TIDMZZL
RNS Number : 3240V
Zeehan Zinc Limited
08 July 2009
8 July 2009
Zeehan Zinc Limited
("ZZL" or the "Company")
Notice of Extraordinary General Meeting
The Company today announces its Extraordinary General Meeting ("EGM") is to be
held at 10am on 31 July 2009 at the office of the Company, Level 1/199 Macquarie
Street, Hobart, Tasmania, 7000. The Notice of EGM and Explanatory Memorandum
will be sent to shareholders on Thursday 9 July 2009.
The Resolutions are proposed against the background of a change in strategy of
the Company from confining its resources solely to its licenses in Tasmania to
seeking to achieve the expansion of the Company's operations nationally and
globally and through resource diversification. The Directors believe that there
are a variety of attractive potential transactions in the market currently that
would facilitate the spread of risk for ZZL.
Included within the Resolutions to be proposed at the EGM and which are
explained in detail within the Explanatory Memorandum, is the deletion of an
article of the Constitution of the Company limiting the borrowing powers of the
Company and proposing that the Company borrow US$30 million from RZB Austria
Finance (Hong Kong) Limited in order to facilitate this expansion of the Company
and resource diversification. Further Resolutions cover the dis-application of
pre-emption rights and a proposed change of name to Creat Resources Holdings
Limited,
All the resolutions are recommended by the appropriate Directors of the Company.
For further information please visit www.zeehanzinc.com or contact:
+-----------------------------------------+----------------------------+
| Zeehan Zinc Limited | Tel: +61 (03) 6216 2705 |
| Yasmine Healy | |
| | |
+-----------------------------------------+----------------------------+
| Nominated Adviser, Grant Thornton UK | Tel:+44 (0) 20 7383 5100 |
| LLP | |
| Philip Secrett, Maureen Tai | |
| | |
+-----------------------------------------+----------------------------+
| Broker, Alexander David Securities | Tel: +44 (0) 20 7448 9800 |
| Limited | |
| Ian Rice, Nick Martin | |
| | |
+-----------------------------------------+----------------------------+
| Bankside Consultants, PR | Tel: +44 (0) 20 7367 8888 |
| Simon Rothschild, Oliver Winters | |
+-----------------------------------------+----------------------------+
Notice of Extraordinary General Meeting
Friday 31 July 2009
Pursuant to rule 7.1.1 of the Constitution, and sections 249J and 249H(1) of the
Corporations Act, notice is hereby given that an Extraordinary General Meeting
of shareholders of Zeehan Zinc Limited (the "Company") will be held at the
office of the Company Level 1/199 Macquarie Street, Hobart, Tasmania, 7000 at
10am on 31 July 2009.
AGENDA
1.Chairman Welcome and Open Meeting
2.Deletion of Rule 18.1 of the Constitution (Borrowing Powers)
To consider and, if thought fit, to pass the following resolution as
a special resolution:
That, for the purposes of section 136(2) of the Corporations Act, approval be
given for the deletion of rule 18.1 of the Constitution in its entirety.
3.Approval under Rule 18.1 of the Constitution (Borrowing of the Company)
In the event that the special resolution in Agenda Item 2 is not passed, to
consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
That, for the purposes of rule 18.1.1 of the Constitution, approval be given for
the Company to enter into a Loan Agreement with the financial institution RZB
Austria Finance (Hong Kong) Limited of 200 Beijing International Club
21 Jiangguomenwai Dajie Beijing 100020 PRC to borrow US$30,000,000 ("Loan
Agreement"), guaranteed by its related parties Marvel Link Group Limited and
Kingswealth Finance Limited, for the reasons described in the attached
Explanatory Memorandum.
4.Deletion of Rule 17.1 of the Constitution (Directors Authority to Allot)
To consider and, if thought fit, to pass the following resolution as
a special resolution:
That, for the purposes of section 136(2) of the Corporations Act, approval be
given for the deletion of rule 17.1 of the Constitution in its entirety.
