time unless the holder has less than 5,000 Options in which event the holder must
exercise all of its Options together.
(g)
Exercise Date
A Notice of Exercise is only effective on and from the later of:
(h)
(i)
the date of receipt by the Company of the Notice of Exercise; and
(ii)
the date of receipt by the Company of payment of the Exercise Price
for each Option the subject of the Notice of Exercise, in cleared funds
(Exercise Date).
Timing of issue of Shares on exercise
No later than 15 Business Days after the Exercise Date, the Company will issue
the number of Shares required under these terms and conditions in respect of
the number of Options specified in the Notice of Exercise and for which cleared
funds have been received by the Company.
45
(i)
Shares issued on exercise
Shares issued on exercise of the Options will, upon issue, be fully paid, will rank
equally with all other then issued Shares and will otherwise be subject to the
provisions of the Constitution and any restriction or escrow arrangements
imposed on them by ASX or under applicable Australian securities laws.
(j)
Reorganisation of Capital
If at any time the issued capital of the Company is reorganised, the number
and/or the exercise price of each Option are to be changed in accordance
with the Corporations Act and the ASX Listing Rules at the time of the
reorganisation, with the intention that such reorganisation will not result in
benefits being conferred on the holder of the Option which are not conferred
on Shareholders. In all other respects, the terms of exercise of the Options will
remain unchanged.
(k)
Participation in New Issues
There are no participation rights or entitlements inherent in the Options and
holders will not be entitled to participate in new issues of capital offered to
Shareholders during the currency of the Options without first exercising the
Options.
(l)
Change in Exercise Price
An Option does not confer the right to a change in Exercise Price or a change in
the number of underlying securities over which the Option can be exercised,
except to the extent required under the ASX Listing Rules in connection with the
reorganisation of the capital of the Company (as set out in paragraph (j)).
(m)
Application for Quotation of Shares issued on exercise
If the Company is admitted to the official list of ASX at the time, application will
be made by the Company to ASX for quotation of any Shares issued upon the
exercise of the Options.
(n)
Application for Quotation of Options
The Company will apply for quotation of the Options on ASX.
(o)
Transferability
The Options are transferable subject to any restriction or escrow arrangements
imposed by ASX or under applicable Australian securities laws.
46
SCHEDULE 2 – STATEMENT OF FINANCIAL POSITION
Torrens Energy Ltd
Unaudited 31
December 2013
Consolidated Group
Unaudited Proforma 31
December 2013
Current Assets
Cash assets
Trade and other receivables
2,533,500
22,206
5,693,517
82,237
Total Current Assets
2,555,706
5,776,287
Non Current Assets
Other receivables
Property, plant and equipment
Capitalised exploration costs
Intangible assets
Borrowing costs
156,561
11,203
2,228,199
-
166,561
11,203
3,045,422
30,652,646
95,312
Total Non Current Assets
2,395,963
33,971,143
Total Assets
4,951,669
39,747,430
Current Liabilities
Trade payables/accrued income
Provisions
Secured financial liabilities
30,500
2,970
-
289,551
2,970
420,000
Total Current Liabilities
33,470
712,521
Non Current Liabilities
Secured financial liabilities
Provision for rehabilitation
200,000
270,000
200,000
Total Non Current Liabilities
200,000
470,000
Total Liabilities
233,470
1,182,521
Net Assets (Liabilities)
4,718,199
38,564,909
Equity
Issued Capital
Reserves
Accumulated Losses
11,966,211
457,370
(7,705,382)
46,580,046
614,927
(8,553,544)
4,718,199
38,564,909
47
SCHEDULE 3 – PHOENIX OIL AND GAS LIMITED ASSETS
Property
Location
Royalty
Interest
Operator
Longtom Gas Condensate
Field (Vic L29 / Vic P54)
Gippsland Basin
0.3% ORI
Nexus Energy
Peat Gas Field (PL101)
Bowen Basin
Tintaburra Oil Field (ATP 299P)
Cooper/
Eromanga Basins
3.6%/4%
NPRI
Santos
Surat Basin CSG Project (PL
171 / ATP574)
Surat Basin
2.5% ORI
QGC/BG Group
Surprise Oil Field (EP 115)
Amadeus Basin
1.0% ORI
Central Petroleum
Currently Producing
2.125% ORI
Australia Pacific LNG JV
partnership
Fields/Projects under
Development
Exploration
Greater Poseidon LNG Project
(WA-314P)
Browse Basin
0.103125%
ORI
ConocoPhillips
Greater Poseidon LNG Project
(WA-315P)
Browse Basin
0.103125%
ORI
ConocoPhillips
Amadeus - 100% Central
Petroleum Blocks (EPA111,
EP115, EPA120, and EPA124)
Amadeus Basin
1% ORI
Central Petroleum
Amadeus - Santos Farm-Out
Blocks (EP 112, EP 115NM and
EP 125)
Amadeus Basin
1% ORI
Santos
Officer (WA- EP468)
Officer Basin
2% ORI
Paltar Petroleum
Seychelles
Seychelles, Indian
Ocean
Western Flank- Cooper Basin
(PEL 512)
Cooper Basin
0.075% ORI
1.3% ORI
WHL Energy
Discovery Energy
48
North Carnarvon (WA-482-P)
North Carnarvon
Basin
0.2% ORI
Karoon Gas
100% Owned Permits
Amadeus (EPA 155 and EP
156)
Amadeus Basin
NA
Phoenix
49
SCHEDULE 4 – TAKEOVER OFFER CONDI TIONS
The Takeover Offer is subject to the following conditions. Terms used below have the
meaning given in the Bid Implementation Agreement as disclosed to the ASX on 20
December 2013 and in the Bidder’s Statement lodged with ASIC on or about 14 February
2014.
