NZX Announcement: Notice of Special Meeting of Shareholders

Notice is hereby given that a Special Meeting of Shareholders of Chatham Rock Phosphate Limited (the Company) will be held at the offices of Duncan Cotterill Lawyers, Level 2, 50 Customhouse Quay, Wellington on Thursday, 19 February 2015 at 11:00am.

Items of Business

A.           The Chairman’s introduction.

B.           Addresses to Shareholders.

C.           Shareholder discussion.

D.           Resolution.

Ordinary Resolution:

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

Other Business

To consider any other matter that may properly be brought before the Special Meeting.

 Proxies

Any shareholder who is entitled to attend and vote at the Special Meeting may appoint a proxy to attend and vote instead of him or her.  Such proxy need not be a shareholder of the Company.  The Chairman of the Company is prepared to act as proxy.

To appoint a proxy you should complete and sign the enclosed Proxy Form and return it by delivery, mail or fax to the share registrar of the Company:

If you wish to vote by proxy, you must complete the form and produce it to the Company by delivering it to the Company’s Share Registrar, Computershare Investor Services Limited, Level 2, 159 Hurstmere Road, Takapuna, Auckland, New Zealand, or by posting in to The Share Registrar, Chatham Rock Phosphate Limited, C/-Computershare Investor Services Limited, Private Bag 92119, Auckland 1142, New Zealand. Proxies may also be lodged online at www.investorvote.co.nz. In each case, please ensure that your Proxy Form is completed so as to be received at least 48 hours before the time for holding the meeting.

Where the Chairman is appointed discretionary proxy, he presently intends to vote in favour of the resolution before the meeting.

Ordinary Resolution

The resolution set out in this notice of meeting is an ordinary resolution. An ordinary resolution is a resolution passed by a simple majority of votes of those holders of securities of the Company which carry votes, are entitled to vote and are voting on the resolution in person or by proxy.

Voting Entitlements

Voting entitlements of the meeting will be determined with reference to the Company share register as at 5:00pm on Tuesday, 17 February 2015 (Record Date). Accordingly, only those persons who are registered shareholders of the Company on the Record Date will entitled to vote at the meeting and the only voting rights which may be exercised at the meeting by the same registered shareholders are those attaching to shares which are registered as at the Record Date.

Additionally and in accordance with Listing Rule 9.3.1, persons who have been issued or have acquired securities that are the subject of ratification under the resolution and their “Associated Persons” (as that term is defined in the Listing Rules) are disqualified from voting on the resolution. For a full list of those persons who have been issued or have acquired securities that are the subject of ratification under the resolution, please refer to the Explanatory Notes to this notice of meeting.

 The Company will disregard any votes cast on the resolution by such persons. Any discretionary proxies given to persons disqualified from voting under the requirements set out above will not be valid. Proxies that give express voting instructions to such persons will, however, be accepted.

 Listing Rule References

In this notice of meeting, references to the Listing Rules are references to the listing rules of the NZAX market.

 NZX Approval

This notice of meeting has been approved by NZX Limited. NZX Limited does not accept any responsibility for any statement made in this notice of meeting.

EXPLANATORY NOTES

Resolution: Ratification of Placements

Listing Rule 7.3.5

Listing Rule 7.3.5 (the Placement Rule) allows a company to issue equity securities without shareholder approval provided that the number of equity securities issued is not more than 25% of the equity securities of that class already on issue in the company (and calculated over a rolling twelve month period). The Company’s ordinary shares are equity securities under the Listing Rules and are relevant for calculating the limit applying to the Company under the Placement Rule.

Before issuing any securities under the Placement Rule, the Board of a listed issuer must resolve and certify that the relevant issue is for consideration and on terms that are fair and reasonable to the company and to all existing shareholders.

 The key benefit of the Placement Rule is that it allows listed issuers to act quickly to place equity securities if a suitable opportunity arises. Calling a shareholder meeting or undertaking a pre break disclosure to authorise an issue of equity securities can take three to five weeks. Accordingly with the Company being in a growth phase without operating revenues, having maximum flexibility to utilise the Placement Rule and raise new capital is necessary to fund the Company’s operations.

Why Ratification is Sought

At the date of this notice of meeting the Company has very limited residual capacity to issue equity securities under the Placement Rule. If the resolution is passed, the Company will then have the capacity to issue approximately 88,612,806 equity securities under the Placement Rule.

At the date of this Notice of Meeting the Company is still awaiting the decision as to the grant of a marine consent for the Company’s offshore rock phosphate project. The Company requires additional capital to fund its ongoing business irrespective of the decision outcome. There are three likely outcomes from the decision:

  •  The Marine Consent is granted to the Company. The Company will then proceed to developing its offshore rock phosphate project to production. This will include completing some final aspects of the mining vessel design with Boskalis Offshore B.V., negotiating and entering a long term mining contract for the project with a specialist operator, securing a mining vessel and adaption of that vessel. In addition the Company intends to continue funding studies on optimising use of the rock phosphate (particularly as a direct application fertiliser). Emphasis will also be placed on securing purchasers of the rock phosphate both domestically and overseas.
  • The Marine Consent is granted to the Company but the grant is then appealed to the High Court. In these circumstances the Company will continue to pursue the matters above however on a decelerated basis while also responding to such an appeal.
  • The Marine Consent is not granted. The Company will then consider the detail of the decision and weigh the relative merits of a new application, an appeal of the decision or the possible abandonment of the project.

Accordingly each of these three courses of action requires funding and the quantum required, likely pricing and then application of proceeds

Dilution Effect on Shareholders through Issues made under the Placement Rule

A resulting effect on each shareholder from issues made by the Company under the Placement Rule may be a dilution in their percentage shareholding in the Company. This dilution occurs immediately when shares are issued (or other forms of equity securities are converted into shares). However, such dilution does not take into account the increased prospects of the Company by having further capital. The availability of capital to the Company, in light of the growth and development stage that the Company is in, is critical.

Placements made under the Placement Rule

The persons listed in the table below have received placements under the Placement Rule which are subject to ratification under the Resolution (Placement Securities). The Placement Shares (and Shares to be issued on conversion of the Options) rank pari passu with all existing ordinary shares of the Company.  In respect of the subscribers listed below: Robyn Margaret Hamilton and Aorere Resources Limited constitute “Associated Persons” of the Company for the purposes of the Listing Rules, whilst Christopher David Castle is the Company’s Managing Director.  With the exception of the issue of Placement Securities to Wimmer Financial LLP (constituting payment in scrip for services rendered), the Company received cash for the Placement Securities. Such cash was raised by the Company, for the purposes of ensuring the availability of sufficient working capital, pending the outcome of its Marine Consent application.