5.Amendment to Rule 17.2 of the Constitution (Pre-emption Rights and
disapplication)
To consider and, if thought fit, to pass the following resolution as
a special resolution:
That, for the purposes of section 136(2) of the Corporations Act, approval be
given for:
(a)the deletion of the first paragraph of rule 17.2.8 of the
Constitution in its entirety and its replacement with the following
paragraph:
"The Directors may be given power by special resolution to allot Equity
Securities as if:"
(b)the deletion of rule 17.2.9 and rule 17.2.10 of the Constitution in their
entirety; and
(c)the deletion of rule 17.2.12 of the Constitution in its entirety and its
replacement with the following rule:
"Notwithstanding rule 17.2 above, in the period following the general meeting
held on 31 July 2009 (the "Current Meeting") until the 2010 annual general
meeting, rules 17.2.1 to 17.2.7 (inclusive) do not apply to the allotment of
such number of Equity Securities which does not exceed 50% of the outstanding
number of shares at the date of the Current Meeting ("Disapplication Limit"),
provided that in the period following the annual general meeting held in 2010
and each year thereafter the Disapplication Limit shall be 30% of the
outstanding number of shares at the date of the 2010 annual general meeting.
6.Removal of Auditor
To consider and, if thought fit, to pass the following resolution as
an ordinary resolution:
That the firm, UHY Haines Norton, be removed as auditors of the
Company.
7.Appointment of Auditor
To consider and, if thought fit, to pass the following resolution as a special
resolution:
That, subject to the passing of the resolution contained in Agenda Item 6 and
for the purposes of section 327D(2) of the Corporations Act, approval be given
for the appointment of Deloitte Touche Tohmatsu of Level 9, 22 Elizabeth Street
Hobart in Tasmania as the auditor of the Company.
8.Change of Company Name
To consider and, if thought fit, to pass the following resolution as
a special resolution:
That, for the purposes of section 157 of the Corporations Act, approval be given
to change the Company's name from "Zeehan Zinc Limited" to "Creat Resources
Holdings Limited", effective from the time Australian Securities and Investments
Commission alters the details of the Company's registration.
9.Change in Strategy
To consider and, if thought fit, to pass the following resolution as an ordinary
resolution:
That, for the purposes of the AIM Rules for Companies published by the London
Stock Exchange, approval be given for the Company to focus on expansion of its
mining operations and resource diversification within the resource industry as
described in the attached Explanatory Memorandum.
10.Meeting Close
By order of the Board
Yasmine Healy
Company Secretary
Hobart, 7 July 2009
EGM ITEMS - EXPLANATORY MEMORANDUM
This Explanatory Memorandum provides information in relation to the Business of
the 2009 Extraordinary General Meeting.
At the Annual General Meeting of the Company on 14 November 2008, and in the
context of the Company's then urgent need for funding to satisfy its current and
long term liabilities, member approval was given for the Creat Group (which
includes Marvel Link Group Limited and Kingswealth Finance Limited), an existing
shareholder of the Company, to subscribe for a total of 308.3 million additional
shares at approximately 1 pence per share. This resulted in the Company raising
approximately A$7,200,000. These funds have, and will continue to be, applied to
fund the Company's operations and meet its objectives.
As a result of this share issue, the Creat Group has an ownership interest in
and controls 70% of the shares on issue of the Company. Two directors of the
Company, Mr Xiaojian Ren and Dr Yuewen Zheng have controlling ownership
interests in the Creat Group and its subsidiaries Marvel Link Group Limited and
Kingswealth Finance Limited.
Agenda Item 2
In light of the prevailing global economic climate and current resource prices,
the Board of Directors considers it would be in the best interests of the
Company to expand the Company's operations and business interests in mining
nationally and globally, at the same time as continuing to further its
exploration activities on its Tasmanian licenses with a view to extracting,
producing and selling any viable commercial quantities of resources discovered.
In order to facilitate this expansion and to achieve resource diversification,
it is proposed that the Company borrow US$30,000,000 from the financial
institution, RZB Austria Finance (Hong Kong) Limited (the "Lender"), and that
this facility be guaranteed by the Company's related parties Marvel Link Group
Limited and Kingswealth Finance Limited (both subsidiaries of the Creat Group).
Based on the Company's preliminary discussions, the Directors consider the
Company has the potential to acquire distressed mining businesses through share
sales, purchases of assets or similar for a price that reflects the current
global economic climate.
Rule 18.1.1 of the Constitution currently provides that the Company cannot
borrow an amount in excess of three times the adjusted capital of the Company
without shareholder approval. In light of the potential opportunities for the
Company to expand referred to above, the Directors consider that this limit on
the ability of the Company to borrow funds is unnecessarily restrictive and
limits the Company's ability to act quickly in order to take advantage of
opportunities in the market place as they present themselves and propose that
rule 18.1 be deleted in its entirety to give the Company more flexibility.