1.
Approval of Essential Bidder Resolutions
Torrens Shareholders approve the Essential Bidder Resolutions, in accordance with
the Corporations Act and ASX Listing Rules, before the end of the Takeover Offer
Period.
2.
No Target Material Adverse Change
During the period from the Announcement Date to the end of the Offer Period
(inclusive), no Target Material Adverse Change occurs, is announced or becomes
known to Bidder (whether or not it becomes public).
3.
No Target Prescribed Occurrence
(inclusive), no Target Prescribed Occurrence occurs.
4.
Minimum Acceptance Condition
As at the end of the Offer Period, Bidder Group has a Relevant Interest in such
number of Target Shares as represents at least 90% in aggregate of all Target Shares
then on issue
5.
Prospectus Offer Condition
The Prospectus Offer closes and, as at the close of the Prospectus Offer, Bidder
receives or becomes entitled to receive, in immediately available funds, gross
proceeds of no less than $4 million as a result of subscriptions made under the
Prospectus Offer.
6.
ASX consent to re-admission
Bidder receives from ASX written confirmation that ASX will re-admit Bidder to the
official list of ASX and terminate the suspension from official quotation of Bidder
Shares, subject to the satisfaction of such terms and conditions (if any) as are
prescribed by ASX or the ASX Listing Rules.
7.
No regulatory intervention
(inclusive):
(a)
there is not in effect any preliminary or final decision, order or decree issued
by an Authority; and
(b)
no application is made to any Authority (other than by Bidder or a subsidiary
of Bidder), or action or investigation is announced, threatened or
commenced by an Authority,
in consequence of or in connection with the Offer (other than an application to or a
determination by ASIC or the Takeovers Panel in the exercise of the powers and
discretions conferred by the Corporations Act), which restrains, impedes or prohibits
(or if granted could restrain, impede or prohibit), or otherwise materially adversely
impacts upon, the making of the Offer or any transaction contemplated by this
agreement, the Offer or the rights of Bidder in respect of Target or the Target Shares
to be acquired under the Takeover Bid, or requires the divestiture by Bidder or
Bidder’s Shareholders of any Target Shares or the divestiture of any assets of Target
Group, Bidder, Bidder Group or otherwise.
50
8.
No material acquisitions
Between the Announcement Date and the end of the Offer Period (each inclusive),
no Target Material Transaction occurs.
9.
RMB Consent
Prior to the end of the Offer Period, Target receives the written consent of RMB to the
change in control of Target as a result of the implementation of the Takeover Bid.
51
Lodge your vote:
 By Mail:
*S000001Q01*
Computershare Investor Services Pty Limited
GPO Box 242 Melbourne
Victoria 3001 Australia
T 000001
Alternatively you can fax your form to
(within Australia) 1800 783 447
(outside Australia) +61 3 9473 2555
000
TEY
MR SAM SAMPLE
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
For intermediary Online subscribers only
(custodians) www.intermediaryonline.com
For all enquiries call:
(within Australia) 1300 559 360
(outside Australia) +61 3 9415 4875
Proxy Form
 For your vote to be effective it must be received by 10.30am (WST) Saturday, 22 March 2014
How to Vote on Items of Business
Signing Instructions
All your securities will be voted in accordance with your directions.
Individual: Where the holding is in one name, the securityholder
must sign.
Joint Holding: Where the holding is in more than one name, all of
the securityholders should sign.
Power of Attorney: If you have not already lodged 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, this form must be signed by that
person. If the company (pursuant to section 204A of the Corporations
Act 2001) does not have a Company Secretary, a Sole Director can
also sign alone. Otherwise this form must be signed by a Director
jointly with either another Director or a Company Secretary. Please
sign in the appropriate place to indicate the office held. Delete titles
as applicable.
Appointment of Proxy
Voting 100% of your holding: Direct your proxy how to vote by
marking one of the boxes opposite each item of business. If you do
not mark a box your proxy may vote as they choose. If you mark
more than one box on an item your vote will be invalid on that item.
Voting a portion of your holding: Indicate a portion of your
voting rights by inserting the percentage or number of securities
you wish to vote in the For, Against or Abstain box or boxes. The
sum of the votes cast must not exceed your voting entitlement or
100%.
Appointing a second proxy: You are entitled to appoint up to two
proxies to attend the meeting and vote on a poll. If you appoint two
proxies you must specify the percentage of votes or number of
securities for each proxy, otherwise each proxy may exercise half of
the votes. When appointing a second proxy write both names and
the percentage of votes or number of securities for each in Step 1
overleaf.
A proxy need not be a securityholder of the Company.
Attending the Meeting
Bring this form to assist registration. If a representative of a corporate
securityholder or proxy is to attend the meeting you will need to
provide the appropriate “Certificate of Appointment of Corporate
Representative” prior to admission. A form of the certificate may be
obtained from Computershare or online at www.investorcentre.com
under the information tab, "Downloadable forms".
Comments & Questions: If you have any comments or questions for
the company, please write them on a separate sheet of paper and
return with this form.
Turn over to complete the form


Update your securityholding, 24 hours a day, 7 days a week:
www.investorcentre.com
Review your securityholding
Your secure access information is:
SRN/HIN: I9999999999
Update your securityholding

PLEASE NOTE: For security reasons it is important that you keep your
SRN/HIN confidential.
Samples/000001/000001/i
MR SAM SAMPLE
FLAT 123
123 SAMPLE STREET
THE SAMPLE HILL
SAMPLE ESTATE
SAMPLEVILLE VIC 3030
Change of address. If incorrect,
mark this box and make the
correction in the space to the left.
Securityholders sponsored by a
broker (reference number
commences with ’X’) should advise
your broker of any changes.
Proxy Form
I 9999999999
Please mark
I ND
to indicate your directions
XX
Appoint a Proxy to Vote on Your Behalf
STEP 1

I/We being a member/s of Torrens Energy Limited hereby appoint
the Chairman
of the Meeting
 PLEASE NOTE: Leave this box
blank if you have selected the
Chairman of the Meeting. Do not
insert your own name(s).
OR
or failing the individual or body corporate named, or if no individual or body corporate is named, the Chairman of the Meeting, as my/our proxy to
act generally at the meeting on my/our behalf and to vote in accordance with the following directions (or if no directions have been given, and to
the extent permitted by law, as the proxy sees fit) at the General Meeting of Torrens Energy Limited to be held at Level 31, Allendale Square, 77
St George's Terrace, Perth, Western Australia on Monday, 24 March 2014 at 10.30am (WST) and at any adjournment or postponement of that
meeting.
Important for Resolution 5: If you have not directed your proxy how to vote as your proxy in respect of Resolution 5 and the Chair is, or may by
default be, appointed your proxy, you must mark the box below.
I/we direct the Chair to vote in accordance with his/her voting intentions (as set out above) on Resolution 5 (except where I/we have indicated
a different voting intention above) and acknowledge that the Chair may exercise my/our proxy even if the Chair has an interest in the outcome
of Resolution 5 and that votes cast by the Chair for Resolution 5, other than as proxy holder, will be disregarded because of that interest.
If the Chair is, or may by default be, appointed your proxy and you do not mark this box and you have not directed the Chair how to vote, the Chair
will not cast your votes on Resolution 5 and your votes will not be counted in calculating the required majority if a poll is called on Resolution 5.
PLEASE NOTE: If you mark the Abstain box for an item, you are directing your proxy not to vote on your
Items of Business  behalf on a show of hands or a poll and your votes will not be counted in computing the required majority.
STEP 2
Resolution 1 Approval for change in nature
and scale of activities
Resolution 9
Resolution 2 Consolidation of capital
Resolution 10 Issue of Broker Options to
Argonaut
Resolution 3 Change of Company name
Resolution 11 Placement of securities to AGL
in relation to Takeover Offer
Resolution 4 Placement of Securities
under Prospectus
Issue of Options to Nigel
Hartley
Resolution 12 Election of Director Geoffrey King
Resolution 5 Participation of Anthony Wooles
in Placement under Prospectus
Resolution 13 Election of Director Andrew Carroll
Resolution 6 Placement of Options to
unrelated Phoenix Optionholders
Resolution 14 Election of Director Nigel Hartley
Resolution 7 Issue of Options to
Andrew Carroll
Resolution 15 Election of Director John Theobald
Resolution 8 Issue of Options to
Geoffrey King
Resolution 16 Replacement of
Constitution
The Chairman of the Meeting intends to vote undirected proxies in favour of each item of business.
SIGN
Signature of Securityholder(s)
This section must be completed.
Individual or Securityholder 1
Securityholder 2
Securityholder 3
Sole Director and Sole Company Secretary
Director
Director/Company Secretary
Contact
Name
TEY
Contact
Daytime
Telephone
999999A
Date
/
/

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