The Board recommends that shareholders vote in favour of this resolution.
Agenda Item 3
As an example of the requirement to borrow amounts in excess of 3 times adjusted
capital and as referred to above, the Board of Directors are proposing that the
Company borrow US$30,000,000 from the financial institution, RZB Austria Finance
(Hong Kong) Limited in order to facilitate the expansion of the Company and to
achieve resource diversification.
It is proposed that the loan will be to the Company as borrower, with the
Company's related parties Marvel Link Group Limited and Kingswealth Finance
Limited, guaranteeing the Company's obligations under that facility.
Rule 18.1.1 of the Constitution provides that the Company cannot borrow an
amount in excess of three times the adjusted capital of the Company without
shareholder approval. The proposed loan of US$30,000,000 is approximately 4.6
times the adjusted capital of the Company as at the date of this Notice of
Meeting. Accordingly, if the resolution contained in Agenda Item 2 ("Resolution
1") is not passed by shareholders, the Company will seek shareholder approval to
enter into the loan agreement for the purposes of rule 18.1.1 of the
Constitution. If Resolution 1 is passed by shareholders, the Company will not
be required to seek shareholder approval for the purposes of rule 18.1.1 of the
Constitution.
The material terms of the Loan Agreement are summarised below:
Lender: RZB Austria Finance (Hong Kong) Limited.
Borrower: the Company
Guarantors: Marvel Link Group Limited and Kingswealth Finance Limited (both
subsidiaries of the Creat Group) who shall guarantee
the Company's liability for all Loans up to the
Facility Limit.
Facility Limit: US$30,000,000.
Interest Rate: Equal to the sum of the Lender's "cost of funding" (being the
cost expressed as a % to the Lender of funding
or maintaining a Loan for 3 months from whatever
source it may select) plus a margin of 3.5% payable every 3 months
on the outstanding principal in relation to each
Loan. For example, LIBOR + 3.5%.
Conditions: Drawdown conditional on no default, no breach of representations and
warranties provided
for in the agreement and the aggregate amount of
loans not exceeding the Facility Limit.
Termination: Availability of the Facility shall be subject to Lender's review
from time to time and Lender reserves right to terminate
Facility at any time by notice to the Borrower
whereupon all outstanding principal and interest shall become
immediately due and payable.
Repayment: Subject to termination rights of the Lender, the Borrower must repay
all outstanding principal and interest on Final
Maturity Date, being approximately 30 June 2011.
Early repayment permitted and prepaid funds may be redrawn.
Fees & Charges: Management fee payable to the Lender of US$150,000 (once off).
The Borrower must pay all Lender's costs associated
with the preparation, execution and enforcement of
the Loan Agreement and all stamp duty and other taxes, fees
etc.
Security Provided:Includes a Fixed and Floating Charge over the assets of the
Company and Fixed and Floating Charge over the assets
and undertaking of each of Marvel Link Group Limited
and Kingswealth Finance Limited, Share Mortgages over the
shares in Marvel Link Group Limited and Kingswealth
Finance Limited held by Dr Yuewen Zheng and Mr Xiaojian Ren,
respectively, Share Mortgages over the shares in all
the Australian companies wholly owned by the Borrower, Share
Mortgage over the shares in the Company held by
Marvel Link Group Limited, Personal Guarantees from some or all of
the directors of each of Marvel Link Group Limited
and Kingswealth Finance Limited which include Mr Xiaojian Ren
and Dr Yuewen Zheng and a charge over the all cash
and deposits in the accounts of the Company and the
Guarantors held with Raiffeisen Zentralbank
Oesterreich (RZB) Beijing Branch.
The terms of the Loan Agreement currently provide that the funds drawn down
under the Facility may only be applied toward the acquisition by the Company of
one or both of two specific mining assets specified in the Loan Agreement, the
names of which cannot be disclosed at this point in time due to confidentiality
requirements associated with those negotiations. These acquisitions would take
place through acquiring shares or other equity interests in the company or
companies which currently own those mining assets (the "Acquisition").
In the event that the Acquisition does not occur within the 12 month period
commencing on the date of the Loan Agreement, the Lender is entitled to
terminate the Facility and the Loan Agreement. However, in those circumstances,
it is the current intention of the Board to renegotiate the terms of the Loan
Agreement with the Lender such that the funds available under the Facility may
be applied toward alternative mining asset acquisitions.
It is also a term of the Loan Agreement that the Company procure the investment
of not less than $US30,000,000 by new investors in the Company within 18 months
of the date of the Loan Agreement ("New Equity Investments"). On completion of
the New Equity Investments the Company must apply the proceeds of such
investment toward a mandatory pre-payment of the Loans made under the Facility.
In the event that the Company is unable to procure all or any part of the New
Equity Investments, the Company must apply funds to be held in a Debt Service
Reserve Account which shall be received from the Creat Group Corp. Ltd in order
to satisfy the mandatory repayment of the Loans.
Directors' recommendation:
The directors unanimously recommend shareholders vote in favour of
the Resolution as it will:
(a)allow the Company to diversify its business interests in mining and exploit
additional resources thereby limiting risk of suffering a loss by concentrating
on zinc, lead and silver only in a climate where those commodity prices have
recently fallen;
(b)allow the Company to utilize the leveraging position of its related parties
that are willing to provide security and guarantee the repayment of the loan in
the event of the Company's default; and
(c)allow the Company to grow its value internationally with a view
to enhancing shareholder value.
Other information that is reasonably required by shareholders to make a decision
and that is known to the Company or any of its directors:
The proposed loan agreement requires that, in addition to the Company providing
security in the form of a fixed and floating charge over the assets and
undertaking of the Company and its subsidiaries, Marvel Link Group Limited
provide a mortgage over the shares that it holds in the Company. Shareholders
should therefore be aware that should the Company and the Guarantors default,
the Lender would be able to, in addition to realizing the Company's assets in
order to satisfy the loan, acquire a controlling interest in the Company through
exercising its rights under the share mortgage. Such an acquisition of a
relevant interest in the shares in the Company by the Lender would be exempt
from the takeover prohibitions under the Corporations Act - see Item 6 of
section 611 of the Corporations Act.
Agenda Item 4
As referred to above, the Board are of the view that there may be significant
opportunities for the Company to make acquisitions of either shares or assets in
order to expand the Company's operations and business interests in mining
nationally and globally and, given the current state of the economic climate,
that these opportunities could be further enhanced due to the fact that such
assets and shares may well be acquired from distressed mining businesses at
reduced prices.
Rule 17.1 of the Constitution restricts the Board of Director's ability to
issues shares in the Company, save for a general authority to issue up to 1/3 of
the outstanding issued share capital of the Company in the period following an
annual general meeting of the Company until the next annual general meeting
(i.e. an annual 1/3 limitation).
In light of:
(a)the desire to be able to raise funds without the time restraints associated
with having to hold a general meeting of shareholders in order to obtain
approval; and
(b)the terms of the Loan Agreement referred to above under Agenda Item 3
requiring the Company to procure the New Equity Investments (of not less than
$US30,000,000) in the Company within 18 months of the date of the Loan
Agreement,
the Board is proposing to delete Rule 17.1 of the Constitution in its entirety
in order to give the Board more flexibility to allow the Company to take
advantage of opportunities as they present themselves. Where it is proposed to
issue securities for cash consideration, then pre-emption rights for existing
shareholders will apply, subject to the existing limits provided for in Rule
17.2.12 and, if passed, the limits proposed in the resolution contained in
Agenda Item 5.
Any issue of shares in the Company associated with the New Equity Investments
referred to above shall have the effect of diluting the existing holdings of
shareholders in the Company.
The Board recommends that shareholders vote in favour of this resolution.
Agenda Item 5
Assuming that the resolution contained in Agenda Item 4 is passed, Rule 17.2.8
of the Constitution should be amended as set out in the resolution contained in
Agenda Item 5 in order to account for the deletion of rule 17.1 of the
Constitution.
Further, if Rule 17.1 is deleted, Rules 17.2.9 and 17.2.10 become redundant and
should therefore also be deleted.
Rule 17.2.12 of the Constitution currently provides that pre-emption rights on
any proposed issue of shares or securities convertible into shares for cash
could be disapplied by the Board for the issue of up to 15% of the outstanding
issued share capital of the Company in the period following an annual general
meeting of the Company until the next annual general meeting. It is customary
for AIM companies to approve a level of pre-emption rights disapplication on an
annual basis to allow the Board to make decisions to raise capital in relatively
short periods of time if the need arises. The Board, in light of information
referred to above under Agenda Items 2 and 4, proposes to amend the Constitution
so that pre-emption rights can be disapplied on an annual basis, at a level
which reflects the capital intensive nature of the Company's business and
proposed expansion and development stages. Accordingly, immediately following
this extraordinary general meeting (and in the period prior to the 2010 AGM) it
is proposed that the Directors shall be entitled to issue Equity Securities up
to a level of 50% of the issued number of shares at the time without having to
apply the pre-emption rights in the Constitution provided for in rules 17.2.2 to
17.2.7. In addition, it is proposed that the Directors will be entitled to issue
Equity Securities to a level equal to 30% of the issued number of shares in the
Company in each year after the 2010 Annual General Meeting. This will allow the
Company to comply with its obligations under the Loan Agreement to make the New
Equity Investments (as referred to under Agenda Item 3).
The Board recommends that shareholders vote in favour of this resolution.
Agenda Item 6
Section 329 of the Corporations Act provides that an auditor of a Company may be
removed from office by resolution at a general meeting of which notice of
intention to the move the resolution has been given.
The Company has received a notice of intention from Marvel Link Group Limited,
being a shareholder of the Company, to remove the current auditors, UHY Haines
Norton. Accordingly, shareholder approval is sought to remove the current
auditors.
It is understood that the reasons for the proposed removal of UHY Haines Norton
are:
* the fees to date are significantly higher than the cost of services provided by
a competitor; and
* the Auditor is based in Sydney, requiring the Company to spend significant
resources on hosting the Auditor to complete the services, whereby appointing a
local auditor would avoid this cost.
The Board recommends that shareholders vote in favour of this resolution.
Agenda Item 7
Section 327D of the Corporations Act provides that the Company, by way of
special resolution at a general meeting, may appoint an auditor to replace an
auditor removed in accordance with section 329. Accordingly, approval is sought
from shareholders for the appointment of Deloitte Touche Tohmatsu as auditors of
the Company (assuming that the resolution contained in Agenda Item 6 is passed).
The Directors have received a notice of nomination from Marvel Link Group
Limited, being a shareholder of the Company, for the appointment of Deloitte
Touche Tohmatsu as auditors of the Company. A copy of this notice of nomination
is set out in Schedule 1.
Deloitte Touche Tohmatsu has given the Company the necessary consent to act as
auditor of the Company.
If the resolution contained in Agenda Item 6 and the special resolution
contained in Agenda Item 7 are passed, Deloitte Touche Tohmatsu will hold office
until the next Annual General Meeting of the Company where they, subject to
receipt by the Company of a nomination from a shareholder or shareholders, will
be eligible for re-election by shareholders at the Annual General Meeting.
Agenda Item 8
In line with the Company's objectives of expanding the Company both in terms of
resource diversification and acquiring business interests in mining nationally
and globally, the Board of Directors consider it no longer appropriate that the
Company's name represents one site of operations and one resource. Given the
Company's biggest and controlling shareholder is providing the financial
leverage to fund the Company's operations and expansion, the Directors consider
it appropriate that the name of the Company reflect its proposed operations and
is changed to "Creat Resources Holdings Limited".
The independent Directors each recommend that shareholders vote in favour of
this resolution.
Agenda Item 9
As outlined above, the Directors consider there are a variety of attractive
transactions in the market given the global financial climate has left many
companies under financial distress that are looking to divest. The Directors
consider it would be advantageous to the Company to proceed with acquisitions or
other transactions that would result in expansion of its mining operations
within and outside Australia and resource diversification (including gold,
nickel, and a continued focus on lead, zinc and silver) in order to spread the
risk of commodity fluctuations and take advantage of the deals on offer.
Assuming member approval is sought to effect the loan agreement, the Company
will have access to funds to enable it to proceed with attractive acquisitions.
In addition the Creat Group Corp. Ltd., a significant stakeholder to the Company
has indicated is continued financial and human resources support in executing
the strategy. The Company has historically pursued a strategy of exploration and
mining with a view to processing and selling commercial quantities of zinc, lead
and silver within its leases on the West Coast of Tasmania. The Company now
seeks to adopt a dual focus of continuing its exploration activities at the same
time as expanding its mining operations and resource interests. Given the change
in strategy represents a significant development and the requirement of the AIM
Rules for Companies published by the London Stock Exchange to obtain shareholder
approval, the Directors now seek member approval to proceed.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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Zeehan Zinc (LSE:ZZL)
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